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.

### Utilty Solid Waste Activities Group U
c/o Edison Electric Institute 701 Pennsylvania Avenue, NW Washington, DC 20004-2696

202-508-5645 www.uswag.org

December 23, 2008

VIA MESSENGER AND ELECTRONIC SUBMISSION

U.S. Environmental Protection Agency

Water Docket EPA Docket Center (EPA/DC)

EPA West 

### Room 3334 1301 Constitution Avenue NW
Washington, D.C.

Re: Proposal for Federal Requirements Under the Underground 

### Injection Control Program for Geologic Sequestration of Carbon Dioxide (Docket No.: EPA-HQ-OW-2008-0390)

Dear Sir or Madam:

Enclosed please find the comments of the Utility Solid Waste Activities Group ("USWAG") on the Environmental Protection Agency's Proposal for Geologic Sequestration ("GS") of Carbon Dioxide ("C02") under the Underground Injection Control ("UIC") Program.

As the leading utility organization responsible for interacting with EPA and other federal and state agencies regarding the management of materials from the combustion of coal and other fossil fuels, USWAG has a valuable knowledge base and perspective from which to provide meaningful input on the development . of EPA's UIC regulations for CO2 sequestration. We appreciate the opportunity to comment on this important rulemaking initiative and look forward to working with EPA on this effort.



### Sincerely,

James Rower Executive Director, USWAG



### Enclosures

### 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 the Utility Solid Waste Activities Group

INTRODUCTION

The Utility Solid Waste Activities Group ("USWAG") 1 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

("C02") under the Underground Injection Control ("UIC") Program pursuant to the Safe


### Drinking Water Act ("SDWA"). 73 Fed. Reg. 43492 (July 25, 2008). For the past thirty

years, USWAG has been the leading utility organization responsible for interacting with

EPA and other federal and state agencies concerning the management of materials

from the combustion of coal and other fossil fuels (e.g., fly ash and bottom ash) under

federal and state environmental programs.

The development of a viable CO2 capture and sequestration regulatory program

has been cited by many as a prerequisite to the implementation of energy reform

initiatives involving carbon reduction measures on both the federal and state leveL.

Because the electric utility industry, including USWAG members, has been identified as

the primary industrial sector targeted for regulation under future carbon capture and

1 USWAG was formed in 1978, and is an informal consortium of approximately 80 energy industry operating companies and associations, including the Edison Electric Institute ("EEl"), the National Rural Electric Cooperative Association ("NRECA"), and the American Gas Association ("AGA"). EEl is the principal national association of investor-owned electric power and light companies. NRECA is the national association of rural electric cooperatives. AGA is the national association of natural gas utiliies. Together, USWAG members represent more than 85% of the total electric generating capacity of the United States, and service more than 95% of the nation's consumers of electricity and more than 93% of the nation's consumers of natural gas.sequestration ("CCS") regulations, USWAG has a direct and substantial interest in



### EPA's development of a realistic and cost-effective UIC program for Class Vi CO2 GS

wells. EPA projects that the electric power sector "will most likely be the largest

potential market for (CCS) technologies," and predicts that CCS technology could lead

to CO2 reductions of approximately 80-90% at an individual plant. 73 Fed. Reg. 44354,

44492 (July 30, 2008). USWAG's decades-long involvement with the management of

fossil fuel combustion materials has given us a valuable knowledge base and

perspective from which to provide meaningful input on the development of EPA's UIC

regulations for CO2 sequestration.

USWAG outlines below its major views on the Proposal and then provides a

more detailed discussion regarding these and other issues.



### · EPA must resolve key policy and legal uncertainties to alleviate financial concerns of potential Class Vi well Owners or Operators and to encourage investment in the development and operation of Class Vi CO2 injection wells. Issues that must be addressed include the interaction of the Resource Conservation and Recovery Act (''RCRA'') and the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") with Class Vi injection activities as well as long-term post-injection liability.



### · In many instances the proposed requirements for Class Vi CO2 GS wells are unnecessarily more stringent than existing requirements for other well classes under the UIC Program. While it is essential that the Final Rule be protective of underground sources of drinking water ("USDWs"), many of the more rigorous requirements proposed for Class Vi wells are not warranted by findings of unique 

### risks posed by CO2 GS wells. The Final Rule should craft requirements that protect USDWs while avoiding the imposition of unnecessary costs or the creation of an unfounded negative public perception of C02 GS projects.



### · Because the technology described in the Proposal will not be commercially deployed for a number of years, the Final Rule must be flexible enough to accommodate developments in information and technology related to carbon sequestration. Similarly, because there is likely to be a significant amount of CO2 available for sequestration under the Program, the Final Rule should avoid arbitrary absolutes or blanket prohibitions regarding site selection or well construction or injection procedures. The Final Rule should keep available as

DC2DOCS i -#985086v7 2many options as possible for site selection and method of injection, subject

always to the standard that any CO2 GS be protective of USDWs.



### · Because carbon sequestration technology is still developing and the characteristics and limitations of CO2 GS projects will vary greatly from one site to another, it is essential to incorporate performance-based standards into the Final Rule, leading to a site-tailored approach to requirements for Area of Review ("AoR") reevaluation and post-injection site care and closure periods.


### · In discussing the potential applicability of RCRA's hazardous waste rules to Class Vi CO2 injection activities, EPA prematurely assumes that the CO2 is being "discarded" and is a solid waste under RCRA. To the extent there is any possibility that CO2 injection operations could be subject to RCRA controls, EPA should exempt such activities from RCRA regulation under the well-established "contingent management" concept, particularly given that the UIC permit will ensure that the injected material is not mismanaged.



### · In developing guidanæ identifying financial responsibility mechanisms available for post-injection care, EPA should retain the option of self-insurance instruments including the corporate financial test. Self-insurance has worked successfully for over two decades under the RCRA program and there is no reason why this option should not also be available for Class Vi UIC wells. EPA must also take steps to mitigate the specter of open-ended financial liability for CO2 injectionoperations after the cessation of the post-injection site care period. Such openend liability is one of the major impediments to the successful development of a 

### commercial CO2 GS program.



### · The Final Rule must not make the application process overly burdensome or unrealistic by requiring detailed information that may not be available at the time of the initial application; instead, the Final Rule should allow for submission of updated information regarding a CO2 GS well and its AoR as that information becomes available.



### · Given the similarities between Class Vi wells (as envisioned by the Proposal) and the existing requirements for those Class I and V wells permitted exclusively for CO2 injection, the Final Rule should allow grandfathering of construction and operating requirements for these existing wells seeking to become Class Vi wells provided that it can be demonstrated that such carrying-over of requirements will be protective of USDWs.



### · While directorial discretion is a useful mechanism to ensure flexibility in the Final Rule, such discretion must be clearly defined and limited.



### · Because state regulators have worked extensively with Owners or Operators of UIC Class V experimental CO2 wells and have familiarity with environmental, 

### geologic, and financial concerns specific to a given region, state adoption and

DC2DOCS i -#985086v7 3tailored implementation of the CO2 GS rules will be crucial to the success of the



### Program.

DISCUSSION
1. Legal and Regulatory Challenges to Commercial-Scale CO2 GS

It is important to recognize that the development of a viable, large-scale

commercial CCS program requires resolution of technical, policy, and legal issues that

are beyond the scope of this rulemaking. The General Accounting Office ("GAO")

recently issued a report entitled "Climate Change - Federal Actions Will Greatly Affect

the Viability of Carbon Capture and Storage As a Key Mitigation Option" which

emphasizes that significant technological barriers involving CO2 capture technologies

must be resolved before a successful CO2 CCS program of the scale envisioned by

policymakers can be achieved. GAO-08-1080 at 3-5 (September 2008) ("GAO

Report"). The GAO Report also references a number of regulatory and legal

uncertainties involving CO2 storage, leakage, and ownership issues, the resolution of



### which is critical to a successful CCS program. 'd. Federal agencies must also work

together to "examine how CO2 pipeline infrastructure might be regulated to

accommodate commercial-scale CCS," as well as how "C02 emissions reductions from



### CCS will be treated in a future emissions trading scheme." 'd. at 4.

In addition, the GAO report discusses the complex and still unresolved property

rights issues involving CO2 injection on both federal and nonfederal lands. 'd. at 42-23.

Finally, GAO cites a National Academy of Sciences ("NAS") report emphasizing that a

large-scale CO2 UIC program cannot be successful "if a significant fraction of the public

DC2DOCS 1-#985086v7 4views it as dangerous or unacceptable," concluding that CO2 storage technologies must

not only be safe and effective, they must be presented "to the public and the regulatory

community in such a way as to instill confidence that they are in fact safe and effective."

'd. at 49 (quoting National Research Council, NAS, Prospective Eva'uation of App'ied

Energy Research and Deve'opment at DOE (Phase Two) (2007)).

With that being said, this rulemaking can resolve some important policy and legal

issues and, in doing so, help foster the development of a practical, commercially



### deployable CCS regulatory program. For example, the Final Rule can provide much

needed clarity regarding (1) the potential for liability under RCRA and CERCLA resulting

from CO2 injection and GS activities, and (2) the options for addressing long-term post

### injection liability for Class Vi wells. GAO Report at 39-42. As discussed below, there

are practical regulatory and legislative options available to resolve these uncertainties

that will help assure the public and the regulated community that CO2 UIC activities can

be conducted in a manner that is both safe and effective.



### 2. Necessity of a Flexible Regulatory Scheme

USWAG applauds the efforts EPA has taken thus far to instill certainty and



### transparency in the future Class Vi CO2 regulatory regime. 73 Fed. Reg. at 43496. At

the same time, it is imperative that the Final Rule reflect the challenges inherent in

crafting regulations for commercial CO2 injection activities when large-scale commercial

operations are only at the nascent stage. The challenge confronting EPA in this

rulemaking is to establish a cost-effective and environmentally protective regulatory

DC2DOCS i -#985086v7 5program to cover a range of operations for which the technology wil not be

commercially deployed for a number of years.

To meet this challenge, it is critical that the Final Rule emphasize performancebased rules that can be readily adjusted and fine-tuned as industry and regulators alike

gain experience with large-scale CO2 sequestration. USWAG acknowledges EPA's

efforts to build flexibility mechanisms into the Proposal, including provisions for

directorial discretion and the suggestion that forthcoming guidance may be used to

clarify other requirements. In general, we agree that these methods will help create a

regulatory framework that can evolve as information and technological advancements

are gained in the field of carbon capture and sequestration. It is important, however,

that any directorial discretion be clearly defined and limited; this can be achieved while

still maintaining a rule that is flexible and avoids unnecessary prohibitions. In addition,

guidance on any aspect of the Final Rule (for example, clarification of requirements for

financial assurance mechanisms) must be developed in accordance with OMB's Good

Guidance Practices Bulletin, which directs that notice and comment be provided on

"economically significant" guidance documents.2 See 72 Fed. Reg. 3432, 3438 (Jan.



### 25,2007).

Because information and technology related to carbon sequestration will develop

as industry and regulators gain experience with CCS, USWAG urges EPA to avoid

blanket prohibitions or arbitrary absolutes in the Final Rule. We agree that the

appropriate standard underlying the technical requirements for CO2 GS wells is the

protection of USDWs. However, because it is difficult to know at this point what

2 The Bulletin defines "economically significant guidance document" as "a significant guidance document that 'may reasonably be anticipated to lead to' an annual effect on the economy of $100 million or more or adversely affect in a material way the economy or a sector of the economy." See 72 Fed. Reg. at 3435.

DC2DOCS i -#985086v7 6methods or technology will be developed for injection and long-term storage of CO2 in a

manner that is protective of USDWs - and because there is sure to be demand for

significant capacity for CO2 GS - EPA should not prematurely preclude the use of

specific types of sites or methods for Class Vi CO2 injection. The Final Rule should

leave the door open for a range of injection sites and methods (some of which are

unknown or not yet fully understood), provided that the Owner or Operator can show

that the injection and storage will be protective of USDWs.

3. Classification and Regulation of CO2 GS Wells
USWAG believes the creation of a new category of wells under the UIC Program

for long-term storage of CO2 is appropriate. 73 Fed. Reg. at 43502. USWAG agrees

with the Proposal's structure that would only apply the requirements for Class Vi wells

to those wells specifically permitted for purposes of geologic sequestration, while

maintaining a distinct permittng classification (Class II) for the injection of CO2 for the

purposes of enhanced oil and gas recovery. 'd.

With respect to the integration of state programs, USWAG agrees that the Final

Rule should create a delegable program and encourage the adoption and



### implementation of that program by states. 'd. at 43497. Our members' experiences

with Class V experimental CO2 wells underscore the benefits of regulation on a state

leveL. State regulators have familiarity with local environmental, geologic, and financial

concerns, and in many cases have pre-existing relationships with the regulated

community that will facilitate implementation of a new and complex regulatory program.

For these reasons, it is appropriate to allow states to obtain primacy for only Class Vi

DC2DOCS i -#985086v7 7

### wells if a particular state so chooses. 'd. at 43523. Such class-specific primacy is

consistent with the statutory authorization behind the UIC Program and EPA is correct

in predicting that states obtaining primacy for Class Vi wells - regardless of whether

they have sought primacy for other well classes under the UIC program - may be more

likely to develop a comprehensive regulatory program for all aspects of carbon capture

and storage. 'd.; see a'so 42 U.S.C. § 300h-1 (SDWA § 1422).

USWAG also urges EPA to issue more definitive direction in the Final Rule

regarding the regulation of CO2 injection activities that cross state boundaries. This

issue is mentioned in the Preamble to the Proposal but receives little attention. See 73

Fed. Reg. at 43497. Rather, EPA simply observes that "some injection activities may

raise cross-state boundary issues that are beyond the scope of this rulemaking." 'd.

EPA should provide more direction regarding how such cross-state activities would be

regulated, and specifically should make clear in the Final Rule that Owners or Operators

of Class Vi CO2 GS projects will seek a Class Vi permit for that operation from the state

in which the wellhead is located. In other words, a given state is the permitting body for

any Class Vi CO2 GS project with a wellhead in that state. EPA should direct states to

consult and coordinate with other affected states (i.e., other states to which the

underground portion of the well may extend and/or those to which there could be a

subsurface release or migration of injected material) in determining how to avoid



### duplicative or dueling regulatory systems. USWAG urges EPA to playa leadership role

and proactively address these issues by suggesting procedural guidelines for interstate



### regulation and cooperation.

DC2DOCS i -#985086v7 84. Grandfathering Requirements for Class I and V UIC Wells

Grandfathering is an extremely important issue to USWAG as a number of our

members have invested substantial resources in developing and permitting nonhazardous Class I and V experimental CO2 injection wells to help demonstrate the

viability of large-scale commercial deployment of C02 sequestration. Federal and state

governments are encouraging these efforts as their success is critical to the large-scale

commercial deployment of C02 sequestration. Therefore, Owners or Operators should

be given the opportunity to operate these wells on a regular basis as Class Vi wells

once the wells have been shown to be safe and effective on an experimental basis.

This will help encourage the substantial upfront investment necessary to get these wells



### permitted. USWAG therefore supports the Proposal's provision allowing for the

grandfathering of construction requirements for existing Class I and V wells developed

for the injection of CO2 if and when Owners or Operators of those wells seek a Class Vi



### permit for GS of CO2. 'd. at 43502.

However, the Proposal's grandfathering provision does not go far enough. It is

both necessary and appropriate to allow for grandfathering of requirements beyond

those related to construction where this carrying-over of requirements can be done in a

manner that is protective of USDWs. This is particularly true for the Class I and V wells

developed solely for the injection of CO2. It has already been determined through the

permittng process that the operation of these Class I and V wells is protective of



### USDWs. See 40 C.FR. § 144 et seq. Having made this determination, there should



### be a regulatory presumption that conversion of these wells for the exact same activity -

albeit at a larger scale and for an extended period of time - under the Class Vi program

DC2DOCS i -#985086v7 9is also protective of USDWs, with the understanding that grandfathering will not be

allowed if the Director demonstrates that conversion of these wells to Class Vi would

endanger USDWs. In other words, EPA should bear the burden of showing why

continued operation of the CO2 injection activities under the Class Vi program should

not be allowed.

To the extent that EPA can demonstrate that elements of the Class Vi program

not already incorporated into the pre-existing Class I or V permit are necessary to

protect USDWs, Owners or Operators can be required to incorporate such elements



### into the Class Vi permit. This approach would be preferable to a default wholesale

application of the Class Vi program requirements to Class I or V wells currently used for

the same activity and already proven to be protective of USDWs. USWAG

recommends that the Final Rule include a presumption that Class I and V CO2 injection

wells be allowed to transition into Class Vi wells based on existing conditions, while

allowing the Director to incorporate additional elements into the Class Vi permit if the

Director can show that continued operation of the pre-existing well under the Class VI

program would not be protective of USDWs.

5. Siting of CO2 GS Wells
As a general matter, USWAG believes that EPA must consider the potential

impact of CO2 GS projects on other pre-existing subsurface activities (e.g., natural gas

storage operations). In particular, the Final Rule should ensure that final Class Vi

permits not inappropriately interfere with these other pre-existing subsurface interests

and operations.

DC2DOCS i -#985086v7 10With respect to the types of formations into which CO2 may be injected for GS

under the UIC Program, it is counterproductive at this stage in the development of the

CO2 GS regulatory regime to categorically preclude any potentially feasible injection

formations as possible long-term storage sites. EPA recognizes that the commercial

deployment of CO2 GS activities will result in the new production of large volumes of

CO2 for which Owners or Operators will have to locate new and environmentally

protective injection zones. In fact, the GAO Report anticipates a need to permit

thousands, if not tens of thousands, of additional UIC wells to accommodate the

increased volumes of CO2 expected to be captured in a large-scale CCS program.



### GAO Report at 40. Therefore, it makes sound policy sense for EPA to encourage the

identification and utilization of as many injection zones as possible, with the prerequisite

that injection at any site be protective of USDWs.

To achieve this result, the Final Rule should avoid absolute prohibitions on any

category of injection site and instead keep all options open; injection should be allowed

as long as it can be demonstrated that injection will be protective of USDWs and meet



### other applicable conditions for Class Vi CO2 GS wells. As a result, USWAG believes

that the Final Rule should not contain a blanket prohibition on injection of CO2 into coal

seams (whether above or below the lowermost USDW) or into other formations such as



### basalts, salt domes, or shales. 73 Fed. Reg. at 43503. If it can be demonstrated that

the injection of CO2 into such sites is protective of USDWs, then such activities should

remain available options under the Class Vi UIC program.

