Bracewell: Many Await Updates to Existing CO2 Pipeline Safety Regulations

Catherine Little and Annie Cook are partners in the Washington, D.C., office of Bracewell law firm, where they advise oil and gas pipeline, associated storage and LNG clients across the U.S. on traditional and renewable energy, transportation and safety-related legal matters at federal, state and local levels.

CO₂ pipelines are expected to play a key role in reducing greenhouse-gas emissions and achieving net-zero emissions by 2050 in the U.S.

Carbon capture and storage (CCS) projects, many of which involved transportation by pipeline, are intended to capture and remove CO₂ from the atmosphere and transport it to permanent underground storage or conversion sites. Certain of these projects are eligible for grants from the Department of Energy (DOE), which is tasked with providing “future growth grants” to fund CO₂ projects such as CCS.     

A critical path for success of CO₂ projects depends, in part, on regulation by the Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration, referred to as PHMSA. While pipelines are considered the most efficient and safest mode to transport CO₂, the sufficiency of existing CO₂ pipeline safety regulations has come under scrutiny in light of a 2020 CO₂ pipeline incident in Satartia, Mississippi.

As CCS projects progress, third parties have called for updated CO₂ regulations. Meanwhile, states and local governments have considered—and some have passed—moratoriums on CO₂ pipeline projects until updated regulations are in place or local regulations are enacted to address what they see as gaps in the federal regulatory scheme.

It is a common misconception, however, that PHMSA does not regulate any CO₂ pipelines, or that those regulations are not comprehensive. PHMSA has long exercised statutory and regulatory authority over the design, construction and operation of thousands of miles of CO₂ pipelines. Further, PHMSA announced a rulemaking in 2022 to both update CO₂ regulations and establish regulations for gaseous CO₂ pipelines.

The agency has been slow, however, to rebut public misconceptions about regulation of CO₂ pipelines and to issue a proposed rule. Such delays potentially hinder CCS projects and the ability of the U.S. to meet its climate goals.

Existing PHMSA regulations

Congress authorizes PHMSA to regulate the transportation of gas and liquids by pipeline, including both gaseous and liquid CO₂, to protect against risks to life and property. Approximately 5,200 miles of regulated pipelines currently transport liquid (supercritical) CO₂ in the U.S., which have been regulated since 1991. Current regulations for supercritical CO₂ pipelines govern design, construction, operation, maintenance and emergency response planning, and many establish supplemental or different design, construction, operations and maintenance obligations specific to the unique risk profile presented by CO₂, which is colorless, odorless, heavier than air and non-flammable.  

PHMSA regularly monitors compliance of CO₂ pipeline operators through routine inspections of pipeline facilities and construction projects, as well as accident response and investigations.  Through enforcement, PHMSA requires remedial actions and assesses civil penalties, including a record proposed civil penalty associated with the Satartia incident.

As it relates to gaseous CO₂, PHMSA has asserted that it maintains “safety authority” with the ability to investigate and address “any” safety issue through safety orders, even though the agency has not yet established regulations for gaseous CO₂. PHMSA’s authority to regulate pipelines does not, however, extend to pipeline siting, routing or permanent storage. 

Pending CO₂ pipeline rulemaking and state laws

PHMSA has been working on its “priority” CO₂ rulemaking to regulate gaseous CO₂ and revise existing supercritical CO₂ regulations specific to emergency response, conversion of service, dispersion modeling and leak detection and reporting. Based on public comments, other topics which may be addressed by PHMSA could include, among others, standards for impurities and odorization.

The Office of Management and Budget is currently reviewing PHMSA’s proposed rule, a review initiated in February 2024. As of this writing, the proposed rule was likely to be published at the end of 2024 or early 2025, although the change in administrations may impact the timeline for the proposed rule and, ultimately, the content as well.

Multiple states have considered issuing moratoriums on CO₂ pipeline projects, and California and Illinois passed laws establishing such moratoriums until PHMSA finalizes its rule. California allows the state to pass its own regulations and the Illinois moratorium expires after a certain time has passed.

In addition, Congress is reauthorizing the Pipeline Safety Act in 2025 and current proposals floated by the House and Senate have addressed CO₂ pipeline regulation in varying degrees.  Industry trade groups have tried to fill the gap left by PHMSA’s slow march to updated regulations, such as the development of the “Carbon Dioxide Emergency Response Tactical Guidance” by API and the Liquid Energy Petroleum Association, to provide best practices for preparedness and initial response to a release of CO₂. Meanwhile, some local governments have responded by attempting to put ordinances in place to establish their own moratoriums or to limit development, such as in Iowa and Illinois. 

Challenges for CO₂ project proponents

In 2021-2022, several large CO₂ pipelines were proposed in the Midwest as part of larger CCS projects, aiming to reduce CO₂ emissions. Opposition to those projects and/or the development of CO₂ pipelines more generally has worked at federal, state and local levels to leverage the Satartia incident and the fact that the PHMSA has not yet issued updated regulations for CO₂ pipelines. 

On the other hand, pipeline proponents are facing challenges and have been hampered by the lack of clarity regarding CO₂ pipeline safety regulation and the failure of PHMSA to expeditiously update its regulations, despite climate goals and DOE funding to incentivize such projects.

Existing and proposed projects face challenges with respect to permitting, other necessary regulatory approvals and possibly funding unless or until PHMSA issues a final rule. The “one government” approach should support these projects to meet the nation’s climate goals as well as provide additional jobs and other economic benefits.