This comment letter response contains two parts: (1) The original submittal from the commenter. (2) A data base printout of EPA’s response to each point raised by the commenter.

Notes about the response letters:

• The response letters were generated by a data base used to track the content of all public comment submittals and ensure that the Agency responds to each. Each comment letter was assigned a Letter ID that corresponds to the last four digits of the docket number of the original comment (as posted on www.regulations.gov).

• Each response letter includes: comment text; an EPA

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

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

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

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

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

• All comments in a topic area were reviewed, evaluated, and responded to concurrently. Responses on each topic area are compiled and are also available in the rulemaking docket.December 22, 2008

Via Electronic Mail and Hand Delivery


### Docket 

### ID No.: 

### EPA
- HQ
- OW
- 2008
- 0390
Water Docket Environmental Protection Agency Docket Center (EPPNDC) EPA West Room 

### 3334 1301 Constitution Avenue, N.W. Washington, DC 20460
Re: Comments on the United States Environmental Protection Agency' s Proposed Rule: Federal Requirements Under the Underground Injection Control (UIC) Program for Carbon Dioxide (COz) Geologic Sequestration (GS) Wells


### Dear Sir or Madam: The Carbon Capture and Storage Alliance ( " CCS Alliance " or " Alliance " ) is pleased lo
submit its comments on the United States Environmental Protection Agency's ( " EPA or

" Agency " ) Proposed Rule: Federal Requirements Under the Underground Injection Control (UIC) Program for Carbon Dioxide (COz) Geologic Sequestration (GS)Wells, which was released on July 

### 25,2008 for review and comment by the public.1
The CCS Alliance is a coalition of entities, spanning a number of economic sectors, that
share a common interest in removing impediments to investment in and development of carbon capture and storage ( " CCS " ), as well as mitigating the potential risks associated with the deployment of this technology.' Its purpose is to promote development of policy by the states 

## ' Federal Requirements Under the Underground Injection Control (UIC, Program for Carbon Dioxide (C02) Geological Sequestration (GS) Wells. 73 Fed. Reg. 43503 (proposed July 25, 2008) ( " Proposed Rule " ).

! MidAmerican Energy Holdings Company, National Mining Association, National Rural Electric Cooperative Association, NRG Energy, Inc., PacifiCorp and Zurich North America.and the federal government to appropriately address risks and potential liabilities, thereby enabling the further development and increased deployment of CCS. The CCS Alliance believes
these technologies can be developed while protecting underground sources of drinking water, significantly reducing global and U.S. greenhouse gas 

### ("GHG") emissions, and enhancing 

### U.S. energy security.
A plethora of regulations affect the delivery of power using coal. We suggest that the Agency consider other regulations addressing the environment, human health and safety, and electricity cost and reliability, when drafting and implementing these regulations. The Alliance urges the Agency to consider the support of integrated energy, climate, and environmental policy

as time 

### progresses.
A central mission of the Alliance is to help ensure that the burden of regulations related

to CCS, such as those proposed by EPA, and legislative proposals promote the mobilization of capital for use in CCS projects that have well managed risk profiles and help ensure that existing
barriers to CCS created by laws and regulations are minimized, consistent with environmental, health, and safety objectives.


### If promulgated as currently proposed, the Proposed Rule will have a significant and direct impact on the interests of the members of the CCS Alliance and their customers. The CCS
Alliance believes the Proposed Rule is helpful in many ways, but also that it can be improved in

a manner that will both promote good risk management and reduce barriers to CCS deployment.


### I. INTRODUCTION
If atmospheric emissions of CO:! are to be controlled, CCS is the only tool now on the horizon that may be capable of addressing in a major way and within a mid

- term timeframe, the very large quantities of C02 emissions from fossil

- fuel using facilities in the United States.However, CCS still requires the definition of a stable and rational legal and regulatory regime
before it can be widely deployed. EPA has clear regulatory authority over the injection of wastes
and other substances into below-surface wells through the UIC program. The UIC program was
created by Congress under the Safe Drinking Water Act ( " SDWA " ) over 

### 30 years ago, without
consideration of potential interaction with policies to address climate change, for the protection
of underground sources of drinking water ( " USDW). The Agency now proposes to use this
framework to regulate below

- ground CO2 injection activities, an application not contemplated at
the time SDWA was drafted. Rules for geologic sequestration ( " GS " ) of COz are timely and
would be needed even if CCS is not deployed as quickly as many predict. While many projects
are under development, many observers are operating under the assumption that it will be a
decade or more before there can be wide deployment of CCS.~ The future of 

### CCS is and will be

at a critical juncture for some years. The CCS Alliance seeks, through its comments, to help

ensure that these regulatory activities promote well designed and implemented CCS projects with
sound risk management practices, and do not preclude the responsible, cost effective commercial-scale sequestration of C02.


### 11. IMPORTANCE OF PROMOTING CCS TECHNOLOGIES
EPA agrees, given the United States' abundant coal resources and its reliance on coal for
power generation, that " CCS could be a key mitigation technology for achieving domestic
emissions reductions. " As the following diagram demonstrates, coal is indispensable to meeting
the country's electricity demands, regardless of region:

3 See, e.g., " EPRI Summer Seminar and Energy Technology Assessment Center (ETAC) Studies, " presentation of Hank Courtright, Senior Vice President, Electric Power Research Institute. October 22. 2008.

### oiffen'ng Electricity 

### Mix by Region (EEI), 2008~

As the only significant technology to reduce atmospheric CO2 emissions from coal, CCS
is indispensable to reducing GHG emissions while meeting energy demand and achieving energy security. It is true, as 

### EPA notes, that underground storage of 

### C02 is " only one of a portfolio of options, " including efficiency improvements, and the use of alternative and renewable energy sources. However, these other tools are not a substitute for baseload power generation, which

comes primarily from fossil fuels. All 

### GHG emission reduction options will need to be pursued

Edison Electric Institute, DiJfermr Regions of the Countty Rely on Ugerent Fuel Mircs (April 2008), http://www.eei.comto meet proposed emission reduction targets. The CCS Alliance urges that EPA, and those
concerned with the Proposed Rule, consider the importance of 

### CCS in the context of climate risk
mi tigation.
The U.S. population is expected to grow by 

### 60 million by 

### 2030. During that time, electricity demand is projected to increase by approximately 

### 30 percent.5 Without rapid deployment of technologies that have begun to show promise, such as CCS, it will not be possible to meet the 

### GHG emission reduction goals being discussed by IPCC and others now for
attainment by mid

- century. While the thrust of this rulemaking is to protect and preserve USDWs, such environmental objectives should neither be viewed in isolation nor divorced from
other environmental and policy considerations - including energy security, economic stability
and trade considerations. A rational, comprehensive approach to the management of 

### C02
emissions from GHG

- emitting facilities must be undertaken if we are to simultaneously preserve economic stability, ensure returns on invested capital, enhance 

### U.S. energy security, and mitigate the predicted effects of climate change.


### 111. SUMMARY OF SUGGESTED PRINCIPLES FOR A 

### CCS POLICY STRUCTURE
The CCS Alliance supports 

### a CCS policy structure with the following elements. While

we recognize that some of these elements are beyond the purview of a UIC rule, we provide
them for consideration.

5 Energy Information Administration, Annual Energy Outlook 2008 (June 2008), http://www.eia.doe.gov/oiaf/aeo/electricity,html; U.S. Census Bureau, Projections of the Population by Age and .5~t for the United States: 2010 to 2050 (Aug. 2008), http://www.census.gov/population/www/p~/np2008-12.xls.

### Promote CCS Development
A CCS policy regime should be designed to encourage CCS, in addition to serving other public goals 

### - - such as promotion of energy security, economic stability. and protection of USDWs, human health and the environment.


### Sound 

### Risk Management
Federal and state policy should encourage owners, operators, technology companies, engineering firms, utility regulators, and others involved in the CCS chain to take appropriate
action to ensure safe and reliable operation of 

### GS sites and systems, minimize risks, and allow
CCS to earn broad public acceptance. 

### Single, Clear Liabiliv Structure
To the extent possible, policymakers should put in place a single, clear liability regime
for CCS activities. In the context of this rule, EPA has considered the possibility of cleanup liability both under the Comprehensive Environmental Response, Compensation, and Liability
Act ( " CERCLA " or " Superfund " ) and the Resource Conservation and Recovery Act ( " RCRA),
in addition to the UIC program. There is also the possibility of liability under state statutes and

common law. Parties who may be injured in the future must be able to resort to a fair liability scheme, but potential applicability of multiple schemes is likely to discourage CCS development. 

### Single, Clear Regulatory Structure
There should be a single, clear regulatory structure applicable to CCS rather than multiple, ill

- suited regulatory and liability statutes and regulations that likely will discourage
CCS To that end, the CCS Alliance believes that a beneficial approach would be to enact a1 the
federal level a new regulatory structure specific to CCS.Site

- Specific 

### Approach Policy regarding 

### GS siting should reflect that conditions affecting risk differ by site and
should be tailored to risks presented by specific sites. For example, C02 has been injected underground for several decades for EOR. This technique is well developed and there is now a history through which its risks can be assessed. This differs from injection for long

- term storage
in deep saline formations or unmineable coal seams, with which there is limited experience, particularly on the massive scale

- - a million or more tons per year per site

- - envisioned for the
future. Policy must encourage development of new data, technology, and practices while recognizing that existing technology is readily applicable. It also should reflect that some long term injection practices such as natural gas storage and 

### EOR already are known to pose little
risk. Sites also will differ based on reservoir and confinement geological details, proximity to
USDWs and other resources, and other factors. In addition, it is not necessarily the case that injection always should have to occur beneath the lower most water source with a confining
system in place as suggested by EPA. This should be determined on a case
- by

- case basis. Liability and Size Cave Responsibility Cannot be Unlimited
Site responsibility and liability of owners and operators should be designed to account

not only for protection of the public, but recognizing that private parties cannot assume open ended or unlimited risks. This includes site owners and operators, others involved in the CCS chain, and offerors of risk management products. There is not now, nor is there likely to be, a private market through which risks can be managed far beyond a reasonable post

- operation site

care period. In recognition of the market's limits, the duration and amount of site responsibility
must be limited.As a point of clarification, we use the following terms to denote different periods in the
CCS chain: 

### Operation is intended to mean the period during which C02 is injected at
the injection site. 

### Pust-upemtion site care period or 

### closure period is intended to mean the period of years after operation during which the owner or operator is required to meet State or EPA site care responsibilities.


### Post

- closure period is intended to mean the period after State or EPA site

care responsibilities end.


### Allow u Broad Array of Financial Assurance Mechanisms
Government policy should allow a broad array of mechanisms, including trust funds, especially since the market is likely to be limited for risk management mechanisms for CCS. We provide suggested principles for financial assurance below. 

### Government Backstop Role
The government will need to step in beyond an owner and operator liability limit, as has
been the case in many other areas in which the government has sought to encourage private
action to achieve a public good. The private sector's capacity to manage risks is substantial, but

not unlimited in either aggregate capital capacity or tenor and term. Government will need to accept responsibility beyond what the private market can manage. Because the goal in most

cases will be long

- term storage of 

### C02, long beyond the typical lifespan of private entities,
government should assume liability after injection operations cease and a reasonable closure period has elapsed.State and 

### Federal Regulatory Responsibility
State oil and gas commissions are repositories of expertise in regulating oil and gas industry underground injections, which have been safely undertaken for many decades. These
commissions also have regulated COz injections for enhanced oil and gas recovery, a practice
that has been in use for 40 years. However, not all states have oil and gas regulatory experience.
In states that do not have experience regulating oil and gas injections, EPA and the state should ensure the application of reasonable regulation that protects public health and the environment without discouraging CCS development and deployment.


### IV. 

### THE PROPOSED RULE: ASPECTS THE 

### CCS ALLIANCE SUPPORTS From the point of view of the CCS Alliance, the Proposed Rule has a number of positive
aspects.
A. 

### R ECOGNITION OF THE 

### I MPORTANCE OF 

### S PURRING THE 

### D EVELOPMENT OF 

### CCS T ECHNOLOGY The Proposed Rule recognizes the value of promoting CCS technology. With further
modification and a broader scope, these regulations could encourage substantially the safe deployment of CCS technologies, support the construction of new fossil fuel

- fired generation, promote capital formation, and broaden the availability of risk management mechanisms for CCS projects. The costs and benefits associated with protecting USDWs must be the focus of the Proposed Rule, but account has to be taken of the reality that such protection is inextricably
linked to the mitigation of climate change risk.


### B. 

### SDWA A UTHORITY 

### I S 

### L IMITED
The CCS Alliance agrees with EPA 7 s view of its authority under the SDWA as limited to preventing endangerment of USDWs by the underground injection of 

### COz. The Agency properly notes that regulating surface water and atmospheric releases is outside the scope of thisproposal and SDWA authority. Though EPA regulates both pollutants and commodities under
the UIC provisions, it is clear that the proposal does not address the status of COz whether as a pollutant or commodity.


### C. V I E W OF 

### GS R I S K S AND 

### H AZARDS
The CCS Alliance concurs with the Agency's identification of the risks and hazards, to
the extent these are understood and can be reasonably predicted, that likely are posed by underground injection. The 

### U.S. oil and gas industry, as EPA has pointed out. has had decades
of experience drilling through highly pressurized formations and injecting significant amounts of
COz for purposes of enhanced recovery. The Agency rightly notes that C02 has been successfully injected on much larger scale at several sites outside the United States. However,
broad scale, large CCS injections pose new considerations, and CCS requires site

- specific
review.


### D. W ELL 

### C LASS 

### A P P R O A C H
The creation of a new class of wells (Class 

### VI) to cover underground injection of C02
outside the context of EOR (existing Class I1 or Class V wells already permitted are properly left
outside the scope of the Class 

### VI proposal) is a reasonable approach due to the unique features of CCS, including the low viscosity of supercritical C02, its high buoyancy, and injection volumes
that could dwarf those of other well classes. There is important recognition that such an approach should not impede the development of 

### CCS technology but should " support the development of 

### a key climate change " risk " mitigation technology"."he CCS Alliance agrees
that where there is an EOR component in a project, that project should continue to be permitted
and regulated under the Class I1 program. It is also positive that EPA is proposing that Directors

6 Proposed Rule, 73 Fed. Reg. at p. 43,495.have authority to grandfather certain requirements for Class V experimental project wells and
other wells (Class 11) when they are converted to full scale Class VI wells. The Alliance
suggests that EPA should consider whether grandfathering the existing siting, AoR, operations, and monitoring plans for Class 

### I1 and Class V wells when they are converted to full scale Class
VI wells would protect USDWs while avoiding additional regulatory burden.


### E. R EASONABLE 

### LIMITS ON 

### P OST 

### - C LOSURE 

### C ARE AND 

### A SSURANCES 

### A GAINST 

### L EAKAGE
The notion of owners and operators being responsible in perpetuity should continue to be avoided. Washington State has instituted the requirement that there be a " high degree of
confidence that substantially 

### 99 percent of the GHGs will remain contained for at least one
thousand years."7 Such a standard would be inappropriate for C02 injection wells, and is not
related to effects on human health or the environment from a potential leak. The CCS Alliance is encouraged by EPA's apparent focus on a workable approach to such matters as casing and cement quality, and on instituting a monitoring, mitigation and validation program that provides

assurance of safe, long

- term storage, in conjunction w~th setting 

### a defined financial responsibility period that enables financing and risk management of CCS. Ultimately, needs associated with risk management of emissions to the atmosphere must be balanced against needs to manage risk

to the water supply, as well as other public policy issues mentioned above. This points to why
the Alliance suggests an iutegrated policy management approach to CCS technology.


### V. THE PROPOSED RULE: ASPECTS 

### OF CONCERN 

### TO THE CCS ALLIANCE


### A. F I F T Y 

### Y EAR 

### T IME 

### F RAME FOR 

### P OST 

### - C LOSURE 

### S ITE 

### CARE R ESPONSIBILITY
The Proposed Rule states that the timeframe over which C02 will be trapped depends on the properties of the receiving formation and the injected C02 stream. Currently available

W A S H

. ADMIN. C O D E 173-407-1 10 (2008) (se~ definition of " Permanent Sequestration " )information does not provide a complete understanding of the time required to stabilize geologically sequestered C02 under various conditions: however, some experience does exist
and has led some to develop extrapolative estimates for related geologies. Some believe that significant number of cases, a 

### 10 to 

### 30 year timeframe will be sufficient to determine that the remaining pressure in plugged wells will not lift fluid to overlying strata. Any uncertainty in characterizing post

- injection site care timeframes for GS, while challenging, could be dealt with through a maximum time period, performance standards, and Director discretion.
The CCS Alliance recommends establishing a maximum 30

- year post

- operation site care and financial responsibility period. The Director would have discretion to shorten

- - but not to lengthen
-- this period if the owner or operator meets certain enumerated performance standards
based on available data on pressure. fluid movement, mineralization andlor dissolution reactions

to show whether movement of the plume and pressure front have ceased. Once the thirty

- year period is reached 

### - - or shorter if the performance standards are met
- - a government backstop
would be triggered, thereby ensuring that a risk management mechanism is in place beyond the responsibility of the owner or operator. Investment requires assumptions about the amount of capital required and for how long it is required. If either the maximum amount of capital or the

term cannot be established, investment is deterred. Further, because most capital available will

not commit for terms longer than thirty years, and the duration for which it is available is generally inversely proportional to risk. Thus, long term capital for even low frequency but high severity risks is difficult to obtain. To assure public funds can be leveraged with private
investment to assure widespread deployment of this climate risk mitigating technology, a balance
of risk and reward is required in the policy development that underpins this UIC regulation.

### B. POTEKTIAL A PPLICABILITY OF 

### RCRA AND 

### CERCLA
As discussed in greater detail below, the potential applicability of RCRA and CERCLA is a key concern. These statutes simply arc not designed with the thought in mind of encouraging
the safe and widespread deployment of a new technology. The CCS Alliance believes that many parties involved in the CCS chain of events should bear responsibility for safe operation. Rather than apply environmental statutes with contentious and litigious histories, Congress should enact

a new regulatory and liability framework for CCS in place of the multiple regimes that now may apply. This is not meant to detract from the progress EPA is making in this rulemaking. It merely recognizes the limitations and overlapping structures EPA itself has noted. CCS should
be subject to a single, clear regulatory structure, and a single, clear liability structure. In the meantime, EPA should use what interpretive authority it has to limit the applicability of multiplc

statutes and provisions, the applicability of which would discourage CCS.


### C. G UIDANCE FOR 

### EPA R EGIONAL 

### A DMINISTRATORS AND 

### S TATE 

### O FFICIALS Broad responsibility and decision making authority is centered in the EPA Regional
Administrators (for UIC programs administered by EPA) and in non

- EPA officials (responsible
for permitting, implementation and compliance of state, territorial or tribal UIC programs). However, no guidance is provided as to how these individuals are to exercise such wide
discretion. They will havc the authority to determine whether large pilot projects should be
considered Class 

### V (experimental) or Class VI wells, but on what basis such a decision is to be
made is not clear. In accordance with OMB's Final Bulletin for Agency Good Guidance ~ractices,~ EPA should consider developing additional guidelines that limit the ability of mid 8 Final Bulletinfor Agency Good Gltidunce Prucfices, 72 Fed. Reg. 3432 (Jan. 25, 2007).level officials to implement and alter the program without review by the EPA Administrator or other organs of the U.S. Government.


### D. I N S U F F I C I E N T 

### R E C O G N I T I O N O F 

### L I K E L I H O O D O F 

### T E C H N I C A L 

### A D V A N C E S
C02 injection has been successfully utilized in the 

### EOR process for decades. As such,

even though CCS technology has not been widely deployed, the technology and industry knowledge are nevertheless presently sufficient to commence CCS activities. However, significant advances in technology and understanding are likely to be made in the future. The Proposed Rule fails to fully recognize or otherwise take into account that technology and the

state of knowledge almost certainly will improve and continue to evolve. 

### EPA, therefore, should
better reflect that as technology and understanding improves, the risks associated with CCS will
be reduced and the ability to mitigate remaining risks will be improved.


### E. S E C O N D A RY 

### C O N T A I N M E N T 

### S H O U L D 

### N O T BE 

### R E Q U I R E D Secondary containment (i.e., a second formation of " caprock " above the initial formation)
should not be required because it could limit the eligibility of potential storage sites, raise costs
due to extra transportation, and add to the considerable regulatory burden of regulating site
characterization. The standards of the Safe Drinking Water Act require that any injection that
does occur will not result in endangerment of USDWs. This should be sufficient, without imposing in addition an arbitrary additional standard.


### F. G E O L O G I C 

### S E Q U E S T RA T I O N OF 

### CO;! NEED NOT BE, IN EVERY INSTAKCE, BENEATH THE LOWERMOST FORMATION CONTAINING A 

### USDW Geologic sequestration of C02 need not be, in every instance, beneath the lowermost formation containing a USDW, as is the case with Class 

### I wells. Such a requirement likely would preclude injection into certain targeted geologic formations, which may include storage
sites currently under consideration for 

### GS. The Director should be given discretion, but to act inaccordance with guidelines, to allow injection above or between USDWs in specific geological settings where the depth of the USDW would preclude GS and where there are thousands (or only hundreds) of feet of rock strata between the injection zone and the underlying or overlying


### USDW. This could in many instances open up more areas for 

### CO;! slorage without endangering
USDWs.


### G. 

### V AGUE 

### L ANGUAGE AND 

### DEFINITIONAL P R O BL E M S
There are many words and phrases in the draft regulations that are not well defined, and the meaning of which ought to be expanded upon. For instance, what might constitute

" significant leakage " in the context of mechanical integrity testing should be identified.


### H. N ON 

### - C OMPLIANCE
If a site is not in compliance, there should be no requirement that injection cease immediately, unless an imminent threat of harm to human health or the environment is posed.


### VI. SPECIAL FOCUS: FINANCIAL ASSURANCE AND LONG TERM SITE RESPONSIBILITY Financial assurance and long

- term site responsibility are an area of special focus for the
CCS Alliance. As noted above. we believe the proposed 50

- year time frame for site care responsibility after a GS facility has ceased operation is too long, and there should be a known end point fur site care responsibility up front. In addition to these concerns, we offer the following comments on financial assurance.


### A. 

### T H E 

### P URPOSE O F 

### F INANCIAL 

### A SSURANCE
EPA's Geologic Sequestration Stewardship paper, released in conjunction with the Proposed Rule in July, states that the purpose of financial assurance is " to minimize the numberof facilities that are orphaned and abandoned; thereby, reducing the potential that these costs will
be borne by the public."9
This goal must be considered in the context of the facts surrounding CCS. It is an activity the government wants to encourage, the risks attendant to which may be significant 

### if they occur but likely are of low probability, and for which the private risk management market
will not cover the full amount or duration of the risks. To fail to implement CCS at this juncture,
is not an option if we are to serve other public priorities, such as addressing climate change and energy security, which depends in part on utilizing domestic resources like coal. For CCS to

occur 

### on a broad

- scale basis, " costs, " in the form of long

- term risk, will have to be borne by the public. 

### A question is how to define and shape the public role. Insuring or otherwise rnannging risk at a complex industrial facility requires specialty risk products, not ordinary property and casualty coverage.10 In the broader environmental risk insurance market, only four or five insurers offer products. In the energy market, the number is roughly the same. Private risk managers must have experts in place with appropriate perspective

to analyze the risks and calculate probabilities of the activity. Few risk management entities likely will develop this capability for 

### CCS. Each may be willing to take a portion of the risk with respect to an individual project. However, consider that today there are 1,493 coal

- fired

5, U.S. ENVIRONMENTAL P R O T E C T I O N AGEKCY, Approaches to Geologic Sequestration Site Stewardship Afler Site Closure, n.2 (July 2008).

10 Chiara Trabucchi and Lindene Patton, Storing Carbon: Options,for Liability Risk hfmagement, Financicrl Re.rpon.sibili~, BNA Daily Environment Report at p. 9 (Sept. 3, 2008). " Because CCS is what the financial services sector would call a specialty risk. only a small part of the sector would be equipped and qualified to analyze the risks and place capital thereon. "electric generating units in the United states. 

# ' This suggests a large potential need for risk management mechanisms. Forecasting for CCS can be difficult because there is no established track record in some formations where GS is envisioned to occur, such as deep saline aquifers, or on the scale
envisioned for facilities generating electricity. Each risk management company will have differing conditions under which it will or will not accept risk. These might be based on factors such as geography, due diligence in siting, formation pressure and chemistry, type of geologic formation, proximity to population, and the applicable legal and liability regimes. These factors

are not yet actual factors, as CCS as envisioned by policymakers has yet to emerge, but are based

on the considerations in other fields. Companies may further specialize in the layer of risk they are willing to accept. For example, one risk management company may be comfortable writing coverage for the initial
tranche of risk - perhaps the first $30 mdlion in potential damages, above the first 

### $10 million, which it may require that the policyholder bear. Another may be willing trl write coverage for
the next 

### $30 million, liability for which would only arise if damages were beyond the $40
million borne by the policy holder and the first insurer. Others may not be willing to provide

coverage until after the first $100 million or more in risk is covered. A small pool of reinsurers

may be willing to help further spread some of these risks.
In considering financial assurance requirements, EPA and stakeholders should distinguish
financial assurance from liability. Regardless of the length of time EPA establishes in the final
rule for a 

### GS facility owner or operator to maintain financial instruments to pay to clean up potential 

### USDW contamination, liability for such cleanup may last longer, depending on which

I I Energy Information Admmstration. Electric Power Annual, Existing Capaci~ by Energy Source, Table 2

- 2 (Oct. 22, 2007).statutory provisions are applicable, as well as state law. While 

### EPA is limited in its ability to
address potential liability, it should seek to do so, as findings of the Risk Study conducted by the
CCS Alliance (discussed below) show that potential long

- term liability is a significant barrier to
CCS development.

Risk managers - insurers, sureties, banks, and others - will determine whether to provide
financial assurance based on a calculation of the severity of risks and probability that they will

occur over a given time period and the terms and conditions of the obligation.
The severity and probability of risk is defined not just by physical dimensions, such as
fractures and leaks, but by the regulatory and liability structure that is in place. A party may be
in violation of a rule or may trigger large potential liability, notwithstanding that the risk to
USDWs or human health or the environment may be minimal. One may look at the risks of a CCS project in two ways: by the activity being performed
in the CCS chain (i.e.. generation, compression, transportation, injection, long

- term storage), or by the phase of the project 

### (i.e., operation, closure, post

- closure). The CCS activity being performed, as well as other site

- specific conditions, will affect the availability of risk management products:
In the context of CCS, different risks are likely to present themselves at different stages during the facility's life

- cycle. resulting in a range of consequences the financial materiality of which will depend on the site

- specific characteristics and location of each CCS project. For these reasons, different phases of the CCS process wilI warrant different financial (risk) management mechanisms. "



## '' Chiara Trabucchi and Lindene Patton, Storing Carbon: Options for Liability Risk kfanugement, Financial Responsibility, BNA Daily Environment Report at p. -3 (Sept. 3,2008).Some risks will be more easily addressed by the market than others. Risks in the generation and carbon capture phase 

### are manageable under standard mechanisms such as bonds
and insurance, or are retained by the operator. The same is true for risks during the transportation phase.I3 However, the long-term storage phase presents a set of risks the duration
of which is beyond the scope of the market. The market will not take on liabilities beyond a
defined amount for a defined period. Granger Morgan of Carnegie Mellon University's CCS Regulatory Project said, "[tlhey don't know how to write a policy that goes on f~rever."'~ It is

not a matter of knowing how - it is a matter of not being willing to provide risk management for
such duration.
Underwriters look to ;I variety of factors in determining whether to offer a risk management product, what its features and conditions will be, and how to price it:
An underwriter will look to the fundamentals of the technology itself when undertaking risk analysis. Technical specialists are assigned (such as engineers, geologists, chemists or the like) to develop an understanding of the technology's functionality and its potential failure points. The underwriter will ask for testing and performance data, including the conditions of performance - especially scale. 

### In the area of technology, scalability presents substantial risk for many reasons, including - but not limited to - basic theory extensions, specific chemical or physical behavioral changes associated with volume or environmental factors (such as temperature or humidity) and supply-chain risks, to name a few.I5 Many of these issues are key considerations in evaluating CCS risks. As noted above, few risk management companies may undertake to develop this information.

14 Evan Lehmann, Wanted: 1,000 Year Insurance Policy, Climatewire, Aug. 19, 2008, http:llwww.eenews.net/climatewire/2008/O8ll9ll/.

15 Lindene Patton, Beyond Rising Sea Levels, T H E E U R O P E A N B U S I N E S S R E V I E W (Mar.1Apr. 2008).

### C. 

### W H A T 

### M A R KE T 

### P ARTICIPANTS 

### S AY A B O U T 

### R I S K
The framework for approaching the commercial risk in the development and deployment
of coal

- based projects with CCS is demonstrated by the following chart:

FarDlmlQmtp 

### Approach to Commercial 

### Risk Framework
Energy Risk Analysis
Develo~rnent Develo~ment Evaluation, Application

of Risk Mitigation Mechanisms

Coal prolecis wlth CCS cannot , Technical and operating risks complete financing without a comprehensive cornrnerc~al risk analysis by creditors, tmically in a prolect finance framework. Deployment = project finance possible

Source. Scuily Capital Repayment and profit

Design & Engineering & Operations & Development Construction Maintenance

The 

### CCS Alliance has evaluated technical, market, and policy risks associated with CCS deployment. On behalf ol' the 

### CCS Alliance, Andrew Paterson of Econergy International
interviewed dozens of market participants earlier this year, including project developers, utilities, technology vendors, risk managers, and financial providers to assess which risks were considered

most likely to occur, and which, if they occurred, would be considered to have the greatest impact to the project.
The results can be viewed graphically in a Cartesian coordinate analysis, as follows:

## Which Risks 

## Matter? Which Will the Market Handle? Probability 

## vs. lmpact

Lower Likelihood Higher lmpact



### Accidents (Plant fires, or spikes in feedstock costs or a gas price slump with loss of competitiveness)

Low Likelihood Low lmpact High Likelihood High lmpact Risks likely need to be shared between public and private

(e.g., high capital costs with CCS, or lack of clarity about carbon regs)

Higher Likelihood Lower lmpact 

### Marketing and

Operations (Workforce issues, coal transport, transmission congestion, etc.) 

### Externalities (e.g., pollution)

Or lax enforcement, lack of standards

The CCS Alliance analysis confirms that market participants concur with the view of the Intergovernmental Panel on Climate Change ( " IPCC " ) that physical risks such as an operating
accident or geologic sequestration site failure are low probability, high impact ri~ks.'~ However. they view as higher probability the risk of policy failure.
In the CCS Alliance Risk Study, the highest rated risks for companies and investors considering investment in projects with CCS were focused on: Higher capital costs for capture, compression, transport, injection and storage.

l6 IPCC, Special Reporf on Carbon Dioxide Capture and Storage (2005). IPCC report states that there is only a one percent chance that C02 would escape into the atmosphere in 100 years.Uncertainty about the extent and timing of legislation and regulations for carbon emission
constraints
- in other words, a regulatory basis for pursuing CCS at all.
Unclear rules at the federal and state level for CCS injection (which the 

### UIC Proposed
Rule is seeking to address), creating some uncertainty about specific liabilities.
Lack of clarity about long

- term ultimate liability for C02 leakage after injection and storage for some commercially relevant time period (e.g., 

### 10 to 30 years). The Proposed
Rule also seeks to address this issue. Electricity (or fuel) prices
- in the regional market or set by state utility commissions
- which are too low to cover costs for CCS.
Some mechanisms, as either subsidies or for risk transfer, exist to address these issues,
but as depicted in the table below, they are concentrated in the area of either reducing capital

costs and other CCS related expenses, or in dealing with electricity rates and adjusting revenues
in some manner. Subsidies to cover higher costs include: federal grants for new facilities, tax credits, and state grants. Other mechanisms, such as a federal loan guarantee (Section 1703 of
EPAct 2005) or rate

- basing a plant with CCS, remove substantial risk for capital recovery by providing alternative recovery or prevention of default.Uncertainty on - pr - Lack of clarity on (or rates set) High Capital Carbon Emission Unclear rules on lona

- term CCS too low for

Federal Federal grants (DOE) Federal Investment tax credits (capital subsidy) Federal Unit tax credits (operating subsidy) State State grants (e.g., for engineering) 6)

Risk Assumption/ Transfer Federal Federal Loan Guarantee State Rate

- basing or Dispatch Preference Industry Stockpiles; Backup supplies or systems

State Additional collateral or Revolving funds Federal Carbon allowurn (traded with cap) 6)

Risk Assumphan / Transfer Federal Clear regulations on carbon emissions State Clear ~les on CCS and LT Liabilay

Because substantial exposure to some critical risks remains, additional mechanisms and regulatory clarification are needed to garner the scale of investment and capital recovery needed
for commercial entities to deploy major facilities with CCS. As summarized in the table above, clarifying injection and transport rules clearly help, and can be coordinated with private insurance, trust funds or bonding, and state revolving funds. Additionally, some clarity on
carbon emission rewlations would eventually enhance the value of assets with CCS, and help

attract capital for construction in the first place. Without capital investment, no 

### CCS will be implemented because it is an inherently capital

- intensive activity primarily involving facilities costing more than $1 billion. But, there is no private instrument that can bear " indefinite, long

- term liability " for leakage from CCS sites because commercial enterprise carries a finite horizon for investment.
The 

### EPA 

### UIC program does wield a regulatory incentive, though, in negotiating or retaining

some flexibility on the point (e.g., 10 years versus 

### 50 years) at which liability for long

- term leakage is assumed by the federal holder after injection.Results of the CCS Alliance Risk Study are summarized in the following chart. Note that
in addition to the concern noted earlier about state CCS regulations and liability policies, one of
the issues scoring the highest risk factor is that EPA regulations on underground injection of COs
and liability fail to offer clarity for financing. Lack of clarity could prove to be a " showstopper. "


### EPA should do its utmost to use its statutory authority to reduce this risk through this rulemaking. 

# I Far Deplovment of Coal
- based Proiects with CCS 

## Risk Study: Technical, Policy, Market Risks

30 Respondents 25 pim scale Rdad

High High From interviews of key actors (owners, builders, financial entities, agencies, states) critical risks in three major areas are evaluated in a project finance credit analysis framework. Risks are rated (1 lo 5) for "likelihoad" and " impact " if a risk event occurs. The product (25 point scale) provides a

" severity " of risk for specific events affecting deployment with CCS.

