Carbon Dioxide (CO2) Pipelines for Carbon Sequestration: Emerging Policy Issues

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

Congress is examining potential approaches to reducing manmade contributions to global
warming from U.S. sources. One approach is carbon capture and sequestration (CCS)—capturing
CO² at its source (e.g., a power plant) and storing it indefinitely (e.g., underground) to avoid its
release to the atmosphere. A common requirement among the various techniques for CCS is a
dedicated pipeline network for transporting CO² from capture sites to storage sites.
In the 110^th Congress, there has been considerable debate on the capture and sequestration aspects
of carbon sequestration, while there has been relatively less focus on transportation. Nonetheless,
there is increasing understanding in Congress that a national CCS program could require the
construction of a substantial network of interstate CO² pipelines. S. 2144 and S. 2191 would
require the Secretary of Energy to study the feasibility of constructing and operating such a
network of pipelines. S. 2323 would require carbon sequestration projects to evaluate the most
cost-efficient ways to integrate CO² sequestration, capture, and transportation. S. 2149 would
allow seven-year accelerated depreciation for qualifying CO² pipelines. P.L. 110-140, signed by
President Bush on December 19, 2007, requires the Secretary of the Interior to recommend
legislation to clarify the issuance of CO² pipeline rights-of-way on public land.
That CCS and related legislation have been more focused on the capture and storage of CO² than
on its transportation, reflects a perception that transporting CO² via pipelines does not present a
significant barrier to implementing large-scale CCS. Notwithstanding this perception, and even
though regional CO² pipeline networks already operate in the United States for enhanced oil
recovery (EOR), developing a more expansive national CO² pipeline network for CCS could pose
numerous new regulatory and economic challenges. There are important unanswered questions
about pipeline network requirements, economic regulation, utility cost recovery, regulatory
classification of CO² itself, and pipeline safety. Furthermore, because CO² pipelines for EOR are
already in use today, policy decisions affecting CO² pipelines take on an urgency that is, perhaps,
unrecognized by many. Federal classification of CO² as both a commodity (by the Bureau of
Land Management) and as a pollutant (by the Environmental Protection Agency) could
potentially create an immediate conflict which may need to be addressed not only for the sake of
future CCS implementation, but also to ensure consistency of future CCS with CO² pipeline
operations today.
In addition to these issues, Congress may examine how CO² pipelines fit into the nation’s overall
strategies for energy supply and environmental protection. If policy makers encourage continued
consumption of fossil fuels under CCS, then the need to foster the other energy options may be
diminished—and vice versa. Thus decisions about CO² pipeline infrastructure could have
consequences for a broader array of energy and environmental policies.

Introduc tion ..................................................................................................................................... 1
Backgr ound ..................................................................................................................................... 2
Carbon Capture and Sequestration............................................................................................2
Capture ........................................................................................................................ ........ 3
Tr ansportation ..................................................................................................................... 3
Sequestration in Geological Formations.............................................................................4
Existing U.S. CO² Pipelines......................................................................................................4
Key Issues for Congress..................................................................................................................5
CO² Pipeline Requirements for CCS........................................................................................5
Economic Regulation................................................................................................................6
Federal Jurisdiction over CO² Pipelines.............................................................................7
Potential Issues Related to ICC Jurisdiction.......................................................................8
Policy Implications for Rate Regulation.............................................................................8
Siting Authority...................................................................................................................9
Commodity vs. Pollutant Classification..................................................................................10
Pipeline Costs...........................................................................................................................11
Materials Costs..................................................................................................................11
Cost Recovery...................................................................................................................13
CO² Pipeline Incentives....................................................................................................13
Cost Implications for Network Development...................................................................14
CO² Pipeline Safety.................................................................................................................15
Criminal and Civil Liability..............................................................................................16
Other Issues.............................................................................................................................16
Conclusion ..................................................................................................................................... 17
Figure 1. Major CO² Pipelines in the United States........................................................................5
Figure 2. U.S. Prices for Large Diameter Steel Pipe.....................................................................12
Author Contact Information..........................................................................................................17

Congress has long been concerned about the impact of global climate change that may be caused ¹
by manmade emissions of carbon dioxide (CO²) and other greenhouse gases. Congress is also
debating policies related to global warming and is examining a range of potential initiatives to ²
reduce manmade contributions to global warming from U.S. sources. One approach to mitigating
manmade greenhouse gas emissions is direct sequestration: capturing CO² at its source, ³
transporting it via pipelines, and storing it indefinitely to avoid its release to the atmosphere. This
paper explores one component of direct sequestration—transporting CO² in pipelines.
Carbon capture and storage (CCS) is of great interest because potentially large amounts of CO²
emitted from the industrial burning of fossil fuels in the United States could be suitable for
sequestration. Carbon capture technologies can potentially remove 80%-95% of CO² emitted
from an electric power plant or other industrial source. Power plants are the most likely initial
candidates for CCS because they are predominantly large, single-point sources, and they
contribute approximately one-third of U.S. CO² emissions from fossil fuels.
There are many technological approaches to CCS. However, one common requirement for nearly
all large-scale CCS schemes is a system for transporting CO² from capture sites (e.g., power
plants) to storage sites (e.g., underground reservoirs). Transporting captured CO² in relatively
limited quantities is possible by truck, rail, and ship, but moving the enormous quantities of CO²
implied by a widespread implementation of CCS technologies would likely require a dedicated
interstate pipeline network.
In the 110^th Congress, there has been considerable debate on the capture and sequestration aspects
of carbon sequestration, while there has been relatively less focus on transportation. Nonetheless,
there is increasing understanding in Congress that a national CCS program could require the
construction of a substantial network of interstate CO² pipelines. The Carbon Dioxide Pipeline
Study Act of 2007 (S. 2144), introduced by Senator Coleman and nine cosponsors on October 4,
2007, would require the Secretary of Energy to study the feasibility of constructing and operating
such a network of CO² pipelines. The America’s Climate Security Act of 2007 (S. 2191),
introduced by Senator Lieberman and nine cosponsors on October 18, 2007, and reported out of
the Senate Environment and Public Works Committee in amended form on December 5, 2007,
contains similar provisions (Sec. 8003). The Carbon Capture and Storage Technology Act of 2007
(S. 2323), introduced by Senator Kerry and one cosponsor on November 7, 2007, would require
carbon sequestration projects authorized by the act to evaluate the most cost-efficient ways to
integrate CO² sequestration, capture, and transportation (Sec. 3(b)(5)). The Coal Fuels and
Industrial Gasification Demonstration and Development Act of 2007 (S. 2149 introduced by
Senator Dorgan on October 4, 2007, would allow accelerated depreciation for certain new CO²

¹^T^h^is^r^e^por^t^doe^s^{not e}^x^pl^or^e^the^unde^r^l^yⁱ^ng^s^c^ie^nc^e^of^c^lⁱ^m^a^t^e^c^h^ang^e^{, nor}^the^que^s^tioⁿ^of^w^h^e^t^he^r^ac^{tion is}^jus^tif^ie^d.
^Se^e^C^R^S^R^e^por^t^R^L³³⁸^49,^C^lim^a^t^e^C^h^a^nge^:^Sc^ie^nc^e^an^{d P}^o^lic^y^I^m^plic^ati^ons^,^by^J^a^ne^A^.^L^e^gg^e^tt.
²^{For m}^o^re^inf^o^rm^a^{tion o}ⁿ^c^o^ng^re^ssiona^{l a}^c^tiv^itie^{s re}^la^te^{d to}^g^l^oba^l^w^a^r^m^ing^,^se^e^{CRS Re}^{port RL}³¹⁹^31,^C^limate
^C^han^ge^:^Fe^de^r^a^{l L}^a^w^s^a^{nd P}^o^licⁱ^e^s^Re^late^{d t}^o^G^r^e^e^nho^us^e^G^a^s^Re^duc^ti^ons^,^b^y^Bren^t^D.^Yaco^b^u^cci^an^d^L^a^rr^y^P^a^rker;^th
^a^{nd C}^R^S^R^e^por^t^R^L³⁴⁰^67,^C^lim^a^t^e^C^h^a^nge^Le^gis^l^ati^oⁿⁱⁿ^the¹¹⁰^Co^ng^ress^,^b^y^Joⁿ^a^t^h^an^L^.^Ram^s^e^u^{r an}^{d Bren}^t^D.
^Yaco^b^u^cci^.
³^T^h^is^r^e^por^t^doe^s^{not a}^ddr^e^s^sⁱⁿ^di^r^e^c^t^s^e^que^s^t^r^a^tion,^w^h^e^r^eⁱ^{n C}^O²ⁱ^s^st^o^r^edⁱⁿ^soi^l^s^,^o^cean^s,^o^r^p^l^an^t^s^t^h^rou^g^hⁿ^a^t^u^ral
^pr^oc^e^s^s^e^s^.^Forⁱⁿ^f^o^r^m^a^{tion on}^the^la^tte^r^,^s^e^e^C^R^S^R^e^por^t^R^L³¹⁴³²^,^C^a^r^b^on^Se^que^s^t^r^a^tio^{n i}ⁿ^F^o^r^e^s^t^s^{, by}^Ros^s^W^.
^Go^r^t^e^.

pipelines. The Energy Independence and Security Act of 2007 (P.L. 110-140) signed by President
Bush, as amended, on December 19, 2007, requires the Secretary of the Interior to recommend
legislation to clarify the appropriate framework for issuing CO² pipeline rights-of-way on public
land (Sec. 714(7)).
Legislative focus on the capture and storage components of direct carbon sequestration reflects a
perception that transporting CO² via pipelines does not present a significant barrier to
implementing large-scale CCS. Even though regional CO² pipeline networks already operate in
the United States for enhanced oil recovery (EOR), developing a more expansive national CO²
pipeline network for CCS could pose numerous new regulatory and economic challenges. As one
analyst has remarked,
^Each^o^f^th^{e in}^dⁱ^vⁱ^d^u^{al tec}^hⁿ^o^l^o^gⁱ^{es in}^v^o^lv^edⁱⁿ^t^h^{e tr}^an^sp^o^r^t^p^o^r^tioⁿ^o^f^th^{e CCS p}^r^o^{cess is}
^m^a^t^u^r^e^{, b}^u^{t in}^te^g^r^atiⁿ^g^aⁿ^d^d^e^p^l^o^yⁱⁿ^g^th^e^m^oⁿ^a^m^a^ssi^v^e^scal^e^w^{ill b}^e^{a co}^m^p^lex^tas^k^.^“^T^h^e⁴
^qu^es^tⁱ^oⁿⁱ^s^{, h}^o^w^w^oul^{d t}^h^{e n}^e^ces^s^a^r^y^pi^pelⁱⁿ^eⁿ^e^t^w^ork^{be est}^a^blⁱ^s^h^e^{d an}^{d e}^v^ol^v^e^?^”
A thorough consideration of potential CCS approaches necessarily involves an assessment of their
overall requirements for CO² transportation by pipeline, including the possible federal role in
establishing an interstate CO² pipeline network.
This report introduces key policy issues related to CO² pipelines which may require congressional
attention. It summarizes the technological requirements for CO² pipeline transportation under a
comprehensive CCS strategy. It characterizes these requirements relative to the existing CO²
pipeline infrastructure in the United States used for EOR. The report summarizes policy issues
related to CO² pipeline development, including uncertainty about pipeline network requirements,
economic regulation, utility cost recovery, regulatory classification of CO² itself, and pipeline
safety. The report concludes with perspectives on CO² pipelines in the context of the nation’s
overall energy and infrastructure requirements.

