As part of an ongoing Blog series, Arnold & Porter's cross-practice Energy and Energy Transition team is highlighting key legal and regulatory developments for clients across economic sectors.
A recent Fifth Circuit decision has eased the path for the U.S. Environmental Protection Agency (EPA) to delegate authority to state agencies to issue and enforce Class VI injection well permits, a key permit needed for most carbon capture and storage (CCS) projects.
In Deep South Center for Environmental Justice v. EPA, a group of NGOs had challenged the Biden administration's 2024 decision to grant Louisiana Class VI permitting authority — referred to as "primacy" under the Safe Drinking Water Act's Underground Injection Control (UIC) Program. The Fifth Circuit dismissed the case after concluding that the groups lacked either organizational or associational standing. First, the court determined that petitioners "cannot manufacture its own standing" by alleging that the primacy approval forced them to divert time and resources that would otherwise go towards the group's other activities. The court also determined that petitioners lacked associational standing on behalf of its individual members, finding that they could not satisfy the imminence or traceability requirements of Article III.
Among other things, petitioners challenged the liability transfer mechanism in Louisiana's CCS legislation. This mechanism requires CCS operators to pay into a trust fund throughout the course of injection operations, and in exchange the state assumes long-term responsibility and liability for the facility after closure if certain technical requirements are met and the trust is adequately funded. See L.R.S. § 30:1109. Petitioners alleged that its members would face future harm if an incident occurred after a state transfer because they could receive reduced compensation from a state fund as compared to a private operator. Emphasizing that the Louisiana provision acts as a liability transfer, not a liability waiver, the court concluded that petitioners' theory "stretches attenuation and speculation far beyond their breaking points."
The ruling comes at a time when states and the EPA have shown increased interest in states efficiently obtaining primacy over Class VI wells. For example, EPA has removed expectations that Class VI state regulatory packages include explicit consideration of environmental justice, which, under the Biden administration EPA had led to delays in EPA approvals. Nine states are currently in the process of applying for Class VI primacy (Alabama, Alaska, Arizona, Colorado, Mississippi, Nebraska, Oklahoma, Texas, and Utah). Earlier this month, EPA proposed to approve Arizona's application for primacy over all UIC well classes, including Class VI (the comment period for this proposal closes on July 3, 2025). EPA also recently reached a Memorandum of Agreement with the Texas Railroad Commission regarding the commission's plan to administer the state's Class VI program, indicating a proposed primacy approval is likely forthcoming. These states would join the four other states that have obtained Class VI primacy thus far: North Dakota (2018), Wyoming (2020), Louisiana (2024), and West Virginia (2025).
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