On a related subject, EPA requests comment on whether the Final Rule should

require, or allow the Director to require at his discretion, the identification and

DC2DOCS i -#985086v7 11characterization of additional confining and containment zones above the primary (i.e.,

lowermost) confining zone that could further impede vertical fluid movement and allow



### for pressure dissipation - in effect, a "secondary containment" requirement. 'd. at

43505-06. As a general matter, USWAG opposes the inclusion of a secondary

containment requirement, even at the Director's discretion, and believes that it will only

be in the most unusual situations where circumstances warrant the requirement of this

additional 

### layer of protection.

In developing this regulatory program, EPA must ensure that CO2 GS is

protective of USDWs while simultaneously taking care not to unduly burden the

permitting process or discourage the development of environmentally protective Class



### Vi wells. While it is of course true that additional containment zones above the

confining zone could impede vertical fluid movement, there is no basis for requiring

these additional zones if it has a'ready been demonstrated that the original confining



### zone is protective of USDWs. A redundant requirement that is frequently unnecessary

will eliminate otherwise valid injection zones from the universe of potential Class Vi



### injection sites.

6. Interaction with RCRA

The Agency seeks comment on the proposal to preclude the injection of



### hazardous waste into Class Vi injection wells. 'd. at 43503. USWAG takes issue with

the underlying premise behind EPA's discussion regarding the potential applicability of



### the RCRA hazardous waste regulations to CO2 GS. 'd. The fundamental error in EPA's

request for comment on this point is its premature assumption that CO2 is being

DC2DOCS i -#985086v7 12discarded and therefore is a solid waste. A material cannot be a RCRA hazardous



### waste if it is not first a "solid waste." See 40 C.F.R. § 261.2. Under the statutory

definition of "solid waste," a material cannot be a "solid waste" unless it has first been

"discarded." 42 U.S.C. § 6903 (RCRA § 3001).

While there have been numerous judicial decisions addressing what constitutes

"discard," the fundamental holding from these cases is simple and straightforward:

Congress intended to extend EPA's authority to regulate "solid waste" under RCRA

"on'y to materials that are truly discarded, disposed of, thrown away, or abandoned"

American Mining Congress v. EPA, 824 F.2d 1177, 1190 (D.C. Cir. 1987) (emphasis

added). The D.C. Circuit has emphasized that the "plain meaning" of the term "solid

waste" extends only to materials that are "discarded" and that the term "discard" should

be interpreted with reference to its ordinary meaning. Ass'n of Battery Recyc'ers, 'nco v.

EPA, 208 F.3d 1047, 1051-52 (D.C. Cir. 2000).

CO2 is a valuable commodity used in a variety of manufacturing operations,

including in the enhanced oil recovery ("EOR") and enhanced gas recovery ("EGR")

production process. When used in these commercial applications, CO2 is not

"discarded" and therefore is not a solid waste. While large volumes of CO2 will be

produced under the CCS programs contemplated by the UIC Class Vi Proposal, it is

premature for EPA to presume that these additional volumes of CO2 will not retain

commercial value and that their sequestration in Class Vi wells automatically means

that they have been "discarded" as that term has been defined under RCRA. As we

have already cautioned, the Agency should refrain from making categorical

DC2DOCS i -#985086v7 13assumptions associated with this still-emerging technology, including with respect to the

status of captured C02 destined for GS.

Assuming, for purposes of argument, that CO2 is "discarded" and exhibits a

hazardous waste characteristic when injected for long-term sequestration, there are

compelling policy reasons to exclude such activities from RCRA regulation. Facilities

that have obtained a RCRA "permit by rule" for the operation of a Class i UIC hazardous

waste injection well are potentially subject to the full scope of RCRA's corrective action

program for all solid waste management units ("SWMUs") located at the facility,

including units that are in no way related to the CO2 injection operations. See 40 C.F.R.

§§ 270.1 (c)(1 )(i) and 270.64; see a'so EPA RCRA/Superfund Hotline Monthly

Summary, "Corrective Action for UIC Wells," 9502.1986(07) (April 1986). The potential

for RCRA applicability on such a broad scale is a significant economic and practical

obstacle for any facility considering whether to seek a permit for a new Class Vi well, as

facility-wide RCRA corrective action is an administratively complex and exceedingly

expensive undertaking.

The imposition of this obstacle is unwarranted because any well receiving a

permit under the UIC Program for CO2 GS will be, by definition, protective of USDWs.

EPA's RCRA program has established a legally sound process, referred to as

"contingent management," for the exclusion of materials from hazardous waste

regulation when such materials are already subject to an alternate regulatory regime

that ensures the wastes are managed in an environmentally protective manner. As

discussed below, where the potential for mismanagement of a waste is already

adequately addressed by another regulatory regime - as would be the case with the

DC2DOCS 1-#985086v7 14injection of CO2 under the Class Vi UIC program - regulation of such materials under

the RCRA's hazardous waste program is duplicative and unwarranted. EPA has

successfully employed the contingent management concept in various contexts where

the Agency determined that other regulatory regimes adequately addressed any

potential mismanagement scenarios related to certain materials; examples include

regulation of used oil, mixed radioactive/hazardous waste, and military munitions.

The Court of Appeals for the District of Columbia Circuit has reviewed EPA's

legal theory underlying the contingent management concept and found it to be a

"permissible construction of the statute," based on the idea that the statutory definition

of "hazardous waste" is predicated upon the risks posed by a solid waste when



### "improper'y" managed. Miltary Toxics Project v. EPA, 146 F.3d 948, 958 (D.C. Cir

1998) (emphasis added). Therefore, "where a waste might pose a hazard only under

limited management scenarios, and other regulatory programs already address such

scenarios, EPA is not required to classify a waste as hazardous waste subject to

regulation under (RCRA) Subtitle C." 'd.

Even if such operations were deemed subject to RCRA regulation, including a

RCRA permit by rule, EPA could - and should - establish a conditional exclusion from

RCRA regulation for CO2 GS operations. Such an exclusion would be legally justified,

consistent with the Agency's past promulgation of conditional exclusion rules, and would

make sound policy sense by removing a potentially significant regulatory barrier to the



### commercial development of C02 GS operations.

DC2DOCS i -#985086v7 15

### 7. Interaction with CERCLA

An important issue on which EPA seeks comment is the interaction of CERCLA

with the CO2 GS regulatory program. While EPA acknowledges that "C02 itself is not

listed as a hazardous substance under CERCLA," the Agency raises the possibility of

potential liability under CERCLA, including liability for natural resource damages, if the

CO2 stream contains other CERCLA hazardous constituents (e.g., mercury), or if other

hazardous constituents are formed when the injected CO2 stream reacts with

groundwater.3 73 Fed. Reg. at 43504. The potential for open-ended CERCLA liability

for any contamination resulting from CO2 GS activities will act as a serious deterrent to

would-be Owners or Operators of Class Vi wells and could jeopardize the contemplated



### wide-spread commercial deployment of CO2 GS operations.

EPA correctly acknowledges that CERCLA's "federally permitted release"

exemption will provide CERCLA protection from those releases that fall within the scope

of a Class Vi permit (e.g., contained within the AoR), but the Agency also recognizes

the limitations of this exemption, as it does not offer protection for any release of a

hazardous substance that is beyond the scope of the Class Vi permit (e.g., outside the

AoR). Indeed, EPA states that any permits will have to "be carefully structured to

ensure that they do not 'authorize' inappropriate hazardous releases," including

"potential releases from the well which are outside the scope of the Class Vi permit." 'd.

USWAG appreciates that the contamination issue is extremely important. At the

same time, the potential for open-ended CERCLA liability will impede the ability of

Owners or Operators to calculate and demonstrate financial responsibility, obtain

3 In the Preamble to the Proposal, EPA suggests that sulfuric acid is one such hazardous substance that could be formed when the injected CO2 stream reacts with groundwater; it is extremely unlikely that sulfuric acid would be produced as a result of the injectate reacting with groundwater.

DC2DOCS i -#985086v7 16financial assurance, and acquire the initial capital necessary to invest in this important

technology. The specter of CERCLA liability will serve as a significant barrier to the

commercial development of CO2 GS -unnecessarily so, given EPA's ample civil and

criminal enforcement authority under the SDWA for violations of UIC permits (see

SDWA § 1423(b), 42 U.S.C. § 300h-2(b) (authorizing the imposition of $32,500 per day

civil penalties and/or criminal penalties and imprisonment)). EPA must mitigate the

threat of potential CERCLA liability to the extent possible in this rulemaking.

One step that the Agency can take is to ensure that final Class Vi permits for

individual CO2 GS projects have the broadest possible reach whi'e remaining protective

of USDWs in order to maximize the protection offered by the federally permitted release

exemption. This would mean including in the scope of the permit for CO2 injection all



### other CERCLA hazardous constituents likely to be contained in the CO2 stream,

including those generated during capture and transport as well as any that could be

formed in the injection zone as a result of the injection of CO2. Similarly, the scope of

the authorized "permit zone" should be as broad as possible while remaining protective

of USDWs. This could mean, for example, effectively authorizing the migration of

constituents contained in the C02 stream (or resulting from injection) outside the scope

of the AoR, provided that such migration does not directly impact a USDW.

We understand that EPA's authority in this rulemaking is limited by the SDWA.

However, given the importance of this issue from a public policy perspective, we urge

EPA to take whatever regulatory measures are available to mitigate the chilling effect

that the potential for such open-ended liability could have on CO2 GS operations, and

DC2DOCS i -#985086v7 17then consider whether a legislative solution is necessary to eliminate this concern. If so,

we recommend that EPA strongly support such a solution.

8. Modeling
As most models now are proprietary, USWAG supports the use of proprietary

models for use with CO2 GS sites. As EPA recognizes, many popular proprietary codes

in the petroleum-reservoir engineering discipline have been used in peer-reviewed

studies to model CO2 sequestration. 73 Fed. Reg. at 43507. These and other

proprietary models should be available for use in modeling for Class Vi CO2 GS wells,

provided that they are based on accepted science and have been validated, and as long

as the Owners or Operators using proprietary models disclose, as necessary, the code

assumptions, relevant equations, and scientific basis of each modeL. USWAG believes

that the use of computational fluid flow models for delineating the AoR of GS sites is



### acceptable but should not be required. 'd.

9. Area of Review and Corrective Action
USWAG appreciates the importance and complexity of proper AoR evaluation.

See id. The Proposal would require Owners or Operators to invest a significant amount

of time and resources in the initial delineation of the AoR. Provided that the Program's

requirements are satisfied in the initial determination of the AoR, USWAG believes that

a requirement for AoR reevaluations every ten years or at any other fixed period is

unnecessary; this will result in the arbitrary imposition of costs that may be wholly

unwarranted. A more appropriate approach would be performance-based, with

DC2DOCS 1-#985086v7 18reevaluation required upon occurrence of some triggering event. One example of a

triggering event could be a significant deviation from previously modeled scenarios,

provided that the level of deviation that would require reevaluation is clearly defined by

the regulating agency. As with many other decisions related to implementation of the

Class Vi CO2 GS program, determinations such as these are best made on a local level
by regulators having the most familiarity with the characteristics and constraints of a



### given geologic setting for a CO2 GS project.

Corrective action - As a threshold matter, USWAG believes that the terminology

used in the Proposal is problematic; use of the phrase "corrective action" to describe

well plugging and repair risks confusion with the concept of corrective action under

either RCRA or CERCLA. As the GAO Report cautions, public perception is critical to

the development of a commercially viable CO2 GS program. GAO Report at 49. To

avoid any unintended and unwarranted negative associations with the phrase

"corrective action," USWAG suggests the Final Rule abandon this phrase and instead

use a phrase such as "well plugging and repair."

Most importantly, USWAG supports a phased approach to corrective action (well

plugging and repair) for CO2 GS wells as contemplated in the ProposaL. 73 Fed. Reg.

at 43507-08. However, a phased approach to well plugging and repair for CO2 GS



### wells should be available to all Owners or Operators of CO2 GS wells rather than be

available only at the discretion of the Director. 'd. at 43508 (proposal "would give the

Director the discretion to allow owners or operators to perform corrective action on an

iterative, phased basis... "); see a'so id. at 43536-37 (including proposed § 146.84(b),

which would require Owners or Operators of Class Vi wells to, inter a'ia, "perform

DC2DOCS i .#985086v7 19corrective action that meets the requirements of this section and is acceptable to the

Director").

As EPA recognizes, the AoR for CO2 GS sites may be extensive; requiring well

plugging and repair to be complete for all wells in a CO2 GS AoR prior to

commencement of the injection project would be overly burdensome, unnecessary, and



### unrealistic. This is particularly true given that the AoR may be shown, through periodic

AoR reevaluations, to have expanded or shifted, identifying new wells for plugging and



### repair. USWAG supports an approach that would require the Owner or Operator of a

Class Vi well to perform pre-injection well plugging and repair on only those wells within



### the portion of the AoR that would be intersected by the CO2 plume or pressure front

during the initial years of injection. Well plugging and repair for the rest of the AoR

should be allowed to take place as the injection project progresses, ensuring that,

eventually, "all wells in the AoR that need corrective action (well plugging and repair)



### eventually receive it." 73 Fed. Reg. at 43508.

On a related topic, USWAG would like to ensure that the obligation of Class Vi

Owners or Operators to plug or repair a pre-existing well within the AoR will not be

viewed as excusing prior well owners or operators from fulfilling their own pre-existing

legal obligations under applicable federal or state law to have properly closed the well in

the first instance. Well plugging and repair obligations imposed on Class VI Owners or

Operators should not supersede any pre-existing legal obligations that have yet to be

fulfilled by previous owners or operators. To prevent this from occurring, the Final Rule

should make clear that, in those circumstances where pre-existing wells in an AoR have

not been properly closed and are now subject to well plugging and repair under a Class

DC2DOCS 1-#985086v7 

### 20Vi UIC permit, EPA and/or the applicable state regulatory agency should first look to

see whether the responsible party for such closure is still available to properly close the

well as legally required before imposing such obligations on the Owner or Operator of

the Class Vi UIC permit.

It also is important to clarify in the Final Rule that well plugging is only necessary

and appropriate for those wells that are potential conduits of contamination to USDWs.

USWAG raises this point because EPA suggests that the Final Rule may give the

Director discretion to require Owners or Operators to conduct surface air monitoring



### and/or soil gas monitoring in the AoR. 'd. at 43516. Such a requirement would be

appropriate only to the extent that this monitoring would be done with the goal of

identifying potential endangerment of USDWs as a result of C02 injection and



### sequestration activities. 'd. To the extent that such monitoring would be required

simply to guard against potential atmospheric releases or to trigger a corrective action

requirement to terminate such atmospheric releases, it would be outside of the scope of

EPA's authority under this rulemaking. See id. at 43498 ("preventing releases of CO2 to

the atmosphere is not within the scope of this proposal").



### Proposed requirements for well drillng. construction, and other characteristics -

With respect to many of the proposed requirements, USWAG believes it is imperative to

craft the Final Rule as a flexible instrument that establishes performance-based

standards, which can be achieved through a variety of methods as long as there is a

sound technical basis underlying each method and assuring its protection of USDWs.

See id. at 43508-09. Because this technology is years from commercial deployment

and is still developing, the Final Rule should allow for the use of technologies and

DC2DOCS i -#985086v7 21methods that are not yet developed or are only in the beginning stages, provided that

they are shown to be protective of USDWs. This logic also applies to argue against a

prohibition on any type of well drilling, whether horizontal, vertical, or angled. 'd. at

43509. There will likely be a need to maximize capacity for CO2 GS, and it would be

premature at this point to impose a blanket prohibition on any type of well drilling without

knowing whether that drilling could be done in a manner that is protective of USDWs.

10. Proposed Injection Well Operating Requirements

USWAG reiterates that in order to accommodate developing technology and

varied geological settings, the Final Rule must be flexible and avoid overly burdensome

or prescriptive measures that do little to further the protection of USDWs. For example,

a requirement for down-hole shut-off valves would force Owners or Operators to incur

great costs, particularly if those valves malfunction, with minimal benefit. 'd. at 43511.

Additiona' injection sites - As discussed above, it is likely that there will be great

demand for wells in which to inject CO2 for GS, with the potential need for tens of

thousands of additional sites. Accordingly, the goal of the Program should be to provide

as much capacity as possible for CO2 GS while still ensuring that USDWs are not

jeopardized. USWAG supports alternative approaches that would allow injection

between and/or above the lowermost USDW, increasing capacity for CO2 GS, as long

as Owners or Operators of Class Vi wells can show that their CO2 GS operations will be



### protective of USDWs. 'd. at 43512. This will be particularly important in areas of the

country with deep USDWs, where an absolute requirement that Class Vi wells be

constructed beneath the lowermost USDW could render the program impracticaL. 'd.

DC2DOCS i -#985086v7 

### 22USWAG also supports this alternative approach in areas where the Owner or Operator

can show that geologic conditions would prevent fluid movement into adjacent USDWs.


### 'd. For similar reasons, USWAG opposes an absolute prohibition on use of exempt

aquifers for Class Vi injection; use of exempt aquifers should be permitted where the

specific aquifer exemption criteria are satisfied. 'd.

Hvdrau'ic fracturing - While hydraulic fracturing is not appropriate in all geologic

settings, it should be an available option, subject to approval of the Director. See id. at

43511. For years, EOR operations have employed hydraulic fracturing to enlarge

fractures in rock; hydraulic fracturing has proven an effective way to create permeability

and increase well capacity with minimal risk to USDWs. Because this technique has

been used safely for many years, there are regulatory protocols in place that could be

adopted to ensure safe and effective hydraulic fracturing where appropriate for Class Vi

CO2 GS operations. When used where appropriate, hydraulic fracturing increases the

capacity of existing wells, thereby requiring fewer cap rock penetrations and fewer wells



### overall. Again, USWAG shares EPA's underlying goal of protecting USDWs, and

recognizes that hydraulic fracturing may not meet this standard in some situations; we

ask only that the opportunity remain for use of hydraulic fracturing at the Director's

discretion and only when the Owner or Operator can demonstrate that such fracturing

will not jeopardize USDWs.

