Permitting and siting regimes for carbon dioxide pipelines

January 2026  |  SPECIAL REPORT: ENERGY & UTILITIES

Financier Worldwide Magazine

January 2026 Issue

Carbon capture utilisation and sequestration – the process of capturing carbon dioxide (CO2) emissions from point sources – has emerged as a key tool for managing and mitigating anthropogenic CO2 emissions.

Use of this technology is projected to increase substantially in the coming years as companies look to decrease their carbon footprints and capitalise on various economic incentives, such as the growing demand for carbon-low products, tax credits and opportunities on carbon credit markets.

To accommodate this increased demand, CO2 pipeline infrastructure must be built-out to provide more extensive and interconnected infrastructure. That buildout will require efficient siting and construction mechanisms. As of now, however, there is no comprehensive federal regulatory regime for the siting and construction of CO2 pipelines.

The absence of such a regime has caused some to question whether CO2 pipelines can be built at the scale required to meet the projected demand. This article first surveys the current regulatory landscape and then discusses potential options for increased federal regulation.

Current regulatory frameworks

The Federal Energy Regulatory Commission (FERC), the Surface Transportation Board (STB) and the Pipeline and Hazardous Materials Safety Administration (PHMSA) are the primary federal regulators of pipelines.

None of these agencies, however, regulate the siting and construction of CO2 pipelines. That remains subject to state regulation and has resulted in a patchwork of jurisdictional frameworks.

FERC and Interstate Commerce Commission (ICC) disclaimed jurisdiction over CO2 pipelines. The lack of a comprehensive federal role in regulating CO2 pipelines within the current statutory frameworks stems, in large part, from both FERC and the ICC disclaiming jurisdiction over these projects.

FERC regulates the interstate transportation and sale of natural gas pursuant to the Natural Gas Act (NGA). Under the NGA, FERC may grant eligible entities certificates of public convenience and necessity to engage in an interstate project that involves the transportation or sale of natural gas.

Importantly, certificate holders may use the power of eminent domain to obtain necessary rights of way for their project. The power of eminent domain can be critical for project development. Although eminent domain is often used as a tool of last resort, it enables developers to obtain rights of way in situations where they are unable to come to terms on an agreement with a landowner.

FERC explicitly disclaimed jurisdiction over interstate CO2 pipelines in 1979. In that case, the company sought a declaratory order that the pipeline construction and subsequent interstate transportation of predominantly pure CO2 was not within FERC’s jurisdiction because it is not “natural gas”, as defined in the NGA. Relying on legislative history and the purpose of the NGA, FERC determined that Congress did not intend for the NGA to apply to the transportation of predominantly pure CO2.

STB regulates rates and access for interstate pipelines transporting a commodity other than water, gas, or oil. Like FERC, the STB’s predecessor – the ICC – explicitly disclaimed jurisdiction over CO2 pipelines in 1981. In an ICC proceeding involving the same pipeline project, the ICC determined that it lacked jurisdiction over CO2 pipelines because the plain meaning and legislative history of the pertinent statute exempted all gas types classified by origin or source, thus excluding CO2 when transported by pipeline.

Since succeeding the ICC, STB has not opined on whether it has jurisdiction over CO2 pipelines. Even if STB were to exert jurisdiction over CO2 pipelines, however, its oversight would be more limited than FERC’s under the NGA because STB’s authority does not encompass siting, certification or eminent domain authority.

PHMSA exercises limited oversight over CO2 pipelines. CO2 pipelines are subject to limited oversight by the PHMSA for certain safety requirements. Under the Hazardous Liquid Pipeline Act of 1979, the PHMSA has authority to regulate interstate CO2 pipelines to ensure adequate safety procedures are in place to mitigate pipeline safety concerns.

PHMSA is authorised to enforce minimum safety standards for pipeline transportation and facilities and, through the Office of Pipeline Safety, engage in regulatory oversight for infrastructure management and spill response plans.

In January 2025, the PHMSA issued a notice of proposed rulemaking to enhance federal pipeline safety standards and to establish new standards for transporting gaseous CO2 through pipelines. The NPRM was subsequently withdrawn from publication in the Federal Register after the Trump administration took office.

On 4 June 2025, PHMSA published an advance notice of proposed rulemaking (ANPRM) soliciting feedback on its current pipeline safety requirements to eliminate undue burdens associated with project development and improve government efficiency. The ANPRM’s comment period closed on 4 August 2025.

State regulation of CO2 pipelines varies by jurisdiction. The lack of a comprehensive federal regulatory framework for CO2 pipelines has resulted in a patchwork of regulatory regimes at the state level. Currently, only a few states have legal frameworks specifically designed to regulate the siting and construction of CO2 pipelines.

Most states govern CO2 pipelines through statutes and regulations that are broadly applicable to pipelines for other substances. The inconsistency between states results in different procedural requirements and obligations for CO2 pipeline developers.

Many states grant CO2 pipeline developers the power of eminent domain, however, there are still considerable differences that can impact project development.

