Midwest CO2 pipeline rush creates regulatory chaos

By Mike Soraghan | 03/03/2023 07:09 AM EST

Proposed carbon dioxide pipelines are sparking debate about whether federal rules are adequate to cover thousands of miles of transported greenhouse gas.

A cornfield next to an ethanol plant in Illinois.

A cornfield sits next to an ethanol plant in Illinois. Getty Images

A complicated question is looming in the Midwest over plans to build thousands of miles of carbon dioxide pipelines: Who would regulate them?

The answer could affect the Biden administration’s hopes for a massive buildup of carbon sequestration projects, which would in many cases be supplied by those pipelines. Safety advocates say there are loopholes in federal safety regulations that could leave the lines largely unregulated.

Pipelines being converted from shipping natural gas to carrying CO2 aren’t covered by current rules, for example. Existing standards to move carbon dioxide for enhanced oil recovery also may not be adequate for new pipeline projects, critics say.


“There’s a lot of ambiguity,” said Bill Caram, executive director of the Pipeline Safety Trust, an advocacy group. “The way the regulations are written leaves it open.”

Pipeline companies scoff, saying the Department of Transportation, through its Pipeline and Hazardous Materials Safety Administration (PHMSA), has clear jurisdiction over the lines planned in the Midwest.

“There is a misconception that somehow we would not be subject to new regulations, and that is just not the case,” said Andy Bates, a spokesperson for Navigator CO2 Ventures, which is seeking approval from regulators in several states to build the Heartland Greenway, a 1,300-mile pipeline network that would take CO2 captured from biofuel makers across the Midwest to a sequestration site in central Illinois.

But uncertainty about PHMSA’s jurisdiction is adding to backlash against Navigator and two other Midwest pipeline projects. Opponents have been pushing for a moratorium on construction of the projects until new federal regulations for carbon dioxide pipelines are completed. PHMSA has begun an overhaul of its existing rules, but the agency isn’t projecting a first draft before October 2024. And PHMSA regulations often take years.

The jurisdiction issue is creating confusion for some state regulators. In January, the Illinois Commerce Commission, which is weighing approval of Navigator’s project, sent a formal request asking PHMSA whether the federal agency would regulate the pipeline once built.

Commission spokesperson Victoria Crawford said it also asked “whether and to what extent PHMSA inspects such pipelines.”

A PHMSA spokesperson said the agency is reviewing Illinois’ request, adding that it will “need to investigate the characteristics of the pipeline facility.”

Other state bodies, however, have taken a definitive stance. Members of the Iowa Utilities Board last month said their agency is preempted by federal law and regulation from getting involved in safety matters “clearly under the jurisdiction of PHMSA” (Energywire, Dec. 15, 2022).

The board was ruling on whether it would require Summit Carbon Solutions LLC , the developer of another pipeline, the Midwest Carbon Express, to file safety assessments of its project. Summit, Navigator and Wolf Carbon Solutions, the developer of a third project, objected to being required to submit safety assessments, saying the federal government has authority over safety. The Iowa Office of Consumer Advocate, the Iowa Farm Bureau Federation and the Sierra Club argued the state should require the companies to submit the safety information

“There simply can’t be an end run around federal preemption by claiming to use safety information for a non-safety-related purpose,” Samantha Norris, an attorney for Navigator, argued before the utilities board.

The board ruled last month that, for now, Summit isn’t required to submit safety assessments (Energywire, Feb. 15).

Eminent domain, Congress and the ‘supercritical’ phase

The three companies have proposed thousands of miles of pipelines to deliver carbon dioxide captured from ethanol plants and other facilities to permanent underground storage sites. Such projects got a boost from the 2021 infrastructure law, which included billions in funding for carbon capture demonstration and pilot projects.

The companies have also filed at least four federal lawsuits against local governments in Iowa and South Dakota challenging zoning and permitting regulations adopted in response to the projects.

The jurisdictional issue stems in part from the unique characteristics of how carbon dioxide behaves when transported.

PHMSA’s existing regulations cover pipelines carrying carbon dioxide in a “supercritical” phase. That’s a liquid-like phase that requires high pressures and certain temperatures. The developers of the Midwest pipelines say the carbon dioxide in their lines will be in that state at certain points of its journey, such as the beginning and end.

In between, as temperatures and pressures change, it wouldn’t necessarily stay in that supercritical state. For that to happen, the CO2 would need to stay above 88 degrees Fahrenheit. But it doesn’t.

“It will revert down to ground temperature a certain distance away from the pressure source,” Steve Lee, executive vice president of engineering and construction for Navigator CO2, said at a December presentation at a PHMSA public meeting.

