This comment letter response contains two parts:

(1) The original submittal from the commenter. (2) A data base printout of EPA’s response to each point raised by the commenter.

Notes about the response letters:

• The response letters were generated by a data base used to track the content of all public
comment submittals and ensure that the Agency responds to each. Each comment letter

was assigned a Letter ID that corresponds to the last four digits of the docket number of the original comment (as posted on www.regulations.gov).

• Each response letter includes: comment text; an EPA

‐ assigned comment code; and an individual response. These are described and explained below.

• The data base contains Comment text from the letters submitted by commenters. Many hard copy letters were scanned into electronic format for inclusion in the data base. As a result, there may be some typographical errors attributable to optical character recognition issues. However, all original submittals were reviewed in the
process of drafting responses to ensure that the comment content was understood and appropriately addressed.

• The content of each comment letter was divided into topic areas and assigned a unique Comment ID. Additionally, one or more Comment Codes (i.e., unique topic area ID) was assigned to each discrete point raised by a commenter. This information was added to the data base. To inform final rulemaking decisions, all comments and information received on a given topic were reviewed by technical experts in each rule area (e.g., on construction requirements).

• Following decisions on the final rule requirements, Individual responses were drafted by topic area to ensure completeness and consistency of the responses with the final rule and other responses to similar comments. Each discrete point made by a commenter was given a unique response.

• Upon completion of comment responses, all information was entered into the data base. Each letter response is a compilation of each comment and its individual response, compiled in the order of the original comment letter. As a result of this process, there is repetition in the response text. The Agency believes this approach ensures completeness and attention to each comment letter that was submitted.

• All comments in a topic area were reviewed, evaluated, and responded to concurrently. Responses on each topic area are compiled and are also available in the rulemaking docket.

# NACCSA

csrbon c .oam

. a Stono~ Auod .aon Nor1h I 

# DEC 2 3 2008

The Atlantic Building " 950 F Street, NW " Washington, D

.C

. 20004
202 .654 .4860 " 202 .756 .3333 fax " www

.naccsa .org

COMMENTS OF THE NORTH AMERICAN CARBON CAPTURE AND STORAGE ASSOCIATION (NACCSA) ON THE ENVIRONMENTAL PROTECTION AGENCY'S PROPOSED RULEMAKING UNDERTHE SAFE DRINKING WATER ACT'S UNDERGROUND INJECTION CONTROL PROGRAM FOR CARBON DIOXIDE GEOLOGIC SEQUESTRATION WELLS

DOCKET ID NO

. EPA-HQ-OW-2008-0390

December 23, 2008

The North American Carbon Capture and Storage Association (NACCSA) submits these comments

on the Environmental Protection Agency (EPA or Agency)'s proposed regulations for the injection and

geologic storage (GS) of carbon dioxide (C02) under the authority of the Safe Drinking Water Act
(SDWA)'s underground injection control (UIC) program, issued in July 2008 (Docket ID No

. EPA-HQ-OW2008-0390)

.

I

. About NACCSA

NACCSA is a nonprofit organization of companies in North America that support the development of

a sustainable carbon dioxide capture and storage (CCS) industry in the United States and Canada

. The

members of NACCSA include companies' involved in developing commercial processes to mitigate

greenhouse gas emissions through CCS, and specialists engaged in the technical, commercial, financial and
developmental aspects of CCS activities in both the U .S

. and Canada

. As we noted in our oral and written

testimony presented at EPA's September 30, 2008 public hearing on the proposed rules, policymakers and

' NACCSA members are the American Petroleum Institute ; Arch Coal Inc

. ; Blue Source LLC ; Halliburton ; International Paper ; Keener Oil & Gas Company ; Kinder Morgan ; Occidental Petroleum Corporation ; Peabody Energy ; SandRidge Energy ; Schlumberger Carbon Services ; Shell ; and Tenaska

. 

# ~'

. . DEC 23 2008companies are, and should be, like the members of NACCSA, interested in CCS technology because it holds

significant promise as a tool to manage C02 emissions as well as to maximize energy recovery

. EPA's

proposed regulations are a needed first step toward establishing a stable, predictable, and workable

regulatory framework that appropriately encourages the development of a CCS industry to both safely

mitigate GHG emissions and maximize energy production

.

11

. General Principles Applicable To EPA's GS Regulatory Effort

As legislative and regulatory efforts to address climate change accelerate, it is critically important

that policymakers follow EPA's lead by continuing to recognize the central role that CCS can play as a
mitigation tool

. As noted in the Preamble to EPA's proposed rule, CCS holds the promise of storing large

volumes of carbon dioxide in geologic formations such as deep saline formations, depleting and depleted oil

& natural gas reservoirs, unmineable coal seams and similar geologic structures

. Because CCS has the

potential to be applied in a wide range of fossil fuel production processes, NACCSA believes that CCS

should be recognized as an emissions mitigation measure under any climate regime

. Additionally, NACCSA

members view

carbon dioxide as a central component in the enhanced recovery of oil and natural gas and

recognize that it is capable of being responsibly stored as part of this process

. Recognizing the significance of the initiative displayed by EPA in proposing regulations for injection

and storage of C02 carbon dioxide under the Safe Drinking Water Act's UIC program, NACCSA appreciates

the opportunity to provide input on which aspects of the proposed rules are favorable, and for which aspects

of the proposed rules EPA should consider possible changes, in light of the rulemaking's dual goals of

improving the chances of achieving commercial viability for CCS while also preventing potentially

undesirable impacts to drinking water resources

. NACCSA's general areas of focus in this discussion

include siting and secondary containment ; monitoring/use of tracers ; closure and post-injection site care ;

financial assurance ; grandfathering ; state primacy ; and potential issues arising under other environmental

laws

. Comments on specific aspects of the Agency's proposed rules within these general focus areas are set

forth below

.III

. Specific Comments on the Proposed Regulations

a

. Executive Summary

The primary areas of comment and a brief summary of NACCSA's comments within each area are

listed below

.
" Siting/Secondary Containment : Injection above the lowermost USDW should not be categorically prohibited ; further, any discretion vested in the UIC program director to require secondary containment should be explicitly bounded with appropriate criteria for its exercise

.

" Area of Review

Reevaluation : NACCSA questions the inclusion of a requirement that the area of review by reevaluated at least every ten years

.

" Monitoring Provisions/Use of Tracers/Use of Down-Hole Shut-off Valves : NACCSA is opposed to imposition of mandatory requirements to use tracers ; conduct surface air/soil gas monitoring

.

" Closure and Post-Injection Site Care : NACCSA urges the Agency to adopt a shorter default time period than the 50 year period currently proposed

. Although a fair amount of certainty may be achieved through setting some default period of time for the post-injection site care period, the proposed 50 year default is both arbitrary and unjustifiably long

. Further, while NACCSA supports the concept of a performance-based component, the rules should include specific and appropriate circumstances that the program director will consider in exercising any discretion in this regard

.

" 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

.

" Grandfathering Provisions : The Agency should (1) expand the scope of available grandfathering beyond construction requirements and (2) allow grandfathering unless an examination of specified factors reveals that the project would be unsuitable for C02 storage

.

" 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

.

" Relationships with other Environmental Laws : The Agency should carefully consider any discussion of other environmental laws that it may desire to include in the Preamble to the rules in order to ensure that such discussion is necessary and does not hamper the successful commercialization of CCS

.

Other Issues for the Agency's Consideration : The Agency should ensure that nothing in the rule precludes C02-EOR operators from claiming "storage" at some 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 a~sence of such resolution

. NACCSA encourages the Agency to continue seeking information i%&s regard and to support development of a complete regulatory scheme for CCS

.b

. Specific Comments

1

. Ban on Injection Above the Lowermost USDW

The proposed regulations do not permit project operators to inject and store C02 above the lowermost

formation containing a USDW

. NACCSA believes that a categorical elimination of receiving formations is

unnecessary and undesirable

. Rather, the appropriateness of any given receiving formation-as with the

bulk of issues related to the siting of projects-should be considered on a case-by-case basis in light of the
geologic characteristics of a given project and based on the application of clear and appropriate parameters

set forth in the rules

. Categorically eliminating a set of potential receiving formations is simply unnecessary in light of the

overall function of the UIC rules

. As a general proposition, permit applicants must demonstrate that projects

will not endanger USDWs ; permit applicants for C02 injection and storage projects would be held to the

same standard

. The proposed rules would require permit applicants to demonstrate that the project will be

sited in areas with a "suitable geologic system," consisting of an injection zone of sufficient areal extent,

thickness, porosity, and permeability to receive the total anticipated volume of injectate, as well as a
confining zone free of transmissive faults or fractures and sufficient to contain the injected stream and any

displaced fluids, considering the proposed maximum pressures and volumes of injection, without fracturing

.
It is NACCSA's view

that if the "suitable geologic system" contains confining zones above and below the

injection formation that will not allow the endangerment of USDWs, injection above a USDW should be

allowed because the system will still meet the groundwater protection requirements of the UIC program

.
The fact that permit applications would be considered based on site specific information would mean that the
regulator could evaluate whether individual projects would be protective of groundwater regardless of their

depth with respect to USDWs

.
Further, a blanket exclusion will hinder the ability of existing and possibly future Class I, II, and V

projects to convert to Class VI projects, as the proposed grandfathering requirement is limited to well

construction (as further discussed below), thus excluding projects that do not inject below the lowermost

-4-USDW

from the scope of potential grandfathering

. Existing (and future) projects that do not inject beneath

the lowermost USDW

would seemingly be stranded, left with no ability to convert to Class VI GS projects

. Such a risk greatly disincentivizes many projects that would otherwise be likely to go forward and would
hamper commercialization of CCS

. And creation of such a disincentive is unnecessary because the wells at

issue would have been designed and constructed specifically with injection of C02 and the protection of

USDWs in mind

.
While NACCSA acknowledges that EPA has raised for consideration the possibility of aquifer exemptions or the use of discretion to allow injection above the lowermost USDW in a given case, NACCSA

submits that such a procedure would introduce increased complexity to the process with no corresponding

increase in protection afforded to USDWs as compared to an approach under which no default limitations on siting exist and the merits of a proposed receiving formation are considered in the context of a particular
project, using clearly identified and appropriate factors

. And in the context of existing or proposed projects

that may be seeking to later convert to Class VI wells, such provisions would create unnecessary uncertainty regarding the potential viability of projects going forward

. Finally, a default limitation on injections to only those formations below the lowermost USDWcurrently in place only for Class I hazardous waste injection wells-is likely to create a public misimpression

that C02 injection wells are analogous to hazardous waste injection wells and carry analogous risks

. NACCSA urges EPA to consider the potential effects of each proposed regulation on public perception of
CCS, as attaching unnecessary stigmas to CCS will do nothing to further its development or to protect

USDWs

.

