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.
December 19, 2008

VIA USPS AND ELECTRONIC SUBMISSION 

EPA Docket Center 

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

Environmental Protection Agency, Mail Code 2822T

1200 Pennsylvania Avenue, N.W.

Washington, DC 20460 

Dear Sir or Madam: 

San Miguel Electric Cooperative, Inc. submits the attached comments on 

the proposed Underground Injection Control (UIC) Program, published by the 

Environmental Protection Agency at 73 Fed. Reg. 43492 (July 25, 2008).

San Miguel Electric Cooperative, Inc appreciates the opportunity to offer 

comments concerning the U.S. Environmental Protection Agency’s (EPA) 

proposed rulemaking referenced above. The principal business of San Miguel 

Electric Cooperative, Inc (hereinafter referred to as San Miguel) is the production 

of electric energy in South Central Texas. Production includes one (1) coal-fired 

power plant and one (1) lignite mine in South Central Texas. The lignite mine 

supplies fuel only for the San Miguel Generating Station and produces on 

average 3.3 million tons of lignite. The generating unit fires only lignite provided 

by this mine. This one lignite-fired unit comprises 100% of San Miguel’s 

generating capacity; average yearly output is 3.2 million megawatt hours. 

San Miguel appreciates EPA’s efforts to develop regulations that will help 

insure CO2 GS activities can move forward in an orderly manner. Please 

consider the attached comments that are intended to help promote final GS 

regulations that will aid the development of full scale, commercial GS activities 

while remaining protective of the environment. If you have any questions or if you 

would like to discuss these comments, please contact Joe Euitizi at 

830.784.3411 ext. 226.

Sincerely;

Joseph G. Eutizi

Engineering Manager

San Miguel Electric 

Cooperative, Inc. 

P.O. Box 280

Jourdanton, TX 78026
Federal Requirements Under the Underground Injection Control Program 

for Carbon Dioxide Geologic Sequestration Wells

Docket No. EPA-HQ-OW-2008-0390

73 Fed. Reg. 43492 (July 25, 2008)

Comments of San Miguel Electric Cooperative, Inc.

San Miguel Electric Cooperative, Inc submits these comments on the Proposal of the 

Environmental Protection Agency ("EPA" or "the Agency") to establish the regulatory

framework for geologic sequestration (“GS”) of carbon dioxide (“CO2”) under the 

Underground Injection Control (“UIC”) Program pursuant to the Safe Drinking Water 

Act ("SDWA"). 73 Fed. Reg. 43492 (July 25, 2008).

San Miguel greatly appreciates EPA's work toward developing a regulatory framework 

for underground injection of CO2. EPA's decision to develop regulations under the UIC 

program and to develop a new Class VI for CO2 GS well is appropriate. San Miguel also 

appreciates EPA's recognition that while the new regulations at hand must be within the 

scope of the SDWA, there are a number of very important issues (such as long term 

liability) that are outside the scope of the act but are highly pertinent to developing a 

viable GS program and we are glad that EPA is willing to discuss these issues as part of 

this regulatory proposal. 

It appears that GS of CO2 from fossil-fueled power plants will be a necessary part of any 

national strategy to control green house gas emissions. San Miguel, operates coal-fired 

power plants and these plants are likely to be directly affected by new GS regulations. 

The regulations could have significant financial and operational impacts on San Miguel 

and we ask EPA to carefully consider our comments because of the significant stake we 

have in the outcome of this important rulemaking. San Miguel is a member of the 

National Rural Electric Cooperative Association (“NRECA”). NRECA will also be 

submitting comments on the proposed UIC rules. San Miguel supports NRECA’s 

comments, and incorporates them here by reference.

SUMMARY

San Miguel applauds the efforts EPA has taken thus far to instill "certainty" and 

"transparency" into the future Class VI CO2 regulatory regime, 73 Fed. Reg. at 43496. 

