Land & Renewables Connection

On April 8, 2024, the Pennsylvania Senate passed Senate Bill 831 (“SB 831”), the “Carbon Capture and Sequestration Act”. The legislation is not the law; it now moves to the House for consideration. On the whole, SB 831 is an attempt by the Commonwealth to establish a baseline framework for carbon capture and sequestration activities involving pore space. But, several provisions of this legislation could negatively impact private property rights. While creating a basic set of rules governing carbon capture and sequestration is a worthy endeavor, it is not clear that SB 831 appropriately addresses potential economic development from carbon sequestration in the pore space versus the property rights used in or impacted from that development. 

The fundamental purpose of SB 831 is to authorize carbon capture and sequestration projects. Carbon sequestration aims to prevent carbon dioxide from being deposited the atmosphere by storing it elsewhere; in this case, underground. The legislation under consideration authorizes the injection of carbon dioxide into the subsurface pore space and also permits the underground storage of carbon dioxide in that pore space. The injection of carbon dioxide would be done through via an injection well subject to an Underground Injection Control Class VI permit. The federal government is currently responsible for issuing those types of permits in Pennsylvania, though SB 831 seems to contemplate the Commonwealth issuing those permits. SB 831 requires a storage operator to design the project to isolate its subsurface storage area from minerals, coal, oil or gas.

Carbon capture and sequestration projects contemplated in SB 831 use the subterranean pore space for long-term carbon storage. The pore space consists of cavities and voids in the subsurface. Pennsylvania common law has long considered the subterranean pore space to be owned by the owner of the surface of the land. See, Chartiers Block Coal Co. v. Mellon, 25 A. 597, 598–99 (Pa. 1893). SB 831 preserves this status quo. Its Section 4 sets out a general rule that, absent some other conveyance, the pore space is owned by the surface property owner of that land. Additionally, SB 831 states that an agreement to sell subsurface interests would not include the pore space unless the pore space was specifically identified. SB 831 also stipulates that deeds conveying pore space need to contain specific descriptions of the pore space being sold.

With the subsurface pore space being used for long-term carbon storage, questions naturally arise about the interplay between the use of the subsurface for carbon sequestration, versus the extraction and production of subsurface coal, oil and gas resources. Pennsylvania has long-considered subsurface mineral, oil and gas rights to be “dominant” over the surface. As reflected in the “Accommodation Doctrine”, owners of subsurface minerals, oil and gas can use the surface as necessary to produce and extract their subsurface rights. See, Chartiers Block Coal Co.. However, the subsurface owner’s use of the surface must be made with “due regard” for the rights of the surface owner. Id.

SB 831 states that the minerals, coal, oil and gas are dominant over the pore space. So, owners of minerals, coal, oil and gas would be able to use and disturb the pore space as necessary to effectuate the development of the minerals, coal, oil and gas. Since SB 831 and Pennsylvania common law consider the pore space to be owned by the surface owner, SB 831’s identification that minerals, coal, oil and gas are dominant over the pore space makes sense. The minerals, coal, oil and gas have historically been considered to be dominant over the surface. However, the interplay between future carbon storage projects and mineral extraction would need further coordination.

While SB 831’s treatment of pore space ownership and the historic dominance of subsurface estates over the surface estate seem to preserve the status quo under Pennsylvania common law, other provisions of SB 831 are more concerning because they impact private property ownership in new ways.

Section 5 of SB 831 specifically addresses the mechanics of subsurface carbon sequestration and authorizes the Department of Environmental Protection to enact orders requiring pore space owners to allow a carbon sequestration project operator to use their pore space for storage, even if they do not agree to the project. Under SB 831, a company (or individual) seeking to develop and operate a carbon sequestration project must first attempt to negotiate in good faith with pore space owners to acquire agreements or consent to use the pore space for a carbon sequestration project.

Once the operator of a proposed carbon sequestration project has obtained the consent or agreement from 60% of pore space owners within the project area to use their pore space for storage, “all of the pore space of said interests for which an agreement has not been reached shall be declared to be included within the proposed storage facility if the secretary finds that the requirements of this section have been met.” However, this 60% requirement does not necessarily require 60% of pore space owners within the boundaries of a carbon sequestration project to agree that their pore space can be used for storage. There can be owners of pore space whose identity and/or whereabouts are unknown. For purposes of calculating the 60% agreement threshold, “an unknown or nonlocatable owner shall be deemed to have consented or agreed to the use of the pore space, provided that the storage operator has complied with the publication requirements of this act.”

When the 60% agreement threshold is met, a prospective storage operator could apply to the Department of Environmental Protection for “Collective Storage Order”. The storage operator would have to publish notice of its application:

• at least once in the newspaper with the largest circulation in the county where the storage project is located;
• at least thirty days before the operator applies for a “Collective Storage Order”;
• identifying that an application was filed;
• describing the location of the pore space for the proposed storage facility;
• providing the name and/or last known address of unknown or unlocatable pore space owners;
• directing individuals to contact the Department of Environmental Protection and/or storage operator within twenty days.