This information is buttressed by the recently published findings of the Government Accountability Office 

### ( " GAO " ) which, in part, concludes that regulatory and legal uncertainties,including questions about liability concerning 

### C02 leakage and ownership, are primary barriers

to 

### CCS deployment.17


### D. P R I N C I P L E S FOR A 

### R I S K MANAGEMENT 

### R E G I M E FOR 

### CCS Recognizing that it must act within the confines of its authority under the 

### SDWA, and
with the goal in mind of protecting USDWs, 

### EPA should consider the following principles in constructing a financial assurance program.
One means of encouraging adequate financial assurance is for regulators to (1) require site operators to provide accurate, comprehensive and current information on costs for closure, post-closure and corrective action activities; and (2) ensure that stakeholders have the means to verify those estimates. Moreover, the Alliance seeks to remind 

### EPA that no type of financial
assurance instrument can meet regulatory demands for an unrealistically long coverage time period that extends beyond the willingness of capital markets to accept covered risks for such periods. With these concepts in mind, regulations can be developed to ensure that funds will be readily available, and in the amount necessary, to cover costs associated with environmental obligations in thc event that owner/operators of underground injection sites are unable to meet
their financial responsibilities.
1. 

### Clear, Reasonable, and Limited Regulatory and Liability Structure
EPA should use its discretion, to the extent practicable, to establish a single, clear, and reasonable regulatory structure. 

### CCS developers will be willing to abide by reasonable rules that
protect human health and the environment, but society should not bear enhanced costs resulting
from requirements that do not contribute to health and environmental protection. Nor do developers and risk managers want to face liability via multiple State and federal statutory and

" G O V E R N M E N T A C C O U N T A B I L I T Y O FFICE
. GAO-OX- 1080, C L IM ATE CHAKGE: FEDERAL. ACTIONS WILL G R E A T L Y AFFE C T THE V I A B I L I T Y OFCARBON C A P T U R E AND S T O R A G E AS A K E Y MIT~GATION O P T I O N (2008).common law pathways, with the possibility of unnecessarily expensive and contentious
remedies. EPA should use its discretion, to the extent practicable, to provide a single, clear,
reasonable liability reglme. As these goals likely will require some legislative action, EPA also
should educate Congress on the need for regulatory and liability regimes with these
characteristics.
2. 

### Allow a Broad Array 

### of Financial Assurance Instruments
Since private market financial assurance may be scarce for some CCS phases, EPA
should be flexible in the type of financial assurance instruments it authorizes and needs 

### to

encourage the development of financial assurance offerings for 

### CCS.
The Proposed Rule discusses four financial assurance/risk management instruments and
requests comment on others. Generally, the CCS Alliance believes policy should foster a broad array of means whereby a regulated entity can satisfy financial assurance. Both regulators and site owner/operators will benefit from broad availability of an innovation in offering different types
of financial assurance instruments. Increased competition may reduce the cost of obtaining these

assurances as much as market conditions will permit. Each instrument has specific
characteristics and may play a different role 

### in addressing CCS risks. It should be noted that in
difficult economic environments (e.g.,contractions of available capital in the market), the capital
markets may make less money available for new types of projects, especially 

### if the risk profile is unclear, which could mean that arranging financial assurance for CCS may be difficult in the

near term.
One issue that applies to a variety of financial assurance instruments is the
creditworthiness of the issuer. While 

### EPA should seek satisfaction that the issuer is on soundfinancial footing, it should avoid unduly restrictive standards, or standards beyond the control of
the issuer. For example, Bureau of Land Management regulations require that insurance providers offering financial assurance " must have an A.M. Best rating of 'superior' or an equivalent rating from a nationally recognized insurance rating ~ervice."'~ Such standards may dramatically contract the pool of available issuers, especially during difficult economic times.
Creditworthiness standards should consider both ability to pay and the availability of cost effective financial assurance.



### a. Trust 

### Funds
The Alliance supports the concept of trust funds as reserves to address 

### CCS liabilities for long

- term stewardship. Properly structured, trust funds can be valuable tools in this area.
A valuable feature of a trust fund is that 

### a large reserve may be accumulated gradually.
Costs can be spread over time. EPA has focused on the obverse of this issue - that in early years,

a trust fund may not be sufficiently capitalized to address all the risks that may arise. EPA has proposed that trust funds have a three

- year pay
- in period. 

### EPA should not impose such limitations, for two reasons. First, while it is possible that an incident may occur that would
result in a demand on the fund in early years, many consider that risks are likely to be lower in
the early phases of injection. Second, and more importantly, given that the private risk management market appears unlikely to be able to address all risks, EPA should encourage development of mechanisms that can address any portion of the risk. A three

- year pay
- in period arbitrarily restricts a potentially valuable tool with a heavy early payment burden. EPA should
allow flexibility in trust fund arrangements, and can link the credit it gives to financial assurance through trust funds to the amount available in the fund.

'$43CFR 3809.555(f).Long

- term, 

### EPA and other policy makers should consider the possibility that too large an

amount might be accumulated in trust funds, relative to the risks they are designed to cover. A recently released assessment of a 

### $1 per ton tipping fee for CO;? sequestration, at levels required
under 

### WRE450 and 

### WRE550 climate policies, would accumulate up to 

### $1.5 trillion by the time
the first 

### 100 CCS facilities reach the end of their useful lives.l9 Such misplaced wealth storage is

not economically sound. Furthermore, in light of the history of trust funds managed by the federal government, it would provide an unfortunate temptation for policy makers with other fiscal priorities.
Observers have suggested fees to capitalize CCS trust funds with a number of different

structures. The type of mechanism or amount of the fee should not be of concern to the 

### EPA, but
should be addressed by the policy makers establishing the trust. It may be that multiple trust
funds could be applicable for portions of the risk associated with a CCS facility or facilities.
Both private and government

- run trust funds may arise. 

### EPA should ensure sound management of trust funds, but does not need to limit parentage. Again, innovation should be
and will need to be encouraged. The trusts could be privately administered in compliance with state insurance regulations; in this way, the state has final governance authority by charter status, while private industry can bring fiduciary and engineering analysis resources to bear which
would be expensive for the states to match.
Trust funds also could be structured to provide incentive for risk

- mitigating behavior. As

an example, their terms might be structured to limit eligibility to projects whose siting or operations meet superior standards.

' " James J. Dooley. Chiara Trabucchi, and Lindene Patton, Tipping Fees Can't Save us fmm the Tipping Point: The Need to Create Rational Approaches to Risk Munagement that Motivure Geologic C02 Sforuge Best Pmctices. ScienceDirect, GHGT

- 9, November, 2008.Again, 

### EPA should encourage development of trust funds, rather than artificially limit
them.


### b. Insurance
lnsurance should be authorized as a risk management tool for 

### CCS. Insurance for CCS liability is a " specialty " product. Specialty underwriters generally are well

- trained to focus on
the environmental risks involved with each facility, and insurance provides full coverage for the
financial assurance risk from pollcy inception forward.
EPA appears to be approaching insurance guardedly, noting that the " insurance
mechanism was and still is. rarely used for the purpose of demonstrating financial assurance for injection wells. " 

### EPA should provide guidance for the use of insurance.


### EPA should be careful to avoid several problems that have made insurance less available
and more expensive in the past. For example, regulators typically require an insurance policy to
be written to require payment to an entity designated by the regulator, rather than to the insured.
The requirement to pay the regulator or a designated agency creates potential for " double payment " 

### - both to the regulator, and as a result of state law, to the insured. EPA should address
this problem by making possible clear designation of sole beneficiary status, and allowing parties

to contract for express waivers by policyholders of their payment rights, where the regulator requires a different beneficiary. Another problem is that regulators often prohibit cancellation of

a policy if an operating permit is revoked or if the operator seeks bankruptcy protection, even if
continued premium payments do not occur. Such a prohibition drives up the cost of insurance,

" front

- loads'' insurance costs as insurers require up
- front payments, and reduces insurers' willingness to offer policies.Since, as noted above, some risks associated with CCS will be beyond the market's willingness to bear, 

### EPA should allow insurance to be arranged on terms that will encourage its availability. It should encourage the private risk management market to address as much risk as possible.

c. 

### Surety Bonds
Bonds are a traditional financial assurance mechanism and have been widely used. They

ensure the performance of the bond holder on behalf of a third party, such as the state or the federal government. Unfortunately, the surety market has contracted in other environmental areas. " ' Some of
the conditions that led to the contraction elsewhere are relevant to CCS. For example, some agencies have focused on very long

- term risks that might arise after site care responsibility has
ended. " The result can be bond amount increases by two orders of magnitude. " Further exacerbating the problem, at least one court has found that EPA7s financial assurance requirements for bonds does not limit payment to the amount of the bond, should the bond issuer
choose to perform the cleanup rather than pay the bond.23 Thus. for example, a bond issuer
could pay $100 million for cleanup, even if the bond amount was $10 million. Surety industry representatives indicate that they are hesitant to underwrite any obligation
that may extend even beyond five years. Presently, for example, surety bonds for mining

- related obligations are virtually unavailable at any price. A 

### 2002 National Mining Association report on

") " Mining and the Vanishing Surety Bond Market, " Lisa A. Kirschner and Edward B. Grandy, American Bar Association, Natural Resources & Environment, Winter 2003, Vol. 17, Number 3. 

## " See, p.g., Mont. Code Ann. 382-4-338. 

## '' Jim Carlton, " Mining Firms in U.S. Face Crisis Over Cleanups, " Asian Wall Street Journal. July 34. 2002. People ex uel. Ryan v. Enrtl. Waste Res. Inc., 782 N.E. 2d 29 1, 296 (Ill. App. 2003).surety bonds for mining operations noted " Five of the top 

### 10 sureties in the 1990s have either merged or left the business. Others have announced their intent to withdraw, and several longstanding market participants have effectively withdrawn by curtailing their exposures so substantially.24
As with other financial assurance mechanisms, EPA should take steps to encourage the availability of surety bonding. Such steps should include clarifying in EPA's financial assurance regulations for surety bonds the bonding period, and clarifying that sureties may offer pay or perform instruments that will remain subject to the bonding limit, even if the surety chooses the performance option.


### d. Corporate Financial Strength and Corporate Guarantees
EPA proposes to authorize the use of corporate demonstration of financial strength and corporate guarantees as acceptable forms of financial assurance. 

### In keeping with our recommendation that a broad array of financial assurance mechanisms be authorized, we support
this proposal.



### e. Letters 

### of Credit
Letters of credit ("LoCs")are a standard form of financial assurance and should be
authorized. A great advantage of LoCs in commercial practice is that as long as a LoC is valid, presentation of the proper documentation by the LoC beneficiary entitles it 

### to payment. Their

ease of use is a great benefit.

24 Interim Report, National Mining Association Surety Bond Working Group, 2002, p. 4.However, LoCs can be expensive. Issuing banks may require a site owner or operator to provide secured collateral or deposits before agreeing to issue a LOC,?~ a possibility made all the

more likely by the extended time window of liability in the environmental context (and in fact
referred to by EPA in promulgating some of its FA regulations).26 Such a commitment of capital

may be difficult in the context 

### of an innovative project, such as a facility deploying CCS. EPA
should take care not to assume heavy reliance on LoCs to meet financial assurance requirements, again pointing to the need to provide for a broad set of financial assurance instruments. Also, EPA should consider in its guidance for LoCs addressing the potential for
differences in the coverage period detailed in the letter of credit and the letter's expiration date.
LoCs ordinarily are issued for a short period, perhaps a year, with an annual renewal date. If the
renewal merely extends the expiration date of the letter, giving additional time to present requests on the letter, without altering the period during which incidents covered by the letter
would have to occur, gaps in coverage may arise. This issue could be addressed in guidance.


### 3. A Government Backstop 

### Is Necessary As the Proposed Rule states, EPA does not have the authority under the 

### SDWA to
establish a government backstop mechanism. Nevertheless, it is clear that such a mechanism is
needed. 

### A government backstop should be in place to the extent the private market is not.
The CCS Alliance believes that the government will need to step in beyond an owner and
operator liability limit, as has been the case in many other areas in which the government has sought to encourage private action to achieve a public good. The private sector's capacity to

25 James William Boyd, " Financial Responsibility for Environmental Obligations: Are Bonding and Assurance Rules Fulfilling Their Promise?,' Resources for the Future Working Paper No. 01

- 42. August 2001, at 24.
26 See 53 Fed. Reg. 43,322, at 43$353, Oct. 26, 1988.manage risks may be substantial, but will have limits. Government will need to accept responsibility beyond what the prlvate market can manage, which is likely at a minimum to
include the time after which operations cease and the project no longer produces revenues that would enable a private entity to cover liabilities. Because the goal in most cases is likely to be long

- term storage of COz, long beyond the typical lifespan of private entities, government should be prepared to assume liability after injection operations cease and a 30

- year or shorter (as described above) closure period has elapsed.
4. 

### Encourage Risk Management Through the Private Sector Notwithstanding that CCS will require some level of government risk management, particularly for long

- term liability. EPA's financial assurance regime should encourage the role of private market risk management to be as large as possible.
5. 

### Encourage Economically Efficient 

### Risk Management
Financial assurance mechanisms should be cost effective. Factors in cost will include the risk estimate, the type of instrument, and the duration of the instrument. Each cost in the CCS
chain will have an effect on whether CCS is deployed. The EPA should carefully consider the potential cost of financial assurance mechanisms when designing a Class 

### VI financial assurance regime.


### VII. SPECIAL FOCUS: APPLICABILITY OF CERCLA
The Proposed Rule raises the question whether the injected C02 stream 2 ' will be
considered a " hazardous substance " under CERCLA.
The Proposed Rule states:

27 The rule uses the terms " carbon dioxide stream " and "injectate" interchangeably. EPA's proposed definition of these terms includes C02 " plus incidental associated substances derived from the source materials and the capture process, and any substances added to the stream to enable or improve the injection process. This subpart does not apply to any carbon dioxide stream that meets the definition of a hazardous waste under 40 CFR Part 26 1 ."While C02 itself is not listed as a hazardous substance under CERCLA, the C02 stream may contain other substances such as mercury that are hazardous substances or the constituents of the COz stream could react with groundwater to produce listed hazardous substances such as sulfuric acid. Thus, whether or not there is a " hazardous substance " that may result in CERCLA liability from a
7 stream sequestration facility depends entirely on the make

- up of the specific 

### CO- and of the environmental media (e.g., soil, groundwater) in which it is stored.
A mechanism must be in place to address liability for releases from GS sites. However, Superfund has had a number of problems that EPA should carefully consider in the context of a regulatory regime the Agency hopes will encourage deployment of CCS. Cleanups sometimes
have been delayed by decades, lawsuits can stretch for years and involve numerous parties, and cleanups have been far too costly. 

### EPA should use its interpretive authority to limit the applicability of Superfund and respond to releases under other authorities. Ultimately, Congress
should adopt a new response and liability system recognizing the policy goals, scale, and other special features of CCS that is unburdened by the problems of Superfund.


### A. 

### R E L E V A N T 

### PROBLEMS WITH 

### S U P E R F U N D Superfund imposes a strict, joint, and several liability scheme upon facility owners and
operators, parties who arrange for treatment, storage, transportation, or disposal of hazardous substances; and transporters of hazardous substances. This strict, joint, and several liability scheme, in conjunction with other features of Superfund, particularly what many consider to be inordinately high cleanup costs, frequently results in expensive and lengthy lawsuits and delayed cleanups. Superfund also has been criticized for remedies that are l'ar more aggressive than the
risks warrant.


### B.
EPA's authority to order cleanups under CERCLA is triggered whenever any " hazardous
substance " is released or there is a substantial threat of such a release into the environment. TheAgency is considering whether the injectate, substances mobilized as a result of injection, or
substances formed by geochemical reactions between the injectate and underground materials will trigger the " hazardous substance " definition.
While EPA correctly notes that C02 is not now a hazardous substance, that may not
continue to be the case given 

### Mussach~nsetts v. 

### EPA.~"~ which the Supreme Court ruled that
COz is 

### a pollutant and directed the EPA to determine whether or how it should be regulated.
Such a decision could affect whether COz is determined to be a hazardous substance under
CERCLA.
CERCLA defines a hazardous substance to include " any hazardous air pollutant listed
under section 112 of the Clean Air Act



### . . 

### . ."" C02 is not on this list at present. However,
Section 1 12 authorizes EPA to add a compound to the list if the Agency finds that emissions of the compound " may reasonably be anticipated to cause adverse effects to human health or
adverse environmental effe~ts."'~ If in response to 

### Massachusetts 

### v. EPA, EPA were to decide to regulate C02 under Section 1 12, releases of C02, even without the presence of or interaction
with hazardous substances, would be subject to Superfund liability.
EPA also notes that the presence of other materials or the injectate's reaction with other
substances underground may result in it becoming a hazardous substance. These post-injection geochemical 

### reactions are of significant concern because C02 injectate considered nonhazardous upon injection could, over time, react with underground materials, potentially creating

a hazardous substance and triggering unintended and unanticipated Superfund applicability.

'8 Massacl~usetts v. EPA, 549 U.S. 497 (2007).
2"2 U.S.C. $ 9601.

'O 42 U.S.C. $741 1.Triggering application of the "hazardous substance " definition under Superfund to CO2, either

pre - or post

- injection, will create concerns about liability that will not encourage CCS development and, as our research cited above suggests. likely 

### will be an impediment to the
investment and risk management needed for CCS projects.


### C. 

### F EDERALLY 

### PERMITTED R ELEASE 

### E XEMPTION Superfund liability does not apply to a " federally permitted release, " pursuant to Section 107(i).~' The Proposed Rule notes that parties may be able to avoid Superfund liability through this exception. However, this exception likely would not apply in cases where injectate accidentally has been released from a storage site. Both 

### EPA" and the 

## court^'^ have interpreted
the federally permitted rdease exemption to apply to releases that are in compliance with 

### a permit, but not to accidental releases. It potentially may not apply where injectate remains safely
within a containment zone, but beyond the area for which a permit was granted. The EPA
should consider the potential for triggering Superfund liability in determining how it writes permits, particularly in cases where the COz remains safely stored. 

## " 42 U.S.C. # 9607.

32 ~6 In most circumstances, releases resulting from accidents and maifunctions do not qualify for the federally permitted release exemption as defined in CERCLA section 10 1 (10)(H). Releases due to accidents and malfunctions, because they are by definition not anticipated, are difficult to subject to controls which limit or eliminate emissions. Congress did not intend to exempt unanticipated releases such as accidents and malfunctions from CERCLA section 103. An accidental release not in compliance with a permit would be subject to response costs and damages claims under Superfund in addition ot the provisions of the SDWA and state and common law.'' Guidance on the CERCLA Section I01 (lO)(H) Federally Permitted Release Definition for Certain Air Emissions, 67 Fed. Reg. 18899, 18903 (Apr. 17,2002).

33 See Ur~ired Stat~s v. Iron Mountain Mines. IIX, 812 F. Supp. 1528. 1540

- 41 (E.D. Cal. 1992) ( " Congress considered the interplay between FWPCA and CERCLA when it enacted the latter statute, but declined to exempt municipal sewer authorities from its broad reach

. . FWPCA exemption extends to industrial discharges into POTWs, indicating that Congress specifically intended for CERCLA liability to reach releases from sewers or POTWs.") Reading Co, v. City ofPhiladelphia, 823 F. Supp. 1218, 1230

- 3 1 (E.D. Penn. 1993) (Toxic Substances Control Act (TSCA) compliance is insufficient to invoke the RCRA exemption under CERCLA); Westfarm Associates Ltci. Partrtership v. International Fubricare Inst., 1993 U.S. Dist. LEXIS 19952 (D.Md. 1993). See alro Idaho v. Bunker Hill Co., 635 F. Supp. 665, 673 (D. Idaho 1986); Reporting Exemptions for Federally Permitted Releases of Hazardous Substances, 53 Fed. Reg. 27,268-81 (proposed July 19, 1988) (to be codified at 40 C.F.R. $3 117.12, 302.3,302.6, 355).If Superfund does not apply because of the exemption, remedies may be obtained under
other law. CERCLA's federally permitted release exemption states that " recovery

. . , for

response costs


### . . 

## . resulting from a federally permitted release shall be pursuant to existing law in
lieu of [CERCLA] ."34


### D. 

### P OTENTIAL 

### E FFECT O F 

### S U P E R F U N D O N 

### CCS 

### D EPLOYMENT
The CCS Alliance conducted a Risk Study earlier this year, surveying more than 30
executives in companies involved with or considering CCS deployment.35 Thc purpose of the
Risk Study was to identify policy, technical, and market risks that could pose barriers to proceeding with CCS projects. Respondents were asked to rate the likelihood of a policy, technical, or market factor occurring, as well as the severity of the impact to a CCS project if it
did occur. The product of the likelihood and the severity of impact to the project for each surveyed issue generated a risk ranking.
Three of the top eight concerns identified by respondents related to liability for CCS, including lack of clarity in the applicability of federal and state liability regimes. As the following chart demonstrates, particularly results for responses to questions 

### 17,31, and 

### 34.
executives are very much concerned with the risks associated with the lack of clarity in state and
federal rcgulations and liability regimes, as well as with liability over the long

- term.



## " 42 U.S.C. rj 9607Cj) (2006).

15 Risk Study for Commercicrl Deployment of CCS: Fcrctors Affecting Financingji~r Early Plants, CCS Alliance (July 2008).Moreover, a recent GAO report emphasizes the concern about liability:
EPA's 2007 UIC workshop, attended by more than 200 stakeholders, revealed liability associated with unintended migration of injected 

### COz to be a critical concern. Similarly, 

### 19 of the 20 stakeholders we interviewed told us that liability related to C02 storage was a large or very large barrier to deployment of 

### CCS at commercial scale, with some noting that liability concerns have already negat~vely impacted companies' ability to initiate CCS projects. For example. two stakeholders reported that these concerns have already made it difficult to obtain insurance for CCS proj ject~.~~ Although we currently are aware of no report specifically stating that liability under Superfund is the principal liability concern among CCS proponents, it clearly is a significant

- -

39.~. GAO, GAO-08- 1080. F E D E R A L A C T I O N S WlLL G R E A I I Y A tWC' I THE V I A B I L I T Y O F C A R B O N C A P T U R E AND STORAGE AS A KE Y M I T I G A T I O N OPTION 25 (2008).issue that has been raised repeatedly, including through EPA advisory processes and the imposition of which would negatively affect future investment in CCS technologies.?"


### VIIL 

### SPECIAI, FOCUS: APPLICABILITY 

### OF RCRA
The Proposed Rule raises the question whether injected C02 streams will be considered

" hazardous waste " under RCRA. Rather than apply on top of the SDWA another environmental
statute that was not designed with the thought of encouraging development and deployment of technology to address climate change, which is likely to discourage 

### CCS deployment, CCS
should be subject to a single. clear regulatory structure shaped by consideration of climate change objectives. Designating the C02 stream as a hazardous waste also will result in it being
considered a " hazardous substance " under CERCLA, the problems with which are discussed
above.
The Proposed Rule states:
Because the types of impurities and their concentrations in the C02 stream are likely to vary by facility, coal composition, plant operating conditions, and pollution removal technologies, EPA cannot make a categorical determination as to whether injected COz is hazardous under RCRA. Owners and operators will need to characterize their C02 stream as part of their permit application to determine if the injectate is considered hazardous as defined in 

### 40 CFR Part 

### 261. 

### If the injectate is considered hazardous under RCRA, then the more stringent UIC Class 

### I requirements for injection of hazardous waste apply.38
Where EPA faces an interpretive question about the applicability of RCRA, it should avoid applying the statute. As noted above, the CCS Alliance believes that in place of existing, illsuited regulatory regimes, a new single, clear regulatory structure should apply to protect the
environment.

" EPA's Advanced Coal Technology Work Group Final Report recommends that EPA's UIC rulemaking proposal should " include a thorough discussion of.

. liability implications under other statutes (CERCLA, RCRA, etc.) and potential linkages and impacts (or lack thereof) for CCS projects. " U.S. ENVIRONMEKTAL P R O T E C T I O N AGENCY, F I N A L REPORT : A D V A N C E D C O A L TECHNOLOGY W O R K GROUP R E P O R T 5 (Jan. 29,2008).

38 Proposed Rule, 73 Fed Reg. 43503.

### A. 

### BURDENS AND 

### B ARRIERS OF 

### RCRA
The UIC regulatory structure proposed by EPA to minimize releases not only protects groundwater, but by extension protects human health and the environment. RCRA's requirements are extensive, cxpcnsive, and ill

- suited to activities to sequester large volumes of
low

- toxicity materials, especially when such activities will be regulated under the UIC program.
EPA itself has acknowledged the burden of RCRA and the fact that many of its requirements are poorly suited to at least some of the activities to which they apply. EPA
initiated a rulemaking in 2002 to reduce the burdens associated with the RCRA hazardous waste program.39 The Agency noted, "[tlhe existing hazardous waste regulations require the submittal
of 

### 334 notifications, reports, certifications, demonstrations, and plans from generators and
TSDFs to demonstrate compliance with the RCRA regulations."40 Reporting requirements are just one example of RCRA's burdens.
Given that CCS is a technology that the Agency and 

### a broad array of others want to
encourage, with this rule more than most others, EPA must consider very carefully whether the emission streams involved truly warrant hazardous waste regulation. Imposing extensive.
burdensome RCRA regulations likely to have little benefit for human health and the environment may result in larger atmospheric releases of COZ if this " key " technology is not as widely deployed.
Class 

### I wells under the UIC program are intended, in part, to regulate hazardous waste disposal wells for the injection of hazardous waste, as defined by RCRA. If EPA were to

39 Resource Conservation and Recovery Act Burden Reduction Initiative. 67 Fed. Reg. 25 18 (proposed Jan. 17, 2002); see also RCRA Burden Initiative; Final Rule, 7 1 Fed. Reg. 16,862 (Apr. 4,2006).
RCRA Burden Reduction Initiative: Notice of Data Availability, 68 Fed. Reg. 61,662, 61,644 (Oct. 29, 2003).determine that CO;! is a hazardous waste under RCRA, C02 injection would be required to meet
the more rigorous Class I well requirements, rather than the proposed Class V1 requirements. Indeed, the construction, permitting, operating, monitoring, and post

- site closure requirements

are much more burdensome for Class 

### I hazardous wells than for the other types of injection
wells. For instance, Class 

### I wells have a requirement that there be no migration for 10,000 years.
Such stl-ict requirements may be appropriate to protect USDWs and the environment from certain
hazardous wastes, but such requirements were not established with COz injectate 

### in mind. Furthermore, if a facility were required to obtain a Class I 

### UIC hazardous waste injection permit, all other waste management units at the facility couId be subject to the full extent of
RCRA's Subtitle 

### C corrective action program, which is an extremely costly and administratively complex program. Determining that C02 constitutes A hazardous waste and subjecting COz injection and storage to the burdensome Class I well requirements would not promote underground injection and storage of C02.


### B. C ONTINGENT 

### M ANAGEMENT
Materials already subject to another regulatory regime that will ensure environmentally protective management of wastes can be excluded from RCRA regulation under " contingent management, " a practice EPA has applied in other contexts.


### In this Proposed Rule, EPA is proposing a framework it believes is appropriate to ensure environmentally protective management of injected C02. The Agency makes clear that the

extent of the 

### UIC program limits the purpose of EPA's proposal to protection of USDWs; however, the Agency adds that it cons~del-s the risk of

- 'chronic and acute health effects fromairborne exposure resulting from 

### C02 injection activities (even in the case of leakage or
accidental exposure) is rnir~ii~zal."~'
EPA has applied the contingent management practice in case\ where potential mismanagement scenarios are addressed under other regulation. With respect to the Proposed Rule, EPA has proposed measures that would limit potential effects on human health and the
environment by ensuring that the injectate should remain contained within the injection zone.
The contingent management practice has been upheld, with the court holding that where other appropriate management programs are in place. hazardous waste classification and regulation are

not required.42


### C. C O N D I T I O N A L 

### E XCLUSION 

### If EPA considers that geologic sequestration of C02 constitutes waste disposal that

cannot be subject to exclusion from RCRA regulation under a contingent management theory, it
should establish a conditional exclusion from RCRA regulation for geologic sequestration of


### C02 injectate.


### IX. OTHER ISSUES: WELL PLUGGING, POST
- IN JECTION SITE CARE, AND SITE CLOSURE REQUIREMENTS

EPA's Proposed Rule would require owners and operators to develop a well plugging plan to be approved by the Director as part of each permit application. Such a plan would
include: 

### (I) a determination of bottom

- hole reservoir pressure; 

### (2) the identification of type and numbers of plugs to be used; 

### (3) the placement of each plug; (4) testing methods to ensure mechanical integrity testing 

### ("MIT"); (5) the method of plug placement; and 

### (6) the type, grade

4I Proposed Rule, 73 Fed. Reg. at pp. 43,497

- 98 (emphasis added).

42 See. e.g., Military Toxics Puojecf v. EPA, 146 F. 36 948 (D.C. Cir. 1998).and quantity of material to be used in plugging. By not mandating specific typcs, materials, or testing methods, EPA is giving applicants broad flexibility to accommodate the varying types of
GS projects contemplated by this rulemaking. The 

### CCS Alliance agrees with this approach.
Such flexibility also accounts for the fact that supercritical 

### C02 has different properties than current injectants under the 

### UIC program and, therefore. may require different plugging methods
and materials. For instance, cement plugs can degrade over time from the build up of carbonic acid, which forms when C02 is injected in subsurface formations containing brine. However. well integrity should be considered the function of well materials collectively in maintaining a fluid barrier (as opposed to individual components susceptibility, particularly from laboratory tests).


### B. 

### P O S T 

### - I N J E C T I O N 

### S I T E 

### C A R E 

### P L A N
The Proposed Rule would require that owners or operators develop a post

- injection site

care and closure plan, submitted as part of the permit application and approved by the Director.
The proposed regulation at 40 C.F.R. 

### 9 146.93 would require the plan to describe: (1) the pressure differential between pre

- injection and anticipated post

- injection pressures in the injection zone; (2) predicted position of the plume and associated pressure front at the timc the site is closed; (3) post

- injection monitoring location(s), methods, and proposed frequency of monitoring; and (4) a schedule for submitting post

- injection site care and monitoring results to
the Director.
These requirements are reasonable given the long

- term nature of GS projects. The CCS
Alliance also supports the ability to amend the plan should the plan no longer reflect what is likely to occur upon closing the site. Likewise, the CCS Alliance agrees that, upon permanentcessation of injection, the owner or operator should be provided the opportunity to demonstrate
that no amendment to the plan is necessary through monitoring and modeling results.


### C. POST-~JECTION S I T E 

### C ARE 

### PERIOD AND 

### F INANCIAL 

### R ESPONSIBILITY
The Agency has proposed a post

- injection site care and financial responsibility period of


### 50 years, which can be shortened or lengthened based on the discretion of the Director. The
CCS Alliance agrees, in part, with this suggested use of a combination of a fixed timeframe and performance standard. However, as previously explained, the CCS Alliance recommends establishing a maximum 30

- year post

- closure per~od and providing the Director with discretion
to shorten

- - but not lengthen

- - this period if the owner or operator meets certain enumerated performance standards based on avilable data on pressure, fluid movement. mineralization
and/or dissolution reactions to show whether the plume and pressure front have stabilized.
CCS is an activity the Agency hopes to encourage. A 50

- year post

- injection site care default 

### is longer than any period of post

- operation site care of which the Alliance is aware. The potential for threats to USDWs will have been considered prior to site operation. and will have
been reconsidered throughout the life of the project, not only by the regulator, but by the owner or operator, entities providing financial support, and providers of risk management products and
services. Continuance of injection will have depended upon an assessment of the potential for
threats to USDWs at numerous points during the site's operation.
EPA suggests that when owners or operators show that " models predicting 

### C02

movement are consistent 

### with monitoring results and that there are no longer risks of endangerment to USDWs. they could request that the Director authorize site c~osure."~' The

""reposed Rule. 73 Fed. Reg. at p. 43491 (emphasis added).CCS Alliance suggests that if 

### EPA considers the relationship between modeling results and
actual plume movement in determining the continuation of post

- injection site responsibility, the
standard need not be " consistency. " Models may predict a range of outcomes. Notwithstanding falling outside the modeled range, actual plume movement may be safe. including when there are

no USDWs in the area. The Alliance recommends that the rule authorize Directors to end the
post

- injection site responsibility period prior to the 30

- year period, taking into account their ability reasonably to predict the likelihood of minimal or no risk to USDWs.
EPA should consider whether financial assurance mechanisms are likely to be available
for the entire post

- operation site care period. While risks can be expected to decline over- time after injection ceases, it does not follow that private risk management entities will continue to

cover the risks. If there are no financial assurance mechanisms available, owners and operators
should not be at risk of non

- compliance for failing to have them after operations (and revenue
streams from the project) have ceased, especially if risks continue to be low. As such, the CCS
Alliance recommends that once the 30

- year period is reached

- - or shorter if the performance
standards are met
- - a government backstop would be triggered, thereby ensuring that a risk
management mechanism is in place beyond the responsibility of the owner or operator.


### D. 

### S I T E 

### CLOSURE
The CCS Alliance recommends including a provision releasing sites certified as closed
from further monitoring and verification requirements, as well as releasing any outstanding
financial assurance instruments.

