2.9

– Responses to Public Comments on Financial Responsibility

This file contains responsesto public comments onfinancial responsibility (comment

codes 5400 to 5460).This section includes comments on requirements to maintain financial responsibility and liability for long term care

.

Thetable below presents all of the EPA

-assigned comment codes that are included in

this section of the comment and response summary. Use the bookmarks in the PDF to
move among the comment codes

.

Topics included in this summary and associated comment codes

2.9 Proposed Financial Responsibility and Long

-Term Care Requirements 5400

2.9.1 Comments on proposed financial responsibility requirements (40 CFR 146.85) 5430

2.9.1.1 Need to adjust financial responsibility mechanisms 5432

2.9.1.2 Need for additional instruments 5434

2.9.1.3 Allowing separate financial demonstrations for plugging and abandonment and post

injection site care 5436

2.9.2 Comments on transfer of liability for long

-term care 5460

Every comment on these topic areas andthe associated response is included in this
summary; there is some repetition where multiple commenters made the same

comment.

Responses to letters from individual commenters or organizations are also available in

the rulemaking docket.Comment Code: 5400 2.9 Proposed Financial Responsibility and Long-Term Care Requirements



### Individual Comments

Commenter Name: Herbert Skolnick, Ph.D. Letter ID: 0110 Commenter Organization: Group Against Smog and Pollution, Inc. (GASP) Comment ID: 22038 Other EPA Comment Codes and Descriptions: 5000 2.8 Proposed Well Plugging and PostInjection Site Care Requirements

Comment:Finally, given the lower costs of CO2 sequestration in existing oil fields and the attendant increased oil production, sequestration in existing oil fields is also more likely to provide storage site operators with the financial resourcesnecessary to ensure proper site closure and post-closure care, and to meet longterm financial assurance requirements.

Response:EPA agrees with the commenter that depleted oil and gas reservoirs associated with ER operations may be used for CO2 storage and that these sites may be some of the first sites where commercial-scale GS is deployed.

EPA clarifies that the goal of financial responsibility is to ensure that financial resources are available to prevent or remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. Assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected.

EPA is developing guidance on financial responsibility for Class VI wells (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators may use to meet financial responsibility requirements for Class VI wells.

Commenter Name: Herbert Skolnick, Ph.D. Letter ID: 0110 Commenter Organization: Group Against Smog and Pollution, Inc. (GASP) Comment ID: 29296

Comment: Regardless of what specific form the CO2 sequestration program ultimately takes, at a minimum, the program must ensure that:

3. steps must be taken to ensure that site operators have sufficient financial resources to cover post-closure care and any potential future liability

Response:EPA agrees and clarifies that the goal of financial responsibility is to ensure that financial resources are available to prevent or remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA agrees that assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected.

Commenter Name: George Holliday, PhD, PE, BCEE Letter ID: 0114 Commenter Organization: Holliday Environmental Services, Inc. Comment ID: 22523Comment:EPA discusses what happens, if, the sequestration operator goes bankrupt or decides "enough is enough" and cannot or will not continue monitoring the highly pressure CO2 containing formulation. But EPA offers no useable answer in the proposed rule. EPA suggests in the instant preamble that, we wait until EPA finds an answer. Such assurance is without merit. Now, during the rule proposal stage is the time to provide concrete requirements to assure the public of the safety of sequestration!

The Federal Government can establish a trust fund? If one considers the Social Security Trust Fund, we can expect the sequestration fund to be combined with the General Fund for Government maintenance and then the money is not available when need! Who will prevent Congress from using the funds when times are lean? The Safe Drinking Water Act makes no provision for this alternative!

Response: The goal of financial responsibility is to ensure that financial resources are available to prevent or remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. Assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected.

Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.

Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Commenter Name: George Holliday, PhD, PE, BCEE Letter ID: 0114 Commenter Organization: Holliday Environmental Services, Inc. Comment ID: 22535 Other EPA Comment Codes and Descriptions: 1900 1.4.3 Technical workshops

Comment: or nothing was accomplished during the Workshops. EPA deprives the commenters of accurate input from the Workshops. For example, EPA at 73 FR 43520 states:

"...SDWA does not have explicit provisions for financial responsibility, as included in RCRA, EPA believes that the general authorities provided under the SDWA authority to prevent endangerment of USDWs include the authority to set standards for financial responsibility to prevent endangerment of USDWs from improper plugging, remediation, and management of wells after site closure. The SDWA authority does not extend to financial responsibility for activities not related to protection of USDWs (e.g., coverage of risks to air, ecosystems, public health or public safety unrelated to USDW endangerment). It also does notcover transfer of owner or operator financial responsibility to other entities, or creation of a third party financial mechanism where EPA is the trustee."

Response: As described above, the summaries of the workshop discussions were condensed to make them more readable. EPA notes that it received numerous comments on financial responsibility during the comment period for the proposed rule. These comments are available in the docket for this

rule.

In reference to comments on financial responsibility, as described above, under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.

The Agency clarifies that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name: George Holliday, PhD, PE, BCEE Letter ID: 0114 Commenter Organization: Holliday Environmental Services, Inc. Comment ID: 22537

Comment:EPA DOES NOT INCLUDE A RECOMMENDED MEANS OF FUNDING SEQUESTRATION LONG TERM

CORRECTIVE ACTION.

When one considers the emphasis on enhanced income available from climate change presented on www.wecandoit.org, it is difficult to imagine speculative companies being willing to fund short-term injection but not long- term remedial projects. After the financial income ceases, these companies will fade away, particularly if the IOGCC (2007) trust fund recommendation is followed, 73 FR 43504. The trust fund is similar to insurance. The Trust Fund input per ton of CO2 by the speculators will be considered part of the cost of doing business.

EPA appears to be waiting for counsel from the Environmental Financial Advisory Board (EFAB) regarding recommendations for long term corrective action regarding financial responsibility. Review of the EPA cited documents regarding EFAB shows the so called "important topic" of Class VI well financial responsibility was not discussed at the WORKSHOP ON FINANCIAL ASSURANCE IN EPA PROGRAMS,

JUNE 17, 2008 - NEW YORK, NY http://www.epa.gov/efinpage/publications/FinancialAssuranceWorkshopSummary.pdf.

At the EPA, Environmental Financial Advisory Board Meeting 27 March 10-11, 2008, the minutes record the follow action regarding "this important topic":

"DFO Meiburg described EFAB’s role in paying for activities especially in the area of SRFs for water programs. EFAB has expanded in the last few years intothe transportation sector which is related to climate change. For example, the CO2 injection program would require financial assurance, if something goes wrong in the clean up. EFAB has been working with the Office of Solid Waste and the

Office of Enforcement over financial assurance related to Resource Conservation and Recovery Act (RCRA)."

The sense of urgency expressed by the Agency appears to be lacking in these Board minutes. If in fact, EFAB is discussing "transportation sector", the discussion may relate to a different agenda item. In any event, EFAB does not appear to be actively engaged in long term corrective action funding for Class

VI wells.

The EPA discussion from 73 FR 43520 - 43522 regarding surety provisions is not formulated as a rule. The presentation resembles an Agency thinking "out loud trying to find an answer." We are given no opportunity to comment on a rational proposal, because the data are withheld!

Response:EPA notes that long-term liability is outside of the scope of the GS rulemaking and is not addressed in the GS rule. SDWA does not contain any express provisions addressing liability. An owner or operator will be held liable for any permit violations under SDWA §1423.

Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells.Commenter Name:John Stormon Letter ID: 0123 Commenter Organization:Washington State Dept. of Ecology Comment ID: 23009 Other EPA Comment Codes and Descriptions: 5430 2.9.1 Comments on proposed financial responsibility requirements (40 CFR 146.85)

Comment:Financial Assurance: Financial assurance accounts, funded with real assets must be required. Financial tests and self insurance are of no value if a company becomes financially insolvent. As we have recently seen in the financial world, the collapse of a company can occur quite rapidly. Financial assurance is only of value if the assets remain in the account after the company's financial

demise.

Response:EPA agrees that assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at Class VI sites is an important component of ensuring that USDWs are protected. The goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties.

EPA will retain self-insurance as an option to demonstrate financial responsibility for Class VI wells. EPA believes, based on input by commenters, that self-insurance, if properly used, can be an appropriate option for certain owners or operators. Self-insurance has been used successfully in the past (e.g., under the Class I and RCRA programs). EPA recognizes that there are some concerns about the use of self insurance, including those mentioned by the commenters, and is developing guidance (available on EPA’s website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to assist Directors in evaluating the appropriateness of self-insurance in specific circumstances, such as how to evaluate owners or operators' demonstrations of financial worthiness or whether certain owners or operators pose too great a financial risk to use self-insurance as a financial responsibility instrument. EPA acknowledges that states may not be authorized under state law to allow for self insurance or other financial instruments. Therefore, states may prohibit the use of any financial instruments included in the rule, including self insurance, for Class VI wells. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:Emily Rochon Letter ID: 0129 Commenter Organization: Greenpeace International Comment ID: 23068 Other EPA Comment Codes and Descriptions: 5000 2.8 Proposed Well Plugging and PostInjection Site Care Requirements

Comment: It must be reiterated that monitoring and verification of CO2 storage sites is along-term task. It does not end when the storage reservoir is capped. Postoperational monitoring over hundreds of years is essential. Significant risks continue to exist and must be monitored both to prevent a catastrophic short term release as well as long-term slow leakage. Even if it is feasible to bury hundreds of thousands of gigatons of CO2, there is no way to guarantee that storage locations will be appropriately designed and managed over the timescales required.

Response:EPA agrees that post-injection monitoring should continue for an extended time, butdisagrees that hundreds of years of monitoring would be needed. EPA believes that a 50 year postinjection site care timeframe represents a reasonable and protective monitoring period. EPA basesthis on a review of research studies, industry reports, existing environmental programs, and evaluation of public comments. Furthermore, EPA believes that a 50-year default post-injection site care timeframe is not overly burdensome, does not exaggerate the risks associated with GS, is consistent with other environmental programs, and sufficiently protects USDWs from endangerment. For this reason, the final GS regulation retains the 50 year post-injection site care timeframe, as specified in §146.93(b)(1).

The GS rule provides the Director with discretion to extend the timeframe (e.g., if, after 50 years, monitoring data indicates that the CO2 plume may endanger a USDW), or shorten the timeframe (if the owner or operator can demonstrate that the GS project does not pose an endangerment to USDWs), under 146.93(b)(2). Such a demonstration will be site-specific, and based on pressure monitoring and USDW impacts. EPA clarifies that in no cases will site closure be authorized until the owner or operator demonstrates to the satisfaction of the Director that the site no longer poses a risk of endangerment to USDWs.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, his or her financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action, such as administrative orders or civil actions, the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. If the owner or operator fails to comply with the order, he or she may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, including all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of the final

rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, the Clean Air Act, 42 U.S.C. §§ 7401- 7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Emily Rochon Letter ID: 0129Commenter Organization: Greenpeace International Comment ID: 23070

Comment: A final essential consideration that must be taken into account is the vital issue of liability for geologically sequestered CO2. Once the CO2 has been pumped into the ground there must be a clear and definitive procedure for determining who is responsible for continued monitoring of the safety of the site and who is liable for any damages caused by leaks or other failures. The mechanism for detailing the legal and financial liability in such a circumstance absolutely must be established before any CCS projects can be allowed to begin.

Response:EPA agrees that assuring financial responsibility for post-injection site care and site closure is an important component of ensuring that USDWs are protected; the GS rule, at §146.85 requires owners or operators to maintain financial responsibility throughout the post-injection site care timeframe. The goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA adds that owners or operators must perform extensive post-injection site monitoring until it can be demonstrated that the GS site no longer poses a risk of endangerment to USDWs, as required at §146.93. For additional information, please see the discussion of post-injection site care in the final rule and preamble.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

Furthermore, the Agency clarifies that, after site closure, an owner or operator may, depending on the fact scenario, remain liable under tort and other remedies, or under other Statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992.

Commenter Name:Emily Rochon Letter ID: 0129 Commenter Organization: Greenpeace International Comment ID: 23075

Comment: to invest in risky technology such as CCS. However, should such plans be approved it is critical that the regulatory structure is in place to minimize the risk and assign proper financial and legal liability for any damages resulting from the carbon storage. There are aspects of the proposed regulation

Response:EPA agrees that assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected. The goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties.

EPA has specified acceptable financial responsibility instruments in the final regulation at §146.85. Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types offinancial instruments that owners or operators may use to meet financial responsibility requirements for GS wells. EPA plans to take the concerns expressed by commenters on the proposed regulation, including the acceptability of various financial instruments and the timeframe for PISC, into consideration as it develops the financial responsibility guidance.

Commenter Name: Robert Bessette Letter ID: 0139 Commenter Organization: Council of Industrial Boiler Owners (CIBO) Comment ID: 23082

Comment: A. Owner/Operator Liability

The proposed regulations affect owners and operators of injection wells that will be used to inject CO2 into the subsurface for purposes of geological sequestration. Owners and operators will be responsible for numerous siting, construction, testing, and monitoring requirements enumerated in the regulations, as well as long-term maintenance and financial requirements not yet wholly defined by the proposed regulations. The current regulations define "owner or operator" as "the owner or operator of any 'facility or activity' subject to regulation under the UIC program." [FN2 40 C.F.R. §144.3] The current definitions are insufficient to provide certainty on the key question of what activities are subject to regulation, or could impose some future liability. For example, does "activity" include any pipelines, pumps, or other infrastructure used to deliver CO2 to the injection well?

In this new field of technology, the role of the initial CO2 source is not yet fully understood. A September 2008 GAO report identifies the technological barriers to the CCS approach proposed here, which must be addressed for any such program to become a reality.[FN3 U.S. Government Accountability Office, Climate Change: Federal Actions Will Greaty Affect the Viability of Carbon Capture and Storage as a Key Mitigation Option, GAO-08-1080, Sep. 30, 2008, at 15.] For example, an emission source that chooses to engage in carbon capture and sequestration may contract with a third party to construct and operate its well, thus separating the owner and operator functions. Under the proposed regulations, it is unclear which of the parties would be responsible for meeting the new requirements, and therefore would also be liable if the requirements were not met. Given the extent of the responsibilities and potential liability imposed on potentially liable CO2 sources, the regulations should define this term with much greater precision. Precisely defined liabilities are especially important in a rulemaking regarding gas injection into storage fields. Compared to wastewater or other liquid injection and storage, gas has the capability of migrating more easily, quickly and farther, and risks of leakage are not only potentially greater, but also well documented.

Practical considerations must guide the regulation of these activities. For example, the rules must be set up in such a way as to not preclude 3rd party ownership and operation of a field and associated wells for underground sequestration. Generators are not likely to own pipelines, compressor stations, injection wells, properties, and the CO2 itself for any extended period of time. Far superior would be the existence of a pipeline system (similar to the natural gas pipeline system) that would be owned by others. CO2 from many different sources would be piped to appropriate disposal sites (for a fee, of course). Atthe sequestration site, there would likely be two entities. One of these is the operator and well superintendent (a company that provides field services). The other entity will be the owner (or owners) that would be much like wildcat drillers. These owners would offer the service to take the CO2 and properly inject it underground and adhere to the various safety and regulatory requirements (much like existing waste management companies). There would have to be a means for monetizing this service and a means for handling issues such as leakage, etc. There would probably have to be a reserve of CO2 allowances set up to cover events such as a pipeline break or an unexpected fault in the cap rock that allowed some CO2 to escape. This is a possible approach that would address the practical realities for generators, and ensure that generators can shift those liabilities to companies experienced in handling them.

Response:EPA clarifies that the GS requirements, including the financial responsibility requirements at §146.85, apply to the owner or operator of a GS project, which includes the Class VI injection well or wells, and includes the subsurface three-dimensional extent of the carbon dioxide plume, associated pressure front, and displaced brine, as well as the surface area above that delineated region. EPA adds that regulation of CO2 generators and transportation/pipelines is outside the scope of EPA’s authority under the SDWA and the GS rulemaking. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.Commenter Name: Robert Bessette Letter ID: 0139 Commenter Organization: Council of Industrial Boiler Owners (CIBO) Comment ID: 23085 Other EPA Comment Codes and Descriptions: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment: The 50-year post-closure period for continuing liability, from a practical perspective, is not workable. For example, some CIBO members generate power for a range of applications. It is difficult to imagine a generator taking on liability that would include the construction of a generating plant, the long term operation of that plant, and then the 50-year period after closing the well site. Compounding that difficulty is the possibility that the closure of the well does not coincide with the shut down of the power plant, potentially extending liability to 100 years or beyond, per the discretion of the Director.[FN7 73 Fed. Reg. 43519-20.] This raises the question of why a company would take on a 100-year liability that is essentially out of their control and not really a part of their business. The insurance issue is also a major

Response:EPA disagrees that a post-injection site care timeframe of 50 years is excessive for most Class VI wells. EPA proposed a default post-injection site care timeframe of 50 years based on a review of research studies, industry reports, and existing environmental programs. This analysis was included in an EPA-prepared background document that is available in the federal docket, titled"Computational Modeling of Underground Injection of Carbon Dioxide for Determination of Areaof-Review and Potential Risk to Underground Sources of Drinking Water." EPA assessed various default timeframes based on additional review of research studies and evaluation of public comments. While numerous commenters suggested that EPA shorten the monitoring timeframe, none of the commenters provided sufficient data or other evidence to warrant a change in the proposed timeframe. While the 10- or 30-year timeframe suggested by some of these commenters may be within the timeframe suggested in some studies, EPA believes that the potential risks of endangering USDWs will likely not decline within these timeframes and available data, including data submitted by commenters, do not support a different default timeframe.

However, EPA recognizes that there may be sites where the 50 year post injection site care timeframe may be either not appropriate or more burdensome than necessary based on site-specific conditions. For this reason, the GS rule offers owners or operators flexibility regarding the duration of the PISC timeframe by: (1) allowing the Director discretion to shorten or lengthen the PISC timeframe during the post-injection period based on site-specific data, pursuant to requirements at §146.93(b); or (2) affording the Director discretion to allow a Class VI well owner or operator to demonstrate, during the permitting process based on substantial data, that an alternative PISC timeframe may be appropriate if it ensures non-endangerment of USDWs pursuant to requirements at §146.93(c).

EPA believes that a default post-injection site care timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where substantial data exists to demonstrate that an alternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to accommodate site-specific circumstances and various geologic conditions, and addresses commenters’ concerns, while ensuring USDW protection. Both approaches will utilize site-specific data, and be based on pressure monitoring and USDW impacts. EPA believes however, that to ensure USDW protection from endangerment, a default timeframe forpost-injection site care will be necessary in all but a limited number of cases. This default 50 year post-injection site care timeframe represents a reasonable and protective monitoring period based on a review of research studies, industry reports, and existing environmental programs, and evaluation of public comments.

EPA also recognizes the concerns associated with ensuring financial responsibility for the long time frames over which post-injection site care will be conducted. EPA is developing guidance on financial responsibility to assist owners or operators in evaluating the requirements of §146.85 and to assist Directors in evaluating financial responsibility demonstrations. The guidance describes the types of financial mechanisms that operators may choose to use when evaluating the financial responsibility requirements for GS wells and it will also include a section on recommended approaches to estimate costs to support accurate financial responsibility demonstrations. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

As described above, the GS regulation applies to the owner or operator of the GS project, not the generator of the CO2.

Commenter Name: Christine Reimer Letter ID: 0142 Commenter Organization:National Ground Water Association Comment ID: 22574

Comment: Overview of Financial Responsibility Issues

Introduction

Applying financial responsibility for the various operational and post-closure risks is central to widespread deployment of CCS as an effective climate-change mitigation strategy. The commonly perceived CCS categories of risks include toxicological effects, induced seismicity, subsurface trespass, and climate effects (de Figueiredo et al., 2006). The mechanisms for these risks include CO2 gas leakage from the injection wellhead; gas leakage from geologic reservoir; development of injection-related seismicity in existing seismically active areas; and, degradation of drinking water aquifers by mobilization of brines or by geochemical interaction of fugitive CO2 with overlying aquifers.

These liabilities may be further categorized in terms of operational liability and post-injection liability (e.g., Figueiredo et al., 2006). Operational liability includes the environmental, health and safety risks associated with capture, transportation and injection of CO2. Post-injection liability is related to storage of carbon dioxide in the geologic formation after it has been injected. According to Figueiredo et al., post-injection liability can be further divided according to (1) in situ liability of harm to human health, the environment, and property, including degradation of aquifers, and (2) climateliability related to leakage of CO2 from the geologic reservoirs and its longterm effect on climate change.

The long period and geographic scale over which these liabilities can occur pose unique challenges for assessing CCS liability, in comparison to conventional business liability models. For example, the operational phase of individual CCS projects is anticipated to be tens of years (Gerard and Wilson, 2008). Although the post-injection risks are inferred to decrease with time, the long periodover which these risks may manifest themselves and the inherent geophysical uncertainties of geologic reservoirs are not amenable to a strictly private solution to liability. For example, several authors (e.g., Figueredo et al., 2006; Edison Electric Institute, 2007; WRI, 2006; and Gerard and Wilson, 2008) have suggested that the unique liabilities associated with CCS should be assigned to the operators during the injection phase and for a short periodafter cessation of injection and closure of the injection wells, and the longterm post-closure liability should become a public responsibility because of the perceived significant public benefit that CCS will have on local and global climate. Another reason to involve the public sector in the long-term liability may be to ensure that a responsible entity will be around (i.e., should the CCS operator or holding company become insolvent) to address post-closure CCS problems, should they arise (World Resources Institute, 2007).

Edison Electric Institute, 2007, Status and Outlook for Carbon Capture and Storage Technology in the United States. Written statement for the U.S. House Select Committee on Energy and Global Warming.

Figueiredo, M. de, D. Reiner, H. Herzog, and K. Oye, 2006 The Liability of Carbon Dioxide Storage. Presented at the Eight International Conference on Greenhouse Gas Control Technologies, Trondheim, Norway

Gerard, D., and E.J. Wilson, 2008, Environmental Bonds and the Problem of LongTerm Carbon Sequestration. Source. Journal of Environmental Management, In Press. Available online as of July 2008: http://www.epp.cmu.edu/csir/Content/Research/Carbon%20Capture%20and%20Sequestrat ion/Gerard%20Wilson%20Bonding.doc

World Resources Institute, 2007, Workshop Summary: Addressing Long-Term Liability of Carbon Dioxide Capture and Geologic Sequestration.

World Resources Institute, 2006, Executive Summary: WRI Workshop on CCS Liability.

Response:EPA agrees that assuring financial responsibility throughout the lifetime of a GS project, i.e., for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response, is an important component of ensuring that USDWs are protected. The goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties.

Please see the discussion of EPA's final regulatory approach in the preamble to the final GS rule for additional information on how the GS requirements address the unique risks associated with GS projects.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act.

The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner oroperator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:William Kovacs Letter ID: 0148 Commenter Organization: U.S. Chamber of Commerce Comment ID: 21774

Comment:b. Inhibits Financial Backing

EPA should also consider the effect of these regulations on securing critical financial backing for CCS projects. As with public acceptance, EPA can shape carbon capture and storage as a tool for reducing carbon emissions by the messages that it sends the financial world with its regulations.

Response: The goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA believes that minimum financial responsibility requirements are necessary to hold well owners or operators accountable for the safe operation and closure of the well and avoid expense and risk to the public. EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose ofthe GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by GS well owners or operators as deployment of GS technology increases in the future. In addition, EPA allows owners or operators under §146.85 (subject to state law) to choose from a variety of financial instruments to demonstrate their financial responsibility needs, thereby allowing owners or operators flexibility based on each individual site.

Commenter Name: Brianne Metzger Letter ID: 0151 Commenter Organization: Spectra Energy Corp Comment ID: 21877 Other EPA Comment Codes and Descriptions: 1250 1.1.1.4 Flexibility is needed (performancebased standards); 5000 2.8 Proposed Well Plugging and Post-Injection Site Care Requirements

Comment: IV. EPA MUST DEVELOP A FLEXIBLE FRAMEWORK TO ADDRESS POSTINJECTION SITE CARE,
FINANCIAL ASSURANCE, AND LONG TERM LIABILITY THAT ELIMINATES OBSTACLES

TO

COMMERCIAL-SCALE DEPLOYMENT OF CCS.

Numerous studies and commentators have recognized that the principle obstacle to commercial-scale deployment of CCS is regulatory uncertainty over the capture, transport, injection, and storage of CO2. As stated by a recent GAO

report:

The IPCC, two federal advisory committee reports, and many stakeholders we contacted agreed that key regulatory and legal issues will need to be addressed if CCS is to be deployed at commercial scale. Among these issues are (1) confusion over the rules for injecting large volumes of CO2, (2) long-term liability issues concerning CO2 storage and potential leakage, (3) how property ownership patterns may affect CO2 storage, and (4) how the Clean Air Act will apply to facilities that capture CO2. - EPA’s 2007 UIC workshop, attended by more than 200 stakeholders, revealed liability associated with unintended migration of injected CO2 to be a critical concern. Similarly, 19 of the 20 stakeholders we interviewed told us that liability related to CO2 storage was a large or very large barrier to deployment of CCS at a commercial scale, with some noting that liability concerns have already negatively impacted companies’ ability to initiate CCS projects. For example, two stakeholders reported that these concerns had already made it difficult to obtain insurance for CCS projects. They noted specifically that insurers have difficulty writing insurance policies because of uncertainties associated with and limited data available for CCS, while another added that investors will not support projects like CCS if they expose them to unlimited and undefined long-term liabilities, especially when future revenue streams are uncertain.[14]

The promise of CCS as a strategy to address climate change and promote national energy security hinges on resolving this regulatory uncertainty in a way that does not place an unreasonable burden on site owners and operators that would effectively prevent the development of commercial-scale CCS projects in theUnited States. The EPA has the authority under SDWA and the UIC Program to create a flexible framework to address issues such as post-injection site care, financial assurance, and long-term liability in a manner that places enough responsibility on owners and operators to ensure that all applicable best practices are followed, but not so much that it becomes virtually impossible to secure the requisite financing and insurance needed for CCS projects to be commercially viable.

The potentially unique challenge of resolving the regulatory uncertainty currently inhibiting the development of CCS projects, if done with inadequate attention to existing market dynamics and economic realities, likely will preclude any commercial-scale deployment of CCS and undermine its effectiveness as a strategy to reduce greenhouse gas emissions. Addressing the regulatory uncertainty surrounding post-injection site care, financial assurance, and long-term liability effectively boils down to four overarching questions confronting entities involved in the capture, transport, injection, and storage of CO2: (1) length of the post-injection site care time period; (2) aspects of post-injection site care for which entities will be responsible; (3) availability and suitability of different risk management instruments for meeting financial assurance requirements; and (4) permanent transfer of all liability to the State. Spectra’s comments on post-injection site care, financial assurance, and long-term liability focus broadly on these issues.

14 GAO Report, Climate Change, Federal Actions Will Greatly Affect the Viability of Carbon Capture and Storage As a Key Mitigation Option, Report to the Chairman on the Select Committee on Energy Independence and Global Warming, House of Representatives, GAO-08-1080, September 2008, at 23, 25. See also Capturing King Coal: Deploying Carbon Capture and Storage Systems in the US at Scale, WORLD RESOURCES INSTITUTE (2008) at 24 ("In the event of an accident or damage years after the well is closed, who is financially and legally responsible? Current law and policy is unclear on this matter, and more generally on the matter of responsibility for long-term measuring and monitoring of the site. In particular, the degree to which private parties remain responsible, or the government assumes a measure of responsibility, is important.").

Response:EPA acknowledges the commenter¿s request for certainty regarding post-injection site care (PISC) requirements for GS wells. However, EPA believes that a certain amount of flexibility is appropriate for setting the PISC timeframe, given the variety of circumstances that may occur at GS sites. The PISC requirements in the final GS rule, as specified in §146.93(b), incorporate a combination of a fixed timeframe and a performance standard approach. The GS rule offers owners or operators flexibility regarding the duration of the PISC timeframe by: (1) allowing the Directordiscretion to shorten or lengthen the PISC timeframe during the post-injection period based on sitespecific data, pursuant to requirements at §146.93(b); or (2) affording the Director discretion to allow a Class VI well owner or operator to demonstrate, during the permitting process based onsubstantial data, that an alternative PISC timeframe may be appropriate if it ensures nonendangerment of USDWs pursuant to requirements at §146.93(c).

EPA believes that a default post-injection site care timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where substantialdata exists to demonstrate that an alternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to accommodate site-specific circumstances and various geologic conditions, and addresses commenters¿ concerns, while ensuring USDW protection. Both approaches will utilize site-specific data, and be based on pressure monitoring and USDW impacts.

EPA recognizes that there are challenges associated with financial responsibility for GS projects. However, the Agency believes that in order to protect USDWs from endangerment under the SDWA operators must demonstrate under §146.85 that financial resources are available to plug the injection well and provide PISC when injection begins.

Under the final GS rule owners or operators may choose from a variety of financial instruments to demonstrate that they meet the financial responsibility requirements under §146.85, provided the Director determines that the demonstration is adequate to pay for each activity for which financial responsibility is required. EPA is developing guidance (available on EPA¿s website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires an owner or operator to conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until he or she can demonstrate that the GS project no longer poses an endangerment to USDWs.

Once an owner or operator has met all requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it was not used. However, even if site closure is approved, an owner or operator may be held liable for regulatory noncompliance (e.g., violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for noncompliance even after site closure if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action, such as administrative orders or civil actions, the Administrator deems necessary under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. If the owner or operator fails to comply with the order, he or she may be subject to a civil penalty for each day such violation occurs or failure to comply continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby all potential liabilities associated with meeting the requirements of that permit are transferred to that new owner or operator.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, the Clean Air Act, 42 U.S.C. §§ 7401- 7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.Commenter Name: Brianne Metzger Letter ID: 0151 Commenter Organization: Spectra Energy Corp Comment ID: 21881

Comment: V. EPA MUST PROVIDE FLEXIBILITY IN DEMONSTRATING FINANCIAL

ASSURANCE.

In its July 2008 paper Approaches to Geologic Sequestration Site Stewardship After Site Closure, EPA stated that the purpose of financial assurance is "to minimize the number of facilities that are orphaned and abandoned; thereby, reducing the potential that these costs will be borne by the public."[24] With respect to the injection and storage of CO2, abandoned or orphaned sites would place the public and surrounding environment at risk and potentially undermine the primary purpose of CCS - to reduce emissions of CO2. Financial assurance requirements are justified to ensure projects operate in accordance with applicable best practices and appropriate steps are taken to minimize risks in the post-closure period.

EPA notes repeatedly in the GS Rule that the risks of geologic storage of CO2 decrease substantially over time. However, no private market to manage the risks associated with CCS during a virtually indefinite post-closure time period exists or is likely to exist in the future.[25] As a result, ensuring the commercial-scale deployment will depend on the eventual transfer of any and all risk to the State. Given the promise of CCS as a key tool to address global climate change and to promote domestic energy security, shifting long-term risk to the State is justified and, in certain respects, highly desirable given potential public benefits CCS could deliver.

In apportioning the risk, it is clear that owners and operators of CCS projects should bear responsibility for harms and risks of harms caused during the period an injection site is operating, and for a reasonable closure period afterwards, e.g., 30 years with Director discretion to shorten, as discussed more fully above. Among other things, this approach encourages the development and implementation of best practices.

Accordingly, Spectra supports EPA’s approach to releasing owners and operatorsfrom any further financial assurance requirement at the conclusion of the postinjection site care period and upon a determination by the Director that the CO2 plume poses no further risk to USDWs. With respect to specific aspects of financial assurance requirements, Spectra offers the following additional

comments.

24 Id.,n.2.

25 Chiara Trabucchi and Lindene Patton, Storing Carbon: Options for Liability Risk Management, Financial Responsibility, BNA DAILY ENVIRONMENT REPORT at 9 (Sept. 3, 2008) ("Because CCS is what the financial services sector would call a specialty risk, only a small part of the sector would be equipped and qualified to analyze the risks and place capital thereon.").

Response: As described above, EPA agrees that it is appropriate to allow a flexible approach forfinancial responsibility. Under the final GS rule owners or operators may choose from a variety of financial instruments to demonstrate that they meet the financial responsibility requirements under §146.85, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to pay for each activity, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. EPA is developing guidance (available on EPA’s website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods and states may set more specific financial responsibility requirements if they so choose.

Regarding the concern about a private market to manage risks, EPA anticipates that as GS is deployed, particularly if there are early successful uses of these instruments, owners or operators will demand and carriers will offer third-party GS financial instruments in greater numbers.

Regarding transfer of liability, EPA does not have authority to transfer or shift liability from one party to another party. See the final rule and preamble for further discussion of the EFAB's findings and EPA's final approach.

Commenter Name:Joseph Eutizi Letter ID: 0161 Commenter Organization: San Miguel Electric Cooperative, Inc Comment ID: 21283 Other EPA Comment Codes and Descriptions: 1200 1.1 General comments about the rulemaking

Comment: SUMMARY

San Miguel applauds the efforts EPA has taken thus far to instill "certainty" and "transparency" into the future Class VI CO2 regulatory regime, 73 Fed. Reg. at 43496. The challenge EPA faces is to craft a Final Rule for commercial CO2 injection appropriate for activities that will largely be conducted in the future. EPA has had to confront many technical uncertainties regarding the establishment and operation of GS wells. Because many of the technical aspects are unknown, it is also very difficult to develop a clear understanding of project risks and liabilities. As long as risks and liabilities are largely unknown and open-ended, private companies will not step forward to offer insurance and other risk management products, and it will not be possible to obtain the level of financing needed to undertake a costly GS operation. We hope the pilot carbon capture and sequestration (CCS) projects conducted by DOE and other entities will help resolve some of these uncertainties.

Response: To address concerns about certainty, EPA has specified acceptable financial responsibility instruments and requirements in the final regulation at §146.85. Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements

for GS wells.

EPA adds that it anticipates that, as GS is deployed, particularly if there are early successful uses of these financial instruments, owners or operators will demand and carriers will offer third-party GS financial instruments in greater numbers. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.Commenter Name:Joseph Eutizi Letter ID: 0161 Commenter Organization: San Miguel Electric Cooperative, Inc Comment ID: 21284

Comment:EPA needs to establish clear, reasonable regulations that are environmentally protective and cover a range of operations for which the technology will not be commercially deployed for a number of years. To the extent practicable, EPA needs to establish a single, clear, reasonable and protective liability regime for an activity where the nature of the risks are different from many other industrial activities and the full extent of possible risks from full scale CSS operations are presently unknown.

Response:EPA acknowledges commenter's concerns regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. As a federal agency, EPA is working to create a nationally consistent financial responsibility regime within its authority while providing permitting authorities an appropriate level of flexibility for purposes of liability. EPA is finalizing financial responsibility requirements under authority of the SDWA. EPA believes that the general authorities provided under SDWA include the authority to set federal minimum requirements for financial responsibility to ensure that resources are available to protect USDWs from endangerment throughout the life of the GS project. Under current SDWA provisions, EPA does not have authority to transfer liability from one entity to another and it does not provide for the creation of a third party financial instrument where EPA is the trustee.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act.

The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that newowner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Joseph Eutizi Letter ID: 0161 Commenter Organization: San Miguel Electric Cooperative, Inc Comment ID: 21290

Comment: Comments Regarding Liability and Risk Management

San Miguel supports the comments of the Carbon Capture and Sequestration Alliance ( CCS, or the Alliance) on the proposed UIC regulations. The CCS Alliance is a coalition of entities, spanning a number of economic sectors, that share a common interest in removing impediments to investment in and development of carbon capture and storage ("CCS"), as well as mitigating the potential risks associated with the deployment of this technology.[1] Its purpose is to promote development of policy by the states and the federal government to appropriately address risks and potential liabilities, thereby enabling the further development and increased deployment of CCS. The CCS Alliance believes these technologies can be developed while protecting underground water resources, significantly reducing global and U.S. greenhouse gas ("GHG") emissions, and enhancing U.S. energy security. The Alliance’s purpose is to consider ways of promoting the development and use of CCS technologies and to support efforts by the private sector, states, the federal government, non-governmental organizations and others, to help ensure that these technologies can be developed and widely, efficiently and cost-effectively deployed.

We support the comments of the Alliance and incorporate them here by reference. San Miguel is relying on NRECA and the Alliance to provide EPA with specific comments on the Financial Assurance and Long Term Liability issues discussed in the proposal. We are not experts on these matters, however we ask EPA to

************************************** 1 MidAmerican Energy Holdings Company, National Mining Association, National Rural Electric Cooperative Association, NRG Energy, Inc., PacifiCorp and Zurich North America.

Response: Please see the remainder of EPA's responses to this comment related to financial responsibility for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket. EPA is using an adaptive approach to regulating GS.

Commenter Name: Sandi Tabor Letter ID: 0162 Commenter Organization:Lignite Energy Council (LEC) Comment ID: 21296 Other EPA Comment Codes and Descriptions: 3100 2.1 Proposed Geologic Siting Requirements(40 CFR 146.83)

Comment: Third, EPA must develop financial assurance and risk management regulations that clarify the long-term obligations and risk associated with a GS project. One way to meet the EPA's dual goal of protecting the environment while facilitating the development of CCS is to focus regulations on proper site characterization. Proper site selection and characterization will help minimize potential future risks and lessen the need for default provisions that apply to all sites.

Response:EPA agrees that proper site characterization is important to minimizing risks associated with GS, but also believes that assuring financial responsibility for corrective action on Class VI wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected. The goal of the financial responsibility requirements at §146.85 are to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA expects that the cost of financial responsibility will depend heavily on the estimated cost of covered activities as well as certain site-specific factors and their project phases. Under the final rule, the cost estimate must be performed for each phase of the GS project separately and must be based on the costs to the owner or operator of hiring a third party to perform the required activities. Additionally, during the active life of the GS project, the owner or operator must adjust the cost estimate for inflation within 60 days prior to the anniversary date of the establishment of the financial instrument(s) to demonstrate financial responsibility. In order to assist owners or operators and financial institutions in achieving accurate cost estimates, EPA plans to include a guidance that includes discussion of how best to estimate costs, including how to adjust cost estimates for inflation, in its guidance on meeting financial responsibility requirements for GS wells.

Commenter Name: Sandi Tabor Letter ID: 0162 Commenter Organization:Lignite Energy Council (LEC) Comment ID: 21305

Comment: 6. Financial Assurance -The proposed rules require permittees to demonstrate at the time of project permitting financial assurance for a number of activities throughout the PISC period. The requirements for PISC of GS of C02 exceed the rules in place for existing wells injecting hazardous wastes. There is nothing to indicate that stored CO2 warrants a financial assurance program more stringent than that required for the Class I hazardous waste injection well

program.

Response:EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent and remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA disagrees that the requirements for GS wells are more stringent than Class I hazardous waste wells; rather, the financial responsibility requirements for GS wells are tailored to the unique nature of the long term GS of

CO2.

Commenter Name: Sandi Tabor Letter ID: 0162 Commenter Organization:Lignite Energy Council (LEC) Comment ID: 21306Comment: In order to develop more meaningful parameters for the Class VI financial assurance program, EPA should take note of the work of the DOE regional partnerships. For instance, as mentioned earlier in these comments, the PCOR partnership is conducting field validation tests and long-term demonstration testing of GS. Information derived from these studies will help EPA develop more practical financial assurance requirements.

Response:EPA continues to collaborate with DOE and others to obtain information about pilot projects and other research as soon as it becomes available. EPA believes that the GS rule provides an adaptive and flexible approach that will be best for purposes of site specific circumstances.

EPA has specified acceptable financial responsibility instruments and requirements in the final regulation. Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements

for GS wells.

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21311 Other EPA Comment Codes and Descriptions: 1200 1.1 General comments about the rulemaking

Comment: SUMMARY

NRECA applauds the efforts EPA has taken thus far to instill "certainty" and "transparency" into the future Class VI CO2 regulatory regime. 73 Fed. Reg. at 43496. The obvious challenge confronting EPA is to craft a Final Rule for commercial CO2 injection activities when large-scale commercial operations are only at the nascent stage. In the process of developing regulations for activities that will largely be conducted in the future, EPA has had to confront many technical uncertainties regarding the establishment and operation of GS wells. Because many of the technical aspects are unknown, it is also very difficult to develop a clear understanding of project risks and liabilities. As long as risks and liabilities are largely unknown and open-ended, private companies will not step forward to offer insurance and other risk management products, and it will not be possible to obtain the level of financing needed to undertake a costly GS operation.

Response: To address concerns about certainty, EPA has specified acceptable financial responsibility instruments and requirements in the final regulation at §146.85. Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements

for GS wells.

EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by GS well owners or operators as deployment of GS technology increases in the future. In addition, EPA plans to allow owners or operators to choose from a variety of financial instruments to meet their financial responsibility needs, thereby allowing owners or operators flexibility. See the final rule and preamble for further discussion of EPA's final approachto financial responsibility. EPA is using an adaptive approach to regulating GS.

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21318 Other EPA Comment Codes and Descriptions: 1000 1. General and Administrative Comments

Comment: Principles for Managing Liability

NRECA is a member of the Carbon Capture and Storage Alliance (CCS or the Alliance) and this group is planning to submit comments on the proposed UIC

rules for GS of CO2.

The CCS Alliance is a coalition of entities, spanning a number of economic sectors that share a common interest in removing impediments to investment in and development of carbon capture and storage ("CCS"), as well as mitigating the potential risks associated with the deployment of this technology. Its purpose is to promote development of policy by the states and the federal government to appropriately address risks and potential liabilities, thereby enabling the further development and increased deployment of CCS. The CCS Alliance believes these technologies can be developed while protecting underground water resources, significantly reducing global and U.S. greenhouse gas ("GHG") emissions, and enhancing U.S. energy security. The Alliance’s purpose is to consider ways of promoting the development and use of CCS technologies and tosupport efforts by the private sector, states, the federal government, nongovernmental organizations and others, to help ensure that these technologies can be developed and widely, efficiently and cost-effectively deployed.

We support the comments of the Alliance and incorporate them here by reference. NRECA is relying on the Alliance and USWAG to provide EPA with specific comments on the Financial Assurance and Long Term Liability issues discussed in the proposal. We are not experts on these matters, however we do believe that the

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment for further details. For additional information on EPA's final regulatory approach, including financial responsibility for GS wells, please see the final rule and preamble as well as the rulemaking

docket.

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21335

Comment:Financial Assurance and Liability

Private risk managers (insurers, sureties, banks, and others), will determine whether to provide financial assurance for a project based on a calculation of the severity of risks and probability that they will occur over a given time period. The severity and probability of risk is defined not just by physical dimensions, such as fractures and leaks, but by the regulatory and liability structure that is in place.11. EPA should, to the extent practicable, establish a single, clear, and reasonable regulatory structure for managing risks and liabilities. Applicability of multiple statutes - or, as discussed herein, detailed and inappropriately prescriptive command and control statutes such as RCRA and CERCLA - give rise to potential risk through additional cost and by increasing the possibility of violations. CCS developers will be willing to abide by reasonable rules that protect human health and the environment, but they do not want to bear enhanced risks resulting from requirements that do not significantly contribute to health and environmental protection. Nor do developers and risk managers want to face liability via multiple State and federal statutory and common law pathways, with the possibility of unnecessarily expensive and contentious remedies. As these goals likely will require some legislative action, EPA also should educate Congress on the need for regulatory and liability regimes with these characteristics.

Response:EPA acknowledges the commenter's concerns regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. As a federal agency, EPA is working to create a nationally consistent financial responsibility regime within its statutory authority while providing permitting authorities an appropriate level of flexibility. EPA is finalizing financial responsibility requirements under the SDWA . EPA believes that the general authorities provided under SDWA include the authority to set minimum federal requirements for financial responsibility to ensure that financial resources are available to protect USDWs throughout the life of the GS project.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21336

Comment: 12. It is clear, however, that regardless of EPA's success in establishing a clear regulatory structure for addressing site remediation risks, and site liability risks, at some point a government backstop for liability needs to be established. There is a clear role for private insurance / risk management firms for assuming certain categories of the risks associated with a GS project. However, these projects are intended to sequester carbon long into the future. This presents a risk category with particularly difficult characteristics. Private companies cannot quantify risks for such an open-ended condition and we are told they will not write policies for this stage of the GS project. Government is urging GS for protection of the public welfare and in order for it to occur on a broad-scale, government will have to be willing to bear some of the low probability, long time-frame risks.

Response:EPA notes that SDWA does not contain any provisions addressing liability. Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violationoccurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23369

Comment:Financial Responsibility -- Pg. 42

APPA supports EPA’s suggestion to issue guidance in the future for clarification of the financial responsibility mechanisms available for Owners or Operators of CO2 GS wells, provided that such guidance is issued in accordance with OMB’s Good Guidance Manual and that the final rule accommodate a range of options, including self-insurance instruments.

Response:EPA is developing guidance on financial responsibility for GS wells. EPA plans to take OMB's Good Guidance Manual into advisement as financial responsibility guidance is developed. OMB's Good Guidance Manual establishes policies and procedures for the development, issuance, and use of significant guidance documents by Executive Branch departments and agencies.

EPA is developing guidance that describes the types of financial instruments, which owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. EPA notes that directors may disallow certain instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23424

Comment:Financial Responsibility

APPA supports EPA’s suggestion to issue guidance in the future for clarification of the financial responsibility mechanisms available for Owners or Operators of CO2 GS wells. Id. at 43520-22. Provided that such guidance is issued in accordance with OMB’s Good Guidance Manual, APPA believes that such guidance could be particularly helpful as the Program advances and industry and regulators gain experience and knowledge related to CO2 GS projects. APPA believes it is far too soon to offer significant comment on this aspect of the proposed rule.

Response:EPA is developing guidance on financial responsibility for GS wells. EPA plans to take OMB's Good Guidance Manual into advisement as financial responsibility guidance is developed. OMB's Good Guidance Manual establishes policies and procedures for the development, issuance, and use of significant guidance documents by Executive Branch departments and agencies. See thefinal rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:Erik Silvola Letter ID: 0171 Commenter Organization: Great River Energy Comment ID: 23446 Other EPA Comment Codes and Descriptions: 1000 1. General and Administrative Comments

Comment: Comments Regarding Liability and Risk Management

GRE supports the comments of the Carbon Capture and Sequestration Alliance (CCS, or the Alliance) on the proposed UIC regulations. The CCS Alliance is a coalition of entities, spanning a number of economic sectors, that share a common interest in removing impediments to investment in and development of carbon capture and storage ("CCS"), as well as mitigating the potential risks associated with the deployment of this technology.(Footnote 1) Its purpose is to promote development of policy by the states and the federal government to appropriately address risks and potential liabilities, thereby enabling the further development and increased deployment of CCS. The CCS Alliance believes these technologies can be developed while protecting underground water resources, significantly reducing global and U.S. greenhouse gas ("GHG") emissions, and enhancing U.S. energy security. The Alliance’s purpose is to consider ways of promoting the development and use of CCS technologies and tosupport efforts by the private sector, states, the federal government, nongovernmental organizations and others, to help ensure that these technologies can be developed and widely, efficiently and cost-effectively deployed.

We support the comments of the Alliance and incorporate them here by reference. GRE is relying on NRECA and the Alliance to provide EPA with specific comments on the Financial Assurance and Long Term Liability issues discussed in the proposal. We are not experts on these issues, however we ask EPA to consider the

Footnote 1: MidAmerican Energy Holdings Company, National Mining Association, National Rural Electric Cooperative Association, NRG Energy, Inc., PacifiCorp

and Zurich North America.

Response: The goal of financial responsibility is to ensure that financial resources are available to prevent or remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA agrees that assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Please see EPA's responses to the CCS Alliance's comment for additional information.

Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23505

Comment: 13. Financial Responsibility

The GAO report correctly identifies stakeholders' concerns with theuncertainties regarding the type of financial instruments that will be acceptable to meet the Final Rule's financial responsibility requirements, as well as concerns related to the openended nature of post-injection site care liability. GAO Report at 39-40. As the GAO report suggests, further clarity and certainty with respect to these issues is critical to remove these barriers to the commercial development of CO2 GS wells.

Response:EPA acknowledges the commenter's need for additional certainty on the financial responsibility requirements for GS projects. EPA has specified reasonable financial responsibility instruments and requirements in the final GS regulation at §146.85. Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. EPA has taken the concerns expressed by commenters on the proposed regulation, including the acceptability of various financial instruments and the timeframe for PISC, into consideration as it develops the financial responsibility guidance.

EPA acknowledges the commenter's concern about financing PISC activities. EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such financial instruments by GS well owners or operators as deployment of GS technology increases in the future. In addition, EPA plans to allow owners or operators to choose from a variety of financial instruments to meet their financial responsibility needs, thereby allowing owners or operators to select instruments they find easiest to obtain. See the final rule and preamble for further discussion of EPA's final approach to post-injection site care.

Commenter Name: Kenneth Nemeth Letter ID: 0176 Commenter Organization: Southern States Energy Board Comment ID: 23548

Comment:Finally, it is important to note that there are other issues, such as liability, that are crucially important to GS and which can impact GS projects, which are not covered under this proposed rule and program.

Response:EPA notes that SDWA does not contain any provisions addressing liability. Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action forappropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23555

Comment: The proposed financial assurance requirements, which exceed those currently in place for injection of hazardous wastes, raise significant concerns from the perspective of promoting CCS development. EEI strongly urges the Agency to exercise care not to stigmatize geological CO2 storage by equating it in any way with hazardous waste disposal, as doing so could affect public perception (thereby potentially hindering the permitting process) as well as perceptions by financial institutions (thereby potentially hindering project financing). Further, it is crucial that any financial assurance requirements be sufficiently flexible to take into account the particular risks associated with any given project.

Response:EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent or remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA disagrees that the requirements equate GS wells with Class I hazardous waste wells; rather, the financial responsibility requirements for Class VI wells are tailored to account for the unique nature of the long term GS of CO2, while providing flexibility for site specific implementation. EPA adds that the purpose of the GS rule is not to incentivize or promote GS; rather it is to ensure that where GS is deployed, it is done in a manner that ensures USDW protection from endangerment.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23799 Other EPA Comment Codes and Descriptions: 1630 1.3.3 RCRA/hazardous waste issues (seeking comment); 1640 1.3.4 CERCLA issues (seeking comment)

Comment: Single, Clear Liability Structure

To the extent possible, policymakers should put in place a single, clear liability regime for CCS activities. In the context of this rule, EPA has considered the possibility of cleanup liability both under the ComprehensiveEnvironmental Response, Compensation, and Liability Act ("CERCLA" or "Superfund") and the Resource Conservation and Recovery Act ("RCRA), in addition to the UIC program. There is also the possibility of liability under state statutes and common law. Parties who may be injured in the future must be able to resort to a fair liability scheme, but potential applicability of multiple schemes is likely to discourage CCS development.

Response:EPA acknowledges the commenter's concerns regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. As a federal agency, EPA is working to create a nationally consistent financial responsibility regime within its authority while providing permitting authorities an appropriate level of flexibility. EPA is finalizing financial responsibility requirements under authority of the SDWA. EPA believes that the general authorities provided under SDWA include the authority to set minimum federal requirements for financial responsibility to ensure that financial resources are available to protect USDWs throughout the life of the GS project. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Furthermore, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency acknowledges and clarifies that, after site closure, an owner or operator may, depending on the fact scenario and state law, remain liable under state tort law and other remedies, or under other Statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992.

EPA appreciates the commenter’s suggestions for a single liability scheme for CCS; however, the GS rule is not promulgated under either RCRA or CERCLA, and making legislation changes or addressing liability under state statutes and common law is also outside the scope of the GS rulemaking. EPA also notes that the applicability of RCRA and CERCLA will not be determined under the SDWA or the terms of the GS rule, but rather according to those statutes themselves and any implementing regulations that may apply.

EPA agrees that any requirements applicable to CO2 injectate should be clearly identified to the public and to the regulated community. EPA received many comments regarding the applicability of the RCRA regulations and statute to CO2 streams that are geologically sequestered under the final Class VI UIC well requirements. As a result, EPA has decided to initiate a separate proposed rulemaking specifically to examine the issue of RCRA applicability to CO2 streams being geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2 GS in Class VI wells. EPA will consider these comments as part of its development of that proposal. The Agency will consider issues particular to RCRA in the context of that separate rulemaking, and recommends that the commenter read that proposed rule when it is published. The Agency notes that commenters who wish to submit comments on the RCRA proposal will need to do so during the comment period for that rule. Finally, EPA also notes that the final GS rule, which adds new regulations for Class VI wells under the Safe Drinking Water Act (SDWA), is not making any changes to the RCRA regulations.Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23813

Comment:E. REASONABLE LIMITS ON POST-CLOSURE CARE AND ASSURANCES

AGAINST

LEAKAGE

The notion of owners and operators being responsible in perpetuity should continue to be avoided. Washington State has instituted the requirement that there be a "high degree of confidence that substantially 99 percent of the GHGs will remain contained for at least one thousand years."[FN7] Such a standard would be inappropriate for CO2 injection wells, and is not related to effects on human health or the environment from a potential leak. The CCS Alliance is encouraged by EPA's apparent focus on a workable approach to such matters as casing and cement quality, and on instituting a monitoring, mitigation and validation program that provides assurance of safe, long-term storage, in conjunction with setting a defined financial responsibility period that enables financing and risk management of CCS. Ultimately, needs associated with risk management of emissions to the atmosphere must be balanced against needs to manage risk to the water supply, as well as other public policy issues mentioned above. This points to why the Alliance suggests an integrated policy management approach to CCS technology.

[FN7] WASH. ADMIN. CODE 173-407-110 (2008) (see definition of "Permanent Sequestration")

Response:EPA notes that SDWA does not contain any provisions addressing liability. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells. Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act.

The final rule requires that an owner or operator conduct monitoring as specified in the Directorapproved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the

final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and site closure has been approved pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, he or she may be held liable for regulatory noncompliance even after site closure if the Director relied on erroneous information provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencinga civil action for appropriate relief. If the owner or operator fails to comply with the order, he or she may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38, whereby all potential liabilities associated with meeting the requirements of that permit are transferred. Please see further clarification on the issue of long term liability in the preamble of the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

EPA clarifies that standards for containment of carbon dioxide before it is injected are outside the scope of this rulemaking. EPA acknowledges the commenter’s support of EPA’s efforts to ensure the proper construction and monitoring of GS wells.

EPA acknowledges that the issue of GS falls within the broader context of CCS. EPA clarifies that the Class VI requirements are designed to ensure that, where deployed, GS is conducted in a manner that protects USDWs from endangerment. The requirements apply to owners or operators of injection wells used to inject CO2 for permanent storage. The Class VI GS rulemaking is promulgated under SDWA authority and does not relate to any endangerment and cause or contribute findings under the Clean Air Act. The Class VI GS requirements do not depend upon, and are unaffected by, Clean Air Act endangerment and cause or contribute findings.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23814 Other EPA Comment Codes and Descriptions: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment: A. FIFTY YEAR TIME FRAME FOR POST-CLOSURE SITE CARE

RESPONSIBILITY

The Proposed Rule states that the timeframe over which CO2 will be trapped depends on the properties of the receiving formation and the injected CO2 stream. Currently available information does not provide a complete understanding of the time required to stabilize geologically sequestered CO2 under various conditions: however, some experience does exist and has led some to develop extrapolative estimates for related geologies. Some believe that in a significant number of cases, a 10 to 30 year timeframe will be sufficient to determine that the remaining pressure in plugged wells will not lift fluid to overlying strata. Any uncertainty in characterizing post-injection site care timeframes for GS, while challenging, could be dealt with through a maximum time period, performance standards, and Director discretion.

The CCS Alliance recommends establishing a maximum 30-year post-operation site care and financial responsibility period. The Director would have discretion to shorten -- but not to lengthen -- this period if the owner or operator meetscertain enumerated performance standards based on available data on pressure. fluid movement, mineralization and/or dissolution reactions to show whether movement of the plume and pressure front have ceased. Once the thirty-year period is reached -- or shorter if the performance standards are met -- a government backstop would be triggered, thereby ensuring that a risk management mechanism is in place beyond the responsibility of the owner or operator. Investment requires assumptions about the amount of capital required and for how long it is required. If either the maximum amount of capital or the term cannot be established, investment is deterred. Further, because most capital available will not commit for terms longer than thirty years, and the duration for which it is available is generally inversely proportional to risk. Thus, long term capital for even low frequency but high severity risks is difficult to obtain. To assure public funds can be leveraged with private investment to assure widespread deployment of this climate risk mitigating technology, a balance of risk and reward is required in the policy development that underpins this UIC regulation.

Response:EPA disagrees that a post-injection site care timeframe of 50 years is excessive for most Class VI wells. EPA proposed a default post-injection site care timeframe of 50 years based on a review of research studies, industry reports, and existing environmental programs. This analysis was included in an EPA-prepared background document that is available in the federal docket, titled"Computational Modeling of Underground Injection of Carbon Dioxide for Determination of Areaof-Review and Potential Risk to Underground Sources of Drinking Water." EPA assessed various default timeframes based on additional review of research studies and evaluation of public comments. While numerous commenters suggested that EPA shorten the monitoring timeframe, none of the commenters provided sufficient data or other evidence to warrant a change in the proposed timeframe. While the 10- or 30-year timeframe suggested by some of these commenters may be within the timeframe suggested in some studies, EPA believes that the potential risks of endangering USDWs will likely not decline within these timeframes and available data, including data submitted by commenters, do not support a different default timeframe. However, EPA recognizes that alternative timeframes may be appropriate under limited, specific circumstances. For this reason, the Class VI rule offers owners or operators flexibility regarding the duration of the PISC timeframe by: (1) allowing the Director discretion to shorten or lengthen the PISC timeframe during the PISC period based on site-specific data, pursuant to requirements at §146.93(b); or (2) affording the Director discretion to allow a Class VI well owner or operator to demonstrate, based on substantial data during the permitting process, that an alternative PISC timeframe may be appropriate if it ensures non-endangerment of USDWs pursuant to requirements at §146.93(c). EPA believes that a 50 year post-injection site care timeframe represents a reasonable and protective monitoring period and available data, including data submitted by commenters, do not support a different default timeframe. Furthermore, EPA believes that a 50-year default post-injection site care timeframe, as required at §146.93(b)(1), is not overly burdensome, does not exaggerate the risks associated with GS, is consistent with other environmental programs, and sufficiently protects USDWs from endangerment.

EPA believes that a default post-injection site care timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where substantial data exists to demonstrate that an alternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to accommodate site-specific circumstances and various geologic conditions, and addresses commenters’ concerns, while ensuring USDW protection. Both approaches will utilizesite-specific data, and be based on pressure monitoring and USDW impacts. EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23815 Other EPA Comment Codes and Descriptions: 1630 1.3.3 RCRA/hazardous waste issues (seeking comment); 1640 1.3.4 CERCLA issues (seeking comment)

Comment: B. POTENTIAL APPLICABILITY OF RCRA AND CERCLA

As discussed in greater detail below, the potential applicability of RCRA and CERCLA is a key concern. These statutes simply are not designed with the thought in mind of encouraging the safe and widespread deployment of a new technology. The CCS Alliance believes that many parties involved in the CCS chain of events should bear responsibility for safe operation. Rather than apply environmental statutes with contentious and litigious histories, Congress should enact a new regulatory and liability framework for CCS in place of the multiple regimes that now may apply. This is not meant to detract from the progress EPA is making in this rulemaking. It merely recognizes the limitations and overlapping structures EPA itself has noted. CCS should be subject to a single, clear regulatory structure, and a single, clear liability structure. In the meantime, EPA should use what interpretive authority it has to limit the applicability of multiple statutes and provisions, the applicability of which would discourage CCS.

Response:EPA acknowledges the commenter's concerns regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. EPA is working to create a nationally consistent financial responsibility regime within its authority while providing permitting authorities an appropriate level of flexibility. EPA is finalizing financial responsibility requirements under authority of the SDWA, which includes the authority to set federal minimum requirements for financial responsibility to ensure that resources are available to protect USDWs throughout the life of the GS project.

This authority does not extend to release owners or operators from long-term responsibility under other statutes, such as CERCLA, for potential impacts after the PISC period has ended, or for the potential economic costs associated with impacts unrelated to USDWs. Under current SDWA provisions, EPA does not have authority to transfer liability from one entity to another and it does not provide for the creation of a third party financial instrument where EPA is the trustee.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until he or she can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it has not been used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable even after site closure was approved if the Director relied on erroneous information provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. If the owner or operator fails to comply with the order, he or she may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, including all potential liabilities associated with meeting the requirements of that permit.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Comments requesting congressional legislation on liability for GS are outside of the scope of this rulemaking.

EPA agrees that identifying and addressing potential barriers to the deployment of CCS, while protecting human health and the environment, is important. As described above, making legislation changes is outside the scope of the GS rulemaking. Also as described above, EPA has decided to initiate a separate proposed rulemaking specifically to examine the issue of RCRA applicability to CO2 streams being geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2 GS in Class VI wells.

Furthermore, EPA is promulgating the GS rule under the authority of the SDWA. To the extent the commenter is seeking interpretations of CERCLA and its related provisions, such as the definition of a federally permitted release, such interpretations are beyond the scope of this rulemaking.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23823

Comment: A. THE PURPOSE OF FINANCIAL ASSURANCE

EPA's Geologic Sequestration Stewardship paper, released in conjunction with the Proposed Rule in July, states that the purpose of financial assurance is "to minimize the number of facilities that are orphaned and abandoned; thereby, reducing the potential that these costs will be borne by the public."[FN9][FN9] U.S. ENVIRONMENTAL PROTECTION AGENCY, Approaches to Geologic Sequestration Site Stewardship After Site Closure, n.2 (July 2008).

This goal must be considered in the context of the facts surrounding CCS. It is an activity the government wants to encourage, the risks attendant to which may be significant if they occur but likely are of low probability, and for which the private risk management market will not cover the full amount or duration of the risks. To fail to implement CCS at this juncture, is not an option if we are to serve other public priorities, such as addressing climate change and energy security, which depends in part on utilizing domestic resources like coal. For CCS to occur on a broad-scale basis, "costs," in the form of long-term risk, will have to be borne by the public. A question is how to define and shape the public role.

Insuring or otherwise managing risk at a complex industrial facility requires specialty risk products, not ordinary property and casualty coverage.[FN10] In the broader environmental risk insurance market, only four or five insurers offer products. In the energy market, the number is roughly the same. Private risk managers must have experts in place with appropriate perspective to analyze the risks and calculate probabilities of the activity. Few risk management entities likely will develop this capability for CCS. Each may be willing to take a portion of the risk with respect to an individual project. However, consider that today there are 1,493 coal-fired electric generating units in the United states.[FN11] This suggests a large potential need for risk management mechanisms.

[FN10] Chiara Trabucchi and Lindene Patton, Storing Carbon: Options for Liability Risk Management, Financial Responsibility, B N A Daily Environment Report at p.9 (Sept. 3, 2008). "Because CCS is what the financial services sector would call a specialty risk. only a small part of the sector would be equipped and qualified to analyze the risks and place capital thereon."

[FN11] Energy Information Administration. Electric Power Annual, Existing Capacity by Energy Source, Table 2-2 (Oct. 22, 2007).

Forecasting for CCS can be difficult because there is no established track record in some formations where GS is envisioned to occur, such as deep saline aquifers, or on the scale envisioned for facilities generating electricity. Each risk management company will have differing conditions under which it will or will not accept risk. These might be based on factors such as geography, due diligence in siting, formation pressure and chemistry, type of geologic formation, proximity to population, and the applicable legal and liability regimes. These factors are not yet actual factors, as CCS as envisioned by policymakers has yet to emerge, but are based on the considerations in other

fields.

Companies may further specialize in the layer of risk they are willing to accept. For example, one risk management company may be comfortable writing coverage for the initial tranche of risk - perhaps the first $30 million in potential damages, above the first $10 million, which it may require that thepolicyholder bear. Another may be willing to write coverage for the next $30 million, liability for which would only arise if damages were beyond the $40 million borne by the policy holder and the first insurer. Others may not be willing to provide coverage until after the first $100 million or more in risk is covered. A small pool of reinsurers may be willing to help further spread

some of these risks.

In considering financial assurance requirements, EPA and stakeholders should distinguish financial assurance from liability. Regardless of the length of time EPA establishes in the final rule for a GS facility owner or operator to maintain financial instruments to pay to clean up potential USDW contamination, liability for such cleanup may last longer, depending on which statutory provisions are applicable, as well as state law. While EPA is limited in its ability to address potential liability, it should seek to do so, as findings of the Risk Study conducted by the CCS Alliance (discussed below) show that potential long-term liability is a significant barrier to CCS development.

Response: As described above, the goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties, not to encourage or discourage the use of GS.

Regarding the availability of financial responsibility providers, EPA anticipates that the availability of a variety of financial responsibility providers and third-party GS financial instruments will grow in response to demand. In addition, EPA plans to allow owners or operators the flexibility to choose from a variety of financial instruments in order to meet the requirements at §146.85.

EPA acknowledges that financial responsibility and long-term liability are separate issues. EPA clarifies that SDWA does not contain any provisions addressing liability. However, consistent with the policy of the UIC program, the financial responsibility provisions provided in the GS rule are intended to ensure the owner or operator will be liable for remediating or correcting any endangerment of USDWs via their demonstrated financial instrument up through site closure. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility

for Class VI wells.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23824

Comment: B. CONSIDERATION IN VIEWING RISK

Risk managers - insurers, sureties, banks, and others - will determine whether to provide financial assurance based on a calculation of the severity of risks and probability that they will occur over a given time period and the terms and conditions of the obligation.

The severity and probability of risk is defined not just by physical dimensions, such as fractures and leaks, but by the regulatory and liability structure that is in place. A party may be in violation of a rule or may trigger large potential liability, notwithstanding that the risk to USDWs or human health or the environment may be minimal.One may look at the risks of a CCS project in two ways: by the activity being performed in the CCS chain (i.e.. generation, compression, transportation, injection, long-term storage), or by the phase of the project (i.e., operation,closure, post-closure). The CCS activity being performed, as well as other sitespecific conditions, will affect the availability of risk management products:

In the context of CCS, different risks are likely to present themselves at different stages during the facility's life-cycle. resulting in a range of consequences the financial materiality of which will depend on the site-specific characteristics and location of each CCS project. For these reasons, different phases of the CCS process will warrant different financial (risk) management mechanisms."

[FN12] Chiara Trabucchi and Lindene Patton, Storing Carbon: Options for Liability Risk Management, Financial Responsibility, B N A Daily Environment Report at p. 3 (Sept. 3,2008).

Some risks will be more easily addressed by the market than others. Risks in the generation and carbon capture phase are manageable under standard mechanisms such as bonds and insurance, or are retained by the operator. The same is true for risks during the transportation phase.[FN13] However, the long-term storage phase presents a set of risks the duration of which is beyond the scope of the market. The market will not take on liabilities beyond a defined amount for a defined period. Granger Morgan of Carnegie Mellon University's CCS Regulatory Project said, "[t]hey don't know how to write a policy that goes on forever." [FN14] It is not a matter of knowing how - it is a matter of not being willing to provide risk management for such duration.

[FN13] Id. at 9.

[FN14] Evan Lehmann, Wanted: 1,000 Year Insurance Policy, ClimateWire, Aug. 19, 2008, http://www.eenews.net/climatewire/2008/O8ll9ll/.

Underwriters look to a variety of factors in determining whether to offer a risk management product, what its features and conditions will be, and how to price it:

An underwriter will look to the fundamentals of the technology itself when undertaking risk analysis. Technical specialists are assigned (such as engineers, geologists, chemists or the like) to develop an understanding of the technology's functionality and its potential failure points. The underwriter will ask for testing and performance data, including the conditions of performance - especially scale. In the area of technology, scalability presents substantial risk for many reasons, including - but not limited to - basic theory extensions, specific chemical or physical behavioral changes associated with volumeor environmental factors (such as temperature or humidity) and supplychain risks, to name a few.[FN15]Many of these issues are key considerations in evaluating CCS risks. As noted above, few risk management companies may undertake to develop this information.

[FN15] Lindene Patton, Beyond Rising Sea Levels, THE EUROPEAN BUSINESS REVIEW (Mar./Apr. 2008).

Response:EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on how best to estimate costs to assist GS well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing

estimates of the costs associated with various GS activities. EPA will also discuss how best to evaluate the appropriateness of single and multiple bonding and phased release of bonds in the guidance. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

The final rule provides owners or operators the option to use separate financial responsibility instruments for different GS activities and project phases. However, owners or operators must demonstrate adequate financial responsibility for all required activities with their permit application, per §146.82(a)(14). In addition, on an annual basis, the owner or operator must adjust the cost estimate for inflation, increase or decrease the value of the financial instrument to match the cost estimate, and provide any updated information related to their financial responsibility instrument(s), or at any other time deemed appropriate by the Director. These annual reviews provide mechanisms for revising cost estimates up or down to account for changes in the project, including the execution of environmental obligations as phases of a GS project are completed.

EPA clarifies that SDWA does not contain any provisions addressing liability. However, consistent with the policy of the UIC program, the financial responsibility provisions provided in the GS rule are intended to ensure the owner or operator will be liable for remediating or correcting any endangerment of USDWs via their demonstrated financial instrument up through site closure. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility

for Class VI wells. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells.

As described above, EPA anticipates that the availability of a variety of financial responsibility providers and third-party GS financial instruments will grow in response to demand. EPA adds that other aspects of CCS, e.g., capture and transport of CO2, are outside the scope of the GS rule.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23825 Other EPA Comment Codes and Descriptions: 1600 1.3 Risk Associated with CO2 GS

Comment: C. WHAT MARKET PARTICIPANTS SAY ABOUT RISK

The framework for approaching the commercial risk in the development and deployment of coal-based projects with CCS is demonstrated by the following

chart:

For Development of Coal Based Charts with CCS Approach to Commercial Risk Framework [Please see Comment Pdf for Graphic, pg. 20]The CCS Alliance has evaluated technical, market, and policy risks associated with CCS deployment. On behalf of the CCS Alliance, Andrew Paterson of Econergy International interviewed dozens of market participants earlier this year, including project developers, utilities, technology vendors, risk managers, and financial providers to assess which risks were considered most likely to occur, and which, if they occurred, would be considered to have the greatest impact to the project.

The results can be viewed graphically in a Cartesian coordinate analysis, as follows:

Which Risks Matter? Which Will the Market Handle? Probability vs. Impact [Please see Comment Pdf for Graphic, pg. 21]

The CCS Alliance analysis confirms that market participants concur with the view of the Intergovernmental Panel on Climate Change ("IPCC") that physical risks such as an operating accident or geologic sequestration site failure are low probability, high impact risks.[FN16] However, they view as higher probability the risk of policy failure.

[FNl6] IPCC, Special Report on Carbon Dioxide Capture and Storage (2005). IPCC report states that there is only a one percent chance that CO2 would escape into the atmosphere in 100 years.

In the CCS Alliance Risk Study, the highest rated risks for companies and investors considering investment in projects with CCS were focused on:

- Higher capital costs for capture, compression, transport, injection and

storage.

- Uncertainty about the extent and timing of legislation and regulations for carbon emission constraints - in other words, a regulatory basis for pursuing

CCS at all.

- Unclear rules at the federal and state level for CCS injection (which the UIC Proposed Rule is seeking to address), creating some uncertainty about specific

liabilities.

- Lack of clarity about long-term ultimate liability for CO2 leakage after injection and storage for some commercially relevant time period (e.g., 10 to 30 years). The Proposed Rule also seeks to address this issue.

- Electricity (or fuel) prices - in the regional market or set by state utility

commissions - which are too low to cover costs for CCS.

Some mechanisms, as either subsidies or for risk transfer, exist to address these issues, but as depicted in the table below, they are concentrated in the area of either reducing capital costs and other CCS related expenses, or in dealing with electricity rates and adjusting revenues in some manner. Subsidies to cover higher costs include: federal grants for new facilities, tax credits, and state grants. Other mechanisms, such as a federal loan guarantee (Section1703 of EPAct 2005) or rate-basing a plant with CCS, remove substantial risk for capital recovery by providing alternative recovery or prevention of default.

Mechanisms (vs. Capital Risks) -- [Please see Comment Pdf for Graphic, pg. 23]

Because substantial exposure to some critical risks remains, additional mechanisms and regulatory clarification are needed to garner the scale of investment and capital recovery needed for commercial entities to deploy major facilities with CCS. As summarized in the table above, clarifying injection and transport rules clearly help, and can be coordinated with private insurance, trust funds or bonding, and state revolving funds. Additionally, some clarity on carbon emission regulations would eventually enhance the value of assets with CCS, and help attract capital for construction in the first place. Without capital investment, no CCS will be implemented because it is an inherently capital-intensive activity primarily involving facilities costing more than $1

billion.

But, there is no private instrument that can bear "indefinite, long-term liability" for leakage from CCS sites because commercial enterprise carries a finite horizon for investment. The EPA UIC program does wield a regulatory incentive, though, in negotiating or retaining some flexibility on the point (e.g., 10 years versus 50 years) at which liability for long-term leakage is assumed by the federal holder after injection.

Results of the CCS Alliance Risk Study are summarized in the following chart. Note that in addition to the concern noted earlier about state CCS regulations and liability policies, one of the issues scoring the highest risk factor is that EPA regulations on underground injection of CO2 and liability fail to offer clarity for financing. Lack of clarity could prove to be a "showstopper." EPA should do its utmost to use its statutory authority to reduce this risk through this rulemaking.

Far Deployment of Coal-based Projects with CCS Risk Study: Technical, Policy, Market Risks -- [Please see Comment Pdf for Graphic, pg. 24]

This information is buttressed by the recently published findings of the Government Accountability Office ("GAO") which, in part, concludes that regulatory and legal uncertainties, including questions about liability concerning CO2 leakage and ownership, are primary barriers to CCS deployment.[FN17]

[FN17] GOVERNMENT ACCOUNTABILITY OFFICE. GAO-OX-1080, CLIMATE CHANGE:

FEDERAL.

ACTIONS WILL GREATLY AFFECT THE VIABILITY OF CARBON CAPTURE AND

STORAGE AS A KEY MITIGATION OPTION (2008).

Response:EPA acknowledges the comment on market risk. This comment is outside the scope of the UIC Program’s authority under the GS rulemaking. However, EPA clarifies that the final rule, at §146.85, provides more detailed requirements on financial responsibility for risks associated withinjection.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23826

Comment: D. PRINCIPLES FOR A RISK MANAGEMENT REGIME FOR CCS

Recognizing that it must act within the confines of its authority under the SDWA, and with the goal in mind of protecting USDWs, EPA should consider the following principles in constructing a financial assurance program.

One means of encouraging adequate financial assurance is for regulators to (1) require site operators to provide accurate, comprehensive and current information on costs for closure, post-closure and corrective action activities; and (2) ensure that stakeholders have the means to verify those estimates. Moreover, the Alliance seeks to remind EPA that no type of financial assurance instrument can meet regulatory demands for an unrealistically long coverage time period that extends beyond the willingness of capital markets to accept covered risks for such periods. With these concepts in mind, regulations can be developed to ensure that funds will be readily available, and in the amount necessary, to cover costs associated with environmental obligations in the event that owner/operators of underground injection sites are unable to meet their financial responsibilities.

1. Clear, Reasonable, and Limited Regulatory and Liability Structure EPA should use its discretion, to the extent practicable, to establish a single, clear, and reasonable regulatory structure. CCS developers will be willing to abide by reasonable rules that protect human health and the environment, but society should not bear enhanced costs resulting from requirements that do not contribute to health and environmental protection. Nor do developers and risk managers want to face liability via multiple State and federal statutory and common law pathways, with the possibility of unnecessarily expensive and contentious remedies. EPA should use its discretion, to the extent practicable, to provide a single, clear, reasonable liability regime. As these goals likely will require some legislative action, EPA also should educate Congress on the need for regulatory and liability regimes with these characteristics.

2. Allow a Broad Array of Financial Assurance Instruments Since private market financial assurance may be scarce for some CCS phases, EPA should be flexible in the type of financial assurance instruments it authorizes and needs to encourage the development of financial assurance offerings for CCS.

The Proposed Rule discusses four financial assurance/risk management instruments and requests comment on others.

Generally, the CCS Alliance believes policy should foster a broad array of means whereby a regulated entity can satisfy financial assurance. Both regulators and site owner/operators will benefit from broad availability of an innovation in offering different types of financial assurance instruments. Increased competition may reduce the cost of obtaining these assurances as much as marketconditions will permit. Each instrument has specific characteristics and may play a different role in addressing CCS risks. It should be noted that in difficult economic environments (e.g., contractions of available capital in the market), the capital markets may make less money available for new types of projects, especially if the risk profile is unclear, which could mean that arranging financial assurance for CCS may be difficult in the near term.

One issue that applies to a variety of financial assurance instruments is the

creditworthiness of the issuer. While EPA should seek satisfaction that the issuer is on sound financial footing, it should avoid unduly restrictive standards, or standards beyond the control of the issuer. For example, Bureau of Land Management regulations require that insurance providers offering financial assurance "must have an A.M. Best rating of 'superior' or an equivalent rating from a nationally recognized insurance rating service."[FN18] Such standards may dramatically contract the pool of available issuers, especially during difficult economic times. Creditworthiness standards should consider both ability to pay and the availability of cost-effective financial assurance.

[FN18] 43 CFR 3809.555(f).

Response:EPA believes that all of the requirements for owners or operators of Class VI wells, including the financial responsibility requirements, are for the purpose of protecting human health and the environment as it pertains to protection of USDWs. Furthermore, the final rule addresses comments concerns regarding the need to provide a financial assurance program while working

within the confines of the SDWA.

As described above, EPA is working to create a nationally consistent financial responsibility regime within its authority while providing permitting authorities an appropriate level of flexibility. However, under current SDWA provisions, EPA does not have authority to transfer liability from one entity to another.

Under §146.85 provides the owner or operator the option to demonstrate financial responsibility by using a broad array of financial instruments. Furthermore, the owner or operator must maintain financial responsibility and resources until approved site closure while also providing detailed up to date written estimates of the cost of performing corrective action, plugging the injection wells, PISC and site closure, and emergency and remedial response.

Furthermore, EPA’s financial responsibility guidance (see below) will provide recommendations for generating such cost estimates. EPA also agrees that stakeholders should be able to verify such estimates. As described above, EPA anticipates that the availability of a variety of financial responsibility providers and third-party GS financial instruments will grow in response to GS technology demand.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23834 Other EPA Comment Codes and Descriptions: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: D. POTENTIAL EFFECT OF SUPERFUND ON CCS DEPLOYMENT

The CCS Alliance conducted a Risk Study earlier this year, surveying more than30 executives in companies involved with or considering CCS deployment.[FN35] the purpose of the Risk Study was to identify policy, technical, and market risks that could pose barriers to proceeding with CCS projects. Respondents were asked to rate the likelihood of a policy, technical, or market factor occurring, as well as the severity of the impact to a CCS project if it did occur. The product of the likelihood and the severity of impact to the project for each surveyed issue generated a risk ranking.

[FN35] Risk Study for Commercial Deployment of CCS: Factors Affecting Financing for Early Plants, CCS Alliance (July 2008).

Three of the top eight concerns identified by respondents related to liability for CCS, including lack of clarity in the applicability of federal and state liability regimes. As the following chart demonstrates, particularly results for responses to questions 17,31, and 34. executives are very much concerned with the risks associated with the lack of clarity in state and federal regulations and liability regimes, as well as with liability over the long-term.

[Please see Comment Pdf for Chart, pg. 38]

Moreover, a recent GAO report emphasizes the concern about liability:

EPA's 2007 UIC workshop, attended by more than 200 stakeholders, revealed liability associated with unintended migration of injected CO2 to be a critical concern. Similarly, 19 of the 20 stakeholders we interviewed told us that liability related to CO2 storage was a large or very large barrier to deployment of CCS at commercial scale, with some noting that liability concerns have already negatively impacted companies' ability to initiate CCS projects. For example. two stakeholders reported that these concerns have already made it difficult to obtain insurance for CCS projects. [FN36]

[FN36] U.S. GAO, GAO-08-1080. FEDERAL ACTIONS WlLL GREATLY AFFECT THE

VIABILITY OF CARBON CAPTURE AND STORAGE AS A KEY MITIGATION OPTION 25 (2008).

Although we currently are aware of no report specifically stating that liability under Superfund is the principal liability concern among CCS proponents, it clearly is a significant issue that has been raised repeatedly, including through EPA advisory processes and the imposition of which would negatively affect future investment in CCS technologies.[FN37]

[FN37] EPA's Advanced Coal Technology Work Group Final Report recommends that EPA's UIC rulemaking proposal should "include a thorough discussion of. . liability implications under other statutes (CERCLA, RCRA, etc.) and potential linkages and impacts (or lack thereof) for CCS projects." U.S. ENVIRONMEKTAL
PROTECTION AGENCY, FINAL REPORT: ADVANCED COAL TECHNOLOGY WORK

GROUP REPORT 5 (Jan. 29,2008).Response: As described above, EPA is working to create a nationally consistent financial responsibility regime within its authority while providing permitting authorities and owners or operators an appropriate level of flexibility. EPA believes that the general authorities provided under SDWA include the authority to set federal minimum requirements for financial responsibility to ensure that resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to release owners or operators from long-term responsibility of other environmental statutes, such as CERCLA, for potential impacts to USDWs after the PISC period has ended, or for the potential economic costs associated with activities with impacts unrelated to USDWs (e.g., risks to air, or ecosystems).

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

Furthermore, the Agency clarifies that, after site closure, an owner or operator may, depending on the fact scenario, remain liable under tort and other remedies, or under other Statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992.

See the final rule and preamble for further discussion of final approach to financial responsibility for GS projects.

As described above, whether the presence of hazardous substances in CO2 streams may result in CERCLA liability from a sequestration facility depends entirely on the composition of the specific CO2 stream and the environmental media in which it is stored (e.g., soil or ground water). CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “federally permitted releases” (FPR) as defined in CERCLA, 42 U.S.C. 9601(10). Class VI permits will need to be carefully structured to ensure that they prevent potential releases from the well which are outside the scope of the Class VI permit.

Furthermore, EPA is promulgating the GS rule under the authority of the SDWA. To the extent the commenter is seeking interpretations of CERCLA and its related provisions, such as the definition of a federally permitted release, such interpretations are beyond the scope of this rulemaking.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23842 Other EPA Comment Codes and Descriptions: 5460 2.9.2 Comments on transfer of liability for long-term care

Comment:EPA should consider whether financial assurance mechanisms are likely to be available for the entire post-operation site care period. While risks can be expected to decline over time after injection ceases, it does not follow that private risk management entities will continue to cover the risks. If there are no financial assurance mechanisms available, owners and operators should not be at risk of non-compliance for failing to have them after operations (and revenue streams from the project) have ceased, especially if risks continue to be low.As such, the CCS Alliance recommends that once the 30-year period is reached -- or shorter if the performance standards are met -- a government backstop would be triggered, thereby ensuring that a risk management mechanism is in place beyond the responsibility of the owner or operator.

Response:EPA clarifies that owners or operators of GS wells must demonstrate and maintain financial responsibility for addressing corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites, as required at §146.85(a). The final rule provides owners or operators to choose from a variety of financial instruments to meet the financial responsibility requirements. EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by GS well owners or operators as deployment of GS technology increases in the future.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23650

Comment: In its comments, AWWA makes several recommendations for the following specific items to be included in the final regulation:

- Addressing liability, treatment costs for remediation, and financial recourse for a water utility if a USDW is degraded due to a GS project;

Response: The goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. As such, owners or operators must demonstrate financial responsibility for, among other things, any needed emergency and remedial response actions that are necessary to mitigate endangerment of USDWs. Furthermore, the financial responsibility provisions provided the final GS rule are intended to ensure the owner or operator will be held liable for remediating or correcting any endangerment of USDWs via their demonstrated financial instrument up through site closure. For example, if during the life of the GS project (up until site closure) a Class VI well leaks, which results in endangerment of a USDW, the primacy State of other 3rd party beneficiary can call upon that financial instrument to pay for remediation or corrective action. EPA wants to clarify that the Agency can never be the beneficiary of the financial instrument used to meet §146.95 due to limitations under the Miscellaneous Receipts Act. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23711 Other EPA Comment Codes and Descriptions: 5460 2.9.2 Comments on transfer of liability for long-term care

Comment: AWWA would also like to see the issue of long-term liability resolved. EPA’s proposed geologic carbon sequestration rule is not able to address financialresponsibility of the sequestration site after the formal period of postinjection site care has ended (default of 50 year length). Recognizing that EPA does not have the power to assign responsibility after this period of time has expired, AWWA recommends that EPA work with the appropriate stakeholders to develop legislation that will address the issue of who has to assume financial responsibility of the sequestration site after the site closure requirements have been fulfilled. AWWA anticipates that this legislation would provide for a means by which drinking water utilities could recover any costs incurred as a result of USDW contamination by geologic carbon sequestration activities. AWWA also recommends that EPA work with the appropriate stakeholders to develop comprehensive climate change legislation with the goal of protecting water systems, and their customers, from loss of water supply or unplanned major financial burdens. Everyone needs to apply the lessons learned from MTBE contamination to prevent unintended consequences from developing with geologic sequestration wells.

Response:EPA is working to create a nationally consistent financial responsibility regime for GS projects within its authority under the SDWA while providing permitting authorities an appropriate level of flexibility. The goal of financial responsibility is to ensure that financial resources areavailable to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties, thereby preventing costs from spilling over to the public. EPA believes that the general authorities provided under SDWA include the authority to set federal minimum requirements for financial responsibility to ensure that resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to release owners or operators from long-term responsibility of other environmental statutes, such as CERCLA, for potential impacts to USDWs after the PISC period has ended, or for the potential economic costs associated with activities with impacts unrelated to USDWs (e.g., risks to air, or ecosystems).

Comments related to comprehensive climate change legislation is outside the scope of this rulemaking.

Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells.

As described above, EPA disagrees that GS is analogous to the MTBE situation.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25156 Other EPA Comment Codes and Descriptions: 1614 1.3.1.2 Impurities in captured CO2; purity

standards for CO2

Comment:For instance, EPA has recognized that "co-contaminants in the CO2 stream couldendanger a USDW if the injectate migrates into a USDW." 73 Fed. Reg. at 43,497. The "types of impurities and their concentrations in the CO2 stream are likely to vary by facility, coal composition, plant operating conditions, and pollution removal technologies." Id. at 43,503. Yet the proposed regulation’s current standard for stream purity is loosely defined. The proposed regulation allows injection of a stream with "incidental associated substances derived from the source materials and the capture process, and any substances added to the stream to enable or improve the injection process." Id. at 43,535 (proposed 40 CFR § 146.81(d) (definition of "carbon dioxide stream")). By regulating CO2 generators and CO2 stream treatment (purification) facilities directly, EPA could reduce the likelihood that a contaminated CO2 stream would be injected into a GS well and thereby reduce the likelihood that such contaminants would endanger a USDW.[FN12] EPA should therefore consider setting specific requirements for the maximum concentrations of "incidental substances" in injected CO2 streams to reduce the uncertainty about the proper level of treatment required. By imposing financial assurance requirements on those parties, EPA could also reduce the likelihood that costs and damages arising from such contamination would go unpaid, for example, if such costs exceeded the security posted by the owner or operator. Regulatory oversight would make these firms "more likely to undertake operating decisions that consider environmental (and remediation)

costs." WRI ISSUE BRIEF at 6.

Response:EPA clarifies that the financial responsibility requirements in the GS rule apply to owners or operators of Class VI wells, and not to the generator of the CO2. The goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Furthermore, comments related to the need to regulate CO2 generators and CO2 stream treatment facilities are outside the scope of this rulemaking.

The GS rule does not set generic purity standards for CO2 injectate streams (e.g., a percent CO2). Instead, the GS rule addresses the quality and quantity of impurities by requiring owners or operators to submit information on the source of the CO2 and its physical and chemical properties. Specifically, the GS rule requires the owner or operator to submit data about the site, including an analysis of the chemical and physical characteristics of the CO2 stream, as required at §146.82(a)(7)(iv), and information on the compatibility of the CO2 stream with fluids in the injection zone and minerals in both the injection and the confining zones and the materials used to construct the well, per §146.82(c)(3). This information can help the Director determine the potential for geochemical reactions between the injectate (CO2) and the host geologic formations, which could result in the plugging of pore spaces or the dissolution of formation minerals.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25159 Other EPA Comment Codes and Descriptions: 5460 2.9.2 Comments on transfer of liability for long-term care

Comment: 2. EPA’s Proposed RegulationUnder the proposed regulation, "the owner or operator of a GS site is released from post-injection site care responsibilities" (including all monitoring or reporting responsibilities) upon site closure. 73 Fed. Reg. at 43,535 (proposed 40 C.F.R. § 146.81(d)) (defining "site closure" as "the point/time, as determined by the Director following the requirements under § 146.93, at which the owner or operator of a GS site is released from post-injection site care responsibilities")). The owner or operator also is released from responsibility for posting any financial assurance. 73 Fed. Reg. at 43,522 ("[O]bligation for financial responsibility ends for owners or operators after the post-injection site care period has ended and the Director has authorized site closure[.]"). Thus, once the site is closed, the owner or operator’s only remaining regulatory responsibility is to retain its records for a period of three years. See id. at 43,541 (proposed 40 C.F.R. § 146.93(g)).

As the EPA notes in the preamble to the proposed regulation, it is assuming that post-closure liability will remain with the owner or operator of the site. 73 Fed. Reg. at 43,522 ("[O]wners or operators may still be held responsible after the post-injection site care period has ended . . . . Trust responsibility for potential impacts to USDWs remains with the owner or operator indefinitely under current SDWA provisions."). Presumably, this would apply to liability for both anticipated costs associated with the long-term care of a storage facility and the potential for costs associated with unanticipated damages. See 42 U.S.C. § 300j-8(e) ("Nothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law to seek enforcement of any requirement prescribed by or under this subchapter or to seek any other relief.").

There are a number of significant problems with this perpetual-liability-butlimitedfinancial-assurance approach.

a. The Public Is at Risk

The limited financial assurance element puts the public at risk. The proposed regulation’s failure to require the owner or operator to maintain any financial assurance during the post-closure period means that the public has (by definition) no assurance that the owner or operator will in fact be able to pay the cost of post-closure incidents. The owner or operator may no longer be in existence or otherwise unable to pay, leaving the public, the state, or the individual victims to bear the uncompensated damages of any migration, leakage, or damage that occurs after a site is closed. Given the uncertainties of CCS technology at this time and the anticipated indefinite lifetime for GS wells, the government must anticipate that some number of post-closure incidents will occur, and it must provide the public with assurance that any costs or damages arising from them will be paid.

b. Industry Lacks Certainty

In addition to burdening the public with risks of future costs, the proposed regulation’s infinite liability leaves potential owners/operators with muchuncertainty as to the management of their responsibilities. This uncertainty could significantly hamper large-scale industry investment in CCS. EPA is aware of this problem, but the proposed regulation does not offer a solution:

Responsibility for long-term care is often considered an important topic related to GS because of cost implications of indefinite responsibility for GS sites. Because of the focus of the SDWA on endangerment to USDWs and the absence of provisions to allow transfer of liability, stakeholders have expressed interest in alternative instruments for addressing financial responsibility after the post-injection care period has ended. As a result of the interest in alternative instruments, including indemnity programs, EPA has compiled information on a variety of alternative instruments not currently available under the SDWA. . . . EPA has not determined whether any of the models are appropriate for GS wells, however, EPA is aware that these models may contain important concepts that may become the model for future strategies for long-term

care.

73 Fed. Reg. at 43,522.

Until those "future strategies" are incorporated into the regulations for GS, however, industry is left with indefinite long-term liability (in the proposed regulation), which could impede implementation of large-scale GS.