Carbon sequestration policies are inextricably tied to the function and availability of the
necessary technologies. Consequently, discussion of CCS policy alternatives benefits from a basic
understanding of the physical processes involved, and relevant experience with existing
infrastructure. This section provides a basic overview of carbon sequestration processes overall, ⁵
as well as specific U.S. experience with CO² pipelines.
Carbon capture and sequestration is essentially a three-part process involving a CO² source
facility, a long-term CO² storage site, and an intermediate mode of CO² transportation.

⁴^J^o^hⁿ^D^o^ug^la^s^,^“^E^x^p^a^ndi^ng^O^p^tio^ns^f^o^r^C^O²^S^t^o^r^age,^”^{EPRI J}^ourn^a^l,^E^l^ect^ri^c^P^o^w^e^{r Resear}^ch^In^stⁱ^t^u^t^{e (S}^p^rⁱⁿ^{g 20}⁰⁷^):
^24.
⁵^Mor^e^de^ta^ile^{d i}ⁿ^f^o^r^m^a^{tion is}^a^v^a^ila^ble^{in C}^R^{S R}^e^p^o^r^t^R^L³³⁸⁰^1,^C^a^r^b^oⁿ^C^apt^ur^e^an^d^Se^que^s^t^r^a^tioⁿ⁽^C^C^S⁾^{, by}^P^e^te^r
^Folg^e^r^.

The first step in direct sequestration is to produce a concentrated stream of CO² for transport and
storage. Currently, three main approaches are available to capture CO² from large-scale industrial
facilities or power plants:
• pre-combustion, which separates CO² from fuels by combining them with air
and/or steam to produce hydrogen for combustion and CO² for storage,
• post-combustion, which extracts CO² from flue gases following combustion of
fossil fuels or biomass, and
• oxyfuel combustion, which uses oxygen instead of air for combustion,
producing flue gases that consist mostly of CO² and water from which the CO² is ⁶
separated.
These approaches vary in terms of process technology and maturity, but all yield a stream of
extracted CO² which may then be compressed to increase its density and make it easier (and
cheaper) to transport. Although technologies to separate and compress CO² are commercially
available, they have not been applied to large-scale CO² capture from power plants for the ⁷
purpose of long-term storage.
Pipelines are the most common method for transporting large quantities of CO² over long
distances. CO² pipelines are operated at ambient temperature and high pressure, with primary
compressor stations located where the CO² is injected and booster compressors located as needed ⁸
further along the pipeline. In overall construction, CO² pipelines are similar to natural gas
pipelines, requiring the same attention to design, monitoring for leaks, and protection against ⁹
overpressure, especially in populated areas. Many analysts consider CO² pipeline technology to ¹⁰
be mature, stemming from its use since the 1970s for EOR and in other industries. Marine
transportation may also be feasible when CO² needs to be transported over long distances or
overseas; however, many manmade CO² sources are located far from navigable waterways, so
such a scheme would still likely require pipeline construction between CO² sources and port
terminals. Rail cars and trucks can also transport CO², but these modes would be logistically
impractical for large-scale CCS operations.

⁶^In^t^e^rgo^v^ern^m^en^t^a^l^P^aⁿ^e^l^oⁿ^C^lⁱ^m^at^{e Ch}^an^ge,^S^p^eci^al^Rep^o^r^t^:^C^a^r^b^{on D}ⁱ^ox^ide^C^apt^ur^e^an^d^Stor^age^,²⁰⁰⁵⁽²⁰⁰⁵⁾^:²²^-
²³^.^(Hereaf^t^e^{r re}^f^e^rred^to^{as I}^P^CC²⁰⁰⁵^.⁾
⁷^H^.^J^.^H^e^r^z^og^a^{nd D}^.^G^o^lum^b^{, “}^C^a^r^{bon C}^a^ptur^e^aⁿ^d^Stor^a^g^e^f^r^om^Fos^s^{il F}^u^e^l^U^s^e^,^”^{in C}^.^J^.^C^l^e^v^e^l^a^{nd (}^e^d.)^,
^Eⁿ^cycl^o^p^e^dⁱ^a^o^f^Eⁿ^erg^y^(N^e^w^Y^o^rk^{, N}^Y^:^Els^e^vⁱ^e^r^Sc^ie^nc^e^,^Inc^{., 2}⁰^04):²⁷^7-2⁸⁷^.
⁸^I^P^C^C²⁰⁰⁵^:²⁶^.
⁹^I^P^C^C²⁰⁰⁵^:¹⁸¹^.
¹⁰^CO²^us^e^dⁱⁿ^EO^R^eⁿ^ha^nc^e^s^oil^pr^oduc^tⁱ^oⁿ^by^r^e^-^p^r^e^s^s^u^rⁱ^zⁱ^ng^g^e^olo^gⁱ^c^a^l^f^o^r^m^a^tions^aⁿ^d^r^e^ducⁱⁿ^g^oil^vⁱ^s^c^os^it^y^,
^t^h^ereb^yⁱⁿ^creasiⁿ^{g o}ⁱ^l^m^o^ve^men^t^t^o^t^h^{e su}^rf^ace.^CO²^is^us^e^dⁱⁿ^dus^tr^ia^lly^as^a^c^h^em^ic^a^l^f^e^e^d^s^t^oc^k^,^{to c}^a^r^bona^te
^be^v^e^r^a^ge^s^,^f^o^r^r^e^f^r^ig^e^r^a^{tion a}ⁿ^{d f}^ood^pr^oc^e^s^sⁱ^ng^{, to}^tr^e^a^t^w^a^te^r^,^a^{nd f}^o^r^ot^he^r^us^e^s^.

In most CCS approaches, CO² would be transported by pipeline to a porous rock formation that
holds (or previously held) fluids where the CO² would be injected underground. When CO² is
injected over 800 meters deep in a typical storage formation, atmospheric pressure induces the
CO² to become relatively dense and less likely to migrate out of the formation. Injecting CO² into
such formations uses existing technologies developed primarily for oil and natural gas production
which potentially could be adapted for long-term storage and monitoring of CO². Other
underground injection applications in practice today, such as natural gas storage, deep injection of
liquid wastes, and subsurface disposal of oil-field brines, also provide potential technologies and ¹¹
experience for sequestering CO². Three main types of geological formations are being
considered for carbon sequestration: (1) oil and gas reservoirs, (2) deep saline reservoirs, and (3)
unmineable coal seams. The overall capacity for CO² storage in such formations is potentially ¹²
huge if all the sedimentary basins in the world are considered. The suitability of any particular
site, however, depends on many factors, including proximity to CO² sources and other reservoir-
specific qualities like porosity, permeability, and potential for leakage.

The oldest long-distance CO² pipeline in the United States is the 225 kilometer Canyon Reef ¹³
Carriers Pipeline (in Texas), which began service in 1972 for EOR in regional oil fields. Other
large CO² pipelines constructed since then, mostly in the Western United States, have expanded
the CO² pipeline network for EOR. These pipelines carry CO² from naturally occurring
underground reservoirs, natural gas processing facilities, ammonia manufacturing plants, and a
large coal gasification project to oil fields. Additional pipelines may carry CO² from other
manmade sources to supply a range of industrial applications. Altogether, approximately 5,800 ¹⁴
kilometers (3,600 miles) of CO² pipeline operate today in the United States.

¹¹^I^P^C^C²⁰⁰⁵^:³¹^.
¹²^Sedⁱ^m^eⁿ^t^ar^y^b^a^sin^s^{are larg}^{e d}^e^p^r^essioⁿ^sⁱⁿ^th^{e Eart}^h^’^{s su}^rf^ace^f^illed^w^ith^sedⁱ^m^eⁿ^t^{s an}^d^f^l^uⁱ^d^s^.
¹³^Kin^d^e^r^Mo^rg^an^CO²^C^o^m^p^aⁿ^y^,^“C^aⁿ^y^{on R}^e^ef^C^a^r^rⁱ^e^r^s^Pⁱ^pe^li^ne⁽^C^R^C⁾^,”^w^e^{b pa}^g^e⁽²⁰⁰⁷⁾^.
^http:^//w^w^w^.k^inde^r^m^or^ga^n.c^o^m^/^b^u^sⁱ^ne^s^s^/^c^o2/^tr^aⁿ^s^p^or^t_c^aⁿ^y^on_r^e^e^f^.^cf^m
¹⁴^U^.^{S. D}^e^pt^{. of}^T^r^aⁿ^s^por^ta^ti^{on, N}^a^tⁱ^ona^l^Pipe^li^ne^Ma^p^p^ing^Sy^s^t^em^da^ta^ba^s^e⁽^J^une²⁰⁰⁵⁾^.
^https^:^/^/^w^w^w^.npm^s^.^phm^sa^.dot.g^ov

Figure 1. Major CO² Pipelines in the United States
^Sources:^Den^bury^Resources^In^{c., “EOR: The Economic Alternat}^{ive for CCS,” Sl}^{ide presentation (October}
²⁰⁰^{7). http://www.gasification.org}^/Docs/200^7_Papers/^25EVAN.pd^{f; U.S. Dept. of Transportation, National}
^{Pipeline Mapping Syste}^{m, Official use only. (June}²⁰⁰^{5). https://ww}^w.npms.ph^msa.dot.gov
The locations of the major U.S. CO² pipelines are shown in Figure 1. By comparison, nearly

800,000 kilometers (500,000 miles) of natural gas and hazardous liquid transmission pipelines ¹⁵

crisscross the United States.

Congressional consideration of potential CCS policies is still evolving, but so far initiatives have
focused more on developing capture and sequestration technologies than on transportation. ^th
Specific legislative proposals in the 110 Congress reflect the current perception that CO² capture
probably represents the largest technological hurdle to implementing widespread CCS, and that
CO² transportation by pipelines does not present as significant a barrier. While these perceptions
may be accurate, industry and regulatory analysts have begun to identify important policy issues
related specifically to CO² pipelines which may require congressional attention.

