CH A M B E R O F CO M M E R C E

O F T H E

UN I T E D ST A T E S O F AM E R I C A

WI L L I A M L . K O V A C S

VI C E P R E S I D E N T

E N V I R O N M E N T , T E C H N O L O G Y &

R E G U L A T O R Y AF F A I R S

1 6 1 5 H S T R E E T , N . W .

W A S H I N G T O N , D . C . 2 0 0 6 2

( 2 0 2 ) 4 6 3 - 5 4 5 7

December 16, 2008

VIA ELECTRONIC FILING

Water Docket

U.S. Environmental Protection Agency

Mailcode: 2822T

1200 Pennsylvania Ave., N.W.

Washington, DC 20460

Attn: Docket ID No.: EPA-HQ-OW-2008-0390

Re: Comments on Federal Requirements Under the Underground

Injection Control (UIC) Program for Carbon Dioxide (CO2)

Geologic Sequestration (GS) Wells

The U.S. Chamber of Commerce, the world’s largest business federation

representing more than three million businesses and organizations of every size,

sector, and region, is pleased to submit these comments on the proposed regulation

by the U.S. Environmental Protection Agency (EPA) creating a new category of

injection wells under the Safe Drinking Water Act (SDWA)1for the capture and

storage of CO2.

Introduction

Many major scientific bodies have concluded that reducing carbon dioxide, the

most significant greenhouse gas, is essential to mitigating the negative effects of

climate change. The United States, which relies heavily on coal-burning power plants

that emit significant quantities of CO2, recognizes carbon capture and storage (CCS)

as a crucial technology because it will reduce CO2emissions from these facilities while

still allowing for continued increases in electric power demand and output from coal,

America’s abundant, inexpensive energy resource.

1

P.L. 93-523
U.S. Chamber of Commerce

EPA-HQ-OW-2008-0390

December 16, 2008

Page 2 of 7

Simply stated, CCS involves separating and capturing CO2, transporting the

CO2 by truck or pipeline to an underground storage location, and injecting and storing

it in underground geologic formations. While CCS is just one of many climate change

mitigation options,

2

it will be a vital component of any U.S. strategy for addressing

climate change given our reliance on coal for almost half of our electricity production.

Likewise, CCS could have a substantial role in reducing CO2emissions from

developing countries, such as India and China, where CO2emissions are projected to

increase exponentially in connection with their growing energy needs.

As part of the U.S. strategy for addressing climate change and implementing

CCS, EPA has proposed a first-time rule under the SDWA for sequestering CO2in

geologic formations. The proposed rule is based on EPA’s existing regulatory

framework for its UIC Program and proposes a new category of injection well (Class

VI) along with several technical criteria for its implementation.

The Chamber strongly supports the development and deployment of carbon

capture and sequestration technology, and we applaud EPA for its extensive public

outreach, stakeholder dialog, and public workshops on this issue. Nevertheless, in

order to ensure that this proposed rule accomplishes its objectives to promote a CCS

regulatory framework and support “the development of a key climate change

mitigation technology,” the Chamber offers the following comments on potential

legal, economic, regulatory, and technical barriers to CCS deployment that EPA

should consider before finalizing this rule.

General and Specific Comments

The Chamber notes that EPA already regulates CO2injection for enhanced oil

recovery (EOR). Existing “Class II” regulations governing injection of CO2for EOR

have proven successful at protecting underground sources of drinking water (USDW)

and the health and safety of the public. Therefore, as an initial matter, EPA should

consider whether it is really necessary to create a new class of wells and a new set of

regulations for carbon sequestration purposes?

2

Other options include energy efficiency improvements, a switch to less carbon-intensive fuels, nuclear power, and

renewable energy sources.
U.S. Chamber of Commerce

EPA-HQ-OW-2008-0390

December 16, 2008

Page 3 of 7

Assuming EPA determines that a new class of wells is needed, despite existing

Class II wells and regulations, the Chamber would also recommend EPA address the

following concerns:

1. Statutory Liability

EPA is proposing its rule under the SDWA, which governs the Underground

Injection Control program, and provides the statutory authority for geologic

sequestration of CO2. EPA readily admits, however, that the SDWA is limited; it

does not cover the capture or transfer of CO2, the transfer of liability between entities,

nor accounting or certification of greenhouse gas reductions – only CO2injection.

