EPA Proposes Approval of Louisiana’s Assumption of CCS Injection Permitting

EPA has issued a proposed rule that would approve Louisiana’s long-pending application to significantly expand the state’s role in permitting carbon capture and sequestration (CCS) projects. If finalized, Louisiana would become the third state permitting program to receive EPA approval, which is expected to expedite the permitting process for CCS projects and bring increased federal funding to the state. Louisiana’s application ― the first to be approved by the Biden Administration ― is particularly noteworthy for its environmental justice provisions, which EPA has deemed adequate to address concerns raised by a number of stakeholders and may serve as a model for other states. EPA is accepting comments through July 3, 2023.

The Class VI Permitting Program

CCS projects, which rely on injection wells to store carbon dioxide in the deep subsurface, are regulated by EPA’s Underground Injection Control (UIC) Program under the federal Safe Drinking Water Act. This program categorizes well types into classes, with wells for permanent sequestration of carbon dioxide regulated as “Class VI.” States have the option to obtain primary enforcement authority ― or “primacy” ― if they demonstrate that their regulatory program is no less stringent than EPA’s. For Louisiana, the Department of Natural Resources would assume this responsibility.

Across the UIC Program it is very common for states to obtain primacy: 46 states have primacy for at least one class of UIC well, and 31 states have primacy for all classes of wells other than Class VI. Yet Louisiana would become only the third state to obtain primacy for Class VI wells, following North Dakota (2018) and Wyoming (2020). Arizona, Texas, and West Virginia have each entered the “pre-application” phase. Texas, having submitted its official application for primacy on December 19, 2022, has not yet advanced from the “pre-application” phase to the “completeness determination” phase of application review. See here. Pennsylvania has also announced its intention to seek primacy in order to access a share of the US$50 million in grants under the Infrastructure Investment and Jobs Act (IIJA).

Accelerating CCS Development in the Gulf Region

Louisiana currently has 22 Class VI permits pending before EPA ― more than any other state except California. These permits are part of a rapidly growing backlog of pending Class VI permits at EPA, which has ballooned from less than 15 to over 70 in just the past year. Historically, EPA’s process to approve these permits has been slow. The agency has only issued six Class VI permits related to two projects to date ― and none since 2015 ― with time from application to approval exceeding two years for each. In contrast, North Dakota has issued four permits in the past 18 months, with each permit review process lasting less than nine months.

As the first state along the Gulf of Mexico to obtain primacy, Louisiana would be a leader in a region that has long eyed CCS development. The combination of the region’s geology, experience injecting carbon dioxide in enhanced oil recovery projects, and concentration of manufacturing and refining industry creates strong potential for CCS hubs to develop in the region. Indeed, Louisiana, Texas, Mississippi, and Alabama have each enacted legislation to facilitate CCS, and each have pending Class VI permit applications within their boundaries. The potential for CCS development in and around the Gulf could expand even further once the federal government establishes its leasing program for CCS in federal waters, expected later this year.

Environmental Justice (EJ) a Key Consideration in EPA Approval

EPA’s proposed rule highlighted Louisiana’s approach to “fully integrate environmental justice and equity considerations into their UIC Class VI program.” The state’s approach incorporates each of the elements listed in a December 2022 EPA guidance letter. These include commitments to:

• Implement an inclusive public participation process
• Incorporate EJ and civil rights considerations in permit review processes
• Enforce Class VI regulatory protections
• Incorporate mitigation measures
• Examine the potential risks of each proposed Class VI well to minority and low-income populations
• Require well owners or operators to conduct an EJ review as part of the Class VI application process
• Evaluate project sites using EPA’s EJ Screen and utilize qualified third-party reviewers to conduct additional evaluation of the Class VI application when communities with EJ concerns and/or other increased risk factors are identified
• Require applicants to assess alternatives to the site location and propose mitigating measures to ensure adverse environmental effects are minimized

As EJ will continue to be an important consideration in EPA’s evaluation of primacy applications under the Biden Administration, Louisiana’s program provides a template for other states to draw from in designing their EJ approach.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.