Although any widespread CCS scheme in the United States would likely require dedicated CO²
pipelines, there is considerable uncertainty about the size and configuration of the pipeline
network required. This uncertainty stems, in part, from uncertainty about the suitability of
geological formations to sequester captured CO² and the proximity of suitable formations to
specific sources. One recent analysis concludes that 77% of the total annual CO² captured from
the major North American sources may be stored in reservoirs directly underlying these sources, ¹⁶
and that an additional 18% may be stored within 100 miles of additional sources. If this were

¹⁵^B^u^r^e^a^u^of^T^r^aⁿ^s^por^ta^ti^on^Sta^tis^ti^c^s⁽^B^T^S⁾^,^N^a^tiona^{l T}^r^aⁿ^s^por^ta^ti^oⁿ^Sta^tis^tic^s²⁰^{05 (}^D^e^c^.²⁰⁰⁵⁾^,^T^a^ble^1-^10.^Iⁿ^this
^r^e^por^t^oilⁱⁿ^cl^ud^{es p}^e^t^r^ol^eu^m^an^d^o^t^h^e^r^h^azar^dous^lⁱ^q^u^ids^s^u^c^h^a^s^g^a^s^o^line^,^je^{t f}^u^e^l^,^die^s^e^l^f^u^e^l^{, a}^nd^p^r^opa^ne^,^un^le^s^s
^othe^r^w^is^e^note^d^.
¹⁶^R^.^T^.^D^a^how^s^k^{i, J}^.^J^.^D^oole^y^{, C}^.^L^.^D^a^vⁱ^ds^on,^{S. B}^a^c^h^u^,^N^.^G^upta^,^a^{nd J}^.^G^a^le^{, “A}^N^o^r^t^{h A}^m^e^r^icaⁿ^C^O²^S^t^o^r^age
⁽^c^onti^nue^d.^..)

the case, the need for new CO² pipelines would be limited to onsite transportation and a relatively
small number of long-distance pipelines (only a subset of which might need to be interstate
pipelines).
Other analysts suggest that captured CO² may need to be sequestered, at least initially, in more ¹⁷
centralized reservoirs to reduce potential risks associated with CO² leaks. They suggest that,
given current uncertainty about the suitability of various on-site geological formations for long-
term CO² storage, certain specific types of formations (e.g., salt caverns) may be preferred as CO²
repositories because they have adequate capacity and are most likely to retain sequestered CO²
indefinitely. As geologic formations are characterized in more detail and suitable repositories
identified, CO² sources can be mapped against storage sites with increasing certainty. The current
uncertainty over proximity of sources to storage sites, however, implies a wide range of possible
pipeline configurations and a wide range of possible costs.
Whether CCS policies ultimately lead to centralized or decentralized storage configurations
remains to be seen; however, pipeline requirements and storage configurations are closely related.
A 2007 study at the Massachusetts Institute of Technology (MIT) concluded that “the majority of
coal-fired power plants are situated in regions where there are high expectations of having CO² ¹⁸
sequestration sites nearby.” In these cases, the MIT study estimated the cost of CO² transport
and injection to be less than 20% of total CCS costs. However, the study also stated that the costs
of CO² pipelines are highly non-linear with respect to the quantity transported, and highly ¹⁹
variable due to “physical ... and political considerations.” Another 2007 study, at Duke
University, concluded that “geologic sequestration is not economically or technically feasible
within North Carolina,” but “may be viable if the captured CO² is piped out of North Carolina ²⁰
and stored elsewhere.” There are also significant scale economies for large, integrated CO²
pipeline networks that link many sources together rather than single, dedicated pipelines between ²¹
individual sources and storage reservoirs. As Congress considers CCS policies, it may examine
the relationship between CO² reservoir sites and pipeline requirements.
Economic regulation of interstate pipelines by the federal government is generally intended to
ensure pipelines fulfill common carrier obligations by charging reasonable rates; providing rates
and services to all upon reasonable request; not unfairly discriminating among shippers;

^(...c^on^tin^ue^d)
^Sup^p^ly^C^u^r^v^e^:^K^e^y^Finding^s^aⁿ^d^I^m^plic^a^tions^f^o^r^the^C^o^s^t^of^C^C^S^D^e^ploy^m^e^nt,”^P^r^o^ceedⁱⁿ^g^s^o^f^t^h^e^F^o^u^r^t^h^Aⁿ^nu^a^l
^C^onfe^r^eⁿ^c^e^oⁿ^C^a^r^b^oⁿ^C^a^ptur^e^a^nd^Se^que^s^t^r^a^tioⁿ⁽^A^l^e^x^a^ndr^ia^{, V}^A^{: May}^2-^{5, 2}⁰⁰⁵⁾^.^T^h^e^s^t^u^d^y^a^ddr^e^s^s^e^s^C^O²^cap^t^u^re
^a^t^2,0⁸²^Nort^{h Am}^e^r^ic^aⁿ^f^a^c^ilitie^{s inc}^l^u^d^ing^p^o^w^e^{r pla}ⁿ^ts,^na^tu^ra^l^g^a^{s proc}^e^ssing^plaⁿ^{ts, re}^fⁱ^ne^rie^s^{, c}^e^m^e^{nt k}^{ilns, a}^nd
^othe^rⁱⁿ^d^u^s^t^rⁱ^a^l^plaⁿ^ts^.
¹⁷^J^e^nnie^C^.^Ste^v^eⁿ^s^a^{nd B}^ob^Vaⁿ^D^e^r^Zw^aa^{n, “}^T^he^C^a^s^e^f^o^r^C^a^r^b^oⁿ^C^a^pt^ur^e^aⁿ^d^Stor^a^g^e^,^”^I^s^s^u^e^sⁱⁿ^Sc^ie^nc^e^an^d
^Te^c^hnol^ogy^,^v^o^l.^X^X^I^I^,^no^{. 1}⁽^F^a^l^{l 20}⁰⁵⁾^{: 6}⁹^-⁷^{6. (}^S^e^e^pa^g^e¹⁵^of^th^is^r^e^por^{t f}^o^r^a^dis^c^us^sⁱ^oⁿ^of^s^a^f^e^t^y^is^s^u^e^s^.)
¹⁸^Jo^hn^Deu^t^ch^,^E^rⁿ^e^st^J.^M^oⁿⁱ^z,^et^al^.^,^The^Fut^u^r^e^{of C}^oal^{. (}^C^a^m^br^id^g^e^{, MA}^{: Ma}^s^s^a^c^hus^e^tts^Iⁿ^s^tit^ute^o^f^T^e^c^hnolog^y^:
²⁰⁰⁷⁾^:⁵⁸^{. (}^H^e^r^e^a^f^te^r^r^e^f^e^r^r^e^d^{to a}^s^MI^T²⁰⁰^7.)
¹⁹^MI^T²⁰^07:⁵⁸^.
²⁰^{Eric W}^illiam^s^{, No}^ra^G^r^een^g^l^a^{ss, an}^d^Reb^{ecca Ry}^{als, “Car}^{bon C}^a^pt^ur^e^,^Pⁱ^pe^line^aⁿ^{d S}^t^or^a^g^e^:^A^Via^b^le^O^p^tio^{n f}^o^r
^{North Ca}^ro^lina^Uti^litie^s?^”^W^o^rk^ing^pa^pe^{r pre}^p^a^r^e^d^by^the^Ni^c^h^o^l^a^s^Institu^te^f^o^{r Env}ⁱ^ro^nm^eⁿ^ta^{l Poli}^c^y^Soluti^{ons a}ⁿ^d
^T^h^e^C^e^nte^r^{on G}^l^oba^{l C}^h^aⁿ^g^e^{, D}^u^k^e^Uⁿ^iv^e^r^sⁱ^t^y⁽^D^ur^ha^m^,^N^C^{: Ma}^r^c^{h 8,}²⁰⁰⁷⁾^{: 4}^.
²¹^MI^T²⁰^07:⁵⁸^.

establishing reasonable classifications, rules, and practices; and interchanging traffic with other ²²
pipelines or transportation modes. If interstate CO² pipelines for carbon sequestration are
ultimately to be developed, it will raise important regulatory questions in this context because
federal jurisdiction over hypothetical interstate CO² pipeline siting and rate decisions is not clear.
Based on their current regulatory roles, two of the more likely candidates for jurisdiction over
interstate pipelines transporting CO² for purposes of CCS are the Federal Energy Regulatory ²³
Commission (FERC) and the Surface Transportation Board (STB). However, both agencies
have at some point expressed a position that interstate CO² pipelines are not within their purview, ²⁴
as summarized below.

The Natural Gas Act of 1938 (NGA) vests in FERC the authority to issue “certificates of public
convenience and necessity” for the construction and operation of interstate natural gas pipeline ²⁵
facilities. FERC is also charged with extensive regulatory authority over the siting of natural gas
import and export facilities, as well as rates for transportation of natural gas and other elements of
transportation service. FERC also has jurisdiction over regulation of oil pipelines pursuant to the ²⁶
Interstate Commerce Act (ICA). Although FERC is not involved in the oil pipeline siting
process, as with natural gas, FERC does regulate transportation rates and capacity allocation for ²⁷
oil pipelines. Jurisdiction over rate regulation for pipelines “other” than “water, gas or oil”
pipelines resides with the STB, a decisionally independent regulatory agency affiliated with the ²⁸
Department of Transportation. The STB acts as a forum for resolution of disputes related to
pipelines within its jurisdiction. Parties who wish to challenge a rate or another aspect of a
pipeline’s common carrier service must petition the STB for a hearing, however; there is no
ongoing regulatory oversight.
Although CO² pipelines are not explicitly excluded from FERC jurisdiction by statute, FERC
ruled in 1979 that they are not subject to the Commission’s jurisdiction because they do not ²⁹
transport natural gas for heating purposes. Likewise, the ICC in 1980 concluded that Congress
intended to exclude all types of gas, including CO², from ICC regulation. After making the initial
decision that it likely did not have jurisdiction over CO² pipelines, the ICC did conclude that the
issue was “important enough to institute a proceeding and accept comments on the petition and ³⁰
our view on it.” After the comment period the ICC confirmed its view that CO² pipelines were