Response:EPA acknowledges the commenter's need for certainty. The agency is working to create a nationally consistent financial responsibility regime for GS within its authority under SDWA while providing permitting authorities an appropriate level of flexibility. .The SDWA provides EPA the general authority to set minimum federal requirements for financial responsibility to ensure that financial resources are available to protect USDWs from endangerment throughout the life of the GS project. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to complycontinues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

EPA clarifies that site closure will not be authorized (and therefore financial responsibility must continue) until the owner or operator has demonstrated that the site poses no further risk to USDWs.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25160 Other EPA Comment Codes and Descriptions: 5460 2.9.2 Comments on transfer of liability for long-term care

Comment: 3. EPA Should Extend Its Financial Assurance Requirements Into The Post-Closure Period and Transfer MMV Responsibilities to the Government.

The risk to the public can be addressed by requiring owners/operators to post financial security and/or pay into a national fund to cover costs and damages arising after site closure. There is no reason why EPA cannot do this using its existing authority under the SDWA. As EPA itself states, "[a]lthough the SDWA does not have explicit provisions for financial responsibility, as included in RCRA, EPA believes that the general authorities provided under the SDWA authority to prevent endangerment of USDWs include the authority to set standards for financial responsibility to prevent endangerment of USDWs from improper . . . management of wells after site closure." 73 Fed. Reg. at 43,520 (emphasis added).

Response: As described above, EPA notes that under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee. Furthermore, EPA does not have authority in the SDWA to create a trust fund. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments through the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Commenter Name: Paul L. Carpinone Letter ID: 0212 Commenter Organization: Tampa Electric Company Comment ID: 22902

Comment: - EPA must resolve key policy and legal uncertainties to alleviate financialconcerns of potential Class VI well Owners or Operators and to encourage investment in the development and operation of Class VI CO2 injection wells.

Response:EPA clarifies that owners or operators of Class VI wells must demonstrate and maintain financial responsibility for addressing corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites, as required at §146.85(a). The final rule provides owners or operators to choose from a variety of financial instruments to meet the financial responsibility requirements. EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by GS well owners or operators as deployment of GS technology increases in the future.

EPA clarifies that the GS rule is not to promote or encourage the use of GS; rather the intent of the GS regulation is to ensure that, where GS is employed, projects are permitted, sited, constructed, operated, monitored, and closed in a manner that protects USDWs from endangerment. The goal of the financial responsibility requirements for Class VI well owners or operators is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties during the life of the Class VI well. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name: Ronald Evans Letter ID: 0215 Commenter Organization: Denbury Resources, Inc. (DRI) Comment ID: 24283 Other EPA Comment Codes and Descriptions: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment:Finally, this 50-year timeframe raises barriers to obtaining financial assurance for prospective projects. Section 146.85 of the Proposed Rule requires the owner or operator to maintain financial responsibility for corrective action, injection well plugging, post-injection site care and site closure. Undoubtedly owners/operators will enter the private sector financial assurance market forsome period in order to meet this requirement. An uncertain or a 50-year postinjection site care timeframe creates impediments to managing this financial responsibility. We believe that both an indeterminate or an exceedingly long post-injection site-care period will discourage the development of private sector products to address financial responsibility and discourage sequestration in general.

Response:EPA disagrees that the requirements for financial responsibility are overly stringent or unreasonable. The goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties throughout the life of the project. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA believes that minimum financial responsibility requirements are necessary to hold well owners or operators accountable for the safe operation and proper site closure of the well in order to protect USDWs while also avoiding expense and risk to the public. EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.Commenter Name:Edward Steadman Letter ID: 0220 Commenter Organization: The Energy and Environmental Research Center at the University of North Dakota Comment ID:

21628

Comment: Page 43520. Proposed Financial Responsibility and Long-Term Care Requirements The requirements for financial assurance may discourage commercialization of CCS. As currently proposed, the rules would place greater financial assurance requirements on Class VI wells than are currently placed on Class I hazardous waste wells. The more rigorous requirement may result in a needless negative public perception of CCS. The chemical and physical properties of carbon dioxide injected for storage purposes are not uniquely distinctive to garner such attention under the UIC Program. Furthermore, in order for CCS projects to come to fruition, financial assurance obligations need to be consistently and reasonably achievable. If not, considerable uncertainties will be introduced into the economics and finances of proposed projects. The currently proposed rule assumes reliable cost estimates will be available at the time of permitting for a broad range of long-term activities lasting more than 50 years into the future. EPA should carefully consider the implications of the proposed financial assurance provisions so as to not discourage CCS activities.

Response: The goal of financial responsibility is to ensure that resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA believes that assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA disagrees that the requirements equate GS wells with Class I hazardous waste wells; rather, the financial responsibility requirements for GS wells are tailored to the unique nature of the long term GS of CO2. EPA does not agree that the financial assurance requirements will result in negative public perceptions of GS. EPA believes that the public will be reassured that any necessary activities will be covered despite the owner’s or operator’s

financial difficulties.

EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

Commenter Name: Andrew Duguid Letter ID: 0226 Commenter Organization: Schlumberger Carbon Services Comment ID: 24031 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: §146.85 Financial responsibility.

Proposed Rule: (b) The owner or operator must provide to the Director, at a frequency determined by the Director, written updates of adjustments to the costestimate to account for any amendments to the area of review and correctiveaction plan (§146.84), the injection well plugging plan (§146.92), and the postinjection site care and site closure plan (§146.93).

Schlumberger Suggested Revision: (b) The owner or operator must provide to the Director, at the same frequency as the AOR reevaluation, written updates of adjustments to the cost estimate to account for any amendments to the area of review and corrective action plan (§146.84), the injection well plugging plan (§146.92), and the post-injection site care and site closure plan (§146.93).

Schlumberger Rationale: We feel that potential changes in the size of the AOR require that all site plans be reevaluated at the same frequency as the AOR.

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. The final GS rule, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. Owners or operators must also adjust the estimates for inflation annually under §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e). See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23318 Other EPA Comment Codes and Descriptions: 1600 1.3 Risk Associated with CO2 GS

Comment: II. The EPA should create a liability scheme for the CCS program.

There is a long list of potential risks associated with CO2 injection and sequestration. Most prominently for purposes of the proposed rule, injected CO2 could cause groundwater contamination by leaking into potable aquifers or causing saline intrusion.[FN15]

When CO2 is injected underground it will naturally migrate through the pore space. This natural migration could lead CO2 to travel upward throughout the reservoir into undetected or abandoned portions of the reservoir, or into portions of the reservoir not owned by the operator, resulting in potential liability for subsurface trespass.[FN16]

Surface leakage out of the storage formation through faults and fractures may lead to other types of potential liability. It could endanger human health by leaking into indoor air and basements.[FN17] Although unlikely, a large surface release could pose health risks to humans, in the form of asphyxiation or the other effects from prolonged exposure to high concentrations of CO2.[FN18] Such other effects include difficulty breathing, loss of consciousness, and death. In addition, CO2 seepage could harm flora and fauna, and could potentially ruin nearby ecosystems and agriculture.[FN19] CO2 also could make sources of oil and gas unattainable, create pressure changes causing ground heave, and even trigger seismic events.[FN20][FN15: Wilson et al., World Resources Institute Issue Brief, Liability and Financial Responsibility Frameworks for Carbon Capture and Sequestration at 3 (Dec. 2007).] [FN16: Id. at 2.] [FN17: Id. at 3; see also IPCC CCS 5.7.7.] [FN18: Id. at 3.] [FN19: Id.] [FN20: Id.]

Given the potential impacts to the environment, public health, and private property, the proposed rule’s approach of ignoring liability issues is improper. Large-scale CO2 sequestration should not begin until liability is definitively determined. EPA should thus revise the regulations and adopt a liability scheme that encompasses the "polluters pay" principle.

The polluters pay principle derives from the fundamental, fair, and logical proposition that the party responsible for producing pollution should also be responsible for paying for any damage to the natural environment. Utilizing the polluters pay principle provides an incentive for owners, operators and CO2 generators to use precaution in their operations. Potentially liable parties have an incentive to avoid risk and damage, which often manifests in parties undertaking additional investment in research and development to improve knowledge and technologies.

The EPA should revise the regulations to impose joint and several liability on Class VI well owners and operators and the generator of the injected CO2 for contamination of underground sources of drinking water, property damage, personal injury or any other injury arising from the injection. In addition, the EPA should require that an operator has complete liability coverage from a private insurance company before commencing injection. "Pollution legal liability insurance" coverage protects the insured party from claims arising from unknown conditions or problems, such as property damage or public health impacts from CO2 leakage.

Response:EPA believes that the GS rule requirements appropriately address the risk associated with long-term storage of CO2. EPA agrees that caution is warranted and has, as a result, developed a new well class with requirements tailored to address the unique challenges posed by GS and potential risks associated long-term injection of CO2. These requirements include the tailored AoR delineation process per §146.84, monitoring that is appropriate to GS projects per §146.90, and extended post-injection site care per §146.93. Failure to meet these requirements would be considered a violation of the permit and would be subject to applicable civil, criminal, or administrative penalties under SDWA §1423.

EPA agrees that owners or operators of Class VI wells must ensure that resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells. For this reason, the GS rule requires that owners or operators demonstrate and maintain financial responsibility for corrective action on wells in the AoR, injection well plugging, post-injection site care and site closure, and emergency and remedial response at GS sites as specified in §146.85. EPA clarifies that this demonstration must be made before injection can begin. In the event ofcontamination or other adverse event that endangers a USDW during the life of the project, the financial instrument(s), such as insurance, bonds, etc., rather than public monies, would cover necessary response actions to remediate the USDW. EPA clarifies that it is the owner or operator of the well who will be required to demonstrate financial responsibility, not the generator of the CO2, consistent with EPA’s authority under SDWA. Furthermore, EPA notes that tort and other remedies will continue to be available after site closure. Other Federal environmental statutes, e.g. Clean Air Act, 42 U.S.C. §§7401-7671; CERCLA, 42 U.S.C. §9601-9675; and RCRA, 42 U.S.C. §6901-6992, potentially apply as well to the risks created by the long-term storage of CO2.

EPA disagrees that the GS rule ignores liability issues but is working within the confines of its statutory authority under the SDWA. EPA notes that comments regarding liability for contamination of the environment outside of endangerment of USDWs (e.g., CO2 leakage into basements, harm to flora and fauna, etc.) are outside of EPA’s authority under the SDWA and are therefore outside the scope of this rulemaking.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23319

Comment: III. The EPA Should Revise the Regulations to Provide for Adequate Financial Assurance for Long-Term Stewardship

Under the proposed rule, 73 Fed. Reg. 43,492, 43,537 (proposed 40 C.F.R. 146.85), the owner or operator of an injection well must demonstrate and maintain financial responsibility and resources for corrective action, injection well plugging, post-injection site care and emergency and remedial response in a manner prescribed by the Director. The proposed rule, however, does not contain a long-term liability plan; it only gives the Director a general duty to ensure financial responsibility of the operator and states that the EPA will develop guidance at a later date to recommend types of financial mechanisms Directors can use to meet this requirement. Details of a liability scheme for CCS should not be left to a future date and should not rely on a corporate entity over the long term.

Effective financial assurance mechanisms are necessary to ensure that closure and post-closure site care, such as monitoring, are conducted. When an owner or operator becomes insolvent without an adequate financial assurance mechanism, significant delays could occur, increasing the likelihood of environmental contamination and adverse human health effects. Moreover, when these failures occur, federal or state governments (and ultimately the general public) would become financially responsible for the closure and post-closure site care costs. Consequently, any uncertainties about the adequacy of financial assurances need

to be minimized.

A. Financial Assurance Under the Proposed SDWA Rule

If an owner or operator declares bankruptcy and the financial assurances are inadequate, drinking water sources are at risk and the public shoulders the cost of post-closure operations. These risks are unacceptable. EPA needs to take action before finalizing this rule and improve the financial assurance requirements by prohibiting the use of certain financial mechanisms, providing alist of appropriate financial assurance mechanisms, and providing guidance on how those approved mechanisms should be structured.

Numerous federal agencies have documented the deficiencies with providing the Director with complete discretion to determine whether financial assurances are sufficient. In 2003, the United States General Accounting Office investigated whether the financial assurance requirements for Class I wells were sufficient. The GAO noted that since 1980, when the deep injection well program began, only four sites had ceased operation. Two of those facilities did not have adequate financial resources to plug and abandon the wells, resulting in additional costs to taxpayers. For the two other sites, the financial assurance mechanism was not tested because other companies purchased and continued operating the wells. [FN21]

[FN21: United States General Accounting Office, Deep Injection Wells, EPA Needs to Involve Communities Earlier and Ensure that Financial Assurance Requirements Are Adequate, Report No. GAO-03-761 (June 2003).]

Uncertainties exist about the adequacy of financial assurance requirements in other federal waste disposal programs. For instance, EPA officials and EPA’s Office of Inspector General questioned the adequacy of RCRA’s financial assurance requirements, which we describe further below. [FN22]

[FN22: U.S. Environmental Protection Agency, Office of Inspector General, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance, Report No. 2005- P-00026 (Sept. 26, 2005); U.S. Environmental Protection Agency, Office of Inspector General, RCRA Financial Assurance for Closure and Post-Closure, Report No. 2001-P-007 (March 30, 2001).]

These studies underscore that EPA must take affirmative action in the final rule by providing concrete guidance to Directors. EPA should prohibit the use of inadequate financial assurance mechanisms, provide a list of accepted mechanisms and a list of situations to avoid with the accepted mechanisms.

Response:EPA agrees that financial responsibility for GS projects is important. The goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA believes that minimum financial responsibility requirements are necessary to hold well owners or operators accountable for the safe operation and site closure of the well while protecting USDWs and avoiding extra expense to the public. See the final rule and preamble for further discussion of EPA's approach to financial responsibility.

The Agency has clarified the rule by specifying acceptable financial responsibility instruments in the final regulation, at §146.85(a). Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators may choose to meet financial responsibility requirements for Class VI wells. EPA has reviewed OIG and GAO perspectives and is considering all comments in the guidance development process, including recommendations made by OIG and

GAO.Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the GS project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure under §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. The financial instrument required under §146.85 will be released if it has not been used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

An owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. If the owner or operator fails to comply with the order, he or she may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, including all potential liabilities associated with meeting the requirements of that permit.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23321 Other EPA Comment Codes and Descriptions: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment: C. Sierra Club’s Recommendation for Adequate Financial Assurance Under the Proposed Rule

There are several actions that the EPA should take in the proposed rule to ensure that Class IV owners and operators have adequate financial assurance. First, EPA should prohibit the use of certain mechanisms that present too great a risk. The strength of third party mechanisms depends largely on theindependence between risks of financial failure of the facility and the thirdparty providing that mechanism. EPA should thus prohibit reliance on captive insurance, financial test, and corporate guarantee.Captive insurance is insurance issued by a wholly-owned subsidiary of the insured. The financial health of the captive insurance company is closely tied to the parent company, so if the company encounters financial difficulties there is no guarantee that the captive insurance company would retain the necessary resources to fund closure and post-closure. This is counter to the basic purpose of an insurance, which distributes risk among different parties. The risks associated with this mechanism are too great and EPA should prohibit reliance on captive insurance in its regulations.

The EPA should also revise the regulations to prohibit use of the financial test and corporate guarantee. As with captive insurance, there is no diversification of risk. If the firm, its parent or sibling corporation becomes insolvent, then the taxpayer must cover these costs. Given the current financial landscape it is naïve to assume that this mechanism provides adequate safeguards to the environment and tax payers. Many firms that would have passed the financial or corporate guarantee test (a net worth of more than $10 million) have recently collapsed. The reality of the current financial crisis, in addition to the fact that these facilities will be operating for upwards of 50 years, indicate that the financial test and corporate guarantee present too great a risk.

In addition to prohibiting certain financial assurance mechanisms, EPA should revise the regulations to specify that trust funds, letters of credit, surety bonds and insurance (not captive insurance) are acceptable mechanisms. These mechanisms should be selected because they provide a medium to low regulatory

risk.

The regulations should specifically define the terms ‘trust funds’, ‘letters of credit’, ‘surety bonds’ and ‘insurance’ so that the safety of these mechanisms does not become distorted. The regulations should provide this definition backstop because states have sometimes approved variations on these mechanisms that were fiscally imprudent, as noted in the Office of Inspector General report on RCRA financial assurances. [FN25] For instance, the report noted that sometimes regulators allowed trust funds to be funded with stock, including stock of the regulated company or with real estate. [FN26] In addition, if an owner or operator is going to use insurance, it should be required to submit a copy of the insurance policy, and not just a certificate of insurance, so that the permit reviewer can ensure the policy coverage is sufficient.

[FN25: U.S. Environmental Protection Agency, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance, Report No. 2005- P-00026 at 11 (Sept. 26, 2005).] [FN26: Id.]

Response:EPA has clarified the financial responsibility requirements in the final GS rule, and has included at §146.85(a) a list of qualifying financial responsibility instruments, including trust funds, surety bonds, letters of credit, insurance, self insurance, escrow accounts, or any other instrument(s) satisfactory to the Director.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requiresthat an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

EPA retains the use self-insurance as an option to demonstrate financial responsibility for Class VI wells. EPA believes, based on input by commenters, that self-insurance, if properly used, can be an appropriate option for certain owners or operators. Self-insurance has been used successfully in the past (e.g., under the Class I and RCRA programs). EPA recognizes that there are some concerns about the use of self insurance, including those mentioned by the commenters, and is developing guidance to assist Directors in evaluating the appropriateness of self-insurance in specific circumstances, such as evaluation of owners or operators' demonstrations of financial worthiness or evaluation of whether certain owners or operators pose too great a financial risk to use self-insurance as a financial responsibility instrument. States have the discretion under the rule to prohibit the use of specific financial instruments if they feel they are inadequate.

EPA will also retain the financial test and the corporate guarantee as options to demonstrate financial responsibility for Class VI wells. EPA believes that if properly used, the financial test and corporate guarantee can be appropriate options for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy; otherwise USDWs may not be adequately protected. Since there are some concerns about the use of financial tests and corporate guarantees, including those mentioned by the commenter, EPA is developing guidance to assist Directors in evaluating the appropriateness of these instruments in specific circumstances.

EPA acknowledges that states may not be authorized under state law to allow for self insurance or other financial instruments. Therefore, states may prohibit the use of any financial instruments included in the rule, including self insurance, for Class VI wells. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Finally, EPA is developing guidance that describes the types of financial instruments, including insurance, which owners or operators can use to meet financial responsibility requirements for GS wells and will take the commenter's suggestion into consideration. The guidance will discuss the strengths and weaknesses of various instruments. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

As described above, EPA has taken commenter’s concerns about long-term liability into account. See the final rule preamble for further discussion of EPA’s approach.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23322

Comment: D. Accurate Cost Estimates are Necessary for Adequate Financial Assurance

One of the most critical aspects of ensuring that owners or operators have the resources to pay for injection-well plugging and post-injection site care is cost estimation. Sound cost estimation requirements ensure that sufficient funds are set aside in the financial assurance instrument to properly undertake covered activities at any time during the operating life of the facility and during post-injection site care period.Corporate actors, however, have an inherent incentive to underestimate these costs. Owners and operators can save money by underestimating the closure and post-closure care costs because the price of the financial assurance mechanism

is correlated to these closure costs.

Under the proposed rule, there are no guidelines on how the owner or operator should prepare the initial cost estimate. For instance, there is no prohibition against the owner or operator preparing its own cost-estimate. In addition, the proposed rule hardly has any requirements for when and how the cost estimate should be adjusted over time. The proposed rule provides that the owner or operator must provide to the Director, at a frequency determined by the Director, written updates of adjustments to the cost estimate. 73 Fed. Reg. 43,492, 43,537 (proposed 40 C.F.R. § 146.85(b)). In addition, the operator must provide a cost estimate adjustment if the Director has reason to believe the initial estimate is no longer valid. 73 Fed. Reg. 43,492, 43,537 (proposed 40 C.F.R. § 146.85(d)). This approach has not worked for EPA under RCRA, and it

will not work for Class VI wells.

In its review of the RCRA financial assurance mechanisms, EPA’s Office of Inspector General spoke with many state administrators regarding the difficulty of assessing cost estimates. Many state administrators agreed that it was difficult to estimate costs for closure and post-closure activities. As this report explained, "the accuracy of each cost estimate review was subject to the level of expertise and knowledge of the individual inspectors performing the reviews." [FN27] In addition, regulators noted that it was difficult to challenge cost estimates because they did not have the resources to research and look up costs in different forms of documentation.[FN28]

[FN27: U.S. Environmental Protection Agency, Office of Inspector General, RCRA Financial Assurance for Closure and Post- Closure, Report No. 2001-P-007 at page 47 (March 30, 2001).] [FN28: Id.]

To address problems with reviewing cost estimates for RCRA post-closure activities, EPA provided regulators with two tools -- a manual, which provided a consistent, accurate, and rapid method for evaluating cost estimates, and software, which incorporated the manual’s methodology.

In light of incentives to underestimate costs and the problems with reviewing such estimates under other regulatory programs, EPA should revise its cost estimation section to reduce the possibility of undervalued cost estimates and ensure adequate money is available for closure and post-closure care. Specifically, the final rule should incorporate these revisions:

-EPA should specifically set out the elements to be included in an initial cost estimate. If the information is standardized, agency employees will have an easier time evaluating the sufficiency of such estimates.

-When an owner or operator prepares its own cost estimate, EPA should requireindependent third-party review and cost certification.

-The final rule should have a standard cost-estimate adjustment process. The cost estimate should be adjusted annually to account for inflation. In turn, the

initial financial assurance mechanism should be structured to account for these inflation increases. In addition, the Director should be required to assess the adequacy of the cost estimate at five year intervals.

In addition, EPA should also publish a manual that provides permit writers with a consistent, accurate and rapid method for evaluating cost estimates for closure and post-closure care of Class VI wells, as well as a software program that incorporates the manual’s methodology, which will save more time and prevent errors in assessing the adequacy of cost estimates.

Response:EPA agrees that sound financial responsibility cost estimates are important to properly regulating Class VI wells. For this reason, EPA has provided requirements for adjusting cost estimates to reflect changes to the project plans. Furthermore, EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on how best to estimate costs, to assist GS well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(c) requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e). The cost estimation methodology guidance will also contain instructions on how to adjust cost estimates for inflation to help account for the long-term nature of geologic sequestration, as required in the final rule at §146.85(c)(2).

EPA is not requiring independent or third-party review and cost certification of operator-prepared

cost estimates.

Commenter Name:James T. Sims Letter ID: 0249 Commenter Organization:Western Business Roundtable Comment ID: 22264 Other EPA Comment Codes and Descriptions: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment: 5. Make Risk Management Approaches Reasonable - We strongly urge EPA to avoid utilizing risk management approaches that discourage CCS deployment. Regulatory certainty is absolutely crucial, if meaningful investment is going to flow to CCS technologies and implementation.

EPA can be helpful in that regard by bringing certainty to the long-term obligations and risks associated with geologic sequestration projects. For example, EPA should refrain from requiring financial assurance for potential liabilities more than 50 years in the future. Extending those requirements anyfurther may deter and even prevent investment in CCS projects. Likewise, postinjection monitoring and financial assurance requirements are important, but need to be tailored to comport with the potential risks, which decrease substantially after injection is complete.

Response:EPA disagrees that a post-injection site care timeframe of 50 years is excessive for most Class VI wells. EPA recognizes that there are challenges associated with assuring funding for activities that will occur far in the future. However, the Agency believes that operators mustdemonstrate that financial resources are available to plug the injection well and provide postinjection care at the point in time that the first CO2 is injected.

EPA disagrees that the requirements for financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties throughout the life of the project.

EPA believes that minimum financial responsibility requirements are necessary to hold well owners or operators accountable for the safe operation and through closure of the well and avoid expense and risk to the public. EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct post-injection site care that is consistent with the approved PISC plan or for the duration of the alternative timeframe approved by the Director pursuant to requirements in §146.93(c), until a demonstration can be made to the satisfaction of the Director that the plume and pressure front no longer pose a risk of endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

EPA also recognizes the concerns associated with assuring financial responsibility for the long timeframes over which post-injection site care will be conducted. EPA is developing guidance on financial responsibility to assist owners or operators in evaluating the requirements of §146.85 and to assist Directors in evaluating financial responsibility demonstrations. The guidance describes the types of financial mechanisms that operators may choose to use when evaluating the financial responsibility requirements for GS wells, and it will also include a section on how to estimate costs to support accurate financial responsibility demonstrations. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA adds that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA acknowledges that there will be circumstances where it can be demonstrated in less than 50 years that the plume and pressure front no longer pose a risk of endangerment to USDWs. For this reason, the GS rule offers owners or operators flexibility regarding the duration of the PISC timeframe by: (1) allowing the Director discretion to shorten or lengthen the PISC timeframe during the post-injection period based on site-specific data, pursuant to requirements at §146.93(b); or (2)affording the Director discretion to allow a Class VI well owner or operator to demonstrate, during the permitting process based on substantial data, that an alternative PISC timeframe may be appropriate if it ensures non-endangerment of USDWs pursuant to requirements at §146.93(c).

EPA believes that a default post-injection site care timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where substantial data exists to demonstrate that an alternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to accommodate site-specific circumstances and various geologic conditions, and addresses commenters¿ concerns, while ensuring USDW protection. Both approaches will utilize site-specific data, and be based on pressure monitoring and USDW impacts.

Commenter Name:Mary Munn Letter ID: 0273 Commenter Organization:Fond du Lac Reservation Comment ID: 24088

Comment: · Liability issues must be clarified in regard to human welfare and environmental protection rather than ensuring the financial viability of the commercial entities of power plants, pipeline, and well operators. Proponentswish to diminish liability for CCS and GS activities (EPA-HQOW-2008-0390-0150.1) and EPA must explicitly recognize the threat of an uncontrolled release of CO2 to human life. Acknowledgement of the potential hazard, in a manner similar to OSHA guidelines on "gases, vapors, fumes, dusts,

and mists - 1926.55" would be beneficial.

Response:EPA clarifies that the goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs (and risks to human health) from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties as it relates to the Class VI well. EPA believes that assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA adds that regulation of carbon dioxide releases to the atmosphere is outside the scope of this rulemaking. However, such a release would indicate endangerment of a USDW under the GS rule and may trigger an enforcement action under SDWA § 1423 and would most likely require implementation of the emergency and remedial response plan required under §146.94.

Commenter Name:Mic Stewart Letter ID: 0279 Commenter Organization:Metropolitan Water District of Southern CaliforniaComment ID: 24094 Other EPA Comment Codes and Descriptions: 1310 1.1.2.4 Comments on other "out of scope" issues, e.g., pore space ownership

Comment: drinking water, particularly sole-source aquifers. Other concerns include unproven technology to be used for injection wells, undefined water rights between states sharing a single underground source of water, and unresolved long-term liability and financial responsibility for sequestration sites. We

Response:EPA clarifies that subsurface property rights, including water rights, are outside the scope of the GS rulemaking.Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Paul Pike Letter ID: 0535 Commenter Organization: Ameren Corporation on behalf of Utility Solid Waste Activities Group (USWAG) Comment ID:

21440

Comment:With respect to EPA's suggestion that future guidance documents be issued to clarify financial responsibility, we stress that such guidance must be issued in keeping with OMB's good guidance practices bulletin. In addition, it is

essential that the self insurance instruments remain available to owners and operators as a method of financial assurance for Class VI carbon projects.

Response:EPA will retain the use of self-insurance as an instrument to demonstrate financialresponsibility for Class VI wells. EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. EPA notes that directors may disallow certain instruments. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA acknowledges that states may not be authorized under state law to allow for self insurance or other financial instruments. Therefore, states may prohibit the use of any financial instruments included in the rule, including self insurance, for Class VI wells. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA plans to take OMB's Good Guidance Manual into consideration as financial responsibility guidance is developed. OMB's Good Guidance Manual establishes policies and procedures for the development, issuance, and use of significant guidance documents by Executive Branch departments and agencies.

Comment Code: 5430 2.9.1 Comments on proposed financial responsibility requirements (40 CFR 146.85)



### Individual Comments

Commenter Name:Michael H. Cochran Letter ID:

0108 Commenter Organization: Bureau of Water, Division of Environment, Kansas Department of Health & Environment (KDHE) Comment

ID: 21971

Comment: 146.85: Specifics need to be listed for providing acceptable financial responsibility. We recommend that the financial test mechanism not be allowed for use. This is a very weak mechanism and an operator’s financial condition can change quickly. With the financial test there may be nothing tangible available to cover the costs of plugging, closure and post-closure care.

Response: The final GS rule specifies qualifying financial responsibility instruments at §146.85(a)(1). EPA has clarified the financial responsibility requirements by: 1) Describing “qualifying instruments” to cover the cost of corrective action, injection well plugging, PISC and site closure, and emergency and remedial response in a manner that prevents endangerment of USDWs. 2) Adding language clarifying that the financial responsibility instrument is directly enforceable regardless of whether the requirement is a condition of the permit. 3) Requiring submission of annual inflationary updates and specifying a 60-day timeframe after notification by the Director for the submission of written updates of adjustments to the cost estimate.

4) Requiring owners or operators to notify the Director no later than 10 days after filing for bankruptcy. EPA adds that owners or operators will have the flexibility to use instruments for specific activity in a project, but if the use of a financial test is not appropriate to ensure that resources will be availableover the long term, the Director will have the discretion to not allow financial tests as a financial responsibility instrument for PISC and closure.

EPA is developing guidance that will provide more information about the types of financial instruments owners or operators can use to meet their financial responsibility requirements for Class VI wells. The guidance will also assist Directors in evaluating financial responsibility

demonstrations.

EPA is retaining the financial test as an option to demonstrate financial responsibility for Class VI wells. EPA believes that, if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Since there are some concerns about the use of financial tests, including those mentioned by the commenter, EPA is developing guidance (available on EPA’s website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to assist Directors in evaluating the appropriateness of the financial test in specific circumstances.

Commenter Name: Karl R. Moor Letter ID: 0109 Commenter Organization: Southern Company, on behalf of Edison Electric Institute (EEI) Comment ID:

22004

Comment: Similarly, financial assurance requirements should not be set as defaults, but instead should be flexible enough to take into account the particular risks associated with a given project. All projects are not created equal, and therefore, not all risks are the same. Projects with decreased risks should be able to take advantage of proper siting to reduce not only their regulatory burdens, but also their costs of capital and financial assurance.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule owners or operators may choose from a variety of financial instruments to demonstrate meeting their financial responsibility obligations, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. EPA is developing guidance to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods and states may set more specific financial responsibility requirements if they so choose and it allowed under their respective state law. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

The cost of securing financial responsibility instruments will be based on whether or not a third party financial institution is used and the agreement between the financial institution and the owner or operator. EPA expects that some third party providers, such as insurers, will take risk into account when determining the cost of coverage. However, cost is expected to depend heavily on the estimated cost of covered activities as well as certain site-specific factors. In order to assist owners or operators and financial institutions in achieving accurate cost estimates, EPA plans to include a discussion of how to estimate costs, including how to adjust cost estimates for inflation, in its guidance on meeting financial responsibility requirements for Class VI wells.

Commenter Name: Paul Pike Letter ID: 0111 Commenter Organization: Ameren Corporation on behalf of USWAG Comment ID: 22406Comment: 7. With respect to EPA’s suggestion that future guidance documents be issued to clarify requirements for financial responsibility, we stress that such guidance must be issued in keeping with OMB’s Good Guidance Practices bulletin. In addition, it is essential that self-insurance instruments remain available to Owners or Operators as a method of financial assurance for Class VI carbon dioxide geologic sequestration projects.

Response:EPA will retain the use of self-insurance as an instrument for financial responsibility for GS wells. EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. EPA notes that directors may disallow certain instruments. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA plans to take OMB's Good Guidance Manual into consideration as financial responsibility guidance is developed. OMB's Good Guidance Manual establishes policies and procedures for the development, issuance, and use of significant guidance documents by Executive Branch departments and agencies.

Commenter Name: Doug Louis Letter ID: 0121 Commenter Organization: Kansas Corporation Commission Comment ID: 22085

Comment: Proposed Financial Responsibility and Long-term Care Requirements

The proposed rule states EPA will provide guidance, to be developed at a later date, which describes recommended types of owner/operator financial responsibility. On such an important concept, shouldn’t it be addressed in the proposed rule rather than clarified through guidance?

Response:EPA clarifies that the final rule now specifies at §146.85(a)(1) the types of financial responsibility instruments permitted for Class VI wells. EPA believes it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule owners or operators may choose from a variety of financial instruments to meet their obligations under financial responsibility provisions, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to ensure protection of USDWs which includes paying for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

EPA is developing guidance to help owners or operators, permitting authorities, and third partieschoose and evaluate appropriate financial methods, and states may set more specific financial responsibility requirements if they so choose. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:John Stormon Letter ID: 0123 Commenter Organization:Washington State Dept. of Ecology Comment ID: 23009 Other EPA Comment Codes and Descriptions: 5400 2.9 Proposed Financial Responsibility and Long-Term Care Requirements

Comment:Financial Assurance: Financial assurance accounts, funded with real assets must be required. Financial tests and self insurance are of no value if a company becomes financially insolvent. As we have recently seen in the financial world, the collapse of a company can occur quite rapidly. Financial assurance is only of value if the assets remain in the account after the company's financial

demise.

Response:EPA agrees that assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at Class VI sites is an important component of ensuring that USDWs are protected. The goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties.

EPA will retain self-insurance as an option to demonstrate financial responsibility for Class VI wells. EPA believes, based on input by commenters, that self-insurance, if properly used, can be an appropriate option for certain owners or operators. Self-insurance has been used successfully in the past (e.g., under the Class I and RCRA programs). EPA recognizes that there are some concerns about the use of self insurance, including those mentioned by the commenters, and is developing guidance (available on EPA’s website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to assist Directors in evaluating the appropriateness of self-insurance in specific circumstances, such as how to evaluate owners or operators' demonstrations of financial worthiness or whether certain owners or operators pose too great a financial risk to use self-insurance as a financial responsibility instrument. EPA acknowledges that states may not be authorized under state law to allow for self insurance or other financial instruments. Therefore, states may prohibit the use of any financial instruments included in the rule, including self insurance, for Class VI wells. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:John Hanger Letter ID: 0130 Commenter Organization: Pennsylvania Dept. of Env. Protection Comment ID: 21514 Other EPA Comment Codes and Descriptions: 1310 1.1.2.4 Comments on other "out of scope" issues, e.g., pore space ownership

Comment: Proposed Financial Responsibility and Long-Term Care Requirements

-There is no language in the proposed regulation that covers compensation to homeowners for the degradation or loss of a water supply.

-EPA should consider how Class VI wells and associated GS projects could impact the ownership of mineral rights in formations that are penetrated en route tothe CO2 storage reservoir. Some suggestions include a mechanism to require disclosure of mineral rights that may be impacted by a sequestration project and how such ownership issues will be resolved.

-If phased corrective action (plugging of existing penetrations) is to be approved, then the operator must post a 100 percent performance bond with the permitting agency before the permit is issued. The performance bond is to be in the amount necessary for the permitting agency to immediately complete the corrective action should the owner/operator fail to timely do so.

Response:EPA clarifies that the goal of the financial responsibility requirements is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA would also like to highlight the emergency and remedial response plan required under the rule. This includes the cost to perform any necessary responses or remediation to address potential USDW endangerment. See the preamble to the final rule for more details on the emergency and remedial response requirements.

EPA clarifies that pore space ownership and surface and subsurface property and mineral rights are outside the scope of the UIC GS rulemaking. EPA recognizes that many of these issues are the purview of the states and any of these issues as they relate to GS will need to be addressed though state regulations. The purpose of the Class VI GS rule is to ensure that where GS technologies are deployed, GS is performed in a manner that protects USDWs from endangerment.

EPA agrees with the comment on phased corrective action. The GS rule, at §146.85(c), requires the owner or operator to have a detailed written estimate, in current dollars, of the cost of: performing corrective action on wells in the AoR, plugging the injection well(s), PISC and site closure, and emergency and remedial response. A cost estimate must be prepared separately for each of these activities and be based on the costs to the owner or operator of hiring a third party (who is neither a parent nor a subsidiary of the owner or operator) to perform the activities. EPA clarifies that owners or operators will need to demonstrate and maintain financial responsibility for all corrective action at the time of Class VI well permitting, before the onset of injection operations. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name: Carl Carlsson Letter ID: 0131 Commenter Organization: SUEZ Energy Generation NA, LLC Comment ID: 21539

Comment:Financial Responsibility and Long-term Care Requirements Generally, SEGNA supports efforts to minimize post-closure monitoring requirements and costs, and to increase options for demonstrating financial assurance, so as to not unnecessarily discourage entities from pursuing or financing carbon sequestration projects.

Response:EPA agrees that flexibility is important. Owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to theissuance of a Class VI permit (§146.85(a)(5)(i)).

EPA is developing guidance on financial responsibility for Class VI wells to assist owners or operators in evaluating the financial responsibility requirements for Class VI wells. This guidance

will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Dawn A. Thorne Letter ID:

0134 Commenter Organization: University of Utah Energy and Geoscience Institute on behalf of the Southwest Regional Partnership Comment

ID: 21661

Comment: 2.) The SWP would like to comment on site liability.

Section 146.85(a) "The owner or operator must demonstrate and maintain financial responsibility and resources for corrective action (that meets the requirements of §146.84), injection well plugging (that meets the requirements of §146.92), post-injection site care and site closure (that meets the requirements of §14693), and emergency and remedial response (that meets the requirements of §I46.94) in a manner prescribed by the Director until ...."

Response/Discussion: While long-term liability with respect to property rights, personal risk, air quality, etc. are beyond the scope of the proposed rule, the SWP would like to note that it would be highly unlikely for any commercial scale GS project to be initiated without private insurance or a state/federal revolving assurance fund that could cover the project from the beginning to beyond site-closure ("cradle to grave"), which, with a 50-year post-injection site care plan, could be over one hundred years. Since long-term CCS is relatively new and the potential "risks" are not well understood by insurers, it is unlikely that any private insurer would cover a project for such a time span, but rather they may create a renewable policy over short timescales (i.e., 2-5 year increments). In addition, there is no assurance that an owner/operator would still be in business 50 years (and beyond) after CO2 injection ceases.

The SWP agrees with financial responsibility requirements under the current UIC Program for Class II wells as they relate to the injection period and recommend that these be adopted for Class VI wells. The issues of liability and financial responsibility for post-injection site care and after site closure will severely impact private/public industry's decision to conduct CCS projects if these requirements are too burdensome to fulfill.

Response: The goal of financial responsibility is to assure that resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA agrees that assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected. EPA has specified acceptable financial responsibility instruments in the final regulation, believes that the tailored financial responsibility requirements at §146.85 are appropriate for Class VI wells.EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by Class VI well owners or operators as deployment of GS technology increases in the future. In addition, EPA plans to allow owners or operators to choose from a variety of financial instruments to meet their financial responsibility needs, thereby allowing owners or operators to select instruments they find easiest to obtain. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Robert Bessette Letter ID: 0139 Commenter Organization: Council of Industrial Boiler Owners (CIBO) Comment ID: 23087 Other EPA Comment Codes and Descriptions: 6100 3.1 Comments on the cost estimates

Comment: D. Cost Prohibitive Requirements

Owners and operators will be responsible for numerous requirements under the proposed regulations. Specifically, they must provide financial assurances that they will be responsible for any corrective action, well plugging, emergency and remedial responses, and the postinjection site closure. These assurances will be cost-prohibitive for all but the most financially sound owners and operators. Moreover, the true cost of owning and operating an injection well is incalculable because the liability remains unknown and, consequently, insurersare unwilling to take the risk of backing the project. The probability that costs will balloon out of control make carbon capture and sequestration infeasible, even for the most dedicated of owners and operators. In January 2008, the Department of Energy cancelled its $1.8 billion in funding for the FutureGen CCS project because costs had soared to almost double the estimate provided in 2004. The proposed regulations place too high a financial burden on potential owners and operators and will actually discourage new projects.

Response:EPA notes that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

The goal of financial responsibility is to assure that resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA believes that assuring financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected. EPA has specified acceptable financial responsibility instruments in the final regulation.

EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments as deployment of GS technology increases in the future. In addition, EPA plans to allow owners or operators to choose from a variety of financial instruments to meet their financial responsibility needs, allowing them to select instruments they find easiest to obtain. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38, along with all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of the

final rule.Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

The Agency clarifies that sequestration costs are expected to be a small component of total CCS project costs. EPA estimates that the GS rule requirements amount to approximately 2 percent of the total CCS project costs, according to the cost analysis for the final GS rule, which is in the rulemaking docket.

Commenter Name: Christine Reimer Letter ID: 0142 Commenter Organization:National Ground Water Association Comment ID: 22598

Comment: Proposed Rule: 146.85(a)

Comment: A question was raised during discussions about how the producer of the CO2 is impacted and whether they should maintain some liability.

No rationale provided

Response: Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.Commenter Name: Christine Reimer Letter ID: 0142 Commenter Organization:National Ground Water Association Comment ID: 22599 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Proposed Rule: 146.85(b)

Proposed revision: (b) The owner or operator must provide to the Director, at the same frequency as the AOR reevaluation, written updates of adjustments to the cost estimate to account for any amendments to the area of review and corrective action plan (§146.84), the injection well plugging plan (§146.92), and the post-injection site care and site closure plan (§146.93).

Rationale: NGWA proposes that potential changes in the size of the AOR require that all site plans be reevaluated at the same frequency as the AOR.

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(c) requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e). The owner or operator must also update the cost estimate annually to adjust for inflation under §146.85(c)(2).

Commenter Name: Patrick Nugent Letter ID: 0143 Commenter Organization: Texas Pipeline Association (TPA) Comment ID: 23127

Comment: 1. The proposed financial assurance requirements span an unrealistic and unnecessarily lengthy period of time. The financial assurance requirements for corrective action, post-injection site care, and site closure should be modified so as to avoid an unrealistic length of time during which financial arrangements must remain in place. TPA believes that a realistic approach to this issue is crucial, because it is likely that imposition of unduly onerous financial assurance requirements would severely hinder development and implementation of geologic sequestration technology. In no event should Class VI financial assurance requirements be more onerous than those applicable to Class I wells, given that carbon dioxide is a common and generally harmless substance, unlike the far more dangerous substances that can be associated with Class I wells. TPA

Response:EPA disagrees that the requirements for financial responsibility are overly stringent. The goal of financial responsibility is to ensure that resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties throughout the life of the project.

EPA believes that minimum financial responsibility requirements are necessary to prevent endangerment of USDWs by to holding well owners or operators accountable for the safe operation and proper closure of the Class VI wells while avoiding expense and risk to the public. EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS ruleis to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements

for GS wells.

Commenter Name: Patrick Nugent Letter ID: 0143 Commenter Organization: Texas Pipeline Association (TPA) Comment ID: 23128

Comment: the far more dangerous substances that can be associated with Class I wells. TPA urges the adoption of site-specific financial assurance requirements, which would take into account the differences from project to project as well as the declining risks that the project would present over time For example, once the injected carbon dioxide plume has stabilized over time, the amount of financial assurance required should be subject to reduction as any risks posed by that project will not be as great as in the early years. The reduction in financial assurance could be subject to a demonstration that dangers presented by a sequestration project have diminished. In addition, if a site has been certified

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule owners or operators may choose from a variety of financial instruments to demonstrate that they meeting the financial responsibility provisions, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which for example could mean to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

The cost of securing financial responsibility instruments will be based on whether or not a third party financial institution is used and the agreement between the financial institution and the owner or operator. EPA expects that some third party providers, such as insurers, will take risk into account when determining the cost of coverage. However, cost is expected to depend heavily on the estimated cost of covered activities as well as certain site-specific factors.

In order to assist owners or operators and financial institutions in achieving accurate cost estimates, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods. EPA plans to include a discussion of how to estimate costs, including how to adjust cost estimates for inflation, in its guidance on meeting financial responsibility requirements for GS wells.

Commenter Name: Brianne Metzger Letter ID: 0151 Commenter Organization: Spectra Energy Corp Comment ID: 21893

Comment: A. EPA’s Requirement To Include A ‘General Duty’ To Obtain Financial Responsibility Is Reasonable.Spectra believes that the "general duty" in the GS Rule to obtain financial assurance is reasonable. However, Spectra further believes that EPA should seek to provide detailed guidance describing recommended types of risk management instruments that would satisfy this requirement as soon as possible. A lengthy delay in clarifying what is meant by a "general duty" risks inhibiting project development and technology demonstrations.

Spectra also believes that this duty should be broadly construed and include not only traditional instruments such as letters of credit, insurance bonds, and owner/operator ratings but also other potentially more innovative instruments as well. For example, in the GS Rule, EPA indicates that its guidance will be similar to the requirements for financial assurance currently applicable to Class II owners and operators, which is generally limited to the provision of financial assurance by third party instruments, such as surety bonds, financial guarantee or performance bonds, letters of credit, or an irrevocable trust fund. Alternatively, Class II owners and operators can rely on self-insurance instruments. However, modeling financial assurance guidance on what is currently provided for Class II wells overlooks the potential of allowing insurance products, which are permitted for Class I injections. Spectra believes that insurance products should be considered in EPA’s guidance.

Response: The owners or operators general duty is to ensure protection of USDWs from endangerment, which includes the requirement to demonstrate financial responsibility. Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to have the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA will retain the use of self-insurance as an instrument for financial responsibility for Class VI wells. EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) will include considerations for Directors regarding how best to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. EPA notes that directors may disallow certain instruments.

EPA anticipates that as GS is deployed, particularly if there are early successful uses of these instruments, owners or operators will demand and carriers will offer third-party GS financial instruments, including insurance, in greater numbers.

EPA acknowledges that states may not be authorized under state law to allow for self insurance or other financial instruments. Therefore, states may prohibit the use of any financial instruments included in the rule, including self insurance, for Class VI wells. See the final rule and preamble forfurther discussion of EPA's final approach to financial responsibility.

Commenter Name: Bonnie Lovelace Letter ID: 0152 Commenter Organization:Montana Department of Environmental Quality (MDEQ) Comment ID:

22129

Comment: 146.85(c) : MDEQ suggests that the owner or operator follow up notification of adverse financial conditions with a plan to resolve the deficiency in a very

short timeframe.

Response: The goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. In the event of bankruptcy, the owner or operator must notify the Director with 10 days after commencement of the proceeding, as specified in §146.85(d)(1). EPA anticipates that upon notification of these adverse financial conditions, the Director will initiate discussions with the owner or operator about how to make use of financial resources, as necessary, to ensure that USDWs are protected. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:James Dooley Letter ID: 0156 Commenter Organization:Joint Global Change Research Institute, Pacific Northwest National Laboratory Comment ID:

22620

Comment: Page 43520. As correctly noted by the USEPA in the draft Class VI rule, the financial responsibility requirements of the SDWA do not extend to activities not related to protection of USDWs. So this is another example of the need to understand what else is needed to take this Class VI rule and make it part of a national climate policy.

Response:EPA clarifies that the Class VI GS requirements are designed to ensure that, where deployed, GS is conducted in a manner that protects USDWs from endangerment. The requirements apply to owners or operators of injection wells used to inject CO2 for permanent storage. The Class VI GS rulemaking is promulgated under Safe Drinking Water Act authority and does not relate to any endangerment and cause or contribute findings under the Clean Air Act. The Class VI GS requirements do not depend upon, and are unaffected by, Clean Air Act endangerment and cause or contribute findings.

Commenter Name:James Dooley Letter ID: 0156 Commenter Organization:Joint Global Change Research Institute, Pacific Northwest National Laboratory Comment ID:

22638

Comment: It Should Be a Requirement to Periodically Revaluate Funds Set Aside for Well Plugging and Post-Injection Site Care Page 43520. The USEPA should mandate that owners / operators periodically update the cost estimate for well plugging, post-injection site care, ect. Given how long GS projects are likely to last, there is no reason to believe that the amount of money set aside at the start of the project even if it were invested in something that kept up with inflation would necessarily be sufficient to cover these costs. The US DOE Energy Information Administration in its Annual Energy Outlook: 2007 ( http://www.eia.doe.gov/oiaf/aeo/otheranalysis/cecei.html) documented how drilling and other associated costs have escalated at a rate that is far abovethe core inflation rate for the economy as a whole. On page 43522, the draft rule says "Trying to determine the cost for post injection site care, possible 30 to 50 years in the future, could be difficult." Yes, it is difficult to understand what anything would cost 50 years in the future. However, one can figure out what it would cost to do those things now and then one could periodically reassess those costs. That is quite straightforward and the USDOE’s EIA maintains a Oil and Gas Lease Equipment and Operating Costs Index which could easily be used to true up these costs as needed to account for inflation (see http://www.eia.doe.gov/pub/oil_gas/natural_gas/data_publications/cost_indices_eq uipment_production/current/coststudy.html). The Oil and Gas Journal also publishes indices of construction costs which could be used to true up these costs over the life time of a GS project. Again, there are many reasons to mandate that these costs be revised periodically and if need be the corresponding financial assurance mechanisms should be revalued.

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations, which is why the final GS rule, at §146.85(c) requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e). The owner or operator must also update the cost estimate for inflation annually under §146.85(c)(2). See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA will include DOE's EIA Oil and Gas Lease Equipment and Operating Costs and the Oil and Gas Journal as sources of information in the discussion on estimating costs in its guidance on financial responsibility.

Commenter Name:James Childress Letter ID: 0158 Commenter Organization: Gasification Technologies Council (GTC) Comment ID: 23761 Other EPA Comment Codes and Descriptions: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment: Concern #6 Demonstration of financial responsibility. (Ref: page 43520, 9. Proposed Financial Responsibility and Long-Term Care Requirements)

EPA needs to provide clarifying guidance on how to demonstrate financial responsibility. The proposed regulation leaves too much to the discretion of the Director. Such open-ended requirements will effectively discourage carbon capture projects and the development of financial pro formas. Of particular concern are those assurances necessary to cover the costs of potential long-term stewardship or the potential to have to perform remediation at sites that have been previously certified as closed. This uncertainty may increase the perceived risk exposure to levels that serve as a barrier to investment. A potential approach to share risk and overcome this barrier is the Interstate Oil and GasCompact Commission (IOGCC)[5] proposal for an industry-funded and stateadministered trust fund to provide the stewardship during the Post-Closure Period. The trust would be funded through an injection fee assessed to the siteoperator and calculated on a per-ton basis, at the point of custody transfer of the CO2 from the generator to the site operator.

5 The Interstate Oil and Gas Compact Commission Task Force on Carbon Capture and Geologic Storage, Storage of Carbon Dioxide in Geologic Structures -A Legal and Regulatory Guide for States and Provinces, September 25, 2007

Response:EPA believes that minimum financial responsibility requirements are necessary to hold well owners or operators accountable for the safe operation, site closure, and post-injection site care of wells while protecting USDWs and avoiding extra public expense. EPA anticipates that the availability of a variety of financial responsibility providers and third-party GS financial instruments will grow in response to demand for GS technology.

EPA believes that the financial responsibility requirements provided in the final rule do not leave too much discretion to the Director. Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance on financial responsibility for GS wells that will provide information about the appropriateness of various financial instruments. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. This guidance will consider the recommendations in the Office of the Inspector General report on financial assurance and will include recommendations to help permitting authorities determine whether an owner or operator's plan for financial responsibility is adequate.

Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility. Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments in the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until he or she can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the site closure has been approved pursuant to requirements at §146.93, he or she will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it has not been used. However, even if site closure isapproved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances, for example if the Director relied on erroneous information provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, he or she may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, including all potential liabilities associated with meeting the requirements of that permit.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:James Childress Letter ID: 0158 Commenter Organization: Gasification Technologies Council (GTC) Comment ID: 23792

Comment:EPA is assessing whether a financial ratings threshold for all companies using a self-guarantee, similar to those used by other Federal agencies, is appropriate. The Agency also is considering what constitutes an appropriate financial rating threshold, and whether a financial rating greater than BBB or Baa (i.e., the current rating threshold established under the UIC regulations) is appropriate

for GS wells. EPA Notice 133.

Allowing for self-insurance definitely will be helpful to provide another avenue for CCS projects to be deployed. However, as we've experienced in the recent economic crisis, there are no guarantees of financial continuity for either

insurers or other economic entities.

Response:EPA believes that the GS rule provides a flexible approach for financial responsibility. Under the final GS rule owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators may choose to use to meet financial responsibilityrequirements for Class VI wells. EPA recognizes that there are some concerns about the use of self insurance, including those mentioned by the commenters. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a given project, such as potential concerns regardingcompanies with relatively small capitalization or the experiences of states in approving selfinsurance instruments. The guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA acknowledges the commenter's concern regarding the current economic crisis, but notes that such unpredictable events are outside of the scope of this rulemaking and the Agency's control or authority.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24168 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(a)(1)

API Comments: (1) The Director receives WELL PLUGGING REPORT IDENTIFIED IN 146.92(D) and approvesOR COMPLETION OF the completedpost-injection site care and site closure plan AS APPROPRIATE; and

Rationale: Maintenance of the well plugging financial obligation until site closure is not necessary. The Director should have the authority to release the obligation once the well is plugged.

Rule Provision: 146.85(b)

API Comments: (b) The owner or operator must provide to the Director, at a frequency determined by the Director, BUT NO MORE THAN ANNUALLY, written updates of adjustments to the cost estimate to account for any amendmentsCHANGE to the area of review and corrective action plan (§146.84), the injection well plugging plan (§146.92), and the post-injection site care and site closure plan (§146.93).

Rationale: Updates more frequent than annual is not justified.

Rule Provision: 146.85(c)

API Comments: (c) The owner or operator must notify the Director of adverse

financial conditions such as bankruptcy,that may affect the ability to carry out injection well plugging and post-injection site care and site closure.

Rationale: Clarification.

Response: Owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. For example, owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC(i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

To ensure that financial resources are available to protect USDWs from endangerment, the GS rule (at §146.85) identifies qualifying financial instruments, the time frames over which financial responsibility must be maintained, procedures for estimating the costs of activities covered by the financial instruments, procedures for notifying the Director of adverse financial conditions, and requirements for adjusting cost estimates to reflect changes to the project plans.

In addition, on an annual basis, the owner or operator must adjust the cost estimate for inflation, increase or decrease the value of the financial instrument to match the cost estimate, and provide any updated information related to their financial responsibility instrument(s), or at any other time deemed appropriate by the Director. These annual reviews provide a mechanism for revising cost estimates up or down to account for changes in the project, including the execution of environmental obligations as phases of a GS project are completed.

Regarding the suggested edit at §146.85(a)(1), EPA clarifies that the financial instrument the owner or operator provided to meet the requirements under §146.85 will be released when the phase of the project for which the instrument was required is complete and all financial obligations for that instrument have been met, pursuant to §146.85(b)(2) and §146.93.

The GS rule, at §146.85(c), requires the owner or operator to have a detailed written estimate, in current dollars, of the cost of: performing corrective action on wells in the AoR, plugging the injection well(s), PISC and site closure, and emergency and remedial response. A cost estimate must be prepared separately for each of these activities and be based on the costs to the owner or operator of hiring a third party (who is neither a parent nor a subsidiary of the owner or operator) to perform the activities. However, EPA is not requiring independent third-party reviews of owner or operator

cost estimates.

EPA is developing guidance on financial responsibility for GS wells. The guidance will include a discussion on how best to estimate costs to assist Class VI well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. The guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA did not make the proposed edits at §146.85(b) and (c), but did extensively revise and clarify the financial responsibility requirements. See the final GS rule and preamble for additional information on EPA's final approach.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24258

Comment: Rule Provisions: 144.36 EPA Preamble Question: 41. Current UIC guidance describes trust funds as a form of financial assurance. The owner or operator may deposit funds into the trust fund in phases; that is, either over the term of the initial permit or over the remaining operating life of the injection well, as estimated in the well plugging plan, whichever period is shorter. Because of the possibility that theowner or operator may face financial distress prior to the trust being fully funded, EPA is considering a guidance approach that would recommend adopting a pay in period of three years for GS projects, consistent with other similar programs in the Agency. EPA Notice 43521.

API Response: Industry should have a variety of options for meeting financialassurance based upon the companies’ discretion. Options should include selfinsurance, insurance, surety bonds or other appropriate financial instruments.

Response:EPA has clarified the financial responsibility requirements in the final GS rule, and has included at §146.85(a) a list of qualifying financial responsibility instruments that may be used to demonstrate compliance with the financial responsibility provisions, including trust funds, surety bonds, letters of credit, insurance, self insurance, escrow accounts, or any other instrument(s) provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment.

EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greater flexibility and cost savings from this regulation. In the event that the owner or operator combines more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self insurance or performance bond), for example trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial responsibility for an amount at least equal to the current cost estimate.

Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23507

Comment: USWAG does not agree with the Preamble's suggestion that the cost of

selfinsurance should be based on the cost of retaining an independent third party to conduct covered activities including well plugging. Id. In many cases, utilities are sophisticated, integrated companies and will be able to do the same work in a more cost-effective method that is just as technically sound and protective of USDWs, if not more so, than an approach taken by a third party.

Response: The GS rule, at §146.85(c), requires the owner or operator to have a detailed written estimate, in current dollars, of the cost of: performing corrective action on wells in the AoR, plugging the injection well(s), PISC and site closure, and emergency and remedial response. A cost estimate must be prepared separately for each of these activities and be based on the costs to the owner or operator of hiring a third party (who is neither a parent nor a subsidiary of the owner or operator) to perform the activities. The cost estimate is prepared in the same manner regardless of whether self-insurance or a third-party instrument is used because if at any point a self-insured owner or operator no longer meets corporate financial test criteria the cost estimate will be used to inform the required value of a third party instrument.

EPA will retain the use of self-insurance as an instrument for financial responsibility for Class VI wells. Owners or operators may self insure through a financial test provided certain conditions are met. The owner or operator needs to pass a financial test to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operatormeets, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. An owner or operator who is not able to meet corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial test requirements on its behalf. The parent’s demonstration that it meets the financial test requirement is insufficient if it has not also guaranteed to fulfill the obligations for the owner or operator.

EPA acknowledges that states may not be authorized under state law to allow for self insurance or other financial instruments. Therefore, states may prohibit the use of any financial instruments included in the rule, including self insurance, for Class VI wells. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Additionally, EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for Class VI wells. The financial responsibility guidance will include considerations the Director may choose to take into account regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. EPA notes that Directors may disallow certain instruments. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Pamela Faggert Letter ID: 0175 Commenter Organization: Dominion Comment ID: 23526

Comment: 5. Financial Assurance

The proposal would require that permittees demonstrate, at the time of project permitting, financial assurance for activities including injection, corrective action, well plugging and closure, and activities throughout the PISC period - as well as for emergency and remedial response activities to address movement of formation or injection fluids that may endanger USDW. These proposed financial assurance requirements, which exceed those currently in place even for injection of hazardous wastes, raise significant concerns from the perspective of promoting CCS development. The Agency should also consider, as mentioned in the preamble, a phased or staged approach to financial assurance requirements.

Dominion urges the Agency to allow for phasing of financial assurance and consider capping assurances in order to facilitate CCS development.

Response: In the final rule, owners or operators must demonstrate, with their permit application,adequate financial responsibility for all required Class VI activities, including plugging and postinjection site care, per §146.85(a). However, owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.EPA believes that the demonstration at the time of permit application is necessary to ensure that financial resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project. In addition, financial responsibility will need to be reevaluated prior to well plugging or site closure, or at any other time deemed appropriate by the Director, for example, following AoR reevaluations. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA disagrees that the requirements equate GS wells with Class I hazardous waste wells; rather, the financial responsibility requirements for Class VI wells are tailored to account for the unique nature of the long term GS of CO2, while providing flexibility for site specific implementation. EPA adds that the purpose of the GS rule is not to incentivize or promote GS; rather it is to ensure that where GS is deployed, it is done in a manner that ensures USDW protection from endangerment.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23566 Other EPA Comment Codes and Descriptions: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment: iii. Appropriate risk management approaches. The Agency should avoid development of risk management approaches that discourage CCS deployment or create additional uncertainty, and should seek where possible to bring greater certainty to the long-term obligations and risks associated with a GS project. For example, requiring financial assurance for potential liabilities more than 50 years in the future may deter and even prevent investment in CCS projects. Post-injection monitoring and financial assurance requirements are both important, but should not undermine the goals of the regulations, particularly when potential risks decrease substantially after injection is complete.

Response:EPA adds that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

EPA disagrees that the requirements for financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties throughout the life of the project.

EPA believes that minimum financial responsibility requirements are necessary to hold well owners or operators accountable for the safe operation and closure of the well to avoid endangerment of USDWs while avoiding expense and risk to the public.

Regarding the need for financial assurance for a 50-year post-injection period, EPA believes that to ensure USDW protection from endangerment, a default timeframe for post-injection site care is necessary. A 50 year post-injection site care timeframe represents a reasonable and protective monitoring period based on a review of research studies, industry reports, and existing environmental programs, and evaluation of public comments.

EPA agrees with commenters that there will be circumstances where it can be demonstrated in less than 50 years that the plume and pressure front no longer pose a risk of endangerment to USDWs.For this reason, the final GS regulation offers owners or operators flexibility regarding the duration of the PISC timeframe by: (1) allowing the Director discretion to shorten or lengthen the PISC timeframe during the post-injection period based on site-specific data, pursuant to requirements at §146.93(b); or (2) affording the Director discretion to allow a Class VI well owner or operator to demonstrate, during the permitting process based on substantial data, that an alternative PISC timeframe may be appropriate if it ensures non-endangerment of USDWs pursuant to requirements at §146.93(c).

EPA believes that a default post-injection site care timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where substantial data exists to demonstrate that an alternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to accommodate site-specific circumstances and various geologic conditions, and addresses commenters’ concerns, while ensuring USDW protection. Both approaches will utilize site-specific data, and be based on pressure monitoring and USDW impacts.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23593

Comment:F. Financial Assurance Provisions

The fifth general area of concern addressed in these comments relates to the proposed rules‘ provisions for financial assurance. The proposed rules would require that permittees demonstrate, at the time of project permitting, financial assurance for activities including injection, corrective action, well plugging and closure, and activities throughout the PISC period, as well as for emergency and remedial response activities to address movement of formation or injection fluids that may endanger USDW. These proposed financial assurance requirements, which exceed those currently in place even for injection of hazardous wastes, raise significant concerns from the perspective of promoting CCS development. They are in many respects not balanced by corresponding increases in the levels of protection provided to USDW. These concerns include the following:

- More stringent treatment for GS projects are unwarranted from a technical perspective: As noted above, the proposed financial assurance provisions go far beyond the requirements currently in place under the UIC program, even those for wells injecting hazardous waste. EEI and our members do not believe that any showing has been made that the physical and chemical properties of CO2 are sufficiently unique--or that they pose a sufficiently unique potential threat to USDWs--to warrant such unprecedented treatment under the UIC program. Any required financial assurance should in no event go beyond that currently required for Class I hazardous waste injection wells (i.e., beyond requirements to assure corrective action in the AOR).

Response:EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent or remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA disagrees that the requirements equate GS wells with Class I hazardous waste wells; rather, the financial responsibilityrequirements for Class VI wells are tailored to account for the unique nature of the long term GS of CO2, while providing flexibility for site specific implementation. EPA adds that the purpose of the GS rule is not to incentivize or promote GS; rather it is to ensure that where GS is deployed, it is done in a manner that ensures USDW protection from endangerment.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23594

Comment: - More stringent treatment creates unnecessary public perception issues: As a preliminary matter, imposing requirements more stringent than (or even equivalent to) those currently imposed on hazardous waste may contribute to an unwarranted negative public perception of CCS. EEI strongly urges the Agency to exercise care not to stigmatize geological CO2 storage by equating it in any way with hazardous waste disposal, as doing so could affect public perception (thereby potentially hindering the permitting process) as well as perceptions by financial institutions (thereby potentially hindering project financing).

Response: As described above, EPA believes that the tailored financial responsibility requirements are appropriate to the unique nature of GS. Comments related to financial responsibility requirements resulting in negative perceptions of GS are outside the scope of this rulemaking. However, EPA does not agree that the financial assurance requirements will result in negative public perceptions of GS. EPA believes that the public will be reassured that any necessary activities will be covered despite the owner’s or operator’s financial difficulties.

EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23595

Comment: - Consideration of test projects: Small-scale test projects currently underway are providing opportunities to gather necessary information to explore how financial assurance concerns may best be addressed. EEI encourages the Agency to consider the experience of these projects in moving forward with financial assurance provisions.

- Consideration of nature of early projects/incentives for early actors: Early CCS projects are likely to represent the utmost in site selection and characterization in order to minimize risk. Stringent financial assurance requirements imposed in this context likely would not provide any additional protection to USDW. Further, financial assurance requirements beyond those currently in existence under the UIC program would disincentivize early CCS projects from going forward. The Agency should consider financial assurance requirements in line with those currently imposed on other types of wells as a mechanism to incentivize these early projects.

- Consideration of the risk curve: While the Agency properly considers any unique threats that may be posed by the long-term nature of the storage at issue in a CCS project, the risk curve associated with a properly sited and managedproject begins to fall off rapidly over time, [FN8] and well before the Agency‘s proposed financial assurance provisions would come to an end. Further, the proposed rules do not contain clear provisions for reducing financial assurance obligations over time in accordance with declining risk. Any financial assurance requirements imposed should be based upon the actualities of the risk curve for CCS projects, and ideally the risk curve for a particular CCS project.

- Lack of site-specific flexibility in some respects: While the details of

activities to be assured--and in some cases the likelihood that such activities would ever need to be carried out--could vary widely from project to project, the financial assurance requirements as proposed do not include provisions that would allow site-specific characteristics to be taken into account. It is crucial that any financial assurance requirements be sufficiently flexible to take into account the particular risks associated with any given project. All projects are not created equal, and thus not all risks are the same

[FN8] See id.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule, owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well pluggingand PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the postinjection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

Regarding the comment that some sites may not pose the same risk as others, EPA notes that the cost of meeting the financial responsibility requirements is expected to be proportionate to the expected costs of each GS activity. Thus, owners or operators of smaller sites (e.g., that comprise smaller AoRs) may not need to provide financial responsibility instruments that are as highly valued as a larger site. Regardless, all owner or operators must demonstrate to the Director that their financial instrument is adequate to protect USDWs from endangerment.

EPA is developing guidance to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods and states may set more specific financial responsibility requirements if they so choose. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

As described above, the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23596 Other EPA Comment Codes and Descriptions: 5436 2.9.1.3 Allowing separate financial demonstrations for plugging and abandonment and post-injection site care (seeking comment)

Comment: - Ability to generate reliable cost estimates for assured activities: Financialassurance requirements depend on the ability to obtain reliable cost estimates for the activity to be assured. If an accurate cost estimate cannot be developed for the activity at issue, the financial assurance itself cannot be assumed to be appropriate--it may be inadequately protective, or it may be unduly burdensome. The Agency is proposing imposition of financial assurance requirements for activities that may occur more than 50 years in the future, with requirements to be satisfied at the time of permitting. The Agency should carefully examine whether at this time, or at the time of permitting, the cost of all of the activities required to be assured can be accurately estimated and assumed to be relatively accurate going forward. If not, financial assurance is no better than a guess. The preamble indicates that EPA may be willing to consider a phased or staged approach to financial assurance requirements, as well as separate financial assurance demonstrations for plugging and PISC activities at later points in time. Such provisions would ease some of the difficulties with the financial assurance proposal in terms of estimating costs for future activities assuming that better estimation tools would become available, but, again, would not eliminate any difficulties that may exist in forming cost estimates at the time of permitting.

Response: In the final rule, owners or operators are required to demonstrate, with their permitapplication, adequate financial responsibility for specific GS activities, including plugging and postinjection site care, per §146.85(a). EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greater flexibility and cost savings from this regulation. In the event that the owner or operator combines more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self insurance or performance bond), for example trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial responsibility for an amount at least equal to the current cost estimate.

EPA believes that the demonstration at the time of permit application is important to ensure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project. In addition, financial responsibility will need to be reevaluated prior to well plugging or site closure, or at any other time deemed appropriate by the Director, for example, following AoR reevaluations.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23597

Comment: - Market considerations: The above points assume that there currently exist, or will exist by the time the proposed rules are finalized, appropriate financial assurance possibilities for operators. As noted in the Government Accountability Office (GAO)‘s September 2008 report on CCS,[FN9] stakeholders have already reported difficulties in obtaining insurance coverage for CCS projects.[FN10] Even where markets do exist, financial assurance options may prove inordinately expensive to project operators and investors, who may choose to walk away from projects rather than face millions of dollars in assurances for activities 50 years down the road that may never occur. EEI stronglyencourages the Agency to evaluate this issue carefully and ensure that it is not creating obligations with which operators simply cannot comply, or which are so expensive that commercial development and deployment of CCS will be crippled at the outset. One possibility in this regard would be for the Agency to limit financial assurance requirements to reasonable caps (whether absolute caps or based on tons injected) in order to facilitate ability to secure the relevant financial instruments and thus CCS development.

[FN9] GAO, Report to the Chairman of the Select Committee on Energy Independence and Global Warming, House of Representatives, Climate Change: Federal Actions Will Greatly Affect the Viability of Carbon Capture and Storage As a Key Mitigation Option, GAO-08-1080 (Sept. 2008).

[FN10] Id. at 25.

Response:EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by GS well owners or operators as deployment of GS technology increases in the future. In addition, EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greater flexibility and cost savings from this regulation. In the event that the owner or operator combines more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self insurance or performance bond), for example trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial responsibility for an amount at least equal to the current cost estimate.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23598

Comment: - Lack of appropriate standards for updating: The proposed rules would require operators to provide written updates of adjustments to cost estimates as assured plans are amended. However, the preamble suggests that the UIC program director "would set the frequency for... re-demonstration of financial responsibility and resources. It may be appropriate to re-demonstrate financial responsibility on a periodic basis" to take into account any changes in submitted plans. While a requirement to update financial assurance where changes in plans so warrant makes sense, a default periodic requirement to re-demonstrate financial assurance absent some change in circumstances that would require it would impose an unnecessary burden on operators.

Response:EPA clarifies that the GS rule, at §146.85 requires the Director to evaluate the financial responsibility demonstration annually to confirm that the instrument(s) used remain adequate. EPA believes this is necessary to assure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project.

At §146.85(e), the rule states that if the Director determines during the annual evaluation that the original demonstration is no longer adequate to cover the cost of activities for which it is required,that the owner or operator must provide an adjustment to the cost estimate within 60 days.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23707 Other EPA Comment Codes and Descriptions: 1310 1.1.2.4 Comments on other "out of scope" issues, e.g., pore space ownership

Comment: Category: Financial

EPA Request for Comment: Because of the possibility that the owner or operator may face financial distress prior to the trust being fully funded, EPA is considering a guidance approach that would recommend adopting a pay in period of three years for GS projects, consistent with other similar programs in the Agency. EPA Notice 43521.

EPA is assessing whether to provide guidance on the use of insurance providers and, if so, whether to update eligibility requirements for insurers for GS wells consistent with other current Federal agency practices. EPA Notice 43521.

EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA’s authority under the SDWA. EPA Notice 43522.

AWWA Response: AWWA has several major concerns regarding owner/operator financial assurance and liability. Our primary concern is that the liability mechanism that would be triggered when the confining zone fails and carbon dioxide escapes has not been identified. Would this incident trigger CERCLA requirements if groundwater is degraded? AWWA recommends that the liability requirements and financial mechanisms that were used to address MTBE contamination be applied to any USDW degradation from carbon sequestration activities. The definition of a "corrective action" does not provide any protection for aquifers that are contaminated by the carbon sequestration process. The definition as provided in the proposed rule states that corrective action is "...the use of Director approved methods to assure that wells within

the area of review do not serve as conduits for the movement of fluids into underground sources of drinking water (USDW)." Note that this definition does not address "fixing" the impact to USDW. What is unclear to AWWA is if the geologic sequestration process does endanger groundwater aquifers, whether the owners/operators have any financial liability in restoring water quality (e.g., paying for extra treatment costs incurred by water utilities or other groundwater users), as the corrective action seems to focus on fixing injection wells and/or the confining layer.

The question remains regarding what an owner/operator’s total liability would be outside of the USDW contamination. The potential exists for contamination of other ground water aquifers, such as those that are not classified as USDWs but are used as a drinking water sources, and it is extremely important that the liability requirements are extended to these aquifers. The cost to remediate anydegradation can be extremely high. Depending on the scope and location of the degradation, examples of potential costs that might be incurred by a drinking water utility include the installation of advanced water treatment technologies and/or development of alternative water sources. The responsibility for these costs must be assumed by the owner/operator in the event of a failure of the geologic sequestration process.

AWWA believes that the time limit for financial responsibility in the proposed regulation may be too long for most insurance agencies, which may trigger theneed for the development of a trust fund or for owner/operators to use a selfinsurance mechanism. If the trust fund is the desired method, EPA should require that companies constantly add to the fund, even if it appears that the fund is fully funded. In addition to the initial pay in period of three years, owner/operators should be required to pay in any additional amount identified during the five-year reviews for the area of review and corrective action plan, injection well plugging plan, the post-injection site care and site closure plan, and the emergency and remedial response plan. This additional pay in is required so that we don't have a repeat of the funding stoppage with the Superfund program.

Response: The goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. As such, owners or operators must demonstrate financial responsibility for, among other things, any needed emergency and remedial response actions that are necessary to mitigate endangerment or potential endangerment of USDWs. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA clarifies that, while the commenter accurately defines corrective action for wells in the AoR, this term does not refer to actions needed to address endangerment in the UIC program regulations. EPA clarifies that the intent of the emergency and remedial response requirements at §146.94 is that if the owner or operator obtains any evidence that USDWs may be endangered, he or she must cease injection, take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan, per §146.94(b).

EPA disagrees that GS is analogous to the MTBE situation. EPA believes that large scale GS can be done safely. The GS regulation builds upon the long-standing, protective regulatory framework of the UIC program, which has been regulating the injection of fluids for decades. The GS regulation enhances this existing framework with tailored requirements for Class VI GS wells to address the unique nature of large scale GS of CO2. These protective requirements include extensive geologic testing, detailed computational modeling of the AoR and periodic re-evaluations, detailedrequirements for monitoring and tracking the CO2 plume and pressure front, and extended postinjection monitoring and site care.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23708 Other EPA Comment Codes and Descriptions: 4710 2.7.1 Proposed submissions required for permit applications (seeking comment)

Comment: AWWA questions whether it would be acceptable for energy companies andowner/operators to bond projects as a way to demonstrate financial assurance. AWWA recommends that EPA develop formal technical, managerial, and financial requirements for carbon sequestration projects that owner/operators must meet and maintain. This should be tied to the permitting process as these requirements must be demonstrated prior to the operating permit being issued. Demonstrating ongoing technical, managerial, and financial capabilities would be an important component of the five-year permitting review process that AWWA is recommending.

Response:EPA agrees that financial responsibility demonstrations should be part of the permitting process for Class VI wells. As a result, the rule requires owners or operators to demonstrate adequate financial responsibility for all required activities with their permit application, per §146.82(a)(14).

EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on how best to estimate costs to assist GS well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23734 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Part 146.85(b) AWWA believes that potential changes in the size of the area of review require that all site plans be reevaluated at the same frequency as the area of review. Therefore, AWWA recommends revising this part to read:

The owner or operator must provide to the Director, at the same frequency as the AOR reevaluation, written updates of adjustments to the cost estimate to account for any amendments to the area of review and corrective action plan (§146.84), the testing and monitoring plan (§146.90), the injection well plugging plan (§146.92), the post-injection site care and site closure plan (§146.93), and the emergency and remedial response plan (§146.94).

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. The final GS rule, at §146.85(c), requires the owner or operator to provide updates to the cost estimate within 60 days of any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. Owners or operators must also adjust the estimates for inflation annually under §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25147

Comment: III.Providing Certainty with Respect to Financial Assurance Requirements and Short- and Long-Term LiabilityA. Financial Assurance

The role of financial assurance requirements, generally, is "to ensure that owners and operators maintain adequate financial resources to fulfill their current and future environmental obligations [and] to minimize the number of facilities that are orphaned and abandoned; thereby, reducing the potential that these costs will be borne by the public." OFFICE OF WATER, U.S. ENVTL. PROT. AGENCY, APPROACHES TO GEOLOGIC SEQUESTRATION SITE STEWARDSHIP AFTER

SITE CLOSURE 3 n.2 (July 2008) [hereinafter, "EPA SITE STEWARDSHIP"]. To serve these purposes, "[f]inancial responsibility must span the entire life of a project (from capture through post-closure stewardship) and must include adequate assurance that there is sufficient funding to cover the net present value of estimated closure . . . and post-closure[.]" WRI GUIDELINES at 58. The adequacy of financial assurances is not tested, however, until the owner or operator is unable or unwilling to fulfill its obligations at a facility. "The ultimate test of whether financial assurances are adequate is an owner’s bankruptcy. If an owner declares bankruptcy and the financial assurances are found to be inadequate, drinking water sources may be at risk and the public may be required to bear the cost of closing a well. Consequently, any uncertainties about the adequacy of financial assurances need to be minimized." U.S. GENERAL ACCOUNTING
OFFICE, GAO-03-761, DEEP INJECTION WELLS: EPA NEEDS TO INVOLVE

COMMUNITIES EARLIER AND ENSURE THAT FINANCIAL ASSURANCE REQUIREMENTS ARE ADEQUATE 22 (2003) [hereinafter GAO REPORT], cited in 73 Fed. Reg. at 43,521 (discussing financial assurances for Class I wells).

The proposed regulation for GS require owners and operators to make financial assurances, but the requirements are so vague that they likely will lead to uncertainty, confusion, inconsistent and/or fiscally imprudent practices by the states, and other problems. The proposed regulation also does not do enough to

ensure that the amount of the financial assurances reflects the most current cost estimates and includes some margin of error or fund to cover unplanned costs. As a result of these failures, drinking water sources (and the broader environment) and the public are at risk of finding that financial assurances are inadequate to cover actual operational, closure or post-closure costs for a GS facility in the event the facility is unwilling or unable to cover such costs. EPA should revise the proposed regulation in the various ways described below to

minimize that risk.

1.EPA Should Prescribe the Use of Specific Financial Assurance Instruments.

The proposed regulation establishes that the owner or operator must demonstrate and

maintain financial assurance:

The owner or operator must demonstrate and maintain financial responsibility and resources for corrective action (that meets the requirements of § 146.84), injection well plugging (that meets the requirements of § 146.92), postinjection site care and site closure (that meets the requirements of § 146.93), and emergency and remedial response (that meets the requirements of § 146.94) in a manner described by the Director .

73 Fed. Reg. at 43,537 (proposed 40 CFR § 146.85(a)), but it does not adequately inform owners and operators (and state Directors) how to satisfy that duty. EPA admits as much, stating in the preamble that for now, it "is proposing that the rule only specify a general duty to obtain financial responsibility acceptable to the Director," and that it will publish guidance "that describes recommended types of financial mechanisms that owners or operators can use to meet this requirement" at some unspecified future date. Id. at 43,520.

As discussed below, EPA’s long experience with Class I wells, RCRA, and other regulatory frameworks demonstrates that vague financial assurance standards do not work. EPA should specify" now, not later, and in the regulation itself"the mechanisms by which a well owner or operator may demonstrate financial assurance.[FN8] In developing its list of acceptable financial assurance mechanisms for GS, EPA should incorporate the recommendations made by the General Accounting Office ("GAO") and EPA Office of Inspector General ("OIG") in the reports that EPA describes in the preamble (for example, by not allowing captive insurance, see p. 22, infra). 73 Fed. Reg. at 43,521-22. Also, EPA should make sure to provide detailed guidance, especially regarding the problem areas highlighted by GAO and OIG in their reports (for example, regarding cost estimation methodology or pay-in period for trust funds). Id. at 43,521.

[FN8] Merely providing EPA guidance on the subject, as EPA is proposing to do, is insufficient given the fact that guidance is not legally binding on EPA. EPA is free to follow the guidance or to act at variance with it, depending onthe facts of a particular case. See e.g., Memorandum from Victor J. Kimm, Office of Drinking Water, U.S. EPA, to Water Division Directors and Water Supply Branch Chiefs, Regions I-X, U.S. EPA, 1-2 (May 29, 1985) ("This manual is a guidance piece to be used on a case-by-case basis, taking into consideration all relevant factors.") (emphasis in original); see also Cement Kiln Recycling Coalition v. EPA, 493 F.3d 207, 227 (D.C. Cir. 2007) (holding that a different EPA guidance was designed to "have the flexibility to make adjustments for the specific conditions" and was non-binding on EPA). EPA should follow the recommendation that the states and regions made (in the RCRA context), to address concerns about insufficient guidance with respect to financial assurance on a national level, by including detailed guidance in the regulations themselves. See OFFICE
OF INSPECTOR GENERAL, U.S. ENVTL. PROT. AGENCY, REPORT NO. 2005-P-00026,

CONTINUED EPA LEADERSHIP WILL SUPPORT STATE NEEDS FOR INFORMATION AND

GUIDANCE ON RCRA FINANCIAL ASSISTANCE 2 (2005) [hereinafter OIG REPORT], cited in 73 Fed. Reg. at 43,521 ("The States and regions . . . expressed consistent concerns with aspects of financial assurance. They believed these concerns would be best addressed at the national level by EPA, including a rulemaking process that would revise the existing financial assurance regulations [under RCRA].").

To minimize uncertainty (and the attendant risk to drinking water supplies and the public), EPA must provide as much detailed guidance as possible. It shouldlook to existing lists of acceptable financial mechanisms in other EPA programs as just a starting point. EPA’s RCRA regulations (40 C.F.R. § 264.143) include a list of acceptable financial mechanisms, yet OIG reports that states implementing the RCRA regulations have "expressed consistent concerns" regarding "insufficient guidance' in a number of important areas, prompting OIG to recommend that EPA issue additional guidance for its RCRA financial assurance mechanisms. OIG REPORT at 3, 9-12. OIG found that a lack of clear guidance led states to accept a broad range of financial assurance mechanisms, some of which were "not explicitly allowed by Federal regulations" and others that were not fiscally prudent. See OIG REPORT at 11. To avoid those same problems in the GS context, EPA should provide a list of acceptable financial mechanisms like that included in the existing RCRA regulations, but make sure to add more detailed guidance to the GS financial assurance provisions. Such guidance should be based on "best practices" for each of the acceptable financial mechanisms. OIG

REPORT at 12.

Further, time is of the essence. For maximum benefit, EPA should act as soon as possible to include detailed guidance on financial assurance in any regulation for GS, while large-scale CCS projects are still in the early planning stages (or are not yet being planned). "Experience shows that it is often necessary to put [financial responsibility] mechanisms in place before [a] project can move forward." WORLD RESOURCES INSTITUTE, WORKSHOP SUMMARY: ADDRESSING

LONG-TERM LIABILITY OF CARBON DIOXIDE CAPTURE AND GEOLOGICAL SEQUESTRATION 5 (2007) [hereinafter WRI WORKSHOP SUMMARY]. A clear description of required financial mechanisms allows "[p]roject developers, financiers, and insurers . . . to know the operational and regulatory requirements up front in order to manage costs and risks." Id. at 1. Without a clear description from EPA of which mechanisms will be allowed, project owners and operators will have to account for the additional risk that their chosen financial mechanism will not be acceptable to the Director. EPA should also provide this guidance as soon as possible so that states do not create conflicting financial assurance requirements. A lack of clear standards creates a potential "race-to-the-bottom" as states compete to set the lowest standards for financial assurances in an effort to attract GS projects. See
ALEXANDRA B. KLASS AND ELIZABETH J. WILSON, CLIMATE CHANGE AND CARBON SEQUESTRATION: ASSESSING A LIABILITY REGIME FOR LONG-TERM STORAGE OF

CARBON DIOXIDE 30 (2008), available at http://works.bepress/com/alexandra_klass/4,_(discussing the presence of the

"race-to-thebottom" in connection with FutureGen). As financial assurance requirements are relaxed, the public loses its assurance "that adequate care and funding will be in place to manage storage facilities." WRI WORKSHOP SUMMARY at 1. With states unsure, industry also would have uncertainty over the fact that assurances now accepted by a state Director later may be deemed inadequate under more detailed guidance. This uncertainty is especially problematic under market conditions, such as today’s, in which financing may be difficult to secure in the first place. See Peter S. Goodman, Credit Enters a Lockdown, N.Y. TIMES, Sep. 26, 2008, at A1.EPA’s implementing regulations under the Class I deep injection well program provide at least a starting point for EPA to use in compiling the list of acceptable financial assurance mechanisms for GS.[FN9] 40 C.F.R. § 144.63 provides that "an owner or operator of each facility must establish financial assurance for the plugging and abandonment of each existing and new Class I hazardous waste injection well" in one of the following ways: (a) establishing a "plugging and abandonment trust fund"; (b) "surety bond guaranteeing payment into a plugging and abandonment trust fund"; (c) "surety bond guaranteeing performance of plugging and abandonment"; (d) "plugging and abandonment letter of credit"; (5) "plugging and abandonment insurance"; (6) corporate guarantee of plugging and abandonment (after passing a financial test); or (7) a combination of "trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, and insurance." These mechanisms are similar to, but more detailed, than the Class II mechanisms which EPA suggests it intends to use as a model for the financial mechanisms for GS. See 73 Fed. Reg. at 43,521. They are also nearly identical to the financial assurance options available under the RCRA program. See 40 C.F.R. § 264.143. EPA should use the Class I regulations, as opposed to the Class II guidance, as a starting point, eliminate any that are not suitable for long-term CO2 containment, and include a list of acceptable financial assurance mechanisms in the proposed regulation for GS.

[FN9] We recommend, however, that EPA only adopt these standards with the GAO and OIG’s recommendations in mind. See section III(A)(2) below.

2. EPA Should Implement OIG’s and GAO’s Recommendations.

Regardless of whether EPA chooses the Class I, Class II or RCRA program (or a combination) as a model when developing the financial assurance requirements for GS, EPA should make sure to implement OIG’s and GAO’s recommendations as well. See 73 Fed. Reg. at 43,522-23 (discussing OIG’s and GAO’s recommendations for EPA’s financial assurance requirements).

OIG’s and GAO’s criticisms and recommendations are well described in the preamble, but then are entirely ignored in the actual regulation. See 73 Fed. Reg. at 43,521. Those offices "have raised issues regarding the use of financial responsibility instruments applicable to site closure for several EPA programs." 73 Fed. Reg. at 43,521. The Class I, Class II and RCRA guidance and regulations have not been updated to reflect OIG’s and GAO’s recommendations, so many of the financial assurance mechanisms criticized by the OIG and GAO are still accepted in those programs. Id. According to GAO, those "financial assurance requirements may not ensure that adequate resources are available to close a commercial deep injection well in the event of bankruptcy or ceased operations."

GAO REPORT at 1.

In fact, GAO found that of the four Class I wells which "have gone into bankruptcy or ceased operating since the program began in 1980; two did not have adequate financial resources to plug and abandon wells." Id. Financial assurance for the other two wells "was not tested because other companies purchased and continued operating the wells." Id. GAO recognized that "it is increasingly difficult for owners to meet [existing] financial assurance requirements" forinjection wells, but cautioned that "failure to do so risks contaminating underground drinking water sources." Id. at 21.

Response:EPA clarifies that the GAO Report and OIG Report have been reviewed for purposes of finalizing this rule.

EPA has also clarified and specified acceptable financial responsibility instruments in the final regulation under §146.85(a) of the GS rulemaking. Under the final GS rule, owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

These financial responsibility requirements are tailored to the unique nature of the long term GS of

CO2.

EPA adds that the financial responsibility requirements under the rule are legally binding: and failure to meet the requirements at §146.85 will be considered a violation of the UIC permit and subject to applicable civil, criminal, or administrative penalties under SDWA §1423.

In addition, the final rule includes requirements for updating cost estimates to ensure that financial assurance is adequate. Regarding periodic reevaluations and possible revisions to the AoR, EPA clarifies that the GS rule, at §146.85(a), requires the Director to evaluate the financial responsibility demonstration annually to confirm that the instrument(s) used remain adequate. At §146.85(e), the rule states that if the Director determines during the annual evaluation that the original demonstration is no longer adequate to cover the cost of activities for which it is required, the owner or operator must provide an adjustment to the cost estimate within 60 days. In addition, at §146.85(c)(2), the rule requires updating of cost estimates following amendments to the AoR and corrective action plan, the injection well plugging plan, the post-injection site care and site closure plan, and the emergency and remedial response plan. The same provision requires annual updates of the cost

estimates for inflation.

EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) on financial responsibility for GS wells that will provide information about the appropriateness of various financial instruments. This guidance will include recommendations to help permitting authorities determine whether an owner or operator's plan for financial responsibility is adequate.

EPA clarifies that the goal of financial responsibility is to ensure that resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25150Comment: c. EPA Should Set a Firm Timeline for Issuing More Detailed Regulations on

Financial Assurance Mechanisms.

EPA’s bare promise that it will develop further guidance at some unspecified later date runs afoul of the recommendations made by OIG and referenced by the proposed regulation. 73 Fed. Reg. at 43,520-21. In 2005, OIG urged the EPA to "[d]evelop and communicate EPA’s plan for addressing concerns with the existing financial assurance regulations . . . ." OIG REPORT at 17. "The plan should include milestones, decision points, and timelines for taking action, and indicate when and how EPA will determine if a rulemaking is necessary." Id. Although OIG made that recommendation in reference to updating existing financial assurance regulations under RCRA, the reasoning underlying the recommendation applies equally in this situation.

Response:EPA agrees that guidance is necessary, which is why EPA is developing guidance on financial responsibility for class VI wells that will provide information about the appropriateness of various financial instruments. This guidance will consider the recommendations in the OIG report and will include recommendations to help permitting authorities determine whether an owner or operator's plan for financial responsibility is adequate. The guidance, to be issued at the time the final rule is published, is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

In addition, under the final rule owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25151

Comment: 3. EPA Should Require Owners or Operators to Re-Demonstrate Financial Assurance Throughout the Life of the Project.

The proposed regulation states that the "owner or operator must demonstrate and maintain financial responsibility and resources" until the post-injection site care period ends and the Director has approved the site closure plan. 73 Fed. Reg. at 43,538 (proposed 40 C.F.R. § 146.85(a)) (emphasis added). At certain times during the life of the GS project, the owner or operator is required to provide to the Director adjustments to the cost estimates upon which the financial assurances are based. See 73 Fed. Reg. at 43,537 (proposed 40 C.F.R. §146.85). For example, proposed 40 C.F.R. § 146.85(b) requires the owner or operator to "provide to the Director, at a frequency determined by the Director, written updates of adjustments to the cost estimate," but only when the owner or operator amends a plan (area of review and corrective action plan, injection well plugging plan, etc.). Meanwhile, proposed 40 C.F.R. § 146.85(d) requires the operator to "provide an adjustment of the cost estimate to the Director if the Director has reason to believe that the original demonstration is no longer adequate to cover the cost of injection well plugging . . . and post-injection site care and site closure[.]" The regulation, however, does not automatically require an owner or operator to re-demonstrate financial assurances to reflect adjustments in cost estimates. See id. at 43,537 (proposed 40 C.F.R. § 146.85). As a result, the financial assurances "maintained" by the owner or operator may become outdated over time. Instead, EPA should require that the owner or operator re-demonstrate financial assurances on a regular basis (perhaps with each adjustment of cost estimates) so that an owner or operator "maintains" financial assurance that reflects the most upto-date cost estimate information.

