Texas continues to step toward obtaining authority to implement and enforce Class VI permits for long-term underground storage of carbon dioxide. On August 30, 2022, the Railroad Commission of Texas (Railroad Commission) approved updated rules for the state’s permitting and regulation of carbon capture and underground storage (CCUS).

Background

Under the Safe Drinking Water Act (SDWA), the Environmental Protection Agency (EPA) protects underground sources of drinking water by regulating the injection of fluids underground for storage or disposal. From the early 1980s until 2010, EPA regulated five classes of injection wells according to the type of fluid injected, the depth of injection, and the potential to endanger underground sources of drinking water through the Underground Injection Control (UIC) program. EPA designed the UIC program requirements to be adopted by states, territories, and tribes, authority that is often called “primacy.” Historically, most states have sought and been granted primacy over one or more classes of wells. In 2010, EPA promulgated rules creating a sixth well class (Class VI) specifically to regulate the injection of carbon dioxide into deep subsurface rock formations. Currently, only two states have obtained state primacy for Class VI wells: North Dakota and Wyoming. (For more details on the process, see our previous Legal Update “Carbon Capture, Utilization, and Storage: Class VI Wells and US State Primacy.”)

Texas’s Actions to Obtain State Primacy

Texas is in the process of applying for primacy for Class VI wells. In 2009, Texas established a framework for projects capturing, injecting, or storing anthropogenic carbon dioxide, and the statute would require that the state pursue primacy for the Class VI wells. In recent years, Texas has taken additional steps toward obtaining primacy. In June 2021, Texas enacted H.B. 1284, which gave the Railroad Commission sole jurisdiction over carbon sequestration wells. The jurisdiction had previously been shared by the Railroad Commission and the Commission on Environmental Quality. Among other things, H.B. 1284 also required that the Railroad Commission seek primacy to administer and enforce the program for the onshore and offshore geologic storage and associated injection of anthropogenic carbon dioxide in the state.

Texas has been actively working to prepare the documents required for the Class VI primacy application. On May 3, 2022, the Railroad Commission approved submittal to the EPA of a pre-application for Class VI wells and a request that the governor formally ask EPA for Class VI approval. On the same day, the Railroad Commission approved the publication of proposed amendments to the state’s carbon capture and storage rule for public review and comment.

On August 30, 2022, the Railroad Commission approved the amended rules, which are needed for the Railroad Commission’s implementation of H.B. 1284. Among other things, the rules were modified to:

  • Improve program and permit transparency. For example, draft permits and draft permit fact sheets will be posted on the Railroad Commission’s website. Each fact sheet will include, among other things, the type of facility, the source and quantity of carbon dioxide proposed to be injected and stored, and a description of the procedures for reaching a final permit decision.
  • Define key terms so they are consistent with federal tax credits for these projects.
  • Require additional data from the permit applicant. For example, applicants must identify the source(s) of carbon dioxide that will be captured by the project. This requirement was added to ensure the collection of more accurate carbon emission data and to help inform advancements in carbon sequestration strategies.
  • Provide appropriate notice to environmental justice and limited English-speaking households. This new requirement is consistent with the Biden administration’s focus on environmental justice.

Next, the Railroad Commission will submit its application to the EPA for primacy for Class VI wells. The federal review of the Railroad Commission’s application could take months to years. For North Dakota, the state submitted its application in June 2013, and it was approved in April 2018. For Wyoming, the state submitted its application in January 2020, and it was approved in October 2020.

Until Texas receives Class VI primacy, any applicant for geologic storage of anthropogenic carbon dioxide unrelated to Enhanced Oil Recovery will need to submit an application to both the EPA and the Railroad Commission. The Railroad Commission plans to coordinate with the EPA to ensure that both agencies perform the application review on a parallel track using the EPA Geologic Storage Data Tool (GSDT) so that when Texas receives primacy, the transfer will be as seamless as possible. Based on EPA’s website, there is currently one Class VI permit pending for Texas.