Ohio legislators introduce carbon capture and storage bills

Part 3 in our series on Carbon Capture and Storage

As expected, proposed legislation to allow for carbon capture and storage wells (CCS) was introduced this week in the Ohio General Assembly.  The legislation opens the door for CCS underground injection wells to store captured carbon dioxide in “pore space” or cavities far beneath the land’s surface. As we explained in Part 1 and Part 2 of our CCS series, CCS technology removes carbon dioxide from the atmosphere to reduce greenhouse gas emissions and can also trigger final production in an oil or gas field. If passed, the new law would affect agricultural landowners, who could be asked to lease their “pore space” for CCS projects.

The identical CCS bills introduced in the Ohio House of Representatives and Senate are H.B. 170, sponsored by Rep. Monica Robb Blasdel (R-Columbiana) and Rep. Bob Peterson (R-Sabina) and S.B. 136, sponsored by Sen. Tim Schaffer (R-Lancaster) and Sen. Brian Chavez (R-Marietta). The proposal varies in several places from a bill introduced late last year, the result of “fine tuning” by interested parties over the winter, according to Rep. Blasdel.

The proposed legislation includes clarification of the pore space property interest, a regulatory framework and fees for injection wells, consolidation or “pooling” provisions, well closure procedures, and liability provisions for carbon dioxide migration.

Clarification of “pore space” as a real property interest

Currently, Ohio does not have statutory laws that recognize pore space as a real property interest.  The proposal would change that by recognizing that the owner of  surface lands and water also owns “all pore space in all strata below the surface lands and waters.” The definition of “pore space” is “subsurface cavities and voids, whether natural or artificially created, that are suitable for use as a sequestration space for carbon dioxide.”

The proposal also addresses conveyancing of pore space, stating that a conveyance of surface ownership also conveys the pore space interest unless the pore space is expressly reserved or severed from the surface interest. This means a  landowner could sever pore space rights and convey those separate from the surface, as Ohio law currently allows with minerals.  A severed pore space interest would have priority over the surface interest.  The proposal also addresses the relationship with mineral interests, stating that severed mineral or oil and gas interests would be dominant over pore space rights. 

Regulatory framework for CCS injection wells

The proposed legislation would place state regulatory authority over CCS storage facilities in Ohio’s Division of Oil and Gas Resources Management in the Ohio Department of Natural Resources (ODNR). Note that the federal Safe Drinking Water Act also requires CCS injection wells to have a Class VI injection well permit from the U.S. EPA, although with the passage of the proposed bills, Ohio hopes to receive approval from the EPA to administer the state’s Class VI permit program.

The bills directs ODNR to adopt rules for CCS.  At a minimum, the rules must include:

(1) Requirements for the operation and monitoring of a carbon dioxide well;

(2) Safety concerning the drilling and operation of a carbon dioxide well;

(3) Spacing, setback, and other provisions to prevent storage facilities and storage operators from impacting the ability of owners of oil and gas interests to develop those interests;

(4) Protection of the public and private water supply, including the amount of water used and the source or sources of the water;

(5) Fencing and screening of surface facilities of a carbon dioxide well;

(6) Containment and disposal of drilling and other wastes related to a carbon sequestration project;

(7) Construction of access roads for purposes of the drilling and operation of a carbon dioxide well;

(8) Noise mitigation for purposes of the drilling of a carbon dioxide well and the operation of such a well, excluding safety and maintenance operations;

(9) Liability insurance to pay damages for injury to persons or property caused by the construction or operation of the storage facility;

(10) Liability insurance coverage of at least fifteen million dollars to cover bodily injury and property damage caused by the construction, drilling, or operation of wells,  including environmental coverage.

(11) A surety bond  sufficient to cover corrective actions, plugging, post-injection site care prior to receipt of a certificate of project completion, and emergency or remedial response.

The proposed law also states that ODNR may require a CCS storage well operator to deploy a seismicity monitoring system to determine seismic activity in the carbon storage area and requires a well operator to show that owners of oil and gas will not be adversely affected by the well.  Both the well operator and the well owner would pay fees to ODNR for the amount of carbon dioxide stored in the well.

Consolidation or “pooling” of pore space

If a well operator can’t obtain the consent of all pore space owners within a proposed storage area, the legislation would allow the operator to apply for “consolidation” if the operator has consent from at least 75% of the pore space owners. The remaining percentage of pore space owners could be “forced” into the project  if ODNR determines that the consolidation is “reasonably necessary to facilitate the underground storage of carbon dioxide.” Provisions would also address how to compensate the pore space owners.

Well closure

After carbon injections into a storage facility have ended and a period of 50 years passes, a storage operator may apply for a certificate of closure.  If the operator can establish full regulatory compliance and that there is no potential of migration or threat to public health or the environment, the state may issue a certificate of project completion that releases the operator from regulatory requirements and transfers the primary responsibility and liability for the stored carbon dioxide to the state. An operator could remain liable, however, under several circumstances, such as criminal acts, providing deficient or erroneous information, or violating duties.

Liability

The proposal clearly protects owners of pore space and owners of surface or subsurface property interests from liability relating to the injection of carbon dioxide into a storage facility.  It also limits any claims for damages against a storage operator to instances where the claimant can prove that the carbon dioxide injection or migration obstructed the free use of property, or caused direct physical injury to an individual, animal, or real or personal property.  The bill prohibits awarding of punitive damages if the storage operator acted in compliance with the required permit, and limits damages for personal or real property to the “diminution” or loss of value of the property.

How will the legislation affect agricultural landowners?

Our next article in the Carbon Capture and Storage series will focus on issues agricultural landowners need to consider if the CCS legislation passes. Watch for Part 4 on CCS soon, along with continued updates on the progress of Ohio's CCS legislative proposals.