Tracers - The use of tracers should not be required for CO2 GS operations, even

if only at the discretion of the Director. EPA correctly notes that many drawbacks can

accompany the use of tracers, including the possibility of false positives, the release of

PFCs to the atmosphere, and uncertainty regarding cost-effectiveness. 'd. at 43512-13.

DC2DOCS i -#985086v7 

### 23These negative aspects argue against allowing the Director to exercise discretion to

require the use of tracers. If anything, the use of tracers should only be an option

available at the discretion of Owners or Operators, subject to the approval by the

Director.

P'ume and pressure front monitoring - USWAG appreciates the importance of

accurate monitoring of the subsurface extent of the plume and pressure front. 'd. at

43514. We believe, however, that over time constant monitoring may prove

unnecessary as more information is gained regarding the accuracy of initial modeling.

Any requirements for plume and pressure front modeling in the Final Rule should be

flexible enough to adjust in the coming years as industry and regulators become more

knowledgeable regarding the reliability of the modeling techniques initially used.

With respect to the Proposal's suggestion for surface monitoring requirements,

USWAG believes that such requirements will come at significant cost with little benefit.

While surface monitoring may reveal CO2 migration, these data will be of limited use

since, by that point, CO2 has already been released to the surface. Moreover, data

from surface air and soil gas monitoring are complicated by a number of factors,

including natural and anthropogenic impacts from fires, development, and population

growth. Rather than spending significant resources on gathering data that are of limited

reliability and of little practical use in preventing surface releases, the Final Rule should

direct that these resources will be put towards detection of subsurface CO2 movement.

This would prove a far more effective use of monitoring resources as it would enable



### Owners or Operators to correct any problems before CO2 reaches the surface.

DC2DOCS i -#985086v7 

### 2411. Permit Application and Reporting Requirements

The Proposal would impose a number of requirements on Class Vi permit

applications that are not currently required under the existing UIC regulations, most

notably the mandatory inclusion of a monitoring and testing plan, an AoR and corrective


### action plan, and a post-injection site care and site closure plan. 'd. at 43517. For many

of these requirements, there do not appear to be concrete risks particular to CO2 GS

that would warrant these additional measures.

USWAG is particularly concerned that the level of detail that would be required

for Class Vi permit applications is overly burdensome and unnecessary. A great deal of



### this information may be unavailable - or could be speculative at best - because of a

lack of information at the early stages in the application process; an ongoing

requirement for submission of this information over time, as it becomes available

through drilling and operation of the well, would be of greater practical use and would

lead to collection of more accurate data.

For example, some requirements for information related to geologic structure and

hydrogeologic properties of the proposed storage site and overlying formations may be

unavailable until drilling commences, including "data on the depth, areal extent,



### thickness, mineralogy, porosity, permeability and capillary pressure... geologic cores,

outcrop data, seismic surveys, ... and lithologic descriptions" of the injection and

confining zones (proposed § 146.82(d)(4)) and "geomechanical information on

fractures, stress, ductility, rock strength, and in situ fluid pressures within the confining



### zone" (proposed § 146.82(d)(5)). 73 Fed. Reg. at 43536. While some of this

DC2DOCS i -#985086v7 

### 25information may be available during the permit application process, other details will be

unavailable prior to drilling.

To require detailed information that may either be unreliable, because it is based

on unrealistic or unfounded predictions, or may simply be unavailable could delay the

permitting process and have an overall chilling effect on C02 GS projects. EPA should

craft these requirements with flexibility and require in the initial permit application on'y

that information which is necessary to determine whether issuance of a Class Vi permit



### is appropriate. Submission of additional information as it becomes available - whether

through well drilling, construction, operation, reevaluation, or corrective action - will

allow for more reliable data that will in turn ensure greater protection of USDWs.



### Reporting - USWAG agrees that electronic reporting should be an option

available to all states for data exchange related to Class Vi wells, but believes that the

Director should have the discretion to allow other modes of reporting. 'd. at 43517-18.

We appreciate the important steps EPA has taken, including the awarding of grants, to

ensure that all states will have the capability to exchange data electronically. 'd.

USWAG also realizes the benefits of electronic reporting, particularly in terms of

facilitating the application process and streamlining review of CO2 GS projects.

However, while it is likely that all states will eventually have the general capability to

report electronically, some may not have that capacity yet. Additionally, it is foreseeable

that extraordinary circumstances may arise that would preclude access to or limit

availability of electronic resources. Accordingly, any requirement contained in the Final

Rule for electronic reporting should not be absolute but should instead allow the

DC2DOCS 1-#985086v7 

### 26Director to approve other methods of reporting when he deems such methods more



### appropriate.

With respect to the Proposal's suggestion of an annual reporting requirement for

CO2 GS projects, USWAG appreciates the importance of the information EPA seeks to

gather but believes that annual reporting will not always be the best way to collect this



### information over the lifetime of the project. 'd. at 43518. The Final Rule will require

some form of periodic reevaluation of the AoR throughout the life of the project; much of

the information sought through the proposed annual reporting requirement would be

gathered and submitted to EPA through the AoR reevaluation process. Gathering this

information through the AoR reevaluations alone, rather than imposing an unnecessary

and duplicative annual reporting requirement, will provide a more cost-effective and

manageable method of information exchange for regulators and Owners or Operators

alike.



### 12. Well Plugging and Post-Injection Site Care

USWAG believes that the Proposal's suggested fifty-year default fixed timeframe

for the post-injection site care period is arbitrary and will serve to discourage Owners or

Operators of CO2 GS sites from seeking to develop innovative ways to safely close



### wells in a shorter time period. 'd. at 43519. EPA acknowledges that it is likely "that the

actual time for CO2 plume stabilization ... will be very site specific, being influenced by

geologic factors such as formation permeability, geochemistry, and the degree of


### capillary trapping." 'd. (emphasis added). In fact, EPA observes that the studies used

for their preliminary analysis suggest that the length of time required before plume

DC2DOCS 1-#985086v7 

### 27

### stabilization ranges from ten to one hundred years after cessation of injection - quite a

significant range. 'd.

While a ten-year site closure period may be insufficient in some cases, it is clear

that there is no single time period that would apply to every CO2 GS site across the

board. Because of the greatly varied characteristics and needs of different CO2 GS

projects, application of a performance-based standard which is highly site-specific,

rather than any default time period, is the most appropriate approach to the postinjection site care requirements. While the Proposal would give the Director discretion

to decrease or increase the post-injection site care and closure period, the inclusion of a

fifty-year default timeframe is likely to discourage Owners or Operators from working to

develop technology that would facilitate safe and quick site closure; the fifty-year default

may even have a chilling effect on the Program as a whole, discouraging would-be

Owners or Operators from undertaking a CO2 GS project that could impose

requirements decades into the future even when unnecessary. In contrast, by tailoring

requirements to a given site, a performance-based standard would encourage the

development of methods and technology that would achieve long-term protection of

USDWs with well closure after a shorter period of time.

13. Financial Responsibility
The GAO report correctly identifies stakeholders' concerns with the uncertainties

regarding the type of financial instruments that will be acceptable to meet the Final

Rule's financial responsibility requirements, as well as concerns related to the open

### ended nature of post-injection site care liability. GAO Report at 39-40. As the GAO

DC2DOCS i -#985086v7 

### 28report suggests, further clarity and certainty with respect to these issues is critical to

remove these barriers to the commercial development of CO2 GS wells.



### Financia' instruments - With respect to financial responsibility mechanisms,

USWAG is not opposed to EPA's future issuance of guidance describing acceptable

mechanisms provided that the guidance is issued in accordance with OMB's Good

Guidance Practices Bulletin, including an opportunity for public notice and comment



### before issuance of any final guidance. 73 Fed. Reg. at 43520-22. In this regard, it is of

paramount importance that self-insurance instruments - including the corporate

financial test - remain available to Owners or Operators as a method of financial



### assurance for Class Vi CO2 GS projects. 'd. at 43521. In referencing the assessment

by the Environmental Finance Advisory Board ("EFAB") of various financial

responsibility instruments, including self-insurance instruments, EPA recognizes that

EFAB's assessment was not based on any failures of the corporate financial test. 'd.

Self-insurance instruments, including the corporate financial test and the corporate

guarantee, have been utilized successfully under the RCRA program for over two

decades and these instruments should be included in the final menu of options for

meeting financial responsibility obligations under the Final Rule.

USWAG does not agree with the Preamble's suggestion that the cost of selfinsurance should be based on the cost of retaining an independent third party to



### conduct covered activities including well plugging. 'd. In many cases, utilities are

sophisticated, integrated companies and will be able to do the same work in a more

cost-effective method that is just as technically sound and protective of USDWs, if not

more so, than an approach taken by a third party.

DC2DOCS i -#985086v7 

### 29USWAG supports the Proposal's suggestion to allow separate financial

responsibility demonstrations for different phases of CO2 GS projects, specifically for



### well plugging and then post-injection site care. 'd. at 43522. As EPA recognizes, "postinjection site care has the potential to extend many years into the future," and "(t)rying to

determine the cost for post-injection site care... could be difficult, as could the approval



### of a financial demonstration." 'd. Requiring all financial demonstrations to be

completed at one time, prior to well plugging, could unnecessarily delay the site closure

process. Allowing a subsequent demonstration for financial responsibility for the postinjection site care period will allow regulators and Owners or Operators to better

understand the site-closure needs for a given CO2 GS project prior to demonstration

and approval of financial responsibility. This would be particularly helpful as the

Program advances, and industry and regulators gain experience and knowledge related



### to CO2 GS projects.

Long-term 'iabi'itv - The potential for indefinite financial responsibility on the part

of Class Vi well Owners or Operators for any post-injection migration and contamination

of USDWs at GS sites remains of paramount concern to USWAG. EPA acknowledges

that, under the existing SDWA statutory scheme, the Agency has the authority to

terminate the obligation of an Owner or Operator to maintain financial responsibility

instruments for well plugging and post-injection site care. However, EPA also

acknowledges that "owners or operators may still be held responsible after the postinjection site care period has ended (e.g., for unanticipated migration that endangers


### USDWs)." 'd. at 43522. Further, EPA does not currently have the authority "to transfer

DC2DOCS 1-#985086v7 

### 30liability from one entity to another. Trust responsibility for potential impacts to USDWs

remains with the owner or operator indefinitely under current SDWA provisions." 'd.

The private sector will be extremely reluctant to invest the tremendous amount of

time and resources necessary to finance the development of a commercial-scale CO2

GS program if such investments have open-ended liability. USWAG fully appreciates

that EPA is studying this issue and is compiling information "on a variety of alternative


### instruments not currently available under the SDWA" 'd. at 435222. EPA has placed in

the docket a July 2008 EPA report entitled "Approaches to Geologic Sequestration Site



### Stewardship After Site Closure" ("Stewardship Report"). See id. The Stewardship

Report provides a discussion of examples of site closure scenarios, as well as

suggestions on how EPA can cap the amount of post-injection site liability for Class Vi

CO2 well Owners and Operators. Two of the important themes that emerge from the

Stewardship Report are (1) the need to equitably balance the risks of CCS between

public and private actors, and (2) "the need to reduce excessive barriers to commercialscale development of GS" which would "deprive the general public of the benefits of


### reduced CO2 emissions due to GS technologies." Stewardship Report at 11,26. Any

program or mechanism used to limit the opened-end liability of Class Vi well Owners or

Operators must (1) properly reflect the important public benefit in having utilities

undertake the massive investments necessary to develop a commercial-scale CO2 CCS

program, and (2) remove the economic uncertainties associated with investing in such

large-scale programs.

USWAG urges EPA to place a priority on these issues and to actively pursue a

legislative solution if necessary to provide the Agency with the authority to limit postDC2DOCS i -#985086v7 31injection site care liability and/or provide a mechanism to transfer the liability after a

certain period of time, as has been done under other statutory programs. While the

issue of open-ended liability need not be wholly resolved in this particular rulemaking,

USWAG respectfully suggests that this problem must be resolved before a successful

CO2 GS program can be implemented in this country.

14. Public Participation

USWAG agrees that public participation is crucial to the success of any individual



### CO2 GS project and of the UIC Program as a whole. 'd. at 43523. We urge EPA to

structure the Final Rule's public participation requirements to maximize impact without

unnecessarily slowing down the application process. To this end, the Final Rule should

not require public participation too early in the permit process; USWAG believes that

public participation would prove most useful after an application has been deemed

complete but before it has been approved.

* * * * *

USWAG appreciates the opportunity to comment on this important rulemaking

initiative and looks forward to working with EPA on this effort.

DC2DOCS 1-#985086v7 32Letter ID: 0173 Commenter: James Rower Organization: Utility Solid Waste Activities Group (USWAG)

Letter ID: 0173 Comment ID: 23459 Letter Lines: 101 to 107

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

Comment: • EPA must resolve key policy and legal uncertainties to alleviate financial concerns of potential Cl ass VI well Owners or Operators and to encourage investment in the development and opera tion of Class VI CO2 injection wells. Issues that must be addressed incl ude the interaction of the Resource Conservation and Recovery Act ("RCRA") and the Comprehensive Environmental Response, Compensation, and Liability Ac t ("CERCLA") with Class VI injection activities as well as long-ter m post-injection liability.

Individual Response: EPA received many comments regardi ng the applicability of the RCRA regulations and statute to CO2 st reams 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 sulfuric 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: 0173 Comment ID: 23460 Letter Lines: 109 to 116

Comment Code: 1210 1.1.1 Comments about the proposed rule Comment Code: 3140 2.1.4 Comments that the proposed ge ologic data requirements are too

1stringent

Comment: • In many instances the proposed requirements for Class VI CO2 GS wells are unnecessarily more stringent than existing requirements for ot her well classes under the UIC Program. While it is essential that the Final Rule be protective of underground sources of drinking water (" USDWs"), many of the more rigorous requirements proposed for Class VI wells ar e not warranted by findings of unique risks posed by CO2 GS wells. The Final Rule should craft requirements that protect USDWs while avoiding the imposition of unnecessary costs or the creation of an unfounded negative public pe rception of CO2 GS projects.

Individual Response: EPA disagrees that the requireme nts at §146.82 are too stringent and believes that a detailed geological site characteriza tion is essential to eval uating the presence and adequacy of the various geologic features necessary to receive and confine injected CO2 for GS. The requirements for geologic site characteriza tion are based on a long standing UIC regulatory framework developed to address specific risks to USDWs posed by injection. The Class VI GS requirements are tailored so that they are appr opriate for the unique natu re of injecting large volumes of CO2 into a variety of geologi cal formations for long-term storage.

The mission of the UIC program and the goal of the GS regulation is to protect USDWs from endangerment, and every aspect of the GS rule is designed toward th at end. Therefore, EPA disagrees that any of these pr otective requirements are unnecessa ry, and clarifies that waiving any of the requirements would not be acceptable. The GS regulation allows flexibility where appropriate. Certain requirements (e.g., the need to characterize additiona l confining layers) are at the Director's discretion (§146.83(b)), based on his or her understanding of a particular site.

EPA disagrees that the requirements would nega tively affect public perception of CO2 GS projects. Rather, EPA believes that a demonstration 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.

Letter ID: 0173 Comment ID: 23461 Letter Lines: 118 to 126

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

Comment: • Because the technology described in th e Proposal will not be commercially deployed for a number of years, the Final Rule must be flexible enough to accommodate developments in information and technology related to carbon sequestration. Similarly, because there is likely to be a significant amount of CO2 available for sequestration under the Pr ogram, the Final Rule should avoid arbitrary absolutes or blanket prohibiti ons regarding site selection or well construction or injection procedures. The Final Rule should keep available as many options as possible for site selec tion and method of injection, subject always to the standard that any CO2 GS be protective of USDWs.

2Individual 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 flex ible approach, where operators of GS projects would develop and implement site-specific plans for delineating the AoR, testing and monitoring the site, performing corrective actio n, and post-injection site care . EPA believes that the plans— which would be reviewed and approved by the Director and periodical ly updated throughout the life of the project—promote an ongoing dialogue between the operato r and the Director that will encourage use of the most appropriate t echnologies for a particular project.

To address the comment that the rule should accommodate future technological developments related to GS, EPA adds that it is using an ad aptive approach to regulating GS under the UIC Program. Even after finalization of the GS regulat ion, 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 documenta tion are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Letter ID: 0173 Comment ID: 23462 Letter Lines: 128 to 132

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

Comment: • Because carbon sequestration technol ogy is still developing and the characteristics and limitations of CO2 GS projects will vary greatly from one site to another, it is essential to inco rporate performance-based standards into the Final Rule, leading to a site-tailored approach to requirements for Area of Review ("AoR") reevaluation and post-inj ection site care and closure periods.

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 flex ible approach, where operators of GS projects would develop and implement site-specific plans for delineating the AoR, testing and monitoring the site, performing corrective actio n, and post-injection site care . EPA believes that the plans— which would be reviewed and approved by the Director and periodical ly updated throughout the life of the project—promote an ongoing dialogue between the operato r and the Director that will encourage use of the most appropriate t echnologies for a particular project.

EPA adds that it is using an adaptive approach to regulati ng GS under the UIC Program. Even after finalization of the GS regula tion, EPA plans, every six years, to collect and review project data on GS research projects to determine wh ether 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: 0173 Comment ID: 23463 Letter Lines: 134 to 140

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

3Comment: • In discussing the potential applicability of RCRA's hazardous waste rules to Class VI CO2 injection activities, EPA prem aturely assumes that the CO2 is being "discarded" and is a soli d waste under RCRA. To the extent there is any possibility that CO2 injection operations could be subject to RCRA controls, EPA should exempt such activities from RCRA regulation under the well-established "contingent management" concept, partic ularly given that the UIC permit will ensure that the injected ma terial is not mismanaged.

Individual Response: EPA received many comments regardi ng the applicability of the RCRA regulations and statute to CO2 st reams 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 ch anges to the RCRA regulations.

Letter ID: 0173 Comment ID: 23464 Letter Lines: 142 to 150

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

Comment: • In developing guidance identifying fi nancial responsibility mechanisms available for post-injection care, EPA should retain the option of selfinsurance instruments includi ng the corporate financial test. Self-insurance has worked successfully for ove r two decades under the RCRA program and there is no reason why this option should not also be available for Class VI UIC wells. EPA must also take steps to mitigate the sp ecter of open-ended financial liability for CO2 injection operations after the cessa tion of the post-inj ection site care period. Such openend liability is one of the major impediments to the successful development of a co mmercial CO2 GS program.