The challenge EPA faces is to craft a Final Rule for commercial CO2 injection 

appropriate for activities that will largely be conducted in the future. EPA has had to 

confront many technical uncertainties regarding the establishment and operation of GS 

wells. Because many of the technical aspects are unknown, it is also very difficult to 

develop a clear understanding of project risks and liabilities. As long as risks and 

liabilities are largely unknown and open-ended, private companies will not step forward 

to offer insurance and other risk management products, and it will not be possible to 

obtain the level of financing needed to undertake a costly GS operation. We hope the 

pilot carbon capture and sequestration (CCS) projects conducted by DOE and other 

entities will help resolve some of these uncertainties.
EPA needs to establish clear, reasonable regulations that are environmentally protective

and cover a range of operations for which the technology will not be commercially 

deployed for a number of years. To the extent practicable, EPA needs to establish a 

single, clear, reasonable and protective liability regime for an activity where the nature of 

the risks are different from many other industrial activities and the full extent of possible 

risks from full scale CSS operations are presently unknown. 

Comments Regarding UIC Regulations

1. Because of the difficulty of regulating future activities, we urge EPA to continue 

to use a "performance based" approach in developing the requirements for Class 

VI UIC wells. This way, rules can be readily adjusted and fine-tuned as industry

and regulators alike gain experience with large-scale CO2 sequestration.

2. Because information and technology related to carbon sequestration will evolve 

as industry and regulators gain experience with CCS, San Miguel urges EPA to 

resist placing blanket prohibitions or detailed operational specifications in the 

Final Rule.

3. EPA should not automatically exclude placement of wells in particular geologic 

structures. The Final Rule should leave the door open for a range of injection 

sites and methods provided the owner or operator can show that the injection and 

storage will be protective of Underground Sources of Drinking Water (USDWs).

4. San Miguel believes that the states will have the best knowledge of regional 

geology, existing projects, areas in need of special protection, etc. and that states 

should be allowed to assume primacy for administration of the UIC Class VI well 

program.

5. EPA should be careful not to stigmatize GS operations and to take positive 

measures to build public acceptance. EPA should avoid characterizing stored 

CO2 as a waste.

6. EPA must settle the way GS activities will relate to RCRA and CERCLA. RCRA 

is simply the wrong tool to use to regulate GS of CO2 and EPA needs to find a 

way to insure that the onerous requirements of CERCLA, (never intended for GS 

of CO2), are not applied to this highly specialized gas storage operation.

7. Dealing with these last two hazardous waste issues appears to San Miguel to be 

one of the most difficult hurdles standing in the way of commercial deployment 

of full scale GS projects and we recognize that Congressional action may be 

needed.

Comments Regarding Liability and Risk Management

San Miguel supports the comments of the Carbon Capture and Sequestration Alliance ( 

CCS, or the Alliance) on the proposed UIC regulations. The CCS Alliance is a coalition 

of entities, spanning a number of economic sectors, that share a common interest in 

removing impediments to investment in and development of carbon capture and storage 

(“CCS”), as well as mitigating the potential risks associated with the deployment of this 
technology.(1) Its purpose is to promote development of policy by the states and the 

federal government to appropriately address risks and potential liabilities, thereby 

enabling the further development and increased deployment of CCS. The CCS Alliance 

believes these technologies can be developed while protecting underground water 

resources, significantly reducing global and U.S. greenhouse gas (“GHG”) emissions, and 

enhancing U.S. energy security. The Alliance’s purpose is to consider ways of promoting 

the development and use of CCS technologies and to support efforts by the private sector, 

states, the federal government, non-governmental organizations and others, to help ensure 

that these technologies can be developed and widely, efficiently and cost-effectively 

deployed. 

We support the comments of the Alliance and incorporate them here by reference. San 

Miguel is relying on NRECA and the Alliance to provide EPA with specific comments 

on the Financial Assurance and Long Term Liability issues discussed in the proposal. 

We are not experts on these matters, however we ask EPA to consider the following 

general comments for managing risk and liability associated with GS: 

1. It appears to San Miguel that a tiered approach with a government back-stop as 

used in the framework of the Price-Anderson Act for nuclear faculties could be a 

rational way of structuring liability management for GS of CO2. This is 

discussed further in the comments NRECA is submitting on this rulemaking. 