### X. RECORD KEEPING AND REPORTING REQUIREMENTS


### A. G ENERAL 

### C OMMENTS
The application and reporting requirements for Class 

### VI wells should be balanced, placing as little burden as possible on owners and operators, while also achieving EPA's goals. Sufficient reporting requirements ensure the collection of information necessary for the protection of human health and the environment, and provide companies and investors with
information to better manage and mitigate risks. A robust but not overly burdensome reporting regime is necessary to the success of 

### CCS. as well as to achieving EPA's goals of protecting
USDWs.


### B. P E RM I T 

### APPLIC TIO ON 

### R EQUIREMENTS
EPA proposes to require owners and operators to submit relevant site information to the permitting authority for consideration of permit applications, including: maps of the injection wells, the AoR as determined through computational modeling, all artificial penetrations within
the AoR, maps of the general vertical and lateral limits of USDWs, maps of the geologic cross
sections of the local area, the proposcd operating data and injection procedures, proposed
formation testing program, and stimulation program, well schematics and construction procedures, and contingency plans for shut

- ins or well failures.
Some of the data that EPA proposes to require is irrelevant, excessive, or in some cases unavailable. Therefore, the CCS Alliance recommends that 

### EPA ensure that any required data is

necessary to the ultimate goals of the Proposed Rule. For example, artificial penetrations several
formations above the injection zone may have little relevance to the GS operation. Similarly, the
CCS Alliance recommends including a provision in the final rule providing the Directordiscretion to waive certain data requirements, where such requirements are unnecessary, or require that the data be updated as it is collected or becomes available.
EPA is proposing that an applicant include " baseline geochemical data on subsurface formations, including all USDWs in the area of review. " " The Proposed Rule is not clear as to
how much baseline data EPA is expecting the permit applicant to generate and collect from additional drilling or testing of the injection zone and all other zones. Given the likely depth of

many of the GS wells through many strata, this could involve a large number of different
formations above the injection zone. EPA should limit the baseline geochemical data to
information regarding the next porous formation above the injection zone. Similarly, EPA
should clarify that the permit applicant may rely upon secondary sources (such as other drilling or geologic records) that relate to and support the data requirement. 

### EPA also should clarify
whether its expects applicants to test private wells, where permission is granted, within the AoR
for purposes of establishing baseline data.
EPA also has included a requirement that the permit applicant include a " proposed formation testing program to obtain an analysis of the chemical and physical characteristics " of
the injection and confining zone. " A permit applicant is already required to submit the underlying data as part of the permit application process, and it appears that this requirement is unnecessary and duplicative. Therefore, the Alliance requests furthcr clarification regarding the
intent and scope of this formation testing program.
EPA should monitor stimulation activities of third parties to ensure that such activities

not interfere with or damage the containment integrity of other 

### GS operations or natural gas

'"0 C.F.R. rj 146.&2(g). 

## '' 40 C.F.R. rj 146.82Q).storage reservoirs. The CCS Alliance, therefore, generally supports the requirement for the

" proposed stimulation program " to ensure that stimulation activities will not interfere with
containment. 36
EPA has proposed requiring the applicant to submit " the status of corrective action on wells in the area of review."47 The CCS Alliance does not believe it is necessary to require the
inclusion of all wells within the AoR regardless of whether or not they penetrate the injection

zone. There could be many shallow wells within the AoR located hundreds or thousands of feet
above the C02 injection zone. Therefore, EPA should limit this requirement to the injection

zone, injection pool, and only those wells that either intersect or penetrate the proposed reservoir, the cap rock, and possibly the porous strata directly abovc the injection zone.
On a related matter, EPA has stated that only information of public record pertaining to
all types of wells (injection. producing, abandoned) be included on the AoR. Data availability
and use raises a question regarding the possible existence of other data which might be private, proprietary, and/or not publicly available. Such non
- publicly available data may or may not be
relevant to the application process. The CCS Alliance requests EPA to clarify to what extent an applicant would be expected to develop or use information not contained in the public record.
EPA also proposes that permit applications for GS sites include several plans not currently required under existing 

### UIC regulations, including (1) a monitoring and testing plan; 

### (2) an AoR and corrective action plan; (3) a well plugging plan: and (4) a post

- injection site care
and site closure plan. The CCS Alliance questions whether it is necessary for each plan to be
submitted contemporaneously with the permit application. The up

- front gathering and

" 40 C.F.R. 9 146.82(k). 

## " 40 C.F.R. $ 146.Wq).submission of such detailed information would be costly and time

- consuming. We recommend requiring the submission of such plans only upon approval of an initial permit application, with further approvals contingent upon the successful completion, submission, 

### and approval of the required plans. The initial permit application could provide general information regarding the specific plans to be submitted later. Such a process will provide sufficient information for EPA

to make an initial permitting decision.
As part of the permitting process, EPA should require that owners and operators establish

a plan to ensure that resource development may occur in other geologic strata within or near the
AoR. CCS will be a critical technology, but also critical to the nation are energy resources and
mineral reserves. Companies may have made considerable investment in purchasing, identifying and characterizing these resources. This value should be protected as GS sites are selected and developed. EPA's proposed rule at present does not address this issue.
C. 

### Operational Recordkeeping and Reporting Requirements
1. 

### Reporting Requirements
EPA proposes to require owners or operators of Class V1 wells to report semi

- annually to
the permitting authority on: the physical and chemical characteristics of injection fluids; injection pressure, flow rate, temperature, volume and annular pressure; annulus fluid volume added; and
the results of MITs, plume tracking, and atmospheric/soil gas monitoring. Additionally, owners
and operators will be required to submit the results of AoR modeling revisions: any updates to
the information on the type, number, and location of all wells within the site AoR; and
information on additional corrective action performed or planned based on AoR reevaluations.
A semi

- annual reporting obligation with respect to the above information is reasonable.
The CCS Alliance requests, however, that 

### EPA streamline the final reporting requirements toensure simplicity and to avoid unnecessary confusion or duplication of reporting obligations.
For instance, proposed section 146.91(b)requires a report within 

### 30 days for certain tests or any well workover. These additional reports should be incorporated into the semi-annual report, as they are not so time

- sensitive as to require a separate reporting obligation.
EPA also seeks comment on whether owners or operators of GS sites should be required

to provide an annual report on GS operation during the lifetime of the project, including the postinjection period. Such a report is not necessary in light of the other proposed semi

- annual reporting obligations.


### 2. 

### Records Retention
Under the proposal, owners and operators would be required to maintain recordkeeping
and reporting information for the duration of the project, as well as for three years after site closure (following the post

- injection site care period). Owners and operators also would be required to keep their most recent plugging and abandonment report for one year following site
closure. Under proposed requirement 40 C.F.R. 

### 5 146.93(g), EPA would require that the owner

or operator deliver to the Director records collected during the post

- injection site care period at
the conclusion of the 3

- year retention period. The CCS Alliance is concerned that some of this
information may be of a confidential financial or business operations nature and should be protected from public disclosure. Thus, the CCS Alliance recommends the inclusion of ;i " nondisclosure requirement " to protect certain sensitive and confidential business information from public disclosure. The CCS Alliance also requests EPA to consult with the 

### U.S. Department of
Homeland Security to determine whether CCS sites would constitute " critical infrastructure, " thereby necessitating additional protection of sensitive information.

### XI. ADDITIONAL REQUIREMENTS AND CONSIDERATIONS
A. G EOLOGIC 

### S ITING


### 1. Target Geological Formations
EPA discusses the possible target geologic formations for 

### GS of C02,stating at one point
that deep saline formations are the leading candidates for 

### GS. It is premature to prefer one type
of formation over another. Deep saline aquifers have had very little detailed investigation at
commercial scale to date. By contrast, there is a significant amount of information available about depleted oil and gas reservoirs. COz storage in unmineable coal seams is an area of very active research, particularly in certain regions. Industry reports have conservatively
estimated more than 10 billion tons of potential storage in regional coal seams that, if utilized,
could result in the incremental production of more than 17 Tcf of natural gas.
EPA states that "[wlhile coal seams are well studied and understood, the process of COZ adsorption to coal has not been proven."4"he Alliance believes it is well understood. 

### EPA also

states that "many ECBM recovery operations will likely be shallow. Shallow storage will result

-49 in the COz remaining in a gaseous state

. . 

### . Some parties believe this is incorrect, and that
such a statement would be true for storage into shallow aquifer pore space, such as in shallow saline formations, but that it is not true for storage into shallow coal seams. In that case, the COz
is adsorbed and remains in the dense phase.


### 2. Geologic Siting Requirements
EPA's Proposed Rule includes significant technical information requirements for the geological siting of Class VI wells, including: maps and cross
- sections of nearby USDWs;

48 Proposed Rule, 73 Fed. Reg, at p. 43503.

Id.demonstrations of the porosity and permeability of the injection zone and subsurface formations;
information on faults and fractures, including results of geomechanical studies; seismic history studies; determinations of maximum sustainable injection pressures; and geochemical data.
The geological siting requirements for Class 

### VI wells should be reasonably balanced to

ensure that EPA's goals are mct. but not be so burdensome so 

### as to deter the development of
CCS projects. To this end, EPA should ensure that the information it seeks is essential to its
evaluation efforts, and not unnecessarily overbroad. Proper geological siting requirements will help EPA, state actors, and owners and operators identify the risks involved so that proper
additional evaluations may be made to protect human health and the snvironment and to evaluate
financial and strategic risks associated with CCS projects. Moreover, the siting requirements authorize the Director to use his discretion to require owners and operators to identify and provide additional information with respect to additional

zones near the GS. Such discretion should not be unlimited. We recommend that EPA establish clearer guidelines with respect to how such discretion may be exercised to prevent unnecessary requirements.
The CCS Alliance also is concerned about numerous federal and state statutes that may
be triggered through the siting of a CCS project. At the federal level, the siting of linear facilities
most often raises issues under the Clean Water Act, the Rivers and Harbors Act of 

### 1899, the National Environmental Policy Act, and the Endangered Species Act. Any number of other
federal statutes may apply, depending upon the resources affected by or near the facility. Congress may need to consider how to balance the objectives of these acts with the policy
inherent in promoting CCS.Siting requirements should reflect that conditions affecting risk differ by site. They need

to be tailored to the actual risks presented by specific sites. EOR is a well developed technique
and there is now a history through which its risks can be assessed. This differs from injection for long

- term storage in deep saline formations or unmineable coal seams. with which there is little experience, particularly on the massive scale (e.g., a million or more tons per year per plant)
envisioned for the future. For CCS to be a viable long

- term strategy, policy must encourage development of data about these sites, new technology. and new practices.


### B. A REA OF 

### R EVIEW AND 

### C ORRECTIVE 

### A CTION 

### REQUIRF:MENTS
1. Area of Review
The CCS Alliance agrees that traditional AoR delineation methods such as a fixed radius or simple mathematical computations would not he sufficient to predict the extent of C02 plume

movement. The CCS Alliance therefore supports the use of computational fluid flow modeling designed for the specific site conditions and injection regime to delineate the AoR for COz GS sites. Such modeling will provide the level of sophistication necessary to predict the complex
multi

- phase buoyant tlow of the COz, injectates, and mobilizing compounds. EPA also proposes requiring the reevaluation of the site AoR on a periodic basis, suggesting a 10-year minimum fixed frequency for AoR reevaluation. The CCS Alliance agrees
that a 10

- year minimum is reasonable for reevaluating the AoR delineation, given that long

- term
COz storage may produce 

### an AoR differing from other types of UIC injection plumes and should
therefore be reevaluated to assure prqject safety and stability.


### 2. Phased Corrective Action
The CCS Alliance phased correction action and believes such an approach is reasonable, given the potential size of the 

### C02 plume for commercial

- scale GS operations. Requiring up-front corrective action for the entire AoR prior to injection could result in substantial delays in permitting and project implementation. At a minimum, as part of the AoR process, wells that
penetrate the confining or injection zone must be identified. Identifying problematic wells up front may increase short

- term costs, but should reduce risk and liability over the long

- term.
EPA should address gaining access to third party wells that may require corrective action.
Most states require corrective action to be performed prior to injection and the " right of access "
is taken into consideration during the adequacy determination of the corrective action plan.
Some states, such as Texas, require corrective action prior to injection unless the ownerloperator,
after best efforts, is unablc to get permission to access the property of a third party.50 SDWA
does not provide 

### EPA the authority to require third parties to provide access to an owner/operator for the purposes of conducting corrective action. 

### EPA should clarify how ownerloperators and states will be expected to implement corrective action.
Prior to denying a permit application, the regulations should provide the owner or operator the opportunity to demonstrate that a project can maintain its safety and security, despite an uncorrected well. Otherwise, a potential 

### GS site could go unutilized, even if the
uncorrected well creates no actual risk of harm to USDWs. Moreover, well remediation should
be applicable only to those wells that are likely to be impacted (meaning exposed to corrosive
fluid and/or pressure above likely capillary entry pressure) early to mid phases of operation (e.g.,

one to 

### 20 years).


### C. 

### I N J E C T I O N 

### W E LL 

### OPEIWTIKG R E Q U I RE M E N T S Geologic sequestration of CO;! need not be, in every instance, beneath the lowermost USDWs, nor should EPA set a minimum injection depth requirement. Such requirements likelywould preclude injection into certain targeted geologic formations, which may include storage sites currently under consideration for GS. These formations may include unmineable coal

seams, zones in between or above USDWs, and others.
Directors should have discretion to allow injection above or between USDWs in specific geological settings where going below the lowermost USDW would make GS impractical, as
well as where there are appropriate strata between the injection zone and the underlying or overlying USDW. Such Director discretion, however, should be limited or based on measurable
factors or criteria. The CCS Alliance also agrees that Directors should be able to exempt all
USDWs below the injection zone, pursuant to " aquifer exemptions. " With respect to specific well operating requirements, we reiterate the importance of maintaining reasonable standards that take into account that CCS injection will differ from other injection activities. For instance, Class 

### I wells typically must maintain an annular

- fluid pressure greater than the injection tubing pressure to prevent outward leakage from the injection tubing. Typically, these wells operate at pressures much lower than C02 injection wells. This same requirement imposed on C02 injection wells would require specialized high

- pressure equipment
to maintain the required pressure differential on the annular fluid. 

### EPA also recommends as a possible safety device in COz injection wells the use of down

- hole shut

- off valves that would automatically shut

- in the well. It is not clear that safety valves for a C02 injection wells are available in the sizes necessary for most on
- shore injection wells because these devices are primarily used in larger, off

- shore wells. The use of such valves, therefore, needs more
consideration.

### D. I N J ECTION 

### W ELL 

### C ONSTRUCTION 

### R EQUIREMENTS
Well construction procedures and requirements should remain reasonable and flexible given that long-term 

### C02 storage remains a relatively new area with developing science and technologies. The experience of the operator, the volume of COz stored, and the pressure at
which it needs to be injected, should be viewed as important variables when finalizing well construction requirements. EPA also should consider that a properly installed well provides a barrier to fluid movement, even if components are shown to degrade in aggressive laboratory experiments. It is also not known if new 

### COz resistant cements will perform as well as
conventional cements in terms of emplacement and bonding.
Horizontal well construction has proven beneficial in other applications, such as EOR operations, and therefore should be an available option for Class VI wells. The CCS Alliance also supports EPA's proposal to provide Directors the authority to grandfather the construction requirements for Class V experimental project wells and other wells when they are converted to
full scale Class VI wells. The Alliance suggests that EPA should consider whether grandfathering the existing siting, AoR, operations, and monitoring plans for Class I1 and Class
V wells when they are converted to full scale Class VI wells would protect USDWs while avoiding additional regulatory burden.


### E. 

### M ECHANICAL 

### I NTEGRITY 

### T ESTING 

### R EQUIREMENTS


### EPA would require owners and operators of Class VI projects to monitor internal mechanical integrity of their injection wells by continuously monitoring injection pressure, flow
rate, and in-jected volumes, as well as the annular pressure and fluid volume to assure that no
anomalies occur that may indicate an internal leak. The practicability of such monitoring is yet
unknown. The proposed MIT requirements, therefore, should be flexible. The same holds truefor the frequency of internal and external MITs for injection wells, the types of MITs, and how

to optimize MIT methods for geologic sequestration. As industry gains more knowledge and experience, more structured regulations for MIT types and frequency of MITs may be appropriate.
We do not believe there is any compelling reason to require annual integrity testing or quarterly corrosion monitoring. 

### A five

- year testing routine has been sufficient for acid gas wells
in Canada. Many known injection wells are reused producer wells that have been in corrosive
environments for over 15 years and remain in good condition. Annual testing and quarterly
corrosion testing could also result in significant costs from plant shutdowns and downtime. Many companies already conduct periodic plant

- wide shutdowns to thoroughly inspect piping
and equipment for corrosion and make any necessary equipment upgrades. These shutdowns,
which ordinarily occur once every three to five years, are also used to inspect injection wells, including pulling tubing, running cement bond logs, and well casing integrity logs to determine
the thickness and integrity of the steel in the boreholes. From these tests, companies are able to
assess the cement and casing conditions, which provide the primary " isolation " mechanism from
the reservoir fluids. Moreover, companies can and often do run noise logs that can assess for

" channeling " behind the casing. Proposed section 146.89(d) would give the Director discretion to require any other test to
evaluate mechanical integrity, if the alternative tests are approved and published in the Federal Register. We recommend that EPA revise the mechanical integrity testing requirements (1) to give the Director discretion to approve not only different testing requirements but the timing for testing requirements; and 

### (2) to require such testing no more frequently than a reasonable multi year period, or sooner if there is evidence that earlier testing is warranted.EPA has specifically requested comment on the use of tracers. Based on industry experience, tracers are not typically used for monitoring the movement of a 

### C02 plume, unless potential leakage is occurring. They are then used to trace the leakage point. Tracers can be

very expensive and the results can take a lot of time to develop, analyze, and understand.
Radioactive tracers typically have long shelf lives and, if used by neighboring operators, could produce conflicting and indeterminate results. Duc to the potential for groundwater contamination, the use of radioactive materials should be used only sparingly and for targeted

purposes. 

### F. PLUME AND 

### P RESSURE 

### F RONT 

### MONITO~~~ ~QTIEGE~T$
EPA proposes monitoring sequestration sites to track the location of the 

### COz plume and associated pressure front over time. Plume monitoring is important to the long

- term stability of


### CCS sites. However, we submit that such a requirement should be flexible to accommodate growing knowledge about injection and 

### C02 plumes. Monitoring has limited usefulness 

### in some settings (e.g., 

### 4D seismic often does not have the resolution to detect 

### C02 in some deep or complex settings or where hydrocarbon gases are present). Moreover, data gathering requirements related to plume tracking and testing should not unduly burden owners or operators, either in time or cost, and should be essential to evaluation of the plume's stability and safety.


### EPA proposes in section 146.90(d) " periodic monitoring of the ground water quality and geochemical changes above the confining zone(s)." It is unclear how many wells would be required, and whether 

### EPA expects that all zones would be monitored. Given the potential size
of the 

### C02 plume and the number of confining zones, this could potentially require many monitoring wells, which could be extremely expensive and may not produce useful data. 

### Westrongly recommend that EPA limit monitoring to the zone immediately above the confining

zone, and only to the extent that the COz plume is within close proximity. There may be regional
conditions where ground water is separated by hundreds or thousands of feet of confining strata, and where such monitoring is completely unnecessary. Directors should have discretion to limit

or tailor ground water monitoring, as appropriate, based on regional and site specific factors. Proposed section 146.90(h) gives Directors discretion to require surface air monitoring
and/or soil gas monitoring to detect movement of 

### C02 that could endanger a USDW. The
Alliance recommends deleting this provision. It is not clear how ambient air or soil gas monitoring is related to or supports the protection of USDWs. Surface air monitoring can result
in false positives, which could prompt unnecessary and costly response actions and nwdlessly alarm the public Any requirement for ambient air or soil gas monitoring would be a matter of

state discretion pursuant to state law and not the federal 

### UIC program, and would not be federally enf~rceable.~'


### G. D E F I N I T I O N S
EPA defines " area of review " as " the region surrounding the geologic sequestration project that may be impacted by the injection activity. The area of review is based on computational modeling that accounts for the physical and chemical properties of all phases of the injected carbon dioxide stream. " The phrase " may be impacted " is too vague, The AoR
delineation should be based on or limited by certain risk criteria; otherwise, an AoR could cover

an inappropriately large area that could be expensive to review and characterize.
The term "geological sequestration project " is defined as an injection well or wells used

to emplace 

### a C02 stream beneath the lowermost formation containing a USDW, including the

Bath Petrdeum Stomgc, Inc. V. Sows, 309 F.Supp. 2d 357 (N.D.N.Y 2004) (state law requiring sonar survey for UIC injection not federally enforceable).subsurface three

- dimensional extent of the C02 plume, associated pressure front, and displaced brine, as well as the surface area above that delineated region. We recommend removing the phrase " beneath the lowermost formation containing a USDW to reflect our comment suggesting that 

### EPA permit CCS projects above USDWs where feasible. The AoR definition
includes additional area that might be impacted and is not defined in terms of the extent of this

area.
EPA defines " mechanical integrity " as " the absence of significant leakage within the injection tubing, casing, or packer (known as internal mechanical integrity), or outside of the casing (known as external mechanical integrity). " The rerm " significant leakage " 

### is not defined.
An overly broad interpretation could result in a finding that mechanical integrity is not being maintained, notwithstanding the absence of any leakage that calls into question the safety of the project or threatens USDWs. EPA should characterize what constitutes " significant " or clarify
under what conditions significant leakage might be construed. We suggest defining and construing the term within the statutorily defined concept of "endangerment"5' under SDWA, i.e., significant leakage would be defined as any leakage that could potentially endanger a USDW. The amount of leakage and what constitutes significant may vary depending upon the geologic formations and proximity to USDW~.~'



## '' Endangerment is defined as follows: Underground injection endangers drinking water sources if such injection may result in the presence in underground water which supplies or can reasonably be expected lo supply any public water system of any contaminant, and if the presence of such contaminant may result in such system's not complying with any national primary drinking water regulation or may otherwise adversely affect the health of persons. 32 U.S.C. 5 300h(d). 

# '' Miami-Dade Cmnty r. EPA, 529 F.3d 1049 (1 1Ih Cir. 2008) (upholding EPA's rule eliminating the nonendangerment finding requirement for Class I municipal injection wells).

### XII. RELATED ISSUES, NOT RAISED 

### IN THE PROPOSED RULE, THAT REQUIRE RESOLUTION
The SDWA does not provide 

### EPA authority to de\.clop regulations for many important

areas related to thc geulogical sequestration of COz. Thus the draft rule cannot address all of the potential impediments to CCS development. Even if EPA were to promulgate a final UIC rule
that encourages development of these critical technologies, there are other key factors that would
need to be properly addressed before major investment in these technologies can be expected.
The following sets forth key issues that will not be resolved through this rulemaking but
are linked inextricably to the successful development and implementation of CCS technology.


### A. E MINENT 

### D OMAIN 

### A UTHORITY T O 

### F ACILITATE 

### PIPELIM C ONSTRUCTION Energy facilities for the public convenience and necessity, such as electric transmission
facilities and natural gas pipelines, are able to make use of state or federal eminent domain authority to ensure that private landowners cannot block a project necessary for the public good.
Eminent domain authority should be available for COz pipeline5 for 

### CCS when it is necessary to

cross private property. A substantial COz pipeline network may be required for the transport of


### COz from sites where it is produced to an in.jection site. C02 pipelines for CCS clearly should be
considered to be used for thc public convenience and necessity.


### D ETERMINATION O F 

### SUB-SURFACE P ROPERTY 

### R IGHTS
The government must address the ability to gain sufficient property rights to deep saline
formations to conduct geologic sequestration. State property ownership regimes vary, but
surface owners typically are considered to own property below the surface to the center of the
earth. Safe sequestration of C02 will not have any effect on the surface, but GS injections will
result in underground plumes that may stretch across many square miles under the property of multiple surface property owners. Property ownership issues have been resolved successfully inthe context of EOR, but it should not be assumed that the same will be true for 

### GS. Eminent
domain authority should be available to obtain rights to subsurface storage space for geologic sequestration because of its public benefit.


### C. 

### RESOI,UTION O F 

### SURFACE 

### L I A B I L I T Y 

### I S S U E S Though this Proposed Rule is limited in its scope to underground injection of COz and
the potential risks and resulting liabilities, issues regarding risks and liability at the surface must
be addressed for CCS technology to fully develop. These include liability for major and sudden releases, seismic activity and ground heave, as well as liability under any 

### GHG emission control regime when sequestered C02, for the storage of which credits or offsets have been granted, is subsequently released into the upper atmosphere.


### XIII. CONCLUSION
In conclusion, the CCS Alliance appreciates the opportunity to provide these comments.
We would be pleased to clarify or further discuss any of the points contained herein.

Respectfully submitted,

%red Eames for the CCS Alliance

Frederick 

### R. Eames Hunton & Williams 

### LLP 1900 

### K Street, N.W. Washington, D.C. 

### 20006 202/955- 1500

73350.000003 EMF .US 26395536~7Letter ID: 0178 Commenter: Frederick R. Eames Organization: CCS Alliance
Letter ID: 0178 Comment ID: 23794 Letter Lines: 58 to 63
Comment Code: 1270 1.1.2 Comments on other rules/issues
Comment: A plethora of regulations affect the deliv ery of power using coal. We suggest that the Agency consider other regulati ons addressing the environment, human health and safety, and electricity cost and reliability, when drafting and implementing these regulations. The Allianc e urges the Agency to consider the support of integrated energy, climate, and environmental policy as time progresses. Individual Response: EPA agrees that a strong regulatory framework will be important to ensuring that GS is deployed safely. The Cl ass VI GS regulation will provide certainty, consistency, and transparency to owners or ope rators and the public about requirements that apply to GS injection across the U.S. The Cla ss VI GS regulation builds upon the long-standing, protective framework of the UIC program, which ha s been regulating the inje ction of billions of gallons of liquids for decades. The Class VI GS regulation enhances this existing framework with requirements for Class VI wells that are tailo red to the unique nature of large scale GS of CO2. These additional protective requirements include more extensive geol ogic testing, detailed computational modeling of the AoR and period ic re-evaluations, de tailed requirements for monitoring and tracking the CO2 plume and pressure front, and extended post-injection monitoring and site care. In response to the suggestion that the Agency develop an integrated permitting process, EPA clarifies that the UIC program’s authority under SDWA is focused on ensuring consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirements to prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions.

Letter ID: 0178 Comment ID: 23795 Letter Lines: 72 to 76
Comment Code: 1200 1.1 General comments about the rulemaking
Comment: If promulgated as currently proposed, the Proposed Rule will have a significant and direct impact on the interests of the members of the CCS Alliance and their customers. The CCS Alliance believes the Proposed Rule is helpful in many ways, but also that it can be improved in a manner that will both promote good risk management and reduce barriers to CCS deployment. Individual Response: EPA acknowledges the comment. The purpose of the rule is to ensure consistency in permitting underground injection of CO2 at GS operations across the United

1States and provide requirement s to prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions. Pleas e see the remainder of EP A's responses to this comment for further details. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0178 Comment ID: 23796 Letter Lines: 80 to 104
Comment Code: 1330 1.1.3.1 Support use of GS in general Comment Code: 1400 1.2 Comments on EPA's Authority to Regulate Injection of CO2
Comment: If atmospheric emissions of CO2 are to be controlled, CCS is the only tool now on the horizon that may be capable of a ddressing in a major way and within a mid-term timeframe, the very large quanti ties of CO2 emissions from fossil-fuel using facilities in the United States . However, CCS still requires the definition of a stable and rational legal and regulatory regime before it can be widely deployed. EPA has clear regulatory authority over the injection of wastes and other substances into below-surface wells through the UIC program. The UIC program was created by Congress under the Safe Drinking Water Act ("SDWA") over 30 years ago, without consideration of potential interaction with policies to address climate change, for the protec tion of underground sources of drinkingwater ("USDW). The Agency now proposes to use this framework to regulate belowground CO2 injection activities, an application not contemplated at the time SDWA was drafted. Rules for geologic seque stration ("GS") of CO2 are timely and would be needed even if CCS is not depl oyed as quickly as many predict. While many projects are under development, many observers are operating under the assumption that it will be a decade or more before there can be wide deployment of CCS.[FN3] The future of CCS is and will be at a critical juncture for some years. The CCS Alliance seeks, through its comme nts, to help ensure that these regulatory activities promote well designe d and implemented CCS projects with sound risk management practices, and do not preclude the responsible, cost effective commercial-scale sequestration of CO2. [FN3] See, e.g., "EPRI Summer Seminar and Energy Technology Assessment Center (ETAC) Studies," presentation of Hank Courtright, Senior Vice President, Electric Power Research In stitute. October 22. 2008. Individual Response: EPA believes that the creation of a new injection well class (VI) under the existing UIC Program is necessary to enable the use of GS as a climate change mitigation technology in a manner that protects USDWs from endangerment. EPA believes that the UIC Program, under the authority of the SDWA, provides a strong fram ework for regulating injection of CO2 for GS and adds that the GS regulati on tailors the UIC requirements to address the unique issues associated with large-scale GS including large injection volumes, the relative buoyancy of CO2, its corrosivity in the presence of water, the potenti al presence of impurities in captured CO2, and its mobility within subsurface geologic formations. EPA agrees that the implementation of the GS rule in a manner that ensures protection of

2USDWs from endangerment is impo rtant to establishing a foundation for further advances in the field of CO2 GS. EPA acknowledges the need for regulatory certainty: the final GS requirements provide a level of certainty by setting forth unique requirement s for GS. These requirements include: the tailored AoR delin eation process at §146.84, the types of monitoring appropriate to GS projects §146.90, and the post-inj ection site care process §146.93.

Letter ID: 0178 Comment ID: 23797 Letter Lines: 121 to 150
Comment Code: 1200 1.1 General comments about the rulemaking
Comment: As the only significant technology to redu ce atmospheric CO2 emissions from coal, CCS is indispensable to reducing GHG emissions while meeting energy demand and achieving energy security. It is true, as EPA notes, that underground storage of CO2 is "only one of a portfo lio of options," including efficiency improvements, and the use of alternative and renewable energy sources. However, these other tools are not a substitute for baseload power generation, which comes primarily from fossil fuels. All GHG emission reduction options will need to be pursued to meet proposed emission reduction targets. The CCS Alliance urges that EPA, and those concerned with the Proposed Rule, consider the importance of CCS in the context of climate risk mitigation. The U.S. population is expected to growby 60 million by 2030. During that time, electricity demand is projected to incr ease by approximately 30 percent.[FN5] Without rapid deployment of technologies th at have begun to show promise, such as CCS, it will not be possible to meet the GHG emissi on reduction goals being discussed by IPCC and others now for atta inment by mid-century. While the thrust of this rulemaking is to protect and preserve USDWs, such environmental objectives should neither be viewed inisolation nor divorced from other environmental and policy considerations - including energy security, economic stability and trade considerations. A rati onal, comprehensive approach to the management of CO2 emissions from GHG-em itting facilities must be undertaken if we are to simultaneously preserve economic stability, ensure re turns on invested capital, enhance U.S. energy security, and mitigate the predicted effects of climate change. [FN5] Energy Information Administrati on, Annual Energy Outlook 2008 (June 2008), http://www.eia.doe.gov/oiaf/aeo/electri city,html; U.S. Census Bureau, Projections of the Population by Age and Sex for the United States: 2010 to 2050 (Aug. 2008), http://www.census.gov/population/www/projecti ons/files/nation/summary/np2008-12.xls. Individual Response: EPA clarifies that mitigating climate change is outside the scope of the GS rulemaking. Rather, the purpose of the GS regul ation is to ensure consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirements to prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions.

3Letter ID: 0178 Comment ID: 23798 Letter Lines: 159 to 171
Comment Code: 1380 1.1.3.6 Deployment of GS
Comment: Promote CCS Development A CCS policy regime should be designed to encourage CCS, in addition to serving other public goals -- such as promotion of energy security, economic stability. and protection of USDWs, human health and the environment. Sound Risk Management Federal and state policy should enco urage owners, operators, technology companies, engineering firms, utility regul ators, and others involved in the CCS chain to take appropriate action to ensure safe and reliable operation of GS sites and systems, minimize risks, and allow CCS to earn broad public acceptance. Individual Response: EPA clarifies that the Class VI GS regulations promulgated under Safe Drinking Water Act authority do not promote or en courage the use of GS but, ensure consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirements to prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions. EPA believes that the Class VI GS regulations, which build upon the long-standing, protective, regulatory fram ework of the UIC program, will provide the regulatory certainty and cl arity that owners or op erators have requested. EPA acknowledges that there are unknowns associat ed with early GS project deployment and the long term storage of CO2 for GS. For these reasons, the Agency is using anadaptive approach to regulating GS injection. The Agencywill, every six years, collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determ ine if modifications to the requirements are appropriate or necessary. EPA agrees that input of and participation by a wide spectrum of stakeholders is a vital component of successful rulemaking. The Agen cy appreciates the degree of cooperation, participation, and active dialogue between the EP A and stakeholders and will continue to work with stakeholders and experts as itimplements the Class VI GS rule.

