On June 9, 2021, Texas Governor Greg Abbott signed House Bill 1284 (“HB 1284”), which was introduced along with its Senate companion, SB 450, during the state’s 87th legislative session.  HB 1284 grants the Texas Railroad Commission (“RRC”), the governmental agency that regulates the state’s oil and gas industry, sole jurisdiction over Class VI Injection Wells and carbon capture, use, and sequestration (“CCUS”) activities in Texas.

Class VI Injection Wells, which we have discussed previously, are used to inject carbon dioxide (“CO2“) into deep rock formations, also known as geologic sequestration. This technology is utilized in order to reduce CO2 emissions to the atmosphere and mitigate climate change. Class VI wells are one of six types of underground injection well classes established by the U.S. Environmental Protection Agency (“EPA”) that are subject to the requirements of Section 1421 of the Safe Drinking Water Act for the purpose of protecting underground sources of drinking water from endangerment.

A Class VI Underground Injection Control permit is required prior to drilling and operating a Class VI well for CCUS operations.  While Texas currently has “primacy” (approval from the EPA for permitting and enforcement authority) over issuing permits for wells in Classes I-V, it does not yet have primacy for wells in Class VI, which means that final authorization still comes from the EPA.  At this time, only Wyoming and North Dakota currently have Class VI primacy, though Louisiana is currently in the process of applying for primacy.  Again, more on that here.

Until the passing of HB 1284, which is effective immediately, the RRC and the Texas Commission on Environmental Quality (“TCEQ”) split jurisdiction over geologic storage of CO2, depending on whether the geologic formation itself was capable of producing oil, gas or geothermal resources. This shared regulatory responsibility within the state created an impediment to Texas’ eventual goal of receiving primacy from the EPA.

HB 1284 changed that by tasking a single agency with seeking delegation authority from the EPA on Class VI Injection Wells.  The RRC now has sole jurisdiction in Texas over the regulatory processes for these wells, simplifying the steps toward and paving the way for the RRC to seek primacy from the EPA and thus streamline the permitting process.  If Texas were granted primacy from the EPA over Class VI Injection wells, the RRC would be required to enforce the EPA’s environmental standards, and primacy could be revoked if the RRC failed to do so. The TCEQ will also continue to have input on each application for a permit to build a Class VI well, regardless of whether or not primacy is achieved.

This recently enacted legislation is indicative of strong support in Texas for the development of CCUS projects and helps clear the path for onshore and offshore CCUS deployment within the state.  The next step will be for Texas to apply for primacy from the EPA, a process which is expected to take one to two years.  Louisiana began this process last year, sending drafts of primacy documents to the EPA for review at the end of 2020.  Class VI regulations were published in the Louisiana Register on January 20, 2021, and it is expected that the EPA will complete its review of the package and public comments by the third quarter of this year.

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