Indiana to seek primacy over permits for C02 wells, relacing the U.S. Environmental Protection Agency

Hoosier leaders plan to take over federal review of a pipeline of contentious projects to inject carbon dioxide deep underground.

Nine applications for Indiana sites are before the U.S. Environmental Protection Agency, according to an agency tracker of Class VI permits.

They’re one of six classes of wells the EPA regulates under an Underground Injection Control program, for substances like oil, gas and now, the geologic sequestration of carbon dioxide.

CO2 capture and storage proposals have faced intense local opposition in Indiana.

A bill under consideration by the Indiana General Assembly would require the Indiana Department of Natural Resources’ autonomous board to seek primary enforcement authority over Class VI wells. House Bill 1368 also outlines a state-level regulatory scheme.

“Wherever you stand on sequestration … First of all, we want to keep Indiana competitive, bring in business and jobs,” said Rep. Ed Soliday, R-Valparaiso.

“Second of all, we want to be prepared to pivot with whatever happens in Washington, because Washington has been like a pendulum on a clock and it’s bouncing off the sides,” he said.

Soliday, the bill’s author, spoke during a committee hearing last week that featured enthusiastic industry testimony.

But some skeptics fear the state isn’t fully equipped to carry it out.

Primacy’s popularity

Six states already hold primary enforcement authority for Class VI wells, according to an EPA table: Arizona, Louisiana, North Dakota, Texas, West Virginia and Wyoming.

“They have to demonstrate that they will administer the program up to the standards that EPA, the federal government, would do it,” said Janet McCabe, a visiting professor at Indiana University and a former EPA deputy administrator.

An increasing number of states are considering joining.

As of October, Alaska was involved in primacy pre-application activities, while Colorado was working on proposed rulemaking, per an EPA graphic. Six others were in pre-application to revise their programs to include Class VI primacy: Alabama, Mississippi, Nebraska, New Mexico, Oklahoma and Utah.

Some successful Class VI applications took months, while others took years.

“Procedurally, it would follow the same steps” as other well types, McCabe said, “but how the wells would be used would dictate the kind of information that you would need.”

“If you’re going to be using a well to extract oil and gas, people have been doing that for years … and that’s a relatively straightforward and well-understood process,” she continued. “But storing CO2 underground is new, the technology is new. It just hasn’t been done as much. And there are all kinds of other questions that come into play.”

Timelines, proximity

One Indiana project has already obtained a Class VI permit: Wabash Valley Resources, which plans to produce ammonia fertilizer at a a former coal gasification plant — and pump the emissions underground. It’s a pilot with its own state laws and rules.

Others want in, too.

Sequestration would allow ethanol producers, for instance, to “fulfil(l) global and domestic demand for cleaner fuels,” said Tim Phelps, a lobbyist with Hathaway Strategies, who represented the Indiana Ethanol Producers Association in committee.

“While thorough review is vital to the public interest,” he said, the application process under the EPA has been “inconsistent,” causing “significant delays.”

“We are supportive of initiatives which seek to streamline this permitting process, to allow these projects — which involve significant investments of time and capital — to come to fruition,” Phelps said.

Association member POET, which bills itself as the world’s largest producer of bioethanol, is pursing Class VI permits at each of its five Indiana plants.

“We … support any effort to streamline permitting timelines,” said Hamilton Smith, a lobbyist for Ice Miller representing POET.

DNR has also made the case for pace.

“By accepting primacy for Class VI permitting, Indiana will be best positioned to work with all stakeholders to ensure that applications are reviewed with speed and efficiency, following all federal and state regulations,” spokesman Marty Benson said.

“Instead of relying upon an out-of-state regulator, questions can be addressed by DNR staff in Indiana,” he added — an argument industry leaders echoed.

“Generally, we prefer working with DNR,” said Mark Shublak, a Taft law firm partner representing fuel company CountryMark.

He cited familiarity with the agency’s handling of oil and gas wells, hopes staff would process applications “timely,” and accessibility to “Indiana market participants.”

Home ties also played into DNR General Counsel Stephanie Flittner’s testimony.

Primacy would “ensur(e) these decisions are made in Indiana — closer to Indiana geology, Indiana communities and Indiana stakeholders,” she said.

Trust, resources

Others are skeptical of a switch.

Kerwin Olson, the executive director of Citizens Action Coalition, said his ratepayer advocacy organization and peers think agencies like DNR can be too lax.

“Us and many others have sort of viewed Indiana environmental authorities as, you know, nothing more than pay-to-play sort of permit-issuing agencies,” he said. They worry the “streamlined” timeline a firm may seek could come at a cost.

“There’s a reason for that bureaucracy, those regulations, because there’s significant risk with these commercial facilities, and a thorough review with expertise is a good thing,” Olson said.

That’s not to say he had the utmost confidence in even the EPA.

“There’s permits that have been issued that we thought never should have been issued,” he said. “So I don’t know that it’s that we have any more confidence, per se, in outcomes at the EPA … but it’s a matter of staffing levels, expertise, resources, time.”

DNR’s Benson said staff “do not anticipate a fiscal impact” from running a Class VI program, noting the agency already has primacy for oil and gas wells. He also cited that experience in defending personnel “expertise and professionalism.”