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Eminent Domain and Carbon Capture Technology

October 27, 2023

In the ongoing effort to address the threat of climate change, the federal government has set an ambitious goal of achieving net zero carbon dioxide emissions by midcentury.  While there is a concerted effort to reduce emissions from each sector of the economy, it is widely acknowledged that the goal cannot be achieved by emission reductions alone.  Instead, some sort of “carbon capture” technology will need to be developed.

Carbon Capture Technology

The Infrastructure Investment and Jobs Act included $12 billion in funding for the development of carbon capture, use, and storage technologies.  Such technologies would allow carbon dioxide to be captured from stationary emitters, like power plants or industrial plants, compressed, and then transported via pipelines to suitable underground geologic features where it can be stored without escaping into the atmosphere.

Carbon Dioxide Pipelines

The pipelines used to transport carbon dioxide are not new technology.  Carbon dioxide pipelines have long been used, primarily in and around Texas, in enhanced oil recovery operations.  In those traditional uses, pipelines carry carbon dioxide from natural underground sources to oil wells, where the gas is then pumped into the ground to assist in producing oil that would otherwise be unrecoverable.

Unlike natural gas pipelines, no federal law governs the siting or acquisition of property for the construction of carbon dioxide pipelines.  Thus, proponents of such projects must seek eminent domain authority under state law.  Some states, including Texas, have developed standards that such projects must meet before a company may use eminent domain power.  In Texas, for example, only those pipelines that will be “common carriers” qualify for use of eminent domain.  Thus, a pipeline cannot merely serve one company’s wells or facilities and must instead transport product from multiple sources or serve multiple customers on the terminal end.  This means that a company could not exercise eminent domain for a pipeline that would transport carbon dioxide captured from its own facilities to its own storage facilities.  The legal picture is less clear in states that have not yet made specific provision for the exercise of eminent domain for carbon dioxide pipelines or for acquiring the underground geologic features suitable for carbon storage.

Carbon Capture and Storage Tax Credits

The federal government has passed a tax credit program to incentivize the development of carbon capture and storage technologies.  Despite this, few projects have been proposed and those that have been proposed, primarily in the upper Midwest, have been met with opposition from landowners and farm operators.  In addition to safety concerns, protesters often argue that a pipeline built by a private company to secure federal tax credits is not a public use that justifies the exercise of eminent domain.

The Biden administration has suggested to Congress that national legislation may be necessary to allow for the siting of pipelines.  If the Natural Gas Act model is followed, that would include allowing the pipeline company to exercise the federal eminent domain power in the acquisition of property necessary for carbon dioxide sequestration infrastructure.  No such legislation has been forthcoming.  Even if federal legislation governing the siting of such pipelines is eventually adopted, it is unclear if it would allow for the exercise of the federal eminent domain power given federalism concerns.  In the absence of such legislation, companies seeking to take advantage of the federal tax credits will face a hodge-podge of state legislation, some of which makes no explicit provision for the kind of infrastructure needed for the technology.

Matt Hull is a Pender & Coward attorney focusing his practice on eminent domain, right of way, and uniform relocation act matters, local government, and waterfront property law.

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