But it is exactly because EPA’s authority under the SDWA is limited that EPA needs

to provide greater clarity as to what other statutory authorities may become relevant,

which provisions could be triggered, and to delineate, to the extent possible, all

potential liabilities associated with owning, operating, or investing in a Class VI well.

For example, if EPA eventually determines that CO2is hazardous, what are the

ramifications under the Resource Conservation and Recovery Act (RCRA)?

3

Presumably, its stringent “cradle to grave” requirements will be imposed on all

generators, transporters, and treatment, storage and disposal facilities involved in the

CCS project. Or, in the event of a release, under the Comprehensive Environmental

Response, Compensation and Liability Act (CERCLA)?4 The Clean Air Act?5If CO2

is deemed a “hazardous air pollutant” under Section 112, it will automatically trigger

CERCLA liability as it incorporates HAPs in its definition of “hazardous substance.”6

The Clean Water Act?7

The issue becomes even more acute when you consider that EPA has already

declined to address the very basic question of how to classify the CO2stream if trace

amounts of hazardous constituents get in it prior to injection:

Because 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,

3

42 U.S.C. §§ 6901 et seq.

4

42 U.S.C. §§ 9601 et seq.

5

42 U.S.C. §§ 7401 et seq.

6

CERCLA, Section 101(14).

7

33 U.S.C. §§ 1251 et seq.
U.S. Chamber of Commerce

EPA-HQ-OW-2008-0390

December 16, 2008

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EPA cannot make a categorical determination as to whether injected CO2is hazardous

under RCRA.8

Instead, EPA advocates making determinations about the hazardous

classification of injected CO2 on a case-by-case basis. In essence, EPA is saying that

hazardous constituents could be present in the injected CO2stream, and if they are,

then it will be treated as hazardous. This approach provides little guidance to

industry, particularly facility owners and operators who are required to characterize

their CO2stream as part of their initial permit application.

Such overwhelming regulatory uncertainty will only serve to deter investment

in CCS technology and slow the rate at which large-scale commercial CCS projects are

developed. Instead, EPA needs to examine and explain which environmental statutes

could be triggered, how they will interact or overlap, and what potential liability exists

for industry. EPA should also explore the possibility of creating regulatory

exemptions under RCRA, CERCLA, etc., for injected CO2, thereby reducing

regulatory hurdles for CCS projects. One example of this would be to ensure that

final Class VI permits have the broadest possible reach to maximize the protection

offered by CERCLA’s “federally permitted release”9exemption. This would mean

including within the scope of the permit for carbon dioxide injection all other

CERCLA hazardous constituents likely to be contained in the CO2stream, thus

providing some comfort to owners and operators that they will not be subject to

CERCLA liability. When you consider that EPA lacks the authority to transfer well

ownership between entities, and that owners are therefore liable in perpetuity, the need

to craft regulatory exemptions becomes clear.

A final possibility would be to pursue a legislative remedy – ask Congress to

address the issue – in order to give this promising technology a chance to flourish or

fail on its own merits. Similarly, Congress should be encouraged to appropriate

money to fund the Energy Policy Act of 2005 and the Energy Independence and

Security Act, which together contain over 130 new energy technology provisions.

Funding these technologies would go a long way toward EPA’s stated goal of

addressing climate change.

8

Federal Register, Vol. 73 Fed. Reg. No. 144, pg. 43493 (July 25, 2008)

9

CERCLA, Section 107(j).
U.S. Chamber of Commerce

EPA-HQ-OW-2008-0390

December 16, 2008

Page 5 of 7

2. Need for Full-Scale Pilot Projects

Globally, only four full-scale CCS projects exist, and none of them capture CO2

from a coal-fired power plant. The International Energy Agency notes that at least 20

large-scale demonstration projects will need to be in planning by 2010 and in

operation by 2020 to have any impact on climate change policy planning. EPA

should ensure that this timetable is considered before implementing its final rule.

The real challenge, however, will be for EPA to create a regulatory framework

flexible enough to allow for technologies that may not be commercially available for

many years. That is, EPA must craft its CCS regulations with enough flexibility so

that they may be modified to include technologies not yet on the market.

