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.444 North Capitol Street, NW

Suite 401 Washington, DC 20001-1512

Tel: 202.624.5460

Fax: 202.624.5452

Regional Office

701 East 22nd Street

Suite 110

Lombard, Illinois 60148

Tel: 630.925.1922

Fax: 630.925.1930 www.midwesterngovernors.org

Chair

M. Michael Rounds

South Dakota

Vice Chair

Jennifer Granholm

Michigan

Past Chair, 2005 Rod Blagojevich

Illinois

Matt Blunt

Missouri

Chester J. Culver

Iowa

Mitch Daniels

Indiana

Past Chair 2007 Jim Doyle

Wisconsin

Dave Heineman

Nebraska

Past Chair, 2004

John Hoeven

North Dakota

Past Chair, 2006 Tim Pawlenty

Minnesota

Kathleen Sebelius

Kansas

Ted Strickland

Ohio December 16, 2008

Docket #: EPA-HQ-OW -2008-0390

The Honorable Stephen Johnson

Administrator Environmental Protection Agency 1200 Pennsylvania Avenue, N.W. Washington, DC 20460

Dear Administrator Johnson:

On behalf of the Midwestern Governors Association ( MGA), we commend the Environmental Protection Agency on its effort to facilitate the injection of CO 2 for long-term geologic sequestration (GS). Greater regulatory certainty will help advanc e the deployment of carbon capture and sequestration projects. Our com ments are based on the role of geological sequestration within the con text of established MGA regional goals and objectives. We offer commen ts below in the following areas: (1) the adaptive approach, (2) the implications of the

rule on CO 2 -enhanced oil recovery (EOR) projects, and (3) the role of states in implementation of the rule.

The development of GS is an important strategy with in a portfolio of options for the Midwestern region to reduce greenho use gas emissions.

In 2007, we endorsed the Energy Security and Climate Stewardship Platform (Platform) that includes a broad range of measurab le goals, policies and initiatives to transition the Midwest to a lower carbon energy economy. Priorities include the development of energy efficiency, bio-based products and transportation, renewable electricity and advanced coal with carbon capture and sequestra tion (CCS).

The Midwestern region depends heavily on coal-fired generation and has significant coal and oil resources. These reso urces are also located in close proximity to formations that are likely su itable for geologic sequestration, specifically saline aquifers and dep leted oil and gas fields. Thus, the Platform supports the developmen t of a CO 2 management infrastructure and demonstration and com mercialization of large-scale geologic sequestration projects that take advantage of our region’s EOR potential. The Midwest has significan t experience inboth EOR and in the transport of CO 2 through pipelines. These EOR projects would be pa rt of a

broader CO 2 management strategy to capture CO 2 from various sources and effectively leverage projects to build-out an infrastructure that could support long-term CO 2 sequestration across the region.

The MGA would like to address a few areas of the pr oposed rule within the context of the goals and objectives of the Platform. The MGA goals include:

• A model regional regulatory framework for CCS by 20 10;

• A multi-jurisdictional pipeline sited and permitted to transport CO 2 from a source to an appropriate reservoir for use in an EOR project by 2012;

• At least 7 pre and post-combustion coal plants with CCS in operation by 2015;

• All new coal gasification and coal combustion plant s will capture and store CO 2 emissions by

2020; and

• The region’s fleet of coal plants will have transit ioned to CCS by 2050.

Adaptive approach We support the adaptive approach to regulatory deve lopment where relevant data based on demonstrations and commercial scale projects will b e used to determine if the rule continues to appropriately meet the Safe Drinking Water Act (SDW A) objectives and if not, that they will be revised (73 FR 43522). This language is included i n the preamble, but it is not articulated in the language of the rule in terms of how the adaptive a pproach would be put into practice. As projects develop across different geologic formations and fr om various carbon sources, there will be increased knowledge and data on how to effectively manage these sites while meeting the objectives of the SDWA. It is not clear in the pro posed rule by what method or mechanism the relevant knowledge and data would be collected by E PA and how the existing rule would be

evaluated within the context of new information.

