C H A M B E R O F C O M M E R C E O F T H E U N I T E D S T A T E S O F A M E R I C A

W I L L I A M L . K O V A C S V I 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 A F 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

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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

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- 0390 Re: Comments on Federal Requirements Under the Underg round Injection Control (UIC) Program for Carbon Dioxide (CO 2 ) 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, secto r, 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) 1 for the capture and storage of CO 2 . Introduction M any 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 plan ts that emit significant quantities of CO 2 , recognizes carbon capture and storage (CCS) as a crucial technology because it will reduce CO 2 emissions 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

- 523U.S. Chamber of Commerce

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- 0390 December 16 , 2008 Page 2 of 7 Simply stated, CCS involves separating and capturing CO 2 , transporting the CO 2 by truck or pipeline to an underground storage location, and injecting and storing it in underground geologic formati ons. 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 CO 2 emissions from developing countries, such as India and China, where CO 2 emissions 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 S DWA for sequestering CO 2 in geologic formations. The proposed rule is based on EPA’s existing regulatory framework for its U IC Program and proposes a new c ategory 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 objective s to promote a CCS regulatory framework and s upport “the development of a key climate change mitigation technology,” the Chamber of fers 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 CO 2 injection for enhanced oil recovery (EOR). Existing “ Class II ” regulations governing injection of CO 2 for 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

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- 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 seque stration of CO 2 . EPA readily admits , however, that the SDWA is limited; it does not cover the capture or transfer of CO 2 , the transfer of liability between entities, nor accounting or certification of greenhouse gas reductions

– only CO 2 injection. But it is exactly because EPA’s authority under the SDWA is limited that EPA needs to provide greater clarity as to wh at 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 de termines that CO 2 is 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? 5 If 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 subst ance.” 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 CO 2 stream 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

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- 0390 December 16 , 2008 Page 4 of 7 EPA cannot make a categorical determination as to whether inject ed CO2 is hazardous under RCRA. 8 Instead, EPA advocates making determinations about the hazardous classification of injected CO 2 on a case - by

- case basis. In essence, EPA is saying that hazardous constituents could be present in the injected CO 2 stream, 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 CO 2 stream 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 th ey 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 projec ts. 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” 9 exemption. 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 CO 2 stream, 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

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2. Need for Full- Scale Pilot Projects Globally, only four full

- scale CCS projects exist, and none of them capture CO 2 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 s hould 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 ye ars. 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 U nited States, the chamber notes that CO 2 injection 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, geolog ical 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 C CS projects , or future potent ial environmental liability for property trespass, they may decline to offer coverage . 4. Why Does the Proposed Rule Treat CO 2 like a Hazardous Waste? Carbon dioxide is not a hazardous waste; yet the proposed rules for CO 2 storage are, in many ways, far m ore 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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The Chamber does not believe that CO 2 should 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 require s a secondary containment field for CO 2 storage . 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 requiremen t 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 characte rized 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 accep tance, 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

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-injection site care period
. EPA’s reasoning for proposing this time frame is based on CO 2 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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- 0390 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 suggest s 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

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imeframe (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 guidan ce docum ents be issued to clarify requirements for financial responsibility on CO 2 injection 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 CO 2 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 provi ding the opportunity to comment. Sincerely,

William L. Kovacs