2

. Secondary Containment

Another area of concern related to siting involves the Agency's proposed grant of discretion to the

UIC program

director to require permit applicants to identify secondary containment/confining zones

. VVhile
NACCSA agrees with the Agency's current approach not to include a blanket secondary containment requirement (although, if secondary confining units exist with regard to a given project, they should be
-5-included in site modeling, along with identification of any transmissive zones between the primary and
secondary confining units), and, while a discretionary requirement for secondary containment is preferable to

a blanket, universal requirement, any discretionary requirement that is imposed should be bounded by clear
parameters for its use

. The proposed rule, however, contains no such parameters

. NACCSA urges the
Agency to consider what parameters may be put in place to ensure protection of USDWs while providing

some level of clarity for project operators and investors regarding under what circumstances such a requirement should be expected, as well as some degree of assurance that the "on paper" discretionary
requirement will not lead to an "in practice" blanket requirement due to the lack of appropriately

enumerated

.

Several points should be considered in determining whether any sort of requirement for secondary

containment, including a discretionary requirement, should be imposed, as well as what parameters may be
appropriately included in the final rule should the Agency choose to implement a discretionary requirement

. They include the following :

" Do better alternatives exist to protect USDWs? In any given case, the additional protection to

USDWs that the Agency appears to believe secondary containment could provide likely may be better

addressed through proper site selection and well-designed plans and procedures to detect and contain leakage

from the primary containment system, rather than through imposing de facto limitations on the types of sites

that may be used

. If such requirements have already been satisfied, there is likely no need for secondary

containment

.

" What public misconceptions may be created? Secondary containment is unprecedented under the

UIC program, even for the injection of hazardous wastes under the Class I permitting scheme

. Imposition of

such a requirement on injection and storage of C02 suggests that such a project would be more dangerous

than underground injection of a host of other materials, including hazardous wastes, or even than injection of

C02 for purposes of EOR

. The Agency should carefully consider the risk of creating unwarranted negativepublic perception posed by proposed requirements

. In any given case, CCS technology can be safely

employed absent any secondary containment requirements

.

3

. Area of Review

Reevaluation

EPA's proposal would require that the owner or operator periodically reevaluate the AoR during the
injection operation

. Reevaluations would occur at a minimum fixed frequency, not to exceed 10 years, as
agreed upon by the Director

. We question the need for this requirement to be mandatory in light of the rule's

extensive monitoring requirements

. In the event that ongoing monitoring indicated a problem, appropriate

action could be taken at that time without separately requiring a complete AoR reevaluation according to a
pre-defined schedule

.
We recommend that EPA provide the AoR reevaluation is at the discretion of the Administration if

the Administration determines that site-specific data, reservoir characteristics and/or monitoring or modeling

data dictate that such a reevaluation would be warranted

.

4

. Monitoring Provisions/Use of Tracers/Use of Down-Hole Shut-off Valves

The proposed regulations would vest discretion in the programdirector to require the use of tracers

and/or surface air/soil gas monitoring "to detect movement of C02 that could endanger a USDW ."

NACCSA is opposed to this proposed requirement for the reasons outlined below

.
The proposal raises potential issues regarding the scope of EPA's authority

. The Preamble
acknowledges that regulation of surface/atmospheric releases of C02 is outside the scope of the proposed

rule and the Agency's jurisdiction under SDWA

. The UIC program

is designed to protect USDW`s from
endangerment due to subsurface injection

. The use of tracers combined with surface or soil monitoring is
unlikely to be protective because by the time any tracers or C02 is detected in these zones it may have passed
through all USDWs between the injection zone and the surface

.
NACCSA is also concerned that tracers are relatively untested in terms of leak detection capabilities

and transport properties

. Because there have been limited tests of tracers it is not clear how they interact

with the subsurface and if they are conservatively transported with C02

. Further, tracers may also pose

-7-independent safety concerns for project operators, workers, and other potentially affected individuals and the

environment

. Finally, the proposed regulations also would require the use of automatic down-hole shut-off systems

.
We question the need for such a mandatory requirement because in some applications such systems could

cause operational problems and add risk during maintenance operations

. These risks seem to outweigh the

benefits of the use of such systems in GS applications

. Moreover, such systems are not required in other
applications, such as natural gas which arguably pose greater hazards than the storage of carbon dioxide

.
Instead of making the use of automatic down-hole shut-off systems mandatory, the Administrator should be
given discretion to require their installation and use when site-specific data and reservoir characteristics

indicate that the benefits of requiring such systems outweigh the risks of their use

.

5

. Closure and Post-Injection Site Care

An additional key area of concern for NACCSA is the proposed rule's provision imposing a 50 year

default time period following cessation of injection activities to serve as the closure and post-injection site

care ("PISC") period, throughout which monitoring activities and corresponding financial assurance
requirements would continue

. Under the proposal, the programdirector would have discretion to adjust the

time period upward or downward, with the effect that the PISC period would continue "until the geologic
sequestration project no longer poses an endangerment to USDWs ."

NACCSA understands that a fair amount of certainty may be achieved through setting some default
period of time for the PISC

. Establishing such a lengthy default time period also places unnecessary burdens

on owners and operators who can clearly establish that no threat to USDWs will be posed within a shorter

time frame than whatever default may be established

.
NACCSA urges the Agency to adopt a performance-based approach more in keeping with the actual

risks posed by CCS projects

. NACCSA believes that the site specific nature of C02 storage projects will require each project to be judged on its own merit

. If a project can show, at any time after the cessation of
injection, that there is sufficiently small risk of endangerment to USDWs, monitoring should no longer be
-8-required

. Given that under the proposed rule, the programdirector would retain discretion to lengthen or

shorten the PISC period as necessary to protect USDWs, a performance based approach is in keeping with

the spirit of the draft rule

. Furthermore, a performance based approach is more in keeping with the realty of

potential risks associated with C02 storage would minimize disincentivization of CCS projects while
providing an equivalent degree of protection for USDWs

. NACCSA believes that the performance-based
approach, currently proposed by EPA as an element of the rule, would be beneficial to project operators and

investors and for the protection of USDWs

. The final rule should include specific and appropriate

circumstances that the program director will consider in exercising discretion in this regard, so that project

operators and investors have a clear idea of the bar they will be required to meet in order to close out the

PISC period

.

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 fromcorrective 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 C02

has been safely injected under the UIC programfor 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 and well before the Agency's proposed financial assurance provisions would come to an end

. In

-9-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 assurance requirements 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
-10-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 C02,

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

.

7

. Grandfathering Provisions

As referenced above, EPA has also raised for consideration how certain existing wells should be

addressed under the final regulations

. In particular, EPA has proposed allowing the UIC programdirector to
"grandfather," on a discretionary basis, the construction requirements for existing Class II and Class V
experimental wells (as well as existing Class I wells that were not intended to inject C02 originally) where

the director can determine that the wells will not endanger underground sources of drinking water

. But the
proposed grandfathering is not merely discretionary ; it is also limited in scope to construction requirements

. Thus, operators would be required to satisfy all other provisions of the Class VI permitting requirements in

order to transition to Class VI wells

. The limited scope of the grandfathering provision may make it hard for

other classes of wells to transition to Class VI

.
The proposed provision provides little assurance to project operators or investors that existing wells,

or wells that may be permitted before the proposed rule takes effect, could ever be transitioned to the

Class VI regime

. In light of the additional proposed limitations on GS projects, such as the restrictions on
-11-receiving formations, grandfathering may simply prove impossible, even for projects that were specifically
designed to inject and store C02 in the first instance

. Further, as noted above, wells permitted to inject and store C02 have already been deemed safe and

suitable for those purposes, and a determination has already been made that no endangerment is posed to

USDWs

. Under these circumstances, leaving a grandfathering determination to the discretion of the

director-discretion that may be exercised where the director determines that there is no endangerment to

USDWs-is unnecessarily duplicative as long as the operating parameters of the site are unchanged

.
NACCSA thus recommends that the Agency expand the scope of available grandfathering for
existing wells beyond construction requirements to cover all Class VI requirements

. Further, rather than

leave grandfathering to the discretion of the program director, a preferable approach would be to allow
grandfathering unless, upon an examination of specified criteria, the director determines that the

circumstances of the initial project, as compared to the long-term storage aspect, result in a project that is

unsuitable for C02 storage from a point of view of protecting USDWs

.
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

C02 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 C02 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 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

-12-are given credit and recognition for their groundbreaking work on CCS without disincentivizing states from taking a leadership role on CCS

.