2. EPA should consider a broad array of financial mechanisms owners or operators 

can use to meet financial responsibility requirements specified in the regulations.

3. While Self Insurance mechanisms belong on EPA's menu of Financial Assurance 

options, San Miguel is a small business and we have a relatively small 

capitalization so Corporate Guarantees or Self Insurance may not be available 

options for us.

**************************************

1 MidAmerican Energy Holdings Company, National Mining Association, National Rural Electric 

Cooperative Association, NRG Energy, Inc., PacifiCorp and Zurich North America.
Letter ID: 0161 

Commenter: Joseph Eutizi 

Organization: San Miguel Electric Cooperative, Inc 

Letter ID: 0161 Comment ID: 21280 Letter Lines: 69 to 72 

Comment Code: 1420 1.2.1.1 Support the GS rulemaking 

Comment Code: 2020 1.5.1 Support Class VI designation 

Comment: San Miguel greatly appreciates EPA's work toward developing a regulatory 

framework for underground injection of CO2. EPA's decision to develop 

regulations under the UIC program and to develop a new Class VI for CO2 GS well 

is appropriate. San Miguel also appreciates EPA's recognition that while the new 

Individual Response: EPA acknowledges the comment and agrees that tailored requirements for 

Class VI wells are necessary to address the unique nature of injecting large volumes of CO2 and 

to ensure that USDWs are protected from endangerment. The Class VI requirements are 

appropriate because of the unique nature and risks of CO2 injection for long-term storage (e.g., 

large injection volumes, long project duration, and reservoir pressure conditions). The GS rule 

contains tailored requirements for the permitting, geologic site characterization, AoR and 

corrective action, well construction, operation, mechanical integrity testing, monitoring, well 

plugging, post-injection site care, and site closure of GS wells that directly address issues unique 

to the nature of large-scale CO2 injection for GS. 

Letter ID: 0161 Comment ID: 21281 Letter Lines: 72 to 77 

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

ownership 

Comment: is appropriate. San Miguel also appreciates EPA's recognition that while the new 

regulations at hand must be within the scope of the SDWA, there are a number of 

very important issues (such as long term liability) that are outside the scope 

of the act but are highly pertinent to developing a viable GS program and we are 

glad that EPA is willing to discuss these issues as part of this regulatory 

proposal. 

Individual Response: EPA clarifies that the purpose of the Class 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. EPA recognizes the importance of providing clear, 

flexible, scalable, and appropriate regulations. EPA believes that the Class VI GS regulation will 

provide certainty to industry and the public by providing consistency in requirements across the 

U.S. and transparency about what requirements apply to owners or operators. 

EPA notes that long-term liability is outside of the scope of the GS rulemaking and is not 

1
addressed in the GS rule. SDWA does not contain any express provisions addressing liability. An 

owner or operator will be held liable for any permit violations under SDWA §1423. 

Under the final GS rule, once an owner or operator has met all regulatory requirements under 

Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements 

at §146.93, the owner or operator will generally no longer be subject to enforcement for 

regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 

will be released if it was not used. However, even if a site closure is approved under §146.93, an 

owner or operator may be held liable for regulatory noncompliance (including violation of 40 

CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for 

regulatory noncompliance even after site closure was approved if the Director relied on 

erroneous information (e.g., erroneous modeling data) provided by the owner or operator when 

approving site closure. 

Separate from EPA’s authority to enforce regulatory compliance, an owner or operator may be 

subject to a §1431 response order even after proper site closure is approved under §146.93. 

Under §1431 the Administrator may require an owner or operator to take necessary response 

measures if he or she receives information that a contaminant is present or is likely to enter a 

public water system or an USDW, which may present an imminent and substantial endangerment 

to the health of persons, and the appropriate State and local authorities have not acted to protect 

the health of such persons. The action may include issuing administrative orders or commencing 

a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner 

or operator fails to comply with the order, they may be subject to a civil penalty for each day in 

which such violation occurs or failure to comply continues. 

Furthermore, after site closure an owner or operator may remain liable under tort and other 

remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. 

