By Keith Hall
LSU Law Center

In late June 2024, the Pennsylvania General Assembly passed Senate Bill No. 831 to govern carbon capture and storage, and Governor Shapiro signed the bill in July, making it 2024 Act 87.  The law is known as the “Carbon Capture and Sequestration Act.”[1]  The Act is codified at 32 P.S. §§ 696.1 through 696.11.

Declaration of policy

In the legislation, the General Assembly declared that “[i]t is in the public interest to promote the geologic storage of carbon dioxide,” and that “[t]he capture and geologic storage of carbon dioxide will benefit [Pennsylvania] and the global environment by reducing greenhouse gas emissions.”[2]

Ownership and conveyance of pore space rights

The Act states a general rule” that “[t]he ownership of all pore space in all strata below the surface lands and waters of the Commonwealth [of Pennsylvania] shall be vested in the surface property interest owner above the pore space,”[3] but it also recognizes that ownership of subsurface pore spaces can be severed from ownership of the surface.[4] 

The legislation provides that a severance of pore space rights from surface ownership by sale of surface rights and reservation of pore space rights must be express.  In particular, the legislation states: “A conveyance of the surface ownership of real property shall be a conveyance of the pore space in all strata below the surface of the real property unless the ownership interest in the pore space previously has been expressly excepted and reserved, conveyed or otherwise severed from the surface ownership.”[5]  Further, the legislation provides that an agreement conveying minerals does not convey pore space ownership unless the conveyance expressly conveys pore space.[6]  However, the Act states that it does not alter or invalidate any subsurface pore space ownership or rights acquired before effective date of the legislation.[7]  Thus, any agreements or conveyances executed prior to the effective date of the Act might be interpreted without regard to the rules stated in the Act.

The Act states that pore space ownership can be conveyed in the same “manner provided by law for the transfer of real property interests.”[8]  Thus, pore space rights can be severed from surface ownership.  Nevertheless, the Act prohibits any conveyance or lease of pore space beneath public lands without public notice, a public hearing, and the opportunity for public comment.[9] 

The Act states that the legislation is not intended to modify the common law rule that the mineral estate is dominant, and that the owner of a mineral estate has a right to use the surface as reasonably necessary for the subsurface mineral or minerals to which the mineral estate applies.[10]

The legislation requires any instrument that transfers the rights to pore spaces “shall describe the scope of any right to use the surface estate.”[11]  It also provides that the owner of pore space rights “shall have no right to use the surface estate beyond that set out in a property recorded instrument.”[12]  Thus, a transfer of pore space rights apparently does not include an implied right to use the surface.

The Act requires that an instrument transferring pore space rights include a description—whether a metes and bounds description or other description—“of the surface lying over the transferred pore space and identification of the subsurface strata, formations or reservoirs” for which pore space rights are conveyed.[13]  If the instrument describes the surface lying above the pore spaces covered, but does not describe particular depths or formations for which pore space rights are conveyed, the conveyance will be deemed to apply as to all depths.[14]

Unitization via “collective storage orders” for “collective storage”

The legislation authorizes Pennsylvania’s Environmental Hearing Board (the “Board”)[15] to create carbon storage units in the event that a “storage operator does not obtain the consent of all persons that own the storage facility’s pore space.”[16]  An operator has a right to an order creating such a unit if it has secured the consent of 75% of the ownership interests in the pore space to be used by the storage facility, but it has failed to reach an agreement with the other owners of pore space rights, despite the operator’s good-faith attempt to negotiate with those other owners.[17]  For purposes of determining whether the storage operator has obtained the consent of 75% of the ownership interests, “an unknown or unlocatable owner shall be deemed to have consented.”[18]

A prospective storage operator that seeks a “collective storage order” must provide the Board with a list of “all persons reasonably known to own an interest in pore space proposed to be collectively used,” and the Board must give notice to all the pore space owners to be included in the proposed order.[19]  If the proposed order would include “pore space with an unknown or nonlocatable owner,” notice must be given by publication, and that notice must include various information specified in the statute, including the proposed basis of compensation to pore space owners.[20]

If a collective storage order is granted, the storage operator must record a copy of the order, along with a survey of the storage area, in the office of the country clerk for each county in which a portion of the collective storage area is located.[21]  Further, the Board shall provide a copy of the order to the persons entitled to individual notice—the affected pore space owners who are known and locatable.[22]  The order must specify how unknown, “nonlocatable,” and nonconsenting pore space owners will be compensated.[23]

A collective storage order “shall not grant the storage operator … rights of surface use or access.”[24]  Further, a collective storage order cannot include certain categories of land without the consent of the owner or manager of the land or pore spaces beneath it.[25]  This includes land owned or managed by the Commonwealth of Pennsylvania, a municipality or agency of it, or other governmental entity of the Commonwealth or a municipality.[26]  It also includes land subject to certain conservation easements, certain charitable organizations that have a purpose of protecting or conserving land or wildlife.[27]