9

. Relationships with other Environmental Laws

NACCSA is concerned about the potential application of other environmental laws to CCS activities

. These laws include the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA)

. Setting aside for the moment the important questions of whether either of these laws could apply to CCS activities and, if so, precisely how
and to what extent, NACCSA understands and does not disagree with the Agency's position that drafting a
clear exception fromeither of these regimes likely cannot be accomplished through the context of this
SDWA UIC rulemaking

. Nonetheless, NACCSA urges EPA to carefully consider whether to include any
discussion of these two laws (or others) along with the Class VI regulations, as well as the particulars of
what any such discussion may contain, to ensure that such discussion is necessary and does not serve as an
unnecessary and unintended springboard for hampering the successful commercialization of CCS

. NACCSA believes that EPA should clarify that supercritical and gaseous C02 do not fit the defmition
of "solid waste" under RCRA, and that injected C02 is not solid waste that is "disposed of' and thus subject

to RCRA regulation

. While NACCSA acknowledges that such clarification may be best achieved in the

context of a RCRA rulemaking, the Preamble to the proposed rules appears to make the assumption that injected C02 is a solid waste that is being disposed of in the first instance, in the context of its discussion regarding waste characterizations that may be required of permitees

. Such discussion in the Preamble is
unnecessary and will only prove harmful to those seeking to move forward with CCS projects

. Further, any

concern about potentially hazardous constituents in C02 injectate may be addressed without addressing any potential RCRA implications, as the contents of an injectate must be "characterized" under the proposed

rules regardless, and permit limitations may be imposed to address the content of injectate without reference

to RCRA's provisions

.In addition, EPA should clarify that the provisions of CERCLA are not triggered by Class VI

operations

. As a preliminary matter, as the Agency is aware, CERCLA imposes liability for releases of

hazardous substances

. EPA indicates in the Preamble that whether injected C02 may be considered a

hazardous substance "depends entirely on the make-up of the specific C02 stream and of the environmental

media

. . . in which it is stored," leaving the door open for claims of environmental harm arising out of C02
injection and storage activities

. This discussion, however, assumes that C02 injection activities could fall

within CERCLA's ambit in the first instance

. As with the RCRA issue, a determination of this issue is

unnecessary from the point of view of regulating injection and storage of C02 under the UIC program, and

NACCSA urges the Agency to avoid creating unnecessary hurdles for the successful commercial deployment

of CCS by assuming potential applications of other statutes that may not come into play

. Regardless, even if

the provisions of CERCLA could be interpreted to apply to CCS activities, NACCSA is opposed to any

limitations on the federally permitted release exemption fromCERCLA liability, which should be given its

fullest application in the Class VI context

. Relatedly, NACCSA encourages the Agency, pursuant to its
authority under RCRA and CERCLA, to examine possibilities for exemption or exclusion from those

programs

.

10

. Other Issues for the Agency's Consideration

One additional issue raised in the Preamble relates to treatment of injection wells that are currently
producing oil or gas

. The Preamble suggests that as long as production is occurring and the reservoirs are

not depleted, Class II permitting provisions apply ; only when a reservoir is depleted may Class VI provisions
apply

. 2 NACCSA encourages the Agency to consider regulatory or preamble language in the final rule

which clarifies that nothing in the rule is intended to preclude C02-EOR operators for claiming that they are engaged in "storage" operations for purposes (for example) of a future cap-and-trade scheme

. Finally, although NACCSA recognizes the limits on the Agency's jurisdiction with regard to CCS
projects, its members appreciate the Agency raising for public comment issues related to property rights that

2 See discussion in Preamble at 48-49

. -14-may be associated with C02 injection and storage, such as ownership of pore space in which C02 will be

stored, as well as issues of long-term responsibility for stored C02 and storage site integrity

. While the

importance of EPA's rulemaking as an important step in providing clarity and certainty for project operators

and investors cannot be overstated, CCS projects may not go forward in the absence of resolution of these

issues

. EPA's efforts in this regard will serve to raise stakeholder and policy maker awareness regarding the

importance of resolving these critical issues so necessary to the successful commercial deployment of CCS

.

IV

. Conclusion
Again, NACCSA appreciates the opportunity to participate in this important rulemaking process,

which will likely shape the future of CCS activities in the U .S

. Any questions regarding the comments
provided herein may be addressed to :

Michael Moore Executive Director, NACCSA c/o BlueSource 3165 East Millrock Drive Suite 340 Holladay, Utah 84121 801 .322 .4750 mmoore@bluesource .comLetter ID: 0265 Commenter: Michael Moore Organization: North American Carbon Capture & Storage Associ ation (NACCSA)

Letter ID: 0265 Comment ID: 22848 Letter Lines: 48 to 52

Comment Code: 1320 1.1.3 General comments about GS

Comment: developmental aspects of CCS activities in both the U.S. and Canada. As we noted in our oral and written testimony presen ted at EPA's September 30, 2008 public hearing on the proposed rules, policymakers a nd companies are, and should be, like the members of NACCSA,interested in CCS technology because it holds significant promise as a tool to manage CO2 emissions as well as to maximize energy recovery.

Individual Response: EPA acknowledges the comment. Pleas e see the remainder of EPA’s responses to this comment for further deta ils. For additional information on EPA’s final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0265 Comment ID: 22849 Letter Lines: 53 to 56

Comment Code: 1420 1.2.1.1 Support the GS rulemaking

Comment: EPA's proposed regulations are a needed fi rst step toward establishing a stable, predictable, and workable regulatory framew ork that appropriatel y encourages the development of a CCS industry to both sa fely mitigate GHG emissions and maximize energy production.

Individual Response: While EPA agrees with commenters that a stable, predic table, nationally consistent, and workable regulatory framework is important, EPA stresses that the focus of the GS rule is to ensure that, where GS is deploye d, it is conducted in a manner that protects USDWs from endangerment. For additional informati on on EPA’s authority to promulgate this rulemaking, see the preamble section on "Unde r What Authority is This Rulemaking Promulgated?"

Letter ID: 0265 Comment ID: 22850 Letter Lines: 58 to 85

Comment Code: 1330 1.1.3.1 Support use of GS in general

Comment: II. General Principles Applicable To EPA's GS Regulatory Effort
As legislative and regulatory efforts to address climate change accelerate, it is critically important that policymaker s follow EPA's lead by continuing to recognize the central role that CCS can play as a mitigation tool. As noted in the Preamble to EPA's proposed rule, CCS holds th e promise of storing large volumes of

1carbon dioxide in geologic formations such as deep saline formations, depleting and depleted oil & natural gas reservoi rs, unmineable coal seams and similar geologic structures. Because CCS has the potenti al to be applied in a wide range of fossil fuel production processes, NACCSA be lieves that CCS should be recognized as an emissions mitigation measure under any climate regime. Additionally, NACCSA members view carbon dioxide as a central comp onent in the enhanced recovery of oil and natural gas and recognize th at it is capable of bei ng responsibly stored as part of this process.
Recognizing the significan ce of the initiative displayed by EPA in proposing regulations for injection and storage of CO2 carbon dioxide under the Safe Drinking Water Act's UIC pr ogram, NACCSA appreciates th e opportunity to provide input on which aspects of the proposed rule s are favorable, and for which aspects of the proposed rules EPA should consider possible changes, in light of the rulemaking's dual goals of improving the chances of achieving commercial viability for CCS while also preventing potentially undesirable impacts to drinking water resources. NACCSA's general areas of focus in this discussion include siting and secondary containmen t; monitoring/use of tracers; closure and post-injection site care; financial a ssurance; grandfatheri ng; state primacy; and potential issues arising under other e nvironmental laws. Comments on specific aspects of the Agency's proposed rules w ithin these general focus areas are set forth below.

Individual Response: EPA acknowledges the comment. Pleas e see the remainder of EPA’s responses to this comment for further deta ils. For additional information on EPA’s final regulatory approach (including information on s iting and containment, monitoring and use of tracers, site closure and post-injection site care, financial assurance, primacy, transitioning existing wells into Class VI wells, and potential issues arising under other environmental laws), please see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0265 Comment ID: 22851 Letter Lines: 93 to 96

Comment Code: 4324 2.4.4.1.2 Comments opposed to requiring injection below the lowermost USDW

Comment: - Siting/Secondary Containment: Injecti on above the lowermost USDW should not be categorically prohibited; furthe r, any discretion vested in the UIC program director to require secondary c ontainment should be explicitly bounded with appropriate criteri a for its exercise.

Individual Response: EPA acknowledges that there are lim ited circumstances where injection above the lowermost USDW can be performe d in a manner that protects USDWs from endangerment, as long as appropriate protections are in place. The final GS rule at §146.95 establishes a process by which owne rs or operators can seek a waiv er of the Class VI injection depth requirements for injecti on into non-USDW formations above and/or between USDWs.

2The final rule establishes: 1) requirements speci fying information that ow ners or operators must submit, and Directors must consider, in consul tation with PWSS Directors; 2) procedures for public notice of a waiver application and for Di rector-Regional Administrator communication; 3) the waiver issuance process; and, 4) additional requirements that apply to owners or operators of Class VI wells granted a waiver of the injecti on depth requirements to ensure USDW protection above and below the injection zone. The final ru le also establishes limited circumstances under which expansions of the areal extent of aqui fer exemptions may be granted for owners or operators of Class II EOR/EGR wells transi tioning to Class VI injection for GS.
For additional information on the waiver approa ch and aquifer exemptions for Class VI wells, please see the final rule and pr eamble, as well as EPA's responses to comments on the Notice of Data Availability and Request for Comment.

Letter ID: 0265 Comment ID: 22852 Letter Lines: 98 to 99

Comment Code: 3530 2.2.3.1 AoR reevaluation fre quency (seeking comment)

Comment: - Area of Review Reevaluation: NACCS A questions the inclusion of a requirement that the area of review by reevaluated at least every ten years.

Individual Response: EPA believes that periodic AoR reevalua tion at a set frequency of at least every 5 years is necessary to ensure protecti on of USDWs from endangerment and address the uncertainties inherent in predictive modeling. Periodic AoR reevaluations at §146.84(e) ensure that a deliberate effort is made to verify, base d on monitoring and operational data, that the CO2 plume is moving within the subsurface as predicted. EPA believes that less frequent reevaluations may not be sufficient to appropriately model plume and pressure front movement, establish conditions for corrective action, and ensure protecti on of USDWs from endangerment.

Letter ID: 0265 Comment ID: 22853 Letter Lines: 101 to 103

Comment Code: 4490 2.4.5 Use of tracers and potential impact on human health or ecosystems (seeking comment) Comment Code: 4670 2.6.7 Surface air monitoring and/or soil gas monitoring (seeking comment)

Comment: - Monitoring Provisions/Use of Tracer s/Use ofDown-Hole Shut-off Valves: NACCSA is opposed to imposition of mandatory requirements to use tracers; conduct surface air/soil gas monitoring.

