The Rocky Mountain West is quietly becoming the most organized regulatory environment in the country for carbon capture and storage (CCS) projects. Two developments this spring deserve close attention:

1) The Environmental Protection Agency’s (EPA) proposed rulemaking granting Class VI underground injection control (UIC) well primacy to the State of Colorado, and

2) An interstate Memorandum of Understanding (MOU) between Colorado and Wyoming to coordinate cross-border CCS projects.

As explained below, EPA’s final grant of primacy, coupled with the MOU, should provide Colorado and Wyoming CCS project developers and sponsors with increased speed and consistency of permitting and project review.  They should also reduce risk for interstate projects that could otherwise face uncertainty regarding ownership and liability if injected CO₂ migrates across the CO-WY state boundary.

Operators planning Class VI wells and CCS projects near the Colorado-Wyoming border should begin aligning permitting strategy, title diligence, and stakeholder engagement with the emerging state framework ahead of EPA’s final decision on the proposed rule.

Where Things Stand

On March 19, 2026, EPA proposed a rule approving Colorado’s application for primary enforcement responsibility over Class VI UIC wells under the Safe Drinking Water Act. Class VI wells are used for injection of carbon dioxide into underground subsurface rock formations for long-term storage or geologic sequestration. In contrast to past proposed Class VI primacy approvals in Texas, Louisiana, and West Virginia, EPA received little public pushback. The public comment period closed on May 4, 2026, and a public virtual hearing was held on April 23, 2026. If finalized, the Colorado Energy and Carbon Management Commission (ECMC) will issue and enforce Class VI permits statewide, except on tribal lands.

The same day the comment period closed—May 4, 2026—ECMC and the Wyoming Department of Environmental Quality (DEQ) executed a Memorandum of Understanding governing Class VI projects that are within 1 mile of or that cross the Colorado-Wyoming boundary. While five other states also currently have Class VI primacy, i.e., Arizona, North Dakota, Texas, Louisiana, and West Virginia, the MOU is the first such agreement between contiguous Class VI primacy states.

The main purpose of the MOU is to ensure there are no time lags in coordination between the States. Under the MOU, the permitting state must notify its counterpart within thirty days of receiving a Class VI application. The notification must include certain details, such as injection volumes, geologic and hydrologic data, hearing dates, and public comment details; a full list can be found within the MOU linked above. Within fourteen days of receiving such notice, the impacted agency must acknowledge receipt. The impacted agency then must raise legal, regulatory, or environmental concerns within sixty days and request a consultation meeting.

As Colorado Governor Jared Polis stated, “[t]his MOU brings Wyoming and Colorado together to speed up permitting, support cleaner air, and protect property rights.”

How We Got Here

EPA’s proposed approval of Colorado’s application for primacy over Class VI wells was facilitated by significant steps taken by the Colorado General Assembly over the past few years.

In 2023, the Colorado General Assembly enacted Senate Bills 23-285 and 23-016, which, in addition to updating Colorado’s statewide greenhouse gas reduction goals and renaming the “Oil and Gas Conservation Commission” as the “Energy and Carbon Management Commission,” extended ECMC’s regulatory jurisdiction to include Class VI wells.  The bills also directed ECMC to pursue Class VI primacy from EPA under the Safe Drinking Water Act. Senate Bill 23-016 further conditioned Class VI well permitting on a public hearing, operator financial assurance, compliance with local siting requirements, air permitting by the Colorado Department of Public Health and Environment, surface owner consent, applicable setbacks, and a determination that the proposal would not negatively impact a Disproportionately Impacted (DI) Community.

In 2024, House Bill 24-1346 extended ECMC’s authority over geologic storage operations; confirmed that pore space is owned by surface owners unless separately severed, conveyed, or reserved; and created a statutory mechanism for the formation of geologic storage units (so-called “unitization”).  The legal structures provided by these three bills was critical to the success of Colorado’s Class VI primacy application.

Related Litigation in the 4th Circuit

It is worth noting that environmental NGOs have sued EPA claiming its decision to grant West Virginia primacy over Class VI wells and CCS projects was arbitrary and capricious. While the outcome will not be binding in Colorado, it could indicate successful ways to attack the grant of primacy to Colorado and could impact how EPA grants primacy to other states moving forward. The case was fully briefed as of March and a number of organizations and states, including Wyoming, have submitted amicus briefs. The case is tentatively scheduled for oral argument in late October.

Key Takeaways

EPA’s Colorado Class VI primacy proposed rule and the Colorado-Wyoming MOU are complementary developments that attempt to localize and codify CCS permitting in Colorado and nearby in Wyoming.  The key takeaways are:

  • Coordinated Permitting and Technical Review: The two instruments will facilitate information sharing between ECMC and DEQ. For developers, this should reduce the risk of conflicting regulatory requirements from two jurisdictions reviewing the same geologic system.
  • Streamlined Permitting Timelines: One of the primary motivations for primacy is speed. Historically, EPA-administered Class VI permits have faced lengthy review periods. States with primacy generally have more direct access to local geologic expertise and can often process permits more efficiently. EPA itself has framed primacy as part of a broader effort to expedite UIC permitting. Combining that with increased coordination between ECMC and DEQ (rather than siloed or sequential review), and the speed timeline compression should be noticeable. That said, the requirements of the new permitting regime (particularly those in Senate Bill 23-016) will take some getting used to.
  • Reduced Risk Regarding Property Rights and Pore Space Issues: Although the MOU does not eliminate differences in state law, it signals a commitment to coordinate around pore space ownership, unitization and storage agreements, and long-term stewardship concerns.  Particularly in light of House Bill 24-1346’s provisions regarding pore space ownership, this reduces risk for interstate projects that could otherwise face uncertainty regarding ownership and liability if injected CO₂ migrates across state boundaries.