State of Louisiana Granted Primacy Over Class VI Wells

Executive Summary

The State of Louisiana recently achieved a significant milestone in the regulation of the carbon capture and sequestration (CCS) industry by obtaining primary enforcement authority (primacy) over Class VI underground injection wells.¹ The final rule, signed by the US Environmental Protection Agency (EPA) on December 28, 2023, grants Louisiana primacy over Class VI wells, marking a crucial transition in regulatory oversight from the EPA to the Louisiana Department of Natural Resources (LDNR).² Louisiana’s successful application for Class VI primacy is anticipated to expedite the Class VI permitting process, which is expected to accelerate growth for the CCS industry within the state. Louisiana now joins North Dakota (2018) and Wyoming (2020) as the third US state to receive Class VI primacy.³

Class VI Wells and Backlog

In 2010, the EPA established a new class of underground injection control (UIC) well—the Class VI well. Class VI wells are intended for the permanent geological sequestration of carbon dioxide (CO2) from ambient atmosphere, industrial emissions, or other anthropogenic sources into deep subsurface rock formations.⁴ In recent years, demand for Class VI wells has surged due to federal tax credits under the Inflation Reduction Act (IRA) for the permanent sequestration of carbon as well as additional federal funding for CCS projects as provided under the Infrastructure Investment and Jobs Act.⁵ However, despite the strong demand for these wells, the industry’s growth has been constrained due to a Class VI permitting review backlog exceeding 63 pending applications and a wait time exceeding two years, with some permits taking as long as six years for approval.⁶ Of the 63 pending Class VI permits, approximately 22 of the 63 pending permit applications before the EPA are related to projects in Louisiana.⁷ Now that Louisiana has obtained primacy over Class VI wells, all pending permits before the EPA will be transferred to the LDNR for review.⁸ Furthermore, the Class VI permitting process under the LDNR is expected to be more expeditious than the EPA’s process, which has faced a material backlog of pending permit applications.⁹ This is one of the main obstacles in the development of blue hydrogen export terminals in the US portion of the Gulf of Mexico.¹⁰

Louisiana Class VI Requirements¹¹

Louisiana has adopted Class VI well requirements that surpass the EPA’s standards in various crucial aspects.¹² These include:

1. Individual Review and Permitting: Louisiana mandates that each Class VI well undergoes a separate review and permitting process. This approach differs from the EPA’s practice of issuing permits for multiple wells within a given project simultaneously.¹³
2. Prohibition of Salt Cavern Sequestration: The state explicitly prohibits the sequestration of carbon dioxide in salt caverns, a restriction not present in the EPA’s requirements.¹⁴
3. No Waivers to Injection Depth Requirements: Louisiana does not grant waivers to injection depth requirements for Class VI wells, emphasizing a stringent adherence to safety measures. In contrast, the EPA may consider waivers under certain circumstances.¹⁵
4. Additional Monitoring and Operating Requirements: Louisiana imposes additional monitoring systems and operating requirements beyond those mandated by the EPA. This reinforces the state’s commitment to environmental safety and protection.¹⁶

Furthermore, Louisiana’s Class VI program incorporates Environmental Justice (EJ) analysis, a distinctive feature intertwining safety and environmental considerations. This is particularly noteworthy in light of the Biden Administration’s emphasis on EJ.¹⁷ The Memorandum of Agreement between Louisiana and the EPA outlines the state’s EJ commitments, which serve as a benchmark for any state seeking Class VI primacy in the future. These commitments include:

1. Enhanced Public Participation Processes: Louisiana outlines steps to enhance the public’s participation in the permit application process, ensuring inclusivity and transparency.
2. EJ Impacts Analysis in Permitting: The state conducts a comprehensive analysis of EJ impacts on communities during the permitting process. This includes identifying environmental hazards, potential exposure pathways, and susceptible populations.
3. Mitigation Measures: Louisiana incorporates mitigation measures to prevent Class VI wells from increasing environmental impacts and public health risks in already overburdened communities. This involves installing carbon dioxide monitoring networks, release networks, and enhanced pollution controls.
4. Protection of Residential Areas: The state implements measures to protect residential areas, potentially including the establishment of carbon dioxide monitoring and release notification networks, along with enhanced pollution controls.¹⁸

Conclusion

Louisiana gaining primary enforcement authority over Class VI wells after a protracted application process marks a pivotal moment in the regulation of the CCS industry. Large-scale deployment of CCS projects is necessary to meet federal climate goals but has been hindered by long processing times.¹⁹ Industry insiders have commented that the approval of Louisiana’s Class VI primacy application will help reduce permitting time and ensure that operations strictly adhere to all the unique environmental guidelines pertaining to Louisiana.²⁰ Subsequently, they anticipate a rapid acceleration of carbon capture technology and projects.²¹

With Louisiana now in control of the Class VI approvals, robust CCS projects are expected to become operational in an expedited manner, facilitating better planning and increased activity within Louisiana.²²

¹ Federal Register: State of Louisiana Underground Injection Control Program; Class VI Primacy.

² State of Louisiana Underground Injection Program; Class VI Primacy (epa.gov)

³ Primary Enforcement Authority for the Underground Injection Control Program | US EPA

⁴ Class VI - Wells used for Geologic Sequestration of Carbon Dioxide | US EPA

⁵ Class VI - Wells used for Geologic Sequestration of Carbon Dioxide | US EPA; see also FECM Infrastructure Factsheet.pdf (energy.gov)

⁶ Current Class VI Projects under Review at EPA | US EPA

⁷ Current Class VI Projects under Review at EPA | US EPA

⁸ Class VI - Geologic Sequestration Wells | Department of Mineral Resources, North Dakota (nd.gov)

⁹ See generally Class VI - Geologic Sequestration Wells | Department of Mineral Resources, North Dakota (nd.gov) (noting that since North Dakota obtained Class VI primacy in 2018 they have produced eight Class VI permits in contrast to the six Class VI well permits issued by the EPA nationwide since the UIC program was implemented in 2010); cf. Current Class VI Projects under Review at EPA | US EPA (noting that the EPA aims to review complete Class VI applications and issue permits within approximately 24 months).

¹⁰ See generally Green hydrogen: Energizing the path to net zero (deloitte.com) (noting that there are many obstacles in the development of hydrogen export terminals and other economic considerations).

¹¹ Department of Energy and Natural Resources | State of Louisiana

¹² Primary Enforcement Authority for the Underground Injection Control Program | US EPA; Final Class VI Guidance Documents | US EPA

¹³ DNRLegacyReport.pdf (louisiana.gov)

¹⁴ DNRLegacyReport.pdf (louisiana.gov)

¹⁵ DNRLegacyReport.pdf (louisiana.gov)

¹⁶ DNRLegacyReport.pdf (louisiana.gov)

¹⁷ Underground Injection Control Class VI Wells Memorandum (epa.gov)

¹⁸ Primary Enforcement Authority for the Underground Injection Control Program | US EPA

¹⁹ See generally Class VI - Geologic Sequestration Wells | Department of Mineral Resources, North Dakota (nd.gov) (noting that since North Dakota obtained Class VI primacy in 2018 they have produced eight Class VI permits in contrast to the six Class VI well permits issued by the EPA nationwide since the UIC program was implemented in 2010); cf. Current Class VI Projects under Review at EPA | US EPA (noting that the EPA aims to review and complete Class VI applications and issue permits within approximately 24 months).

²⁰ EPA to Decide the Future of Louisiana's Carbon Capture Potential (energyindepth.org)

²¹ Louisiana Granted Primacy Over Class VI Wells (lca.org)

²² See Id.