II
111th CONGRESS
1st Session
S. 1502
IN THE SENATE OF THE UNITED STATES
July 22, 2009
Mr. Casey (for himself and Mr. Enzi) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources
A BILL
To establish a program to be managed by the Department of Energy to ensure prompt and orderly compensation for potential damages relating to the storage of carbon dioxide in geological storage units.
Short title
This Act may be cited as the
Carbon Storage Stewardship Trust Fund
Act of 2009
.
Purposes
The purposes of this Act are—
to promote the commercial deployment of carbon capture and storage as an essential component of a national climate mitigation strategy;
to require private liability assurance during the active project period of a carbon dioxide storage facility;
to establish a Federal trust fund consisting of amounts received as fees from operators of carbon dioxide storage facilities;
to establish a limit on liability for damages caused by injection of carbon dioxide by carbon dioxide storage facilities subject to certificates of closure;
to establish a program—
to certify the closure of commercial carbon dioxide storage facilities; and
to provide for the transfer of long-term stewardship to the Federal Government for carbon dioxide storage facilities on the issuance of certificates of closure for the facilities;
to provide for the prompt and orderly compensation for damages relating to the storage of carbon dioxide; and
to protect the environment and public by providing long-term stewardship of geological storage units.
Definitions
In this Act:
Active project period
The term active project period means the phases of the carbon dioxide storage facility through receipt of a certificate of closure, including—
the siting and construction of the facility;
carbon dioxide injection;
well capping;
facility decommissioning; and
geological storage unit monitoring, measurement, verification, and remediation.
Administrator
The term Administrator means the Administrator of the Environmental Protection Agency.
Carbon dioxide storage facility
The term carbon dioxide storage facility means a facility that receives and permanently stores or sequesters carbon dioxide within a geological storage unit, including carbon dioxide permanently stored as a result of enhanced hydrocarbon recovery.
Certificate of closure
The term certificate of closure means a determination issued by the Administrator or other Federal or State regulatory authority with respect to a carbon dioxide storage facility that certifies that the operator of the carbon dioxide storage facility has completed injection operations, well closure, and any required monitoring and remediation to ensure that any carbon dioxide injected into a geological storage unit would not harm or present a risk to human health, safety, and the environment, including drinking water supplies.
Civil claim
The term civil claim means a claim, cause of action, lawsuit, judgment, court order, administrative order, government or agency order, fine, penalty, or notice of violation, for civil relief with respect to damages or harm to persons, property, or natural resources from the injection of carbon dioxide by a carbon dioxide storage facility.
Damage
In general
The term damage means any direct or indirect damage or harm to persons, property, or natural resources from the injection of carbon dioxide into geological storage units.
Inclusions
The term damage
includes
personal injury, sickness, real or personal property damage, natural resource
damage, trespass, subsidence losses, revenue losses, and loss of
profits.
Enhanced hydrocarbon recovery
The term enhanced hydrocarbon recovery means the use of carbon dioxide to improve or enhance the recovery of oil or natural gas from oil or natural gas fields.
Fund
The term Fund
means the
Carbon Storage Trust Fund established by section 5(d)(1).
Geological storage unit
The term geological storage unit includes saline formations, hydrocarbon formations, basalt formations, salt caverns, unmineable coal seams, or any other geological formation capable of permanently storing carbon dioxide.
Liability assurance
The term liability assurance means privately funded financial mechanisms, including third-party insurance, self-insurance, performance bonds, trust funds, letters of credit, and surety bonds.
Long-term stewardship
The term long-term stewardship means the monitoring, measurement, verification, and remediation and related activities associated with a carbon dioxide storage facility after issuance of a certificate of closure.
Program
The term Program
means the
Carbon Storage Stewardship and Trust Fund Program established by section
5(a).
Secretary
The term Secretary means the Secretary of Energy.
Long-Term Stewardship responsibility
In general
Subject to subsection (b), the Secretary shall be responsible for the long-term stewardship of a carbon dioxide storage facility on the issuance of a certificate of closure for the carbon dioxide storage facility.
Transfer to State
In general
A State may request that the management responsibilities associated with long-term stewardship of a carbon dioxide storage facility located in the State be transferred to the State in accordance with regulations established by the Secretary.
Approval of request
If the Secretary approves a request under paragraph (1), the State shall be responsible for the long-term stewardship of the applicable carbon dioxide storage facility beginning on the date of the approval in accordance with applicable Federal and State laws (including regulations).
Failure to act by State
In accordance with any regulations established under paragraph (1), if the Secretary determines that a State that has accepted management responsibilities under paragraph (1) has failed to carry out the responsibilities of the State with respect to the carbon dioxide storage facility, the Secretary shall assume long-term stewardship of the carbon dioxide storage facility as soon as practicable after the date of the determination.
Standards
The Secretary, in coordination with the Administrator, shall establish standards for any monitoring, measurement, verification, and site remediation activities necessary to protect health, safety, and the environment during long-term stewardship performed by a State or the Federal Government.
Coordination with administrator
If long-term stewardship is vested with the Secretary, the Secretary may coordinate responsibility for site monitoring, measurement, verification, and remediation and related activities with the Administrator.
Carbon Storage Stewardship and Trust Fund Program
In general
There is established in the Department of Energy the Carbon Storage Stewardship and Trust Fund Program.