§§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA 

does not have authority to transfer SDWA or other legal liability for Class VI wells to the State 

or federal government or a third-party fund. See the final rule preamble for further discussion of 

EPA's final approach to financial responsibility for Class VI wells. 

Letter ID: 0161 Comment ID: 21282 Letter Lines: 79 to 88 

Comment Code: 1000 1. General and Administrative Comments 

Comment: It appears that GS of CO2 from fossil-fueled power plants will be a necessary 

part of any national strategy to control green house gas emissions. San Miguel, 

operates coal-fired power plants and these plants are likely to be directly 

affected by new GS regulations. The regulations could have significant financial 

and operational impacts on San Miguel and we ask EPA to carefully consider our 

comments because of the significant stake we have in the outcome of this 

important rulemaking. San Miguel is a member of the National Rural Electric 

Cooperative Association ("NRECA"). NRECA will also be submitting comments on the 

proposed UIC rules. San Miguel supports NRECA’s comments, and incorporates them 

here by reference. 

2
Individual Response: EPA acknowledges the comment. Please see the remainder of EPA's 

responses to this comment and NRECA’s comments for further details. For additional 

information on EPA's final regulatory approach, please see the final rule and preamble as well as 

the rulemaking docket. 

EPA agrees that GS is one technology in a portfolio of options, including solar, wind, biomass, 

and geothermal, that could be deployed to reduce CO2 emissions; however these technologies 

are outside the scope of the UIC GS rulemaking. The Class VI GS requirements are designed to 

ensure consistency in permitting underground injection of CO2 at GS operations across the 

United States and provide requirements to prevent endangerment of USDWs in anticipation of 

the eventual use of GS to reduce CO2 emissions. 

Letter ID: 0161 Comment ID: 21283 Letter Lines: 90 to 104 

Comment Code: 1200 1.1 General comments about the rulemaking 

Comment Code: 5400 2.9 Proposed Financial Responsibility and Long-Term Care 

Requirements 

Comment: SUMMARY 

San Miguel applauds the efforts EPA has taken thus far to instill "certainty" 

and "transparency" into the future Class VI CO2 regulatory regime, 73 Fed. Reg. 

at 43496. The challenge EPA faces is to craft a Final Rule for commercial CO2 

injection appropriate for activities that will largely be conducted in the 

future. EPA has had to confront many technical uncertainties regarding the 

establishment and operation of GS wells. Because many of the technical aspects 

are unknown, it is also very difficult to develop a clear understanding of 

project risks and liabilities. As long as risks and liabilities are largely 

unknown and open-ended, private companies will not step forward to offer 

insurance and other risk management products, and it will not be possible to 

obtain the level of financing needed to undertake a costly GS operation. We hope 

the pilot carbon capture and sequestration (CCS) projects conducted by DOE and 

other entities will help resolve some of these uncertainties. 

Individual Response: To address concerns about certainty, EPA has specified acceptable 

financial responsibility instruments and requirements in the final regulation at §146.85. 

Additionally, EPA is developing guidance (available on EPA's website at 

http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm) that describes the types of 

financial instruments that owners or operators can use to meet financial responsibility 

requirements for GS wells. 

EPA adds that it anticipates that, as GS is deployed, particularly if there are early successful uses 

of these financial instruments, owners or operators will demand and carriers will offer third-party 

GS financial instruments in greater numbers. See the final rule and preamble for further 

discussion of EPA's final approach to financial responsibility. 

3
Letter ID: 0161 Comment ID: 21284 Letter Lines: 106 to 112 

Comment Code: 5400 2.9 Proposed Financial Responsibility and Long-Term Care 

Requirements 

Comment: EPA needs to establish clear, reasonable regulations that are environmentally 

protective and cover a range of operations for which the technology will not be 

commercially deployed for a number of years. To the extent practicable, EPA 

needs to establish a single, clear, reasonable and protective liability regime 

for an activity where the nature of the risks are different from many other 

industrial activities and the full extent of possible risks from full scale CSS 

operations are presently unknown. 