Enhanced oil recovery projects Essential components of a comprehensive greenhouse reduction strategy for the Midwest include the opportunity for current and future properly man aged CO 2 -EOR projects to make the transition to, and to be permitted as, long-term sequestration projects for anthropogenic CO 2 under EPA’s proposed Class VI. Therefore, in order to fully ut ilize EOR sites as part of such a strategy, it will be important for EPA’s proposed rule to make certain t hat CO 2 -EOR will continue uninterrupted and to provide CO 2 -EOR operators a clear, workable path for Class II wells used for CO 2 -EOR to

become Class VI wells.

More generally, we urge that EPA take great care to avoid creating barriers to widespread commercial development of responsible CO 2 -EOR projects that make the transition to long-term sequestration. EOR is a necessary element of our s trategy to develop a regional infrastructure to support commercial-scale deployment of CCS in the M idwestern region. Indeed, in some MGA jurisdictions with significant sequestration potent ial in oil and gas formations, EOR represents a major long-term GHG reduction strategy in its own r ight, as well as a bridge to help finance the infrastructure needed for deep saline aquifer seque stration. The EOR industry has significant, long-standing commercial experience in CO 2 injection, and some MGA states have proven regulat ory

experience in managing CO 2 injection EOR projects, including projects using c aptured CO 2 that

deliver net CO 2 reduction benefits, even after accounting for oil recovered. The Midwest needs a supportive federal regulatory environment to be abl e to leverage this experience to develop projects and to build the infrastructure necessary for the t ransport and injection of CO 2 into depleted oil and gas fields.

Role of states in GS regulation Several of our states in the MGA region have experi ence with the injection of carbon dioxide through Class II and Class V wells. Further, some of our jurisdictions have experience with legal and regulatory aspects of managing CO 2 injection wells. We encourage the EPA to consider approval for states to obtain primacy for Class VI wells, independent of other well classes. The MGA agrees with the EPA in the preamble that this m ay encourage states to take a more comprehensive approach to managing each stage of a CCS project (e.g., capture, transportation, and sequestration) (73 FR 43523). Development of geolo gic sequestration projects will also require increased resources for implementation of the UIC p rogram. Thus, we support increased federal support for state implementation of geologi c sequestration regulation under the UIC program, and we urge EPA to recognize that need as well.

Thank you for your efforts to facilitate geologic s equestration. We respectfully request your

consideration of our comments.

Sincerely,

M. Michael Rounds Jennifer Granholm Governor of South Dakota and Chair, Governor of Mi chigan and Vice Chair,

Midwestern Governors Association Midwestern Gover nors Association

cc: Lee Whitehurst, Office of Ground Water & Drink ing WaterLetter ID: 0159

Commenter: M. Michael Rounds Organization: Midwestern G overnors Association (MGA)

Letter ID: 0159 Comment ID: 22222 Letter Lines: 28 to 36

Comment Code: 1420 1.2.1.1 Support the GS rulemaking

Comment: On behalf of the Midwestern Governor s Association (MGA), we commend the Environmental Protection Agency on its effort to facilitate the injection of CO2 for long-term geologic sequestration (GS) . Greater regulatory certainty will help advance the deployment of carbon capture and sequestration projects. Our comments are based on the role of geologica l sequestration within the context of established MGA regional goals and objectiv es. We offer comments below in the following areas: (1) the adaptive approach, (2) the implications of the rule on CO2-enhanced oil recovery (EOR) projec ts, and (3) the role of states in implementation of the rule.

Individual Response: EPA agrees that the implementation of the GS rule in a manner that ensures protection of USDWs from endangerment is important to establishing a foundation for

further advances in the field of CO2 GS. EPA acknowledges the need for regulatory certainty: the final GS requirements provide a level of cer tainty by setting forth unique requirements for GS. These requirements include: the tailored Ao R delineation process (p er §146.84), the types of monitoring appropriate to GS pr ojects (per §146.90), and the post-in jection site care process (per §146.93).