In the same vein, EPA should require periodic re-demonstration of financial assurance to account for inflation. See id. at 43,522 (stating that EPA is still "considering" whether to include provisions for annual inflationary adjustments)..

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(c) requires the owner or operator to provide periodic adjustments (at least every 5 years) to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e). The owner or operator must also update the cost estimate annually to adjust for inflation under §146.85(c)(2).

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25152

Comment:4. The Regulation Fails to Require Financial Assurance for All Contingencies and Costs of Protecting Drinking Water Supplies.

The amount of financial assurance required by the proposed regulation is based entirely on the costs estimated by the owner or operator (and accepted by the Director) in its plans for corrective action, well plugging, post-injection site care, site closure, and emergency and remedial response as defined by the regulations. 73 Fed. Reg. at 43,537 (proposed 40 C.F.R. § 146.85(a)). There are many reasons why the demonstrated amount could turn out to be inadequate to cover actual costs, yet EPA has not addressed financing to cover these contingencies. [FN10] For example, the owner or operator may simply underestimate costs for the various covered operations, because of lack of experience with the new technology, or confusion regarding cost estimation techniques, or other reasons. Or, any part of the GS operation may take longerthan expected and in turn incur more costs. Or, the demonstrated amount was not updated to reflect adjusted cost estimates or was not adjusted for inflation. Then there is the problem of occurrences or accidents that are completely unanticipated and unplanned. In light of the many unknowns associated with large-scale GS at this time, it seems prudent to factor in a margin of error to the owner or operator’s cost estimates, which would allow for some unplannedcosts to be covered by financial assurances. To address catastrophic, "breakthe-bank" accidents, however, EPA should consider utilizing a funding mechanism based upon the Price-Anderson Nuclear Indemnities Act or other models.

[FN10] ELPC and ETIP also are concerned that the financial assurance does not cover costs not contemplated by the plans or harms caused by the GS activity but affecting interests other than public drinking water supplies, such as, for example, harms to private drinking water supplies.

The proposed regulation requires the owner or operator to "provide the Director with an emergency and remedial response plan that describes actions to be taken to address movement of the injection or formation fluids that may cause an endangerment to a USDW." Id. at 43,541 (proposed 40 C.F.R. § 146.94(a)). Proposed 40 C.F.R. § 146.85 requires the owner or operator to maintain financial assurance to cover the emergency plan. However, neither that provision nor proposed section 146.94 indicates how the costs should be estimated. 73 Fed. Reg. at 43,537, 43,541. Proposed 40 C.F.R. § 146.94 also does not explain how the owner, operator or Director will cover the costs of emergencies not anticipated by the plan. In fact, since the only emergencies covered are those already anticipated by the emergency planning provisions, truly unanticipated

events are not covered.

Given the many uncertainties surrounding GS, the prospect that a GS operation will proceed, or that a CO2 plume will behave, in a way that is "unplanned" is real. See WRI ISSUE BRIEF at 9 ("A need remains for ongoing research and analysis into the post-injection risk profile."). Furthermore, EPA notes, "it may be difficult to estimate the appropriate amount of funds that may be required at either an individual site or collectively at all sites." EPA SITE STEWARDSHIP at 25. In light of this, tying the financial assurance requirement to the owner or operator’s plans, without providing any margin of error or guidance for acceptable models to measure these costs, is risky and inappropriate.

EPA should provide the regulated community and the public with greater assurance that project owners/operators will have the financial wherewithal to cover "the financial consequences of potential cost overruns" and of "unanticipated events." WRI GUIDELINES at 78. The proposed regulations refer to updates of the "cost estimates" to reflect changes in costs of well operation, but do not set any standards for these estimates. 73 Fed. Reg. at 43,537. The Agency should require owners/operators to use rigorous cost estimation techniques to make sure that the owner or operator’s estimation of "planned" costs is as accurate as possible. "Sound cost estimation requirements ensure that sufficient funds are set aside in the financial assurance instrument." Id. at 43,521; see also WRI ISSUE BRIEF at 8 ("Understanding . . . the attendant costs associated withmitigating each stage of risk [is] essential to assess the utility of, and appropriately price, various financial instruments for purposes of financial responsibility."). Cost estimates should "be updated annually" and account for "inflation." OIG REPORT at 2. EPA should require independent verification of all cost estimates as well. See 73 Fed. Reg. at 43,521.

EPA should also proceed with "allowing separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements" in order to tie the most up-to-date cost estimation to financial assurance for later parts of the GS process. Id. at 43,522. Although EPA notes in the preamble that it "may be appropriate to re-demonstrate financial responsibility on a periodic basis," to "take into account any amendments to the area of review and corrective action plan . . . and adjustments for inflation," it has not addressed this sentiment in the proposed regulations. Id. at 43,520. EPA should make it explicit that a re-demonstration of financial responsibility is necessary any time there is a change in cost estimates, amendment to the area of review, or change in the corrective action plan. EPA also should require periodic re-demonstration of financial assurance to account for inflation as it indicates it is considering.

Here again, EPA can draw upon its experience with cost estimation in the RCRA program. Under RCRA regulations, the "closure cost estimate must be based on the costs to the owner or operator of hiring a third party to close the facility." 40 C.F.R. § 265.142(a)(2). This consideration better approximates the true costs to government of continuing post-injection operations. RCRA’s model provides enough collateral to cover closure costs should the owner or operator become insolvent and the financial assurance mechanism fail to cover the true costs of closure. EPA could also adopt the RCRA requirement that the estimate equal costs "at the point in the facility’s active life when the extent and manner of its operation would make closure the most expensive, as indicated by its closure plan," thereby providing a margin of error in financial assurances for cost estimates. 40 C.F.R. § 265.142(a)(1).

Perhaps more importantly, however, unplanned costs that could "break the bank" of the owner or operator must be addressed (such as, for example, costs associated with a catastrophic accident). See WRI WORKSHOP SUMMARY at 6 (identifying -‘break the bank’ risks- as one of the key issues that must be addressed by a financial assurance scheme for GS). Several commentators have suggested addressing such risks through the use of a funding scheme for GS that resembles that developed under the Price-Anderson Nuclear Industries Indemnity Act of 1957, 42 U.S.C. § 2210, or the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et. seq. WORLD RESOURCES INSTITUTE, WORKSHOP SUMMARY:

ADDRESSING

LONG-TERM LIABILITY OF CARBON DIOXIDE CAPTURE AND GEOLOGICAL SEQUESTRATION 5 (2007), at 6-8; EPA SITE STEWARDSHIP at 13-24 (discussing Price-Anderson and National Flood Insurance models, among others); ALEXANDRA B. KLASS & ELIZABETH J. WILSON, CLIMATE CHANGE AND CARBON SEQUESTRATION: ASSESSING A

LIABILITY REGIME FOR LONG-TERM STORAGE OF CARBON DIOXIDE 30 (2008), at 38-39, available athttp://works.bepress/com/alexandra_klass/4. Creation of such a fund would provide the means to pay for costs in excess of any covered by financial assurance posted under proposed 40 C.F.R. § 146.85.

The Price-Anderson Act, for instance, makes available a large pool of funds to cover public compensation for claims of personal injury and property damage. Although each large nuclear plant must obtain "primary financial protection" through financial assurance mechanisms similar to those acceptable under the UIC and RCRA programs, each company also contributes to a collective fund in order to pay for accidents beyond the scope of the financial assurance. 42 U.S.C. § 2210(a)(1). A similar funding mechanism could be useful in the GS context to provide an additional source of funding in the event that financial assurance is insufficient to meet actual costs, for example in the case of a catastrophic

incident.

Response:EPA disagrees that the GS requirements for financial responsibility are inadequate. Under the final rule owners or operators must develop cost estimates that accurately address the potential costs of adverse impacts associated with the GS project, and demonstrate and maintain financial responsibility to address the entire cost of such events. The rule also requires that the cost estimates for each phase of the project to be based on the cost of having a third party do the work.

The final rule also includes requirements for updating cost estimates to ensure that financial assurance is adequate. At §146.85(c)(2), the rule requires updating of cost estimates followingamendments to the AoR and corrective action plan, the injection well plugging plan, the postinjection site care and site closure plan, and the emergency and remedial response plan. Note that the final rule also requires that the AoR and corrective plan and the emergency and remedial response plan be updated at least every five years. The same provision requires annual updates of the cost

estimates for inflation.

EPA further clarifies that the final rule requires adjustments to the financial assurance demonstration following an adjustment to the cost estimate. The final rule, at §146.85(c)(4), requires the owner or operator to increase the face value of the financial instrument or to obtain an additional financial responsibility instrument if the most recent cost estimate is above the value of the existing financial

instruments.

Additionally, EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on recommended approaches to estimating costs to assist Class VI well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. The cost estimation methodology guidance will also contain instructions on how best to adjust cost estimatesfor inflation to help account for the long-term nature of GS. EPA is not requiring independent thirdparty reviews of owner or operator cost estimates.

Upon Director-approved closure of a Class VI well under §146.93, the owner or operator is generally no longer subject to enforcement for regulatory noncompliance and their financial instrument will be released if it was not used. However, even if a site closure is approved under §146.93, the owner or operator may still be held liable for regulatory noncompliance in a variety of circumstances, including endangerment of a USDW or an erroneous approval decision (e.g. the Director’s decision relied on erroneous information supplied by owner or operator). Please see further clarification on the issue of long-term liability in the preamble of the final GS rule.Regarding the suggestion to create a trust fund, EPA clarifies that under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.

Commenter Name: Bradley J. Field Letter ID: 0186 Commenter Organization:New York State Dept. of Environmental Conservation

Div. of Mineral Resources Comment ID:

25214

Comment: PP. EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA’s authority under the SDWA.

NYSDEC-DMN Response: The EPA proposed rule for financial assurance appears to be adequate with respect to wells and NYSDEC-DMN understands that any well plugging financial instrument would be released upon proper plugging and abandonment of the well. It is also understood that a second tier of financial assurance, that could be filed at a later date (i.e., closer to ceasing injection), is being considered for post-injection site care. However, according to the proposed rule, both forms of financial assurance would be limited to SDWA authority which does not extend to financial responsibility for activities unrelated to protection of USDWs (e.g., coverage of risks to air, ecosystems, or public health unrelated to USDW endangerment). Because of EPA’s focused authority under the SDWA for the UIC program, action by individual states may be required to fill any financial assurance and regulatory gaps.

Response:EPA agrees that assuring financial responsibility for corrective action of Class VI wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites is an important component of ensuring that USDWs are protected.

EPA clarifies that financial assurance for post-injection site care and site closure can be obtained separately from that for well plugging; however, financial responsibility for post-injection site care and site closure must be demonstrated at the time the permit application is filed. Please note that the rule requires the owner or operator to adjust the cost estimates of the financial instrument to address any amendments to the AoR and corrective action plan, the injection well plugging plan. Within 60 days after the Director has approved any modification to the plan(s), the owner or operator must review and update the cost estimate for well plugging, PISC and site closure, and emergency and remedial response to account for any amendments to the permit plans listed above. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA confirms that its authority to require financial responsibility is limited to that allowed by the SDWA as part of the UIC program. Financial responsibility and liability for activities unrelated to the protection of USDWs is outside the scope of this rulemaking.Commenter Name: Scott Davis Letter ID: 0187 Commenter Organization: Arizona Public Service Company Comment ID: 25223

Comment: - The final rule must limit open-ended financial liability by developing the appropriate financial responsibility mechanisms. As pointed out in USWAG's comments, EPA should retain the option of self-insurance instruments, which have worked successfully under the RCRA program. Failure to adequately address the issue of open ended liability in this rule making would be a mistake.

Response:EPA will retain the use of self-insurance as an instrument for financial responsibility for Class VI wells. Owners or operators may provide self insurance through a financial test provided certain conditions are met under the final rule. For example, these conditions include the demonstration of profitability and stability. EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. This guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)). See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA disagrees that caps should be placed on financial responsibility requirements in the rule. The goal of financial responsibility is to assure that resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA believes that the instruments chosen for financial responsibility must cover the complete costs of these activities.

The cost of meeting the financial responsibility requirements is expected to be proportionate to the expected costs of each GS activity. EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by Class VI well owners or

operators.

Commenter Name: G. Graham Holden Letter ID: 0189 Commenter Organization: Oglethorpe Power Corporation Comment ID: 25245

Comment:regime.(Footnote 3) The challenge EPA faces is to craft a Final Rule for commercial CO2 injection appropriate for activities that will largely be conducted in the future. EPA has had to confront many technical uncertainties regarding the establishment and operation of GS wells. Because many of the technical aspects are unknown, it is also very difficult to develop a clear understanding of project risks and liabilities. As long as risks and liabilities are largely unknown and open-ended, private companies will not step forward to offer insurance and other risk management products, and it will not be possibleto obtain the level of financing needed to undertake a costly GS operation. The pilot carbon capture and storage ("CCS") projects conducted by DOE and other entities should help resolve some of these uncertainties.

Response:EPA anticipates that the availability of a variety of financial responsibility providers and third-party GS financial instruments will grow in response to demand. In addition, EPA plans to allow owners or operators to choose from a variety of financial instruments, allowing them to select instruments they find easiest to obtain. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility. EPA agrees that the results of the DOE pilot projects will provide some reassurance and certainty about the degree of risk involved in GS projects.

Given that the practice of GS is fairly new and EPA does not have enough information in supporting future prediction, EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24359

Comment: H. Financial Assurance

We support EPA’s flexible approach on financial assurance methods. It would be a mistake to impose any regulatory restrictions that would preclude the use of particular types of financial assurance or particular instruments, regardless of whether those are currently used for other classes of injection wells or in other EPA programs. Allowing for flexibility recognizes that operators are likely to use combinations of approaches and instruments to meet these requirements and that these combinations may change significantly over time as operators, program Directors and the financial markets gain more experience with geologic sequestration projects. EPA’s is wise to avoid any artificial constraints on the development of potentially acceptable means of achieving financial assurance. We recommend that this approach be retained in the final

rule.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility as long as USDWs are protected. Under the final GS rule, owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However, EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

Furthermore, EPA is developing guidance to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods and states may set more specific financial responsibility requirements if they so choose. This guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Owners or operators may select different instruments for specific project activities. EPA alsoanticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by GS well owners or operators. However, EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (e.g., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to issuance of a Class VI permit. See the final rule and preamble for further discussion of the EPA's final approach to financial responsibility.

Given that the practice of GS is fairly new and EPA does not have enough information in supporting future prediction, EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24439 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(a)

Proposed CCS Group Recommendations: (a) The owner or operator must demonstrate and maintain financial responsibility and resources for corrective action (that meets the requirements of § 146.84), injection well plugging (that meets the requirements of § 146.92), post-injection site care and site closure (that meets the requirements of § 146.93), and emergency and remedial response (that meets the requirements of § 146.94) in a manner prescribed by the Director until:

(1) The Director receives WELL PLUGGING REPORT IDENTIFIED IN 146.92(D) and

approvesOR COMPLETION OF the completedpost-injection site care and site closure plan AS APPROPRIATE; and

Basis for CCS Group Comments: Maintenance of the well plugging financial obligation until site closure is not necessary. The Director should have the authority to release the obligation once the well is plugged.

Response:EPA will allow owners or operators to use separate financial responsibility instruments for different GS activities. However, owners or operators must demonstrate adequate financial responsibility for all required activities, including well plugging, with their permit application, per §146.82(a)(14). In addition, on an annual basis, the owner or operator must adjust the cost estimate for inflation, increase or decrease the value of the financial instrument to match the cost estimate, and provide any updated information related to their financial responsibility instrument(s), or at any other time deemed appropriate by the Director. These annual reviews provide a mechanism for revising cost estimates up or down to account for changes in the project, including the execution of environmental obligations as phases of a GS project are completed.

Regarding the suggested edit at §146.85(a)(1), EPA clarifies that the owner or operator may call upon their financial instrument when the phase of the project for which the instrument was required is complete and all financial obligations for that instrument have been met, as specified in §146.85(b)(2). For example, when the injection well is plugged to the Director's satisfaction, the owner or operator's financial instrument will be released if it was not used. See the final rule andpreamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance on financial responsibility for GS wells. The guidance will include a discussion on how best to estimate costs to assist Class VI well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. The guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24440 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(b)

Proposed CCS Group Recommendations: (b) The owner or operator must provide to the Director, at a frequency determined by the Director, BUT NO MORE FREQUENTLY THAN ANNUALLY, written updates of adjustments to the cost estimate to account for any amendmentsCHANGE to the area of review and corrective action plan (§146.84), the injection well plugging plan (§146.92), and the post-injection site care and site closure plan (§146.93).

Basis for CCS Group Comments: Requiring updates more frequently than annually is not justified and less frequent updates should be appropriate in many cases.

Response: Cost estimates will need to be reevaluated after amendments to the area of review and corrective action plan, prior to well plugging or site closure, after amendments to the emergency and remedial response plan, or at any other time deemed appropriate by the Director. The rule will also require annual adjustments to the cost estimates for inflation, as specified in §146.85(c)(2). These annual reviews provide a mechanism for revising cost estimates up or down to account for changes in the project, including the execution of environmental obligations as phases of a GS project are completed.

EPA did not make the proposed edits at §146.85(b), but did extensively revise and clarify the financial responsibility requirements. See the final GS rule and preamble for additional information on EPA's final approach.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24441 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(c)

Proposed CCS Group Recommendations: (c) The owner or operator must notify the

Director of adverse financial conditions such as bankruptcy, that may affect the ability to carry out injection well plugging and post-injection site care

and site closure.

Basis for CCS Group Comments: Clarification.Response: Based on its evaluation of all public comments and input on the proposed rule and NODA and Request for Comment, EPA has made many revisions to the GS rule. Please see the final rule and the discussion of financial responsibility in the preamble for additional information.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24550

Comment: Rule Provisions or Federal Register Cite: 144.36 EPA Preamble Question: 41. Current UIC guidance describes trust funds as a form of financial assurance. The owner or operator may deposit funds into the trust fund in phases; that is, either over the term of the initial permit or over the remaining operating life of the injection well, as estimated in the well plugging plan, whichever period is shorter. Because of the possibility that the owner or operator may face financial distress prior to the trust being fully funded, EPA is considering a guidance approach that would recommend adopting a pay in period of three years for GS projects, consistent with other similar programs in the Agency. EPA Notice 43521.

CSC Response: Industry should have a variety of options for meeting financialassurance based upon the companies’ discretion. Options should include selfinsurance, insurance, surety bonds or other appropriate financial instruments.

Response: Owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However, EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)). The qualifying methods are listed in §146.85(a).

Owners or operators may select different instruments for specific project activities. EPA also anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by GS well owners or operators. See the final rule and preamble for further discussion of EPA's final approach for financial responsibility.

Commenter Name:Jeff W. Sheets Letter ID: 0192 Commenter Organization: ConocoPhillips Comment ID: 23898

Comment:Financial Assurance

This requirement intends to project and cover the cost of closure and postclosure site care plans. There is acknowledgment of three important elements 1)flexible methods and instruments, 2) preserving the availability of selfinsurance mechanisms, and 3) release of financial assurance at closure. Exposure after closure would be a concern to investors and would not provide mechanisms /financial instruments to recognize that risks diminish after monitoring, postinjection site care, and closure. Again, it seems inappropriate that this requirement exceeds requirements for Class I hazardous wells.Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility as long as USDWs are being protected. Owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations and may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

EPA will retain the use of self-insurance as an instrument for financial responsibility for Class VI wells. EPA is developing guidance that describes the types of financial instruments owners or operators can use to meet financial responsibility requirements for Class VI wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. This guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

The goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA disagrees that the requirements equate GS wells with Class I hazardous waste wells; rather, the financial responsibility requirements for Class VI wells are tailored to the unique nature of the long term GS of CO2.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it has not been used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable even after site closure if the Director relied on erroneous information provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38, whereby generally all other regulatory responsibilities are transferred to that new owner and operator, including all potential liabilities associated with meeting the requirements of that permit.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24611

Comment: Rule Provisions: 144.36 EPA Rule Issue: 41. Current UIC guidance describes trust funds as a form of financial assurance. The owner or operator may deposit funds into the trust fund in phases; that is, either over the term of the initial permit or over the remaining operating life of the injection well, as estimated in the well plugging plan, whichever period is shorter. Because of the possibility that the owner or operator may face financial distress prior to the trust being fully funded, EPA is considering a guidance approach that would recommend adopting a pay in period of three years for GS projects, consistent with other similar programs in the Agency. EPA Notice 43521.

Anadarko Petroleum Corporation (APC) Response: Industry should have a variety of options for meeting financial assurance based upon the companies’ discretion. Options should include self-insurance, insurance, surety bonds or other appropriate financial instruments.

Response: Owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)). The allowable instruments are identified at §146.85(a). See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA has clarified the financial responsibility requirements in the final GS rule, and has included at §146.85(a) a list of qualifying financial responsibility instruments, including trust funds, surety bonds, letters of credit, insurance, self insurance, escrow accounts, or any other instrument(s) satisfactory to the Director.

Given that the practice of GS is fairly new and EPA does not have enough information in supporting future prediction, EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24666 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(a)(1)

Anadarko Petroleum Corporation (APC) Comments: (1) The Director receives WELL PLUGGING REPORT IDENTIFIED IN 146.92(D) and approvesOR COMPLETION OF the completedpost-injection site care and site closure plan as appropriate; andRationale: Maintenance of the well plugging financial obligation until site closure is not necessary. The Director should have the authority to release the obligation once the well is plugged.

Response:EPA will allow owners or operators to use separate financial responsibility instruments for different GS activities as long as they are able to demonstrate that their instruments will protect USDWs from endangerment. This means that owners or operators must demonstrate adequate financial responsibility for all required activities, including well plugging, with their permit application, per §146.82(a)(14). In addition, on an annual basis, the owner or operator must adjust the cost estimate for inflation, increase or decrease the value of the financial instrument to match the cost estimate, and provide any updated information related to their financial responsibility instrument(s), or at any other time deemed appropriate by the Director. These annual reviews provide a mechanism for revising cost estimates up or down to account for changes in the project, including the execution of environmental obligations as phases of a GS project are completed.

Regarding the suggested edit at §146.85(a)(1), EPA clarifies that the owner or operator may be released from a financial instrument when the phase of the project for which the instrument was required is complete and all financial obligations for that instrument have been met, as specified in §146.85(b)(2). For example, when the injection well is plugged to the Director's satisfaction, the owner or operator's financial instrument will be released if it was not used.

EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on how best to estimate costs to assist GS well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. The guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24667 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(b)

Anadarko Petroleum Corporation (APC) Comments: (b) The owner or operator must provide to the Director, at a frequency determined by the Director, BUT NO MORE THAN ANNUALLY, written updates of adjustments to the cost estimate to account for any amendmentsCHANGE to the area of review and corrective action plan (§146.84), the injection well plugging plan (§146.92), and the post-injection site care and site closure plan (§146.93).

Rationale: Updates more frequent than annual is not justified.

Response: Cost estimates must be reevaluated after amendments to the area of review and corrective action plan, prior to well plugging or site closure, after amendments to the emergency and remedial response plan, or at any other time deemed appropriate by the Director. The rule will also require annual adjustments to the cost estimates for inflation, as specified in §146.85(c)(2). These annual reviews provide a mechanism for revising cost estimates up or down to account for changes in the project, including the execution of environmental obligations as phases of a GS project arecompleted.

EPA did not make the proposed edits at §146.85(b), but did extensively revise and clarify the financial responsibility requirements. See the final GS rule and preamble for additional information on EPA's final approach.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24668 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(c)

Anadarko Petroleum Corporation (APC) Comments: (c) The owner or operator must notify the Director of adverse financial conditions such as bankruptcy, that may affect the ability to carry out injection well plugging and post-injection

site care and site closure.

Rationale: Clarification.

Response:EPA did not make the proposed edits at §146.85(c), but did extensively revise and clarify the financial responsibility requirements. EPA believes that the Director must be notified of bankruptcy specifically, among other adverse financial conditions, because it affects the use of financial instruments. See the final GS rule and preamble for additional information on EPA's final approach.

Commenter Name: Richard Guinn Letter ID: 0210 Commenter Organization: Eastman Chemical Company Comment ID: 22697

Comment: 6. EPA needs to clarify how to demonstrate financial responsibility; the proposed regulation leaves too much discretion to the Director.

Response:EPA has clarified the financial responsibility requirements in the final GS rule, and has included at §146.85(a) a list of qualifying financial responsibility instruments, including trust funds, surety bonds, letters of credit, insurance, self insurance, escrow accounts, or any other instrument(s) satisfactory to the Director. Owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well pluggingand PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the postinjection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

See the final rule and preamble for further discussion of EPA's final approach to financial responsibility. EPA is also developing guidance on financial responsibility for Class VI wells that will provide information about the appropriateness of various financial instruments. This guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Richard Guinn Letter ID: 0210Commenter Organization:Eastman Chemical Company Comment ID: 22712

Comment:having a USDW below the injection zone). Concern #6 Demonstration of financialresponsibility. (Ref: page 43520, 9. Proposed Financial Responsibility and LongTerm Care Requirements)

EPA needs to provide clarifying guidance on how to demonstrate financial responsibility. The proposed regulation leaves too much to the discretion of the Director. Such openended requirements will effectively discourage carbon capture projects and the development of financial pro formas. Of particular concern are those assurances necessary to cover the costs of potential long-term stewardship or the potential to have to perform remediation at sites that have been previously certified as closed. This uncertainty may increase the perceived risk exposure to levels that serve as a barrier to investment. A potential approach to share risk and overcome this barrier is the Interstate Oil and Gas Compact Commission (IOGCC)[5] proposal for an industry-funded and state-administered trust fund to provide the stewardship during the Post-Closure Period. The trust would be funded through an injection fee assessed to the site operator and calculated on a per-ton basis, at the point of custody transfer of the CO2 from the generator to the site operator.

5 The Interstate Oil and Gas Compact Commission Task Force on Carbon Capture and Geologic Storage, Storage of Carbon Dioxide in Geologic Structures - A Legal and Regulatory Guide for States and Provinces, September 25, 2007

Response:EPA believes that minimum financial responsibility requirements are necessary to hold well owners or operators accountable for the safe operation, site closure, and post-injection site care of wells while protecting USDWs and avoiding extra public expense. EPA anticipates that the availability of a variety of financial responsibility providers and third-party GS financial instruments will grow in response to demand for GS technology.

EPA believes that the financial responsibility requirements provided in the final rule do not leave too much discretion to the Director. Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance on financial responsibility for GS wells that will provide information about the appropriateness of various financial instruments. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. This guidance will consider the recommendations in the Office of the Inspector General report on financial assurance and will include recommendations to help permitting authorities determine whether an owner or operator's plan for financial responsibility is adequate.

Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the government into the Treasury, therefore funds would not necessarily be available for GS financialresponsibility. Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments in the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until he or she can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, he or she will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it has not been used. However, even if site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances, for example if the Director relied on erroneous information provided by the owner or operator when approving site

closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, he or she may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, including all potential liabilities associated with meeting the requirements of that permit.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:John King Letter ID: 0211 Commenter Organization: Shell Exploration and Production Company (SEPCo) Comment ID:

22753

Comment: - Financial Assurance Provisions: .EPA should keep language in the rule that allows for flexibility in the operator’s ability to utilize an array of

financial assurance tools.

Response:EPA agrees about the need for flexibility, which is why owners or operators may choosefrom a variety of financial instruments to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment by paying for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Owners or operators may select different instruments for specific project activities. EPA also anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by Class VI well owners or operators.

Commenter Name:John King Letter ID: 0211 Commenter Organization: Shell Exploration and Production Company (SEPCo) Comment ID:

22783

Comment: H. Financial Assurance

SEPCo supports EPA’s flexible approach on financial assurance methods. It would be a mistake to impose any regulatory restrictions that would preclude the use of particular types of financial assurance or particular instruments, regardless of whether those are currently used for other classes of injection wells or in other EPA programs. Allowing for flexibility recognizes that operators are likely to use combinations of approaches and instruments to meet these requirements and that these combinations may change significantly over time as operators, program Directors and the financial markets gain more experience with geologic sequestration projects. EPA is wise to avoid any artificial constraints on the development of potentially acceptable means of achieving financial

assurance.

Recommendation:

Recommend that this approach be retained in the final rule.

Response: As described above, owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name: Olon Plunk Letter ID: 0217 Commenter Organization:Xcel Energy, Inc. Comment ID: 21555 Other EPA Comment Codes and Descriptions: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment); 5434 2.9.1.2 Need for additional instruments (seeking comment)

Comment:Financial Assurance

Xcel Energy agrees that some method of financial assurance is appropriate for geologic storage projects. However, it is important to retain the concepts of both self-assurance and phased-assurance. The amount of financial assurance required should be limited to what is known, or can be estimated with reasonable accuracy, today. Financial assurance should be periodically adjusted as newinformation becomes available.

Response:EPA will allow owners or operators to use one or more or multiple financial responsibility instruments for well plugging and site closure. However, EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC; this must be done at the time of permit application. This will ensure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project.

EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. The owner or operator must also update the cost estimate annually for inflation. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

EPA will retain the use of self-insurance as an instrument for financial responsibility for Class VI wells. Owner or operators may self insure through a financial test provided certain conditions are met such as demonstration of profitability and stability. Furthermore, EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. This guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA notes that Directors may disallow certain instruments.

Commenter Name: Darrick Eugene Letter ID: 0223 Commenter Organization: Texas Carbon Capture and Storage Association Comment ID: 23964 Other EPA Comment Codes and Descriptions: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment:Finally, when mapped to the requirement for financial assurance, this 50-year timeframe requirement raises barriers to obtaining financial assurance for prospective projects. Section 146.85 of the Proposed Rule requires the owner or operator to maintain financial responsibility for corrective action, injection well plugging, post-injection site care and site closure. Undoubtedly owners/operators will enter the private sector financial assurance market for some period in order to meet this requirement. Both an uncertain or 50-year post-injection site care timeframe create impediments to financial responsibility. We believe that an uncertain or exceedingly long post-injection site-care period will discourage the development of private sector products to address financial responsibility and discourage geologic storage in general.

Given the limited risk profile of the post-operational phase of geologic storage, the impediments to financial responsibility and insurance caused by an uncertain or exceedingly lengthy post-injection site care period and the precedent set by other proposals, we think that a 50-year post-injection site care period is unsupported by the science, unnecessary to protect USDWs andunwarranted by current EOR experience.

Response: As described above, EPA disagrees that a post-injection site care timeframe of 50 years is excessive. EPA proposed a default post-injection site care timeframe of 50 years based on a review of research studies, industry reports, and existing environmental programs. This analysis was included in an EPA-prepared background document that is available in the federal docket, titled"Computational Modeling of Underground Injection of Carbon Dioxide for Determination of Areaof-Review and Potential Risk to Underground Sources of Drinking Water." EPA assessed various default timeframes based on additional review of research studies and evaluation of public comments. While numerous commenters suggested that EPA shorten the monitoring timeframe, none of the commenters provided sufficient data or other evidence to warrant a change in the proposed timeframe. While the 10- or 30-year timeframe suggested by some of these commenters may be within the timeframe suggested in some studies, there are circumstances (e.g., little development of mineral trapping of CO2) under which the potential risks of endangering USDWs will likely not decline within these timeframes. EPA believes that a 50 year post-injection site care timeframe represents a reasonable and protective monitoring period and available data do not support a different timeframe. Furthermore, EPA believes that a 50-year default post-injection site care timeframe, as required at §146.93(b)(1), is not overly burdensome, does not exaggerate the risks associated with GS, is consistent with other environmental programs, and sufficiently protects USDWs from endangerment.

To the comment expressing concern about financial responsibility, EPA recognizes that there are challenges associated with assuring funding for activities that will occur far in the future. However, the Agency believes that in order to protect USDWs from endangerment under the SDWA operators must demonstrate under §146.85 that financial resources are available to plug the injection well and provide post-injection site care at the point in time that the first CO2 is injected. EPA is developing guidance on financial responsibility to assist owners or operators in evaluating the requirements of §146.85 and to assist Directors in evaluating financial responsibility demonstrations. The guidance describes the types of financial mechanisms that operators may choose to use when evaluating the financial responsibility requirements for GS wells and it will also include a section on how to estimate costs to support accurate financial responsibility demonstrations. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA adds that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

EPA acknowledges the concerns of some commenters that there will be circumstances where it can be demonstrated in less than 50 years that the plume and pressure front no longer pose a risk of endangerment to USDWs. For this reason, the final GS regulation includes a provision that the Director may, at his/her discretion, shorten the post-injection site care timeframe if the owner or operator can demonstrate that the GS project does not pose a risk to USDWs, as specified in §146.93(b)(2). Such a demonstration will be site-specific, and based on pressure monitoring and USDW impacts.

EPA disagrees that the requirements for financial responsibility are overly stringent. The goal of financial responsibility is to ensure that resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties throughout the life of the project.Commenter Name: Tiffany Rau Letter ID: 0224 Commenter Organization: Hydrogen Energy International Comment ID: 21698

Comment: (D) EPA’s Proposed Financial Responsibility Demonstration Requirements

The proposed financial assurance requirements for Class VI UIC wells require the owner or operator to establish financial responsibility (or "financial assurance") to cover the costs of plugging and abandoning injection wells, as well as the costs of corrective action, post-injection site care, site closure and emergency and remedial responses. (73 Fed. Reg. at 43537; §146.85.) The financial responsibility requirements should be consistent with the need to protect USDWs, while being reasonable and cost-effective, yet facilitating geologic sequestration of CO2. We support EPA’s proposed approach that allows for a wide range of financial assurance mechanisms to be utilized to demonstrate financial responsibility. We also suggest that EPA adopt a flexible, iterative approach to financial assurance in keeping with the phased, adaptive management philosophy of other aspects of the Proposed Rule.

Response:EPA has adopted a flexible, iterative approach to financial assurance in the GS rulemaking. For example, owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. The allowable instruments are identified at §146.85(a). EPA clarifies that it will allow owners or operators to use separate and or multiple financial responsibility instruments for different GS activities, and that owners or operators can be released from an instrument when the phase of the project for which the instrument was required is complete, as specified in §146.85(b)(1). However, owners or operators must demonstrate adequate financial responsibility for all activities for which financial responsibility is required with their permit applications, per §146.85(a). See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Given that the practice of GS is fairly new and EPA does not have enough information in supporting future prediction, EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name: Brian Williams Letter ID: 0225 Commenter Organization: BP Alternative Energy North America, Inc. (BP) Comment ID: 21755

Comment: (D) EPA’s Proposed Financial Responsibility Demonstration Requirements

The proposed financial assurance requirements for Class VI UIC wells require the owner or operator to establish financial responsibility (or "financial assurance") to cover the costs of plugging and abandoning injection wells, as well as the costs of corrective action, post-injection site care, site closure and emergency and remedial responses. (73 Fed. Reg. at 43537; §146.85.) The financial responsibility requirements should be consistent with the need to protect USDWs, while being reasonable and cost-effective, yet facilitating geologic sequestration of CO2. We support EPA’s proposed approach that allows for a wide range of financial assurance mechanisms to be utilized to demonstratefinancial responsibility. We also suggest that EPA adopt a flexible, iterative approach to financial assurance in keeping with the phased, adaptive management philosophy of other aspects of the Proposed Rule.

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which includes the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. The allowable instruments are identified at §146.85(a). EPA clarifies that it will allow owners or operators to use separate and multiple financial responsibility instruments for different GS activities, and that owners or operators can be released from an instrument when the phase of the project for which the instrument was required is complete, as specified in §146.85(b)(1). However, owners or operators must demonstrate adequate financial responsibility for all activities for which financial responsibility is required with their permit applications, per §146.85(a). See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Given that the practice of GS is fairly new and EPA does not have enough information in supporting future prediction, EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name: Ben Yamagata Letter ID: 0227 Commenter Organization: Coal Utilization Research Council Comment ID: 21791

Comment:Financial Responsibility and Long-term Care Requirements

The proposed rule’s financial responsibility and long-term care requirements lead to significant economic burdens without demonstrating the environmental benefit of the requirement. Alone and in combination, these requirements go well beyond the financial assurance requirements currently in place for existing UIC well classes. Further, the rule provides no guidance to accommodate

Response:EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA believes that minimum financial responsibility requirements are necessary to prevent endangerment of USDWs by holding well owners or operators accountable for the safe operation and closure of the well while avoiding expense and risk to the public. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility. EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

Commenter Name: Steven B. Corneli Letter ID: 0234 Commenter Organization:NRG Energy, Inc. Comment ID: 23172

Comment:Financial AssuranceNRG commends the EPA for allowing flexibility on financial assurance for GS wells. Allowing flexibility will enable operators to use a combination of approaches and instruments to meet the financial requirements over the life of the injection well operation. We believe that it would be a mistake to impose any restrictions on the types of financial assurance or instruments that can be used for GS wells. We recommend that this approach be retained in the final

rule.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility, which is why owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to prevent USDW endangerment by paying for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. The allowable instruments are identified at §146.85(a).

Owners or operators may select and use multiple instruments for specific project activities. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility. EPA also anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by Class VI well owners or operators.

Commenter Name: Abbie Krebsbach Letter ID: 0235 Commenter Organization:Montana-Dakota Utilities Co. Comment ID: 23186 Other EPA Comment Codes and Descriptions: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment: Closure and Post Injection Site Care (PISC)

Establishing a default time period for PISC, in particular a default time period as lengthy as 50 years as proposed in the rule, is unnecessary and undesirable, and the dual goals of protecting USDW and supporting the commercialization of CCS technology are far better served through a site-specific, performance-based approach. Montana-Dakota believes that the unique characteristics of CO2 do not justify imposition of such a lengthy default PISC period for GS projects. Appropriately sited projects should demonstrate the absence of endangerment to USDW in substantially less than 50 years.

Further, imposing requirements on CO2 storage projects that are far beyond those currently in place even for injection of hazardous wastes is unnecessary and will only engender public misperceptions regarding the safety of such projects. There is potential for an obligation to provide financial assurance for activities running through 70 years into the future (according to EPA's assumption of a 20-year injection period), or more. Especially, given the ongoing credit crisis, an unjustifiably lengthy PISC period may make obtaining the necessary financial assurance impossible, stunting or stopping commercial development of CCS.

Montana-Dakota urges EPA to implement a performance-based approach that considers the circumstances of a particular project, bounded by appropriate parameters for its application, and also encourages the EPA to establish clearparameters for such a performance-based approach, and in particular, a clear set of guidelines for demonstrating that the injectate has "stabilized", and for meeting the non-endangerment standard.

Response:EPA disagrees that a post-injection site care timeframe of 50 years is excessive. EPA proposed a default post-injection site care timeframe of 50 years based on a review of research studies, industry reports, and existing environmental programs. This analysis was included in an EPA background document in the federal docket, "Computational Modeling of Underground Injection of Carbon Dioxide for Determination of Area-of-Review and Potential Risk to Underground Sources of Drinking Water." While numerous commenters suggested that EPA shorten the monitoring timeframe, none of the commenters provided sufficient data to warrant a change in the proposed timeframe. While the 10- or 30-year timeframe suggested by some of these commenters may be within the timeframe suggested in some studies, there are circumstances (e.g., little development of mineral trapping of CO2) under which the potential risks of endangeringUSDWs will likely not decline within these timeframes. EPA believes that a 50-year default postinjection site care timeframe, as required at §146.93(b)(1), is not overly burdensome, does not exaggerate the risks associated with GS, is consistent with other environmental programs, and sufficiently protects USDWs from endangerment.

EPA acknowledges that there will be circumstances where it can be demonstrated in less than 50 years that the plume and pressure front no longer pose a risk of endangerment to USDWs. For this reason, the final GS regulation allows the Director to shorten the post-injection site care timeframe if the owner or operator can demonstrate that the GS project does not pose a risk to USDWs, as specified in §146.93(b)(2). Such a demonstration will be site-specific, and based on pressure monitoring and USDW impacts. EPA believes however, that to ensure USDW protection from endangerment, a default timeframe for post-injection site care is necessary.

EPA adds that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

EPA also recognizes the concerns associated with assuring financial responsibility for the long timeframes over which post-injection site care will be conducted. EPA is developing guidance on financial responsibility to assist owners or operators in evaluating the requirements of §146.85 and to assist Directors in evaluating financial responsibility demonstrations. The guidance describes the types of financial mechanisms that operators may choose to use when evaluating the financial responsibility requirements for GS wells and it will also include a section on how to estimate costs to support accurate financial responsibility demonstrations. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA disagrees that the requirements for financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties throughout the life of the project.

EPA believes that minimum financial responsibility requirements are necessary to prevent endangerment of USDWs by holding well owners or operators accountable for the safe operation and closure of the well and to avoid expense and risk to the public. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility. EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS rule is to ensure that,where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

Commenter Name: Abbie Krebsbach Letter ID: 0235 Commenter Organization:Montana-Dakota Utilities Co. Comment ID: 23187

Comment:Financial Assurance Provisions

Requiring financial assurance for potential liabilities for more than 50 years in the future may deter and even prevent investment in CCS projects. This timeframe exceeds what is currently in place even for injection of hazardous wastes, and there is significant concern raised regarding the perspective of promoting CCS development. Montana-Dakota questions whether any significant showing has been made that the physical and chemical properties of CO2 are sufficiently unique, or that they pose a sufficiently unique potential threat to USDW, to warrant such unprecedented treatment under the UTC program.

Financial assurance requirements should in no event go beyond what is currently required for Class I hazardous waste injection wells (i.e., beyond requirements to assure corrective action in the AOR). Again, there is the concern that treating CO2 more stringently than other injectate would create undue public concern and potentially inhibit CCS implementation. MontanaDakota encourages EPA to consider the experience of current CCS demonstration projects in moving forward with financial assurance provisions.

Response: As described above, EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent or remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA disagrees that the requirements equate GS wells with Class I hazardous waste wells; rather, the financial responsibility requirements for Class VI wells are tailored to account for the unique nature of the long-term GS of CO2, while providing flexibility for site-specific implementation. EPA adds that the purpose of the GS rule is not to incentivize or promote GS; rather, it is to ensure that where GS is deployed, it is done in a manner that ensures USDW protection from endangerment.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23264

Comment:41. Current UIC guidance describes trust funds as a form of financial assurance. The owner or operator may deposit funds into the trust fund in phases; that is, either over the term of the initial permit or over the remaining operating life of the injection well, as estimated in the well plugging plan, whichever period is shorter. Because of the possibility that the owner or operator may face financial distress prior to the trust being fully funded, EPA is considering a guidance approach that would recommend adopting a pay in period of three years for GS projects, consistent with other similar programs in the Agency. EPA

Notice 43521.

The pay-in period should coincide with the estimated risk.

Response:EPA acknowledges that there may be several possible approaches to setting pay-inperiods for trust funds. The final rule requires that the Director approve the use and length of pay-in periods. EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. Specifically, the guidance will discuss pay-in periods and provide guidance for Directors to use in determining an appropriate pay-in period. EPA adds that owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23265

Comment:42. Current UIC regulations for Class I hazardous waste injection allow for the use of insurance for purposes of demonstrating financial responsibility. However, insurance was not included as part of the guidance provided for Class II injection because this insurance mechanism was and still is, rarely used for the purpose of demonstrating financial assurance for injection wells. EPA is assessing whether to provide guidance on the use of insurance providers and, if so, whether to update eligibility requirements for insurers for GS wells consistent with other current Federal agency practices. EPA Notice 43521.

Financial assurance should be left to state lawmakers and the regulating agency and should not be a prescribed mechanism.

Response: Regarding the suggestion that financial assurance requirements be left to the states, EPA notes that it is providing consistency nationwide by requiring that any state that wishes to assume primacy for Class VI wells would need to demonstrate that its financial responsibility requirements are at least as stringent as the minimum federal requirements at §146.85. EPA does not believe that the final rule is prescriptive; rather it is flexible in order to tailor the regulations to the unique characteristics of long term storage of CO2.

EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to prevent endangerment of USDWs by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23285

Comment: 146.85(b) The frequency specified for written updates of adjustments to cost

estimates should coincide with the AOR reevaluation.

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(c) requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoRand corrective action plan, the injection well plugging plan, and the PISC and site closure plan. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e). See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name: Kevin Wanttaja Letter ID: 0248 Commenter Organization:Western Energy Supply and Transmission

Associates Comment ID:

22243 Other EPA Comment Codes and Descriptions: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment:– WEST urges EPA to avoid utilizing risk management approaches that discourage CCS development. WEST strongly believes that regulatory certainty is crucial, if meaningful investment is going to flow to CCS technologies and deployment. Certainty needs to be brought to long-term obligations, liabilities and risks associated with GS projects. To assist in this regard, EPA should set a limit of 50 years in the future for liabilities to GS project owners and operators. Extending this limit beyond 50 years may severely limit financial investments in CCS projects. Post injection monitoring and financial assurance requirements are important, but need to be tailored to comport with the potential risks, which decrease significantly after injection is complete.

Response:EPA disagrees that a post-injection site care timeframe of 50 years is excessive for most Class VI wells. However, EPA acknowledges that there will be circumstances where it can be demonstrated in less than 50 years that the plume and pressure front no longer pose a risk of endangerment to USDWs. For this reason, the GS rule offers owners or operators flexibility regarding the duration of the PISC timeframe by: (1) allowing the Director discretion to shorten or lengthen the PISC timeframe during the post-injection period based on site-specific data, pursuant to requirements at §146.93(b); or (2) affording the Director discretion to allow a Class VI well owner or operator to demonstrate, during the permitting process based on substantial data, that an alternative PISC timeframe may be appropriate if it ensures non-endangerment of USDWs pursuant to requirements at §146.93(c).

EPA believes that a default post-injection site care timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where substantial data exists to demonstrate that an alternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to accommodate site-specific circumstances and various geologic conditions, and addresses commenters’ concerns, while ensuring USDW protection. Both approaches will utilize site-specific data, and be based on pressure monitoring and USDW impacts. EPA recognizes that there are challenges associated with ensuring funding for activities that will occur far in the future. However, the Agency believes that operators must demonstrate that financial resources are available to plug the injection well and provide post-injection care at the point in time that the first CO2 is injected. EPA also recognizes the concerns associated with ensuring financial responsibility for the long time frames over which post-injection site care will be conducted. EPA is developing guidance on financial responsibility to assist owners or operators in evaluating the requirements of §146.85 and to assist Directors in evaluating financial responsibility demonstrations. The guidance describes the types of financial mechanisms that operators may choose to use when evaluating the financial responsibility requirements for GS wells and it will also include a section onhow to estimate costs to support accurate financial responsibility demonstrations. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA adds that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

EPA disagrees that the requirements for financial responsibility are overly stringent. The goal of financial responsibility for purposes of this rule is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties throughout the life of the project.

EPA expects the cost of meeting the financial responsibility requirements to be proportionate to the expected costs of each GS activity. The minimum financial responsibility requirements provided are necessary to prevent endangerment of USDWs by holding well owners or operators accountable for the safe operation and closure of the well while avoiding expense and risk to the public. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility. EPA adds that the purpose of the GS rule is not to encourage the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24893 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85

EPA Proposal: 146.85 Financial responsibility

(a) The owner or operator must demonstrate and maintain financial responsibility and resources for corrective action (that meets the requirements of § 146.84),injection well plugging (that meets the requirements of § 146.92), postinjection site care and site closure (that meets the requirements of § 146.93), and emergency and remedial response (that meets the requirements of§ 146.94) in a manner prescribed by the Director until:

(1) The Director receives and approves the completed post-injection site care and site closure plan; and

(2) The Director determines that the site has reached the end of the postinjection site care period.

GWPC Recommendations: No specific language recommended. See rationale

Rationale: Maintenance of plugging liability until site closure release by the Director is probably not needed once the well has been plugged. Should the owner/ operator be allowed to make a demonstration to the Director for the partial release of other financial responsibility elements?Response:EPA will allow owners or operators to use separate or multiple financial responsibility instruments for different GS activities. However, owners or operators must demonstrate adequate financial responsibility for all required activities, including well plugging, with their permit application, per §146.82(a)(14). In addition, on an annual basis, the owner or operator must adjust the cost estimate for inflation, increase or decrease the value of the financial instrument to match the cost estimate, and provide any updated information related to their financial responsibility instrument(s), or at any other time deemed appropriate by the Director. These annual reviews provide a mechanism for revising cost estimates up or down to account for changes in the project, including the execution of environmental obligations as phases of a GS project are completed. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Regarding the suggested edit at §146.85(a)(1), EPA clarifies that the owner or operator may be released from a financial instrument when the phase of the project for which the instrument was required is complete and financial obligations for the required activity have been met, as specified in §146.85(b)(2).

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24894 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment:EPA Proposal: (b) The owner or operator must provide to the Director, at a frequency determined by the Director, written updates of adjustments to the cost estimate to account for any amendments to the area of review and corrective action plan (§ 146.84), the injection well plugging plan (§ 146.92), and the post-injection site care and site closure plan (§ 146.93).

GWPC Recommendations: (b) The owner or operator must provide to the Director, at a frequency determined by the Director, but no more frequently than annually, written updates or adjustments to the cost estimate to account for any changes to: the area of review and corrective action plan (§146.84), the injection well plugging plan (§146.92), and the post-injection site care and site closure plan (§146.93).

Rationale: Does this contemplate both upward and downward adjustments?

Suggest "change" instead of amendments.

Clarification on what is meant by "updates or adjustments" would be beneficial e.g. what is included, at what frequency etc...

Response: Owners or operators will be required to adjust costs when they are no longer adequate, as specified in the GS rule, at §146.85. These baseline estimates can then be updated annually and kept current through input from ongoing dialogue between the owner or operator and the Director. The cost estimation methodology guidance will also contain instructions on how to adjust cost estimates for inflation to help account for the long-term nature of GS and will address the need to adjust cost

estimates for inflation.

EPA is developing guidance on financial responsibility for GS wells. The guidance will include adiscussion on how to estimate costs to assist GS well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. The guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA did not make the proposed edits, but did extensively revise and clarify the financial responsibility requirements. See the final GS rule and preamble for additional information on EPA's final approach.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24895 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(c)

EPA Proposal: (c) The owner or operator must notify the Director of adverse financial conditions such as bankruptcy that may affect the ability to carry out injection well plugging and post-injection site care and site closure.

GWPC Recommendations: (c) The owner or operator must notify the Director of adverse financial conditions that may affect the ability to carry out injection well plugging and post-injection site care and site closure.

Rationale: Delete "such as bankruptcy" from (c). Such examples of potential circumstances are unnecessary.

Response:EPA did not make the proposed edits, but did extensively revise and clarify the financial responsibility requirements. EPA believes that the Director must be notified of bankruptcy specifically, among other adverse financial conditions, because it affects the use of financial instrument. See the final GS rule and preamble for additional information on EPA's final approach. Please see the final rule and the discussion of financial responsibility in the preamble for additional

information.

Commenter Name:Michael Moore Letter ID: 0265 Commenter Organization:North American Carbon Capture & Storage Association (NACCSA) Comment ID:

22855

Comment: - Financial Assurance Provisions: NACCSA urges the Agency to revise the proposed financial assurance provisions, which are more stringent than those currently placed on Class I hazardous waste injection wells and, as proposed, present a number of practical problems for operators.

Response:EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent or remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA disagrees that the requirements equate GS wells with Class I hazardous waste wells; rather, the financial responsibility requirements for Class VI wells are tailored to account for the unique nature of the long term GS of CO2, while providing flexibility for site specific implementation. EPA adds that the purpose of theGS rule is not to incentivize or promote GS; rather it is to ensure that where GS is deployed, it is done in a manner that ensures USDW protection from endangerment.

Commenter Name:Michael Moore Letter ID: 0265 Commenter Organization:North American Carbon Capture & Storage Association (NACCSA) Comment ID:

22869

Comment: 6. Financial Assurance Provisions

NACCSA is also concerned with the nature and scope of the proposed rule's financial assurance provisions, which would require that the permittee, at the time of permitting, demonstrate financial assurance for activities ranging from corrective action and injection well plugging to post-injection site care and well closure, as well as for emergency and remedial response activities to address movement of formation or injection fluids that may endanger an underground source of drinking water-activities that, as contemplated under the proposed rule, could span 50 years or more.

First, the scope of the proposed financial assurance requirements goes beyond what is currently in place for any class of wells under the UIC program, even those injecting hazardous wastes. Given that CO2 has been safely injected under the UIC program for decades, it is relatively clear that its physical and chemical properties are not sufficiently unique-and that they do not pose a sufficiently unique potential threat to USDW-to warrant such heightened treatment under the UIC program. And while the Agency properly considers any unique threats that may be posed by the long-term nature of the storage at issue in a CCS project, the risk curve associated with a properly sited and managed project begins to fall off rapidly over time an dwell before the Agency's proposed financial assurance provisions would come to an end. In any event, any financial assurance requirements that may be imposed should not go beyond those currently in place under the UIC program.

Further concerns arise from a cost certainty perspective. Financial assurance requirements depend on the ability to obtain reliable cost estimates for the activity to be assured. If an accurate cost estimate cannot be developed for the activity at issue, the financial assurance itself cannot be assumed to be adequately protective or not unduly burdensome. The Agency is proposing imposition of financial assurance requirements for activities that may occur more than 50 years in the future, with requirements to be satisfied at the time of permitting. The Agency should carefully examine whether at this time, or at the time of permitting, the cost of such activities can be accurately estimated and assumed to be relatively accurate going forward.

Relatedly, the Agency should consider the cost and availability of financial

assurance for the activities it would seek to ensure. If no market exists to assure activities at issue, projects will be unable to move forward. Even where markets do exist, financial assurance options may prove inordinately expensive to project operators and investors, who may choose to walk away from projects rather than face millions of dollars in assurances for activities 50 years down the road that may never occur. NACCSA believes that any financial assurancerequirements should be subject to reasonable caps (whether absolute caps or based on tons injected) in order to facilitate ability to secure the relevant financial instruments. The Preamble indicates EPA may be willing to consider a phased or staged approach to financial assurance requirements, as well as separate financial assurance demonstrations for plugging and PISC activities at later points in time. Such provisions would ease some of the difficulties with the financial assurance proposal in terms of estimating costs for future activities assuming that better estimation tools would become available, but, again, would not eliminate any difficulties that may exist in forming cost estimates at the time of permitting.

NACCSA acknowledges EPA's statements that, under this SDWA rulemaking, the Agency cannot assign "liabilities" of a project operator or permittee to a third party. Regardless, NACCSA encourages the Agency to consider ways it may be able to tailor the regulations-in particular their financial assurance requirements-to take into consideration situations in which such assignments may have been affected through other laws. As the Agency is aware, various proposed statutes and regulations for CCS contemplate a state, for example, or other third party assuming long-term risk or liability for or ownership of stored CO2, such as the IOGCC model statute and regulations issued in September 2007. One option within the Agency's SDWA jurisdiction may be to include a provision indicating that where a third party assumes a permittee's regulatory obligations, the permittee is deemed to have satisfied applicable financial assurance requirements which can then be terminated. Such a mechanism is not unprecedented under the current UIC program; see, e.g., 40 C.F.R. § 144.66, which provides that, where a state assumes legal responsibility for compliance with plugging and abandonment requirements or assures state funding for such requirements, the operator is deemed to have satisfied applicable financial assurance requirements where the Administrator determines that the state's assumption is at least equivalent to

available financial assurance mechanisms.

Response:EPA disagrees that the requirements for financial responsibility are overly stringent. The goal of financial responsibility under this rulemaking is to ensure that financial resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties. EPA believes that minimum financial responsibility requirements are necessary to prevent endangerment of USDWs by holding well owners or operators accountable for the safe operation and closure of the well. EPA adds that the purpose of the GS rule is not to encourage the use of GS but to ensure that GS is conducted in a manner that protects USDWs from endangerment.

The cost of meeting the financial responsibility requirements is expected to be proportionate to the expected costs of each GS activity. EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand as use of GS technology increases. EPA plans to allow owners or operators to choose from a variety of financial instruments to meet their financial responsibility needs. EPA disagrees that the requirements equate Class VI wells with Class I hazardous waste wells. The financial responsibility requirements for Class VI wells are tailored to the unique nature of the long term GS of CO2.

EPA agrees that accurate cost estimates are important and the final rule requires specific provisions related to cost estimation under §146.85(c). EPA is developing guidance on financial responsibility

for GS wells that will include a discussion on how to estimate costs associated with various GSactivities. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA disagrees that caps should be placed on financial responsibility requirements in the proposed rule. A cap may result in the endangerment of a USDW if the appropriate amount of money provided under the financial instrument is less then what is needed to protect the USDW. EPA believes that the instruments chosen for financial responsibility must cover the complete costs of these activities.

EPA acknowledges the commenter's concern regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that financial resources are available to protect USDWs throughout the life of the GS project. However, the authority under the SDWA does not extend to release owners or operators from long-term responsibility for the potential economic costs of impacts unrelated to USDWs. EPA does not have authority to transfer liability from one entity to another and SDWA does not provide for the creation of a third party financial instrument where EPA is the trustee. In the UIC program, liability under SDWA §1423 remains with the owner or operator for all well classes until all regulatory requirements have been met. EPA understands that Congress is considering legislation that may address the liability issue.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it has not been used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances, for example, if the Director relied on erroneous information provided by the owner or operator when approving site closure. Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38, whereby all other regulatory responsibilities are transferred, including all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of the final rule.

After site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's approach.

Commenter Name:Mark Vickery Letter ID: 0280 Commenter Organization: Texas Commission on Environmental Quality Comment ID: 24106

Comment: (2) Appropriate Financial Assurance for Long Post-Injection Timeframes(a) Although TCEQ recognizes the large potential variation in monitoring,

postinjection site care, and closure processes and the uncertainty regarding potential changes in Resource Conservation and Recovery Act (RCRA) financial assurance generated by the Environmental Financial Advisory Board (EFAB) review, we recommend a more specific financial assurance rule framework, perhaps simply requiring consistency with RCRA financial assurance rules as they may be

amended.

(b) Allowing financial assurance for post-injection site care to be provided as late as 180 days before plugging and abandonment (page 134) leaves significant financial risk with the agency or State. At a minimum, financial assurance should be provided over the period of time that revenue is received prior to plugging and abandonment.

Response: In response to public comments, EPA has added more specific requirements to the rule. These include a list of permitted financial instruments, timeframes for adjusting cost estimates, requirements for protective coverage, steps to take in the event of adverse financial conditions, and others. However, EPA believes flexibility in the financial responsibility requirements is also appropriate in order to account for site specific circumstances. EPA is developing guidance on financial responsibility for Class VI wells (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that will provide information about the appropriateness of various financial instruments.

Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations, as listed in §146.85, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated. EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or

necessary.

EPA clarifies that financial responsibility for all required activities, including plugging and postinjection site care, must be demonstrated at the time of permit application, as required at §146.82(a)(14). To ensure USDW protection, EPA believes that adequate financial resources must be available at the time that CO2 is first injected. The goal of financial responsibility for purposes of this rule is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project. In the final rule, owners or operators must demonstrate financial responsibility to the Director for PISC and other activities for which financial responsibility is required, prior to the issuance of a Class VI permit. The Director is required to evaluate the financial responsibility demonstration annually to confirm that the instrument(s) used remain adequate. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:Mark Vickery Letter ID: 0280 Commenter Organization: Texas Commission on Environmental Quality Comment ID: 24108

Comment: (d) The preamble and rule are inconsistent in that the preamble indicates thatnotice of bankruptcy must be provided within 10 days of the event (p. 128), but the proposed rule specification [40 CFR 146.85(c)] does not specify a time frame. As noted above, we recommend more specificity.

Response:EPA has specified a 10-day timeframe for notifying the Director about adverse financial conditions such as bankruptcy in the regulation at §146.85(d)(1).

Commenter Name:Mark Vickery Letter ID: 0280 Commenter Organization: Texas Commission on Environmental Quality Comment ID: 24109

Comment: (e) The proposed rules do not set out a time frame by which to reevaluate the

postinjection site care, site closure plan and related cost estimates. Absence of such specific time frames could present additional risk by failing to ensure sufficient financial assurance coverage is maintained during the life of the permit.

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(c) requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. EPA adds that the well plugging plan and PISC and site closure plan must be reviewed prior to plugging and the post-injection site care period, and the AoR and corrective action plan must be reviewed at least every 5 years. The final rule also requires the owner or operator to adjust the cost estimate annually for inflation, as specified at §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

EPA is developing guidance on financial responsibility for Class VI wells (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm). The guidance will include a discussion on how to estimate costs, to assist Class VI well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. These baseline estimates can then be updated annually and kept current through input from ongoing dialogue between the owner or operator and the Director. The cost estimation methodology guidance will also contain instructions on how to adjust cost estimates for inflation to help account for the long-term nature of geologic sequestration.

Commenter Name: Kevin Frederick Letter ID: 0525 Commenter Organization:Wyoming Department of Environmental Quality Comment ID: 21394

Comment: Secondly, we believe that additional clarification and guidance on financial assurance instruments and their appropriate use with respect to different phases of CO2 sequestration projects is needed in order to provide a guideline that states may actually begin to use with respect to evaluating the financial assurance requirements and the appropriate use of various types of financial

instruments.

Response: In response to public comments, EPA has added more specific requirements to the rule. These include a list of permitted financial instruments, timeframes for adjusting cost estimates, requirements for protective coverage, steps to take in the event of adverse financial conditions, andothers. However, EPA believes flexibility in the financial responsibility requirements is also appropriate. Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations, as listed in §146.85(a), provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to prevent endangerment of USDWs by demonstrating the ability to pay for each GS activity.

EPA clarifies that it will allow owners or operators to use separate and multiple financial responsibility instruments for different GS activities, and that owners or operators can be released from an instrument when the phase of the project for which the instrument was required is complete, as specified in §146.85(b)(1). However, owners or operators must demonstrate adequate financial responsibility with their permit applications for all activities for which financial responsibility is required at §146.82(a)(14). See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA agrees that guidance is necessary. EPA is developing guidance on financial responsibility for Class VI wells that will provide information about the appropriateness of various financial instruments. This guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Doug Louis Letter ID: 0530 Commenter Organization: Kansas Corporation Commission Comment ID: 21348

Comment: Proposed financial responsibility and long term care requirements. The proposed rule states EPA would provide guidance to be developed at a later date which describes recommended types of owner/operator financial responsibility. On such an important concept, should it not be addressed in the proposed rule rather than clarified through guidance?

Response: In response to public comments, EPA has added more specific requirements to the rule. These include a list of permitted financial instruments, timeframes for adjusting cost estimates, requirements for protective coverage, steps to take in the event of adverse financial conditions, and others. However, EPA believes flexibility in the financial responsibility requirements is also appropriate. Under the final GS rule owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to prevent endangerment of USDWs, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods, and states may set more specific financial responsibility requirements if they so choose. This guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:Mike Moore Letter ID: 0532 Commenter Organization:North American Carbon Capture and Storage Association (NACCSA) Comment ID:

21370

Comment: The fourth area of concern relates to the proposed rule's financial assurance requirements. The proposed rules place greater financial assurance requirementson Class VI wells than currently apply to Class I hazardous waste wells. NACSA believes that the physical and chemical properties of carbon dioxide injected for storage do not warrant such treatment and could prevent the deployment of

CCS.

Response:EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that financial resources are available to prevent or remediate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA disagrees that the requirements equate GS wells with Class I hazardous waste wells; rather, the financial responsibility requirements for Class VI wells are tailored to account for the unique nature of the long term GS of CO2, while providing flexibility for site specific implementation.

Comment Code: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)



### Individual Comments

Commenter Name: Brianne Metzger Letter ID: 0151 Commenter Organization: Spectra Energy Corp Comment ID: 21895

Comment: C. EPA’s Three Year Pay-In Period For A Trust Fund Is Not Reasonable.

In the GS Rule, EPA notes that current UIC guidance describes trust funds as a form of financial assurance, whereby owners and operators can deposit funds into the trust fund in phases, e.g., either over the term of the initial permit or over the remaining operational life of the injection well, whichever is shorter. EPA raised concern over the possibility that the owner or operator may face financial distress prior to the trust being fully funded and statedthat it is considering a guidance approach that would recommend adopting a payin period of three years for GS projects. Spectra respectfully disagrees with this approach, on grounds that it will create an unreasonable and unnecessary barrier to the use of trust funds. A three year pay-in period has the potential to increase upfront costs significantly and discourage use of trusts solely for the purpose of avoiding the unlikely scenario of an owner or operator becoming insolvent prior to the end of the project’s operation or the end of the permit term. While Spectra recognizes that a three year pay-in period would address the Agency’s concerns, the risk that this approach would create a drag on the use of trusts far outweighs any benefit it might afford. Accordingly, Spectra opposes a three year pay-in period for the foregoing reasons.

Response:EPA acknowledges that there may be several possible approaches to setting pay-in periods for trust funds. The final rule requires that the Director approve the use and length of pay-in periods. EPA adds that owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the GS rule. This includes using other financial instruments other than trust funds. Additionally, EPA is developing guidance (available on EPA'swebsite at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that will discuss payin periods and provide guidance for Directors to use in determining an appropriate pay-in period.Commenter Name: Steven Pirner Letter ID: 0153 Commenter Organization: South Dakota Department of Environment and

Natural Resources Comment ID:

22146

Comment: 146.85 Financial responsibility - (b) need to re-evaluate AOR, CAP, P&A, and post-injection site care and closure plans and the financial resources needed to address them on a frequency set by Director - this prevents the initial determination of bonding from becoming inadequate in future - our Class II regulations set a specific amount that can not be changed over time, and allow for a group of wells to be covered under the same, inadequate statewide bonding

mechanism

Response:EPA agrees and clarifies that the GS rule, at §146.85, requires the Director to evaluate the financial responsibility demonstration annually to confirm that the instrument(s) used remain adequate for purposes of protecting USDWs from endangerment. At §146.85(e), it states that if the Director determines during the annual evaluation that the original demonstration is no longer adequate to cover the cost of activities for which it is required, the owner or operator must provide an adjustment to the cost estimate within 60 days. EPA also clarifies that the GS rule, at §146.85(c)(2), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan.

Commenter Name:James Childress Letter ID: 0158 Commenter Organization: Gasification Technologies Council (GTC) Comment ID: 23761 Other EPA Comment Codes and Descriptions: 5430 2.9.1 Comments on proposed financial responsibility requirements (40 CFR 146.85)

Comment: Concern #6 Demonstration of financial responsibility. (Ref: page 43520, 9. Proposed Financial Responsibility and Long-Term Care Requirements)

EPA needs to provide clarifying guidance on how to demonstrate financial responsibility. The proposed regulation leaves too much to the discretion of the Director. Such open-ended requirements will effectively discourage carbon capture projects and the development of financial pro formas. Of particular concern are those assurances necessary to cover the costs of potential long-term stewardship or the potential to have to perform remediation at sites that have been previously certified as closed. This uncertainty may increase the perceived risk exposure to levels that serve as a barrier to investment. A potential approach to share risk and overcome this barrier is the Interstate Oil and GasCompact Commission (IOGCC)[5] proposal for an industry-funded and stateadministered trust fund to provide the stewardship during the Post-Closure Period. The trust would be funded through an injection fee assessed to the site operator and calculated on a per-ton basis, at the point of custody transfer of the CO2 from the generator to the site operator.

5 The Interstate Oil and Gas Compact Commission Task Force on Carbon Capture and Geologic Storage, Storage of Carbon Dioxide in Geologic Structures -A Legal and Regulatory Guide for States and Provinces, September 25, 2007

Response:EPA believes that minimum financial responsibility requirements are necessary to holdwell owners or operators accountable for the safe operation, site closure, and post-injection site care of wells while protecting USDWs and avoiding extra public expense. EPA anticipates that the availability of a variety of financial responsibility providers and third-party GS financial instruments will grow in response to demand for GS technology.

EPA believes that the financial responsibility requirements provided in the final rule do not leave too much discretion to the Director. Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance on financial responsibility for GS wells that will provide information about the appropriateness of various financial instruments. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. This guidance will consider the recommendations in the Office of the Inspector General report on financial assurance and will include recommendations to help permitting authorities determine whether an owner or operator's plan for financial responsibility is adequate.

Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility. Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments in the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until he or she can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the site closure has been approved pursuant to requirements at §146.93, he or she will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it has not been used. However, even if site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances, for example if the Director relied on erroneous information provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencinga civil action for appropriate relief. If the owner or operator fails to comply with the order, he or she may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, including all potential liabilities associated with meeting the requirements of that permit.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:James Childress Letter ID: 0158 Commenter Organization: Gasification Technologies Council (GTC) Comment ID: 23762

Comment: Concern #7. EPA is considering a guidance approach that would recommend adopting a pay in period of three years for GS projects consistent with other similar programs in the Agency. (Ref: page 43521, Sec. 9. Proposed Financial Responsibility and Long-Term Care Requirements, Pay-in period for trust funds)

We strongly urge that the EPA not adopt this approach. CCS projects will be subject to their highest financial strain in the first several years of operation. During this period, commissioning, systems integration and debugging of mechanical and process systems will need to be completed with potential loss of plant operation, production and revenue. Projects will likely be burdened with additional initial capital coverage of an already expensive facility to contend with an accelerated payment. We therefore recommend that any payment schedule be based on a per-ton fee over an amortization period equal to the expected operational life of the project and in a framework as recommended by the IOGCC (ref-Concern #6).

5 The Interstate Oil and Gas Compact Commission Task Force on Carbon Capture and Geologic Storage, Storage of Carbon Dioxide in Geologic Structures -A Legal and Regulatory Guide for States and Provinces, September 25, 2007

Response:EPA acknowledges that there may be several possible approaches to setting pay-in periods for trust funds. The final rule requires that the Director approve the use and length of pay-in periods EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. Specifically, the guidance will discuss pay-in periods and provide guidance for Directors to use in determining an appropriate pay-in period so that the financial benefits to the owner or operator of a longer pay-in period are balanced with the increased financial risk to the public. EPA adds that owners or operators may choose from a variety of financial instruments to meet their financial responsibility needs.Commenter Name:James Childress Letter ID: 0158 Commenter Organization: Gasification Technologies Council (GTC) Comment ID: 23791

Comment: Current UIC regulations for Class I hazardous waste injection allow for the use of insurance for purposes of demonstrating financial responsibility. However, insurance was not included as part of the guidance provided for Class II injection because this insurance mechanism was and still is, rarely used for the purpose of demonstrating financial assurance for injection wells. EPA is assessing whether to provide guidance on the use of insurance providers and, if so, whether to update eligibility requirements for insurers for GS wells consistent with other current Federal agency practices. EPA Notice 131.

The role of insurance needs to be defined and especially, what is being insured and for what events and risks. We interpret this as being limited to insurance related to decommissioning, plugging of wells and closure of the site. Such costs and insurance coverage may change as additional wells are needed or the scope of the AoR changes. Absent of Federal or state assumption of long term liability, and regulatory clarity on the inapplicability of CERCLA, and events and their mitigation, it will be difficult for insurers to provide coverage for any more than a limited scope.

Response:EPA clarifies that owners or operators must demonstrate and maintain financial responsibility for corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response for Class VI wells, as specified at §146.85(a). Owners or operators may choose a combination of instruments, including insurance, for various GS activities for purposes of meeting their regulatory obligations under §146.85.

EPA agrees that it is important for insurance terms to be clear and for that reason requires owners or operators to reassess the needs for coverage when there are changes at the site. The GS regulation, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan.

Furthermore, EPA is developing guidance that describes the types of financial instruments, including insurance, that owners or operators can use to meet financial responsibility requirements for Class VI wells. The guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) will include considerations of how to evaluate the appropriateness of a specific financial responsibility instrument for a project.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24169 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(d)

API Comments: (d) The operator must provide an adjustment of the cost estimate

to the Director if the Director has reason to believe that originalTHE MOST RECENT demonstration is no longer adequate to cover the cost of injection well plugging (as required by §146.92) and post-injection site care and site closure (as required by §146.93)Rationale: Clarification.

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(e), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, and the PISC and site closure plan. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24259

Comment: Rule Provisions: 73 FR 43521 EPA Preamble Question: 42. Current UIC regulations for Class I hazardous waste injection allow for the use of insurance for purposes of demonstrating financial responsibility. However, insurance was not included as part of the guidance provided for Class II injection because this insurance mechanism was and still is, rarely used for the purpose of demonstrating financial assurance for injection wells. EPA is assessing whether to provide guidance on the use of insurance providers and, if so, whether to update eligibility requirements for insurers for GS wells consistent with other current Federal agency practices.

EPA Notice 43521.

API Response: See response to 41

Response: As described above, owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24260

Comment: Rule Provisions: 73 FR 43522 EPA Preamble Question: 43. EPA is assessing whether a financial ratings threshold for all companies using a self-guarantee, similar to those used by other Federal agencies, is appropriate. The Agency also is considering what constitutes an appropriate financial rating threshold, and whether a financial rating greater than BBB or Baa (i.e., the current rating threshold established under the UIC regulations) is appropriate for GS wells. EPA Notice 43522.

API Response: See response to 41

Response: As described above, owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR,injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24261

Comment: Rule Provisions: 146.85 EPA Preamble Question: 44. EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA’s authority under the SDWA. EPA Notice 43522.

API Response: See response to 41

Response: As described above, owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23600 Other EPA Comment Codes and Descriptions: 5434 2.9.1.2 Need for additional instruments (seeking comment)

Comment: - Comments on specific financial assurance mechanisms: The preamble seeks comment on what types of financial assurance mechanisms should be made available for GS projects. While a number of mechanisms currently exist under the UIC program, such as trust funds, surety bonds, insurance and satisfaction of a corporate financial test (with or without a third-party guarantee), the guidance outlining available mechanisms should provide Agency decision-makers with flexibility to take operator and project-specific considerations into account. In addition, current "form" corporate financial test documents may require that corporations have certain financial information available (such as bond ratings) that they may lack, but do not clearly allow for substitution of substantially equivalent financial information for purposes of satisfying the test. Any financial assurance regulations should provide the Agency with considerable flexibility in how to determine a permittee‘s financial position.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition.

Furthermore, EPA is developing guidance (available on EPA's website athttp://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to assist Directors in evaluating the appropriateness of the financial test in specific circumstances. EPA will provide examples of "substantially equivalent" financial information to that can be used to fulfill a financial test.

Owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23827

Comment: a. Trust Funds

The Alliance supports the concept of trust funds as reserves to address CCS liabilities for long-term stewardship. Properly structured, trust funds can be

valuable tools in this area.

A valuable feature of a trust fund is that a large reserve may be accumulated gradually. Costs can be spread over time. EPA has focused on the obverse of this issue - that in early years, a trust fund may not be sufficiently capitalized to address all the risks that may arise. EPA has proposed that trust funds have a three-year pay-in period. EPA should not impose such limitations, for two reasons. First, while it is possible that an incident may occur that would result in a demand on the fund in early years, many consider that risks are likely to be lower in the early phases of injection. Second, and more importantly, given that the private risk management market appears unlikely to be able to address all risks, EPA should encourage development of mechanisms that can address any portion of the risk. A three-year pay-in period arbitrarily restricts a potentially valuable tool with a heavy early payment burden. EPA should allow flexibility in trust fund arrangements, and can link the credit it gives to financial assurance through trust funds to the amount available in the

fund.

Long-term, EPA and other policy makers should consider the possibility that too large an amount might be accumulated in trust funds, relative to the risks they are designed to cover. A recently released assessment of a $1 per ton tipping fee for CO2 sequestration, at levels required under WRE450 and WRE550 climate policies, would accumulate up to $1.5 trillion by the time the first 100 CCS facilities reach the end of their useful lives.[FNl9] Such misplaced wealth storage is not economically sound. Furthermore, in light of the history of trust funds managed by the federal government, it would provide an unfortunate temptation for policy makers with other fiscal priorities.

[FN19] James J. Dooley, Chiara Trabucchi, and Lindene Patton, Tipping Fees Can't Save us from the Tipping Point: The Need to Create Rational Approaches to Risk Management that Motivate Geologic CO2 Storage Best Pmctices . ScienceDirect, GHGT-9, November, 2008.Observers have suggested fees to capitalize CCS trust funds with a number of different structures. The type of mechanism or amount of the fee should not be of concern to the EPA, but should be addressed by the policy makers establishing the trust. It may be that multiple trust funds could be applicable for portions of the risk associated with a CCS facility or facilities.

Both private and government-run trust funds may arise. EPA should ensure sound management of trust funds, but does not need to limit parentage. Again, innovation should be and will need to be encouraged. The trusts could be privately administered in compliance with state insurance regulations; in this way, the state has final governance authority by charter status, while private industry can bring fiduciary and engineering analysis resources to bear which would be expensive for the states to match.

Trust funds also could be structured to provide incentive for risk-mitigating behavior. As an example, their terms might be structured to limit eligibility to projects whose siting or operations meet superior standards.

Again, EPA should encourage development of trust funds, rather than artificially

limit them.

Response:EPA acknowledges that there may be several possible approaches to setting pay-in periods for trust funds while still ensuring financial resources are available to protects USDWs from endangerment. The final rule requires that the Director approve the use and length of pay-in periods.

Furthermore, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. Specifically, the guidance will discuss pay-in periods and provide guidance for Directors to use in determining an appropriate pay-in period. EPA adds that owners or operators may choose from a variety of financial instruments to meet their financial responsibility needs.

Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.

Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23829Comment: c. Surety Bonds

Bonds are a traditional financial assurance mechanism and have been widely used. They ensure the performance of the bond holder on behalf of a third party, such as the state or the federal government.

Unfortunately, the surety market has contracted in other environmental

areas." Some of the conditions that led to the contraction elsewhere are relevant to CCS. For example, some agencies have focused on very long-term risks that might arise after site care responsibility has ended." The result can be bond amount increases by two orders of magnitude." Further exacerbating the problem, at least one court has found that EPA's financial assurance requirements for bonds does not limit payment to the amount of the bond, should the bond issuer choose to perform the cleanup rather than pay the bond.[FN23] Thus. for example, a bond issuer could pay $100 million for cleanup, even if the
bond amount was $10 million.

[FN20]"Mining and the Vanishing Surety Bond Market," Lisa A. Kirschner and Edward B. Grandy, American Bar Association, Natural Resources & Environment, Winter 2003, Vol. 17, Number 3.

[FN21] See, e.g. , Mont. Code Ann. 382-4-338.

[FN22] Jim Carlton, "Mining Firms in U.S. Face Crisis Over Cleanups," Asian Wall Street Journal. July 34. 2002.

[FN23] People ex rel. Ryan v. Envtl. Waste Res. Inc., 782 N.E. 2d 291, 296 (Ill. App. 2003).

Surety industry representatives indicate that they are hesitant to underwrite any obligation that may extend even beyond five years. Presently, for example, surety bonds for mining-related obligations are virtually unavailable at any price. A 2002 National Mining Association report on surety bonds for mining operations noted "Five of the top 10 sureties in the 1990s have either merged or left the business. Others have announced their intent to withdraw, and several longstanding market participants have effectively withdrawn by curtailing their exposures so substantially.[FN24]

[FN24] Interim Report, National Mining Association Surety Bond Working Group, 2002, p. 4.

As with other financial assurance mechanisms, EPA should take steps to encourage the availability of surety bonding. Such steps should include clarifying in EPA's financial assurance regulations for surety bonds the bonding period, and clarifying that sureties may offer pay or perform instruments that will remain subject to the bonding limit, even if the surety chooses the performance option.

Response:EPA acknowledges that there are concerns regarding the feasibility of bonds. Therefore, EPA notes that the GS regulation provides flexibility for owners or operators to choose from a variety of financial instruments to meet their financial responsibility obligations. EPA anticipatesthat the availability of third-party GS financial instruments, including surety bonds, will grow in response to demand for such instruments by Class VI well owners or operators or based on

successful uses of these instruments.

EPA also acknowledges the commenters' concern regarding potential insolvency of surety companies, but notes that such unpredictable events are outside of the Agency's control or authority. However, EPA requires under §146.85 that a Director may only approve instruments determined to be sufficient to address endangerment of USDWs and has the discretion to disapprove of instruments that they determine are not sufficient. Furthermore, owners or operators or their guarantor must notify the Director no later than 10 days after filing for bankruptcy.

Finally, regarding past cases where the courts have ordered bond issuers to pay the full cost of the cleanup rather than spend just the amount of the bond, EPA notes that this problem may be best remedied by requiring accurate cost estimates, which must be updated on an annual basis. The final rule requires annual updating of cost estimates for inflation and requires updates when the AoR and corrective action plan, well plugging plan, post-injection site care and site closure plan, and emergency and remedial response plan are amended, as specified in §146.85(c)(2).

EPA adds that it is developing guidance that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for Class VI wells. The guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23830

Comment: d. Corporate Financial Strength and Corporate Guarantees

EPA proposes to authorize the use of corporate demonstration of financial strength and corporate guarantees as acceptable forms of financial assurance. In keeping with our recommendation that a broad array of financial assurance mechanisms be authorized, we support this proposal.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. An operator or operator that is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its

behalf.

Furthermore, EPA is developing guidance to assist Directors in evaluating the appropriateness of corporate guarantees in specific circumstances. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:Frederick R. Eames Letter ID: 0178Commenter Organization: CCS Alliance Comment ID: 23831

Comment: e. Letters of Credit

Letters of credit ("LoCs")are a standard form of financial assurance and should

be authorized.

A great advantage of LoCs in commercial practice is that as long as a LoC is valid, presentation of the proper documentation by the LoC beneficiary entitles it to payment. Their ease of use is a great benefit.

However, LoCs can be expensive. Issuing banks may require a site owner or operator to provide secured collateral or deposits before agreeing to issue a LoC,[FN25] a possibility made all the more likely by the extended time window of liability in the environmental context (and in fact referred to by EPA in promulgating some of its FA regulations).[FN26] Such a commitment of capital may be difficult in the context of an innovative project, such as a facility deploying CCS. EPA should take care not to assume heavy reliance on LoCs to meet financial assurance requirements, again pointing to the need to provide for a

broad set of financial assurance instruments.

[FN25] James William Boyd, "Financial Responsibility for Environmental Obligations: Are Bonding and Assurance Rules Fulfilling Their Promise?,' Resources for the Future Working Paper No. 01-42. August 2001, at 24.

[FN26] See 53 Fed. Reg. 43,322, at 43,353, Oct. 26, 1988.

Also, EPA should consider in its guidance for LoCs addressing the potential for differences in the coverage period detailed in the letter of credit and the letter's expiration date. LoCs ordinarily are issued for a short period, perhaps a year, with an annual renewal date. If the renewal merely extends the expiration date of the letter, giving additional time to present requests on the letter, without altering the period during which incidents covered by the letter would have to occur, gaps in coverage may arise. This issue could be addressed in guidance.

Response:EPA recognizes that, for some projects, the use of letters of credit may require owners or operators to provide high amounts of collateral. For this reason the final GS rule provides owners or operators the flexibility to choose from a variety of instruments to meet their financial responsibility requirements, thus allowing them to select instruments that are most appropriate to their needs while still ensuring protecting of USDWs.

Furthermore, EPA is developing guidance that describes the types of financial instruments, including letters of credit, which owners or operators can use to meet financial responsibility requirements for Class VI wells. The guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) will include considerations for Directors regarding how best to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. EPA will also consider the commenter's concerns regarding how to clarify confusion about the expiration dates and the coverage period for letters of credit as it develops the guidance.EPA also acknowledges the commenter's concern regarding potential insolvency of surety companies, but notes that such unpredictable events are outside of the Agency's control or authority. However, EPA requires under §146.85 that a Director may only approve instruments determined to be sufficient to address endangerment of USDWs and has the discretion to disapprove of instruments that they determine are not sufficient. Furthermore, owners or operators or their guarantor must notify the Director no later than 10 days after filing for bankruptcy.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 25061

Comment: AWWA believes that the time limit for financial responsibility in the proposed regulation may be too long for most insurance agencies, which may trigger theneed for the development of a trust fund or for owner/operators to use a selfinsurance mechanism. If the trust fund is the desired method, EPA should require that companies constantly add to the fund, even if it appears that the fund is fully funded. In addition to the initial pay in period of three years, owner/operators should be required to pay in any additional amount identified during the five-year reviews for the area of review and corrective action plan, injection well plugging plan, the post-injection site care and site closure plan, and the emergency and remedial response plan. This additional pay in is required so that we don't have a repeat of the funding stoppage with the Superfund program.

Response:EPA acknowledges that there may be several possible approaches to setting pay-in periods for trust funds. However, EPA emphasizes that regardless of the use or duration of a pay-in period, the value of the trust must ultimately be equal to the cost estimate. The final rule requires that the Director approve the use and length of pay-in periods. EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. Specifically, the guidance will discuss pay-in periods and provide guidance for Directors to use in determining an appropriate pay-in period. EPA adds that owners or operators may choose from a variety of financial instruments to meet their financial responsibility

needs.

The final GS rule, at §146.85(c), requires the owner or operator to provide adjustments to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. Owners or operators must also adjust the estimates for inflation annually under §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e). Any adjustment to the cost estimate would require the owner or operator to adjust the funded amount of any financial responsibility instruments, as required at §146.85(c)(4).

Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25148

Comment: a. EPA Should Pay Special Attention to GAO’s and OIG’s Recommendations for Reforming Financial Test and Corporate Guarantee Mechanisms.

EPA should reform the means for meeting the financial test and corporate guarantee in accordance with the recommendations of OIG and the Environmental Finance Advisory Board ("EFAB"). EFAB has recommended the use of "independent third-party assessment" of a company’s credit ratings. Letter from A. Stanley Meiburg, Executive Director, Environmental Finance Advisory Board to Stephen L. Johnson, Administrator, U.S. EPA 6 (Jan. 11, 2006). "Using an independent third party will relieve [the Director] of the administrative burden of reviewing

financial statements" as well as alleviate concerns about the Director’s "capacity to adequately undertake such review." Id. EPA should also follow OIG’s recommendations by making sure that any financial tests are in conformance with the generally accepted accounting principles of today. OIG REPORT at 17.

EPA should indicate that it will review financial test practices on a periodic basis to avoid acceptance of a "financial test on a less stringent opinion [from a certified public accountant] than those that certify conformance with generally accepted accounting principles." Id. at 15.

EPA states that it is also "considering whether adjustments should be made to the absolute net worth threshold of $10 million currently required under the UIC regulations." 73 Fed. Reg. at 43,522. EPA notes that other Federal Agencies and programs require different measures of net worth. Id. For instance, both Class I and RCRA regulations require a showing of "at least six times the sum" of covered costs as measured in the current cost estimate. 40 C.F.R. §§ 144.63(f) (1)(i)(b); 265.143(e)(1)(i)(b). EPA also cites as an example the Minerals Management Service, which "requires a net worth threshold at least 10 times the amount of the obligations being assured." 73 Fed. Reg. at 43,522. A study of cost estimates for GS suggests that estimates "can be made with confidence" given that storage "technologies and equipment" are already being used in the oil and gas industries. INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE, IPCC

SPECIAL REPORT ON CARBON DIOXIDE CAPTURE AND STORAGE 345 (2005). Although costs may

vary significantly from project to project due to the "geological characteristics of the storage formation," the "reservoir depth," the monitoring mechanism, and other factors, once these factors are identified, costs estimates can be made

with some reliance. Id.In determining whether either threshold-or another alternative-is appropriate, the EPA should consider other factors as well, including a company’s net worth/obligations ratio, cash flow, commitments to other projects, and percentage of assets that may not be reachable under United States law.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

EPA is developing guidance to assist Directors in evaluating the appropriateness of the financial test in specific circumstances. EPA's financial responsibility guidance will describe the types of financial instruments, including financial tests, that owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance will include considerations for Directors, such as creditworthiness, regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. The guidance will also provide recommendations on the minimum tangible net worth an owner or operator should demonstrate to qualify for self insurance. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24442 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(d)

Proposed CCS Group Recommendations: (d) The operator must provide an adjustment

of the cost estimate to the Director if the Director has reason to believe that originalTHE MOST RECENT demonstration is no longer adequate to cover the cost of injection well plugging (as required by §146.92) and post-injection site care and site closure (as required by §146.93)

Basis for CCS Group Comments: Clarification.

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(e), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, and the PISC and site closure plan.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24551Comment: Rule Provisions or Federal Register Cite: 73 FR 43521 EPA Preamble Question: 42. Current UIC regulations for Class I hazardous waste injection allow for the use of insurance for purposes of demonstrating financial responsibility. However, insurance was not included as part of the guidance provided for Class II injection because this insurance mechanism was and still is, rarely used for the purpose of demonstrating financial assurance for injection wells. EPA is assessing whether to provide guidance on the use of insurance providers and, if so, whether to update eligibility requirements for insurers for GS wells consistent with other current Federal agency practices.

EPA Notice 43521.

CSC Response: EPA should leave the door open for establishing financial mechanisms on a project by project basis. The rulemaking should not prescribe or preclude particular financial instruments. The issue of financial assurance is complex and must be considered in significant detail and should be based on the initial experience gained from the use of FA mechanisms before any guidance or regulation is issued.

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24552

Comment: Rule Provisions or Federal Register Cite: 73 FR 43522 EPA Preamble Question: 43. EPA is assessing whether a financial ratings threshold for all companies using a self-guarantee, similar to those used by other Federal agencies, is appropriate. The Agency also is considering what constitutes an appropriate financial rating threshold, and whether a financial rating greater than BBB or Baa (i.e., the current rating threshold established under the UIC regulations) is appropriate for GS wells. EPA Notice 43522.

CSC Response: See response to Question 41 above.

Response: As described above, owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190Commenter Organization: Carbon Sequestration Council Comment ID: 24553

Comment: Rule Provisions or Federal Register Cite: 146.85 EPA Preamble Question: 44. EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA’s authority under the SDWA. EPA Notice 43522.

CSC Response: See response to Question 41 above.

Response: As described above, owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24612

Comment: Rule Provisions: 73 FR 43521 EPA Rule Issue: 42. Current UIC regulations for Class I hazardous waste injection allow for the use of insurance for purposes of demonstrating financial responsibility. However, insurance was not included as part of the guidance provided for Class II injection because this insurance mechanism was and still is, rarely used for the purpose of demonstrating financial assurance for injection wells. EPA is assessing whether to provide guidance on the use of insurance providers and, if so, whether to update eligibility requirements for insurers for GS wells consistent with other current Federal agency practices.

EPA Notice 43521.

Anadarko Petroleum Corporation (APC) Response: See response to EPA Notice 43521.

Response: As described above, owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24613

Comment: Rule Provisions: 73 FR 43522 EPA Rule Issue: 43. EPA is assessing whether a financial ratings threshold for all companies using a selfguarantee, similar to those used by other Federal agencies, is appropriate. The Agency also is considering what constitutes anappropriate financial rating threshold, and whether a financial rating greater than BBB or Baa (i.e., the current rating threshold established under the UIC regulations) is appropriate for GS wells. EPA Notice 43522.

Anadarko Petroleum Corporation (APC) Response: See response to EPA Notice 43521.

Response: As described above, owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24614

Comment: Rule Provisions: 146.85 EPA Rule Issue: 44. EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA’s authority under the SDWA. EPA Notice 43522.

Anadarko Petroleum Corporation (APC) Response: See response to EPA Notice 43521.

Response: As described above, owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24669 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.85(d)

Anadarko Petroleum Corporation (APC) Comments: (d) The operator must provide an adjustment of the cost estimate to the Director if the Director has reason to

believe that originalTHE MOST RECENT demonstration is no longer adequate tocover the cost of injection well plugging (as required by §146.92) and postinjection site care and site closure (as required by §146.93)

Rationale: Clarification.

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(e), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoRand corrective action plan, the injection well plugging plan, and the PISC and site closure plan.