Individual Response: EPA acknowledges commenter's concerns regarding the applicability of 

multiple statutes to GS projects and the need for a single clear liability regime for owners or 

operators. As a federal agency, EPA is working to create a nationally consistent financial 

responsibility regime within its authority while providing permitting authorities an appropriate 

level of flexibility for purposes of liability. EPA is finalizing financial responsibility 

requirements under authority of the SDWA. EPA believes that the general authorities provided 

under SDWA include the authority to set federal minimum requirements for financial 

responsibility to ensure that resources are available to protect USDWs from endangerment 

throughout the life of the GS project. Under current SDWA provisions, EPA does not have 

authority to transfer liability from one entity to another and it does not provide for the creation of 

a third party financial instrument where EPA is the trustee. 

Under SDWA authority, owners or operators of injection wells must ensure protection of 

USDWs from endangerment and are subject to liability for enforcement under the Act. 

The final rule requires that an owner or operator must conduct monitoring as specified in the 

Director-approved PISC and site closure plan following the cessation of injection until the owner 

or operator can demonstrate to the Director that the geologic sequestration project no longer 

poses an endangerment to USDWs. For additional information about the PISC and site closure 

requirements, see the preamble to the final GS rule. 

Once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells 

and the Director has approved site closure pursuant to requirements at §146.93, the owner or 

operator will generally no longer be subject to enforcement for regulatory noncompliance. 

Furthermore, their financial instrument as required under §146.85 will be released if it was not 

used. However, even if a site closure is approved under §146.93, an owner or operator may be 

held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain 

circumstances. For example, an owner or operator may be held liable for regulatory 

noncompliance even after site closure was approved if the Director relied on erroneous 

information (e.g., erroneous modeling data) provided by the owner or operator when approving 

site closure. 

4
Additionally, an owner or operator may always be subject to any action the Administrator deems 

necessary to protect the health of persons under §1431 of the SDWA after site closure if there is 

unanticipated migration towards or into a USDW that causes or threatens imminent and 

substantial endangerment to public health. The action may include issuing administrative orders 

or commencing a civil action for appropriate relief. If the owner or operator fails to comply with 

the order, they may be subject to a civil penalty for each day in which such violation occurs or 

failure to comply continues. 

The Agency clarifies that Class VI well permits may be transferred to another owner or operator 

pursuant to §144.38 whereby generally all other regulatory responsibilities are transferred to that 

new owner and operator, which includes all potential liabilities associated with meeting the 

requirements of that permit. Please see further clarification on the issue of long term liability in 

the preamble of the final rule. 

Furthermore, after site closure an owner or operator may remain liable under tort and other 

remedies, or under other federal statutes including, but not limited to, Clean Air Act, 42 U.S.C. 

§§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA 

does not have authority to transfer SDWA or other legal liability for Class VI wells to the State 

or federal government or a third-party fund. See the final rule preamble for further discussion of 

EPA's final approach. 

Letter ID: 0161 Comment ID: 21285 Letter Lines: 114 to 125 

Comment Code: 1250 1.1.1.4 Flexibility is needed (performance-based standards) 

Comment: Comments Regarding UIC Regulations 

1. Because of the difficulty of regulating future activities, we urge EPA to 

continue to use a "performance based" approach in developing the requirements 

for Class VI UIC wells. This way, rules can be readily adjusted and fine-tuned 

as industry and regulators alike gain experience with large-scale CO2 

sequestration. 

2. Because information and technology related to carbon sequestration will 

evolve as industry and regulators gain experience with CCS, San Miguel urges EPA 

to resist placing blanket prohibitions or detailed operational specifications in 

the Final Rule. 

Individual Response: The Agency believes that the Class VI requirements balance site-specific 

flexibility with USDW protection. Rather than setting performance or technology-based 

standards for GS projects, EPA is adopting a flexible approach, where operators of GS projects 

would develop and implement site-specific plans for delineating the AoR, testing and monitoring 

the site, performing corrective action, and post-injection site care. EPA believes that the plans—

which would be reviewed and approved by the Director and periodically updated throughout the 

life of the project—promote an ongoing dialogue between the operator and the Director that will 

encourage use of the most appropriate technologies for a particular project. 

