The Nickel Report

On April 29, 2025, EPA Region 6 entered into a Memorandum of Agreement (MOA) with the Texas Railroad Commission (RRC) that outlines the state’s plans for administering its Class VI injection well program related to carbon capture, utilization, and sequestration. The MOA delineates the responsibility of authority for administering all Class VI injection well activities and regulation in the State of Texas. The signing of the MOA is a significant step towards RRC’s primacy over its Class VI injection well program and represents the end of the application phase of RRC’s primacy effort and the beginning of the proposed rulemaking phase.  

EPA is currently preparing a proposed approval of RRC’s primacy application which will be published in the Federal Register. Publication of the proposed approval will initiate a 45-day public and comment period and, if requested, a public hearing. Upon completion of the proposed rulemaking phase, EPA will review all comments received during the notice and comment period and public hearing. It will then prepare a final rule package for the EPA Administrator’s signature approving or disapproving the primacy application. If approved, the Administrator will sign the final rule and set it to be published in the Federal Register.

We expect that RRC’s primacy application could be granted as early as September 2025. However, as we have seen in other Class VI primacy applications, we expect that Texas’s primacy application will face significant challenges from NGOs and environmental groups, which could extend the process through early 2026.

History of CCUS in Texas

The Texas Legislature originally established the statutory framework for primacy in 2009 under Chapter 27 of the Texas Water Code which directed RRC to promulgate regulations for the storage and injection of anthropogenic CO₂ and to seek primacy over the program if allowed by federal statute or regulation. In response to the legislation, RRC adopted its first set of CCUS regulations in 2010. On September 19, 2022, RRC adopted amendments to its CCUS rules to meet federal primacy requirements and officially submitted its application for primacy to the EPA on December 19, 2022. After EPA’s initial review for completeness, RRC amended its regulations to address EPA’s comments and submitted the final rules to EPA for review in August 2023. By entering into an MOA with RRC, EPA Region 6 signifies that it has determined that RRC’s application is administratively complete, and a proposed rule granting RRC primacy is imminent.

What RRC’s Class VI Permit Program Will Look Like

While the statutory authority for the program is under Texas Water Code ch. 27, the regulatory authority is found in 16 Tex. Admin. Code ch. 5. The primary focus of the program is to protect underground sources of drinking water. It will be administered by RRC’s Oil and Gas Division under the Carbon Sequestration Group. Initially, the Class VI Injection Team will be comprised of 4 employees: 2 geologists and 2 reservoir engineers. This team will conduct the technical review of permit applications, delineation plans and reports, monitoring plans and reports, and mechanical integrity tests and is also responsible for drafting Class VI permit provisions.

Class VI Permitting Process

A Class VI Injection Well Permit issued under Subchapter B, of 16 Tex. Admin. Code ch. 5 will be required for all CCUS projects. In addition to applying to RRC, the applicant must send its permit application to EPA Region 6 and the TCEQ. Tex. Water Code § 27.0461 requires that any permit application must have an associated letter of determination from the TCEQ concluding that the project will not interfere with any previous or existing Class I injection well or other injection wells permitted by TCEQ.

The application must contain all of the information required by 16 Tex. Admin. Code § 5.203, including geologic information, geochemical information, hydrologic information, delineation of the area of review, identification of penetrations, well construction information, etc. Following is the full list of application requirements:

• Fees (for example, $50,000 for a new geologic storage facility)
• Project Narrative and Site Characterization
• Pre-Operational Testing Plan
• Well Construction Plan
• Well Stimulation Plan
• Operating Plan
• Area of Review (AOR) and Corrective Action Plan (CAP)
• Testing and Monitoring Plan (including MIT)
• Quality Assurance and Surveillance Plan (including. seismicity)
• Well Plugging Plan
• Emergency and Remedial Response Plan
• Post-Injection Site Care (PISC) and Site Closure Plan
• Financial Assurance and Responsibility Demonstration
• Freshwater “No Harm” Letter from RRC’s Groundwater Advisory Unit
• Class I “No Harm” Letter from the Texas Commission on Environmental Quality (TCEQ)
• Environmental Justice (EJ) or Limited English-Speaking Community Assessment and Plan

Technical Review

If the permit application is determined to be complete, RRC will perform a technical review of the application. RRC will first perform a review to determine whether the submitted data is accurate, is of high quality, has undergone appropriate QA procedures, and is representative of the site and project.

The RRC will then perform a technical evaluation of the submitted information to determine the suitability of the proposed site for the project. The RRC will determine whether the proposed project meets the general criteria in 16 Tex. Admin. Code § 5.206(b).

