by John W. Andrews

On June 8, 2022, the U.S. Department of the Interior’s Bureau of Land Management (BLM) issued formal guidance[1] describing BLM’s policy for authorizing use of federal public lands for site characterization, injection, and geologic 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 Land Policy and Management Act of 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 clarifies that CCS project use of subsurface pore space for geologic sequestration of CO2 will be authorized through FLPMA Title V rights-of-way (ROWs).  IM 2022-041 also clarifies that use of public lands for CCS will require fair market value (FMV) compensation for use of BLM-managed surface lands and subsurface pore space, in an amount to be determined by BLM in consultation with the departmental Appraisal and Valuation Services Office (AVSO).  Of note is that, in addition to charging for occupancy for injection facilities and similar surface uses, BLM contemplates charging injection fees for CO2 and for occupancy of federal pore space, on a per unit basis.

In a prior blog post,[2] we pointed out that one profound uncertainty for CCS projects located in the western public lands states is whether the United States retains ownership of non-mineral geologic pore space underlying the millions of acres of split-estate lands patented by the federal government under the Stock-Raising Homestead Act (SRHA).  Given the fractured pattern of land ownership in the West, and the large subsurface footprint necessary for containing injected CO2 plumes in a full-scale CCS project, this issue is likely to arise for many proposed CCS projects.  

SHRA land patents contained a reservation of the mineral estate to the United States. The 1983 decision of the U.S Supreme Court in Watt v. Western Nuclear Corp. interpreted this mineral reservation broadly, to include every interest in the land not expressly conveyed to the patentee.  The only court to have expressly applied Watt v. Western Nuclear to the issue of non-mineral pore space ownership concluded that pore space was reserved to the government (in that case, the State of Alaska), and not conveyed to the surface owner.[3]  This decision was contrary to the general “American rule” that geologic pore space ownership resides with the surface owner.

IM 2022-041 recognizes but does not resolve the uncertainty:

In cases of split estate where the federal government owns only the surface or the mineral estate the question of pore-space ownership may arise.  In those situations, pore-space ownership should be determined early in the process.  Typically, pore space is owned by the surface owner, although it may be separately conveyed.  In determining pore-space ownership, title documents should be reviewed.  Questions about pore-space ownership should be resolved in coordination with the Solicitor’s Office. (emphasis added).

The recognition in IM 2022-041 that, typically, pore space is owned by the surface owner, seems to indicate some acceptance by BLM that it does not own or control non-mineral geologic pore space under SRHA lands, but it does not say so directly.  In the western United States, several states – Wyoming, North Dakota, and most recently Utah – have legislatively adopted the “American rule” and vested pore space in the surface owner.  While 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 opinion or rulemaking from the Department of the Interior, ownership uncertainty will remain, and presumably will need to be resolved directly with the Solicitor’s Office.

The BLM guidance in IM 2022-041 does begin to provide clarity for proposed CCS activities on federal public lands.  It provides a permitting framework through the established BLM Title V ROW program, and indicates how required compensation may be addressed in the future.  At the same time, the guidance leaves unanswered many other issues.  These include, but are not limited to: the pore ownership questions described above; whether BLM could enforce subsurface trespass claims if it did claim ownership of split-estate pore space; the scope of National Environmental Policy Act (NEPA) review of BLM pore space ROWs; whether BLM subsurface pore space ROW grants are constrained by surface ROW exclusions contained in BLM land management plans; and the interaction of BLM permitting with USEPA and state Underground Injection Control (UIC) regulatory programs.  Many questions remain for CCS project developers where federal public lands or mineral estate are present in the project area. 

[1] BLM Instruction Memorandum (IM) 2022-041, National Policy for the Right-of-Way Authorizations Necessary for Site Characterization, Capture, Transportation, Injection, and Permanent Geologic Sequestration of Carbon Dioxide in Connection with Carbon Sequestration Projects (June 8, 2022).

[2] Who Owns Pore Space for Geologic Carbon Sequestration? Renewed Focus on Carbon Capture and Storage Likely to Bring Ownership Uncertainties on Western Split-Estate Lands Back into the Picture, Snell & Wilmer Environmental, Natural Resources, Oil & Gas Law Blog (January 19, 2021).

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