Individual Response: EPA believes that surface air and soil gas monitoring, when coupled with subsurface monitoring, may be a ppropriate at some GS project s to ensure USDW protection. EPA acknowledges that surface air and soil gas monitoring may not be suitable in all settings as a method to ensure USDW protection. However, EPA does not believe that this should entirely preclude their use. The decision to use surf ace monitoring and the se lection of monitoring methods will be site-specific (e.g., may be influenced by geology, injection depth, and

3operational conditions) and must be based on potential risks to USDW s within the AoR.
If surface monitoring were the only monitoring method employed to ensure USDW protection, direct correlation of CO2 at the surface with CO 2 in the subsurface might be difficult; however, when combined with information gathered thr ough other monitoring techniques required of GS well owners and operators (e.g., monitoring wells , geophysical techniques ), air and soil gas monitoring may provide valuable data on the magnitude and location of a leak. The CO2 itself may serve as a tracer in the form of stable is otopes of carbon. For exam ple, anthropogenic CO2 is depleted in 13C compared to naturally occurring CO2.
In the final rule, at §146.90(h), the decision to requ ire such monitoring rests with the Director as a means of identifying leaks that may pose a risk to USDWs and informing emergency notification of a Class VI owner or operator and UIC Director in the event of a USDW endangerment, pursuant to requirements at §146.91(c).

EPA believes that, in some circumstances, tr acers can be an important component of a multifaceted approach to monitoring GS projects. However, the Agency recognizes that tracers may not be appropriate in all GS projects. Fo r this reason, EPA does not require the use of tracers at all GS sites; however, the Director has discretion to require their use if he/she determines that the use of tracers could impr ove monitoring of the s ite and enhance USDW protection from endangerment.

Letter ID: 0265 Comment ID: 22854 Letter Lines: 105 to 112

Comment Code: 5260 2.8.2.3 Adjusting the post-injecti on timeframe (seeking comment)

Comment: - Closure and Post-Injection Site Care : NACCSA urges the Agency to adopt a shorter default time period than th e 50 year period currently proposed. Although a fair amount of certainty may be achieved through setting some default period of time for the pos t-injection site care peri od, the proposed 50 year default is both arbitrary and unjustifiably long. Furthe r, while NACCSA supports the concept of a performan ce-based component, the rules should include specific and appropriate circumstances that the program director wi ll consider in exercising any discretio n in this regard.

Individual Response: EPA disagrees that a post-injection si te care timeframe of 50 years is excessive for most Class VI wells. EPA proposed a default post-injection s ite 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 Computationa l Modeling of Undergr ound Injection of Carbon Dioxide for Determination of Area-of-Review and Potential Risk to Underground Sources of Drinking Water. EPA assessed various default timef rames based on additional review of research studies and evaluation of public comments. While numerous co mmenters suggested that EPA shorten the monitoring timeframe, none of the commenters provided suff icient data or other evidence to warrant a change inthe proposed timeframe. While the 10- or 30-year timeframe suggested by some of these commenters may be within the timeframe suggested in some studies,

4EPA believes that the potential risks of endange ring USDWs will likely no t decline within these timeframes and available data, including data submitted by commenters, do not support a different default timeframe. However, EPA r ecognizes that alternative timeframes may be appropriate under limited, specific circumstances, which is why EPA is providing the Director discretion to approve an alternat ive post-injection site care time frame as long as the owner or operator can meet the requi rements provided at §146.93(c).
EPA acknowledges there will be circumstances wh ere it can be demonstrated in less than 50 years that the plume and pressure front no longe r pose a risk of endangerment to USDWs. For this reason, the GS rule offers owners or operators flexibility re garding the duration of the PISC timeframe by: (1) allowing the Director discretio n to shorten or lengthen the PISC timeframe during the post-injection period based on site-s pecific data, pursuant to requirements at §146.93(b); or (2) affording the Dire ctor discretion to allow a Cla ss 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 car e 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 analternative 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 ac commodate site-specific circumstances and various geologic conditions, and addre sses commenters¿ concerns, wh ile ensuring USDW protection. Both approaches will utilize si te-specific data, and be 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 will be necessary in al l but a limited number of cases. This default 50 year post-injection site care ti meframe 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 is developing guidance to assist owners or operators in evaluating well plugging, postinjection site care, and site closure requirements of 146.92 and 146.93. Additionally, the guidance will assist Directors in evaluating propo sed well plugging plans and post-injection site care and site closure plans under 146.92 and 146.93. The guidance describes recommended approaches for how an owner or operator coul d plug injection and m onitoring wells; perform post-injection monitoring; demonstrate the appropriateness of an alternative post-injection site care time frame; demonstrate non endangerment; and perform site closure activities. The guidance will be available at http://water.epa.gov/type /groundwater/uic/wells_sequestration.cfm.

Letter ID: 0265 Comment ID: 22855 Letter Lines: 114 to 117

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

5Comment: - Financial Assurance Provisions: NACCS A urges the Agency to revise the proposed financial assurance provisions, which are more stringent than those currently placed on Class I hazardous wa ste injection wells and, as proposed, present a number of practical problems for operators.

Individual Response: EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial resp onsibility is to ensure that fi nancial resources are available to prevent or remediate the endangerment of US DWs from improper plugging, remediation, and management of wells in the event that the owne r or operator experiences financial difficulties. EPA disagrees that the requirements equate GS we lls with Class I hazardous waste wells; rather, the financial responsibility requirements for Clas s VI wells are tailored to account for the unique nature of the long term GS of CO2, while provi ding 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 ina manner that ensures USDW protection from endangerment.

Letter ID: 0265 Comment ID: 22856 Letter Lines: 119 to 122

Comment Code: 2060 1.5.3 Comments on grandfathering of existing wells (seeking comment)

Comment: - Grandfathering Provisions: The Agency should (1) expand the scope of available grandfathering beyond constr uction requirements and (2) allow grandfathering unless an examination of specified factors reveals that the project would be unsuitable for CO2 storage.

Individual Response: EPA agrees that many Class I, Cl ass II, and Class V experimental technology wells are designed and constructed to withstand exposure to CO2. The final GS rule provides for the construction of these wells to be grandfathered per §146.81(c), provided the owner or operator can demonstrate to the Director that the wells were en gineered 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).
EPA disagrees that other requirements should al so be grandfathered or that grandfathering should be considered the "default" for all well s seeking conversion to Class VI. Following repermitting of the project as GS, many of the uniqu e factors of GS sites (e.g., increased reservoir pressures associated with large volumes of st ored CO2 and the corrosivity of CO2 in the presence of water) will result in an increased risk profile, warrant ing the specific requirements in the final GS rule. Therefore, following re-permitti ng as Class VI wells, these projects must be subject to the operational, MIT, monitoring, reporting, plugging, and post-injection site care and site closure requirements in the final GS rule . See the discussion of EPA's final regulatory approach in the preamble to the GS rule for additional detail on these requirements.

Letter ID: 0265 Comment ID: 22857 Letter Lines: 124 to 125

Comment Code: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

6Comment: - Issues Related to State Primacy: St ates should be permitted to seek primacy for Class VI wells, even in the ab sence of primacy for other well classes.

Individual 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 th e 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 clim ate change, EPA believes that provi ding states the flexibility to obtain primacy for Class VI wells independently of other well cla sses 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 integrat ion of GS activities under SDWA into a broader framework for mana ging CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeli ne operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorit ies that exist at the state level (but outside UIC authority) to provide a more comp rehensive CCS management approach.
The Agency believes that it is important for stat es to use their unique e fficiencies to promote adoption of this burgeoning and important tec hnology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believe s 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 longstandi ng 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 Cl ass 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 Cla ss VI wells independent of other well classes provided they devel op regulations that are at leas t as stringent as the minimum Federal requirements (e.g., permitting, inspec tion, 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 en sure that their GS programs integrate into national climate change priori ties and protect USDWs from endangerment.

Letter ID: 0265 Comment ID: 22858 Letter Lines: 127 to 130

Comment Code: 1270 1.1.2 Comments on other rules/issues

Comment: - Relationships with other Environmenta l Laws: The Agency should carefully consider any discussion of other environmental laws that it may desire to

7include in the Preamble to the rules in orde r to ensure that such discussion is necessary and does not hamper the successful commercia lization ofCCS.

Individual Response: EPA clarifies that the Class VI GS regulation is being promulgated under authority of the Safe Drinking Water Act, and ot her environmental laws are outside the scope of the Class VI GS rulemaking. The purpose of the Cla ss VI GS rule is 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.
In a separate rulemaking under authority of the Clean Air Act (CAA), EPA is amending the Greenhouse Gas Reporting Program at 40 CFR Part 98 to add reporting requirements for CO2 injection and GS. The greenhouse gas mandatory reporting requirements build on the Class VI requirements outlined in this final rule with the additional goals of verifying the amount of CO2 sequestered and collecting data on any CO2 em issions to the surface from GS facilities.
EPA acknowledges that GS falls within the broade r context of CCS and the need for regulatory clarity to ensure that USDWs are protected from endangerment. In develo ping the final GS rule, the Office of Water coordinated with other Agency program offices and across federal agencies (e.g., with the Department of Energy; United Stat es Geological Survey; Bureau of Ocean Energy Management, Regulation, and Enforcement, formerly the Minerals Management Service; Bureau of Land Management). The Agency continues to eval uate areas of potential applicability of other Federal environmental statutes including, but not limited to: the Clean Air Act; the Resource Conservation and Recovery Act; the Comprehe nsive Environmental Response, Compensation, and Liability Act; and the Marine Protection, Resear ch and Sanctuaries Act to various aspects of GS and CCS. The Agency will continue to coordinate on GS and CCS related issues to minimize redundancy and maximize efficiencies for owners or operators. For additional information, please see the discussion entitle d "How Does This Rulemaking Relate to Other Federal Authorities and GS and CCS Activities?" in the preamble to the final GS rule.

Letter ID: 0265 Comment ID: 22859 Letter Lines: 132 to 134

Comment Code: 2046 1.5.2.3 Continuing to classify CO2 in jection for EOR/EGR as Class II/ dividing line between Class II and Class VI (seeking comment)

Comment: - Other Issues for the Agency's Consider ation: The Agency should ensure that nothing in the rule preclude s CO2-EOR operators from claiming "storage" at some future date. Additionally, NACCSA notes th at because of the Agency's limited

Individual Response: The final Class VI regulations re quire that any owner or operator injecting CO2 for the primary purpose of long term storage obtain a Class VI permit with some special consideration for the fact that they are transitioning from a well not originally designed to meet Class VI requirements. The Di rector has the authority to dete rmine at what point a Class VI permit is required for those projects that are transitioning from the primary purpose of EOR to long term storage of CO2. The fina l regulation provides a set of tec hnical factors for the Director to evaluate in making this determination, at §144.19. EPA believes that th is approach provides

8sufficient protection of USDWs when there is anincreased risk to USDWs as compared to traditional Class II operations while allowing for site-specific flexibility. For more information, please see the discussion on transi tion of Class II wells in the preamble to the final GS rule.