While EPA agrees with commenters that a stab le, predictable, nati onally consistent, and workable regulatory framework is important, EPA st resses that the focus of the GS rule is to ensure that, where GS is deployed, it is conduc ted in a manner that protects USDWs from endangerment.

Letter ID: 0159 Comment ID: 22223 Letter Lines: 38 to 44

Comment Code: 1330 1.1.3.1 Support use of GS in general

Comment: The development of GS is an important st rategy within a portfo lio of options for the Midwestern region to reduce greenhous e gas emissions. In 2007, we endorsed the Energy Security and Climate Stewardshi p Platform (Platform) that includes a broad range of measurable goals, policie s and initiatives to transition the

Midwest to a lower carbon en ergy economy. Priorities incl ude the development of energy efficiency, bio-based products and transportation, renewable electricity and advanced coal with carbon captu re and sequestration (CCS).

Individual Response: EPA agrees that GS is one technology in a portfolio of options, including energy conservation, efficiency improvements, a nd the use of alternative fuels and renewable

1energy sources, that could be deployed to redu ce CO2 emissions. Please see the remainder of EPA’s responses to this comment for further details. For additional information on EPA’s final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0159 Comment ID: 22224 Letter Lines: 46 to 56

Comment Code: 1330 1.1.3.1 Support use of GS in general

Comment: The Midwestern region depends heavily on coal-fired generation and has significant coal and oil resources. These resources are also located in close proximity to formations that are likel y suitable for geologic sequestration, specifically saline aquifers and depleted oil and gas fields. Thus, the Platform supports the development of a CO2 manageme nt infrastructure and demonstration and commercialization of large-scale geol ogic sequestration proj ects that take advantage of our region’s EOR potential. The Midwest has significant experience in both EOR and in the transport of CO2 through pipelines. These EOR projects would be part of a broader CO2 management strategy to capture CO2 from various sources and effectively leverage projects to build-out an infrastructure that could support long-term CO2 se questration across the region.

Individual Response: EPA acknowledges the comment. EPA clar ifies that injec tion of CO2 for the purposes of enhanced oil and gas recovery will continue to be permitted under the Class II program, as long as any oil or gas production is occurring. The UIC GS requirements will apply to wells used for the purpose of long-term GS.

Please see the remainder of EPA’s responses to th is comment for further details. For additional information on EPA’s final regulatory approach, pl ease see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0159 Comment ID: 22225 Letter Lines: 58 to 71

Comment Code: 1000 1. General and Administrative Comments

Comment: The MGA would like to address a few areas of the proposed rule within the context of the goals and objectives of the Platform. The MGA goals include:

• A model regional regulatory framework for CCS by 2010;

• A multi-jurisdictional pipeline sited a nd permitted to transport CO2 from a source to an appropriate reservoir for use in an EOR project by 2012;

• At least 7 pre and post-combustion coal plants with CCS in operation by 2015;

• All new coal gasification and coal co mbustion plants will capture and store CO2 emissions by 2020; and

2• The region’s fleet of coal plants will have transitioned to CCS by 2050.

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.

EPA clarifies that permitting of coal plans and pipelines is outside the scope of the GS rulemaking. Rather, the purpose of the GS regula tion 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.

Letter ID: 0159 Comment ID: 22226 Letter Lines: 73 to 84

Comment Code: 2400 1.8 Comments on EPA's adaptive rulemaking process

Comment: Adaptive approach We support the adaptive approach to regulatory development

where relevant data based on demonstra tions and commercial scale projects will

be used to determine if the rule cont inues to appropriately meet the Safe Drinking Water Act (SDWA) objectives and if not, that they will be revised (73 FR 43522). This language is included in th e preamble, but it is not articulated in the language of the rule in terms of how the adaptive approach would be put into practice. As projects develop across different geologic formations and from various carbon sources, there will be increased knowle dge and data on how to effectively manage these sites while mee ting the objectives of the SDWA. It is not clear in the proposed rule by what method or mechanism the relevant knowledge and data would be collected by EPA and how the existing rule would be

evaluated within the context of new information.

