North Dakota’s UIC Class VI Primacy Wait is Almost Over

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The U.S. Environmental Protection Agency (EPA) is poised to approve North Dakota’s application for primary enforcement authority over the underground injection of CO2 for geologic sequestration in that state.  Nearly four years after North Dakota became the first state to seek primacy from EPA over carbon sequestration wells – known as Underground Injection Control (UIC) Class VI wells – EPA just published the proposed rule to effect this delegation on Friday.  82 Fed. Reg. 22,949 (May 19, 2017).  The 60-day public comment period on the proposed delegation ends on July 18, 2017.

Under the federal Safe Drinking Water Act, EPA regulates underground injection to protect underground sources of drinking water. In late 2010 EPA promulgated UIC Class VI rules for wells used to inject CO2 for the purpose of long-term geologic storage or sequestration.  The Class VI rules are broad, covering CO2 injection and site characterization, well permitting, construction, operation, testing, plugging, recordkeeping, corrective action, emergency and remedial response, closure/post-closure care and associated financial assurances.  For more information regarding the Class VI rules, see our 2010 article.  (Wells used to inject CO2 for purposes of enhanced oil recovery (EOR) are regulated as UIC Class II wells.)

The North Dakota legislature put the regulation of geologic carbon sequestration into the hands of the state’s Industrial Commission in 2009. After EPA published its final Class VI rules, the Industrial Commission amended its own carbon sequestration rules in 2013 to align with the federal regulations and then applied for primacy.  EPA is now ready to approve that application, which means that the Industrial Commission, rather than EPA, will be responsible for implementing the Class VI program in North Dakota (excluding Indian lands).

Carbon capture and geologic storage has an almost two-decade history in North Dakota. Since 2000, Dakota Gasification Company has captured up to 3 million metric tons of CO2 per year from its coal gasification plant and transported it via pipeline to the Weyburn field (and later the adjacent Midale field) in Canada for use in EOR.  According to a 2012 report, in a closed-loop CO2 EOR project, over 90% of injected CO2 is permanently sequestered underground.  When the Industrial Commission started working towards seeking primacy from EPA, our client C12 Energy was developing a carbon sequestration project west of Bismarck using the Inyan Kara formation.  Today, much of the geologic sequestration attention (at least from politicians) in North Dakota seems focused on the possibility of using the deeper Broom Creek formation to sequester CO2 from Red Trail Energy’s ethanol plant.  (Both formations are above the Bakken formation, which has experienced intense oil and gas development over the past decade.)  North Dakota’s forthcoming primacy over Class VI wells should help further advance carbon sequestration in that state.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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