Letter ID: 0178 Comment ID: 23799 Letter Lines: 173 to 183
Comment Code: 1630 1.3.3 RCRA/hazardous waste i ssues (seeking comment) Comment Code: 1640 1.3.4 CERCLA issues (seeking comment) Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements

4Comment: Single, Clear Liability Structure To the extent possible, policymakers should put in place a single, clear liability regime for CCS activities. In the context of this rule, EPA has considered the possibility of cleanup liability both under th e Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA" or "Superfund") and the Resource Conservation an d Recovery Act ("RCRA), in addition to the UIC program. There is also the possibility of liabi lity under state statutes and common law. Parties who may be injured in the future must be able to resort to a fair liability scheme, but potential applicability of multiple schemes is likely to discourage CCS development. Individual Response: EPA acknowledges the commenter's con cerns regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. As a federal agency, EPA is working to create a nationally consistent financial responsibility regime within its authority whil e providing permitting author ities an appropriate level of flexibility. EPA is finalizing financial responsibility requirement s under authority of the SDWA. EPA believes that the gene ral authorities provided under SD WA include the authority to set minimum federal requirements for financial res ponsibility to ensure that financial resources are available to protect USDWs throughout the life of the GS project. S ee the final rule and preamble for further discussion of EPA's fi nal approach to financial responsibility. Furthermore, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SD WA after site closure if there is unanticipated migration towards or into a US DW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues. The Agency acknowledges and clarifies that, after site closure, an owner or operator may, depending on the fact scenario and state law, remain liable under state tort law and other remedies, or under other Statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA appreciates the commenter’s suggestions for a single liability scheme for CCS; however, the GS rule is not promulgated under either RCRA or CERCLA, and maki ng legislation changes or addressing liability under state statutes and common law is al so outside the scope of the GS rulemaking. EPA also notes that the applicabilityof RCRA and CERCLA will not be determined under the SDWA or the terms of the GS rule, but rather according to those statutes themselves and any implementing regulations that may apply. EPA agrees that any requirements applicable to CO2 injectate should be cl early identified to the public and to the regulated community. EP A received many comments regarding the applicability of the RCRA regulations and st atute to CO2 streams that are geologically sequestered under the final Class VI UIC well requirements. As a result, EPA has decided to

5initiate a separate proposed rulemaking specificall y to examine the issue of RCRA applicability to CO2 streams being geologically sequestere d, 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 propos al. The Agency will consider issues particular to RCRA in the context of that separate rulemaking, and recommends that the commenter read that proposed rule when it is published. The Ag ency 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: 0178 Comment ID: 23800 Letter Lines: 185 to 191
Comment Code: 1300 1.1.2.3 Comments on other aspects of CCS (capture, transport) Comment Code: 1540 1.2.3.2 Climate change legislation
Comment: Single, Clear Regulatory Structure There should be a single, cl ear regulatory structure a pplicable to CCS rather than multiple, ill-suited regulatory and liab ility statutes and regulations that likely will discourage CCS To that end, the CCS Alliance believes that a beneficial approach would be to enact at the federal level a new regulatory structure specific to CCS. Individual Response: EPA acknowledges that GS falls withinthe broader context of CCS and the need for regulatory clarity to ensure thatUSDWs are protected from endangerment. In developing the final GS rule, the Office of Water coordinated with other Agency program offices and across federal agencies (e.g., with the Department of Energy; United States Geological Survey; Bureau of Ocean Energy Management, Regulation, and Enforcement, formerly the Minerals Management Service; Bureau of Land Management). The Agency continues to evaluate areas of potential applicability of other Federa l environmental statutes including, but not limited to: the Clean Air Act; the Resource Conservation and Recovery Act; the Comprehensive Environmental Response, Compensation, and Liabili ty Act; and the Marine Protection, Research and Sanctuaries Act to various aspects of GS and CCS. The Agency will continue to coordinate on GS and CCS related issues to minimize redundancy and maximize efficiencies for owners or operators. For additional information, please s ee the discussion entitled "How Does This Rulemaking Relate to Other Federal Authorities and GS and CCS Activities?" in the preamble to the final GS rule.
EPA is also aware that states ar e currently in various stages of developing statut ory frameworks, regulations, technical guidance, and strategies for addressi ng CCS and GS. States can use multiple authorities beyond those afforded under the SDWA and UIC regulations, including laws and policies addressing surface access and land rights, unitization of fields, pore space ownership, mineral rights, worker safety and em ergency preparedness, and maximization of state oil and gas resource exploitation. EPA plans to wo rk closely with states and tribes as they develop Class VI primacy programs in this broa der context. EPA adds that states may adopt

6more stringent standards for Class VI wells than the Federal requirements. In a separate rulemaking under authority of th e Clean Air Act, EPA is amending the Greenhouse Gas (GHG) Reporting Program at 40 CFR Part 98 to add reporti ng requirements for facilities that conduct GS (subpart RR) and all other facilities that in ject CO2 underground (subpart UU). For additional information, see the section of the final GS rule preamble entitled, "How Does Mandatory Reporting of Greenhouse Gases (GHGs) Relate to This Rulemaking?” and the GHG Reporting Program rulemaking and docket.

Letter ID: 0178 Comment ID: 23801 Letter Lines: 193 to 207
Comment Code: 1210 1.1.1 Comments about the proposed rule
Comment: Site-Specific Approach Policy regarding GS siting should reflect that conditions affecting risk differ by site and should be tailored to risk s presented by specific sites. For example, CO2 has been injected underground for several decades for EOR. This technique is well developed and there is now a history through which its risks can be assessed. This differs from inj ection for long-term storage in deep saline formations or unmineable coal seams, with which there is limited experience, particularly on the massive s cale -- a million or more tons per year per site -- envisioned for the future. Po licy must encourage development of new data, technology, and practices while rec ognizing that existing technology is readily applicable. It also should refl ect that some long term injection practices such as natural gas storage and EOR already are known to pose little risk. Sites also will differ based on reservoir and confinement geological details, proximity to USDWs and other reso urces, and other factors. In addition, Individual Response: EPA agrees that permitting decisions for GS wells should be based on site-specific factors. The GS ru le requires owners or operators to submit, and Directors to consider, extensive site-specific data, specified at §146.82, to demons trate that a site is suitable for GS. Additionally, many of the permit require ments for GS wells are established through individualized site-specific pl ans for AoR and corrective actio n, testing and monitoring, and injection well plugging and post-injection site care and site closure. EPA adds that the final GS rule includes a balance of speci fic criteria to be met by the owner or operator and areas of Directorial discretion. The Agency believes this ba lance allows for GS projects to be designed and permitted to address the unique, site-specifi c aspects of each project, while providing consistency in permitting across the U.S. EPA adds that the GS rule does not categoricallypreclude injection of CO2 into any formation types. The purpose of the GS rule is to ensure protection of USDWs from endangerment, and the rule requires that owners or operators demonstrat e that wells are sited in suitable systems with geologic formations to receive and confine inje cted CO2, required at §146.83 of the GS rule.

7Letter ID: 0178 Comment ID: 23802 Letter Lines: 207 to 210
Comment Code: 4324 2.4.4.1.2 Comments opposed to requiring injection below the lowermost USDW
Comment: details, proximity to USDWs and other reso urces, and other factors. In addition, it is not necessarily the case that in jection always should have to occur beneath the lower most water source w ith a confining system in place as suggested by EPA. This should be determined on a case-by-case basis. Individual Response: EPA acknowledges that there are lim ited circumstances where injection above the lowermost USDW can be performe d in a manner that protects USDWs from endangerment, as long as appropriate protections are in place. The final GS rule at §146.95 establishes a process by which owne rs or operators can seek a waiv er of the Class VI injection depth requirements for injecti on into non-USDW formations above and/or between USDWs. EPA believes that these requirements will ensure USDW protection while providing flexibility to UIC program Directors and owne rs or operators who undertak e CO2 injection for GS. The Agency believes this approach: 1) responds to co ncerns about local and re gional geologic storage capacity limitations imposed by th e proposed injection depth require ments; 2) allows for a more site-specific assessment of injection depth for GS projects; 3) accommodates injection into different formation types; 4) a llows for injection of CO2 for GS into non-USDWs above and/or between USDWs when appropriate and where it can be demonstrated that USDWs will be protected; and 5) responds to concerns about the use of aqui fer exemptions for GS. Finally, EPA’s approach to addressing injection depth variability through a waiver process responds to concerns about future drinking water resource availability and the need to ensure that high quality water remains available in sufficient quantities to supply drinking water needs. For additional information on the waiver 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: 0178 Comment ID: 23803 Letter Lines: 212 to 232
Comment Code: 5460 2.9.2 Comments on transfer of lia bility for long-term care
Comment: Liability and Site Care Responsibility Cannot be Unlimited Site responsibility and liab ility of owners and operators should be designed to account not only for protection of the public, but recognizing that private parties cannot assume open ended or unlimite d risks. This includes site owners and operators, others involved in the CCS chain, and offerors of risk management products. There is not now, nor is there likely to be, a private market through which risks can be managed far beyond a reasonable post-operation site care period. In recognition of the market's lim its, the duration and amount of site responsibility must be limited. As a point of clarification, we use th e following terms to denote different

8periods in the CCS chain: Operation is intended to mean the period during which CO2 is injected at the injection site. - Post-operation site care period or closure period is intended to mean the period of years after operati on during which the owner or operator is required to meet State or EPA site care responsibilities. - Post-closure period is intended to meanthe period after State or EPA site care responsibilities end. 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 operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in 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 operator when approving site closure. Separate from EPA’s authority to enforce regul atory compliance, an owner or operator may be subject to a §1431 response orde r even after proper site cl osure is approved under §146.93. Under §1431 the Administrator may require an owner or operator to take necessary response measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may pres ent an imminent and s ubstantial endangerment to the health of persons, and the appropriate Stat e and local authorities have not acted to protect the health of such persons. Th e action may include issuing admi nistrative orders or commencing a civil action for appropriate relief against the owner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues. Furthermore, after site closure an owner or ope rator may remain liable under tort and other remedies, or under other federal statutes includi ng, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Letter ID: 0178 Comment ID: 23804 Letter Lines: 234 to 239
Comment Code: 5434 2.9.1.2 Need for additional instruments (seeking comment)
Comment: Allow a Broad Array of Financ ial Assurance Mechanisms Government policy should allow a broad array of mechanisms, including trust

9funds, especially since the market is likely to be limited for risk management mechanisms for CCS. We provide suggested principles for financial assurance below. Individual Response: Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided th e Director determines that the operator's proposed financ ial responsibility demonstration is adequate to protect USDWs from endangerment, which means the ability of th e 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 instruments. See the final rule and pr eamble for further discussion of EPA's final approach to financial responsibility.

Letter ID: 0178 Comment ID: 23805 Letter Lines: 241 to 251
Comment Code: 5460 2.9.2 Comments on transfer of lia bility for long-term care
Comment: Government Backstop Role The government will need to step in beyond an owner and operator liability limit, as has been the case in many othe r areas in which the government has sought to encourage private action to achieve a public good. The private sector's capacity to manage risks is s ubstantial, but not unl imited in either aggregate capital capacity or tenor and term. Government will need to accept responsibility beyond what the private mark et can manage. Because the goal in most cases will be long-term storage of CO2, long beyond the typical lifespan of private entities, government should assume liability after in jection operations cease and a reasonable closure period has elapsed. Individual Response: As described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. EPA does not have authority to tr ansfer SDWA or other legal liab ility 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: 0178 Comment ID: 23806 Letter Lines: 253 to 262
Comment Code: 1530 1.2.3.1 State regulatory effort s on GS (seeking comment)
Comment: State and Federal Regulatory Responsibility

10State oil and gas commissions are reposito ries of expertise in regulating oil and gas industry underground injections, wh ich have been safely undertaken for many decades. These commissions also have re gulated CO2 injections for enhanced oil and gas recovery, a practice that has b een in use for 40 years. However, not all states have oil and gas regulatory e xperience. In states that do not have experience regulating oil and gas injecti ons, EPA and the state should ensure the application of reasonable regulation that protects public health and the environment without discouraging CCS development and deployment. Individual Response: EPA clarifies that states will be granted primacy for Class VI wells on the basis of meeting minimum federal requirements fo r the protection of USDWs. EPA believes that the requirement that states' regulations meet the minimum federal requi rements will promote national consistency. To further ensure the final rule is applied consiste ntly, EPA is developing guidance documents for states that describe th e process of applying for and receiving primary enforcement responsibility (primacy) for GS Cl ass VI wells under Section 1422 of SDWA, as well as the technical and administrative issues on developing GS regul ations that are the equivalent of minimum federal criteria and requirements. EPA a dds that the guidance discusses additional considerations for states that do not have primacy for Class II wells. EPA is developing a series of guidance documents to support the GS rulemaking. These are available on EPA’s website at http://water.epa.gov/type /groundwater/uic/we lls_sequestration.cfm. EPA acknowledges that some states and tribes ar e developing statutory frameworks, regulations, technical guidance, and strategi es for addressing broader issues related to CCS and GS, and encourages states to seek primacy for Cl ass VI wells to further these efforts.

Letter ID: 0178 Comment ID: 23807 Letter Lines: 270 to 279
Comment Code: 1380 1.1.3.6 Deployment of GS
Comment: A. RECOGNITION OF THE IMPORTANCE OF SPURRING THE DEVELOPMENT OF CCS TECHNOLOGY The Proposed Rule recognizes the value of promoting CCS technology. With further modification and a broader scope, th ese regulations could encourage substantially the safe deployment of CCS technologies, support the construction of new fossil fuel-fired generation, prom ote capital formation, and broaden the availability of risk management mechan isms for CCS projects. The costs and benefits associated with protecting USDWs must be th e focus of the Proposed Rule, but account has to be taken of the reality that such protection is inextricably linked to the mitigat ion of climate change risk. Individual Response: EPA clarifies that the Class VI GS regulations promulgated under Safe Drinking Water Act authority do not promote or encourage the use of GS, but, ensure consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirement s to prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions. EP A believes that the Clas s VI GS regulations,

11which build upon the long-standing, protective, re gulatory framework of the UIC program, will provide the regulatory certainty and clarity that owners or operators have requested. EPA acknowledges that there are unknowns associat ed with early GS project deployment and the long-term storage of CO2 for GS. For these reasons, the Agency is using an adaptive approach to regulating GS injection. The Agencywill, every six years, collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determ ine if modifications to the requirements are appropriate or necessary.

Letter ID: 0178 Comment ID: 23808 Letter Lines: 281 to 288
Comment Code: 1400 1.2 Comments on EPA's Authority to Regulate Injection of CO2
Comment: B. SDWA AUTHORITY IS LIMITED The CCS Alliance agrees with EPA's view of its authority under the SDWA as limited to preventing endangerment of USDW s by the underground injection of CO2. The Agency properly notes that regulating surface water and atmospheric releases is outside the scope of this proposal and SDWA authority. Though EPA regulates both pollutants and commodities under the UIC provisions, it is clear that the proposal does not address the status of CO 2 whether as a pollutant or commodity. Individual Response: EPA acknowledges the comment.

Letter ID: 0178 Comment ID: 23809 Letter Lines: 290 to 300
Comment Code: 1600 1.3 Risk Associated with CO2 GS
Comment: C. VIEW OF GS RI SKS AND HAZARDS The CCS Alliance concurs with the Agency 's identification of the risks and hazards, to the extent these are understood and can be reasonably predicted, that likely are posed by underground inje ction. The U.S. oil and gas industry, as EPA has pointed out. has had decade s of experience drilling through highly pressurized formations and injecting si gnificant amounts of CO2 for purposes of enhanced recovery. The Agency rightly notes that CO2 has been successfully injected on much larger scale at seve ral sites outside the United States. However, broad scale, large CCS injec tions pose new considerations, and CCS requires site-specific review. Individual Response: EPA recognizes that industry has decades of experience with well construction and operation. For example, the oil and gas industry has experience drilling and cementing wells in very deep formations, in a variety of environments (e.g., high-pressure and low-pressure formations), and for a variety of uses (e.g., injecti on, oil and gas production,

12monitoring). EPA believes that th is experience has led to the de velopment of well materials and construction and operating procedures thatare applicable to Class VI wells. EPA has taken a regulatory approach that promot es USDW protection, incorporates flexibility or the discretion of the permitting authority when appropriate, seeks to limit burden on owners or operators and permitting agencies, and provides a foundation for national consistency in permitting of GS projects. For example, under th e final rule, many of the permit requirements must be established through site -specific plans (e.g., AoR and corre ctive action plan, testing and monitoring plan, etc.) developed by the owne r or operator and appr oved by the Director. Consequently EPA expects that owners or operators will consult with the Director as they develop, implement, and update these plans. Additionally, the Director has the discretion to approve alternatives to the requirements in some cases. For example, the Director may in certain situations modify the length of the post-inj ection site care period unde r §146.93, allow the use of alternate methods for mechanical integrity testing (if approved by EPA) under §146.89, and waive the requirement that wells be designed to inject below the lowermost USDW under §146.95.

Letter ID: 0178 Comment ID: 23810 Letter Lines: 302 to 312
Comment Code: 2020 1.5.1 Support Class VI designation
Comment: D. WELL CLASS APPROACH The creation of a new class of wells (C lass VI) to cover underground injection of CO2 outside the context of EOR (existing Class II or Class V wells already permitted are properly left outside the sc ope of the Class VI proposal) is a reasonable approach due to the unique features of CCS, including the low viscosity of supercritical CO2, its highbuoyancy, and injection volumes that could dwarf those of other well classes. There is important recognition that such an approach should not impede the development of CCS t echnology but should "support the development of a key c limate change" risk "mitigation technology".[FN6] The CCS Alliance agrees th at where there is an EOR component 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 and 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). EPA clarifies that the purpose of the GS rule is not to incentivize the us e of GS. The purpose of the GS rule is to ensure that, where GS is de ployed, it is conducted in a manner that does not endanger USDWs.

13Letter ID: 0178 Comment ID: 23811 Letter Lines: 312 to 314
Comment Code: 2046 1.5.2.3 Continuing to classify CO2 in jection for EOR/EGR as Class II/ dividing line between Class II and Class VI (seeking comment)
Comment: technology".[FN6] The CCS Alliance agrees th at where there is an EOR component in a project, that project should continue to be permitted and regulated under the Class II program. It is also positive that EPA is proposin g that Directors Individual Response: EPA agrees that injection of CO2 for the primary purpose of enhancing oil and gas recovery should remain under the Cla ss II Program. EPA also recognizes that the oil and gas industry has decades of experience inj ecting CO2 for the purpose of ER, and that sites used for ER may be suitable for GS and may be among the first GS sites. 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 originally 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: 0178 Comment ID: 23812 Letter Lines: 314 to 322
Comment Code: 2060 1.5.3 Comments on grandfathering of existing wells (seeking comment)
Comment: the Class II program. It is also positiv e that EPA is proposing that Directors have authority to grandfather certain requirements for Class V experimental project wells and other wells (Class II) wh en they are converted to full scale Class VI wells. The Alliance suggests that EPA should consider whether grandfathering the existing siting, AoR, operations, and monitoring plans for Class II and Class V wells when they are converted to full scale Class VI wells would protect USDWs while avoidi ng additional regulatory burden. [FN6] Proposed Rule, 73 Fed. Reg. at p. 43,495. Individual Response: EPA agrees that many Class II well s are designed and constructed to withstand exposure to CO2. The final GS rule provi des for the construction of these wells to be grandfathered per §146.81(c), provid ed the owner or operator can demonstrate to the Director that the wells were engineered and constructed to meet th e requirements at §146.86(a) and ensure 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

14requirements (reporting, monitori ng, mechanical integrity testi ng, etc.) must be met following a determination under §146.81(c). EPA disagrees that other requirements (e.g., MI Ts, siting, monitoring, and AoR requirements) should also be grandfathered. Following re-perm itting of the project as GS, many of the unique factors of GS sites (e.g., increase d reservoir pressures associated with large volumes of stored CO2 and the corrosivity of CO2 inthe presence of water) will resultin an increased risk profile, warranting the specific requirements in the final GS rule. Therefore, following re-permitting as Class VI wells, these projects w ould be subject to the operatio nal, MIT, monitoring, reporting, plugging, and post-injection site care and site closure requirements in the final GS rule. See the discussion of EPA's final regulatory approach in the preamble to th e GS rule for additional detail on these requirements.

Letter ID: 0178 Comment ID: 23813 Letter Lines: 324 to 344
Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements
Comment: E. REASONABLE LIMITS ON POST-C LOSURE CARE AND ASSURANCES AGAINST LEAKAGE The notion of owners and operators bei ng responsible in perpetuity should continue to be avoided. Washington Stat e has instituted the requirement that there be a "high degree of confidence that substantially 99 pe rcent of the GHGs will remain contained for at least one thous and years."[FN7] Such a standard would be inappropriate for CO2 injection wells, and is not related to effects on human health or the environment from a potentia l leak. The CCS Allianc e is encouraged by EPA's apparent focus on a workable approach to such matters as casing and cement quality, and on instituting a mon itoring, mitigation and validation program that provides assurance of safe, l ong-term storage, in conjunction with setting a defined financial responsibilityperiod that enables financing and risk management of CCS. Ultimately, needs associated with risk management of emissions to the atmosphere must be balan ced against needs to manage risk to the water supply, as well as other public polic y issues mentioned above. This points to why the Alliance suggests an integrat ed policy management approach to CCS technology. [FN7] WASH. ADMIN. CODE 173-407-110 (2008) (see definition of "Permanent Sequestration") Individual Response: EPA notes that SDWA does not co ntain any provisions addressing liability. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells. Under SDWA authority, owners or operators of injection wells must ensure prot ection of USDWs from endangerment and are subject to liability for enforcement under the Act.

15The final rule requires that an owner or operator conduct monitoring as specified in the Directorapproved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate that the geologic sequestration pr oject no longer poses an endangerment to USDWs. For additional info rmation about the PISC and site closure requirements, see the preamble to the final GS rule. Once an owner or operator has met all regulator y requirements under Part 146 for Class VI wells and site closure has been approved pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcem ent for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be released if it was not used. However, even if a site closure is a pproved 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, he or she may be held liable for regul atory noncompliance even af ter site closure if the Director relied on erroneous information provide d 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 protect the health of persons under §1431 of the SD WA after site closure if there is unanticipated migration towards or into a US DW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, he or she may be subj ect to a civil penalty for each day in which such violation occurs or failure to comply continues. The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38, whereby all potential liabilities a ssociated with meeting the requirements of that permit are transferred. Please see further clarification on the issue of long term liability in the preamble of the final rule. Furthermore, after site closure an owner or 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.
EPA clarifies that standards for containment of carbon dioxide before it is injected are outside the scope of this rulemaking. EPA acknowledges the commenter’s support of EPA’s efforts to ensure the proper construction and monitoring of GS wells. EPA acknowledges that the issue of GS falls with in the broader context of CCS. EPA clarifies that the Class VI requirements are designed to ensure that, where deployed, GS is conducted in a manner that protects USDWs from endangerment. The requirements apply to owners or operators of injection wells used to inject CO2 for permanent storage. The Class VI GS rulemaking is promulgated under SDWA authority and does not relate to any endangerment and

16cause or contribute findings under the Clean Ai r Act. The Class VI GS requirements do not depend upon, and are unaffected by, Clean Air Act endangerment and cause or contribute findings.

Letter ID: 0178 Comment ID: 23814 Letter Lines: 349 to 381
Comment Code: 5240 2.8.2.2 Post injection timeframe (seeking comment) Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements
Comment: A. FIFTY YEAR TIME FRAME FOR POST-CLOSURE SITE CARE RESPONSIBILITY The Proposed Rule states that the time frame over which CO2 will be trapped depends on the properties of the receiv ing formation and the injected CO2 stream. Currently available information does not provide a complete understanding of the time required to st abilize geologically sequestered CO2 under various conditions: however, some e xperience does exist and has led some to develop extrapolative estimates for related geologies. Some believe that in a significant number of cases, a 10 to 30 year timeframe will be sufficient to determine that the remaining pressure inplugged wells will not lift fluid to overlying strata. Any uncertainty in char acterizing post-injection site care timeframes for GS, while challenging, could be dealt with through a maximum time period, performance standards, and Director discretion. The CCS Alliance recommends establishing a maximum 30-year post-operation site care and financial responsibility period. Th e Director would have discretion to shorten -- but not to lengthe n -- this period if the owner or operator meets certain enumerated performance standard s based on available data on pressure. fluid movement, mineralization and/or di ssolution reactions to show whether movement of the plume and pressure fr ont have ceased. On ce the thirty-year period is reached -- or shorter if th e performance standards are met -- a government backstop would be triggered, ther eby ensuring that a risk management mechanism is in place beyond the respons ibility of the owner or operator. Investment requires assumptions about th e amount of capital required and for how long it is required. If either the maximum amount of capital or the term cannot be established, investment is deterred. Further, because most capital available will not commit for terms longer than thir ty years, and the duration for which it is available is generally inversely proportional to risk. Thus, long term capital for even low frequency but high severity risks is difficult to obtain. To assure public funds can be leverage d with private investment to assure widespread deployment of this climate ri sk mitigating technology, a balance of risk and reward is required in the poli cy development that underpins this UIC regulation. Individual Response: EPA disagrees that a post-injection si te care timeframe of 50 years is

17excessive for most Class VI wells. EPA proposed a default post-injection s ite care timeframe of 50 years based on a review of research studies , industry reports, and existing environmental programs. This analysis was included in an EPA- prepared background document that is available in the federal docket, titled "Computationa l Modeling of Underground Injection of Carbon Dioxide for Determination of Area-of-Review and Potential Risk to Underground Sources of Drinking Water." EPA assessed various default timeframes based on additional review of research studies and evaluation of public comments. While numerous commenters suggested that EPA shorten the monitoring timeframe, none of the commenters provided suffi cient data or other evidence to warrant a change inthe proposed timeframe. While the 10- or 30-year timeframe suggested by some of these commenters may be within the timeframe suggested in some studies, EPA believes that the potential risks of endange ring USDWs will likely no t decline within these timeframes and available data, including data submitted by commenters, do not support a different default timeframe. However, EPA r ecognizes that alternative timeframes may be appropriate under limited, specific circumstances. For this reason, the Class VI rule offers owners or operators flexibility regarding the duration of the PISC timeframe by: (1) allowing the Director discretion to shorten or lengthen the PISC timeframe during the PISC period based on site -specific data, pursuant to requirements at §146.93(b); or (2) affording the Dire ctor discretion to allow a Cla ss VI well owner or operator to demonstrate, based on substantial data during th e permitting process, that an alternative PISC timeframe may be appropriate if it ensures non-endangerment of USDWs pursuant to requirements at §146.93(c). EPA believes that a 50 year pos t-injection site care timeframe represents a reasonable and protective monitoring period and available data, including data submitted by commenters, do not support a different default timeframe. Furthermor e, EPA believes that a 50-year default postinjection site care timeframe, as required at §146.93(b)(1), is not overly burdensome, does not exaggerate the risks associated with GS, is consistent with other environmental programs, and sufficiently protects USDWs from endangerment. EPA believes that a default post-injection site car e timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where substantial data exists to demonstrate that analternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to ac commodate site-specific circumstances and various geologic conditions, and addre sses commenters’ concerns, wh ile ensuring USDW protection. Both approaches will utilize si te-specific data, and be based on pressure monitoring and USDW impacts. EPA disagrees that the requirements on financial responsibility are overly stringent. The goal of financial responsibility is to ensure that fi nancial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences fi nancial difficulties. EPA a dds that the purpose of the GS rule is not to encourage the use of GS; rath er, 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: 0178 Comment ID: 23815 Letter Lines: 383 to 397

18Comment Code: 1630 1.3.3 RCRA/hazardous waste i ssues (seeking comment) Comment Code: 1640 1.3.4 CERCLA issues (seeking comment) Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements
Comment: B. POTENTIAL APPLICABILITY OF RCRA AND CERCLA As discussed in greater detail below, the potential applicab ility of RCRA and CERCLA is a key concern. These statutes si mply are not designed with the thought in mind of encouraging the safe and wi despread deployment of a new technology. The CCS Alliance believes that many partie s involved in the CCS chain of events should bear responsibility for safe operation. Rather than apply environmental statutes with contentious and litigious histories, Congress should enact a new regulatory and liability framework for CCS in place of the multiple regimes that now may apply. This is not meant to detr act from the progress EPA is making in this rulemaking. It merely recognizes the limitations and overlapping structures EPA itself has noted. CCS should be subj ect to a single, cl ear regulatory structure, and a single, cl ear liability structure. Inthe meantime, EPA should use what interpretive authority it has to limit the applicability of multiple statutes and provisions, the applicabi lity of which would discourage CCS. Individual Response: EPA acknowledges the commenter's con cerns 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 while providing permitting authorities an appropriate level of flexibility. EPA is finalizing financial responsibilityrequirements under authority of the SDWA, which includes the authority to set federal minimum requirements for financial responsibil ity to ensure that resources are available to protect USDW s throughout the life of the GS project. This authority does not extend to release owners or operators from long-term responsibility under other statutes, such as CERCLA, for potential impacts after the PISC period has ended, or for the potential economic costs associated with impacts unrelated to USDWs. Under current SDWA provisions, EPA does not have authority to transfer liabilityfrom one entity to another and it does not provide for the creation of a third party financial instrument where EPA is the trustee. Under SDWA authority, owners or operators of injection well s must ensure protection of USDWs from endangerment and are subject to liab ility for enforcement under the Act. The final rule requires that an owner or operator conduct monitoring as specified in the Director-approved PISC and site closure plan following the cessation of injection until he or she can demonstrate to the Director that the geologic sequestration project no longer pose s an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule. Once an owner or operator has met all 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

19operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, the financial instrument required under §146.85 will be releas ed if it has not been used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (inc luding violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable even after site closure was approved if the Director relied on erroneous info rmation 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 protect the health of persons under §1431 of the SD WA after site closure if there is unanticipated migration towards or into a US DW that causes or threatens imminent and substantial endangerment to public health. If the owner or operator fails to comply with the order, he or she may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues. The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory re sponsibilities are transferred to that new owner and operator, includ ing all potential liabilities a ssociated with meeting the requirements of that permit. 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. Comments requesting congre ssional legislation on liability for GS are outside of the scope of this rulemaking. EPA agrees that identifying and addressing potentia l barriers to the deployment of CCS, while protecting human health and the environment, is important. As described above, making legislation changes is outside the scope of the GS rulemaking. Also as described above, EPA has decided to initiate a separate proposed rulemaki ng specifically to examine the issue of RCRA applicability to CO2 streams be ing geologically sequestered, in cluding the possible option of a conditional exemption from the RCRA require ments for CO2 GS in Class VI wells. Furthermore, EPA is promulgating the GS rule un der the authority of th e SDWA. To the extent the commenter is seeking interpretations of CE RCLA and its related pr ovisions, such as the definition of a federally permitted release, such interpretations are beyond the scope of this rulemaking.

Letter ID: 0178 Comment ID: 23816 Letter Lines: 399 to 414
Comment Code: 1435 1.2.1.3 EPA should develop guidance

20Comment: C. GUIDANCE FOR EPA REGIONAL ADMINISTRATORS AND STATE OFFICIALS Broad responsibility and decision making authority is centered in the EPA Regional Administrators (for UIC programs administered by EPA) and in non-EPA officials (responsible for permitting, imple mentation and compliance of state, territorial or tribal UIC programs). Howe ver, no guidance is provided as to how these individuals are to exercise suchwide discretion. They will have the authority to determine whethe r large pilot projects shoul d be considered Class V (experimental) or Class VI wells, but on wh at basis such a decision is to be made is not clear. In accordance with OMB's Final Bulletin for Agency Good Guidance Practices,[FN8] EPA should cons ider developing additional guidelines that limit the ability of mid-level offici als to implement and alter the program without review by the EPA Administrator or other organs of the U.S. Government. [FN8] Final Bulletin for Agency Good Guidance Practices, 72 Fed. Reg. 3432 (Jan. 25, 2007). Individual Response: To promote consistency while providi ng the Director with an appropriate level of discretion, EPA is developi ng guidances for states and tribes that describe the process of applying for and receiving primacy for GS Cla ss VI wells under Section 1422 of SDWA, as well as the technical and administrative issues associ ated with developing GS regulations that are the equivalent of minimum federal criteria and requirements. These are available on EPA’s website at http://water.epa.gov/type/ground water/uic/wells_sequestration.cfm.
EPA intends to take OMB’s Good Guidance Manual into consideration as gui dance is developed. OMB’s Good Guidance Manual esta blishes policies and procedures for the development, issuance, and use of significant guidance docum ents by Executive Branch departments and agencies.

Letter ID: 0178 Comment ID: 23817 Letter Lines: 416 to 427
Comment Code: 1600 1.3 Risk Associated with CO2 GS
Comment: D. INSUFFICIENT RECOGNITION OF LIKELIHOOD OF TECHNICAL ADVANCES CO2 injection has been successf ully utilized in the EOR process for decades. As such, even though CCS technology has not been widely deployed, the technology and industry knowledge are nevertheless pr esently sufficient to commence CCS activities. However, sign ificant advances in technology and understanding are likely to be made in the future. The Pr oposed Rule fails to fully recognize or otherwise take into account that technology and the state of knowledge almost certainly will improve and continue to evolve. EPA, therefore, should better reflect that as technologyand understanding improves, the risks associated with CCS will be reduced and the ability to mitigate remaining risks will be

21improved. Individual Response: EPA recognizes that technologies will evolve and improve over time, and for these reasons, the Agency is using an adap tive approach to regul ate GS injection. The Agency plans, every six years, to collect and review data on GS project s to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appr opriate or necessary.

Letter ID: 0178 Comment ID: 23818 Letter Lines: 429 to 437
Comment Code: 3120 2.1.2 Need to identify additional confining and containment zones (seeking comment)
Comment: E. SECONDARY CONTAINMENT SH OULD NOT BE REQUIRED Secondary containment (i.e., a second form ation of "caprock" above the initial formation) should not be required because it could limit the eligibility of potential storage sites, raise costs due to extra transportation, and add to the considerable regulatory burden of re gulating site characterization. The standards of the Safe Drinking Water Act require that any inje ction that does occur will not result in endangerment of USDWs. This should be sufficient, without imposing in addition an arbitrary additional standard. Individual Response: EPA clarifies that secondary confini ng zones are not required for all GS sites. Rather, secondary confini ng zones are required when the Di rector determines that these zones are needed to maximize the protection of USDWs from endangerment. EPA retains the requirement to identify additional containment/confining zones, if required by the Director, as proposed (e.g., §146.83(b)). 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 protection. These layers could further impede vertical fluid movement and allow for pressure dissipation, and also provide additional sites for monitoring, mitigation, and remediation. EPA disagrees that the requirementwould reduce the number of sites available for GS. The intent of this requirement is to ensurethat a proposed site pr ovides adequate protection of USDWs from endangerment; if this protection cannot be demonstrated, the Director would not issue a permit for GS at the site. The Agency believes that providing the Director di scretion will allow consideration of a range of sites for GS, based on site-specific conditions and ensure USDW protection. EPA believes that requiring appropriate site ch aracterization by the owner or operator (under §146.82) and providing an appropriate de gree of flexibility to the Director to evaluate site-specific geologic data will afford the greatest protec tion of USDWs from endangerment.