For instance, some states allow CO2 pipelines to initiate condemnation proceedings on their own, while other states require developers to receive certain regulatory approval first. Additionally, some states condition eminent domain authority on pipelines’ assuming common carrier or public utility status, which obligates pipelines to provide transportation for any qualified shipper on a non-discriminatory basis.

There can also be differences as to what constitutes a ‘public use’ for the purpose of utilising eminent domain authority (for example, whether transporting or sequestering CO2 is a public use under state law).

In Louisiana, for example, only developers that receive ‘certificates of public convenience and necessity’ from the Louisiana Conservation Commission are granted condemnation authority and there is no requirement for pipelines to assume common carrier or public utility status.

Contrastingly, in New York, developers do not need a certificate of public convenience or other regulatory approval before taking land. The condemnation right in New York, however, is only available for “common carrier[s]” whose pipelines are “subject to public use”.

In March 2025, South Dakota prohibited the exercise of eminent domain by CO2 pipelines altogether in House Bill 1052. Some local governments have also enforced CO2 pipeline restrictions. This inconsistency among state and local regulatory frameworks can frustrate CO2 pipeline project development.

Challenges with current framework and potential options for increased federal regulation

While the current decentralised approach to CO2 pipeline regulation has certain benefits (for example, project proponents not having to comply with federal common carrier, rate review or National Environmental Policy Act requirements and respect for individual states’ autonomy over pipeline siting and use determinations), the absence of a centralised federal regulatory regime may make it difficult to build out the CO2 pipeline network at the scale required to accommodate projected demand.

For example, a pipeline transporting CO2 from a source that is several states removed from the location in which it will be stored would be subject to different regulatory regimes in each state. And to the extent that a given state’s law does not confer eminent domain authority, the pipeline could be stymied by a single recalcitrant landowner that is unwilling to negotiate an easement.

Potential for regulation by STB. Adopting a federal regulatory regime requires considering what the regime would entail and which agencies would administer it. Some industry experts and policymakers, including the Government Accountability Office in a 1998 Report, have taken the position that STB already has authority to regulate CO2 pipelines. STB has not, however, asserted this authority and, even if it were to do so, the authority would extend only to economic issues (i.e., rates), such that the states would retain jurisdiction over pipeline siting.

Potential for regulation by FERC. Other options include regulation by FERC. If there is a need for a federal role, looking to FERC has potential appeal due to its deep experience with pipeline siting and rates. One option with FERC would be to adopt the framework for oil pipelines in the Interstate Commerce Act.

Under that approach, states would maintain authority for pipeline siting and FERC would regulate transportation rates and oversee common carrier requirements. However, if one of the main goals of a federal regime is to facilitate the buildout of a CO2 pipeline network at scale greater than is possible when states oversee siting, an approach that does not provide for the grant of federal siting and eminent domain may prove insufficient.

Alternatively, Congress could vest FERC with authority for CO2 pipelines similar to that which it has under the NGA. Amending the NGA to include CO2 pipelines would allow FERC to oversee the siting and, importantly, would confer federal eminent domain authority under the NGA to holders of a certificate of public convenience and necessity.

This approach, however, contemplates a substantially larger federal role and may not be desirable for project proponents that would prefer to avoid far-reaching federal regulation or states and local communities that want to maintain control over the siting process.

The House of Representatives recently put forth a variation of this approach. In May 2025, the House issued H.R. 1, an initial version of the One Big Beautiful Bill Act (OBBBA) that included a provision creating an optional federal siting regime for carbon dioxide, hydrogen and petroleum pipeline permitting. Under this approach, the NGA would be amended to allow any person operating a covered pipeline to voluntarily submit to federal jurisdiction under the NGA by filing an application for a certificate of public convenience and necessity and a $10m fee with FERC.

Although submitting to FERC’s jurisdiction would trigger, among other things, federal environmental review of the project and other requirements under the NGA, it would allow an applicant to rely on the NGA’s conferral of eminent domain authority and pre-empt state and local siting laws.

Although this provision was not carried into the final OBBBA, it indicates that Congress may be interested in considering a more robust federal role.

Conclusion

The absence of a federal role in regulating the siting and construction of CO2 pipelines necessarily results in a patchwork of state regimes to fill the void, which can result in increased siting complexity.

Whether a centralised federal role will ultimately prove necessary remains to be seen, but the House’s recent proposed legislation suggests that there may be interest in increased federal involvement in the future.

 

Deidre Duncan is a partner, Nathan R. Menard is an associate and Sadie E. Mapstone is a law clerk at Hunton Andrews Kurth LLP. Ms Duncan can be contacted on +1 (202) 955 1919 or by email: dduncan@hunton.com. Mr Menard can be contacted on +1 (202) 419 2071 or by email: nmenard@hunton.com. Ms Mapstone can be contacted on +1 (202) 419 2024 or by email: smapstone@hunton.com.

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BY

Deidre Duncan, Nathan R. Menard and Sadie E. Mapstone

Hunton Andrews Kurth LLP

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