Individual Response: EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial te st can be an appropriate option for some owners or operators. EPA recognizes that it is important for sel f-insurers to be creditworthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be ab le to demonstrate profit ability, with a margin sufficient to cover contingencie s and unknown obligations, and stab ility. 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 fi nancial 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 dem onstrating that its corporate parent meets the financial requirements on its behalf.

4EPA is developing guidance that describes the types of financia l instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for Class VI wells. The financial res ponsibility guidance will include considerations for Directors regarding how best to evaluate the appropriateness of a sp ecific financial responsibility instrument for a specific project. EPA notes that directors may disallow ce rtain instruments. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm.

Letter ID: 0173 Comment ID: 23465 Letter Lines: 152 to 156

Comment Code: 3140 2.1.4 Comments that the proposed ge ologic data requirements are too stringent Comment Code: 3300 2.2.1 Delineating the AoR/M odeling CO2 movement

Comment: • The Final Rule must not make the application process overly burdensome or unrealistic by requiring detailed informati on that may not be available at the time of the initial application; inst ead, the Final Rule should allow for submission of updated information regardi ng a CO2 GS well and its AoR as that information becomes available.

Individual Response: EPA agrees that not all of the information listed at §146.82 of the proposed regulation will be avai lable at the time the owner or operator develops their initial permit application. In response to comments and based on an evaluation of the proposed requirements at §146.82, the Agency revised this subpart so that the final regulation specifies separate requirements for information to be submitted with the permit application and before well construction is approved (at §146.82(a)) and in formation to be submitted before operation of the well is authorized (at §146.82(c)).

EPA believes that this revisi on of §146.82 addresses commenters' concerns regarding the timing of information to be submitted. In addition, §146.82 in the final rule is similar to the permit application requirements for other injection well classes, which c ould help avoid confusion about how to meet the permitting requirements for Cl ass VI wells. The requirements at §146.82(c) for information to be submitted before operation of th e well is authorized are very similar to those for Class I wells, with modifications and additio ns that address the unique challenges and types of data collected for GS wells.

Letter ID: 0173 Comment ID: 23466 Letter Lines: 158 to 163

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

Comment: • Given the similarities between Class VI wells (as envisioned by the Proposal) and the existing requirements for those Class I and V wells permitted exclusively for CO2 injection, the Final Ru le should allow gr andfathering of

5construction and operating requirements fo r these existing wells seeking to become Class VI wells provided that it can be demonstrated that such carryingover of requirements will be protective of USDWs.

Individual Response: EPA agrees that many Class I and Cl ass 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 grandfathe red per §146.81(c), provided th e owner or operator can demonstrate to the Director that the wells were engineered and constructed to meet the requirements at §146.86(a) and ensu re protection of USDWs, in lieu of requirements at §146.86(b) and §146.87(a). EPA clarifies that only the construction requirements are grandfathered and that all other Class VI requirements (reporting, monitoring, mechnical integrity testing, etc.) must be met fo llowing a determination under §146.81(c).

Letter ID: 0173 Comment ID: 23467 Letter Lines: 165 to 166

Comment Code: 1200 1.1 General comments about the rulemaking

Comment: • While directorial discretion is a useful mechanism to ensure flexibility in the Final Rule, such discretion must be clearly defined and limited.

Individual Response: To promote consistency while providi ng the Director with an appropriate level of discretion, EPA is devel oping guidances for States, Tribes , and Territories that describe the process of applying for and receiving primacy for GS Cla ss VI wells under Section 1422 of SDWA. EPA is also developing guidance on the t echnical and administrativ e issues associated with developing GS regulations that are the equivalent of minimum federal criteria and requirements. This guidance will be available on EPA’s website at http://water.epa.gov/type/groundwat er/uic/wells_sequest ration.cfm. Please see the remainder of EPA's responses to this comment for further de tails. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0173 Comment ID: 23468 Letter Lines: 168 to 172

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

Comment: • Because state regulators have worked ex tensively with Owners or Operators of UIC Class V experimental CO2 wells and have familiarity with environmental, geologic, and financial concerns specific to a given region, state adoption and tailored implementation of the CO2 GS rule s will be crucial to the success of the Program.

Individual Response: EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settin gs in which GS will be applied. EPA recognizes that State, Tribal, Territorial, a nd DI UIC Program Direct ors are in the best position to evaluate the unique issues related to well depth, geol ogy, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Cl ass VI wells because each decision made will be

6site-specific and conditions will di ffer from state to state. The GS rule balances the need for these site-specific decisions with the need for mi nimum standards to ensure national consistency.

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 fr amework. 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 (encom passing capture, transportation, and geologic sequestration) to be an important part of a na tional 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 res ponsibility for implementation of Class VI regulations and provide for a more co mprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA in to a broader framework for managing CCS. The Agency will allow independe nt primacy for Class VI wells under §145.1(i) of the final GS rule. Furthermore, GS opera tions 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 leve l (but outside UIC author ity) to provide a more comprehensive CCS management approach.

Letter ID: 0173 Comment ID: 23469 Letter Lines: 174 to 192

Comment Code: 1300 1.1.2.3 Comments on other aspects of CCS (capture, transport)

Comment: DISCUSSION

1. Legal and Regulatory Challenges to Commercial-Scale CO2 GS

It is important to recognize that the development of a viable, large-scale commercial CCS program requires resolu tion of technical, policy, and legal issues that are beyond the scope of th is rulemaking. The General Accounting Office ("GAO") recently issued a report entitled "Climate Change - Federal Actions Will Greatly Affect the Viability of Carbon Capture and Storage As a Key Mitigation Option" which emphasizes that significant technological barriers involving CO2 capture technologies must be resolved before a successful CO2 CCS program of the scale envisioned by polic ymakers can be achieved. GAO-08-1080 at 3-5 (September 2008) ("GAO Report"). The GAO Report also references a number of regulatory and legal uncertainties involving CO2 storage, leakage, and ownership issues, the resolution of which is criti cal to a successful CCS program. Id. Federal agencies must also work toge ther to "examine how CO2 pipeline infrastructure might be regulated to a ccommodate commercial-scale CCS," as well as how "CO2 emissions reductions from CCS will be treated in a future emissions

7trading scheme." Id. at 4.

Individual Response: EPA emphasizes that the UIC program ’s authority under the SDWA is focused on ensuring that Class VI CO2 injection projects are permitted, sited, constructed, operated, monitored, and closed in a manner th at protects USDWs from endangerment. The capture and transport of CO2 are not within the UIC program’s authority.

Letter ID: 0173 Comment ID: 23470 Letter Lines: 194 to 196

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

Comment: In addition, the GAO report discusses the complex and still unresolved property rights issues involving CO2 injection on bot h federal and nonfederal lands. Id. at 42-23. Finally, GAO cites a National A cademy of Sciences ("NAS") report

Individual Response: EPA clarifies that pore space ownership and surface and subsurface property and mineral rights are ou tside of the scope of the Class VI GS rulemaking. Rather, the purpose of the Class VI GS rule is to ensure that where GS technologies are deployed, GS is performed in a manner that prot ects USDWs from endangerment. EP A clarifies that these issues are under the purview of states a nd any of these issues, as they relate to GS, will need to be addressed though stat e regulations.

Letter ID: 0173 Comment ID: 23471 Letter Lines: 196 to 203

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

Comment: at 42-23. Finally, GAO cites a National A cademy of Sciences ("NAS") report emphasizing that a large-scale CO2 UIC program cannot be successful "if a significant fraction of the public views it as dangerous or unacceptable," concluding that CO2 storage technologies must not only be safe and effective, they must be presented "to the public and the regulatory community in such a way as to instill confidence that they are in fact safe and effective." Id. at 49 (quoting National Research Council, NAS, Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two) (2007)).

Individual Response: EPA does not believe that the tailor ed requirements will create a negative public perception of GS. The Agency believes that a demonstration to the pub lic that GS projects are meeting the GS rule's tailored requirements would likely improve confidence in the project and help address public qu estions and concerns.

Letter ID: 0173 Comment ID: 23472 Letter Lines: 205 to 214

Comment Code: 1200 1.1 General comments about the rulemaking

8Comment: With that being said, this rulemaking can resolve some important policy and legal issues and, in doing so, help fo ster the development of a practical, commercially deployable CCS regulatory progra m. For example, the Final Rule can provide much needed clarity regarding (1 ) the potential for liability under RCRA and CERCLA resulting from CO2 injection and GS activities, a nd (2) the options for addressing long-term liability for Class VI wells. GAO Report at 39-42. As discussed below, there are practical regulatory and legislative options available to resolve these uncerta inties that will help assure the public and the regulated community that CO 2 UIC activities can be conducted in a manner that is both safe and effective.

Individual Response: Please see the remainder of EPA's res ponses to this comment for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble, including the discussions of R CRA/CERCLA and long-term liability, as well as the rulemaking docket.

Letter ID: 0173 Comment ID: 23473 Letter Lines: 216 to 256 ; 944 to 947

Comment Code: 1250 1.1.1.4 Flexibility is needed (p erformance-based standards) Comment Code: 2400 1.8 Comments on EPA's adaptive rulemaking process

Comment: 2. Necessity of a Flexible Regulatory Scheme

USWAG applauds the efforts EPA has take n thus far to instill certainty and transparency in the future Class VI CO2 regulatory regime. 73 Fed. Reg. at 43496. At the same time, it is imperative that the Final Rule reflect the challenges inherent in crafting regula tions for commercial CO2 injection activities when large-scale commercial ope rations are only at the nascent stage. The challenge confronting EPA in this rulemaking is to es tablish a costeffective and environmentall y protective regulatory program to cover a range of operations for which the technology will not be commercially deployed for a number of years.

To meet this challenge, it is critic al that the Final Rule emphasize performance-based rules that can be readily adjusted and fine-tuned as industry and regulators alike gain experience with large-scal e CO2 sequestration. USWAG acknowledges EPA's efforts to build flexib ility mechanisms into the Proposal, including provisions for directorial discretion and the suggestion that forthcoming guidance may be used to clarify other requirements. In general, we agree that these methods w ill help create a regulatory fr amework that can evolve as information and technological advancemen ts are gained in the field of carbon capture and sequestration. It is import ant, however, that any directorial discretion be clearly defined and limite d; this can be achieved while still maintaining a rule that is flexible an d avoids unnecessary prohibitions. In addition, guidance on any aspect of the Fina l Rule (for example, clarification

9of requirements for financial assurance mechanisms) must be developed in accordance with OMB's Good Guidance Prac tices Bulletin, whic h directs that notice and comment be provided on " economically signifi cant" guidance documents.[FN2] See 72 Fed. Reg. 3432, 3438 (Jan. 25,2007).

Because information and technology relate d to carbon sequestration will develop as industry and regulators gain experience with CCS, USWAG urges EPA to avoid blanket prohibitions or arb itrary absolutes in the Final Rule. We agree that the appropriate standard underl ying the technical requirement s for CO2 GS wells is the protection of USDWs. However, because it is difficult to know at this point what methods or technology will be devel oped for injection and long-term storage of CO2 in a manner that is protective of US DWs - and because there is sure to be demand for significant capacity for CO2GS - EPA should not prematurely preclude the use of specific types of sites or me thods for Class VI CO2 injection. The Final Rule should leave the door open for a range of injection sites and methods (some of which are unknown or not yet fully understood), provided that the Owner or Operator can show that the injection and storage will be protective of USDWs.

[FN2] The Bulletin defines "economically significant guidance document" as "a significant guidance document that 'may reasonably be anticipated to lead to' an annual effect on the economy of $100 million or more or adversely affect in a material way the economy or a sector of the economy." See 72 Fed. Reg. at 3435.

Individual Response: EPA recognizes the importance of provi ding clear, flexible, scalable, and appropriate regulations. The final GS rule includes a balance of sp ecific criteria to be met by the owner or operator and areas of Directorial discretion. The Agency believes this balance allows for GS projects to be designed and permitted to address the unique, site-specific aspects of each project, while providing consistency in permittin g across the U.S. EPA is developing guidances for states that describe th e process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regulations that are the equivalent of minimum federal criteria and requirements. Th e guidance will provide recommended approaches for how permitting authorities may exercise Direct or's discretion. The guidance will be available on EPA's web site, at http://water.epa.gov/type /groundwater/uic/wells_sequestration.cfm.

EPA also agrees that an adaptive approach to rulemaking for GS is appropriate. The Agency plans to use 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 development to proceed in time to m eet the current and future demand for Class VI permits while recognizing the need to: continue to gather data from pilot projects and other research as it becomes available; and to enhance understanding of the technical and administrative aspects of GS deployment, operation, 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 and appropria te documentation are being collected, and to determine if modifications to the requ irements are appropriate or necessary.

10EPA disagrees that the GS rulemaking needs to be based solely on large-volume projects. While studying the impact of injecting large volumes of CO2 is important, data on other aspects of GS—including the buoyancy and corrosivity of CO2 in the presence of water, the potential presence of impurities in captured CO2, and its mobility within subsurface formations— informed the rulemaking.

Letter ID: 0173 Comment ID: 23474 Letter Lines: 258 to 265

Comment Code: 2020 1.5.1 Support Class VI designation

Comment: 3. Classification and Regula tion of CO2 GS Wells

USWAG believes the creation of a new cate gory of wells under the UIC Program for long-term storage of CO2 is appropriat e. 73 Fed. Reg. at 4350 2. USWAG agrees with the Proposal's structure that woul d only apply the requirements for Class VI wells to those wells specifically permitted for purposes of geologic sequestration, while maintaining a distin ct permitting classification (Class II) for the injection of CO2 fo r the purposes of enhanced oil and gas recovery. Id.

Individual Response: EPA agrees that tailored requirements for Class VI wells are necessary to address the unique nature of in jecting large volumes of CO2 a nd to ensure that USDWs are protected from endangerment. EPA also agrees that the nature and risks of CO2 injection for long term storage is different from Class II CO2 injection for ER, and that tailored requirements for GS wells are appropriate and necessary to protect USDWs from endangerment. For this reason, the Agency tailored UIC requirements for Cl ass VI wells that addr ess the general risks deep injection may pose to USDWs and specifically address the unique nature of CO2 GS (i.e., very large volumes, very long time-periods , and reservoir pressure conditions).

The final Class VI regulations re quire that any owner or operato r injecting CO2 for the primary purpose of long term storage obtain a Class VI pe rmit with some special consideration for the fact that they are transitioning from a well not or iginally designed to meet Class VI requirements. The Director has the authority to determine at wh at point a Class VI permit is required for those projects that are transitioning from the primar y purpose of EOR to long term storage of CO2. The final regulation provides a set of technical factors for the Direct or to evaluate in making this determination, at §144.19. EPA believes that this approach provides su fficient protection of USDWs when there is an increased risk to USDWs as compared to traditi onal Class II operations while allowing for site-specific flexibility. For more information, please see the discussion on transition of Class II wells in the preamble to the final GS rule.

Letter ID: 0173 Comment ID: 23475 Letter Lines: 267 to 281

Comment Code: 5600 2.11 Comments related to UIC Program primacy for Class VI wells Comment Code: 5610 2.11.1 Allowing partial primacy for Class VI wells (seeking comment)

11Comment: With respect to the integration of state programs, USWAG agrees that the Final Rule should create a delegable prog ram and encourage the adoption and implementation of that program by states. Id. at 43497. Our memb ers' experiences with Class V experimental CO2 wells unders core the benefits of regulation on a state level. State regulators have fam iliarity with local environmental, geologic, and financial concerns, an d in many cases have pre-existing relationships with the regulated commun ity that will facilit ate implementation of a new and complex regulatory program. Fo r these reasons, it is appropriate to allow states to obtain primacy for only Cla ss VI wells if a part icular state so chooses. Id. at 43523. Such class-specific primacy is consistent with the statutory authorization behind the UIC Progr am and EPA is correct in predicting that states obtaining primacy for Class VI wells - regardless of whether they have sought primacy for other well classe s under the UIC program - may be more likely to develop a comprehensive regulatory program for all aspects of carbon capture and storage. Id.; see also 42 U.S.C. § 300h-1 (SDWA § 1422).

Individual Response: EPA agrees that states should be al lowed to obtain primacy for Class VI wells independently of other well classes, and wi ll allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past , EPA has not accepted UIC primacy applications for individual well classes unde r Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also ne ed to accept responsibilit y for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility fo r UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encom passing capture, transportation, and geologic sequestration) to be an important part of a na tional 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 res ponsibility for implementation of Class VI regulations and provide for a more co mprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA in to 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 leve l (but outside UIC author ity) to provide a more comprehensive CCS management approach.

The Agency believes that it is important for Stat es to use their unique efficiencies 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

12"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) in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and w ill be able to develop a primacy application for Class VI wells under section 1422 of SDWA to en sure that their GS programs integrate into national climate change priorities an d protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative e fforts that are wider in scope than the Federal GS rule and believes that allo wing Class VI primacy (i ndependent of other well classes) may encourage states to take responsibility for implemen tation of a more comprehensive approach to managing CCS proj ects (e.g., capture, transportati on, and geologic sequestration).

Letter ID: 0173 Comment ID: 23476 Letter Lines: 283 to 299

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

Comment: USWAG also urges EPA to issue more de finitive direction in the Final Rule regarding the regulation of CO2 injection activi ties that cross state boundaries. This issue is mentioned in th e Preamble to the Pr oposal but receives little attention. See 73 Fed. Reg. at 43497. Rather, EPA simply observes that "some injection activities may raise cro ss-state boundary issues that are beyond the scope of this rulemaking." Id. EPA s hould provide more direction regarding how such cross-state activities would be regulated, and specifi cally should make clear in the Final Rule that Owners or Operators of Class VI CO2 GS projects will seek a Class VI permit for that operation from the state in which the wellhead is located. In other words, a given state is the permitting body for any Class VI CO2 GS project with a wellh ead in that state. EPA should direct states to consult and coordinate with othe r affected states (i.e., other states to which the underground portion of the we ll may extend and/or those to which there could be a subsurface release or migration of injected material) in determining how to avoid dup licative or dueling regulator y systems. USWAG urges EPA to play a leadership role and proactively address these issues by suggesting procedural guidelines for inters tate regulation and cooperation.