EPA clarifies that carbon stor age credits are outside the sc ope of the GS rulemaking.

Letter ID: 0265 Comment ID: 22860 Letter Lines: 134 to 139

Comment Code: 5460 2.9.2 Comments on transfer of lia bility for long-term care

Comment: future date. Additionally, NACCSA notes th at because of the Agency's limited jurisdiction, issues relate d 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 regardand to support development of a complete regulatory scheme for CCS.

Individual Response: EPA is working to create a nationally consistent financial responsibility regime within its authority to ensure that fi nancial resources are available to protect USDWs throughout the life of the GS project . However, EPA does not have authority to tran sfer 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 th e 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 legisl ation that may address the liability issue.
EPA clarifies that the GS regul ation does not promote or encour age the use of GS, and that addressing property rights is out side 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 pr ovide requirements to prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions.

Letter ID: 0265 Comment ID: 22861 Letter Lines: 143 to 194

Comment Code: 4324 2.4.4.1.2 Comments opposed to requiring injection below the lowermost USDW

Comment: 1. Ban on Injection Above the Lowermost USDW
The proposed regulations do not permit project operators to inj ect and store CO2 above the lowermost formation contai ning a USDW. NACCSA believes that a categorical elimination of receiving form ations is unnecessary and undesirable. Rather, the appropriateness of any given receiving formation-as with the bulk of issues related to the siting of project s-should be considered on a case-by-case basis in light of the geologic characteris tics of a given proj ect and based on the application of clear and appropriate parameters set forth in the rules.

9Categorically eliminating a set of potenti al receiving formations is simply unnecessary in light of th e overall function of the UIC rules. As a general proposition, permit applicants must demons trate that projects will not endanger USDWs; permit applicants for CO2 injection and storage projects would be held to the same standard. The proposed rules would require permit applicants to demonstrate that the project will be sited in areas w ith a "suitable geologic system," consisting of an injection zone of sufficient areal extent, thickness, porosity, and permeability to receive the to tal anticipated volume of injectate, as well as a confining zone free of tr ansmissible faults or fractures and sufficient to contain the injected streamand any displaced fluids, considering the proposed maximum pressures and volumes of injection, without fracturing. It is NACCSA's view that if the "suitable geologic system" c ontains confining zones above and below the injection formation that will not allow the endangerment of USDWs,injection above a USDWshould be al lowed because the system will still meet the groundwater protection requirements of the UIC program. The fact that permit applications would be considered base d on site specific information would mean that the regulator could evaluate whether individual projects would be protective of groundwater re gardless of their depth w ith respect to USDWs.

Further, a blanket exclusion will hinder the ability of existing and possibly future Class I, II, and V projects to convert to Class VI projects, as the proposed grandfathering requirement is limited to well constr uction (as further discussed below), thus excluding projects th at do not inject below the lowermost USDW from the scope of pot ential grandfathering. Existi ng (and future) projects that do not inject beneath the lowermost USDW would seemingly be stranded, left with no ability to convert to Class VI GS projects. Such a risk greatly disincentivizes many projects that woul d otherwise be likely to go forward and would hamper commercializ ation of CCS. And creation of such a disincentive is unnecessary because the wells at issue woul d have been designed and constructed pecifically with injectio n of CO2 and the protect ion of USDWs in mind.
While NACCSA acknowledges that EPA has rais ed for consideration the possibility of aquifer exemptions or the use of di scretion to allow injection above the lowermost USDW in a given case, NACCSA submits that such a procedure would introduce increased complexi ty to the process with no corresponding increase in protection afforded to USDWs as compared to an approach under which no default limitations on siting exist and the merits of a proposed receiving formation are considered in the context of a particular project, using clearly identified and appropriate factors. And in the context of ex isting or proposed projects that may be seeking to later convert to Class VI wells, such provisions would create unnecessary uncertainty regarding the potential viability of projects going forward.

Individual Response: EPA acknowledges that there are lim ited circumstances where injection above the lowermost USDW can be performe d in a manner that protects USDWs from

10endangerment, as long as appropriate protections are in place. The final GS rule at §146.95 establishes a process by which owne rs or operators can seek a waiv er of the Class VI injection depth requirements for inject ion into non-USDW formations above and/or between USDWs. Additionally, the final GS rule doe s not categorically preclude or prohibit injection into any type of formation.
EPA believes that these requirements will ensure USDW protection while providing flexibility to UIC program Directors and owne rs or operators who undertak e CO2 injection for GS. The Agency believes this approach: 1) responds to co ncerns about local and re gional geologic storage capacity limitations imposed by th e proposed injection depth require ments; 2) allows for a more site-specific assessment of injection depth for GS projects; 3) accommodates injection into different formation types; 4) a llows for injection of CO2 for GS into non-USDWs above and/or between USDWs when appropriate and where it can be demonstrated that USDWs will be protected; and 5) responds to concerns about the use of aqui fer exemptions for GS. Finally, EPA’s approach to addressing injection depth variability through a waiver process responds to concerns about future drinking wa ter resource availability and the need to ensure that high quality water remains available in sufficient quantities to supply drinking water needs.
For additional information on the waiver approa ch, please see the final rule and preamble, as well as EPA's responses to comments on the No tice of Data Availability and Request for Comment.

Letter ID: 0265 Comment ID: 22862 Letter Lines: 196 to 202

Comment Code: 4324 2.4.4.1.2 Comments opposed to requiring injection below the lowermost USDW

Comment: Finally, a default limitation on injections to only those formations below the lowermost USDW- currently in place only for Class I hazardous waste injection wells-is likely to create a public misimp ression that CO2 injection wells are analogous to hazardous waste injection wells and carry analogous risks. NACCSA urges EPA to consider the potential effects of each pr oposed regulation on public perception of CCS, as attaching unn ecessary stigmas to CCS will do nothing to further its development or to protect USDWs.

Individual Response: EPA acknowledges that there are lim ited circumstances where injection above the lowermost USDW can be performe d in a manner that protects USDWs from endangerment, as long as appropriate protections are in place. The final GS rule at §146.95 establishes a process by which owne rs or operators can seek a waiv er of the Class VI injection depth requirements for injecti on into non-USDW formations above and/or between USDWs. The waiver approach requires the submission of exte nsive, site-specific information (in conjunction with the permit application submission) to dem onstrate that injection of CO2 into a non-USDW that is above or between USDW s can be done in a manner that is protective of USDWs. The requirements are designed to ensure that the owner or operator, the Director, and the Regional Administrator consider, on a site specific basis, the implications, benefits, and challenges associated with GS and ensuring water availability and USDW protection. EPA believes that the

11additional procedures for public notice of a wa iver application and for Director-Regional Administrator communication at §146.95 will improve public confidence in and acceptance of GS projects operating under injectio n depth waivers. EPA clarifies th at, due to the unique nature of the injection depth waiver process and in an effort to ensure national consistency and application of the requirements, the require ment at §146.95(d) indicates that the Regional Administrator makes the final determination re garding waiver issuance following an evaluation of all site-specific information, public notice, and recommendations from the UIC Director.
EPA disagrees that the GS regulation overstates the risk of CO2 injec tion. EPA recognizes that injecting large volumes of CO2 for GS poses uni que challenges that, if not properly managed, could endanger drinking water sources and have other adverse impacts. However, with proper site selection, the final, tailored, Class VI requirements address the large volumes of CO2 injected, its buoyancy, potential corr osivity in the presence of wate r, and potential impurities in the CO2 stream. In addition, the tailored perm itting, siting, construction, operation, monitoring, and post-injection site care requi rements in the GS rule are intended to prevent leakage from injection formations and protect USDWs.
For additional information on the waiver approa ch, please see the final rule and preamble, as well as EPA's responses to comments on the No tice of Data Availability and Request for Comment.

Letter ID: 0265 Comment ID: 22863 Letter Lines: 204 to 245

Comment Code: 3120 2.1.2 Need to identify additional confining and containment zones (seeking comment)

Comment: 2. Secondary Containment

Another area of concern related to siti ng involves the Agency's proposed grant of discretion to the UIC pr ogram director to require pe rmit applicants to identify secondary containment/confining zones. Wh ile NACCSA agrees with the Agency's current approach not to include a blanket secondary containment requirement (although, if secondary confining units exis t with regard to a given project, they should be included in site mode ling, along with identif ication of any transmissible zones between the primary and secondary confining units), and, while a discretionary requirement for sec ondary containment is preferable to a blanket, universal requirement, any disc retionary requirement that is imposed should be bounded by clear parameters for its use. The proposed rule, however, contains no such parameters. NACCSA urges th e Agency to consider what parameters may be put in place to ensure protecti on ofUSDWs while providing some level of clarity for project operators and inve stors regarding under what circumstances such a requirement should be expected, as well as some degree of assurance that the "on paper" discretionary requirem ent will not lead to an "in practice" blanket requirement due to the lack of appropriately enumerated.
Several points should be considered in determining whether any sort

12of requirement for secondary containment, including a discretionary requirement, should be imposed, as well as what paramete rs maybe appropriately included in the final rule should the Agency choose to impl ement a discretionary requirement. They include the following:
- Do better alternatives exist to prot ect USDWs? In any given case, the additional protection to USDWs that the Agency appears to believe secondary containment could provide likely may be better addressed through proper site selection and well-designed plans and pro cedures to detect and contain leakage from the primary containment system, rather than through imposing de facto limitations on the types of sites that maybe used. If such requirements have already been satisfied, th ere is likely no need for secondary containment.
- What public misconceptions maybe created? Secondary containment is unprecedented under the UIC program, even fo r the injection of hazardous wastes under the Class I permitting scheme. Imposition of such a requirement on injection and storage of CO2s uggests that such a project would be more dangerous than underground injection of a host of other materials, including hazardous wastes, or even than injection of CO2 for purposes of EOR. The Agency should carefully consider the risk of creating unwarranted ne gative public perception posed by proposed requirements. In any gi ven case, CCS technology can be safely employed absent any secondary containment requirements.