So, for much of the length of the pipeline, the CO2 would not be in a supercritical state. Still, Lee said, Navigator’s pipeline would be covered by PHMSA’s rules.

It hasn’t been much of a question up to now. There are about 5,000 miles of carbon dioxide pipelines in the country. Most ship carbon to be injected underground to force crude oil to the surface through enhanced oil recovery.

Whether the carbon dioxide is supercritical at all times during transit is a “distinction without a difference,” said John Stoody, vice president of government and public relations at the Liquid Energy Pipeline Association, a trade group that advocates for carbon dioxide and other types of pipelines. PHMSA’s jurisdiction, he said, is uncontested.

“Both the company and PHMSA will consider this line subject to PHMSA regulation,” Stoody said in an email exchange.

John Satterfield, director of regulatory affairs for Summit Carbon Solutions, echoed that sentiment in an emailed response to questions. PHMSA’s regulations, he said, “apply to the entirety of our proposed CO2 pipeline system.”

But the business of transporting carbon dioxide in long steel tubes is about to change dramatically. The pipes won’t be different, but the network could expand more than twelvefold if midcentury climate targets are reached. That means new companies, new issues and new arguments about the rules. Experts have said as many as 65,000 miles of carbon pipelines will be needed for the country to reach net-zero emissions by 2050 (Greenwire, May 30, 2022).

Just because companies haven’t contested PHMSA’s authority in the past and aren’t contesting it now, said Caram of the Pipeline Safety Trust, doesn’t mean new pipeline owners will accept it in the future.

Caram said he began to worry when he heard an engineer explain that the carbon dioxide doesn’t stay in a supercritical state for the whole trip. He fears a company could one day challenge a PHMSA fine by arguing the agency lacks regulatory authority because the carbon dioxide in question was not in supercritical state.

“I heard that and thought, a good lawyer could probably talk their way out of that,” he said. “Then I thought some more and realized even a not-so-good lawyer could do it.”

In addition, he said, many of the new pipelines will be in more densely populated areas than the western Plains where many of the EOR pipelines are located.

The companies say their pipelines — and the sequestration sites they lead to — are crucial to maintaining a healthy ethanol industry as demand rises for cleaner fuels. The Biden administration is promoting carbon capture projects as an important part of its plans for cutting greenhouse gas emissions.

But the projects face resistance from landowners and environmentalists who question the value of carbon capture and sequestration in fighting climate change, and object to the prospect that some of the companies might seek to condemn land under eminent domain.

A Wolf Carbon spokesperson said company officials “do not intend” to seek eminent domain power.

Pipeline critics also point to the 2020 rupture of a carbon dioxide pipeline used for enhanced oil recovery in Satartia, Miss., that sent 45 people to the hospital (Energywire, May 27, 2022).

‘The Wild West’

Farther west, the jurisdictional conundrum is more clear in at least one case. Tallgrass Energy LP is converting its Trailblazer natural gas transmission pipeline in Nebraska and Wyoming to carry carbon dioxide for storage at a site near Cheyenne, Wyo. But because the pipes that carry natural gas can’t handle the pressures needed for supercritical CO2, it won’t be in a supercritical state. So PHMSA’s regulations currently won’t cover it.

What happens then is an open question.

Trailblazer spokesperson Steven Davidson said the “vast majority” of the pipeline’s permits still apply, including state permits for air quality and environmental protection. But Trailblazer is an interstate pipeline currently subject to federal jurisdiction, and other pipeline companies are arguing in Iowa that state governments have no place in safety regulation. To Caram, it sounds like “the Wild West.”

“Unregulated pipelines carrying a dangerous asphyxiant is a clear example of policy getting way out ahead of safety regulations,” Caram said.

Davidson says that criticism is “not factual” and could “inadvertently mislead” people about pipeline development.

“The pipeline has been operated safely in natural gas service for nearly 40 years,” Davidson said. “It is important to definitively restate our expectation that as PHMSA determines any expanded future regulations for CO2 pipelines, our pipeline will not be exempt from those regulations.”

But the first draft of PHMSA’s proposal isn’t expected until 2024, around the time the converted Trailblazer pipeline is projected to begin operations.

The industry supports regulation of gaseous carbon dioxide pipelines, Stoody said. And such a provision is likely to be included in PHMSA’s overhaul of the rules. Still, a final rule could be years down the road.

Industry leaders are expected to try to get Congress to speed up the process as it considers reauthorization of pipeline laws this year, Stoody said.

Clarification: The story has been updated to clarify the scope of the Iowa Utility Board’s decision on its jurisdiction.