Carbon Capture, Utilization, and Storage: Class VI Wells and US State Primacy

Industry has recently expressed significant interest in long-term underground storage of carbon dioxide (CO2) in deep subsurface geologic formations—a process that generally requires an Environmental Protection Agency (EPA) Class VI permit under the federal Underground Injection Control (UIC) program. 

This Legal Update provides an overview of the Class VI permit application, the status of current and pending Class VI applications, and the status of state primacy for UIC programs.

Background

Carbon capture, utilization, and storage (CCUS) will be essential in meeting the Biden administration’s net zero GHG emission goals, as the chair of the White House Council on Environmental Quality (CEQ) acknowledges that “[t]o reach the President’s ambitious domestic climate goal of net-zero emissions economy-wide by 2050, the United States will likely have to capture, transport, and permanently sequester significant quantities of carbon dioxide.” 87 Fed. Reg. 8808 (Feb. 16, 2022). Pursuant to the UIC program, EPA has promulgated regulations and established minimum federal requirements for six classes of injection wells (Class I to Class VI). Each well class is based on the type and depth of the injection activity and the potential for the injection activity to impact underground sources of drinking water. For instance, Class II wells are used only to inject fluids associated with oil and natural gas production for purposes of either disposal, enhanced oil recovery (EOR), or hydrocarbon storage. In 2010, EPA established Class VI, the most recently created UIC well class, for wells used to inject CO2 into deep subsurface geologic formations for long-term underground storage—a process known as “geologic sequestration.” Currently, there are approximately 180,000 active Class II wells but only two active Class VI wells in the United States.

Class VI Permit Application

Both Class II and Class VI wells are utilized for the underground injection of CO2. The purposes (and, thus, regulations) of these classes, however, are different. As much as 80 percent of active Class II wells are used for EOR, where fluids containing CO2, among other things, are injected into oil-bearing formations to recover residual oil and natural gas. Although some CO2 remains underground during the EOR process, Class II wells are not intended to inject CO2 for long-term storage.

Thus, project proponents seeking to inject CO2 for permanent geologic sequestration must obtain a permit from EPA to drill and operate a Class VI well. A geologic sequestration project is defined by the extent of the area of review (AoR), which is the region surrounding the well where underground sources of drinking water may be impacted by the injection activity. A permit applicant must delineate the AoR to predict the movement of the injected CO2 and displaced fluids using a computational model that considers the geologic conditions and proposed operations.

The permit application must present a detailed evaluation of site geology, the AoR, and how the modeling inputs reflect site-specific geologic and operational conditions, well construction design, plans to monitor the site, and other required activities. Permit applications are multifaceted and address all aspects of the geologic sequestration project to ensure that underground sources of drinking water are protected. They are comprehensive, and contain maps and cross sections, modeling results, water quality data, analyses of core samples and well logs, engineering schematics, and financial information. All of the permit application information submitted and reviewed is interrelated, and the information collected to meet one requirement may inform or be informed by other submittals or analyses. Therefore, project proponents need to ensure that, collectively, all of the information submitted is consistent, supports a determination of site-suitability, and affords protection to underground sources of drinking water.

The core of the permit application review is an in-depth evaluation of the geologic setting and the AoR modeling, including assessing the local/regional geology, hydrology, geochemistry, etc. This serves two purposes: (1) it confirms that the site is suitable to receive and store the CO2 and (2) it establishes the foundation for protective permit conditions. From there, EPA assesses risks and uncertainties. Then, EPA sets appropriate operating parameters and conditions and identifies testing and monitoring needs. EPA’s review of the Class VI permit application is an iterative process, which requires frequent communication between the project proponent and EPA.

Figure 1: Class VI well diagram. See EPA, Class VI.