Individual Response: EPA believes that the Class VI requir ements, including the level of site characterization required under §§146.82 and 146.83, appropria tely address the unique challenges posed by large-scale GS including large injection vol umes, the relative buoyancy of CO2, its corrosivity in the presence of water, the potential presence of impurities in captured CO2, and its mobility within subsurface geologic formations. The Agency believes that in some geologic settings, the presence and identification of additional confining and containment zones above the primary (i.e., lowermost) confining zone can improve USDW protection. These formations could further impede vertical flui d movement, allow for pressure dissipation, and provide additional sites for monitoring, mitigatio n, and remediation, while also affording the greatest protection of USDWs from endangerment.
To the comment that the geologic siting require ments could create a negative public perception, EPA believes that a demonstrati on to the public that extensive data have been collected and evaluated would likely improve confidence in the project and help address public questions and

concerns.
The Agency believes that providing the Director di scretion will allow consideration of a range of sites for GS, based on site-specific conditions and ensure USDW protection. EPA believes that requiring appropriate site ch aracterization by the owner or operator (under §146.82) and providing an appropriate de gree of flexibility to the Director to evaluate site-specific geologic data will afford the greatest protec tion of USDWs from endangerment.
EPA is developing guidance on site characterization for GS projects to assist owners or operators

13and Directors in evaluating permit requirements and applications under §146.82. The guidance provides recommendations regard ing characterizing the region al geology and hydrogeology of a proposed GS site as well as performing th e necessary geochemical, geomechanical, and geophysical analyses of the injection and confin ing zone. EPA expects that this guidance will assist permit writers in making an objective deci sion about requiring additional confining layers. The guidance can be found on EPA’s website at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

Letter ID: 0265 Comment ID: 22864 Letter Lines: 247 to 260

Comment Code: 3530 2.2.3.1 AoR reevaluation fre quency (seeking comment)

Comment: 3. Area of Review Reevaluation
EPA's proposal would require that the owner or operator periodically reevaluate the AoR during the injection operation. R eevaluations would occur at a minimum fixed frequency, not to exceed 10 years, as agreed upon by the Director. We question the need for this requirement to be mandatory in light of the rule's extensive monitoring requirements. In the ev ent that on going mon itoring indicated a problem, appropriate action could be take n at that time without separately requiring a complete AoR reevaluation acco rding to a pre-defined schedule.
We recommend that EPA provide the AoR r eevaluation is at the discretion of the Administration if the Administration de termines that site-specific data, reservoir characteristics and/or monitori ng or modeling data dictate that such a reevaluation would be warranted.

Individual Response: As described above, EPA believes thatperiodic AoR reevaluation at a set frequency of at least every 5 years is nece ssary to ensure prot ection of USDWs from endangerment and address the uncertainties inherent in predictive modeling. Periodic AoR reevaluations at §146.84(e) ensure th at a deliberate effort is made to verify, based on monitoring and operational data, that the CO2 plume is movi ng within the subsurface as predicted. EPA believes that less frequent reevaluations may not be sufficient to appropriately model plume and pressure front movement, establish conditions for corrective action, and ensure protection of USDWs from endangerment.
In response to the suggestion that site-specific factor s should dictate the reevaluation schedule, EPA notes that the AoR and corrective action planmust specify the site-specific monitoring and operational conditions that warrant reevaluation, as specified in §146.84(b)(2)(ii). In addition, the Director has discretion to re quire more frequent AoR reevalua tion if he or she has reason to believe, based on site-specific information, th at a five-year reeval uation schedule is not sufficiently protective of USDWs.

EPA clarifies that if site m onitoring data agrees with the existing AoR delin eation, a model recalibration may not be necessary, and the AoR reevaluation may consist of a demonstration

14that the current AoR delineation is ad equate based on site monitoring data.

Letter ID: 0265 Comment ID: 22865 Letter Lines: 262 to 283

Comment Code: 4490 2.4.5 Use of tracers and potential impact on human health or ecosystems (seeking comment) Comment Code: 4670 2.6.7 Surface air monitoring and/or soil gas monitoring (seeking comment)

Comment: 4. Monitoring Provisions/Use ofTracers/Use of Down-Hole Shut-off Valves
The proposed regulations would vest disc retion in the program director to require the use of tracers and/or surf ace air/soil gas monitoring "to detect movement of CO2 that could endanger a US DW." NACCSA is opposed to this proposed requirement for the reasons outlined below.
The proposal raises potentia l issues regarding the scope ofEPA's authority. The Preamble acknowledges that regulation of surface/atmospheric releases of CO2 is outside the scope of the proposed rule and the Agency's jurisdiction under SDWA. The UIC program is designed to protect USDW`s from endangerment due to subsurface injection. The use of tracers combined with surface or soil monitoring is unlikely to be protective because by the tim e any tracers or CO2 is detected in these zones it may have passed through a ll USDWs between the in jection zone and the surface.

NACCSA is also concerned that tracers ar e relatively untested in terms of leak detection capabilities and transport prope rties. Because there have been limited tests of tracers it is not cl ear how they interact with the subsurface and if they are conservatively transported with CO 2. Further, tracers may also pose independent safety concerns for project ope rators, workers, and other potentially affected individuals a nd the environment.

Individual Response: EPA clarifies that use of surface air and soil gas monitoring as specified in the final GS rule at §146.90(h), as a means of identifying leaks that may pose a risk to USDWs and informing emergency notification of a Class VI owner or oper ator and UIC Director in the event of a USDW endangerment, pursuant to requir ements at §146.91(c), is at the Director's discretion.
If surface monitoring were the only monitoring method employed to ensure USDW protection, direct correlation of CO2 at the surface with CO 2 in the subsurface might be difficult; however, when combined with information gathered thr ough other monitoring techniques required of GS well owners and operators (e.g., monitoring wells , geophysical techniques ), air and soil gas monitoring may provide valuable data on the magnitude and location of a leak. The CO2 itself may serve as a tracer in the form of stable is otopes of carbon. For exam ple, anthropogenic CO2 is depleted in 13C compared to naturally occurring CO2.

15EPA believes that surface air and soil gas monitoring are within th e scope of the SDWA in that they can provide additional data to pinpoint the lo cation and magnitude (or ab sence) of leaks that could endanger USDWs. Used in conjunction withdeep subsurface monitoring, as required at §146.90, and as part of a multi-barrier approachto protecting USDWs from endangerment, surface air and soil gas m onitoring are within the scope of SDWA’s general authority (SDWA sections 1421 et al).
Regarding the use of tracers, EPA believes that , in some circumstances, tracers can be an important component of a multifaceted approach to monitoring GS projects. However, the Agency recognizes that tracers may not be approp riate in all GS projects. For this reason, EPA does not require the use of tracers at all GS sites; however, the Dire ctor has discretion to require their use if he/she determines that the use of tracers could improve monitoring of the site and enhance USDW protection from endangerment.
While the intent of the GS regulations is to prevent leaks of CO2 to USDWs, EPA clarifies that all of the protective components of the regulation, includin g a comprehensive monitoring program per §146.90 (which includes testing of th e well, ground water quality monitoring, and tracking of the CO2 plume and pressure front) support a multi-barrier approach to protecting USDWs. Additionally, some studies (e.g., Phel ps and Cole, 2008; Hovorka et al., 2004; McCallum et al., 2005) found that tracers can pr ovide useful CO2 monitoring information at injection wells both at depth and at near-surface locations. At Fr io, tracers enabled quantification of CO2 plume behavior and provided a techniqu e for model validity tes ting (McCallum et al., 2005). EPA will continue to track research related to tracer use. The Agency plans to, every six years, 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.
The provision allowing the Director to require the use of tracers and surface air and soil gas monitoring is within EPA's authority under the SDWA because these methods can provide additional data to pinpoint the location and magnit ude (or absence) of l eaks that could endanger USDWs. Used in conjunction with deep subs urface monitoring, as re quired at §146.90, and as part of a multi-barrier approach to protecting USDWs from endangerment, tracers and surface air and soil gas monitoring are within the scope of SDWA's general authority (SDWA sections 1421 et al).

Letter ID: 0265 Comment ID: 22866 Letter Lines: 285 to 295

Comment Code: 4200 2.4.2 Down-hole shut-off valves inGS wells (seeking comment)

Comment: Finally, the proposed regulations also woul d require the use of automatic downhole shut-off systems. We question the need for such a mandatory requirement because in some applications such syst ems could cause operational problems and add risk during maintenan ce operations. These risks seem to outweigh the benefits of the use of such systems in GS applications. Moreover, such systems are not required in other applications, su ch as natural gas which arguably pose

16greater hazards than the storage of carbon dioxide. Instead of making the use of automatic down-hole shut-off systems mandatory, the Administrator should be given discretion to require their installa tion and use when site-specific data and reservoir characteristics indicate th at the benefits of requiring such systems outweigh the risks of their use.

Individual Response: After evaluating the risks and benefi ts of down-hole shut-off systems and considering additional research, EPA will not re quire automatic down-hole shut-off devices for onshore Class VI wells since it is not necessary inall cases to ensure protection of USDWs from endangerment. Instead, the final rule, at §146.88(e)(2 ), requires that owne rs or operators of onshore Class VI wells install automatic surface shut-off devices. The rule affords Director's discretion to mandate automatic down-hole shut -off devices in onshore situations that may warrant their use. However, the Agency believ es that offshore Class VI wells present unique construction and operational conditi ons, including isolation from shorelines and the need to construct wells through the water column and the subsurface, which may delay response time in the event of well difficulties. Th e rule requires, at §146.88(e)(3), that owners or operators of offshore wells within State territorial waters install automatic down-hole shut-off systems.
EPA recognizes that down-hole shut-off devices may make well maintenance and operation more challenging. However, the bu oyant nature of CO2 and the elevated injection pressures associated with GS increase the likelihood of anuncontrolled flow of CO 2 out of the well. If CO2 does begin to flow back up an injection we ll, it will rapidly cool and expand as it moves toward the surface and can result in a stream of solid CO2 which can cause damage to the wellhead and other well instrumentation; such damage has been documented in CO2 ER wells (Skinner, 2003; Duncan et al ., 2008). Automatic shut-off devi ces can help prevent such occurrences, and EPA believes affording Director 's discretion to require down-hole devices where necessary ensures that proper precautions ar e taken to prevent subs urface fluid movement and ensure protection of USDWs.