Commenter Name: Chris M. Hobson Letter ID: 0201 Commenter Organization: Southern Company Comment ID: 22174 Other EPA Comment Codes and Descriptions: 5434 2.9.1.2 Need for additional instruments (seeking comment)

Comment:Financial Responsibility

As GAO observed in its recent report, there is a great deal of uncertainty regarding the type of financial instruments that will be available to meet the financial responsibility requirements of the Final Rule. GAO Report at 39-40. This uncertainty has the potential to slow development on CO2 GS programs; EPA can ease stakeholders' fears and facilitate commercial deployment of the CO2 GS UIC Program by providing further clarity regarding these requirements in the Final Rule where possible. In some situations, it may be more appropriate to provide further clarification at a later date in the form of guidance, as EPA suggests in the Preamble to the Proposal. ¡d. at 43520-22. Such guidance, however, must be issued in accordance with the Good Guidance Practices Bulletin issued by the Office of Management and Budget ("OMB"), including provision of public notice and opportunities for comment before issuance of any final guidance. 72 Fed. Reg. 3432, 3438 (Jan. 25, 2007).

The continued availability of self-insurance instruments as methods of financial assurance for Class VI CO2 GS projects is crucial to the viability of the CO2 GS regulatory scheme set forth in the Final Rule. Self-insurance instruments, including the corporate financial test and the corporate guarantee, have been used successfully under the RCRA program for more than two decades and will be important elements of a full menu of options for meeting financial responsibility mechanisms under the Final Rule. Given the likelihood that many Class VI Owners or Operators will use a combination of approaches and instruments to meet the Program's financial assurance requirements, EPA should take care not to constrain the development of any otherwise acceptable means of achieving financial assurance. We urge EPA to craft flexible requirements that allow Owners or Operators to use multiple instruments and adjust their methods as necessary as industry, regulators, and markets gain experience with the financial aspects of CO2 GS projects.

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners oroperators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owners or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an owner or operator is not able to meet the corporate financial test criteria, they may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its

behalf.

Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. EPA plans to take OMB's Good Guidance Manual into consideration as financial responsibility guidance is developed. OMB's Good Guidance Manual establishes policies and procedures for the development, issuance, and use of significant guidance documents by Executive Branch departments and agencies.

Commenter Name: Richard Guinn Letter ID: 0210 Commenter Organization:Eastman Chemical Company Comment ID: 22698

Comment: 7. EPA should not adopt a pay-in period of three years.

Response:EPA acknowledges that there may be several possible approaches to setting pay-in periods for trust funds. The final rule requires that the Director approve the use and length of pay-in periods. EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. Specifically, the guidance will discuss pay-in periods and provide guidance for Directors to use in determining an appropriate pay-in period. EPA adds that owners or operators may choose from a variety of financial instruments to meet their financial responsibility needs.

Commenter Name: Richard Guinn Letter ID: 0210 Commenter Organization:Eastman Chemical Company Comment ID: 22713

Comment: Concern #7. EPA is considering a guidance approach that would recommend adopting a pay in period of three years for GS projects, consistent with other similar programs in the Agency. (Ref: page 43521, Sec. 9. Proposed Financial Responsibility and Long-Term Care Requirements, Pay-in period for trust funds)

We strongly urge that the EPA not adopt this approach. CCS projects will be subject to their highest financial strain in the first several years of operation. During this period, commissioning, systems integration and debugging of mechanical and process systems will need to be completed with potential loss of plant operation, production and revenue. Projects will likely be burdened with additional initial capital coverage of an already expensive facility to contend with an accelerated payment. We therefore recommend that any payment schedule be based on a per-ton fee over an amortization period equal to the expected operational life of the project and in a framework as recommended by the IOGCC (ref: Concern #6).Response:EPA acknowledges that there may be several possible approaches to setting pay-in periods for trust funds. The final rule requires that the Director approve the use and length of pay-in periods. EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. Specifically, the guidance will discuss pay-in periods and provide guidance for Directors to use in determining an appropriate pay-in period. EPA adds that owners or operators may choose from a variety of financial instruments to meet their financial responsibility needs.

Commenter Name: Richard Guinn Letter ID: 0210 Commenter Organization:Eastman Chemical Company Comment ID: 22741

Comment: Current UIC regulations for Class I hazardous waste injection allow for the use of insurance for purposes of demonstrating financial responsibility. However, insurance was not included as part of the guidance provided for Class II injection because this insurance mechanism was and still is, rarely used for the purpose of demonstrating financial assurance for injection wells. EPA is assessing whether to provide guidance on the use of insurance providers and, if so, whether to update eligibility requirements for insurers for GS wells consistent with other current Federal agency practices. EPA Notice 131.

The role of insurance needs to be defined and especially, what is being insured and for what events and risks. We interpret this as being limited to insurance related to decommissioning, plugging of wells and closure of the site. Such costs and insurance coverage may change as additional wells are needed or the scope of the AoR changes. Absent of Federal or state assumption of long term liability, and regulatory clarity on the inapplicability of CERCLA, and events and their mitigation, it will be difficult for insurers to provide coverage for any more than a limited scope.

EPA is assessing whether a financial ratings threshold for all companies using a self-guarantee, similar to those used by other Federal agencies, is appropriate. The Agency also is considering what constitutes an appropriate financial rating threshold, and whether a financial rating greater than BBB or Baa (i.e., the current rating threshold established under the UIC regulations) is appropriate

for GS wells. EPA Notice 133.

Allowing for self-insurance definitely will be helpful to provide another avenue for CCS projects to be deployed. However, as we’ve experienced in the recent economic crisis, there are no guarantees of financial continuity for either

insurers or other economic entities.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporatefinancial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

Additionally, owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance that describes the types of financial instruments, including insurance, that owners or operators can use to meet financial responsibility requirements for Class VI wells. The financial responsibility guidance will include considerations for Directors regarding how best to evaluate the appropriateness of a specific financial responsibility instrument for a given project, such as potential concerns regarding companies with relatively small capitalization or the experiences of states in approving self-insurance instruments. The guidance will also include consideration of how best to evaluate the appropriateness of a specific financial responsibility instrument for a project. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA agrees that it is important for the owner or operator to reassess the needs for coverage when there are changes at the site. The GS regulation, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan.

Commenter Name: Paul L. Carpinone Letter ID: 0212 Commenter Organization: Tampa Electric Company Comment ID: 22908 Other EPA Comment Codes and Descriptions: 5200 2.8.2 Post injection site care (seeking comment) (40 CFR 146.93)

Comment: - In developing guidance identifying financial responsibility mechanismsavailable for post-injection care, EPA should retain the option of selfinsurance instruments including the corporate financial test. Self-insurance has worked successfully for over two decades under the RCRA program and there is no reason why this option should not also be available for Class VI UIC wells. EPA must also take steps to mitigate the specter of open-ended financial liability for CO2 injection operations after the cessation of the post-injection site care period. Such open-end liability is one of the major impediments to the successful development of a commercial CO2 GS program.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. Owners or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner oroperator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria it may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct post-injection site care that is consistent with the approved PISC plan or for the duration of the alternative timeframe approved by the Director pursuant to requirements in §146.93(c), until a demonstration can be made to the satisfaction of the Director that the plume and pressure front no longer pose a risk of endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Olon Plunk Letter ID: 0217 Commenter Organization:Xcel Energy, Inc. Comment ID: 21555 Other EPA Comment Codes and Descriptions: 5430 2.9.1 Comments on proposed financial responsibility requirements (40 CFR 146.85); 5434 2.9.1.2 Need for additional instruments (seeking comment)

Comment:Financial AssuranceXcel Energy agrees that some method of financial assurance is appropriate for geologic storage projects. However, it is important to retain the concepts of both self-assurance and phased-assurance. The amount of financial assurance required should be limited to what is known, or can be estimated with reasonable accuracy, today. Financial assurance should be periodically adjusted as new

information becomes available.

Response:EPA will allow owners or operators to use one or more or multiple financial responsibility instruments for well plugging and site closure. However, EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC; this must be done at the time of permit application. This will ensure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project.

EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. The owner or operator must also update the cost estimate annually for inflation. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

EPA will retain the use of self-insurance as an instrument for financial responsibility for Class VI wells. Owner or operators may self insure through a financial test provided certain conditions are met such as demonstration of profitability and stability. Furthermore, EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. This guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA notes that Directors may disallow certain instruments.

Commenter Name: Tiffany Rau Letter ID: 0224 Commenter Organization: Hydrogen Energy International Comment ID: 21699 Other EPA Comment Codes and Descriptions: 5434 2.9.1.2 Need for additional instruments (seeking comment)

Comment: (1) Allow for a Broad Range of Financial Assurance Mechanisms

We support an approach that takes into account changing market conditions and other factors and allows an operator to utilize a wide range and variety of financial assurance mechanisms to demonstrate financial responsibility. This should be coupled with the flexibility to combine multiple types of financial assurance mechanisms to demonstrate compliance. The regulations or guidance should be flexible and authorize EPA to accept and recognize other types of instruments, programs or conditions that provide similar reliable assurance.

While the Proposed Rule does not limit the range of financial assurancemechanisms, EPA indicates that the Agency is considering revising various guidance documents related to financial assurance. (73 Fed. Reg. at 43520-21.) EPA refers to several reports issued by the United States General Accountability Office ("GAO"), Office of Inspector General ("OIG"), and the Environmental Financial Advisory Board ("EFAB"). Id. In 2003, the GAO issued a report reviewing, in part, the financial assurance requirements for Class I injection wells. See GAO Report to the Honorable Lynn C. Woolsey, House of Representatives, Deep Injection Wells: EPA Needs to Involve Communities Earlier and Ensure that Financial Assurance Requirements are Adequate, GAO-03-761, 17-22 (June 2003). GAO noted that there is uncertainty about the adequacy of financial assurance requirements, but did not make any conclusions about specific mechanisms. Similarly, in 2005, OIG issued a report reviewing the financial assurance mechanisms under the RCRA program. OIG Evaluation Report, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance, Report No. 2005-P-00026 (Sept. 26, 2005). OIG concluded that despite ongoing concerns, the lack of uniform national data prohibited ready identification of the problems. Id. at 8.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule, owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well pluggingand PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the postinjection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods, and states may set more specific financial responsibility requirements if they so choose.

Commenter Name: Brian Williams Letter ID: 0225 Commenter Organization: BP Alternative Energy North America, Inc. (BP) Comment ID: 21756 Other EPA Comment Codes and Descriptions: 5434 2.9.1.2 Need for additional instruments (seeking comment)

Comment: (1) Allow for a Broad Range of Financial Assurance Mechanisms

We support an approach that takes into account changing market conditions and other factors and allows an operator to utilize a wide range and variety of financial assurance mechanisms to demonstrate financial responsibility. This should be coupled with the flexibility to combine multiple types of financial assurance mechanisms to demonstrate compliance. The regulations or guidance should be flexible and authorize EPA to accept and recognize other types of instruments, programs or conditions that provide similar reliable assurance.

While the Proposed Rule does not limit the range of financial assurance mechanisms, EPA indicates that the Agency is considering revising variousguidance documents related to financial assurance. (73 Fed. Reg. at 43520-21.) EPA refers to several reports issued by the United States General Accountability Office ("GAO"), Office of Inspector General ("OIG"), and the Environmental Financial Advisory Board ("EFAB"). Id. In 2003, the GAO issued a report reviewing, in part, the financial assurance requirements for Class I injection wells. See GAO Report to the Honorable Lynn C. Woolsey, House of Representatives, Deep Injection Wells: EPA Needs to Involve Communities Earlier and Ensure that Financial Assurance Requirements are Adequate, GAO-03-761, 17-22 (June 2003). GAO noted that there is uncertainty about the adequacy of financial assurance requirements, but did not make any conclusions about specific mechanisms. Similarly, in 2005, OIG issued a report reviewing the financial assurance mechanisms under the RCRA program. OIG Evaluation Report, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance, Report No. 2005-P-00026 (Sept. 26, 2005). OIG concluded that despite ongoing concerns, the lack of uniform national data prohibited ready identification of the problems. Id. at 8.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods, and states may set more specific financial responsibility requirements if they so choose.

Commenter Name: Abbie Krebsbach Letter ID: 0235 Commenter Organization:Montana-Dakota Utilities Co. Comment ID: 23188

Comment: Also, the proposed rules do not contain clear provisions for reducing financial assurance obligations over time in accordance with declining risk. Financial assurance requirements should be based upon the actualities of the risk curve for CCS projects, and ideally the risk curve for a particular CCS project. Financial assurance requirements as proposed do not include provisions that would allow site-specific characteristics to be taken into account. It is crucial that any financial assurance requirements be sufficiently flexible to take into account the particular risks associated with any given project and also, the type of financial assurance mechanism that can be utilized.

The preamble indicates that EPA may be willing to consider a phased or staged approach to financial assurance requirements, as well as separate financial assurance demonstrations for plugging and PISC activities at later points in time. Such provisions would ease some of the difficulties with the financial assurance proposal in terms of estimating costs for future activities assumingthat better estimation tools would become available.

It is understood that stakeholders have already reported some difficulty in obtaining insurance coverage for CCS projects. Montana-Dakota encourages the EPA to evaluate this issue carefully and ensure that it is not creating obligations with which operators simply cannot comply, or which are so expensive that commercial development and deployment of CCS will be crippled at the outset.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

However, EPA will not allow for a separate (or "phased") financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

The GS rule allows owners or operators to use separate or multiple financial responsibility instruments for different GS activities. However, owners or operators must demonstrate adequate financial responsibility for all required activities with their permit application per §146.82(a)(14). In addition, on an annual basis, the owner or operator must adjust the cost estimate for inflation, increase or decrease the value of the financial instrument to match the cost estimate, and provide any updated information related to their financial responsibility instrument(s), or at any other time deemed appropriate by the Director. These annual reviews provide a mechanism for revising cost estimates up or down to account for changes in the project, including the execution of environmental obligations as phases of a GS project are completed.

EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on recommended approaches to estimate costs to assist Class VI well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. EPA will also discuss how best to evaluate the appropriateness of single and multiple bonding and phased release of bonds in the guidance. EPA will review the requirements under SMCRA as it develops the guidance and incorporate any relevant information. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Regarding tying financial responsibility requirements to site-specific risk, EPA clarifies that the cost of securing financial responsibility instruments will be based on whether or not a third party financial institution is used and the agreement between the financial institution and the owner or operator. EPA expects that some third party providers, such as insurers, will take risk into account when determining the cost of coverage. However, cost is expected to depend heavily on the estimated cost of covered activities as well as certain site-specific factors. In order to assist owners or operators and financial institutions in achieving accurate cost estimates, EPA plans to include in the financial responsibility guidance a discussion of how to estimate costs, including how to adjust cost estimates for inflation, in its guidance on meeting financial responsibility requirements for ClassVI wells.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23266

Comment:43. EPA is assessing whether a financial ratings threshold for all companies using a self-guarantee, similar to those used by other Federal agencies, is appropriate. The Agency also is considering what constitutes an appropriate financial rating threshold, and whether a financial rating greater than BBB or Baa (i.e., the current rating threshold established under the UIC regulations) is appropriate for GS wells. EPA Notice 43522.

Financial assurance should be left to state lawmakers and the regulating agency and should not be a prescribed mechanism.

Response:EPA disagrees that the GS rule is overly prescriptive; rather it offers an adaptive and flexible approach that will be best for purposes of addressing the variety of site-specific circumstances to be encountered in GS projects. Furthermore, EPA notes that it is providing consistency nationwide by requiring that any state that wishes to assume primacy for Class VI wells demonstrate that its financial responsibility requirements are at least as stringent as the minimum federal requirements at §146.85.

EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Additionally, EPA is developing guidance to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods and states may set more specific financial responsibility requirements if they so choose. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23267

Comment:44. EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA’s authority under the SDWA. EPA Notice 43522.

Financial assurance should be left to state lawmakers and the regulating agency and should not be a prescribed mechanism.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility;however, EPA believes that a minimum framework for financial responsibility is necessary. Under the final GS rule owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods, and states may set more specific financial responsibility requirements if they so choose.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23321 Other EPA Comment Codes and Descriptions: 5400 2.9 Proposed Financial Responsibility and Long-Term Care Requirements

Comment: C. Sierra Club’s Recommendation for Adequate Financial Assurance Under the Proposed Rule

There are several actions that the EPA should take in the proposed rule to ensure that Class IV owners and operators have adequate financial assurance. First, EPA should prohibit the use of certain mechanisms that present too great a risk. The strength of third party mechanisms depends largely on theindependence between risks of financial failure of the facility and the thirdparty providing that mechanism. EPA should thus prohibit reliance on captive insurance, financial test, and corporate guarantee.

Captive insurance is insurance issued by a wholly-owned subsidiary of the insured. The financial health of the captive insurance company is closely tied to the parent company, so if the company encounters financial difficulties there is no guarantee that the captive insurance company would retain the necessary resources to fund closure and post-closure. This is counter to the basic purpose of an insurance, which distributes risk among different parties. The risks associated with this mechanism are too great and EPA should prohibit reliance on captive insurance in its regulations.

The EPA should also revise the regulations to prohibit use of the financial test and corporate guarantee. As with captive insurance, there is no diversification of risk. If the firm, its parent or sibling corporation becomes insolvent, then the taxpayer must cover these costs. Given the current financial landscape it is naïve to assume that this mechanism provides adequate safeguards to the environment and tax payers. Many firms that would have passed the financial or corporate guarantee test (a net worth of more than $10 million) have recently collapsed. The reality of the current financial crisis, in addition to the fact that these facilities will be operating for upwards of 50 years, indicate that the financial test and corporate guarantee present too great a risk.

In addition to prohibiting certain financial assurance mechanisms, EPA should revise the regulations to specify that trust funds, letters of credit, suretybonds and insurance (not captive insurance) are acceptable mechanisms. These mechanisms should be selected because they provide a medium to low regulatory

risk.

The regulations should specifically define the terms ‘trust funds’, ‘letters of credit’, ‘surety bonds’ and ‘insurance’ so that the safety of these mechanisms does not become distorted. The regulations should provide this definition backstop because states have sometimes approved variations on these mechanisms that were fiscally imprudent, as noted in the Office of Inspector General report on RCRA financial assurances. [FN25] For instance, the report noted that sometimes regulators allowed trust funds to be funded with stock, including stock of the regulated company or with real estate. [FN26] In addition, if an owner or operator is going to use insurance, it should be required to submit a copy of the insurance policy, and not just a certificate of insurance, so that the permit reviewer can ensure the policy coverage is sufficient.

[FN25: U.S. Environmental Protection Agency, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance, Report No. 2005- P-00026 at 11 (Sept. 26, 2005).] [FN26: Id.]

Response:EPA has clarified the financial responsibility requirements in the final GS rule, and has included at §146.85(a) a list of qualifying financial responsibility instruments, including trust funds, surety bonds, letters of credit, insurance, self insurance, escrow accounts, or any other instrument(s) satisfactory to the Director.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

EPA retains the use self-insurance as an option to demonstrate financial responsibility for Class VI wells. EPA believes, based on input by commenters, that self-insurance, if properly used, can be an appropriate option for certain owners or operators. Self-insurance has been used successfully in the past (e.g., under the Class I and RCRA programs). EPA recognizes that there are some concerns about the use of self insurance, including those mentioned by the commenters, and is developing guidance to assist Directors in evaluating the appropriateness of self-insurance in specific circumstances, such as evaluation of owners or operators' demonstrations of financial worthiness or evaluation of whether certain owners or operators pose too great a financial risk to use self-insurance as a financial responsibility instrument. States have the discretion under the rule to prohibit the use of specific financial instruments if they feel they are inadequate.

EPA will also retain the financial test and the corporate guarantee as options to demonstrate financial responsibility for Class VI wells. EPA believes that if properly used, the financial test and corporate guarantee can be appropriate options for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy; otherwise USDWs may not be adequately protected. Since there are some concerns about the use of financial tests and corporate guarantees, includingthose mentioned by the commenter, EPA is developing guidance to assist Directors in evaluating the appropriateness of these instruments in specific circumstances.

EPA acknowledges that states may not be authorized under state law to allow for self insurance or other financial instruments. Therefore, states may prohibit the use of any financial instruments included in the rule, including self insurance, for Class VI wells. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Finally, EPA is developing guidance that describes the types of financial instruments, including insurance, which owners or operators can use to meet financial responsibility requirements for GS wells and will take the commenter's suggestion into consideration. The guidance will discuss the strengths and weaknesses of various instruments. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

As described above, EPA has taken commenter’s concerns about long-term liability into account. See the final rule preamble for further discussion of EPA’s approach.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23323

Comment:E. Congress Should Create a Trust Fund to Cover Closure, Post-Closure, and

Remediation Costs for Cases When a Financial Assurance Mechanism Fails.

Even if EPA revises the regulations to incorporate all of these suggested improvements to the financial assurance program, there will undoubtedly be instances when a facility becomes insolvent and the financial assurance mechanism fails. In addition, there could be instances were the financial assurance mechanism does not fail, but is insufficient to cover costs because the cost estimate was too low. To ensure that citizens do not have to pick up the tab in such situations, Congress should create a fee payment system that funds a trust, which would be used to fund these closure, post-closure and

remediation actions. The trust must be created so that its funds cannot be drawn for any other purposes. Congress should assess fees on all owners, operators, generators and transporters of the injected CO2. These fees should be assessed based on a pricing system that reflects the risk profile of each particular injection site, which will also influence selection of the safest sites for large scale CCS, especially for the earliest projects.

Response: Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.

Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would coverlarge numbers of GS projects.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

To prevent incidents in which the cost estimate is too low, the final rule requires frequent updating of cost estimates at §146.85(c)(2). The owner or operator must update the cost estimate after amendments to the AoR and corrective action plan, well plugging plan, post-injection site care and site closure plan, and the emergency and remedial response plan. (The AoR and corrective action plan and the emergency and remedial response plan must be updated at least every five years.) In addition, the cost estimate must be updated annually for inflation. The rule also requires updates when the Director determines the original cost estimate is insufficient.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24822

Comment:EPA Notice Questions: 144.36

EPA Rule Issue: 41. Current UIC guidance describes trust funds as a form of financial assurance. The owner or operator may deposit funds into the trust fund in phases; that is, either over the term of the initial permit or over the remaining operating life of the injection well, as estimated in the well plugging plan, whichever period is shorter. Because of the possibility that the owner or operator may face financial distress prior to the trust being fully funded, EPA is considering a guidance approach that would recommend adopting a pay in period of three years for GS projects, consistent with other similar programs in the Agency. EPA Notice 43521.

GWPC CO2 Committee Response: The Committee recommends that financial assurance requirements be based on costing of plans, with updating as appropriate to account for changed conditions and modified plans. The methods of providing FA should remain flexible, as EPA has proposed, to allow markets to adapt to the requirements and to identify methods for providing FA. Under any circumstances, EPA should continue to use self-insurance mechanisms through a financial test. Any development of guidance for specific FA instruments should await the initial experience with those instruments, but would probably be addressed better through guidance than regulations to maintain a greater amount of flexibility to adapt to changes in the market that are likely to follow increased understanding of the technologies involved and operating experience with those technologies. All FA requirements should be released at closure.

Rationale: For any particular instrument, the pay-in period should be commensurate with the risk profile. i.e. greater risk = faster pay-in.

The plans should be updated as appropriate in conjunction with the iterativeprocess of AoR reevaluations using data from monitoring and operational experience to reevaluate the modeling.

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

EPA acknowledges that there may be several possible approaches to setting pay-in periods for trust funds. The final rule requires that the Director approve the use and length of pay-in periods. EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. Specifically, the guidance will discuss pay-in periods and provide guidance for Directors to use in determining an appropriate pay-in period. EPA adds that owners or operators may choose from a variety of financial instruments to meet their financial responsibility needs.

EPA also agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. The owner or operator must also adjust the cost estimate annually for inflation. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24823

Comment:EPA Notice Questions: 73 FR 43521

EPA Rule Issue: 42. Current UIC regulations for Class I hazardous waste injection allow for the use of insurance for purposes of demonstrating financial responsibility. However, insurance was not included as part of the guidanceprovided for Class II injection because this insurance mechanism was and still is, rarely used for the purpose of demonstrating financial assurance for injection wells. EPA is assessing whether to provide guidance on the use of insurance providers and, if so, whether to update eligibility requirements for insurers for GS wells consistent with other current Federal agency practices.

EPA Notice 43521.

GWPC CO2 Committee Response: Leave the door open for establishing financials mechanisms on a project by project basis. The rulemaking should not prescribe or preclude particular financial instruments. The issue of financial assurance is complex and must be considered in significant detail and should be based on the initial experience gained from the use of FA mechanisms before any guidance or regulation is issued.

EPA Notice Questions: 73 FR 43522

EPA Rule Issue: 43. EPA is assessing whether a financial ratings threshold for all companies using a self-guarantee, similar to those used by other Federal agencies, is appropriate. The Agency also is considering what constitutes an appropriate financial rating threshold, and whether a financial rating greater than BBB or Baa (i.e., the current rating threshold established under the UIC regulations) is appropriate for GS wells. EPA Notice 43522.

GWPC CO2 Committee Response: See response to #41.

EPA Notice Questions: 146.85

EPA Rule Issue: 44. EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA’s authority under the SDWA. EPA Notice 43522.

GWPC CO2 Committee Response: See response to #41

Response: As described above, owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to prevent endangerment of USDWs by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24896 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment:EPA Proposal: (d) The operator must provide an adjustment of the cost estimate to the Director if the Director has reason to believe that the original demonstration is no longer adequate to cover the cost of injection well plugging(as required by § 146.92) and post-injection site care and site closure (as required by § 146.93).

GWPC Recommendations: (d) The operator must provide an adjustment of the cost

estimate to the Director if the Director has reason to believe that the most recent demonstration is no longer adequate to cover the cost of injection well plugging (as required by § 146.92) and post-injection site care and site closure (as required by § 146.93).

Rationale: The reference should be to the last demonstration not the original

demonstration

This is a one time extraordinary event. Regular updates are covered by 146.85(b).

Recognize that these will be updated periodically.

Response:EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(e) requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, and the PISC and site closure plan.

Letter ID: 0263 Commenter Organization: Interstate Oil & Gas Compact Commission Comment ID: 22826

Comment: III A. 9 Proposed Financial Responsibility and Long-Term Care Requirements

RR. EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA's authority under the SDWA.

IOGCC Response: The EPA proposed rule for well financial assurance appears comprehensive enough. However, the proposed two-tier bond system of pre and post plugging of the well would be administratively cumbersome and the IOGCC would recommend one bond that covers operational, eventual plugging and post site

remediation until the release date.

The IOGCC model regulations proposed that in addition to well bonds that there also be an overall facility bond. The purpose of the facility bond would be to insure financial responsibility to address and mitigate non-well specific issues. What EPA is suggesting in the rule needs to be supplemented by the states via mechanisms such as a facility bond.

Response:EPA will allow owners or operators to demonstrate that §146.85(a) is met by using separate and multiple financial responsibility instruments for different GS activities. However, owners or operators must demonstrate adequate financial responsibility for all required activities with their permit application per §146.82(a)(14).EPA is developing guidance on financial responsibility for Class VI wells to assist owners or operators in evaluating the financial responsibility requirements for Class VI wells. EPA will describe the types of financial instruments that owners or operators can use to meet the financial responsibility requirements for GS wells. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

To the suggestion that EPA require an overall "facility bond," EPA clarifies that the financial responsibility requirements are limited to covering activities associated with the injection. If the commenter refers to USDW endangerment that is related to the project but not necessarily the injection well, EPA notes that sufficient financial resources must be set aside to address the possibility of an emergency or remedial response in order to prevent endangerment of USDWs. Financial responsibility to address activities not associated with the endangerment of USDWs is outside of the scope of this rulemaking.

EPA clarifies that the financial instrument the owner or operator provided to meet the requirements under §146.85 will be released when the phase of the project for which the instrument was required is complete and all financial obligations for that instrument have been met, pursuant to §146.85(b)(2) and §146.93.

Letter ID: 0263 Commenter Organization: Interstate Oil & Gas Compact Commission Comment ID: 22827

Comment: III A. 9 Proposed Financial Responsibility and Long-Term Care Requirements

SS. The Agency is also requesting comment on allowing separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements.

IOGCC Response: The IOGCC model regulations proposed that in addition to well bonds that there also be an overall facility bond. The purpose of the facilitybond would be to insure financial responsibility to address and mitigate nonwell specific issues. What EPA is suggesting in the rule needs to be supplemented by the states via mechanisms such as a facility bond.

Response: To the suggestion that EPA require an overall "facility bond," EPA clarifies that the financial responsibility requirements are limited to covering activities associated with the injection. If the commenter refers to USDW endangerment that is related to the project but not necessarily the injection well, EPA notes that sufficient financial resources must be set aside to address the possibility of an emergency or remedial response in order to prevent endangerment of USDWs. Financial responsibility to address activities not associated with the endangerment of USDWs is outside of the scope of this rulemaking scope.

Commenter Name: Steven Chester Letter ID: 0264 Commenter Organization:Michigan Department of Environmental Quality (MDEQ) Comment ID:

22846

Comment:EPA (III . A. 9.) proposes corporate self-assurance for well plugging.

- Staff is opposed to the use of corporate self-assurance. It has been the Office of Geological Survey's experience that the mere net worth of an owner oroperator at any given time is not adequate to insure that funds for plugging are actually available or that the owner or operator will be viable and financially able to plug the wells. If a governmental entity assumes responsibility for plugging if the owner is unable to do so, requiring actual surety/conformance bonds or insurance allows the wells to be plugged without spending public

monies.

Response:EPA will retain self-insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owners or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria, it may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its

behalf.

Additionally, EPA is developing guidance to assist Directors in evaluating the appropriateness of self-insurance in specific circumstances, such as how best to evaluate owners or operators' demonstrations of financial worthiness or whether certain owners or operators pose too great a financial risk to use self-insurance as a financial responsibility instrument. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. States have the discretion under the rule to prohibit the use of financial instruments they feel are inadequate.

Commenter Name:William Herz Letter ID: 0266 Commenter Organization: The Fertilizer Institute Comment ID: 22882 Other EPA Comment Codes and Descriptions: 5434 2.9.1.2 Need for additional instruments (seeking comment)

Comment:Financial Assurance Instruments

TFI recommends that EPA implement a flexible approach to the types of financial assurance mechanisms authorized by the NPRM. The broadest possible array of available instruments would go furthest in promoting EPA's expressed policy to encourage carbon sequestration while still avoiding, to the greatest extent possible, imposition of remediation costs on the public. In addition to those instruments already addressed in the NPRM, EPA should allow demonstration of financial assurance through trust funds, environmental insurance, corporate guarantees, and letters of credit.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility for purposes of this rule. Under the final GS rule Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedialresponse throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods. Furthermore, states may set more specific financial responsibility requirements if they so choose and have authority to do so. This guidance

will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:Mark Vickery Letter ID: 0280 Commenter Organization: Texas Commission on Environmental Quality Comment ID: 24107

Comment: (c) Financial assurance mechanisms allowing performance (performance bond) or reimbursement (insurance) may not be appropriate for long-term activities such as post-injection site care. Both mechanisms would only be collected one year at a time leaving significant risk that the surety or insurer could go out of business in the event that post-injection site care is required for an extended period of time. Collection under a letter of credit, on the other hand, would provide funding for the entire period and eliminate future collection risk.

Response: Under the final GS rule owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility needs, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. EPA is developing guidance to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods, and states may set more specific financial responsibility requirements if they so choose. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. States have the discretion under the rule to prohibit the use of financial instruments they feel are inadequate.

Comment Code: 5434 2.9.1.2 Need for additional instruments (seeking comment)



### Individual Comments

Commenter Name: Robert Bessette Letter ID: 0139 Commenter Organization: Council of Industrial Boiler Owners (CIBO) Comment ID: 23086

Comment: not really a part of their business. The insurance issue is also a major concern. Nothing will be done without some kind of insurance. It will likely be necessary to set up an insurance pool in advance so that there is time to gain adequate experience to allow insurance companies to assess the proper risks. This concern of public acceptance and other related concerns are the focus of an NAS report, which concludes that they must be addressed before the CCS strategy can be fully developed.

The high degree of uncertainty regarding any liability makes insurance companiesunwilling to insure these projects. For example, there is potential for problems to exist thousands of years into the future when these owners/operators no longer exist. Any regulations must address liability issues to be effective.

Response:EPA recognizes the commenter's concern over the availability of funds to cover the costs of financial responsibility. However, EPA does not have authority under SDWA to require insurance companies to set up an insurance "pool" of resources. EPA anticipates that, as GS is deployed, insurers will refine their products to meet the needs of these projects.

EPA is developing guidance that describes the types of financial instruments, including insurance, which owners or operators can use to meet financial responsibility requirements for GS wells; this guidance document will be available to insurance providers as well. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or athird-party fund. See the final rule preamble for further discussion of EPA's final approach.

EPA clarifies that the financial instrument the owner or operator provided to meet the requirements under §146.85 will be released when the phase of the project for which the instrument was required is complete and all financial obligations for that instrument have been met.

Commenter Name: Kenneth Alexander Letter ID: 0146 Commenter Organization: Old Dominion Electric Cooperative (ODEC) Comment ID: 21727

Comment:We support the comments of the Alliance and incorporate them here by reference. ODEC is relying on NRECA and the Alliance to provide EPA with specific comments on the Financial Assurance and Long Term Liability issues discussed in the proposal. We are not experts on these matters, however we ask EPA to consider the following general comments for managing risk and liability associated with

GS:

1.It appears to ODEC that a tiered approach with a government back-stop as

used in the framework ofthe Price-Anderson Act for nuclear faculties could be a rational way of structuring liability management for GS of C02. This is discussed further in the comments NRECA is submitting on this rulemaking.

2.EPA should consider a broad array of financial mechanisms owners or operators can use to meet financial responsibility requirements specified in the regulations.

3.While Self Insurance mechanisms belong on EPA's menu of Financial Assurance options, ODEC is a small business and we have a relatively small capitalization so Corporate Guarantees or Self Insurance may not be available options for us.

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed instrument is adequate to protect USDWs from endangerment. The ability of the owner or operator to pay for each activity must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's approach to financial responsibility.

EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria, it may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, he or she will generally no longer be subject to enforcement for regulatory noncompliance. The financial instrument asrequired under §146.85 will be released if it has not been used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances, for example, if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

An owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit.

After site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:James Dooley Letter ID: 0156 Commenter Organization:Joint Global Change Research Institute, Pacific Northwest National Laboratory Comment ID:

22666

Comment: - Page 43521. The text here briefly mentions on going analysis of "pay-in periods for trust funds" in the context of financial assurance. I do not understand the statement here that says "EPA is considering a guidance approach that would recommend a pay in period of three years for GS projects." "Three years" seems completely arbitrary. What would be the basis for the fee paid in those three years? Would it be a charge of $1/tonCO2 or $50/tonCO2? There is no way to understand the utility of a three year pay-in period without knowing much more about what costs this fund was supposed to cover, how the fee would be assessed, at what level would the fee be set, etc We have recently completed an analysis that sheds light on a number of issues specifically related to trust funds applied to GS and I believe it is potentially relevant to the USEPA’s ongoing evaluation of these issues. Please see [SEE PDF TO VIEW THIS DOCUMENT]:

o Dooley JJ, C Trabucchi, and L Patton. 2008. "Tipping Fees Can't Save us from the Tipping Point: The Need to Create Rational Approaches to Risk Management that Motivate Geologic CO2 Storage Best Practices." To be published in the Proceedings of the 9th International Conference on Greenhouse Gas Technologies. October 2008. PNWD-SA-8349, Pacific Northwest National Laboratory, Richland, WA.

Response:EPA acknowledges that there may be several possible approaches to setting pay-in periods for trust funds. The three year pay-in period considered for comment in the proposal is not arbitrary because it is a time frame consistent with other similar programs in the Agency. The finalrule requires that the Director approve the use and length of pay-in periods. EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. Specifically, the guidance will discuss pay-in periods and provide guidance for Directors to use in determining an appropriate pay-in period so that the financial benefits to the owner or operator of a longer pay-in period are balanced with the increased financial risk to the public. EPA adds that owners or operators may choose from a variety of financial instruments to meet their financial responsibility needs.

Commenter Name:Joseph Eutizi Letter ID: 0161 Commenter Organization: San Miguel Electric Cooperative, Inc Comment ID: 21291

Comment: the proposal. We are not experts on these matters, however we ask EPA to consider the following general comments for managing risk and liability

associated with GS:

1. It appears to San Miguel that a tiered approach with a government back-stop

as used in the framework of the Price-Anderson Act for nuclear faculties could be a rational way of structuring liability management for GS of CO2. This is discussed further in the comments NRECA is submitting on this rulemaking.

2. EPA should consider a broad array of financial mechanisms owners or operators can use to meet financial responsibility requirements specified in the regulations.

3. While Self Insurance mechanisms belong on EPA's menu of Financial Assurance options, San Miguel is a small business and we have a relatively small capitalization so Corporate Guarantees or Self Insurance may not be available options for us.

Response: Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.

Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection wellplugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21319

Comment:proposal. We are not experts on these matters, however we do believe that the following principles for managing risk and liability associated with GS should

be considered in the Final Rule.

§ It appears to NRECA that a tiered approach with a government back-stop as used

in the framework of the Price-Anderson Act for nuclear faculties could be a rational way of structuring liability management for GS of CO2. This is

discussed further below in the comments section.

§ EPA should consider a broad array of financial mechanisms owners or operators can use to meet financial responsibility requirements specified in the regulations.

§ While Self Insurance mechanisms belong on EPA's menu of Financial Assurance options, many of NRECA's members are small business and may have a relatively small capitalization so Corporate Guarantees or Self Insurance may not be an available option for them.

Response: Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of theMiscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.

Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21337

Comment: 13. NRECA appreciates the work EPA has done studying possible approaches to GS site stewardship. NRECA sees some promise in parts of the general framework of the first model listed in the study for federal management of GS liability -- The Price-Anderson Act. Specifically, using three tiers for funding the liability regime would seem to be a good starting point for developing a similar regime for GS. The approach "requires a licensed nuclear facility to maintain both site-specific liability insurance (Tier 1) and industry-pooled liabilityinsurance (Tier 2). In the event that the private claims against a licensee exceed the amounts available in both the site-specific, individual insurance and the industry-pooled insurance, the federal government (Tier 3) provides the licensee with indemnity." EPA should consider a 3-tier liability scheme for GS that incorporates private insurance, pooled industry insurance and a government backstop.

14. In considering financial assurance requirements, EPA and stakeholders should distinguish financial assurance from liability. Regardless of the length of time EPA establishes in the final rule for a GS facility owner or operator to maintain financial instruments to pay to clean up potential USDW contamination, liability for such cleanup may last longer, depending on which statutory provisions are applicable, as well as state law. While EPA is limited in its ability to address potential liability, it should seek to do so, as findings of the Risk Study conducted by the CCS Alliance (discussed above) show that potential long-term liability is a significant barrier to CCS development. In considering FA instruments, EPA should allow as broad an array of tools as possible including:

§ Trust Funds § Insurance § Surety Bonds § Letters of Credit § Corporate

Guarantees / Self Insurance

Regarding Self Insurance mechanisms, however, while these should be one of the tools on EPA's menu of FA options, many of NRECA's members are small business and may have a small capitalization compared with some of the other entities that may be interested in conducting GS projects. Because of the very make-up of these companies, Corporate Guarantees / Self Insurance may not be an option for

them.

Response: As described above, owners or operators may choose from a variety of financial instruments, as listed in §146.85(a), to meet their financial responsibility needs, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

EPA recognizes that there are some concerns about the use of self insurance, including those mentioned by the commenter. EPA also recognizes the commenter's concern over the availability of funds to cover the costs of financial responsibility. However, EPA does not have authority under SDWA to require insurance companies to set up an insurance "pool" of resources.

EPA clarifies that the financial instrument the owner or operator provided to meet the requirements under §146.85 will be released when the phase of the project for which the instrument was required is complete and all financial obligations for that instrument have been met, pursuant to §146.85(b)(2) and §146.93.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23425

Comment: APPA would like to see that the final rule accommodate a range of optionsincluding self-insurance instruments remain available to Owners or Operators as a method of financial assurance for Class VI CO2 GS projects. Id. at 43521. Self-insurance instruments, including the corporate financial test and the corporate guarantee, have been utilized successfully under RCRA over two decades. However, APPA must acknowledge that the volume of CO2 and the length of operations would suggest that the UIC Class VI wells will be different. As EPA mentions in the Preamble, the assessment by the Environmental Finance Advisory Board ("EFAB") of various financial responsibility issues revealed no specific failures of the corporate financial test. Id.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for GS wells. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project.

Commenter Name:Erik Silvola Letter ID: 0171 Commenter Organization: Great River Energy Comment ID: 23448

Comment: 2. EPA should consider a broad array of financial mechanisms owners or operators can use to meet financial responsibility requirements specified in the regulations.

3. While Self Insurance mechanisms belong on EPA’s menu of Financial Assurance options, GRE is a relatively small business and we may not have adequate capitalization for Corporate Guarantees or Self Insurance to be available options for meeting potential financial responsibility requirements.

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that, if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owners or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria, they may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its

behalf.

EPA recognizes that there are some concerns about the use of self insurance, including those mentioned by the commenters. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a given project, such as potential concerns regarding companies with relatively small capitalization or the experiences of states in approving self-insurance instruments.

Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23464

Comment: • In developing guidance identifying financial responsibility mechanismsavailable for post-injection care, EPA should retain the option of selfinsurance instruments including the corporate financial test. Self-insurance has worked successfully for over two decades under the RCRA program and there is no reason why this option should not also be available for Class VI UIC wells. EPA must also take steps to mitigate the specter of open-ended financial liability for CO2 injection operations after the cessation of the post-injection site care period. Such openend liability is one of the major impediments to the successful development of a commercial CO2 GS program.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for Class VI wells. The financial responsibility guidance will include considerations for Directors regarding how best to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. EPA notes that directors may disallow certain instruments. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23506

Comment:Financial instruments - With respect to financial responsibility mechanisms, USWAG is not opposed to EPA's future issuance of guidance describing acceptable mechanisms provided that the guidance is issued in accordance with OMB's Good Guidance Practices Bulletin, including an opportunity for public notice and comment before issuance of any final guidance. 73 Fed. Reg. at 43520-22. In this regard, it is of paramount importance that self-insurance instruments - including the corporate financial test - remain available to Owners or Operators as a method of financial assurance for Class VI CO2 GS projects. Id. at 43521. In referencing the assessment by the Environmental Finance Advisory Board("EFAB") of various financial responsibility instruments, including selfinsurance instruments, EPA recognizes that EFAB's assessment was not based on any failures of the corporate financial test. Id. Self-insurance instruments, including the corporate financial test and the corporate guarantee, have been utilized successfully under the RCRA program for over two decades and these instruments should be included in the final menu of options for meeting financial responsibility obligations under the Final Rule.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for Class VI wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA plans to take OMB's Good Guidance Manual into consideration as financial responsibility guidance is developed. OMB's Good Guidance Manual establishes policies and procedures for the development, issuance, and use of significant guidance documents by Executive Branch departmentsand agencies.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23600 Other EPA Comment Codes and Descriptions: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment: - Comments on specific financial assurance mechanisms: The preamble seeks comment on what types of financial assurance mechanisms should be made available for GS projects. While a number of mechanisms currently exist under the UIC program, such as trust funds, surety bonds, insurance and satisfaction of a corporate financial test (with or without a third-party guarantee), the guidance outlining available mechanisms should provide Agency decision-makers with flexibility to take operator and project-specific considerations into account. In addition, current "form" corporate financial test documents may require that corporations have certain financial information available (such as bond ratings) that they may lack, but do not clearly allow for substitution of substantially equivalent financial information for purposes of satisfying the test. Any financial assurance regulations should provide the Agency with considerable flexibility in how to determine a permittee‘s financial position.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition.

Furthermore, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to assist Directors in evaluating the appropriateness of the financial test in specific circumstances. EPA will provide examples of "substantially equivalent" financial information to that can be used to fulfill a financial test.

Owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23804

Comment: Allow a Broad Array of Financial Assurance Mechanisms

Government policy should allow a broad array of mechanisms, including trust funds, especially since the market is likely to be limited for risk management mechanisms for CCS. We provide suggested principles for financial assurancebelow.

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23828

Comment:b. Insurance

Insurance should be authorized as a risk management tool for CCS. Insurance for CCS liability is a "specialty" product. Specialty underwriters generally are well-trained to focus on the environmental risks involved with each facility, and insurance provides full coverage for the financial assurance risk from policy inception forward.

EPA appears to be approaching insurance guardedly, noting that the "insurance mechanism was and still is. rarely used for the purpose of demonstrating financial assurance for injection wells." EPA should provide guidance for the

use of insurance.

EPA should be careful to avoid several problems that have made insurance less available and more expensive in the past. For example, regulators typically require an insurance policy to be written to require payment to an entity designated by the regulator, rather than to the insured. The requirement to pay the regulator or a designated agency creates potential for "double payment" - both to the regulator, and as a result of state law, to the insured. EPA should address this problem by making possible clear designation of sole beneficiary status, and allowing parties to contract for express waivers by policyholders of their payment rights, where the regulator requires a different beneficiary. Another problem is that regulators often prohibit cancellation of a policy if an operating permit is revoked or if the operator seeks bankruptcy protection, even if continued premium payments do not occur. Such a prohibition drives up the cost of insurance, "front-loads" insurance costs as insurers require up-front payments, and reduces insurers' willingness to offer policies.

Since, as noted above, some risks associated with CCS will be beyond the market's willingness to bear, EPA should allow insurance to be arranged on terms that will encourage its availability. It should encourage the private risk management market to address as much risk as possible.

Response:EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some ownersor operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

EPA is developing guidance that describes the types of financial instruments, including insurance, which owners or operators can use to meet financial responsibility requirements for GS wells and will take the commenter's suggestion into consideration. The guidance will discuss the strengths and weaknesses of various instruments, and EPA anticipates that some of the strengths of insurance described by the commenter will be included in this discussion. In developing the guidance, EPA will also consider these commenters' concerns about creating certainty with regard to beneficiary designations as it develops the guidance. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA anticipates that as GS is deployed, particularly if there are early successful uses of these instruments, owners or operators will demand and carriers will offer third-party GS financial instruments, including insurance, in greater numbers.

EPA has expanded and clarified the financial responsibility requirements in the final rule to address commenters' requests for additional certainty. For example, regarding cancellation of policies, the final GS rule contains new language at §146.85(a)(4)(i)(C) that an owner or operator must provide that their financial mechanism may not cancel, terminate or fail to renew except for failure to pay such financial instrument. If there is a failure to pay the financial instrument, the financial institution may elect to cancel, terminate, or fail to renew the instrument by sending notice by certified mail to the owner or operator and the Director. The cancellation must not be final for 120 days after receipt of cancellation notice, the owner or operator must provide an alternate financial responsibility demonstration within 60 days of notice of cancellation, and if an alternate financial responsibility demonstration is not acceptable (or possible), any funds from the instrument being cancelled should be released within 60 days of notification by the Director.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23709

Comment:With respect to the required financial mechanisms, AWWA would like to leave the door open for establishing financial mechanisms on a project by project basis. The rulemaking should not prescribe or preclude particular financial instruments as the issue of financial assurance is very complex. Other funding models could be developed, and it may be that Moodys or Standards and Poors will see this as a potential opportunity. Many significant financial details remain that must be

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout thelife of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25149

Comment:b. EPA Should Implement the Recommendations Made by OIG and GAO Regarding Insurance Mechanisms Before Allowing Their Use by Owners or Operators

EPA also notes that it "is assessing whether to provide guidance on the use of insurance providers" and whether to allow insurance as a financial assurance mechanism for GS wells at all. 73 Fed. Reg. at 43,521. Given the lack of experience using private commercial insurance for injection wells, EPA should develop clear guidelines for its use in this context. The guidance should take into account the "numerous problems" with insurance reported by states in the RCRA context, "including the difficulty of getting claims paid and lack of State awareness of the true coverage provided by the policy." OIG REPORT at 3. Furthermore, "the lack of standardized language for policies" creates problems for Directors in approving the plan. Id. At the very least, EPA should consult with insurers currently involved in sequestration and oil and gas injection projects in the United States and abroad. This will allow EPA to better understand the role of insurance in providing financial assurances and how to best manage the use of insurance for this purpose. EPA should include representatives from OIG, GAO and EFAB in those consultations.

If insurance is allowed, EPA should make sure to exclude "captive insurance" from the definition of acceptable insurance. GAO defines captive insurance companies as "wholly owned subsidiaries of the corporation they are insuring." GAO REPORT at 20. This kind of insurance provides the public with "little confidence that the captive insurance company will provide the funds to pay for closure" if "the parent company experiences financial difficulty." Id. Captive insurance leaves "no independence of risk between the corporate parent and the company insured." OIG REPORT at 15-16. These policies "are also high risk if they cannot be assigned to different owners" if a GS site is sold. GAO REPORT at

20.

Response: Under the final GS rule, owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA recognizes that there are some concerns about the use of captive insurance, including those mentioned by the commenter. Note that under the GS regulation, Directors can choose not to allowcertain financial instruments if they feel the instruments are too risky or otherwise inappropriate to protect USDWs from endangerment.

The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument, including captive insurance, for a specific project. The guidance will include model forms and templates for financial responsibility instruments but will not include standard language for insurance policies. The guidance will also address policy exclusions.

EPA has reviewed OIG and GAO perspectives and is considering all comments in the guidance development process, including recommendations made by OIG and GAO. These guidances will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA clarifies that the Agency will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

Commenter Name: Chris M. Hobson Letter ID: 0201 Commenter Organization: Southern Company Comment ID: 22174 Other EPA Comment Codes and Descriptions: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment:Financial Responsibility

As GAO observed in its recent report, there is a great deal of uncertainty regarding the type of financial instruments that will be available to meet the financial responsibility requirements of the Final Rule. GAO Report at 39-40. This uncertainty has the potential to slow development on CO2 GS programs; EPA can ease stakeholders' fears and facilitate commercial deployment of the CO2 GS UIC Program by providing further clarity regarding these requirements in the Final Rule where possible. In some situations, it may be more appropriate to provide further clarification at a later date in the form of guidance, as EPA suggests in the Preamble to the Proposal. ¡d. at 43520-22. Such guidance, however, must be issued in accordance with the Good Guidance Practices Bulletin issued by the Office of Management and Budget ("OMB"), including provision of public notice and opportunities for comment before issuance of any final guidance. 72 Fed. Reg. 3432, 3438 (Jan. 25, 2007).

The continued availability of self-insurance instruments as methods of financial assurance for Class VI CO2 GS projects is crucial to the viability of the CO2 GS regulatory scheme set forth in the Final Rule. Self-insurance instruments, including the corporate financial test and the corporate guarantee, have been used successfully under the RCRA program for more than two decades and will beimportant elements of a full menu of options for meeting financial responsibility mechanisms under the Final Rule. Given the likelihood that many Class VI Owners or Operators will use a combination of approaches and instruments to meet the Program's financial assurance requirements, EPA should take care not to constrain the development of any otherwise acceptable means of achieving financial assurance. We urge EPA to craft flexible requirements that allow Owners or Operators to use multiple instruments and adjust their methods as necessary as industry, regulators, and markets gain experience with the financial aspects of CO2 GS projects.

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owners or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an owner or operator is not able to meet the corporate financial test criteria, they may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its

behalf.

Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. EPA plans to take OMB's Good Guidance Manual into consideration as financial responsibility guidance is developed. OMB's Good Guidance Manual establishes policies and procedures for the development, issuance, and use of significant guidance documents by Executive Branch departments and agencies.

Commenter Name: Olon Plunk Letter ID: 0217 Commenter Organization:Xcel Energy, Inc. Comment ID: 21555 Other EPA Comment Codes and Descriptions: 5430 2.9.1 Comments on proposed financial responsibility requirements (40 CFR 146.85); 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment:Financial Assurance

Xcel Energy agrees that some method of financial assurance is appropriate for geologic storage projects. However, it is important to retain the concepts ofboth self-assurance and phased-assurance. The amount of financial assurance required should be limited to what is known, or can be estimated with reasonable accuracy, today. Financial assurance should be periodically adjusted as new

information becomes available.

Response:EPA will allow owners or operators to use one or more or multiple financial responsibility instruments for well plugging and site closure. However, EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC; this must be done at the time of permit application. This will ensure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project.

EPA agrees that it is important to periodically update cost estimates that support financial responsibility determinations. EPA clarifies that the GS rule, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. The owner or operator must also update the cost estimate annually for inflation. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

EPA will retain the use of self-insurance as an instrument for financial responsibility for Class VI wells. Owner or operators may self insure through a financial test provided certain conditions are met such as demonstration of profitability and stability. Furthermore, EPA is developing guidance that describes the types of financial instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. This guidance is available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA notes that Directors may disallow certain instruments.

Commenter Name: Tiffany Rau Letter ID: 0224 Commenter Organization: Hydrogen Energy International Comment ID: 21699 Other EPA Comment Codes and Descriptions: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment: (1) Allow for a Broad Range of Financial Assurance Mechanisms

We support an approach that takes into account changing market conditions and other factors and allows an operator to utilize a wide range and variety of financial assurance mechanisms to demonstrate financial responsibility. This should be coupled with the flexibility to combine multiple types of financial assurance mechanisms to demonstrate compliance. The regulations or guidance should be flexible and authorize EPA to accept and recognize other types of instruments, programs or conditions that provide similar reliable assurance.

While the Proposed Rule does not limit the range of financial assurance mechanisms, EPA indicates that the Agency is considering revising various guidance documents related to financial assurance. (73 Fed. Reg. at 43520-21.) EPA refers to several reports issued by the United States General AccountabilityOffice ("GAO"), Office of Inspector General ("OIG"), and the Environmental Financial Advisory Board ("EFAB"). Id. In 2003, the GAO issued a report reviewing, in part, the financial assurance requirements for Class I injection wells. See GAO Report to the Honorable Lynn C. Woolsey, House of Representatives, Deep Injection Wells: EPA Needs to Involve Communities Earlier and Ensure that Financial Assurance Requirements are Adequate, GAO-03-761, 17-22 (June 2003). GAO noted that there is uncertainty about the adequacy of financial assurance requirements, but did not make any conclusions about specific mechanisms. Similarly, in 2005, OIG issued a report reviewing the financial assurance mechanisms under the RCRA program. OIG Evaluation Report, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance, Report No. 2005-P-00026 (Sept. 26, 2005). OIG concluded that despite ongoing concerns, the lack of uniform national data prohibited ready identification of the problems. Id. at 8.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule, owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well pluggingand PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the postinjection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods, and states may set more specific financial responsibility requirements if they so choose.

Commenter Name: Brian Williams Letter ID: 0225 Commenter Organization: BP Alternative Energy North America, Inc. (BP) Comment ID: 21756 Other EPA Comment Codes and Descriptions: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment: (1) Allow for a Broad Range of Financial Assurance Mechanisms

We support an approach that takes into account changing market conditions and other factors and allows an operator to utilize a wide range and variety of financial assurance mechanisms to demonstrate financial responsibility. This should be coupled with the flexibility to combine multiple types of financial assurance mechanisms to demonstrate compliance. The regulations or guidance should be flexible and authorize EPA to accept and recognize other types of instruments, programs or conditions that provide similar reliable assurance.

While the Proposed Rule does not limit the range of financial assurance mechanisms, EPA indicates that the Agency is considering revising various guidance documents related to financial assurance. (73 Fed. Reg. at 43520-21.) EPA refers to several reports issued by the United States General Accountability Office ("GAO"), Office of Inspector General ("OIG"), and the EnvironmentalFinancial Advisory Board ("EFAB"). Id. In 2003, the GAO issued a report reviewing, in part, the financial assurance requirements for Class I injection wells. See GAO Report to the Honorable Lynn C. Woolsey, House of Representatives, Deep Injection Wells: EPA Needs to Involve Communities Earlier and Ensure that Financial Assurance Requirements are Adequate, GAO-03-761, 17-22 (June 2003). GAO noted that there is uncertainty about the adequacy of financial assurance requirements, but did not make any conclusions about specific mechanisms. Similarly, in 2005, OIG issued a report reviewing the financial assurance mechanisms under the RCRA program. OIG Evaluation Report, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance, Report No. 2005-P-00026 (Sept. 26, 2005). OIG concluded that despite ongoing concerns, the lack of uniform national data prohibited ready identification of the problems. Id. at 8.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC (§146.85(a)(6)). However EPA will not allow for a separate financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit (§146.85(a)(5)(i)).

EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods, and states may set more specific financial responsibility requirements if they so choose.

Commenter Name: Randy Joseph Letter ID: 0240 Commenter Organization:Western Organization of Resource Councils Comment ID: 23222

Comment:Financial assurance: a. EPA is assessing whether a financial ratings threshold for all companies using a self-guarantee, similar to those used by other Federal agencies, is appropriate. The Agency also is considering what constitutes an appropriate financial rating threshold, and whether a financial rating greater than BBB or Baa (i.e., the current rating threshold established under the UIC regulations) is appropriate for GS wells.

We do not think a financial ratings threshold for all companies using a selfguarantee similar to those of other Federal agencies is appropriate, and urge EPA to require bonds. Wyoming and North Dakota are the only states that allow self-bonding for coal, and that standard is fairly high. Requiring bonds doesn’t stop development, and helps ensure that funds will be available for cleanup if the company fails to do the job for any reason.

Response:EPA will retain self-insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use thefinancial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an owner or operator is not able to meet the corporate financial test criteria, it may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23320

Comment: B. Financial Assurance Mechanisms

Financial assurance mechanisms ensure that facilities will have sufficient funds to properly close their permitted units and maintain the site for the duration of post-closure responsibility. These mechanisms are meant to prevent default to federal or state funds in the event that facilities are unable or unwilling to cover closure and post-closure costs. EPA has not developed a guidance document for financial assurances for the Class VI wells, but there is an EPA guidance document on financial assurances for UIC injection. [FN23]

[FN23: Victor J Kim, Director of the Office of Drinking Water, U.S.Environmental Protection Agency, Guidance for Financial Assurance for FederallyAdministered UIC Programs, Underground Injection Control Branch Guidance #39 (May 29, 1985).]

The following is a list of the different mechanisms that EPA recommends for UIC injection and the problems associated with each one:

1. Financial Test - If a facility meets corporate financial test criteria, it may satisfy financial assurance obligations solely on the strength of its financial condition. For instance, under the current UIC regulations, a firm must have a minimum of $10 million in tangible net worth to pass the corporate financial test. Net worth is not the only financial test requirement. Additional requirements include financial ratios or bond ratings.

Risks: A firm using the financial test to satisfy obligations cannot guarantee it will have funds for closure and post-closure activities in the event it becomes insolvent. Taxpayers bear the risk of the firm’s insolvency.

2. Corporate Guarantee - A corporate parent, sibling corporation, or firm with a substantial business relationship with the facility can meet the financial test requirement on its behalf.

Risks: For the same reasons as the financial test, a firm using the corporate guarantee cannot guarantee it will have funds for closure and post-closure activities in the event its corporate parent, sibling or firm with a substantial business relationship with becomes insolvent. Taxpayers bear the risk of the firm’s insolvency.

3. Trust Fund - Owners and operators are required to deposit money according toa phased-in schedule (known as a pay-in period). At the end of the pay-in period, the facility should have enough money set aside to cover its financial assurance requirements.

Risks: Risks from trust funds include bank failures and the trust will not be fully funded before the facility becomes insolvent. This later risk can be mitigated by shortening the pay-in-period.

4. Letter of Credit - A letter of credit is a credit document issued to an owneror operator by a financial institution, covering the costs of closure and postclosure.

Risks: Risks from a letter of credit is that the bank that issued the credit becomes insolvent. The letter of credit is no longer in effect because, unlike a bank deposit, a letter of credit is not guaranteed by the Federal Deposit Insurance Corporation when a bank fails.

5. Surety Bond - Two types of surety bonds guarantee that closure and postclosure obligations will be fulfilled:

Payment Bond - If an owner or operator fails to fulfill closure or post-closure requirements, a payment bond funds a standby trust fund in the amount equal to

the face value of the bond.

Performance Bond - A performance bond guarantees performance of closure and post-closure requirements. A performance bond can also be paid into a standby

trust fund.

Risks: The main risk is the surety company becomes insolvent. This risk can be mitigated by imposing regulations on surety bonds. For instance, the U.S. Treasury issues a list of acceptable sureties and regulations could require that the surety be on this list.

6. Insurance - Owner or operator takes out an insurance policy to cover the costs of closure and post-closure. The policy must guarantee that funds up tothe face amount of the policy will be available for payment of closure or postclosure care upon the direction of the permitting authority. (It should be noted that, to date, insurance is rarely used as a financial assurance mechanism for injection wells so it has a less developed space in the marketplace.)

Risks: Insurance presents a number of issues, including (1) policy terms and exclusions may be are inconsistent with regulations; (2) regulators may have to pursue litigation in order to secure payment; and (3) regulators fail to receive cancellation notices or late notices even if required by regulations. Since insurance is primarily regulated by states, differences in state insurance regulations contribute to the complexities in evaluating insurance policies. A standardized insurance policy form would mitigate those risks.

7. Captive Insurance - Captive insurance is insurance issued by a wholly-owned subsidiary of the company being insured.Risks: Even though the captive may be a legally separate corporation, the financial strength of the captive is dependent upon the parent corporation. Therefore, the risk of insolvency of a captive insurance company and the risk of insolvency of a facility insured by a captive are not independent but instead are positively correlated. Since the failure of the one is closely tied to the failure of the other, the assurance risk is high.

8. Combinations - Trust funds, letters of credit, surety bonds guaranteeing payment, and insurance can be combined for a facility if together their value is at least equal to the closure or post-closure estimate. Surety bonds guaranteeing performance, financial tests, and corporate guarantees cannot be

combined.

EPA’s Office of Inspector General looked at these different financial assurance mechanisms, determined the regulatory risk versus facility cost of each option with regard to the RCRA program, and ranked the risks and costs as the following: [FN24]

[FN24: U.S. Environmental Protection Agency, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance, Report No. 2005-P-00026 (Sept. 26, 2005).]

Mechanism Regulatory Risk Cost to Facility

Letter of Credit Low High

Trust Fund Low High

Insurance Medium Medium

Surety Bond Medium Low Medium High

Financial Test High Low

Corporate Guarantee High Low

Captive Insurance Very High Very Low

Response: Under the final GS rule, owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment. The ability of the owner or operator to pay for each GS activity must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments in the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects. EPA does not have authority to set up a national-level trust fund under the SDWA.EPA will retain self insurance and corporate guarantee as options for financial responsibility for Class VI wells. EPA believes that if properly used, these can be appropriate options for some owners or operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stability. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’s financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate parent meets the financial requirements on its behalf.

EPA also acknowledges the commenters' concern regarding potential insolvency of surety companies, but notes that such unpredictable events are outside of the Agency's control or authority. However, EPA requires under §146.85 that a Director may only approve instruments determined to be sufficient to address endangerment of USDWs and has the discretion to disapprove of instruments that they determine are not sufficient. Furthermore, owners or operators or their guarantor must notify the Director no later than 10 days after filing for bankruptcy.

Regarding concerns that the surety industry may be reluctant to underwrite bonds for the long term, EPA notes that the GS regulation provides flexibility for owners or operators to choose from a variety of financial instruments to meet their financial responsibility needs. EPA cannot, under the SDWA, require that the surety be included on the U.S. Treasury's list of acceptable sureties. However, EPA notes that the preamble to the final rule clarifies the conditions under which the Director can disprove instruments that he/she determines may not be sufficient.

EPA emphasizes that, with comprehensive financial responsibility requirements in place (i.e., to cover corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites), no taxpayer money should be necessary to address endangerment of USDWs throughout the lifetime of the site.

EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for GS wells. The financial responsibility guidance will include considerations for Directors regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project.

Commenter Name:William Herz Letter ID: 0266 Commenter Organization: The Fertilizer Institute Comment ID: 22882 Other EPA Comment Codes and Descriptions: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment:Financial Assurance Instruments

TFI recommends that EPA implement a flexible approach to the types of financial assurance mechanisms authorized by the NPRM. The broadest possible array of available instruments would go furthest in promoting EPA's expressed policy to encourage carbon sequestration while still avoiding, to the greatest extent possible, imposition of remediation costs on the public. In addition to thoseinstruments already addressed in the NPRM, EPA should allow demonstration of financial assurance through trust funds, environmental insurance, corporate guarantees, and letters of credit.

Response:EPA agrees that it is appropriate to allow a flexible approach for financial responsibility for purposes of this rule. Under the final GS rule Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods. Furthermore, states may set more specific financial responsibility requirements if they so choose and have authority to do so. This guidance

will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Comment Code: 5436 2.9.1.3 Allowing separate financial demonstrations for plugging and abandonment and post-injection site care (seeking comment)



### Individual Comments

Commenter Name: Brianne Metzger Letter ID: 0151 Commenter Organization: Spectra Energy Corp Comment ID: 21894

Comment: B. EPA Should Require Separate Financial Demonstrations For Well Plugging And Post-Injection Site Care Requirements.

Spectra believes the financial assurance requirements for post-injection site care should be separate from the financial assurance requirements for well plugging in the GS Rule. The high likelihood that the need for well plugging will vary greatly from site to site raises concern over the extent to which it could distort a given owner or operator’s needs for financial assurance at a particular site. Allowing for a separate well plugging financial assurance requirement would allow owners and operators to acquire the appropriate risk management instrument that takes into account a particular site’s unique character and well plugging needs, thereby making overall financial assurance requirements more cost effective and efficient. In addition, post-injection site care requirements will similarly vary from site to site, and maximum flexibility in selecting risk management instruments to meet financial assurance requirements will encourage CCS project development. In neither case would separate requirements result in diminished coverage or in any way jeopardize USDWs. Accordingly, EPA should revise the GS Rule to reflect Spectra’s comments on this point.Response:EPA will allow owners or operators to use separate financial responsibility instruments for well plugging and site closure. However, owners or operators must demonstrate adequate financial responsibility for all required activities with their permit applications per §146.85(a), and financial responsibility will need to be reevaluated prior to well plugging or site closure, or at any other time deemed appropriate by the Director. EPA believes this is necessary to assure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project.

In order to assist owners or operators and financial institutions in achieving accurate cost estimates for all GS activities, EPA plans to include a discussion of how to estimate costs, including how to adjust cost estimates for inflation to account for the long-term nature of GS projects, in its guidance on meeting financial responsibility requirements for GS wells. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA acknowledges that GS technologies and cost estimating methods are likely to change and improve as GS is deployed nationwide. However, EPA believes that past injection practices provide a good foundation for estimating the necessary costs and demonstrating financial responsibility. EPA envisions that financial responsibility updates required at the time of AoR reevaluation or at other frequencies specified by the Director, will provide opportunities to refine the cost estimates and adjust the financial responsibility instruments as appropriate.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23426

Comment: APPA is comfortable with the Proposal’s suggestion to allow separate financial responsibility demonstrations for different phases of CO2 GS projects, specifically for well plugging and then post-injection site care. Id. at 43522. As EPA recognizes, "post-injection site care has the potential to extend many years into the future," and "[t]rying to determine the cost for post-injection site care...could be difficult, as could the approval of a financial demonstration." Id. Requiring all financial demonstrations to be completed at one time, prior to well plugging, could unnecessarily delay the site closure process. Allowing a subsequent demonstration for financial responsibility for the post-injection site care period will allow regulators and Owners or Operators to better understand the site-closure needs for a given CO2 GS project prior to demonstration and approval of financial responsibility.

Response:EPA will allow owners or operators to use separate financial responsibility instruments for well plugging and site closure. However, owners or operators must demonstrate adequate financial responsibility for injection well plugging and post-injection site care and site closure with their permit applications per §146.85(a). This will ensure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project. In addition, financial responsibility will need to be reevaluated and updated as needed prior to well plugging or site closure, or at any other time deemed appropriate by the Director (e.g., if the Director determines that based on information about the site, additional financial resources are needed to protect USDWs).

EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on how best to estimate costs to assist Class VI well owners or operators in developing estimates of the costs associated with various GS activities. The guidance will includeconsiderations, such as risk, that support accurate cost estimates. In addition, the final regulation at §146.85(e) requires the owner or operator to provide annual updates to the cost estimates to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24124

Comment: A related concern is that EPA is proposing imposition of financial assurance requirements for activities that may occur more than 50 years in the future, with requirements to be satisfied at the time of permitting. EPA should carefully examine whether at this time, or at the time of permitting, the cost of such activities can be accurately estimated and assumed to be relatively accurate going forward. If not, financial assurance is no better than a guess, and serves only to introduce significant uncertainties into project economics and project finance.

Response:EPA recognizes that there are challenges associated with estimating costs for activities that will occur far in the future. However, the Agency believes that owners or operators mustdemonstrate that financial resources are available to plug the injection well and provide postinjection care at the time the Class VI well is permitted. EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greater flexibility and cost savings from this regulation. In the event that the owner or operator combines more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self-insurance or performance bond), such as, trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial responsibility for an amount at least equal

to the current cost estimate.

EPA believes that it is important to periodically update cost estimates that support financial responsibility determinations. The final GS rule, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. Owners or operators must also adjust the estimates for inflation annually under §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

In order to assist owners or operators and financial institutions in achieving accurate cost estimates for all GS activities, EPA plans to issue financial responsibility guidance that will include a discussion of how to estimate costs, including how best to adjust cost estimates for inflation to account for the long-term nature of GS projects, in its guidance on meeting financial responsibility requirements for Class VI wells. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA agrees that GS technologies and cost estimating methods are likely to change and improve as GS is deployed nationwide. However, EPA believes that past injection practices provide a goodfoundation for estimating the necessary costs and demonstrating financial responsibility. EPA envisions that financial responsibility updates required at the time of AoR reevaluation or at other frequencies specified by the Director will provide opportunities to refine the cost estimates and adjust the financial responsibility instruments as appropriate.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24262

Comment: Rule Provisions: 73 FR 43522 EPA Preamble Question: 45. The Agency is also requesting comment on allowing separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements. EPA Notice

43522.

API Response: See response to 41

Response: As described above, owners and operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23508

Comment: USWAG supports the Proposal's suggestion to allow separate financial responsibility demonstrations for different phases of CO2 GS projects, specifically for well plugging and then post-injection site care. Id. at 43522. As EPA recognizes, "postinjection site care has the potential to extend many years into the future," and "[t]rying to determine the cost for post-injection site care ... could be difficult, as could the approval of a financial demonstration." Id. Requiring all financial demonstrations to be completed at one time, prior to well plugging, could unnecessarily delay the site closure process. Allowing a subsequent demonstration for financial responsibility for the postinjection site care period will allow regulators and Owners or Operators to better understand the site-closure needs for a given CO2 GS project prior to demonstration and approval of financial responsibility. This would be particularly helpful as the Program advances, and industry and regulators gain experience and knowledge related to CO2 GS projects.

Response:EPA recognizes that there are challenges associated with estimating costs for activities that will occur far in the future. However, the Agency believes that owners or operators mustdemonstrate that financial resources are available to plug the injection well and provide postinjection care at the time the Class VI well is permitted. EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greaterflexibility and cost savings from this regulation. In the event that the owner or operator combines more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self insurance or performance bond), for example trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial responsibility for an amount at least equal to the current cost estimate.

EPA also believes that it is important to periodically update cost estimates that support financial responsibility determinations. The final GS rule, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. Owners or operators must also adjust the estimates for inflation annually under §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

In order to assist owners or operators and financial institutions in achieving accurate cost estimates for all GS activities, EPA plans to issue financial responsibility guidance that will include a discussion of how to estimate costs, including how to adjust cost estimates for inflation to account for the long-term nature of GS projects, in its guidance on meeting financial responsibility requirements for GS wells. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA agrees that GS technologies and cost estimating methods are likely to change and improve as GS is deployed nationwide. However, EPA believes that past injection practices provide a good foundation for estimating the necessary costs and demonstrating financial responsibility. EPA envisions that financial responsibility updates required at the time of AoR reevaluation or at other frequencies specified by the Director, will provide opportunities to refine the cost estimates and adjust the financial responsibility instruments as appropriate.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23596 Other EPA Comment Codes and Descriptions: 5430 2.9.1 Comments on proposed financial responsibility requirements (40 CFR 146.85)

Comment: - Ability to generate reliable cost estimates for assured activities: Financial assurance requirements depend on the ability to obtain reliable cost estimates for the activity to be assured. If an accurate cost estimate cannot be developed for the activity at issue, the financial assurance itself cannot be assumed to be appropriate--it may be inadequately protective, or it may be unduly burdensome. The Agency is proposing imposition of financial assurance requirements for activities that may occur more than 50 years in the future, with requirements to be satisfied at the time of permitting. The Agency should carefully examine whether at this time, or at the time of permitting, the cost of all of the activities required to be assured can be accurately estimated and assumed to be relatively accurate going forward. If not, financial assurance is no better than a guess. The preamble indicates that EPA may be willing to consider a phased or staged approach to financial assurance requirements, as well as separate financial assurance demonstrations for plugging and PISCactivities at later points in time. Such provisions would ease some of the difficulties with the financial assurance proposal in terms of estimating costs for future activities assuming that better estimation tools would become available, but, again, would not eliminate any difficulties that may exist in forming cost estimates at the time of permitting.

Response: In the final rule, owners or operators are required to demonstrate, with their permitapplication, adequate financial responsibility for specific GS activities, including plugging and postinjection site care, per §146.85(a). EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greater flexibility and cost savings from this regulation. In the event that the owner or operator combines more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self insurance or performance bond), for example trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial responsibility for an amount at least equal to the current cost estimate.

EPA believes that the demonstration at the time of permit application is important to ensure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project. In addition, financial responsibility will need to be reevaluated prior to well plugging or site closure, or at any other time deemed appropriate by the Director, for example, following AoR reevaluations.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25154

Comment:EPA should also proceed with "allowing separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements" in order to tie the most up-to-date cost estimation to financial assurance for later parts of the GS process. Id. at 43,522. Although EPA notes in the preamble that it "may be appropriate to re-demonstrate financial responsibility on a periodic basis," to "take into account any amendments to the area of review and corrective action plan . . . and adjustments for inflation," it has not addressed this sentiment in the proposed regulations. Id. at 43,520. EPA should make it explicit that a re-demonstration of financial responsibility is necessary any time there is a change in cost estimates, amendment to the area of review, or change in the corrective action plan. EPA also should require periodic re-demonstration of financial assurance to account for inflation as it indicates it is considering.

Response:EPA agrees with the commenter. The final GS rule, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. Owners or operators must also adjust the estimates for inflation annually under §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).In order to assist owners or operators and financial institutions in achieving accurate cost estimates for all GS activities, EPA plans to issue financial responsibility guidance that will include a discussion of how best to estimate costs, including how to adjust cost estimates for inflation to account for the long-term nature of GS projects, in its guidance on meeting financial responsibility requirements for Class VI wells. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Bradley J. Field Letter ID: 0186 Commenter Organization:New York State Dept. of Environmental Conservation

Div. of Mineral Resources Comment ID:

25215

Comment: QQ.The Agency is also requesting comment on allowing separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements.

NYSDEC-DMN Response: EPA’s proposal for financial assurance appears to be adequate with respect to wells and NYSDEC-DMN understands that any well plugging financial instrument would be released upon proper plugging and abandonment of the well. It is also understood that a second tier of financial assurance, that could be filed at a later date (i.e., closer to ceasing injection), is being considered for post- injection site care. EPA states that it is consideringrequiring well plugging financial demonstration at permit issuance and postinjection site care financial security demonstration at a later time (e.g., within 180 days of notifying the Director that the well will be plugged and abandoned). EPA also states "Trying to determine the cost for post-injection site care, possibly 30 to 50 years in the future, could be difficult, as could the approval of a financial demonstration." It is NYSDEC-DMN’s opinion that some level of financial assurance for post-site injection care should be in place at first injection of CO2. If there are concerns with uncertainty and overly burdening an operator, perhaps the amount of post-injection site care assurance could start with a basic level of protection and be required to be increased as the potentially affected area grows over time with additional injection.

Response:EPA agrees that an initial financial responsibility demonstration at the time of permitting is appropriate. In the final rule, owners or operators are required to demonstrate, with their permit applications, adequate financial responsibility for all GS activities that require financial responsibility, at §146.82(a)(14). This will ensure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project.

The final GS rule, at §146.85(c), also requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. Owners or operators must also adjust the estimates for inflation annually under §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

In order to assist owners or operators and financial institutions in achieving accurate cost estimatesfor all GS activities, EPA plans to issue financial responsibility guidance that will include a discussion of how best to estimate costs, including how to adjust cost estimates for inflation to account for the long-term nature of GS projects, in its guidance on meeting financial responsibility requirements for GS wells. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24554

Comment: Rule Provisions or Federal Register Cite: 73 FR 43522 EPA Preamble Question: 45. The Agency is also requesting comment on allowing separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements. EPA Notice

43522.

CSC Response: We support the use of separate financial demonstrations for the plugging of the injection well and for the post-injection site care requirements based on the greater experience with well plugging requirements and methods. It will be easier to retain certainty for these actions and to use established FA

methods.

EPA should look into the options available for single bonding with phased release and multiple bonding, as is done under SMCRA.

Response:EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greater flexibility and cost savings from this regulation. In the event that the owner or operator combines more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self insurance or performance bond), for example trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial responsibility for an amount at least equal to the current cost estimate.

Additionally, the final GS rule, at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. Owners or operators must also adjust the estimates for inflation annually under §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate, as specified at §146.85(e).

EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on how best to estimate costs to assist Class VI well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of

the costs associated with various GS activities. EPA will also discuss how to evaluate the appropriateness of single and multiple bonding and phased release of bonds in the guidance. EPA will review the requirements under SMCRA as it develops the guidance and incorporate any relevant information. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24615

Comment: Rule Provisions: 73 FR 43522 EPA Rule Issue: 45. The Agency is also requesting comment on allowing separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements. EPA Notice 43522.

Anadarko Petroleum Corporation (APC) Response: See response to EPA Notice 43521.

Response: As described above, owners or operators may choose from a variety of financial instruments listed in §146.85(a) to meet their financial responsibility obligations, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to prevent endangerment of USDWs by demonstrating the ability to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response.

EPA agrees that it is appropriate to allow a flexible approach for financial responsibility. Under the final GS rule, owners or operators may choose from a variety of financial instruments to meet their financial responsibility needs, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to pay for each activity for which financial responsibility must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response. The permitted methods are specified at §146.85(a)(1). EPA is developing guidance to help owners or operators, permitting authorities, and third parties choose and evaluate appropriate financial methods, and states may set more specific financial responsibility requirements if they so choose. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:John Corra Letter ID: 0205 Commenter Organization:Wyoming Department of Environmental Quality (DEQ) Comment ID:

22199

Comment: 5. Not allowing for the use of separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements:

a. It may be advantageous to require the approval of the well plugging financial demonstration at permit issuance and the post-injection site care financial demonstration at a later time (e.g., within 180 days of notifying the Director that the well will be plugged and abandoned.). We recommend that the regulation provide for accepting separate financial demonstrations not only for well plugging and post-injection site care phases, but for the other operational and nonoperational phases of GS, including Operation/Injection, Monitoring/Measurement/Verification, etc., as may be necessary.

Response: In the final rule, owners or operators are required to demonstrate, with their permitapplication, adequate financial responsibility for specific GS activities, including plugging and postinjection site care, per §146.85(a). EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greater flexibility andcost savings from this regulation. In the event that the owner or operator combines more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self insurance or performance bond), for example trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial responsibility for an amount at least equal to the current cost estimate.

Additionally, EPA is developing guidance (available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for Class VI wells; this guidance will also address how different instruments may be applied for

various GS activities.

Commenter Name: Tiffany Rau Letter ID: 0224 Commenter Organization: Hydrogen Energy International Comment ID: 21701

Comment: (2) EPA’s Suggestion for a Phased Approach to Financial Assurance for PostInjection Site Care Should be Adopted

EPA is relying on an adaptive management approach for regulation of CO2 injection. (73 Fed. Reg. at 43522.) EPA specifically requested comment on allowing separate financial demonstration to be submitted for well-plugging and for post-injection site care. In the Preamble, EPA states that:

Since post-injection site care has the potential to extend many years into the future, subsequent to the time a permit is issued, the Agency believes that it may be advantageous to require the approval of the well plugging financial demonstration at permit issuance and the post-injection site care financial demonstration at a later time (e.g., within 180 days of notifying the Director that the well will be plugged and abandoned). Trying to determine the cost for post-injection site care, possibly 30 to 50 years in the future, could be difficult, as could the approval of a financial demonstration.

(73 Fed. Reg. at 43522.) We agree with EPA’s stated rationale and recommend that EPA specifically incorporate language in the Final Rule that describes the

manner in which determinations and demonstrations of financial assurance for post-injection site care will be postponed until a later time as discussed by

EPA.

(3) Clarifying that adaptive management approach allows for phased financial assurance release In accordance with the adaptive management approach for CCS, the rulemaking should clarify that the financial assurance can be released (or amounts reduced) as particular activities are completed and regulatory criteria are met (e.g., well plugging for corrective action). Also, the owner or operator should be able to use site-specific data gathered from such activities to support revisions to site-specific financial assurance requirements.

Response: In the final rule, owners or operators are required to demonstrate, with their permit application, adequate financial responsibility for specific GS activities, including plugging and post-injection site care, per §146.85(a). EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greater flexibility and cost savings from this regulation. In the event that the owner or operator combines more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self insurance or performance bond), for example trust funds, surety bonds guaranteeing payment into a trust fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial responsibility for an amount at least equal to the current cost estimate.

EPA recognizes that there are challenges associated with estimating costs for activities that will occur far in the future. However, the Agency believes that owners or operators must demonstrate that financial resources are available to plug the injection well and provide post-injection care at the time the Class VI well is permitted.

EPA agrees that GS technologies and cost estimating methods are likely to change and improve as GS is deployed nationwide. However, EPA believes that past injection practices provide a good foundation for estimating the necessary costs and demonstrating financial responsibility. EPA envisions that financial responsibility updates required at the time of AoR reevaluation or at other frequencies specified by the Director, will provide opportunities to refine the cost estimates and adjust the financial responsibility instruments as appropriate.

In order to assist owners or operators and financial institutions in achieving accurate cost estimates for all GS activities, EPA plans to issue financial responsibility guidance that will include a discussion of how to estimate costs, including how to adjust cost estimates for inflation to account for the long-term nature of GS projects, in its guidance on meeting financial responsibility requirements for GS wells.

EPA clarifies that the final rule, at §146.85(b)(2), allows release from a financial instrument when the phase of the project for which the instrument was obtained is complete, assuming that all other financial obligations have been met.

Commenter Name: Brian Williams Letter ID: 0225 Commenter Organization: BP Alternative Energy North America, Inc. (BP) Comment ID: 21758

Comment: (2) EPA’s Suggestion for a Phased Approach to Financial Assurance for PostInjection Site Care Should be Adopted

EPA is relying on an adaptive management approach for regulation of CO2 injection. (73 Fed. Reg. at 43522.) EPA specifically requested comment on allowing separate financial demonstration to be submitted for well-plugging and for post-injection site care. In the Preamble, EPA states that:

Since post-injection site care has the potential to extend many years into the future, subsequent to the time a permit is issued, the Agency believes that it may be advantageous to require the approval of the well plugging financial demonstration at permit issuance and the post-injection site care financial demonstration at a later time (e.g., within 180 days of notifying the Director that the well will be plugged and abandoned). Trying to determine the cost forpostinjection site care, possibly 30 to 50 years in the future, could be difficult, as could the approval of a financial demonstration.

(73 Fed. Reg. at 43522.) We agree with EPA’s stated rationale and recommend that EPA specifically incorporate language in the Final Rule that describes the

manner in which determinations and demonstrations of financial assurance for post-injection site care will be postponed until a later time as discussed by

EPA.

(3) Clarifying that adaptive management approach allows for phased financial

assurance release

In accordance with the adaptive management approach for CCS, the rulemaking should clarify that the financial assurance can be released (or amounts reduced) as particular activities are completed and regulatory criteria are met (e.g., well plugging for corrective action). Also, the owner or operator should be able to use site-specific data gathered from such activities to support revisions to site-specific financial assurance requirements.

Response:EPA will allow owners or operators to use separate financial responsibility instruments for well plugging and site closure. However, owners or operators must demonstrate adequate financial responsibility for all required activities with their permit applications, per §146.82(a)(14), and financial responsibility will need to be reevaluated prior to well plugging or site closure, or at any other time deemed appropriate by the Director. EPA believes this is necessary to ensure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project.

EPA recognizes that there are challenges associated with estimating costs for activities that will occur far in the future. However, the Agency believes that owners or operators must demonstrate that financial resources are available to plug the injection well and provide post-injection care at the time the Class VI well is permitted.

EPA agrees that GS technologies and cost estimating methods are likely to change and improve as GS is deployed nationwide. However, EPA believes that past injection practices provide a good foundation for estimating the necessary costs and demonstrating financial responsibility. EPA envisions that financial responsibility updates required at the time of AoR reevaluation or at other frequencies specified by the Director, will provide opportunities to refine the cost estimates and adjust the financial responsibility instruments as appropriate.

In order to assist owners or operators and financial institutions in achieving accurate cost estimates for all GS activities, EPA plans to issue financial responsibility guidance that will include a discussion of how to estimate costs, including how to adjust cost estimates for inflation to account for the long-term nature of GS projects, in its guidance on meeting financial responsibility requirements for GS wells.

EPA clarifies that the final rule, at §146.85(b)(2), allows release from a financial instrument when the phase of the project for which the instrument was obtained is complete, assuming that all other financial obligations have been met.Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23268

Comment:45. The Agency is also requesting comment on allowing separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements. EPA Notice 43522.

This seems a sensible approach however; financial assurance should be left to the regulating agency and not prescribed.

Response:EPA will allow owners or operators to use separate financial responsibility instruments for well plugging and site closure. However, owners or operators must demonstrate adequate financial responsibility for all required activities with their permit applications, per §146.82(a)(14), and financial responsibility will need to be reevaluated prior to well plugging or site closure, or at any other time deemed appropriate by the Director. EPA believes this is necessary to ensure that resources are available to prevent the endangerment of USDWs in the event that the owner or operator experiences financial difficulties at any time during the life of the GS project.

Regarding the suggestion that financial assurance requirements be left to the states, EPA notes that it is providing consistency nationwide by requiring that any state that wishes to assume primacy for Class VI wells would need to demonstrate that its financial responsibility requirements are at least as stringent as the minimum federal requirements at §146.85. EPA does not believe that the final rule is prescriptive; rather it is flexible in order to tailor the regulations to the unique characteristics of long term storage of CO2.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24824

Comment:EPA Notice Questions: 73 FR 43522

EPA Rule Issue: 45. The Agency is also requesting comment on allowing separate financial demonstrations to be submitted for the plugging of the injection well and for the post-injection site care requirements. EPA Notice 43522.

GWPC CO2 Committee Response: The Committee supports the use of separate financial demonstrations for the plugging of the injection well and for the post-injection site care requirements based on the greater experience with well plugging requirements and methods. It will be easier to retain certainty for

these actions and to use established FA methods.

Rationale: EPA should look into the options available for single bonding with phased release and multiple bonding, as is done under SMCRA.

Response:EPA will allow owners or operators to use separate or multiple financial responsibility instruments for different GS activities. However, owners or operators must demonstrate adequate financial responsibility for all required activities with their permit applications per §146.82(a)(14). In addition, on an annual basis, the owner or operator must adjust the cost estimate for inflation, increase or decrease the value of the financial instrument to match the cost estimate, and provide any updated information related to their financial responsibility instrument(s), or at any other time deemed appropriate by the Director. These annual reviews provide a mechanism for revising cost estimates up or down to account for changes in the project, including the execution of environmentalobligations as phases of a GS project are completed.

EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on how best to estimate costs to assist Class VI well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. EPA will also discuss approaches to evaluate the appropriateness of single and multiple bonding and phased release of bonds in the guidance. EPA will review the requirements under SMCRA as it develops the guidance and incorporate any relevant information. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Kevin Frederick Letter ID: 0525 Commenter Organization:Wyoming Department of Environmental Quality Comment ID: 21406

Comment: And finally, we do not support allowing, or excuse me, not allowing for the use of separate financial demonstrations to be submitted for the plugging of the injection well and for the post injection site care requirements. It may be advantageous to require the approval of the well plugging financial demonstration at permit issuance and the post injection site care financial

demonstration at a later time.

Response: Owners or operators have the flexibility to choose from a variety of financial instruments to meet their financial responsibility obligations. Owners or operators may use one or multiple financial responsibility instruments for well plugging and PISC, as specified at §146.85(a)(6). However EPA will not allow for a separate financial responsibility demonstration for well pluggingand PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the postinjection site care period rather than with the permit application). A demonstration of financial responsibility for all phases of the GS project will be required prior to the issuance of a Class VI permit, per §146.85(a)(5)(i).

Comment Code: 5460 2.9.2 Comments on transfer of liability for long-term care



### Individual Comments

Commenter Name:Michael H. Cochran Letter ID:

0108 Commenter Organization: Bureau of Water, Division of Environment, Kansas Department of Health & Environment (KDHE) Comment

ID: 21957

Comment: 6. The practicality and appropriateness of liability staying with the owner/operator for an extended period of time. Should instead, some form of a Federal/Industry partnership be implemented to address this issue, especially since this technology is being pushed at a national level as a significant method for reducing CO2 releases to the atmosphere?

Potential costs and legal issues in regards to long term liability could limit the number of projects implemented.Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. Please note that EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

EPA notes that under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee. Furthermore, EPA does not have authority in the SDWA to create a trust fund. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments through the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Commenter Name: Dawn A. Thorne Letter ID:

0134 Commenter Organization: University of Utah Energy and Geoscience Institute on behalf of the Southwest Regional Partnership Comment

ID: 21662

Comment: The SWP supports the recommendation of the IOGCC [Footnote IOGCC. 2007. A Legal

and Regulatory Guide for States and Provinces. Task Force on Carbon Capture and Storage, IOGCC, September 25, 2007.] to create a state-administered compensation fund for post site closure stewardship for the following reasons:

- The SWP agrees that states/provinces are in the best position to oversee CCS regulatory compliance within their jurisdiction; - The funding mechanism is sound and has a history of success withabandoned or orphaned oil and gas wells and underground storage tank release sites; - The SWP agrees that after a site has been successfully closed, liability should transfer from the owner/operator to the state(s), who can assure that the site is properly monitored and maintained; and - Long-term post-closure liability left in the hands of the owner/operator would hinder many (if not all) commercial scale CCS projects from implementation.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. Please note that EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Robert Bessette Letter ID: 0139 Commenter Organization: Council of Industrial Boiler Owners (CIBO) Comment ID: 23084

Comment: C. Long-term Stewardship and Liability

The proposed regulations impose a default care period of 50 years, subject to the discretion of the Director and demonstration of non-endangerment of US drinking waters.[FN5 73 Fed. Reg. 43519-20.] The proposed regulations do not extend the financial responsibilities of the owners or operators after this point. SDWA authorizes the EPA to impose liability for the site only to the extent that it endangers drinking water. After the EPA determines the site is no longer a danger to drinking water and "closes" the site, it cannot assign liability for the site. In short, the owners and operators are no longerresponsible for the injection site once it is closed, which by default is fifty years after the injection period. However, the sites do not disappear after fifty years; the risks inherent in long-term carbon storage remain, including risks of leakage into air, and other non-drinking water impacts.