Following that publication and a hearing, the Department of Environmental Protection can issue a “Collective Storage Order” authorizing long-term carbon storage in the pore space. That “Collective Storage Order” also will identify the “. . . compensation to be paid to unknown, nonlocatable and nonconsenting pore space owners and the basis for fair market valuation of the collective interest of the pore space owners.” The “Collective Storage Order” can also provide for the locations of injection wells, monitoring equipment, outbuildings, roads and other infrastructure.

While unknown or unlocatable owners can pose problems for an individual or entity who needs to secure their agreement to undertake some economic activity, SB 831 does not provide any real guidance or standards about the type of search that must be undertaken before an owner could be considered “unknown” or “unlocatable”. Likely, a single publication in a county newspaper is not going to place an “unknown” or “unlocatable” owner on notice that their pore space may be used and developed without their consent.

Private property rights would have greater protection with a more robust requirement that a storage operator demonstrate that a detailed investigation was performed, in good faith, with the intent of actually finding someone, and using all available technology, before an owner could be determined “unknown” or “unlocatable”. Those protections are not in SB 831 and their absence presents the potential for abuse where it is easier not to find someone for a project to move ahead, particularly if “unknown” or “unlocatable” pore space owners count toward the 60% permission threshold a storage operator needs to apply for a “Collective Storage Order”.

Property rights fare no better under SB 831 when a prospective storage operator wants to undertake seismic testing to evaluate whether the subsurface pore space lends itself to a carbon sequestration area. A storage operator who wants to perform seismic testing studies must attempt to negotiate with a property owner for entry. But, if the storage operator is “. . . unable to reasonably negotiate with a surface owner for the right to conduct a seismic survey on lands owned by the surface owner, the [Department of Environmental Protection] secretary may issue an order for the entry onto the lands by the storage operator. In this instance, the storage operator shall pay the surface owner just and reasonable compensation as established by the secretary.” Being “unable to reasonably negotiate” seems to be in the eye of the beholder, and SB 831 provides no more detail about what type of negotiations must be attempted, or compensation offered, before an operator can seek an order from the Commonwealth allowing the prospective storage operator to access private property to conduct seismic testing against the wishes of that landowner.

Under SB 831, even for an activity like seismic testing to evaluate if geology is favorable for carbon sequestration, property owners cannot entirely prohibit entry onto their lands. That is concerning. SB 831’s obligation that a storage owner indemnify the surface owners for damages related to this entry seems an unsatisfying trade-off for a property owner who did not want to grant permission to enter the land in the first place.

On a positive note, SB 831 stipulates that pore space owners, those having rights to control the pore space, or surface owners, will not be liable for the effects of carbon dioxide injection for sequestration simply because of their ownership or interests in the property. That has the potential to relieve substantial liability concerns that could exist merely from owning property where carbon dioxide is stored. As to the storage operators, under SB 831, their potential liability for damages resulting from carbon dioxide injection is fairly narrow. Claims for damages against a storage operator due to injection or migration of carbon dioxide would require a showing that the carbon dioxide injection or migration “(1) is injurious to health, or an obstruction to the free use of property so as essentially to interfere with the comfortable enjoyment of life or property; or (2) has caused injury to an individual, animal or real or personal property.”

SB 831 also contains a provision that allows the operator of a carbon storage project to ultimately turn the storage facility over to the Commonwealth. At least 10 years after all carbon dioxide injections into a sequestration facility have ended, the Department of Environmental Protection could issue a “Certificate of Project Completion.” In order to obtain that certificate, a storage operator would be required to demonstrate compliance with a variety of criteria geared toward establishing that the carbon sequestration facility works properly and is in a good state of repair.

With the issuance of a “Certificate of Project Completion”, responsibility for the carbon sequestration project can be turned over to the Commonwealth, with the Commonwealth obtaining ownership of all carbon dioxide stored in the pore space, and prior owners of the facility being released of their obligations. Then, the Commonwealth would be responsible to indefinitely maintain the carbon sequestration facility until the federal government takes the project over.

The proviso in SB 831 that the state can eventually become responsible for carbon sequestration facilities reflects a public policy decision that promotes carbon sequestration as an economic activity, because it provides a way for individuals or entities who engage in carbon sequestration to avoid perpetual liability for their conduct. This policy choice, promoting carbon sequestration as an economic activity, is evident throughout the text of SB 831, with the economic activity having primacy over private property rights of those who do not want their property rights used for this activity. It is unclear that SB 831 strikes the right balance in this regard.

SB 831 has only been approved by the Pennsylvania Senate and it is not law at this time. It is subject to further debate and amendment in the legislative process. The creation of a set of ground rules before any activity commences in Pennsylvania is preferable to legislating from behind and trying to put the proverbial toothpaste back in the tube once an economic activity begins in earnest. However, SB 831 seems to impair private property rights in concerning ways that may need to be addressed and improved.

Attorneys in Houston Harbaugh’s Renewable Energy, Zoning and Land Use practice group are staying up-to-date with issues related to carbon sequestration and pore space ownership. As SB 831 progresses through the Pennsylvania General Assembly, further commentary will be provided. In the interim, if you have questions about pore space, carbon sequestration or any other renewable energy question, contact attorney Brendan A. O’Donnell at 412-288-2226 or odonnellba@hh-law.com.

This is not intended to be a full summary of legislation, to provide political commentary, or to provide legal advice.