Individual Response: EPA acknowledges that CO2 plumes may cross state or ev en international boundaries and encourages cooperation and coor dination among permitting authorities. The final Class VI GS rule, at §146.82(a)(2), requires the ow ner or operator to identi fy all State, Tribal, and territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application

13and ensure that they are involve d in any necessary processes; th is new requirement was added to the final rule at §146.82(b). The Agency encourag es transparency in the permitting process and anticipates that State-State/State-Tribal comm unication on Class VI GS permitting will facilitate information sharing and encourag e safe, protective projects.

EPA clarifies that the Class VI permit would be issued by the permitting authority in the state where the wellhead is located.

Letter ID: 0173 Comment ID: 23477 Letter Lines: 301 to 316

Comment Code: 2062 1.5.3.1 Grandfathering construction of Class I wells (seeking comment) Comment Code: 2066 1.5.3.3 Grandfathering construction of Class V wells (seeking comment)

Comment: 4. Grandfathering Requirements fo r Class I and V UIC Wells

Grandfathering is an extremely important issue to USWAG as a number of our members have invested substantial re sources in developing and permitting nonhazardous Class I and V experimental CO2 injection wells to help demonstrate the viability of larg e-scale commercial deployment of CO2 sequestration. Federal and state governments are encouraging thes e efforts as their success is critical to the large-scale commercial deployment of CO2 sequestration. Therefore, Owners or Operators should be given the opportuni ty to operate these wells on a regular basis as Class VI wells once the wells have been shown to be safe and effective on an experimental basis. This will help encourage the substantial upfront investment necessary to get these wells permitted. USWAG ther efore supports the Proposal's provision allowing for the grandfathering of construction requirements for existing Class I and V wells developed for the injection of CO2 if and when Owners or Operators of those wells seek a Class VI permit for GS of CO2. Id. at 43502.

Individual Response: EPA agrees that many Class I and Cl ass 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 grandfathe red per §146.81(c), provided th e owner or operator can demonstrate to the Director that the wells were engineered and constructed to meet the requirements at §146.86(a) and ensu re protection of USDWs, in lieu of requirements at §146.86(b) and §146.87(a). EPA clarifies that only the construction requirements are grandfathered and that all other Class VI requirements (reporting, monitoring, mechnical integrity testing, etc.) must be met fo llowing a determination under §146.81(c).

Letter ID: 0173 Comment ID: 23478 Letter Lines: 318 to 345

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

Comment: However, the Proposal's grandfathering provision does not go far enough. It is both necessary and appropriate to allo w for grandfathering of requirements

14beyond those related to construction wher e this carrying-over of requirements can be done in a manner that is protective of USDWs. This is particularly true for the Class I and V wells developed sole ly for the injection of CO2. It has already been determined through the pe rmitting process that the operation of these Class I and V wells is protective of USDWs. See 40 C.F.R. § 144 et seq. Having made this determination, there shoul d be a regulatory presumption that conversion of these wells for the exact same activity albeit at a larger scale and for an extended period of time - unde r the Class VI program is also protective of USDWs, with the understandi ng that grandfathering will not be allowed if the Director demonstrates that conversion of these wells to Class VI would endanger USDWs. In other words, EP A should bear the burden of showing why continued operation of the CO2 injection activities under the Class VI program should not be allowed.

To the extent that EPA can demonstrate that elements of the Class VI program not already incorporated into the pre-existi ng Class I or V permit are necessary to protect USDWs, Owners or Operators can be required to incorporate such elements into the Class VI permit. This approach would be preferable to a default wholesale application of the Class VI progr am requirements to Class I or V wells currently used for the same activity a nd already proven to be protective of USDWs. USWAG recommends that the Final Ru le include a presumption that Class I and V CO2 injection wells be allowed to transition into Class VI wells based on existing conditions, while allowing the Di rector to incorporate additional elements into the Class VI permit if th e Director can show that continued operation of the pre-existing well under the Class VI program would not be protective of USDWs.

Individual Response: EPA disagrees that other require ments (e.g., MITs, siting, monitoring, operational, and AoR requirement s) should also be grandfathered for Class V and I wells. Following re-permitting of the well as Class VI, many of the unique factors of GS sites (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 GS rule. Therefore, following re-permitting as Class VI wells, these projects would be subject to the operational, MIT, monitoring, re porting, plugging, and postinjection site care and site closur e requirements in the final GS ru le. See the discussion of EPA's final regulatory approach in the preamble to the GS rule for additional detail on these requirements.

Letter ID: 0173 Comment ID: 23479 Letter Lines: 347 to 367

Comment Code: 3100 2.1 Proposed Geologic Siting Requirements (40 CFR 146.83)

Comment: 5. Siting of CO2 GS Wells

As a general matter, USWAG believes that EP A must consider the potential impact of CO2 GS projects on ot her pre-existing subsurface activities (e.g., natural

15gas storage operations). In particular, th e Final Rule should ensure that final Class VI permits not inappropriately in terfere with these other pre-existing subsurface interests and operations.

With respect to the types of formations into which CO2 may be injected for GS under the UIC Program, it is counterproductive at this stage in the development of the CO2 GS regulatory regime to cat egorically preclude any potentially feasible injection formations as pos sible long-term storage sites. EPA recognizes that the commercial deployment of CO2 GS activities will result in the new production of large volumes of CO2 for which Owners or Operators will have to locate new and environmentally pr otective injection zones. In fact, the GAO Report anticipates a need to permit thous ands, if not tens of thousands, of additional UIC wells to accommodate the incr eased volumes of CO2 expected to be captured in a large-scale CCS program. GA O Report at 40. Therefore, it makes sound policy sense for EPA to encourage the identification and ut ilization of as many injection zones as possible, with th e prerequisite that injection at any site be protective of USDWs.

Individual Response: EPA believes that the extensive requirements for geologic site characterization (at §146.82), AoR evaluation (§1 46.84), and testing of the well during drilling (§146.87) are appropriate to ensure that permitting authorities have the necessary information to evaluate whether a specific site will allow safe injection of CO2. EPA adds that submittal and review of monitoring data (as required at §146.90) and the AoR reevaluation process (§146.84(e)) will provide an opportunity for an ongoing review of the site and a dialogue between the Director and the owne r or operator to ensure that th e project is being operated in a manner that protects USDWs from endangerment. EPA believes that any natural gas storage operations would be found in si te characterization as would any faults or fractures.

The final rule does not preclude injection into any formations or types of injection sites provided that the wells meet the final GS rule requirements. The purpose of the GS regulation is to ensure that injection of CO2 for GS is conducted in a manner that is protective of USDWs. This includes appropriate site charac terization and identification of geologic formations that are amenable to injection of potentially large volum es of CO2 for long-term storage. The regulation provides flexibility to owners or operators to select appropriate s ites and target formations (under §146.82), well construction specifics (under §146.86), and injection proce dures provided the owner or operator can demonstrate that the injection and storage will not endanger USDWs and that minimum requirements for the site are met.

Letter ID: 0173 Comment ID: 23480 Letter Lines: 369 to 372

Comment Code: 2100 1.6 Target Geologic Formations for GS

Comment: To achieve this result, the Final Rule should avoid absolute prohibitions on any category of injection site and instead keep all options open; injection should be allowed as long as it can be demonstr ated that injection will be protective of USDWs and meet other applicable condi tions for Class VI CO2GS wells. As a

16Individual Response: EPA clarifies that the GS rule does not categorically prec lude 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 Cla ss VI siting, well cons truction and operation, monitoring and testing, and post-inj ection site care and site closur e 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 a nd meets all of the requirements of the GS rule, the project may be permitted as a Class VI well.

Letter ID: 0173 Comment ID: 23481 Letter Lines: 372 to 378

Comment Code: 2200 1.6.4 Other formation types Comment Code: 4410 2.4.4.3.1 Comments in favor of allowing injection above/between USDWs in certain circumstances Comment Code: 4430 2.4.4.3.3 Injection into coal seams above USDWs (seeking comment)

Comment: of USDWs and meet other applicable condi tions for Class VI CO2GS wells. As a result, USWAG believes that the Final Rule should not contain a blanket prohibition on injection of CO 2 into coal seams (wheth er above or below the lowermost USDW) or into other formations such as basalts, salt domes, or shales. 73 Fed. Reg. at 43503. If it can be demonstrat ed that the injection of CO2 into such sites is protective of USDWs, then such activities should remain available options under the Class VI UIC program.

Individual Response: The final GS rule does not precl ude injection into any non-USDW formation type provided owners or operators can demonstrate th at GS can be performed in a manner that protects USDWs from endangermen t as required under today’s rulemaking. The Agency acknowledges that GS into basalts, coal seams, salt domes, and shales will likely have limited application, or that owners or operators se eking Class VI permits for injection into these formations may not be able to meet the final GS requirements or demonstrate protection of USDWs.

The purpose of the GS rule is to ensure protect ion of USDWs, and the ru le includes requirements to ensure that the geologic formations are adeq uate to receive and confine injected CO2, at §146.83. The siting, well constructio n, operational, and other requirements in the GS rule are designed to ensure that injected CO2 remains within the target formation.

EPA acknowledges that there may be risks associat ed with GS, particularly regarding GS into basalts, which have been the subject of limited e xperimental projects in the past. EPA anticipates that in the short-term, GS into basalts, coal seams, salt domes, and shales will continue to be experimental in nature (i.e., if they are to test GS technologies and collect data), and will likely be permitted as Class V experimental technology wells and be subject to UIC Program Guidance #83. EPA will continue to review data on early GS projects, including those in such formations,

17to determine whether the appropriate amount a nd types of information and documentation are required and being collected. EPA plans, every si x years, to collect a nd review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determ ine if modifications to the requirements are appropriate or necessary.

EPA clarifies that the final rule requires that injection for GS be into non-USDWs below the lowermost USDW; however, owners or operators may apply for a waiver from this requirement, as described in §146.95. For more information, see the discussion of waivers in the preamble to the final rule.

Letter ID: 0173 Comment ID: 23482 Letter Lines: 380 to 399

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

Comment: On a related subject, EPA requests comm ent on whether the Final Rule should require, or allow the Director to requir e at his discretion, the identification and characterization of additional confining and containment zones above the primary (i.e., lowermost) confining zone that could further impede vertical fluid movement and allow for pressure dissipation - in effect, a "secondary containment" requirement. Id. at 43505- 06. As a general matter, USWAG opposes the inclusion of a secondary containment requirement, even at the Director's discretion, and believes that it will only be in the most unusual situations where circumstances warrant the requirem ent of this additional layer of protection.

In developing this regulatory program, EPA must ensure that CO2 GS is protective of USDWs while simultaneously taking care not to unduly burden the permitting process or discourage the development of environmentally protective Class VI wells. While it is of course true that additional containment zones above the confining zone could impede vertical fluid movement, there is no basis for requiring these additional zones if it has already been demonstrated that the original confining zone is protective of USDWs. A redunda nt requirement that is frequently unnecessary will eliminate othe rwise valid injection zones from the universe of potential Cla ss VI injection sites.

Individual Response: EPA retains the requirement to iden tify additional containment/confining zones, if required by the Di rector, as proposed (§146.83(b)). EPA acknowledges that such additional zones may not be needed in all circumst ances, and clarifies that this requirement is at the Director's discretion, based on his or her understanding of a part icular site. EPA believes that, in some situations, the presence of additional confining and containment zones above the primary (i.e., lowermost) confining zone can improve USDW protecti on. These layers could further impede vertical fluid movement and al low for pressure dissipation, and also provide additional sites for monitoring, mitigation, and re mediation. The Agency's decision is supported by commenters representing states, water associati ons, and an electric utility who assert that

18these requirements promote a flexible, risk-base d, site-specific approach to characterizing and permitting a site for GS projects, and are intende d to improve understanding of the project as a whole and promote better modeling of the site.

Letter ID: 0173 Comment ID: 23483 Letter Lines: 401 to 483

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

Comment: 6. Interaction with RCRA

The Agency seeks comment on the proposal to preclude the injection of hazardous waste into Class VI injection wells. Id. at 43503. USWAG takes issue with the underlying premise behind EPA's discussion re garding the potential applicability of the RCRA hazardous waste regulations to CO2 GS. Id. The fundamental error in EPA's request for comment on this point is its premature assumption that CO2 is being discarded and therefore is a soli d waste. A material cannot be a RCRA hazardous waste if it is not first a "so lid waste." See 40 C.F.R. § 261.2. Under the statutory definition of "solid waste," a material cannot be a "solid waste" unless it has first been "discarde d." 42 U.S.C. § 6903 (RCRA § 3001).

While there have been numerous judicial decisions addressing what constitutes "discard," the fundamental holding fr om these cases is simple and straightforward: Congress intended to exte nd EPA's authority to regulate "solid waste" under RCRA "only to materials that are truly discarde d, disposed of, thrown away, or abandoned" American Mining Congress v. EPA, 824 F.2d 1177, 1190 (D.C. Cir. 1987) (emphasis added). The D. C. Circuit has emphasized that the "plain meaning" of the term "solid wast e" extends only to materials that are "discarded" and that the term "discard" s hould be interpreted w ith reference to its ordinary meaning. Ass'n of Battery Recyclers, Inc. v. EPA, 208 F.3d 1047, 1051-52 (D.C. Cir. 2000).

CO2 is a valuable commodity used in a variety of manuf acturing operations, including in the enhanced oil recovery (" EOR") and enhanced gas recovery ("EGR") production process. When used in these commercial applications, CO2 is not "discarded" and therefore is not a solid waste. While large volumes of CO2 will be produced under the CCS programs contempl ated by the UIC Class VI Proposal, it is premature for EPA to presume that th ese additional volumes of CO2 will not retain commercial value and that thei r sequestration in Class VI wells automatically means that they have been "discarded" as that term has been defined under RCRA. As we have already cau tioned, the Agency should refrain from making categorical assumptions associated with this still- emerging technology, including with respect to the status of captured CO2 destined for GS.

Assuming, for purposes of argument, that CO2 is "discarded" and exhibits a hazardous waste characteristic when inje cted for long-term sequestration, there are compelling policy reasons to exclude such activities from RCRA regulation.

19Facilities that have obtained a RCRA "permit by rule" for the operation of a Class I UIC hazardous waste injection well are potentially subject to the full scope of RCRA's corrective action program for all solid waste management units ("SWMUs") located at the facility, includi ng units that are in no way related to the CO2 injection operations. See 40 C.F. R. §§ 270.1 (c)(1 )(i) and 270.64; see also EPA RCRA/Superfund Hotline Monthly Su mmary, "Corrective Action for UIC Wells," 9502.1986(07) (April 1986). The potential for RCRA applicability on such a broad scale is a significant economic a nd practical obstacle for any facility considering whether to seek a permit for a new Class VI well, as facility-wide RCRA corrective action is an administrativ ely complex and exceedingly expensive undertaking.

The imposition of this obstacle is unwarranted because any well receiving a permit under the UIC Program for CO2 GS will be, by definition, protective of USDWs. EPA's RCRA program has established a legally sound process, referred to as "contingent management," for the excl usion of materials from hazardous waste regulation when such materials are alrea dy subject to an a lternate regulatory regime that ensures the wastes are mana ged in an environmentally protective manner. As discussed below, where the poten tial for mismanagement of a waste is already adequately addressed by another regulatory regime - as would be the case with the injection of CO2 under the Class VI UIC program - regulation of such materials under the RCRA's hazardous waste program is duplicative and unwarranted. EPA has successfu lly employed the contingent management concept in various contexts where the Agency determ ined that other re gulatory regimes adequately addressed any potential misman agement scenarios related to certain materials; examples include regulation of used oil, mixed radioactive/hazardous waste, and military munitions.

The Court of Appeals for the District of Columbia Circuit has reviewed EPA's legal theory underlying the contingent ma nagement concept and found it to be a "permissible construction of the statute," based on the idea that the statutory definition of "hazardous waste" is predic ated upon the risks posed by a solid waste when "improperly" managed. Milita ry Toxics Project v. EPA, 146 F.3d 948, 958 (D.C. Cir 1998) (emphasis added). Ther efore, "where a waste might pose a hazard only under limited management scenarios, and other regulatory programs already address such scenarios, EPA is not required to classify a waste as hazardous waste subject to regulati on under [RCRA] Subtitle C." Id.

Even if such operations were deemed s ubject to RCRA regulati on, including a RCRA permit by rule, EPA could - and should - establish a conditional exclusion from RCRA regulation for CO2 GS operations. Su ch an exclusion would be legally justified, consistent with the Agency's past promulgation of conditional exclusion rules, and would make sound policy sense by removing a potentially significant regulatory barrier to the commercial de velopment of CO2 GS operations.

20Individual Response: EPA clarifies that the GS rule does not address the status of CO2 as a pollutant or a commodity. Under the SDWA and the UIC program, EPA regulates the injection of a range of fluids, which may include polluta nts and commodities, rega rdless of how they are characterized, for the purpos e of protecting USDWs.

EPA received many comments regarding the applicab ility of the RCRA regulations and statute to CO2 streams that are geologically sequestered under the final Cl ass VI UIC well requirements. As a result, EPA has decided to initiate a sepa rate proposed rulemaking specifically to examine the issue of RCRA applicability to CO2 stream s 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 pa rt 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 propose d 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.

Letter ID: 0173 Comment ID: 23484 Letter Lines: 485 to 540 ; 949 to 952

Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: 7. Interaction with CERCLA

An important issue on which EPA seeks comment is the interaction of CERCLA with the CO2 GS regulatory program. While EPA acknowledges that "CO2 itself is not listed as a hazardous substance under CERCLA, " the Agency raises the possibility of potential liability under CERCLA, incl uding liability for natural resource damages, if the CO2 stream contains ot her CERCLA hazardous constituents (e.g., mercury), or if other hazardous constitu ents are formed wh en the injected CO2 stream reacts with groundwater.[FN3] 73 Fed. Reg. at 43504. The potential for open-ended CERCLA liability for any c ontamination resulting from CO2 GS activities will act as a serious deterrent to would-be Owners or Operators of Class VI wells and could je opardize the contemplated wide-spread commercial deployment of CO2 GS operations.

