[Congressional Record Volume 155, Number 111 (Wednesday, July 22, 2009)]
[Senate]
[Pages S7888-S7890]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CASEY (for himself and Mr. Enzi):
  S. 1502. 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; to the Committee on Energy and Natural 
Resources.
  Mr. CASEY. Mr. President, I rise today on behalf of myself and my 
colleague Senator Enzi of Wyoming to introduce the Carbon Storage 
Stewardship Trust Fund Act of 2009. This bill will encourage the 
commercial deployment of technology that will allow for the continued 
use of our Nation's vast coal resources to produce economical and 
reliable power while at the same time mitigating the impact of climate 
change.
  The capture and storage of carbon dioxide from power generation 
facilities and large industrial sources is a critical component of both 
U.S. and international policy to reduce global emissions of greenhouse 
gases. The criticality of this technology has been driven home by the 
Pew Center on Global Climate Change which has pointed out that ``carbon 
capture and storage, CCS, is the key enabling technology for a future 
in which we can continue to use our vast coal resources and protect the 
climate.'' And former British Prime Minister Tony Blair stated in 
November, 2008, that ``the vast majority of new power stations in China 
and India will be coal fired; not ``may be coal fired''- will be. So 
developing carbon capture and storage technology is not optional, it is 
literally the essence.''
  The commercial deployment of CCS will require further large-scale 
development and demonstration of the technology. Just as important, 
however, it will also require a well thought out approach to address 
the risk and liability of injecting large volumes of CO2 
into geological formations, such as saline aquifers, depleted oil and 
gas fields, and unminable coal seams, where it will be permanently 
stored.
  The risk of geological CO2 storage, also commonly known as 
carbon sequestration, is considered small. In fact, CO2 has 
been safely injected into oil and gas fields to enhance the recovery of 
these hydrocarbons for decades without incident. While the potential 
for CO2 to leak to the surface and cause human or ecological 
harm in a well designed and operated carbon sequestration project is 
minimal, the financial liability associated with this risk is uncertain 
given the huge disparity between the typical lifetime of a firm 
operating a storage facility and the need to ensure the safe storage of 
CO2 in perpetuity. This uncertainty can cause a chilling 
effect on private sector investment in CCS.
  The purpose of this act is to create a program for managing the 
financial risk, or liability, of the long-term storage of 
CO2 . This program will offer the private sector with a 
framework for how legal and financial responsibilities for commercial 
carbon storage operations will be addressed. Moreover, it will provide 
a strong incentive to industry to manage and reduce risk by deploying 
carbon sequestration in the safest possible manner.
  Specifically, the act will require the owner or operator of a 
commercial CO2 storage facility to self insure or obtain 
private insurance or other types of financial assurance to cover 
liability claims during the CO2 injection phase of the 
project and for an extended period of time after injection has stopped. 
After the operator has received a site closure certificate from the 
appropriate regulatory agency, the act would then convey stewardship 
for the long-term management of the site to the U.S. Department of 
Energy. The State where the storage facility is located may request to 
take on stewardship for the site from the Department of Energy. The act 
will also create a trust fund from fees paid by storage facility 
operators on a per ton of CO2 injected basis that will be 
used to pay for

[[Page S7889]]

claims for damages made after storage facility stewardship is 
transferred to the Federal government.
  In summary, this act will give the private sector the certainty they 
need regarding the longterm stewardship of CO2 storage 
facilities. Just as important, it will strongly encourage the safe and 
responsible operation of these facilities while ensuring the prompt and 
orderly compensation for damages or harm to humans, to the environment, 
and to natural resources, should they occur, from the injection and 
storage of CO2 in geological formations.
  I urge all of my colleagues to join Senator Enzi and me in support of 
this act so that a clear signal is given about our commitment to the 
development, demonstration, and ultimately, the widespread commercial 
deployment of CCS technology as a key component of the Nation's 
strategy to reduce emissions of CO2.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1502

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Carbon Storage Stewardship 
     Trust Fund Act of 2009''.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to promote the commercial deployment of carbon capture 
     and storage as an essential component of a national climate 
     mitigation strategy;
       (2) to require private liability assurance during the 
     active project period of a carbon dioxide storage facility;
       (3) to establish a Federal trust fund consisting of amounts 
     received as fees from operators of carbon dioxide storage 
     facilities;
       (4) to establish a limit on liability for damages caused by 
     injection of carbon dioxide by carbon dioxide storage 
     facilities subject to certificates of closure;
       (5) to establish a program--
       (A) to certify the closure of commercial carbon dioxide 
     storage facilities; and
       (B) 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;
       (6) to provide for the prompt and orderly compensation for 
     damages relating to the storage of carbon dioxide; and
       (7) to protect the environment and public by providing 
     long-term stewardship of geological storage units.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) 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--
       (A) the siting and construction of the facility;
       (B) carbon dioxide injection;
       (C) well capping;
       (D) facility decommissioning; and
       (E) geological storage unit monitoring, measurement, 
     verification, and remediation.
       (2) Administrator.--The term ``Administrator'' means the 
     Administrator of the Environmental Protection Agency.
       (3) 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.
       (4) 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.
       (5) 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.
       (6) Damage.--
       (A) 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.
       (B) 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.
       (7) 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.
       (8) Fund.--The term ``Fund'' means the Carbon Storage Trust 
     Fund established by section 5(d)(1).
       (9) 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.
       (10) 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.
       (11) 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.
       (12) Program.--The term ``Program'' means the Carbon 
     Storage Stewardship and Trust Fund Program established by 
     section 5(a).
       (13) Secretary.--The term ``Secretary'' means the Secretary 
     of Energy.