Given the potential for lawsuits to arise after site closure, the regulations must address which party takes over responsibility for the site from the owner/operator post-closure. Because the EPA lacks the authority under SDWA to enforce regulation of these sites after a default fiftyyear period, other enforcement mechanisms such as RCRA and Superfund may attach. EPA attempts to address these concerns, but states that it "cannot make a categorical determination as to whether injected CO2 is hazardous under RCRA." [FN6 73 Fed. Reg. 43503.] CIBO disagrees that EPA cannot make such a determination, or provide some regulatory mechanism to rule out potential RCRA liability for actions that under other regulations parties will be required to undertake. Again, practical considerations demand clear answers to basic questions. These injection aquifers will be several thousand feet underground. They may run for miles in any direction. It is entirely possible that the CO2 could be injected in one state and carried underground to another state by the course of the aquifer. There must be some consistent regulatory policy about this.

EPA should expect little or no CO2 to be stored if states can sue other States because somewhere underground there is CO2 entrapped. Gases have been trapped underground, including CO2, for hundreds of millions of years. We wouldn't be able to use natural gas today if they were not. The key to this proposed rule is to set it up so that these undesirable possibilities do not arise and that the potentially more reasonable structures are not precluded. If the rule is written such that the generator owns the CO2 until the government takes over the liability 50 to 100 years later, there will be no CO2 sequestration. That is not a desirable outcome. Additionally, EPA attempts to preclude Superfund liability through permitting requirements, but this issue must be addressed clearly and unequivocally. Emission sources are hesitant to take responsibility for such a project with these unknowns.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure. With regard to commenter’s statement about non-USDW impacts related to long term liability, EPA clarifies that its authority under the SDWA is to protect USDWs from endangerment, which does not include other risks associated with air emissions and non-drinking water impacts.

Additionally, EPA clarifies that the 50 year timeframe for PISC is based on review of research studies, industry reports, and existing environmental programs. Under the approach that is part of the final rule it is possible that the PISC may be extended beyond 50 years if the owner or operator isunable to demonstrate that USDWs will not be endangered by the CO2 plume and/or pressure front

at site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. Please note that EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Christine Reimer Letter ID: 0142 Commenter Organization:National Ground Water Association Comment ID: 22572 Other EPA Comment Codes and Descriptions: 4650 2.6.5 CO2 plume and pressure front tracking (seeking comment)

Comment: As the pressure in the injection zone starts to stabilize it may be possible to lengthen the period between measurements if the reservoir is performing as expected based on the calibrated site models. When the location of the CO2 either stops changing or can be predicted and validated against measurements over multiple measurement cycles, the ownership of the site and the responsibility for future MMV, if deemed necessary, may be transferred from the operator to the government, starting the post-closure phase. If the site is not behaving as expected, an iterative MMV-modeling approach will help identify areas of uncertainty that can be reduced by changes in the MMV plan to collect more or different data to determine the site’s performance.

Regulations for the operational phase need to ensure that a licensed Carbon Capture and Storage (CCS) site is operated safely and should allow for flexibility in the monitoring schedule based on the performance of the site and site models. A site that is performing well probably requires less frequent monitoring than one that is not performing well. A long-term match between MMV data and site modeling results probably indicates a good understanding of the site and should be one of the criteria used to decide when the custodianship of the site should be transferred from the operator to the government. It is possible that iterative MMV and modeling will show that the AoR changes over time. The idea of a variable AoR should be included and accepted in any regulations. The results of the MMV and modeling including the integrity of the

Response:EPA clarifies that once injection is complete, the owner or operator must monitor asspecified in the post-injection site care and site closure plan for at least 50 years (the Director may require longer if necessary to ensure USDW protection) or for the duration of the alternative timeframe approved by the Director pursuant to the requirements at §146.93(b), unless the owner or operator can make a demonstration earlier that the geologic sequestration project no longer poses a risk of endangerment to USDWs.

As described above, EPA agrees that monitoring data should be used to review model assumptions, verify computational model projections, and, when necessary, provide input for model refinements. As data are collected at an injection site, model parameters can be adjusted to match observations (i.e., for model calibration or), which in turn improves the predictive capability of the model. As a GS project proceeds, both monitoring and modeling will evolve, with monitoring results supporting effective AoR reevaluations and leading to improved model predictions.

EPA agrees with commenters and believes that flexibility is important in developing and implementing a monitoring plan that is appropriately tailored for a specific GS site. The purpose of the requirement at §146.90 to develop site-specific testing and monitoring plans is to ensure that the monitoring performed at a site is appropriate for site operational conditions and the geologic setting.

Regarding transfer of responsibility following site closure, please note that EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site

closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Christine Reimer Letter ID: 0142 Commenter Organization:National Ground Water Association Comment ID: 22575Comment: Applicable and Relevant Liability Models

Public health/environmental liability models currently exist in North America that may to offer some insights to help develop workable CCS liability policy to safeguard public interests yet remain attractive to private/corporate investors who will help fund development of the required CCS technology and large-scale CCS operations.

Alberta Acid Gas Re-Injection. Acid gas streams, consisting primarily of hydrogen sulfide and carbon dioxide, are commonly generated as a by-product of the gas "sweetening" process used to bring produced natural gases and solution gases up to pipeline specifications for sales and transport. Prior to introduction of acid gas re-injection, treatment of acid gases included flaring. The province of Alberta has over 38 acid gas re-injection wells in operation (Wong et al., 2003). In Alberta, the injection well operator is financially responsible (liable) for operation and closure of acid gas re-injection wells, but there is no responsibility for post-closure monitoring or mitigation of gas leaks, whether leakage is from the storage reservoir or from the closed injection well (Bachu, 2007). In addition, there is no provision to ensure that "orphaned" (abandoned) re-injection wells are closed properly by a public or private entity, should the operator becoming insolvent.

Price-Anderson Act. The Price-Anderson Act was passed as federal law in the United States in 1957 to partially indemnify the nuclear industry against liability claims for nuclear incidents while still protecting the general public. The Act established a no-fault insurance fund in which the first $10 billion of an incident claim is funded by industry and the federal government covers the remainder over this amount. The federal government instituted this Act to provide an incentive for private investment in nuclear power; without this type of indemnification, investors were unwilling to accept the unquanitifed risks of nuclear energy. Although criticized by some groups , the Act has been renewed several times and is currently set to expire in 2025. The Act appears to focus primarily on liability for nuclear plant operation and not for post-closure incidents. Over the first 43 years of operation until 2000, the secondary federal insurance has not been required. The nuclear industry has paid a total of $151 million to cover claims, including $70 million for the Three Mile Island incident. During the same period, the Department of Energy has paid about $65 million to cover claims for its own nuclear operations.

Resource Conservation and Recovery Act (RCRA). Enacted by the U.S. Congress in 1976, RCRA mandates that companies set aside funds for post-closure care of solid and hazardous waste sites, and establishes EPA’s authority to control related wastes from "cradle-to-grave" (USEPA(a), downloaded 2008). For example, solid waste landfill operators in most U.S. states bear financial responsibility for public health and safety, environmental health, environmental monitoring, landfill maintenance, and remediation/treatment of leachate and contaminated ground water during landfill operation and for a post-closure period. Financial assurance of ability to cover these costs is generally required as a condition of the operator’s state permit for both the operating and post-closure period. Some states (e.g., Maine) require that the financial assurance cost estimates bebased on the entire expected time that the solid waste facility is expected to be generating leachate, landfill gases and other contaminants that have a potential for creating an adverse environmental impact. Pennsylvania bases bonding estimates on a 30-year post-closure period, but final closure is performance-based and site specific; upon final closure determination, a 10-year bond liability period commences. However, the operator and landowner are still liable beyond this period for adverse effects and other changes in site conditions. Other states require post-closure monitoring, remediation and financial assurance for a finite period (e.g., Ohio - 30 years; Vermont - 20 years).

In 1986, Congress created a Leaking Underground Storage Tank (LUST) Trust Fund by amending Subtitle I of RCRA. The LUST Trust Fund provides money for overseeing and enforcing corrective action by a responsible party, and for cleanup at UST sites where the owner is unknown, unable, or unwilling to respond (USEPA(b), downloaded 2008). The Trust Fund is financed by a 0.1 cent tax on each gallon of motor fuel. All 50 states have cooperative agreements with EPA to spend this money for LUST-related activities. In addition, 47 states have established state-run LUST Funds to help owners and operators with UST upgrades and LUST remediation problems (Tiemann, 1999). Reimbursements from the state LUST Funds have generally benefited most UST owners/operators who comply with the existing state and federal UST regulations, regardless of financial ability to cover these costs. Like the RCRA LUST Trust Fund, the state LUST Funds are generated through gas taxes and tank fees.

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). CERCLA (also referred to as Superfund), enacted by the U.S. Congress in 1980, established a tax on the chemical and petroleum industries to finance a fund that addresses the liabilities arising from the clean up of hazardous waste sites. Over a period of five years, $1.6 billion was collected and the tax went into a trust fund for cleaning up abandoned or uncontrolled hazardous waste sites (USEPA(c), downloaded 2008). CERCLA was amended in 1986 by the Superfund Amendments and Reauthorization Act (SARA). SARA increased the size of the trust fund to $8.5 billion (USEPA(d), downloaded 2008). While RCRA was intended to be forward-looking, CERCLA is intended to be backward-looking, i.e., contamination that occurred prior to RCRA authorization.

Tiered Approach

A key tenet of environmental laws and regulations is that pollution costs should e borne by their creators. U.S. environmental laws and regulations give this principle form by making polluters liable for property, health, and natural resource damages and unperformed resource reclamation obligations (Boyd, 2001). However, the anticipated great public benefit from CCS implementation and reluctance of private investors to become involved in an enterprise that may have several hundred years of post-closure liability suggest that a shared private/public liability model may be appropriate for long-term post-closure phase of CCS.

Gerard and Wilson (2008) provide a temporally-tiered approach to managingliability for all phases of CCS. This approach relies on operator liability and use of operator-funded bonds to cover liability during the operational phase (Phase 1) of CCS. Gerard and Wilson report that this approach has been used effectively for many oil and gas wells and wells regulated under the UIC Program where the operational lifetime of the wells is tens of years. This surety mechanism and time frame may also encourage proper site management and well closure for CCS wells. Short-term post-closure liability (Phase 2) for unanticipated accidents would rest with the operator, but active bonding by the operator would cease. Monitoring and verification during Phase 2 would be financed by publicly run or pooled financial mechanisms that would be funded by operator/industry contributions during the active injection phase of the project. The third phase of liability and management (Phase 3) would be a public responsibility, ensuring that long-term standards of care are met.

According to Gerard and Wilson, demarcation of the Phase 2 to Phase 3 transition could be performance-based (e.g., based on pressure levels in the CCS reservoir or on dissolved CO2 in the formation fluid), or prescriptive (e.g., after a finite period [10 years, 25 years, etc.]). By Phase 3, project performance and success are more certain and public "liability" and management would be viewed as primarily administration and record-keeping.

USEPA’s Proposed UIC CCS Rule

In the proposed UIC CCS Rule, USEPA is proposing a combination of fixed timeframe and a performance standard. Post-injection site care (monitoring) would occur for a period of 50 years. This period could be shortened or lengthened based on plume behavior. If monitoring data demonstrate that the plume/pressure front is stabilized and the CO2 injectate does not pose risk to USDWs, the 50-year post-injection site care period could be shortened. Conversely, if the plume/pressure front has not stabilized after 50 years of post-injection monitoring, USEPA would extend the monitoring period until

stabilization is achieved.

Conclusion

It is apparent that much work and public-private sector discussions are needed to develop a liability policy framework and details that are workable and acceptable to all parties. In recognition of this, USEPA is requesting public comments on their proposed 50-year monitoring period with a performance element. Developing effective performance-based criteria upon which to base transfer of post-closure liability to the public appears to be an area that

warrants considerable technical research. This transition mechanism could become one of the key issues to gain public acceptance for CCS.

The Task Force recommends that federal and energy industry funding for CCS research be directed toward establishing performance-based indicators for CO2 reservoir stability to facilitate liability transfer. This tiered approach may offer ample incentives to ensure that CCS operations are managed responsibly, yet not discourage investors from supporting CCS. Public assumption of Phase 3 liability after the CCS reservoir stabilizes appears commensurate with the greatpublic benefit that CCS offers.

Bachu, S., 2007, Legal and Regulatory Aspects of CCS, in Workshop on Capacity Building for Emerging Economies. Carbon Sequestration Leadership Forum in Porto Alegre, Brazil.

Gerard, D., and E.J. Wilson, 2008, Environmental Bonds and the Problem of LongTerm Carbon Sequestration. Source. Journal of Environmental Management, In Press. Available online as of July 2008: http://www.epp.cmu.edu/csir/Content/Research/Carbon%20Capture%20and%20Sequestrat ion/Gerard%20Wilson%20Bonding.doc

Tiemann, M., 1999, Leaking Underground Storage Tank Issues. CRS Report: 97-471.

USEPA(a), downloaded 6/29/08. Summary of the Resource Conservation and Recovery Act. http://www.epa.gov/lawregs/laws/rcra.htm

USEPA(b), downloaded 6/29/08. Leaking Underground Storage Tank (LUST) Trust Fund. http:www.epa.gov/oust/ltffacts.htm

USEPA(c), downloaded 6/29/08. CERCLA Overview. http://www.superfund/policy/cercla.htm

USEPA(d) download 10/28/08, SARA Overview http://www.epa.gov/superfund/policy/sara.htm

Wong, S., D. Keith, E. Wichert, W. Gunter1and T. McCann, 2003, Economics of Acid Gas Reinjection: An Innovative CO2 Storage Opportunity. In Greenhouse Gas Control Technologies, J. Gale and Y. Kaya (Eds.) © 2003 Elsevier Science Ltd. All rights reserved

Response: As described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance.

EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Patrick Nugent Letter ID: 0143 Commenter Organization: Texas Pipeline Association (TPA) Comment ID: 23129

Comment: sequestration project have diminished. In addition, if a site has been certified as closed, and the project presents no danger to the public, then participants in the project should be released from any further monitoring or financial assurance requirements. TPA urges EPA to consider mechanisms such as group

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant torequirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Patrick Nugent Letter ID: 0143 Commenter Organization: Texas Pipeline Association (TPA) Comment ID: 23130

Comment: assurance requirements. TPA urges EPA to consider mechanisms such as group stewardship arrangements or designated management entities for the post-closure period.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails tocomply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. Please note that EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

EPA notes that under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee. Furthermore, EPA does not have authority in the SDWA to create a trust fund. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments through the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Commenter Name: Patrick Nugent Letter ID: 0143 Commenter Organization: Texas Pipeline Association (TPA) Comment ID: 23145

Comment: 12. The issue of long term liability should be addressed by legislation. TPA recognizes that identification of long term liability is beyond this rulemaking. However, TPA believes it is important to note that clarification of which parties would be responsible for unintended migration or similar problems after a well had been closed is vitally important to the long term success of this program. Such an issue should be addressed by legislation at either the state or

federal level.

Response:EPA clarifies that addressing long term liability by legislation is outside the scope of the GS rulemaking. Furthermore, as described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance.

EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Richard Driggans Letter ID: 0145 Commenter Organization: Tennessee Valley Authority Comment ID: 23155 Other EPA Comment Codes and Descriptions: 5800 2.13 Comments on emergency and remedial response (40 CFR 146.94)

Comment: 5. Unspecified Operational Consequences - In the unfortunate event operational experience at a GS site shows the permitted geologic storage was ill advised and that CO2 injection from a fossil-fueled power plant sited and operated at (or transporting supercritical CO2 to) that location must be terminated, TVA requests a provision be added to this rule to address what consequences, withregards to resumed emissions of CO2, discontinuation of CCS would have for such a facility.

Response:EPA clarifies that EPA’s authority under the Safe Drinking Water Act is limited to and the focus of the GS regulation is on preventing USDW endangerment due to injection, and that any impacts to or procedures for fossil fuel power plants are outside the scope of the GS rule. EPA is, however, developing guidance on the development and implementation of emergency and remedial response plans for GS sites. To meet the requirements for developing an emergency and remedial response plan (specified at §146.94(a)), an owner or operator should identify people (in addition to the Director), such as first responders, who should be contacted in the event of an emergency associated with the well. EPA envisions that the party that transports the CO2 onsite should be

notified as well.

See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Brianne Metzger Letter ID: 0151 Commenter Organization: Spectra Energy Corp Comment ID: 21880

Comment: D. After The Post-Injection Site Care Period And Determination That The CO2 Plume Has Stabilized, Owners And Operators Should Not Be Liable For Unanticipated Migration Of CO2 Plume And Any Potential Endangerment Of USDWs Or Other Environmental Impacts.

The successful completion of the post-injection site care period and a showing that the CO2 plume has stabilized and poses no further risk to USDWs should mark the end of any and all liability for owners and operators, absent a showing of gross negligence, willful misconduct, or a violation of one or more applicable federal laws. Such an approach would provide clarity and certainty to owners and operators with respect to liability exposure, as well as to investors, lenders, insurers, and others. Given the multiple benefits conferred to the public by the successful capture, transport, injection and underground storage of CO2, the end of the post-injection site care period represents a fair and reasonable point to demarcate the end of private liability and the beginning of State responsibility, even in cases of unanticipated migration of the CO2 plume. And such an approach is fully consistent with the Interstate Oil and Gas Compact Commission’s (IOGCC) position, as discussed below.[17] Placing a strict limit on owner/operator liability also offers among the best available incentives for owners and operators to adhere to best practices in managing the project.

This type of limit on liability is of critical importance, since commercial viability of CCS depends on the ability of owners and operators to transfer any and all long-term liability, either by contract to another party, or to the State upon completion of the post-injection site care period and a showing that the CO2 plume has stabilized. The World Resources Institute has recognized the importance of the ability to transfer long-term liability, stating that "[i]t is unlikely that any commercial operation would agree to assume responsibilities indefinitely."[18] The GAO report also noted that "[s] takeholders told us that they were concerned by the unspecified period of time for which they may be liable for stored CO2."[19]Where owners and operators face uncertainty as to the limits of their liability, or if these limits are not reasonable, then prospective investors and lenders will lack any assurance of a return on their investment and the financing essential to commercial-scale deployment will not materialize. Furthermore, private insurers will similarly be deterred in the face of uncertain or unreasonable liability from providing sufficient insurance

coverage.

A useful approach to limiting liability for activities that provide valuable public benefits is the Oil Pollution Act (OPA) of 1990.[20] Under the OPA, a responsible party’s liability is limited except in cases of gross negligence or willful misconduct or where there are violations of applicable federal laws. Where the costs or damages arising from an accident exceed the applicable liability limit, responsible parties may seek compensation from the Oil Spill Liability Trust Fund (OSLTF).

The OPA establishes liability limits for permit holders or pipeline right of way holders, vessel owners, and owners or operators of onshore facilities, offshore facilities, and deepwater ports. When a party pays or incurs costs or damages in excess of an applicable liability limit, the responsible party may present a claim to the OSLTF for compensation. The Fund will compensate parties for any one oil pollution incident up to $1 billion or the balance of the Fund, whichever is less. Natural resource damage assessments and claims in connection with any one incident are limited to $500 million of the $1 billion per incident limit. The OSLTF is funded by an oil tax, interest on fund principal, cost recovery from responsible parties, and penalties (which include civil penalties assessed to the responsible party). The OSLTF also can borrow from the U.S. Treasury to cover potential shortfalls.

A concept similar to the OSLTF for geologic storage of CO2 has been proposed by, among others, the IOGCC Task Force.[21] Specifically, the IOGCC has proposed a multi-state Carbon Mutual Account that would cover damages or remediation costs that exceed what is already covered by private insurers. This "trust" would be funded by industry and administered by the States and could draw upon a variety of funding mechanisms, including pooled contributions by multiple projects, royalty revenues from coal, wire charges or carbon levy applied to regulated transmission entities, carbon credits from verified carbon emission reductions, tax rebates from property taxes paid by storage projects, or an extension fee applied to rates approved by state public service commission and charged by the storage facility and/or coal-burning power plant.

Other regulatory models have been suggested as a way to manage long-term liability associated with CCS, including the Price-Anderson Nuclear Industries Indemnity Act and the National Flood Insurance Act of 1968, both of which appear to be poor fits for CCS and raise numerous concerns.[22] Based on the collective experience using these other regulatory constructs, it is important to underscore the significance of creating certainty with respect to liability transfers to the State. Given the clear advantages of placing strict limits on owner/operator liability and covering the balance of any further damages orremediation costs with a trust fund-type of approach, Spectra recommends that the EPA Office of General Counsel analyze the legal issues arising from the creation of a state-administered fund as discussed above, including in particular whether EPA believes it has the authority to do so under existing law. If EPA concludes it does not have the authority, then it should communicate to Congress so that it may act if so desired.

E. SDWA Does Not Preclude EPA From Establishing A Framework That Allows The Transfer Of Long-Term Liability.

In the GS Rule, EPA has taken the position that "SDWA does not provide EPA with the authority to transfer liability from one entity to another." GS Rule at 43522. Contrary to EPA’s position, Spectra believes that allowing the transfer of liability does not violate SDWA. Specifically, Spectra believes that EPA can proceed in the GS Rule to allow the full and complete transfer of liability from one entity to another without running afoul of SDWA on grounds that there is no express prohibition in SDWA.

Recently, EPA has said that SDWA does not "explicitly provide EPA the authority to transfer liability from the owner/operator to another entity."[23] In addition, current UIC regulations allow the transfer of permits to new owners or operators, although EPA has taken the position that trust responsibilities to the owner are in perpetuity. We respectfully request further clarification from the Agency as to why it believes that SDWA precludes the transfer of liability.

17 See CO2 Storage: A Legal and Regulatory Guide for States, INTERSTATE OIL & GAS COMPACT COMMISSION (December 2007).

18 See also Capturing King Coal:Deploying Carbon Capture and Storage Systems in the US at Scale, WORLD RESOURCES INSTITUTE (2008) at 24.

19 GAO Report, Climate Change, Federal Actions Will Greatly Affect the Viability of Carbon Capture and Storage As a Key Mitigation Option, REPORT TO

THE CHAIRMAN ON THE SELECT COMMITTEE ON ENERGY INDEPENDENCE AND
GLOBAL WARMING, HOUSE OF REPRESENTATIVES, GAO-08-1080 (September 2008) at 39.

20 33 U.S.C. 2701 et seq. The OPA generally consolidated the liability and compensation provisions of the Trans-Alaska Pipeline Authorization Act (TAPPA) of 1973. For an additional discussion of OPA as a suitable model for managing CCS long-term liability, see Approaches To Geologic Sequestration Site Stewardship After Site Closure, U.S. EPA (July 2008).

21 See CO2 Storage: A Legal and Regulatory Guide for States, INTERSTATE OIL & GAS COMPACT COMMISSION (December 2007).

22 See generally Chiara Trabucchi and Lindene Patton, Storing Carbon: Options for Liability Risk Management, Financial Responsibility, BNA DAILY ENVIRONMENT REPORT (Sept. 3, 2008).23 Approaches To Geologic Sequestration Site Stewardship After Site Closure, U.S. EPA (July 2008).

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992.

EPA disagrees with the commenter that the Agency has the authority to transfer liability under SDWA because it is not expressly prohibited. EPA maintains that the Agency does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. Furthermore, if an owner or operator were to transfer their Class VI permit pursuant to §144.38 then generally all other regulatory responsibilities are transferred to the new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. For additional clarification on the issue of long term liability, please see the preamble to the final rule.

Commenter Name:James Childress Letter ID: 0158 Commenter Organization: Gasification Technologies Council (GTC) Comment ID: 23793

Comment:EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA's authority under the SDWA. EPA Notice 133.

EPA needs to consider and define how it will deal with and allow transfer of financial responsibility between private entities and also potentially to Federal agencies or other sovereign entities such as states or commonwealths.Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. Please note that EPA does not have authority under SDWA to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21312

Comment: The challenge confronting EPA in this rulemaking is twofold: 1) to establish clear, reasonable and environmentally protective regulations to cover a range of operations for which the technology will not be commercially deployed for a number of years, and 2) to the extent practicable establish a single, clear, reasonable and protective liability regime for an activity where the nature of the risks are different from many other industrial activities and the full extent of possible risks from full scale CCS operations are presently unknown.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23427

Comment: APPA urges EPA to actively pursue a legislative solution to the liability issue. APPA does not yet have the legislative solution in mind to address long-term liability under RCRA, CERCLA, Natural Resource Damage Assessment (NRDA) and

other state laws but we know that considerable effort will have to be made to enable power plants to comfortably enter into these commercial activities without unlimited environmental or tort liability.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies,or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Comments requesting EPA to pursue amendments to legislation related to liability are outside the scope of this rulemaking. This is also true to comments related to tort liability.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24131

Comment:Long-term Responsibility

While API realizes the issue of long-term responsibility management for GS sites is beyond the scope of this rule, API feels it is important to offer some comments on this topic. API believes long-term responsibility management for decommissioned carbon storage sites is an issue that should be defined early in the planning process for a carbon capture and storage (CCS) project. A management system that ensures the responsible entity is clearly identified, defines the scope of those responsibilities, and ensures the entity is properly funded is essential for sound project planning.

The recommended model is for the storage site owner or operator to hold responsibility during the operational phases of the project through a reasonable post-closure monitoring period. With adequate demonstration of site integrity and stability, responsibility for the long term stewardship of the site should be transferred to a public entity (government, public trust, or other competent authority). Prior to transfer of this responsibility the site owner or operator should demonstrate the following: 1) compliance with the requirements of all applicable regulations, permits, and approvals relevant to the long term integrity of the site and 2) site integrity by reasonable and proven surface and subsurface monitoring for an appropriate period of time after the completion of injection operations or any subsequent remediation operations.

Response:EPA agrees that the issue of long-term liability management for GS sites is outside the scope of this rulemaking.

Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if heor she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Erik Silvola Letter ID: 0171 Commenter Organization: Great River Energy Comment ID: 23447

Comment: 1. It appears to GRE that a tiered approach with a government back-stop as used

in the framework of the Price-Anderson Act for nuclear faculties could be a rational way of structuring liability management for GS of CO2. This is discussed further in the comments NRECA is submitting on this rulemaking.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. Please note that EPA does not have authority under the SDWA to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. Furthermore, EPA does not have the authority under the SDWA to create a trust fund upon which to manage long-term liability of GS sites. See the final rule preamble for further discussion of EPA's final approach.Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23509

Comment:Long-term liability - The potential for indefinite financial responsibility on the part of Class VI well Owners or Operators for any post-injection migration and contamination of USDWs at GS sites remains of paramount concern to USWAG. EPA acknowledges that, under the existing SDWA statutory scheme, the Agency has the authority to terminate the obligation of an Owner or Operator to maintain financial responsibility instruments for well plugging and post-injection site care. However, EPA also acknowledges that "owners or operators may still be held responsible after the postinjection site care period has ended (e.g., for unanticipated migration that endangers USDWs)." Id. at 43522. Further, EPA does not currently have the authority "to transfer liability from one entity to another. Trust responsibility for potential impacts to USDWs remains with the owner or operator indefinitely under current SDWA provisions." Id.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23510

Comment: The private sector will be extremely reluctant to invest the tremendous amount of time and resources necessary to finance the development of a commercial-scale CO2 GS program if such investments have open-ended liability. USWAG fully appreciates that EPA is studying this issue and is compiling information "on avariety of alternative instruments not currently available under the SDWA." Id. at 435222. EPA has placed in the docket a July 2008 EPA report entitled "Approaches to Geologic Sequestration Site Stewardship After Site Closure" ("Stewardship Report"). See id. The Stewardship Report provides a discussion of examples of site closure scenarios, as well as suggestions on how EPA can cap the amount of post-injection site liability for Class VI CO2 well Owners and Operators. Two of the important themes that emerge from the Stewardship Report are (1) the need to equitably balance the risks of CCS between public and private actors, and (2) "the need to reduce excessive barriers to

commercialscale development of GS" which would "deprive the general public of the benefits of reduced CO2 emissions due to GS technologies." Stewardship Report at 11,26. Any program or mechanism used to limit the opened-end liability of Class VI well Owners or Operators must (1) properly reflect the important public benefit in having utilities undertake the massive investments necessary to develop a commercial-scale CO2 CCS program, and (2) remove the economic uncertainties associated with investing in such large-scale programs.

USWAG urges EPA to place a priority on these issues and to actively pursue a legislative solution if necessary to provide the Agency with the authority to limit postinjection site care liability and/or provide a mechanism to transfer the liability after a certain period of time, as has been done under other statutory programs. While the issue of open-ended liability need not be wholly resolved in this particular rulemaking, USWAG respectfully suggests that this problem must be resolved before a successful CO2 GS program can be implemented in this country.

Response:EPA acknowledges the commenter’s concern regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that financial resources are available to protect USDWs throughout the life of the GS project.However, the authority under the SDWA does not extend to release owners or operators from longterm responsibility for the potential economic costs of impacts unrelated to USDWs. EPA does not have authority to transfer liability from one entity to another and SDWA does not provide for the creation of a third party financial instrument where EPA is the trustee. In the UIC program, liability under SDWA §1423 remains with the owner or operator for all well classes until all regulatory requirements have been met. EPA understands that Congress is considering legislation that may address the liability issue. EPA adds that the GS rule does not promote or encourage the use of GS; rather it is designed to ensure consistency in permitting injection of CO2 at GS operations across the U.S. and provide requirements to prevent USDW endangerment in anticipation of the eventual use of

GS to reduce CO2 emissions.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Further, the financial instrument required under §146.85 will be released if it has not been used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances, for example, if the Director relied on erroneous information provided by the owner or operator when approving site closure. Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if thereis unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to an ongoing civil penalty.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38, including all potential liabilities associated with meeting the requirements of that permit. See further clarification on the issue of long term liability in the preamble of the final

rule.

After site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992.

EPA notes that under SDWA, it has general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing EPA to create a financial instrument with EPA as the trustee. Furthermore, EPA does not have authority in

the SDWA to create a trust fund. EPA clarifies that trust funds that are addressed as financial responsibility instruments through the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects. See the final rule preamble for further discussion of EPA's approach.

Commenter Name: Pamela Faggert Letter ID: 0175 Commenter Organization: Dominion Comment ID: 23527

Comment:While EPA's authority with regard to issues of liability transfers for CCS projects is limited, we encourage the Agency to consider that liability transfers may be accomplished under other laws and to examine closely how the UIC rules can take such provisions into account. An option that is within the SDWA's jurisdiction may be to include a provision indicating that where a third party assumes a permittee's regulatory obligations, the permittee is deemed to have satisfied applicable financial assurance requirements, which can then be terminated for the original permittee.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health ofpersons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23599

Comment: - Lack of contemplation of third-party assumption of risk or liability: The preamble acknowledges that EPA is making no attempt to factor in circumstances in which a state, for example, or other third party has assumed long-term risk or liability for or ownership of stored CO2 (as is contemplated in the Interstate Oil and Gas Compact Commission (IOGCC) model statute and regulations issued in September 2007 and the October 2008 Guidelines for Carbon Dioxide Capture, Transport and Storage, released by World Resources Institute). It specifically notes that "SDWA does not provide EPA with the authority to transfer liability from one entity to the other. Trust responsibility for potential impacts to USDWs remains with the owner or operator indefinitely under current SDWA provisions." While EEI acknowledges that EPA‘s authority with regard to issues of liability transfers for CCS projects generally speaking is limited, we encourage the Agency to consider that liability transfers may be effectuated under other laws and to examine closely how the UIC rules can take such provisions into account.

For example, the current UIC regulations at least contemplate changes in ownership of projects; see, e.g., 40 C.F.R. § 144.66, which provides that where a state assumes legal responsibility for compliance with plugging and abandonment requirements or assures state funding for such requirements, the operator is deemed to have satisfied applicable financial assurance requirements where the Administrator determines that the state‘s assumption is at least equivalent to available financial assurance mechanisms. As another example, one option within the Agency‘s SDWA jurisdiction may be to include a similar provision indicating that where a third party assumes a permittee‘s regulatory obligations, the permittee is deemed to have satisfied applicable financial assurance requirements, which can then be terminated as to the permittee.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirementsunder Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23803

Comment:Liability and Site Care Responsibility Cannot be Unlimited

Site responsibility and liability of owners and operators should be designed to account not only for protection of the public, but recognizing that private parties cannot assume open ended or unlimited risks. This includes site owners and operators, others involved in the CCS chain, and offerors of risk management products. There is not now, nor is there likely to be, a private market through which risks can be managed far beyond a reasonable post-operation site care period. In recognition of the market's limits, the duration and amount of site responsibility must be limited.

As a point of clarification, we use the following terms to denote different periods in the CCS chain:

Operation is intended to mean the period during which CO2 is injected at theinjection site. - Post-operation site care period or closure period is intended to mean the period of years after operation during which the owner or operator is required to meet State or EPA site care responsibilities. - Post-closure period is intended to mean the period after State or EPA site care responsibilities end.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23805

Comment: Government Backstop Role

The government will need to step in beyond an owner and operator liability limit, as has been the case in many other areas in which the government has sought to encourage private action to achieve a public good. The private sector's capacity to manage risks is substantial, but not unlimited in either aggregate capital capacity or tenor and term. Government will need to accept responsibility beyond what the private market can manage. Because the goal in most cases will be long-term storage of CO2, long beyond the typical lifespan of private entities, government should assume liability after injection operations cease and a reasonable closure period has elapsed.

Response: As described above, once an owner or operator has met all regulatory requirements underPart 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance.

EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23832

Comment: 3. A Government Backstop Is Necessary As the Proposed Rule states, EPA does not have the authority under the SDWA to establish a government backstop mechanism. Nevertheless, it is clear that such a mechanism is needed. A government backstop should be in place to the extent the private market is not.

The CCS Alliance believes that the government will need to step in beyond an owner and operator liability limit, as has been the case in many other areas in which the government has sought to encourage private action to achieve a public good. The private sector's capacity to manage risks may be substantial, but will have limits. Government will need to accept responsibility beyond what the private market can manage, which is likely at a minimum to include the time after which operations cease and the project no longer produces revenues that would enable a private entity to cover liabilities. Because the goal in most cases is likely to be long-term storage of CO2, long beyond the typical lifespan of private entities, government should be prepared to assume liability after injection operations cease and a 30-year or shorter (as described above) closure period has elapsed.

4. Encourage Risk Management Through the Private Sector Notwithstanding that CCS will require some level of government risk management, particularly for long-term liability. EPA's financial assurance regime should encourage the role of private market risk management to be as large as possible.

5. Encourage Economically Efficient Risk Management

Financial assurance mechanisms should be cost effective. Factors in cost will include the risk estimate, the type of instrument, and the duration of the

instrument. Each cost in the CCS chain will have an effect on whether CCS is deployed. The EPA should carefully consider the potential cost of financial assurance mechanisms when designing a Class VI financial assurance regime.

Response: As described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance.

EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.Commenter Name:Frederick R. Eames Letter ID: 0178 Commenter Organization: CCS Alliance Comment ID: 23842 Other EPA Comment Codes and Descriptions: 5400 2.9 Proposed Financial Responsibility and Long-Term Care Requirements

Comment:EPA should consider whether financial assurance mechanisms are likely to be available for the entire post-operation site care period. While risks can be expected to decline over time after injection ceases, it does not follow that private risk management entities will continue to cover the risks. If there are no financial assurance mechanisms available, owners and operators should not be at risk of non-compliance for failing to have them after operations (and revenue streams from the project) have ceased, especially if risks continue to be low. As such, the CCS Alliance recommends that once the 30-year period is reached -- or shorter if the performance standards are met -- a government backstop would be triggered, thereby ensuring that a risk management mechanism is in place beyond the responsibility of the owner or operator.

Response:EPA clarifies that owners or operators of GS wells must demonstrate and maintain financial responsibility for addressing corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response at GS sites, as required at §146.85(a). The final rule provides owners or operators to choose from a variety of financial instruments to meet the financial responsibility requirements. EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by GS well owners or operators as deployment of GS technology increases in the future.

Under SDWA authority, owners or operators of injection wells must ensure protection of USDWs from endangerment and are subject to liability for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final

GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23710

Comment: a potential opportunity. Many significant financial details remain that must be addressed before any guidance or regulation is issued on this topic. As an example, the issue of long-term liability still has not been resolved. Who is ultimately responsible for ownership of the injection wells and the carbon dioxide plume after the post-closure period has ended? Does the liability transfer to whoever manages the trust fund (in that particular financial assurance mechanism)?

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23711 Other EPA Comment Codes and Descriptions: 5400 2.9 Proposed Financial Responsibility and Long-Term Care Requirements

Comment: AWWA would also like to see the issue of long-term liability resolved. EPA’s proposed geologic carbon sequestration rule is not able to address financialresponsibility of the sequestration site after the formal period of postinjection site care has ended (default of 50 year length). Recognizing that EPA does not have the power to assign responsibility after this period of time has expired, AWWA recommends that EPA work with the appropriate stakeholders to develop legislation that will address the issue of who has to assume financial responsibility of the sequestration site after the site closure requirements have been fulfilled. AWWA anticipates that this legislation would provide for a means by which drinking water utilities could recover any costs incurred as a result of USDW contamination by geologic carbon sequestration activities. AWWA also recommends that EPA work with the appropriate stakeholders to develop comprehensive climate change legislation with the goal of protecting water systems, and their customers, from loss of water supply or unplanned major financial burdens. Everyone needs to apply the lessons learned from MTBE contamination to prevent unintended consequences from developing with geologic sequestration wells.

Response:EPA is working to create a nationally consistent financial responsibility regime for GS projects within its authority under the SDWA while providing permitting authorities an appropriate level of flexibility. The goal of financial responsibility is to ensure that financial resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties, thereby preventing costs from spilling over to the public. EPA believes that the general authorities provided under SDWA include the authority to set federal minimum requirements for financial responsibility to ensure that resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to release owners or operators from long-term responsibility of other environmental statutes, such as CERCLA, for potential impacts to USDWs after the PISC period has ended, or for the potential economic costs associated with activities with impacts unrelated to USDWs (e.g., risks to air, or ecosystems).

Comments related to comprehensive climate change legislation is outside the scope of this rulemaking.

Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may besubject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells.

As described above, EPA disagrees that GS is analogous to the MTBE situation.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25157

Comment: C. EPA’s Long-Term Liability Scheme for GS Does Not Adequately Protect the Public or Address the Concerns of Industry

The proposed regulation sets out the following long-term liability scheme for GS: (1) owners and operators remain liable for the GS operation and all damages arising from it, in perpetuity; however, (2) owner and operators are required to post financial security only until the end of the site-care period, and are freed from this responsibility at site closure.

The combination of these two elements, perpetual liability plus limited financial assurance, means that: (1) the public is at risk of more orphaned sites and uncompensated post-closure costs and damages; and (2) the industry is left with liability that is unlimited in scope or time. EPA should minimize the risks to the public by requiring owners and operators to post financial security and/or contribute to a national fund to cover costs and damages arising frompost-closure incidents that endanger USDWs and to provide for the costs of postclosure monitoring, measurement, and verification ("MMV").

To address the issue of long-term care of GS facilities in a way that would balance the public interest in having the private sector pay for CCS with theprivate sector’s interest in removing obstacles to deployment of CCS, a longterm liability scheme for GS that would transfer post-closure site care and MMV to the government once closure conditions are met should be developed. EPA should seek from Congress the additional authority it would need to establish

such a scheme.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirementsunder Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. Furthermore, EPA does not have authority under SDWA to create a fund for long term liability of GS sites. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25158

Comment: 1. The Problem of Long-Term Care of GS Facilities

Long-term liability "comprises both anticipated costs associated with the longterm care of a storage facility and the potential for costs associated with unanticipated damages." WRI WORKSHOP SUMMARY at 1. EPA has discussed the issue of long-term liability for GS in various workshops leading up to the proposed regulation and seems to recognize that it is a key issue that must be addressed. See 73 Fed. Reg. at 43,500-01 (discussing EPA’s participation in, or hosting of, workshops to discuss "key questions and considerations" including long-term financial assurance and liability); see also UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE ("UNFCCC"), FACT SHEET: INVESTMENT AND FINANCIAL

FLOWS FOR A STRENGTHENED RESPONSE TO CLIMATE CHANGE 1 (2007) (discussing critical factors for large scale implementation of CCS: developing the technology, managing public perception, and deciding upon a long-term liability regime); MARK E.
FESMIRE ET. AL., NEW MEXICO ENERGY, MINERALS, NATURAL RESOURCES
DEPARTMENT, CARBON DIOXIDE SEQUESTRATION: REPORT ON IDENTIFIED STATUTORY AND

REGULATORYISSUES 40 (2007). ("The various forms of liability (e.g., economic and environmental) inherent in proposed sequestration projects and how they will be addressed within a given regulatory framework are perceived as being significant factors in making sequestration projects feasible and for attaining public acceptance of the technologies, processes and regulations."); WRI WORKSHOP SUMMARY at 1 ("Long-term liability is one of the several important challenges that CCS faces.").

Given the indefinite long-term lifespan of GS projects, stakeholders and policy makers have struggled with how to establish a framework that balances the interests of the private sector (in avoiding perpetual, limitless liability) and the public (in being protected against adverse impacts and the risk of uncompensated costs and damages). One prominent view among policymakers is that a regulatory regime for GS should include a transfer of liability to the public at some point in time. ELPC and ETIP favor an approach that would require the GS owner/operator to calculate and pay into a fund or otherwise set aside the funds needed to cover the costs with (1) MMV or its Class VI wells and (2) remediation, corrective action, personal injury, natural resource damages, treatment of contaminated drinking water supplies, and the like that, while unlikely, are nonetheless possible, and, hence the public sector should not bear the entire cost (or risk). EPA’s proposal to regulate GS within a UIC framework applies a different long-term liability regime to GS, as discussed below.

Response: As described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance.

EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25159 Other EPA Comment Codes and Descriptions: 5400 2.9 Proposed Financial Responsibility and Long-Term Care Requirements

Comment: 2. EPA’s Proposed Regulation

Under the proposed regulation, "the owner or operator of a GS site is released from post-injection site care responsibilities" (including all monitoring or reporting responsibilities) upon site closure. 73 Fed. Reg. at 43,535 (proposed 40 C.F.R. § 146.81(d)) (defining "site closure" as "the point/time, as determined by the Director following the requirements under § 146.93, at which the owner or operator of a GS site is released from post-injection site care responsibilities")). The owner or operator also is released from responsibility for posting any financial assurance. 73 Fed. Reg. at 43,522 ("[O]bligation for financial responsibility ends for owners or operators after the post-injection site care period has ended and the Director has authorized site closure[.]").Thus, once the site is closed, the owner or operator’s only remaining regulatory responsibility is to retain its records for a period of three years. See id. at 43,541 (proposed 40 C.F.R. § 146.93(g)).

As the EPA notes in the preamble to the proposed regulation, it is assuming that post-closure liability will remain with the owner or operator of the site. 73 Fed. Reg. at 43,522 ("[O]wners or operators may still be held responsible after the post-injection site care period has ended . . . . Trust responsibility for potential impacts to USDWs remains with the owner or operator indefinitely under current SDWA provisions."). Presumably, this would apply to liability for both anticipated costs associated with the long-term care of a storage facility and the potential for costs associated with unanticipated damages. See 42 U.S.C. § 300j-8(e) ("Nothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law to seek enforcement of any requirement prescribed by or under this subchapter or to seek any other relief.").

There are a number of significant problems with this perpetual-liability-butlimitedfinancial-assurance approach.

a. The Public Is at Risk

The limited financial assurance element puts the public at risk. The proposed regulation’s failure to require the owner or operator to maintain any financial assurance during the post-closure period means that the public has (by definition) no assurance that the owner or operator will in fact be able to pay the cost of post-closure incidents. The owner or operator may no longer be in existence or otherwise unable to pay, leaving the public, the state, or the individual victims to bear the uncompensated damages of any migration, leakage, or damage that occurs after a site is closed. Given the uncertainties of CCS technology at this time and the anticipated indefinite lifetime for GS wells, the government must anticipate that some number of post-closure incidents will occur, and it must provide the public with assurance that any costs or damages arising from them will be paid.

b. Industry Lacks Certainty

In addition to burdening the public with risks of future costs, the proposed regulation’s infinite liability leaves potential owners/operators with much uncertainty as to the management of their responsibilities. This uncertainty could significantly hamper large-scale industry investment in CCS. EPA is aware of this problem, but the proposed regulation does not offer a solution:

Responsibility for long-term care is often considered an important topic related to GS because of cost implications of indefinite responsibility for GS sites. Because of the focus of the SDWA on endangerment to USDWs and the absence of provisions to allow transfer of liability, stakeholders have expressed interest in alternative instruments for addressing financial responsibility after the post-injection care period has ended. As a result of the interest in alternative instruments, including indemnity programs, EPA has compiledinformation on a variety of alternative instruments not currently available under the SDWA. . . . EPA has not determined whether any of the models are appropriate for GS wells, however, EPA is aware that these models may contain important concepts that may become the model for future strategies for long-term

care.

73 Fed. Reg. at 43,522.

Until those "future strategies" are incorporated into the regulations for GS, however, industry is left with indefinite long-term liability (in the proposed regulation), which could impede implementation of large-scale GS.

Response:EPA acknowledges the commenter's need for certainty. The agency is working to create a nationally consistent financial responsibility regime for GS within its authority under SDWA while providing permitting authorities an appropriate level of flexibility. .The SDWA provides EPA the general authority to set minimum federal requirements for financial responsibility to ensure that financial resources are available to protect USDWs from endangerment throughout the life of the GS project. The final rule requires that an owner or operator must conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that the geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply

continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that new owner and operator, which includes all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of

the final rule.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authorityto transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

EPA clarifies that site closure will not be authorized (and therefore financial responsibility must continue) until the owner or operator has demonstrated that the site poses no further risk to USDWs.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25160 Other EPA Comment Codes and Descriptions: 5400 2.9 Proposed Financial Responsibility and Long-Term Care Requirements

Comment: 3. EPA Should Extend Its Financial Assurance Requirements Into The Post-Closure Period and Transfer MMV Responsibilities to the Government.

The risk to the public can be addressed by requiring owners/operators to post financial security and/or pay into a national fund to cover costs and damages arising after site closure. There is no reason why EPA cannot do this using its existing authority under the SDWA. As EPA itself states, "[a]lthough the SDWA does not have explicit provisions for financial responsibility, as included in RCRA, EPA believes that the general authorities provided under the SDWA authority to prevent endangerment of USDWs include the authority to set standards for financial responsibility to prevent endangerment of USDWs from improper . . . management of wells after site closure." 73 Fed. Reg. at 43,520 (emphasis added).

Response: As described above, EPA notes that under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee. Furthermore, EPA does not have authority in the SDWA to create a trust fund. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments through the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25161

Comment:Many commentators have suggested that government should put in place a long-term liability scheme which includes the transfer of liability to the public at a reasonable point in time and after satisfaction of performance standards. See generally WRI WORKSHOP SUMMARY at 6 ("Some participants voiced the opinion that the private sector could adequately deal with the risks, but would need the public sector to take over the long-term responsibility for monitoring."); MIT, THE FUTURE OF COAL: OPTIONS FOR A CARBON-CONSTRAINED WORLD 60 (2008),

available at http://web.mit.edu/coal/The_ Future_ of_Coal.pdf ("The government needs to assume liability for the sequestered CO2 once injection operations cease and the site is closed. The transfer of liability would be contingent on the sitemeeting a set of regulatory criteria . . . and the operators paying into an insurance pool to cover potential damages from any future CO2 leakage."). The New Mexico Report summarizes neatly,

Nearly all of the sequestration literature assumes that long-term liability must be transferred to the public sector to maintain economic viability and to encourage industry participation. Because the lifespan of sequestration projects after closure, which would include continuous [MMV] of the reservoir integrity, is contemplated to endure for possibly hundreds to thousands of years, the public sector (because of the longevity of public institutions and the ease of transferability of institutional knowledge) is seen as the most viable entity capable of maintaining these projects over the long term.

FESMIRE ET AL., supra, at 39.

ELPC and ETIP agree that transferring liability to the public during the postclosure period is sensible so long as there are effective cost-sharing arrangements and other limitations on the financial burden to be borne by the public. Notably, the transference of liability is not the only way to monitor and maintain these projects over the long term. For example, Australia’s proposed regulations for off-shore sequestration of CO2 intend that when a site is "closed" and the owner or operator vacates the site, post-closure long-term monitoring will be carried out by the Commonwealth, the cost of such monitoring nevertheless remains the responsibility of the operator, who must post financial security for the estimated cost of long-term monitoring and is liable to the

Commonwealth for actual costs incurred. See Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 § 249CZGAA & Explanatory Memorandum

Attachment A at 27.

A regulatory regime for GS in the U.S. too, could incorporate financial assurances and/or funding to address the long-term costs of MMV post-closure.[FN13] See Jeffrey W. Moore, The Potential Law of On-Shore Geological Sequestration of CO2 Captured From Coal-Fired Power Plants, 28 ENERGY L.J. 443, 468 (2007) (advocating a site-specific, risk-based approach to GS regulation). Additionally, the long-term liability scheme could provide for a national fund to address all other costs (e.g., remediation and corrective action), as well as damages relating to any incident at any closed GS facility.

[FN13] The proposed UIC regulations address MMV post-site closure very minimally. The ELPC and ETIP believe that given the uncertainties of GS and the great discretion which the proposed regulation grants the Director indetermining when a site no longer poses a risk to USDW, EPA should address longterm, post-closure MMV practices. We accept the scientific assessment that sequestered CO2 becomes more stable over time as secondary trapping mechanismsengage; however, given that the CO2 is meant to be contained indefinitely, postclosure monitoring and associated costs should be addressed.

The ELPC and ETIP support the transfer of responsibility not only because it is a practical solution to the problems of ensuring long-term care and responsibility of GS sites while encouraging sufficient investment, but alsofrom a moral standpoint-"philosophically, everyone-not just industry-is responsible in part for climate change and should bear some burden for its mitigation." FESMIRE ET AL., supra, at 59.

Response: As described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance.

EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25162

Comment: a. EPA’s Need for Additional Authority

In the preamble to the proposed regulation, EPA notes (probably correctly) that it lacks authority under the SDWA to establish a comprehensive long-term liability scheme for GS such as the one outlined above. "The SDWA authority . . . does not cover transfer of owner or operator financial responsibility to other entities [such as a government entity], or creation of a third party financial mechanism where EPA is the trustee." 73 Fed. Reg. at 43,520.

Nonetheless, a comprehensive long-term liability regime for GS, which includes an eventual transfer of responsibility to the government and the creation of a national fund, would facilitate large-scale implementation of CCS. EPA should advocate for the best approach that will not impede GS while giving maximum protection to USDWs and the public and, to the extent that EPA lacks authority under the SDWA to implement such an approach, it should seek additional authority from Congress.

Response: As described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance.

EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25163

Comment:b. Long-Term Liability Should Be Addressed at a National Level, Not Left to the

StatesEPA seems to suggest that because it lacks the authority to transfer liability from the owner or operator to the federal government, this piece of the liability puzzle could be left to the states to establish (or not). See U.S. EPA, PROPOSED UIC REGULATIONS FOR GEOLOGICAL SEQUESTRATION OF CARBON

DIOXIDE FEBRUARY 26-27, 2008 MEETING SUMMARY 6 (2008) (noting that individual states, exercising primacy under SDWA, could choose to assume responsibility for GS sites after closure, but that the EPA could not require the transfer of liability). Leaving it to the states to create appropriate liability and

financial mechanisms for GS is inadvisable for the reasons stated below. A

uniform national framework is needed.

First, individual states may not be able to achieve the economies of scale and pooling of resources that would make fund measures able to generate adequate coverage for CCS. Moreover, the "[t]ransfer of liability and ownership of the injected gas to the public sector may pose too great a financial burden, especially for a state with a populace of limited means and other significant resource-demanding needs (e.g. education, health care)." FESMIRE ET. AL., supra, at 59.

Second, much if not all of the energy industry is composed of companies that operate and/or supply energy in multiple states. We could see races to the bottom in which states compete with each other to attract CCS investment. Indeed, this has already been seen in reaction to the Department of Energy’s FutureGen project, where both Texas and Illinois extended indemnification and significant tax benefits to CCS projects in order to attract the investment. This competition increases the likelihood that state-implemented liability assumption and creation of trusts may not be adequate to cover the long-term costs of monitoring or future accidents. MOORE, supra, at 463 ("Disparities in state UIC programs could also lead to a concentration of [GS] activity in states with more lenient regulations . . . .").

Third, geological realities mean that some states (i.e., those with suitable storage formations) may bear a disproportionate share of the costs and risks of geological sequestration relative to those states’ consumption of the electricity or other products which generated the CO2.

Fourth, given the fact that stored CO2 is expected to migrate, in cases where the CO2 crosses state boundaries, liability and remediation issues would impact more than the single state in which the GS facility (well) is situated.

For these and other reasons, a national approach to GS regulation of long-term liabilities should be taken, which includes the creation of a national fund to address costs associated with unexpected damages or remediation measures.

Response: As described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance.EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. Furthermore, EPA does not have the authority under SDWA to create a national fund to address costs associated with unexpected damages or remediation associated with Class VI wells. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Scott Davis Letter ID: 0187 Commenter Organization: Arizona Public Service Company Comment ID: 25220 Other EPA Comment Codes and Descriptions: 1630 1.3.3 RCRA/hazardous waste issues (seeking comment); 1640 1.3.4 CERCLA issues (seeking comment)

Comment: - The final rule must resolve several key policy and legal questions regarding underground injection of CO2, including but not limited to implications under the Resource Conservation and Recovery Act ("RCRA") and the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), and limiting post injection liability.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA's authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

EPA received many comments regarding the applicability of the RCRA regulations and statute to CO2 streams that are geologically sequestered under the final Class VI UIC well requirements. As a result, EPA has decided to initiate a separate proposed rulemaking specifically to examine the issue of RCRA applicability to CO2 streams being geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2 GS in Class VI wells. EPA will consider these comments as part of its development of that proposal. The Agency will considerissues particular to RCRA in the context of that separate rulemaking, and recommends that the commenter read that proposed rule when it is published. The Agency notes that commenters who wish to submit comments on the RCRA proposal will need to do so during the comment period for that rule. Finally, EPA also notes that the final GS rule, which adds new regulations for Class VI wells under the Safe Drinking Water Act (SDWA), is not making any changes to the RCRA regulations.

EPA also clarifies that CO2 itself is not listed as a hazardous substance under CERCLA; however, the CO2 stream may contain a listed hazardous substance (such as mercury) or may mobilize substances in the subsurface that could react with ground water to produce listed hazardous substances (such as sulfuric acid). Whether such substances may result in CERCLA liability from a sequestration facility depends entirely on the composition of the specific CO2 stream and the environmental media in which it is stored (e.g., soil or ground water). CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain "federally permitted releases" (FPR) as defined in CERCLA, 42 U.S.C. 9601(10). Class VI permits will need to be carefully structured to ensure that they prevent potential releases from the well which are outside the scope of the Class VI permit.

Commenter Name: G. Graham Holden Letter ID: 0189 Commenter Organization: Oglethorpe Power Corporation Comment ID: 25243

Comment: appropriate. We also support EPA's recognition that while the new regulations at hand must be within the scope of the SDWA, there are a number of very important issues (such as long term liability) that are outside the scope of the act, but that are critical to developing a viable GS program for CO2 injection and

storage.

Response:EPA acknowledges the commenter’s concern regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that financial resources are available to protect USDWs throughout the life of the GS project.However, the authority under the SDWA does not extend to release owners or operators from longterm responsibility for the potential economic costs of impacts unrelated to USDWs. EPA does not have authority to transfer liability from one entity to another and SDWA does not provide for the creation of a third party financial instrument where EPA is the trustee. In the UIC program, liability under SDWA §1423 remains with the owner or operator for all well classes until all regulatory requirements have been met. EPA understands that Congress is considering legislation that may address the liability issue.

See the final rule preamble for further discussion of EPA's approach.

Commenter Name: Richard Guinn Letter ID: 0210 Commenter Organization:Eastman Chemical Company Comment ID: 22694 Other EPA Comment Codes and Descriptions: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: 3. CLASS VI (Underground Injection Control (UIC) permits need to identify the potential for hazardous substances that might be generated in geologic formations after facility decommissioning and well closure so that should releases occur, they would be federally-permitted.Response: As described above, CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “federally permitted releases” (FPR) as defined in CERCLA, 42 U.S.C. 9601(10). Class VI permits will need to be carefully structured to ensure that they prevent potential releases from the well which are outside the scope of the Class VI permit.

Regarding long term liability, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§7401-7671; CERCLA, 42 U.S.C. §9601-9675; and RCRA, 42 U.S.C. §6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Richard Guinn Letter ID: 0210 Commenter Organization:Eastman Chemical Company Comment ID: 22742

Comment: scope of the AoR changes. Absent of Federal or state assumption of long term liability, and regulatory clarity on the inapplicability of CERCLA, and events and their mitigation, it will be difficult for insurers to provide coverage for any more than a limited scope.

Response:EPA acknowledges the commenter’s concern regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that financial resources are available to protect USDWs throughout the life of the GS project.However, the authority under the SDWA does not extend to release owners or operators from longterm responsibility for the potential economic costs of impacts unrelated to USDWs. EPA does not have authority to transfer liability from one entity to another and SDWA does not provide for the creation of a third party financial instrument where EPA is the trustee. In the UIC program, liability under SDWA §1423 remains with the owner or operator for all well classes until all regulatory requirements have been met. EPA understands that Congress is considering legislation that mayaddress the liability issue.

As described above, whether the presence of hazardous substances in the CO2 may result in CERCLA liability from a sequestration facility depends entirely on the composition of the specific CO2 stream and the environmental media in which it is stored (e.g., soil or ground water). CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “federally permitted releases” (FPR) as defined in CERCLA, 42 U.S.C. 9601(10). Class VI permits will need to be carefully structured to ensure that they prevent potential releases from the well which are outside the scope of the Class VI permit. Class VI permits will need to be carefully structured to ensure that they prevent potential releases from the well which are outside the scope of the Class VI permit.

The UIC program Director has authority under SDWA §1423 to address potential compliance issues (e.g., potential releases that may endanger USDWs) resulting from injection violations in the unlikely event that a remedial response is necessary. Although EPA anticipates that the need for emergency or remedial actions at GS sites will be rare, the GS rule requires, at §146.94, that emergency and remedial response plans be developed and updated to address such events and that owners or operators demonstrate that financial resources are set aside to implement the plans if necessary, per §146.85. As described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will no longer be subject to enforcement under specific sections of the Act as they relate to the UIC regulatory requirements. Furthermore, their financial instrument will be released if was not used. However, the Agency clarifies that an owner or operator may be held liable, even after site closure is approved under §146.93, under §1423 of the SDWA for violating §144.12.

Commenter Name: Richard Guinn Letter ID: 0210 Commenter Organization:Eastman Chemical Company Comment ID: 22743

Comment:EPA is requesting comments on whether financial responsibility mechanisms to be recommended in EPA guidance should be adjusted in the manner described, whether additional instruments should be included, and whether other adjustments to the financial responsibility mechanisms should be considered, all subject to EPA’s authority under the SDWA. EPA Notice 133.

EPA needs to consider and define how it will deal with and allow transfer of financial responsibility between private entities and also potentially to Federal agencies or other sovereign entities such as states or commonwealths.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under§1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Barbara Walz Letter ID: 0216 Commenter Organization: Tri-State Generation and Transmission Association,

Inc. Comment ID:

22979

Comment: H. Regardless of EPA's success in establishing a clear regulatory structure for addressing site remediation risks and site liability risks, at some point a government backstop for liability needs to be established. There is a clear role for private insurance/risk management firms for assuming certain categories of the risks associated with a geologic sequestration project. However, these projects are intended to sequester carbon long into the future. This presents a risk category with particularly difficult characteristics. Private companies cannot quantify risks for such an open-ended condition and likely will not write policies for this stage of the geologic sequestration project. Government is urging geologic sequestration for protection of the public welfare. In order for it to occur on a broad-scale, government will have to be willing to bear some of the low probability, long time-frame risks.

Tri-State appreciates the work EPA has done studying possible approaches to geologic sequestration site stewardship. Tri-State sees some promise in parts of the general framework of the first model listed in the study for federal management of geologic sequestration liability --The Price-Anderson Act. Specifically, using three tiers for funding the liability regime would seem to be a good starting point for developing a similar regime for geologic sequestration. The approach "requires a licensed nuclear facility to maintain both site-specific liability insurance (Tier 1) and industry-pooled liability insurance (Tier 2). In the event that the private claims against a licensee exceed the amounts available in both the site-specific, individual insurance and the industry-pooled insurance, the federal government (Tier 3) provides the licensee with indemnity."

EPA should consider a 3-tier liability scheme for geologic sequestration that incorporates private insurance, pooled industry insurance and a government backstop.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirementsunder Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Barbara Walz Letter ID: 0216 Commenter Organization: Tri-State Generation and Transmission Association,

Inc. Comment ID:

22980

Comment: I. In considering financial assurance requirements, EPA and stakeholders should distinguish financial assurance from liability. Regardless of the length of time EPA establishes in the final rule for a geologic sequestration facility owner or operator to maintain financial assurance instruments, liability may last longer, depending on which statutory provisions are applicable, as well as state law. While EPA is limited in its ability to address potential liability, it should seek to do so, as potential long-term liability is a significant deterrent to development of carbon capture and storage.

Response:EPA acknowledges the commenter’s concern regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that financial resources are available to protect USDWs throughout the life of the GS project.However, the authority under the SDWA does not extend to release owners or operators from longterm responsibility for the potential economic costs of impacts unrelated to USDWs. EPA does not have authority to transfer liability from one entity to another and SDWA does not provide for the creation of a third party financial instrument where EPA is the trustee. In the UIC program, liability under SDWA §1423 remains with the owner or operator for all well classes until all regulatory requirements have been met. EPA understands that Congress is considering legislation that may address the liability issue.EPA clarifies that the GS regulation does not promote or encourage the use of GS; rather it is designed to ensure consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirements to prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions. See the final rule preamble for further discussion of EPA's approach.

Commenter Name: Olon Plunk Letter ID: 0217 Commenter Organization:Xcel Energy, Inc. Comment ID: 21554

Comment: Owners and operators must have a means to bound and quantify the potential longterm liabilities associated with a geologic storage project, otherwise, it could be impossible to secure the necessary insurance and financing. As a matter of national policy, the success of geologic storage is essential to our future energy security and climate mitigation strategies. These projects provide a public benefit. As such, the regulatory framework should provide a mechanism whereby the long-term liability for a properly sited, permitted, operated and closed project can be capped or quantified, and then later transferred or shared. Unless the potential open-ended and long-term liability imposed by the proposed rule is resolved, it is questionable whether geologic storage can be implemented on a large-scale basis.

Response:EPA acknowledges the commenter’s concern regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that financial resources are available to protect USDWs throughout the life of the GS project.However, the authority under the SDWA does not extend to release owners or operators from longterm responsibility for the potential economic costs of impacts unrelated to USDWs. EPA does not have authority to transfer liability from one entity to another and SDWA does not provide for the creation of a third party financial instrument where EPA is the trustee. In the UIC program, liability under SDWA §1423 remains with the owner or operator for all well classes until all regulatory requirements have been met. EPA understands that Congress is considering legislation that may address the liability issue. EPA clarifies that the GS regulation does not promote or encourage the use of GS; rather it is designed to ensure consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirements to prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions.

EPA disagrees that caps should be placed on financial responsibility requirements in the proposed rule. A cap may result in the endangerment of a USDW if the appropriate amount of money provided under the financial instrument is less then what is needed to protect the USDW. EPA believes that the instruments chosen for financial responsibility must cover the complete costs of these activities.

Commenter Name: Ben Yamagata Letter ID: 0227 Commenter Organization: Coal Utilization Research Council Comment ID: 21792

Comment: UIC well classes. Further, the rule provides no guidance to accommodate transfer of owner or operator financial responsibility to other entities, and there is no discussion of the creation of a third-party financial mechanism whereby a government entity, for example, could act as trustee to execute or cause to be executed any long-term responsibilities or requirements. It isrecommended that such mechanisms be established in order for GS projects to move

forward.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. Furthermore, EPA does not have the authority under the SDWA to create a financial mechanism for Class VI wells. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:M. Granger Morgan Letter ID: 0233 Commenter Organization: Carnegie Mellon University on behalf of the CCS Reg Project Comment ID:

21907

Comment: 16. Long-term Liability: Widespread commercial deployment of CCS requires a clear prior understanding of what entity will be responsible and financially liable for assuring that injected CO2 remains safely underground after operations at the site cease. Private sector entities often have relatively short time-horizons and lifetimes in comparison with the period over which injected CO2 must remain sequestered. Thus, we have serious doubts about the efficacy of holding operators responsible in perpetuity, as under the proposed UIC class VI rules. A number of alternative strategies could be used to finance and manage long-term liability, as detailed in Chapters 7 and 8 of the attached report [SEE PDF TO VIEW THE REPORT]. We believe that settling the question of long-term liability, in a manner that gives confidence to both the public and project financial backers, will require either amendment of the SDWA, or passage of new legislation, to allow legal responsibility for closed GS sites to be transferred to a thirdparty or government entity.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Abbie Krebsbach Letter ID: 0235 Commenter Organization:Montana-Dakota Utilities Co. Comment ID: 23189

Comment: The preamble acknowledges that EPA is making no attempt to factor in circumstances in which a state, for example, or other third party has assumed long-term risk or liability for or ownership of stored CO2 (as is contemplated in the Interstate Oil and Gas Compact Commission (IOGCC) model statute and regulations issued in September 2007 and by some states). Montana-Dakota encourages the EPA to consider that liability transfers may be effectuated under other laws and to examine closely how the UIC rules can take such provisions into account, and consider how these entities would be required to provide

financial assurance.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information(e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Robert E. Carter Jr. Letter ID: 0236 Commenter Organization: Indiana Department of Natural Resources (IDNR) Comment ID: 23202

Comment: 2. The establishment of a viable framework for managing long-term property rights, monitoring, and liability issues that may arise after the closure period specified in the Class VI proposed rules. Consideration may be given to a process for the transfer of ownership of the storage facility from the operator to the state or another third-party entity who assume the role of "caretaker" for the management of long-term liabilities. Included also should be the creation of a state-administered trust fund or other sound long-term funding mechanism that would ensure that sufficient resources are available to remedy any adverse conditions that might arise after the release of the facility operator from further liability.

We believe that these issues are most appropriately managed by individual states who, like Indiana, are interested in promoting the development of CCGS operations.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if heor she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. Furthermore, EPA does not have the authority under the SDWA to create a financial mechanism for Class VI wells. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Kevin Wanttaja Letter ID: 0248 Commenter Organization:Western Energy Supply and Transmission

Associates Comment ID:

22244

Comment:– Nevertheless, WEST believes an efficient and effective liability insurance program should be developed for UIC GS site developers and owners to avoid what otherwise will be a very large disincentive for project developers to construct the significant amount of GS capacity that will be needed to meet the goals of a national GHG emissions abatement program such as what S.2191 portends. The utility electric power industry is familiar with the model offered by the nuclear power industry as regulated by the NRC. WEST believes that because of the very low probability of catastrophic release of stored CO2, but because of the extremely high potential risk of harm to the public in the unlikely event of a catastrophic release, a Liability Model patterned after the principles laid out in the "Price-Anderson Nuclear Industries Indemnity Act of 1957" may be workable in this instance. This Liability Model is comprised of three elements:

1. Site-specific private insurance, 2. Industry-wide pooled insurance, and 3. Federal indemnity as the insurance of last resort.

Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, including private insurance, provided the Director determines that the operator's proposed instrument is adequate to protect USDWs from endangerment. The ability of the owner or operator to pay for each activity must be demonstrated, including corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. See the final rule and preamble for further discussion of EPA's approach to financial responsibility.

Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of theMiscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.

Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

EPA acknowledges the commenter’s concern regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that financial resources are available to protect USDWs throughout the life of the GS project. However, the authority under the SDWA does not extend to release owners or operators from long-term responsibility for the potential economic costs of impacts unrelated to USDWs. EPA does not have authority to transfer liability from one entity to another and SDWA does not provide for the creation of a third party financial instrument where EPA is the trustee. In the UIC program, liability under SDWA §1423 remains with the owner or operator for all well classes until all regulatory requirements have been met. EPA understands that Congress is considering legislation that may address the liability issue. EPA clarifies that the GS regulation does not promote or encourage the use of GS; rather it is designed to ensure consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirements to prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name:Walter L. Baker Letter ID: 0253 Commenter Organization: Utah Division of Water Quality Comment ID: 22354

Comment:LIABILITY

Currently, under the Safe Drinking Water Act, liability remains with the owner/operator indefinitely. We believe this represents a significant barrier to the implementation of CCGS projects so long as there are perceived long-term risks after closure. Alternative scenarios have been proposed (IOGCC Sept 5, 2007; de Figueiredo, 2007) that would significantly reduce this barrier by establishing a CO2 sequestration fund capitalized by a CO2 storage tax or fee paid by the owner/operator on a per-ton-of-CO2-injected basis. This fund would be used by the long-term liability management entity to conduct on-going monitoring, to plug and abandon orphaned CO2 storage wells, to pay out compensation for damages, and to remediate a CO2 storage facility.

We encourage the EPA to enable an alternate liability scheme to the one offered currently by the Safe Drinking Water Act in which liability remains with the owner/operator indefinitely. This may require an amendment to the Safe Drinking

Water Act.

Response:EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that financial resources are available to protect USDWs throughout the life of the GS project. However, the authority under the SDWA does not extend to release owners or operatorsfrom long-term responsibility for the potential economic costs of impacts unrelated to USDWs. EPA does not have authority to transfer liability from one entity to another. In the UIC program, liability under SDWA §1423 remains with the owner or operator for all well classes until all regulatory requirements have been met. EPA understands that Congress is considering legislation that may address the liability issue.

Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility.

Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-level trust described by the commenters that would cover large numbers of GS projects.

EPA clarifies that the GS regulation does not promote or encourage the use of GS; rather it is designed to ensure consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirements to prevent endangerment of USDWs in anticipation of

the eventual use of GS to reduce CO2 emissions.

Commenter Name:Michael Moore Letter ID: 0265 Commenter Organization:North American Carbon Capture & Storage Association (NACCSA) Comment ID:

22860

Comment: future date. Additionally, NACCSA notes that because of the Agency's limited jurisdiction, issues related to long-term liability and property rights will remain to be resolved despite this rulemaking, and CCS projects may not go forward in the absence of such resolution. NACCSA encourages the Agency to continue seeking information in this regard and to support development of a complete regulatory scheme for CCS.

Response:EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that financial resources are available to protect USDWs throughout the life of the GS project. However, EPA does not have authority to transfer liability from one entity to another and SDWA does not provide for the creation of a third party financial instrument where EPA is the trustee. In the UIC program, liability under SDWA §1423 remains with the owner or operator for all well classes until all regulatory requirements have been met. EPA understands that Congress is considering legislation that may address the liability issue.

EPA clarifies that the GS regulation does not promote or encourage the use of GS, and that addressing property rights is outside the scope of the GS rulemaking. Rather the GS rule is designed to ensure consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirements to prevent endangerment of USDWs in anticipation of the eventual

use of GS to reduce CO2 emissions.Commenter Name: Grover Campbell Letter ID: 0271 Commenter Organization: Chesapeake Energy Comment ID: 22894

Comment: 3. Liability after "Site Closure"

In the preamble to the proposed rule, the EPA states that "Trust responsibility for potential impacts to USDWs remains with the owner or operator indefinitely under current SDWA provisions." In essence, the EPA has chosen not to address the issue of long term liability after "site closure", which is the period of time after the end of the post-injection site care phase of the GS project.

Prior to issuing a final rule on CO2 sequestration, the EPA must address this liability issue. While we do not offer a specific approach to the problem of "site stewardship after site closure", we do believe that the approach taken should be in line with the basic recommendations of the Interstate Oil and Gas Compact Commission (IOGCC) as outlined in "CO2 Storage: A Legal and Regulatory Guide for

States".

The IOGCC has proposed a two-stage Closure Period and Post-Closure Period. The Closure Period is defined as that period of time when the plugging of the injection well has been completed and continuing for a defined period of time (10 years unless otherwise designated by the State Regulatory Agency) after injection activities cease and the injection well is plugged. During this Closure Period, the operator of the storage site would be responsible to maintain an operational bond and individual well bonds.The individual well bonds would be released as the wells are plugged. At the conclusion of the Closure Period, the operational bond would be released and the liability for ensuring that the site remains a secure storage site during the Post-Closure Period would transfer to the state. During the Post-Closure Period, the financial resources necessary for the state or a state contracted entity to engage in future monitoring, verification, and remediation activities would be provided by astate-administered trust fund. The IOGCC proposed the creation of an industryfunded and state-administered trust fund as the most effective and responsive "care-taker" program to provide the necessary oversight during the Post-Closure Period . The trust fund would be funded by an injection fee assessed to the site operator and calculated on a per-ton basis, at the point of custody transfer of the CO2 from the generator to the site operator.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if heor she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: David Hawkins Letter ID: 0272 Commenter Organization:Natural Resources Defense Council Comment ID: 24080

Comment: In addition, given the desired permanent nature of CO2 sequestration in the subsurface and the importance to the public of ensuring long-term attention to oversight of project sites, EPA should adopt provisions to assure long-term stewardship of GS repositories. This framework should designate an entity with responsibility for monitoring and managing sites after closure has been authorized. The proposed rule authorizes operators to stop monitoring, but does not provide for the stewardship of sites following closure. This needs to be rectified by EPA. The agency should consider its authority not just under the Safe Drinking Water Act, but also under the Clean Air Act to provide the required stewardship framework. It is important that the post-closure framework include financing provisions that avoid hidden subsidies for private sector operators and are adequate to ensure proper site stewardship in the long-term.

Response: Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it has not been used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances, for example, if the Director relied on erroneous information provided by the owner or operator when approving site closure. Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migration towards or into a USDW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38, whereby all other regulatory responsibilities are transferred, including all potential liabilities associated with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of the final rule.After site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's approach.

Comments related to EPA’s authority under the Clean Air Act are outside the scope of the GS regulation.

Commenter Name: Becki Clayborn Letter ID: 0509 Commenter Organization: Sierra Club Comment ID: 21204

Comment: One of the other concerns that I have is we've seen states that have proposed legislation to pass the liability for any problems in such a, in such projects, to pass the liability on to the state government, which therefore means the

taxpayers.

The taxpayers should not be responsible for the liability of these projects. And the companies need to take responsibility, either in the form of a long-term bond, or a trust, which the government can then help maintain.

Response: Under the final GS rule, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be subject to a §1431 response order even after proper site closure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may present an imminent and substantial endangerment to the health of persons, and the appropriate State and local authorities have not acted to protect the health of such persons. The action may include issuing administrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or operator may remain liable under tort and other remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Comment Code: 5500 2.1 Comments on Involving the Public in Permitting Decisions

### Individual Comments

Commenter Name: Dwight Lockwood, PE, QEP Letter ID: 0141 Commenter Organization: Global Energy, Inc. Comment ID: 23093

Comment: The authority should also prescribe appropriate public involvement in siting decisions, and a process for review. They should however not allow extensive obstruction of technically decided decisions, or the program will have limited adoption and support.

Response: The Agency believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects that may affect the public. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to request a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin communicating with the public by providing information as early in the process as possible. Encouraging public participation allows the permitting authority to understand public viewpoints, preferences, and concerns about the project, which might help avoid public misperceptions about the nature and safety of GS projects and forestall resistance later in the permitting effort.

Commenter Name:James Dooley Letter ID: 0156 Commenter Organization:Joint Global Change Research Institute, Pacific Northwest National Laboratory Comment ID:

22652

Comment: Stakeholder Input and the Periodicity of this Involvement

o Page 43520. The draft rule states "During this 50 year period, the owner or operator would be required to submit periodic reports." What’s the periodicity of these reports? A layperson would likely see this as a more meaningful step to regulate GS if the periodicity was annually as opposed to once every 15 years. I do not intend to imply that annual reporting is the appropriate periodicity but by not specifying the interval the value of this as a regulatory tool or a means of building public trust in nascent GS technologies is largely gutted.

o Page 43520. The draft rule seems to imply that the draft site closure plan would be made publically available. That is fine and appropriate, but the rule does not address what data will be made publically available when the GS project is being planned or during its operational phase. I do not see how the USEPA can be silent on this point.

o Pages 43522-43523 contain an explicit discussion of public involvement in GS projects. This passage says that a summary of this pre-construction public involvement activity would become part of the public record. So the rule says that something at the very earliest stages of a GS project and something at the very end are public documents, but it is not clear what data during the 30-50 year operational life of the project are publically available.Response:EPA clarifies that the final GS rule does not specify a frequency for monitoring or reporting during the post-injection period. However, the post-injection site care and site closure plan submitted as part of the permit application must specify monitoring and reporting frequencies (See §146.93(a)(2)), and the Director must approve the plan. Additionally, the owner or operator must continue monitoring as specified in the post-injection site care and site closure plan for 50 years following the cessation of injection, unless demonstrated otherwise or for the duration of the alternative timeframe approved by the Director pursuant to requirements in §146.93(c).

In addition to the public process during the permitting phase, EPA expects that permitting authorities will maintain an administrative record for the project, which at the discretion of the permitting authority might be available online and at the authority's office. This record should consist of the application materials and draft and final permits, along with public comments received on the draft permit as required under 40 CFR Part 124. Please note all state programs for purposes of Class VI wells must be at least as stringent as the federal minimum requirements under the UIC program, which includes permitting requirements under 40 CFR 145.11. EPA anticipates that permitting authorities will maintain monitoring and operational data submitted by owners and operators; the public could request this information from the permitting authority. Where EPA is the permitting authority, such data could be requested by the public under the Freedom of Information Act. EPA will also encourage an ongoing relationship between the permitting authority and the owner or operator, e.g., at the time of periodic reevaluation of the AoR and corrective action plan required at §146.84(e), as well as when any revisions are made to the testing and monitoring plan and financial responsibility demonstrations based on the AoR reevaluation.

EPA notes that administrative procedure laws vary by state. States will describe their public participation activities in their primacy applications and must be at least as stringent as those provided under Parts 145 and 146.

EPA recognizes that the AoR reevaluation process may generate significant levels of public interest. EPA added text to §144.39(a)(5) that permit modifications would be required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. This would invoke the public notification procedures of 40 CFR Part 124. EPA clarifies that minor permit modifications under 40 CFR 144.41 do not require public notification.

Commenter Name:James Dooley Letter ID: 0156 Commenter Organization:Joint Global Change Research Institute, Pacific Northwest National Laboratory Comment ID:

22654 Other EPA Comment Codes and Descriptions: 4700 2.7 Proposed Recordkeeping and Reporting Requirements (40 CFR 146.91)

Comment: Page 43528. The proposed Class VI rule states "The information gathered as a result of this proposed rule" allows the Agency to verify throughout the life of the injection project that UIC protective requirements are in place and that USDWs are protected. At the end of the day, this is indeed the figure of merit. Does this rule allow for sufficient exchange of information between the owners/operators of GS projects and regulators and stakeholders (?). This reviewer is not convinced that this metric is satisfied by the proposed rule.

Response:EPA agrees that interaction between the owner or operator and the Director is animportant part of ensuring that GS projects are operated in a manner that protects USDWs from endangerment. EPA believes that the site-specific GS project plans which will be reviewed and approved by the Director and periodically updated throughout the life of the project—promote an ongoing dialogue between the operator and the Director that will encourage use of the most appropriate technologies for a particular project.

EPA encourages (but does not require) operators and permitting agencies to begin involving the public by providing information as early in the GS project development process as possible. Involving the public in the permitting process is an important aspect of both UIC Program requirements and EPA's overall mission. The public will also have the opportunity to submit written comments and, in many cases, attend hearings on proposed GS projects during formal public comment periods. Although permit application information will not be made available as it is submitted, permitting authorities must follow the public participation requirements for UIC permits specified in 40 CFR Part 124 which require that owners or operators publish a public notice that includes information about where interested parties can obtain copies of the draft permit and application in addition to requesting a public hearing.

Furthermore, the Agency recognizes that the initial phases of site evaluation and site selection may begin in advance of permit application submission. The public may become aware of these activities and begin to have questions or concerns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process—can help clarify project details and avoid public misperceptions about the nature and safety of GS projects. This may also benefit the owner or operator by improving local acceptance of the site. EPA also notes that should changes to these plans require a permit modification under §144.39, the public must be notified according to the public comment procedures under 40 CFR 124.

In addition, EPA is evaluating options for a centralized data system through which the public could have access to public information on a GS project. EPA will also provide access to any required plan to the public upon request. Providing the public with information throughout the GS project will help clear up and avoid public misperceptions about the nature and safety of GS.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23370

Comment: Public Participation -- Pg. 44

APPA agrees that public participation is crucial to the success of any individual CO2 GS project and of the UIC Program as a whole.

Response: The Agency believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to request a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Encouraging public participation allows the permitting authority to understand public viewpoints, preferences, and concerns about the project, which might help avoid public misperceptions about the nature and safety of GS projects and forestall resistance later in the permitting effort.Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23428

Comment: Public Participation

APPA agrees that public participation is crucial to the success of any individual CO2 GS project and of the UIC Program as a whole. Id. at 43523. We urge EPA to structure the Final Rule’s public participation requirements to maximize impact without unnecessarily slowing down the application process. To this end APPA believes that public participation would prove most useful after an application has been deemed complete but before it has been approved. APPA is inclined to believe that the states will set up public participation requirements consistent with their existing proposed new plant operations. APPA does not want the EPA UIC Class VI rulemaking to add new steps for permit review or hearings but offers no Federal pre-emption of existing state public participation requirements.

Response: The Agency believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to request a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Encouraging public participation allows the permitting authority to understand public viewpoints, preferences, and concerns about the project, which might help avoid public misperceptions about the nature and safety of GS projects and forestall resistance later in the permitting effort.

EPA disagrees with commenters who claim that early public involvement may slow the application process. Encouraging public participation allows the permitting authority to understand public viewpoints, preferences, and concerns about the project, which might help avoid public misperceptions about the nature and safety of GS projects and forestall resistance later in the permitting effort.

Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23511

Comment: 14. Public Participation

USWAG agrees that public participation is crucial to the success of any individual CO2 GS project and of the UIC Program as a whole. Id. at 43523. We urge EPA to structure the Final Rule's public participation requirements to maximize impact without unnecessarily slowing down the application process. To this end, the Final Rule should not require public participation too early in the permit process; USWAG believes that public participation would prove most useful after an application has been deemed complete but before it has been approved.

Response: The Agency believes that public participation is an important part of the UIC permittingprocess and wants to ensure wide access to decision-making processes and information on projects that may affect the public. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to request a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Encouraging public participation allows the permitting authority to understand public viewpoints, preferences, and concerns about the project, which might help avoid public misperceptions about the nature and safety of GS projects and forestall resistance later in the permitting effort. EPA disagrees with commenters who claim that early public involvement may slow the application process. Encouraging public participation allows the permitting authority to understand public viewpoints, preferences, and concerns about the project, which might help avoid public misperceptions about the nature and safety of GS projects and forestall resistance later in the permitting effort.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23557

Comment:EEI shares the Agency‘s view that accurate public perception and increased understanding of CCS technology are critical to its success at the commercial level. To that end, EEI supports the development of regulations and policies that will serve to educate the public and provide for appropriate public input on projects. However, EEI is concerned that imposition of public participation provisions like those currently applicable under the Resource Conservation and Recovery Act (RCRA) are unnecessary and undesirable for GS projects. EEI encourages the Agency to craft provisions that support decision-making based upon sound science and do not unduly hamper siting decisions.

Response: The Agency believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects that may affect the public. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to request a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Encouraging public participation allows the permitting authority to understand public viewpoints, preferences, and concerns about the project, which might help avoid public misperceptions about the nature and safety of GS projects and forestall resistance later in the permitting effort.

EPA clarifies that RCRA public participation provisions do not apply to Class VI permits.

Commenter Name:Lee Sprague Letter ID: 0505 Commenter Organization: Sierra Club Comment ID: 21235

Comment: I believe that attempts to limit public information and public awareness of the UIC technologies and the state of the monitoring activities -- out of consideration for them for unduly raised concerns or disingenuous. The public, if it is safe, then -- is safe, full public disclosure is essential forconfidence.

Public notices to residents in the areas of review and residents adjacent to areas of review should include notifications of the initial wells and subsequent well injections for the lifetime of the emission source or the capacity of the AoR. Simply allowing the permit on a one-time basis is not adequate. The public has the right to know of the future plans, the right-of-ways, and the injection points that will be used over the entirety of the process.

Public hearings should be required and not be left to the discretion of the director. This makes an uneven application of the law, and it should be a mandatory requirement for all applications.

The public should be notified early on in the process, during site evaluation and site selection processes. Again, public information and knowledge is essential to public confidence. Failure to disclose these elements while the process is undergoing will raise more concerns at the end of the day.

Any application for UIC permits for geologic sequestration of carbon dioxide should be required to estimate the number of injection sites from AoR, area of review. This is legal and clear at this point over the lifetime of emission of the power plant how many injection wells will be needed. In some states it depends on the geological substrata of, to what that capacity may be.

Well, to come into a community and just place one well for one permit and then all of a sudden more permits are being issued based on initial site review,there are a lot of issues that are raised with that eminent domain, right-ofway. The industry wants to put a straight line pipeline to its next injection well site, but that's going to cost public access, public right-of-way, private property that needs to be fully disclosed and mapped out prior, before utilization of that field for all of its injection well sites and capacities.

This is critical because local communities have long range local zoning ordinances and planning process that will extend throughout the lifetime of a, of a well or an area to be used for well site. And so these kinds, this kind of notification and long-term notification of potential well types is essentially to local communities to adequately plan and provide health and safety for the

welfare of their residents.

Property owners should be required to disclose UIC sites on or adjacent properties that are being sold in the AoR. Covenants for the land regarding UIC sites should be required. Public disclosure of UIC sites nearby, near, on, or adjacent to properties should be disclosed to sellers. If it's a safe process, again, this is part of the public notification.

Mapping a potential AoR well site leakage it should be disclosed and noticed as part of any public hearing process. For example, low- lying areas next to a well site should be mapped out to where the first one hundred thousand tons of CO2 could escape via well heads. Where does that settle at? It's heavier than air, it'll accumulate in low-lying areas, and I believe that the public, the publicneeds to be notified, and a worse case scenario, mapping out low-lying areas of the CO2. And again, this should be part of the public disclosure for any transfer of land, or selling of land in that community?

And as an example, I would say that a map that would be adequate for public health and welfare of a local community, if there was a leak at the wellheads, where the first hundred thousand tons of CO2, where would it funnel at, where would that be rolled or displace oxygen at, and map out those low-lying areas.

And then a concentric circle where the second one hundred thousand tons of CO2 that escape from a well, where would that settle in and apply, and map out where it will go. Because those people in those areas potentially could be impacted. And it's just not people, we're talking of other resources.

I think that a metric that is easily discernible to the public needs to be created and utilized in this process. In other words, once you have a well closure safe, or you can, during the monitoring process, that I want to know as a public citizen, what if a one inch penetration of a cap stone occurs during the injection process or during the closure process. How much CO2 per day, per annum can I expect? I would like to say not annum, but per day, per week, by month, can I expect from a one inch penetration of a cap stone in geologically sequestered area review.

How, and I want to know, well, what about a two inch penetration? How much CO2 is likely to escape? What about a three inch penetration?

This is a metric that the public likely needs to understand the potential. There could be an accidental penetration of the cap stone. There are existing wells that I know, I'm personally aware of in Madison County, Michigan where I have resided and where my tribe is located, where there are simply pools of mud. And we already have sulfide gases that are turning, up to 40,000 parts per million, way above any standard by the EPA. But these are controlled by simply putting them in the mud. These are potential escape routes for CO2, again, they needed to be mapped out as the proposals indicate.

But, you know, I want to know what the failure, or the opening up of one of these penetrations means by communicating in terms of the rate of CO2 emissions that are becoming stagnant. And again, the mapping out of where the CO2 will accumulate in low lying areas.

The public should be made aware of and have an opportunity to participate in any of the emergency or contingency planning based on catastrophic leaks of a well site. If this happens there needs to be clear steps taken, and coordination of the local community to outline a contingency plan or notification.

Response:EPA encourages GS well owners or operators and permitting agencies to begin involving the public by providing information as early in the GS project development process as possible. Involving the public in the permitting process is an important aspect of both UIC Program requirements and EPA's overall mission. The public will also have the opportunity to submit written comments and, in many cases, attend hearings on proposed GS projects during formal publiccomment periods. Although permit application information will not be made available to the public as it is submitted to the Director, permitting authorities must follow the public participation requirements for UIC permits specified in 40 CFR Part 124, which require that owners or operators publish a public notice that includes information about where interested parties can obtain copies of the draft permit and application.

Furthermore, the Agency recognizes that the initial phases of site evaluation and site selection may begin in advance of permit application submission. The public may become aware of these activities and begin to have questions or concerns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process—can help clarify project details and avoid public misperceptions about the nature and safety of GS projects. This may also benefit the owner or operator by improving local acceptance of the project.

In response to the comment that public notice should be required for every well, EPA notes that the final rule requires a permit application, and therefore public notice, for every Class VI well. Area permits are not an option for Class VI wells. EPA disagrees that public hearings should be mandatory for all GS permits, in order to account for the possibility that, if the public does not express an interest in a hearing, holding one would not be useful. 40 CFR 124.12 provides the Director with the discretion to hold public hearings if there is a significant degree of interest in a draft permit. EPA expects that public hearings will be requested and held for many GS projects, due to the expected level of public interest in GS projects. EPA notes that the final rule requires the owner or operator, upon site closure, to add a notation to the deed for the facility property noting that geologic sequestration took place. See §146.93(g). It does not require any notification to adjacent property owners, however.

EPA notes that the owners or operators must develop an emergency and remedial response plan for responding to USDW endangerment under §146.94. However, EPA does not have authority under the Safe Drinking Water Act to require owners or operators to develop plans for carbon dioxide that leaks to the surface outside the protection of USDWs from endangerment. EPA also does not have authority to address eminent domain and rights-of-way, which may vary from state to state.

Commenter Name:Leslie Glustrome Letter ID: 0527

Comment ID: 21415

Comment: absurd to try and go ahead. We need to make sure that all data is completely transparent, fully available to the public and all assumptions are identified clearly in plain English when you actually decipher some of the scientific papers that are being used to prepare the models, you realize that the assumptions assume that it is all going to be fine. Well if you assume it is part of the model, those will be fine. That is not -- does not take a lot of brains, but it is hard to dig down and find those assumptions, so I think that is all. Thank you very much.

Response:EPA agrees that all information presented to the public must be clear, understandable, and available. 40 CFR 124.10 requires EPA to provide public notice when a draft permit is prepared. Additionally, stakeholders may request copies of the draft permit and the permit application during the draft permit comment period; the application includes data on the geology of the injection and confining zones which are likely to be used as inputs for modeling. However, it is likely that information submitted in support of a permit in its original form (e.g., modeling inputs) may be extremely technical and not easily understood by a lay audience. Permitting authorities are requiredproduce a fact sheet that summarizes relevant information for the public in a much more understandable format than the supporting data in a permit application. See §124.8. The fact sheet describes the draft permit conditions, procedures to determine the final decision on the permit, any procedures to request a hearing, and procedures that may be available for additional public participation in the final permitting decision. EPA will encourage permitting authorities and operators to present all modeling data to the public.

Please note that EPA is not required under §124.10 to provide public notice of a request for permit modification, revocation and reissuance, or termination is denied. Furthermore, public notices may describe more than one permit action.