²²^G^e^ne^ra^l^A^c^c^ountiⁿ^g^O^f^fⁱ^c^e^(now^G^o^v^e^rn^m^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e⁾^,^Sur^fac^e^Tr^ans^p^o^r^t^a^tio^n:^I^s^s^u^e^s^As^s^o^cⁱ^ate^d
^W^{ith Pipe}^li^ne^Re^g^u^la^tioⁿ^by^the^S^u^rfac^e^Traⁿ^sp^ortati^on^Bo^ard^,^R^C^E^D^-^98-^{99 (}^W^a^s^hing^to^{n, D}^C^:^A^p^r^{il 2}¹^,¹⁹⁹⁸⁾^:³^{; a}ⁿ^d
⁴⁹^U^.^S.C^.^{§ 15}^5.
²³^T^h^{e S}^T^{B i}^s^t^h^{e su}^ccesso^{r agen}^c^y^t^o^t^h^{e In}^t^e^rst^a^t^e^Co^m^m^{erce Co}^mmⁱ^s^si^oⁿ^(ICC)^uⁿ^d^e^{r t}^h^{e I}ⁿ^t^e^rst^a^t^e^Co^mmerce
^C^o^m^m^is^sⁱ^{on T}^e^r^m^ina^{tion A}^c^{t of}¹⁹⁹^{5 (}^P^.L^{. 10}^4-⁸⁸⁾^.
²⁴^For^a^m^o^r^e^c^o^m^p^r^e^he^ns^iv^e^dis^c^us^sⁱ^on^of^C^O²^pipe^li^ne^r^e^g^u^la^tor^y^jurⁱ^s^d^ic^ti^on,^s^e^e^C^R^S^R^e^por^t^R^L³⁴³⁰^7,^Re^gu^lati^on
^{of C}^a^r^b^oⁿ^Dⁱ^oxⁱ^d^e⁽^C^O²⁾^Se^que^s^t^r^a^tio^{n Pi}^pe^line^s^:^J^u^rⁱ^s^d^ic^tio^nal^I^s^s^u^e^s^{, by}^A^d^am^Va^{nn a}^nd^P^a^{ul W}^.^P^a^r^f^o^m^a^k^.
²⁵^{15 U}^.^S.C^.⁷^17f⁽^c⁾^.
²⁶⁴⁹^A^p^p.^U.^S^.^C^.^§1^.
²⁷^Se^c^tion¹⁸⁰¹^of^the^Eⁿ^e^r^g^y^P^o^lic^y^A^c^{t of}¹⁹⁹²^dir^e^c^t^e^d^FER^C^t^o^“^p^r^o^m^u^lg^a^t^e^r^e^g^u^la^tions^e^s^ta^blis^hi^ng^a^sⁱ^m^p^lif^ie^d
^a^{nd g}^e^ne^r^a^lly^a^pplic^a^b^le^r^a^tem^a^kⁱ^ng^m^e^thodolog^y^”^f^o^r^oil^pipe^li^ne^tr^aⁿ^s^por^ta^ti^on^.
²⁸^{49 U}^.^S.C^.^§^1-⁵⁰¹⁽^a⁾⁽¹⁾⁽^c⁾^.
²⁹^C^o^r^t^e^z^Pipe^li^ne^C^o^m^p^aⁿ^y^,⁷^FE^R^C^¶⁶¹^,0^{24 (}¹⁹⁷⁹⁾^.
³⁰^Id.

excluded from the ICC’s (and, therefore, the STB’s) jurisdiction.³¹ Thus, the two federal
regulatory agencies that, generally speaking, have jurisdiction over interstate pipeline rate and
capacity allocation matters appear to have rejected explicitly jurisdiction over CO² siting and
rates, and there is no legislative or judicial history to suggest that their rejections were improper
at the time. Absent federal authority, CO² pipelines are regulated to varying degrees by the states.
Notwithstanding the ICC’s 1980 disclaimer of jurisdiction over CO² pipelines, other evidence
indirectly suggests the possibility that interstate CO² pipelines could still be considered subject to ³²
STB jurisdiction. For example, an April 1998 report by the General Accounting Office (GAO)
stated that interstate CO² pipelines, as well as pipelines transporting other gases are subject to the
board’s oversight authority. The STB reviewed the GAO’s analysis and, apparently, did not object ³³
to this jurisdictional classification. Furthermore, although the STB is the successor to the now-
defunct ICC, the STB conceivably could determine that its jurisdiction is not governed by the
ICC’s decision in the CO² matter. Indeed, the Supreme Court has ruled that federal agencies are
not precluded from changing their positions on the issue of regulatory jurisdiction. According to
the Court, “an initial agency interpretation is not instantly carved in stone. On the contrary, the
agency, to engage in informed rulemaking, must consider varying interpretations and the wisdom ³⁴
of its policy on a continuing basis.” Accordingly, regulation of CO² pipelines for CCS purposes
by the STB (or by FERC, for that matter) under existing statutes remains a possibility.
If CCS technology develops to the point where interstate CO² pipelines become more common,
and if FERC and the STB continue to disclaim jurisdiction over CO² pipelines, then the absence
of federal regulation described above may pose policy challenges. In particular, with many more
pipeline users and interconnections than exist today, complex common carrier issues might ³⁵
arise. One potential concern, for example, is whether rates should be set separately for existing
pipelines carrying CO² as a valuable commercial commodity (e.g., for EOR), versus new
pipelines carrying CO² as industrial pollution for disposal. Furthermore, if rates are not reviewed
prior to pipeline construction, it might be difficult for regulators to ensure the reasonableness of
CO² pipeline rates until after the pipelines were already in service. If CO² pipeline connections
become mandatory under future regulations, such arrangements might expose pipeline users to

³¹^C^o^r^t^e^z^Pⁱ^pe^line^C^o^m^p^aⁿ^y^—^P^e^tit^{ion f}^o^r^D^e^c^l^a^r^a^t^or^y^O^r^de^r^—^C^o^m^m^issⁱ^{on J}^u^rⁱ^s^d^ic^tio^{n O}^v^e^r^T^r^aⁿ^s^por^ta^tio^{n of}^C^a^r^b^oⁿ
^Dⁱ^ox^ide^by^Pⁱ^pe^line^,⁴⁶^Fe^d.^Re^g^.¹⁸⁸⁰^{5 (}^M^a^r^c^h²⁶^{, 1}⁹⁸¹⁾^.
³²^N^o^w^k^now^{n a}^s^the^G^o^v^e^rⁿ^m^e^nt^A^c^c^ounta^b^il^ity^Of^fⁱ^c^e^.
³³^S^u^rf^{ace T}^r^an^sp^o^r^t^a^tⁱ^oⁿ^B^o^ard^(S^T^B^),^P^e^rsoⁿ^a^l^co^mm^uⁿⁱ^catⁱ^oⁿ^,^(Dece^m^b^er²⁰⁰⁷⁾^{. T}^h^e^ST^B^O^f^fⁱ^c^e^of^G^ove^rⁿ^m^e^nta^l
^an^d^P^u^b^lⁱ^c^Aff^aⁱ^r^{s i}ⁿ^f^o^r^m^ed^CRS^t^h^at^t^h^e^b^o^a^r^d^reco^gnⁱ^zes^the^c^o^nf^lic^{t be}^tw^e^eⁿ^{this GA}^{O re}^{port a}ⁿ^d^the^{ICC de}^cⁱ^sioⁿ
⁽^a^s^w^e^{ll a}^s^the^w^o^r^d^ing^of⁴⁹^C^.^F.^R^.^§¹⁵³⁰^{1 g}^o^v^e^rⁿ^ing^ST^B^jurⁱ^s^dⁱ^c^tion^ov^e^r^pipe^li^ne^s^ot^he^r^thaⁿ^t^h^os^e^tr^aⁿ^s^por^ting
^“wat^er,^{gas o}^r^oⁱ^l^”^).^Ho^w^e^{ver t}^h^{e o}^f^fⁱ^{ce d}ⁱ^d^no^t^w^aⁿ^t^t^o^st^at^{e an}^opⁱⁿⁱ^oⁿ^{as t}^o^t^h^{e cu}^rreⁿ^t^ext^eⁿ^t^o^f^S^T^{B j}^u^ri^sdi^c^tⁱ^oⁿ
^ov^e^r^C^O²^pipe^li^ne^{s a}^{nd s}^u^g^g^e^ste^d^tha^t^t^h^e^ST^{B w}^{ould lik}^e^l^y^{not a}^c^t^{to re}^solv^e^th^{is c}^onf^lic^{t u}ⁿ^le^{ss a}^C^O²^pipe^li^ne
^dⁱ^sp^ut^{e co}^m^e^{s b}^e^f^o^{re i}^t^.
³⁴^C^h^e^v^r^{on U}^.^S.A^.^v^.^N^a^{t. R}^e^s^.^D^e^f^.^C^o^uⁿ^c^il,⁴⁶^{7 U}^.^S^.⁸³⁷^,^a^t⁸^63-⁶⁴⁽¹⁹⁸⁴⁾^.
³⁵^Be^a^r^{d Com}^p^aⁿ^y^{2000 a}ⁿ^nua^l^re^p^o^{rt (1}^0-k⁾^f^ile^{d w}^{ith the}^U^.^S^.^Se^c^u^ritie^s^aⁿ^d^Ex^c^h^aⁿ^g^e^Com^m^is^sⁱ^oⁿ^s^t^a^t^e^s^tha^t^t^h^e
^c^o^m^p^aⁿ^y⁽^w^{ith othe}^r^plaⁱⁿ^tif^f^s⁾^fⁱ^le^{d a}^la^w^s^{uit in}¹⁹^{96 a}^g^aⁱ^ns^{t C}^O²^pipe^li^ne^ow^ne^r^She^l^l^O^{il C}^o^m^p^aⁿ^y^a^{nd ot}^he^r
^de^f^e^nda^nts^a^lle^gⁱ^ng^{, a}^m^ong^othe^r^thing^s^{, t}^h^a^t^t^h^e^de^f^e^nda^nts^“^c^ontr^o^lle^{d a}ⁿ^d^de^pr^e^s^s^e^{d the}^pr^ic^e^of^C^O^2”^f^r^o^m^a^fⁱ^e^l^d
^pa^rtia^lly^ow^ne^{d by}^Be^a^r^{d a}^{nd “}^r^e^duc^[^e^d^]^t^h^e^de^liv^e^r^e^d^pric^e^of^CO^{2 w}^h^ile^{... s}ⁱ^m^u^lta^ne^o^u^s^l^y^inf^l^a^ting^the^c^o^s^t^of
^traⁿ^sporta^ti^on^.”^htt^p^://w^ww^.se^c^inf^o^.c^om^/^d^Rx^z^p^.42⁴^.h^tm^#1fm^r

