A coming wave of planned carbon sequestration projects related to the production of blue hydrogen and climate change remediation may force the Surface Transportation Board (STB) to clarify whether it has jurisdiction over the rates and practices of interstate carbon dioxide pipelines. Currently, it is unclear which, if any, regulations apply to the United States’ limited number of carbon dioxide pipelines. Clarity concerning jurisdiction is necessary to alleviate uncertainty and ease the completion of what is expected to be a large number of new carbon dioxide pipelines.
The Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) have earmarked tens of billions of dollars for carbon sequestration projects, as well as the production of “blue” hydrogen—where hydrogen is produced from fossil fuels and the carbon dioxide emissions are captured and sequestered. Bringing these carbon dioxide sequestration projects to fruition will require the construction and conversion of a massive pipeline network aimed at transporting carbon dioxide from the point of production to storage sites. According to one estimate made prior to either the IRA or the IIJA, by 2050 the United States may be transporting twice as much carbon dioxide as the oil it currently transports.1
Under the Interstate Commerce Commission Termination Act (ICCTA), the STB is tasked with regulating pipelines carrying any “commodity other than water, gas, or oil.”2 Under the ICCTA, pipelines are regulated as common carriers under a regime very similar to the Federal Energy Regulatory Commission’s (FERC) regulation of oil, petroleum products, and natural gas liquids pipelines under the Interstate Commerce Act (ICA).3 The word “gas” in this statute was meant as a shortened wording of “natural gas and artificial gas.”4 Therefore, by the terms of the statute, every interstate pipeline not regulated by FERC (carrying “oil” or “gas”) should be regulated by the STB.5
However, an isolated and uncontested decision from 1980, Cortez Pipeline Company, created confusion over the jurisdictional status of carbon dioxide pipelines. In that decision, the Interstate Commerce Commission (ICC), which is the STB’s predecessor agency, agreed with a pipeline applicant that it could not regulate carbon dioxide pipelines because the commodity is gaseous.6 Since then there have been conflicting opinions expressed by government agencies and commenters concerning this issue.7 Furthermore, the STB also disclaimed the logic of Cortez in a case dealing with a pipeline carrying gaseous ammonia.8
The STB has acknowledged this uncertainty but indicated to researchers from the Congressional Research Service that it would “likely not act to resolve this conflict unless a CO2 pipeline dispute comes before it.”9 Pipelines regulated by the STB are not required to file tariffs or applications for certificates, and the STB has no authority to initiate its own proceeding. However, there are many ways a party could bring this issue to the STB. For instance, a carbon dioxide pipeline’s shipper could file a complaint at the STB challenging the rates or practices as discriminatory or unreasonable.10 Or a would-be shipper could file a complaint if a pipeline refuses to provide it with transportation services.11 Carbon dioxide pipelines could also file a petition at the STB, requesting exemption from certain requirements of ICCTA or maybe approval of contract terms.12 Any of these situations would require the STB to reevaluate its position on whether carbon dioxide pipelines fall within its jurisdiction.
While carbon dioxide is not considered an energy commodity today, it has increasing potential as a feedstock for synthetic “efuels,” which are fuels manufactured using captured carbon dioxide and hydrogen to form drop-in replacement fuels for fossil fuels like diesel and jet fuel. Eventual use as fuel input could weigh in favor of FERC claiming jurisdiction over carbon pipelines under its ICA authority, rather than that same authority being exercised by the STB.13 However, even in that scenario, FERC jurisdiction would not be assured, and determining whether carbon dioxide pipelines are FERC jurisdictional would require a FERC decision in a complaint, petition for declaratory order, or rulemaking proceeding.14 Establishing STB (or FERC) jurisdiction over carbon dioxide pipelines would benefit developers of new carbon dioxide pipeline systems by aiding project development. Regulatory certainty would assist in securing financing and state authorizations for the siting and conversion of pipelines.
Finally, while federal regulation of carbon dioxide pipelines under existing regimes would not come with eminent domain powers, establishing jurisdiction might facilitate the use of state eminent domain authority in some cases. For example, Iowa (where multiple major carbon dioxide pipelines are proposed) will not grant eminent domain authority unless a property is needed for a “public use,” including the functioning of a common carrier.15 Notably, opponents of the carbon dioxide pipelines in Iowa are already arguing that they would not qualify as common carriers under Iowa law. Establishing that carbon dioxide pipelines are common carriers under federal law through establishing STB jurisdiction would therefore help project developers overcome this potential obstacle.16