Comment Code: 5520 2.10.1 Appropriateness of existing public participation requirements (Part 25 and Part 124) for GS (seeking comment)



### Individual Comments

Commenter Name: Anonymous2 Letter

ID: 0133 Commenter Organization: Sierra Club National Global Warming and Energy Committee and Sierra Club California-Nevada Regional Conservation Committee on Energy and Climate Change Comment

ID: 21596

Comment: III. Public Acceptance

Public Participation: Adopt the existing requirements for public participation in programs under the Safe Drinking Water Act at 40 CFR Part 25 and 40 CFR Part

124.

Response:EPA agrees that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

Commenter Name: Skiles Boyd Letter ID: 0160 Commenter Organization: DTE Energy Comment ID: 21278

Comment: PUBLIC PERCEPTION AND AWARENESS

In conjunction with the issuance of the injection permit for the MRCSP project, EPA Region V staff required a public information meeting in lieu of a formal public hearing. The information meeting was coordinated by the MRCSP and included a briefing on the injection demonstration and anticipated results. Presentations were conducted by the project hosts, technical experts and academia. The public (which consisted of neighbors surrounding the project and several community advocates) was provided an opportunity to raise questions and concerns and learn about carbon sequestration. In general, the meeting was asuccess with the public reassured of the safety of the demonstration and that they were given an opportunity to voice their concerns. The point to be made here is that outreach is crucial to the successful deployment of CCS. DTE Energy supports development of regulations and policies that will serve to educate the public and provide for appropriate public input on projects. The preamble proposes to apply the public participation provisions of 40 C.F.R. Parts 25 and 124 to GS projects and seeks comments on the appropriateness and completeness of those provisions for this task. As elaborated by EEI: "...public participation provisions currently existing under the UIC program are appropriately applied to GS projects as well. However, Part 124 includes provisions for public participation that are unique to other programs, including RCRA. Imposition of public participation provisions like those currently applicable under RCRA is unnecessary and undesirable for GS projects ..."

Response:EPA agrees that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are important and appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete. Furthermore, the Agency clarifies that the provisions of 40 CFR 124 that apply to RCRA permits do not apply to Class VI UIC permits.

In response to comments regarding the requirements in 40 CFR Parts 25 and 124 applicable under RCRA, EPA clarifies that only the public participation requirements pertaining to the UIC program apply to Class VI wells.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24263

Comment: Rule Provisions: 73 FR 43523 EPA Preamble Question: 46. EPA requests comment on adopting the existing requirements for public participation at 40 CFR Part 25 and 40 CFR Part 124 and whether additional requirements should be included to reflect the availability of new tools for disseminating and gathering information. Such tools include cable networks, the Internet, and other new technology. EPA Notice 43523.

API Response: The current provisions in Parts 25 and 124 are sufficient to inform the public. Additional requirements should not be included.

Public participation should be consistent across programs. If EPA believes the public participation requirements should be expanded, it should be done in a holistic manner across programs.

Response:EPA agrees that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project-specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions aboutthe nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

In response to the suggestion to apply additional public participation requirements to all injection well classes, EPA notes that this is beyond the scope of the GS rulemaking.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23602

Comment: H. Public Participation Provisions

The preamble seeks comment on what public participation provisions should be included for GS wells. EEI shares the Agency‘s view that accurate public perception and increased understanding of CCS technology are critical to its success at the commercial level. To that end, EEI supports the development of regulations and policies that will serve to educate the public and provide for appropriate public input on projects. The preamble proposes to apply the public participation provisions of 40 C.F.R. Parts 25 and 124 to GS projects and seeks comments on the appropriateness and completeness of those provisions for this task. EEI agrees that public participation provisions currently existing under the UIC program are appropriately applied to GS projects as well. However, Part 124 includes provisions for public participation that are unique to other programs, including RCRA.[FN11] Imposition of public participation provisions like those currently applicable under RCRA is unnecessary and undesirable for GS projects, as further explained below.

The general public participation requirements under the UIC program provide for operators to submit a permit application, complete with all information required by the regulations, and for a completeness review of the submitted information. The public comment period is generally commenced once the director has prepared a draft permit for the project. This is a rationale approach for GS projects. It allows the project operator and the Agency to make preliminary decisions, such as decisions related to siting, that are critical to the success of the project generally--and to the protection of USDW specifically--based upon appropriate geologic and technical considerations. It then allows the public to review the proposed project in light of all of the information that would be required for permit issuance, including, for example, in the GS context, specific information related to siting, construction, operation and monitoring.

However, the RCRA public participation provisions provide for, under certain circumstances, public meetings prior to submission of a permit application for a hazardous waste management unit. While the siting of RCRA-regulated facilities is obviously based on a number of concrete considerations, the siting of GS projects is dependent upon site geology to an extent that does not exist in the RCRA context. While EEI supports creation of provisions that allow for public input into projects, issues related to project siting are particularly susceptible to public response, which may be based upon improper perceptions of risk or desires that projects be sited elsewhere rather than upon true risks that a project may pose to USDW. EEI encourages the Agency to craft provisions that support decision-making based upon sound science and do not unduly hampersiting decisions. In addition, as is echoed throughout these comments, imposing provisions on GS projects similar to those imposed upon hazardous waste in and of itself may feed into public misperceptions regarding the nature of projects and their safety as a general matter.

[FN11] See generally 40 C.F.R. Part 124, Subpart B.

Response:EPA agrees that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

In response to comments regarding the requirements in 40 CFR Parts 25 and 124 applicable under RCRA, EPA clarifies that only the public participation requirements pertaining to the UIC program apply to Class VI wells.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23715

Comment: Category: Public Participation

EPA Request for Comment: EPA requests comment on adopting the existing requirements for public participation at 40 CFR Part 25 and 40 CFR Part 124 and whether additional requirements should be included to reflect the availability of new tools for disseminating and gathering information. Such tools include cable networks, the Internet, and other new technology. EPA Notice 43523.

AWWA Response: 40 CFR 124 does not include a requirement for public notification when a request is made to modify, revoke and/or reissue an operating permit for a geologic sequestration project. It also does not provide for mandatory public hearings, as the regulations states that it is up to the discretion of the Director unless a hearing is specifically requested by a stakeholder. AWWA disagrees the omission of with these requirements and recommends that both of these activities be recognized as mandatory during the permit development, review, and approval processes for geologic sequestration projects.

Response:EPA disagrees that the requirements at 40 CFR Parts 25 and 124 are inadequate for GS projects. These public participation requirements have been effective for the other UIC well classes. EPA believes that these requirements can help avoid public misperceptions about the nature and safety of GS projects and address the public's concerns about the project. EPA notes that public notice is required when a draft permit is issued including when existing permits are modified (except for minor modifications). See §124.10(a) Public notice is also required when a permit is revoked or reissued. See §124.5(c)). Although public hearings are not mandatory, EPA expects that public hearings will be requested and necessary due to the expected level of public interest in GS projects. See §124.12. The commenter is correct that public notice is not required when a request for modification, revocation and reissuance and termination of a permit is made, however, EPA believes the public notice required when the draft is issued is appropriate for GS wells.EPA recognizes that the AoR reevaluation process may generate significant levels of public interest. EPA added text to §144.39(a)(5) that permit modifications would be required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. EPA notes that any permit modifications, except for minor modifications under 40 CFR 144.41, would invoke the public notification procedures of 40 CFR Part 124.

EPA disagrees that public hearings should be mandatory for all GS permits, in order to account for the possibility that, if the public does not express an interest in a hearing, holding one would not be useful. 40 CFR 124.12(a) requires the Director to hold public hearings if there is a significant degree of interest in a draft permit. EPA expects that public hearings will be requested and held for many GS projects, due to the expected level of public interest in GS projects.

Commenter Name: Bradley J. Field Letter ID: 0186 Commenter Organization:New York State Dept. of Environmental Conservation

Div. of Mineral Resources Comment ID:

25216

Comment: RR. EPA requests comment on adopting the existing requirements for public participation at 40 CFR Part 25 and 40 CFR Part 124 and whether additional requirements should be included to reflect the availability of new tools for disseminating and gathering information. Such tools include cable networks, the Internet, and other new technology.

NYSDEC-DMN Response: All states have public notice laws and regulations that cover most regulatory and permitting functions. These laws and regulations would extend to the permitting and the regulation of GS that require public notice, hearings and due process to all affected parties. This should be adequate for public involvement purposes.

Response:EPA does not require the use of any new information technologies to inform the public, but encourages GS project operators and permitting authorities to use the Internet as well as both new and established tools to explain and post information on the latest developments. This information may include schedules for hearings, briefings, and other opportunities for involvement. EPA plans to conduct outreach on the GS rule, and provides GS related information on its website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA currently uses social networking applications for important information (e.g., Facebook and Twitter), and will encourage GS operators and permitting authorities to use similar technologies to keep the public informed of GS projects. If states have applicable public participation requirements, these would need to be met

as well.

EPA believes that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

EPA understands that public notice laws and regulations vary from state to state. EPA would like toclarify that in order for a state to receive primacy for Class VI GS wells their public notice requirements for permits must be at least as stringent as those required under Part 124. This requirement should provide a level uniformity between primacy states for purposes of providing public notice for GS wells.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24559

Comment: Rule Provisions or Federal Register Cite: 73 FR 43523 EPA Preamble Question: 46. EPA requests comment on adopting the existing requirements for public participation at 40 CFR Part 25 and 40 CFR Part 124 and whether additional requirements should be included to reflect the availability of new tools for disseminating and gathering information. Such tools include cable networks, the Internet, and other new technology. EPA Notice 43523.

CSC Response: The current provisions in Parts 25 and 124 are sufficient to inform the public. Additional requirements should not be included.

Public participation should be consistent across programs. If EPA believes the public participation requirements should be expanded, it should be done in a holistic manner across programs.

Response:EPA agrees that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project-specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

In response to the suggestion to apply additional public participation requirements to all injection well classes, EPA notes that this is beyond the scope of the GS rulemaking.

Commenter Name: Paul Pike Letter ID: 0198 Commenter Organization: Ameren Corporation Comment ID: 23954

Comment: PUBLIC PARTICIPATION

Ameren agrees that public participation is an important part of any CO2 GS project, but we urge EPA to require public participation after an application has been deemed complete but before it has been approved. We believe that the initial application will require some degree of interaction between an Agency and the permitee. Therefore, the best time to involve the public is when basic information needs have been fulfilled and there is a belief that the project can move proceed to permitting. The public can then voice their concerns or support based on the best available information on a project.

Ameren appreciates the opportunity to comment on this important rule and would welcome the opportunity to work further with the Agency. Please feel free to contact me with any questions.Response: The Agency believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects that may affect the public. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Encouraging public participation allows the permitting authority to understand public viewpoints, preferences, and concerns about the project, which might help avoid public misperceptions about the nature and safety of GS projects and forestall resistance later in the permitting effort.

Commenter Name:M. Granger Morgan Letter ID: 0233 Commenter Organization: Carnegie Mellon University on behalf of the CCS Reg Project Comment ID:

21914

Comment: 23. Appropriate outreach techniques: The proposed rule’s 30-day public comment period for GS wells should be extended to at least 60 days because of the complexity of the issues. EPA should utilize modern media (electronic and

Response:EPA disagrees that a 60-day comment period should be required for all GS projects. EPA believes that the existing public comment period requirements at 40 CFR 124.10, which requires a minimum 30-day comment period for draft permits, are appropriate for GS projects. The Agency does not believe it is appropriate to impose longer time frames if they are unnecessary, but supports the Directors' discretion and authority under 40 CFR 124.10 to extend the public comment period if he or she determines that such an extension is warranted. Circumstances that may affect a Director's determination may include the level of public interest in a GS project, specific permit details, or project-specific considerations.

Commenter Name: Abbie Krebsbach Letter ID: 0235 Commenter Organization:Montana-Dakota Utilities Co. Comment ID: 23196

Comment: Public Education

Montana-Dakota supports the development of regulations and policies that will serve to educate the public and provide for appropriate public input on projects, however, public participation provisions like those currently applicable under RCRA are unnecessary and undesirable for GS projects. Otherwise, Montana-Dakota believes that the rule provides a rational public participation approach for GS projects. The EPA is recommended, as it indicates its interest in the preamble, to provide education about this topic on their website regarding the benefits and true risks of CCS projects.

Response:EPA agrees that informing the public on all aspects of GS projects is important. The Agency encourages permitting authorities and GS operators to provide the public, including residents near the project, with as much project-specific information as possible. This information may include, but is not limited to, specific technologies used at the GS injection site, potential/new GS projects, and opportunities for public involvement. In addition to requiring public notice of all draftpermits under §124.10(a)(1)(ii), stakeholders can request that they be notified about draft permits. In addition, §124.10(d) requires that the public notice state how stakeholders can obtain a copy of the permit application and draft permit. GS operators and permitting authorities are also encouraged to

make this information available on the Internet.

EPA agrees that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project-specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

In response to comments regarding the requirements in 40 CFR Parts 25 and 124 applicable under RCRA, EPA clarifies that only the public participation requirements pertaining to the UIC program apply to Class VI wells.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23269

Comment:46. EPA requests comment on adopting the existing requirements for public participation at 40 CFR Part 25 and 40 CFR Part 124 and whether additional requirements should be included to reflect the availability of new tools for disseminating and gathering information. Such tools include cable networks, the Internet, and other new technology. EPA Notice 43523.

Public participation requirements should be left to the regulating agency and not prescribed. Requirements could mirror the agency’s existing public notice and participation requirements.

Response:EPA agrees that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages (but does not require) early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

EPA is not requiring the use of new information technologies. EPA encourages GS operators to use new information technologies whenever possible to keep the public informed of GS projects. The Agency believes that flexibility is important and does not want to limit use of public participation and notification technologies developed in the future.

Commenter Name: Kurt Waltzer Letter ID: 0250 Commenter Organization: Clean Air Task Force Comment ID: 22288

Comment: Public Water Systems should receive notice of permit applications and have the opportunity to participate in the permitting processEPA should adopt the existing requirements for public participation at 40 CFR Part 25 and 40 CFR Part 124 as suggested in the proposal. UIC Program Directors should also incorporate modern communication technologies (cable television, various internet tools) to increase the likelihood of effective public understanding and involvement. Engaging the public as soon as candidate

locations are identified will also increase the effectiveness of the effort. Given the focus of the rule on preventing harm to USDWs, UIC Program Directors should work with primacy agencies and departments with responsibility for implementing other aspects of SDWA to identify and notify Public Water Systems (PWSs) with a potential interest in the project. PWSs are an important stakeholder in the projects and should be the focus of targeted outreach at every stage of the permitting process. PWS representatives should be invited to serve on any Advisory Groups or other bodies set up during the lifetime of the project. We suggest that in Guidance to accompany this rulemaking, EPA urge owners and operators to establish on-going relationships with potentially impacted PWSs.

Response:EPA agrees and has adopted the existing public participation requirements at 40 CFR Part 25 and 40 CFR Part 124. EPA encourages but does not require operators and permitting agencies to begin involving the public by providing information as early in the GS project development process as possible. Furthermore, the Agency recognizes that the initial phases of site evaluation and site selection may begin in advance of permit application submission. The public may become aware of these activities and begin to have questions or concerns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process —can help clarify project details and avoid public misperceptions about the nature and safety of GS projects. This may also benefit the owner or operator by improving local acceptance of the site. The public will also have the opportunity to submit written comments and, in many cases, attend hearings if requested on proposed GS projects during formal public comment periods. Permitting authorities must follow the public participation requirements for UIC permits specified in 40 CFR Part 124.10 which generally requires that the public notice include information about where interested parties can obtain copies of the draft permit and application. In addition, the existing public participation requirements for UIC permits at 40 CFR 124.10(c)(1)(x)(A) require notification "to any unit of local government having jurisdiction over the area where the facility is proposed to be located."

In addition, the final rule now requires notification of the director of the state public water supply supervision program (drinking water program) of the availability of the draft Class VI permit. See 40 CFR §124.10(c)(1)(xi). EPA anticipates that the Director of the drinking water program will inform public water systems located within the proposed area of review about the permit application.

EPA agrees with commenters that the use of new forms of information technology can improve public participation and understanding of GS projects and the associated injection technologies involved. EPA does not require the use of any new information technologies to inform the public, but encourages GS project operators and permitting authorities to use the Internet as well as both new and established tools to explain and post information on the latest developments. This information may include schedules for hearings, briefings, and other opportunities for involvement. EPA plans to conduct outreach on the GS rule, and provides GS related information on its website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA currently uses social networking applications for important information (e.g., Facebook and Twitter), and will encourage GS operators and permitting authorities to use similar technologies to keep the public informed of GS projects.Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24825

Comment:EPA Notice Questions: 73 FR 43523

EPA Rule Issue: 46. EPA requests comment on adopting the existing requirements for public participation at 40 CFR Part 25 and 40 CFR Part 124 and whether additional requirements should be included to reflect the availability of new tools for disseminating and gathering information. Such tools include cable networks, the Internet, and other new technology. EPA Notice 43523.

GWPC CO2 Committee Response: Public participation requirements for Class VI well permitting should follow established requirements for UIC program permitting, which have proven successful. Any modifications to account for technological advances should be considered on a program-wide basis; there is nothing unique about GS in this respect.

Response:EPA agrees that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA is not requiring the use of new information technologies, but encourages GS operators to use new information technologies whenever possible to keep the public informed of GS projects. EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

In response to the suggestion to apply additional public participation requirements to all injection well classes, EPA notes that this is beyond the scope of the GS rulemaking.

Letter ID: 0263 Commenter Organization: Interstate Oil & Gas Compact Commission Comment ID: 22828

Comment: IV. How Should UIC Program Directors Involve the Public In Permitting Decisions for GS Projects?

TT. EPA requests comment on adopting the existing requirements for public participation at 40 CFRPart 25 and 40 CFRPart 124 and whether additional requirements should be included to reflect the availability of new tools for disseminating and gathering information. Such tools include cable networks, the Internet, and other new technology.

IOGCC Response: All states have public notice laws and regulations that cover most regulatory and permitting functions. These laws and regulations would extend to the permitting and the regulation of GS that require public notice, hearings and due process to all affected parties. This should be adequate for public involvement purposes.

Response:EPA does not require the use of any new information technologies to inform the public, but encourages GS project operators and permitting authorities to use the Internet as well as bothnew and established tools to explain and post information on the latest developments. This information may include schedules for hearings, briefings, and other opportunities for involvement. EPA plans to conduct outreach on the GS rule, and provides GS related information on its website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA currently uses social networking applications for important information (e.g., Facebook and Twitter), and will encourage GS operators and permitting authorities to use similar technologies to keep the public informed of GS projects. If states have applicable public participation requirements, these would need to be met

as well.

EPA believes that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

EPA understands that public notice laws and regulations vary from state to state. EPA would like to clarify that in order for a state to receive primacy for Class VI GS wells their public notice requirements for permits must be at least as stringent as those required under 40 CFR Part 124. This requirement should provide a level uniformity between primacy states for purposes of providing public notice for GS wells.

Commenter Name: Becky English Letter ID: 0524 Commenter Organization: Sierra Club Comment ID: 21484 Other EPA Comment Codes and Descriptions: 1280 1.1.2.1 General comments on climate change/ global warming

Comment:Modeling data should have been provided well before the beginning of this thirty day period, this comment period. Again, we need more time.

I also want to point out that a remediation plan should have been developed by now to deal with all possible contamination events in tandem with this particular process especially in view of EPA's, some of EPA's past failures to perform adequate risk monitoring and timely detection of remediation of contamination. Obviously, a remediation plan needs to be in place along with this particular proposal. Please provide us with that remediation plan and give the public time to comment on that as well.

EPA's management of carbon capture and sequestration operations should be absolutely transparent to the public and so today, I want to call for real time online postings and RSS feeds of all incidents no matter how minor to interested members of the public. EPA should be providing such reporting for all incidents already and not just for carbon sequestration leaks, but for really I think all incidents across your entire realm of responsibility. Again, with the transparency, the public needs to know what is going on a lot easier than it currently is for us to find things out.

I am not a geologist or a mining engineer, but I think I have some common sense and as a U.S. citizen, I just must insist that EPA adopt a more comprehensivemethod for evaluating IGCC and carbon sequestration, carbon capture and sequestration in view of the now well known fact that carbon based fuels are roasting our atmosphere and rapidly reducing the viability of our planet.

Response:EPA clarifies that the final rule does not change the public notice requirements for injection well owners or operators already required under 40 CFR Part 124. However, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

EPA clarifies that the final GS rule requires each owner or operator to develop an emergency and remedial response plan prior to receiving a permit to inject carbon dioxide. See §146.94. This plan must be submitted to the Director along with the permit application and will be available for review during the public comment period for the draft permit. Each owner or operator will be responsible for any remediation associated with his or her well. The rule also requires each owner or operator to maintain financial responsibility for emergency and remedial response. See §146.85(a). EPA is developing guidance on both financial responsibility and emergency and remedial response plans.

EPA agrees with commenters that the use of new forms of information technology can improve public participation and understanding of GS projects and the associated injection technologies involved. EPA does not require the use of any new information technologies to inform the public, but encourages GS project operators and permitting authorities to use the Internet as well as both new and established tools to explain and post information on the latest developments. This information may include schedules for hearings, briefings, and other opportunities for involvement. EPA plans to conduct outreach on the GS rule, and provides GS related information on its website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA currently uses social networking applications for important information (e.g., Facebook and Twitter), and will encourage GS operators and permitting authorities to use similar technologies to keep the public informed of GS projects.

Commenter Name: Becky English Letter ID: 0524 Commenter Organization: Sierra Club Comment ID: 21485

Comment:EPA must develop its own models of the overall life cycle of carbon based fuel processes. A good model would give this lay person satisfying answers to some naive, but necessary questions.

Response:EPA clarifies that the overall life cycle of carbon based fuel processes (i.e., beyond the GS component) is outside the scope of the GS rulemaking. However, when drafting proposed and final GS regulations, EPA estimated the costs associated with complying with the GS regulations; these are presented in the docket for this rulemaking. In the cost analysis (which is available in the docket), EPA anticipated that the impact on any individual household (as a result of CO2 GS requirements) is expected to be very minor. Please see the cost analysis for the GS rule for additional

information.

Commenter Name: Becky English Letter ID: 0524Commenter Organization: Sierra Club Comment ID: 21490

Comment: So in addition to asking for more time for public comment then, on behalf of Sierra Club's 22,000 members in the state of Colorado, thank you very much for your consideration. And now did you want to ask me anything?

Response:EPA disagrees that a comment period longer than 30 days should be required for all GS projects. EPA believes that the existing public comment period requirements at §124.10, which require a minimum 30-day comment period for draft permits, are appropriate for GS projects. The Agency does not believe it is appropriate to impose longer time frames if they are unnecessary, but supports the Directors' discretion and authority under §124.10 to extend the public comment period if he or she determines that such an extension is warranted. Circumstances that may affect a Director's determination may include the level of public interest in a GS project, specific permit details, or project-specific considerations.

Comment Code: 5540 2.10.2 Need for additional public participation requirements/ use of new information technology (seeking comment)



### Individual Comments

Commenter Name: Skiles Boyd Letter ID: 0160 Commenter Organization: DTE Energy Comment ID: 21279

Comment: DTE Energy supports the use of the Internet as an important source of information for the public, and echoes the Agency’s desire to utilize its capabilities to provide not only for public involvement, but also-perhaps more importantly as an initial matter-for public education on the benefits and true risks of CCS projects.

Response:EPA agrees with commenters that the use of new forms of information technology can improve public participation and understanding of GS projects and the associated injection technologies involved. EPA does not require the use of any new information technologies to inform the public, but encourages GS project operators and permitting authorities to use the Internet as well as both new and established tools to explain and post information on the latest developments. This information may include schedules for hearings, briefings, and other opportunities for involvement. EPA plans to conduct outreach on the GS rule, and provides GS related information on its website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA currently uses social networking applications for important information (e.g., Facebook and Twitter), and will encourage GS operators and permitting authorities to use similar technologies to keep the public informed of GS projects.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24617

Comment: Rule Provisions: 73 FR 43523 EPA Rule Issue: 46. EPA requests comment on adopting the existing requirements for public participation at 40 CFR Part 25 and 40 CFR Part 124 and whether additional requirements should be included to reflect the availability of new tools for disseminating and gathering information. Such tools include cable networks, the Internet, and other new technology. EPA Notice 43523.Anadarko Petroleum Corporation (APC) Response: The current provisions in Parts 25 and 124 are sufficient to inform the public. The EPA should not require new technology for involving the public. As technological advancements happen at an ever increasing rate, current possibilities may be obsolete in a few years. In addition, there is still a vast population in the country that are not comfortable with the newer technologies. While in some areas of the country these may be beneficial, in other areas they may not provide enough public engagement (or more importantly not enough local engagement). The Class VI program should involve public participation but should not dictate the method in which that is performed.

Public participation should be consistent across programs. If EPA believes the public participation requirements should be expanded, it should be done in a holistic manner across programs.

Response:EPA agrees that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit.

In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

EPA is not requiring the use of new information technologies. EPA encourages GS operators to use new information technologies whenever possible to keep the public informed of GS projects. The Agency believes that flexibility is important and does not want to limit use of public participation and notification technologies developed in the future.

Commenter Name: Chris M. Hobson Letter ID: 0201 Commenter Organization: Southern Company Comment ID: 22176

Comment: Public Perception and Participation

Southern Company encourages EPA to take steps to ensure that the public fully understands that it is extremely unlikely that C02 GS projects will harm USDWs or human health. Effective dissemination of information regarding the limited risks posed by CO2 GS will lead to more informed and meaningful public participation in the permitting process. One step EPA can take to adequately inform the public is to tie the requirements of the Final Rule more closely to actual risks. The Class VI requirements are unprecedented in the UIC Program in terms of their stringency; this will create unnecessary public apprehension without improving protection of USDWs.Southern Company supports EPA's suggestion to modify existing public notice and comment requirements under the UIC Program to reflect the availability of new tools and technology, particularly web-based technology, for gathering and disseminating information. ¡d. at 43523. Use of internet-based tools can playa key role in connecting regulators, permit applicants, and the public through all stages of the comment period. Southern Company understands that the public must be kept informed and allowed an opportunity to provide input on potential Class VI projects; however, we urge EPA to establish requirements in the Final Rule that call for public notice after submission of a Class VI permit application, but not before that application has been deemed complete.

Response:EPA agrees that informing the public on all aspects of GS projects is important. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision-making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit.

The Agency encourages permitting authorities and GS operators to provide the public, including residents near the project, with as much project-specific information as possible. This information may include, but is not limited to, specific technologies used at the GS injection site, potential/new GS projects, and opportunities for public involvement. In addition to requiring public notice of all draft permits under §124.10(a)(1)(ii), stakeholders can request that they be notified about draft permits. In addition, §124.10(d) requires that the public notice state how stakeholders can obtain a copy of the permit application and draft permit. GS operators and permitting authorities are also encouraged to make this information available on the Internet.

EPA is not requiring the use of new information technologies. EPA encourages GS operators to use new information technologies whenever possible to keep the public informed of GS projects. The Agency believes that flexibility is important and does not want to limit use of public participation and notification technologies developed in the future.

Commenter Name:M. Granger Morgan Letter ID: 0233 Commenter Organization: Carnegie Mellon University on behalf of the CCS Reg Project Comment ID:

21915

Comment: complexity of the issues. EPA should utilize modern media (electronic and digital communications, including, but not limited to web-pages and e-mails) to inform local citizens about GS site permitting.

Response:EPA agrees with commenters that the use of new forms of information technology can improve public participation and understanding of GS projects and the associated injection technologies involved. EPA does not require the use of any new information technologies to inform the public, but encourages GS project operators and permitting authorities to use the Internet as well as both new and established tools to explain and post information on the latest developments. This information may include schedules for hearings, briefings, and other opportunities for involvement. EPA plans to conduct outreach on the GS rule, and provides GS-related information on its website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA currently uses social networking applications for important information (e.g., Facebook and Twitter), and will encourage GS operators and permitting authorities to use similar technologies to keep the public informed ofGS projects.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23335

Comment: Opportunities for public participation in the proposed rule are not sufficient; the following changes are necessary:

1. The proposed rule has a 30-day public comment period on a proposed Class VI site-specific permit. This is too little too late. Thirty days is not sufficient time for the public to identify and raise concerns, and given the comment period falls at the end of a long negotiating process with the applicant, it is unlikely EPA could meaningfully address concerns at that point in the process. The public should be informed as soon as the EPA begins working with a permit applicant, and make the application materials publicly available and easily accessible. EPA and the permit applicant should hold public information sessions in the affected community and work to address public concerns throughout the process. The formal comment period should be extended to at least 90 days because the permit will contain a range of complicated issues that will likely require expert consultation.

Response:EPA agrees that that public participation and education are important parts of the UIC permitting process. EPA encourages (but does not require) operators and permitting agencies to begin involving the public by providing information as early in the GS project development process as possible. Involving the public in the permitting process is an important aspect of both UIC Program requirements and EPA's overall mission. The public will also have the opportunity to submit written comments and, in many cases, attend hearings on proposed GS projects during formal public comment periods. Although permit application information will not be made available as it is submitted, permitting authorities must follow the public participation requirements for UIC permits specified in 40 CFR 124 section §124.10(d) which require that owners or operators publish a public notice that includes information about where interested parties can obtain copies of the draft permit and application. Generally, see 40 CFR Part 124.

Furthermore, the Agency recognizes that the initial phases of site evaluation and site selection may begin in advance of permit application submission. The public may become aware of these activities and begin to have questions or concerns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process—can help clarify project details and avoid public misperceptions about the nature and safety of GS projects. This may also benefit the owner or operator by improving local acceptance of the site.

EPA disagrees that a 90-day comment period should be required for all GS projects. EPA believes that the existing public comment period requirements at §124.10, which require a minimum 30-day comment period for draft permits, are appropriate for GS projects. The Agency does not believe it is appropriate to impose longer time frames if they are unnecessary, but supports the Directors' discretion and authority under 40 CFR 124.10 to extend the public comment period if he or she determines that such an extension is warranted. Circumstances that may affect a Director's determination may include the level of public interest in a GS project, specific permit details, or project-specific considerations.Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23336 Other EPA Comment Codes and Descriptions: 3350 2.2.1.5 Use of proprietary models for GS sites (seeking comment)

Comment: 2. The proposed rule allows an applicant to use proprietary modeling software to submit predictions of plume behavior and movement, storage capacity, and injection rates. Use of proprietary software would hinder public participation because the public could not test applicant’s modeling predictions. To ensure transparency in the application process, publicly available modeling programs must be required.

Response:EPA expects that permitting authorities would make some information about the model available to the public, such as information about the model used and the parameters modeled. However, EPA does not expect that members of the public would evaluate the AoR delineation models themselves. The models and their inputs will, by necessity, entail an extensive amount of technical information that may not be easily understood by the public. EPA believes that it is the Director's responsibility, as a steward of public health and the environment, to review models, model inputs, and results and to determine whether the model is appropriate for predicting the AoR, and to distribute information that may be easily understood by the public (e.g., in the form of a fact sheet).

In response to comments about the need for additional public participation and the use of new information technology, EPA shares the commenter’s concern about the need to evaluate the inputs and assumptions used, but disagrees that the use of proprietary models should be disallowed. EPA intends to allow the use of proprietary models in meeting the requirements for the GS regulation, as long as GS well operators using a proprietary model clearly disclose, to the Director's satisfaction, the code assumptions, relevant equations, and scientific basis.

EPA believes that operators should have the flexibility to select models with which they are familiar and that are most appropriate to the site conditions and available data types and amounts. EPA also recognizes that a standardized model for AoR delineations could be effective as long as the model accounts for the expected variations in site conditions, and adds that a state or regional UIC Director could select one standard model if it took site-specific variations into account. EPA has evaluated technical documents regarding several computational models that may be used for GS sites. Based on this review (as documented in the preamble to the proposed GS regulation and the background document "Computational Modeling of Underground Injection of Carbon Dioxide for Determination of Area-of-Review and Potential Risk to Underground Sources of Drinking Water"), EPA believes that several models meet the minimum requirements for models in the GS regulation. EPA adds that its Confidential Business Information requirements at 40 CFR 144.5 will apply to the use of proprietary models.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23337

Comment: 3. Each stage of the Club’s recommended permit process should incorporate application transparency, public hearings and a comment period. EPA should maintain a list of interested persons in each proposed/completed project and inform this list of every new application change, hearing, comment period, annual report, etc. These materials should be posted on the internet.

4. All remediation plans should be subject to notice and public comment.Response:EPA agrees that informing the public on all aspects of GS projects is important. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit.

The Agency encourages permitting authorities and GS operators to provide the public, including residents near the project, with as much project-specific information as possible. This information may include, but is not limited to, specific technologies used at the GS injection site, potential/new GS projects, and opportunities for public involvement. In addition to requiring public notice of all draft permits under §124.10(a)(1)(ii), stakeholders can request that they be notified about draft permits. In addition, §124.10(d) requires that the public notice state how stakeholders can obtain a copy of the permit application and draft permit. GS operators and permitting authorities are also encouraged to make this information available on the Internet.

Regarding the comment that remediation plans should be included in the public participation requirements, EPA notes that emergency and remedial response plans are required under §146.94(a) as part of the permit application and copies of the permit application are available upon request during the draft permit public comment period. In addition, EPA added text to §144.39(a)(5) that permit modifications would be required if the Director determines that a modification is necessary based on amendments to any of the project plans, among other situations. In such cases, the revised plan would be available for public comment.

EPA also encourages permitting authorities to notify and involve as many stakeholders as possible including drinking water organizations and local water utilities. 40 CFR §124.10(c)(1)(x)(A) requires notification "to any unit of local government having jurisdiction over the area where the facility is proposed to be located; and (B) to each State agency having any authority under State law with respect to the construction or operation of such facility."

Commenter Name: Greg Shubel Letter ID: 0284 Commenter Organization: Inter-Tribal Council of Michigan, Inc Comment ID: 25304

Comment: To further enhance public participation ITCMI ESD suggests that instead of mere encouragement, the permit applicants and permit writer be required to use the Internet and all other available tools to explain potential GS projects; describe the technology; and post information on the latest developments including schedules for hearings, briefings, and other opportunities for

involvement.

Response:EPA agrees that the use of new forms of information technology can improve public participation and understanding of GS projects and the associated injection technologies involved. However, EPA does not require the use of any new information technologies to inform the public. The Agency believes that flexibility is important and does not want to limit use of public participation and notification technologies developed in the future. EPA encourages GS project operators and permitting authorities to use the Internet as well as both new and established tools to explain and post information on the latest developments. This information may include schedules for hearings, briefings, and other opportunities for involvement. EPA plans to conduct outreach on the GS rule, and provides GS related information on its website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA currently uses socialnetworking applications for important information (e.g., Facebook and Twitter), and will encourage GS operators and permitting authorities to use similar technologies to keep the public informed of GS projects.

Commenter Name:Jonah Fruchter Letter ID: 0526 Commenter Organization: Sierra Club Comment ID: 21492

Comment:With that said, I would like to focus on transparency in regard to a future permit process. As I said earlier, I think that the public comment in deciding environmental regulation is important and I am glad the EPA is hosting comment periods. However, this is complicated stuff. If you would like comment from Coloradans in the future, for example, when companies have submitted permit applications, the public needs more than thirty days to digest and respond to the information submitted. We are not experts.

One way of helping with this to release this permit information as it is submitted so that just like the EPA, the public will have time to digest and develop an informed opinion, so that is in regard to future permitting that will

occur.

There is no point in holding a comment period if you do not give the public time

to inform themselves on the issues. The information itself also needs to be accessible to the public and comprehensive in order to create informed meaning filled public comment. Companies need to submit their information in an accessible manner such as using modeling software that is open access to the public. It does not require an expensive purchase to view the modeling data. Also the EPA should make it easy for anyone to gain access to information and comment on provisional permits and permanent permits. I do not see a point in having a comment for one and not the other. The public should be allowed to comment on all potential moves to develop a carbon sequestration program in

Colorado.

In closing, I would like to see the EPA make it easier not more difficult for Colorado to have a say in what happens in their own backyard. I hope you see many more comment periods in the future in regards to carbon sequestration technology and that we are allowed as the public to comment on how sequestration develops in the future. Thank you.

Response:EPA believes that the existing public comment period requirements at §124.10, which require a minimum 30-day comment period for draft permits, are appropriate for GS projects. The Agency does not believe it is appropriate to impose longer time frames if they are unnecessary, but supports the Directors' discretion and authority under §124.10 to extend the public comment period if he or she determines that such an extension is warranted. Circumstances that may affect a Director's determination may include the level of public interest in a GS project, specific permit details, or project-specific considerations.

Because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow apotential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

EPA would like to highlight that under §124.12 during the public comment period any interested person may request a public hearing in writing. Furthermore, the Director is required to hold a public hearing whenever he or she finds, on the basis of requests, a significant degree of public interest in a draft permit under §124.12. EPA does not accept comments on final permits but does allow appeals of final permit decisions in certain cases under §124.19. In addition, the public would be able to participate in the public notice process in the event of modifications to the permit.

Comment Code: 5560 2.10.3 Enhancing the public participation process (seeking comment)



### Individual Comments

Commenter Name: Anonymous2 Letter

ID: 0133 Commenter Organization: Sierra Club National Global Warming and Energy Committee and Sierra Club California-Nevada Regional Conservation Committee on Energy and Climate Change Comment

ID: 21617

Comment: Public Acceptance

G. Public Participation

Recommendation G: Adopt the existing requirements for public participation in programs under the Safe Drinking Water Act at 40 CFR Part 25 and 40 CFR Part

124.

Historical illustrations of community resistance to a range of proposed CCS projects would suggest that EPA policies which truncate the technical aspects of CO2 storage from the social and cultural values held by targeted localities carry a high degree of likelihood for public opposition. A 2008 Congressional Research Report, Community Acceptance of Carbon Capture and Sequestration Infrastructure: Siting Challenges cites public opposition as an important consideration in the successful formulation of national CCS policy in general, and local resistance as a key ingredient in the appropriate siting of geosequestration projects in particular. The Report warns:

Community opposition could complicate and delay each element of CCS implementation, potentially adding years to a national CCS deployment. Alternatively, community concerns could lead to a national patchwork of CCS projects constructed only in publicly acceptable geographies (or on public lands), creating inter-regional disparities and failing to meet congressional objectives (http://assets.opencrs.com/rpts/RL34601_20080729.pdf at CRS-28).

As a general rule, community concerns regarding CCS will fall into three categories: health and safety, economic, and environmental. In 2007, two studies involving residents of California's Central Valley expressed the followingconcerns about proposed geosquestration projects in their areas: a risk of carbon dioxide release and/or an increase in seismic activity [health and safety]; the lowering of property values and/or the raising of cost-of-living [economic]; the disruptive construction of a pipeline infrastructure for transporting the CO2 to the proposed site and/or a negative change to the character of the community [environmental] (see "Community" at CRS-16).

While it is unrealistic to expect that every contentious rationale raised by local residents can be overcome through trust-building strategies instituted by governments and businesses, it is well- recognized that a substantial number of legitimate grievances can be allayed 'up- front' with the structuring of participatory permitting processes. In cases where residents can be convinced that benefits to their community will outweigh anticipated costs, that the risks are clearly articulated and will be competently managed, sufficient community acceptance can be garnered in order to proceed. Establishing procedural mechanisms for public citizens to express genuine concerns relating to proposed geosequestration sites under the new EPA regulations can provide opportunities for solving disputes before they become intractable.

Response:EPA believes that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit.

In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

Furthermore, the Agency recognizes that the initial phases of site evaluation and site selection may begin in advance of permit application submission. The public may become aware of these activities and begin to have questions or concerns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process—can help clarify project details and avoid public misperceptions about the nature and safety of GS projects. This may also benefit the owner or operator by improving local acceptance of the site.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24264

Comment: Rule Provisions: 73 FR 43522-23 EPA Preamble Question: 47. EPA also requests comment on ways to enhance the public participation process, including engaging communities in the site characterization process as soon as candidate locations are identified. EPA

Notice 43523.

API Response: API does not believe that the public participation process should be extended to the site characterization stage of a GS project, particularlygiven that many sites might be characterized in the process of winnowing down the portfolio of potential sites.

Response: The Agency believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects that may affect the public. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. Generally, these regulations require the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Such information exchange can affect how the local community and surrounding communities perceive potential environmental, economic, or health effects.

Furthermore, the Agency recognizes that the initial phases of site evaluation and site selection may begin in advance of permit application submission. The public may become aware of these activities and begin to have questions or concerns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process—can help clarify project details and avoid public misperceptions about the nature and safety of GS projects. This may also benefit the owner or operator by improving local acceptance of the site.

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23603

Comment:Finally, EEI notes that the Internet has become an important source of information for the public, and EEI echoes the Agency‘s desire to utilize its capabilities to provide not only for public involvement, but also--perhaps more importantly as an initial matter--for public education on the benefits and true risks of CCS projects.

Response:EPA agrees with commenters that the use of new forms of information technology can improve public participation and understanding of GS projects and the associated injection technologies involved. EPA is not requiring the use of any new information technologies to inform the public, but encourages GS project operators and permitting authorities to use the Internet as well as both new and established tools to explain and post information on the latest developments. This information may include schedules for hearings, briefings, and other opportunities for involvement. EPA plans to conduct outreach on the GS rule, and provides GS related information on its website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA currently uses social networking applications for important information (e.g., Facebook and Twitter), and will encourage GS operators and permitting authorities to use similar technologies to keep the public informed of GS projects.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23657

Comment: In its comments, AWWA makes several recommendations for the following specific items to be included in the final regulation:

- Requirement for mandatory public notification and public hearings for any new permit and any permit revision or renewal, and for a 90-day public comment periodResponse:EPA disagrees that a 90-day comment period should be required for all GS projects. EPA believes that the existing public comment period requirements at §124.10, which require a minimum 30-day comment period for draft permits, and which require public notice for most permit modifications, are appropriate for GS projects. The Agency does not believe it is appropriate to impose longer time frames if they are unnecessary, but supports the Directors' discretion and authority under §124.10 to extend the public comment period if he or she determines that such an extension is warranted. Circumstances that may affect a Director's determination may include the level of public interest in a GS project, specific permit details, or project-specific considerations.

EPA also disagrees that public hearings should be mandatory for all GS permits, in order to account for the possibility that, if the public does not express an interest in a hearing, holding one would not be useful. 40 CFR 124.12 requires the Director to hold public hearings if there is a significant degree of interest in a draft permit. EPA expects that public hearings will be requested and held for many GS projects, due to the expected level of public interest in GS projects.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23675 Other EPA Comment Codes and Descriptions: 1910 1.4.4 Stakeholder outreach

Comment: Data and Research Needs: AWWA believes that stakeholder access to the necessary data is lacking and will inhibit making informed/transparent decisions on geologic carbon sequestration projects. Stakeholders need better and more accessible data and data reduction tools (i.e., GIS maps). EPA should consider creating an interactive web based data warehouse that would store data and GIS layers on large carbon dioxide emitters, drinking water groundwater basins, seismic/volcanic/geothermal zones, proposed carbon dioxide saline injection basins, etc. and provide the ability to overlay layers. Stakeholders would then have improved abilities to evaluate a proposed geologic sequestration project to determine if they would be impacted by the carbon dioxide plume and/or associated pressure front.

Response:EPA notes that the full results of the regional carbon sequestration partnership pilot projects will be available to the public once the projects are complete (the results of Phase II of these projects are currently available). Results of other research sponsored by EPA and DOE are available in the GS rulemaking docket as it is complete.

EPA agrees that all information presented to the public must be clear, understandable, and available. In addition to requiring public notice of all draft permits under §124.10(a)(1)(ii), stakeholders may request copies of the draft permit and the permit application during the draft permit comment period; the application includes data on the geology of the injection and confining zones which are likely to be used as inputs for modeling. However, it is likely that information submitted in support of a permit in its original form (e.g., modeling inputs) may be extremely technical and not easily understood by a lay audience. Permitting authorities are required under §124.8 to produce a fact sheet which typically summarizes relevant information for the public in a much more understandable format than the supporting data in a permit application. The fact sheet describes the draft permit conditions, procedures to determine the final decision on the permit, any procedures to request a hearing, and procedures that may be available for additional public participation in the final permitting decision. EPA will encourage permitting authorities and operators to present all modeling data to the public.EPA has no plans to create a web-based GIS database, due to the sheer volume of information required and variety in GIS software products available by potential users.

Information about specific GS projects would be available from permitting authorities as part of the administrative record associated with each permit. EPA will encourage (but not require) that this

information be available online.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23716

Comment:Most of the geologic sequestration projects will be located in rural areas where the local water utility is very small with limited staffing and funding resources. While these utilities may be impacted by the projects, they may not have the technical ability to adequately participate in a project review. Therefore, AWWA recommends that as part of the public participation requirements, owner/operators should be required to notify and involve national and state drinking water organizations as well as the local water utilities. This would allow the local utility to be supported technically by the staff of the national organization, which can provide technical expertise in drinking water issues related to carbon sequestration.

Each project should be required to establish public advisory groups, such as those created for some of the regional carbon sequestration partnership projects. Owner/operators need to ensure they identify stakeholders groups from water sector, such as rural water associations, groundwater associations, and drinking water utility associations. These groups would be involved in the project from the beginning and provide the stakeholder voice for the project.

AWWA recommends that the public comment period for the permit review process be extended in the final regulation. Due to the technical nature of the geologic sequestration process, AWWA recommends that the comment period be extended from 30 days to 90 days. A 30 day comment period does not provide enough time for outside groups to obtain the permit, perform a detailed technical review and generate comments. Extending the comment period for 90 days allows the stakeholders to perform a much more comprehensive review of the project.

The issue of environmental justice must be appropriately considered when involving the public in geologic sequestration projects. Consideration should be given to ensure that certain populations aren't repeatedly subjected to the problems that may arise from the sequestration projects. It is also necessary to remember that not everyone has access to the same media outlets. When an owner/operator is advertising public hearings or comment periods, they should be required to utilize all forms of media, including the newspaper, radio, television and internet. The general public has a wide range of media-viewing habits, and many have moved away from some of the more traditional communication

methods.

Response:EPA recognizes that there may be local public interest in GS projects, and notes that the Director has the authority to include local governments in the public participation process asnecessary. The existing public participation requirements for UIC permits at §124.10(c)(1)(x)(A) require notification "to any unit of local government having jurisdiction over the area where the facility is proposed to be located." In addition, the final rule adds a requirement that the director of the State Public Water System Supervision program be notified. See §124.10(c)(1)(xi). EPA anticipates that this state director will notify public water systems within the area of review and will make their own evaluation of the proposed project.

EPA anticipates that drinking water associations and local water utilities will express interest in and be notified of draft permits and public hearings as required under §124.10(c)(1)(ix) and 40 CFR Part 25.5 (where EPA is providing public information) which requires the permitting authority to notify all interested parties.

EPA disagrees that a 90-day comment period should be required for all GS projects. EPA believes that the existing public comment period requirements at 40 CFR 124.10, which require a minimum 30-day comment period for draft permits, are appropriate for GS projects. The Agency does not believe it is appropriate to impose longer time frames if they are unnecessary, but supports the Directors' discretion and authority under §124.10 to extend the public comment period if he or she determines that such an extension is warranted. Circumstances that may affect a Director's determination may include the level of public interest in a GS project, specific permit details, or project-specific considerations.

Regarding the suggestion to form advisory groups, EPA clarifies that such advisory groups could participate in the public process associated with any GS project, although such groups are not necessary for the public to engage the agency about any GS project.

EPA agrees that environmental justice is an important concern. The Agency has determined that the GS rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it increases the level of environmental protection for all affected populations. Please see the discussion of Environmental Justice and Executive Order 12898 in the preamble to the final GS rule. The rule does not require that GS be undertaken; but does require that if it is undertaken, operators will conduct the activity in such a way as to protect USDWs from endangerment caused by CO2. Additionally, this rule will ensure that all areas of the United States are subject to the same minimum Federal requirements for protection of USDWs from endangerment from GS. EPA's primacy implementation materials for UIC Directors place emphasis on considering the potential impact of any GS permits on communities (such as minority and low income populations) when evaluating Class VI injection well permit applications, as well as provides suggestions and tools for targeted outreach to ensure more meaningful public input and participation from the most affected communities during the permit evaluation and approval process.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24556

Comment: Rule Provisions or Federal Register Cite: 73 FR 43522-23 EPA Preamble Question: 47. EPA also requests comment on ways to enhance the public participation process, including engaging communities in the site characterization process as soon as candidate locations are identified. EPA

Notice 43523.

CSC Response: CSC does not believe that the public participation process should be extended to the site characterization stage of a GS project, particularlygiven that many sites might be characterized in the process of winnowing down the portfolio of potential sites.

Response: The Agency believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects that may affect the public. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. Generally, these regulations require the Director to notify the public regarding the availability of the draft permit and allow him or her to request a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Such information exchange can affect how the local community and surrounding communities perceive potential environmental, economic, or health effects.

Furthermore, the Agency recognizes that the initial phases of site evaluation and site selection may begin in advance of permit application submission. The public may become aware of these activities and begin to have questions or concerns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process—can help clarify project details and avoid public misperceptions about the nature and safety of GS projects. This may also benefit the owner or operator by improving local acceptance of the site.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24618

Comment: Rule Provisions: 73 FR 43522- 23 EPA Rule Issue: 47. EPA also requests comment on ways to enhance the public participation process, including engaging communities in the site characterization process as soon as candidate locations are identified. EPA

Notice 43523.

Anadarko Petroleum Corporation (APC) Response: While public participation is critical, bringing in public review before the project details are worked out can create unnecessary complications. APC does not believe that the public participation process should be extended to the site characterization stage of a GS project, particularly given that many sites might be characterized in the process of winnowing down the portfolio of potential sites.

Response: The Agency believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects that may affect the public. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. Generally, these regulations require the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Such information exchange can affect how the local community and surrounding communities perceive potential environmental, economic, or health effects.

Furthermore, the Agency recognizes that the initial phases of site evaluation and site selection may begin in advance of permit application submission. The public may become aware of these activities and begin to have questions or concerns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process—can helpclarify project details and avoid public misperceptions about the nature and safety of GS projects. This may also benefit the owner or operator by improving local acceptance of the site.

Commenter Name: Paul L. Carpinone Letter ID: 0212 Commenter Organization: Tampa Electric Company Comment ID: 22913

Comment: The ultimate successful long term implementation of a UIC Final Rule will be dependant on public outreach of the GS of CO2. It is critically important to: (1) identify and respond to public needs, fears, and desires; (2) inform the public about carbon sequestration strategies; (3) involve the public in a joint discovery of opportunities associated with carbon sequestration; (4) educate the public the appropriate amount of risk associated with long term GS of CO2; (5) and enable the public to more effectively evaluate costs and benefits associated with carbon sequestration.

Response:EPA agrees that informing the public on all aspects of GS projects is important. The Agency encourages permitting authorities and GS operators to provide the public, including residents near the project, with as much project-specific information as possible. EPA encourages owners or operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Such information exchange can affect how the local community and surrounding communities perceive potential environmental, economic, or health effects.

The Agency also believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects that may affect the public. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. Generally, these regulations require the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit.

In addition to requiring public notice of all draft permits under §124.10(a)(1)(ii), stakeholders may request copies of the draft permit and the permit application during the draft permit comment period. Permitting authorities are required under §124.8 to produce a fact sheet which typically summarizes relevant information for the public in a much more understandable format than the supporting data in a permit application. The fact sheet describes the draft permit conditions, procedures to determine the final decision on the permit, any procedures to request a hearing, and procedures that may be available for additional public participation in the final permitting decision.

In response to the comment about the regulations ensuring that the public is informed of the full cost of a GS project, EPA clarifies that any impact on the cost of electricity is likely to be influenced by all aspects of CCS, including capture, transport, and sequestration. Sequestration costs are expected to be a small component of total CCS project costs; EPA estimates that the GS requirements amount to approximately 3 percent of the total CCS project costs.

Commenter Name: Diane VanDe Hei Letter ID: 0213 Commenter Organization: Association of Metropolitan Water Agencies (AMWA) Comment ID:

22927 Other EPA Comment Codes and Descriptions: 3500 2.2.3 Area of Review Reevaluation (seeking comment)

Comment: In addition, AMWA recommends that local drinking water utilities be included inthe AoR review process, as drinking water or potential drinking water sources may become threatened due to a change in plume direction or behavior. Public involvement also needs to be a mandatory part of the AoR reevaluation process.

Response:EPA agrees that coordination between GS project owners or operators, program Directors, drinking water utilities that may be affected by GS activities, and the public is important. EPA encourages GS project operators and permitting authorities to use the Internet and other available tools to explain potential GS projects, describe the technology, and post information on the latest developments, including schedules for hearings, briefings, and other opportunities for involvement. EPA has added a requirement at §124.10(c)(1)(xi) that state and local oil and gas regulatory agencies and state agencies regulating mineral exploration and recovery, the PWSS program director, and all agencies that oversee injection wells in the state must be notified as part of the public notice process for a Class VI permit.

EPA encourages permitting authorities to notify and involve as many stakeholders as possible including drinking water organizations and local water utilities. §124.10(c)(1)(x)(A) requires notification "to any unit of local government having jurisdiction over the area where the facility is proposed to be located; and (B) to each State agency having any authority under State law with respect to the construction or operation of such facility."

EPA anticipates that drinking water associations and local water utilities will express interest in and be notified of draft permits and public hearings as required under §124.10(c)(1)(ix) and 40 CFR Part 25.5 (where EPA is providing public information) which requires the permitting authority to notify all interested parties.

EPA notes that public notice is required if the Director determines that a major permit modification is necessary as a result of an AoR reevaluation or other indication that the plume is moving in a manner other than predicted. See §144.39(a)(5).

Commenter Name: Diane VanDe Hei Letter ID: 0213 Commenter Organization: Association of Metropolitan Water Agencies (AMWA) Comment ID:

22944 Other EPA Comment Codes and Descriptions: 3500 2.2.3 Area of Review Reevaluation (seeking comment)

Comment:plume direction or behavior. Public involvement also needs to be a mandatory part of the AoR reevaluation process.

Response:EPA notes that, public notice is required if the Director determines that a major permit modification is necessary as a result of an AoR reevaluation. See §144.39(a)(5).

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23270

Comment:47. EPA also requests comment on ways to enhance the public participation process, including engaging communities in the site characterization process as

soon as candidate locations are identified. EPA Notice 43523.

Public participation requirements should be left to the regulating agency and not prescribed. The applicant should be allowed to do some sitecharacterization to assess site suitability and project feasibility before the public is engaged. Requirements could mirror the agency’s existing public notice and participation requirements.

Response:EPA believes that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit.

In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24826

Comment:EPA Notice Questions: 73 FR 43522-23

EPA Rule Issue: 47. EPA also requests comment on ways to enhance the public participation process, including engaging communities in the site characterization process as soon as candidate locations are identified. EPA

Notice 43523.

GWPC CO2 Committee Response: This is best left up to the discretion of the regulator. Establishing a process may provide a standard that can be followed by developers. There was concern about the term "as soon as". If included, this term should be changed to a more reasonable period following applicant evaluation of a site. Public participation requirements should be similar to other portions of the UIC program (e.g. Class I). The program should assure a public hearings process when warranted by substantive issues and affected stakeholders but the timing and particulars of the process should not be prescribed in the rule.

Response: The Agency believes that public participation is an important part of the UIC permitting process and wants to ensure wide access to decision-making processes and information on projects that may affect the public. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. Generally, these regulations require the Director to notify the public regarding the availability of the draft permit and allow him or her to request a public hearing on the draft permit. Furthermore, §124.12(a) requires the Director to hold a public hearing whenever he or she finds based on received comments articulating a significant degree of public interest in a draft permit.

EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Such information exchange can affect how the local community and surrounding communities perceive potential environmental, economic, or healtheffects.

Letter ID: 0263 Commenter Organization: Interstate Oil & Gas Compact Commission Comment ID: 22829

Comment: IV. How Should UIC Program Directors Involve the Public In Permitting Decisions for GS Projects?

UU. EPA also requests comment on ways to enhance the public participation process, including engaging communities in the site characterization process as soon as

candidate locations are identified.

IOGCC Response: All states have public notice laws and regulations that cover most regulatory and permitting functions. These laws and regulations would extend to the permitting and the regulation of GS that require public notice, hearings and due process to all affected parties. This should be adequate for public involvement purposes.

Response:EPA disagrees with the commenter and believes that the existing UIC public participation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of the draft permit and allow him or her to require a public hearing on the draft permit.

EPA notes that administrative procedure laws vary by state. States will describe their public participation activities in their primacy applications and must be at least as stringent as those provided under Parts 145 and 146.

In addition, because of the unique nature of GS projects, and the anticipated level of public interest in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project specific information in the early stages of each GS project can help clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allow a potential GS owner or operator and the permitting agency to address the public's concerns before the permitting process is complete.

Comment Code: 5600 2.11 Comments related to UIC Program primacy for Class VI wells



### Individual Comments

Commenter Name:Michael H. Cochran Letter ID:

0108 Commenter Organization: Bureau of Water, Division of Environment, Kansas Department of Health & Environment (KDHE) Comment

ID: 21947

Comment: 7. Adequate funding must be provided by EPA to the states so the states can properly administer these wells in a protective manner. This is new, additional work for the states that EPA is responsible for funding. Current fundingprovided by EPA does not adequately cover the costs of existing state UIC programs, let alone this additional work.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the States to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Karl R. Moor Letter ID: 0109 Commenter Organization: Southern Company, on behalf of Edison Electric Institute (EEI) Comment ID:

22009 Other EPA Comment Codes and Descriptions: 1250 1.1.1.4 Flexibility is needed (performancebased standards); 2400 1.8 Comments on EPA's adaptive rulemaking process

Comment:Flexible, site-specific regulations ask a great deal of the regulator, in this case the UIC program director. Despite these challenges, EEI urges EPA to consider these types of regulations because they present a win-win situation: a higher level of environmental protection while fostering a regulatory regime that encourages investment in CCS projects. We also acknowledge that these benefits cannot be realized unless the UIC program director is given good guidance on how best to exercise his or her discretion. EPA should provide that guidance in either the final regulations or supplemental guidance, in order to ensure that the director’s decisions have a sound regulatory basis.

Response:EPA agrees that flexibility is important to accommodate the varied conditions that may be encountered at GS sites. EPA notes that the final rule does allow owners or operators flexibility. Many of the permit requirements will be established through site-specific plans developed by the owner or operator and approved by the Director, and EPA anticipates that owners or operators will consult with the Director as they develop, implement, and update these plans. In addition, the final rule affords the Director flexibility to approve alternatives to the requirements in some cases. For example, the Director may in certain situations modify the length of the post-injection site care period or approve an alternative post-injection site care timeframe as part of the permitting process under §146.93, allow the use of alternate methods for mechanical integrity testing, and waive the requirement that wells be designed to inject below the lowermost USDW. Additionally, the regulations provide flexibility for selecting appropriate sites and target formations at §146.82, well construction specifics at §146.86, and testing and monitoring regimes at §146.90, provided the owner or operator can demonstrate that the injection and storage will not endanger USDWs and that minimum requirements for the site are met.

EPA agrees with commenters on the importance of allowing Directors discretion given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need forminimum Federal requirements to ensure national consistency while ensuring the protection of USDWs. To ensure the final rule is applied consistently, EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues related to developing GS regulations that are the equivalent of minimum Federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

As part of its adaptive approach, if EPA finds that there is not sufficient consistency in the permits so that USDWs are not being sufficiently protected from endangerment, it will consider changes to the permit requirements in the future.

Commenter Name: Paul Pike Letter ID: 0111 Commenter Organization: Ameren Corporation on behalf of USWAG Comment ID: 22404

Comment: 5. Because state regulators have worked extensively with permitting UIC Class V experimental carbon dioxide wells and have familiarity with environmental, geologic, and financial concerns specific to a given region, adoption and implementation of the Class VI rules by the states will be crucial to the success of the Program.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum Federal requirements to ensure national consistency while ensuring the protection of USDWs.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.Commenter Name: George Holliday, PhD, PE, BCEE Letter ID: 0114 Commenter Organization: Holliday Environmental Services, Inc. Comment ID: 22540

Comment: PRIMACY

We find many of the state regulator are knowledgeable, but many state regulators are not formally trained and certainly not Professional Engineers. CO2 sequestration is too technical and dangerous an undertaking to leave the highly technical review and decision making to non-Professional Engineers. The instant Class VI rule must be based on Primacy only being given to State and Tribes employing and using specially trained Professional Engineers for review and approval of CO2 sequestration projects. Without this provision, EPA places the general public in severe danger.

Response:EPA agrees that having skilled personnel in various technical areas relevant to GS of CO2 is critically important for effective UIC oversight of Class VI wells. EPA notes that staff in existing State UIC Programs including programs that implement the UIC requirements under section 1422 of the SDWA (Class I, III, IV, and V wells) and State oil and gas agencies that have been regulating Class II UIC wells for decades under section 1425 of SDWA have expertise in the technical areas necessary to evaluate permit applications and effectively oversee GS projects.

When a State applies for Class VI Primacy, it must demonstrate that it has sufficient and appropriate technical capacity (e.g., personnel, infrastructure, technical expertise) to implement a Class VI program that meets EPA's minimum Federal requirements finalized by this rulemaking. EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA. The guidance will also provide tools designed to assist UIC Directors with evaluating permit application information. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Regarding the suggestion that specially trained professional engineers review and approve CO2 GS projects, EPA notes that most permitting authority staff have years of experience with the current injection well classes and have relevant specialties in geology, engineering, and related disciplines. EPA will also consult with NDWAC, associations and organizations, ORD, and experts to provide cross-regional assistance and build expertise.

Commenter Name: Doug Louis Letter ID: 0121 Commenter Organization: Kansas Corporation Commission Comment ID: 22086

Comment: Conclusion

It is our hope the EPA will fully fund the Class VI program if it desires states to administer the program. The 1425 program we administer is not fully funded and has seen cuts each year for the past three fiscal years. It has also become increasingly difficult for states to manage primacy programs that demand increasing budgets but undergo annual funding decreases. Thank you for this opportunity to share our concerns and questions.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challengesassociated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:John Hanger Letter ID: 0130 Commenter Organization: Pennsylvania Dept. of Env. Protection Comment ID: 21515 Other EPA Comment Codes and Descriptions: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

Comment: Primacy for Class VI Wells

-There are no statutory limitations to EPA granting primacy to states for individual classes of underground injection wells; however, EPA typically refuses to do so by policy. Pennsylvania requests that EPA allow separable primacy for the proposed Class VI UIC well program, to secure that option. Resources to conduct the program continue to be the issue for any state considering primacy of the UIC program. Federal appropriations have been stagnant for over a decade at $10 million for the national program. Pennsylvania is concerned that EPA may not be able to secure the funding necessary to develop a robust Class VI well program that includes on-the-ground resources for non-primacy states.

-Adequate resources must be made available to effectively develop and implement a program for this added category of UIC well that is this significantly different from other UIC well types.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage States to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA to ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges associated

with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Dwight Lockwood, PE, QEP Letter ID: 0141 Commenter Organization: Global Energy, Inc. Comment ID: 23092

Comment: 1.Global supports EPA’s intent to delegate implementation of the program to authorized state agencies, and recommends ensuring that the state has ultimate decision authority over lower government entities such as counties and cities.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believesthat providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

Regarding authority provided to local governments, EPA clarifies that its authority to delegate primary enforcement responsibility extends only to states (including tribes and territories), not local governments. EPA notes that local governments have the right to provide input on a proposed Class VI permit during the public notice and comment period (consistent with Part 124) required to be included in every State approved program under §145.11. Additionally, the state is required to have a program which ensures consideration of all comments before a final permit decision is made.

Commenter Name: Dwight Lockwood, PE, QEP Letter ID: 0141 Commenter Organization: Global Energy, Inc. Comment ID: 23094 Other EPA Comment Codes and Descriptions: 1260 1.1.1.5 More certainty/stringency is needed

Comment: 2.EPA should set standards and criteria that will result in reasonably consistent implementation and results regardless of geographic location.

3.EPA should establish a hierarchy of authority for decision making and oversight, to ensure interstate and inter- jurisdictional conflicts are avoided. In this, Global appreciates that some states have moved ahead to implement carbon management programs. However, it is our view that effective and early implementation will be best served by consistency across the board. We therefore encourage EPA to review the programs of all states and select the common threads that are most suitable to early and effective implementation.

Response:EPA agrees that it is important to balance flexibility and national consistency. The GS rule sets forth minimum Federal requirements, tailored to the unique nature of CO2 GS, which must be met in order to ensure USDW protection from endangerment. EPA acknowledges the importance of flexibility for certain Class VI well requirements given the variety of geologic settings in which GS will be applied and therefore affords the Director discretion when making permitting decisions. Such requirements where the Director has discretion include whether to require owners or operators to identify and characterize additional confining zones, as specified in §146.83, whether to require surface air monitoring and/or soil gas monitoring, as specified in §146.90, and whether to extend or shorten the post-injection site care period or approve an alternative post-injection site care timeframeas part of the permitting process, as specified in §146.93. The GS rule balances the need for sitespecific decisions with the need for minimum standards to ensure national consistency and USDW protection from endangerment while also ensuring that states have the data they need to make permitting decisions. EPA Headquarters also plans to review initial permits to ensure that the final rule, including all permitting decisions, are implemented consistently, and to ensure that USDW protection goals are consistently met across differing geologic situations.

EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial, or EPA Regional boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, theDirector must provide written notification to all States, Tribes, and Territories to inform them of the permit application, as specified in §146.82(b), and ensure that they are involved in any necessary processes (e.g., development of the emergency and remedial response plan, as specified in §146.94).The Agency encourages transparency in the permitting process and anticipates that State-State/StateTribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Because some GS projects will require coordination across State, Tribal, and Territorial jurisdictions, the Agency will work with the appropriate entities to facilitate communication among States, Tribes, and Territories during the implementation phase of the GS regulation. Such communication may involve other organizations such as the Sierra Club, NDWAC, associations, and other experts. However, the responsibility for addressing such subjects ultimately rests with the States, Tribes, and Territories with primacy. EPA is developing primacy implementation materials for states that describe recommended approaches to addressing trans-boundary issues during the permitting of Class VI wells under the GS regulation. The materials will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

In response to questions about which state or region would oversee the permit for projects where the AoR spans State, Tribal, or Territorial boundaries, EPA clarifies that issuance and oversight of a GS permit, including any associated AoR boundary-related coordination, is the responsibility of the primacy (State, Tribe, or Territory) or regional DI program in the state where the injection well is

located.

Commenter Name: Dwight Lockwood, PE, QEP Letter ID: 0141 Commenter Organization: Global Energy, Inc. Comment ID: 23103

Comment:4.We strongly support that EPA should establish national standard and guidelines, and delegate implementation to states. Site selection and well installation criteria should be clear but flexible, affording states discretion and judgment with respect to risk management.

Response: As described above, EPA will allow states to apply for primacy for Class VI wells independently of primacy for other well classes. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories that describe the technical and administrative issues on developing and implementing GS regulations that are the equivalent of minimum Federal criteria and requirements. EPA is also developing materials for owners or operators on site characterization and well construction. The guidances will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA expects that both Headquarters and the Regions will work closely with the states during the early permitting process to ensure that flexibility is applied in a manner that ensures a consistent level of USDW protection from endangerment. EPA designed flexibility into the regulations to ensure that site-specific factors can be accounted for and expects that permit writers will use discretion where site-specific factors are important. As part of its adaptive approach, EPA also plans to review initial permits (after they are granted) to ensure that USDW protection goals have been consistently met across differing geologic situations. If necessary, EPA will reevaluate the flexibility granted to states in the rule.Commenter Name: Dwight Lockwood, PE, QEP Letter ID: 0141 Commenter Organization: Global Energy, Inc. Comment ID: 23118

Comment:4.We believe discretion afforded the states for implementation of this program

is warranted.

Response:EPA agrees with commenters on the importance of allowing Directors discretion given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency. To ensure the final rule is applied consistently, EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues related to developing GS regulations that are the equivalent of minimum Federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA is using an adaptive approach to regulating GS. EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

As part of its adaptive approach, if EPA finds that there is not sufficient consistency in the permits and that USDWs are not being sufficiently protected from endangerment, it will consider changes to the permit requirements in the future.

Commenter Name: Christine Reimer Letter ID: 0142 Commenter Organization:National Ground Water Association Comment ID: 22594 Other EPA Comment Codes and Descriptions: 3560 2.2.3.2 Conditions that merit reevaluation of the AoR (seeking comment)

Comment: Proposed Rule: 146.84(c)

Comment: There should be somewhere in the rules a requirement that "mutual interference effects" should trigger reevaluation and re-delineation of the AORs of all projects that are interferring with each other. In essence, when a new project is submitted for permitting, there should be a system-wide, "regional" entity charged with ensuring that AORs for each project are appropriate, andperhaps that a "hybrid" or "combo AOR" be defined for the set of mutuallyinterferring projects.

No rationale provided

Response:EPA anticipates that the impacts of multiple operators injecting into hydraulically

connected formations will be accounted for in the initial AoR calculation. EPA adds that the owner or operator must demonstrate, in the proposed AoR and corrective action plan, to the satisfaction of the Director that the modeled AoR will be based on detailed geologic data collected on the site andincludes consideration of existing conditions such as the presence of multiple operators. EPA adds that if any new GS projects are permitted within the AoR of a GS project between AoR evaluations, the AoR reevaluation would need to address such projects. EPA also expects that the permitting of the newer GS project would have considered the presence of an existing GS project.

EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial, EPA Regional, or national boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application, as specified in §146.82(b) and ensure that they are involved in any necessary processes (e.g., development of the emergency and remedial response plan, as specified in §146.94).The Agency encourages transparency in the permitting process and anticipates that State-State/StateTribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Because some GS projects will require coordination across State, Tribal and Territorial jurisdictions, the Agency will work with the appropriate entities to facilitate communication among States, Tribes, and Territories interested in obtaining primacy during the implementation phase of the GS regulation. Such communication may involve other organizations such as the Sierra Club, NDWAC, associations, and other experts. However, the responsibility for addressing such subjects ultimately rests with the States, Tribes, and Territories with primacy. In addition, EPA is developing guidances for states that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum Federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Kenneth Alexander Letter ID: 0146 Commenter Organization: Old Dominion Electric Cooperative (ODEC) Comment ID: 21723

Comment:4.ODEC believes that the states will have the best knowledge of regional geology, existing projects, areas in need of special protection, etc. and that states should be allowed to assume primacy for administration of the UIC Class VI well program.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

Commenter Name: Bonnie Lovelace Letter ID: 0152 Commenter Organization:Montana Department of Environmental Quality (MDEQ) Comment ID:

22102

Comment: 2. MDEQ supports delegation of Class VI primacy to states as a separate and distinct delegation process, not requiring states to also be delegated any of the other classes. Throughout this rulemaking notice and discussion, EPA points out the differences between carbon dioxide injection and other classes ofinjection activities.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of otherwell classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA to ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name: Bonnie Lovelace Letter ID: 0152 Commenter Organization:Montana Department of Environmental Quality (MDEQ) Comment ID:

22103

Comment: 3. EPA must provide adequate funding to states delegated primacy in the UIC program. Current levels are not adequate and a new program must not only be adequate, but allow for start up.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Steven Pirner Letter ID: 0153 Commenter Organization: South Dakota Department of Environment and

Natural Resources Comment ID:

22140

Comment: 5. There was no appreciable discussion of funding mechanisms to run the program

at the state level.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:Jeff Moseley Letter ID: 0155 Commenter Organization: Greater Houston Partnership (GHP) Comment ID: 21258

Comment: 5. Create and maintain a consistent national framework for geologic carbon sequestration, while continuing to enable states to apply for authority to administer the rules at the state level;Response:EPA agrees that it is important to balance flexibility and national consistency. The GS rule sets forth minimum requirements, tailored to the unique nature of CO2 GS, which must be met in order to ensure USDW protection from endangerment. EPA acknowledges the importance of flexibility for certain Class VI well requirements given the variety of geologic settings in which GS will be applied and therefore affords the Director discretion when making permitting decisions. Such requirements where the Director has discretion include whether to require owners or operators to identify and characterize additional confining zones, as specified in §146.83, whether to require surface air monitoring and/or soil gas monitoring, as specified in §146.90, and whether to extend or shorten the post-injection site care period or approve an alternative post-injection site care timeframe as part of the permitting process, as specified in §146.93. EPA Headquarters also plans to review initial permits to ensure that the final rule, including all permitting decisions, are implemented consistently, and to ensure that USDW protection goals are consistently met across differing geologic

situations.

EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA to ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.Commenter Name:James Dooley Letter ID: 0156 Commenter Organization:Joint Global Change Research Institute, Pacific Northwest National Laboratory Comment ID:

22621 Other EPA Comment Codes and Descriptions: 1540 1.2.3.2 Climate change legislation

Comment: On the Issue of Primacy: An Example of the Challenge Inherent in "Filling in the Missing Linkages between Class VI Rule and a Larger National Climate Policy"

Given the need to link the issuance and compliance with a Class VI injection permit to a larger national climate policy and eventually the need to link that U.S. national climate policy to an international climate policy regime, careful consideration should be given about how high the bar should be set for granting primacy to States, Territories, and Tribes. There is a significant imperative to make sure that CCS derived emissions reductions are comparable (and more precisely fungible) with GHG emission reductions obtained by implementing other greenhouse gas mitigation technologies and measures. A delicate balance must be sought between the desire to delegate authority to the local level with a need to preserve a sufficient level of national uniformity in how CO2 storage is carried out in practice. At a very minimum, the USEPA needs to recognize and reject as insufficient such reasoning that says because a state has shown that it can handle the Class II program they should also be given primacy for Class VI wells. The requirements to eventually integrate this proposed Class VI rule which in its present form is bounded by the SDWA into a much larger climate protection regulatory structure implies that the decision to grant primacy must be deliberate and must explicitly take account of how it would complicate the smooth and efficient functioning of a national climate policy.

The degree to which EPA changes what is proposed as a common federal rule for Class VI CO2 storage wells because some states might be further along in the development of their own CO2 storage regulations (see for example discussion of "Who implements the UIC program" p. 43497) must also take into account the need for an owner/operator of CCS infrastructure to eventually be able to take CO2 injected under a class VI permit in Ohio, Georgia, Michigan, California, Washington State, etc. and turn that into a tradable/fungible emissions reduction credit (or a verified non-emission) that could be used to satisfy the requirements of a national climate policy. The degree to which the federal class VI CO2 storage policy should be amended to allow for discrepancies in how individual states are currently planning on regulating CO2 storage must take into account the need to create an economically efficient national climate change policy. This consideration goes well beyond the boundaries of the SDWA but it must be addressed by the USEPA as a whole if this proposed Class VI storage rule is to be put into practice (e.g., if this issue is not resolved it is hard to see the private sector motivation for deploying CCS technologies even if the Class VI rule is in place).

Response:EPA agrees that it is important to balance flexibility and national consistency. EPA clarifies that the primacy approval processes for Class II and Class VI differ. The SDWA directs EPA to grant primary enforcement responsibility (or primacy) to the States through two statutory provisions. The first provision, under Section 1422, provides for States to demonstrate that their proposed UIC program is at least as stringent as the minimum Federal requirements in order to prevent endangerment of USDWs. The second provision, under Section 1425, allows States tosubmit an alternative demonstration for their Class II programs (oil and gas) where the State only has to demonstrate that its proposed Class II program is an effective program to prevent underground injection that endangers USDWs.

EPA acknowledges the expertise of state oil and gas agencies that have been regulating Class II wells for decades under section 1425 of SDWA. These agencies already understand many of the issues pertaining to Class VI wells and have experience with CO2 injection, subsurface operations, and pipeline transport, as well as familiarity with local interests and the SDWA. EPA assumes that this experience, along with the agencies' familiarity with UIC permitting requirements, will help facilitate the adoption of Class VI primacy programs and assumes that many states with Class II programs will choose to have the Class II primacy agency implement the Class VI program. However, EPA clarifies that, while there are many similarities between Class II and Class VI wells, additional requirements are needed to fully address the unique nature of Class VI wells for CO2 GS, and because GS wells are not oil and gas wells, they must be regulated under authority of Section

1422 of SDWA.

EPA believes that the requirement that states' regulations meet the minimum federal requirements will promote national consistency. To further ensure the final rule is applied consistently, EPA is developing guidance documents for states that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements.

EPA acknowledges that some states and tribes are developing statutory frameworks, regulations, technical guidance, and strategies for addressing broader issues related to CCS and GS, and encourages states to seek primacy for Class VI wells to further these efforts.

EPA acknowledges that carbon crediting and greenhouse gas accounting are important issues. However, these issues are outside of the UIC Program's authority under the Safe Drinking Water Act and outside the scope of this rulemaking. The UIC requirements are designed to ensure that where GS is employed, it is done in a manner that protects USDWs from endangerment. All of the requirements of the GS rule are for the purpose of protecting USDWs from endangerment, consistent with the UIC Program's authority under SDWA.

In a separate rulemaking under authority of the Clean Air Act, EPA is amending the Greenhouse Gas (GHG) Reporting Program at 40 CFR Part 98 to add reporting requirements for facilities that conduct GS (subpart RR) and all other facilities that inject CO2 underground (subpart UU). For additional information, see the section of the final GS rule preamble entitled, "How Does Mandatory Reporting of Greenhouse Gases (GHGs) Relate to This Rulemaking?” and the GHG Reporting Program rulemaking and docket.

Commenter Name:James Childress Letter ID: 0158 Commenter Organization: Gasification Technologies Council (GTC) Comment ID: 23764

Comment: Concern #9: On-going state efforts to regulate GS. (Ref: page 43497, Sec. C. Who Implements the UIC Program?)

Although we recognize that state primacy is integral to the UIC program, we strongly recommend that EPA drive its state stakeholder activities towards the goal of unanimity and uniformity of technical requirements. Disparaterequirements and processes will increase cost, delay, and complexity and make the permitting process less predictable. Individual states should not develop regulations that are substantially more restrictive or prescriptive than that required by the EPA. Many states will also not have technical resources that are comparable to that of the US EPA. EPA's stakeholder technical workshops had good representation from the EPA regions, but it appears that many states have not yet been engaged. To avoid this and the problems from a patchwork of permitting regulations, EPA should carefully but quickly consider and integrate input from a majority of state environmental protection and conservation and natural

resource offices.

Response:EPA recognizes the importance of consistency in state regulations. Under Section 1421 of the SDWA, EPA is responsible for the development of minimum federal requirements for underground injection wells to ensure protection of USDWs from endangerment. In order to receive primacy the States, Tribes, and Territories must then demonstrate that their programs are at least as stringent as the minimum Federal requirements, which helps to ensure consistency between State UIC programs. The Agency acknowledges that Section 1422 of the SDWA provides that States, Tribes and Territories may develop requirements that are more stringent than the federal requirements –for Class VI GS and other UIC well classes.

Furthermore, EPA believes that it is appropriate to allow Director's discretion, given the variety of geologic settings even within each State in which GS will be applied. The Agency believes that the GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

When a State applies for Class VI Primacy, it must demonstrate that it has sufficient and appropriate technical capacity (e.g., personnel, infrastructure, technical expertise) to implement a Class VI program that meets EPA's minimum requirements. EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:M. Michael Rounds Letter ID: 0159 Commenter Organization:Midwestern Governors Association (MGA) Comment ID: 22231

Comment: Development of geologic sequestration projects will also require increased resources for implementation of the UIC program. Thus, we support increased federal support for state implementation of geologic sequestration regulation under the UIC program, and we urge EPA to recognize that need as well.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the States to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocationformula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:Joseph Eutizi Letter ID: 0161 Commenter Organization: San Miguel Electric Cooperative, Inc Comment ID: 21287

Comment:4. San Miguel believes that the states will have the best knowledge of regional geology, existing projects, areas in need of special protection, etc. and that states should be allowed to assume primacy for administration of the UIC Class VI well program.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21315

Comment: § NRECA believes that the states will have the best knowledge of regional geology, existing projects, areas in need of special protection, etc. and that states should be allowed to assume primacy for administration of the UIC Class VI well program.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree offlexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21326 Other EPA Comment Codes and Descriptions: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

Comment: 5. State regulators have familiarity with local environmental, geologic, and financial concerns, and in many cases have pre-existing relationships with the regulated community that will facilitate implementation of a new and complex regulatory program.

For these reasons, NRECA believes it is appropriate to allow states to obtain primacy for the entire UIC program or for only Class VI wells if a particular state so chooses. Id. at 43523. Such class-specific primacy is consistent with the statutory authorization behind the UIC Program, and as EPA predicts, states obtaining primacy for Class VI wells -- regardless of whether they have sought primacy under other aspects of the UIC program -- may be more likely to develop a comprehensive regulatory program for all aspects of carbon capture and storage. Id.; see also 42 U.S.C. § 300h-1 (SDWA § 1422).

Response:EPA acknowledges the expertise of existing State, Tribal, Territorial, and DI UIC programs including programs that implement the UIC requirements under Section 1422 of the SDWA (Class I, III, IV, and V wells) and state oil and gas agencies that have been regulating Class II UIC wells for decades under Section 1425 of SDWA. These agencies already understand the technical and administrative issues involved in construction, operation, injection and permitting as well as, in the case of Class II operators issues related to CO2 injection, subsurface operations, and pipeline transport. EPA believes that existing programs can adapt this expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wellsunder Section 1422 of SDWA.

Many of the tools, resources, expertise, and infrastructure currently exist within States to effectively and efficiently manage GS projects. Additionally, States can use multiple authorities beyond those afforded under the SDWA including surface access and land rights, unitization of fields, pore space ownership, mineral rights, site safety and emergency preparedness, and maximization of State oil and gas resource exploitation.

Throughout the GS regulatory development process, EPA has made it a priority to engage States and State organizations. EPA works with State co-regulators on regulatory issues related to GS – including state representation on the GS regulatory development workgroup. The Agency has also conducted a series of stakeholder and technical workshops, and public hearings, and EPA met with national organizations including the Ground Water Protection Council, the Interstate Oil and Gas Compact Commission, and the American Association of State Geologists. EPA values coordination with States and State co-regulators and will continue an open dialogue as the Agency moves forward in the regulatory development process.

As described above, EPA plans to allow States to apply for primacy for the Class VI program independently of primacy for other well classes.

Commenter Name:Michael Mudd Letter ID: 0167 Commenter Organization:FutureGen Alliance (FGIA) Comment ID: 22465

Comment: Primacy Question

If an injection site boarder more than one state, which state or region will have primacy over the UIC permit?

Response:EPA clarifies that issuance and oversight of a GS permit, including any associated AoR boundary-related coordination, is the responsibility of the primacy (State, Tribal, or Territorial) or regional DI program in the state where the injection well is located. EPA is developing primacy implementation materials for states that describe recommended approaches to addressing trans-boundary issues that a state may need to address when permitting Class VI wells under the GS regulation. The materials will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23361 Other EPA Comment Codes and Descriptions: 2020 1.5.1 Support Class VI designation

Comment: General Issues Related to Classification and Regulation of CO2 GS Wells -- Pg. 20

APPA believes the creation of a new category of wells under the UIC Program for long-term storage of CO2 is appropriate and agrees with EPA that the Final Rule should create a delegable program and encourage the adoption and implementation of that program by States.

Response:EPA acknowledges the comment and agrees that tailored requirements for Class VI wells are necessary to address the unique nature of injecting large volumes of CO2 and to ensure thatUSDWs are protected from endangerment. The Class VI requirements are appropriate because of the unique nature and risks of CO2 injection for long-term storage (e.g., large injection volumes, long project duration, and reservoir pressure conditions). The GS rule contains tailored requirements for the permitting, geologic site characterization, AoR and corrective action, well construction, operation, mechanical integrity testing, monitoring, well plugging, post-injection site care, and site closure of GS wells that directly address issues unique to the nature of large-scale CO2 injection for

GS.

EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23403 Other EPA Comment Codes and Descriptions: 1320 1.1.3 General comments about GS

Comment: Because state regulators in approximately five or six states have worked extensively with Owners or Operators of UIC Class V experimental CO2 wells they have familiarity with environmental, geologic, and financial concerns specific to a given region, their adoption and tailored implementation of the CO2 GS rules will be crucial to the success of the Program.

Response:EPA acknowledges the expertise of existing State, Tribal, and Territorial programs that implement the UIC requirements under Section 1422 of the SDWA (Class I, III, IV, and V wells (particularly Class V experimental technology wells)) and state oil and gas agencies that have been regulating Class II UIC wells for decades under section 1425 of SDWA. These agencies already understand the technical and administrative issues involved in construction, operation, injection and permitting as well as, in the case of Class II operators issues related to CO2 injection, subsurfaceoperations, and pipeline transport. EPA believes that existing programs can adapt this expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class

VI wells under section 1422 of SDWA.

Many of the tools, resources, expertise, and infrastructure currently exist within States to effectively and efficiently manage GS projects. Additionally, States can use multiple authorities beyond those afforded under the SDWA and UIC regulations including surface access and land rights, unitization of fields, pore space ownership, mineral rights, site safety and emergency preparedness, and maximization of State oil and gas resource exploitation.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24265

Comment: Rule Provisions: 73 FR 43523 EPA Preamble Question: 48. To gain authority for Class VI wells, States, Territories, and Tribes will be required to show that their regulations are at least as stringent as, and may be more stringent than, the proposed minimum Federal requirements (e.g., inspection, operation, monitoring, and recordkeeping requirements that well owners or operators must meet). Such Primacy States, Territories, and Tribes are authorized under Section 1422 of the SDWA. EPA

Notice 43523.

API Response: States should be able to gain primacy as long as they show that their regulations are at least as stringent as the proposed minimum Federal requirements. EPA should ensure that adequate funding is provided for the delegated program.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA clarifies that, in order for States, Tribes, or Territories to obtain primacy for Class VI wells (under Section 1422 of the SDWA) they must demonstrate that they have requirements that are at least as stringent as the Federal Class VI requirements; have the authority to inspect and assess construction and operation of the wells as well as have the necessary legal authorities to take administrative, civil and criminal enforcement actions required by the SDWA under §1423; impose criminal, civil, and administrative penalties on owners and operators for non-compliance with regulatory requirements; and demonstrate sufficient/appropriate technical capacity (e.g., personnel, infrastructure, and technical expertise) to implement their Class VI programs.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:Erik Silvola Letter ID: 0171 Commenter Organization: Great River Energy Comment ID: 23443Comment:4. GRE believes that the states will have the best knowledge of regional geology, existing projects, areas in need of special protection, etc. and that states should be allowed to assume primacy for administration of the UIC Class VI well program.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

Commenter Name:James Taft Letter ID: 0172 Commenter Organization: Association of State Drinking Water Administrators (ASDWA) Comment ID:

23457

Comment: State Resources Needed:

The financial and resource burden on EPA and state primacy agencies to assess the geologic sequestration permit submissions, evaluate the technical models, and make permitting determinations will be greatly increased by this rule. Financial resource considerations should accompany eventual promulgation of the rule in order to ensure adequate state funding for these various tasks.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the States to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. TheStates/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:James Taft Letter ID: 0172 Commenter Organization: Association of State Drinking Water Administrators (ASDWA) Comment ID:

23458 Other EPA Comment Codes and Descriptions: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

Comment: State Primacy Considerations:

EPA should investigate options for state primacy considerations under SDWA 1425 to regulate the new class VI wells for carbon sequestration independently of other well classes. As the proposed rule is currently written, it precludes states that only have primacy on Class II wells.

Response:EPA clarifies that Section 1425 of SDWA allows an alternative primacy demonstration only for programs regulating injection wells associated with oil and gas recovery or natural gas storage. Therefore, wells used for the purpose of GS cannot be covered under Section 1425. While EPA acknowledges that states that have not obtained primacy under SDWA Section 1422 for other well classes may be less familiar with implementing the UIC program under that section of the Act, the Agency does not believe this would preclude their ability to effectively obtain and implement primacy for Class VI wells. EPA does not intend to limit primacy of Class VI wells to only states with primacy for Class II wells—any state that can demonstrate in its primacy application that it has developed regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule will be granted primacy for Class VI wells.

EPA also plans to support states as needed to help them develop and implement their Class VI programs. EPA will allow states to apply for primacy for Class VI independently of other well classes regardless of whether or not they have primacy for other well classes. EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories to describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23468

Comment: • Because state regulators have worked extensively with Owners or Operators of UIC Class V experimental CO2 wells and have familiarity with environmental, geologic, and financial concerns specific to a given region, state adoption and tailored implementation of the CO2 GS rules will be crucial to the success of the Program.

Response:EPA agrees with commenters on the importance of states having primacy for GS wellsgiven the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages States to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23475 Other EPA Comment Codes and Descriptions: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

Comment:With respect to the integration of state programs, USWAG agrees that the Final Rule should create a delegable program and encourage the adoption and implementation of that program by states. Id. at 43497. Our members' experiences with Class V experimental CO2 wells underscore the benefits of regulation on a state level. State regulators have familiarity with local environmental, geologic, and financial concerns, and in many cases have pre-existing relationships with the regulated community that will facilitate implementation of a new and complex regulatory program. For these reasons, it is appropriate to allow states to obtain primacy for only Class VI wells if a particular state so chooses. Id. at 43523. Such class-specific primacy is consistent with the statutory authorization behind the UIC Program and EPA is correct in predicting that states obtaining primacy for Class VI wells - regardless of whether they have sought primacy for other well classes under the UIC program - may be more likely to develop a comprehensive regulatory program for all aspects of carbon capture and storage. Id.; see also 42 U.S.C. § 300h-1 (SDWA § 1422).

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications forindividual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for States to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA to ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23558 Other EPA Comment Codes and Descriptions: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

Comment: Regarding whether states should be permitted to seek primacy for Class VI wells, EEI agrees that states and tribes should play a key role in managing CCSprojects going forward. Further, many states are moving ahead with developing their own legislation and regulations related to CCS activities. Allowing those states to take on primacy for Class VI wells (in particular, allowing them to take on primacy for Class VI without assuming the regulatory burden that may be associated with other well classes) will help ensure that they are given credit and recognition for their groundbreaking work on CCS.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA to ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes)may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23604 Other EPA Comment Codes and Descriptions: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

Comment: I. State Primacy Provisions

The proposed rules seek comment on whether states should be permitted to seek primacy for Class VI wells, noting the Agency‘s belief that "the most effective approach for the comprehensive management of CO2 GS projects would be achieved at the State and Tribal level." EEI agrees that states and tribes should play a key role in managing CCS projects going forward. Numerous states have decades of experience regulating CO2 injection through Class II programs, and those states in particular may have much to offer in the context of Class IV wells. Further, many states are moving ahead with developing their own legislation and regulations related to CCS activities--in many cases laws and rules that go beyond the scope of EPA‘s jurisdiction, such as incentives provisions and provisions clarifying the nature of potentially affected property rights. Allowing those states to take on primacy for Class VI wells (in particular, allowing them to take on primacy for Class VI without assuming the regulatory burden that may be associated with other well classes) will help ensure that they are given credit and recognition for their groundbreaking work on CCS. EEI supports increased funding for those states that have primacy for Class VI wells to ensure that sufficient resources exist to review appropriately the complex permit applications GS projects will entail.

EEI also encourages the Agency to consider potential issues related to projects that may span multiple states in light of primacy issues. Under such circumstances the rules could include, for example, provisions for establishing a primary state for permitting purposes, with additional affected states provided an opportunity for notice and comment.

Response: As described above, EPA will allow states to apply for primacy for Class VI wells independently of primacy for other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

In response to the question about which state or region would oversee the permit for projects where the AoR spans State, Tribal or Territorial boundaries, EPA clarifies that issuance and oversight of a GS permit, including any associated AoR boundary related coordination, is the responsibility of the primacy (State, Tribal, or Territorial) or regional DI program in the state where the injection well is

located.

