EPA Releases Two New Final Rules Today Regarding Geologic Sequestration of Carbon Dioxide
An update from Sara Bergan and Sarah Johnson Phillips
Federal Requirements Under the Underground Injection Control (UIC) Program for Carbon Dioxide (CO2) Geologic Sequestration (GS) Wells See Pre-publication Rule
The rule finalizes minimum federal requirements under the Safe Drinking Water Act for underground injection of carbon dioxide (CO2) for GS purposes. It establishes a new class of well, Class VI, and sets minimum technical criteria for projects. The guidance covers steps from permitting and site characterization to ongoing monitoring of the CO2 stream, injection wells and CO2 plume to well plugging, post-injection site care and site closure. All criteria are set for the purposes of protecting underground sources of drinking water (USDW) only. The rule covers owners and operators of new CO2 injection wells used for Class VI GS as well as those transitioning CO2 injection wells from Class I,II, or V to Class VI GS. Notably the final rule, as changed or clarified from the earlier proposed rule, provides for the following:
- Independent primacy exclusively for Class VI wells under subparagraph §145.1(i) of the final rule;
- Adaptive rulemaking whereby EPA will review the rulemaking every 6 years to make changes as necessary to incorporate new research, data and information about GS technologies;
- Reevaluation of the Area of Review (AoR) for GS projects every 5 years in order to address concerns about the inherent uncertainties in modeling CO2 movement and with emerging GS technology;
- Requirement that owners or operators use direct methods to monitor for pressure changes in the injection zone and to supplement with indirect, geophysical techniques; and
- Clarification of the requirements necessary to ensure financial resources are available to protect USDWs from endangerment over the long term.
The Final Rule will be published in the Federal Register. Information on the Final Rule and earlier actions can also be found at www.regulations.gov, under Docket ID No. EPA-HQ-OW-2008-0390.
Final Rule: Mandatory Reporting of Greenhouse Gases: Injection and Geologic Sequestration of Carbon Dioxide See Pre-publication Rule
EPA amended the Greenhouse Gas (GHG) Reporting Program, 40 CFR part 98, to cover GHG monitoring and reporting requirements for owners and operators of facilities conducting GS activities (subpart RR) and of any other facility conducting CO2 injection (subpart UU). The data collected under the GHG Reporting Program will inform EPA policy decisions under the Clean Air Act related to the use of CO2 capture and sequestration (CCS) for mitigating GHG emissions. Owners or operators of GS facilities are required to develop and implement a site-specific Monitoring, Reporting and Verification (MRV) plan that would be used to verify the amount of CO2 sequestered and quantify any emissions leaks.
All UIC permitted Class VI wells will be covered under subpart RR. Enhanced oil and gas recovery (EOR) projects using CO2 will be covered under subpart UU, but could be covered by subpart RR if they choose to opt in or apply for a Class VI well permit. Opting into subpart RR would not, for example, require an existing EOR project with a UIC Class II well permit to obtain a Classs VI permit.
The EPA approval process for the purposes of GHG reporting and verification is separate from the UIC permitting process, and the GHG reporting requirements were developed to minimize overlap with the UIC requirements. Despite the effort to avoid overlap, both programs require regular reporting on the quantity of CO2 injected (flow rate) but at different frequencies and specifications. There may also be overlap in monitoring for CO2 leakage to the surface, although the UIC purpose in doing so is to protect USDWs whereas the GHG program’s purpose is to assess the efficacy of GS as a climate change mitigation strategy. The GHG rule is drafted to build upon the UIC requirements and accept information obtained under the UIC program where feasible. Research and development projects meeting eligibility requirements are exempt from reporting under subpart RR.
The Final Rule will be published in the Federal Register. Information on the Final Rule and earlier actions can also be found at www.regulations.gov under Docket ID No. EPA-HQ-OAR-2009-0926.
EPA Announces "Endangerment" and "Cause or Contribute" Findings
Stoel Rives partner Tom Wood reports:
Minutes ago EPA announced its long awaited “endangerment” and “cause or contribute” findings in relation to six key greenhouse gases – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. While technically this announcement is of limited significance (applying only to motor vehicle emissions), the policy import of these determinations is tremendous.
In 2007, the U.S. Supreme Court held that greenhouse gases are air pollutants covered by the Clean Air Act in the Massachusetts v. EPA decision. This case arose in relation to EPA’s choice not to regulate carbon dioxide emissions from new motor vehicles. The Court held that EPA must determine whether or not emissions of greenhouse gases from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision.
Earlier this year EPA proposed to issue the two part finding required to commence regulation of greenhouse gas emissions from new motor vehicles. This required first a finding that greenhouse gas emissions endanger public health and welfare and a second finding that emissions from new motor vehicle engines cause or contribute to greenhouse gas air pollution. The comment period for these proposed findings ended June 23, 2009 and EPA received over 380,000 public comments. Today, Lisa Jackson (EPA Administrator) signed final findings that greenhouse gases endanger both the public health and the public welfare of current and future generations and that the combined emissions of these greenhouse gases from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas air pollution that endangers public health and welfare.