Letter ID: 0178 Comment ID: 23819 Letter Lines: 439 to 451

22Comment Code: 4410 2.4.4.3.1 Comments in favor of allowing injection above/between USDWs in certain circumstances
Comment: F. GEOLOGIC SEQUESTRATION OF CO2 NEED NOT BE, IN EVERY INSTAKCE, BENEATH THE LOWERMOST FORMATION CONTAINING A USDW Geologic sequestration of CO2 need not be, in every instance, beneath the lowermost formation containing a USDW, as is the case with Class I wells. Such a requirement likely would preclude injec tion into certain targeted geologic formations, which may include storage si tes currently under consideration for GS. The Director should be given disc retion, but to act in accordance with guidelines, to allow injection above or between USDWs in specific geological settings where the depth of the USDW would preclude GS and where there are thousands (or only hundreds) of feet of rock strata be tween the injection zone and the underlying or overlying USDW. This could in many instances open up more areas for CO2 storage without endangering USDWs. Individual Response: EPA acknowledges that there are lim ited circumstances where injection above the lowermost USDW can be performe d in a manner that protects USDWs from endangerment, as long as appropriate protections are in place. The final GS rule at §146.95 establishes a process by which owne rs or operators can seek a waiv er of the Class VI injection depth requirements for injection into non-USDW formations above and/or between USDWs. Additionally, the final GS rule doe s not categorically preclude or prohibit injection into any type of formation. EPA believes that these requirements will ensure USDW protection while providing flexibility to UIC program Directors and owne rs or operators who undertak e CO2 injection for GS. The Agency believes this approach: 1) responds to co ncerns about local and re gional geologic storage capacity limitations imposed by th e proposed injection depth require ments; 2) allows for a more site-specific assessment of injection depth for GS projects; 3) accommodates injection into different formation types; 4) a llows for injection of CO2 for GS into non-USDWs above and/or between USDWs when appropriate and where it can be demonstrated that USDWs will be protected; and 5) responds to concerns about the use of aqui fer exemptions for GS. Finally, EPA’s approach to addressing injection depth variability through a waiver process responds to concerns about future drinking water resource availability and the need to ensure that high quality water remains available in sufficient quantities to supply drinking water needs. For additional information on the waiver 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. EPA clarifies that all decisions regarding inject ion depth waivers will be at the Director's discretion and based on site-specific informati on. EPA is developing guidance on the injection depth waiver process. The guidance describes th e recommended approach an owner or operator may follow when submitting a waiver application, processing waiver applications by the UIC and PWSS Program Directors, and additional processe s that may apply to projects that have been

23issued waivers. This guidance will be available on EPA’s website at http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm.

Letter ID: 0178 Comment ID: 23820 Letter Lines: 453 to 458
Comment Code: 1220 1.1.1.1 Terminology and definitions Comment Code: 1230 1.1.1.2 General comments on the regulatory text
Comment: G. VAGUE LANGUAGE AND DE FINITIONAL PROBLEMS There are many words and phrases in the draft regulations that are not well defined, and the meaning of which ought to be expanded upon. For instance, what might constitute "significant leakage" inthe context of mechanical integrity testing should be identified. Individual Response: A properly designed and operated we ll should have no leakage in the casing, tubing, or packer and no fluid movement into a USDW through channels adjacent to the wellbore. While the intent of MITs is to detect these types of pr oblems as early as possible, the goal of the well design and constr uction requirements at §146.86 is th e complete absence of such problems. EPA clarifies that the purpose of the "significant leakage" language in this narrow context is simply to avoid triggering corrective actions for essentially de minimis situations. Determining whether a MIT result should trigger follow-up action is necessarily a case and sitespecific situation; as a result, EPA does not believe it is appropriate to define the term "significant leakage" in the c ontext of MITs. In addition, EPA has not defined this term for purposes of other injection well classes and this has not been shown to hinder permitting authorities' and owners or operators' ability to assess whether injection wells have adequate mechanical integrity. EPA believes that this appro ach allows states flexib ility, will not interfere with the implementation of existing UIC program s, and maintains protection of USDWs from endangerment.
The final definition of mechanicalintegrity is unchanged. EPA clarif ies that mechanical integrity is defined at §146.89(a) as the absence (1) of signif icant leak in the casin g, tubing, or packer and (2) of significant fluid movement into a USDW through channels adjacent to the injection wellbore. Based on its evaluation of all public comments and input on the proposed rule and the NODA and Request for Comment, EPA has made many revisions to the Cla ss VI GS rule. Please see the final rule and preamble for additional information.

Letter ID: 0178 Comment ID: 23821 Letter Lines: 460 to 464
Comment Code: 4000 2.4 Proposed Injection Well Operating Requirements (40 CFR 146.88)
Comment: H. NON-COMPLIANCE

24If a site is not in compliance, there should be no requirement that injection cease immediately, unless an imminent threat of harm to human health or the environment is posed. Individual Response: EPA disagrees with the commenter, and believes that the requirement at §146.88(f) to cease injection immediately upon indi cation of a mechanical integrity loss is necessary and appropriate because loss of mechan ical integrity can signal problems which could lead to a loss of integrity or well failure and potential leaks of CO2 that may cause endangerment to a USDW. While there may be circumstances in which a well appears to lack mechanical integrity but actually poses no risk, such a determination cannot be made without an investigation. It would be inad equate for purposes of protecti ng USDWs from endangerment to require that injection cease only when there was an imminent threat of harm to human health or environment.

Letter ID: 0178 Comment ID: 23822 Letter Lines: 467 to 475
Comment Code: 5240 2.8.2.2 Post injection timeframe (seeking comment)
Comment: VI. SPECIAL FOCUS: FINANCIAL ASSURANCE AND LONG TERM SITE RESPONSIBILITY Financial assurance and long-term site responsibility are an area of special focus for the CCS Alliance. As noted above. we believe the proposed 50-year time frame for site care responsibility after a GS facilityhas ceased operation is too long, and there should be a known e nd point fur site care responsibility up front. In addition to these concerns , we offer the following comments on financial assurance. Individual Response: EPA disagrees that a post-injection si te care timeframe of 50 years is excessive for most Class VI wells. EPA proposed a default post-injection s ite care timeframe of 50 years based on a review of research studies , industry reports, and existing environmental programs. This analysis was included in an EPA- prepared background document that is available in the federal docket, titled ""Computationa l Modeling of Underground Injection of Carbon Dioxide for Determination of Area-of-Review and Potential Risk to Underground Sources of Drinking Water."" EPA assessed various default timeframes based on additional review of research studies and evaluation of public comments. While numerous commenters suggested that EPA shorten the monitoring timeframe, none of the commenters provided suffi cient data or other evidence to warrant a change inthe proposed timeframe. While the 10- or 30-year timeframe suggested by some of these commenters may be within the timeframe suggested in some studies, EPA believes that the potential risks of endange ring USDWs will likely no t decline within these timeframes and available data, including data submitted by commenters, do not support a different default timeframe. However, EPA recognizes that alternative timeframes may be appropriate under limited, specific circumstances. For this reason, the Class VI rule offers owners or operators flexibility regarding the duration of the PISC timeframe by: (1) allowing the Direct or discretion to shorten or

25lengthen the PISC timeframe during the PISC pe riod based on site-specific data, pursuant to requirements at §146.93(b); or (2) affording the Director discretion to allow a Class VI well owner or operator to demonstrate, based on substantial data during the permitting process, that an alternative PISC timeframe may be appropria te if it ensures non- endangerment of USDWs pursuant to requirements at §146.93(c). EPA believes that a 50 year pos t-injection site care timeframe represents a reasonable and protective monitoring period and available data, including data submitted by commenters, do not support a different default timeframe. Furthermor e, EPA believes that a 50-year default postinjection site care timeframe, as required at §146.93(b)(1), is not overly burdensome, does not exaggerate the risks associated with GS, is consistent with other environmental programs, and sufficiently protects USDWs from endangerment. EPA believes that a default post-injection site car e timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where substantial data exists to demonstrate that analternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to ac commodate site-specific circumstances and various geologic conditions, and addre sses commenters¿ concerns, wh ile ensuring USDW protection. Both approaches will utilize si te-specific data, and be based on pressure monitoring and USDW impacts. EPA recognizes that there are chal lenges associated with assuring funding for activities that will occur far in the future. However, the Agency be lieves that in order to protect USDWs from endangerment under the SDWA operators must demonstrate under §146.85 that financial resources are available to plug the injection well and provide post-injection site care at the point in time that the first CO2 is injected. EPA also recognizes the concerns associated with assuring financial responsibil ity for the long time frames over which post-injection site care will be conducted. EPA is developing guidance on financial responsibility to a ssist owners or operators in evaluating the requirements of §146.85 and to assist Directors in evaluating fi nancial responsibility demonstrations. The guidance describes the types of financial mechanisms that operators may choose to use when evaluating the financial responsibility requirements for GS wells and it will also include a section on how to estimate costs to s upport accurate financial respon sibility demonstrations. The guidance will be available at http://water.epa.gov/type /groundwater/uic/wells_sequestration.cfm.

Letter ID: 0178 Comment ID: 23823 Letter Lines: 477 to 548
Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements
Comment: A. THE PURPOSE OF FINANCIAL ASSURANCE EPA's Geologic Sequestration Stewardship pape r, released in conjunction with the Proposed Rule in July, states that the purpose of financial assurance is "to

26minimize the number of facilities that are orphaned and abandoned; thereby, reducing the potential that these costs will be borne by the public."[FN9] [FN9] U.S. ENVIRONMENTAL PROTECTIONAGENCY, Approaches to Geologic Sequestration Site Stewardship After Site Closure, n.2 (July 2008). This goal must be considered in the cont ext of the facts surr ounding CCS. It is an activity the government wants to encour age, the risks attendant to which may be significant if they occur but likely are of low probability, and for which the private risk management market will not cover the full amount or duration of the risks. To fail to implement CCS at this juncture, is not an option if we are to serve other public priorities, such as addressing climate change and energy security, which depends in part on utili zing domestic resources like coal. For CCS to occur on a broad-scale basis, "cos ts," in the form of long-term risk, will have to be borne by the public. A ques tion is how to define and shape the public role. Insuring or otherwise managing risk at a complex industrial facility requires specialty risk products, not ordinary property and casualty coverage.[FN10] In the broader environmental risk insurance mark et, only four or five insurers offer products. In the energy market, the numberis roughly the same. Private risk managers must have experts in place with appropriate perspective to analyze the risks and calculate probabilities of the activity. Few risk management entities likely will develop this capability for CCS. Each may be w illing to take a portion of the risk with respect to an i ndividual project. Ho wever, consider that today there are 1,493 co al-fired electric generating units in the United states.[FN11] This suggests a large potentia l need for risk management mechanisms. [FN10] Chiara Trabucchi and Lindene Patton, Storing Carbon: Options for Liability Risk Management, Financial Responsibility, B N A Daily Environment Report at p.9 (Sept. 3, 2008). "Because CCS is what the financial services sector would call a specialty risk. only a small part of the sector would be equipped and qualified to analyze the risks and place capital thereon." [FN11] Energy Information Administration. El ectric Power Annual, Existing Capacity by Energy Source, Table 2-2 (Oct. 22, 2007). Forecasting for CCS can be difficult becau se there is no established track record in some formations where GS is e nvisioned to occur, such as deep saline aquifers, or on the scale envisioned for facilities generating electricity. Each risk management company will have diffe ring conditions under which it will or will not accept risk. These might be ba sed on factors such as geography, due diligence in siting, formation pressure and chemistry, type of geologic formation, proximity to population, and th e applicable legal and liability regimes. These factors are not yet actualfactors, as CCS as envisioned by

27policymakers has yet to emerge, but are ba sed on the considerations in other fields. Companies may further specialize in the layer of risk they are willing to accept. For example, one risk managementcompany may be comfortable writing coverage for the initial tranche of ri sk - perhaps the first $30 million in potential damages, above the first $10 million, which it may require that the policyholder bear. Another may be willing to write coverage for the next $30 million, liability for which would only arise if damages were beyond the $40 million borne by the policy holder and the first insurer. Others may not be willing to provide coverage until after th e first $100 million or more in risk is covered. A small pool of reinsurers may be willing to help further spread some of these risks. In considering financial assurance requi rements, EPA and stakeholders should distinguish financial assurance from liab ility. Regardless of the length of time EPA establishes in the final rule for a GS facility owner or operator to maintain financial instruments to pay to clean up potential USDW contamination, liability for such cleanup may last longer, depending on which statutory provisions are applicable, as well as state law. While EPA is limited in its ability to address potential liability, it should seek to do so, as findings of the Risk Study conducted by the CCS Alliance (discussed below) show that potential long-term liability is a sign ificant barrier to CCS development. Individual Response: As described above, the goal of financia l responsibility is to ensure that financial resources are available to prevent the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties, not to en courage or discourage the use of GS. Regarding the availability of financial responsibility providers, EPA anticipates that the availability of a variety of financial responsibility providers and third-party GS financial instruments will grow in response to demand. In addition, EPA plans to allow owners or operators the flexibility to choose from a variety of financial instruments in order to meet the requirements at §146.85. EPA acknowledges that financial re sponsibility and long-term liabil ity are separate issues. EPA clarifies that SDWA does not contain any provisi ons addressing liability. However, consistent with the policy of the UIC program, the financ ial responsibility provisi ons provided in the GS rule are intended to ensure the owner or operato r will be liable for remediating or correcting any endangerment of USDWs via their demonstrated financial instrument up through site closure. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells.

Letter ID: 0178 Comment ID: 23824 Letter Lines: 550 to 616
Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care

28Requirements
Comment: B. CONSIDERATION INVIEWING RISK Risk managers - insurers, sureties, banks , and others - will determine whether to provide financial assurance based on a calculation of the severity of risks and probability that they will occur over a given time period and the terms and conditions of the obligation. The severity and probability of risk is defined not just by physical dimensions, such as fractures and leaks, but by the regulatory and liabilitystructure that is in place. A party may be in violation of a rule or may trigger large potential liability, notwithstanding that th e risk to USDWs or human health or the environment may be minimal. One may look at the risks of a CCS proj ect in two ways: by the activity being performed in the CCS chain (i.e.. ge neration, compression, transportation, injection, long-term storage) , or by the phase of the project (i.e., operation, closure, post-closure). The CCS activity being performed, as well as other sitespecific conditions, will affect the availa bility of risk management products: In the context of CCS, different risks are likely to present themselves at different stages during the facil ity's life-cycle. resulting in a range of consequences the financial materiality of which will depend on the site-specific characteristics and location of each CCS project. For these reasons, different phases of the CCS process will warrant different financial (risk) management mechanisms." [FN12] Chiara Trabucchi and Lindene Patton, Storing Carbon: Options for Liability Risk Management, Financial Responsibility, B N A Daily Environment Report at p. 3 (Sept. 3,2008). Some risks will be more easily addressed by the market than others. Risks in the generation and carbon capture phase are manageable under standard mechanisms such as bonds and insurance, or are reta ined by the operator. The same is true for risks during the transportation phase.[FN13] However, the long-term storage phase presents a set of ri sks the duration of which is beyond the scope of the market. The market will not take on li abilities beyond a defined amount for a defined period. Granger Morgan of Carneg ie Mellon University's CCS Regulatory Project said, "[t]hey don't know how to write a policy that goes on forever." [FN14] It is not a matter of knowing how- it is a matter of not being willing to provide risk manageme nt for such duration. [FN13] Id. at 9. [FN14] Evan Lehmann, Wanted: 1,000 Year In surance Policy, ClimateWire, Aug. 19,

292008, http://www.eenews.net/clim atewire/2008/O8ll9ll/. Underwriters look to a variety of factor s in determining whether to offer a risk management product, what its featur es and conditions will be, and how to price it:
An underwriter will look to the fundamentals of the technology itself when undertaking risk analysis. Techni cal specialists are assigned (such as engineers, geologists, chemists or the like) to develop an understanding of the technology's functionality and its potential failure points. The underwriter will ask for testing and performance data, including the conditions of performance - especially scale. In the area of technology, scalability presents substantial risk for many reasons, including - but not limited to - basic theory extensions, specific chemical or physical behavior al changes associated with volume or environmental factors (such as te mperature or humidity) and supplychain risks, to name a few.[FN15] Many of these issues are key considerati ons in evaluating CCS risks. As noted above, few risk management companies may undertake to develop this information. [FN15] Lindene Patton, Beyond Rising Sea Le vels, THE EUROPEAN BUSINESS REVIEW (Mar./Apr. 2008). Individual Response: EPA is developing guidance on financ ial responsibility for Class VI wells. The guidance will include a discussion on howbest to estimate costs to assist GS well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates of the costs associated with various GS activities. EPA will also discuss how best to evaluate the appr opriateness of single and multiple bonding and phased release of bonds in the guidance. This guidance will be available on EPA's website at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm. The final rule provides owners or operators the option to use separate fi nancial responsibility instruments for different GS activities and projec t phases. However, owners or operators must demonstrate adequate financial responsibility for all required activities with their permit application, per §146.82(a)(14). In addition, on an annual basis, the owner or operator must adjust the cost estimate for inflat ion, increase or decrease the valu e of the financial instrument to match the cost estimate, and provide any updated information relate d to their financial responsibility instrument(s), or at any other time deemed appropriate by the Director. These annual reviews provide mechanisms for revising cost estimates up or down to account for changes in the project, includi ng the execution of environmental obligations as phases of a GS project are completed. EPA clarifies that SDWA does not contain any provisions addressing liability. However, consistent with the policy of the UIC program, th e financial responsibility provisions provided in the GS rule are intended to ensure the owner or operator will be liable for remediating or

30correcting any endangerment of USDWs via their demonstrated financial instrument up through site closure. See the final rule and preamble fo r further discussion of EPA's final approach to financial responsibility for Class VI wells. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility for Class VI wells. As described above, EPA anticipates that the availability of a variety of financial responsibility providers and third-party GS financial instrume nts will grow in response to demand. EPA adds that other aspects of CCS, e.g., capture and tran sport of CO2, are outside the scope of the GS rule.

Letter ID: 0178 Comment ID: 23825 Letter Lines: 618 to 720
Comment Code: 1600 1.3 Risk Associated with CO2 GS Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements
Comment: C. WHAT MARKET PARTICIPANTS SAY ABOUT RISK The framework for approaching the comme rcial risk in the development and deployment of coal-based projects withCCS is demonstrated by the following chart: For Development of Coal Based Charts w ith CCS Approach to Commercial Risk Framework [Please see Comment Pdf for Graphic, pg. 20] The CCS Alliance has evaluated technical, market, and policy risks associated with CCS deployment. On behalf of the CCS Alliance, Andrew Paterson of Econergy International interviewed dozens of mark et participants earlier this year, including project developers , utilities, technology vendors, risk managers, and financial providers to assess which risks were considered most likely to occur, and which, if they occurred, would be cons idered to have the greatest impact to the project. The results can be viewed graphically in a Cartesian coordinate analysis, as follows: Which Risks Matter? Which Will the Market Handle? Probability vs. Impact [Please see Comment Pdf for Graphic, pg. 21] The CCS Alliance analysis confirms that mark et participants concur with the view of the Intergovernmental Panel on Climat e Change ("IPCC") that physical risks such as an operating accident or geol ogic sequestration site failure are low probability, high impact risks.[FN16] However, they view as higher probability the risk of policy failure. [FNl6] IPCC, Special Report on Carbon Dioxi de Capture and Storage (2005). IPCC

31report states that there is only a one percent chance th at CO2 would escape into the atmosphere in 100 years. In the CCS Alliance Risk Study, the highe st rated risks for companies and investors considering investment in pr ojects with CCS were focused on: - Higher capital costs for capture, co mpression, transport, injection and storage. - Uncertainty about the extent and timi ng of legislation and regulations for carbon emission constraints - in other wo rds, a regulatory basis for pursuing CCS at all.
- Unclear rules at the federal and state level for CCS injection (which the UIC Proposed Rule is seeking to address), cr eating some uncertainty about specific liabilities. - Lack of clarity about long-term ultimate liability for CO2 leakage after injection and storage for some commercia lly relevant time period (e.g., 10 to 30 years). The Proposed Rule also s eeks to address this issue. - Electricity (or fuel) prices - in the regional market or se t by state utility commissions - which are too low to cover costs for CCS. Some mechanisms, as either subsidies or for risk transfer, exist to address these issues, but as depicted in the tabl e below, they are concentrated in the area of either reducing capital costs and other CCS related expenses, or in dealing with electricity rates and adjusti ng revenues in some manner. Subsidies to cover higher costs include: federal grants for new facilities, tax credits, and state grants. Other mechanisms, such as a federal loan guarantee (Section 1703 of EPAct 2005) or rate-basing a plant wi th CCS, remove substantial risk for capital recovery by providi ng alternative recovery or prevention of default. Mechanisms (vs. Capital Risks) -- [Pl ease see Comment Pdf for Graphic, pg. 23] Because substantial exposure to some critical risks remains, additional mechanisms and regulatory clarification are needed to garner the scale of investment and capital recovery needed for commercial entities to deploy major facilities with CCS. As summarized in th e table above, clarifying injection and transport rules clearly help, and can be coordinated with pr ivate insurance, trust funds or bonding, and state revolving funds. Additionally, some clarity on carbon emission regulations would eventuallyenhance the value of assets with CCS, and help attract capital for constr uction in the first place. Without capital investment, no CCS will be implemented because it is an inherently capital-intensive activity primarily involvi ng facilities costing more than $1 billion.

32But, there is no private instrument th at can bear "indefinite, long-term liability" for leakage from CCS sites b ecause commercial enterprise carries a finite horizon for investment. The EP A UIC program does wield a regulatory incentive, though, in negotiating or retain ing some flexibility on the point (e.g., 10 years versus 50 year s) at which liability fo r long-term leakage is assumed by the federal ho lder after injection. Results of the CCS Alliance Risk Study are summarized in the following chart. Note that in addition to the concern no ted earlier about stat e CCS regulations and liability policies, one of the issues scoring the highest risk factor is that EPA regulations on underground injec tion of CO2 and liability fail to offer clarity for financing. Lack of clarity c ould prove to be a "showstopper." EPA should do its utmost to use its statutory authority to reduce this risk through this rulemaking. Far Deployment of Coal-based Projects wi th CCS Risk Study: Technical, Policy, Market Risks -- [Please see Comment Pdf for Graphic, pg. 24] This information is buttressed by the recently published findings of the Government Accountability Office ("GAO" ) which, in part, concludes that regulatory and legal uncertainties, including questions about liability concerning CO2 leakage and ownershi p, are primary barriers to CCS deployment.[FN17] [FN17] GOVERNMENT ACCOUNTABILITY OFFICE. GAO-OX-1080, CLIMATE CHANGE: FEDERAL. ACTIONS WILL GREATLY AFFECT THE VIABILITY OF CARBON CAPTURE AND STORAGE AS A KEY MITIGATION OPTION (2008). Individual Response: EPA acknowledges the comment on market risk. This comment is outside the scope of the UIC Program’s authority under the GS rulemaking. However, EPA clarifies that the final rule, at §146.85, provides more detailed requirements on financial responsibility for risks associated with injection.

Letter ID: 0178 Comment ID: 23826 Letter Lines: 722 to 785
Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements
Comment: D. PRINCIPLES FOR A RISK MANAGEMENT REGIME FOR CCS Recognizing that it must actwithin the confines of its authority under the SDWA, and with the goal in mind of prot ecting USDWs, EPA should consider the following principles in constructing a financial assurance program.

33One means of encouraging adequate financ ial assurance is for regulators to (1) require site operators to provide accurate, comprehensive and current information on costs for closure, post-clo sure and corrective action activities; and (2) ensure that stakeholders have the means to verify those estimates. Moreover, the Alliance seeks to remind EPA that no type of financial assurance instrument can meet regulatory demands fo r an unrealistically long coverage time period that extends beyond the willingne ss of capital markets to accept covered risks for such periods. With these c oncepts in mind, regulations can be developed to ensure that funds will be readily available, and in the amount necessary, to cover costs associated with environmental obligations in the event that owner/operators of underground injec tion sites are unable to meet their financial responsibilities. 1. Clear, Reasonable, and Limited Re gulatory and Liability Structure EPA should use its discretion, to the extentpracticable, to es tablish a single, clear, and reasonable regulatory structure. CCS devel opers will be willing to abide by reasonable rules that protect hum an health and the environment, but society should not bear enhanced costs resulting from requirements that do not contribute to health and environmental protection. Nor do developers and risk managers want to face liability via mu ltiple State and federal statutory and common law pathways, with the possibili ty of unnecessarily expensive and contentious remedies. EPA should use its discretion, to the extent practicable, to provide a single, clear, reasonable li ability regime. As these goals likely will require some legislative action, EPA also should educate Congress on the need for regulatory and liability re gimes with these characteristics. 2. Allow a Broad Array of Financial Assurance Instruments Since private market financial assurance may be scarce for some CCS phases, EPA should be flexible in the type of financ ial assurance instruments it authorizes and needs to encourage the development of financial assurance offerings for CCS. The Proposed Rule discusses four financial assurance/risk management instruments and requests comment on others. Generally, the CCS Alliance believes policy should foster a broad array of means whereby a regulated entity can satisfy financial assurance. Bothregulators and site owner/operators will be nefit from broad availabili ty of an innovation in offering different types of financial assurance instruments. Increased competition may reduce the cost of obtaining these assurances as much as market conditions will permit. Each instrument has specific characteristics and may play a different role in addressing CCS risks. It should be noted that in difficult economic environments (e.g., cont ractions of availa ble capital in the market), the capital markets may make less money available for new types of projects, especially if th e risk profile is unclear, which could mean that arranging financial assurance for CCS may be difficult in the near term.

34One issue that applies to a variety of financial assurance instruments is the creditworthiness of the issuer. While EP A should seek satisfaction that the issuer is on sound financial footi ng, it should avoid unduly restrictive standards, or standards beyond the control of the issuer. For example, Bureau of Land Management regulations require that insurance provi ders offering financial assurance "must have an A.M. Best rating of 'superior' or an equivalent rating from a nationally recognized insurance rating service."[FN18] Such standards may dramatically contract the pool of available issuers, especially during difficult economic times. Creditworthiness standards should consider both ability to pay and the availability of cost-effective financial assurance. [FN18] 43 CFR 3809.555(f). Individual Response: EPA believes that all of the requirement s for owners or operators of Class VI wells, including the financial responsibility requirements, are for the purpose of protecting human health and the environment as it pertains to protection of USDWs. Furthermore, the final rule addresses comments concerns regarding the need to provide a financial assurance program while working within the confines of the SDWA. As described above, EPA is working to create a nationally consistent financial responsibility regime within its authority while providing permitting authorities an appropriate level of flexibility. However, under current SDWA provisi ons, EPA does not have authority to transfer liability from one entity to another. Under §146.85 provides the owner or operator the op tion to demonstrate fi nancial responsibility by using a broad array of financial instrument s. Furthermore, the owner or operator must maintain financial responsibility and resource s until approved site closure while also providing detailed up to date written estimates of the cost of performing corrective action, plugging the injection wells, PISC and site closure, and emergency and remedial response. Furthermore, EPA’s financial responsibility guidance (see below) will provide recommendations for generating such cost estimates. EPA also agrees that stakeholders should be able to verify such estimates. As described above, EPA anticipates that the availability of a variety of financial responsibility providers and third- party GS financial instruments will grow in response to GS technology demand.

Letter ID: 0178 Comment ID: 23827 Letter Lines: 787 to 843
Comment Code: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)
Comment: a. Trust Funds The Alliance supports the concept of trus t funds as reserves to address CCS liabilities for long-term st ewardship. Properly structur ed, trust funds can be

35valuable tools in this area.
A valuable feature of a trust fund is th at a large reserve may be accumulated gradually. Costs can be spread over time. EPA has focused on the obverse of this issue - that in early years, a trust fund may not be sufficiently capitalized to address all the risks that may arise. EP A has proposed that trust funds have a three-year pay-in period. EPA should not impose such limitations, for two reasons. First, while it is possible thatan incident may occur that would result in a demand on the fund in early years, many consider that risks are likely to be lower in the early phas es of injection. Second, and more importantly, given that the private risk management market appears unlikely to be able to address all risks, EPA shoul d encourage development of mechanisms that can address any portion of the risk. A three-year pay-in period arbitrarily restricts a potentially valuable tool with a heavy early payment burden. EPA should allow flexibility in trust fund arrangements, and can link the credit it gives to financial assurance through trust funds to the amount available in the fund. Long-term, EPA and other policy makers shoul d consider the possibility that too large an amount might be accumulated in tr ust funds, relative to the risks they are designed to cover. A recently released assessment of a $1 per ton tipping fee for CO2 sequestration, at levels re quired under WRE450 and WRE550 climate policies, would accumulate up to $1.5 trillion by the time the first 100 CCS facilities reach the end of their usefullives.[FNl9] Such misplaced wealth storage is not economically sound. Furthermor e, in light of the history of trust funds managed by the federal government , it would provide an unfortunate temptation for policy makers withother fiscal priorities. [FN19] James J. Dooley, Chiara Trabucch i, and Lindene Patton, Tipping Fees Can't Save us from the Tipping Point: The Need to Create Rational Approaches to Risk Management that Motivate Geologic CO2 St orage Best Pmctices . ScienceDirect, GHGT-9, November, 2008. Observers have suggested fees to capita lize CCS trust funds with a number of different structures. The type of mechan ism or amount of the fee should not be of concern to the EPA, but should be addr essed by the policy makers establishing the trust. It may be that multiple trust funds could be applicable for portions of the risk associated with a CCS facility or facilities. Both private and government-run trust funds may arise. EPA should ensure sound management of trust funds, but does not need to limit parentage. Again, innovation should be and will need to be encouraged. The trusts could be privately administered in compliance withstate insurance regulations; in this way, the state has final governance authority by charter status, while private industry can bring fiduciary and engineeri ng analysis resources to bear which would be expensive for the states to match.

36Trust funds also could be structured to provide incentive for risk-mitigating behavior. As an example, their terms might be structured to limit eligibility to projects whose siting or operations meet superior standards. Again, EPA should encourage development of trust funds, rather th an artificially limit them. Individual Response: EPA acknowledges that there may be several possible approaches to setting pay-in periods for trust funds while stil l ensuring financial resources are available to protects USDWs from endangerment. The final rule requires that the Di rector approve the use and length of pay-in periods. Furthermore, EPA is developing guidance (available 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. Specifically, the guidance will discuss pay-inperiods and provide guidance for Directors to use in determining an appropriate pay-in period. EPA adds that owners or operators may choose from a variety of fi nancial instruments to meet their financial responsibility needs. Under SDWA, EPA has the general authority to set financial responsibility requirements for injection well owners or operators to ensure th at adequate resources are available to protect USDWs throughout the life of the GS project. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrictions of the Miscellane ous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Government into the Treasury, therefore funds would not necessarily be available for GS financial responsibility. Additionally, EPA does not have authority under SDWA to establis h a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifie s that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-le vel trust described by th e commenters that would cover large numbers of GS projects.

Letter ID: 0178 Comment ID: 23828 Letter Lines: 845 to 876
Comment Code: 5434 2.9.1.2 Need for additional instruments (seeking comment)
Comment: b. Insurance
Insurance should be authorized as a risk management tool for CCS. Insurance for CCS liability is a "specialty" product. Specialty underwriters generally are well-trained to focus on the environmenta l risks involved with each facility, and insurance provides full coverage for the financial assurance risk from policy inception forward.

37EPA appears to be approaching insuran ce guardedly, noting th at the "insurance mechanism was and still is. rarely used for the purpose of demonstrating financial assurance for injection wells. " EPA should provide guidance for the use of insurance. EPA should be careful to avoid several pr oblems that have made insurance less available and more expensive in the past. For example, regulators typically require an insurance policy to be writt en to require payment to an entity designated by the regulator, rather than to the insure d. The requirement to pay the regulator or a designated agency cr eates potential for "double payment" - both to the regulator, and as a result of state law, to the insured. EPA should address this problem by making possible cl ear designation of sole beneficiary status, and allowing parties to contract for express wa ivers by policyholders of their payment rights, where the regulator requires a differe nt beneficiary. Another problem is that regulators often prohibit cancellation of a policy if an operating permit is revoked or if the oper ator seeks bankruptcy protection, even if continued premium payments do not occur. Such a prohibition drives up the cost of insurance, "front-loads" insurance costs as insurers require up-front payments, and reduces insurers' willingness to offer policies. Since, as noted above, some risks associated with CCS will be beyond the market's willingness to bear, EPA should al low insurance to be arranged on terms that will encourage its availability. It should encourage the private risk management market to address as much risk as possible. 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. EPA is developing guidance that describes th e types of financial instruments, including insurance, which owners or operators can use to meet financial responsibility requirements for GS wells and will take the commenter's suggesti on into consideration. The guidance will discuss the strengths and weaknesses of various instrume nts, and EPA anticipates that some of the strengths of insurance describe d by the commenter will be included in this discussion. In developing the guidance, EPA will also consider these commenters' concerns about creating certainty with regard to benefi ciary designations as it develops the guidance. This guidance will be available on EPA's website at

38http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm. EPA anticipates that as GS is de ployed, particularly if there are early successful uses of these instruments, owners or operators will demand an d carriers will offer third-party GS financial instruments, including insurance, in greater numbers. EPA has expanded and clarified the financial res ponsibility requirements in the final rule to address commenters' requests for additional certainty. For example, regarding cancellation of policies, the final GS rule contains new languageat §146.85(a)(4)(i)(C) that an owner or operator must provide that their financia l mechanism may not cancel, terminate or fail to renew except for failure to pay such financial instrument. If there is a failure to pay the financial instrument, the financial institution may elect to cancel, terminate, or fail to renew the instrument by sending notice by certified mail to the owner or operator and the Director . The cancellation must not be final for 120 days after receipt of cancellation no tice, the owner or operator must provide an alternate financial responsibility demonstration within 60 days of notice of cancellation, and if an alternate financial responsibility demonstration is not acceptabl e (or possible), any funds from the instrument being cancelled should be released within 60 days of notific ation by the Director.