Because some GS projects will require coordination across State, Tribal, and Territorial jurisdictions, the Agency will work with the appropriate entities to facilitate communication among States, Tribes, and Territories interested in obtaining primacy during the implementation phase of the GS regulation. Such communication may involve other organizations such as the Sierra Club, NDWAC, associations, and other experts. However, the responsibility for addressing such subjects ultimatelyrests with the States, Tribes, and Territories with primacy. EPA is developing primacy implementation materials for states that describe trans-boundary issues that should be addressed in permitting Class VI wells under the GS regulation. The materials will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial or EPA Regional boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application, as specified in §146.82(b), and ensure that they are involved in any necessary processes (e.g., development of the emergency and remedial response plan, as specified in §146.94).The Agency encourages transparency in the permitting process and expects that State-State/StateTribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Commenter Name:Lee O. Fuller Letter ID: 0179 Commenter Organization: Independent Petroleum Association of America et

al. Comment ID:

23614

Comment: A third area of concern relates to the federal-state regulatory relationship and the process for a state to obtain primacy for Class VI wells. The Interstate Oil and Gas Compact Commission (IOGCC) has been actively developing a regulatory framework for GS wells. We urge EPA to work closely and cooperatively with IOGCC to develop a sound regulatory framework. IOGCC member states have a long history of managing UIC operations, particularly those related to CO2 EOR. EPA needs to develop a structure that can be willingly sought by states.

Class II wells provide an example of the risks that can arise. After enactment of the Safe Drinking Water Act (SDWA) in 1974, EPA developed a Class II regulatory structure that states were largely unwilling to adopt. Faced with a regulatory burden that EPA could not bear of permitting Class II wells throughout the country, Congress enacted amendments in 1980 to the SDWA to provide for states to obtain primacy for Class II wells based on equivalent environmental protection rather than adopting the EPA regulatory program itself. The Class VI program should not result in a similar outcome. The SDWA is structured with the presumption that states will obtain primacy for the UIC program and manage the wells that must be developed. While EPA suggests that a national structure may be necessary to address interstate consistency, this dynamic would pale compared to the challenge for EPA to attempt to develop the permitting expertise and daily regulatory management capability to run a national UIC Class VI program given the enormous volumes of captured carbon resulting from the aggressive global climate initiatives currently proposed. Moreover, the history of the IOGCC shows that it can serve as a multistate management operation. While it has been decades since it has functioned to allocate oil and natural gas production among states, IOGCC’s original role was managing oil and natural gas production to avoid wasted resources. This history works well in the context of coordinating the movement of captured carbon to state regulated UIC operations. Consequently, a close relationship between IOGCC and EPA in crafting a workable structure where states will seek primacy is essential for a positive national outcome.Response:EPA acknowledges the expertise of IOGCC, and notes that it coordinated with IOGCC throughout the rulemaking process. EPA also recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial, or EPA Regional boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application, as specified in §146.82(b), and ensure that they are involved in any necessary processes (e.g., development of the emergency and remedial response plan, as specified in §146.94).The Agency encourages transparency in the permitting process and anticipates that State-State/StateTribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23714

Comment: Other AWWA Comments Related to State Primacy and Capacity: When EPA allows states to obtain primacy for the Class VI wells and develop their own regulations for geologic sequestration, these regulations must be developed in accordance with Section 1422 of the SDWA instead of Section 1425. The language in Section 1422 mandates that state requirements for geologic sequestration be as stringent as federal requirements. By comparison, the language in Section 1425 mandates that the state requirements represent an "effective" program to prevent injection which endangers drinking water sources. The language in Section 1425 leaves too much room for interpretation, and could result in varying degrees of protection of USDWs across the country. Given the current strain on our groundwater resources in some areas of the United States, AWWA recommends that EPA ensure state regulations provide at least the same level of protection as the federal regulations.

AWWA recognizes that the SDWA currently provides for a $16 million statuary limit for federal support to states to enact and enforce the Act. Given that state primacy agencies are already resource limited and are inadequately funded to cover existing oversight responsibilities, AWWA anticipates that this regulation could place an even larger burden on them. Geologic carbon sequestration will require new resources, and in addition, staff with very specialized expertise in areas such as groundwater, wells, geochemistry, and underground injection. Inadequate resources and staff capabilities will result in delayed permit reviews/approvals and/or rushed and poor decision making. AWWA recognizes the funding limitation for the state primacy programs and this is an issue that Congress would have address either through a modification of the SDWA or by a revenue set-aside as part of a future "cap and trade" program. As aresult, AWWA recommends that EPA consider the potential burden on state programs when finalizing the regulation and look for ways to streamline the process without sacrificing the protective measures of the regulation.

Response:EPA clarifies that primacy for Class II and primacy for Class VI are different. While there are many similarities between CO2-ER injection and GS, CO2 injection for the purpose of GS is not explicitly authorized under section 1425 of the SDWA; therefore GS of CO2 is regulated under Section 1422. In order for States, Tribes, or Territories to obtain Primacy for Class VI wells (under Section 1422 of the SDWA) they must demonstrate that they have requirements that are at least as stringent as the federal Class VI requirements; have the authority to inspect and assess construction and operation of the wells as well as have the necessary legal authorities to take administrative, civil and criminal enforcement actions required by the SDWA under §1423, impose criminal, civil, and administrative penalties on owners and operators for non-compliance with regulatory requirements; and demonstrate sufficient/appropriate technical capacity (e.g., personnel, infrastructure, and technical expertise) to implement their Class VI program.

However, EPA acknowledges the expertise of state oil and gas agencies, which have been regulating Class II wells for decades. These agencies already understand many of the issues pertaining to Class VI wells, which should facilitate the adoption of Class VI primacy programs in states with Class II

wells.

EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges associated

with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

EPA adds that the GS rule does not address “cap and trade.” Cap and trade is outside the scope of this rulemaking; the purpose of the GS rule is to ensure that injection of CO2 for GS is conducted in a manner that is protective of USDWs.

Commenter Name: Ginny Brannon Letter ID: 0182 Commenter Organization: Colorado Department of Public Health and

Environment Comment ID:

23753 Other EPA Comment Codes and Descriptions: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

Comment: The SDWA provides that States may apply to EPA for primary enforcement responsibility to administer the underground injection control program. These states, referred to as Primacy States, must meet the minimum federal requirements for UIC programs, including construction, operating, monitoring, testing, reporting, and closure requirements for well owners or operators.

Additionally, the SDWA allows states to apply for such primacy in part, such as for well Classes I, III, IV, and V under Section 1422, or for Class II wells only underSection 1425. Colorado falls in this latter camp, with primacy for Class II wells only.

The proposed rule calls for another class of wells, Class VI, for the injection of carbon dioxide. It is our contention that states should be able to seek primacy for Class VI wells as a ‘stand alone’ class, just as they do for Class II wells now. Because Class II wells are for oil and gas injection, Class II wells and the proposed Class VI wells are similar in purpose and particularly suited as ‘stand

alone’ classes of wells.

Also, in addition to our own staff, Colorado is home to a premier university and scientific community, such that we have the expertise in the event we were to assume primacy for Class VI wells.

Finally, geologic sequestration is only one component in a broader carbon capture and sequestration context. Colorado agrees with EPA that allowing states to acquire primacy for Class VI wells may encourage them to assume the responsibility of implementation and provide for a more comprehensive approach to managing CCS projects.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA agrees that having skilled personnel in various technical areas relevant to GS of CO2 is critically important for effective implementation of the Class VI regulation. EPA acknowledges that such expertise may be present among staff in state UIC programs or through university systems, such as in state universities or the scientific community. EPA believes such expertise will benefit implementation of the Class VI program nation-wide.

Commenter Name: Bradley J. Field Letter ID: 0186 Commenter Organization:New York State Dept. of Environmental Conservation

Div. of Mineral Resources Comment ID:

25170Comment: A. Funding: It is essential that EPA provide adequate funding to states assuming primacy jurisdiction under the UIC program to administer CO2 storage regulatory

activities.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: G. Graham Holden Letter ID: 0189 Commenter Organization: Oglethorpe Power Corporation Comment ID: 25248

Comment:4. Oglethorpe Power believes that the states will have the best knowledge of regional geology, existing projects, areas in need of special protection, etc. and that states should be allowed to assume primacy for administration of the UIC Class VI well program.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24557

Comment: Rule Provisions or Federal Register Cite: 73 FR 43523 EPA Preamble Question: 48. To gain authority for Class VI wells, States, Territories, and Tribes will be required to show that their regulations are at least as stringent as, and may be more stringent than, the proposed minimum Federal requirements (e.g., inspection, operation, monitoring, and recordkeeping requirements that well owners or operators must meet). Such Primacy States, Territories, and Tribes are authorized under Section 1422 of the SDWA. EPA

Notice 43523.

CSC Response: States should be able to gain primacy as long as they meet the requirements of the UIC program for obtaining and retaining primacy. EPA should ensure that adequate funding is provided for the delegated program.

Response:EPA agrees that states should be able to receive primacy for Class VI wells. EPA adds that States, Tribes, or Territories may obtain Primacy for Class VI wells (under Section 1422 of the SDWA) if they demonstrate that they have requirements that are at least as stringent as the federal Class VI requirements; have the authority to inspect and assess construction and operation of the wells as well as have the necessary legal authorities to take administrative, civil, and criminal enforcement actions required by the SDWA under §1423; impose criminal, civil, and administrative penalties on owners and operators for non-compliance with regulatory requirements; and demonstrate sufficient/appropriate technical capacity (e.g., personnel, infrastructure, and technical expertise) to implement their Class VI program.

EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges associated

with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Kyle Isakower Letter ID: 0191 Commenter Organization: American Petroleum Institute Comment ID: 23885

Comment:Need for adequate implementation resources

Although not directly addressed in the EPA proposal, the need for adequate resources to implement the regulatory program for geologic sequestration at both the federal and state levels is a major consideration and one that EPA should be addressing both internally and in its discussions with Congress. The annual national budget for the UIC program (approximately $11 million) has remained static for many years, while UIC agencies have been asked to take on additional responsibilities. Furthermore, inflation of salaries and other expenses has eroded the buying power of the unchanging UIC budget. If state and regional agencies are asked to take on the additional workload of CO2 injection, whileensuring careful scientific review as well as an expeditious processing time, they will require additional trained staff and other resources.

If the nation is serious about controlling CO2 through underground injection, significant additional resources will need to be made available to hire new permitting staff and field inspectors. Those new staff, along with the existing cadre of UIC staff and managers, must be trained in subjects that will enable them to make prudent permitting, management, and oversight decisions. As momentum grows to begin sequestering CO2 underground, EPA and states will need to develop new regulatory requirements for CO2 wells and prepare to review applications and make permitting decisions. Failure to provide sufficient resources will likely create permitting backlogs, resulting in a bottleneck in the overall geologic sequestration effort.

The Ground Water Protection Council (GWPC) estimated in 2004 that an annual funding increase to $56 million would be needed just to meet the needs of the existing UIC program at the state level even without the addition of geologic sequestration project permitting.[FN2/] GWPC has further estimated that EPA will need to provide funding at a level of $100 million annually to meet the needs for the full UIC program, including the regulation of geologic sequestration. [FN2/: GWPC, Class V Resource Needs Survey, Summary (September 2004).]

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:Jeff W. Sheets Letter ID: 0192 Commenter Organization: ConocoPhillips Comment ID: 23906

Comment:Need for adequate implementation resources

Although not directly addressed in the EPA proposal, the need for adequate resources to implement the regulatory program for geologic sequestration at both the federal and state levels is a major consideration and one that EPA should be addressing both internally and in its discussions with Congress. The annual national budget for the UIC program (approximately $11 million) has remained static for many years, while UIC agencies have been asked to take on additional responsibilities. Furthermore, inflation of salaries and other expenses has eroded the buying power of the unchanging UIC budget. If state and regional agencies are asked to take on the additional workload of CO2 injection, while ensuring careful scientific review as well as an expeditious processing time, they will require additional trained staff and other resources.If the nation is serious about reducing atmospheric CO2 through underground injection, significant additional resources will need to be made available to hire new permitting staff and field inspectors. Those new staff, along with the existing cadre of UIC staff and managers, must be trained in subjects that will enable them to make prudent permitting, management, and oversight decisions. As momentum grows to begin sequestering CO2 underground, EPA and states will need to develop additional regulatory requirements and prepare to review applications and make permitting decisions. Failure to provide sufficient resources will likely create permitting backlogs, resulting in a bottleneck in the overall geologic sequestration effort.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:John R. Baza Letter ID: 0193 Commenter Organization: Utah Division of Oil, Gas, and Mining Comment ID: 23907

Comment: The Division has been administering a Class II UIC Program for many years while receiving less than adequate funding from EPA. This deficit in funding has been compensated by the state’s Oil and Gas Conservation Fee paid by operators based on oil and gas production volumes. It will be important for EPA to address adequate funding for the new Class VI Well program because states will not be able to simply take on such a new responsibility without a mechanism to adequately fund it.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Paul Pike Letter ID: 0198 Commenter Organization: Ameren Corporation Comment ID: 23939

Comment: STATE ISSUES

We believe that the Final Rule should include a process that will allowdelegation as well as encourage adoption and implementation of the program by states. If there is to be a smooth implementation of the Class VI wells, it will mean working closely with State regulators who are familiar local concerns and can work with the regulated community to address those specific concerns.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

Commenter Name: Paul Pike Letter ID: 0198 Commenter Organization: Ameren Corporation Comment ID: 23941

Comment: value of this overall program. A final aspect for the states will be the Agency’s ability to provide funding to the states to aid them in implementing the program. Some States will not have the adequate expertise or manpower to respond to the potential of this program and will need assistance to ensure that adequate staff is available.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matchingrequirement.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24619

Comment: Rule Provisions: 73 FR 43523 EPA Rule Issue: 48. To gain authority for Class VI wells, States, Territories, and Tribes will be required to show that their regulations are at least as stringent as, and may be more stringent than, the proposed minimum Federal requirements (e.g., inspection, operation, monitoring, and recordkeeping requirements that well owners or operators must meet). Such Primacy States, Territories, and Tribes are authorized under Section 1422 of the SDWA. EPA

Notice 43523.

Anadarko Petroleum Corporation (APC) Response: Primacy should be granted for Class VI and Class II GS well classifications. In addition, the primacy for Class VI should be granted independently of other well classes allowing the states to determine the appropriate regulating agency (Class II-GS will obviously be part of the current Class II program).

EPA should ensure that adequate funding is provided for the delegated program.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State also had to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges associated

with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:John Corra Letter ID: 0205 Commenter Organization:Wyoming Department of Environmental Quality (DEQ) Comment ID:

22189

Comment: 1. Funding: It is essential that the US EPA provide adequate funding to states assuming primacy jurisdiction under the UIC program to administer CO2 storage regulatory activities. EPA funding to states to administer federal environmental programs, such as UIC, continues to decline in terms of real dollars. Recognizing the scope of work anticipated for CO2 sequestration in this country alone, substantial additional skills and resources will be required at the state level in order to develop and implement effective permitting and oversight programs. It is imperative that EPA recognize that need and begin to establish special provisions to set aside funds that states and tribes, will need to operate those programs.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Paul L. Carpinone Letter ID: 0212 Commenter Organization: Tampa Electric Company Comment ID: 22912

Comment: - Because state regulators have worked extensively with Owners or Operators of UIC Class V experimental CO2 wells and have familiarity with environmental,geologic, and financial concerns specific to a given region, state adoption and tailored implementation of the CO2 GS rules will be crucial to the success of the Program.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

Commenter Name: Olon Plunk Letter ID: 0217 Commenter Organization:Xcel Energy, Inc. Comment ID: 21556 Other EPA Comment Codes and Descriptions: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

Comment: State Primacy

Xcel Energy supports the concept of state primacy. States should have the ability to obtain delegated authority for Class VI wells only, as opposed to being required to develop delegable programs for all classes of wells. As noted by EEI and USWAG, permitting decisions are best made at the state level where knowledge of local conditions and public concerns is the greatest. In addition, it is essential that the final rule establish a "lead state" concept for projects where the AoR may cross state boundaries. Xcel Energy supports assigning the project permitting lead role to the state where the Class VI

wellhead is located.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under§145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA clarifies that issuance and oversight of a GS permit, including any associated AoR boundary related coordination, is the responsibility of the primacy (State, Tribal or Territorial) or regional DI program in the state where the injection well is located. EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial, EPA Regional, or national boundaries. The final GS rule, at 146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application 146.82(b) and ensure that they are involved in any necessary processes (e.g., development of the emergency and remedial response plan (146.94)). The Agency encourages transparency in the permitting process and anticipates that State-State/State-Tribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Commenter Name:Jonathon Palm Letter ID: 0222 Commenter Organization:Nevada Division of Environmental Protection, Bureau

of Water Pollution Control Comment ID:

21644 Other EPA Comment Codes and Descriptions: 1200 1.1 General comments about the rulemakingComment: 5. In implementing this rule, the state will be encumbered with increased financial and resource burdens in assessing the geologic sequestration permit submissions, evaluating the technical models, and making permitting determinations. Financial resource considerations should accompany eventual promulgation of the rule in order to ensure adequate funding for these various

tasks.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:M. Granger Morgan Letter ID: 0233 Commenter Organization: Carnegie Mellon University on behalf of the CCS Reg Project Comment ID:

21903

Comment: 12. Adoption of the Class VI rules should be accompanied by funding adequate to implement them. Regulation of GS through the UIC program cannot be effective unless funding is provided commensurate to the goals of the Class VI program. The EPA UIC budget, including grants to state programs, is chronically underfunded. Annual federal appropriations to the UIC program have been approximately $11 million: less than half the funding level ($25 million per year) authorized in the SDWA. Studies by the Ground Water Protection Council show that the Class V program would need an additional $50 million annually to meet its objectives and that the Class II program is under-funded by approximately $25 million annually. An under-resourced regulatory agency cannot ensure the safe and effective operation of GS projects.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:M. Granger Morgan Letter ID: 0233 Commenter Organization: Carnegie Mellon University on behalf of the CCS Reg Project Comment ID:

21913

Comment: 22. Primacy issues: Many geological formations suitable for GS span stateboundaries, making consistent regulation important. The proposed rule calls for "Director discretion" over a number of important issues. This flexibility is necessary because of geologic variability across the U.S., but should be balanced by inclusion of specific thresholds for action, to provide consistency. In other words, because of the potential for basin-scale, interstate interactions with GS, the primacy for Class VI wells should be more constrained

than for other well classes.

Response:EPA agrees with commenters on the importance of allowing Director's discretion given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency. To ensure the final rule is applied consistently, EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

As part of its adaptive approach, if EPA finds that there is not sufficient consistency in the permits so that USDWs are not being sufficiently protected from endangerment, it will consider changes to the permit requirements in the future.

Commenter Name: Abbie Krebsbach Letter ID: 0235 Commenter Organization:Montana-Dakota Utilities Co. Comment ID: 23191

Comment: State Primacy

Montana-Dakota agrees that states and tribes should play a key role in managing CCS projects. Many states are moving ahead with developing their own legislation and regulations related to CCS activities, as are a number of western states. The EPA should consider potential issues related to projects that may span multiple states in light of primacy issues. The EPA should consider provisions in the rule for establishing a primary state for permitting purposes, with additional affected states provided an opportunity for notice and comment.

Response:EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial, or EPA Regional boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application, as specified in §146.82(b), and ensure that they are involved in any necessary processes (e.g., development of the emergency and remedial response plan, as specified in §146.94. The Agency encourages transparency in the permitting process and anticipates that State-State/State-Tribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Because some GS projects will require coordination across State, Tribal, and Territorial jurisdictions,the Agency will work with the appropriate entities to facilitate communication among States, Tribes, and Territories interested in obtaining Primacy during the implementation phase of the GS regulation. Such communication may involve other organizations such as the Sierra Club, NDWAC, associations, and other experts. However, the responsibility for addressing such subjects ultimately rests with the States, Tribes, and Territories with primacy. In addition, EPA is developing guidances for states that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: Robert E. Carter Jr. Letter ID: 0236 Commenter Organization: Indiana Department of Natural Resources (IDNR) Comment ID: 23200

Comment: Drinking Water Act. Indiana intends to seek primacy for the regulation of Class VI wells as proposed under this rulemaking by EPA. Obtaining primacy will be an important component of our broader commitment to promote newer and cleaner markets for Indiana coal, oil, and natural gas while at the same time contributing to our nation's energy independence and to a cleaner environment.

Indiana is blessed with an abundance of natural resources making it a prime location for the use of GS methods. Among these resources are the following: oil and gas reservoirs suitable for both enhanced oil recovery (EOR) and long-term storage; unmineable coal seams for long-term storage and the potential for the production of coal bed methane (CH4) displaced by the injection of CO2 into these coals; deep saline reservoirs (Ordovician St. Peter Sandstone and Cambrian Mt. Simon Sandstone) suitable for long-term storage; and organic-rich shales (primarily Devonian New Albany) for long-term storage and the potential for enhanced production of CH4.

Our state also has a long history of the regulation of oil and gas production since development of oil and gas first began in 1886 with the discovery of the Trenton Field. Indiana also has primacy under the UIC Program for Class II wells and the (IDNR), Division of Oil and Gas has been effectively administering that program since 1991. Our regulatory experience also includes the permitting and oversight of underground natural gas storage facilities as well as facilities for the underground storage of liquefied petroleum gases.

Much of the technology and methodologies to be employed with the siting, drilling, construction, operation, testing, and eventually with the plugging and abandonment of Class VI wells, have been derived from the oil and gas industry. While there are differences between many aspects of Class VI injection wells when compared to Class II injection wells or underground natural gas and petroleum liquid storage wells, we believe there are far more similarities, including such aspects as reservoir selection, injection and withdrawal parameters, unauthorized releases, and pressure limitations. Accordingly, we believe that Indiana is well prepared to effectively administer a regulatory program for the long-term storage of CO2 in underground formations once the appropriate state statutes and regulations are established.Response:EPA acknowledges the expertise of existing State, Tribal, and Territorial programs that implement the UIC requirements under Section 1422 of the SDWA (Class I, III, IV, and V wells) and state oil and gas agencies that have been regulating Class II UIC wells for decades under section 1425 of SDWA. These agencies already understand the technical and administrative issues involved in construction, operation, injection and permitting as well as, in the case of Class II operators issues related to CO2 injection, subsurface operations, and pipeline transport. EPA believes that existing programs can adapt this expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA.

Many of the tools, resources, expertise, and infrastructure currently exist within States to effectively and efficiently manage GS projects. Additionally, States can use multiple authorities beyond those afforded under the SDWA and UIC regulations including surface access and land rights, unitization of fields, pore space ownership, mineral rights, site safety and emergency preparedness, and maximization of State oil and gas resource exploitation.

Throughout the GS regulatory development process, EPA has made it a priority to engage States and State organizations. EPA works with State co-regulators on regulatory issues related to GS – including state representation on the GS regulatory development workgroup. The Agency has also conducted a series of stakeholder and technical workshops, and public hearings, and EPA met with national organizations including the Ground Water Protection Council, the Interstate Oil and Gas Compact Commission, and the American Association of State Geologists. EPA values coordination with States and will continue an open dialogue as the Agency moves forward in the regulatory development process.

Commenter Name: Robert E. Carter Jr. Letter ID: 0236 Commenter Organization: Indiana Department of Natural Resources (IDNR) Comment ID: 23207

Comment: Section V - How Will States, Territories, and Tribes Obtain UIC Program Primacy

for Class VI Wells?

Comment: Indiana strongly encourages EPA to allow states to seek primacy for the Class VI program independent of other UIC well classes.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land userights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name: Angie Burckhalter Letter ID: 0239 Commenter Organization: Oklahoma Independent Petroleum Association Comment ID: 23215

Comment: In Oklahoma, oil and gas reservoirs provide a great capacity to store CO2. The State’s oil and gas agency has a long history of effectively regulating Class II wells since the early 1980s. EPA should allow a process for states like Oklahoma to easily obtain primacy for Class VI wells. In addition, states should have flexibility in determining which agency should regulate CO2 storage wells. For example, in Oklahoma, it would be more efficient and cost effective if the state oil and gas agency retained authority for all Class II EOR projects converted to Class VI CO2 storage projects and CO2 storage projects using depleted oil and gas reservoirs since this agency has the most knowledge and experience with those underground formations.

Response:EPA acknowledges the expertise of existing State, Tribal, and Territorial programs that implement the UIC requirements under Section 1422 of the SDWA (Class I, III, IV, and V wells) and state oil and gas agencies that have been regulating Class II UIC wells for decades under section 1425 of SDWA. These agencies already understand the technical and administrative issues involved in construction, operation, injection and permitting as well as, in the case of Class II operators issues related to CO2 injection, subsurface operations, and pipeline transport. EPA believes that existing programs can adapt this expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA.

Many of the tools, resources, expertise, and infrastructure currently exist within States to effectively and efficiently manage GS projects. Additionally, States can use multiple authorities beyond those afforded under the SDWA including surface access and land rights, unitization of fields, pore spaceownership, mineral rights, site safety and emergency preparedness, and maximization of State oil and gas resource exploitation.

In addition, EPA is developing guidances for states that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA also clarifies that primacy is granted to a state, not to any agency within that state, and states are free to choose which agency will implement the Class VI program—for instance, an environmental quality protection agency (non-Class II) or the state's traditional oil and gas regulatory agency (Class II)—as long as the program meets the minimum federal requirements for Class VI wells as required under section 1422 of SDWA. Some states administer their program for all injection well classes through a single agency, whereas other States elect to divide the program between agencies. EPA believes that retaining this flexibility for States to identify the appropriate agency to oversee Class VI wells will address commenters’ concerns that States should be afforded the opportunity to determine which agency should oversee Class VI wells, and recognizes the existing expertise of both State oil and gas agencies and environmental agencies.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23314 Other EPA Comment Codes and Descriptions: 3150 2.1.5 Comments on required permit information (40 CFR 146.82); 5700 2.12 Comments on the proposed duration of Class VI permits (seeking comment)

Comment: • EPA - advised by experts and regional stakeholders - and not individual states, should make permitting decisions on CCS projects, at least for the first few years. • Permits should be issued in stages, to be adaptive to advances in knowledge, science and regulation, not for the operating life of the well.

Response:EPA agrees that an adaptive approach to address the availability of new information and technology is appropriate. EPA plans to, every six years, collect and review project data on early GS projects, including site characterization, operational, monitoring, and modeling data, to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

EPA disagrees that it should be the only entity to issue permits during the first few years after promulgation. EPA acknowledges the expertise of existing State, Tribal, and Territorial programs that implement the UIC requirements under Section 1422 of the SDWA (Class I, III, IV, and V wells) and state oil and gas agencies that have been regulating Class II UIC wells for decades under section 1425 of SDWA. These agencies already understand the technical and administrative issues involved in construction, operation, injection and permitting as well as, in the case of Class II operators issues related to CO2 injection, subsurface operations, and pipeline transport. EPA believes that existing programs can adapt this expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA.

Additionally, States can use multiple authorities beyond those afforded under the SDWA including surface access and land rights, unitization of fields, pore space ownership, mineral rights, site safetyand emergency preparedness, and maximization of State oil and gas resource exploitation.

EPA expects that both Headquarters and the Regions will work closely with the states during the early permitting process to ensure that flexibility is applied in a manner that ensures a consistent level of USDW protection from endangerment. EPA designed flexibility into the regulations to ensure that site-specific factors can be accounted for and expects that permit writers will use discretion where site-specific factors are important. As part of its adaptive approach, EPA also plans to review initial permits (after they are granted) to ensure that USDW protection goals have been consistently met across differing geologic situations. If necessary, EPA will reevaluate the flexibility granted to states in the rule. As part of its adaptive approach, if EPA finds that there is not sufficient consistency in the permits so that USDWs are not being sufficiently protected from endangerment, it will consider changes to the permit requirements in the future.

Regarding the commenter's request that permits be issued in stages, EPA clarifies that the final rule maintains the lifetime permit provision and that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23324

Comment: IV. EPA Should Administer the CCS Program with the Help of a Specially Formed CCS Technical Advisory Committee.

Under the Safe Drinking Water Act, delegated states can administer their ownunderground injection control ("UIC") programs once approved by EPA. Thirtythree states have primacy to run the UIC program and 7 states have authority to administer some UIC permits. [FN29] In states without primacy and on tribal lands, EPA administers the program.

[FN29: U.S.Environmental Protection Agency. UIC Program Primacy, available at http://www.epa.gov/OGWDW/uic/primacy.html]

The proposed CCS rule would give the enormous responsibility of regulating CCS at this early stage to state administrators. As provided in the rule: "States with primacy must develop a program incorporating all new Federal requirements for Class VI wells if they wish to regulate CO2 GS, and all programs will be subject to EPA approval. If States do not develop a program for Class VI wells, EPA will oversee CO2 GS in those States." 73 Fed. Reg. 43,492, 43,530; see 42 U.S.C. § 300h-1(b)(1)(B) (requiring state showing of conformity to newrequirements).

Permit decisions require evaluation of many complicated technical issues that demand a high level of expertise and there are scores of uncertainties at this early stage of CCS development, as explained above in the introduction to these comments. There is also cause for concern over the capacity and competency of some state regulatory agencies to properly regulate a CCS program. State permitting decisions can contradict science and logic and produce dangerous results for local health and welfare. The Florida Department of Environmental Protection approved the construction and operation of a facility designed to inject more than 112 million gallons of treated sewage a day, erroneously believing that the subsurface geology would prevent the injected sewage from migrating into the overlying Floridan Aquifer. Most experts agreed that the injection program should not have been permitted, and eventually the injected sewage migrated upward into the Floridan Aquifer. Even after evidence of contamination was well-established, Florida continued to expand its injection

program.

Federal administration coupled with a technical advisory board would ensure the initial implementation of a national CCS program will be based on the best science, insulate decisions from profit and political motives, facilitate good public perception of CCS and would ensure the long-term integrity of the program. The International Risk Governance Council stressed that "[a]ssignment of regulatory responsibility to competent and trustworthy bodies or agencies will be paramount in assuring the public that the technology is deployed with adequate oversight and safeguards." [FN30] A nationally administered program will also enable federal coordination of information for this young program, ensure information-sharing to other states and developing nations, and help manage regional issues that transcend state lines.

[FN30: IRGC, Regulation of Carbon Capture and Storage, p. 24, available at http://www.irgc.org/IMG/pdf/Policy_Brief_CCS.pdf (last visited December 17, 2008).]

Over the last few years, there has been a global CCS dialogue among a wide range of stakeholders--with top scientists, engineers, industry and environmental groups working together to contribute to reports and policy suggestions. The IPCC is an international scientific body that provides an objective source of information. The comprehensiveness of the scientific content is achieved through contributions from experts in all regions of the world and all relevant disciplines. [FN31] The World Resources Institute, an environmental think tank, convened a diverse group of over 80 stakeholders, including representatives from academia, business, government, and environmental nongovernmental organizations to craft its Guidelines for Carbon Dioxide Capture, Transport, and Storage. [FN32] A technical advisory board would ensure this diversity of opinion and viewpoint is considered, and the expertise acquired in this dialogue is reflected, in the initial development and implementation of the United States’ CCS program.

[FN31: http://www.ipcc.ch/about/index.htm (last visited Dec. 15, 2008).][FN32: http://pdf.wri.org/ccs_guidelines.pdf (last visited Dec. 15, 2008).]

The CCS technical board should include a diverse group of experts in CCS-related fields with CCS experience, including geology, geophysics, structural geology, hydrogeology, and geochemistry. Additionally, the board should dedicate a few flexible positions to include members with site-specific knowledge at the state, regional, and national levels that will rotate depending on project location. Alternatively, for local information, the technical board could coordinate with regional advisory boards formed pursuant to 40 C.F.R. § 25.7.

The CCS technical board should have the following responsibilities, among other appropriate functions:

• review technical data and make recommendations for site selection and permit

terms • review monitoring data and make recommendations for permit revisions • fact checking • ensuring coordination among permits • accelerating and disseminating best practices • make decisions regarding delegation of primacy

Technical advisory boards are well-respected by the public and environmental community and work well in other contexts. The Desert Tortoise Recovery Committee is made up of a diverse group of scientific experts and serves an advisory role to agency administers to ensure species’ recovery plans, revisions, monitoring, effectiveness, etc. meet rigorous scientific standards. [FN33] The Independent Scientific Advisory Board serves the National Marine Fisheries Service (NOAA Fisheries), Columbia River Indian Tribes, and Northwest Power and Conservation Council by providing independent scientific advice and recommendations regarding scientific issues that relate to the respective agencies' fish and wildlife programs. [FN34]

[FN33: http://www.fws.gov/nevada/desert_tortoise/dt_sac.html (last visited Dec. 15, 2008).] [FN34: http://www.nwcouncil.org/fw/isab/background.htm and http://www.nwcouncil.org/fw/isab/members.htm (last visited Dec. 15, 2008).]

The success or failure of CCS cannot rest on the decisions of state administrators like the ones in Florida responsible for the sewage injection debacle. "'[A] single major accident, resulting from inadequate regulatory oversight, anywhere in the world, could seriously endanger the future viability of GS [geologic sequestration]." [FN35] EPA must take responsibility for administration of the nation’s CCS program, at least for the first few years until the task becomes less extraordinary. Agency officials will need help interpreting and understanding the technical data that will accompany permit decisions, and it should enlist the help of a diverse group of CCS experts on a technical advisory board.

[FN35: Wilson, E., Morgan, M. et al., Regulating the Geological Sequestration of CO2, Environmental Science & Technology, Apr. 15, 2008, at p. 5.]Response: As described above, EPA disagrees that it should be the only entity to issue permits during the first few years after promulgation and believes it is contrary to the SDWA.

EPA will consult with the National Drinking Water Advisor Committee, associations and organizations, EPA’s Office of Research and Development, and experts; review permits; and continue to hold workshops to build expertise and ensure that implementation of the national program is based on the best available science. The Agency plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Regarding unintended consequences related to municipal disposal wells in Florida, EPA clarifies that this is outside the scope of this rulemaking and that GS is quite different from the injection of wastewater in Florida. An owner or operator seeking to characterize a site similar to one used for municipal disposal in Florida for GS (pursuant to the requirements at §146.82) and to identify both injection formations and suitable confining units (per §146.83) might not be able to meet the requirements and ensure protection of USDWs due to the nature of karst formations/geology. In addition, the computational modeling required to delineate the AoR at §146.84 for a GS project would likely predict inappropriate buoyant flow in this example and eliminate such formations as potential GS sites.

Commenter Name: Kevin Wanttaja Letter ID: 0248 Commenter Organization:Western Energy Supply and Transmission

Associates Comment ID:

22249 Other EPA Comment Codes and Descriptions: 1530 1.2.3.1 State regulatory efforts on GS (seeking comment)

Comment:– EPA's proposed UIC for CO2 GS rule needs to fully respect states' expertise in administering the current SDWA programs. The UIC for CO2 GS program needs to provide a reasonable process whereby individual states can obtain permitting and compliance primacy over regulation of EPA's proposed Class VI (CCS) wells. Many states already administer SDWA programs and a number of states are moving ahead with developing their own initiatives and regulations to solve other issues associated with CCS. However, EPA will need to consider how to handle projects that span multiple states, tribal lands, and other agency jurisdictions as commented earlier. EPA could establish a primary state in such multiple jurisdiction affected projects, along with a permitting and coordination process for permitting purposes would engage other affected states in providing for notice and comment by all stakeholders. This same principle may be applied to multiple agency jurisdictions, such as the BLM, the NPS, and other agencies.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, Territorial and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA clarifies that issuance and oversight of a GS permit, including any associated AoR boundary related coordination, is the responsibility of the primacy (State, Tribal, or Territorial) or regional DI program in the state where the injection well is located. EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial or EPA Regional boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application, as specified in §146.82(b), and ensure that they are involved in any necessary processes (e.g., development of the emergency and remedial response plan, as specified in §146.94. The Agency encourages transparency in the permitting process and anticipates that State-State/State-Tribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Because some GS projects will require coordination across State, Tribal, and Territorial jurisdictions and plans, the Agency will work with the appropriate entities to facilitate communication among States, Tribes, and Territories interested in obtaining Primacy during the implementation phase of the GS regulation. Such communication may involve other organizations such as the Sierra Club, NDWAC, associations, and other experts. However, the responsibility for addressing such subjects ultimately rests with the States, Tribes, and Territories with primacy. In addition, EPA is developing guidances for states that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:James T. Sims Letter ID: 0249 Commenter Organization:Western Business Roundtable Comment ID: 22265 Other EPA Comment Codes and Descriptions: 1530 1.2.3.1 State regulatory efforts on GS (seeking comment)

Comment: 6. Respect State Primacy on SDWA Permitting - EPA should respect states’ expertise in administering the SDWA, by providing a reasonable process whereby they can obtain primacy over regulation of Class VI (CCS) wells. Many states already administer SDWA programs and have long experience regulating CO2 injection through Class II EOR programs. Further, a number of states are moving ahead with developing their own initiatives and regulations to solve other issues associated with CCS -- incentives provisions and provisions clarifying the nature of potentially affected property rights as two examples.Clearly, in determining state primacy, EPA will have to consider how to handle projects that span multiple states. We do not believe that issue to be insurmountable. Rules could include, for example, provisions for establishing a primary state for permitting purposes, with other affected states provided an opportunity for notice and comment.

Response:EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes that State, Tribal, and Territorial, and DI UIC Program Directors are in the best position to evaluate the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Class VI wells because each decision made will be site-specific and conditions will differ from state to state. The GS rule balances the need for these site-specific decisions with the need for minimum standards to ensure national consistency.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. The Agency will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial, or EPA Regional boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application, as specified in §146.82(b), and ensure that they are involved in any necessary processes (e.g., development of the emergency and remedial response plan, as specified in §146.94).The Agency encourages transparency in the permitting process and anticipates that State-State/StateTribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Because some GS projects will require coordination across State, Tribal, and Territorial jurisdictions, the Agency will work with the appropriate entities to facilitate communication among States, Tribes, and Territories interested in obtaining Primacy during the implementation phase of the GS regulation. Such communication may involve other organizations such as the Sierra Club, NDWAC, associations, and other experts. However, the responsibility for addressing such subjects ultimately rests with the States, Tribes, and Territories with primacy. In addition, EPA is developing guidances for states that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA clarifies that issuance and oversight of a GS permit, including any associated AoR boundaryrelated coordination, is the responsibility of the primacy (State, Tribal, or Territorial) or regional DI program in the state where the injection well is located.

Commenter Name: Kurt Waltzer Letter ID: 0250 Commenter Organization: Clean Air Task Force Comment ID: 22287

Comment:Funding and resources for the UIC Program

Although not directly addressed in the EPA proposal, the need for adequate resources to implement the regulatory program for geologic sequestration at both the federal and state levels is a major consideration and one that EPA should be addressing both internally and in its discussions with Congress. The annual national budget for the UIC program (approximately $11 million) has remained static for many years, while UIC agencies have been asked to take on additional responsibilities. Furthermore, inflation of salaries and other expenses has eroded the buying power of the unchanging UIC budget. If state and regional agencies are asked to take on the additional workload of CO2 injection, while ensuring careful scientific review as well as an efficient processing time, they will require additional trained staff and other resources.

Significant additional resources will need to be made available to hire new permitting staff and field inspectors. Those new staff, along with existing UIC staff, must be trained in subjects that will enable them to make prudent permitting, management, and oversight decisions. EPA and states will need to be adequately prepared to review applications and make permitting decisions. Failure to provide sufficient resources will likely create permitting backlogs

or result in suboptimal permits being issued.

The Ground Water Protection Council (GWPC) estimated in 2004 that an annual funding increase to $56 million would be needed just to meet the needs of the existing UIC program at the state level even without the addition of GS project permitting.[FN19] GWPC has further estimated that EPA will need to provide funding at a level of $100 million annually to meet the needs for the full UIC program, including the regulation of geologic sequestration.

[FN19: GWPC, Class V Resource Needs Survey, Summary (September 2004).]

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the States to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:Michel Paque Letter ID: 0259Commenter Organization: Ground Water Protection Council Comment ID: 24966

Comment:EPA Notice Questions: 73 FR 43523

EPA Rule Issue: 48. To gain authority for Class VI wells, States, Territories, and Tribes will be required to show that their regulations are at least as stringent as, and may be more stringent than, the proposed minimum Federal requirements (e.g., inspection, operation, monitoring, and recordkeeping requirements that well owners or operators must meet). Such Primacy States, Territories, and Tribes are authorized under Section 1422 of the SDWA. EPA

Notice 43523.

GWPC CO2 Committee Response: Retain current requirement, but recognize that geology varies from state to state and some modifications may be appropriate that will result in variations that are not less stringent, but simply adapted to different circumstances. There should also be some recognition that the beneficial effects of GS may be enhanced by allowing flexibility for adaptation of state requirements.

Response:EPA agrees that it is important to balance flexibility and national consistency. The GS rule sets forth minimum requirements, tailored to the unique nature of CO2 GS, which must be met in order to ensure USDW protection from endangerment. EPA acknowledges the importance of flexibility for certain Class VI well requirements given the variety of geologic settings in which GS will be applied and therefore affords the Director discretion when making permitting decisions. Such requirements where the Director has discretion include whether to require owners or operators to identify and characterize additional confining zones, as specified in §146.83, whether to require surface air monitoring and/or soil gas monitoring, as specified in §146.90, and whether to extend or shorten the post-injection site care period or approve an alternative post-injection site care timeframeas part of the permitting process, as specified in §146.93. The GS rule balances the need for sitespecific decisions with the need for minimum standards to ensure national consistency and USDW protection from endangerment while also ensuring that states have the data they need to make permitting decisions. EPA Headquarters also plans to review initial permits to ensure that the final rule, including all permitting decisions, are implemented consistently, and to ensure that USDW protection goals are consistently met across differing geologic situations.

Letter ID: 0263 Commenter Organization: Interstate Oil & Gas Compact Commission Comment ID: 22788

Comment: A. Funding: It is essential that EPA provide adequate funding to states assuming primacy jurisdiction under the UIC program to administer CO2 storage regulatory

activities.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matchingrequirement.

Commenter Name:Mark Vickery Letter ID: 0280 Commenter Organization: Texas Commission on Environmental Quality Comment ID: 24112

Comment: Also, with primary responsibility for carbon geo-sequestration residing with EPA until an application for state primacy is approved, it will be in the mutual interests of EPA and applying states, to make the state primacy process more efficient. In TCEQ's experience, revisions of UIC program primacy (authorization) which have been relatively limited in scope and complexity have required years for development and approval.

Opportunities for streamlining the Class VI primacy process may be achieved by redesigning the review and approval processes coordinated between EPA regions and headquarters. Also, for consideration by states, the primacy process could be made easier for state and EPA staff, to the extent that federal regulations can be adopted verbatim, minimizing or eliminating the complicated "crosswalk" process for determining rule-for-rule equivalency. As an additional consideration, the possibility of optional interim authorization of a state program, or delegation of responsibility by EPA to states under a memorandum of agreement until primacy is approved, should be explored.

Response:EPA agrees that opportunities exist to streamline primacy application process. The final GS rule includes new regulatory language at §145.22 and §145.23 to streamline and clarify the process for submission of Class VI primacy applications and address the unique aspect of Class VI injection operations. For example, EPA is allowing the electronic submission of required primacy application information (e.g., letter from the Governor, program description, Attorney General’s statement, or Memorandum of Agreement). The Agency is also allowing the use of existing reporting form(s) for Class VI wells, as appropriate.

Additionally, to address the unique nature of Class VI injection operations, the final rule at §145.23(f) includes new language describing the requirements for Class VI State Program descriptions. Specifically, §145.23(f)(13) requires States to describe in their primacy applications procedures for notifying any States, Tribes, and Territories of Class VI permit applications where the AoR is predicted to cross jurisdictional boundaries and for documenting this consultation. This new requirement addresses comments on the proposed rule and NODA and Request for Comment that Class VI operations are likely to have larger AoRs that may cross jurisdictional boundaries and necessitate trans-boundary coordination. Other additions in the final rule at §145.23(f) clarify the requirements for State Program descriptions, which must include information regarding the schedule, priorities for, and number of permits to be issued in the first two years of program operation. These changes ensure expeditious implementation of nationally consistent Class VI requirements.

EPA is developing guidances for states that describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. EPA will work closely with States, Tribes, and Territories to ensure timely approval of Class VI primacy applications.Commenter Name:Mark Vickery Letter ID: 0280 Commenter Organization: Texas Commission on Environmental Quality Comment ID: 24113

Comment: (4) Resource Needs for Regulation of the Proposed New Class of Wells-As described in

the Ground Water Report to the Nation: A Call to Action (Ground Water Protection Council, 2007), the great challenges for the UIC Program are the need to effectively address higher risk Class V wells, and readiness to regulate waste streams from emerging technologies such as carbon capture and storage. In either case, the principal obstacle is the insufficiency of funding for state UIC programs. In congressional testimony, GWPC has recommended an increase in annual funding for the national UIC Program to $56 million, nearly a five-fold increase over present appropriations. While the full scope of resources needed for implementing a Class VI well program is not presently known, needs will be particularly acute in the following areas:

Additional Staff -In addition to staff needed for regulation of the existing injection well classes, more qualified persons will be needed to conduct rulemaking for state equivalency with the new federal regulations, develop program procedures, form, and other documents for Class VI, assemble program authorization packages for submittal to EPA, and conduct permitting, compliance monitoring, and enforcement of Class VI wells.

Additional Tools (Computer Models for Simulation of Multi-Phase Interactions in Determining Fate and Transport of Injected CO2) -The central role, iterative nature, and unprecedented complexity of computational modeling and monitoring of the injected CO2 plume and pressure front in nearly every consideration in a CO2-GS project will require additional developmental work and funding to provide the specialized computer models, monitoring instruments, and other tools needed by state and EPA regional staff for regulation of Class VI wells.

Guidance and Training in Implementation of Class VI Requirements -In the interest of regulatory flexibility and avoidance of unnecessary constraints in development of the technology through overly prescriptive specification of materials and methods, EPA's proposed rules feature a series of plans that an applicant for a Class VI permit must submit for director approval. Among the plans required that are unique or require special considerations in application to a Class VI well project are the area of review and corrective action plan, the monitoring plan, and the post-injection site care and closure plan. Under the proposed rules, the adequacy of any such plans would be a matter of director discretion. Practically, this would include public participation in a permitting or permit amendment process. While it is appropriate that EPA has provided with each requirement of a plan, a list of considerations in evaluating the plan, more specific guidance and training on such plans including the use and evaluation of models and monitoring data will be needed for efficient regulation. The need for guidance and training will be greatest in the first commercial scale CO2-GS projects in the early phase of rule implementation.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challengesassociated with GS. EPA will coordinate with and assist states, e.g., through guidance and on-line and in-person training, to help them address problematic technical and policy issues.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

EPA is developing a Class VI program primacy application and implementation manual that describes, for States, the process of applying for and receiving primacy for GS Class VI wells under Section 1422 of SDWA. The manual will also provide tools designed to assist States with the development of their primacy application and UIC Directors with evaluating permit application information. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name: George Peridas Letter ID: 0291 Commenter Organization:Natural Resources Defense Council Comment ID: 25291

Comment: • A separate injection class or subclass with appropriate site characterization, operation, monitoring and closure provisions should govern all injection in hydrocarbon reservoirs for the (sole or concurrent) purpose of GS as defined above (which includes earning carbon credits) and injection that exceeds business-as-usual Class II volume, pressure or other key thresholds that result in greater risk;

• The primacy delegation criteria for this class or subclass should be subject to the primacy delegation requirements that apply to Class VI as proposed, and not to the more general showing used for Class II; and

Response:EPA clarifies that Class VI wells are regulated under Section 1422 of SDWA, and adds that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the

final GS rule.

In order for States, Tribes, or Territories to obtain Primacy for Class VI wells (under Section 1422 of the SDWA) they must demonstrate that they have requirements that are at least as stringent as the federal Class VI requirements; have the authority to inspect and assess construction and operation of the wells as well as have the necessary legal authorities to take administrative, civil and criminal enforcement actions required by the SDWA under §1423, impose criminal, civil, and administrative penalties on owners and operators for non-compliance with regulatory requirements; and demonstrate sufficient/appropriate technical capacity (e.g., personnel, infrastructure, and technical expertise) to implement their Class VI program.

EPA agrees that a separate well classification is appropriate for GS and that tailored requirements for Class VI wells are necessary to address the unique nature of injecting large volumes of CO2 and to ensure that USDWs are protected from endangerment. The GS rule contains tailored requirements for the permitting, geologic site characterization, AoR and corrective action, well construction, operation, mechanical integrity testing, monitoring, well plugging, post-injection site care, and siteclosure of GS wells that directly address issues unique to the nature of large-scale CO2 injection for

GS.

Commenter Name: Scott Anderson Letter ID: 0520 Commenter Organization:Environmental Defense Fund Comment ID: 21418

Comment: I would also like to start out by addressing couple of issues that are perhaps technically outside the scope of this rulemaking. They may not actually affect the wording of the rule, but they are certainly relevant to the subject.

First I would like to agree with Doug Louis of the Kansas Corporation Commission and also the people from the Department of Environmental Quality of Wyoming that it is essential that this program be funded adequately both at the federal, but also at the state level. In round numbers, state UIC agencies currently get about ten million dollars from the federal government to administer these programs. It has been estimated that they really need even under the current regulatory system, something more like fifty million dollars and it has further been estimated that for the state programs to do a good job both with the existing UIC classes and Class VI that they may need something more in the order of a hundred million dollars and I realize you people at the table do not have a hundred million dollars handy, but I think that is a very important policy issue that perhaps the EPA could help highlight with Congress.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Kevin Frederick Letter ID: 0525 Commenter Organization:Wyoming Department of Environmental Quality Comment ID: 21393

Comment:First of all, let me start with a few general comments on EPA's proposed approach. With respect to funding, EPA funding to states to administer federal environmental programs such as the underground injection control program continues to decline in terms of real dollars. Recognizing the scope of work anticipated for CO2 sequestration in this country alone, substantial additional skills and resources would be required at the state level in order to develop and implement effective permitting and oversight programs. It is imperative that EPA recognize that need and begin to consider establishing special provisions to set aside and identify funds specifically for the use by states and tribes that they will need in order to effectively develop and operate these types of permitting programs.

Response:EPA acknowledges that there may be technical and administrative challenges includingresource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Doug Louis Letter ID: 0530 Commenter Organization: Kansas Corporation Commission Comment ID: 21349

Comment: In conclusion, it is our vote the EPA will fully fund the Class VI program if it desires states to administer the program. The 1425 program re-administer is not fully funded and has seen cuts each year for the past three fiscal years. It has also become increasingly difficult for states to manage numerous programs that demand increasing budgets, but undergo annual funding decreases.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:Mike Moore Letter ID: 0532 Commenter Organization:North American Carbon Capture and Storage Association (NACCSA) Comment ID:

21372

Comment: The sixth area of concern relates to primacy or to state primacy for proposed Class VI wells. EPA can accelerate the deployment of CCS while allowing states to obtain primacy for Class VI wells without obtaining primacy for the entire UIC program. Numerous states have established their own CCS regulations and their expertise should be relied upon.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipelineoperations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name: George Peridas Letter ID: 0534 Commenter Organization:Natural Resources Defense Council (NRDC) Comment ID: 21466

Comment: And I would like to close with one final comment. Even if we do write the perfect rule text via its effective implementation really does rest on capacity building and funding, not just the federal agency level, but at the state agency level. I think now is the time to be thinking about it and to put requirements in place and sufficient funding in place, for states and for federal and regional offices to gear up and be up to date with these rules and capable of administering them effectively.

Response:EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges

associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Comment Code: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

### Individual Comments

Commenter Name:Leslie Savage Letter ID: 0122 Commenter Organization: Railroad Commission of Texas (RRC) Comment ID: 24743

Comment: Delegation of Primacy Congress mandated, through Section 1421(b)(3)(B)(i) of the Safe Drinking Water Act (SDWA), that, to the extent feasible, EPA avoid promulgating requirements that would unnecessarily disrupt State UIC programs already in effect and being enforced in a substantial number of States.

The EPA has indicated that it will delegate the program under Section 1422 of the SDWA. The RRC agrees with EPA that it is in the best interest of protecting groundwater resources for the geologic sequestration of CO2 to be regulated at the state level. However, any requirement by EPA that states accept primacy for Class I, III and V wells as a condition for obtaining primacy for Class VI wells will create an unreasonable burden upon states. This matter needs to be clarified in the rule. In addition, any requirement by EPA that states with primacy for Class I, III, and V wells also accept primacy for Class VI wells will unnecessarily disrupt the states’ existing UIC programs and will compromise the states’ ability to decide how best to administer the state’s program. In addition, EPA should allow for split delegation in the Class VI program, as it has in Texas for the Class III program, to allow the state to best determine how to implement the Class VI program. Furthermore, EPA should not be allowed to reopen any state’s primacy over other well classes in order for a state to obtain primacy for the Class VI well program.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for ClassVI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

In addition, EPA recognizes that some states may not have appropriate geology for sequestering CO2, and these states should be able to retain primacy for other well classes without incurring the cost and burden of adopting primacy changes to address the new Class VI well requirements. EPA also clarifies that a state’s application for primacy for Class VI wells will not affect the status of that state’s primacy for other well classes under the UIC program.

Commenter Name:John Hanger Letter ID: 0130 Commenter Organization: Pennsylvania Dept. of Env. Protection Comment ID: 21515 Other EPA Comment Codes and Descriptions: 5600 2.11 Comments related to UIC Program primacy for Class VI wells

Comment: Primacy for Class VI Wells

-There are no statutory limitations to EPA granting primacy to states for individual classes of underground injection wells; however, EPA typically refuses to do so by policy. Pennsylvania requests that EPA allow separable primacy for the proposed Class VI UIC well program, to secure that option. Resources to conduct the program continue to be the issue for any state considering primacy of the UIC program. Federal appropriations have been stagnant for over a decade at $10 million for the national program. Pennsylvania is concerned that EPA may not be able to secure the funding necessary to develop a robust Class VI well program that includes on-the-ground resources for non-primacy states.

-Adequate resources must be made available to effectively develop and implement a program for this added category of UIC well that is this significantly different from other UIC well types.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage States to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologicsequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA to ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges associated

with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name:Jill D. Jonas Letter ID: 0135 Commenter Organization:Wisconsin Dept. of Natural Resources (WDNR) Comment ID: 21668

Comment: Primacy for Class VI Injection Wells

As the state agency which currently regulates all injection well classes in the State of Wisconsin, WDNR urges EPA to allow primacy approval for Class VI wells independent of the other well classes. First, such an approach provides state permitting authorities the flexibility to implement a more comprehensive approach to managing the capture, transportation, and sequestration of CO2. Second, some states already have one agency responsible for a Class H program and have another agency managing the other four existing injection well classes. Independent approval enables each state to determine if it is more suitable and cost effective to have one of those agencies or an alternative state agencyadminister the CO2 GS program separately from the UIC programs established for other injection well classes. Third, independent approval of Class VI injection well program primacy more clearly defines the criteria and primacy application process for those states that seek primary enforcement authority for GS and makes the administrative review and approval of state primacy applications for GS more manageable for EPA.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA also clarifies that primacy is granted to a state, not to any agency within that state, and states are free to choose which agency will implement the Class VI program—for instance, an environmental quality protection agency (non-Class II) or the state's traditional oil and gas regulatory agency (Class II)—as long as the program meets the minimum federal requirements for Class VI wells as required under section 1422 of SDWA. Some states administer their program for all injection well classes through a single agency, whereas other States elect to divide the program between agencies. For example, in most States, the Class II program is run by an oil and gas agency and other well classes are run by a State environmental agency (e.g., the Oklahoma Corporation Commission oversees Class II wells in the State, and the Oklahoma Department of Environmental Quality oversees other well classes). Additionally, several States allow their oil and gas agencies to administer their UIC program for specific well classes or subclasses provided they meet all Federal requirements (e.g., the Texas Railroad Commission oversees Class III brine-mining wells and Class V geothermal wells in Texas). EPA believes that retaining this flexibility for States to identify the appropriate agency to oversee Class VI wells will address commenters’ concerns that States shouldbe afforded the opportunity to determine which agency should oversee Class VI wells, and recognizes the existing expertise of both State oil and gas agencies and environmental agencies.

Commenter Name: Steven Pirner Letter ID: 0153 Commenter Organization: South Dakota Department of Environment and

Natural Resources Comment ID:

22139

Comment:4. South Dakota recommends that EPA allow states to gain regulatory primacy of UIC Class VI wells without having to also take primacy for the other UIC classes in Section 1422 of the SDWA. Class VI wells actually appear more closely related

to UIC Class II wells in Section 1425 of the SDWA than those in Section 1422.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name:M. Michael Rounds Letter ID: 0159 Commenter Organization:Midwestern Governors Association (MGA) Comment ID: 22230Comment: Role of states in GS regulation Several of our states in the MGA region have experience with the injection of carbon dioxide through Class II and Class V wells. Further, some of our jurisdictions have experience with legal and regulatory aspects of managing CO2 injection wells. We encourage the EPA to consider approval for states to obtain primacy for Class VI wells, independent of other well classes. The MGA agrees with the EPA in the preamble that this may encourage states to take a more comprehensive approach to managing each stage of a CCS project (e.g., capture, transportation, and sequestration) (73 FR 43523).

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name: Sandi Tabor Letter ID: 0162 Commenter Organization:Lignite Energy Council (LEC) Comment ID: 21307

Comment: 7. State Class VI Well primacy -Presently, North Dakota has primacy for the UIC program. The state is in the process of developing the statutory framework for regulating the long-term GS of CO2. If passed by the 2009 ND LegislativeAssembly, regulations for GS will be promulgated in 2009. As such, North Dakota will have a program in place that can be modified as needed to implement a future EPA program. We encourage EPA to allow state primacy to regulate Class VI UIC wells regardless of whether or not the state has primacy for other UIC

programs.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name:James Stine Letter ID: 0163 Commenter Organization:National Rural Electric Cooperative Association (NRECA) Comment ID:

21326Other EPA Comment Codes and Descriptions: 5600 2.11 Comments related to UIC Program primacy for Class VI wells

Comment: 5. State regulators have familiarity with local environmental, geologic, and financial concerns, and in many cases have pre-existing relationships with the regulated community that will facilitate implementation of a new and complex regulatory program.

For these reasons, NRECA believes it is appropriate to allow states to obtain primacy for the entire UIC program or for only Class VI wells if a particular state so chooses. Id. at 43523. Such class-specific primacy is consistent with the statutory authorization behind the UIC Program, and as EPA predicts, states obtaining primacy for Class VI wells -- regardless of whether they have sought primacy under other aspects of the UIC program -- may be more likely to develop a comprehensive regulatory program for all aspects of carbon capture and storage. Id.; see also 42 U.S.C. § 300h-1 (SDWA § 1422).

Response:EPA acknowledges the expertise of existing State, Tribal, Territorial, and DI UIC programs including programs that implement the UIC requirements under Section 1422 of the SDWA (Class I, III, IV, and V wells) and state oil and gas agencies that have been regulating Class II UIC wells for decades under Section 1425 of SDWA. These agencies already understand the technical and administrative issues involved in construction, operation, injection and permitting as well as, in the case of Class II operators issues related to CO2 injection, subsurface operations, and pipeline transport. EPA believes that existing programs can adapt this expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells

under Section 1422 of SDWA.

Many of the tools, resources, expertise, and infrastructure currently exist within States to effectively and efficiently manage GS projects. Additionally, States can use multiple authorities beyond those afforded under the SDWA including surface access and land rights, unitization of fields, pore space ownership, mineral rights, site safety and emergency preparedness, and maximization of State oil and gas resource exploitation.

Throughout the GS regulatory development process, EPA has made it a priority to engage States and State organizations. EPA works with State co-regulators on regulatory issues related to GS – including state representation on the GS regulatory development workgroup. The Agency has also conducted a series of stakeholder and technical workshops, and public hearings, and EPA met with national organizations including the Ground Water Protection Council, the Interstate Oil and Gas Compact Commission, and the American Association of State Geologists. EPA values coordination with States and State co-regulators and will continue an open dialogue as the Agency moves forward in the regulatory development process.

As described above, EPA plans to allow States to apply for primacy for the Class VI program independently of primacy for other well classes.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23409

Comment:With respect to the integration of State programs, APPA agrees with EPA that the Final Rule should create a delegable program and encourage the adoption and implementation of that program by States. APPA realizes that some states have noexperience with oil and gas use of CO2 but encourages all states to adopt the program. Adopting the program does not automatically presume that all power plants built and operated in those states will be able to conduct geologic sequestration in that state. Id. at 43497. State regulators have familiarity with local environmental, geologic, and financial concerns, and in many cases have pre-existing relationships with the regulated community that can facilitate implementation of a new and complex regulatory program. For these reasons, APPA also believes it is appropriate to allow States to obtain primacy for only Class VI wells if a particular State so chooses. Id. at 43523. Such class-specific primacy is consistent with the statutory authorization behind the UIC Program, and EPA correctly predicts that States obtaining primacy for Class VI wells, regardless of whether they have sought primacy under other aspects of the UIC program, may be more likely to develop a comprehensive regulatory program for all aspects of carbon capture and storage. Id.; see also 42 U.S.C. § 300h-1 (SDWA § 1422). Simply put, APPA is not trying to force states to have Class I and Class II UIC programs in order to have Class VI programs. States may well decide that they still are not comfortable with a Class II or Class I UIC program. APPA has no desire to change those state policies through this UIC rulemaking.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any otherwell Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24129

Comment: State Primacy

API contends that states and tribes should play a key role in managing CCS projects going forward. Accordingly, states should be permitted to seek primacy for the Class VI program, even in the absence of primacy for other well classes (partial primacy). Numerous states have decades of experience regulating CO2 injection through Class II programs, and those states in particular may have much to offer in the context of Class VI wells. A critical component of the primacy delegation process is for EPA to ensure that States will be adequately funded to deal with the increased burdens associated with managing the Class VI program. Conversely, some states may not have formations with the necessary geologic characteristics to allow GS and so may want to pass on obtaining primacy for this program.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level(but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA recognizes that some states may not have appropriate geology for sequestering CO2, and these states should be able to retain primacy for other well classes without incurring the cost and burden of adopting primacy changes to address the new Class VI well requirements.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA also acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges associated

with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24213

Comment:EPA Preamble Question: 1. EPA seeks comment on any aspects of the ongoing State efforts to regulate the GS of CO2 and how these efforts might be used to better inform a final Federal rulemaking. EPA Notice 43497.

API Response: API supports the implementation of partial primacy for Class VI separately from other classes of wells.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipelineoperations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24266

Comment: Rule Provisions: 73 FR 43523, 73 FR 43529 EPA Preamble Question: 49. There may be benefits to parsing out primacy for Class VI wells, however EPA has not made a decision on this. Allowing States, Territories, and Tribes to acquire primacy for only Class VI wells may encourage them to assume the responsibility of implementation and provide for a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration). EPA is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of

other well classes. EPA Notice 43523.

API Response: API supports the implementation of partial primacy for Class VI separately from other classes of wells. The geologic variation across the country justifies partial primacy.

Response: As described above, EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

Commenter Name:James Taft Letter ID: 0172 Commenter Organization: Association of State Drinking Water Administrators (ASDWA) Comment ID:

23458Other EPA Comment Codes and Descriptions: 5600 2.11 Comments related to UIC Program primacy for Class VI wells

Comment: State Primacy Considerations:

EPA should investigate options for state primacy considerations under SDWA 1425 to regulate the new class VI wells for carbon sequestration independently of other well classes. As the proposed rule is currently written, it precludes states that only have primacy on Class II wells.

Response:EPA clarifies that Section 1425 of SDWA allows an alternative primacy demonstration only for programs regulating injection wells associated with oil and gas recovery or natural gas storage. Therefore, wells used for the purpose of GS cannot be covered under Section 1425. While EPA acknowledges that states that have not obtained primacy under SDWA Section 1422 for other well classes may be less familiar with implementing the UIC program under that section of the Act, the Agency does not believe this would preclude their ability to effectively obtain and implement primacy for Class VI wells. EPA does not intend to limit primacy of Class VI wells to only states with primacy for Class II wells—any state that can demonstrate in its primacy application that it has developed regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule will be granted primacy for Class VI wells.

EPA also plans to support states as needed to help them develop and implement their Class VI programs. EPA will allow states to apply for primacy for Class VI independently of other well classes regardless of whether or not they have primacy for other well classes. EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories to describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:James Rower Letter ID: 0173 Commenter Organization: Utility Solid Waste Activities Group (USWAG) Comment ID: 23475 Other EPA Comment Codes and Descriptions: 5600 2.11 Comments related to UIC Program primacy for Class VI wells

Comment:With respect to the integration of state programs, USWAG agrees that the Final Rule should create a delegable program and encourage the adoption and implementation of that program by states. Id. at 43497. Our members' experiences with Class V experimental CO2 wells underscore the benefits of regulation on a state level. State regulators have familiarity with local environmental, geologic, and financial concerns, and in many cases have pre-existing relationships with the regulated community that will facilitate implementation of a new and complex regulatory program. For these reasons, it is appropriate to allow states to obtain primacy for only Class VI wells if a particular state so chooses. Id. at 43523. Such class-specific primacy is consistent with the statutory authorization behind the UIC Program and EPA is correct in predicting that states obtaining primacy for Class VI wells - regardless of whether they have sought primacy for other well classes under the UIC program - may be more likely to develop a comprehensive regulatory program for all aspects of carboncapture and storage. Id.; see also 42 U.S.C. § 300h-1 (SDWA § 1422).

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for States to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA to ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name: Quinlan J. Shea Letter ID: 0177Commenter Organization:Edison Electric Institute Comment ID: 23558 Other EPA Comment Codes and Descriptions: 5600 2.11 Comments related to UIC Program primacy for Class VI wells

Comment: Regarding whether states should be permitted to seek primacy for Class VI wells, EEI agrees that states and tribes should play a key role in managing CCS projects going forward. Further, many states are moving ahead with developing their own legislation and regulations related to CCS activities. Allowing those states to take on primacy for Class VI wells (in particular, allowing them to take on primacy for Class VI without assuming the regulatory burden that may be associated with other well classes) will help ensure that they are given credit and recognition for their groundbreaking work on CCS.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wellsunder section 1422 of SDWA to ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name: Quinlan J. Shea Letter ID: 0177 Commenter Organization:Edison Electric Institute Comment ID: 23604 Other EPA Comment Codes and Descriptions: 5600 2.11 Comments related to UIC Program primacy for Class VI wells

Comment: I. State Primacy Provisions

The proposed rules seek comment on whether states should be permitted to seek primacy for Class VI wells, noting the Agency‘s belief that "the most effective approach for the comprehensive management of CO2 GS projects would be achieved at the State and Tribal level." EEI agrees that states and tribes should play a key role in managing CCS projects going forward. Numerous states have decades of experience regulating CO2 injection through Class II programs, and those states in particular may have much to offer in the context of Class IV wells. Further, many states are moving ahead with developing their own legislation and regulations related to CCS activities--in many cases laws and rules that go beyond the scope of EPA‘s jurisdiction, such as incentives provisions and provisions clarifying the nature of potentially affected property rights. Allowing those states to take on primacy for Class VI wells (in particular, allowing them to take on primacy for Class VI without assuming the regulatory burden that may be associated with other well classes) will help ensure that they are given credit and recognition for their groundbreaking work on CCS. EEI supports increased funding for those states that have primacy for Class VI wells to ensure that sufficient resources exist to review appropriately the complex permit applications GS projects will entail.

EEI also encourages the Agency to consider potential issues related to projects that may span multiple states in light of primacy issues. Under such circumstances the rules could include, for example, provisions for establishing a primary state for permitting purposes, with additional affected states provided an opportunity for notice and comment.

Response: As described above, EPA will allow states to apply for primacy for Class VI wells independently of primacy for other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

In response to the question about which state or region would oversee the permit for projects where the AoR spans State, Tribal or Territorial boundaries, EPA clarifies that issuance and oversight of a GS permit, including any associated AoR boundary related coordination, is the responsibility of the primacy (State, Tribal, or Territorial) or regional DI program in the state where the injection well is

located.Because some GS projects will require coordination across State, Tribal, and Territorial jurisdictions, the Agency will work with the appropriate entities to facilitate communication among States, Tribes, and Territories interested in obtaining primacy during the implementation phase of the GS regulation. Such communication may involve other organizations such as the Sierra Club, NDWAC, associations, and other experts. However, the responsibility for addressing such subjects ultimately rests with the States, Tribes, and Territories with primacy. EPA is developing primacy implementation materials for states that describe trans-boundary issues that should be addressed in permitting Class VI wells under the GS regulation. The materials will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial or EPA Regional boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application, as specified in §146.82(b), and ensure that they are involved in any necessary processes (e.g., development of the emergency and remedial response plan, as specified in §146.94).The Agency encourages transparency in the permitting process and expects that State-State/StateTribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23713

Comment:EPA Request for Comment: EPA is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of

other well classes. EPA Notice 43523.

AWWA Response: AWWA recommends that a state be able to administer only Class VI well permits, if they so desire. The Class VI well program is a very specialized class, which has major differences from all the other well classes. A state that decides to apply for primacy of the Class VI wells only would be able to specialize in this well class, and could develop and execute a very detailed program. The state would have an advantage in that the state staff would be very familiar with the regional geology, water resources and business operations in the areas proposed for geologic sequestration. One disadvantage could be seen if the applying state had never held primacy for any of the other classes of wells. Since this is a fairly specialized class, there could be some logistical issues in the beginning stages of the state administering the program. However, AWWA believes that these issues could be addressed through consultation with either the federal EPA offices, or in discussions with other states that are administering the Class VI program. In our opinion, the benefits associated with state primacy, such as a more in depth knowledge of the state geology, operations and politics far outweighs any minor implementation issues that might be associated with a state having primacy approval for only Class VI wells.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. Thispolicy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA agrees that states without primacy for other injection well classes may encounter some logistical challenges while developing a new Class VI primacy program. EPA is developing guidance that describes, for States, the process of applying for and receiving primacy for GS Class VI wells under Section 1422 of SDWA. The manual will also provide tools designed to assist States with the development of their primacy application and UIC Directors with evaluating permit application information. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

EPA also encourages States, Tribes, and Territories to consult with their EPA Region or other States, Tribes, and Territories administering the Class VI program for guidance as they begin the primacy application process and develop a UIC program for Class VI wells.

Commenter Name: Ginny Brannon Letter ID: 0182 Commenter Organization: Colorado Department of Public Health and

Environment Comment ID:

23753 Other EPA Comment Codes and Descriptions: 5600 2.11 Comments related to UIC Program primacy for Class VI wells

Comment: The SDWA provides that States may apply to EPA for primary enforcement responsibility to administer the underground injection control program. Thesestates, referred to as Primacy States, must meet the minimum federal requirements for UIC programs, including construction, operating, monitoring, testing, reporting, and closure requirements for well owners or operators.

Additionally, the SDWA allows states to apply for such primacy in part, such as for well Classes I, III, IV, and V under Section 1422, or for Class II wells only under Section 1425. Colorado falls in this latter camp, with primacy for Class II wells only.

The proposed rule calls for another class of wells, Class VI, for the injection of carbon dioxide. It is our contention that states should be able to seek primacy for Class VI wells as a ‘stand alone’ class, just as they do for Class II wells now. Because Class II wells are for oil and gas injection, Class II wells and the proposed Class VI wells are similar in purpose and particularly suited as ‘stand

alone’ classes of wells.

Also, in addition to our own staff, Colorado is home to a premier university and scientific community, such that we have the expertise in the event we were to assume primacy for Class VI wells.

Finally, geologic sequestration is only one component in a broader carbon capture and sequestration context. Colorado agrees with EPA that allowing states to acquire primacy for Class VI wells may encourage them to assume the responsibility of implementation and provide for a more comprehensive approach to managing CCS projects.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA agrees that having skilled personnel in various technical areas relevant to GS of CO2 is critically important for effective implementation of the Class VI regulation. EPA acknowledges that such expertise may be present among staff in state UIC programs or through university systems, such as in state universities or the scientific community. EPA believes such expertise will benefitimplementation of the Class VI program nation-wide.

Commenter Name: Bradley J. Field Letter ID: 0186 Commenter Organization:New York State Dept. of Environmental Conservation

Div. of Mineral Resources Comment ID:

25171

Comment: A. EPA seeks comment on any aspects of the ongoing State efforts to regulate the GS of CO2 and how these efforts might be used to better inform a final Federal rulemaking.

NYSDEC-DMN Response: While the UIC program in New York State is directly implemented at this time, many other states currently have primacy jurisdiction and administer Class II and other wells. Primacy should be allowed solely for Class VI, and such should be structured to allow flexibility in the primacy process and defer to the state rule when it effectively meets the intent of the federal requirements.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climatechange priorities and protect USDWs from endangerment.

Commenter Name: Bradley J. Field Letter ID: 0186 Commenter Organization:New York State Dept. of Environmental Conservation

Div. of Mineral Resources Comment ID:

25217

Comment: SS. EPA is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of other well classes.

NYSDEC- DMN Response: NYSDEC-DMN supports the creation of a separate class VI for GS wells and strongly supports allowing state primacy solely for Class VI. In addition, states should have the authority to designate which agency in the state can apply for and be granted primacy.

Response: As described above, EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

EPA also clarifies that primacy is granted to a state, not to any agency within that state, and states are free to choose which agency will implement the Class VI program—for instance, an environmental quality protection agency (non-Class II) or the state's traditional oil and gas regulatory agency (Class II)—as long as the program meets the minimum Federal requirements for Class VI wells as required under section 1422 of SDWA. Some states administer their program for all injection well classes through a single agency, whereas other States elect to divide the program between agencies. For example, in most States, the Class II program is run by an oil and gas agency and other well classes are run by a State environmental agency (e.g., the Oklahoma Corporation Commission oversees Class II wells in the State, and the Oklahoma Department of Environmental Quality oversees other well classes). Additionally, several States allow their oil and gas agencies to administer their UIC program for specific well classes or subclasses provided they meet all Federal requirements (e.g., the Texas Railroad Commission oversees Class III brine-mining wells and Class V geothermal wells in Texas). EPA believes that retaining this flexibility for States to identify the appropriate agency to oversee Class VI wells will address commenters’ concerns that States should be afforded the opportunity to determine which agency should oversee Class VI wells, and recognizes the existing expertise of both State oil and gas agencies and environmental agencies.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24506

Comment: Rule Provisions or Federal Register Cite: 73 FR 43497 EPA Preamble Question: 1. EPA seeks comment on any aspects of the ongoing State efforts to regulate the GS of CO2 and how these efforts might be used to better inform a final Federal rulemaking. EPA Notice 43497.

CSC Response: Use state approaches as examples to support recommendations where appropriate. As EPA moves toward finalizing this rule, EPA should monitor state rulemaking to assess the extent to which its rule needs to afford state Director’s the flexibility to account for regional differences. We also support the implementation of separate primacy for Class VI separately from other

classes of wells.Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Throughout the process of this rulemaking EPA has been keeping track of individual state legislative regulatory approaches. The Agency recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration). EPA considered those legislative approaches that are within the scope of the SDWA while finalizing this rulemaking.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24558

Comment: Rule Provisions or Federal Register Cite: 73 FR 43523, 73 FR 43529 EPA Preamble Question: 49. There may be benefits to parsing out primacy for Class VI wells, however EPA has not made a decision on this. Allowing States, Territories, and Tribes to acquire primacy for only Class VI wells may encouragethem to assume the responsibility of implementation and provide for a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration). EPA is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of

other well classes. EPA Notice 43523.

CSC Response: CSC supports separate primacy for Class VI. The geologic variation across the country justifies separate primacy determinations. The final rule should also preserve state authority to determine what agencies will exercise primacy. Moreover, EPA should provide adequate funding, which will require a substantial increase above current funding levels both to meet existing program needs and to provide the additional resources anticipated to be necessary for the Class VI program. These increases need to be provided in time to ramp up of resources, personnel, and training in advance of the anticipated heavy demand.

Response: As described above, EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. EPA also clarifies that primacy is granted to a state, not to any agency within that state, and states are free to choose which agency willimplement the Class VI program—for instance, an environmental quality protection agency (nonClass II) or the state's traditional oil and gas regulatory agency (Class II)—as long as the program meets the minimum Federal requirements for Class VI wells as required under section 1422 of SDWA. Some states administer their program for all injection well classes through a single agency, whereas other States elect to divide the program between agencies. For example, in most States, the Class II program is run by an oil and gas agency and other well classes are run by a State environmental agency (e.g., the Oklahoma Corporation Commission oversees Class II wells in the State, and the Oklahoma Department of Environmental Quality oversees other well classes). Additionally, several States allow their oil and gas agencies to administer their UIC program for specific well classes or subclasses provided they meet all Federal requirements (e.g., the Texas Railroad Commission oversees Class III brine-mining wells and Class V geothermal wells in Texas). EPA believes that retaining this flexibility for States to identify the appropriate agency to oversee Class VI wells will address commenters’ concerns that States should be afforded the opportunity to determine which agency should oversee Class VI wells, and recognizes the existing expertise of both State oil and gas agencies and environmental agencies.

EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges associated

with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24568

Comment: Rule Provisions: 73 FR 43497EPA Rule Issue: 1. EPA seeks comment on any aspects of the ongoing State efforts to regulate the GS of CO2 and how these efforts might be used to better inform a final Federal rulemaking. EPA Notice 43497.

Anadarko Petroleum Corporation (APC) Response: APC supports the implementation of partial primacy for Class VI separately from other classes of wells.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24620

Comment: Rule Provisions: 73 FR 43523, 73 FR 43529 EPA Rule Issue: 49. There may be benefits to parsing out primacy for Class VI wells, however EPA has not made a decision on this. Allowing States, Territories, and Tribes to acquire primacy for only Class VI wells may encourage them to assume the responsibility of implementation and provide for a morecomprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration). EPA is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of

other well classes. EPA Notice 43523.

Anadarko Petroleum Corporation (APC) Response: APC supports the implementation of partial primacy for Class VI separately from other classes of wells. The geologic variation across the country justifies partial primacy.

Response: As described above, EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

Commenter Name:John Corra Letter ID: 0205 Commenter Organization:Wyoming Department of Environmental Quality (DEQ) Comment ID:

22190

Comment: 2. Primacy for Class VI Wells: The US EPA should allow for separate delegation of primacy to the states and tribes for Class VI wells unless the state or tribe requests that the delegation be made part of their existing UIC program for Class I, II, III or V wells.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of otherwell classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name:Michael Stroben Letter ID: 0209 Commenter Organization: Duke Energy Comment ID: 22688

Comment: STATE PRIMACY

The proposed rule seeks comment on whether states should be permitted to seek primacy for Class VI wells, noting the Agency’s belief that "the most effective approach for the comprehensive management of CO2 GS projects would be achieved at the State and Tribal level." Duke Energy believes it is appropriate to allow States to obtain primacy for only Class VI wells. States should play a key role in managing CO2 GS projects going forward, as they have with Class II wells for decades. The experience states have gained by regulating CO2 injection through the existing programs can offer many benefits in the context of Class VI wells. State regulators have familiarity with local environmental, geologic, and financial concerns, and in many cases have pre-existing relationships with the regulated community that can facilitate implementation of a new and complex regulatory program. Further, some states are moving ahead with developing their own legislation and regulations related to carbon capture and storage ("CCS") activities--in many cases developing laws and rules that include unique provisions and provide incentives for the development of new CCS projects. Allowing those states to take on primacy for Class VI wells (in particular, allowing them to take on primacy for Class VI wells without assuming the regulatory burden that may be associated with other well classes) will help ensure that they are given credit and recognition for their groundbreaking work

in this area.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land userights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name: Barbara Walz Letter ID: 0216 Commenter Organization: Tri-State Generation and Transmission Association,

Inc. Comment ID:

22967

Comment: B. State regulators have familiarity with local environmental, geologic, and financial concerns, and in many cases have pre-existing relationships with the regulated community that will facilitate implementation of a new and complex regulatory program. For these reasons, Tri-State believes it is also appropriate to allow states to obtain primacy for only Class VI wells if a particular state so chooses. Such class-specific primacy is consistent with the statutory authorization behind the UIC Program, and as EPA predicts, states obtaining primacy for Class VI wells -regardless of whether they have sought primacy under other aspects of the UIC program -may be more likely to develop a comprehensive regulatory program for all aspects of carbon capture and storage.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intendedto encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name: Olon Plunk Letter ID: 0217 Commenter Organization:Xcel Energy, Inc. Comment ID: 21556 Other EPA Comment Codes and Descriptions: 5600 2.11 Comments related to UIC Program primacy for Class VI wells

Comment: State Primacy

Xcel Energy supports the concept of state primacy. States should have the ability to obtain delegated authority for Class VI wells only, as opposed to being required to develop delegable programs for all classes of wells. As notedby EEI and USWAG, permitting decisions are best made at the state level where knowledge of local conditions and public concerns is the greatest. In addition, it is essential that the final rule establish a "lead state" concept for projects where the AoR may cross state boundaries. Xcel Energy supports assigning the project permitting lead role to the state where the Class VI

wellhead is located.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA clarifies that issuance and oversight of a GS permit, including any associated AoR boundary related coordination, is the responsibility of the primacy (State, Tribal or Territorial) or regional DI program in the state where the injection well is located. EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial, EPA Regional, or national boundaries. The final GS rule, at 146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application 146.82(b) and ensure that they are involved in any necessary processes (e.g., development of the emergencyand remedial response plan (146.94)). The Agency encourages transparency in the permitting process and anticipates that State-State/State-Tribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23223 Other EPA Comment Codes and Descriptions: 1530 1.2.3.1 State regulatory efforts on GS (seeking comment)

Comment: 1. EPA seeks comment on any aspects of the ongoing State efforts to regulate the GS of CO2 and how these efforts might be used to better inform a final Federal rulemaking. EPA Notice 43497.

The North Dakota Industrial Commission has drafted legislation concerning capture and storage of carbon dioxide to be acted upon during the upcoming legislative session in January 2009. This legislation was crafted using the IOGCC model. If the legislation is enacted, administrative rules will be promulgated. As with most regulatory programs, the states are best qualified to take state-specific issues into account and to tailor the regulatory needs to fit their unique circumstances. To this end, partial primacy for Class VI wells is imperative.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for ClassVI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23271

Comment:48. To gain authority for Class VI wells, States, Territories, and Tribes will be required to show that their regulations are at least as stringent as, and may be more stringent than, the proposed minimum Federal requirements (e.g., inspection, operation, monitoring, and recordkeeping requirements that well owners or operators must meet). Such Primacy States, Territories, and Tribes

are authorized under Section 1422 of the SDWA. EPA Notice 43523.

Partial primacy should be granted for Class VI wells independently of other well classes and through a process similar to granting primacy under existing UIC classes, allowing the states to determine the appropriate regulating agency.

Response: As described above, EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23272

Comment:49. There may be benefits to parsing out primacy for Class VI wells, however EPA has not made a decision on this. Allowing States, Territories, and Tribes to acquire primacy for only Class VI wells may encourage them to assume the responsibility of implementation and provide for a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration). EPA is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of other well

classes. EPA Notice 43523.

Partial primacy should be granted for Class VI wells independently of other well classes allowing the states to determine the appropriate regulating agency.This will encourage states to apply for primacy.

Response: As described above, EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

Commenter Name:Walter L. Baker Letter ID: 0253 Commenter Organization: Utah Division of Water Quality Comment ID: 22355

Comment: PRIMACY OF CLASS VI WELLS

We encourage EPA to allow primacy approval for Class VI wells independent of the other classes of injection wells. This would allow the state agency that is best positioned for implementing the Class VI program to apply for primacy for the program or to apply for an amendment to an existing primacy application. This would facilitate the rapid deployment of commercial- scale CCGS projects.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24811

Comment: RESOLUTION 08-1

REGARDING DELEGATION OF PRIMARY ENFORCEMENT AUTHORITY TO STATES FOR

THE GEOSEQUESTRATION OF CARBON DIOXIDE

WHEREAS, the United States Environmental Protection Agency (USEPA) has determined the geologic sequestration of carbon dioxide is a process that falls within the jurisdiction of the Safe Drinking Water Act (SDWA), Underground Injection Control (UIC) program; and

WHEREAS, the USEPA has developed a proposed federal rule under the UIC program to regulate the practice of geologic sequestration of carbon dioxide; and

WHEREAS, the USEPA has proposed the creation of a new injection well class for carbon dioxide geologic sequestration injection wells with the designation of Class VI; and

WHEREAS, upon adoption of a federal rule states will lack primacy enforcement authority (Primacy) for Class VI wells until such authority is delegated to the states by USEPA; and

WHEREAS, the USEPA has indicated the delegation of primacy for Class VI wells will fall under the authority of Section 1422 of the SDWA; and

WHEREAS, it is the current practice of USEPA to only delegate primacy under Section 1422 of the SDWA if a state accepts primacy for all well classes other than Class II wells; and

WHEREAS, it is in the best interest of protecting ground water resources for the geologic sequestration of carbon dioxide to be regulated at the state level; and

WHEREAS, the GWPC is an association of state administrators of underground injection control and ground water protection programs that will be responsible for administering programs for the geologic sequestration of carbon dioxide; andWHEREAS, any requirement by USEPA that states accept primacy for Class I, III, IV and V wells, as a condition for obtaining primacy for Class VI wells will create an unreasonable burden upon states; and

WHEREAS, any requirement by USEPA that states with primacy for Class I, III, IV and V wells also accept primacy for Class VI wells will compromise the states ability to decide how best to administer the states UIC program and may unnecessarily disrupt the states’ UIC program;

NOW THEREFORE BE IT RESOLVED THAT, the GWPC recommends USEPA provide for the voluntary and separate delegation of primacy to the states for Class VI wells under the UIC program unless the state requests the delegation be made a part of a state UIC primacy program.

Response:EPA agrees that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past, EPA has not accepted UIC primacy applications for individual well classes under Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also need to accept responsibility for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility for UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federalrequirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative efforts that are wider in scope than the Federal GS rule and believes that allowing Class VI primacy (independent of other well classes) may encourage states to take responsibility for implementation of a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration).

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24827

Comment:EPA Notice Questions: 73 FR 43523

EPA Rule Issue: 49. There may be benefits to parsing out primacy for Class VI wells, however EPA has not made a decision on this. Allowing States, Territories, and Tribes to acquire primacy for only Class VI wells may encourage them to assume the responsibility of implementation and provide for a more comprehensive approach to managing CCS projects (e.g., capture, transportation, and geologic sequestration). EPA is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of

other well classes. EPA Notice 43523.

GWPC CO2 Committee Response: Resolution 08-1 of the GWPC strongly urges USEPA to allow for the granting of individual primacy to states for the Class VI program. We further support the preservation of state authority to determine what agencies will exercise primacy, strongly urge USEPA to provide adequate funding, which will require a substantial increase above current funding levels both to meet both existing UIC program needs and the additional resources anticipated to be necessary for the Class VI program. Ramp up of resources, personnel, and training should precede anticipated heavy demand.

Rationale: Submit GWPC resolution 08-1

Response: As described above, EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule.

EPA acknowledges that there may be technical and administrative challenges including resource concerns, and will work closely with the states to assist them in resolving funding issues or acquiring the resources, personnel, and training needed to address the unique technical challenges associated

with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The States/Tribes/Territories must also demonstrate that they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs are required to meet a minimum of 25 percent matching requirement.Letter ID: 0263 Commenter Organization: Interstate Oil & Gas Compact Commission Comment ID: 22789

Comment: A. EPA seeks comment on any aspects of the ongoing State efforts to regulate the GS of CO2 and how these efforts might be used to better inform a final Federal rulemaking.

IOGCC Response: Many states currently have primacy jurisdiction under the UIC program and administer Class II and other wells. Primacy should be allowed for Class VI and should be structured to allow flexibility in the primacy process and defer to the state rule where it effectively meets the intent of the federal requirements.

Response:EPA clarifies that the primacy approval processes for Class II and Class VI differ. Section 1421 of SDWA directs EPA to grant primary enforcement responsibility (or primacy) to the States through two statutory provisions. The first provision, under Section 1422, provides for a State to demonstrate that its proposed UIC program is at least as stringent as the minimum Federal requirements in order to prevent endangerment of USDWs. The second provision, under Section 1425, allows a State to submit an alternative demonstration for its Class II program (oil and gas), where the State only has to demonstrate that its proposed Class II program is an effective program to prevent underground injection that endangers USDWs.

EPA clarifies that Class VI wells are regulated under Section 1422 of SDWA, and adds that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final

GS rule.

EPA acknowledges the expertise of state oil and gas agencies that have been regulating Class II wells for decades under section 1425 of SDWA. These agencies already understand CO2 injection, subsurface operations, and pipeline transport, and they are familiar with public interests and the SDWA. EPA believes that this experience, along with the agencies' familiarity with UIC permitting requirements, will help facilitate the adoption of Class VI primacy programs.

Letter ID: 0263 Commenter Organization: Interstate Oil & Gas Compact Commission Comment ID: 22830

Comment: V. How Will States, Territories, and Tribes Obtain UIC Program Primacy for Class

VI Wells?

VV. EPA is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of other well classes.

IOGCC Response: The IOGCC strongly supports independent state primacy for Class VI. States should have the authority to designate which agency in the state can apply for and be granted primacy.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture,transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA also clarifies that primacy is granted to a state, not to any agency within that state, and states are free to choose which agency will implement the Class VI program—for instance, an environmental quality protection agency (non-Class II) or the state's traditional oil and gas regulatory agency (Class II)—as long as the program meets the minimum Federal requirements for Class VI wells as required under section 1422 of SDWA. Some states administer their program for all injection well classes through a single agency, whereas other States elect to divide the program between agencies. For example, in most States, the Class II program is run by an oil and gas agency and other well classes are run by a State environmental agency (e.g., the Oklahoma Corporation Commission oversees Class II wells in the State, and the Oklahoma Department of Environmental Quality oversees other well classes). Additionally, several States allow their oil and gas agencies to administer their UIC program for specific well classes or subclasses provided they meet all Federal requirements (e.g., the Texas Railroad Commission oversees Class III brine-mining wells and Class V geothermal wells in Texas). EPA believes that retaining this flexibility for States to identify the appropriate agency to oversee Class VI wells will address commenters’ concerns that States should be afforded the opportunity to determine which agency should oversee Class VI wells, and recognizes the existing expertise of both State oil and gas agencies and environmental agencies.

Commenter Name: Steven Chester Letter ID: 0264 Commenter Organization:Michigan Department of Environmental Quality (MDEQ) Comment ID:

22847

Comment:EPA (V.) proposes allowing state regulatory agencies to assume primacy for Class VI GS wells only.