abuses of potential market power in CO² pipeline services, at least until rate cases could be heard.
Presiding over a large number of CO² rate cases of varying complexity in a relatively short time
frame might also be administratively overwhelming for state agencies, which may have limited
resources available for pipeline regulatory activities.
A company seeking to construct a CO² pipeline must secure siting approval from the relevant
regulatory authorities and must subsequently secure rights of way from landowners along the
pipeline right by purchasing easements or by eminent domain. However, since federal agencies
claim no regulatory authority with respect to CO² pipeline construction, potential builders of new
CO² pipelines do not require, and could not obtain, federal approval to construct new pipelines.
Likewise, federal regulators claim no eminent domain authority for pipeline construction, and so
cannot ensure that pipeline companies can secure rights of way to construct new pipelines. By
contrast, companies seeking to build interstate natural gas pipelines must first obtain certificates
of public convenience and necessity from FERC under the Natural Gas Act (15 U.S.C. §§ 717, et
seq.). Such certification may include safety and security provisions with respect to pipeline ³⁶
routing, safety standards and other factors. A certificate of public convenience and necessity
granted by FERC (15 U.S.C. § 717f(h)) confers eminent domain authority.
The state-by-state siting approval process for CO² pipelines may be complex and protracted, and
may face public opposition, especially in populated or environmentally sensitive areas. As the ³⁷
National Commission on Energy Policy (NCEP) states in its 2006 report:
^R^ecen^t^dev^e^lop^m^en^t^sⁿ^o^t^wⁱ^t^hs^tan^d^ing^,^m^o^s^tⁿ^e^w^eⁿ^e^r^g^y^p^r^o^j^e^c^t^s^a^r^e^s^{till r}^e^g^u^l^a^t^ed^p^r^im^ar^il^y
^{at th}^{e state lev}^e^{l an}^d^p^u^b^{lic o}^p^p^o^s^itioⁿ^r^e^m^aⁱⁿ^{s in}^e^x^tr^icab^l^yⁱⁿ^ter^t^wⁱⁿ^e^d^wⁱ^th^lo^c^a^l^c^oⁿ^c^e^rⁿ^s^,
ⁱⁿ^cl^u^d^ing^envⁱ^ronm^{ental an}^{d ecos}^y^s^t^e^mⁱ^m^pac^t^s^as^w^e^{ll as}^{, i}ⁿ^s^o^m^e^cas^e^s^,^c^o^m^p^l^e^x^is^s^u^e^s^o^f
^property^righ^ts^aⁿ^{d co}^m^p^etiⁿ^g^laⁿ^d^us^es^{.... In}^s^o^m^e^cas^es^{, u}^p^s^t^rea^m^{or do}^wⁿ^s^t^rea^m
^inf^r^as^tru^c^t^u^{re requ}^ire^m^eⁿ^t^s^—s^u^c^h^as^t^h^{e n}^{eed f}^o^{r ... u}ⁿ^d^erg^r^ouⁿ^d^carbon^s^e^qu^es^tratioⁿ^sⁱ^t^e^s
^{... m}^a^y^g^eⁿ^e^{rate as}^m^u^chⁱ^fⁿ^o^t^m^o^{re oppos}^ition^th^aⁿ^th^{e e}ⁿ^ergy^f^a^cⁱ^lⁱ^tⁱ^e^s^th^ey^s^u^pport^.^A^t^t^h^e
^sa^m^e^tⁱ^me^—^a^nd^d^e^spⁱ^t^e^r^e^c^e^nt^m^o^ve^{s t}^o^w^a^r^d^c^o^nso^lⁱ^d^a^t^e^d^o^v^e^r^si^ght^b^y^FE^{RC o}^r^o^t^he^r
^r^e^g^u^l^ato^r^y^au^th^o^r^itie^s—^f^r^ag^m^eⁿ^t^ed^p^e^r^m^ittiⁿ^g^p^r^o^cess^e^{s, n}^oⁿ^s^taⁿ^d^ar^d^p^e^r^mⁱ^ttiⁿ^g
^r^e^q^u^ir^e^m^en^{ts, an}^dⁱⁿ^ter^a^g^eⁿ^c^y^r^e^d^uⁿ^d^an^c^y^o^f^teⁿ^stil^{l co}^m^p^o^uⁿ^d^si^tin^g^c^h^alleⁿ^g^e^s.
Securing rights of way along existing easements for other infrastructure (e.g., natural gas
pipelines, electric transmission lines) may be one way to facilitate the siting of new CO²
pipelines. However, existing easements may be ambiguous as to the right of the easement holder
to install and operate CO² pipelines. Questions may also arise as to compensation for landowners
or easement holders for use of such easements, and as to whether existing easements can be sold ³⁸
or leased to CO² pipeline companies. A related issue is whether state condemnation laws, which
are often used to secure sites for infrastructure deemed to be in the public interest, allow for CO²
pipelines to be treated as public utilities or common carriers. This issue also arises on federal
lands managed by the Bureau of Land Management (BLM). New CO² pipelines through BLM
lands potentially may be sited under right of way provisions in either the Federal Land Policy and

³⁶^{18 C}^.^F.R^.^§¹⁵^7.
³⁷^N^a^tiona^{l C}^o^m^m^is^sⁱ^{on on}^Ene^r^g^y^Polic^y^,^Sitin^{g Critic}^{al E}ⁿ^e^r^gy^Infr^astruc^tu^re^{: A}ⁿ^Ov^e^r^vⁱ^e^w^{of Ne}^e^d^{s an}^d
^Challeⁿ^g^e^s^{. (}^W^a^s^hing^to^{n, D}^C^{: J}^u^ne²⁰⁰⁶⁾^{: 9}^.⁽^H^e^r^e^a^f^te^r^r^e^f^e^r^r^e^{d to}^a^s^N^C^{EP 2}⁰⁰⁶^.)
³⁸^P^a^r^t^ha^S.^C^h^a^u^dh^ur^i,^Mic^h^a^e^l^M^u^r^p^hy^{, a}^{nd R}^obe^r^t^{E. B}^u^rⁿ^s^,^“^C^o^m^mⁱ^s^sⁱ^one^r^P^r^im^e^r^{: C}^a^r^{bon D}ⁱ^oxⁱ^d^e^C^a^ptur^e^aⁿ^d
^Stora^g^e^”^(Na^tiona^{l Re}^g^u^la^tory^Re^se^a^r^c^h^Institute^{, O}^h^io^Sta^t^e^Univ^.,^Colum^{bus, OH:}^Ma^{r. 2}⁰⁰⁶^):¹⁷^.

Management Act (FLPMA; 43 U.S.C. § 35) or the Mineral Leasing Act (MLA; 30 U.S.C. § 185).
However, the MLA imposes a common carrier requirement while the FLPMA does not. Although ³⁹
the agency currently permits CO² pipelines for EOR under the MLA, CO² pipeline companies
seeking to avoid common carrier requirements under CCS schemes may litigate to secure rights ⁴⁰
of way under FLPMA. Provisions in P.L. 110-140 require the Secretary of the Interior to
recommend legislation to clarify the appropriate framework for issuing CO² pipeline rights-of-
way on federal land (Sec. 714(7)).
Another complicating factor in the siting of CO² pipelines for CCS is the types of locations of
existing CO² sources. Although a network of long-distance CO² pipelines exists in the United
States today for EOR, these pipelines are sited mostly in remote areas accustomed to the presence
of large energy infrastructure. However, many potential sources of CO², such as power plants, are
located in populated regions, many with a history of public resistance to the siting of energy
infrastructure. If a widespread CO² pipeline network is required to support CCS, the ability to site
pipelines to serve such facilities may become an issue requiring congressional attention. As the
NCEP concluded, “In sum, it seems probable that the siting of critical infrastructure will continue ⁴¹
to present a major challenge for policymakers.”
Under a comprehensive CCS policy, captured CO² arguably could be classified as either a
commodity or as a pollutant. CO² used in EOR is considered to be a commodity, and is regulated
as such by the states. Because captured CO² may be sold as a valuable commodity for EOR, and
may have further economic potential for enhanced recovery of coal bed methane (ECBM), some ⁴²
argue that all CO² under a CCS scheme should be classified as a commodity. However, it is
unlikely that the quantities of CO² captured under a widely implemented CCS policy could all be
absorbed in EOR or ECBM applications. In the long run, significant quantities of captured CO² ⁴³
will have to be disposed as industrial pollution, with negative economic value. Furthermore, on
April 2, 2007, the U.S. Supreme Court held that the Clean Air Act gives the U.S. Environmental
Protection Agency (EPA) the authority to regulate greenhouse gas emissions, including CO², from ⁴⁴
new motor vehicles. The court also held that EPA cannot interpose policy considerations to
refuse to exercise this authority. While the specifics of EPA regulation under this ruling might be
subject to agency discretion, it has implications for the regulation of CO² emissions from
stationary sources, such as power plants.
Separately, EPA has also concluded that geologic sequestration of captured CO² through well
injection meets the definition of “underground injection” in § 1421(d)(1) of the Safe Drinking

³⁹^U^.^{S. D}^e^pt^{. of}^the^Iⁿ^te^rⁱ^or^{, B}^u^r^e^a^u^of^L^a^{nd Ma}^na^g^e^m^e^nt,^Envⁱ^r^oⁿ^m^eⁿ^{tal As}^s^e^s^s^m^eⁿ^{t for}^An^ad^ar^k^o^E^&^{P C}^o^m^pany
^{L.P. M}^o^ne^{ll CO}²^Pⁱ^p^e^lⁱⁿ^e^P^r^o^j^ect^{, EA}^#W^Y^-^040-⁰³^-⁰³⁵⁽^F^e^b^.²⁰⁰³⁾^:⁷¹^.
⁴⁰^C^h^a^u^d^hur^{i e}^t^a^l:^17.
⁴¹^NC^EP²⁰⁰⁶^:⁹^.
⁴²^I^O^G^C^C^2005:⁴¹^.
⁴³^S.M.^Fra^ile^y^,^R.J^.^Finla^y^{, a}^{nd T}^.^{S. H}ⁱ^c^k^m^a^{n, “}^C^O²^S^e^q^u^e^st^ratⁱ^oⁿ^:^S^t^o^r^{age Cap}^aci^t^y^G^uⁱ^d^elⁱⁿ^{e Need}^ed^,^”^{Oil &}^Gas
^J^ourⁿ^a^l⁽^A^ug^{. 14}^{, 2}⁰⁰⁶⁾^:^44.
⁴⁴^Ma^ssa^ch^u^s^et^t^s^v.^E^P^A^{; a}^t^htt^p^://^w^w^w^.s^upr^em^ec^our^tus^.^g^o^v^/^opinⁱ^oⁿ^s^/⁰⁶^pdf^/^05-¹¹²⁰^.p^df^{. For}^f^u^r^t^he^r^inf^o^r^m^a^{tion s}^e^e
^C^R^S^R^e^por^t^R^L³³⁷^76,^Cl^ean^Aⁱ^r^Issu^{es i}ⁿ^t^h^e¹¹⁰^th^C^oⁿ^g^re^{ss: Climate}^Cha^nge^,^{Air Qu}^ality^Staⁿ^d^a^r^{ds, a}^{nd Ov}^e^rsigh^t^,
^b^y^Ja^{mes E.}^M^c^Carth^y^.