The Board may order the storage operator to pay reasonable attorney fees and costs of nonconsenting pore space owners for administrative hearing associated with a collective pore space order.[28]

Seismicity monitoring

In certain circumstances, the subsurface injection of fluids can trigger seismic activity (earthquakes).  This is sometimes called “induced seismicity.”  The Act requires the storage operator to deploy and maintain a seismicity monitoring system to monitor for seismic events, including induced seismicity.[29] 

Seismic surveys

Under Part C of the federal Safe Drinking Water Act,[30] a person must obtain a Class VI Underground Injection Control (UIC) before injecting carbon dioxide for permanent storage.  As part of the application process, the applicant must provide substantial information about the subsurface, to demonstrate to the regulator that the injections can be done without harming underground sources of drinking water.  To gather the information regarding the subsurface, a Class VI permit applicant likely will need to perform seismic surveys to map subsurface formations.  Performing a seismic survey requires creating a sound (seismic) wave and using a network of “geophones” that are spread over a wide area to monitor for seismic reflections from the interfaces of different subsurface strata.  To do this effectively, a prospective CCS storage operator may need to access neighboring properties.

If the storage operator is unable to reasonably negotiate an agreement with a surface owner for access to conduct a seismic survey, the Department of Environmental Protection (DEP) may issue an order allowing the storage operator to enter onto the lands, subject to an obligation to pay reasonable compensation for such access.[31]  A seismic survey conducted pursuant to such an order must be limited to gathering information for geologic storage, and the results of a seismic survey shall remain confidential and proprietary.[32]

Permitting considerations

The legislation directs the DEP to promulgate regulations for CCS to protect Pennsylvania’s natural resources and public health, safety, and welfare, and the regulations must consider “community and cumulative impacts.”[33]  For projects affecting “environmental justice” areas, the DEP may require additional impact assessments and opportunity for public participation.[34]

The legislation requires any CCS project “to isolate any existing or future production from the commercially valuable mineral, including of the coal, or oil and gas estate, from the carbon dioxide plume.”[35]  Further, the legislation instructs the DEP not to grant a permit for storage unless “the department is satisfied that the interests of the mineral, including coal, or oil and gas estate, will not be adversely affected and the subsurface property interest owners have been notified by the storage operator.”[36]

Ownership of injected substances and liability

The legislation creates a rebuttable presumption that carbon dioxide and other substances injected by the storage operator are owned by the operator.[37]  The legislation provides that no pore space owners or surface owners shall be liable for any effects of the injection “solely by virtue of their interest in the pore space or surface or subsurface rights.”[38]  The legislation also provides that the storage operator shall not be liable unless a plaintiff shows that “the injection or migration of carbon dioxide was performed without reasonable care and has caused injury to an individual, animal or real or personal property.”[39]  The legislation expressly recognizes the right of persons suffering injury or damage from storage operations to seek both compensatory and punitive damages, but the Act prohibits the imposition of punitive damages against a storage operator unless “the storage operator is determined to have had a reasonable basis for believing that the carbon sequestration project would not result in migration of carbon dioxide beyond the storage facility.”[40]

Establishment of Trust Fund

The legislation establishes the “Carbon Dioxide Storage Facility Trust Fund” as a separate fund within the Sate Treasury to defray the DEP’s cost of processing permit applications and regulating storage facilities after grant of a permit.[41]  Further, a restricted account is established within the Fund for managing the costs of any facility for which the State assumes ownership and liability under 32 P.S. § 696.11 after issuing a “certificate of project completion,” as is discussed below.[42]

Money in the account can only be used for the purposes stated above,[43] and money cannot be transferred out of the Fund into the general fund.[44]  Money in the fund and restricted account is to annually appropriated by the General Assembly.[45]

Transfer of ownership and liability to the State

The legislation provides that a storage operator may apply for a “certificate of project completion,” which the DEP can issue if at least fifty years have elapsed since injections end “or until an approved alternative period of time.”[46]  To issue such a certificate, the DEP must also find that the storage operator is in compliance with all laws governing injection and storage, that the storage operator has addressed any pending claims regarding its operations, that the carbon dioxide that was injected is not expected to migrate further and that it poses no threat to human health, safety, or underground sources of drinking water.[47]  In addition, the DEP must find that all wells and facilities are in good condition and will retain mechanical integrity, and that the operator has plugged all wells and completed any required reclamation.[48]  Upon issuance of a certificate of completion, the Commonwealth will assume responsibility, liability for, and ownership of the storage facility, and will perform any remaining monitoring that is required.[49]  The Act specifically states, however, that the Act is not intended as a waiver of sovereign immunity.[50]