- Staff is in favor of this proposal.Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name:Michael Moore Letter ID: 0265 Commenter Organization:North American Carbon Capture & Storage Association (NACCSA) Comment ID:

22857

Comment: - Issues Related to State Primacy: States should be permitted to seek primacy for Class VI wells, even in the absence of primacy for other well classes.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach tomanaging CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name:Michael Moore Letter ID: 0265 Commenter Organization:North American Carbon Capture & Storage Association (NACCSA) Comment ID:

22871

Comment: 8. Issues Related to State Primacy

The proposed rule seeks comment on whether states should be permitted to seek primacy for Class VI wells, noting the Agency's belief that "the most effective approach for the comprehensive management of CO2 GS projects would be achieved at the State and Tribal level." NACCSA agrees that states and tribes should play a key role in managing CCS projects going forward. To that end, states should be permitted to seek primacy for Class VI wells, even in the absence of primacy for other well classes. Numerous states have decades of experience regulating CO2 injection through Class II programs, and those states in particular may have much to offer in the context of Class IV wells. Further, many states are moving ahead with developing their own legislation and regulations related to CCSactivities-in many cases legislation and regulations that go beyond the scope of EPA's jurisdiction, such as incentives provisions and provisions clarifying the nature of potentially affected property rights. Allowing those states to take on primacy for Class VI wells unencumbered with the burdens of taking on primacy for other well classes ensures that they are given credit and recognition for their groundbreaking work on CCS without disincentivizing states from taking a leadership role on CCS.Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

Commenter Name: Grover Campbell Letter ID: 0271 Commenter Organization: Chesapeake Energy Comment ID: 22893

Comment: 2. State Primacy for Class VI Wells

The EPA noted in the preamble to the proposed rule that it is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of other well classes.

We prefer that no state have primacy approval for Class VI wells unless that state also has primacy approval for Class II wells. Our concern is that a state with primacy for only the new Class VI wells may assume that the only permitting option for injection of CO2 underground for any purpose, including the injection of naturally occurring acid gases, including CO2, at gas production and/or gasprocessing sites, would be a Class VI permit. This could lead to confusion and delays in obtaining a Class II permit. Any state granted primacy for the new Class VI wells should also have primacy for Class 11 wells so that their permitting agency is familiar with the purpose of Class II wells and the less restrictive requirements for Class II wells.

Response:EPA disagrees that Class VI primacy should only be granted to states with Class II programs. Many states that intend to sequester CO2 may not have oil and gas programs (e.g., states with extensive saline formations and no oil and gas resources). Furthermore, states with primacy for other well classes (e.g., Class I or deep Class V wells) would also possess a great deal of technical expertise regarding injection technology and an understanding of Section 1422 of SDWA.

While EPA acknowledges that states that have not obtained primacy under SDWA Section 1422 for other well classes may be less familiar with implementing the UIC program under that section of the Act, the Agency does not believe this would preclude their ability to effectively obtain and implement primacy for Class VI wells. EPA does not intend to limit primacy of Class VI wells to only states with primacy for Class II wells—any state that can demonstrate in its primacy application that they have developed regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule will be granted primacy for Class VI wells.

EPA also plans to support states as needed to help them develop and implement their Class VI programs. EPA will allow states to apply for primacy for Class VI independent of other well classes regardless of whether or not they have primacy for other well classes. EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories to describe the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum Federal criteria and requirements. The guidance will be available at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Commenter Name:Mark Vickery Letter ID: 0280 Commenter Organization: Texas Commission on Environmental Quality Comment ID: 24111 Other EPA Comment Codes and Descriptions: 1250 1.1.1.4 Flexibility is needed (performancebased standards)

Comment: (3) Flexibility and Streamlining in Class VI Program Primacy Considerations - TCEQ concurs with EPA's assessment that current options for injection of CO2 include Class I, ClassII, and ClassV wells. Accordingly, under state law, injection of CO2 in Texas will be regulated by either the TCEQ or the Railroad Commission (RRC). Noting the RRC's responsibility for Class II injection (including CO2 injection for enhanced recovery of oil and gas), TCEQ is responsible for Class I and most of Class V (including experimental injection of CO2). Class VI as proposed by EPA, under state law, would appear to be in TCEQ's jurisdiction. Section 27.022, Texas Water Code provides: "The commission has jurisdiction over the injection of carbon dioxide produced by a clean coal project, to the extent authorized by federal law, into a zone that is below the base of usable quality water and that is not productive of oil, gas, or geothermal resources". However, such jurisdictional lines are subject to change by state legislation. Flexibility will therefore be needed in federal authorization of the Class VI well program at whichever agency is designated by the state legislature.Flexibility in this sense primarily means free from constraints that EPA has traditionally imposed by bundling various well classes into an "all or nothing" condition for program primacy.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstanding policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Class under Section 1422. EPA will continue to discourage applications for partial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Class VI wells independent of other well classes provided they develop regulations that are at least as stringent as the minimum Federal requirements (e.g., permitting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and ensure that their GS programs integrate into national climate change priorities and protect USDWs from endangerment.

EPA also clarifies that primacy is granted to a state, not to any agency within that state, and states are free to choose which agency will implement the Class VI program—for instance, an environmental quality protection agency (non-Class II) or the state's traditional oil and gas regulatory agency (Class II)—as long as the program meets the minimum Federal requirements for Class VI wells as required under section 1422 of SDWA. Some states administer their program for all injection well classes through a single agency, whereas other States elect to divide the program between agencies. For example, in most States, the Class II program is run by an oil and gas agency and other well classes are run by a State environmental agency (e.g., the Oklahoma Corporation Commission oversees Class II wells in the State, and the Oklahoma Department of Environmental Quality oversees other well classes). Additionally, several States allow their oil and gas agencies to administer their UIC program for specific well classes or subclasses provided they meet all Federal requirements (e.g., the Texas Railroad Commission oversees Class III brine-mining wells and Class V geothermal wells in Texas). EPA believes that retaining this flexibility for States to identify the appropriate agency to oversee Class VI wells will address commenters’ concerns that States should be afforded the opportunity to determine which agency should oversee Class VI wells, and recognizes the existing expertise of both State oil and gas agencies and environmental agencies.

Commenter Name: Ginny Brannon Letter ID: 0521 Commenter Organization: Colorado Department of Public Health and

Environments Comment ID:

21449Comment: framework. With respect to that regulatory framework, the Safe Drinking Water Act provides the states that apply to EPA for primary enforcement responsibility to administer the underground injection control program. These states referred to as primacy states must meet the minimum federal requirements for UIC programs including construction, operating, monitoring, testing, reporting and closure requirements for well owners or operators.

Additionally, the Safe Drinking Water Act allows states to apply for such primacy in part, such as for only classes I, III, IV and VI under section 1422 or for Class II wells only under section 1425.

Colorado falls in this latter camp with primacy for Class II wells only.

The proposed rule calls for another class of wells, Class VI with the injection of carbon dioxide. It is our contention the state should be able to seek primacy for Class VI wells as a stand alone class just as they do for Class II wells now. Because Class II wells are for oil and gas injection, Class II wells and the proposed Class VI wells for CO2 injection are similar in purpose and particularly suited as stand alone classes of wells.

Also in addition to our own staff, Colorado is home to a premier university and scientific community such that we have the expertise in the event we were to assume primacy for Class VI wells.

Finally geologic sequestration is only one component in a broader carbon and capture, carbon capture and sequestration context. Colorado agrees with EPA. By allowing states to acquire primacy for Class VI wells may encourage them to assume the responsibility of implementation and provide for more comprehensive approach to managing carbon capture and sequestration projects.

Response:EPA agrees with commenters that states should be allowed to obtain primacy for Class VI wells independently of other well classes, and will allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. Given the potential for CCS (encompassing capture, transportation, and geologic sequestration) to be an important part of a national priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take responsibility for implementation of Class VI regulations and provide for a more comprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA into a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state level (but outside UIC authority) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for states to use their unique efficiencies to promote adoption of this burgeoning and important technology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believes that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.EPA agrees that having skilled personnel in various technical areas relevant to GS of CO2 is critically important for effective UIC oversight of Class VI wells. EPA acknowledges that such expertise may be present among staff in state UIC programs or through university systems, such as in state universities or the scientific community. EPA believes such expertise will benefit implementation of the Class VI program nation-wide.

Comment Code: 5700 2.12 Comments on the proposed duration of Class VI permits (seeking comment)



### Individual Comments

Commenter Name:Michael H. Cochran Letter ID:

0108 Commenter Organization: Bureau of Water, Division of Environment, Kansas Department of Health & Environment (KDHE) Comment

ID: 24921

Comment: 144.36: We believe it would be prudent to limit the life of the permit so that necessary adjustments to the permit can be made as needed with the opportunity for public comment and to establish a process for obtaining updated information concerning the injection operation. We would recommend a permit life of no more than 10 years.

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least once every five years to determine whether it should be modified, revoked and reissued, terminated, or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA emphasizes that, in addition to the requirement that the Director review the permit every five years, as part of existing requirements at 40 CFR 144.39, the Director has the authority to revise the permit if project operations change or if the Director believes based on monitoring or operational data that the project may endanger USDWs.

EPA has also added text to 144.39(a)(5) requiring permit modifications if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41, depending on the extent of the plan amendment. All permit modifications, except minor modifications under 40 CFR 144.41, require an opportunity for public comment on the portion of the permit that is being reopened pursuant to requirements

under 40 CFR Part 124.EPA believes that the iterative process of developing and executing the various plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., ten years as suggested by some commenters).

The Agency plans to collect and review data on GS projects every six years to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name:Leslie Savage Letter ID: 0122 Commenter Organization: Railroad Commission of Texas (RRC) Comment ID: 24756

Comment: §144.36 Duration of permits.

{We agree with the proposal to issue permits for UIC wells associated with sequestration of CO2 "for the period up to the operating life of the facility." The substantial financial investment in a project makes a permit for the operating like of the facility imperitive. }

Response:EPA agrees with commenters that Class VI permits should be issued for the operating life of the GS project. The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). The rule also requires the Director to review the permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. EPA believes that the iterative process of developing and executing the various plans required of GS well operators under the final rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., five years as suggested by some commenters). EPA adds that the required reviews of the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (at least every 5 years) are preferable to a periodic permit reapplication. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to

USDWs.

Commenter Name:John Hanger Letter ID: 0130 Commenter Organization: Pennsylvania Dept. of Env. Protection Comment ID: 21516

Comment: Proposed Duration of Class VI Injection Permit

-Permit renewal or review requirements should be added to the proposed rulemaking. The permit renewal or review process allows for extra permit transparency and regulatory authority to monitor and safeguard the operation. Pennsylvania recommends permit renewal or review every 10 years.

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39,144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA adds that, as part of existing requirements at 40 CFR 144.39, the Director has the authority to revise the permit if project operations change or if the Director believes based on monitoring or operational data that the project may endanger USDWs. EPA has also added text to 144.39(a)(5) requiring permit modifications if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41 depending on the extent of the plan amendment. All permit modifications, except minor modifications under 40 CFR 144.41, require an opportunity for public comment on the portion of the permit that is being reopened pursuant to requirements under 40 CFR Part 124.

The Agency plans to collect and review data on GS projects every six years to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name: Carl Carlsson Letter ID: 0131 Commenter Organization: SUEZ Energy Generation NA, LLC Comment ID: 21540

Comment: Proposed Injection Permit Duration SEGNA agrees that with EPA's proposal that permits be issued for the operating life and post-closure care period of the injection well. The ongoing monitoring, reporting and regulatory review required by other provisions of this proposed rule are adequate to ensure that human health and the environment are protected.

Response:EPA agrees with commenters that Class VI permits should be issued for the operating life of the GS project. EPA believes that the iterative process of developing and executing the various plans required of GS well operators under the final rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., five years as suggested by some commenters). EPA adds that the required reviews of the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan at least every five years throughout the life of the project are preferable to a periodic permit reapplication. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA clarifies that the final GS rule specifies that Class VI permits will be issued for the operating life of the facility and the post-injection site care period (144.36(a)). The rule also requires the Director to review Class VI permits at least every 5 years to determine whether they should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39,
144.40, or 144.41.Commenter Name: Christine Reimer Letter ID: 0142 Commenter Organization:National Ground Water Association Comment ID: 22586

Comment: Proposed Rule: 144.36(a)

Comment: Would there be a scenario where a facility would stop and restart? Concern is to make sure temporarily stopped injection activity does not allow party to wait a period of time and then walk away or alternatively cause closure if only a temporary stop.

Response:EPA clarifies that the final regulation at 144.51(o) states that temporary or intermittent cessation of injection operations is not abandonment. Please see the requirements for approving plugging and abandonment plans pursuant to §§144.51(o)--(p), 146.10, and 146.92. See also the discussion of plugging and abandonment in the preamble to the final rule.

Commenter Name: Bonnie Lovelace Letter ID: 0152 Commenter Organization:Montana Department of Environmental Quality (MDEQ) Comment ID:

22121

Comment: REGULATION-SPECIFIC COMMENTS

144.36: MDEQ believes that the life ofthe permit should not exceed 10 years. Such a limitation would allow for updating all aspects of the application, a complete review by the regulatory agency and public comment.

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least once every 5 years. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the GS project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments to the plan or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA adds that, in addition to the requirement that the Director review the permit every 5 years, as part of existing requirements at 40 CFR 144.39, the Director has the authority to revise the permit if project operations change or if the director believes based on monitoring or operational data that the project may endanger USDWs. EPA has also added text to 144.39(a)(5) that says permit modifications may be required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41 depending on the extent of the plan amendment. All permit modifications, except minor modifications under 40 CFR 144.41, require an opportunity for public comment on the portion of the permit that is being reopened.

EPA believes that the iterative process of developing and executing the various plans required of GSwell operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., ten years as suggested by some commenters).

The Agency plans to collect and review data on GS projects every six years to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name:James Dooley Letter ID: 0156 Commenter Organization:Joint Global Change Research Institute, Pacific Northwest National Laboratory Comment ID:

22653

Comment: Page 43523. EPA explicitly asserts that because it (or a state that has primacy) has such a rigorous on-going dialogue with owners/operators that it is prudent to issue injection permits "for the life of the GS project including the post-injection site care period." This very consequential decision hinges upon whether or not there truly is an ongoing dialogue that is substantive and happens with enough frequency to allow problems to be detected and remediated quickly. I am not sure that I see this dialogue as being that robust.

Response:EPA agrees with the commenters regarding the importance of continuous interaction between permitting authorities and owners and operators during the life of a GS project. In response, EPA has built periodic plan reevaluations by the Director and owners and operators into the GS regulation . The final rule under §144.36(a) requires that the Director review each Class VI permit at least every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. EPA believes that this process will promote rigorous on-going dialogue between owners and operators and the permitting authority to ensure protection of USDWs from endangerment.

EPA believes that the iterative process of developing and executing the various plans required of GS well operators is tailored to the unique aspects of GS and is preferable to a periodic permit reapplication. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs..

The Agency plans to collect and review data on GS projects every six years to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24136 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rulelanguage

Comment: Rule Provision: 144.36(a)

API Comments: (a) Permits for Class I and V wells shall be effective for a fixed term not to exceed 10 years. UIC Permits for Class II AND III and VIwells

shall be issuedEFFECTIVE for a period up to the operating life of the facility. PERMITS FOR CLASS VI WELLS SHALL BE EFFECTIVE FOR THE PERIOD

THROUGH

SITE CLOSURE.

Rationale: Permits are necessary for Class VI wells through the end of the post closure monitoring phase, which is consistent with the term site closure in the amended requirement.

Response:EPA clarifies that the final GS rule specifies that Class VI permits will be issued for the operating life of the facility and the post-injection site care period (144.36(a)). The rule also adds a requirement that the Director review each Class VI permit at least every five years to determine whether it should be modified, revoked and reissued, terminated, or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24267

Comment: Rule Provisions: 144.36(a) EPA Preamble Question: 50. EPA proposes that Class VI injection well permitswould be issued for the operating life of the GS project including the postinjection site care period. EPA seeks comment on the merits of this approach.

EPA Notice 43523.

API Response: A permit for the life of the project would ensure the continuity of operations. Shorter time periods would yield administrative burden without

commensurate benefits.

Response:EPA agrees with commenters that Class VI permits should be issued for the operating life of the GS project. The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). EPA believes that the iterative process of developing and executing the various plans required of GS well operators under the finalrule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, postinjection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., five years as suggested by some commenters). EPA adds that the required reviews of the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life ofthe project are preferable to a periodic permit reapplication. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs. EPA notes that the final rule also adds a requirement that the Director review each Class VI permit at least every five years.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23693

Comment: Category: Permit Life

EPA Request for Comment: EPA proposes that Class VI injection well permits would be issued for the operating life of the GS project including the post-injection site care period. EPA seeks comment on the merits of this approach. EPA Notice

43523.

AWWA Response: AWWA does not support issuing an operating permit for the life of the sequestration site. AWWA recommends issuing a lifetime operating permit for the coal plant, but with a separate and renewable permit for the operation of the geologic sequestration process. Much like the wastewater treatment plants and NPDES permits go through a permit review process every five years, AWWA recommends that this same process be used for operating permits for geologic sequestration processes. For water and wastewater treatment plants, the operating permit is issued at the start of operation and the plant must renew it every five years. This allows for the expansion of plant flow, and changes in required effluent criteria due to regulation modifications. Much as water and wastewater plants are required to keep up with available technology, carbon sequestration systems should be required to apply BACT when it is feasible to incorporate it into the treatment process. Owner/operators should also be required to periodically re-evaluate their injectate stream for any emerging contaminants, and remove them if required. If wastewater treatment plants can be constructed and operating using this type of process, then a sequestration operation should be permitted in the same manner. Process changes are part of standard business operation in that regulations become more stringent, and processes become more efficient, and the owner/operators should be required to adapt to these changes through the permit renewal process.

AWWA recommends that the application process include a review of the site operations to see if any instances of unsafe operation or changes in regulation would require a change in the plant operation. If a problem were detected, the permit wouldn't be immediately revoked, but the operator would be given the chance to rectify the situation so that the permit could be reissued. An owner/operator should consider the financial implications of this requirement and plan accordingly as the process will require a certain level of effort every five years to execute. AWWA recommends that the permit review process be aligned with the process used for review and renewal of NPDES permits. This would allow for all of the permit activities to be consolidated into one reapplication effort every five years.

The capacity of the various state agencies to deal with the five year permit review process is an issue that needs to be recognized. Some states that arealready stressed for resources could be overwhelmed with this additional task. However, AWWA believes that this permit requirement should not be sacrificed because the states might be resource stressed. Therefore, the federal government should consider allocating enough money to the state programs to adequate staff their sequestration permit division

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). They must identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA believes that the iterative process of developing and executing the various plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, well plugging, and post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., five years as suggested by some commenters). This is preferable to a periodic permit reapplication.

EPA believes that these changes will address many comments in support of permit renewal. Additionally, the reevaluation process could be aligned with issuance of other environmental permits associated with the facility, provided the minimum reevaluation frequency requirements are met. EPA clarifies that it does not have the authority under the SDWA (and associated UIC requirements) to alter permitting requirements issued under other environmental statutes for coal plants or any CO2 sources. The UIC program's authority is limited to the injection operation and ensuring that USDWs are protected from endangerment.

EPA adds that, in addition to the requirement that the Director review the permit at least every 5 years, as part of existing requirements at 40 CFR 144.39, the Director has the authority to revise the permit if project operations change or if the director believes based on monitoring or operational data that the project may endanger USDWs. EPA also added text to 144.39(a)(5) that says permit modifications may be required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41, depending on the extent of the plan amendment.

EPA acknowledges that states and other commenters are concerned about resource availability for GS. The Agency will work closely with states to assist them in acquiring the resources, personnel, and training needed to address the unique challenges associated with GS. The Agency is developing guidance materials and plans to conduct on-line and in-person training for States and Tribes to enhance national understanding of the specific requirements in the GS rule and to support primacy application development and eventual implementation of the GS rule.The Agency plans to collect and review data on GS projects every six years to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary to ensure the protection of USDWs from endangerment.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23719 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Part 144.36(a): The geologic sequestration of carbon dioxide is not a fully proven technology and much is unknown about the long-term impacts, and potential unintended consequences of such injection. As previously stated, AWWA believes it would be prudent to limit the life of the Class VI permit so that necessary adjustments to the permit can be made as needed, with the opportunity for public comment. This will also establish a process for obtaining updated information on the injection operation. We would recommend a permit life of no more than 5 years. Therefore, AWWA recommends revising this part to read:

Permits for Class I and V wells shall be effective for a fixed term not to exceed 10 years. UIC Permits for Class II and III shall be issued for a period up to the operating life of the facility. Permits for Class VI wells shall be effective for a fixed term not to exceed 5 years.

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the GS project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA believes that the iterative process of developing and executing the various plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, well plugging, and post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., five years as suggested by some commenters). This is preferable to a periodic permit reapplication.

Commenter Name: Bradley J. Field Letter ID: 0186 Commenter Organization:New York State Dept. of Environmental Conservation

Div. of Mineral Resources Comment ID:

25218

Comment: TT. Therefore, EPA proposes that Class VI injection well permits would be issued for the operating life of the GS project including the post-injection site careperiod. EPA seeks comment on the merits of this approach.

NYSDEC-DMN Response: NYSDEC-DMN agrees with the EPA proposal.

Response:EPA agrees with commenters. The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary

amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA believes that the iterative process of developing and executing the various plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, well plugging, and post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., five years as suggested by some commenters).

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24366 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 144.36

Proposed CCS Group Recommendations: (a) Permits for Class I and V wells shall be effective for a fixed term not to exceed 10 years EXCEPT FOR WELLS USED FOR GEOLOGIC SEQUESTRATION. UIC Permits for Class II AND III and VI wellsshall

be issuedEFFECTIVE for a period up to the operating life of the facility.

PERMITS FOR CLASS VI WELLS AND FOR OTHER WELLS USED FOR GEOLOGIC SEQUESTRATION

OF CO2 STREAMS SHALL BE EFFECTIVE FOR THE PERIOD THROUGH SITE CLOSURE.

Basis for CCS Group Comments: Permits are necessary for geologic sequestration wells through the end of the post closure monitoring phase, which is consistent with the term site closure in the amended requirement.

Response:EPA clarifies that the final GS rule specifies that Class VI permits will be issued for the operating life of the facility and the post-injection site care period (144.36(a)). EPA believes that including the phrase "other wells used for geologic sequestration of CO2 streams" is unnecessary, because all wells used to inject CO2 for the purpose of GS will be classified as Class VI wells. See also discussion in the preamble on grandfathered experimental Class V wells and transitioning Class

II to Class VI wells.Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24560

Comment: Rule Provisions or Federal Register Cite: 144.36(a) EPA Preamble Question: 50. EPA proposes that Class VI injection well permitswould be issued for the operating life of the GS project including the postinjection site care period. EPA seeks comment on the merits of this approach.

EPA Notice 43523.

CSC Response: A permit for the life of the project would ensure the continuity of operations. Shorter time periods would yield administrative burden without commensurate benefits. The development of AoR, plans, and other parts of the permitting process must be addressed on a project-wide basis. Therefore it is important for permits to last for the operating life. It is also sensible to allow for area permits.

Response:EPA agrees with commenters that Class VI permits should be issued for the operating life of the GS project. The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least every five years to determine whether it should be modified, revoked and reissued, terminated, or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years.

EPA adds that the required reviews of the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project are preferable to a periodic permit reapplication. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA disagrees that area permits are appropriate for Class VI wells. The Agency believes that individual injection well permits are essential to ensure that every Class VI well is constructed, operated, monitored, plugged, and closed in a manner that is protective of USDWs.

EPA believes that the efficiencies and administrative benefits offered by area permits can be achieved through well executed plans required for Class VI wells. EPA envisions that planned additional GS wells should be discussed as part of the ongoing dialog between the owner or operator and the Director. For example, EPA expects the AoR plan to consider anticipated future wells so that the Director is able to consider all anticipated injection and resultant pressure changes in evaluating the plan and setting permit conditions. Similarly, testing and monitoring plans should account for future injection wells to ensure that ground water monitoring or CO2 plume and pressure front tracking are planned appropriately.

EPA also believes that requiring separate permit applications for each well will ensure that the publichas an opportunity to provide input on each well in the field as it is constructed or brought online. In addition, where wells are re-permitted as Class VI wells (e.g., in ER projects, which may typically operate under Class II area permits), EPA believes that the unique nature of GS necessitates individual review of each well to ensure the re-permitted wells were engineered and constructed to meet the requirements at §146.86(a) and ensure protection of USDWs, in lieu of requirements at §§146.86(b) and 146.87(a).

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24621

Comment: Rule Provisions: 144.36(a) EPA Rule Issue: 50. EPA proposes that Class VI injection well permits would be issued for the operating life of the GS project including the post-injection site care period. EPA seeks comment on the merits of this approach. EPA Notice

43523.

Anadarko Petroleum Corporation (APC) Response: A permit for the life of the project would ensure the continuity of operations. Shorter time periods would yield administrative burden without commensurate benefits.

Response:EPA agrees with commenters that Class VI permits should be issued for the operating life of the GS project. The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least every five years to determine whether it should be modified, revoked and reissued, terminated, or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years.

EPA adds that the required reviews of the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project are preferable to a periodic permit reapplication. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24627 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 144.36(a)

Anadarko Petroleum Corporation (APC) Comments: (a) Permits for Class I and V wells shall be effective for a fixed term not to exceed 10 years. UIC Permits

for Class II AND III and VIwells shall be issuedEFFECTIVE for a periodup to the operating life of the facility. PERMITS FOR CLASS VI WELLS SHALL BE

EFFECTIVE FOR THE PERIOD THROUGH SITE CLOSURE.

Rationale: Permits are necessary for Class VI wells through the end of the post closure monitoring phase, which is consistent with the term site closure in the amended requirement.

Response:EPA clarifies that the final GS rule specifies that Class VI permits will be issued for the operating life of the facility and the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least every five years to determine whether it should be modified, revoked and reissued, terminated, or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA believes that the iterative process of developing and executing the various plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, well plugging, and post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., five years as suggested by some commenters). This is preferable to a periodic permit reapplication.

Commenter Name: Chris M. Hobson Letter ID: 0201 Commenter Organization: Southern Company Comment ID: 22161

Comment: Duration of permit - Southern Company supports EPA's proposal to issue Class VI injection well permits for the operating life of the GS project. Id. at 43523. EPA correctly observes that the requirements for periodic reevaluation of site data, corrective action status, monitoring results, and operating parameter modifications would render mandatory five- and ten year permit reviews unnecessary and duplicative. Id. Issuance of permits extending through the operating life of the GS project, including the post-injection site care period, will provide Owners or Operators and investors with certainty and will encourage investment in CO2 GS projects.

Response:EPA agrees with commenters that Class VI permits should be issued for the operating life of the GS project. EPA clarifies that the final GS rule specifies that Class VI permits will be issued for the operating life of the facility and the post-injection site care period (144.36(a)). The final rule also adds a requirement that the Director review each Class VI permit at least every five years to determine whether it should be modified, revoked and reissued, terminated, or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e),146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary

amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years.

EPA adds that the required reviews of the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project are preferable to a periodic permit reapplication. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

Commenter Name: Diane VanDe Hei Letter ID: 0206 Commenter Organization: Association of Metropolitan Water Agencies (AMWA) Comment ID:

22210

Comment: - Permits should be issued for five-year periods and not the life of the geosequestration project. In addition, an annual reevaluation of the project’s

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA believes that the iterative process of developing and executing the various plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, well plugging, and post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., five years as suggested by some commenters). This is preferable to a periodic permit reapplication.

Commenter Name: Diane VanDe Hei Letter ID: 0206 Commenter Organization: Association of Metropolitan Water Agencies (AMWA) Comment ID:

22213 Other EPA Comment Codes and Descriptions: 4710 2.7.1 Proposed submissions required for permit applications (seeking comment)

Comment:have a plan to update the regulation on a regular basis as well. Having a permit

renewal schedule built into the rule will allow each state Director to ensure that updates to the regulation are included in permit renewals. AWWA and AMWA also suggest that the permit application process include a review of the site operations to see if any instances of unsafe operation or changes in regulation would require a change in the plant operation.Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA believes that the iterative process of developing and executing the various plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, well plugging, and post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., five years as suggested by some commenters). This is preferable to a periodic permit reapplication.

EPA adds that, in addition to the requirement that the Director review the permit every 5 years, as part of existing requirements at 40 CFR 144.39, the Director has the authority to revise the permit if project operations change, if the Director believes based on monitoring or operational data that the project may endanger USDWs, or if the regulations change. EPA has also added text to 144.39(a)(5) saying that permit modifications may be required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41, depending on the extent of the plan amendment. All permit modifications, except minor modifications under 40 CFR 144.41, require an opportunity for public comment on the portion of the permit that is being reopened.

Commenter Name: Diane VanDe Hei Letter ID: 0213 Commenter Organization: Association of Metropolitan Water Agencies (AMWA) Comment ID:

22949

Comment: - 73 FR 43523 -EPA proposes that Class VI injection well permits would be issued for the operating life of the GS project including the post-injection site care period. EPA seeks comment on the merits of this approach.

Response: AMWA does not support issuing an operating permit for the life of the sequestration site. Instead, AMWA recommends issuing a lifetime operating permit for the coal plant, but with a separate and renewable permit for the operation of the geologic sequestration process. Drinking water treatment plants must notify state regulators of changes in ownership, management, or operations, and AMWA recommends that owner/operators of CCS sites be required to provide the same type of information to the Director in the event of changes. In addition, AMWA recommends that owner/operators be required to periodically reevaluate their injectate stream for any emerging contaminants, and remove them if required.As CCS is a developing technology, AMWA recommends that EPA have a plan to update the regulation as additional information is gathered through research and through data and observations collected from permitted sites. Having a permit renewal schedule built into the process will allow the Director to ensure that updates to the regulation are included in permit renewals. AMWA also suggests

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA adds that, as part of existing requirements at 40 CFR 144.39, the Director has the authority to revise the permit if project operations change or if the Director believes based on monitoring or operational data that the project may endanger USDWs. EPA has also added text to 144.39(a)(5) that permit modifications are required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41, depending on the extent of the plan amendment. All permit modifications, except minor modifications under 40 CFR 144.41, require an opportunity for public comment on the portion of the permit that is being reopened pursuant to requirements under 40 CFR Part 124.

EPA notes that monitoring of the injectate stream is required under the monitoring and testing plandeveloped under 40 CFR 146.90; operators or owners must include injectate data in their semiannual reports to the Director.

The Agency plans to collect and review data on GS projects every six years to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

EPA believes that these changes will address many comments in support of permit renewal. Additionally, the reevaluation process could be aligned with issuance of other environmental permits associated with the facility, provided the minimum reevaluation frequency requirements are met. EPA clarifies that it does not have the authority under the SDWA (and associated UIC requirements) to alter permitting requirements issued under other environmental statutes for coal plants or any CO2 sources. The UIC program's authority is limited to the injection operation and ensuring that USDWs are protected from endangerment.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23273

Comment: 50. EPA proposes that Class VI injection well permits would be issued for theoperating life of the GS project including the post-injection site care period. EPA seeks comment on the merits of this approach. EPA Notice 43523.

This will reduce administrative burdens that would yield little or no

environmental benefit.

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

Commenter Name:Mark Bohrer Letter ID: 0241 Commenter Organization:North Dakota Industrial Commission Comment ID: 23277

Comment: 144.36 Permits for Class VI wells should be effective indefinitely, until the well is plugged.

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)).

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23314 Other EPA Comment Codes and Descriptions: 3150 2.1.5 Comments on required permit information (40 CFR 146.82); 5600 2.11 Comments related to UIC Program primacy for Class VI

wells

Comment: • EPA - advised by experts and regional stakeholders - and not individual states, should make permitting decisions on CCS projects, at least for the first few years. • Permits should be issued in stages, to be adaptive to advances in knowledge, science and regulation, not for the operating life of the well.

Response:EPA agrees that an adaptive approach to address the availability of new information and technology is appropriate. EPA plans to, every six years, collect and review project data on early GS projects, including site characterization, operational, monitoring, and modeling data, to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

EPA disagrees that it should be the only entity to issue permits during the first few years after promulgation. EPA acknowledges the expertise of existing State, Tribal, and Territorial programs that implement the UIC requirements under Section 1422 of the SDWA (Class I, III, IV, and Vwells) and state oil and gas agencies that have been regulating Class II UIC wells for decades under section 1425 of SDWA. These agencies already understand the technical and administrative issues involved in construction, operation, injection and permitting as well as, in the case of Class II operators issues related to CO2 injection, subsurface operations, and pipeline transport. EPA believes that existing programs can adapt this expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA.

Additionally, States can use multiple authorities beyond those afforded under the SDWA including surface access and land rights, unitization of fields, pore space ownership, mineral rights, site safety and emergency preparedness, and maximization of State oil and gas resource exploitation.

EPA expects that both Headquarters and the Regions will work closely with the states during the early permitting process to ensure that flexibility is applied in a manner that ensures a consistent level of USDW protection from endangerment. EPA designed flexibility into the regulations to ensure that site-specific factors can be accounted for and expects that permit writers will use discretion where site-specific factors are important. As part of its adaptive approach, EPA also plans to review initial permits (after they are granted) to ensure that USDW protection goals have been consistently met across differing geologic situations. If necessary, EPA will reevaluate the flexibility granted to states in the rule. As part of its adaptive approach, if EPA finds that there is not sufficient consistency in the permits so that USDWs are not being sufficiently protected from endangerment, it will consider changes to the permit requirements in the future.

Regarding the commenter's request that permits be issued in stages, EPA clarifies that the final rule maintains the lifetime permit provision and that the permit extends through the post-injection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

Commenter Name: Kristin Henry Letter ID: 0242 Commenter Organization: Sierra Environmental Law Program, Sierra Club Comment ID: 23325

Comment: V. EPA Should Issue Class VI Staged Permits, Rather Than Permits for the Operating Life of the Well.

Selecting an underground CO2 storage site and determining an appropriate injection rate necessarily contains uncertainties because underground geology is heterogeneous and impossible to map. There is a considerable lack of CCS experience and significant gaps in knowledge, including modeling storage capacity and plume behavior and monitoring storage performance and movement. The rule must reflect these uncertainties, and be flexible enough to adapt to the new information that will be learned through the first few major demonstrationprojects. At this early stage, Class VI permits should not be granted for the operating life of the well.

An adaptive management approach (measuring while managing) is a sound, wellestablished method for dealing with scientific uncertainty. Adaptive regulatory design permits progressive regulatory action in response to improvements in information. [FN36] The adaptive management model envisages an initial regulatory approval based on available information (estimations and modeling) followed by a period of monitoring and reporting with reassessment of the appropriateness of the initial regulatory action and adjustment as required in light of new information, and presumably the resolution of previously identified uncertainties. [FN37]

[FN36: Judith Jones, Regulatory Design for Scientific Uncertainty, JOURNAL OF ENVTL. LAW, 19 JENVTLL 347 (2007).] [FN37: Id.]

The Class VI program should implement an adaptive management approach that acknowledges the scientific uncertainty regarding large-scale CCS. Under the proposed rule, initial Class VI permit limits are based on modeled predictions of plume behavior and movement, storage capacity, and suitable injection rates for the geologic formation. Under the proposed rules, based on these predictions, a Class VI operator receives a permit for the life of the well.

Operating a CCS well over a period of years, however, provides more accurate, site-specific data on the formation’s characteristics and plume behavior. To ensure the most current information is reflected in the permit terms, and thereby in well operation, EPA should issue permits in phases. As explained in comment VII regarding necessary changes in the AOR definition, EPA should also require the operator to submit an annual affidavit certifying that the permit terms and accompanying plans (monitoring, emergency response, etc.) do not require a change.

We recommend a three phase permitting system. The first phase will mirror the current permitting structure, except that the permit will not be for the life of the well, but rather for 5 years. Five years after the initial permit is issued, the owner or operator will be required to apply for the second phase. The Director would re-evaluate the permit to determine whether, based on the most current information, it is appropriate to continue injection at the site and, if so, whether the permit terms should be modified. The third and final phase of the permit would be 10 years after the second phase permit is issued. Again, the Director would re-evaluate the permit to determine whether, based on the most current information, it is appropriate to continue injection at the site and, if so, whether the permit terms should be modified. The Director’s periodic reevaluation would allow advances in regulation and science to be incorporated into the permit.

Response:EPA appreciates the commenter’s approach and believes the final rule addresses concerns about adaptability. The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). It also adds a requirement that theDirector review each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA believes that the iterative process of developing and executing the various plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., ten years as suggested by some commenters). EPA believes that its approach will allow advances in regulation and science to be incorporated into the permit.

EPA emphasizes that Director has the authority to revise the permit if project operations change or if the Director believes based on monitoring or operational data that the project may endanger USDWs. EPA has also added text to 144.39(a)(5) that permit modifications would be required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41, depending on the extent of the plan amendment. All permit modifications, except minor modifications under 40 CFR 144.41, require an opportunity for public comment on the portion of the permit that is being reopened pursuant to requirements under 40 CFR Part 124.

The Agency plans to collect and review data on GS projects every six years to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name: Kurt Waltzer Letter ID: 0250 Commenter Organization: Clean Air Task Force Comment ID: 22291

Comment:E. Specific Amendments to the Proposed Rule

The rule should authorize Class VI permits for "up to" the operating life of a facility only if the rule is amended to require all aspects of project operations to be modified as appropriate over the course of the project

We support EPA’s proposal in §144.36 to issue Class VI well permits for a period "up to" the operating life of the facility. Still, it is not appropriate to issue these permits for the full operating life of the facility without consideration how project performance is evolving. Revisions of the Area of Review, and the various plans outlined in the proposed rule are to be expected from time to time, and it is possible that some of the needed revisions might be so material so as to constitute ground for modification, revocation or reissuance of the permit.Response:EPA appreciates the commenter’s concern and believes that the final rule addresses this concern about adaptability. The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). It also adds a requirement that the Director review each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

EPA believes that the iterative process of developing and executing the various plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, post-injection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., ten years as suggested by some commenters).

EPA emphasizes that the Director has the authority to revise the permit if project operations change or if the director believes based on monitoring or operational data that the project may endanger USDWs. EPA has also added text to 144.39(a)(5) that permit modifications would be required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41, depending on the extent of the plan amendment. All permit modifications, except minor modifications under 40 CFR 144.41, require an opportunity for public comment on the portion of the permit that is being reopened pursuant to requirements under 40 CFR Part 124.

The Agency plans to collect and review data on GS projects every six years to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Commenter Name:Walter L. Baker Letter ID: 0253 Commenter Organization: Utah Division of Water Quality Comment ID: 22356

Comment: PERMIT DURATION

Permit duration may be less than the duration of the project in primacy states with the option for permit renewal. This offers the operator and regulator the opportunity to amend the permit as new information relevant to the project becomes available. The Utah DWQ also will require the inclusion of a re-opener clause in the permit to allow revision of the permit to accommodate extenuating circumstances and new information relevant to the permit.

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). It also adds a requirement that the Directorreview each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs. EPA believes that the iterative process of developing and executing the various plans required of GS well operators in thefinal rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, postinjection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., ten years as suggested by some commenters).

EPA emphasizes that the Director has the authority to revise the permit if project operations change or if the Director believes based on monitoring or operational data that the project may endanger USDWs. EPA has also added text to 144.39(a)(5) that permit modifications would be required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41, depending on the extent of the plan amendment. All permit modifications, except minor modifications under 40 CFR 144.41, require an opportunity for public comment on the portion of the permit that is being reopened pursuant to requirements under 40 CFR 124.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24838 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language; 3500 2.2.3 Area of Review Reevaluation (seeking comment)

Comment: Rule Provision: 144.36

EPA Proposal: 6. Section 144.36 is amended by revising the first two sentences in paragraph (a) to read as follows:

§ 144.36 Duration of permits.

(a) Permits for Class I and V wells shall be effective for a fixed term not to exceed 10 years. UIC Permits for Class II, III and VI wells shall be issued for a period up to the operating life of the facility. * * *

* * * * *

GWPC Recommendations: Support the proposed language.

Rationale: The proposed provision is considered acceptable as long as the iterative reevaluation process established for AoRs also applies to other aspects of the project including modeling, characterization, operational decisions, monitoring, financial assurance, etc. It is recognized thatDirectors may also depend on 144.39 regarding modification and revocation of Class VI permits.

Response:EPA acknowledges the commenter’s support and notes that the final rule retains this requirement. The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). It also adds a requirement that the Director review each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs. EPA believes that the iterative process of developing and executing the various plans required of GS well operators in thefinal rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, postinjection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration.

EPA emphasizes that the final rule requires owners or operators to revise their cost estimates for financial assurance within 60 days of amendments to the AoR and corrective action plan, the injection well plugging plan, the post-injection site care and site closure plan, or the emergency and remedial response plan (40 CFR 146.85(c)(2).

EPA emphasizes that, the Director has the authority to revise the permit if project operations change or if the Director believes based on monitoring or operational data that the project may endanger USDWs. EPA has also added text to 144.39(a)(5) that permit modifications would be required if the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing and monitoring results. The Director may also choose to require minor permit modifications under 40 CFR 144.41, depending on the extent of the plan amendment. All permit modifications, except minor modifications under 40 CFR 144.41, require an opportunity for public comment on the portion of the permit that is being reopened pursuant to requirements under 40 CFR Part 124.

Letter ID: 0263 Commenter Organization: Interstate Oil & Gas Compact Commission Comment ID: 22831

Comment: VI. What Is the Proposed Duration of a Class VI Injection Permit?

WW. Therefore, EPA proposes that Class VI injection well permits would be issued for the operating life of the GS project including the post-injection site care period. EPA seeks comment on the merits of this approach.

IOGCC Response: The IOGCC agrees with the EPA proposal.

Response: The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). It also adds a requirement that the Directorreview each Class VI permit at least once every 5 years to determine whether it should be modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the final rule includes a requirement that the AoR be reevaluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In no case can reviews occur less often than once every five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs. EPA believes that the iterative process of developing and executing the various plans required of GS well operators in thefinal rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, postinjection site care, and emergency and remedial response) is tailored to the unique aspects of—and is more appropriate for–GS than establishing a finite permit duration (e.g., ten years as suggested by some commenters).

Comment Code: 5800 2.13 Comments on emergency and remedial response (40 CFR 146.94)



### Individual Comments

Commenter Name:John Stormon Letter ID: 0123 Commenter Organization:Washington State Dept. of Ecology Comment ID: 23008

Comment: Remedial Action: Establish triggers for entering remedial action during the negotiation of the geologic sequestration permit. Identification of environmental impacts from monitoring at a permitted facility is frequently followed by a prolonged legal discussion of when these impacts become large enough to trigger remedial actions. EPA should consider moving this discussion to the initial permitting process so that the operator and regulatory agency agree before impacts are observed. This will help all to understand where the threshold is and will help to prevent legal efforts intended to delay beginning remedial actions when environmental impacts have been observed.

Response:EPA believes that the final rule takes a proactive approach to remedial actions by requiring, under §146.94, each permit application to include an emergency and remedial response plan so that both the owner or operator and the Director may immediately respond to any fluid movement that may endanger a USDW at GS sites. Furthermore, EPA believes that each response action will be site- and event- specific, and that setting specific environmental impact triggers outside of a showing of USDW endangerment in advance would not be practical or account for every potential scenario. For this reason, the emergency and remedial response requirements at §146.94 are designed to ensure that, in the unlikely event of endangerment, the owner or operator will immediately cease injection (i.e., take immediate action to avoid any further endangerment) and initiate a dialogue with the Director as soon as possible to identify appropriate next steps based on

the circumstances.

EPA clarifies that, if the owner or operator obtains evidence that USDWs may be endangered or that leakage is occurring, he or she must cease injection, take all steps reasonably necessary to identifyand characterize any release, notify the Director, and implement the approved emergency and remedial response plan (§146.94(b)).

Commenter Name: George Holliday, PhD, PE, BCEE Letter ID: 0127 Commenter Organization: Holliday Environmental Services, Inc. Comment ID: 23058

Comment:E. EPA PROVIDES IN THE PROPOSED RULE NO MEANS OF ASSURING

CORRECTIVE ACCTION WILL BE TAKEN BY THE SEQUESTRATION PROJECT OWNER.

1 EPA discusses in the proposed rule the difficulty of corrective action in the event of a project problem, but does not come to a resolution.

2. There is no assurance major oil and gas companies will operate the Class VI wells, since experienced engineers are needed to produce oil and gas for the

nation.

2. EPA discusses using the Interstate Oil and Gas Compact Commission (IOGCC) idea of charging each Class VI well operator a per ton injection fee to be use in the case of an emergency, but what fee should be charged? EPA had no answer.

3. In Canada 4.6 percent of the sequestration wells leak. The chance of an CO2 leak appears real.

4. If a leak occurs under a home and the residents are asphyxiated, and the project owner has gone bankrupt, who is responsible?

5. EPA suggest they are in contact with a Federal Agency regarding funding for emergencies, but reading the references provided by EPA, the reader finds no reference to sequestration well funding. The reference is to transportation, perhaps transportation of CO2 by pipeline, but even that is not clear.

Response:EPA expects the emergency and remedial response requirements at §146.94 will encourage owners or operators to plan (during the permitting phase of a GS project) for any actions that would be necessary in the unlikely event of a GS project-related emergency and ensure that operators know what entities and individuals must be notified and what actions must be taken to expeditiously mitigate any emergency situations.

EPA clarifies that, if the owner or operator obtains evidence that USDWs may be endangered or that leakage is occurring, he or she must cease injection, take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan (§146.94(b)). Failure to respond to any evidence of USDW endangerment would be considered a violation of the UIC permit and would be subject to applicable civil, criminal, or administrative penalties.

In response to the comment about funding for emergency actions or damage if the owner or operator were to go bankrupt, EPA clarifies that §146.85 requires owners or operators to demonstrate and maintain financial responsibility for performing any necessary remedial actions associated with the requirements at §146.94, including the actions outlined in their GS project-specific emergency and remedial response plan.Commenter Name:John Hanger Letter ID: 0130 Commenter Organization: Pennsylvania Dept. of Env. Protection Comment ID: 21512

Comment: -EPA should identify existing methods for remediation of a rogue CO2 plume.

Response:EPA clarifies that determining appropriate remedial actions and mitigation technologies that may be employed at a GS site is site- and event-specific and will depend on a variety of factors, including the nature of any movement of CO2 or other fluids, the presence of USDWs, and what, if any, impacts may have resulted. EPA is developing guidance on the development and implementation of emergency and remedial response plans for GS sites. EPA clarifies that, if owners or operators obtain evidence that USDWs may be endangered or that leakage is occurring, owners or operators must cease injection, take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan (§146.94(b)).

Commenter Name: Christine Reimer Letter ID: 0142 Commenter Organization:National Ground Water Association Comment ID: 22615 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Proposed Rule: 146.94(a)

Proposed revision: (a) As part of the permit application, the owner or operator must provide the Director with an emergency and remedial response plan that describes actions to be taken to address movement of the injection or formation fluids that may cause an endangerment to a USDW during construction, operation, closure and post-closure periods. The emergency and remedial response plan must be reviewed and updated, as necessary, on the same schedule as the update to the

Area of Review.

Rationale: Keep same update schedule as AOR

Response: In response to comments on the duration of the emergency and remedial response plan, EPA clarifies that the plan will apply over the life of the GS project through the post-injection site care period (§146.94(a)). EPA has added a requirement at §146.94(d) that owners or operators must review their emergency and remedial response plan within one year of an AoR reevaluation required under §146.84 or following significant changes to the facility. Subsequently, owners or operators must submit an amended plan or demonstrate to the Director that no amendment to the plan is needed based on the AoR reevaluation or any significant changes made to the facility.

Commenter Name: Richard Driggans Letter ID: 0145 Commenter Organization: Tennessee Valley Authority Comment ID: 23155 Other EPA Comment Codes and Descriptions: 5460 2.9.2 Comments on transfer of liability for long-term care

Comment: 5. Unspecified Operational Consequences - In the unfortunate event operational experience at a GS site shows the permitted geologic storage was ill advised and that CO2 injection from a fossil-fueled power plant sited and operated at (or transporting supercritical CO2 to) that location must be terminated, TVA requests a provision be added to this rule to address what consequences, with regards to resumed emissions of CO2, discontinuation of CCS would have for sucha facility.

Response:EPA clarifies that EPA’s authority under the Safe Drinking Water Act is limited to and the focus of the GS regulation is on preventing USDW endangerment due to injection, and that any impacts to or procedures for fossil fuel power plants are outside the scope of the GS rule. EPA is, however, developing guidance on the development and implementation of emergency and remedial response plans for GS sites. To meet the requirements for developing an emergency and remedial response plan (specified at §146.94(a)), an owner or operator should identify people (in addition to the Director), such as first responders, who should be contacted in the event of an emergency associated with the well. EPA envisions that the party that transports the CO2 onsite should be

notified as well.

See the final rule preamble for further discussion of EPA's final approach.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23372

Comment:Leaks and response plans -- Pg. 46

APPA believes that the owner/operator must take remedial action as described in the permit’s response plan.

Response:EPA agrees that an emergency and remedial response plan is an important part of assuring protection of USDWs from endangerment at GS sites. The requirements for an emergency and remedial response plan at §146.94(a) are designed to ensure that owners or operators, as part of their permit applications, comprehensively plan what actions would be necessary in the unlikely event of an emergency. The plan will ensure that operators know what entities and individuals must be notified and what actions must be taken to expeditiously mitigate any emergency situations.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23418 Other EPA Comment Codes and Descriptions: 4720 2.7.2 Operational recordkeeping and reporting

Comment: data point. We also suggest that the EPA have some reasonable test for response to the state or Federal permitting agency in the event that a reporting event happens on a weekend or during nighttime hours. Some owner/operators will be on different time zones than the injection well operator. APPA suggests that a reasonable time be allowed for reporting to be sent in on routine data where there is no catastrophic reporting event.

Response:EPA clarifies that the requirement at §146.94(b)(3) is to notify the Director within 24 hours of an emergency. The Agency believes that the 24 hour timeframe for notifying the Director is a "reasonable" time period. Furthermore, permitting agency response personnel are typically "on call" 24 hours a day, 7 days a week.

Commenter Name: Theresa Pugh Letter ID: 0169 Commenter Organization: American Public Power Association Comment ID: 23431

Comment:Leaks and response plansAPPA believes that the owner/operator must take remedial action as described in the permit’s response plan.

Response:EPA agrees that an emergency and remedial response plan is an important part of assuring protection of USDWs from endangerment at GS sites. The requirements for an emergency and remedial response plan at §146.94(a) are designed to ensure that owners or operators, as part of their permit applications, comprehensively plan what actions would be necessary in the unlikely event of an emergency. The plan will ensure that operators know what entities and individuals must be notified and what actions must be taken to expeditiously mitigate any emergency situations.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24211 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.94(b)

API Comments: (b) If the owner or operator obtains evidence that the injected carbon dioxide stream, DISPLACED FORMATION FLUIDS OR andassociated pressure

front may cause an endangerment toENDANGERS a USDW, the owner or operator

must: (1) Immediatelycease injection IN A PRUDENT MANNER CONSIDERING

CIRCUMSTANCES. (2) Take all steps reasonably necessary to identify and characterize THE
ENDANGERMENT POSED; (3) Notify the Director or the designated representative within 24 hours OF BECOMING AWARE OF THE ENDANGERMENT; and

Rationale: Technical clarifications.

There is a slight change that immediately ceasing injection could have adverse impacts on other aspects of the operation.

Response: After consideration of comments, EPA has finalized the rule language in §146.94(b) as proposed. In the introductory section of §146.94(b), EPA clarifies that the pressure front, as defined in §146.81, is a zone where the pressure differential is sufficient to cause the movement of injected fluids or formation fluids into a USDW. Therefore, displaced formation fluids are implicitly included in the requirements for §146.94. EPA also clarifies that owners or operators must take action when the CO2 stream or pressure front may cause endangerment. In order to prevent the endangerment of USDWs, as required under §1421 of the SDWA, EPA expects the owner or operator to act preemptively and not wait until endangerment has occurred. This language is consistent with existing UIC requirements for other well classes and EPA’s authority under the

SDWA.

Regarding changes to the language in §146.94(b)(1), EPA believes that it is implicit that owners or operators should take care not to damage the well when ceasing injection. At §146.94(b)(2), EPA is maintaining the requirement to “characterize the release.” As currently written, the situation should be characterized whether or not a USDW has actually been endangered, and owners or operators are encouraged to discuss with the Director whether actual endangerment has occurred. Concerning commenters’ suggestions for §146.94(b)(3), EPA clarifies that the 24 hours begins when the owneror operator obtains evidence of possible endangerment. EPA believes the rule language is clear on this requirement.

Commenter Name: Kyle Isakower Letter ID: 0170 Commenter Organization: American Petroleum Institute Comment ID: 24212 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.94(d)

API Comments: (d) The owner or operator must notify the Director prior to conducting any well workover IN RESPONSE TO ANY CASE OF

ENDANGERMENT.

Rationale: In critical situations, time spent obtaining approval could adversely affect the ability to conduct operations or increase the level of endangerment.

Response: Since proposal, EPA has modified the final regulatory language at §146.94(d) to clarify what constitutes a workover to address a well failure (which invokes remedial actions) and what constitutes a maintenance-type workover. For maintenance-type workovers (i.e., those that are scheduled in advance), the owner or operator must notify and gain approval from the Director prior to beginning the workover. In the final GS regulation, EPA has moved this requirement to the reporting requirements at §146.91(d) to clarify its intent.

Regarding concerns that notification could delay responses, EPA clarifies that the GS rule, at §146.94(b), describes procedures owners or operators must take in emergency situations. Specifically, upon determining that there is a problem with the well that may endanger a USDW, the owner or operator must first cease injection, then take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan, which may include a well workover. EPA believes that ceasing injection (which the owner or operator would do immediately and before notifying the Director) is the immediate action necessary to prevent or mitigate endangerment of USDWs.

Commenter Name: Thomas Curtis Letter ID: 0181 Commenter Organization: American Water Works Association (AWWA) Comment ID: 23751 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Part 146.94(a) It is important that the emergency and remedial response plan is reviewed and updated on the same schedule as the area of review update. Changes

in the area of review could affect the actions that would need to be taken in the event of an emergency. AWWA recommends revising this part to read:

As part of the permit application, the owner or operator must provide the Director with an emergency and remedial response plan that describes actions to be taken to address movement of the injection or formation fluids that may causean endangerment to a USDW during construction, operation, closure and postclosure periods. The emergency and remedial response plan must be reviewed and updated, as necessary, on the same schedule as the update to the Area of Review.Response:EPA has added a requirement at §146.94(d) that owners or operators must review their emergency and remedial response plan within one year of an AoR reevaluation required under §146.84 or following significant changes to the facility. Subsequently, owners or operators must submit an amended plan or demonstrate to the Director that no amendment to the plan is needed based on the AoR reevaluation or any significant changes made to the facility.

Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25146

Comment: D. EPA Should Expand the Emergency and Remedial Response Requirements

The proposed emergency and remedial response provisions are meant to address threats to USDWs that may arise during the lifetime of a Class VI well. 73 Fed. Reg. at 43,541 (proposed 40 C.F.R. § 146.94(a)). As part of the permitting process, the owner or operator is required to submit a remedial response plan describing responses "address[ing] movement of the injection or formation fluids that may cause an endangerment to a USDW." Id. The plan should cover the "construction, operation, closure and post-closure" phases of the GS project.[FN7] Id. No additional guidance for the plan’s contents is provided by the proposed regulation.

[FN7] It is unclear whether EPA intended the term "operation" to include the post-injection site care period (which precedes site closure). See 73 Fed. Reg. at 43,540-41 (proposed 40 C.F.R. § 146.93). EPA should clarify this language and require that the emergency and remedial response plan specifically cover the post-injection site care period.

The emergency and remedial response provisions are too narrow in that they fail to address ways in which GS may endanger USDWs other than "movement of the injection or formation fluids." For example, as a result of the CO2 mixing with fluid during or after injection, two problems may occur. First, the mixture can be highly corrosive, thereby potentially weakening the well and/or the containment boundaries and increasing the risk inherent to all Class VI wells that injected fluids will migrate outside the containment zone. Second, the corrosive liquid can cause metals and minerals present in a specific containment zone to leach, migrate, and threaten USDWs. Under the proposed regulation, these dangers would not be accounted for in the owner or operator’s emergency and remedial response plan. The emergency and remedial response provisions should be expanded to address these concerns.

Further, the draft regulations require the owner or operator to report and implement its emergency and remedial response plan only if the "owner or operator obtains evidence that the injected carbon dioxide stream and associated pressure front may cause an endangerment to a USDW." Id. at 43,541 (proposed 40 C.F.R. §146.94(b)). As an initial matter, the phrase "obtains evidence" is undefined and has no clear meaning within the regulation. ELPC and ETIP recommend that EPA clarify the term. Further, like proposed 40 C.F.R. section146.94(a), proposed section 146.94(b) is too narrow, for two reasons. First, it is unclear why EPA should rely solely on evidence obtained from owners or operators. ELPC and ETIP recommend that EPA require that remedial (or at least investigatory) responses be triggered by information from third parties in addition to owners or operators, including but not limited to sub-surface, surface or adjacent property owners, as well as government entities. Second, the owner or operator’s duty to report and implement the remedial response plan would not be triggered in every instance in which a USDW may be endangered. ELPC and ETIP recommend expanding the trigger to include, for example, instances where leaching of metals or minerals is detected (by the owner or operator or third parties).

Response: In response to comments on the duration of the emergency and remedial response plan, EPA clarifies that the plan will apply over the life of the GS project through the post-injection site care period (§146.94(a)). EPA has added a requirement at §146.94(d) that owners or operators must review their emergency and remedial response plan within one year of an AoR reevaluation required under §146.84 or following significant changes to the facility. Subsequently, the owners or operators must submit an amended plan or demonstrate to the Director that no amendment to the plan is needed based on the AoR reevaluation or any significant changes made to the facility.

In response to the comment that the rule language should be expanded to require the plan to address potential problems that can result when CO2 combines with other fluids during or after the injection process, EPA clarifies that emergency and remedial response actions would be triggered by any evidence that USDWs are endangered, which would include evidence of interactions between CO2 and other fluids that have the potential to affect USDWs.

EPA notes that in developing Class VI requirements, the Agency identified the potential corrosivity of CO2 in the presence of water (or other formation fluids) as a unique challenge that warranted requirements tailored for GS and has addressed this concern throughout the GS rule. EPA requires corrosion monitoring, MIT, and ground water sampling (at §146.90) to provide early warning of any potential problem with a GS project that could endanger USDWs. While the multiple barriers of protection afforded by other aspects of the regulation should make such adverse events unlikely, the purpose of the emergency and remedial response plan is to ensure that procedures are in place to address adverse events, including corrosion of the well, as expeditiously as possible.

In response to the recommendation that remedial responses be triggered by information from third parties, EPA clarifies that the GS rule requires that if the owner or operator obtains any evidence (regardless of the source of that evidence) that USDWs may be endangered, he or she must cease injection, take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan (§146.94(b)). EPA clarifies that §1421 of SDWA mandates protection of USDWs from endangerment due to injection activities; the purpose of the emergency and remedial response requirements is to ensure that if other protective measures afforded by the regulations fail, timely actions will be taken to address contamination. Failure to respond to any evidence that USDWs may be endangered would be considered a violation of the UIC permit and would be subject to applicable civil, criminal, or administrative penalties.

Additionally, EPA is developing guidance on the development and implementation of emergency and remedial response plans for GS sites.Commenter Name:Wendy Jacobs Letter ID: 0183 Commenter Organization: Harvard Law School Environmental Law and Policy

Center Comment ID:

25153

Comment: The proposed regulation requires the owner or operator to "provide the Director with an emergency and remedial response plan that describes actions to be taken to address movement of the injection or formation fluids that may cause an endangerment to a USDW." Id. at 43,541 (proposed 40 C.F.R. § 146.94(a)). Proposed 40 C.F.R. § 146.85 requires the owner or operator to maintain financial assurance to cover the emergency plan. However, neither that provision nor proposed section 146.94 indicates how the costs should be estimated. 73 Fed. Reg. at 43,537, 43,541. Proposed 40 C.F.R. § 146.94 also does not explain how the owner, operator or Director will cover the costs of emergencies not anticipated by the plan. In fact, since the only emergencies covered are those already anticipated by the emergency planning provisions, truly unanticipated

events are not covered.

Response: In response to the comment about funding for emergency actions, EPA clarifies that §146.85 requires owners or operators to demonstrate and maintain financial responsibility for performing any necessary remedial actions associated with the requirements at §146.94, including the actions outlined in their GS project-specific emergency and remedial response plans. EPA believes the emergency and remedial response plan required under §146.94 will be a comprehensive plan that should include all possible events. EPA is also developing guidance on how to demonstrate financial responsibility.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24504 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.94(a)

Proposed CCS Group Recommendations: (a) As part of the permit application, the owner or operator must provide the Director with an emergency A RISK-BASED remedial response plan that describes actions to be taken to address movement of the injection or formation fluids that may cause an endangerment to a USDW during construction, operation, closure and post-closure periods.

Basis for CCS Group Comments: Any response plan should be based on a risk assessment and risk management approach that accounts not only for potential causes of endangerment, but probabilities and potential timing of occurrence as determined on a site-specific basis. As EPA has recognized, "The SDWA does not provide authority to develop regulations for all areas related to GS." 73 Fed. Reg. at 43495. Accordingly, the nature and scope of any such plans will necessarily be limited to the extent of that authority.

Response:EPA agrees that emergency and remedial response plans should be risk-based, however,EPA did not make the requested change. The Agency believes that the requirement to develop a sitespecific emergency and remedial response plan that is informed by required site characterization data collected under per §146.82, modeling for AoR evaluations and reevaluations, per §146.84, and monitoring data, per §146.90, will appropriately address commenter concerns regarding the need fora risk-based emergency and remedial response plan.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24505 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.94(b)

Proposed CCS Group Recommendations: (b) If the owner or operator obtains evidence that the injected carbon dioxide stream, DISPLACED FORMATION FLUIDS OR

andassociated pressure front may cause an endangerment toENDANGERS a USDW, the owner or operator must:

(1) ImmediatelyCease injection IN A PRUDENT MANNER CONSIDERING

CIRCUMSTANCES.

(2) Take all steps reasonably necessary to identify and characterize THE
ENDANGERMENT POSED;

(3) Notify the Director or the designated representative within 24 hours OF BECOMING AWARE OF THE ENDANGERMENT; and

Basis for CCS Group Comments: Technical clarifications.

Under some circumstances, an immediate cessation of injection could have adverse impacts on other aspects of the operation.

Rule Provision: 146.94(c)

Proposed CCS Group Recommendations: Support the proposed language.

Basis for CCS Group Comments: Agree with EPA’s rationale.

Rule Provision: 146.94(d)

Proposed CCS Group Recommendations: (d) The owner or operator must notify the Director prior to conducting any well workover IN RESPONSE TO ANY CASE OF

ENDANGERMENT.

Basis for CCS Group Comments: In critical situations, time spent obtaining approval could adversely affect the ability to conduct operations or increase the level of endangerment.

Response: After consideration of comments, EPA has finalized the rule language in §146.94(b) as proposed. In the introductory section of §146.94(b), EPA clarifies that the pressure front, as defined in §146.81, is a zone where the pressure differential is sufficient to cause the movement of injected fluids or formation fluids into a USDW. Therefore, displaced formation fluids are implicitly included in the requirements for §146.94. EPA also clarifies that owners or operators must take action when the CO2 stream or pressure front may cause endangerment. In order to prevent theendangerment of USDWs, as required under §1421 of the SDWA, EPA expects the owner or operator to act preemptively and not wait until endangerment has occurred. This language is consistent with existing UIC requirements for other well classes and EPA’s authority under the

SDWA.

EPA clarifies that the Agency expects that owners or operators should take care not to damage the well when ceasing injection under §146.94(b)(1). At §146.94(b)(2), EPA is maintaining the requirement to “characterize the release.” In order to prevent the endangerment of USDWs, as required under §1421 of the SDWA, EPA expects the owner or operator to act preemptively and not wait until endangerment has occurred. This language is consistent with existing UIC requirements for other well classes and EPA’s authority under the SDWA.

EPA clarifies that the 24-hour notification required under §146.94(b)(3) begins when the owner or operator obtains evidence of possible endangerment. EPA believes the rule language is clear on this requirement.

Since proposal, EPA has modified the final regulatory language at §146.94(d) to clarify what constitutes a workover to address a well failure (which invokes remedial actions) and what constitutes a maintenance-type workover. For maintenance-type workovers (i.e., those that are scheduled in advance), the owner or operator must notify and gain approval from the Director prior to beginning the workover. In the final GS regulation, EPA has moved this requirement to the reporting requirements at §146.91(d) to clarify its intent.

Regarding concerns that notification could delay responses, EPA clarifies that the GS rule (at §146.94(b)) describes procedures owners or operators must take in emergency situations. Specifically, upon determining that there is a problem with the well that may endanger a USDW, the owner or operator must first cease injection, then take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan, which may include a well workover. EPA believes that ceasing injection (which the owner or operator would do immediately and before notifying the Director) is the immediate action necessary to prevent or mitigate endangerment of USDWs, as required under the SDWA.

Commenter Name: Andy Horn Letter ID: 0196 Commenter Organization: Colorado Ground Water Association (CGWA) Comment ID: 23935

Comment: Issue 13. The proposed rule should consider and discuss mitigation options for large- scale failure of a mature GS reservoir.

Response:EPA clarifies that determining appropriate remedial actions and mitigation technologies that may be employed at a GS site is site- and event-specific and will depend on a variety of factors, including the nature of any movement of CO2 or other fluids, the presence of USDWs, and what, if any, impacts may have resulted. EPA is developing guidance on the development and implementation of emergency and remedial response plans for GS sites. EPA clarifies that, if the owner or operator obtains evidence that USDWs may be endangered or that leakage is occurring, he or she must cease injection, take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan (§146.94(b)).

Commenter Name: Craig R. Walters Letter ID: 0200Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24724 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.94(b)

Anadarko Petroleum Corporation (APC) Comments: (b) If the owner or operator obtains evidence that the injected carbon dioxide stream, DISPLACED FORMATION

FLUIDS OR andassociated pressure front may cause an endangerment to ENDANGERS a USDW, the owner or operator must:

(1) Immediatelycease injection IN A PRUDENT MANNER CONSIDERING

CIRCUMSTANCES.

(2) Take all steps reasonably necessary to identify and characterize THE
ENDANGERMENT POSED;

(3) Notify the Director or the designated representative within 24 hours OF BECOMING AWARE OF THE ENDANGERMENT; and

Rationale: Technical clarifications.

There is a slight change that immediately ceasing injection could have adverse impacts on other aspects of the operation.

Response: After consideration of comments, EPA has finalized the rule language in §146.94(b) as proposed. In the introductory section of §146.94(b), EPA clarifies that the pressure front, as defined in §146.81, is a zone where the pressure differential is sufficient to cause the movement of injected fluids or formation fluids into a USDW. Therefore, displaced formation fluids are implicitly included in the requirements for §146.94. EPA also clarifies that owners or operators must take action when the CO2 stream or pressure front may cause endangerment. In order to prevent the endangerment of USDWs, as required under §1421 of the SDWA, EPA expects the owner or operator to act preemptively and not wait until endangerment has occurred. This language is consistent with existing UIC requirements for other well classes and EPA’s authority under the

SDWA.

EPA clarifies that the Agency expects that owners or operators should take care not to damage the well when ceasing injection under §146.94(b)(1). At §146.94(b)(2), EPA is maintaining the requirement to “characterize the release.” In order to prevent the endangerment of USDWs, as required under §1421 of the SDWA, EPA expects the owner or operator to act preemptively and not wait until endangerment has occurred. This language is consistent with existing UIC requirements for other well classes and EPA’s authority under the SDWA.

In response to commenters’ suggestions regarding §146.94(b)(3), EPA clarifies that the 24 hours begins when the owner or operator obtains evidence of possible endangerment. EPA believes the rule language is clear on this requirement.

Commenter Name: Craig R. Walters Letter ID: 0200 Commenter Organization: Anadarko Petroleum Corporation Comment ID: 24725 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rulelanguage

Comment: Rule Provision: 146.94(d)

Anadarko Petroleum Corporation (APC) Comments: (d) The owner or operator must notify the Director prior to conducting any well workover IN RESPONSE TO ANY

CASE OF ENDANGERMENT.

Rationale: In critical situations, time spent obtaining approval could adversely affect the ability to conduct operations or increase the level of endangerment.

Response: Since proposal, EPA has modified the final regulatory language at §146.94(d) to clarify what constitutes a workover to address a well failure (which invokes remedial actions) and what constitutes a maintenance-type workover. For maintenance-type workovers (i.e., those that are scheduled in advance), the owner or operator must notify and gain approval from the Director prior to beginning the workover. In the final GS regulation, EPA has moved this requirement to the reporting requirements at §146.91(d) to clarify its intent.

Regarding concerns that notification could delay responses, EPA clarifies that the GS rule (at §146.94(b)) describes procedures owners or operators must take in emergency situations. Specifically, upon determining that there is a problem with the well that may endanger a USDW, the owner or operator must first cease injection, then take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan, which may include a well workover. EPA believes that ceasing injection (which the owner or operator would do immediately and before notifying the Director) is the immediate action necessary to prevent or mitigate endangerment of USDWs, as required under the SDWA.

Commenter Name: Andrew Duguid Letter ID: 0226 Commenter Organization: Schlumberger Carbon Services Comment ID: 24075 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: §146.94 Emergency and remedial response.

Proposed Rule: (b) If the owner or operator obtains evidence that the injected carbon dioxide stream and associated pressure front may cause an endangerment to a USDW, the owner or operator must:

Schlumberger Suggested Revision: (b) If the owner or operator obtains evidence that the injected carbon dioxide stream or associated pressure front endangers a USDW, the owner or operator must:

Schlumberger Rationale: -

Proposed Rule: (2) Take all steps reasonably necessary to identify and characterize any release;

Schlumberger Suggested Revision: (2) Take all steps reasonably necessary to identify and characterize the endangerment posed;

Schlumberger Rationale: -Proposed Rule: (3) Notify the Director within 24 hours; and

Schlumberger Suggested Revision: (3) Notify the Director within 24 hours of becoming aware of the endangerment; and

Schlumberger Rationale:-

Proposed Rule: (d) The owner or operator must notify the Director and obtain his approval prior to conducting any well workover.

Schlumberger Suggested Revision: (d) The owner or operator must notify the Director prior to conducting any well workover in response to any case of endangerment.

Schlumberger Rationale:In critical situations, time spent obtaining approval could adversely affect the ability to conduct operations or increase the level of endangerment.

Response: After consideration of comments, EPA has finalized the rule language in §146.94(b) as proposed. In the introductory section of §146.94(b), EPA clarifies that the pressure front, as defined in §146.81, is a zone where the pressure differential is sufficient to cause the movement of injected fluids or formation fluids into a USDW. Therefore, displaced formation fluids are implicitly included in the requirements for §146.94. EPA also clarifies that owners or operators must take action when the CO2 stream or pressure front may cause endangerment. In order to prevent the endangerment of USDWs, as required under §1421 of the SDWA, EPA expects the owner or operator to act preemptively and not wait until endangerment has occurred. This language is consistent with existing UIC requirements for other well classes and EPA’s authority under the

SDWA.

EPA clarifies that the Agency expects that owners or operators should take care not to damage the well when ceasing injection under §146.94(b)(1). At §146.94(b)(2), EPA is maintaining the requirement to “characterize the release.” In order to prevent the endangerment of USDWs, as required under §1421 of the SDWA, EPA expects the owner or operator to act preemptively and not wait until endangerment has occurred. This language is consistent with existing UIC requirements for other well classes and EPA’s authority under the SDWA.

Concerning commenters’ suggestions for §146.94(b)(3), EPA clarifies that the 24 hours begins when the owner or operator obtains evidence of possible endangerment. EPA believes the rule language is clear on this requirement.

Since proposal, EPA has modified the final regulatory language at §146.94(d) to clarify what constitutes a workover to address a well failure (which invokes remedial actions) and what constitutes a maintenance-type workover. For maintenance-type workovers (i.e., those that are scheduled in advance), the owner or operator must notify and gain approval from the Director prior to beginning the workover. In the final GS regulation, EPA has moved this requirement to the reporting requirements at §146.91(d) to clarify its intent.

Regarding concerns that notification could delay responses, EPA clarifies that the GS rule, at §146.94(b), describes procedures owners or operators must take in emergency situations.Specifically, upon determining that there is a problem with the well that may endanger a USDW, the owner or operator must first cease injection, then take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan, which may include a well workover. EPA believes that ceasing injection (which the owner or operator would do immediately and before notifying the Director) is the immediate action necessary to prevent or mitigate endangerment of USDWs, as required under the SDWA.

Commenter Name: Kurt Waltzer Letter ID: 0250 Commenter Organization: Clean Air Task Force Comment ID: 22285 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: The rule should incorporate a "non-interference principle" to keep one sequestration project from interfering with the effectiveness of another

As EPA notes in the preamble (page 43506), "it is ... possible that multiple owners or operators will be injecting CO2 into formations that are hydraulically connected and thus the elevated pressure zones may intersect or interfere with each other." Our Environmental NGO Group agrees that this is a genuine possibility at this stage in GS implementation. Until comprehensive approaches to basin-scale management are developed, we urge the adoption of the following addition to §146.94:

"(e) If an owner or operator obtains evidence that a pressure front associated with one geologic sequestration project intersects or threatens to intersect a pressure front associated with any other project, the owner or operator obtaining such evidence must notify the Director and the other owner or operator. If the Director determines that the pressure front associated with one project interferes or threatens to interfere with the ability of a project that began operations at an earlier date to sequester the earlier project’s total anticipated volume of the carbon dioxide stream as determined under §146.83(a), the Director may require the owner or operator of the project that began operations at a later date to modify operations as necessary to avoid such

interference."

Response:EPA agrees with the commenter that there are a variety of factors that may affect the need for emergency and remedial response at GS sites. EPA believes that the GS Rule adequately protects USDWs from being endangered by multiple wells. EPA has decided not to adopt the commenter’s edit. However, the Agency believes that a site-specific emergency and remedial response plan that is informed by required site characterization data (per §146.82), modeling for AoR evaluations and reevaluations (per §146.84), and monitoring data (per §146.90) will appropriately address commenter concerns regarding the potential impacts of multiple GS projects. EPA has added a requirement at §146.94(d) that owners or operators must review their emergency and remedial response plan within one year of an AoR reevaluation required under §146.84 or following significant changes to the facility. Subsequently, the owners or operators must submit an amended plan or demonstrate to the Director that no amendment to the plan is needed based on the AoR reevaluation or any significant changes made to the facility.

EPA also encourages owners or operators and permitting authorities to communicate planned GS activities during initial permitting activities to maximize coordination and minimize pressureinterference. If a permit applicant (or the permitting authority) is aware of pending GS projects near a proposed well, the AoR delineation performed pursuant to §146.84 should account for the impacts of multiple owners and operators injecting within a single basin. EPA expects that, where multiple operators are involved, the Director will not approve modeling that does not account for changes that may result from all injection operations.

EPA expects that changes within the AoR, such as the addition of new wells or projects that could potentially interfere with a GS project, will be identified as part of the AoR reevaluations required at §146.84(e) and would need to be addressed in a revised emergency and remedial response plan. EPA is developing guidance on the development and implementation of project plans for GS sites, including emergency and remedial response plans.

Commenter Name: Kurt Waltzer Letter ID: 0250 Commenter Organization: Clean Air Task Force Comment ID: 22299 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment:Emergency and remedial response, including response to potential problems relating to geologic features, is a necessary complement to corrective action and should remain in the rule. While wells are the most likely conduits for fluid movement into USDWs, the definition of corrective action and the relevant provisions in §146.84 do not take into account the potential for geologic features, such as faults, spill points or fractures, to act as conduits for CO2 or other fluid migration, and hence breach of confinement. Actions to mitigate or remediate a potential breach of confinement, or a situation which might eventually lead to a breach of confinement, should not be limited to corrective action on wells. We therefore strongly support EPA’s inclusion of the Emergency and remedial response section. We propose two minor changes - change §146.94(b) (4) to read:

[In the paragraphs below the text in all CAPS denotes added text. See also EPA-HQ-OW-0390- 0250.pdf to see the original formatting.]

"Implement the emergency and remedial response plan approved by the Director, AND KEEP HIM APPRIZED OF THE IMPLEMENTATION."

and §146.94(d) to read:

"The owner or operator must notify the Director and obtain his approval prior to conducting any well workover OR OTHER REMEDIATION MEASURES NOT LISTED IN THE

EMERGENCY AND REMEDIAL RESPONSE PLAN."

Response: The final rule keeps the language in §146.94(b)(4) as proposed. EPA agrees that the Director should be kept apprised of progress on the implementation of the emergency and remedial response plan and expects that the plan itself will include provisions on communications with the Director. EPA agrees that an emergency and remedial response plan is an important part of assuring protection of USDWs from endangerment at GS sites. The requirements for an emergency and remedial response plan at §146.94(a) are designed to ensure that owners or operators, as part of their permit applications, comprehensively plan what actions would be necessary in the unlikely event ofan emergency. The plan will ensure that operators know what entities and individuals must be notified and what actions must be taken to expeditiously mitigate any emergency situations. EPA is developing guidance on the development and implementation of emergency and remedial response plans for GS sites.

Since proposal, EPA has modified the final regulatory language at §146.94(d) to clarify what constitutes a workover to address a well failure (which invokes remedial actions) and what constitutes a maintenance-type workover. For maintenance-type workovers (i.e., those that are scheduled in advance), the owner or operator must notify and gain approval from the Director prior to beginning the workover. In the final GS regulation, EPA has moved this requirement to the reporting requirements at §146.91(d) to clarify its intent.

Regarding concerns that notification could delay responses, EPA clarifies that the GS rule, at §146.94(b), describes procedures owners or operators must take in emergency situations. Specifically, upon determining that there is a problem with the well that may endanger a USDW, the owner or operator must first cease injection, then take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan, which may include a well workover. EPA believes that ceasing injection (which the owner or operator would do immediately and before notifying the Director) is the immediate action necessary to prevent or mitigate endangerment of USDWs as required under the SDWA.

Commenter Name: Kurt Waltzer Letter ID: 0250 Commenter Organization: Clean Air Task Force Comment ID: 22313

Comment: Perhaps inadvertently, the proposed rule does not explicitly require updating of several of the required plans. In most but not all cases, there is a rather ambiguous requirement to "maintain" a given plan. Explicit requirements to make updates as warranted appear to be missing from provisions relating to:

• the emergency and remedial response plan required by §146.94 (there is no requirement here that the plan be updated as warranted - there is not even a requirement that the plan be "maintained."

Response: In response to comments on the need for revision of the emergency and remedial response plan, EPA has added a requirement at §146.94(d) requiring owners or operators to review their emergency and remedial response plans within one year of an AoR reevaluation or following significant changes to the facility. Subsequently, the owners or operators must submit an amended plan or demonstrate to the Director that no amendment to the plan is needed.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24956 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.94(b)

(b) If the owner or operator obtains evidence that the injected carbon dioxide stream and associated pressure front may cause an endangerment to a USDW, the

owner or operator must:(1) Immediately cease injection; (2) Take all steps reasonably necessary to identify and characterize any release; (3) Notify the Director within 24 hours; and (4) Implement the emergency and remedial response plan approved by the Director.

GWPC Recommendations: (b) If the owner or operator obtains evidence that the injected carbon dioxide stream, displaced formation fluids or associated pressure front endangers a USDW, the owner or operator must:

(1) Immediately cease injection; (2) Take all steps reasonably necessary to identify and characterize the endangerment posed; (3) Notify the Director or the designated representative within 24 hours of becoming aware of the endangerment; and (4) Implement the emergency and remedial response plan approved by the Director.

Rationale: The GWPC felt the notification period needed clarification since it did not specify when the clock began to run for the 24 hour notice period. Further, it was felt that notification of someone representing the Director would also constitute appropriate notice.

Response: After consideration of comments, EPA has finalized the rule language in §146.94(b) as proposed. In the introductory section of §146.94(b), EPA clarifies that the pressure front, as defined in §146.81, is a zone where the pressure differential is sufficient to cause the movement of injected fluids or formation fluids into a USDW. Therefore, displaced formation fluids are implicitly included in the requirements for §146.94. EPA also clarifies that owners or operators must take action when the CO2 stream or pressure front may cause endangerment. In order to prevent the endangerment of USDWs, as required under §1421 of the SDWA, EPA expects the owner or operator to act preemptively and not wait until endangerment has occurred. This language is consistent with existing UIC requirements for other well classes and EPA’s authority under the

SDWA.

Regarding changes to the language in §146.94(b)(1), EPA clarifies that the Agency expects that owners or operators take care not to damage the well when ceasing injection under §146.94(b)(1). At §146.94(b)(2), EPA is maintaining the requirement to “characterize the release.” In order to prevent the endangerment of USDWs, as required under §1421 of the SDWA, EPA expects the owner or operator to act preemptively and not wait until endangerment has occurred. This language is consistent with existing UIC requirements for other well classes and EPA’s authority under the

SDWA.

Concerning commenters’ suggestions for §146.94(b)(3), EPA clarifies that the 24 hours begins when the owner or operator obtains evidence of possible endangerment. Note that the definition of the Director in 40 CFR 144.3 includes the Director’s authorized representative. EPA believes the rule language is clear on this requirement.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24957Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment:EPA Proposal: (c) The Director may allow the operator to resume injection prior to remediation if the owner or operator demonstrates that the injection operation will not endanger USDWs.

(d) The owner or operator must notify the Director and obtain his approval prior to conducting any well workover.

GWPC Recommendations: Support the proposed EPA language for (c)

(d) The owner or operator must notify the Director prior to conducting any well workover in response to any case of endangerment.

Rationale: In critical situations, time spent obtaining approval could adversely affect the ability to conduct operations or increase the level of endangerment.

Response: Since proposal, EPA has modified the final regulatory language at §146.94(d) to clarify what constitutes a workover to address a well failure (which invokes remedial actions) and what constitutes a maintenance-type workover. For maintenance-type workovers (i.e., those that are scheduled in advance), the owner or operator must notify and gain approval from the Director prior to beginning the workover. In the final GS regulation, EPA has moved this requirement to the reporting requirements at §146.91(d) to clarify its intent.

Regarding concerns that notification could delay responses, EPA clarifies that the GS rule, at §146.94(b), describes procedures owners or operators must take in emergency situations. Specifically, upon determining that there is a problem with the well that may endanger a USDW, the owner or operator must first cease injection, then take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan, which may include a well workover. EPA believes that ceasing injection (which the owner or operator would do immediately and before notifying the Director) is the action necessary to prevent or mitigate endangerment of USDWs as required under the SDWA.

Commenter Name:John McManus Letter ID: 0294 Commenter Organization: American Electric Power Comment ID: 25309 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: 2. Non-interference principle

EPA notes in the preamble (page 43506), "it is...possible that multiple owners or operators will be injecting CO2 into formations that are hydraulically connected and thus the elevated pressure zones may intersect or interfere with each other." We have agreed that this possibility should be addressed through a revision to the regulations. Until more comprehensive approaches to basin-scale management are developed and based on the proposed definition of "pressure front", we recommend the adoption of the following addition to §146.94:

"(e) If an owner or operator obtains evidence that a pressure front associated with one geologic sequestration project intersects or will more likely than notintersect the pressure front or area of review associated with another project, the owner or operator obtaining such evidence must notify the Director. The Director shall notify the owner or operator of the other geologic sequestration project. If the Director determines that the pressure front associated with one project interferes or will more likely than not interfere with the ability of another project to comply with the terms of its permit(s), the Director may require the owners or operators of the interfering or potentially interfering projects to modify operations as necessary to mitigate or avoid such interference. Such modifications may also include modifications mutually agreed upon by the respective owners and operators and approved by the Director."

Response:EPA agrees with the commenter that there are a variety of factors that may affect the need for emergency and remedial response at GS sites. The Agency believes that a site-specific emergency and remedial response plan that is informed by required site characterization data (per §146.82), modeling for AoR evaluations and reevaluations (per §146.84), and monitoring data (per §146.90) will appropriately address commenter concerns regarding the potential impacts of multiple GS projects. EPA has added a requirement at §146.94(d) that owners or operators must review their emergency and remedial response plan within one year of an AoR reevaluation required under 146.84 or following significant changes to the facility. Subsequently, the owners or operators must submit an amended plan or demonstrate to the Director that no amendment to the plan is needed based on the AoR reevaluation or any significant changes made to the facility.

EPA also encourages owners or operators and permitting authorities to communicate planned GS activities during initial permitting activities to maximize coordination and minimize pressure interference. If a permit applicant (or the permitting authority) is aware of pending GS projects near a proposed well, the AoR delineation performed pursuant to 146.84 should account for the impacts of multiple owners and operators injecting within a single basin. EPA expects that, where multiple operators are involved, the Director will not approve modeling that does not account for changes that may result from all injection operations.

EPA expects that changes within the AoR, such as the addition of new wells or projects that could potentially interfere with a GS project, would be identified as part of the AoR reevaluations required at §146.84(e) and would need to be addressed in a revised emergency and remedial response plan. EPA is developing guidance on the development and implementation of project plans for GS sites, including emergency and remedial response plans.

Commenter Name:John McManus Letter ID: 0294 Commenter Organization: American Electric Power Comment ID: 25318 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment:With respect to the emergency and remedial response section, we propose two changes - change §146.94(b)(4) to read:

"Implement the emergency and remedial response plan approved by the Director, and keep the Director apprized of the implementation."

Response: The final rule retains the language in §146.94(b)(4) as proposed. EPA agrees that the Director should be kept apprised of progress on the implementation of the emergency and remedialresponse plan but expects that the plan itself will include provisions on communications with the Director. The requirements for an emergency and remedial response plan at §146.94(a) are designed to ensure that owners or operators, as part of their permit application, comprehensively plan what actions would be necessary in the unlikely event of an emergency. The plan will ensure that operators know what entities and individuals must be notified and what actions must be taken to expeditiously mitigate any emergency situations. The rule sets forth triggers for notification to the Director that initiates consultation on appropriate responses. EPA expects that the owner or operator and Director would discuss the necessary response action and maintain a dialogue and communication throughout the conclusion of any needed actions. EPA is developing guidance on the development and implementation of emergency and remedial response plans for GS sites.

Commenter Name:John McManus Letter ID: 0294 Commenter Organization: American Electric Power Comment ID: 25319 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: and §146.94(d) to read:

"The owner or operator must notify the Director and obtain his approval prior to conducting any well workover or other remediation measures not listed in the emergency and remedial response plan."

It should be noted that the language chosen here for §146.94(d) relates specifically to remediation measures and not to emergency responses, which should not be delayed to seek approval when immediate response action is necessary. Every effort should be taken to ensure that emergency responses are comprehensively addressed in the plan, including appropriate notification provisions and timeframes, but emergency responses should not be delayed when awaiting approvals could impair the effectiveness of the response.

Response: Since proposal, EPA has modified the final regulatory language at §146.94(d) to clarify what constitutes a workover to address a well failure (which invokes remedial actions) and what constitutes a maintenance-type workover. For maintenance-type workovers (i.e., those that are scheduled in advance), the owner or operator must notify and gain approval from the Director prior to beginning the workover. In the final GS regulation, EPA has moved this requirement to the reporting requirements at §146.91(d) to clarify its intent.

Regarding concerns that notification could delay responses, EPA clarifies that the GS rule (at §146.94(b)) describes procedures owners or operators must take in emergency situations. Specifically, upon determining that there is a problem with the well that may endanger a USDW, the owner or operator must first cease injection, then take all steps reasonably necessary to identify and characterize any release, notify the Director, and implement the approved emergency and remedial response plan, which may include a well workover. EPA believes that ceasing injection (which the owner or operator would do immediately and before notifying the Director) is the action necessary to prevent or mitigate endangerment of USDWs, as required under the SDWA.

Commenter Name: Scott Anderson Letter ID: 0510 Commenter Organization:Environmental Defense Fund Comment ID: 21223

Comment: And we are, of course, pleased that 146.94 requires remedial response and USDWsare endangered.

Response:EPA agrees that an emergency and remedial response plan is an important part of assuring protection of USDWs from endangerment at GS sites. The requirements for an emergency and remedial response plan at 146.94(a) are designed to ensure that owners or operators, as part of their permit applications, comprehensively plan what actions would be necessary in the unlikely event of an emergency. The plan will ensure that operators know what entities and individuals must be notified and what actions must be taken to expeditiously mitigate any emergency situations.

Comment Code: 5900 2.14 Other administrative requirements under 40 CFR 144



### Individual Comments

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24378 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 144.52

Proposed CCS Group Recommendations: Support the proposed language.

Basis for CCS Group Comments: Agree with EPA’s rationale.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24379 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 144.55

Proposed CCS Group Recommendations: Support the proposed language.

Basis for CCS Group Comments: Agree with EPA’s rationale.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24387 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: Part 146 (12)Proposed CCS Group Recommendations: Support the proposed language.

Basis for CCS Group Comments: Agree with EPA’s rationale.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Commenter Name: Robert F. Van Voorhees Letter ID: 0190 Commenter Organization: Carbon Sequestration Council Comment ID: 24389 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 146.5(e)

Proposed CCS Group Recommendations: Support the proposed language.

Basis for CCS Group Comments: Agree with EPA’s rationale.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24839 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment:EPA Proposal: 7. Section 144.39 is amended by revising the second sentence in paragraph (a) introductory text and by revising the second sentence in paragraph (a)(3) introductory text to read as follows:

§ 144.39 Modification or revocation and reissuance of permits.

* * * * *

GWPC Recommendations: Support the proposed language.

Rationale: Agree with EPA’s rationale.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24840 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule languageComment: Rule Provision: 144.39

EPA Proposal: (a) * * * For Class I hazardous waste injection wells, Class II, Class III or Class VI wells the following may be causes for revocation and reissuance as well as modification; and for all other wells the following may be cause for revocation or reissuance as well as modification when the permittee requests or agrees. * * *

* * * * *

(3) * * * Permits other than for Class I hazardous waste injection wells, Class II, Class III or Class VI wells may be modified during their terms for this cause only as follows: * * * * * * * *

GWPC Recommendations: Support the proposed language.

Rationale: Agree with EPA’s rationale.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24842 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment:EPA Proposal: (2) When the Director determines that a Class I, II, III or VI well lacks mechanical integrity pursuant to § 146.8 or § 146.89 for Class VI of this chapter, he/she shall give written notice of his/ her determination to the owner or operator. * * *

* * * * *

GWPC Recommendations: Support the proposed language.

Rationale: Agree with EPA’s rationale.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24843 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 144.52

EPA Proposal: 9. Section 144.52 is amended by revising paragraph (a)(8) toread as follows:

§ 144.52 Establishing permit conditions.

(a) * * *

(8) Mechanical integrity. A permit for any Class I, II, III or VI well or injection project which lacks mechanical integrity shall include, and for any Class V well may include, a condition prohibiting injection operations until the permittee shows to the satisfaction of the Director under § 146.08 or § 146.89 for Class VI that the well has mechanical integrity.

* * * * *

GWPC Recommendations: Support the proposed language.

Rationale: Agree with EPA’s rationale.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24844 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: 144.55

EPA Proposal: § 144.55 Corrective action.

(a) Coverage. Applicants for Class I, II, (other than existing), III or VI injection well permits shall identify the location of all known wells within the injection well’s area of review which penetrate the injection zone, or in the case of Class II wells operating over the fracture pressure of the injection formation, all known wells within the area of review penetrating formations affected by the increase in pressure. Applicants for Class VI shall perform corrective action as specified in § 146.84.* * *

* * * * *

GWPC Recommendations: Support the proposed language.

Rationale: Agree with EPA’s rationale.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.Commenter Name:Michel Paque Letter ID: 0259 Commenter Organization: Ground Water Protection Council Comment ID: 24848 Other EPA Comment Codes and Descriptions: 1240 1.1.1.3 Suggested changes/edits to rule language

Comment: Rule Provision: Part 146

EPA Proposal: 12. The authority citation for part 146 continues to read as

follows:

Authority: Safe Drinking Water Act 42, U.S.C. 300f et seq.; Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq.

GWPC Recommendations: Support the proposed language.

Response:EPA acknowledges the comment. Please see the remainder of EPA's responses to this comment letter for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.