Water Act (SDWA).⁴⁵ EPA anticipates protecting underground sources of drinking water, through
its authority under the SDWA, from “potential endangerment” as a result of underground
injection of CO² in anticipated CCS pilot projects. EPA’s assertion of authority under SDWA for
underground injection of CO² during CCS pilot studies may contribute to uncertainty over future
classification of CO² as a commodity or a pollutant.
Conflicting classification of captured CO² as either a commodity or pollutant has important
implications for CO² pipeline development. For example, classifying all CO² as a pollutant not
only would contradict current state and BLM treatment of CO² for EOR, but might also
undermine an interstate commerce rationale for FERC regulation of CO² pipelines. On the other
hand, classifying all CO² as a commodity would create other policy contradictions, for example,
in regions like New England where EOR may be impracticable. Under either scenario, legislative
and regulatory ambiguities would arise—especially for an integrated, interstate CO² pipeline
network carrying a mixture of “commodity” CO² and “pollutant” CO². Resolving these
ambiguities to establish a consistent and workable CCS policy could likely be an issue for
Congress.
If an extensive network of pipelines is required for CO² transportation, pipeline costs may be a
major consideration in CCS policy. MIT estimated overall annualized pipeline transportation (and ⁴⁶
storage) costs of approximately $5 per metric ton of CO². If CO² sequestration rates in the
United States were on the order of 1 billion metric tons per year at mid-century, as some analysts
propose, annualized pipeline costs would run into the billions of dollars. Furthermore, because
most pipeline costs are initial capital costs, up-front capital outlays for a new CO² pipeline
network would be enormous. The 2007 Duke study, for example, estimated it would cost
approximately $5 billion to construct a CO² trunk line along existing pipeline rights of way to
transport captured CO² from North Carolina to potential sequestration sites in the Gulf states and ⁴⁷
Appalachia. Within the context of overall CO² pipeline costs, several specific cost-related issues
may warrant further examination by Congress.
Analysts commonly develop cost estimates for CO² pipelines based on comparable construction
costs for natural gas pipelines, and to a lesser extent, petroleum product pipelines. In most cases,
these comparisons appear appropriate since CO² pipelines are similar in design and operation to
other pipelines, especially natural gas pipelines. A University of California (UC) study analyzing
the costs of U.S. transmission pipelines constructed between 1991 and 2003 found that, on
average, labor accounted for approximately 45% of the total construction costs. Materials, rights ⁴⁸
of way, and miscellaneous costs accounted for 26%, 22%, and 7% of total costs, respectively.

⁴⁵^U^.^{S. E}ⁿ^vⁱ^r^onm^eⁿ^ta^l^P^r^o^t^e^c^tion^A^g^eⁿ^cy^,^m^e^m^o^r^a^ndum⁽^J^ul^y^{5, 20}⁰⁶⁾^.^A^v^a^ila^ble^a^t^http:/^/w^w^w^.e^pa^.gov^/O^G^W^DW^/
^uic^/^pdf^s^/^m^e^m^o^_^w^e^lls^_s^e^que^s^t^r^a^tion_^7-^5-⁰⁶^.p^df^.
⁴⁶^MI^T²⁰^{07: x}ⁱ^.
⁴⁷^Eric^W^illia^m^s^e^t^a^l^{. (2007)}^{: 2}⁰^.
⁴⁸^N.^P^a^rk^e^r^{, “}^U^sing^Na^tura^{l G}^a^s^Traⁿ^sm^is^sion^Pⁱ^pe^line^C^o^{sts to}^Esti^m^a^te^H^y^drog^eⁿ^Pⁱ^pe^line^C^o^sts,”^UCD-IT^S-RR-
^04-^35,^Iⁿ^s^t^.^of^T^r^aⁿ^s^por^ta^tio^{n St}^u^d^ie^s^,^Uⁿ^iv^.^of^C^a^lif^or^nia⁽^D^a^v^is^{, C}^A^{: 2004)}^:^1.^htt^p^://^hy^dr^og^eⁿ^.its^.^u^c^d^a^v^is^.e^du/^pe^ople^/
^nc^pa^r^k^e^r^/pa^p^e^r^s^/^pipe^li^ne^s^;^s^e^e^,^a^l^s^o^{, G}^.^H^e^ddle^,^H^.^H^e^r^z^og^{, a}ⁿ^{d M}^.^K^l^e^{tt, “}^T^he^Ec^on^om^ic^s^of^C^O²^S^t^o^r^age,^{” M}^I^T
^L^F^{EE 20}^03-⁰⁰^{3 R}^P⁽^L^a^bor^a^t^or^y^f^o^r^Ene^r^g^y^a^{nd the}^Eⁿ^vⁱ^r^onm^eⁿ^t,^MI^T^,^C^a^m^b^rⁱ^dg^e^,^MA^{: A}^u^g^.²⁰⁰³⁾^.
⁽^c^onti^nue^d.^..)

Materials cost was most closely dependent upon pipeline size, accounting for an increasing
fraction of the total cost with increasing pipeline size, from 15% to 35% of total costs. The MIT
study estimated that transportation of captured CO² from a 1 gigawatt coal-fired power plant ⁴⁹
would require a pipe diameter of 16 inches. According to the UC analysis, total construction
costs for such a pipe between 1991 and 2003 averaged around $800,000 per mile (in 2002
dollars), although the study stated that costs for any individual pipeline could vary by a factor of ⁵⁰
five depending its location.
Figure 2. U.S. Prices for Large Diameter Steel Pipe
^Source:^Prest^{on Pipe}^{& Tube Rep}^ort^{. Pipe prices rep}^resent^average^transaction^{price (by w}^{eighted a}^{verage value)}
^{for double-subme}^{rged arc-welded pipe >}^{24” diameter, combining}^{domestic and import shipme}^nts.^{Prices are}
^reported^th^{rough October 20}^07.
Since pipeline materials make up a significant portion of CO² pipeline construction costs, analysts
have called attention to rising pipeline materials costs, especially steel costs, as a concern for ⁵¹
policymakers. Following a period of low steel prices and company bankruptcies earlier in the
decade, the North American steel industry has returned to profitability and enjoys strong domestic ⁵²
and global demand. Now, higher prices resulting from both strong demand and increased
production costs for carbon steel plate, used in making large-diameter pipe, may alter the basic
economics of CO² pipeline projects and CCS schemes overall. As Figure 2 shows, the price of
large-diameter pipe was generally around $600 per ton in late 2001 and early 2002. By late 2007,
the price of pipe was approaching $1,400 per ton. Analysts forecast carbon steel prices to decline
over the next two years, but only gradually, and to a level still more than double the price early in ⁵³
the decade.

^(...c^on^tin^ue^d)
^http:^//lf^e^e^.^m^it.e^du/^publ^ic^/L^FEE_2⁰⁰³^-0⁰³^_R^P^.^pdf
⁴⁹^MI^T²⁰^07:⁵⁸^.
⁵⁰^N.^P^a^r^k^er⁽²⁰⁰⁴⁾^{: F}ⁱ^g.²³^.
⁵¹^I^P^C^C²⁰⁰⁵^:²⁷^.
⁵²^Se^e^C^R^S^R^e^por^{t R}^L³²³³³^,^St^eel^{: P}^rⁱ^{ce a}ⁿ^d^P^o^lⁱ^{cy Issu}^es^{, by}^Ste^p^he^{n C}^o^one^y^.
⁵³^Mic^h^a^e^l^Cow^d^eⁿ^{, “}^A^P^r^of^us^ion^of^N^e^w^Pⁱ^pe^li^ne^P^r^oje^c^t^s^a^nd^Prof^its^{... f}^o^{r N}^o^w^,^”^Ame^r^ic^{an M}^e^tal^M^a^rk^e^t⁽^J^a^nua^r^y
²⁰⁰⁸⁾^:¹⁸^{; G}^l^oba^{l I}ⁿ^sⁱ^g^h^t^,^Ste^e^l^I^ndus^tr^y^Re^vⁱ^e^w⁽²^nd^Q^t^r^.²⁰⁰⁶⁾^,^ta^bs^{. 1}^.¹¹^-¹^.^12;^aⁿ^d^Ame^r^ic^{an M}^e^ta^{l M}^a^rk^e^t^,^“W^est
^Se^e^s^Mor^e^Ste^e^l^P^l^a^t^e^B^u^t^P^r^ic^e^s^H^o^ldiⁿ^g^G^r^ound”⁽^A^ug^{. 3}¹^,²⁰⁰⁶⁾^.

If some form of CCS is effectively mandated in the future, a surge in demand for new CO² pipe,
in competition with demand for natural gas and oil pipelines, may exacerbate the trend of rising
prices for pipeline materials, and could even lead to shortages of pipe steel from North American
sources. As a consequence, the availability and cost of pipeline steel to build such a CO² pipeline
network for CCS may be a limiting factor for widespread CCS implementation.
In states where traditional rate regulation exists, construction and operation of CO² pipelines for
CCS could raise questions about cost recovery for electric utilities under state utility regulation.
If, for example, a CO² pipeline is constructed for the exclusive use of a single power plant for on-
site (or nearby) CO² sequestration, and is owned by the power plant owners, it logically could be
considered an extension of the plant itself. In such cases, the CO² pipelines could be eligible for
regulated returns on the invested capital and their costs could be recovered by utilities in
electricity rates. Alternatively such a CO² pipeline could be owned by third parties and considered
a non-plant asset providing a transportation service for a fee. In the latter case, the costs could
still be recovered by the utility in its rates as an operating cost.
Two complications arise with respect to pipeline cost recovery. First, because utility regulation
varies from state to state (e.g., some states allow for competition in electricity generation, others ⁵⁴
do not), differences among states in the economic regulation of CO² pipelines could create
economic inefficiencies and affect the attractiveness of CO² pipelines for capital investment.
Second, if CO² transportation infrastructure is intended to evolve from shorter, stand-alone,
intrastate pipelines into a network of interconnected interstate pipelines, pipeline operators
wishing to link CO² pipelines across state lines may face a regulatory environment of daunting
complexity. Without a coherent system of economic regulation for CO² pipelines, whether as a
commodity, pollutant, or some other classification, developers of interstate CO² pipelines may
need to negotiate or litigate repeatedly issues such as siting, pipeline access, terms of service, and
rate “pancaking” (the accumulation of transportation charges assessed by contiguous pipeline
operators along a particular transportation route). It is just these kinds of issues which have
complicated and impeded the integration of individual utility electric transmission systems into ⁵⁵
larger regional transmission networks.