Letter ID: 0178 Comment ID: 23829 Letter Lines: 878 to 923
Comment Code: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)
Comment: c. Surety Bonds
Bonds are a traditional financial assurance mechanism and have been widely used. They ensure the performance of the bond hol der on behalf of a third party, such as the state or the federal government. Unfortunately, the surety market has contracted in other environmental areas." Some of the conditions that le d to the contraction elsewhere are relevant to CCS. For example, some agenci es have focused on very long-term risks that might arise after si te care responsibility has ended." The result can be bond amount increases by two orders of magnitude." Further exacerbating the problem, at least one court has found that EPA's financial assurance requirements for bonds does not limit paym ent to the amount of the bond, should the bond issuer choose to perform the cl eanup rather than pay the bond.[FN23] Thus. for example, a bond issuer could pay $100 million for cleanup, even if the bond amount was $10 million. [FN20]"Mining and the Vanishing Surety Bond Market," Lisa A. Kirschner and Edward B. Grandy, American Bar Association, Natural Resources & Environment, Winter 2003, Vol. 17, Number 3. [FN21] See, e.g. , Mont . Code Ann. 382-4-338.

39[FN22] Jim Carlton, "Mining Firms in U.S. Face Crisis Over Cleanups," Asian Wall Street Journal. July 34. 2002. [FN23] People ex rel. Ryan v. Envtl. Waste Res. Inc., 782 N.E. 2d 291, 296 (Ill. App. 2003). Surety industry representatives indicate that they are hesitant to underwrite any obligation that may extend even beyond five years. Presently, for example, surety bonds for mining-related obligations are virtua lly unavailable at any price. A 2002 National Mining Associati on report on surety bonds for mining operations noted "Five of the top 10 sureties in the 1990s have either merged or left the business. Others have announced their intent to withdraw, and several longstanding market participants have effectively w ithdrawn by curtailing their exposures so substantially.[FN24] [FN24] Interim Report, National Mining Association Surety Bond Working Group, 2002, p. 4.
As with other financial assurance mechanis ms, EPA should take steps to encourage the availability of surety bonding. Such steps should include clarifying in EPA's financial assurance regulations fo r surety bonds the bonding period, and clarifying that sureties may offer pay or perform instruments that will remain subject to the bonding limit, even if the surety chooses the performance option. Individual Response: EPA acknowledges that there are concer ns regarding the feasibility of bonds. Therefore, EPA notes that the GS regulation provides flexib ility for owners or operators to choose from a variety of financial instrume nts to meet their financial responsibility obligations. EPA anticipates that the availabil ity of third-party GS financial instruments, including surety bonds, will grow in response to demand for such instruments by Class VI well owners or operators or based on succe ssful uses of these instruments. EPA also acknowledges the commenters' concern regarding potential in solvency of surety companies, but notes that such unpredictable ev ents are outside of the Agency's control or authority. However, EPA requires under §146.85 th at a Director may only approve instruments determined to be sufficient to address endangerment of USDWs and has the discretion to disapprove of instruments that they determine are not sufficient. Furthermore, owners or operators or their guarantor must notify the Di rector no later than 10 days after filing for bankruptcy. Finally, regarding past cases wher e the courts have ordered bond i ssuers to pay the full cost of the cleanup rather than spend just the amount of the bond, EPA notes that this problem may be best remedied by requiring accurate cost estimates , which must be updated on an annual basis. The final rule requires annual updating of cost estimates for inflation and requires updates when the AoR and corrective action plan, well plugging plan, pos t-injection site care and site closure plan, and emergency and remedial response planare amended, as specif ied in §146.85(c)(2).

40EPA adds that it is developing guidance that de scribes the types of financial instruments that owners or operators can use to meet financial responsibility requirements for Class VI wells. The guidance is available on EPA's website at http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm.

Letter ID: 0178 Comment ID: 23830 Letter Lines: 925 to 930
Comment Code: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)
Comment: d. Corporate Financial Strength and Corporate Guarantees EPA proposes to authorize the use of co rporate demonstration of financial strength and corporate guarantees as acceptable forms of financial assurance. In keeping with our recommendation that a broad array of financial assurance mechanisms be authorized, we support this proposal. 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. An operator or operator that is not able to m eet the corporate financial test criteria may arrange a corporate guarantee by dem onstrating that its corporate parent meets the financial requirements on its behalf. Furthermore, EPA is developing guidance to assistDirectors in evaluating the appropriateness of corporate guarantees in specific circumstances. The guidance will be available on EPA's website at http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm.

Letter ID: 0178 Comment ID: 23831 Letter Lines: 932 to 964
Comment Code: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)
Comment: e. Letters of Credit Letters of credit ("LoCs")are a standard form of financial a ssurance and should be authorized. A great advantage of LoCs in commercial practice is that as long as a LoC is valid, presentation of the proper documentation by the LoC beneficiary entitles

41it to payment. Their ease of use is a great benefit. However, LoCs can be expensive. Issui ng banks may require a site owner or operator to provide secured collateral or deposits before agreeing to issue a LoC,[FN25] a possibility ma de all the more likely by th e extended time window of liability in the environmental context (and in fact referred to by EPA in promulgating some of its FA regulations). [FN26] Such a commitment of capital may be difficult in the context of an innov ative project, such as a facility deploying CCS. EPA should take care not to assume heavy reliance on LoCs to meet financial assurance requirements, again poi nting to the need to provide for a broad set of financial as surance instruments. [FN25] James William Boyd, "Financial Responsibility for Environmental Obligations: Are Bonding and Assurance Rules Fulfilling Their Promise?,' Resources for the Future Working Paper No. 01-42. August 2001, at 24. [FN26] See 53 Fed. Reg. 43,322, at 43,353, Oct. 26, 1988. Also, EPA should consider in its guidance for LoCs addressing the potential for differences in the coverage period detail ed in the letter of credit and the letter's expiration date. LoCs ordinarilyare issued for a short period, perhaps a year, with an annual renewal date. If the renewal mere ly extends the expiration date of the letter, giving additional time to present requests on the letter, without altering the period during which incidents cove red by the letter would have to occur, gaps in coverage may arise. This issue could be addressed in guidance. Individual Response: EPA recognizes that, for some projects, the use of letters of credit may require owners or operators to provide high amounts of collateral. For this reason the final GS rule provides owners or operators the flexibilityto choose from a variety of instruments to meet their financial responsibility requirements, thus a llowing them to select instruments that are most appropriate to their needs while st ill ensuring protecting of USDWs. Furthermore, EPA is developing guidance that de scribes the types of fi nancial instruments, including letters of credit, whic h owners or operators can use to meet financial responsibility requirements for Class VI wells. The gui dance (available on EPA's website at http://water.epa.gov/type/groundwat er/uic/wells_sequestration.cfm) will include considerations for Directors regarding how best to evaluate the appropriate ness of a specific financial responsibility instrument for a specific project. EPA will also consider the commenter's concerns regarding how to clarify confusion about the expi ration dates and the coverage period for letters of credit as it develops the guidance. EPA also acknowledges the commenter's concern regarding potential in solvency of surety companies, but notes that such unpredictable ev ents are outside of the Agency's control or authority. However, EPA requires under §146.85 th at a Director may only approve instruments determined to be sufficient to address endangerment of USDWs and has the discretion to

42disapprove of instruments that they determine are not sufficient. Furthermore, owners or operators or their guarantor must notify the Di rector no later than 10 days after filing for bankruptcy.

Letter ID: 0178 Comment ID: 23832 Letter Lines: 966 to 995
Comment Code: 5460 2.9.2 Comments on transfer of lia bility for long-term care
Comment: 3. A Government Backstop Is Necessary As the Proposed Rule states, EPA does not have the authority under the SDWA to establish a government backstop mechanism. Nevertheless, it is clear that such a mechanism is needed. A government backstop should be in place to the extent the private market is not. The CCS Alliance believes that the government will need to step in beyond an owner and operator liability limit, as has been the case in many other areas in which the government has sought to encour age private action to achieve a public good. The private sector's capacity to managerisks may be substantial, but will have limits. Government will need to accept responsibility beyond what the private market can manage, which is likely at a minimum to include the time after which operations cease and the pr oject no longer produces revenues that would enable a private entity to cover li abilities. Because the goal in most cases is likely to be long-term storage of CO2, long beyond the typical lifespan of private entities, government should be prepared to assume liability after injection operations cease and a 30-year or shorter (as described above) closure period has elapsed. 4. Encourage Risk Management Through the Private Sector Notwithstanding that CCS will require some level of government risk management, particularly for long-term liability. EP A's financial assurance regime should encourage the role of private market risk management to be as large as possible. 5. Encourage Economically Effi cient Risk Management Financial assurance mechanisms should be cost effective. Factors in cost will include the risk estimate, the type of instrument, and the duration of the instrument. Each cost in the CCS chain wi ll have an effect on whether CCS is deployed. The EPA should carefully consider the potential costof financial assurance mechanisms when designing a Class VI financial assurance regime. Individual Response: As described above, once an owner or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. EPA does not have authority to tr ansfer SDWA or other legal liab ility for Class VI wells to the

43State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Letter ID: 0178 Comment ID: 23833 Letter Lines: 998 to 1134
Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)
Comment: VII. SPECIAL FOCUS: APPLICABILITY OF CERCLA The Proposed Rule raises the question wh ether the injected CO2 stream[FN27]" will be considered a "hazardous substance" under CERCLA. [FN27] The rule uses the terms "car bon dioxide stream" and "injectate" interchangeably. EPA's proposed definiti on of these terms includes CO2 "plus incidental associated substances derived from the source materials and the capture process, and any substances added to the stream to enable or improve the injection process. This subpart does not apply to any carbon dioxide stream that meets the definition of a hazardous waste under 40 CFR Part 261." The Proposed Rule states:
While CO2 itself is not listed as a hazardous substance under CERCLA, the CO2 stream may contain other subs tances such as mercury that are hazardous substances or the constituents of the CO2 stream could react with groundwater to produce listed hazar dous substances such as sulfuric acid. Thus, whether or not there is a "hazardous substance" that may result in CERCLA liability from a sequestration facility depends entirely on the make-up of the speci fic CO2 and of the environmental media (e.g., soil, groundwater) in which it is stored. A mechanism must be in place to address li ability for releases from GS sites. However, Superfund has had a number of problems that EPA should carefully consider in the context of a regulatory regime the Agency hopes will encourage deployment of CCS. Cleanups sometimes have been delayed by decades, lawsuits can stretch for years and involve numerous part ies, and cleanups have been far too costly. EPA should use its interpretive authority to limit the applicability of Superfund and respond to releases under other authorities. Ultimately, Congress should adopt a new response and liabilitysystem recognizing the policy goals, scale, and other special features of CCS that is unburdened bythe problems of Superfund.
A. RELEVANT PROBLEMS WITH SUPERFUND Superfund imposes a strict, joint, and several liabili ty scheme upon facility owners and operators, parties who arrange for treatment, storage, transportation, or disposal of hazardous substances; and transporters of

44hazardous substances. This strict, joint, and several liability scheme, in conjunction with other featur es of Superfund, particularlywhat many consider to be inordinately high cleanup costs, frequently results in expensive and lengthy lawsuits and delayed cleanups. Superfund also has been criticized for remedies that are far more aggressive than the risks warrant.
B. SUPERFUND APPLICABILITY EPA's authority to order cleanups unde r CERCLA is triggered whenever any "hazardous substance" is released or ther e is a substantial threat of such a release into the environment. The Agency is considering whether the injectate, substances mobilized as a result of injection, or substances formed by geochemical reactions betw een the injectate and underground materials will trigger the "hazardous substance" definition. While EPA correctly notes that CO2 is notnow a hazardous substance, that may not continue to be the case given Mass achusetts v. EPA,[FN28] in which the Supreme Court ruled that CO2 is a pollutant and directed the EPA to determine whether or how it should be regulated. Sucha decision could affect whether CO2 is determined to be a hazardous substance under CERCLA. [FN28] Massachusetts v. EPA, 549 U.S. 497 (2007).
CERCLA defines a hazardous substance to include "any hazardous air pollutant listed under section 112 of the Clean Air Act . . . ."[FN29] CO2 is not on this list at present. However, Section 112 authorizes EPA to add a compound to the list if the Agency finds that emission s of the compound "may reasonably be anticipated to cause adverse effects to human health or adverse environmental effects."[FN30] If in response to Massachus etts v. EPA, EPA were to decide to regulate CO2 under Section 112, releases of CO2, even without the presence of or interaction with hazardous substa nces, would be subj ect to Superfund liability. [FN29] 42 U.S. C. $9601. [FN30] 42 U.S. C. $7411. EPA also notes that the presence of othe r materials or the injectate's reaction with other substances underground may result in it becoming a hazardous substance. These post-injection geochemicalreactions are of si gnificant concern because CO2 injectate considered non-h azardous upon injection could, over time, react with underground materi als, potentially creating a hazardous substance and triggering unintended and unanticip ated Superfund applicability. Triggering application of the "hazardous substance" definition under Superfund to CO2, either pre- or post-injection, w ill create concerns about liability that

45will not encourage CCS development and, as our research cited above suggests. likely will be an impediment to the investment and risk management needed for CCS projects.
C. FEDERALLY PERMITTED RELEASE EXEMPTION Superfund liability does not apply to a "federally pe rmitted release," pursuant to Section 107(j).[FN31] The Proposed Rule notes that parties may be able to avoid Superfund liability through this excep tion. However, this exception likely would not apply in cases wh ere injectate accidentally ha s been released from a storage site. Both EPA [FN32] and the courts [FN33] have interpreted the federally permitted release exemption to appl y to releases that are in compliance with a permit, but not to accidental re leases. It potentially may not apply where injectate remains safely within a containment zone, but beyond the area for which a permit was granted. The EPA should consider the potential for triggering Superfund liability in de termining how it writes permits, particularly in cases where th e CO2 remains safely stored. [FN31] 42 U.S.C. # 9607. [FN32] "In most circumstances, rele ases resulting from accidents and maifunctions do not qualify for the federally permitted release exemption as defined in CERCLA section 101(10)(H). Releases due to accidents and malfunctions, because they are by definiti on not anticipated, are difficult to subject to controls which limit or elim inate emissions. Congress did not intend to exempt unanticipated releases such as accidents and malfunc tions from CERCLA section 103. An accidental release not in compliance with a permit would be subject to response costs and damages clai ms under Superfund in addition ot the provisions of the SDWA and state and co mmon law." Guidance on the CERCLA Section 101(10)(H) Federally Permitted Release Defi nition for Certain Air Emissions, 67 Fed. Reg. 18899, 18903 (Apr. 17,2002). [FN33] See United States v. Iron Mo untain Mines. Inc., 812 F. Supp. 1528. 1540-41 (E.D. Cal. 1992) ("Congress considered the interplay between FWPCA and CERCLA when it enacted the latter statute, but declined to exempt municipal sewer authorities from its broad reach . . FWPCA exemption extends to industrial discharges into POTWs, indicating that Congress specifically intended for CERCLA liability to reach releases from sewers or POTWs.") Readin g Co. v. City of Philadelphia, 823 F. Supp. 1218, 1230-31 (E .D. Penn. 1993) (Toxic Substances Control Act (TSCA) compliance is insuffi cient to invoke the RCRA exemption under CERCLA); Westfarm Associat es Ltd. Partnership v. Intern ational Fabricare Inst., 1993 U.S. Dist. LEXIS 19952 (D.Md. 1993). See also Idaho v. Bunker Hill Co., 635 F. Supp. 665, 673 (D. Idaho 1986); Reporting Exemptions for Federally Permitted Releases of Hazardous Substances, 53 Fed. Reg. 27,268-81 (proposed July 19, 1988) (to be codified at 40 C.F.R. $$ 117.12, 302.3, 302.6, 355).

46If Superfund does not apply because of th e exemption, remedies may be obtained under other law. CERCLA's federally permitted release exemption states that "recovery . . . for response costs . . . resulting from a federally permitted release shall be pursuant to existing law in lieu of [CERCLA]."[FN34] [FN34] 42 U.S. C. $ 9607(j) (2006). Individual Response: CO2 itself is not listed as a hazardous substance under CERCLA however, the CO2 stream may contain a listed hazardous substance (such as mercury) or may mobilize substances in the subsurface that could react with ground water to produce listed hazardous substances (such as sulf uric acid). Whether such subs tances may result in CERCLA liability from a sequestration f acility depends entirely on the composition of the specific CO2 stream and the environmental media in which it is stored (e.g., soil or ground water). CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “federally permitted releases” (FPR) as defined in CERCLA, 42 U.S. C. 9601(10). Class VI permits will need to be carefully structured to ensure that they prevent potential releases from the well which are outside the scope of the Class VI permit. Furthermore, EPA is promulgating the GS rule under the authority of the SDWA. To the extent the comm enter is seeking interp retations of CERCLA and its related provisions, such as the definition of a federally permitted release, such interpretations are beyond the scope of this rulemaking. The UIC program Director has authority under SDWA §1423 to address potential compliance issues (e.g., potential releases that may endanger USDWs) resulting from injection violations in the unlikely event that a remedi al response is necessary. Although EPA anticipates that the need for emergency or remedial actions at GS sites wi ll be rare, the GS rule requires, at §146.94, that emergency and remedial response plans be deve loped and updated to address such events and that owners or operators demonstr ate that financial resources are set aside to implement the plans if necessary, per §146.85. EPA clarifies that, while the Administrator re serves the right to promulgate regulations designating additional substances as hazardous under §102 of CERCLA, EPA intends to avoid any potential overlap of SDWAand CERCLA authority through its comprehensive Class VI requirements. CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “federally permitted releases” (FPR) as defined in CERCLA, 42 U.S.C. 9601(10). Therefore, Class VI requirements and permits will need to be carefully structured to ensure that they do not “authorize” inappropriate releases , and would need to prevent pot ential releases from the well which are outside the scope of the Class VI permit.

Letter ID: 0178 Comment ID: 23834 Letter Lines: 1136 to 1185
Comment Code: 1640 1.3.4 CERCLA issues (seeking comment) Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements

47Comment: D. POTENTIAL EFFECT OF SUPERFUND ON CCS DEPLOYMENT The CCS Alliance conducted a Risk Study earlier this year, surveying more than 30 executives in companies involved with or considering CCS deployment.[FN35] the purpose of the Risk Study was to identify policy, technical, and market risks that could pose barriers to proceed ing with CCS projects. Respondents were asked to rate the likelihood of a policy, technical, or market factor occurring, as well as the severity of the impact to a CCS project if it did occur. The product of the likelihood and the severity of impact to the project for each surveyed issue generated a risk ranking. [FN35] Risk Study for Commer cial Deployment of CCS: F actors Affecting Financing for Early Plants, CCS Alliance (July 2008). Three of the top eight concerns identifi ed by respondents related to liability for CCS, including lack of clarity in th e applicability of federal and state liability regimes. As the following chart demonstrates, particularly results for responses to questions 17,31, and 34. executi ves are very much concerned with the risks associated with the lack of cl arity in state and federal regulations and liability regimes, as well as with liability ove r the long-term. [Please see Comment Pdf for Chart, pg. 38] Moreover, a recent GAO report emphasi zes the concern about liability: EPA's 2007 UIC workshop, attended by more than 200 stakeholders, revealed liability associated with un intended migration of injected CO2 to be a critical concern. Similarl y, 19 of the 20 stakeholders we interviewed told us that liability re lated to CO2 storage was a large or very large barrier to deployment of CCS at commercial scale, with some noting that liability concerns have already negatively impacted companies' ability to initiate CCS projects. For example. two stakeholders reported that these conc erns have already made it difficult to obtain insurance for CCS projects. [FN36] [FN36] U.S. GAO, GAO-08-1080. FEDERAL ACTIONS WlLL GREATLY AFFECT THE VIABILITY OF CARBON CAPTURE AND STORAGE AS A KEY MITIGATION OPTION 25 (2008). Although we currently are aware of no report specifically stati ng that liability under Superfund is the principal liabi lity concern among CCS proponents, it clearly is a significant issue that ha s been raised rep eatedly, including through EPA advisory processes and the imposition of which would negatively affect future investment in CCS technologies.[FN37] [FN37] EPA's Advanced Coal Technology Work Group Final Report recommends that

48EPA's UIC rulemaking proposal should "include a thorough discussion of. . liability implications unde r other statutes (CERCLA, RCRA, etc.) and potential linkages and impacts (or lack thereof) fo r CCS projects." U.S. ENVIRONMEKTAL PROTECTION AGENCY, FINAL REPORT: ADVANCED COAL TECHNOLOGY WORK GROUP REPORT 5 (Jan. 29,2008). Individual Response: As described above, EPA is working to create a nationally consistent financial responsibility regime within its authority while providing permitting authorities and owners or operators an appropriate level of flexibility. EPA believes that the general authorities provided under SDWA include the authority to set federal minimum requirements for financial responsibility to ensure that re sources are available to protec t USDWs throughout the life of the GS project. However, this auth ority does not extend to release owners or operators from longterm responsibility of other environmental stat utes, such as CERCLA, for potential impacts to USDWs after the PISC period has ended, or for the potential ec onomic costs associated with activities with impacts unrelated to USDW s (e.g., risks to air, or ecosystems). Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SD WA after site closure if there is unanticipated migration towards or into a US DW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues. Furthermore, the Agency clarifies that, after s ite closure, an owner or operator may, depending on the fact scenario, remain liable under tortand other remedies, or under other Statutes including, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. See the final rule and preamble for further discu ssion of final approach to financial responsibility for GS projects. As described above, whether the presence of hazar dous substances in CO2 streams may result in CERCLA liability from a seque stration facility depends enti rely on the composition of the specific CO2 stream and the environmental medi a in which it is stored (e.g., soil or ground water). CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “federally permitted releases” (FPR) as defined in CERCLA, 42 U.S.C. 9601(10). Class VI permits will need to be carefully structured to ensure that they prevent potential releases from the well which are outside the scope of the Class VI permit. Furthermore, EPA is promulgating the GS rule un der the authority of th e SDWA. To the extent the commenter is seeking interpretations of CE RCLA and its related pr ovisions, such as the definition of a federally permitted release, such interpretations are beyond the scope of this rulemaking.

49Letter ID: 0178 Comment ID: 23835 Letter Lines: 1188 to 1217
Comment Code: 1630 1.3.3 RCRA/hazardous waste i ssues (seeking comment)
Comment: VIII. SPECIAL FOCUS: APPLICABILITY OF RCRA The Proposed Rule raises the question whether injected CO2 streams will be considered "hazardous waste" under RCRA. Rather than apply on top of the SDWA another environmental statute that wa s not designed with the thought of encouraging development and deployment of technology to address climate change, which is likely to discourage CCS deployment, CCS should be subject to a single. clear regulatory structure sh aped by consideration of climate change objectives. Designating the CO2 stream as a hazardous waste also will result in it being considered a "hazardous substance" under CERCLA, the problems with which are discussed above. The Proposed Rule states: Because the types of impurities and their concentrations in the CO2 stream are likely to vary by facility, coal composition, plant operating conditions, and pollution removal te chnologies, EPA cannot make a categorical determination as to whet her injected CO2 is hazardous under RCRA. Owners and operators will need to characterize their CO2 stream as part of their permit application to determine if the injectate is considered hazardous as defined in 40 CFR Part 261. If the injectate is considered hazardous under RCRA, then the more stringent UIC Class I requirements for injection of hazardous waste apply.[FN38] [FN38] Proposed Rule, 73 Fed Reg. 43503. Where EPA faces an interpretive questi on about the applicability of RCRA, it should avoid applying the statute. As noted above, the CCS Alliance believes that in place of existing, ill-suited regulatory regime s, a new single, clear regulatory structure should apply to protect the environment. Individual Response: EPA agrees that any requirements applicable to CO2 injectate should be clearly identified to the public and to th e regulated community. As mentioned, making legislation changes is outside the scope of the GS rulemaking. As discussed above, EPA received many comments regarding the applicability of the RCRA regulations and statute to CO2 streams that are geologically seque stered under the final Class VI UIC well requirements. As a result, EPA has deci ded to initiate a separate 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 particular to RCRA in the context

50of 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 period for that rule.

Letter ID: 0178 Comment ID: 23836 Letter Lines: 1219 to 1268
Comment Code: 1630 1.3.3 RCRA/hazardous waste i ssues (seeking comment)
Comment: A. BURDENS AND BA RRIERS OF RCRA The UIC regulatory structure proposed by EPA to minimize releases not only protects groundwater, but by extensi on protects human health and the environment. RCRA's requirements are extens ive, expensive, and ill-suited to activities to sequester large volumes of lo w-toxicity materials, especially when such activities will be regulated under the UIC program. EPA itself has acknowledged the burden of R CRA and the fact that many of its requirements are poorly suited to at least some of the activities to which they apply. EPA initiated a rulemaking in 2002 to reduce the burdens associated with the RCRA hazardous waste program.[FN39] The Agency noted, "[t]he existing hazardous waste regulations require the s ubmittal of 334 notifications, reports, certifications, demonstrations, and plan s from generators and TSDFs to demonstrate compliance with the RCRA regul ations."[FN40] Reporting requirements are just one example of RCRA's burdens. [FN39] Resource Conservation and RecoveryAct Burden Reduction Initiative. 67 Fed. Reg. 2518 (proposed Jan. 17, 2002); see al so RCRA Burden In itiative; Final Rule, 71 Fed. Reg. 16,862 (Apr. 4,2006). [FN40] RCRA Burden Reduction Initiative: Notice of Data Availability, 68 Fed. Reg. 61,662, 61,644 (Oct. 29, 2003). Given that CCS is a technology that the Agen cy and a broad array of others want to encourage, with this rule more thanmost others, EPA must consider very carefully whether the emission streams i nvolved truly warrant hazardous waste regulation. Imposing extensive. burdensom e RCRA regulations likely to have little benefit for human health and th e environment may result in larger atmospheric releases of CO2 if this "k ey" technology is not as widely deployed. Class I wells under the UIC program are inte nded, in part, to regulate hazardous waste disposal wells for the injection of hazardous waste, as defined by RCRA. If EPA were to determine that CO2 is a hazardous waste under RCRA, CO2 injection would be required to meet the more rigor ous Class I well requirements, rather than the proposed Class VI requirement s. Indeed, the construction, permitting, operating, monitoring, and post-site clos ure requirements are much more burdensome for Class I hazardous wells thanfor the other types of injection

51wells. For instance, Class I wells have a requirement that there be no migration for 10,000 years. Such strict requirements may be appropriate to protect USDWs and the environment from certain hazardous wastes, but such requirements were not established with CO2 injectate in mind. Furthermore, if a facility were required to obtain a Class I UIC hazardous waste injection permit, all other waste management units at the facility couId be subject to the full extent of RCRA's S ubtitle C corrective action program, which is an extremely costly and administrativ ely complex program. Determining that CO2 constitutes a hazardous waste and subj ecting CO2 injection and storage to the burdensome Class I well requirements would not promote unde rground injection and storage of CO2. Individual Response: The Agency acknowledges the comme nter’s concerns over potential barriers to CCS deployment, and wi ll consider these comments as it examines the issue of RCRA applicability to CO2 streams bei ng geologically sequestered in a separate Agency action related to RCRA, already described above. The Agency recommends that the commenter read that proposed rule when it is published. The Agencynotes that commenters who wish to submit comments on the RCRA proposal will need to do so during the comment pe riod for that rule.

Letter ID: 0178 Comment ID: 23837 Letter Lines: 1270 to 1297
Comment Code: 1630 1.3.3 RCRA/hazardous waste i ssues (seeking comment)
Comment: B. CONTINGENT MANAGEMENT Materials already subject to another regulatory regime that will ensure environmentally protective management of wastes can be excluded from RCRA regulation under "contingent management," a practice EPA has applied in other contexts. In this Proposed Rule, EPA is proposing a framework it believes is appropriate to ensure environmentally protective mana gement of injected CO2. The Agency makes clear that the extent of the UI C program limits the purpose of EPA's proposal to protection of USDW s; however, the Agency a dds that it considers the risk of -'chronic and acute health effect s from airborne exposure resulting from CO2 injection activities (even in the case of leakage or accidental e xposure) is minimal."[FN41] [FN41] Proposed Rule, 73 Fed. Re g. at pp. 43,497-98 (emphasis added). EPA has applied the contingent manageme nt practice in cases where potential mismanagement scenarios are addressed under other regulation. With respect to the Proposed Rule, EPA has proposed measur es that would limit potential effects on human health and the environment by ensuring that the injectate should remain contained within the injection zone. The c ontingent management practice has been

52upheld, with the court holdi ng that where other appropriate management programs are in place. hazardous waste classi fication and regulation are not required.[FN42] [FN42] See. e.g., Military Toxics Pr oject v. EPA, 146 F. 36 948 (D.C. Cir. 1998). Individual Response: As described above, EPA has decide d to initiate a separate proposed rulemaking specifically to examine the issue of RCRA applicability to CO2 streams being geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2 GS in Class VI wells. The Agency recommends that the commenter read that proposed rule when it is published. The Agency notes that commenters who wish to submit comments on the RCRA proposal will need to do so during the comment period for that rule.

Letter ID: 0178 Comment ID: 23838 Letter Lines: 1299 to 1304
Comment Code: 1630 1.3.3 RCRA/hazardous waste i ssues (seeking comment)
Comment: C. CONDITIONAL EXCLUSION If EPA considers that geologic sequestration of CO2 constitutes waste disposal that cannot be subject to exclusion from RCRA regulation un der a contingent management theory, it should establish a conditional exclusion from RCRA regulation for geologic sequestration of CO2 injectate. Individual Response: EPA received many comments regardi ng the applicability of the RCRA regulations and statute to CO2 streams that are geologically seque stered under the final Class VI UIC well requirements. As a result, EPA has deci ded to initiate a separate 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 particular to RCRA in the context of that separate rulemaking, and recommends that the commenter read that proposed rule when it is published. The Agency notes that 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: 0178 Comment ID: 23839 Letter Lines: 1310 to 1328
Comment Code: 4710 2.7.1 Proposed submissions required for permit applications (seeking comment) Comment Code: 5100 2.8.1 Injection well plugging activ ities (seeking comment) (40 CFR 146.92)

53Comment: A. WELL PLUGGING PLAN EPA's Proposed Rule would require owners and operators to develop a well plugging plan to be approved by the Director as part of each permit application. Such a plan would include: (1) a de termination of bottom-hole reservoir pressure; (2) the identification of type and numbers of plugs to be used; (3) the placement of each plug; (4) testing methods to ensure mechanical integrity testing ("MIT"); (5) the method of plug placement; and (6) the type, grade and quantity of material to be used in pl ugging. By not mandating specific types, materials, or testing methods, EPA is gi ving applicants broa d flexibility to accommodate the varying types of GS proj ects contemplated by this rulemaking. The CCS Alliance agrees with this approac h. Such flexibility also accounts for the fact that supercritical CO2 has differ ent properties than current injectants under the UIC program and, therefore. may require different plugging methods and materials. For instance, cement plugs can degrade over time from the build up of carbonic acid, which forms when CO2 is in jected in subsurface formations containing brine. However. well integrity should be consideredthe function of well materials collectively in maintain ing a fluid barrier (as opposed to individual components susceptibility, particularly from laboratory tests). Individual Response: EPA agrees with commenters that a fl exible approach is appropriate for GS wells. The GS rule does not prescribe the spec ific cements to be used to plug injection wells because industry standards, such as those deve loped by API or ASTM International, reflect the current state of the science and the expertise of industrial users on CO2-compatible materials, as specified in §146.92(b). Providing flexibility to c hoose materials for plugging, provided they are compatible with the injected fluid, is consistent with requirements for other injection well classes and will allow operators to uti lize improved well technologies as they become available in the future without a need to amend the regulation.

Letter ID: 0178 Comment ID: 23840 Letter Lines: 1330 to 1347
Comment Code: 4710 2.7.1 Proposed submissions required for permit applications (seeking comment) Comment Code: 5200 2.8.2 Post injection site care (seeking comment) (40 CFR 146.93)
Comment: B. POST-INJECTION SITE CARE PLAN The Proposed Rule would require that owners or operators develop a postinjection site care and closure plan, submitted as part of the permit application and approved by the Director. Th e proposed regulation at 40 C.F.R. $ 146.93 would require the plan to describe: (1) the pressure differential between pre-injection and anticipated post-injec tion pressures in the injection zone; (2) predicted position of the plume and associated pressure front at the time the site is closed; (3) post-injection monitoring lo cation(s), methods, and proposed frequency of monitoring; and (4) a schedule for submitting post54injection site care and monitori ng results to the Director. These requirements are reasonable given the long-term nature of GS projects. The CCS Alliance also supports the ability to amend the plan should the plan no longer reflect what is likely to occur upon closing the site. Likewise, the CCS Alliance agrees that, upon permanent ce ssation of injection, the owner or operator should be provided the opportunityto demonstrate that no amendment to the plan is necessarythrough monitoring and modeling results. Individual Response: EPA agrees that a post-injection site care monitoring plan is an important tool for GS, and retains this requirement in th e final rule, at 146.93(a). Regarding updates to the plan, EPA is requiring that upon the cessation of injection, the owner or operator submit an amended post-injection site care and site closure plan or demonstrate to the Director that no changes to the original post-injection site care and site closure plan are necessary, as specified in §146.93(a)(3). EPA is not requiring formal periodic review and updates to the PISC and site closure plan throughout the injecti on phase. EPA does not expect that changes to this plan would be implemented until injec tion operations cease.

