carbon sequestration
A bill authorizing the capture and storage of carbon dioxide via underground storage wells has passed the Ohio House of Representatives. The nearly unanimous vote by the House now advances H.B. 170 to the Ohio Senate.
We’ve reported previously on the prospect of Carbon Capture and Storage (CCS) coming to Ohio. CCS is one part of a strategy to reduce airborne CO2 emissions. It’s of high interest to hard-to-abate emission sources, such as ethanol, steel, chemical, and concrete production facilities. Rather than reducing the CO2 in their emissions, CCS allows such sectors to capture CO2 from emissions and store the CO2 in pore spaces far beneath the land’s surface. But landowners must be willing to lease their “pore space” for CO2 storage. If passed, then, CCS legislation will create pore space leasing opportunities and challenges for Ohio landowners.
Refer to our Ag Law Blog posts explaining CCS and discussing how CCS requires landowners to lease “pore space.” We also reviewed the first CCS bills in Ohio, proposed last legislative session, in a third blog post. Those bills did not pass, and H.B. 170 represents a new version of the proposals, developed after additional consideration by interested parties.
What’s in H.B. 170?
H.B. 170 sets up a state regulatory framework that authorizes the storage of capture carbon dioxide into subsurface “pore space” via Class VI injection wells, which are regulated by the U.S. EPA under the federal Safe Drinking Water Act’s Underground Injection Control Program. The bill addresses several
- Agency authority and rules. Delegates regulatory authority over CCS to the Ohio Department of Natural Resources Division of Oil and Gas Resources Management and directs the Chief to adopt rules that carry out the legislation.
- “Pore space” interests. Defines “pore space” as the subsurface cavities and voids that are suitable for use as storage areas for CO2, outlines procedures for severing and conveying pore space, clarifies the relationship between pore space, surface rights, and mineral interests, and limits the liability of pore space owners for the injection of CO2 into their pore space.
- CCS projects. Lays out the components of “carbon sequestration projects,” which includes “storage facilities” operated by “storage operators” who inject CO2 into pore space via injection wells.
- “Pooling” of pore space. Authorizes the pooling or “statutory consolidation” of pore space for carbon sequestration projects if the storage operator obtains the consent of owners of at least 70% of the pore space and establishes rights and responsibilities for statutory consolidation.
- Project completion and closure. Provides procedures for “certificates of project completion” that apply to the closure of storage facilities and a transfer of responsibility and liability to the State.
- Fees and penalties. Establishes fees for storage facilities and funds to pay for current and post-closure care program costs and sets civil and criminal penalties for violation of CCS regulations.
- Limitations on damages. Limits claims for damages dues to injection or migration of CO2 to claims that establish direct physical injury to persons, animals, or property, limits claims to diminution of value caused by the injection or migration and prohibits punitive damages in such cases.
What’s next for CCS?
The Ohio Senate now has its turn to consider H.B. 170. The Senate President referred the bill to the Senate Energy Committee, which already has a CCS bill before the committee. The Senate’s version of CCS, S.B. 136, was introduced last March but has not received any hearings.
S.B. 136 mirrors the version of H.B. 170 first introduced in the House. But amendments to H.B. 170 occurred in the House Natural Resources Committee that created differences between the two bills. It will be up to Energy Committee Chair Brian Chavez to determine which bill to advance, if any.
For a comparison of the original introduced bills (H.B. 170 and S.B. 136) and the substitute bill for H.B. 170 that passed the House of Representatives, refer to this synopsis by the Legislative Service Commission that highlights the differences.
H.B. 170 is a step toward “primacy”
Ohio is already on its way toward seeking approval from the U.S. EPA to regulate Class VI injection wells within the state, a concept referred to as “primacy.” State-based regulation of the well permitting program would speed up the permitting process for CCS, according to proponents of primacy. However, the state regulatory program must be at least as stringent as federal requirements before the U.S. EPA will delegate the Class VI program to the state. H.B. 170 and its resulting regulations will be reviewed by the U.S. EPA when Ohio submits its application for primacy to the U.S. EPA.
To date, only five other states have obtained primacy over Class VI wells. Six other states are currently in the process of applying for such approval. By obtaining primacy, Ohio could be ahead of many states in encouraging CCS development, proponents state.
Implications for Ohio landowners: pore space leasing
We’ve heard that some companies are already out with offers of “pore space leases” to Ohio landowners. Some are offering around $25 per acre for the right to use pore space for CCS. But now is the time for caution. The legislation is necessary to clarifying legal interests in pore space and how CCS development will occur in Ohio—both important issues landowners need to know before entering into pore space leases. A third important issue in need of clarification is the value of pore space, and it’s still too early to have firm answers to that question. Experience from oil and gas leasing teaches us, however, that early lease payment offers tend to be lower than later offers.
Landowners who want to move forward now on pore space leases, however, would be wise to work with an attorney. Some attorneys across the state are already reviewing and negotiating pore space leases on behalf of the landowners. Contact the agricultural law team for help with identifying attorneys knowledgeable in this area.
Watch for more resources on CCS and pore space leases coming to our program soon.