5
To address the comment that the rule should accommodate future technological developments 

related to GS, EPA adds that it is using an adaptive approach to regulating GS under the UIC 

Program. Even after finalization of the GS regulation, EPA plans, every six years, to collect and 

review project data on GS research 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. 

Letter ID: 0161 Comment ID: 21286 Letter Lines: 127 to 131 

Comment Code: 2100 1.6 Target Geologic Formations for GS 

Comment: 3. EPA should not automatically exclude placement of wells in particular 

geologic structures. The Final Rule should leave the door open for a range of 

injection sites and methods provided the owner or operator can show that the 

injection and storage will be protective of Underground Sources of Drinking 

Water (USDWs). 

Individual Response: EPA clarifies that the GS rule does not categorically preclude injection of 

CO2 into any non-USDW formation types. The purpose of the GS rule is to ensure protection of 

USDWs from endangerment, and the rule requires that owners or operators demonstrate that 

wells are sited in suitable systems with geologic formations to receive and confine injected CO2, 

required at §146.83 of the GS rule. The Class VI siting, well construction and operation, 

monitoring and testing, and post-injection site care and site closure requirements are designed to 

ensure that injected CO2 remains within the target formation. If an owner or operator can 

demonstrate to the Director's satisfaction that GS in coal seams, basalts, salt domes, or shales can 

be accomplished in a manner that protects USDWs and meets all of the requirements of the GS 

rule, the project may be permitted as a Class VI well. 

Letter ID: 0161 Comment ID: 21287 Letter Lines: 133 to 136 

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

Comment: 4. San Miguel believes that the states will have the best knowledge of regional 

geology, existing projects, areas in need of special protection, etc. and that 

states should be allowed to assume primacy for administration of the UIC Class 

VI well program. 

Individual Response: EPA agrees with commenters on the importance of states having primacy 

for GS wells given the variety of geologic settings in which GS will be applied. EPA recognizes 

that State, Tribal, Territorial, and DI UIC Program Directors are in the best position to evaluate 

the unique issues related to well depth, geology, and hydrogeology that are posed by a Class VI 

well. Some degree of flexibility is needed for Class VI wells because each decision made will be 

site-specific and conditions will differ from state to state. The GS rule balances the need for 

these site-specific decisions with the need for minimum standards to ensure national consistency. 

6
The Agency believes that it is important for states to use their unique efficiencies to promote 

adoption of this burgeoning and important technology, while assuring that USDWs are protected 

from endangerment through the UIC regulatory framework. EPA encourages states to accept 

primacy for Class VI, and believes that, due to the importance of implementing an effective, 

comprehensive, and seamless CCS program, States should be provided the flexibility to obtain 

primacy for Class VI only. 

However, given the potential for CCS (encompassing capture, transportation, and geologic 

sequestration) to be an important part of a national priority to address climate change, EPA 

believes that providing states the flexibility to obtain primacy for Class VI wells independently 

of other well classes can help foster effective management of CCS. EPA believes that allowing 

independent Class VI primacy may encourage states to take responsibility for implementation of 

Class VI regulations and provide for a more comprehensive approach to managing CCS projects 

by promoting the integration of GS activities under SDWA into a broader framework for 

managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline 

operations, pore space ownership, land use rights, and surface access) for which states can call 

upon other authorities that exist at the state level (but outside UIC authority) to provide a more 

comprehensive CCS management approach. 

Letter ID: 0161 Comment ID: 21288 Letter Lines: 138 to 140 

Comment Code: 1680 1.3.8 Don't overstate risk, don't stigmatize CO2 

Comment: 5. EPA should be careful not to stigmatize GS operations and to take positive 

measures to build public acceptance. EPA should avoid characterizing stored CO2 

as a waste. 

Individual Response: EPA does not believe that the tailored requirements will create a negative 

public perception of GS. The Agency believes that a demonstration to the public that GS projects 

are meeting the GS rule's tailored requirements would likely improve confidence in the project 

and help address public questions and concerns. 