Fees

In 32 P.S. § 969.9, the legislation provides that storage operators shall pay the DEP a fee on each ton of carbon dioxide injected to cover the department’s anticipated expenses associated with regulating CCS operations, along with any monitoring or maintenance required if the Commonwealth assumes responsibility for a storage operation after the DEP has issued a certificate of project completion.[51]  The amount of this fee is to be set by the Environmental Quality Board.[52]  Half of the amount collected is to be deposited in the restricted account within the Carbon Dioxide Storage Facility Trust Fund for use in handling any responsibilities assumed by the Commonwealth after issuing a certificate of project completion, and the other half to be deposited in the Fund for the costs of regulating CCS operations.[53]  Any amounts received by the Commonwealth on penalties imposed under the Act or any funds received as part of financial responsibility mechanisms are also to be deposited in the Fund.[54]

In addition, 32 P.S. § 696.6(b)(1)(iii) authorizes the DEP to “charge a permit or periodic management fee sufficient to maintain oversight and enforcement of carbon sequestration projects in this Commonwealth.”  The Act does not appear to expressly require that any permit or periodic management fee be deposited in the Fund, though arguably that is implied.

[1] Act No. 87, section 1, codified at 32 P.S. § 696.1.  The remainder of the citations in this article will cite to the codified statute.  As a general rule, a portion of the legislation found in Section “x” of the legislation are codified at 32 P.S. § 696.x.

[2] 32 P.S. § 696.2

[3] 32 P.S. § 696.4(a).

[4] 32 P.S. § 696.4(b).

[5] 32 P.S. § 696.4.

[6] 32 P.S. § 696.4(b).

[7] 32 P.S. § 696.4(d)(3).

[8] 32 P.S. § 696.4(b).

[9] 32 P.S. § 696.4(c).

[10] 32 P.S. § 696.4(d).

[11] 32 P.S. § 696.4(e)(1).

[12] 32 P.S. § 696.4(e)(1).

[13] 32 P.S. § 696.4(e)(2).

[14] Id.

[15] The Environmental Hearing Board was created as part of the Department of Environmental Resources, which was created by the Act of December 3, 1970, P.L. 834, codified at 71 P.S. § 510-1 et seq.  The Environmental Hearing Board was made independent of the Department by the Act of July 13, 1988, P.L. 530 (the “Environmental Hearing Board Act”), codified at 35 P.S. §§ 7511 through 7516.  The Department of Environmental Resources became the Department of Environmental Protection by Act No. 1995-18 in 1995.

[16] 32 P.S. § 696.5(a).

[17] 32 P.S. § 696.5(a).

[18] 32 P.S. § 696.5(a)(2).

[19] 32 P.S. § 696.5(b)(1).

[20] 32 P.S. § 696.5(b)(3).

[21] 32 P.S. § 696.5(b)(5).

[22] 32 P.S. § 696.5(b)(5).

[23] 32 P.S. § 696.5(b)(4).

[24] 32 P.S. § 696.5(c).

[25] 32 P.S. § 696.5(d).

[26] 32 P.S. § 696.5(d)(1)-(2).  The prohibition also applies to: “Land acquired under the act of January 19, 1967 (1968 P.L. 992, No. 442), entitled ‘An act authorizing the Commonwealth of Pennsylvania and local government units thereof to preserve, acquire or hold land for open space uses.’”  32 P.S. § 696.5(d)(4).

[27] 32 P.S. § 696.5(d)(3).

[28] 32 P.S. § 696.5(e).

[29] 32 P.S. § 696.5a(c).

[30] Part C of the Safe Drinking Water Act is designed to protect “Underground Sources of Drinking Water” or “USDWs.”

[31] 32 P.S. § 696.5a(d).

[32] 32 P.S. § 696.5a(e).

[33] 32 P.S. § 696.6(b)(1).

[34] 32 P.S. § 696.6(b)(1)(ii).

[35] 32 P.S. § 696.6(b)(4).

[36] 32 P.S. § 696.6(b)(4).

[37] 32 P.S. § 696.7(a).

[38] 32 P.S. § 696.7(b).

[39] 32 P.S. § 696.8(a).

[40] 32 P.S. § 696.8(b).

[41] 32 P.S. § 696.10(a)-(c).

[42] 32 P.S. § 696.10(a)(2).

[43] 32 P.S. § 696.10(c).

[44] 32 P.S. § 696.10(e).

[45] 32 P.S. § 696.10(f).

[46] 32 P.S. § 696.11(a), (b).

[47] 32 P.S. § 696.11(c).

[48] 32 P.S. § 696.11(c).

[49] 32 P.S. § 696.11(d).

[50] 32 P.S. § 696.11(e).

[51] 32 P.S. § 696.9.

[52] 32 P.S. § 969.9(b).

[53] 32 P.S. § 969.9(c).

[54] 32 P.S. § 969.9(d).