TAKEAWAYS

• Louisiana is the third state granted authority to permit and regulate Class VI underground injection control (UIC) wells, marking a significant step forward for these projects.
• The Environmental Protection Agency (EPA) established the Class VI well to regulate the injection of CO₂ into deep subsurface rock formations.
• Large-scale deployment of carbon capture and sequestration projects is necessary to meet climate goals but has been hindered by delayed processing times.

In the waning days of 2023, Louisiana became the third state granted authority by the U.S. Environmental Protection Agency (EPA) under the Safe Drinking Water Act (SDWA) to permit and regulate Class VI underground injection control (UIC) wells—i.e., wells permitted specifically for long-term, deep geological storage of carbon dioxide (CO₂) and which are critical to the full-scale development of commercial geological carbon sequestration. Until now, only North Dakota (2018) and Wyoming (2020) had been granted primacy, and Louisiana becomes the first state to receive this “primacy” status under the Biden Administration.

The approval comes as Class VI permit applications have ballooned over the past couple of years. The interest in these wells is driven largely by increased political support and corporate commitments for growing carbon capture and sequestration projects to meet climate targets and by generous tax incentives.

Class VI Wells

EPA protects underground sources of drinking water by regulating the underground injection of fluids for storage or disposal through the UIC program within the SDWA’s regulatory framework. In 2010, EPA established a new class of UIC well, the Class VI well, specifically to regulate the injection of CO₂ into deep subsurface rock formations. While many states have long been granted primacy to permit other classes of UIC wells, Class VI wells have largely been the sole authority of the federal government. With primacy, EPA delegates to states the primary authority to regulate and permit these injection wells within their borders to be used as safe, permanent repositories for captured carbon.

Unlike when the Class VI UIC wells were first established, demand for permanent underground CO₂ storage has surged in recent years, from the carbon removal industry and from a clear political directive supporting carbon capture and sequestration to achieve climate goals. Yet, progress has been constrained by regulatory delays. EPA has permitted only two Class VI wells to date and expects to complete permitting on only a handful of others this year, with average expected permitting times exceeding two years.

State primacy is generally thought to speed up approval processes (illustrated by North Dakota’s four to eight month turnaround time). However, projects still must meet standards at least as rigorous as federal standards for environmental health and safety to ensure that injection wells do not contaminate underground sources of drinking water. Indeed, as part of its primacy application process, Louisiana promulgated its own Class VI regulations that are largely consistent with federal regulations established in 2021.

Louisiana’s Class VI Program

Granting primacy to Louisiana will almost certainly help EPA address the logjam of Class VI applications—22 of which are located in Louisiana, with many more projects in development. But the regulatory efficiencies to be gained from granting primacy are only realized after a multiyear application process—one that has deterred many states from seeking primacy. Louisiana submitted its original primacy application in spring of 2021 and amended it in September 2021 to add primacy over Class VI injection wells. Following four public hearings across 2021 and 2023 and the review of over 45,000 public comments, EPA determined in December 2023 that Louisiana’s Class VI UIC program is consistent with the SDWA and meets all requirements for approval.

One unique component of Louisiana’s Class VI program is the environmental justice (EJ) analysis, which intertwines safety and environmental considerations to ensure the protection of all communities. This feature is perhaps unsurprising given the Biden Administration’s focus on EJ. Memorialized in the Memorandum of Agreement between EPA and Louisiana, EPA cites Louisiana’s EJ commitments as “a clear benchmark for any state that seeks Class VI primacy in the future.” These requirements include:

• Enhanced, inclusive public participation processes;
• EJ impacts analysis in permitting, including environmental hazards, exposure pathways and susceptible subpopulations;
• Mitigation measures to ensure Class VI projects do not increase environmental impacts and public health risks in EJ communities; and
• Measures to protect residential areas, potentially including carbon dioxide monitoring and release notification networks and installation of enhanced pollution controls.

This is consistent with the December 9, 2022, letter EPA Administrator Reagan sent to governors, detailing EPA’s expectation that all new primacy applications will contain how the state proposes to address EJ and equity concerns and EPA’s August 18, 2023, “Environmental Justice Guidance for UIC Class VI Permitting and Primacy” memorandum.

Now that primacy has been granted, all Class VI permit applications currently pending with EPA will be transferred to the Louisiana Department of Natural Resources (LDNR), and all future Class VI applications will be submitted to LDNR rather than EPA.

Primacy Beyond Louisiana

EPA’s approval of Louisiana’s primacy application could serve as a model for other states seeking and planning to seek primacy. This includes Texas, which like Louisiana is situated in EPA Region 6, a state with extensive oil and gas industry presence, favorable geology, and the heart of the U.S. energy transition. Texas is in the “pre-application phase,” having submitted a formal primacy application on December 19, 2022. In September 2023, the Texas Railroad Commission (RRC) amended its Class VI regulations to further align its existing Class VI regulations with federal requirements, taking advantage of lessons learned from Louisiana, North Dakota and Wyoming’s primacy application processes. Among other changes, the RRC amendments clarified the definition of anthropogenic sources of CO₂ that can be sequestered, revised the evidentiary requirements for establishing pore space ownership, instituted new test well and mechanical integrity requirements, and mandated financial assurances. This step was largely favored by industry and viewed with optimism as an important step in moving Texas’s primacy application forward and clearing the backlog of eight Class VI permit applications currently pending with EPA. States such as Arizona and West Virginia are similarly positioned.

EPA officials have sought to speed Class VI permit approvals and encouraged states to obtain primacy in recent years. Supporting those efforts, the 2021 bipartisan infrastructure law gave EPA, in addition to $25 million over five years to address the current backlog of permit applications, a further one-time award of $50 million in grants to support 25 states that had indicated their interest in developing Class VI UIC programs and applying for primacy. Still, EPA estimates it will take 24 months to approve federal primacy applications from the date the application is deemed complete, which in itself can take many months to achieve.

Leading up to approval of Louisiana’s primacy application, the EPA Office of Inspector General (OIG) launched an evaluation into EPA’s Class VI permit program in November 2023. The OIG says its goal is “to determine whether the EPA has used available resources, including [the infrastructure law funding], to improve permitting of Class VI wells under its Underground Injection Control Program.”

Conclusion

Large-scale deployment of carbon capture and sequestration projects is necessary to meet climate goals but has been hindered by delayed processing times. EPA’s approval of Louisiana’s application to seek primacy is a significant step in moving projects forward in a state with relatively robust carbon capture and sequestration interest and activity, providing industry with planning certainty. It simultaneously serves as a benchmark for other states seeking primacy. The final rule was published in the Federal Register on January 5, 2024, starting a 45-day clock for interested parties to seek judicial review.

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