EPA adds that the requirements of the GS rule are tailored to the nature of the CO2 itself, and do 

not address the status of CO2 as either a pollutant, commodity, or waste. 

Letter ID: 0161 Comment ID: 21289 Letter Lines: 142 to 150 

Comment Code: 1630 1.3.3 RCRA/hazardous waste issues (seeking comment) 

Comment Code: 1640 1.3.4 CERCLA issues (seeking comment) 

Comment: 6. EPA must settle the way GS activities will relate to RCRA and CERCLA. RCRA 

is 

simply the wrong tool to use to regulate GS of CO2 and EPA needs to find a way 

to insure that the onerous requirements of CERCLA, (never intended for GS of 

7
CO2), are not applied to this highly specialized gas storage operation. 

7. Dealing with these last two hazardous waste issues appears to San Miguel to 

be one of the most difficult hurdles standing in the way of commercial 

deployment of full scale GS projects and we recognize that Congressional action 

may be needed. 

Individual Response: EPA agrees that any requirements for the CO2 stream should be clearly 

identified. EPA received many comments regarding the applicability of the RCRA regulations 

and statute to CO2 streams that are geologically sequestered under the final Class VI UIC well 

requirements. As a result, EPA has decided to initiate a separate proposed rulemaking 

specifically to examine the issue of RCRA applicability to CO2 streams being geologically 

sequestered, including the possible option of a conditional exemption from the RCRA 

requirements for CO2 GS in Class VI wells. EPA will consider these comments as part of its 

development of that proposal. The Agency will consider issues particular to RCRA in the context 

of that separate rulemaking, and recommends that the commenter read that proposed rule when it 

is published. The Agency notes that commenters who wish to submit comments on the RCRA 

proposal will need to do so during the comment period for that rule. Finally, EPA also notes that 

the final GS rule, which adds new regulations for Class VI wells under the Safe Drinking Water 

Act (SDWA), is not making any changes to the RCRA regulations. 

CO2 itself is not listed as a hazardous substance under CERCLA; however, the CO2 stream may 

contain a listed hazardous substance (such as mercury) or may mobilize substances in the 

subsurface that could react with ground water to produce listed hazardous substances (such as 

sulfuric acid). Whether such substances may result in CERCLA liability from a sequestration 

facility depends entirely on the composition of the specific CO2 stream and the environmental 

media in which it is stored (e.g., soil or ground water). CERCLA exempts from liability, under 

CERCLA section 107, 42 U.S.C. 9607, certain “federally permitted releases” (FPR) as defined in 

CERCLA, 42 U.S.C. 9601(10). Class VI permits will need to be carefully structured to ensure 

that they prevent potential releases from the well which are outside the scope of the Class VI 

permit. 

Letter ID: 0161 Comment ID: 21290 Letter Lines: 152 to 174 ; 192 to 194 

Comment Code: 5400 2.9 Proposed Financial Responsibility and Long-Term Care 

Requirements 

Comment: Comments Regarding Liability and Risk Management 

San Miguel supports the comments of the Carbon Capture and Sequestration 

Alliance ( CCS, or the Alliance) on the proposed UIC regulations. The CCS 

Alliance is a coalition of entities, spanning a number of economic sectors, that 

share a common interest in removing impediments to investment in and development 

of carbon capture and storage ("CCS"), as well as mitigating the potential risks 

associated with the deployment of this technology.[1] Its purpose is to promote 

development of policy by the states and the federal government to appropriately 

8
address risks and potential liabilities, thereby enabling the further 

development and increased deployment of CCS. The CCS Alliance believes these 

technologies can be developed while protecting underground water resources, 

significantly reducing global and U.S. greenhouse gas ("GHG") emissions, and 

enhancing U.S. energy security. The Alliance’s purpose is to consider ways of 

promoting the development and use of CCS technologies and to support efforts by 

the private sector, states, the federal government, non-governmental 

organizations and others, to help ensure that these technologies can be 

developed and widely, efficiently and cost-effectively deployed. 

We support the comments of the Alliance and incorporate them here by reference. 

