New Bureau of Land Management Guidance on Geological Carbon Sequestration on Federal Crown Lands Answers Some Questions, but Uncertainty Remains for Shared Domain Lands | Snell and Wilmer

On June 8, 2022, the U.S. Department of the Interior’s Bureau of Land Management (BLM) issued official guidance[1] outlining BLM’s policy for authorizing the use of federal public lands for site characterization, injection and geological sequestration of carbon dioxide (CO2) for carbon capture and storage (CCS). BLM Instruction Memorandum 2022-041 (IM 2022-041) provides that BLM authorization of CCS projects on federal public lands will be authorized under Title V of the Federal Lands Policy and Management Act. 1976 (FLPMA), which is the same right-of-way authority used by BLM to manage roads, transmission lines, telecommunications sites and other surface land uses. IM 2022-041 specifies that the CCS project uses the underground pore space for the geological sequestration of CO2 will be permitted through FLPMA Title V rights-of-way (ROWs). IM 2022-041 also clarifies that the use of public land for CCS will require fair market value (FMV) compensation for the use of surface land and subsurface pore space managed by BLM, on a amount to be determined by BLM in consultation with the Assessment and Valuation Department. Assessment Services Office (AVSO). It should be noted that in addition to charging for the occupancy of injection facilities and similar surface uses, BLM is considering charging an injection fee for CO2 and for the occupation of federal interstitial space, on a unitary basis.

In a previous blog post,[2] we have pointed out that a deep uncertainty for CCS projects located in the western public land states is whether the United States retains ownership of the underlying non-mineral geologic pore space to the millions of acres of federally patented shared land under the Stock-Homesteads Livestock Act (SRHA). Given the fractured pattern of land ownership in the West and the large underground footprint needed to contain the injected CO2 plumes in a large-scale CCS project, this issue is likely to arise for many proposed CCS projects.

The SHRA land patents contained a reservation of the mining domain in the United States. The 1983 decision of the United States Supreme Court in Watt c. Western Nuclear Corp. construed this Mineral Reserve broadly, to include any interest in the land that has not been expressly surrendered to the patent holder. The only court to have expressly applied Watt vs. Western Nuclear to the question of ownership of the non-mineral pore space concluded that the pore space was reserved for the government (in this case, the State of Alaska) and not conveyed to the owner of the surface.[3] This decision was contrary to the general “American rule” that ownership of geological interstitial space belongs to the owner of the surface.

IM 2022-041 acknowledges but does not resolve uncertainty:

In cases of shared domain where the federal government only owns the surface or the mining domain, the question of ownership of the interstitial spaces may arise. In these situations, the property of the pore space must be determined early in the process. Typically, the pore space belongs to the owner of the surface, although it may be transported separately. To determine ownership of the pore space, the title documents must be reviewed. Questions regarding the ownership of the porous space should be resolved in coordination with the prosecutor’s office. (emphasis added).

The acknowledgment in IM 2022-041 that, generally, the pore space belongs to the surface owner, seems to indicate some acceptance by BLM that it does not own or control the nonmineral geological pore space beneath the SRHA lands , but that does not say so. directly. In the western United States, several states—Wyoming, North Dakota, and more recently Utah—legislated the “American Rule” and assigned the porous space to the owner of the surface. . Although some case law suggests that the United States would be bound by state law on this issue, until a more formal determination of ownership is made, whether through the courts, Congressional action or formal notice or rulemaking from the Department of the Interior, ownership uncertainty will remain and will likely need to be resolved directly with the attorney’s office.

BLM guidance in IM 2022-041 begins to clarify proposed CCS activities on federal public lands. It provides an authorization framework through the established BLM Title V ROW program and indicates how the required compensation can be handled in the future. At the same time, the guidance leaves many other questions unanswered. These include, but are not limited to: the pore property issues described above; whether BLM could assert claims of subterranean intrusion if it claimed ownership of the porous space of a shared domain; the scope of the National Environmental Policy Act (NEPA) review of BLM interstitial space footprints; whether BLM subterranean pore space right-of-way grants are limited by surface right-of-way exclusions contained in BLM’s land management plans; and the interaction of BLM permits with USEPA and state regulatory programs for underground injection control (UIC). Many questions remain for CCS project proponents when federal public lands or mining are present in the project area.

[1] BLM Instruction Memorandum (IM) 2022-041, National Policy for Right-of-Way Permits Required for Site Characterization, Capture, Transport, Injection, and Permanent Geological Sequestration of Carbon Dioxide for Carbon Sequestration Projects (June 8, 2022).

[2] Who owns the pore space for geological carbon sequestration? The renewed emphasis on carbon capture and storage is likely to bring to light again the uncertainties relating to the ownership on the western lands of the shared ownership, Snell & Wilmer Environmental, Natural Resources, Oil & Gas Law Blog (January 19, 2021).

[3] City of Kenai v. Cook Inlet Alaska Natural Gas Storage, LLC, Alaska Supreme Court No. S-15682 (May 6, 2016).