General Criteria of the Technical Review

• The injection and geologic storage of anthropogenic CO₂ will not endanger or injure any existing or prospective oil, gas, geothermal, or other mineral resource, or cause waste ;
• Both USDWs and surface water can be adequately protected from CO₂ migration or displaced formation fluids;
• Injection of anthropogenic CO₂ will not endanger or injure human health and safety;
• The construction, operation, maintenance, conversion, plugging, abandonment, or any other injection activity does not allow the movement of fluid containing any contaminant into USDWs;
• The reservoir into which the anthropogenic CO₂ is injected is suitable for or capable of being made suitable for protecting against the escape or migration of anthropogenic CO₂ from the storage reservoir;
• The geologic storage facility will be sited in an area with suitable geology;
• The applicant for the permit meets all of the other statutory and regulatory requirements for the issuance of the permit;
• The applicant has provided a letter from the Groundwater Advisory Unit of the Oil and Gas Division in accordance with §5.203(o) of this title (relating to Application Requirements);
• The applicant has provided a letter of determination from TCEQ concluding that drilling and operating an anthropogenic CO₂ injection well for geologic storage or constructing or operating a geologic storage facility will not impact or interfere with any previous or existing Class I injection well, including any associated waste plume or any other injection well authorized or permitted by TCEQ;
• The applicant has provided a signed statement that the applicant has a good faith claim to the necessary and sufficient property rights for construction and operation of the geologic storage facility for at least the first five years after initiation of injection in accordance with § 5.203(d)(1)(A) of this title;
• The applicant has paid the fees required in § 5.205(a) of this title (relating to Fees, Financial Responsibility, and Financial Assurance);
• The director has determined that the applicant has sufficiently demonstrated financial responsibility as required in § 5.205(b) of this title; and
• The applicant submitted to the director financial assurance in accordance with § 5.205(c) of this title.

Completion of Technical Review

Once its technical review is finished, RRC will notify the applicant whether the application is technically complete or deficient and will request additional information as necessary. Upon completion of the permit application evaluation, RRC will determine whether to prepare a draft permit or deny the application. If the permit application is denied administratively, an administrative denial notice will be mailed to the applicant, and the applicant has the right to request a hearing. If the RRC determines that a draft permit should be issued, RRC will prepare a fact sheet summarizing the project and issue public notice of the comment period and a public hearing.

Public Participation

To meet the public participation requirement, RRC must publish notice of the draft permit once a week for three consecutive weeks in a newspaper in each county where the storage facility is to be located and must publish notice on RRC’s website.

Notice must also be given to the persons listed in 16 Tex. Admin. Code § 5.204(a)(3):

• The applicant;
• EPA;
• TCEQ, TWDB, TDSHS, TPWD, GLO, Texas Historical Commission, the United States Fish and Wildlife Service, other federal and state agencies;
• Each adjoining mineral interest owner, other than the applicant, of the outermost boundary of the proposed geologic storage facility;
• Each leaseholder and interest owner of minerals lying above or below the proposed geologic storage facility;
• Each adjoining leaseholder of minerals offsetting the outermost boundary of the proposed geologic storage facility;
• Each owner or leaseholder of any portion of the surface overlying the proposed geologic storage facility and the adjoining area of the outermost boundary of the proposed geologic storage facility;
• The clerk of the county or counties where the proposed geologic storage facility is located or is proposed to be located;
• The city clerk or other appropriate city official where the proposed geologic storage facility is located within city limits;
• Any other unit of local government having jurisdiction over the area where the geologic storage facility is or is proposed to be located, and each state agency having any authority under state law with respect to the construction or operation of the geologic storage facility;
• Any State, Tribe, or Territory any portion of which is within the AOR of the Class VI project;
• Persons on the mailing list developed by the Commission, including those who request in writing to be on the list and by soliciting participants in public hearings in that area for their interest in being included on area mailing lists; and
• Any other class of persons that the director determines should receive notice of the application.

Upon publication of the notice, the public comment period begins, and any interested person may submit written comments for 30 days. If the permit goes to a public hearing, the public comment extends through the close of the hearing. 16 Tex. Admin. Code § 5.204(b)(1).

Public Hearing

A public hearing will be held if:

• If RRC receives a protest or request from an interested person or an affected person, that is, a person who, as a result of activity sought to be permitted, has suffered or may suffer actual injury or economic damage other than as a member of the general public;
• If the RRC finds there to be a significant degree of public interest in the draft permit; or
• If RRC determines within its discretion that a hearing will clarify certain issues in the draft permit.

The RRC will provide notice to the applicant and, upon applicant’s request, schedule a contested hearing on the permit application. After completion of the public hearing and review of the public comments, RRC will make its decision on the permit and issue the Class VI permit. RRC will issue a response to all formal comments it received during the hearing process. 16 Tex. Admin. Code § 5.204(b)(5)

If a protestant wishes to seek judicial review of a permit being granted, the protestant must file a motion for rehearing as a prerequisite for seeking an administrative appeal. The motion for rehearing must be filed within 25 days of the RRC’s final order. Tex. Gov’t Code § 2001.146(a). If RRC does not act on the motion for rehearing within 55 days of the final order, the motion for rehearing is overruled as a matter of law. Tex. Gov’t Code § 2001.146(c). The standard of review is substantial evidence under which a court can overturn RRC’s decision only if it is arbitrary and capricious. Unlike EPA permits, suits for judicial review will not stay the effectiveness of the RRC’s issued permit.