Liability assurance required for operators of commercial carbon dioxide storage facilities
Notwithstanding any other provision of Federal or State law, in carrying out the Program, the Secretary shall require operators of carbon dioxide storage facilities to maintain adequate liability assurance during the active project period.
Fees
In general
In carrying out the Program, the Secretary shall require operators of carbon dioxide storage facilities to pay a risk-based fee, in an amount to be established in accordance with paragraph (2), for each ton of carbon dioxide injected by the carbon dioxide storage facility into geological storage units during the operation phase of the facility.
Amount
In general
As soon as practicable after the date of enactment of this Act and after taking into account the criteria described in subparagraph (B), the Secretary shall establish—
the minimum and maximum balance for the Fund; and
the amount of the fee required under paragraph (1).
Criteria
The criteria referred to in subparagraph (A) are—
the estimated quantity of carbon dioxide to be injected annually into geological storage units by all operating commercial carbon dioxide storage facilities;
the likelihood or risk of an incident resulting in liability;
the likely dollar value of any damages relating to an incident;
other factors relating to the risk of the carbon dioxide storage facility and associated geological storage unit; and
impact on commercial and economic viability of carbon dioxide storage facilities.
Considerations
In establishing the amount of the fee under subparagraph (A)(ii), the Secretary may consider using a fee system that is based on the level of risk associated with a specific geological storage unit to provide an incentive for the selection and operation of the best carbon dioxide storage facilities.
Enhanced hydrocarbon recovery
The Secretary shall determine the most appropriate approach for charging a fee on the quantity of carbon dioxide injected into oil and gas fields, after taking into consideration—
the quantity of carbon dioxide that is permanently stored;
whether or not the enhanced hydrocarbon recovery operation is also being operated as a carbon dioxide storage facility; and
any other factors that the Secretary determines to be appropriate.
Review and adjustment
The Secretary shall, on at least an annual basis, review the Fund balance—
to ensure that there are sufficient amounts in the Fund to make the payments required under subsection (d)(3)(A); and
to determine whether or not to increase or decrease the amount, or discontinue collection, of the fee, after taking into consideration—
the annual quantity of carbon dioxide injected by carbon dioxide storage facilities;
the number and estimated value of claims against the Fund; and
any other relevant factors, as determined by the Secretary.
Deposit
Notwithstanding section 3302 of section 31, United States Code, the fees collected under paragraph (1) shall be deposited in the Fund.
Carbon storage trust fund
Establishment
There is established in the Treasury of the
United States a revolving fund, to be known as the Carbon Storage Trust
Fund
, consisting of such amounts as are deposited under subsection
(c)(3).
Use of Fund
In general
Amounts in the Fund shall be made available, without further appropriation or fiscal year limitation—
to the Secretary for the payment of civil claims from a carbon dioxide storage facility that are brought after a certificate of closure for the carbon dioxide storage facility has been issued;
to the Secretary for long-term stewardship after the date of issuance of a certificate for closure; and
to the Secretary or other appropriate regulatory authority to pay any reasonable and verified administrative costs incurred by the Secretary or regulatory authority in carrying out the Program.
Limitation
Amounts in the Fund shall only be used for the purposes described in clause (i), (ii), or (iii) of subparagraph (A).
Limitation on payments
In general
Subject to clause (ii), an aggregate claim for damages brought under subparagraph (A)(i) shall be limited to an amount to be established by the Secretary as soon as practicable after the date of enactment of this Act, based on mechanisms such as—
actuarial modeling of probable damage; and
net present value analysis.
Congressional action
If estimated or actual aggregate damages exceed the amount established under clause (i)—
the Secretary shall notify Congress; and
on receipt of notice under subclause (I), Congress may provide for payments in excess of that amount, in accordance with guidelines established by Congress by law.
Exception for gross negligence and intentional misconduct
Notwithstanding subparagraph (A), no amounts in the Fund shall be used to pay a claim for liability arising out of conduct of an operator of a carbon dioxide storage facility that is grossly negligent or that constitutes intentional misconduct, as determined by the Secretary.
Procedures for adjudication of claims
Claims of damage brought under subparagraph (A)(i) relating to carbon dioxide in a carbon dioxide storage facility subject to a certificate of closure shall be—
filed in the United States Court of Federal Claims; and
adjudicated in accordance with procedures established by the United States Court of Federal Claims.
Initial funding
In general
If sufficient amounts are not available in the Fund to cover potential claims during the first years of the Program, the Secretary may request from the Secretary of the Treasury an interest-bearing advance in funding from the Treasury to carry out the Program, subject to subparagraph (B).
Terms and conditions
The terms and conditions for the repayment of an advance under subparagraph (A) shall be specified by the Secretary of the Treasury.
Limitation on civil claims
In general
Except as provided in subsection (b), on issuance of a certificate of closure, a civil claim or claim for the performance of long-term stewardship responsibilities under applicable Federal and State law, may not be brought against—
the operator or owner of the carbon dioxide storage facility subject to the certificate of closure;
the generator of the carbon dioxide stored in the applicable geological storage unit; or
the owner or operator of the pipeline used to transport the carbon dioxide to the carbon dioxide storage facility subject to the certificate of closure.
Exception
Subsection (a) shall not apply in the case of a civil claim involving the gross negligence or intentional misconduct of an owner, operator, or generator.