EPA correctly acknowledges that CERCLA's "fed erally permitted release" exemption will provide CERCLA protection from those re leases that fall within the scope of a Class VI permit (e.g., contained within the AoR), but the Agency also recognizes the limitations of this exemp tion, as it does not offer protection for any release of a hazardous substance that is beyond the scope of the Class VI permit (e.g., outside the AoR). Indeed, EP A states that any permits will have to "be carefully structured to ensure th at they do not 'authorize' inappropriate hazardous releases," including "potential releases from the well which are outside the scope of the Class VI permit." Id.

21USWAG appreciates that the contamination issue is extremely important. At the same time, the potential for open-ended CERCLA liability will impede the ability of Owners or Operators to calculate a nd demonstrate financial responsibility, obtain financial assurance, and acquire th e initial capital necessary to invest in this important technology. The specter of CERCLA liability will serve as a significant barrier to the commercial deve lopment of CO2 GS -unnecessarily so, given EPA's ample civil and criminal enfo rcement authority under the SDWA for violations of UIC permits (see SD WA § 1423(b), 42 U.S.C. § 300h-2(b) (authorizing the imposition of $32,500 per da y civil penalties and/or criminal penalties and imprisonment)). EPA must m itigate the threat of potential CERCLA liability to the extent po ssible in this rulemaking.

One step that the Agency can take is to ensure that final Class VI permits for individual CO2GS projects have the broa dest possible reach while remaining protective of USDWs in order to maximize the protection offered by the federally permitted release exemption. This would mean including in the scope of the permit for CO2 injection all other CERCLA hazardous constituents likely to be contained in the CO2 stream, including those generated during capture and transport as well as any that could be fo rmed in the injection zone as a result of the injection of CO2. Si milarly, the scope of the au thorized "permit zone" should be as broad as possible while rema ining protective of US DWs. This could mean, for example, effectively authorizing the migration of constituents contained in the CO2 stream (or resulting from injection) outs ide the scope of the AoR, provided that such migration does not directly impact a USDW.

We understand that EPA's authority in th is rulemaking is limited by the SDWA. However, given the importance of this issu e from a public policy perspective, we urge EPA to take whatever regulatory measures are available to mitigate the chilling effect that the potential for su ch open-ended liability could have on CO2 GS operations, and then consider whet her a legislative solu tion is necessary to eliminate this concern. If so, we r ecommend that EPA strongly support such a solution.

[FN3] In the Preamble to the Proposal, EPA suggests that sulfuric acid is one such hazardous substance that could be formed when the injected CO2 stream reacts with groundwater; it is extremely unlikely that sulfur ic acid would be produced as a result of the inje ctate reacting with groundwater.

Individual Response: The Agency thanks the commenter for their comments regarding the scope and possible impacts of CERCLA liability on CCS activities, and in particular comments related to the CERCLA exemption for federally-pe rmitted releases. As the commenter points out, the GS rule is not promulgated under CERCLA; ther efore, the applicability of that statute will not be determined under the SDWA or the terms of the GS rule, but rather according to the CERCLA statute itself and any implementing regul ations that may apply. To the extent the commenter is seeking interpre tations of CERCLA a nd its related provisions, such as the

22definition of a federally permitted release, such interpretations are beyond the scope of this rulemaking.

Letter ID: 0173 Comment ID: 23485 Letter Lines: 542 to 553

Comment Code: 3320 2.2.1.2 Comments opposed to requiring computational models to delineate the AoR Comment Code: 3350 2.2.1.5 Use of proprietary models for GS sites (seeking comment)

Comment: 8. Modeling

As most models now are propr ietary, USWAG supports the us e of proprietary models for use with CO2 GS sites. As EPA rec ognizes, many popular proprietary codes in the petroleum-reservoir engineering discip line have been used in peer-reviewed studies to model CO2 sequestration. 73 Fed. Reg. at 43507. These and other proprietary models should be available fo r use in modeling for Class VI CO2 GS wells, provided that they are based on accep ted science and have been validated, and as long as the Owners or Operators us ing proprietary models disclose, as necessary, the code assumptions, relevant equations, and scie ntific basis of each model. USWAG believes that the use of computational fluid flow models for delineating the AoR of GS sites is accep table but should not be required. Id.

Individual Response: EPA agrees that some of the availa ble proprietary models may meet the needs for calculating the AoRs of GS sites a nd will allow their use for GS projects. EPA acknowledges that several propr ietary models have been used by petroleum-reservoir engineering professionals as we ll as in peer-reviewed studies to model CO2 sequestration. EPA plans to allow their use in mee ting the requirements for the GS re gulation, but clarifies that GS well operators using proprietary models are required to disclose, to the Di rector's satisfaction, the code assumptions, relevant equations, and scient ific basis. EPA adds that its Confidential Business Information requirements at 40 CFR 144.5 will apply to the use of proprietary models.

EPA clarifies that the final rule will require th e use of computational models. EPA believes that the unique aspects of GS merit the use of sophisticated comput ational modeling for delineation of the AoR, based on site-specific features and geology, including the presence of faults, fractures, and artificial penetra tions. EPA believes that computat ional modeling of the AoR prior to injection will provide the be st obtainable estimates of the extent of the CO2 plume over several years of active injection.

Letter ID: 0173 Comment ID: 23486 Letter Lines: 555 to 571

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

Comment: 9. Area of Review and Corrective Action

23USWAG appreciates the importance and comp lexity of proper AoR evaluation. See id. The Proposal would require Owners or Operators to invest a significant amount of time and resources in the init ial delineation of the AoR. Provided that the Program's requirements are satisfied in the initial determination of the AoR, USWAG believes that a requirement for AoR reevaluations every ten years or at any other fixed period is unnecessa ry; this will result in the arbitrary imposition of costs that may be wholly unw arranted. A more appr opriate approach would be performance-based, with reevalua tion required upon occurrence of some triggering event. One example of a tri ggering event could be a significant deviation from previously modeled scen arios, provided that the level of deviation that would require reevaluation is clearly defined by the regulating agency. As with many other decisions rela ted to implementation of the Class VI CO2 GS program, determinations such as these are best made on a local level by regulators having the most familiarity with the characteristics and constraints of a given geologic setti ng for a CO2 GS project.

Individual Response: EPA disagrees that the requirement at §146.84(e) for a periodic AoR reevaluation is arbitrar y. EPA proposed the ten-year frequenc y based on input from stakeholders and experts at the technical workshops on "Geo logical Considerations and AoR Studies" and "Modeling and Reservoir Simulation for Geologic Carbon Storage." EPA also requested comment on the ten-year frequency. In the pr eamble to the proposed rule, EPA identified benefits to periodically r eevaluating the AoR, including allowing refinement to the AoR delineation based on real-world conditions and monitoring results , increasing confidence in the modeled predictions, and targeting monitoring in t hose areas subject to the greatest potential risk.

Based on the comments received (including those by water associati ons, an energy company, associations, industries, states, and envir onmental groups), EPA has changed the minimum frequency for the AoR reevaluation from 10 years to at least every 5 year s. EPA believes that this revised frequency addresse s commenters' concerns about th e inherent uncertainties in modeling CO2 movement, the emerging nature of GS technology, risk-b ased targeting of monitoring activities, and the unique nature of CO2 GS.

EPA adds that the GS rule at §146.84(e) requires the AoR reevaluation, along with the iterative process of developing and executing the variou s plans required of GS well operators (e.g., for AoR and corrective action, testi ng and monitoring, injection we ll plugging, post-injection site care, and emergency and remedial response) inst ead of period permit renewals (e.g., of 10 years for Class I wells). EPA believes the iterative pr ocess and subsequent reevaluations of the AoR and corrective action, testing and monitoring, an d emergency and remedial response plans are preferable to a periodic permit reapplication and review of the entire permit because they focus time and resources to the most critical aspect s of the permit. Additionally, AoRs reevaluated after at least every 5 years of injection will provide data on GS projects to inform EPA's adaptive rulemaking approach.

Letter ID: 0173 Comment ID: 23487 Letter Lines: 573 to 580

24Comment Code: 1220 1.1.1.1 Terminology and definitions Comment Code: 3200 2.2 Proposed Area of Review and Corrective Action Requirements (40 CFR 146.84)

Comment: Corrective action - As a threshold matter, USWAG believes that the terminology used in the Proposal is problematic; use of the phrase "corrective action" to describe well plugging and re pair risks confusion with the concept of corrective action under either RCRA or CERCLA. As the GAO Report cautions, public perception is critical to the developm ent of a commercially viable CO2 GS program. GAO Report at 49. To avoid any unintended and unwarranted negative associations with the phra se "corrective action," USW AG suggests the Final Rule abandon this phrase and instead use a phrase such as "well plugging and repair."

Individual Response: EPA notes that the term "corrective ac tion" at 146.84(d) has been used to describe the process of addre ssing improperly plugged wells in th e AoR of injection wells since the inception of the UIC Program, e.g., at 146.7 and 146.64. While EPA is aware that the term has a different meaning under RCRA and CERCLA, this has not caused confusion in the past. The alternative term, "well plugging," suggested by the commenter is reserved for injection well plugging (as indicated at 146.92).

Letter ID: 0173 Comment ID: 23488 Letter Lines: 582 to 605

Comment Code: 3630 2.2.4.1 Comments in favor of allowing phased corrective action

Comment: Most importantly, USWAG supports a phased approach to correc tive action (well plugging and repair) for CO2 GS wells as contemplated in the Proposal. 73 Fed. Reg. at 43507-08. However, a phased approach to well plugging and repair for CO2 GS wells should be available to all Owners or Operators of CO2 GS wells rather than be available only at the discretion of the Director. Id. at 43508 (proposal "would give the Director the discretion to allow owners or operators to perform corrective action on an itera tive, phased basis... "); see also id. at 43536-37 (including proposed § 146.84(b), which would require Owners or Operators of Class VI wells to, inter alia, "perfo rm corrective action that meets the requirements of this section and is acceptable to the Director").

As EPA recognizes, the AoR for CO2 GS s ites may be extensive; requiring well plugging and repair to be complete for all wells in a CO2 GS AoR prior to commencement of the injection project w ould be overly burdensome, unnecessary, and unrealistic. This is particularly tr ue given that the AoR may be shown, through periodic AoR reevaluations, to have expanded or shifted, identifying new wells for plugging and repair. USWAG supports an approach that would require the Owner or Operator of a Class VI well to perform pre-injectio n well plugging and repair on only those wells within the portion of the AoR that would be intersected by the CO2 plume or pressu re front during the initial years of injection. Well plugging and repair for the re st of the AoR should be allowed to take place as the injection project prog resses, ensuring that, eventually, "all

25wells in the AoR that need correctiv e action [well plugging and repair] eventually receive it." 73 Fed. Reg. at 43508.

Individual Response: EPA acknowledges the commenter’s s upport of phased corrective action and agrees that phased corrective action may provide many benefits to a project including, but not limited to, spreading the burden of cost, avoi ding delays in project start-up, allowing for use of future, improved corrective act ion techniques and addressing unanticipated changes in the movement of the CO2 plume or pressure front . EPA believes that the phased corrective action approach is appropriate for GS projects, and retained it at §146.84(b)(2)(iv) in the final GS regulation. EPA clarifies th at, if monitoring or modeling data indicate a change in the AoR (i.e., an expansion or shift), the owner or operator would need to review and amend the AoR and corrective action plan and follow the amended plan.

EPA does not agree that a phased ap proach to corrective action shoul d be available to all owners or operators because phased corrective may not be appropriate at all GS s ites. EPA believes that, given the wide range of conditions at GS sites, the Director is in the best position to make decisions about the appropriatene ss of phased corrective action base d on his or her knowledge of the local geologic and site condi tions. EPA is developing guidances for states that help to describe the technical and administrative issues a state may need to consider when developing GS regulations that are the e quivalent of minimum federal cr iteria and requirements; this guidance will provided recommended approaches for Directors to exer cise discretion. The guidances will be available on EPA's web site, at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

Letter ID: 0173 Comment ID: 23489 Letter Lines: 607 to 620

Comment Code: 3400 2.2.2 Corrective Action

Comment: On a related topic, USWAG would like to en sure that the obliga tion of Class VI Owners or Operators to plug or repair a pre-existing well within the AoR will not be viewed as excusing prior well ow ners or operators from fulfilling their own pre-existing legal obligations under appl icable federal or state law to have properly closed the well in the firs t instance. Well plugging and repair obligations imposed on Class VI Owners or Operators should not supersede any pre-existing legal obligations that have yet to be fulfilled by previous owners or operators. To prevent this from occu rring, the Final Rule should make clear that, in those circumstances where pre-ex isting wells in an AoR have not been properly closed and are now subject to well plugging and repair under a Class VI UIC permit, EPA and/or the applicable st ate regulatory agency should first look to see whether the responsible party for such closure is still available to properly close the well as legally requir ed before imposing such obligations on the Owner or Operator of the Class VI UIC permit.

Individual Response: EPA clarifies that the purpose of th e requirement to perform corrective action at §146.84(d) is to ensure that all wells in the AoR that have the potential to cause

26movement of CO2 or other fluids into or be tween USDWs receive appr opriate corrective action. All needed corrective action must be performed by the GS well owne r or operator as described in the approved AoR and corrective act ion plan, regardless of owners hip of the wells in the AoR. Failure to do so would either pr eclude authorization to inject or , in the case of phased corrective action, be considered a violation of the permit and subject to a pplicable civil, criminal, or administrative penalties. EPA clarifies that UI C program authority is limited to the proper operation and plugging of injection wells, and that it does not have authority to require plugging of other types of wells.

Letter ID: 0173 Comment ID: 23490 Letter Lines: 622 to 634

Comment Code: 1400 1.2 Comments on EPA's Authority to Regulate Injection of CO2 Comment Code: 4670 2.6.7 Surface air monitoring and/or soil gas monitoring (seeking comment)

Comment: It also is important to clarify in the Final Rule that well plugging is only necessary and appropriate for those we lls that are potential conduits of contamination to USDWs. USWAG raises th is point because EPA suggests that the Final Rule may give the Director discre tion to require Owners or Operators to conduct surface air monitoring and/or soil gas monitoring in the AoR. Id. at 43516. Such a requirement would be appropria te only to the extent that this monitoring would be done with the goal of identifying potentia l endangerment of USDWs as a result of CO2 injection a nd sequestration activities. Id. To the extent that such monitoring would be re quired simply to guard against potential atmospheric releases or to trigger a co rrective action requirement to terminate such atmospheric releases, it would be out side of the scope of EPA's authority under this rulemaking. See id. at 43498 (" preventing releases of CO2 to the atmosphere is not within the scope of this proposal").

Individual Response: EPA believes that surface air and soil gas monitoring are within the scope of the SDWA in that they can provide additional data to pinpoint the lo cation and magnitude (or absence) of leaks that could endanger USDWs. Used in conjunction with deep subsurface monitoring, as required at §146.90, and as part of a multi-barrier approach to protecting USDWs from endangerment, surface air and soil gas monito ring are within the scope of SDWA’s general authority (SDWA sections 1421 et al.).

EPA clarifies that use of surface air and soil gas monitori ng as specified in th e final GS rule at §146.90(h), as a means of identifyi ng 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), is at the Director's discretion.

Regarding corrective action for wells in the Ao R, EPA clarifies that the rule, at §146.84(d), requires owners or operators to perform corrective action on all deficient wells in the AoR. This requirement is independent of the test ing and monitoring requirements at §146.90.

27Letter ID: 0173 Comment ID: 23491 Letter Lines: 636 to 644

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

Comment: Proposed requirements for well drilling, c onstruction, and other characteristics With respect to many of the proposed requirements, USWAG believes it is imperative to craft the Final Rule as a flexible instrument that establishes performance-based standards, which can be achieved through a va riety of methods as long as there is a sound technical basis underlying each method and assuring its protection of USDWs. See id. at 43508-09. Because this technology is years from commercial deployment and is still developing, the Final Rule should allow for the use of technologies and methods th at are not yet deve loped or are only in the beginning stages, provided that they are shown to be pr otective of USDWs.

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 flex ible approach, where operators of GS projects would develop and implement site-specific plans for delineating the AoR, testing and monitoring the site, performing corrective actio n, and post-injection site care . EPA believes that the plans— which would be reviewed and approved by the Director and periodical ly updated throughout the life of the project—promote an ongoing dialogue between the operato r and the Director that will encourage use of the most appropriate t echnologies for a particular project.

To address the comment that the rule should accommodate future technological developments related to GS, EPA adds that it is using an ad aptive approach to regulating GS under the UIC Program. Even after finalization of the GS regulat ion, 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 documenta tion are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Letter ID: 0173 Comment ID: 23492 Letter Lines: 645 to 650

Comment Code: 1250 1.1.1.4 Flexibility is needed (p erformance-based standards) Comment Code: 3840 2.3.2 Horizontal well drilling techniques (seeking comment)

Comment: This logic also applies to argue against a prohibition on any type of well drilling, whether horizontal, vertical, or angled. Id. at 43509. There will likely be a need to maximize capacity for CO2 GS, and it would be premature at this point to impose a blanket prohibiti on on any type of we ll drilling without knowing whether that drilling could be done in a manner that is protective of USDWs.

Individual Response: In the final rule, EPA allows the use of horizontal wells at GS projects. In the proposed rule, EPA sought comment on the appr opriateness of horizontal drilling techniques for Class VI wells, and commenters representing energy companies, el ectric utilities, the oil and

28gas industry, CCS associations, states, and the public, unanimously suppo rted the concept and provided many reasons why horizonta l wells could be beneficial at GS sites. Based on an evaluation of these comments and additional research by EPA, the Agency has concluded that horizontal wells that are properly constructed, logged, and tested for mechanical integrity (i.e., to meet the requirements of the GS rule) can ensu re the protection of USDW s from endangerment.

Letter ID: 0173 Comment ID: 23493 Letter Lines: 652 to 659

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

Comment: 10. Proposed Injection Well Operating Requirements

USWAG reiterates that in order to acco mmodate developing te chnology and varied geological settings, the Final Rule must be flexible a nd avoid overly burdensome or prescriptive measures that do little to further the protecti on of USDWs. For example, a requirement for down-hole s hut-off valves would force Owners or Operators to incur great co sts, particularly if thos e valves malfunction, with minimal benefit. Id. at 43511.

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 in all 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 believes that these requirements at §146.88(e) ensure that proper precautions are taken to prevent subsurface fluid movement and ensure protection of USDWs.