Oil industry representatives frequently point to EOR as offering a market-based model for
profitable CO² transportation via pipeline. It should be noted, however, that much of the existing
CO² pipeline network in the United States for EOR has been established with the benefit of
federal tax incentives. Although current federal tax law provides no special or targeted tax
benefits specifically to CO² pipelines, investments in CO² pipelines do benefit from tax
provisions targeted for EOR. They also benefit from accelerated depreciation rules, which apply
generally to any capital investment including petroleum and natural gas (non-CO²) pipelines. For
example, the Internal Revenue Code provides for a 15% income tax credit for the costs of
recovering domestic oil by one of nine qualified EOR methods, including CO² injection (I.R.C. §

⁵⁴^In^m^a^rket^-b^ased^st^at^es,^co^st^reco^ver^y^ma^y^a^f^f^e^ct^el^ect^ri^ci^t^y^market^s.
⁵⁵^For^f^u^r^t^he^r^inf^o^r^m^a^{tion of}^e^l^e^c^t^rⁱ^c^tr^aⁿ^s^m^is^sⁱ^{on r}^e^g^u^la^{tion, s}^e^e^C^R^{S R}^e^por^t^R^L³³⁸⁷⁵^,^E^l^ect^ri^{c T}^r^ansmi^ssi^oⁿ^:
^Appr^o^a^c^h^e^s^f^o^r^Ene^r^gⁱ^zⁱ^ng^a^Sa^g^gⁱⁿ^{g I}ⁿ^dus^tr^y^,^by^A^m^y^A^b^e^l^.

43).⁵⁶ Also, extraction of naturally occurring CO² may qualify for percentage depletion allowance
under I.R.C. § 613(b)(7). Prior federal law, both tax and nontax, also provided various types of
incentives for EOR which stimulated investment in CO² pipelines. In particular, oil produced
from EOR projects was exempt from oil price controls in the 1970s. Development of CO²
pipeline infrastructure in the 1980s benefitted from tax advantages to EOR oil under the crude oil
windfall profits tax law, which was in effect from March 1980 to August 1988.
Although there were never incentives explicitly for CO² pipelines under federal tax and price
control regulation in the 1970s and 1980s, it is clear that CO² pipeline infrastructure development
benefitted from these regulations. In a CCS environment where some captured CO² is a valuable
commodity, but the remainder is not, establishing similar regulatory incentives for CO² pipelines
becomes complex. One initial proposal in S. 2149 would allow seven-year accelerated
depreciation for qualifying CO² pipelines constructed after enactment (Sec. 4). As debate
continues about the economics of CO² capture and sequestration generally, and how the federal
government can encourage CCS infrastructure investment, Congress may seek to understand the
implications of CCS incentives specifically on CO² pipeline development.
In light of the overall costs associated with CO² pipelines, including the uncertainty about future
materials costs and cost recovery, some analysts anticipate that a CO² network for CCS will begin
with shorter pipelines from CO² sources located close to sequestration sites. Larger CO² trunk
lines are expected to emerge to capture substantial scale economies in long-distance pipeline
transportation. According to the 2007 MIT report, “it is anticipated that the first CCS projects will
involve plants that are very close to a sequestration site or an existing CO² pipeline. As the ⁵⁷
number of projects grow, regional pipeline networks will likely evolve.” It is debatable,
however, whether piecemeal growth of a CO² pipeline network in this way, presumably by
individual facility operators seeking to minimize their own costs, would ultimately yield an
economically efficient and publically acceptable CO² pipeline network for CCS. Weaknesses and
failures in the North American electric power transmission grid, which was developed in this
manner, may be one example of how piecemeal, uncoordinated network development may fail to
satisfy key economic and operating objectives.
As an alternative to piecemeal CO² pipeline development, some analysts suggest that it may be
more cost effective in the long run to build large trunk pipelines when the first sites with CO²
capture come on line with the expectation that subsequent users could fill the spare capacity in the
trunk line. In addition to lower per-unit transport costs for CO², such an arrangement would
smooth out potentially intermittent CO² flows from individual capture sites (especially
discontinuously operated power plants), provide a greater buffer for overall CO² supply ⁵⁸
fluctuations, and generally allow for more operational flexibility in the system. Planning and
financing such a CO² trunk line system would present its own challenges, however. As another
analysis points out, “implementation of a ‘backbone’ transport structure may facilitate access to
large remote storage reservoirs, but infrastructure of this kind will require large initial upfront

⁵⁶^Unf^o^rtuna^te^ly^f^o^{r EOR inv}^e^{stors, w}^h^ile^{this ta}^x^c^r^e^d^{it is}^pa^r^t^of^c^u^r^r^eⁿ^{t f}^e^de^r^a^{l ta}^x^law^,^its^pha^s^e^out^pr^ov^is^io^ns^m^e^aⁿ
^tha^t^pre^s^eⁿ^tly^{it is n}^o^{t a}^v^a^ila^ble^—^the^c^r^e^d^{it is}^z^e^r^o—^due^t^o^hig^h^c^r^ude^o^il^pr^ic^e^s^.
⁵⁷^Ibid^{., M}^I^T^.⁽²⁰^07):⁵⁹^.
⁵⁸^J^o^hⁿ^G^a^le^a^{nd J}^o^hⁿ^D^a^vⁱ^ds^on^{, “}^T^r^a^nsmⁱ^s^sⁱ^{on of}^C^O²^—^S^a^f^e^t^y^aⁿ^{d Ec}^o^nom^ic^C^ons^ide^r^a^tⁱ^ons^,”^En^e^r^g^y^,^V^o^l.²⁹^{, N}^o^s^.
^9-¹⁰⁽^J^uly^-^A^u^g^u^s^t²⁰⁰⁴⁾^:¹³²⁶^.

investment decisions.”⁵⁹ How a CO² network for CCS would be configured, and who would ⁶⁰
configure it, may be issues for Congress.

CO² occurs naturally in the atmosphere, and is produced by the human body during ordinary
respiration, so it is commonly perceived by the general public to be a relatively harmless gas.
However, at concentrations above 10% by volume, CO² may cause adverse health effects and at
concentrations above 25% poses a significant asphyxiation hazard. Because CO² is colorless,
odorless, and heavier than air, an uncontrolled release may accumulate and remain undetected
near the ground in low-lying outdoor areas, and in confined spaces such as caverns, tunnels, and ⁶¹
basements. Exposure to CO² gas, as for other asphyxiates, may cause rapid “circulatory ⁶²
insufficiency,” coma, and death. Such an event occurred in 1986 in Cameroon, when a cloud of
naturally-occurring CO² spontaneously released from Lake Nyos killed 1,800 people in nearby ⁶³
villages.
The Secretary of Transportation has primary authority to regulate interstate CO² pipeline safety
under the Hazardous Liquid Pipeline Act of 1979 as amended (49 U.S.C. § 601). Under the act,
the Department of Transportation (DOT) regulates the design, construction, operation and
maintenance, and spill response planning for CO² pipelines (49 C.F.R. § 190, 195-199). The DOT
administers pipeline regulations through the Office of Pipeline Safety (OPS) within the Pipelines ⁶⁴
and Hazardous Materials Safety Administration (PHMSA). Although CO² is listed as a Class 2.2
(non-flammable gas) hazardous material under DOT regulations (49 C.F.R. § 172.101), the
agency applies nearly the same safety requirements to CO² pipelines as it does to pipelines
carrying hazardous liquids such as crude oil, gasoline, and anhydrous ammonia (49 C.F.R. § 195).
To date, CO² pipelines in the United States have experienced few serious accidents. According to
OPS statistics, there were 12 leaks from CO² pipelines reported from 1986 through 2006—none
resulting in injuries to people. By contrast, there were 5,610 accidents causing 107 fatalities and

520 injuries related to natural gas and hazardous liquids (excluding CO²) pipelines during the ⁶⁵

same period. It is difficult to draw firm conclusions from these accident data, because CO²
pipelines account for less than 1% of total natural gas and hazardous liquids pipelines, and CO²
pipelines currently run primarily through remote areas. Based on the limited sample of CO²
incidents, analysts conclude that, mile-for-mile, CO² pipelines appear to be safer than the other

⁵⁹^I^P^C^C²⁰⁰⁵^:¹⁹⁰^.
⁶⁰^For^f^u^r^t^he^r^dis^c^us^sⁱ^oⁿ^s^e^e^C^R^S^R^e^por^{t R}^L³⁴³¹^6,^Pⁱ^pe^li^ne^s^for^C^a^r^bon^Dⁱ^oxⁱ^d^e⁽^C^O²⁾^C^ontr^o^l:^N^e^tw^or^k^N^e^e^d^s^an^d
^{Cost Unc}^e^r^taiⁿ^tie^s^{, by}^P^a^{ul W}^.^Pa^r^f^o^m^ak^a^nd^P^e^te^r^Folg^e^r^.
⁶¹^J^.^B^a^r^rⁱ^e^,^K^.^B^r^ow^n,^P.R^.^H^a^tc^he^r^,^a^{nd H}^.^U^.^Sc^he^ll^ha^s^e^{, “}^C^a^r^boⁿ^Dⁱ^ox^ide^Pⁱ^pe^line^s^{: A}^P^r^e^lim^ina^r^y^R^e^vⁱ^ew^of
^Desi^gn^an^d^Ri^sks,^{” P}^r^o^ceedⁱⁿ^{gs of}^t^h^{e 7}^th^Iⁿ^te^rⁿ^a^tio^na^{l C}^o^nf^e^r^eⁿ^c^e^{on G}^r^e^e^nho^us^e^G^a^s^C^ontr^o^{l T}^e^c^hnol^og^ie^s
⁽^V^aⁿ^c^o^uv^e^r^{, C}^a^na^da^{: Se}^p^t^.^5-^9,²⁰⁰⁴⁾^:²^.
⁶²^Aⁱ^rco^,^In^c.^,^“Carb^oⁿ^Di^o^xⁱ^d^{e G}^a^s,^”^M^a^te^{rial S}^a^fe^ty^Dat^a^S^h^e^e^t⁽^A^ug^{. 4,}¹⁹⁸⁹⁾^{. h}^ttp:^//w^w^w^2.sⁱ^rⁱ^.or^g^/m^s^d^s^/^f²^/by^d^/
^by^djl.htm^l
⁶³^Ke^vⁱ^{n Kra}^jic^k^,^“^D^e^f^using^Af^ric^a^’^{s Kille}^{r L}^a^ke^s,”^S^mⁱ^t^h^soⁿⁱ^an^,^v^.^{34, n. 6. (}²⁰⁰³⁾^:⁴⁶^—⁵^5.
⁶⁴^P^H^M^S^A^su^cceed^{s t}^h^{e Research}^aⁿ^d^S^p^eci^al^P^r^o^g^ra^m^s^A^d^mⁱⁿⁱ^st^ratⁱ^oⁿ^(R^S^P^A⁾^,^reo^r^ganⁱ^zed^uⁿ^d^e^r^P^.^L^.^108-²⁴^6,
^w^h^ic^{h w}^a^s^sⁱ^gⁿ^e^d^by^the^P^r^e^s^ideⁿ^{t on}^N^o^v^.³⁰^,²⁰⁰⁴^.
⁶⁵^O^f^fⁱ^c^e^o^f^Pⁱ^pe^line^Sa^f^e^ty⁽^O^P^S⁾^,^“^D^is^tr^ibuti^on,^T^r^aⁿ^s^m^issⁱ^{on, a}ⁿ^d^Lⁱ^{quid A}^c^cⁱ^de^{nt a}ⁿ^d^Iⁿ^cⁱ^de^{nt D}^a^t^a^,”⁽²⁰⁰⁷⁾^{. O}^PS
^ha^s^not^y^e^{t r}^e^le^as^e^d²⁰⁰^{7 i}ⁿ^cⁱ^de^nt^s^t^a^tis^tic^s^.^D^a^ta^f^ile^{s a}^v^a^ila^ble^a^t^http://^ops.^d^o^t^.g^ov^/sta^ts/IA^98.htm^.

