The Nickel Report

On May 3, 2022, the Railroad Commission of Texas (Railroad Commission) voted to approve three actions that represent a major step forward in facilitating the deployment of carbon capture, use and sequestration activities (CCUS) in Texas. Specifically, the Railroad Commission approved:

• Publication of proposed amendments to its rules implementing the state program for geologic storage of anthropogenic CO₂ and incorporating federal requirements;
• Submittal to the US Environmental Protection Agency (EPA) of a pre-application to gain regulatory authority over Class VI underground injection control (UIC) wells that are used for injection of CO₂ into deep subsurface formations; and
• A request that the Governor formally ask EPA for Class VI UIC well program approval. [i]  

While the primacy application process will take some time, [ii] EPA’s approval of primacy for Texas could provide an opportunity to accelerate the Class VI well permitting process in Texas. EPA handles Class VI permitting today in all but two states. CCUS proponents are concerned that as CCUS grows, States will need to be authorized to issue the permits or delays will develop at the EPA.

Background

The federal UIC program was established under the provisions of the Safe Drinking Water Act.  Its requirements are designed to prevent endangerment of underground sources of drinking water (“USDW”). [iii] States may apply to EPA for primacy over all or part of the federal UIC program and, once approved, become responsible for implementing the program within their borders.  Injection wells regulated under the federal UIC program are classified into six classes generally defined by type of activity, type of fluids injected, and depth of injection relative to USDWs.

Class VI, the most recently created regulated UIC well class, was established by EPA in 2010 for wells used to inject CO₂ into deep subsurface geologic formations for long-term underground storage. [iv] As a part of its 2010 rulemaking for Class VI wells, EPA adopted minimum technical criteria addressing permitting, geologic 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.  In 2010, in response to a legislative directive and growing interest in carbon capture and storage technology as a means to reduce greenhouse gas emissions, the Railroad Commission adopted state rules for geologic storage and injection of anthropogenic CO_2. [v] Texas has primacy for UIC Class I-V wells, but does not yet have primacy for UIC Class VI wells. [vi] 

In 2021, in response to strong support for the development of CCUS projects, the Texas legislature passed House Bill (HB) 1284 giving the Railroad Commission, the state agency regulating the oil and gas industry, sole jurisdiction over carbon sequestration wells at the state level.  This eliminated shared jurisdiction over geologic storage of CO₂ with the Texas Commission on Environmental Quality (TCEQ), simplified the permitting framework, [vii] and directed the Railroad Commission to seek primacy for Class VI UIC wells. The actions taken by the Railroad Commission this month implement that legislative directive.

Proposed Rules

The Railroad Commission’s proposed rules to implement HB 1284 include those relating to applicability of the rules, application requirements, notice and hearing requirements, fees, financial responsibility, permit standards, and reporting and record-keeping requirements. The Railroad Commission expressly seeks comment on the provisions of the rules relating to post-injection site care and site closure.  Specifically, the preamble to the proposed rules provides that, “[t]o meet the minimum federal requirements, the Commission proposes to amend § 5.203(m) to include the data and information required to make a demonstration that an alternative timeframe [to the 50-year federal default monitoring period] is appropriate and ensures non-endangerment of USDWs.  The proposed amendment would require additional effort for each Class VI permit application, but would provide a more appropriate, site-specific post injection site care timeframe…. The Commission requests comments on whether the Commission should finalize the rules as proposed or adopt the federal 50-year default timeframe with an option for an alternative timeframe.  In addition, the Commission requests comment on whether the Commission should consider a minimum post injection site care monitoring period.”

Next Steps

The proposed rules and an online comment form have been made available on the Railroad Commission’s website. The formal proposal was published in the Texas Register on May 20, 2022. A virtual public hearing to receive comments on the proposed rules and the application for primacy of the Class VI UIC well program will also be held during the public comment period.  Information on the public hearing will be posted on the agency’s website at least 10 business days in advance of the hearing.  The public comment period will end on June 20, 2022.  In light of the breadth and significance of issues presented, it will be important for the regulated community to offer their input and expertise.

[i] See Memorandum and Proposed Rule.

[ii] To date, only North Dakota and Wyoming have primacy over Class VI wells.  Louisiana’s Class VI well primacy application (dated April 21, 2021, and updated on May 13, 2021) remains pending.  West Virginia and Arizona also have initiated efforts to achieve Class VI primacy. See EPA website and State of Louisiana Class VI US EPA Primacy Application.

[iii] See 42 U.S.C. § 300f et seq.

[iv] See 75 Fed. Reg. 77229-77303 (Dec. 10, 2010).

[v] See Senate Bill (SB 1387), 81^st Legislative Session (2009), and 16 Tex. Admin. Code (TAC) § 5.101 et seq.

[vi] See EPA chart describing status of UIC program primacy. State regulation of UIC wells is split between the Railroad Commission and Texas Commission on Environmental Quality, depending on the purpose of the wells.  See Tex. Water Code, Chapter 27, Subchapters B and C, and TCEQ website.

[vii] Under HB 1284, TCEQ continues to have input on Class VI well applications, as the permitting process requires a letter of determination from TCEQ stating that the drilling and operation of the well will not impact or interfere with any previous or existing Class I injection well, including any associated waste plume or any other injection well authorized or permitted by TCEQ.  See Tex. Water Code, § 27.0461.  Without EPA’s approval of primacy, carbon sequestration wells would require permitting by both the Railroad Commission and EPA.