On Friday, December 10, 2010, EPA published in the Federal Register its final rule governing the underground injection of carbon dioxide (CO2) for geologic sequestration (GS) under the Safe Drinking Water Act (SDWA). EPA released a pre-publication version of this rule back on November 22, 2010. Stoel Rives previewed the pre-publication version on our Renewable Energy + Law Blog.This alert also highlights some key deadlines included in final rule, as published last Friday.

Background: Last Friday's rule focuses on protecting underground sources of drinking water (USDW) from endangerment due to CO2 GS activities. The rule was promulgated pursuant to EPA's SDWA authority. The rule, which becomes effective on January 10, 2011, resulted from a proposed rule issued by EPA on July 25, 2008 (73 FR 43492) and a notice of data availability and request for comment by EPA on August 31, 2009 (74 FR 44802).

Highlights: Last Friday's rule covers owners / operators of wells used to inject CO2 into the subsurface for GS. Complex and dense, EPA's explanation of last Friday's rule and the rule itself consume more than 70 pages in the Federal Register. The rule creates a new class of injection well (Class VI) to address CO2 injection for GS and imposes minimum federal requirements on Class VI well owners / operators. Boiled down to one sentence, those requirements cover: CO2 injection and site characterization, CO2 GS well permitting, construction, operation, testing, plugging, recordkeeping, corrective action, emergency and remedial response, closure / post-closure care and associated financial assurances.

Key elements of and deadlines included in last Friday's rule include:

  • Opportunities for States to Obtain Primacy to Regulate Class VI Wells: States must apply to EPA for approval to implement the new Class VI well program (i.e., to issue Class VI CO2 GS permits). Last Friday's rule gives states until September 6, 2011 to apply for primacy. After that deadline, EPA will implement this rule and serve as the Class VI permitting authority in all states whose Class VI programs are not yet federally approved.
  • Looming Requirements for Certain Class I and Class V Well Owners / Operators: Wells previously permitted as Class I wells for CO2 GS must apply for Class VI permits by December 10, 2011. The same is true of CO2 GS wells previously permitted as Class V experimental technology wells, provided such wells are no longer being used for experimental injection purposes. Last Friday's rule affords owners / operators of Class I and Class V wells requiring re-permitting as Class VI wells an opportunity to avoid the new Class VI well construction requirements under specific circumstances
  • Class VI Requirements Potentially Applicable to Class II Well Owners / Operators of CO2 Enhanced Recovery Injection Wells: CO2 injection is one of the principal techniques employed to enhance recovery (EOR) of underground oil and gas supplies. Wells used to inject CO2 underground for EOR have historically been regulated as Class II wells. That will remain true after last Friday's rule for most Class II CO2 injection wells. The rule, however, "clarifies" that the stringent Class VI well requirements (including the requirement to obtain a Class VI permit) will apply to any Class II CO2 wells used to inject CO2 for the primary purpose of long-term storage and which present "an increased risk to USDWs as compared to traditional Class II operations." The rule includes several factors for EPA, states and Class II owners / operators to use in evaluating whether Class II wells present sufficient risk to warrant regulation as Class VI wells.
  • Corollary Greenhouse Gas (GHG) Reporting Program: EPA intends last Friday's rule to compliment the final CO2 injection and GS reporting rule published in the Federal Register earlier this month as Subparts RR and UU of EPA's federal GHG reporting program (75 FR 75060). Subpart RR includes reporting requirements for facilities conducting CO2 GS. Subpart UU imposes similar requirements on facilities injecting CO2 underground for other reasons. Whereas the purpose and intent of last Friday's rule is to protect USDW from endangerment, Subparts RR and UU were established to enable EPA to quantify the amount of CO2 sequestered underground as well as surface CO2 emissions from injecting facilities.
  • Adaptive Requirements: Last Friday's rule is future-looking and adaptable. For example, Class VI wells owners / operators will—every five years—need to re-evaluate the area around the CO2 GS project where USDWs may be endangered to ensure that the CO2 injected is moving as predicted beneath the surface. EPA itself intends to review the sufficiency of its Class VI program every six years to determine whether modifications to it are needed.

Last Friday's rule can be found at 75 FR 77230. Supporting information is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm, and in the rulemaking docket at www.regulations.gov (docket ID: EPA-HQ-OW-2008-0390). It remains to be seen whether last Friday's rule will, as EPA hopes, provide the long-awaited shot in the arm for CO2 GS projects.