Proposed CEQ Guidance Seeks to Streamline Rollout of CCUS Technologies

The Biden Administration this month announced several initiatives aimed at reducing greenhouse gas (GHG) emissions from the industrial and manufacturing sectors. Included within this effort is a push for responsible deployment of Carbon Capture, Utilization, and Sequestration (CCUS) technologies. The White House Council on Environmental Quality (CEQ), the agency responsible for implementing National Environmental Policy Act (NEPA) requirements, published interim guidance on February 16 to clarify and streamline the permitting process for CCUS activities in the US and help accelerate project implementation. CEQ is accepting comments on the guidance until March 18, 2022. In this guidance document, CEQ calls for programmatic treatment of CCUS projects in environmental review, utilization of the FAST-41 permitting program, coordinated regulation for carbon dioxide pipeline expansion, interagency collaboration in Infrastructure Investment and Jobs Act (IIJA) implementation, attention to environmental justice principles and other measures to increase public confidence in CCUS projects.

The permitting of a CCUS project is complex and may require a multitude of federal, state and local permits or permissions. (See, e.g., Table 1 of CEQ’s July 2021 report to Congress for an overview of types of permits and permissions needed for CCUS projects). With regard to federal review alone, a CCUS project may require one or more Clean Air Act permits, an Underground Injection Control permit, and a Clean Water Act permit, among others. For offshore projects, a CCUS project will need to comply with the Marine Protection, Research and Sanctuaries Act (MPRSA) and the Outer Continental Shelf Lands Act (OCSLA). And, finally, for CCUS projects on federal lands, supported by federal funds, or that require certain federal permits and authorizations, the project must also comply with NEPA, Section 7 of the Endangered Species Act (ESA), the National Historic Preservation Act, as well as potentially other statutes impacting federal land. Of course, CCUS project proponents must also navigate the complex patchwork of state and local laws and regulations as well as legal uncertainties on issues from drilling a test well to ascertaining who owns the necessary pore space to store the carbon.

The CEQ guidance is an encouraging development, but it is important to note that the guidance addresses only certain aspects of the permitting framework relevant to CCUS project proponents. It does not directly address EPA’s issuance of Class VI permits under the SDWA, which is one of the central components of federal regulation. Nor does it address the many state law requirements that apply to CCUS projects.

CEQ Guidelines Promote CCUS, Highlight Need for Streamlined Permitting

The CEQ guidance emphasizes the importance of CCUS to the Biden Administration’s climate goals. While cautioning that avoiding emissions must be the first priority, the guidance notes that “[t]here is growing scientific consensus that . . . CCUS technologies and permanent sequestration are likely needed to prevent the worst impacts of climate change.” This is consistent with previous climate policy positions taken by the current administration, including, for example, the Long-Term Strategy of the United States on Net-Zero, released concurrently with the Glasgow Climate Conference in November, which features CCUS as a cross-sector tool to achieve net-zero ambitions by 2050. In addition to the climate benefits, CEQ highlights the potential for CCUS to support union-friendly jobs nationwide.

The proposed guidance, which CEQ was required to develop under the 2020 USE IT Act, seeks to facilitate accelerated rollout of CCUS technology by addressing bottlenecks in the permitting process. To further this goal, CEQ provides various recommendations aiming to balance needs of timeliness, predictability and efficiency in the permitting process with needs for meaningful community engagement and robust environmental safety standards. These recommendations build from a detailed report released by CEQ in June 2021.

CEQ Recommends Use of Programmatic Environmental Reviews for CCUS

The CEQ guidance directs agencies to consider developing programmatic environmental reviews to increase the efficiency and effectiveness of the CCUS permitting process. Under NEPA, CEQ suggests the use of tiered documents or programmatic environmental impact statements to analyze areas where agencies expect the development of multiple CCUS projects. Similarly, under the Endangered Species Act (ESA), CEQ encourages the use of programmatic biological impacts statements. Agencies within the Obama Administration utilized this programmatic approach to environmental review when facilitating the development of utility-scale solar power projects in 2012. Some observers contend that programmatic NEPA reviews can be complicated and lengthy, and CEQ will need to carefully consider the circumstances in which this tool would be appropriate.

Utilizing Title 41 of the Fixing America's Surface Transportation Act (FAST-41) to Facilitate Interagency Coordination

CEQ highlights that the FAST-41 framework can be utilized to clarify the timeline of CCUS permitting. FAST-41 is a voluntary program established in 2015 which is designed to ensure a transparent and predictable environmental review and permitting process for qualifying major infrastructure projects. The USE IT Act established that CCUS projects are eligible for FAST-41 treatment, but to date no CCUS project applications have been received by FAST-41’s Federal Permitting Improvement Steering Council (FPISC). CEQ recommends that FPISC establish an appropriate facilitating agency for each general CCUS project category and develop recommended performance schedules. CEQ also recommends that agencies identify the environmental reviews most commonly required for such projects, and consider implementing interagency MOUs to facilitate collaboration on CCUS activities.

Carbon Dioxide Pipelines

The CEQ guidance notes that expansion of the nation’s carbon dioxide pipeline network will be “critical to the future nationwide deployment of CCUS.” To support this expansion, CEQ recommends that agencies with regulatory authority over any component of carbon dioxide pipelines issue updated guidance, as appropriate. This includes a broad swath of regulatory activities, from defining the safety requirements of the physical pipeline to training first responders on how to respond to potential carbon dioxide pipeline incidents. CEQ commits to facilitating interagency collaboration between the various federal and state agencies involved in the pipeline regulatory process, and to supporting close monitoring and enforcement of existing pipeline safety regulations.

IIJA Implementation

CEQ also makes commitments to assist and monitor the progress of federal agencies in implementing various CCUS-related provisions of the IIJA, including DOI’s roll out of a leasing process for offshore CCUS projects in federal waters and the allocation of increased funding for EPA’s Class VI UIC Program, which could enable increased federal staffing and grants to States with primary enforcement authority (primacy) or seeking such authority.

Environmental Justice and Other Good Governance Considerations

The guidance emphasizes the need for community engagement, and in particular incorporation of community environmental justice and equity considerations, in the environmental permitting process. CEQ recognizes the importance of this issue to supporting public confidence in CCUS technologies, as a number of community organizations have historically expressed concern about the siting of CCUS projects. CEQ provides a list of environmental “best practices” for agencies and CCUS project developers to consider, including evaluating the impacts of CCUS actions on potential host communities early in the planning process, avoiding the imposition of additional pollution burdens on overburdened communities, and consulting with tribes and communities in a transparent manner. Indeed, transparency is a major theme throughout the guidance document, including CEQ’s support for enhancing CCUS reporting requirements under EPA’s Greenhouse Gas Reporting Program and further study of the non-carbon air quality impacts of carbon capture technology.

*          *          *

Interested parties may submit comments to CEQ on the interim guidance until March 18, 2022. 

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.