types of pipeline regulated by OPS.⁶⁶ Additional measures, such as adding gas odorants to CO² to
aid in leak detection, may further mitigate CO² pipeline hazards. Nonetheless, as the number of
CO² pipelines expands, analysts suggest that “statistically, the number of incidents involving CO² ⁶⁷
should be similar to those for natural gas transmission.” If the nation’s CO² pipeline network
expands significantly to support CCS, and if this expansion includes more pipelines near ⁶⁸
populated areas, more CO² pipeline accidents are likely in the future.
There are no special provisions in U.S. law protecting the CO² pipeline industry from criminal or
civil liability. In January 2003, the Justice Department announced over $100 million in civil and
criminal penalties against Olympic Pipeline and Shell Pipeline resolving claims from a fatal ⁶⁹
gasoline pipeline fire in Bellingham, WA, in 1999. In March 2003, emphasizing the
environmental aspects of homeland security, Attorney General John Ashcroft reportedly
announced a crackdown on companies failing to protect against possible terrorist attacks on ⁷⁰
storage tanks, transportation networks, industrial plants, and pipelines.
Even if no federal or state regulations are violated, CO² pipeline operators could still face civil
liability for personal injury or wrongful death in the event of an accident. In the Bellingham
accident, the pipeline owner and associated defendants reportedly agreed to pay a $75 million ⁷¹
settlement to the families of two children killed in the accident. In 2002, El Paso Corporation
settled wrongful death and personal injury lawsuits stemming from a natural gas pipeline ⁷²
explosion near Carlsbad, NM, which killed 12 campers. Although the terms of those settlements ⁷³
were not disclosed, two additional lawsuits sought a total of $171 million in damages. The MIT
study concluded that operational liability for CO² pipelines, as part of an integrated CCS
infrastructure, “can be managed within the framework that has been successfully used for decades ⁷⁴
by the oil and gas industries.” Nonetheless, as CCS policy evolves, Congress may seek to
ensure that liability provisions for CO² pipelines are adequate and consistent with liability
provisions in place for other CO² infrastructure.
In addition to the issues discussed above, additional policy issues related to CO² pipelines may
arise as CCS policy evolves. These may include addressing technical transportation problems

⁶⁶^J^o^hⁿ^G^a^le^a^{nd J}^o^hⁿ^D^a^vⁱ^ds^on^{. (}²⁰⁰⁴⁾^:¹³²²^.
⁶⁷^Barri^{e et}^al^.⁽²⁰⁰⁴⁾^:²^.
⁶⁸^G^a^le^a^{nd D}^a^vⁱ^ds^{on (}²⁰⁰⁴⁾^:¹³^21.
⁶⁹^“S^h^e^l^l^,^Ol^ym^pⁱ^{c S}^o^cked^f^o^r^Pⁱ^p^e^lⁱⁿ^{e A}^cci^d^eⁿ^t^,^”^Ene^r^gy^Dai^l^y^(J^aⁿ^{. 22}^{, 2}⁰⁰³^).
⁷⁰^Jo^hn^Hei^l^p^riⁿ^,^“A^sh^cro^f^t^P^r^o^mⁱ^s^{es In}^creased^Eⁿ^f^o^rce^m^en^t^o^f^Eⁿ^vi^roⁿ^m^en^t^a^l^L^a^w^s^f^o^{r Ho}^mel^aⁿ^d^S^e^cu^ri^t^y^,^”
^A^s^so^ci^at^ed^P^r^ess,^W^a^shⁱⁿ^gt^on^d^a^t^e^lⁱⁿ^{e (M}^ar.¹¹^,²⁰⁰³^).
⁷¹^Busine^{ss Ed}^itors,^“^O^ly^m^p^ic^Pⁱ^pe^Lⁱ^ne^{, Othe}^rs^P^a^y^Out^Re^c^o^{rd $}⁷⁵^Milli^onⁱⁿ^Pipe^li^ne^Ex^pl^osio^{n W}^r^ong^f^u^{l De}^a^t^h
^Se^ttle^m^e^nt,”^Bu^sin^e^{ss Wire}⁽^A^pr^{il 10,}²⁰⁰²⁾^.
⁷²^N^a^tiona^{l T}^r^aⁿ^s^por^ta^tio^{n Sa}^f^e^t^y^B^o^a^r^d,^Pⁱ^pe^li^ne^Ac^cⁱ^de^nt^Re^por^t^,^PA^R^-^03-^01.⁽^F^e^b^{. 11}^,²⁰⁰³⁾^.
⁷³^El^P^a^s^o^C^o^rp^.,^Qu^arte^rly^Re^port^Pursuaⁿ^{t t}^o^Se^c^tion¹³^or¹⁵⁽^{d) o}^f^the^Se^c^u^ritie^s^Ex^c^h^a^nge^Ac^{t of 1}⁹³⁴^,^F^o^r^m^10-^Q^,
^P^e^rⁱ^{od e}^ndi^ng^J^une³⁰^{, 2}⁰⁰²^{. (}^H^o^u^s^t^on^{, T}^X^:²⁰⁰²⁾^{. T}^h^e^im^pa^c^t^of^the^s^e^la^w^s^uits^on^the^c^o^m^p^aⁿ^y^’^s^bus^ine^s^s^is^uⁿ^c^l^e^a^r^,
^how^e^v^e^r^{; the}^re^{port sta}^t^e^s^tha^t^“^o^{ur c}^o^{sts a}ⁿ^{d le}^g^a^{l e}^x^posure^..^{. w}^{ill be}^f^u^lly^c^o^v^e^r^e^{d by}^insura^nc^e^.^”
⁷⁴^MI^T²⁰^07:⁵⁸^.

related to the presence of other pollutants, such as sulfuric and carbonic acid, in CO² pipelines.
Some have also suggested the use or conversion of existing non-CO² pipelines, such as natural ⁷⁵
gas pipelines, to transport CO². Coordination of U.S. CO² pipeline policies with Canada, with
whom the United States shares its existing pipeline infrastructure, may also become a
consideration. Finally, the potential impacts of CO² pipeline development overseas on the global
availability of construction skills and materials may arise as a key factor in CCS economics and
implementation.

Policy debate about the mitigation of climate change through some scheme of carbon capture and
sequestration is expanding quickly. To date, debate among legislators has been focused mostly on
CO² sources and storage sites, but CO² pipelines are a vital connection between the two. Although
CO² transportation by pipeline is in some respects a mature technology, there are many important
unanswered questions about the socially optimal configuration, regulation, and costs of a CO²
pipeline network for CCS. Furthermore, because CO² pipelines for EOR are already in use today,
policy decisions affecting CO² pipelines take on an urgency that is, perhaps, unrecognized by
many. It appears, for example, that federal classification of CO² as both a commodity (by the
BLM) and as a pollutant (by the EPA) potentially could create an immediate conflict which may
need to be addressed not only for the sake of future CCS implementation, but also to ensure
consistency between future CCS and today’s CO² pipeline operations.
In addition to these issues, Congress may examine how CO² pipelines fit into the nation’s overall
strategies for energy supply and environmental protection. The need for CO² pipelines ultimately
derives from the nation’s consumption of fossil fuels. Policies affecting the latter, such as energy
conservation, and the development of new renewable, nuclear, or hydrogen energy resources,
could substantially affect the need for and configuration of CO² pipelines. If policy makers
encourage continued consumption of fossil fuels under CCS, then the need to foster the other
energy options may be diminished—and vice versa. Thus decisions about CO² pipeline
infrastructure could have consequences for a broader array of energy and environmental policies.
^Pa^u^l^W.^Pa^r^f^o^m^a^k ^P^e^ter^Fo^lg^er
^Sp^{ecialist i}ⁿ^En^er^g^y^aⁿ^d^Iⁿ^f^r^a^s^tr^u^c^t^u^r^e^P^o^licy^Sp^{ecialist i}ⁿ^En^er^g^y^aⁿ^d^Natu^r^a^{l Reso}^u^r^{ces P}^o^lic^y
^pparf^om^a^k^@^c^rs^.l^oc.g^ov^{, 7}^-⁰⁰³⁰^pf^ol^g^e^r@^cr^s^.^l^o^c.g^o^v^,^7-¹⁵¹⁷

⁷⁵^Aⁿ^e^x^am^ple^is^the^G^w^inv^ille^{, MS-L}^a^k^e^{St. J}^o^hⁿ^{, L}^A^na^tura^{l g}^a^s^pipe^line^purc^h^a^s^e^d^by^D^e^nbury^Res^ourc^e^s^{, Inc}^.ⁱⁿ
²⁰⁰^{6 a}ⁿ^{d c}^o^nv^e^r^te^{d to}^C^O²^traⁿ^sp^orta^tio^{n f}^o^{r EOR i}ⁿ²⁰⁰⁷^.