As a legal matter, today’s findings relate only to vehicle emissions. However, the precedent that they create will almost certainly result in substantial regulation for other source categories. It is no coincidence that this finding was announced on the first day of the Copenhagen talks on climate change. The Obama administration both wanted to show that some progress was being made in the U.S. and it wants to leverage this progress into further statutory or regulatory requirements.
Towards this goal, one of the more interesting things to come out of the determinations is the formal establishment of the new pollutant: “Well-Mixed Greenhouse Gases.” This term is now officially entered into EPA’s regulatory lexicon as a pollutant to be regulated. Well-Mixed Greenhouse Gases consists of the 6 Kyoto gases (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride) but introduces the grouping now as a regulatory unit. It is noteworthy that vehicles are not material sources of all of these greenhouse gases and so the use of this term should be seen as setting the stage for future regulation.
Also of interest is an EPA restatement in a footnote that at this time it does not consider greenhouse gases to be a regulated air pollutant. This is of tremendous significance to stationary sources of greenhouse gases as the moment that greenhouse gases become regulated, there is the potential argument that they are subject to Title V and major new source review permitting. At the risk of understating the issue, that would be a mess of biblical proportions.
For those wishing to read all 284 pages of the findings document, it can be found at: http://www.epa.gov/climatechange/endangerment/downloads/FinalFindings.pdf
The findings are not valid until 30 days after they are published in the Federal Register. Expect publication to occur later this month.
Federal Appeals Court Reinstates Carbon Dioxide Nuisance Suit Against Utilities
My partner Tom Wood recently composed and circulated this email alert about the return of the "Global Warming" case against several electric utilities:
Five years ago eight states and New York City made headlines when they sued several electric utilities alleging that their carbon dioxide emissions constituted a federal common law nuisance. The plaintiffs wanted to force the companies to cap and reduce their carbon dioxide emissions. The federal trial court dismissed the case, holding that the issue was a political question that had to be addressed through the political branches of government and not through the courts. Earlier today the Second Circuit Court of Appeals reversed the trial court. This enables the plaintiffs to resume their nuisance lawsuit against the generating companies, but does not guarantee them victory as they will have significant evidentiary challenges to address. In reinstating the suit, the Second Circuit touted the judiciary’s ability to handle complex cases of this type and said that doing so would not interfere with the business of the other branches of government. However, the court noted in several places that the judiciary would be preempted in the future from addressing carbon dioxide through nuisance law if either Congress (i.e., the legislative branch) amends the Clean Air Act to regulate carbon dioxide or the executive branch, through EPA, moves to regulate carbon dioxide under existing authority.
Today’s decision will potentially have significant impacts on future climate change litigation. One of the areas heavily debated in the case was who has the ability to bring a federal nuisance claim such as that alleged here. The defendant companies recognized that states have the ability to bring federal common law nuisance claims, but argued that the potential contribution of carbon dioxide emissions to climate change was not the sort of issue for which a federal nuisance suit is available because, among other reasons, the impacts could not be traced to particular emission sources. The Second Circuit rejected this argument, setting the stage for the state suits to continue. The court also rejected arguments that private parties cannot bring federal nuisance suits related to climate change. The court recognized that the Supreme Court had never addressed this question, but concluded that private parties should be able to proceed with federal nuisance claims related to climate change when they invoke an overriding federal interest or federalism concerns. By holding that private parties can bring federal nuisance suits and by recognizing that climate change is of overriding federal interest, the court potentially cleared the way for federal lawsuits against all types of companies that emit material levels of greenhouse gases.
The decision will create significant new pressure on EPA and Congress to regulate greenhouse gas emissions. The court noted that it was reasonable to assume that EPA has the authority to regulate greenhouse gas emissions if it first determines that they “cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare” (referred to as an “endangerment finding”). However, as the court noted, EPA has only proposed to make such a finding and only in relation to mobile sources—not stationary sources such as factories and power plants. When/if EPA makes such findings, it must then develop a regulatory program. Until such time that a program is developed, the court held that the field is left open for federal common law nuisance suits. This holding will undoubtedly create increased support for taking the regulation of greenhouse gases out of the courts and back into the legislative or executive branches.
EPA is poised to issue several rules that will commence the regulation of greenhouse gases for mobile and stationary sources. These rules were not considered by the court as they had not been finalized. As these rules become finalized in the weeks and months ahead, the plaintiff’s victory may prove short-lived. However, there is no question that the decision is likely to have a tremendous impact on the debate regarding whether to proceed with greenhouse gas regulations.
