S. 1502 would establish a program managed by the Department of Energy to create a trust fund to ensure prompt compensation for any damages from the geologic storage of carbon dioxide. Importantly, the bill also identifies the transfer of responsibility for stewardship of a geologic site to the Federal or State government following the receipt of a site closure certificate. Site closure certification and legislative clarity in the responsibility for post-closure stewardship activities were among the recommendations proposed in Guidelines for Carbon Dioxide Capture, Transport, and Storage.
Overview of Bill
- Establishes a Federal trust fund for carbon storage stewardship. The bill establishes a revolving fund in the Treasury consisting of the deposits collected by the DOE from operators of carbon dioxide storage sites. The fund may be used for civil claims that arise during the post-closure stewardship phase, costs associated with any long-term stewardship MMV or remediation, and administrative costs.
- Assures the collection of funds on a per ton of carbon dioxide basis to cover post-closure stewardship costs. The bill requires the DOE to collect a risk-based fee for each ton of carbon dioxide injected. The fee will be determined by the DOE based on the annual national quantity of carbon dioxide injected, the likelihood of risk, an estimated dollar value for damages as well as the impact on commercial viability of CCS and other applicable factors. The fee may be adjusted to match the site-specific risks associated with storage to provide an incentive for selecting low-risk sites. The fee may apply to hydrocarbon recovery projects and is reviewed and adjusted on an annual basis.
- Establishes a mechanism for certification of site closure. Establishes a program for site closure certification, whereby the Federal or state regulatory authority issues a certificate of closure that the carbon dioxide storage facility has completed injection, closed all wells, and completed requiring monitoring to ensure that the stored carbon dioxide does not pose harm or present a risk to human health, safety, and the environment, including drinking water supplies.
- Transfers the responsibility of long-term stewardship of closed sites to the government. After the site receives a closure certificate responsibility for long-term stewardship is transferred to the Federal government (under the oversight of the Department of Energy), unless a State requests management responsibilities.
- Establishes standards for measurement, monitoring and verification (MMV) and remediation during post-closure stewardship. The bill requires the DOE, in coordination with the EPA, to establish standards for post closure stewardship MMV and remediation. Responsibility for such activities would be led by DOE in coordination with EPA.
- Requires private liability assurance during the active project period. The bill requires operators to maintain adequate assurance of liability prior to receipt of the site closure certificate. Such assurance may include: third-party insurance, self insurance, performance ponds, trust funds, letters of credit, and surety bonds.
- Establishes a limit on liability for damages during post-closure Stewardship. The bill requires DOE to set a limit on claims for damages during post closure stewardship, based on the volume of the fund which is determined via actuarial modeling of probable damages and net present value analysis. After receipt of the certificate of closure, the operator is no longer liable for any damages, except for claims that result from gross negligence or intentional misconduct.
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