On July 17, 2024, Pennsylvania joined a growing number of states establishing a legal framework for the underground storage of carbon dioxide. Carbon capture and underground sequestration (“CCUS”) is promoted as a technology to reduce carbon emissions from fossil fuel power plants. However, until the passage of the Carbon Capture and Sequestration Act[1] (the “Act”), Pennsylvania lacked the legal infrastructure necessary to compete with other states in this emerging field.
Key Provisions of Pennsylvania’s Carbon Capture and Sequestration Act
The Act clears the way for CCUS projects in the Commonwealth. Specifically, it:
- Confirms that underground “pore space” belongs to the surface owner, not the oil, gas, or mineral estate owner, and allows pore space to be severed as a separate property interest, similar to oil and gas rights.
- Establishes a framework for collective storage (pooling) of pore space, granting the Environmental Hearing Board authority to issue collective storage orders.
- Directs the Environmental Quality Board to draft regulations, and permitting criteria, for CCUS projects while authorizing the Department of Environmental Protection to seek primacy for UIC Class VI well permitting.
- Introduces liability limitations for surface owners, sets a “reasonable care” standard for storage operators, and transfers title and ownership of injected carbon dioxide to the Commonwealth after 50 years, contingent on certain conditions being met.
Legal and Land Use Implications
Notably, the Act creates a new estate in land—pore space—which can be severed and conveyed separately from both surface and mineral estates. This raises the potential for land disputes between surface and subsurface owners. In Pennsylvania, the oil, gas, and mineral estate is considered dominant to the surface estate, meaning an operator has the right to make reasonable use of the surface to access subsurface minerals. The Act clarifies that the oil, gas, and mineral estate is also dominant over the pore space. Still, it leaves unresolved whether severed pore space itself holds dominance over the surface estate.
Additionally, the Act creates a unique forced pooling regime for CCUS projects. The state has historically declined to allow forced pooling of oil and gas interests and other underground storage rights without the owner’s consent. As the first pooling procedure of its kind in the state, its application, particularly with respect to good-faith negotiations with pore space owners, and “reasonable” efforts to locate and notify pore space owners prior to pooling, will inevitably be tested in court.
Will CCUS projects gain traction in Pennsylvania? More seismic data is required to determine the extent of the state’s underground storage capacity, especially in deeper formations, and to assess their economic feasibility. Furthermore, significant activity is unlikely until the Environmental Quality Board establishes the necessary permitting regulations.
A New Era for Carbon Capture in Pennsylvania
The Carbon Capture and Sequestration Act opens the door to an exciting new chapter for Pennsylvania’s energy industry. As regulations take shape and legal questions are resolved in the coming years, the potential for CCUS projects to transform the state’s approach to carbon emissions is significant. It is an exciting time for stakeholders, with opportunities for innovation and investment. How this law is applied and interpreted will shape the future of CCUS in Pennsylvania, making it a critical space to watch as the industry evolves.
Law Clerk Matt Gibson contributed to this publication.
References
[1] Act of July 17, 2024, P.L. 933, Act No. 87.