EPA clarifies that down-hole shut-off devices are cu rrently used in situa tions where loss of well integrity could result in damage to the well or harm to humans (e.g., ne ar high-density population areas, or in onshore acid gas inj ection; IEA, 2003). EPA has identi fied examples of documented logging techniques, including ultr asonic and temperature logs, th at can be performed with an automatic down-hole device emplaced (Julian et al., 2007; Somaschini et al., 2009). They are also used in high pressure, high temperature onshore wells and in permafrost areas.

Letter ID: 0173 Comment ID: 23494 Letter Lines: 661 to 673

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

29Comment: Additional injection sites - As discussed above, it is lik ely that there will be great demand for wells in which to inject CO2 for GS, with the potential need for tens of thousands of additional sites. Accordingly, the goal of the Program should be to provide as much capacity as possible for CO2 GS while still ensuring that USDWs are not jeopardized. USWAG supports alternative approaches that would allow injection between and/or above the lo wermost USDW, increasing capacity for CO2 GS, as long as Owners or Operators of Class VI wells can show that their CO2 GS operations will be pr otective of USDWs. Id. at 43512. This will be particularly important in areas of the country with deep USDWs, where an absolute requirement that Class VI wells be constructed beneath the lowermost USDW could render the program impractic al. Id. USWAG also supports this alternative approach in areas where the Own er or Operator can show that geologic conditions would prevent fluid movement into adjacent USDWs. Id. For similar

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 a bove and/or between USDWs.

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 va riability 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 qua ntities to supply drinking water needs. For additional information on the waiver approach, pleas e see the final rule and preamble, as well as EPA's responses to comments on the Notice of Data Availability and Request for Comment.

Letter ID: 0173 Comment ID: 23495 Letter Lines: 673 to 676

Comment Code: 4460 2.4.4.4.1 Comments in favor of allowing aquifer exemptions in certain circumstances

Comment: conditions would prevent fluid movement into adjacent USDWs. Id. For similar reasons, USWAG opposes an absolute prohib ition on use of exempt aquifers for Class VI injection; use of exempt aquifers should be permitted where the specific aquifer exemption criteria are satisfied. Id.

Individual Response: EPA acknowledges that there are lim ited circumstances where aquifer exemptions for GS may be warranted. The final rule allows for the expansion of the areal extent

30of existing aquifer exemptions for Class II EOR/ EGR wells transitioning to Class VI injection for GS pursuant to requirements at §§146.4 and 144.7( d). Class VI owners or operators granted expansions of existing Class II EOR/EGR aquifer exemptions for GS projects must meet all of the tailored requirements for GS wells in the final GS rule.

However, the final rule precludes the issuance of new aquifer exemptions for Class VI GS wells; that is, aquifer exemptions will only be granted for projects that are transitioning from Class II EOR/EGR wells to Class VI.

The Agency clarifies that the aquifer exempti on requirements and the injection depth waiver requirements serve different purposes. Class VI owners or operators granted expansions of existing Class II EOR/EGR aquifer exemptions fo r GS projects must meet all of the tailored requirements for GS wells in the final GS ru le, including the requirements at §146.83 for site criteria. EPA believes that, in most cases, the inj ection depth waiver is a more appropriate option than aquifer exemptions for Class VI injection, and believes that aquifer exemption expansions for GS should be granted in limited circumstances.

EPA clarifies that all decisions regarding whethe r expansion of existing aquifer exemptions will be at the Director's discretion and based on site -specific information. If an owner or operator applies for a Class VI permit to inject CO2 into a previously exempted aquifer (non-USDW) that is located above and/or between USDWs, the perm it applicant must also apply for a waiver of the injection depth requirements pursuant to §146 .95 to ensure that if a waiver is granted, USDWs above and below the injection z one are protected from endangerment.

This approach is designed to ensure that th e differences between traditional Class II EOR/EGR operations and Class VI operati ons are considered during the aquifer exemption application process and the Class VI permitting process. Thes e differences include the anticipated large CO2 injection volumes associated with GS, the buoyant and mobile nature of the injectate, and its corrosivity in the presence of water. The Agen cy believes that this process will encourage owners or operators and Directors to consider the use of alterna tive formations for GS, including non-USDW formations through the waiver process, prior to applying for or approving aquifer exemption expansions for Class II EOR/EGR wells transitioning to Clas s VI GS operations.

For additional information on aquifer exemptions for Class VI wells, please see the final rule and preamble, as well as EPA's responses to comments on the Notice of Da ta Availability and Request for Comment.

Letter ID: 0173 Comment ID: 23496 Letter Lines: 678 to 692

Comment Code: 4120 2.4.1.2 Allowing hydraulic fracturing during GS (seeking comment)

Comment: Hydraulic fracturing - While hydraulic fr acturing is not appropriate in all geologic settings, it should be an availabl e option, subject to approval of the Director. See id. at 43511. For years, EOR operations have employed hydraulic fracturing to enlarge frac tures in rock; hydraulic fr acturing has proven an effective way to create permeability and increase well capacity with minimal

31risk to USDWs. Because this technique has been used safely for many years, there are regulatory protocols in place that c ould be adopted to ensure safe and effective hydraulic fracturing where appropr iate for Class VI CO 2 GS operations. When used where appropriate, hydraulic fracturing increases the capacity of existing wells, thereby requiring fewer cap rock penetrations and fewer wells overall. Again, USWAG shares EPA's underl ying goal of protecting USDWs, and recognizes that hydraulic fracturing may not meet this standard in some situations; we ask only th at the opportunity remain for use of hydraulic fracturing at the Director's discretion a nd only when the Owner or Operator can demonstrate that such fracturi ng will not jeopardize USDWs.

Individual Response: The final rule allows the use of hydr aulic fracturing for purposes of Class VI injection, where approved by the Director. Hydraulic fracturi ng is one of several stimulation technologies available to improve we llbore and formation injectivity.

EPA clarifies that all stimula tion, including hydraulic fracturing, must be approved by the Director and that §146.88(a) permits injection pr essure to exceed 90 percent of the fracture pressure only during well stimulation. Owners or operators must submit a proposed stimulation program as part of the permit application unde r §146.82(a)(9); the plan mu st demonstrate that any stimulation activities will not compromise the integrity of the confining zone. The Director will evaluate the owner or operator's proposed stimu lation plan in the context of all information about the site, and the owner or operator must perform stimulation only as approved. EPA clarifies that UIC regulations prohibit fracturing of the conf ining zone at any time during injection or stimulation.

Letter ID: 0173 Comment ID: 23497 Letter Lines: 694 to 701

Comment Code: 4490 2.4.5 Use of tracers and potential im pact on human health or ecosystems (seeking comment)

Comment: Tracers - The use of tracers should not be required for CO2 GS operations, even if only at the discretion of the Dir ector. EPA correctly notes that many drawbacks can accompany the use of tracers, including the possibility of false positives, the release of PFCs to the atmosphere, and uncertainty regarding cost-effectiveness. Id. at 43512-13. Thes e negative aspects argue against allowing the Director to exercise discre tion to require the use of tracers. If anything, the use of tracers should only be an option av ailable at the discretion of Owners or Operators, subj ect to the approval by the Director.

Individual Response: EPA agrees that the use of tracers may not be appropriate for all GS sites, but should be available as an option. For this reason, EPA does not require the use of tracers at all GS sites; however, the Director has discretion to require their us e if he/she determines that the use of tracers could improve monitoring of the site and enhance USDW protection from endangerment. The rule will also allow their use if proposed by the owner or operator and approved by the Director.

32Letter ID: 0173 Comment ID: 23498 Letter Lines: 703 to 710

Comment Code: 4600 2.6 Proposed Plume and Pressure Front Monitoring Requirements (40 CFR 146.90)

Comment: Plume and pressure front monitoring - USWAG appreciates the importance of accurate monitoring of the subsurface extent of the plume and pressure front. Id. at 43514. We believe, however, that ove r time constant monitoring may prove unnecessary as more information is gained regarding the accuracy of initial modeling. Any requirements for plume and pr essure front modeling in the Final Rule should be flexible enough to adjust in the coming years as industry and regulators become more knowledgeable rega rding the reliability of the modeling techniques initially used.

Individual Response: EPA agrees that flexibility is appropr iate, and clarifies that the specific plume and pressure front monitoring requirement s will be established in the monitoring and testing plan submitted by the ow ner or operator along with the permit application. EPA believes that the monitoring requirements for GS site s at §146.90 provide an appropriate level of flexibility in structuring a testing and monitori ng plan that protects USDWs from endangerment.

In addition, EPA is using an adaptive approach to regulating GS. EPA will collect and review project data on early GS projects to determin e whether the appropriate amount and types of information and appropriate documentation are required and being collected. The Agency will evaluate the information and determine if m odifications to the requirements are necessary.

EPA believes that this approach provides flexibility to develop a site-specific monitoring plan, ensures that direct monitoring is available to track movement of the CO2 and validate models, and recognizes that indirect techniques are no t appropriate in all s ituations. The owner or operator's approved testing and monitoring pl an will include the site-specific details, technologies, testing and monitoring freque ncies, and other pertinent information.

Pressure monitoring in the injection zone is nece ssary to track the develo pment and movement of the pressure front and CO2 plume. When combin ed with information on temperature, pressure data provide an indication of the phase (e.g., gas, supercritical) and distri bution of the injected CO2 (73 FR 43515). Monitoring can also identify n eeded remedial actions, provide inputs for AoR reevaluation modeling, evaluate predictions of plume movement, and target additional geochemical and surface monitoring needs.

Letter ID: 0173 Comment ID: 23499 Letter Lines: 712 to 723

Comment Code: 4670 2.6.7 Surface air monitoring and/or soil gas monitoring (seeking comment)

Comment: With respect to the Proposal's suggestion for surface monitoring requirements, USWAG believes that such requirements will come at significant cost with little

33benefit. While surface monitoring may reve al CO2 migration, these data will be of limited use since, by that point, CO2 has already been released to the surface. Moreover, data from surface air and soil gas monitoring are complicated by a number of factors, including natural and anthropogenic impacts from fires, development, and population growth. Rather than spending signi ficant resources on gathering data that are of limited reliability and of little practical use in preventing surface releases, the Final Rule should direct that these resources will be put towards detection of subsurf ace CO2 movement. This would prove a far more effective use of monitoring res ources as it would enable Owners or Operators to correct any problems before CO2 reaches the surface.

Individual Response: EPA acknowledges that air and soil gas monitoring are subject to variability and may not be suitable in all se ttings as a method to ensure USDW protection. However, the Agency believes that surface ai r and soil gas monitoring, when coupled with subsurface monitoring, may be a ppropriate at some GS project s to ensure USDW protection. However, EPA does not believe that this should en tirely preclude their use. For example, if a leak to the surface is suspected, surface monito ring could provide vital information on its location and magnitude to assist owners and operators in identifying what USDWs may have been impacted by a leak. EPA clarifies that the various air and soil gas monitoring methods (e.g., chambers, eddy covariance, hyperspectral imaging) all have different capab ilities that may prove useful in specific GS project s (Miles et al., 2005; Pickles and Cover, 2005; IPCC, 2005; Menzies et al., 2001). The occurrence of false positives will be reduced by comparing monitoring data to baseline data collected prior to injection or from a nearby area away from the GS project.

Letter ID: 0173 Comment ID: 23500 Letter Lines: 725 to 741

Comment Code: 4710 2.7.1 Proposed submissions required for permit applications (seeking comment)

Comment: 11. Permit Application and Reporting Requirements

The Proposal would impose a number of requirements on Class VI permit applications that are not currently re quired under the existing UIC regulations, most notably the mandatory inclusion of a monitoring and testing plan, an AoR and corrective action plan, and a post-in jection site care and site closure plan. Id. at 43517. For many of these requi rements, there do not appear to be concrete risks particular to CO2 GS that would warrant these additional

measures.

USWAG is particularly concerned that the level of detail that would be required for Class VI permit applications is ov erly burdensome and unnecessary. A great deal of this information may be unavailabl e - or could be speculative at best - because of a lack of information at the ear ly stages in the application process; an ongoing requirement for submission of this information over time, as it becomes available through drilling and ope ration of the well, would be of greater practical use and would lead to collection of more accurate data.

34Individual Response: EPA believes that the unique charact eristics of CO2 injection (e.g., its relative buoyancy, the large volum e that may be injected, or the potential for chemical interaction with the subsurface) warrant the additional information required to be submitted by GS operators under §146.82. All of the tailored requirements of th e GS rule are necessary to protect USDWs from endangerment; therefore Direct ors must have all site-specific data listed under §146.82 to make well-informed decisions when establishing permit conditions and granting permits.

In response to concerns that some data will not be available until the well has been drilled, EPA acknowledges that not all of the information listed at §146.82 of the proposed regulation would be available at the time the owner or opera tor develops the permit application. Based on comments and evaluation of the proposed requireme nts, EPA revised this subpart so that the final regulation specifies separate requirements for information to be submitted for approval with the permit application before well construction, as required at §146.82(a), and information to be submitted after the well is constructed yet befo re injection is authorized, as required at §146.82(c).

Letter ID: 0173 Comment ID: 23501 Letter Lines: 743 to 762

Comment Code: 3140 2.1.4 Comments that the proposed ge ologic data requirements are too stringent

Comment: For example, some requirements for inform ation related to geol ogic structure and hydrogeologic properties of the proposed st orage site and overlying formations may be unavailable until drilling commences , including "data on the depth, areal extent, thickness, mineralogy, porosity, permeability and capillary pressure ... geologic cores, outcrop data, seismic survey s, ... and litholog ic descriptions" of the injection and confining z ones (proposed § 146.82(d)(4)) and "geomechanical information on fractures, stress, ductility, ro ck strength, and in situ fluid pressures within the c onfining zone" (proposed § 146.82(d)(5)). 73 Fed. Reg. at 43536. While some of this info rmation may be available during the permit application process, other details will be unavailable prior to drilling.

To require detailed information that ma y either be unreliable, because it is based on unrealistic or unfounded predicti ons, or may simply be unavailable could delay the permitting process and have an overall chilling effect on CO2 GS projects. EPA should craft these requiremen ts with flexibility and require in the initial permit application only that information which is necessary to determine whether issuance of a Class VI permit is appropriate. Submission of additional information as it becomes av ailable - whether th rough well drilling, construction, operation, reevaluation, or corrective action - will allow for more reliable data that will in turn ensure greater protection of USDWs.

Individual Response: EPA agrees that not all of the information listed at §146.82 of the proposed regulation will be avai lable at the time the owner or operator develops their initial

35permit application. In response to comments and based on an evaluation of the proposed requirements at §146.82, the Agency revised this subpart so that the final regulation specifies separate requirements for information to be submitted with the permit application and before well construction is approved (at §146.82(a)) and in formation to be submitted before operation of the well is authorized (at §146.82(c)).

EPA believes that this revisi on of §146.82 addresses commenters' concerns regarding the timing of information to be submitted. In addition, section §146.82 in the final rule is similar to the permit application requirements for other inje ction well classes, which could help avoid confusion about how to meet the permitting requirem ents for Class VI wells. The requirements at §146.82(c) for information to be submitted before operation of the well is authorized are very similar to those for Class I wells, with modifi cations and additions th at address the unique challenges and types of data collected for GS wells.

Letter ID: 0173 Comment ID: 23502 Letter Lines: 764 to 778

Comment Code: 4740 2.7.4 Electronic reporting (seeking comment)

Comment: Reporting - USWAG agrees that electronic reporting s hould be an option available to all states for data exchange related to Class VI wells, but believes that the Director should have the discretion to allow other m odes of reporting. Id. at 43517-18. We appreciate the important step s EPA has taken, including the awarding of grants, to ensu re that all states will have the capability to exchange data electronically. Id. USWAG also realizes th e benefits of electronic reporting, particularly in terms of fac ilitating the application process and streamlining review of CO2 GS projects. However, while it is likely that all states will eventually have the genera l capability to report electronically, some may not have that capacity yet. Additionally, it is foreseeable that extraordinary circumstances may arise that would preclude access to or limit availability of electronic resources. Acco rdingly, any requirement contained in the Final Rule for electronic reportin g should not be absolute but should instead allow the Director to approve ot her methods of reporting when he deems such methods more appropriate.

Individual Response: EPA believes that electronic formatting is the most appropriate format for submitting Class VI project information to the Director, and based on comments received on the proposed rule, the majority of Class VI well owners or operators will have the capability to report electronically, and re quires this at §146.91(e).

EPA is developing guidance for states that describes the recordkeeping, reporting, and additional data management needs associated with GS act ivities and provides recommended guidelines on the types of data to be collected for tracki ng GS projects, reporti ng to EPA for compliance tracking, and transfer of data to EPA's GS data system. The recordkeeping and reporting guidance will be available on EPA's web site, at http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm.

36Letter ID: 0173 Comment ID: 23503 Letter Lines: 780 to 790

Comment Code: 4750 2.7.5 Comments on the merit of a nnual reports (seeking comment)

Comment: With respect to the Proposal's suggestion of an annual reporti ng requirement for CO2 GS projects, USWAG appreciates the im portance of the information EPA seeks to gather but believes that annual reporti ng will not always be the best way to collect this information over the lifet ime of the project. Id. at 43518. The Final Rule will require some form of pe riodic reevaluation of the AoR throughout the life of the project; much of the information sought through the proposed annual reporting requirement would be gath ered and submitted to EPA through the AoR reevaluation process. Gathering this information through the AoR reevaluations alone, rather than imposing an unnecessa ry and duplicative annual reporting requirement, will provide a more cost-effective and manageable method of information exchange for regulator s and Owners or Operators alike.

Individual Response: The final GS regulation retains the reporting requirements as proposed, which does not include a requirement for an annu al report. Instead, EPA believes that periodic reevaluation of the AoR, as re quired at §146.84(e), along with any re visions to the required plans that may be necessary based on the AoR reevaluation, will promote an ongoing relationship between the permitting authority and the owner or operator. The final GS rule, at §§146.84(c), 146.90(j), and 146.94(d), requires owners or oper ators to review and update the AoR and corrective action plan, the testi ng and monitoring plan, and the emergency and remedial response plan throughout the life of the project. Owners or operators mu st review each plan and identify necessary amendments to the plan or demonstrat e to the Director that no amendment is needed. These reviews must be performed within one year of an AoR reevaluation, following any significant changes to the facility (e.g., the additi on of monitoring or injection wells), or when required by the Director. In no cas e can reviews occur less often than once every five years. For additional information, please see the final rule an d the preamble for a discussion of EPA's final approach to recordk eeping and reporting.