Letter ID: 0265 Comment ID: 22867 Letter Lines: 297 to 312

Comment Code: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment: 5. Closure and Post-Inje ction Site Care
An additional key area of concern for NACCSA is the proposed rule's provision imposing a 50 year default time peri od following cessation of injection activities to serve as the closure and pos t-injection site car e ("PISC") period, throughout which monitoring activities a nd corresponding financ ial assurance requirements would continue. Under the propos al, the program dir ector would have discretion to adjust the time period upward or downward, with the effect that the PISC period would continue "until the geologic sequestration project no longer poses an endangerment to USDWs."

NACCSA understands that a fa ir amount of certainty may be achieved through setting some default period of time for the PISC. Establishing such a lengthy default

17time period also places unnecessary burde ns on owners and operators who can clearly establish that no threat to USDW s will be posed within a shorter time frame than whatever default may be established.

Individual Response: EPA agrees that some owners or operat ors will be able to demonstrate, in less than 50 years, that the pr essure front and plume no longer pose a risk of endangerment to USDWs. However, based on studies, EPA believes that the 50 year default time frame is warranted in most cases based on additional re view of research studies and reports and evaluation of public comments.
EPA believes that the best way to address a ll possibilities, while en suring USDW protection from endangerment, is to set a 50 year default post-injection site care timeframe, with flexibility to: (1) allow the Director discre tion 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) afford 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-e ndangerment of USDWs pursuan t to requirements at §146.93(c).
EPA believes that a default post-injection site car e 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 analternative 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 ac commodate site-specific circumstances and various geologic conditions, and addre sses commenters’ concerns, wh ile ensuring USDW protection. Both approaches will utilize si te-specific data, and be based on pressure monitoring and USDW impacts.

Letter ID: 0265 Comment ID: 22868 Letter Lines: 314 to 331

Comment Code: 1250 1.1.1.4 Flexibility is needed (p erformance-based standards) Comment Code: 5240 2.8.2.2 Post injection timeframe (seeking comment) Comment Code: 5260 2.8.2.3 Adjusting the post-injecti on timeframe (seeking comment)

Comment: NACCSA urges the Agency to adopt a performance-based approach more in keeping with the actual risks posed by CCS projects . NACCSA believes that the site specific nature of CO2 storage projects will requi re each project to be judged on its own merit. If a project can show, at any time after the cessation of injection, that there is sufficiently small risk of endangerment to USDWs, monitoring should no longer be required. Given thatunder the proposed rule, the program director would retain discretion to lengthen or shorten th e PISC period as necessary to protect USDWs, a performance based approach is inkeeping with the spirit of the draft rule. Furthermore, performance based appr oach is more in keeping with the realty of potential risks associated with CO2 storage would minimize disincentivization of CCS projects wh ile providing an equivalent degree of protection for USDWs. NACCSA believes that the performance-based approach, currently proposed by EPA as an element of the rule, would be beneficial to

18project operators and investors and for th e protection of USDWs. The final rule should include specific and appropriate circ umstances that the program director will consider in exercising discretion in th is regard, so that project operators and investors have a clear idea of the bar th ey will be required to meet in order to close out the PISC period.

Individual Response: As described above, EPA agrees 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 pos t-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 car e 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 analternative 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 ac commodate site-specific circumstances and various geologic conditions, and addre sses commenters’ concerns, wh ile ensuring USDW protection. Both approaches will utilize si te-specific data, and be based on pressure monitoring and USDW impacts.

Letter ID: 0265 Comment ID: 22869 Letter Lines: 333 to 405

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

Comment: 6. Financial Assurance Provisions

NACCSA is also concerned with the nature and scope of the proposed rule's financial assurance provisions, which woul d require that the permittee, at the time of permitting, demonstrate financial a ssurance for activities ranging from corrective action and injec tion well plugging to post-in jection site care and well closure, as well as for emergency and remedial response activities to address movement of formation or inj ection fluids that may endanger an underground source of drinking water-activi ties that, as contemplated under the proposed rule, could span 50 years or more.
First, the scope of the proposed financ ial assurance requirements goes beyond what is currently in place for any cl ass of wells under the UIC program, even those injecting hazardous wastes. Give n that CO2 has been safely injected under the UIC program for decades, it is relatively clear that its physical and chemical properties are not sufficientlyunique-and that they do not pose a

19sufficiently unique potential threat to USDW-to warrant such heightened treatment under the UIC program. And while th e 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 witha properly sited and managed project begins to fall off rapidly over time andwell before the Agency's proposed financial assurance provisions would come to an end. In any event, any financial assurance requirements that may be impos ed should not go beyond those currently in place under the UIC program.

Further concerns arise from a cost certai nty perspective. Fi nancial assurance requirements depend on the ability to obtai n reliable cost estimates for the activity to be assured. If an accurate co st estimate cannot be developed for the activity at issue, the financial assurance itself cannot be assumed to be adequately protective or not unduly bu rdensome. The Agency is proposing imposition of financial assurance requirements for activities that may occur more than 50 years in the future, with requir ements to be satisfied at the time of permitting. The Agency should carefully exam ine whether at this time, or at the time of permitting, the cost of such activ ities 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 opti ons may prove inordinately expensive to project operators and i nvestors, 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 fi nancial assurance requirements should be subject to reasonable caps (whether absolute caps or based on tons injected) in order to facil itate ability to secure the relevant financial instruments. The Preamble indicat es EPA may be willing to consider a phased or staged approach to financia l assurance requirements, as well as separate financial assurance demonstrati ons for plugging and PI SC activities at later points in time. Such provisions woul d 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 Agencyis aware, various proposed statutes and regulations for CCS contemplate a stat e, for example, or other third party assuming long-term risk or liability for or ownership of stored CO2, such as the

20IOGCC model statute and regul ations 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 permitt ee'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, wh ich 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 fi nancial assurance requirements where the Administrator determines that the state's assumption is at least equivalent to available financial assurance mechanisms.

Individual Response: EPA disagrees that the requirements fo r financial respons ibility are overly stringent. The goal of financial re sponsibility under this rulemaki ng is to ensure that financial resources are available to prevent the endangerm ent 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 encour age 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 anticip ates 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. EP A disagrees that the requirements equate Class VI wells with Class I hazardous waste wells. The financial resp onsibility 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 GS activities. This guidan ce will be available on EPA's website at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.
EPA disagrees that caps should be placed on fi nancial responsibility requirements in the proposed rule. A cap may result in the endangerm ent of a USDW if the appropriate amount of money provided under the financial in strument 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 regardi ng the applicability of multiple statutes to GS projects and the need for a single clear liabi lity regime for owners or operators. EPA is working to create a nationally consistent financia l responsibility regime wi thin 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

21from long-term responsibility for the potential economic costs of impact s 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 withthe owner or operator for all well classes until all regulatory requirements have been me t. EPA understands that Congress is considering legislation that may address the liability issue.
Once an owner or operator has met all regulator y 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 releas ed 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 (inc luding 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 prot ect the health of persons under §1431 of the SDWA after site closure if there is unanticipated migrati on towards or into a USDW that causes or threatens imminent and substantial enda ngerment 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 violati on 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 othe r regulatory respons ibilities are transf erred, including all potential liabilities associ ated with meeting the requirements of that permit. Please see further clarification on the i ssue of long term liab ility in the preamble of the final rule.
After site closure an owner or operator may remainliable under tort and other remedies, or under other federal statutes includi ng 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 nothave authority to transfer SDWA or other legal liability for Class VI wells to th e State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's approach.

Letter ID: 0265 Comment ID: 22870 Letter Lines: 407 to 445

Comment Code: 2060 1.5.3 Comments on grandfathering of existing wells (seeking comment)

Comment: 7. Grandfathering Provisions

As referenced above, EPA has also raised for consideration howcertain existing wells should be addressed under the final regulations. In particular, EPA has proposed allowing the UIC program director to "grandfather," on a discretionary basis, the construction requirements for existing Class II and Class V experimental wells (as well as existing Cl ass I wells that were not intended to inject CO2 originally) where the director can determine that the wells will not endanger underground sources of drinking water. But the proposed grandfathering

22is not merely discretionary; it is also limited in scope to construction requirements. Thus, operators would be re quired to satisfy all other provisions of the Class VI permitting requirements in order to transition to Class VI wells. The limited scope of the grandfathering pr ovision may make it hard for other classes of wells to transition to Class VI.
The proposed provision provides little a ssurance to project operators or investors that existing wells, or wells that may be permitted before the proposed rule takes effect, c ould ever be transitioned to the Class VI regime. In light of the additional proposed limitations on GS projects, such as the restrictions on receiving formations , grandfathering may simply prove impossible, even for projects that were specifically designed to inject and store CO2 in the first instance.
Further, as noted above, wells permitted to inject and store CO2 have already been deemed safe and suitable for those purposes, and a determination has already been made that no endangerment is posed to USDWs. Under these circumstances, leaving a grandfathering determination to the disc retion of the directordiscretion that may be exercised where the director determines that there is no endangerment to USDWs-is unnecessarily duplicative as long as the operating parameters of the site are unchanged.

NACCSA thus recommends that the Agency expand the scope of available grandfathering for existing wells beyond construction re quirements to cover all Class VI requirements. Further, rather than leave grandfathering to the discretion of the program director, a preferable approach w ould be to allow grandfathering unless, upon an examination of specified criteria , the director dete rmines that the circumstances of the initial project, as compared to the long-term storage aspect, result in a project that is uns uitable for CO2 storage from a point of view of protecting USDWs.