Status of Class VI Permits and Applications

Of the more than 700,000 well permits issued under the UIC program to date, only six are for Class VI wells. Unfortunately, four of those permits expired before any well construction began. But, two Class VI wells are active. Both are located at the Archer Daniel Midland’s ethanol plant in Macon County, Illinois. And, for both, the time from application submission to issuance was approximately three years, though generally the entire permitting process can take up to six years. (Archer Daniels Midland CCS1: application submitted December 2011, permits effective February 2015; Archer Daniels Midland CCS2: application submitted July 2011, permits effective September 2014). As shown in the table below, currently, there are fourteen Class VI permit applications pending before EPA. (The table below does not reflect permit applications that are pending (or have been approved) at the state level, in those states that are directly implementing the UIC program in lieu of having the EPA implement. We discuss this state “primacy” in the section immediately below.)

State Primacy for UIC Programs

EPA has developed UIC program requirements that are designed to be adopted by states, territories, and tribes. Primary enforcement authority, often called “primacy,” refers to state, territory, or tribal responsibilities associated with implementing EPA approved UIC programs. A state, territory, or tribe with UIC primacy oversees the UIC program in that state or territory or on the tribal land.

Primacy is not mandatory or vested as a matter of right; rather, states, territories, and tribes must apply for it. States, territories, and tribes may apply for and obtain primacy for all well classes, Classes I–V, or Class VI only. EPA may grant primacy for all or part of the UIC program. This means that in some jurisdictions primacy for certain well classes may be shared with EPA or divided between different state, territory or tribal authorities. States seeking UIC program primacy must demonstrate to EPA that the state has jurisdiction over underground injection; regulations that meet the federal UIC requirements; and the necessary administrative, civil, and criminal enforcement penalty remedies.

EPA has approved UIC primacy programs for well Classes I–V in 31 states and three territories. Florida and Idaho have EPA-approved UIC primacy for well Classes I, III, IV, and V. EPA retains direct implementation authority for Class II wells in those states. Currently, EPA implements the UIC program for all well classes in nine states and two territories.

Since the inception of Class VI in 2010, states have been slow to apply for primacy. The demand for Class VI permits—particularly in the first few years—had not been great enough to compel most states to apply. Moreover, the primacy application process can take years. Indeed, currently, only two states have primacy for Class VI wells: North Dakota and Wyoming. North Dakota applied for primacy in 2013, which EPA approved in 2018. Wyoming formally applied in 2019 and was approved in 2020, but that process was preceded by years of dialogue with EPA Region 8. North Dakota and Wyoming are also the only two states that have primacy for all well Classes I–VI.

While EPA directly implements the Class VI program in all other states, territories, and on tribal lands, demand trends are shifting and several states are moving towards primacy. Louisiana’s Class VI primacy application is under review at EPA in the “completeness determination” phase of the application process. Arizona and West Virginia are listed as being in the “pre-application” phase. In June 2021, Texas took an important step towards seeking primacy by enacting H.B. 1284, which gave the state Railroad Commission sole jurisdiction over carbon sequestration wells (jurisdiction had previously been shared with the Commission on Environmental Quality). As a result, Texas’s primacy application likely will be greatly simplified. 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 UIC well program approval.

On October 19, 2021, North Dakota became the first state to issue a Class VI permit when it approved Red Trail Energy LLC (RTE) to geologically store CO2 from the RTE ethanol facility located near Richardton, ND. The state followed up with a second approval on January 21, 2022, when it issued a permit to the Minnkota Power Cooperative to permanently store CO2 deep underground near Center, ND, for its prospective Project Tundra. Importantly, North Dakota has demonstrated the speed at which a state-run UIC program can approve a Class VI permit: the state approved Minnkota’s application in 8 months, whereas the federal program has taken approximately 3–6 years. In addition, Project Tundra received a $100 million loan from the state.

Related Articles & Events

Carbon Capture Sequestration Utilization and Storage Projects and US Federal Environmental Laws

US – Storing CO2 And Lowering Emissions (SCALE) Act 

Final Carbon Capture Regulations Released by IRS 

Carbon Capture Use and Sequestration: An Expanding Market