San Miguel is relying on NRECA and the Alliance to provide EPA with specific 

comments on the Financial Assurance and Long Term Liability issues discussed in 

the proposal. We are not experts on these matters, however we ask EPA to 

************************************** 1 MidAmerican Energy Holdings Company, 

National Mining Association, National Rural Electric Cooperative Association, 

NRG Energy, Inc., PacifiCorp and Zurich North America. 

Individual Response: Please see the remainder of EPA's responses to this comment related to 

financial responsibility for further details. For additional information on EPA's final regulatory 

approach, please see the final rule and preamble as well as the rulemaking docket. EPA is using 

an adaptive approach to regulating GS. 

Letter ID: 0161 Comment ID: 21291 Letter Lines: 174 to 190 

Comment Code: 5434 2.9.1.2 Need for additional instruments (seeking comment) 

Comment: the proposal. We are not experts on these matters, however we ask EPA to 

consider the following general comments for managing risk and liability 

associated with GS: 

1. It appears to San Miguel that a tiered approach with a government back-stop 

as used in the framework of the Price-Anderson Act for nuclear faculties could 

be a rational way of structuring liability management for GS of CO2. This is 

discussed further in the comments NRECA is submitting on this rulemaking. 

2. EPA should consider a broad array of financial mechanisms owners or operators 

can use to meet financial responsibility requirements specified in the 

regulations. 

3. While Self Insurance mechanisms belong on EPA's menu of Financial Assurance 

options, San Miguel is a small business and we have a relatively small 

capitalization so Corporate Guarantees or Self Insurance may not be available 

options for us. 

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10

Individual Response: Under SDWA, EPA has the general authority to set financial 

responsibility requirements for injection well owners or operators to ensure that adequate 

resources are available to protect USDWs throughout the life of the GS project. However, this 

authority does not extend to allowing the Agency to create a financial instrument with EPA as 

the trustee, due to the restrictions of the Miscellaneous Receipts Act (MRA). The MRA requires 

that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore 

funds would not necessarily be available for GS financial responsibility. 

Additionally, EPA does not have authority under SDWA to establish a trust fund for purposes of 

financial responsibility for Class VI projects. The Agency clarifies that the trust funds that are 

addressed as financial responsibility instruments on the GS rule are set up by individual owners 

or operators and are different from a national-level trust described by the commenters that would 

cover large numbers of GS projects. 

Owners or operators may choose from a variety of financial instruments to meet their financial 

responsibility obligations under the rule, provided the Director determines that the operator's 

proposed financial responsibility demonstration is adequate to protect USDWs from 

endangerment, which means the ability of the owner or operator to pay for each activity for 

which financial responsibility must be demonstrated, including corrective action on wells in the 

AoR, injection well plugging, PISC and site closure, and emergency and remedial response 

throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types 

of financial responsibility instruments. See the final rule and preamble for further discussion of 

EPA's final approach to financial responsibility. 

EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA 

believes that if properly used, the financial test can be an appropriate option for some owners or 

operators. EPA recognizes that it is important for self-insurers to be credit-worthy, otherwise 

USDWs may not be adequately protected. Owner or operators who choose to self-insure and use 

the financial test must be able to demonstrate profitability, with a margin sufficient to cover 

contingencies and unknown obligations, and stability. If the owner or operator meets corporate 

financial test criteria, this is an indication that the owner or operator can guarantee its ability to 

satisfy financial obligations based solely on the strength of the company’s financial condition. If 

an operator or operator is not able to meet the corporate financial test criteria may arrange a 

corporate guarantee by demonstrating that its corporate parent meets the financial requirements 

on its behalf. 

Under SDWA authority, owners or operators of injection wells must ensure protection of 

USDWs from endangerment and are subject to liability for enforcement under the Act. The final 

rule requires that an owner or operator must conduct monitoring as specified in the Directorapproved PISC and site closure plan following the cessation of injection until the owner or 

operator can demonstrate to the Director that the geologic sequestration project no longer poses 

an endangerment to USDWs. For additional information about the PISC and site closure 

requirements, see the preamble to the final GS rule.