Letter ID: 0178 Comment ID: 23841 Letter Lines: 1349 to 1384
Comment Code: 5240 2.8.2.2 Post injection timeframe (seeking comment)
Comment: C. POST-INJECTION SITE CA RE PERIOD AND FINANCIAL RESPONSIBILITY The Agency has proposed a post-injection site care and financ ial responsibility period of 50 years, which can be shortene d or lengthened based on the discretion of the Director. The CCS Alliance agrees, inpart, with this suggested use of a combination of a fixed timeframe and performance standard. However, as previously explained, the CCS Alliance r ecommends establishing a maximum 30-year post-closure period and providi ng the Director with disc retion to shorten -- but not lengthen -- this period if the owner or operator meets certain enumerated performance standards based on available data on pressure, fluid movement. mineralization and/or dissolution reacti ons to show whether the plume and pressure front have stabilized. CCS is an activity the Agency hopes to en courage. A 50-year pos t-injection site care default is longer than any period of post-operation site care of which the Alliance is aware. The potential for threat s to USDWs will have been considered prior to site operation. and will have been reconsidered throughout the life of the project, not only by the regulator, butby the owner or operator, entities providing financial support, and provider s of risk management products and services. Continuance of in jection will have depended upon an assessment of the potential for threats to USDWs at nume rous points during the site's operation. EPA suggests that when owners or operat ors show that "mod els predicting CO2

55movement are consistent with monitoring results and that there are no longer risks of endangerment to USDWs. they coul d request that the Director authorize site closure."[FN43] The CCS Alliance suggests that if EPA considers the relationship between modeling results and actual plume movement in determining the continuation of post- injection site responsibility, the standard need not be "consistency." Models may predict a range of outcomes. Notwithstanding falling outside the modeled range, actual plume movement may be safe. including when there are no USDWs in the area. Th e Alliance recommends that the rule authorize Directors to end the post-injection site re sponsibility period prior to the 30-year period, taking into account their ability reasonably to predict the likelihood of minimal or no risk to USDWs. [FN43] Proposed Rule. 73 Fed. Reg. at p. 43491 (emphasis added). Individual Response: EPA agrees that there will be circumst ances 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 Class VI rule offers owners or operators fl exibility regarding the duration of the PISC timeframe by: (1) allowing the Director discretion to shorten or lengthen the PISC timeframe during the PISC period based on site-specific data, pur suant to requirements at §146.93(b); or (2) affording the Director discretion to allow a Class VI well owner or operator to demonstrate, based on substantial data during the permitting process, that an alternative PISC timeframe may be appropriate if it ensures non-endangerment of USDWs pursuant to requirements at §146.93(c). EPA believes that a default post-injection site car e timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where substantial data exists to demonstrate that analternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to ac commodate site-specific circumstances and various geologic conditions, and addre sses commenters’ concerns, wh ile ensuring USDW protection. Both approaches will utilize si te-specific data, and be based on pressure monitoring and USDW impacts. EPA agrees that proper site characterization is a critical component of ensuring that USDWs are protected. However, EPA disagrees that this is a substitute fo r post-injection site care. EPA believes that extensive post-injection monito ring is necessary to protect USDWs from endangerment.

Letter ID: 0178 Comment ID: 23842 Letter Lines: 1386 to 1396
Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements Comment Code: 5460 2.9.2 Comments on transfer of lia bility for long-term care
Comment: EPA should consider whether financial assu rance mechanisms are likely to be available for the entire post-operationsite care period. While risks can be expected to decline over time after inj ection ceases, it does not follow that

56private risk management entities will continue to cover the risks. If there are no financial assurance mechanisms availabl e, owners and operators should not be at risk of non-compliance for failing to have them after operations (and revenue streams from the project) have ceased, espe cially if risks continue to be low. As such, the CCS Alliance recommends that once the 30-year period is reached -- or shorter if the performance standards are met -- a government backstop would be triggered, thereby ensuring that a risk management mechanism is in place beyond the responsibility of the owner or operator. Individual Response: EPA clarifies that owners or operators of GS wells must demonstrate and maintain financial responsibility for addressing corrective action on wells in the AoR, injection well plugging, PISC and site clos ure, and emergency and remedial response at GS sites, as required at §146.85(a). The final rule provides owners or operators to choose from a variety of financial instruments to meet the financial respon sibility requirements. EPA anticipates that the availability of third-party GS financial instruments will grow in response to demand for such instruments by GS well owners or operators as deployment of GS technology increases in the future. Under SDWA authority, owners or operators of injection well s must ensure protection of USDWs from endangerment and are subject to liab ility for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Directorapproved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that th e geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule. Once an owner or operator has met all regulator y requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as re quired 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 (inc luding violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was a pproved if the Direct or relied on erroneous information (e.g., erroneous modeling data) provi ded 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 protect the health of persons under §1431 of the SD WA after site closure if there is unanticipated migration towards or into a US DW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in which such violation occurs or failure to comply continues. The Agency clarifies that Class VI well permits may be transferred to another owner or operator

57pursuant to §144.38 whereby generally all other regulatory re sponsibilities are transferred to that new owner and operator, which includes all potential liabilities associat ed with meeting the requirements of that permit. Please see further clarification on the issue of long term liability in the preamble of the final rule. Furthermore, after site closure an owner or 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: 0178 Comment ID: 23843 Letter Lines: 1398 to 1402
Comment Code: 5300 2.8.3 Site closure activities (40 CFR 146.93)
Comment: D. SITE CLOSURE The CCS Alliance recommends including a prov ision releasing sites certified as closed from further monitoring and ve rification requirements, as well as releasing any outstanding financ ial assurance instruments. Individual Response: EPA disagrees that the owner or operator should not be responsible for record retention such as site closure reports. EPA believes that the requirements that the owner or operator retain for ten years following site closure, records collected during the post-injection site care period at §146.93(f) and §146.93(h) are appropriate for the post-injection and site closure period to ensure that data are availabl e to support non-endangerment demonstrations and to address any concerns that may arise following site closure. This data will also support EPA's review of project data as part of the adaptive rulemaking approach.

Letter ID: 0178 Comment ID: 23844 Letter Lines: 1407 to 1416
Comment Code: 4700 2.7 Proposed Recordkeeping and Reporting Requirements (40 CFR 146.91)
Comment: A. GENERAL COMMENTS The application and reporting requirements for Cla ss VI wells should be balanced, placing as little burden as po ssible on owners and operators, while also achieving EPA's goals. Sufficient reporting requirements ensure the collection of information necessary for th e protection of human health and the environment, and provide companies and investors with information to better manage and mitigate risks. A robust but not overly burdensome reporting regime is necessary to the success of CCS. as well as to achieving EPA's goals of

58protecting USDWs. Individual Response: EPA believes that all of the requireme nts for Class VI wells, including the reporting and recordkeeping requirements, are necessary to ensure that GS is conducted in a manner that protects USDWs from endangerment. The requirements for GS projects are tailored to address the unique issues associated with GS including large injection volumes, the relative buoyancy of CO2, its corrosivity in the presence of water, the potenti al presence of impurities in captured CO2, and its mobility within subsurface geologic formations. Because these requirements are necessary to protect USDWs from endangerment, they are in effect not overly burdensome to the owner or operator. The final GS rule affords flexibility to owners or operators. Many of the permit requirements will be established through site-specific plans deve loped by the owner or operator and approved by the Director. EPA is using an adaptive approach to regulating GS. The Agency plan s to, every six years, collect and review data on GS projects to dete rmine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Letter ID: 0178 Comment ID: 23845 Letter Lines: 1418 to 1514
Comment Code: 3150 2.1.5 Comments on required permit information (40 CFR 146.82)
Comment: B. PERMIT APPLICATION REQUIREMENTS EPA proposes to require owners and operators to submit relevant site information to the permitting authority for consideration of permit applications, including: maps of the injection wells, the AoR as determined thr ough computational modeling, all artificial pene trations within the AoR, maps of the general vertical and lateral limits of USDWs, maps of the geologic cro ss sections of the local area, the proposed operating data and injection procedures, proposed formation testing program, and stimul ation program, well schematics and construction procedures, and contingency plans for shut-ins or well failures. Some of the data that EPA proposes to re quire is irrelevant, excessive, or in some cases unavailable. Therefore, the CCS Alliance recommends that EPA ensure that any required data is necessary to the ultimate goals of the Proposed Rule. For example, artificial pene trations several formations above the injection zone may have little relevance to the GS operation. Similarly, the CCS Alliance recommends including a provision in th e final rule providi ng the Director discretion to waive certain data require ments, where such requirements are unnecessary, or require that the data be updated as it is collected or becomes available. EPA is proposing that an applicant in clude "baseline geochemical data on

59subsurface formations, including all US DWs in the area of review."" The Proposed Rule is not clear as to how muchbaseline data EPA is expecting the permit applicant to generate and collect from additional drilling or testing of the injection zone and all other zones. Gi ven the likely depth of many of the GS wells through many strata, this could involve a large number of different formations above the injection zone. EP A should limit the baseline geochemical data to information regarding the nextporous formation above the injection zone. Similarly, EPA should clarify thatthe permit applicant may rely upon secondary sources (such as other drilling or geologic records) that relate to and support the data requirement. EPA al so should clarify whether its expects applicants to test private wells, where permission is granted, within the AoR for purposes of establis hing baseline data. [FN44] 40 C.F.R. $ 146.82(g). EPA also has included a requirement that the permit applicant include a "proposed formation testing program to obt ain an analysis of the chemical and physical characteristics" of the inject ion and confining zone." A permit applicant is already required to subm it the underlying data as part of the permit application process, and it appears that this requirem ent is unnecessary and duplicative. Therefore, the Allia nce requests further clarification regarding the intent and scope of this formation testing program. [FN45] 40 C.F.R. $ 146.82(j).
EPA should monitor stimulation activities of third parties to ensure that such activities not interfere with or damage the containment integrity of other GS operations or natural gas storage reservoirs. The CCS Alliance, therefore, generally supports the requirement for th e "proposed stimulation program" to ensure that stimulation activities will notinterfere with containment. [FN46] [FN46] 40 C.F.R. 9 146.82(k). EPA has proposed requiring the applicant to submit "the status of corrective action on wells in the area of review."[F N47] The CCS Alliance does not believe it is necessary to require the inclusion of all wells within the AoR regardless of whether or not they penetrate the inj ection zone. There could be many shallow wells within the AoR located hundreds or thousands of feet above the CO2 injection zone. Therefore, EPA should lim it this requirement to the injection zone, injection pool, and only those wells that either intersect or penetrate the proposed reservoir, the cap rock, and possibly the porous strata directly above the injection zone. [FN47] 40 C.F.R. $ 146.82(q). On a related matter, EPA has stated thatonly information of public record

60pertaining to all types of wells (injection. producing, abandoned) be included on the AoR. Data availability and use ra ises a question regarding the possible existence of other data which might be pr ivate, proprietary, an d/or not publicly available. Such non-publicly available datamay or may not be relevant to the application process. The CCS Alliance request s EPA to clarify to what extent an applicant would be expected to develop or use information not contained in the public record. EPA also proposes that permit applications for GS sites include several plans not currently required under existing UIC regulations, including (1) a monitoring and testing plan; (2) an AoR and corrective action plan; (3) a well plugging plan: and (4) a post-in jection site care and site closure plan. The CCS Alliance questions whether it is necessary for each plan to be submitted contemporaneously with the permit app lication. The up-front gathering and submission of such detailed information would be costly and time-consuming. We recommend requiring the submission of su ch plans only upon approval of an initial permit application, with furt her approvals contingent upon the successful completion, submission, and a pproval of the required plans. The initial permit application could provid e general information regarding the specific plans to be submitted later. Such a process will provide sufficient information for EPA to make an initial permitting decision. As part of the permitting process, EPA s hould require that owners and operators establish a plan to ensure that resource development may occur in other geologic strata within or near the AoR. CCS will be a critical technology, but also critical to the nation are energy resources and mineral reserves. Companies may have made considerable investment in purchasing, identifying and characterizing these resources. This value should be prot ected as GS sites are selected and developed. EPA's proposed rule at pres ent does not addres s this issue. Individual Response: EPA believes that a detailed geologic al site characterization (required under 146.82) is essential to evaluating the pr esence and adequacy of the various geologic features necessary to receive and confine inje cted CO2 for GS. The requirements for geologic site characterization are base d on a long standing UIC regulatory framework developed to address specific risks to USDWs posed by injection. The Clas s VI GS requirements are tailored so that they are appropriate for the unique natureof injecting large volume s of CO2 into a variety of geological formations for long-term storage. EPA recognizes that some of this information may not be available until after a well has been drilled. EPA revised §146.82 so that the final re gulation specifies separate requirements for information to be submitted with the permit appl ication and before well construction is approved (at §146.82(a)) and information to be submitted befo re operation of the we ll is authorized (at §146.82(c)). EPA disagrees that any of these protective re quirements are unnecessar y, and clarifies that waiving any of the requirements would not be a cceptable. The GS regulation allows flexibility

61where appropriate. Certain requirements (e.g., the need to characterize additional confining layers) are at the Director's discretion ( §146.83(b)), based on his or her understanding of a particular site. The Agency believes that the requirement at §146.82(a)(6) to submit baseline geochemical data on subsurface geologic formations, including all USDWs in the AoR is appropriate and protective of USDWs. EPA believe s that this data will support monitoring plan development, inform injectate fate and transport model de velopment (e.g., by providing appropriate input parameters), and provide information needed to respond to any unexpected and unpermitted leaks outside of the injection zone. The baseli ne geochemical information will allow the owner or operator and permitting authority to evaluate monitoring data and identify any changes in subsurface geochemistry that may indicate fluid movement. The rule requires geochemical analysis of, at a minimum, the injection zone, confining zone, and all USDWs (§146.82(a)(6)). These geochemical tests ar e necessary to ensure the adequacy of the confining system and to serve as a baseline for future monitoring. The Director has the discretion to require geochemical analysis of additional s ubsurface zones if in the Director's opinion they are necessary for the protection of USDWs from endangerment.
EPA believes that a determination about whether or what information may be necessary (for a specific GS project) is outside of the public record will be site-specific and based on knowledge of the site, data availability, and data quality. For instance, in m eeting the requirement to tabulate information on wells in the AoR, the Director ha s the discretion to require the owner or operator to supplement a data records search if there is reason to believe thatthe incompleteness of available information could compromise USDW protection from endangerment. In response to the comment that EPA should require that owners or operators establish a plan to ensure that resource development may occur in other geologic stratawithin or near the AoR, the Agency clarifies ensuring protection of resour ce rights including mineral, water, and energy resource development rights is outs ide the scope of this rulemaking. In conducting GS site characterization, the Agencyanticipates that the owner or operator would consider the proximity of and implications that a GS project may have onother activities in the AoR. However, the purpose of the requirement s is to ensure that Class VI GS well is constructed, operated, monitored, and closed ina manner that is pr otective of USDWs.

Letter ID: 0178 Comment ID: 23846 Letter Lines: 1518 to 1537
Comment Code: 4760 2.7.6 Proposed reporting frequency (seeking comment)
Comment: 1. Reporting Requirements EPA proposes to require owners or operator s of Class V1 wells to report semiannually to the permitting authority on: the physical and chemical characteristics of injection fluids; injec tion pressure, flow rate, temperature, volume and annular pressure; annulus flui d volume added; and the results of

62MITs, plume tracking, and atmospheric/soil gas monitoring. Add itionally, owners and operators will be required to submit the results of AoR modeling revisions: any updates to the information on the type , number, and locati on of all wells within the site AoR; and information on additional corrective action performed or planned based on AoR reevaluations. A semi-annual reporting oblig ation with respect to th e above information is reasonable. The CCS Alliance requests, how ever, that EPA streamline the final reporting requirements to ensure simplicityand to avoid unnecessary confusion or duplication of reportin g obligations. For instan ce, proposed section 146.91(b) requires a report within 30 days for certain tests or any well workover. These additional reports should be incorporated into the semi-annual report, as they are not so time-sensitiv e as to require a separate reporting obligation. Individual Response: EPA is retaining the semi-annual repo rting requirements as proposed at §146.91(a). These requirements ensure the Direct or has the information needed to take preventive action in a timely manner to protec t USDWs from endangerment. EPA notes that operators who want to streamline their reporting schedules can negotiate with the permitting authority to establish a schedule that allows repo rting on all wells in a GS project at the same time; however, data for each well must be report ed separately and at least as frequently as required at §146.91. For additional information, pleas e see the final rule and the preamble for a discussion of EPA's final approach to recordkeeping and reporting.

Letter ID: 0178 Comment ID: 23847 Letter Lines: 1539 to 1542
Comment Code: 4750 2.7.5 Comments on the merit of a nnual reports (seeking comment)
Comment: EPA also seeks comment on whether owners or operators of GS sites should be required to provide an annual report on GS operation during th e lifetime of the project, including the post-injection peri od. Such a report is not necessary in light of the other proposed semi -annual reporting obligations. 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

63approach to recordk eeping and reporting. While the Agency recognizes some concerns expressed by commenters about the burden associated with an annual report, the Agency 's decision to retain the semi-annual reporting requirement at §146.91(a) is because the semi-annua l report in conjunction with the continued dialogue associated with AoR r eevaluations and periodic updates to the plans is a preferred approach to an annual report.

Letter ID: 0178 Comment ID: 23848 Letter Lines: 1544 to 1561
Comment Code: 4730 2.7.3 Reporting associated with closur e and post-injection site care
Comment: 2. Records Retention Under the proposal, owners and operators would be required to maintain recordkeeping and reporting information for the duration of the project, as well as for three years after si te closure (following the post-injection site care period). Owners and operators also would be required to keep their most recent plugging and abandonment report for one ye ar following site closure. Under proposed requirement 40 C.F.R. $ 146.93(g), EPA would require that the owner or operator deliver to the Director record s collected during the post-injection site care period at the conclusion of th e 3-year retention period. The CCS Alliance is concerned that some of this information may be of a confidential financial or business operations nature and should be protected from public disclosure. Thus, the CCS Alliance recomme nds the inclusion of a "non-disclosure requirement" to protect certain sensitiv e and confidential business information from public disclosure. The CCS Alliance al so requests EPA to consult with the U.S. Department of Homeland Security to determine whether CCS sites would constitute "critical infrastructure," thereby necessitating additional protection of sensitive information. Individual Response: The Agency clarifies that owners or operators may claim confidential business information under existing UIC regulations at 40 CFR 144.5. These requirements are applicable to all well classes.

Letter ID: 0178 Comment ID: 23849 Letter Lines: 1566 to 1579
Comment Code: 2100 1.6 Target Geologic Formations for GS
Comment: A. GEOLOGIC SITING 1. Target Geological Formations EPA discusses the possible target geologic formations for GS of CO2, stating at one point that deep saline formations ar e the leading candidates for GS. It is

64premature to prefer one type of formation over another. Deep saline aquifers have had very little detailed investigat ion at commercial scale to date. By contrast, there is a signif icant amount of information available about depleted oil and gas reservoirs. CO2 storage in unmi neable coal seams is an area of very active research, particularly in certa in regions. Industry reports have conservatively estimated more than 10 billion tons of potential storage in regional coal seams that, if utilize d, could result in the incremental production of more than 17 Tcf of natural gas. Individual Response: EPA believes that saline formations offer the greatest total capacity for GS and therefore will most likely be used for purposes of GS. EPA clarifies that the GS rule does not categorically preclude inje ction 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 th at wells are sited in suitable sy stems with geologic formations to receive and confine injected CO2, required at §146.83 of the GS rule. 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 USDW s and meets all of the requirements of the GS rule, the project may be permitted as a Class VI well.

Letter ID: 0178 Comment ID: 23850 Letter Lines: 1581 to 1592
Comment Code: 2160 1.6.3 Unmineable coal seams
Comment: EPA states that "[w]hile coal seams ar e well studied and understood, the process of CO2 adsorption to coal has not been proven."[FN48] The Alliance believes it is well understood. EPA also states that "many ECBM recovery operations will likely be shallow. Shallow storage will resu lt in the CO2 remaining in a gaseous state..."[FN49] Some parties believe th is is incorrect, and that such a statement would be true for storage into shallow aquifer pore space, such as in shallow saline formations, but that it is not true for storage into shallow coal seams. In that case, the CO2 is adso rbed and remains in the dense phase. [FN48] Proposed Rule, 73 Fed. Reg, at p. 43503. [FN49] Id. Individual Response: EPA acknowledges that site-suitabilityfor GS is dependent on a number of factors and that many formation types may be suitable for GS. The final GS rule does not preclude injection into unmineable coal seams, or any other formation type, provided owners or operators can demonstrate that GS can be pe rformed in a manner thatprotects USDWs from endangerment based on the requirements provided in the GS rulemaking. The Agency anticipates that in the near-term, most GS in unmineable co al seams will continue to be experimental. Such projects may be permitted as Class V experi mental technology wells if they are of an experimental nature (i.e., to test GS technologies and collect data). EPA will continue to review data on early GS projects, includ ing those in unmineable coal s eams, to determine whether the appropriate amount and types of informati on and documentation are required and being

65collected. EPA plans, every six years, to collectand review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modificatio ns to the requirements are appropriate or necessary. EPA recognizes that GS in unmineable coal seam s has been the subject of less research than saline formations or depleted oi l and gas reservoirs. However, EPA has examined select field projects involving injection into unmineable co al seams, including the Pump Canyon Site, near Archuleta, New Mexico. In the Notice of DataAvailability and Reque st for Comment, EPA described research at the Pump Canyon site where the Southwes t Partnership is studying CO2 injection into deep, unmineable coal seams and pe rforming a "seal analysis" of the ability of the Kirtland Formation to act as a barrier to the m ovement of CO2 or othe r reservoir fluids. EPA continues to follow this projec t, recently completed projects, and ongoing GS projects injecting into unmineable coal seams. Other coal seam in jection projects are underway through the RCSPs in the Illinois Basin, Black Warrior Basin, and Central Appalachian Basin.

Letter ID: 0178 Comment ID: 23851 Letter Lines: 1594 to 1617
Comment Code: 3110 2.1.1 Proposed siting requirements (i.e., injection/confining zones, trapping mechanism)
Comment: 2. Geologic Siting Requirements EPA's Proposed Rule includes significant technical information requirements for the geological siting of Cla ss VI wells, including: maps and cross-sections of nearby USDWs; demonstrations of the por osity and permeability of the injection zone and subsurface formations; information on faults and fractures, including results of geomechanical studies; seismi c history studies; de terminations of maximum sustainable injection pres sures; and geochemical data. The geological siting requirements for Cl ass VI wells should be reasonably balanced to ensure that EPA's goals are me t. but not be so burdensome so as to deter the development of CCS projects. To this end, EPA should ensure that the information it seeks is essential to its evaluation efforts, and not unnecessarily overbroad. Proper geological siting requirements will help EPA, state actors, and owners and operators identify the risks involved so that proper additional evaluations may be madeto protect human health and the snvironment and to evaluate financial and strategic risks associated with CCS projects. Moreover, the siting requirements authori ze the Director to use his discretion to require owners and operators to identify and provide additional information with respect to additional zones near the GS. Such discretion should not be unlimited. We recommend that EPA establish clearer guidelines with respect to how such discretion may be exercised to prevent unnecessary requirements.

66Individual Response: EPA believes that requiring appr opriate, site-specific, site characterization by the owner or operator (und er §146.82) and providing anappropriate degree of flexibility to the Director to evaluate site -specific geologic data will afford the greatest protection of USDWs from endangerment. EPA di sagrees the requirements are too burdensome, and believes that it is important for the Director to have as much site-specific information as possible in order to make an informed decision to permit injection for GS at a specific site. EPA is developing guidance on site ch aracterization for GS projects to assist owners or operators and Directors in evaluating permit requirement s and applications under §146.82. The guidance provides recommendations regard ing characterizing the region al geology and hydrogeology of a proposed GS site as well as performing th e necessary geochemical, geomechanical, and geophysical analyses of the injection and confin ing zone. EPA expects that this guidance will assist permit writers in evaluating this info rmation and exercising discretion. The guidance can be found on EPA’s website at http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm.

Letter ID: 0178 Comment ID: 23852 Letter Lines: 1619 to 1626
Comment Code: 1520 1.2.3 Other authorities (e.g., CAA, MPRSA, London Convention)
Comment: The CCS Alliance also is concerned aboutnumerous federal and state statutes that may be triggered through the siting of a CCS project. At the federal level, the siting of linear faciliti es most often raises issues under the Clean Water Act, the Rivers and Harbors Act of 1899, th e National Environmental Policy Act, and the Endangered Species Act. Any number of other federal statutes may apply, depending upon the resources affected by or near the facility. Congress may need to consider how to balance the objectives of these acts with the policy inherent in promoting CCS. Individual Response: EPA acknowledges that GS falls withinthe broader context of CCS and the need for regulatory clarity to ensure thatUSDWs are protected from endangerment. In developing the final GS rule, the Office of Water coordinated with other Agency program offices and across federal agencies (e.g., with the Department of Energy; United States Geological Survey; Bureau of Ocean Energy Management, Regulation, and Enforcement, formerly the Minerals Management Service; Bureau of Land Management). The Agency continues to evaluate areas of potential applicability of other Federa l environmental statutes including, but not limited to: the Clean Air Act; the Resource Conservation and Recovery Act; the Comprehensive Environmental Response, Compensation, and Liabili ty Act; and the Marine Protection, Research and Sanctuaries Act to various aspects of GS and CCS. The Agency will continue to coordinate on GS and CCS related issues to minimize redundancy and maximize efficiencies for owners or operators. For additional information, please s ee the discussion entitled "How Does This Rulemaking Relate to Other Federal Authorities and GS and CCS Activities?" in the preamble to the final GS rule. Regarding the need for a CCS agency to coordi nate across agencies, EPA is coordinating with and will continue to facilitate communication among federal and state agencies during the

67implementation phase of the GS regulation. EPA clarifies that the Agency is not obligated under the UIC program to comply with NEPA §§102(2)(c) and 102(2)(e) because the UIC permitting process is considered a “functional equivalent.

Letter ID: 0178 Comment ID: 23853 Letter Lines: 1628 to 1636
Comment Code: 1250 1.1.1.4 Flexibility is needed (p erformance-based standards) Comment Code: 3100 2.1 Proposed Geologic Siting Requirements (40 CFR 146.83)
Comment: Siting requirements should reflect that conditions affecting risk differ by site. They need to be tailored to the actual risks presented by specific sites. EOR is a well developed technique and th ere is now a history through which its risks can be assessed. This differs from in jection for long-term storage in deep saline formations or unmineable coal s eams. with which there is little experience, particularly on the massive s cale (e.g., a million or more tons per year per plant) envisioned for the futu re. For CCS to be a viable long-term strategy, policy must encourage development of data about these sites, new technology. and new practices. Individual Response: EPA agrees with the commenter that every site (and the risk posed) is unique. EPA agrees that site charac terization should be site-specific, particularly in light of the variety of geologic settings in which GS may be employed. EPA believes that, while there is a large amount of required information, the owner or operator is given flex ibility in determining what methods are used to demonstrate the suit ability of a potential site. EPA envisions an ongoing dialogue between the Director and the owner or operator during the permitting process (as well as throughout the operation of the site).

Letter ID: 0178 Comment ID: 23854 Letter Lines: 1640 to 1648
Comment Code: 3310 2.2.1.1 Comments in favor of requiring computational models to delineate the AoR (seeking comment)
Comment: 1. Area of Review The CCS Alliance agrees that traditional AoR delineation methods such as a fixed radius or simple mathematical computati ons would not he sufficient to predict the extent of CO2 plume movement. The CCS Alliance therefore supports the use of computational fluid flow modeling designed for the specific site conditions and injection regime to delineate the AoR fo r CO2 GS sites. Such modeling will provide the level of sophistication necessary to predict the complex multi-phase buoyant flow of the CO2, injectates, and mobilizing compounds. Individual Response: EPA acknowledges the commenter’s support and believes th at predicting

68the complex multiphase, buoyant flow of the CO 2, co-injectates, and compounds that may be mobilized due to injection requires the sophistication of computational models, as required at 146.84(c)(1). Models can predict CO2 fate and tr ansport, as well as changes in formation pressure, in three dimensions, as a function of ti me in order to delineate the subsurface storage site and the AoR. Models can account for site-specific and predicted operating conditions as well as geologic heterogeneities and potential migration through fau lts, fractures, and artificial penetrations.

Letter ID: 0178 Comment ID: 23855 Letter Lines: 1650 to 1655
Comment Code: 3530 2.2.3.1 AoR reevaluation fre quency (seeking comment)
Comment: EPA also proposes requiring the reevaluation of the site AoR on a periodic basis, suggesting a 10-year minimum fixe d frequency for AoR reevaluation. The CCS Alliance agrees that a 10-year minimum is reasonable for reevaluating the AoR delineation, given that long-term CO2 storage may produce an AoR differing from other types of UIC injection plumes and should therefore be reevaluated to assure project safety and stability. Individual Response: Based on evaluation of the public comments on this topic, EPA has changed the minimum frequency for the AoR reev aluation at §146.84(e) from 10 years to at least every 5 years. EPA believes that this revised fre quency addresses concerns raised by commenters representing water associations, an energy co mpany, associations, industries, states, and environmental groups about the inherent uncerta inties in modeling CO2 movement, the emerging nature of GS technology, risk-based targeting of monitoring activities, an d the unique nature of CO2 GS. The 5-year reevaluation frequency, particularly during early stages of GS deployment, will also support EPA's adaptive approach to the GS rule making. EPA is using an adaptive approach to regulating GS. The Agency plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determ ine if modifications to the requirements are appropriate or necessary.

Letter ID: 0178 Comment ID: 23856 Letter Lines: 1657 to 1666
Comment Code: 3630 2.2.4.1 Comments in favor of allowing phased corrective action
Comment: 2. Phased Corrective Action The CCS Alliance phased correction action and believes such an approach is reasonable, given the potential size of th e CO2 plume for commercial-scale GS operations. Requiring up-front corrective action for the entire AoR prior to injection could result in substantia l delays in permitting and project

69implementation. At a minimum, as part of the AoR process, wells that penetrate the confining or injection zone must be identified. Identifying problematic wells up-front may increase short-term costs, but should reduce risk and liability over th e long-term. Individual Response: EPA agrees that phased corrective ac tion may provide many benefits to a project including, but not limited to, spreading th e burden of cost, avoidi ng delays in project start-up, allowing for use of future, improved corrective action techni ques and addressing unanticipated changes in the movement of the CO 2 plume or pressure front. EPA believes that the phased corrective action approach is approp riate for GS projects, and retained it at §146.84(b)(2)(iv) in the fi nal GS regulation.

Letter ID: 0178 Comment ID: 23857 Letter Lines: 1668 to 1688
Comment Code: 3400 2.2.2 Corrective Action
Comment: EPA should address gaining access to th ird party wells that may require corrective action. Most states require corrective action to be performed prior to injection and the "right of access" is taken into consideration during the adequacy determination of the correctiv e action plan. Some states, such as Texas, require corrective action prior to injection unless the owner/operator, after best efforts, is unable to get permission to access the property of a third party.[FN50] SDWA does not provide EPA the authority to require third parties to provide access to an owner/operator for the purposes of conducting corrective action. EPA should clarify how owner/operators and states will be expected to implement corrective action. [FN 50] 30 TEX. ADMIN Code $ 305.151 (2008) Prior to denying a permit application, th e regulations should provide the owner or operator the opportunity to demonstrat e that a project canmaintain its safety and security, despite an uncorrected well. Otherwis e, a potential GS site could go unutilized, even if the uncorrected well creates no actual risk of harm to USDWs. Moreover, well remediation shou ld be applicable only to those wells that are likely to be impacted (meani ng exposed to corrosive fluid and/or pressure above likely capillary entry pre ssure) early to mid phases of operation (e.g., one to 20 years). Individual Response: The purpose of the corrective action requirement at §146.84(d) is to ensure that all wells in the AoR that have the potential to cause the m ovement of CO2 or other fluids into or between USDWs receive appropriate corrective action. In general, to meet this requirement, the owner or operator most likely wi ll need to obtain the right of access to wells that may require corrective action, and demonstrat e they have done this in their proposed AoR and corrective action plan. In the AoR and corre ctive action plan, the owner or operator must describe how site access will be guaranteed for future corrective action, as specified in §146.84(b)(2)(iv). EPA adds that, in some circumst ances, monitoring in the injection zone may

70be an appropriate corrective action technique. Thes e types of determinations would need to be made by the Director on a site-specific basis.

Letter ID: 0178 Comment ID: 23858 Letter Lines: 1692 to 1697
Comment Code: 4324 2.4.4.1.2 Comments opposed to requiring injection below the lowermost USDW Comment Code: 4344 2.4.4.2.2 Comments opposed to setting a minimum injection depth
Comment: Geologic sequestration of CO2 need not be, in every instance, beneath the lowermost USDWs, nor should EPA set a mini mum injection depth requirement. Such requirements likely would preclude inject ion into certain targeted geologic formations, which may include storage si tes currently under consideration for GS. These formations may include unmineab le coal seams, zones in between or above USDWs, and others. Individual Response: EPA agrees that it is notappropriate to set a mi nimum injection depth for GS projects. EPA believes that a determination of site-suitability for GS (i.e., that subsurface formations will receive and confin e injected CO2) should be made on a site-specific basis. The GS rule, at §146.82, requires the owner or operator to pr ovide extensive site- and project-specific information to the Director to demonstrate that the site meets the minimum site criteria at §146.83, that the CO2 will be contained within the injection formation, and that USDWs will be protected from endangerment. EPA believes that proper siting, monitoring, and c ontainment capacity are cr itical elements of Class VI injection for GS. However, the Agencyalso believes that in jection into non-USDW formations above and between USDWs presents unique challenges related to movement of CO2 in the subsurface, which requires a unique approach to ensure that USDWs are protected. Therefore, the Agency believes that additional requirements are appropriate and necessary for wells that would inject into non- USDWs above and be tween USDWs. EPA acknowledges that there are limited circum stances where injectio n above the lowermost USDW can be performed in a manner that protec ts USDWs, as long as appropriate protections are in place. The final GS rule at §146.95 establis hes a process by which owners or operators can seek a waiver of the Class VI injection de pth requirements for in jection into non-USDW formations above and/or between USDWs. The waiver approach requires the submission of extensive, site-specific information (in conjunc tion with the permit appl ication submission) to demonstrate that injection of CO2 into a non-US DW that is above or between USDWs can be done in a manner that is protective of USDWs. The requirements are designed to ensure that the owner or operator, the Director, and the Regional Administrator cons ider, on a site specific basis, the implications, benefits, and challenges associat ed with GS and ensuring water availability and USDW protection. For additional information on the waiver approach, please see the final rule and preamble, as well as EPA's responses to comments on the Notice of Data Availability and Request for Comment.

