The Nickel Report

On January 5, 2024, EPA approved Louisiana’s application to administer the Class VI underground injection control program (UIC). 89 Fed. Reg. 703. Class VI wells are used to inject carbon dioxide into deep geological formations for long-term underground storage. This technology is a promising tool for reducing carbon dioxide emissions to the atmosphere.

EPA’s grant of “primacy” to Louisiana for the Class VI program will allow the state’s Department of Natural Resources to issue UIC permits for Class VI wells, and to ensure compliance with the program. Louisiana submitted its application for Class VI primacy on September 17, 2021. It becomes the third state with primacy over Class VI wells, joining North Dakota (granted primacy in 2018) and Wyoming (2020). Louisiana is the first state to receive primacy over Class VI wells during the Biden administration. Several other states—including Texas, West Virginia, and Arizona, according to the EPA’s website—currently are seeking primacy.

Parties affected by EPA’s grant of primacy to Louisiana have 45 days from January 5, 2025, to challenge this final rule in court. Several environmental special interest groups have been active in opposing CCUS operations in Louisiana, but it is unclear whether they will challenge this final rule.

EPA has not issued a Class VI permit since granting Archer Daniels Midland’s for the Decatur project in 2014. A relatively recent and dramatic increase in the Section 45Q carbon sequestration tax credit has piqued corporate interest, and in recent years many have begun to pursue carbon sequestration projects. Louisiana has more Class VI permit applications pending than any other state.

While many hope that Louisiana and other states will be able to permit the safe underground storage of carbon dioxide more quickly than EPA, it can be expected to take some time before Louisiana issues its first Class VI carbon storage permits. This is because of the extensive requirements applicants must meet before receiving a permit, such as:

1. Site characterization, which includes assessing the ability of the formation to accept the CO₂ (porosity and permeability), the presence of a confining layer, and absence of faults, fractures, and penetrations that would be a conduit for CO₂ to escape the injection zone;
2. Delineation of an area of review where the CO₂ is predicted to flow through the lifetime of the project;
3. Construction requirements specifically geared toward maintaining CO₂ sequestration;
4. Operational requirements to maintain containment, such as pressure monitoring to assure that pressure remains below a level that could jeopardize the integrity of the confining layer, and emergency response planning and capability;
5. Reporting requirements to assure informed oversight;
6. Post-injection site care requirements;
7. Financial responsibility that extends through both the operational and post-injection site care periods; and
8. Closure requirements to assure long-term integrity of the facility.

The International Energy Agency has said that the current administration’s carbon targets will not be reached without broad deployment of CCUS. To accelerate broad deployment in the United States, EPA should grant additional primacy authorizations to position more states to issue their own carbon storage permits.

At this link, our readers can find Hunton Andrews Kurth’s Class VI permit tracker which we update regularly.