Individual Response: EPA agrees that many Class I, Cl ass II, and Class V experimental technology wells are designed and constructed to withstand exposure to CO2. The final GS rule provides for the construction of these wells to be grandfathered per §146.81(c), provided the owner or operator can demonstrate to the Director that the wells were en gineered 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).
EPA disagrees that the other Class VI require ments (e.g., MITs, siting, monitoring, operational, and AoR requirements) should also be grandf athered. Following re-permitting of the well as Class VI, many of the unique factors of GS site s (e.g., increased reservoir pressures associated with large volumes of stored CO2 and the corrosivity of CO2 in the presence of water) will result in an increased risk profile, warranting the specific requirements in the final Class VI rule. Therefore, following re-permitting as Class VI wells, these projects must be subject to the operational, MIT, monitoring, reporting, plugging, and post-injection site care and site closure requirements in the final GS rule. See the discus sion of EPA's final regulatory approach in the

23preamble to the GS rule for additional detail on these requirements.
EPA clarifies that the purpose of the GS rule is not to incentivize the use of GS or to address the use of pore space. The purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that does not endanger USDWs.

Letter ID: 0265 Comment ID: 22871 Letter Lines: 447 to 465

Comment Code: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

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 withdeveloping their own legi slation and regulations related to CCSactivities-in many cases legislation and regul ations that go beyond the scope of EPA's jurisdiction, su ch as incentives provisions and provisions clarifying the nature of pote ntially 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 thei r groundbreaking work on CCS without disincentivizing states from taki ng a leadership role on CCS.

Individual 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 th e 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 clim ate change, EPA believes that provi ding states the flexibility to obtain primacy for Class VI wells independently of other well cla sses 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 integrat ion of GS activities under SDWA into a broader framework for mana ging 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 authorit ies that exist at the state level (but outside UIC authority) to provide a more comp rehensive CCS management approach.
The Agency believes that it is important for stat es to use their unique e fficiencies to promote adoption of this burgeoning and important tec hnology, while assuring that USDWs are protected

24from endangerment through the UIC regulatory framework. EPA believe s 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 longstandi ng 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 Cl ass 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 Cla ss VI wells independent of other well classes provided they devel op regulations that are at leas t as stringent as the minimum Federal requirements (e.g., permitting, inspec tion, 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 en sure that their GS programs integrate into national climate change priori ties and protect USDWs from endangerment.

Letter ID: 0265 Comment ID: 22872 Letter Lines: 467 to 516

Comment Code: 1630 1.3.3 RCRA/hazardous waste i ssues (seeking comment) Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: 9. Relationships with other Environmental Laws
NACCSA is concerned about the potential a pplication of other e nvironmental laws to CCS activities. These laws include the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA). Setting aside for the moment the important questions of whether either of these laws coul d apply to CCS activities and, if so, precisely how and to what extent, NACCSA understands and does not disagree with the Agency's position that drafting a cl ear exception from either of these regimes likely cannot be accomplished thr ough the context of this SDWA UIC rulemaking. Nonetheless, NACCSA urges EPA to carefully consider whether to include any discussion of these two laws (or others) along with the Class VI regulations, as well as the particulars of what any such discussion may contain, to ensure that such discussion is necessary and does not serve as an unnecessary and unintended springboard for hampering the su ccessful commerciali zation of CCS.
NACCSA believes that EPA should clarify thatsupercritical and gaseous CO2 do not fit the definition of" solid waste" under RCRA,and that injected CO2 is not solid waste that is "disposed of" and thus subject to RCRA regulation. While NACCSA acknowledges that such clarification may be best achieved in the context of a RCRA rulemaking, the Preamble to th e proposed rules appears to make the

25assumption that injected CO2 is a solid wa ste that is being disposed of in the first instance, in the context of its discussion regarding waste characterizations that may be required of permitees. Such discussion in the Preamble is unnecessary and will only prove harmful to those seeking to move forward with CCS projects. Further, a ny concern about potentially hazardous constituents in CO2 injectate may be a ddressed without addressing any potential RCRA implications, as the contents of an injectate must be "characterized" under the proposed rules regardless, and permit limitations maybe imposed to address the content of injectate without reference to RCRA's provisions.
In addition, EPA should clarify that the pr ovisions of CERCLA ar e not triggered by Class VI operations. As a preliminary ma tter, as the Agency is aware, CERCLA imposes liability for releas es of hazardous substances. EPA indicates in the Preamble that whether injected CO2 may be considered a hazardous substance "depends entirely on the make- up of the specific CO2 stream and of the environmental media . . . in which it is stored," leaving the door open for claims of environmental harm arising out of CO2 injection and storage activities. This discussion, however, assumes that CO2 in jection activities c ould fall within CERCLA's ambit in the first instance. As with the RCRA issue, a determination of this issue is unnecessary from the pointof view of regulating injection and storage of CO2 under the UIC program, and NA CCSA urges the Agency to avoid creating unnecessary hurdles for the su ccessful commercial deployment of CCS by assuming potential applications of other statutes th at may not come into play. Regardless, even if the provisions of CERCLA could be interpreted to apply to CCS activities, NACCSA is opposed to any limitations on the federally permitted release exemption from CERCLA liability, which should be given its fullest application in the Class VI context. Relatedly, NACCSA en courages the Agency, pursuant to its authority under RCRA and CERCLA, to examine possibilities for exemption or exclusion from those programs.

Individual Response: EPA received many comments regardi ng the applicability of the RCRA regulations and statute to CO2 streams that are geologically seque stered under the final Class VI UIC well requirements. As a result, EPA has deci ded to initiate a sepa rate proposed rulemaking specifically to examine the issue of RCRA appl icability 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 pa rticular 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 comment ers who wish to submit comments on the RCRA proposal will need to do so during the comment pe riod for that rule. Finall y, EPA also notes that the final GS rule, which adds ne w regulations for Class VI wells under the Safe Drinking Water Act (SDWA), is not making any changes to the RCRA regulations.

CO2 itself is not listed as a hazardous substan ce 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

26sulfuric acid). Whether such substances may result in CERCLA liability from a sequestration facility depends entirely on th e composition of the specific CO2 stream and the environmental media in which it is stored (e.g., soil or gr ound water). CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “feder ally 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 we ll which are outside the scope of the Class VI permit.

Letter ID: 0265 Comment ID: 22873 Letter Lines: 518 to 527 ; 561 to 561

Comment Code: 2046 1.5.2.3 Continuing to classify CO2 in jection for EOR/EGR as Class II/ dividing line between Class II and Class VI (seeking comment)

Comment: 10. Other Issues for the Agency's Consideration
One additional issue raised in the Preamble relates to treatment of injection wells that are currently pr oducing oil or gas. The Pream ble suggests that as long as production is occurring and the re servoirs are not depleted, Class II permitting provisions apply; only when a reservoir is depleted may Class VI provisions apply.[FN2] NACCSA encourages the Agency to consider regulatory or preamble language in the final rule which clarifies that nothing in the rule is intended to preclude CO2-EOR operators fo r claiming that they are engaged in "storage" operations for purposes (for exam ple) of a future cap-and-trade scheme.

[FN2] See discussion inPreamble at 48-49.

Individual Response: EPA clarifies that the final Class VI regulations require that any owner or operator injecting CO2 for the pr imary purpose of long term storage obtain a Class VI permit with some special consideration for the fact that they are transitioning from a well not originally designed to meet Class VI require ments. The Director has the authority to determine at what point a Class VI permit is required for those pr ojects that are transitioning from the primary purpose of EOR to long term storage of CO2. Th e final regulation provides a set of technical factors for the Director to evaluate in maki ng this determination, at §144.19. EPA believes that this approach provides sufficient protection of USDWs when there is an increased risk to USDWs as compared to traditional Class II operat ions while allowing for site-specific flexibility. For more information, please see the discussion on transition of Class II we lls in the preamble to the final GS rule.
EPA clarifies that cap and trad e legislation is outside the scope of the GS rulemaking.

Letter ID: 0265 Comment ID: 22874 Letter Lines: 528 to 537

Comment Code: 1310 1.1.2.4 Comments on other "out of scope" issues, e.g., pore space ownership

27Comment: Finally, although NACCSA recognizes the limits on the Agency's jurisdiction with regard to CCS projects, its members appr eciate the Agency raising for public comment issues related to property rights that may be associated with CO2 injection and storage, such as ownership of pore space in which CO2 will be stored, as well as issues of long-term responsibility for stored CO2 and storage site integrity. While the importance of EPA's rulemaking as an important step in providing clarity and certainty for project operators and investors cannot be overstated, CCS projec ts may not go forward in the absence of resolution of these issues. EPA's effo rts in this regard will serve to raise stakeholder and policy maker awareness regard ing the importance of resolving these critical issues so necessary to the suc cessful commercial deployment of CCS.

Individual Response: EPA acknowledges the comment. EPA ag rees that pore space ownership issues are outside the scope of the Class VI GS rulemaking; these are under the purview of states and any of these issues, as they relate to GS, w ill need to be addresse d though state regulations. The purpose of the Class VI GS rule is to ensure consistency in permitting underground injection of CO2 at GS operations across the United St ates and provide requirements to prevent endangerment of USDWs in anticipation of the ev entual use of GS to reduce CO2 emissions.
EPA recognizes the importance of providing cl ear, flexible, scalable, and appropriate regulations. EPA believes that the Class VI GS regulation will provi de certainty to industry and the public by providing consistency in requirements across the U.S. and tr ansparency about what requirements apply to owners or operators.
EPA notes that long-term liabil ity is outside of the scope of the GS rulemaking and is not addressed in the GS rule. SDWA does not contai n 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 ope rator has met all regulatory requirements under Part 146 for Class VI wells and th e Director has approved site cl osure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, thei r financial instrument as required under §146.85 will be released if it was not used. However, ev en if a site closure is approved under §146.93, an owner or operator may be held liable for re gulatory noncompliance (inc luding 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 clos ure 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 regul atory compliance, an owner or operator may be subject to a §1431 response orde r even after proper site cl osure 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 pres ent an imminent and s ubstantial endangerment to the health of persons, and the appropriate Stat e and local authorities have not acted to protect the health of such persons. Th e action may include issuing admi nistrative orders or commencing

2829 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 ope rator may remain liable under tort and other remedies, or under other federal statutes includi ng, 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.