     SEC. 4. LONG-TERM STEWARDSHIP RESPONSIBILITY.

       (a) 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.
       (b) Transfer to State.--
       (1) 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.
       (2) 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).
       (3) 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.
       (c) 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.
       (d) 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.

     SEC. 5. CARBON STORAGE STEWARDSHIP AND TRUST FUND PROGRAM.

       (a) In General.--There is established in the Department of 
     Energy the Carbon Storage Stewardship and Trust Fund Program.
       (b) 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.
       (c) Fees.--
       (1) 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.
       (2) Amount.--
       (A) 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--
       (i) the minimum and maximum balance for the Fund; and
       (ii) the amount of the fee required under paragraph (1).
       (B) Criteria.--The criteria referred to in subparagraph (A) 
     are--
       (i) the estimated quantity of carbon dioxide to be injected 
     annually into geological storage units by all operating 
     commercial carbon dioxide storage facilities;
       (ii) the likelihood or risk of an incident resulting in 
     liability;
       (iii) the likely dollar value of any damages relating to an 
     incident;
       (iv) other factors relating to the risk of the carbon 
     dioxide storage facility and associated geological storage 
     unit; and
       (v) impact on commercial and economic viability of carbon 
     dioxide storage facilities.
       (C) 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

[[Page S7890]]

     operation of the best carbon dioxide storage facilities.
       (D) 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--
       (i) the quantity of carbon dioxide that is permanently 
     stored;
       (ii) whether or not the enhanced hydrocarbon recovery 
     operation is also being operated as a carbon dioxide storage 
     facility; and
       (iii) any other factors that the Secretary determines to be 
     appropriate.
       (E) Review and adjustment.--The Secretary shall, on at 
     least an annual basis, review the Fund balance--
       (i) to ensure that there are sufficient amounts in the Fund 
     to make the payments required under subsection (d)(3)(A); and
       (ii) to determine whether or not to increase or decrease 
     the amount, or discontinue collection, of the fee, after 
     taking into consideration--

       (I) the annual quantity of carbon dioxide injected by 
     carbon dioxide storage facilities;
       (II) the number and estimated value of claims against the 
     Fund; and
       (III) any other relevant factors, as determined by the 
     Secretary.

       (3) Deposit.--Notwithstanding section 3302 of section 31, 
     United States Code, the fees collected under paragraph (1) 
     shall be deposited in the Fund.
       (d) Carbon Storage Trust Fund.--
       (1) 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).
       (2) Use of fund.--
       (A) In general.--Amounts in the Fund shall be made 
     available, without further appropriation or fiscal year 
     limitation--
       (i) 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;
       (ii) to the Secretary for long-term stewardship after the 
     date of issuance of a certificate for closure; and
       (iii) 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.
       (B) Limitation.--Amounts in the Fund shall only be used for 
     the purposes described in clause (i), (ii), or (iii) of 
     subparagraph (A).
       (C) Limitation on payments.--
       (i) 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--

       (I) actuarial modeling of probable damage; and
       (II) net present value analysis.

       (ii) Congressional action.--If estimated or actual 
     aggregate damages exceed the amount established under clause 
     (i)--

       (I) the Secretary shall notify Congress; and
       (II) 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.

       (D) 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.
       (E) 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--
       (i) filed in the United States Court of Federal Claims; and
       (ii) adjudicated in accordance with procedures established 
     by the United States Court of Federal Claims.
       (3) Initial funding.--
       (A) 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).
       (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.

     SEC. 6. LIMITATION ON CIVIL CLAIMS.

       (a) 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--
       (1) the operator or owner of the carbon dioxide storage 
     facility subject to the certificate of closure;
       (2) the generator of the carbon dioxide stored in the 
     applicable geological storage unit; or
       (3) 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.
       (b) 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.

  Mr. ENZI. Mr. President, we need clean energy. We need cheap energy. 
We need abundant energy from right here at home. Why not concentrate 
some of our efforts on hitting a triple play?
  Coal is our Nation's most abundant energy source. It provides more 
than 50 percent of our Nation's electricity today and makes electricity 
more affordable for millions of Americans. It provides for thousands of 
well paying American jobs and is an essential part of my home State's 
economy.
  Unfortunately, in the discussions surrounding climate change, some 
have suggested that we should end our Nation's use of coal. Because of 
the abundant, cost-effective nature of this resource, that doesn't make 
sense. Instead of talking about eliminating one of our country's most 
important energy sources, we should be talking about how we can make 
coal cleaner.
  An essential element of the effort to make coal cleaner will be the 
development of carbon capture and storage, CCS, technology. There are 
many pieces to that effort, and today, Senator Casey and I have 
introduced The Carbon Storage Stewardship Trust Fund Act of 2009 to 
address one issue with CCS liability for the stored CO2.
  Our legislation sets up a framework that answers the question of who 
is responsible for the CO2 once it is placed underground. 
The Carbon Storage Stewardship Trust Fund Act of 2009 requires 
companies injecting CO2 into the ground to obtain private 
liability insurance for a period of time. After the CO2 is 
injected and the injection site is certified as closed by the Federal 
Government, liability for the CO2 is transferred to the 
Federal Government.
  To cover any claims that may arise from damages caused by the 
injected CO2, the bill sets up a Federal trust fund that is 
paid for through a small fee charged for each ton of CO2 
that is injected. Additionally, it provides a method for compensation 
for those damages.
  While this legislation is far from everything we need to make 
commercial CCS a reality, it is an important step and answers an 
important question about long-term liability of CO2. I 
appreciate Senator Casey's leadership on this issue and look forward to 
working with him and other Members of the Senate to move this 
legislation forward.
                                 ______