Individual Response: EPA agrees that an adaptive approach to the UIC GS rulemaking is appropriate. The Agency plans on using such an approach to ensure that USDWs are protected from endangerment and meet the potentially fast pace of GS deployment. EPA believes that an adaptive approach will allow regulatory developmen t to proceed in time to meet the current and future demand for Class VI permits while recognizi ng the need to: continue to gather data from pilot projects and other research as it becomes available; and to enhan ce understanding of the technical and administrative asp ects of GS deployment, operati on, and technology developments.

EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information a nd appropriate documentation are being collected,

and to determine if modifications to the requirements are appropriate or necessary.

Letter ID: 0159 Comment ID: 22227 Letter Lines: 86 to 94

3Comment 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: Enhanced oil recovery projects Essen tial components of a comprehensive greenhouse reduction strategy for the Midw est include the opportunity for current and future properly managed CO2-EO R projects to make the transition to, and to be permitted as, long-term sequest ration projects for anthropogenic CO2 under EPA’s proposed Class VI. Therefore, in order to fully utilize EOR sites as part of such a strategy, it will be important for EPA’s proposed rule to make

certain that CO2-EOR will continue uni nterrupted and to provide CO2-EOR operators a clear, workable path for Class II wells used for CO2-EOR to become

Class VI wells.

Individual Response: EPA agrees that injection of CO2 for the primary purpose of enhancing oil and gas recovery should remain under the Cl ass II Program. EPA rec ognizes that the oil and gas industry has decades of experience injecting CO2 for the purpose of EOR, and that sites used for EOR may be suitable for GS and may be amo ng the first GS sites. The Agency believes that the nature and risks of CO2 inj ection for the primary purpose of long term storage poses different risks than injection for the primary purpose of ER, and therefore has de veloped new Class VI regulations to address these unique risks.

EPA agrees that many Class II wells are designe d and constructed to withstand exposure to CO2.

The final GS rule allows the construction of these wells to be gra ndfathered per §146.81(c), provided the owner or operator can demonstrate to the Director that the wells were engineered and constructed to meet the requirements at §146. 86(a) and ensure protec tion of USDWs, in lieu of requirements at §146.86(b) and §146.87(a).

EPA is developing guidance on transitioning perm its from Class II to Class VI. The guidance will assist Directors in determining whether an injection project should be transitioned from Class II where the primary purpose is oil and gas production to Class VI where the primary purpose is long-term storage of large volumes of CO2. The gu idance describes the methods

available for the Director to evaulate cha nges in risk to USDWs from projects, and recommended approaches for how the Director may determine whether a project should be regulated within the Class II or Class VI UIC program. This guidance will be available on EPA’s website at http://water.epa.gov/type/groundwat er/uic/wells_sequestra tion.cfm. For more information, please see the discussion on transition of Class II wells in the preamble to the final

GS rule.

Letter ID: 0159 Comment ID: 22229 Letter Lines: 96 to 111

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: More generally, we urge that EPA take gr eat care to avoid crea ting barriers to widespread commercial development of res ponsible CO2-EOR projects that make the transition to long-term sequestration. EO R is a necessary element of our

4strategy to develop a regional infrastr ucture to support commercial-scale deployment of CCS in the Midwestern regi on. Indeed, in some MGA jurisdictions with significant sequestration potentia l in oil and gas formations, EOR represents a major long-term GHG reduction strategy in its own right, as well as a bridge to help finance the infrastruc ture needed for deep saline aquifer sequestration. The EOR industry has si gnificant, longstanding commercial experience in CO2 injection, and some MGA states have proven regulatory experience in managing CO2 injection EOR projects, including projects using captured CO2 that deliver net CO2 reducti on benefits, even after accounting for oil recovered. The Midwest needs a supportiv e federal regulatory environment to be able to leverage this experience to develop projects and to build the infrastructure necessary for the transpor t and injection of CO2 into depleted oil and gas fields.

