State-Level Permitting Primacy May Boost Carbon Capture and Storage
Texas and Louisiana are stepping up efforts to assume regulatory authority for an emerging wave of carbon capture and storage projects.
Carbon sequestration may be on the cusp of a much-anticipated breakthrough. The process of sequestering carbon from power plants or other industrial sources into deep geologic formations for long-term storage is the last step in carbon capture and storage (CCS). Although it is widely recognized as a critical tool to mitigate against climate change, few commercial CCS projects have materialized in the United States. In the decade plus since the federal Interagency Task Force on Carbon Capture and Storage observed that “there are no insurmountable technological, legal, institutional, regulatory, or other barriers that prevent [carbon capture and storage] from playing a role in reducing GHG [greenhouse gas] emissions,” the US Environmental Protection Agency (EPA) has permitted only two commercial projects specifically for the purpose of carbon sequestration.
Carbon sequestration may be about to turn a corner, as recent regulatory developments in key states suggest both industry and political support for new sequestration projects. Louisiana and Texas, two states with great potential for geologic sequestration of CO2, have recently taken steps to assume primary permitting and enforcement responsibility for carbon sequestration projects. Coupled with political support for CCS at the state and federal level as well as the recently increased 45Q tax credit, the outlook for CCS is brighter than it has been in a decade.
Underground Injection Control Program
EPA protects underground sources of drinking water by regulating the injection of fluids underground for storage or disposal, including the injection of supercritical CO2 for the purpose of carbon sequestration. The Safe Drinking Water Act (SDWA) and the Underground Injection Control (UIC) program provide the primary regulatory framework.
From early the 1980s until 2010, EPA regulated five classes of wells according to the type of fluid injected, the depth of injection, and the potential to endanger underground sources of drinking water. Historically, most states have sought and been granted primacy over one or more classes of wells. For example, most states have primacy over Class II wells, in which fluids are injected for natural gas and oil production, hydrocarbons storage, and enhanced oil recovery (EOR), a process that commonly consists of injecting CO2 into oil or gas reservoirs to increase production and that results in the incidental sequestration of CO2. States that maintain primacy over such wells can issue permits more quickly. For example, it takes the Texas Commission on Environmental Quality approximately 60 days to issue a Class V well permit once a complete application has been submitted.
In 2010, the EPA created a sixth well class (Class VI) specifically to regulate the injection of CO2 into deep subsurface rock formations. At the time, very few projects were sequestering CO2 solely to reduce greenhouse gas emissions, but EPA anticipated that the technology would be “key to achieving domestic emissions reductions.”
The Class VI rule was an important regulatory step to enable commercial geological carbon sequestration. By the same rulemaking, EPA established minimum technical criteria for permitting, site characterization, area of review and corrective action, financial responsibility, well construction, operation, mechanical integrity testing, monitoring, well-plugging, post-injection site care, and site closure requirements.
Under the SDWA, the EPA can delegate its authority to implement and enforce the UIC program to states or tribes upon application to the agency. If the EPA approves a state’s primacy application, the state assumes primary enforcement authority over a class or classes of wells, also known as primacy. In order to assume primacy over Class VI wells, a state’s Class VI regulations must be at least as stringent as federal regulations. States need not seek primacy, however, and until a state applies to the EPA, the EPA directly implements the UIC program through its regional offices.
In the 11 years since the creation of the Class VI well classification, states have taken a tepid approach to Class VI wells because the demand for Class VI permits had not merited states’ efforts to seek primacy from EPA. The primacy process can take years, even if those states have primacy over Class II wells that inject CO2 underground as part of EOR, which is why only a few states have sought primacy over Class VI wells. For example, North Dakota applied for primacy in 2013 and was granted primacy in 2018. Wyoming submitted its complete primacy application in 2019, after some years of discussions with EPA Region 8, and was granted primacy the following year. Currently, only North Dakota and Wyoming have primacy over Class VI wells. Neither has approved a Class VI permit yet, although a large sequestration project is currently planned for North Dakota. Currently, the Oil and Gas Division of the North Dakota Department of Mineral Resources estimates that a permit for a Class VI well could issue 7 months after receipt of a complete application.
Because only North Dakota and Wyoming have successfully applied for and obtained primacy, EPA directly implements the Class VI program in all other states. To date, only two Class VI permits have been granted, both in Illinois under the authority of EPA Region 5. Both permits were under review for roughly 6 years before they were ultimately granted. Going forward, a number of EPA regional offices estimate permitting timelines of between 18 and 24 months, and possibly longer. This raises an issue that highlights that, while there is a clear policy directive to support CCS to combat climate change, there remains a lack of permitting expertise and resources across EPA’s regional offices to efficiently process permits for the growing interest in CCS projects.