The Texas Railroad Commission (RRC) adopted new rules governing carbon capture and sequestration and storage at its August 22, 2023, Open Meeting. The rules go into effect on September 11, 2023, and are intended to align with the requirements of Environmental Protection Agency’s (EPA) Class VI Underground Injection Control (UIC) program. Importantly, these rules go into effect while the State of Texas’s application to the EPA for primary authority over approval of Class VI wells is pending.
Class VI wells were established by EPA in 2010 for the purpose of injecting CO2 into deep subsurface geological formations. EPA promulgated the minimum technical requirements for obtaining Class VI permits and Texas has worked to develop its own statutory and regulatory framework consistent with EPA requirements. The key issues Texas addresses through this rulemaking are site characterization, area of review and corrective action, financial responsibility, well construction, operation, mechanical integrity testing, monitoring, well-plugging, post-injection site care, and site closure requirements.
Importantly, mechanical integrity tests must be completed every five (5) years once CO2 injection begins to confirm the absence of significant fluid movement within the geologic formation. Operators of CO2 sequestration facilities must also submit a post-injection storage facility care and closure plan demonstrating how long-term threats to drinking water will be prevented. Plans must also include details on a CO2 operator’s financial responsibility (which must be updated annually) requirements for care of the storage facility once the injection of CO2 ceases. If any permit applications receive any protests, a hearing may be required, however, administrative approval of CO2 permit applications is possible under the rules. Permits will be approved following notice to the public and any Environmental Justice communities.
Each permit will require payment of a $50,000 fee and an additional $25,000 fee for any permit amendments. Operators will also be charged an annual fee of $0.025 per metric ton of CO2 injected and an annual post-injection fee of $50,000 for each year that an operator does not inject into the geologic storage facility until the facility is closed. Operators must also install monitoring wells to confirm that sequestered CO2 is not migrating into other geologic strata.
Permit applications for CO2 storage must include detailed analyses estimating in current dollars the cost to perform corrective actions and emergency remedial responses to the CO2 facility. The amount of financial assurance required must be equal to or greater than the maximum amount necessary to perform corrective actions, provide emergency responses, post-injection monitoring, and site care and closure. The cost estimate must be performed separately for each phase of the life of the CO2 sequestration facility and must be based on the costs to the RRC of hiring a third party to perform the required activities. Cost estimates submitted to the RRC must be updated annually and whenever the estimated amounts exceed the amount of the obligated financial assurance. The financial assurances of the operator must be maintained until the CO2 facility is closed.
Operators must also file, of record in the county where the CO2 sequestration facility is located, on the deed to the facility property, a document indicating that the location is used to geologically store CO2, the volume and mass of the CO2 injected, and the zone or zones in which the CO2 was injected.
There have been recent developments surrounding direct air capture of CO2 in Texas, however, the RRC rules apply only to anthropogenic CO2. Additionally, the rules do not pertain to injection for enhanced oil recovery operations, which are governed by separate and already established RRC rules. Notably, the operator of an enhanced recovery project may propose and simultaneously seek to permit an enhanced recovery project as a CO2 geologic storage facility.
There remain other outstanding issues to address in Texas for CO2 sequestration projects to move forward, such as clarifying pore space ownership, which is pending before the Texas Supreme Court. However, the new RRC rules provide clarity for those seeking to develop CO2 storage projects in the Lone Star State. Many of Beatty & Wozniak, P.C.’s clients are actively working to establish CO2 projects and permit Class VI wells in Texas and throughout the country. If you have any questions about UIC permitting or about the recent changes to Texas rules for CO2 sequestration, please contact our team of regulatory professionals.