EPA also encourages and expects owners and op erators to share monitoring and operating data with the public voluntarily (e .g., through the Internet ), however. Providing the public with information throughout the GS project will help clear up and avoid public misperceptions about the nature and safety of GS. The Agency plans to, every six years, evaluate th e information and determine if modifications to the requirements are appropria te or necessary to ensure protection of USDWs from endangerment.

Letter ID: 0173 Comment ID: 23504 Letter Lines: 792 to 821

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

Comment: 12. Well Plugging and Post-In jection Site Care

37USWAG believes that the Proposal's suggested fifty-year default fixed timeframe for the post-injection site care period is arbitrary and will serve to discourage Owners or Operators of CO2 GS sites from seeking to develop innovative ways to safely close wells in a shorter time period. Id. at 43519. EPA acknowledges that it is likely "tha t the actual time for CO2 plume stabilization ... will be very site sp ecific, being influenced by geologic factors such as formation permeabilit y, geochemistry, and the degree of capillary trapping." Id. (emphasis adde d). In fact, EPA observes that the studies used for their preliminary analys is suggest that the length of time required before plume stabilization ranges from ten to one hundred years after cessation of injection - quite a significant range. Id.

While a ten-year site closure period may be insufficient in some cases, it is clear that there is no single time period that would apply to every CO2 GS site across the board. Because of the greatly varied characterist ics and needs of different CO2 GS projects, application of a performance-based standard which is highly site-specific, rath er than any default time period, is the most appropriate approach to the postinjecti on site care requirements. While the Proposal would give the Dir ector discretion to decreas e or increase the postinjection site care and closure period, th e inclusion of a fifty-year default timeframe is likely to discourage Owners or Operators from working to develop technology that would facilita te safe and quick site cl osure; the fifty-year default may even have a chilling effect on the Program as a whole, discouraging would-be Owners or Operators from undertak ing a CO2 GS project that could impose requirements decades into the future ev en when unnecessary. In contrast, by tailoring requirements to a given site , a performance-base d standard would encourage the development of methods and technology that would achieve long-term protection of USDWs with well closure after a shor ter period of time.

Individual Response: EPA agrees with commenters that th ere 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 final GS regulation 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 post-injecti on 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 demons trate, during the permitting process based on substantial data, that an alternative PISC tim eframe may be appropria te if it ensures nonendangerment of USDWs pursuant to requirements at §146.93(c).

EPA believes however, that to ensure USDW protection from enda ngerment, a default timeframe for post-injection site care will be necessary in most cases. The default 50 year post-injection site care timeframe represents a reasonable and prot ective monitoring period based on a review of research studies, industry reports, and existing environmental programs, and evaluation of public
comments. 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

38substantial data exists to demonstrate that an alternative 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 adds that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

Letter ID: 0173 Comment ID: 23505 Letter Lines: 823 to 831

Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements

Comment: 13. Financial Responsibility

The GAO report correctly identifies st akeholders' concerns with the uncertainties regarding the type of financial instruments that will be acceptable to meet the Final Rule's fina ncial responsibility requirements, as well as concerns related to the openended nature of pos t-injection site care liability. GAO Report at 39-40. As the GAO re port suggests, further clarity and certainty with respect to these issues is critical to remove these barriers to the commercial development of CO2 GS wells.

Individual Response: EPA acknowledges the commenter's need for additional certainty on the financial responsibility requirements for GS pr ojects. EPA has specified reasonable financial responsibility instruments and requirements in the final GS regulation at §146.85. Additionally, EPA is developing guidance (a vailable on EPA's website at http://water.epa.gov/type/groundwat er/uic/wells_sequest ration.cfm) that describes the types of financial instruments that owners or operato rs can use to meet financial responsibility requirements for GS wells. EPA has taken the concerns expressed by commenters on the proposed regulation, including the acceptability of various financial instruments and the timeframe for PISC, into consideration as it develops the financial resp onsibility guidance.

EPA acknowledges the commenter's concern about financing PISC activiti es. EPA anticipates that the availability of third-pa rty GS financial instruments will grow in response to demand for such financial instruments by GS well owners or operators as deployment of GS technology increases in the future. In addi tion, EPA plans to allow owners or operators to choose from a variety of financial instruments to meet their financial responsibility needs, thereby allowing owners or operators to select instruments they find easiest to obtain. See the final rule and preamble for further discussion of EPA's fina l approach to post-injection site care.

Letter ID: 0173 Comment ID: 23506 Letter Lines: 833 to 848

39Comment Code: 5434 2.9.1.2 Need for additional instruments (seeking comment)

Comment: Financial instruments - With respect to financial re sponsibility mechanisms, USWAG is not opposed to EPA's future issu ance of guidance desc ribing acceptable mechanisms provided that the guidance is issued in accordance with OMB's Good Guidance Practices Bulleti n, including an opportunity for public notice and comment before issuance of any final gui dance. 73 Fed. Reg. at 43520-22. In this regard, it is of paramount importance that self-insurance instruments - including the corporate financial test - remain available to Owners or Operators as a method of financial assurance for Cl ass VI CO2 GS projects. Id. at 43521. In referencing the assessment by the E nvironmental Finance Advisory Board ("EFAB") of various financial responsi bility instruments, including selfinsurance instruments, EPA recognizes that EFAB's assessment was not based on any failures of the corporate financial te st. Id. Self-insurance instruments, including the corporate financial test and the corporate guarantee, have been utilized successfully und er the RCRA program for ove r two decades and these instruments should be included in the final menu of options for meeting financial responsibility obliga tions under the Final Rule.

Individual Response: EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial te st can be an appropriate option for some owners or operators. EPA recognizes that it is important for sel f-insurers to be creditworthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use the financial test must be ab le to demonstrate profit ability, with a margin sufficient to cover contingencie s and unknown obligations, and stab ility. 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 fi nancial 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 dem onstrating that its corporate parent meets the financial requirements on its behalf.

Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director de termines that the operator's proposed financial responsibility demonstrat ion 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 demonstr ated, including correctiv e action on wells in the AoR, injection well plugging, PISC and site cl osure, 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 instru ments. See the final rule and pr eamble for further discussion of EPA's final approach to financial responsibility.

EPA is developing guidance that describes the types of financia l instruments, including self insurance, which owners or operators can use to meet financial responsibility requirements for Class VI wells. The financial res ponsibility guidance will include considerations for Directors regarding how to evaluate the ap propriateness of a specific financ ial responsibility instrument for a specific project. This guidance will be available on EPA's website at

40http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

EPA plans to take OMB's Good Guidance Manual in to consideration as financial responsibility guidance is developed. OMB's Good Guidance Manua l establishes policies and procedures for the development, issuance, and use of signi ficant guidance documents by Executive Branch departments and agencies.

Letter ID: 0173 Comment ID: 23507 Letter Lines: 850 to 855

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

Comment: USWAG does not agree with the Preamb le's suggestion that the cost of selfinsurance should be based on the cost of retaining an independent third party to conduct covered activities including well plugg ing. Id. In many cases, utilities are sophisticated, integrated companies and will be able to do the same work in a more cost-effective method that is just as technically sound and protective of USDWs, if not more so, th an an approach taken by a third party.

Individual Response: The GS rule, at §146.85(c), requires the owner or operator to have a detailed written estimate, in current dollars, of the cost of: performing corrective action on wells in the AoR, plugging the injection well(s), PISC and site closure, and emergency and remedial response. A cost estimate must be prepared separa tely for each of these activities and be based on the costs to the owner or operator of hiring a third party (who is neither a parent nor a subsidiary of the owner or operator) to perform the activities. The co st estimate is prepared in the same manner regardless of whether self-insurance or a third-party instrument is used because if at any point a self-insured owne r or operator no longer meets cor porate financial test criteria the cost estimate will be used to inform the re quired value of a third party instrument.

EPA will retain the use of self-insurance as an instrument for financial responsibility for Class VI wells. Owners or operators may self insu re through a financial test provided certain conditions are met. The owner or operator n eeds to pass a financial test to demonstrate profitability, with a margin sufficient to cover contingencies a nd unknown obligations, and stability. If the owner or operato r meets, this is an indication that the owner or operator can guarantee its ability to satisfy fi nancial obligations based solely on the strength of the company’s financial condition. An owner or oper ator who is not able to meet co rporate financial test criteria may arrange a corporate guarantee by demonstrating that its corporate pare nt meets the financial test requirements on its behalf. The parent’s de monstration that it meets the financial test requirement is insufficient if it has not also guar anteed to fulfill the obligations for the owner or operator.

EPA acknowledges that states may not be authorized under state law to allow for self insurance or other financial instruments. Th erefore, states may prohibit the use of any financial instruments included in the rule, including self insurance, for Class VI wells. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

41Additionally, EPA is developing gu idance that describe s the types of fina ncial instruments, including self insurance, which owners or operators can us e to meet financ ial responsibility requirements for Class VI wells. The fina ncial responsibility guidance will include considerations the Director may choose to ta ke into account regarding how to evaluate the appropriateness of a specific financial responsibility instrument for a specific project. EPA notes that Directors may disallow certain instrume nts. The guidance will be available on EPA's website at http://water.epa.gov/type/gr oundwater/uic/wells_se questration.cfm.

Letter ID: 0173 Comment ID: 23508 Letter Lines: 857 to 870

Comment Code: 5436 2.9.1.3 Allowing separate financial demonstrations for plugging and abandonment and post-injection si te care (seeking comment)

Comment: USWAG supports the Proposal's suggesti on to allow separate financial responsibility demonstrations for diffe rent phases of CO 2 GS projects, specifically for well plugging and then pos t-injection site car e. Id. at 43522. As EPA recognizes, "postinjection site ca re has the potential to extend many years into the future," and "[t]rying to determine the cost for post-injection site care ... could be difficult, as c ould the approval of a financial demonstration." Id. Requiring all financia l demonstrations to be completed at one time, prior to well plugging, could unnecessarily delay the site closure process. Allowing a subsequent demonstr ation for financial responsibility for the postinjection site care period wi ll allow regulators and Owners or Operators to better understand the site-closu re needs for a given CO2 GS project prior to demonstration and approval of financial respons ibility. This would be particularly helpful as the Program adva nces, and industry and regulators gain experience and knowledge relate d to CO2 GS projects.

Individual Response: EPA recognizes that there are challenges associated with estimating costs for activities that will occur far in the future. However, the Agency believes that owners or operators must demonstrate that financial resources are available to plug the injection well and provide post-injection care at the time the Class VI well is permitted. EPA clarifies at §146.85(a)(6) that, prior to obtaining a Class VI permit, an owner or operator may demonstrate financial responsibility by using one or multiple qualifying financial instruments for specific GS activities, thereby realizing greater flexibility and cost savings fr om this regulation. In the event that the owner or operator combin es more than one instrument for a specific GS activity (e.g., well plugging), such combination must be limited to instruments that are not based on financial strength or performance (i.e., self insurance or performance bond), for example trust funds, surety bonds guaranteeing payment into a trus t fund, letters of credit, escrow account, and insurance. In this case, it is the combination of instruments, rather than the single instrument, which must provide financial res ponsibility for an amount at least equal to the current cost estimate.

EPA also believes that it is important to periodi cally update cost estimates that support financial responsibility determinations. The final GS rule , at §146.85(c), requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and

42corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. Owners or operators must also ad just the estimates for inflation annually under §146.85(c)(2). EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequa te, as specified at §146.85(e).

In order to assist owners or operators and financial instituti ons in achieving accurate cost estimates for all GS activities, EPA plans to i ssue financial responsibil ity guidance that will include a discussion of how to estimate costs, incl uding how to adjust cost estimates for inflation to account for the long-term nature of GS pr ojects, in its guidance on meeting financial responsibility requirements for GS wells. This guidance will be availabl e on EPA's website at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

EPA agrees that GS technologies and cost estima ting methods are likely to change and improve as GS is deployed nationwide. However, EPA be lieves that past injec tion practices provide a good foundation for estimating the necessary costs and demonstrating financial responsibility. EPA envisions that financial responsibility updates required at the time of AoR reevaluation or at other frequencies specified by the Director, will provide opportunities to refine the cost estimates and adjust the financial responsibil ity instruments as appropriate.

Letter ID: 0173 Comment ID: 23509 Letter Lines: 872 to 883

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

Comment: Long-term liability - The potential for i ndefinite financial responsibility on the part of Class VI well Owners or Operators for a ny post-injection migration and contamination of USDWs at GS sites re mains of paramount concern to USWAG. EPA acknowledges that, under the existing SDWA statutory scheme, the Agency has the authority to terminate the obligation of an Owner or Operator to maintain financial responsibility instruments for well plugging and post- injection site care. However, EPA also acknowledges that "owners or operators may still be held responsible after the pos tinjection site care period has ended (e.g., for unanticipated migration that endangers US DWs)." Id. at 43522. Further, EPA does not currently have the authority "to tr ansfer liability from one entity to another. Trust responsibility for potentia l impacts to USDWs remains with the owner or operator indefinitely unde r current SDWA provisions." Id.

Individual Response: Under the final GS rule, once an owne r 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 opera tor will generally no longer be subject to enforcement for regulatory noncompliance. Furtherm ore, 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 ce rtain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even afte r site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provid ed by the owner or

43operator 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 ow ner 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 ha ve not acted to protect the health of such persons. Th e action may include issuing admi nistrative orders or commencing a civil action for appropriate relief against the ow ner 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.

Letter ID: 0173 Comment ID: 23510 Letter Lines: 885 to 913

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

Comment: The private sector will be extremely relu ctant to invest the tremendous amount of time and resources necessary to finance the development of a commercial-scale CO2 GS program if such investments ha ve open-ended liabili ty. USWAG fully appreciates that EPA is studying this i ssue and is compiling information "on a variety of alternative instruments not currently available unde r the SDWA." Id. at 435222. EPA has placed in the docket a July 2008 EPA report entitled "Approaches to Geologic Sequestration Site Stewardship After Site Closure" ("Stewardship Report"). See id. The Stewar dship Report provides a discussion of examples of site closure scenarios, as well as suggestions on how EPA can cap the amount of post-injecti on site liability for Clas s VI CO2 well Owners and Operators. Two of the important themes th at emerge from the Stewardship Report are (1) the need to equitably balance the risks of CCS between public and private actors, and (2) "the need to reduce excessive barriers to commercialscale development of GS" which w ould "deprive the general public of the benefits of reduced CO2 emissions due to GS technologies." Stewardship Report at 11,26. Any program or mechanism used to limit the opened-end liability of Class VI well Owners or Operators mu st (1) properly reflect the important public benefit in having utilities underta ke the massive investments necessary to develop a commercial-scale CO2 CCS program, and (2) remove the economic uncertainties associated with invest ing in such large-scale programs.

USWAG urges EPA to place a priority on th ese issues and to actively pursue a

44legislative solution if necessary to provi de the Agency with the authority to limit postinjection site care liability and/ or provide a mechanism to transfer the liability after a certain period of time, as has been done under other statutory programs. While the issue of ope n-ended liability need not be wholly resolved in this particular rulemaking, USWAG respectfully suggests that this problem must be resolved before a successf ul CO2 GS program can be implemented in this country.

Individual Response: EPA acknowledges the commenter’s con cern regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. EPA is working to create a nationally c onsistent 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, the authority under the SDWA does not extend to release owners or operators from long-term responsib ility for the potential economic costs of impacts 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 fi nancial instrument where EPA is the trustee. In the UIC program, liability under SDWA §1423 remain s with the owner or operator for all well classes until all regulatory requirements have been met. EPA understa nds that Congress is considering legislation that may address the liabi lity issue. EPA adds that the GS rule does not promote or encourage the use of GS; rather it is designed to ensure consistency in permitting injection of CO2 at GS operati ons across the U.S. and provide requirements to prevent USDW endangerment in anticipation of the eventu al use of GS to reduce CO2 emissions.

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. Further, the financial instrument required under §146.85 will be released if it has not been used. However, even if a site closure is approve d under §146.93, an owner or operator may be held liable for regulatory noncompliance (includi ng 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 an ongoing civil penalty.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38, including all pote ntial liabilities associated w ith meeting the requirements of that permit. See further clarification on the issu e of long term liability in the preamble of the final rule.

After site closure an owner or operator may remain liable 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.

45EPA notes that under SDWA, it has 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 au thority does not extend to allowing EPA to create a financial instrument wi th EPA as the trustee. Furthermore, EPA does not have authority in the SDWA to create a trus t fund. EPA clarifies that trust funds that are addressed as financial responsibility instrume nts through the GS rule are set up by individual owners or operators and are di fferent from a national-level tr ust described by the commenters that would cover large numbers of GS projects. See the final rule preamble for further discussion of EPA's approach.

Letter ID: 0173 Comment ID: 23511 Letter Lines: 915 to 924

Comment Code: 5500 2.1 Comments on Involving the Public in Permitting Decisions

Comment: 14. Public Participation

USWAG agrees that public participation is crucial to the success of any individual CO2 GS project and of the UI C Program as a whole. Id. at 43523. We urge EPA to structure the Final Rule's public participation requirements to maximize impact without unnecessarily slow ing down the application process. To this end, the Final Rule should not requi re public participa tion too early in the permit process; USWAG believes that public participation would prove most useful after an application has been deem ed complete but before it has been approved.

Individual Response: The Agency believes that public particip ation is an important part of the UIC permitting process and wants to ensure wi de access to decision-making processes and information on projects that may affect the pub lic. GS permitting authorities must follow the existing public participat ion requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay out the pr ocedures for decision making and include requirements such as requiring the Director to notify th e public regarding the availabili ty of the draft permit and allow him or her to request a public hearing on the draft permit. EPA encourages operators and permitting agencies to begin involving the public by providing information as early in the process as possible. Encouraging public part icipation allows the permitting authority to understand public viewpoints, preferences, and con cerns about the project, which might help avoid public misperceptions about th e nature and safety of GS projects and forestall resistance later in the permitting effort. EPA disagrees with commenters who claim th at early public involvement may slow the application process. Encouraging public part icipation allows the permitting authority to understand public viewpoints, preferences, and con cerns about the project, which might help avoid public misperceptions about th e nature and safety of GS projects and forestall resistance later in the permitting effort.

46