Individual Response: EPA believes that injection of CO2 for the primary purpose of enhancing oil and gas recovery must remain under the Cla ss II Program. EPA also re cognizes that the oil and gas industry has decades of experience inj ecting CO2 for the purpose of ER, and that sites used for ER may be suitable for GS and may be among the first GS sites. However, EPA believes that injection for the primary purpose of l ong term storage is sufficiently different from Class II ER operations and warra nts tailored requirements. Fo r example, the volume of CO2 anticipated to be injected in Class VI wells is significantly greater th an for Class II wells. Reservoir pressure conditions wi ll also be different, with Cla ss VI injection operations involving large volumes of CO2 and likely having higher pressures within th eir storage formations than Class II ER projects.

In response to the comment that establis hing a new well class will create economic and operational barriers, EPA clarifies that the purpose of the GS rule is to ensure protection of USDWs from endangerment, not to encourage a nd incentivize deployment of GS. However, the Agency believes that establishing a regulator y framework for the future development and deployment of CCS technology may pr ovide the regulatory and jurisd ictional certainty needed to foster development and deployment of CCS while ensuring USDW protection.

Letter ID: 0159 Comment ID: 22230 Letter Lines: 113 to 120

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

Comment: Role of states in GS regulation Several of our states in the MGA region have experience with the injec tion of carbon dioxide thr ough Class II and Class V wells. Further, some of our jurisdicti ons have experience with legal and regulatory aspects of managing CO2 injection wells. We encourage the EPA to consider approval for states to obtain pr imacy for Class VI wells, independent of other well classes. The MGA agrees with the EPA in the preamble that this may encourage states to take a more comprehens ive approach to managing each stage of a CCS project (e.g., capture, transporta tion, and sequestration) (73 FR 43523).

Individual Response: EPA agrees with commenters that states should be allowed to obtain

5primacy 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 pa rtial 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: 0159 Comment ID: 22231 Letter Lines: 121 to 124

Comment Code: 5600 2.11 Comments related to UIC Program primacy for Class VI wells

Comment: Development of geologic sequestration pr ojects will also require increased resources for implementation of the UI C program. Thus, we support increased federal support for state implementation of geologic sequest ration regulation under the UIC program, and we urge EPA to recognize that need as well.

Individual Response: EPA acknowledges that there may be technical and administrative challenges including resource concerns , and will work closely with the States to assist them in

6resolving funding issues or acquiri ng the resources, personnel, and training needed to address the unique technical challenges associated with GS.

EPA will also incorporate Class VI wells into the UIC Program's grant allocation process. The

States/Tribes/Territories must also demonstrate th at they have adequate resources to implement the program through matching resources against those allocated by the UIC Program's grant allocation formula. Currently, primacy programs ar e required to meet a minimum of 25 percent matching requirement.

Letter ID: 0159 Comment ID: 22232 Letter Lines: 126 to 143

Comment Code: 1000 1. General and Administrative Comments

Comment: Thank you for your efforts to facilitate geologic sequestration. We respectfully request your consideration of our comments.

Sincerely,

M. Michael Rounds, Governor of South Dakota and Chair, Midwes tern Governors Association

Jennifer Granholm, Governor of Michigan and Vi ce Chair, Midwestern Governors Association

cc: Lee Whitehurst, Office of Ground Water & Drinking Water

444 North Capitol Street, NW Su ite 401 Washington, DC 20001-1512

Tel:202.624.5460 Fax: 202.624.5452 Regional Office 701 East 22nd Street Suite 110 Lombard, Illinois 60148 Tel: 630.925.1922 Fax: 630.925.1930 www.midwesterngovernors.org

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.

7