Tags: CCS, carbon capture and storage, carbon sequestration, class VI injection
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Part 2 in our series on Carbon Capture and Storage
If you’re a landowner, you may hold a valuable property interest that is gaining attention across the country: pore space. Pore space is the empty space between the particles of soil, sand, rock, and sediment beneath the surface of your land. It’s a geological formation that, if large enough, can store gas, brine water, and similar substances. Why the recent interest in pore space? It’s a necessity for Carbon Capture and Storage (CCS)—a technology that removes carbon dioxide (CO2) from emission sources and stores it in pore space far beneath the land’s surface.
We began this series on CCS with an overview of the technology and why it’s gaining traction in Ohio. See our first post on the Ohio Ag Law Blog. This second post focuses on legal issues related to pore space. The capacity to store CO2 in the pore space beneath the surface is a property interest that may have value to landowners—one that could be sold or leased to another party for CCS or other storage purposes. But before pore space transactions occur in Ohio, the General Assembly must address a few legal issues: clarification of pore space ownership, whether and how pore space interests can be severed and conveyed, and the relationship between a severed pore space interest and surface and mineral interests. Here’s why these are important legal needs.
- Ownership of pore space. A golden rule of property law partly answers the issue of pore space ownership in Ohio: the “ad coleum” doctrine. The doctrine states that the owner of land owns the rights above and below the land, from the sky to the earth’s core. The assumption under this common law rule, then, is that a landowner owns all subsurface pore space. But what if the pore space is created as a result of a particular activity, like mining? While a few court cases in Ohio have followed the ad coleum doctrine and recognized pore space ownership as an attribute of surface ownership, there have been inconsistent court rulings on the question of ownership of pore space resulting from mining activities. The rulings drive a need for the Ohio legislature to clarify pore space ownership issues, first by codifying the ad coleum doctrine and stating that a surface owner also owns the pore space beneath the surface. Second, statutory law could state whether the surface or mineral owner holds the right to pore space resulting from mineral extraction. If Ohio follows the general rule on mineral extraction adopted among other states, Ohio law would state that the surface owner retains the right to pore space after minerals are fully extracted.
- Severance, conveyance, and recording of pore space interests. Can a surface owner sever the rights to pore space and convey the interest to another party, as Ohio law allows with mineral interests? That’s another legal question in need of clarification in Ohio. The legislature could establish the right to sever pore space and adopt the same conveyancing and recording standards we utilize for tracking other property interests in Ohio.
- Conflicts with other property interests. Can pore space owners interfere with mineral and surface ownership interests by taking actions such as establishing a CCS well on the surface to store CO2 in the pore space? Which property interest has priority over the others if there is a conflict? Our courts can address legal questions as they arise but the Ohio legislature has the power to clear up the relationship between these property interests through statutory law. In particular, Ohio law should establish the priority of rights between the surface, pore space, and mineral interests and answer which is dominant over another when there is a conflict.
Will the legislature tackle these pore space issues that arise with the potential of CCS in Ohio? Possibly, but probably not until the next legislative session begins in January. There are currently proposals in both chambers of the legislature that simply declare an “intent to regulate carbon capture and storage technologies and the geologic sequestration of carbon dioxide for long-term storage,” House Bill 358 and Senate Bill 200, but those bills do not yet contain any detailed language and they will die if not passed by year’s end. With few days remaining in the legislative session this year, the bills are not likely to see any action. There will likely be new versions of the bills introduced next year, however, if the interest in CCS in Ohio continues. Hopefully, the proposals will answer our legal questions about pore space as a property interest of Ohio landowners.
Read the next blog post in this series, which reviews the CCS legislation under consideration in Ohio, at this link.
Tags: pore space, CCS, carbon, carbon capture, carbon injection, carbon lease, carbon sequestration
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One thing we're not short on in agriculture today is the opportunity to engage in carbon sequestration programs. Many programs are available that offer to pay farmers and landowners for adopting practices that sequester carbon dioxide to keep the pollutant out of the atmosphere. The practice aims to reduce greenhouse gas (GHG) emissions, as carbon dioxide is a significant contributor to GHG. Farming practices that sequester carbon include using cover crops, adopting no-till, and planting trees.
If you're considering a carbon sequestration or carbon credit program, what do you need to know about carbon sequestration? An upcoming program offered by OSU Extension's Energy Outreach Program will offer insight into carbon sequestration. Join us on October 29, 2024 at 8 a.m. for a webinar on "Carbon Sequestration for the Farmer and Landowner" and hear from these three panelists:
- Michael Estadt, Assistant Professor & Extension Educator, Pickaway County
- Peggy Kirk Hall, Attorney & Director, Agricultural & Resource Law Program
- John Porter, Outreach & Partnership Liaison,Truterra, LLC
The panel will highlight important issues and considerations for farmers and landowners interested in carbon sequestration. Pre-registration is not necessary; simply join the webinar through this link: go.osu.edu/carbon2024.
Contact Dan Lima at lima.19@osu.edu or call the OSU Extension office in Belmont Co. (740) 695-1455 for more information.
Tags: carbon, carbon sequestration, carbon dioxide, greenhouse gas, climate change, climate smart
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