3. CCS May impact Private Property Rights

Recognizing that subsurface land can be privately owned in the United States,

the chamber notes that CO2injection into geologic formations may require

permission from all owners of intersected subsurface property. While this

consideration may be somewhat addressed during the initial siting process, it may still

lead to tensions between large-scale CCS projects and individual property rights. The

issue becomes even more important as investors and industry participants will seek to

minimize liability from property trespass claims related to sub-surface trespass,

geological surveying, and deposit monitoring.

Likewise, property rights considerations may impact the availability of liability

insurance for CCS project participants. If insurance companies cannot accurately

calculate the risk of CCS projects, or future potential environmental liability for

property trespass, they may decline to offer coverage.

4. Why Does the Proposed Rule Treat CO2like a Hazardous Waste?

Carbon dioxide is not a hazardous waste; yet the proposed rules for CO2

storage are, in many ways, far more strict than those for underground injection of

hazardous wastes under Class I of the UIC program. Many of the construction,

mechanical integrity, monitoring and financial assurance provisions for Class VI wells

are more comprehensive and more onerous than those for Class I wells.
U.S. Chamber of Commerce

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December 16, 2008

Page 6 of 7

The Chamber does not believe that CO2should be treated more stringently

than hazardous waste because it distorts public perception about the safety of carbon

capture and storage, and it may make securing financial backing for CCS more

difficult.

a. Distorts Public Perception

By making the proposed rule so strict, the public may unduly perceive CCS as a

dangerous activity. Consider that the proposed rule requires a secondary containment

field for CO2storage. Such a requirement is unprecedented both domestically, in the

UIC program (including for storage of hazardous wastes in Class I wells), as well as

internationally.10 Singling out carbon capture and storage for this heightened and

substantially more rigorous requirement would suggest to the public that EPA thinks

geologic storage of carbon dioxide is more dangerous than the underground injection

of other substances. Since EPA is the agency charged with protecting the

environment, the public could be easily swayed by EPA’s apparent apprehension of

carbon capture and storage as currently embodied in the proposed regulations. In

order to create a regulatory scheme that fosters carbon capture and storage

development and deployment, EPA should reconsider how it has characterized

carbon dioxide injection – both explicitly and implicitly – in its final regulations.

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.

Consider that the proposed regulations contemplate a 50-year post-injection

site care period. EPA’s reasoning for proposing this time frame is based on CO2

plume stabilization and protection of USDWs. EPA attempts to ameliorate the

harshness of this time frame by stating that the UIC program director can modify it

under certain circumstances. A better approach would be to allow the characteristics

of each site determine the appropriate length of time for post-injection site care. This

10 Countries such as Norway, Canada, and Australia, which have carbon capture and storage projects currently

underway, do not require secondary containment zones, and in fact, those countries regulate CCS using existing

petroleum laws.
U.S. Chamber of Commerce

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December 16, 2008

Page 7 of 7

would prevent placing an unnecessary burden on those owners and operators who

can show that their projects pose no threat to underground sources of drinking water

in less than 50 years. In fact, the Chamber believes that appropriately sited CCS

projects will need substantially less than 50 years, especially since research suggests

that the risk profile of carbon dioxide injection diminishes dramatically after a decade.

Consequently, a lengthy post-injection care period would only serve to penalize those

owners and operators who have taken steps to ensure proper site characterization.

As a result, the 50-year timeframe (if retained in the final rule) could have an

inhibiting effect on insurers, investors, owners, and operators hoping to participate or

invest in CCS activities.

5. OMB’s Good Guidance Practices

With respect to EPA’s suggestion that future guidance documents be issued to

clarify requirements for financial responsibility on CO2injection projects, the

Chamber reiterates that such guidance must be issued in conformance with OMB’s

Good Guidance Practices bulletin.

Conclusion

CCS is not a “silver bullet” but an innovative solution for reducing CO2

emissions to the atmosphere. The Chamber applauds EPA for seeking out novel and

important approaches for addressing climate change, reducing CO2 emissions, and

continuing to protect our vital sources of safe drinking water. Nevertheless, the

Chamber encourages EPA to address the potentially serious impediments to CCS

development and deployment that have been raised in these comments.

The Chamber thanks EPA for drafting this proposed rule and providing the

opportunity to comment.

Sincerely,

William L. Kovacs