71Letter ID: 0178 Comment ID: 23859 Letter Lines: 1699 to 1703
Comment Code: 4410 2.4.4.3.1 Comments in favor of allowing injection above/between USDWs in certain circumstances
Comment: Directors should have discre tion to allow injection above or between USDWs in specific geological settings where going belo w the lowermost USDW would make GS impractical, as well as where there are appropriate strata between the injection zone and the underlying or overlying USDW . Such Director di scretion, however, should be limited or based on measurable factors or criteria . The CCS Alliance Individual Response: As described above, EPA acknowledges that there are limited circumstances where injection above the lowerm ost USDW can be performed 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 pr ocess by which owners or operato rs can seek a waiver of the Class VI injection depth requirements for inje ction into non-USDW form ations above and/or between USDWs. Determinations about the appr opriateness of a waiver would be made by the Director, based on evaluation of site-specific conditions.

Letter ID: 0178 Comment ID: 23860 Letter Lines: 1703 to 1705
Comment Code: 4460 2.4.4.4.1 Comments in favor of allowing aquifer exemptions in certain circumstances
Comment: should be limited or based on measurable factors or criteria . The CCS Alliance also agrees that Directors should be able to exempt all USDWs below the injection zone, pursuant to "aquifer exemptions." Individual Response: EPA acknowledges that there are lim ited circumstances where aquifer exemptions for GS may be warranted. The final ruleallows for the expansion of the areal extent of 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.

72EPA 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 withGS, 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 alternative 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 Data Availability and Request for Comment.

Letter ID: 0178 Comment ID: 23861 Letter Lines: 1707 to 1715
Comment Code: 4100 2.4.1 Injection parameters
Comment: With respect to specific well operati ng requirements, we reiterate the importance of maintaining reasonable standa rds that take into account that CCS injection will differ from other inject ion activities. For instance, Class I wells typically must maintain an annu lar-fluid pressure greater than the injection tubing pressure to prevent outward leakage fr om the injection tubing. Typically, these wells operate at pressure s much lower than CO2 injection wells. This same requirement imposed on CO2 inj ection wells would require specialized high-pressure equipment to maintain the required pressure differential on the annular fluid. EPA also recommends as a possible safety device in CO2 injection Individual Response: EPA believes that maintaining an annulus pressure that is higher than the injection pressure, as required at §146.88(c), will ensure that if there are leaks in the tubing, the annulus fluid will move into the tubing, rather than the injectate moving out of the tubing and potentially along the outside of the well. EPA belie ves this requirement is appropriate for Class VI wells given the potential high volumes and superc ritical nature of the CO2 injectate, potential geomechanical stresses in the wellbore, and the potential for movement of the CO2 in the event of a mechanical integrity loss.

Letter ID: 0178 Comment ID: 23862 Letter Lines: 1715 to 1720

73Comment Code: 4200 2.4.2 Down-hole shut-off valves inGS wells (seeking comment)
Comment: annular fluid. EPA also recommends as a possible safety device in CO2 injection wells the use of down-hole s hut-off valves that would automatically shut-in the well. It is not clear that safety valves for a CO2 injection wells are available in the sizes necessary for most on-shore injection wells because these devices are primarily used in larger, off-s hore wells. The use of such valves, therefore, needs more consideration. Individual Response: After evaluating the risks and benefi ts of down-hole shut-off systems and considering additional research, EPA will not re quire automatic down-hole shut-off devices for onshore Class VI wells since it is not necessary inall cases to ensure protection of USDWs from endangerment. Instead, the final rule, at §146.88(e)(2 ), requires that owne rs or operators of onshore Class VI wells install automatic surface shut-off devices. The rule affords Director's discretion to mandate automatic down-hole shut -off devices in onshore situations that may warrant their use. However, the Agency believ es that offshore Class VI wells present unique construction and operational conditi ons, including isolation from shorelines and the need to construct wells through the water column and the subsurface, which may delay response time in the event of well difficulties. Th e rule requires, at §146.88(e)(3), that owners or operators of offshore wells within State territorial waters install automatic down-hole shut-off systems. EPA believes that these requirements at §146.88(e) ensure that proper precautions are taken to prevent subsurface fluid movement and ensure protection of USDWs.

Letter ID: 0178 Comment ID: 23863 Letter Lines: 1722 to 1731
Comment Code: 3800 2.3 Proposed Injection Well Construction Requirements (40 CFR 146.86)
Comment: D. INJECTION WELL CONS TRUCTION REQUIREMENTS Well construction procedures and requirements should remain reasonable and flexible given that long-term CO2 storag e remains a relatively new area with developing science and technologies. The e xperience of the operator, the volume of CO2 stored, and the pressure at whic h it needs to be injected, should be viewed as important variables when fi nalizing well construction requirements. EPA also should consider that a properlyinstalled well provid es a barrier to fluid movement, even if components are shown to degrade in aggr essive laboratory experiments. It is also not known if new CO2 resistant cements will perform as Individual Response: EPA agrees that a flexible approach to the construction of Class VI wells is appropriate, and believes the rule provi des an appropriate amount of flexibility. The construction requirements at §146.86 provide flexibility by listing the basic components a Class VI well must have to prevent endangerment of USDWs, and allow owners or operators to choose appropriate materials in m eeting these requirements.

74Letter ID: 0178 Comment ID: 23864 Letter Lines: 1731 to 1732
Comment Code: 3864 2.3.3.2 Use of corrosion-resistant cements (seeking comment)
Comment: experiments. It is also not known if new CO2 resistant cements will perform as well as conventional cements in terms of emplacement and bonding. Individual Response: EPA notes that corrosion-resistant materials and cement do exist. Industry experience of many decades in corrosive down-hole situations such as acid gas injection and production of natural gas with carbon dioxide and hydrogen sulfide impurities shows that materials are available that can re sist corrosive environments. Meye r (2007) lists several types of cements that have been used under such corro sive conditions. EPA ac knowledges that studies have likely not been performed to prove a 50-ye ar life span for corrosion-resistant materials. However, there are two studies of wells that we re exposed to CO2 for approximately 30 years by Carey et al. (2007) and Crow etal. (2008). Although these studies are limited in the number of well material samples and the number of wells examined, the casing and cement sampled indicate fairly good condition (i.e., fairly signi ficant corrosion resistance) of well materials installed three decades ago. The best available corrosion-resistant materials suited for each GS project will be determ ined by the Director. EPA acknowledges that there is limited data on this subject, and believes that providing multiple barriers of protection is the most appropriate approach to protecting USDWs from endangerment. EPA anticipates further findings on the use of acid-resistant cements, in particular the physical integrity of such modified cements in place. The Agency plans to, every six years, collect and review data on GS projects to dete rmine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Letter ID: 0178 Comment ID: 23865 Letter Lines: 1734 to 1736
Comment Code: 3840 2.3.2 Horizontal well drilling techniques (seeking comment)
Comment: Horizontal well construction has proven beneficial in other applications, such as EOR operations, and therefore should be an available option for Class VI wells. The CCS Alliance also supports EPA' s proposal to provide Directors the 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 gas 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 ensure the protection of USDW s from endangerment.

75Letter ID: 0178 Comment ID: 23866 Letter Lines: 1736 to 1742
Comment Code: 2060 1.5.3 Comments on grandfathering of existing wells (seeking comment)
Comment: wells. The CCS Alliance also supports EPA' s proposal to provide Directors the authority to grandfather th e construction requirements for Class V experimental project wells and other wells when they are converted to full scale Class VI wells. The Alliance suggests that EPA shoul d consider whether grandfathering the existing siting, AoR, operations, and mon itoring plans for Class II and Class V wells when they are converted to full s cale Class VI wells w ould protect USDWs while avoiding additiona l regulatory burden. Individual Response: EPA agrees that many Class II well s are designed and constructed to withstand exposure to CO2. The final GS rule provi des for the construction of these wells to be grandfathered per §146.81(c), provid ed the owner or operator can demonstrate to the Director that the wells were engineered and constructed to meet th e requirements at §146.86(a) and ensure 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, monitori ng, mechanical integrity testi ng, etc.) must be met following a determination under §146.81(c). EPA disagrees that other requirements (e.g., MI Ts, siting, monitoring, and AoR requirements) should also be grandfathered. Following re-perm itting of the project as GS, many of the unique factors of GS sites (e.g., increase d reservoir pressures associated with large volumes of stored CO2 and the corrosivity of CO2 inthe presence of water) will resultin an increased risk profile, warranting the specific requirements in the final GS rule. Therefore, following re-permitting as Class VI wells, these projects w ould be subject to the operatio nal, MIT, monitoring, reporting, plugging, and post-injection site care and site closure requirements in the final GS rule. See the discussion of EPA's final regulatory approach in the preamble to th e GS rule for additional detail on these requirements.

Letter ID: 0178 Comment ID: 23867 Letter Lines: 1744 to 1755
Comment Code: 4500 2.5 Proposed Mechanical Integrity Testing (MIT) Requirements (40 CFR 146.89)
Comment: E. MECHANICAL INTEGRITY TESTING REQUIREMENTS EPA would require owners and operators of Class VI projects to monitor internal mechanical integrity of their injec tion wells by conti nuously monitoring injection pressure, flow rate, and inje cted volumes, as well as the annular pressure and fluid volume to assure that no anomalies occur that may indicate an internal leak. The practic ability of such monitoring is yet unknown. The proposed MIT requirements, therefore, shoul d be flexible. The same holds true for the frequency of internal and extern al MITs for injection wells, the types of MITs, and how to optimize MIT methods for geologic sequestration. As industry

76gains more knowledge and experience, more structured regulati ons for MIT types and frequency of MITs may be appropriate. Individual Response: EPA believes that continuous pressure monitoring to demonstrate internal mechanical integrity of Class VI wells as re quired under §146.89(b), inst ead of periodic testing (which is required for most other types of deep injection wells) is important given the potential corrosive impact of CO2 and impurities on well materials, the potential geomechanical impacts to well integrity due to CO2 phase changes, and the temperature and pressure effects associated with injecting supercritical CO2. EPA also believes that the technology for continuous monitoring is practicable, available, and is currently in fairly wi de use. The Texas Class I well regulations for industrial wells currently require continuous monitoring of annulus pressure and volume and the majority of injection wells in Ohio conduct continuous monitoring (GWPC, 2006). At least one commenter indicated that the technology required fo r continuous monitoring is currently available and should not present an undue cost burd en. Continuous annulus monitoring is also conducted atthe commercial-scaled carbon capture and geologic sequestration operation at the In Salah, Algeria natural gas plant where more than 3 million tons of CO2 have been sequestered since 2004. EPA believes that the annual mechanical integr ity testing is appropriate for GS wells. EPA retains the requirement that owners or operators of Class VI wells demonstrate injection well external mechanical integrityat least once annually. See §146 .89(c). EPA believes this is justifiable for the protection of USDWs from endangerment given the unique nature of CO2 GS relative to other injection operations, including the potential co rrosive impact of CO2 in the presence of water and impurities on well material s, the potential geomechanical impacts to well integrity due to CO2 phase changes, the temper ature and pressure effects associated with injecting supercritical CO2, and the buoyant nature of the injected CO2. Because of the unknown long-term effects of CO2 GS, EPA chose a more cons ervative initial approachin the early stages of deployment for GS. The Agency plants to collect and review data every six years on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modificatio ns to the requirements are appropriate or necessary.

Letter ID: 0178 Comment ID: 23868 Letter Lines: 1757 to 1771
Comment Code: 4546 2.5.2.2 MIT frequency (seeking comment) Comment Code: 4630 2.6.3 Corrosion monitoring
Comment: We do not believe there is any compelli ng reason to require annual integrity testing or quarterl y corrosion monitoring. A five-year testing routine has been sufficient for acid gas wells in Canada. Many known injection wells are reused producer wells that have b een in corrosive environments for over 15 years and remain in good condition. Annual testing and quarterly corrosion testing could also result in significant costs from plant shutdowns and downtime. Many

77companies already conduct periodic plant- wide shutdowns to thoroughly inspect piping and equipment for corrosion and make any necessary equipment upgrades. These shutdowns, which ordinarily occur on ce every three to five years, are also used to inspect injection wells, incl uding pulling tubing, r unning cement bond logs, and well casing integrity logs to determine the thickness and integrity of the steel in the boreholes. From these te sts, companies are able to assess the cement and casing conditions, which provide the primary "isolation" mechanism from the reservoir fluids. Moreover, comp anies can and often do run noise logs that can assess for "channeling" behind the casing. Individual Response: EPA disagrees that a five-year extern al MIT is appropriate. The final GS regulation retains the requirement that owners or operators of Class VI wells must demonstrate injection well external mechan ical integrity at least once annually under §146.89(c). While EPA acknowledges the successful history of the Class II injection program, incl uding injection of sour (acid) gas, the Agency believes that CO2 injecti on for GS is substantially different from Class II ER operations and believes annual MITs are ju stifiable for the prot ection of USDWs from endangerment given the unique nature of CO2 GS relative to other injection operations, including the potential corrosive impact of CO2 in the presence of water and impurities on well materials, the potential geomechanical impacts to well integrity due to CO2 phase changes, the temperature and pressure effect s associated with injecting supercritical CO2, and the buoyant nature of the injected CO2. Because of the unknown long-term effects of CO2 GS, EPA chose a more conservative initial approach in th e early stages of deployment for GS. In addition, a comprehensive review conducte d by EPA of MIT results from 1993 to 1998 found that Class I wells injecting corrosi ve fluids fail MITs at rates two to three times higher than those that inject non-corrosive fluids (USEPA 1999). Given the potentia l for CO2 to be corrosive (e.g., in the presence of water or aqueous formation flui ds), there is a potential risk factor for MIT failure and, for this reason, EPA be lieves that the tailored MIT requi rements in the final GS rule are appropriate. Regarding concer ns about disruptions of plant operations, EPA believes that, due to the expected size of GS fields, many GS operations will have more than one injection well, and that testing of each we ll can be timed to avoid complete interruption of the project. On the topic of corrosion monitoring, EPA disagr ees with commenters' a ssertions that corrosion monitoring is unnecessary or excessive. CO2 in the presence of water (including water with NOx, SOx, and H2S impurities) can be corrosive to well materials and cements. Thus, although a CO2 stream may be dry, the pot ential for corrosion of well materials down-hole, where the injectate can potentially mix with water in the target formation, must be considered. EPA adds that it is using an ad aptive approach to regulating GS. The Agency plans to collect and review data every six years on GS projects, including MIT data, to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Letter ID: 0178 Comment ID: 23869 Letter Lines: 1773 to 1780

78Comment Code: 4540 2.5.2 Proposed external MIT requirements Comment Code: 4546 2.5.2.2 MIT frequency (seeking comment)
Comment: Proposed section 146.89(d) would give the Director discretion to require any other test to evaluate mechanical integrity, if the alternative tests are approved and published in the Federal Regist er. We recommend that EPA revise the mechanical integrity testing requirements (1 ) to give the Director discretion to approve not only different testing requirements but the timing for testing requirements; and (2) to require such testing no more frequently than a reasonable multi-year period, or sooner if there is evidence that earlier testing is warranted. Individual Response: EPA believes that the MITs describe d in §146.89(c) of the rule (e.g., an approved tracer log or temperatur e or noise logs) are effective me thods to demonstrate external MI, provide an important early warning of potenti al problems in the injection well system, and represent standard techniques that have been used successfully by the drilling industry and for the UIC Program for decades. The Agency notes th at the regulations provide the Director the flexibility at §146.89(e) to approve th e use of alternative MIT methods. The final GS regulation retains th e requirement that owners or operators of Class VI wells must demonstrate injection well extern al mechanical integrity at le ast once annually. See §146.89(c). EPA believes this is justifiable for the prot ection of USDWs from endangerment given the unique nature of CO2 GS relative to other injection operations, including the potential corrosive impact of CO2 in the presence of water and impurities on well materials, the potential geomechanical impacts to well integrity due to CO 2 phase changes, the temperature and pressure effects associated with injecti ng supercritical CO2, and the buoyant nature of the injected CO2. Because of the unknown long-term effects of CO2 GS, EPA chose a more conservative initial approach in the early stag es of deployment for GS. A comprehensive review conducted by EPA of MIT results from 1993 to 1998 found that Class I wells injecting corrosive fluids fa il MITs at rates two to three times higher than those that inject non-corrosive fluids (USEPA 1999). Given the potent ial for CO2 to be corrosive (i.e., in the presence of water or aqueous formation fluids), there is a potential risk factor for MIT failure and, for this reason, EPA believes that the tailor ed MIT requirements in the final GS rule are appropriate. EPA adds that it is using an ad aptive approach to regulating GS. The Agency plans to collect and review data every six years on GS projects, including MIT data, to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirem ents are appropriate or necessary. For additional information, please see the discussion of MITs in the final rule preamble.

Letter ID: 0178 Comment ID: 23870 Letter Lines: 1782 to 1790
Comment Code: 4490 2.4.5 Use of tracers and potential impact on human health or ecosystems

79(seeking comment)
Comment: EPA has specifically requested comment on the use of tracers. Based on industry experience, tracers are not typically used for monitoring the movement of a CO2 plume, unless potential leakage is occurri ng. They are then used to trace the leakage point. Tracers can be very expensive and the re sults can take a lot of time to develop, analyze, and understand. Radioactive tracers typically have long shelf lives and, if used by ne ighboring operators, could produce conflicting and indeterminate results. Due to the potential for groundwater contamination, the use of radioactive materials should be used only sparingly and for targeted purposes. Individual Response: EPA agrees that tracer use is notappropriate in all Class VI well situations. Some tracers may have the potential to cause harm to people or the environment. For this reason, EPA does not require th e use of tracers at all GS site s. Nevertheless, there are many different types of tracers and not all are pr oblematic; research is being done to overcome problems with existing tracers. EPA believes that tr acers have been used safely and successfully in other applications. Therefor e the Director has di scretion to require their use if he/she determines that the use of tracers could impr ove monitoring of the s ite and enhance USDW protection from endangerment. The rule will also allow their use if proposed by the owner or operator and approved by the Director. EPA has been following new and ongoing research on the safety and efficacy of tracers, and believes that, in some circumstances, tracers can be an effective part of monitoring GS projects. EPA will continue to track research related to tra cer use and plans to, every six years, collect and review data on GS 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: 0178 Comment ID: 23871 Letter Lines: 1792 to 1803
Comment Code: 4600 2.6 Proposed Plume and Pressure Front Monitoring Requirements (40 CFR 146.90)
Comment: F. PLUME AND PRESSURE FRON T MONITORING REQUIREMENT EPA proposes monitoring sequestration site s to track the locat ion of the CO2 plume and associated pressure front over time. Plume monitoring is important to the long-term stability of CCS sites. However, we submit that such a requirement should be flexible to accommodate grow ing knowledge about in jection and CO2 plumes. Monitoring has limited usefulness in some settings (e.g., 4D seismic often does not have the resolution to de tect CO2 in some deep or complex settings or where hydrocarbon gases are present). Moreover, data gathering requirements related to plume tracki ng and testing should not unduly burden owners or operators, either in time or cost, and should be essential to evaluation of the plume's stability and safety.

80Individual Response: EPA agrees with commenters on the im portance of monitoring at GS sites and emphasizes that monitoring of injection activ ities will be an important component of every GS project. Monitoring associated with injecti on wells and the movement of the CO2 plume is necessary to verify that the injectate is confin ed in the target formations and does not endanger USDWs. EPA agrees with commenters that flexibility is important in developing and implementing a monitoring plan that is appropr iately tailored for a specific GS site. The purpose of the requirement at §146.90 to develop site-specific testi ng and monitoring plans is to ensure that the monitoring performed at a site is appropriate for site operat ional conditions and the geologic setting. EPA believes that this is the best approach for addressi ng potential risks at GS sites. These flexible provisions in the monitoring requirements for Class VI wells enable the owner or operator to tailor monitoring programs to the speci fic needs of each project in consultation with the Director. EPA agrees that seismic monitoring is not applic able to all sites. The final rule, at §146.90(g), requires owners or operators to perform monito ring to track the extent of the CO2 plume and pressure front. The owner or operator must use dire ct methods to monitor for pressure changes in the injection zone. Indirect methods (e.g., seismic, electrical, gravity, or electromagnetic surveys and/or down-hole CO2 detection to ols) are required unless the Director determines, based on site-specific geology that suchmethods are not appropriate. EPA is affording Director's disc retion regarding the use of geophys ical techniques at some sites because the Agency recognizes that geophysical methods are not appropriate in all geologic settings. For example, geophysical methods are diffi cult to execute in areas that are structurally and topographically complex or where lithologies have limited contrast in density, porosity, permeability, and other physical properties. EPA clarifies that this determination will be made by the Director based on the site-specific geologi c information submitted by the owner or operator with their permit application.

Letter ID: 0178 Comment ID: 23872 Letter Lines: 1805 to 1816
Comment Code: 4660 2.6.6 Geochemical monitoring
Comment: EPA proposes in section 146.90(d) "perio dic monitoring of the ground water quality and geochemical changes above the confining zone(s)." It is unclear how many wells would be required, and whether EPA expects that all zones would be monitored. Given the potential size of the CO2 plume and the number of confining zones, this could potentia lly require many monitoring wells, which could be extremely expensive and may not produce us eful data. We strongly recommend that EPA limit monitoring to the zone immediat ely above the confining zone, and only to the extent that the CO2 plume is within close proximity. There may be regional conditions where ground water is separated by hundreds or thousands of feet of confining strata, and where suchmonitoring is completely unnecessary. Directors should have discre tion to limit or tailor gr ound water monitoring, as

81appropriate, based on regional and site specific factors. Individual Response: Regarding monitoring locations, se ction §146.90(d) requ ires periodic monitoring of the ground water qua lity and geochemical changes above the confining zone(s). EPA clarifies that this monitoring requirementdoes not include the confining layer itself. Monitoring above the confining layer will provide an indication of upward movement of CO2 that might endanger a USDW. The exact number of formations to be tested will, however, be based on site-specific characteri stics and vulnerabilities and desc ribed in the Director-approved testing and monitoring plan. EPA believes that monitoring above the confining layer is an important part of a rigorous monitoring program. The final rule, at §146.90(d) requires peri odic monitoring of the ground water quality and geochemical changes above the confining zone(s). Monitoring in additional formations, e.g., the injection zone, may also be necessary, and if the Director believes such monitoring is warranted he/she has the authority to require that it be incl uded in the testing and monitoring plan. EPA agrees that geochemical monitoring in the in jection zone may not be warranted in all cases, and that it is important to in stall an appropriate number ofmonitoring wells based on sitespecific information and the planned monitoring re gime. However, the Agency believes that the data gained from monitoring wells in carefu lly selected locations will be invaluable. EPA disagrees that such monitori ng should be restricted to areas near the plume. Research, both EPA-funded and external, has shown that the zone of elevated pressure may be much larger than the plume (e.g., Birkholzer et al., 2008). This area of elevated pressure may cause migration of native brines from the target formation into overlying formations. Careful placement of monitoring wells within the delineated AoR (whi ch includes areas beyond the extent of the CO2 plume) would allow for detection of changes inwater quality related to GS activities. EPA acknowledges that very thick c onfining zones would reduce the ch ance that CO2 or other fluids will move from the injection zone; however, to increase protectiveness, a multiple-barrier approach to protecting USDWs from endange rment that includes both proper site characterization and a detailed m onitoring regime is warranted.

Letter ID: 0178 Comment ID: 23873 Letter Lines: 1818 to 1829
Comment Code: 4670 2.6.7 Surface air monitoring and/or soil gas monitoring (seeking comment)
Comment: Proposed section 146.90(h) gives Director s discretion to re quire surface air monitoring and/or soil gas monitoring to detect movement of CO2 that could endanger a USDW. The Alliance recommends deleting this provision. It is not clear how ambient air or soil gas monito ring is related to or supports the protection of USDWs. Surface air monitoring can result in false positives, which could prompt unnecessary and costly res ponse actions and needlessly alarm the public Any requirement for ambient air or soil gas monitoring would be a matter of state discretion pursuant to state law and not the federal UIC program, and

82would not be federally enforceable. [FN51] [FN51] Bath Petroleum Storage , Inc. v. Sows, 309 F.Supp. 2d 357 (N.D.N.Y 2004) (state law requiring sonar survey for UIC injection not federally enforceable). 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, EPA does not believe that this should entirely preclude their use. EPA believes that surface air and soil gas m onitoring in conjunction with deep subsurface monitoring as required at §146.90, can provide additional data to pinpoint the location and magnitude (or absence) of leaks that could endanger USDWs. The final rule at §146.90(h) retains the allowance for surface air and soil gas monitoring at the discretion of the Director as a means of identif ying 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, pursu ant to requirements at §146.91(c). EPA cl arifies that the decision to use surface monitoring and the selecti on of monitoring methods will be site-specific (e.g., may be influenced by geology, injection depth, and operational conditions) and must be based on potential risks to USDWs within the AoR.
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 Di rector's discretion.

Letter ID: 0178 Comment ID: 23874 Letter Lines: 1833 to 1839
Comment Code: 1220 1.1.1.1 Terminology and definitions Comment Code: 3300 2.2.1 Delineating the AoR/M odeling CO2 movement
Comment: EPA defines "area of review" as "the region surrounding the geologic sequestration project that may be imp acted by the injection activity. The area of review is based on computational modeling that accounts for the physical and chemical properties of all phases of the injected carbon diox ide stream." The phrase "may be impacted" is too vague, The AoR delineation shoul d be based on or limited by certain risk criteria; othe rwise, an AoR could cover an inappropriately large area that could be expensive to review and characterize. Individual Response: EPA agrees with commenters that furthe r clarity is needed with regard to the boundaries of the AoR. After considering the public comments on the proposed GS regulation, EPA has augmented the definition of Ao R to better encompass the area that may be impacted by the injectio n activity (i.e., the "surrounding area" to which the commenter refers). The Agency has modified the AoR definition at 146.84(a) to read as follows: The region surrounding the geologic sequestration proj ect where USDWs may be endangered by the injection activity. The area of review is deline ated using computationa l modeling that accounts for the physical and chemical prope rties of all phases of the inj ected CO2 stream and is based on

83available site characterization, m onitoring, and operational data. EPA is developing guidance on AoR and corrective action at GS Class VI s ites to assist owners or operators and Directors in evaluating requi rements and proposed AoR and corrective action plans under 146.84. The guidance describes EPA's reco mmended approaches for the data to be considered in an initial AoR delineation, how to apply computat ional modeling to delineate the AoR, performing corrective action at GS sites, and, when appropriate, completing AoR reevaluations. The guidance will be available on EPA's web site, at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

Letter ID: 0178 Comment ID: 23875 Letter Lines: 1840 to 1848
Comment Code: 1220 1.1.1.1 Terminology and definitions
Comment: The term "geological sequestration project" is defined as an injection well or wells used to emplace a CO2 stream beneath the lowermost formation containing a USDW, including the subsurface three-dimensional extent of the CO2 plume, associated pressure front, and displaced brine, as well as the surface area above that delineated region. We reco mmend removing the phrase "beneath the lowermost formation containing a USDW to reflect our comment suggesting that EPA permit CCS projects above USDWs where feasible. The AoR definition includes additional area that might be impacted and is not defined in terms of the extent of this area. Individual Response: EPA agrees that the geological se questration project definition should account for the limited circumstances where in jection above the lowermost USDW can be performed in a manner that protects USDWs. The Agency has modified the final definition of geologic sequestration project to read as follows: “Geologic se questration project means an injection well or wells used to emplace a carbon dioxide stream beneath the lowermost formation containing a USDW; or, wells used for geologic sequestration of carbon di oxide that have been granted a waiver of the inject ion depth requirements pursuant to requirements at §146.95; or, wells used for geologic sequestration of carbon di oxide that have receivedan aquifer exemption expansion. It includes the subsurface three-dime nsional extent of the carbon dioxide plume, associated pressure front, and displaced brine, as well as the surface areaabove that delineated region.” The final Class VI GS rule at §146.95 establishe s a process by which owners or operators can seek a waiver of the Class VI injection depth requirements. The waiver approach requires the submission of extensive, site-specific information (in conjunction with the permit application submission) to demonstrate that injection of CO2 into a non-USDW that is above or between USDWs can be done in a manner that is protectiv e of USDWs. The requirements are designed to ensure that the owner or operato r, the Director, and the Region al Administrator consider, on a site specific basis, the implications, benefits, and challenges associated with GS and ensuring water availability and USDW protection.

84Based on its evaluation of all public comments and input on the proposed rule and the NODA and Request for Comment, EPA has made many revisions to the Cla ss VI GS rule. Please see the final rule and preamble for additional information.

Letter ID: 0178 Comment ID: 23876 Letter Lines: 1850 to 1876
Comment Code: 1220 1.1.1.1 Terminology and definitions Comment Code: 4500 2.5 Proposed Mechanical Integrity Testing (MIT) Requirements (40 CFR 146.89)
Comment: EPA defines "mechanical integrity" as "the absence of significant leakage within the injection tubing, casing, or packer (known as internal mechanical integrity), or outside of the casing (known as external mechanical integrity)." The term "significant leakage" is not defined. An overly broad interpretation could result in a finding that mechanicalintegrity is not being maintained, notwithstanding the absence of any leakage that calls into question the safety of the project or threaten s USDWs. EPA should charac terize what constitutes "significant" or clarify under what c onditions significant leakage might be construed. We suggest defining and construing the term within the statutorily defined concept of "endangerment"[FN52] under SDWA, i.e., significant leakage would be defined as any leakage that c ould potentially endanger a USDW. The amount of leakage and what constitutes significant may vary depending upon the geologic formations and proxi mity to USDWs.[FN53] [FN52] Endangerment is defined as follows: Underground injection endangers drinking water sources if such injection may result in the presence in underground water which supplies or can reasonably be expected to supply any public water system of any contaminant, and if the presence of such contaminant may result in such system's not complying with any national primary drinking water regulation or may otherwise adversely affect the health of persons. 32 U.S.C. $ 300h(d). [FN53] Miami-Dade County. EPA, 529 F.3d 1049 (11th Cir. 2008) (upholding EPA's rule eliminating the non-endangerm ent finding requirement for Class I municipal injection wells). Individual Response: A properly designed and operated we ll should have no leakage in the casing, tubing, or packer and no fluid movement into a USDW through channels adjacent to the wellbore. While the intent of MITs is to detect these types of pr oblems as early as possible, the goal of the well design and constr uction requirements at §146.86 is th e complete absence of such problems. EPA clarifies that the purpose of the "significant leakage" language in this narrow context is simply to avoid triggering corrective actions for essentially de minimis situations. Determining whether a MIT result should trigger follow-up action is necessarily a case and sitespecific situation; as a result, EPA does not believe it is appropriate to define the term

85"significant leakage" in the c ontext of MITs. In addition, EPA has not defined this term for purposes of other injection well classes and this has not been shown to hinder permitting authorities' and owners or operators' ability to assess whether injection wells have adequate mechanical integrity. EPA believes that this appro ach allows states flexib ility, will not interfere with the implementation of existing UIC program s, and maintains protection of USDWs from endangerment. In keeping with its adaptive rule making approach, the Agency plan s to collect and review data every six years on early GS proj ects, including MIT data, to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary. For additional information, please see the discussion of MITs in the final rule preamble.

Letter ID: 0178 Comment ID: 23877 Letter Lines: 1879 to 1927
Comment Code: 1300 1.1.2.3 Comments on other aspects of CCS (capture, transport) Comment Code: 1310 1.1.2.4 Comments on other "out of scope" issues, e.g., pore space ownership Comment Code: 1400 1.2 Comments on EPA's Authority to Regulate Injection of CO2
Comment: XII. RELATED ISSUES, NOT RAISED IN THE PROPOSED RULE, THAT REQUIRE RESOLUTION The SDWA does not provide EPA authority to develop regulations for many important areas related to the geologicalsequestration of CO2. Thus the draft rule cannot address all of the potential impe diments to CCS development. Even if EPA were to promulgate a final UIC rule that encourages development of these critical technologies, ther e are other key factors th at would need to be properly addressed before major investment in these technologies can be expected. The following sets forth key issues thatwill not be resolved through this rulemaking but are linked inextricably to the successful development and implementation of CCS technology.
A. EMINENT DOMAIN AUTHORITY TO FA CILITATE PIPELINE CONSTRUCTION Energy facilities for the public convenie nce and necessity, su ch as electric transmission facilities and natural gas pipe lines, are able to make use of state or federal eminent domain authority to ensure that privat e landowners cannot block a project necessary for the public good. Eminent domain authority should be available for CO2 pipelines for CCS wh en it is necessary to cross private property. A substantial CO2 pi peline network may be requ ired for the transport of CO2 from sites where it is produced to an injecti on site. CO2 pipelines for CCS clearly should be considered to be used for the public convenience and

86necessity.
B. DETERMINATION OF SUB-SURFACE PROPERTY RIGHTS The government must address the ability to gain sufficient property rights to deep saline formations to conduct geologic sequestrati on. State property ownership regimes vary, but surface owners typically are considered to own property below the surface to the center of the earth. Safe sequestration of CO2 will not have any effect on the surface, but GS injections will result in underground plumes that may stretch acro ss many square miles under the property of multiple surface property owners. Prope rty ownership issues have been resolved successfully in th e context of EOR, but it s hould not be assumed that the same will be true for GS. Eminent dom ain authority should be available to obtain rights to subsurface storage space for geologic sequestration because of its public benefit.
C. RESOLUTION OF SURFACE LIABILITY ISSUES Though this Proposed Rule is limited in its scope to undergr ound injection of CO2 and the potential risks and resulting liabilities, issues regarding risks and liability at the surface must be addressed for CCS technology to fully develop. These include liability for major and sudden releases, seismic activity and ground heave, as well as liability under any GHG emission control regime when sequestered CO2, for the storage of which credits or offsets have been granted, is subsequently releas ed into the upper atmosphere. Individual Response: EPA acknowledges that the issue of GS falls within the broader context of CCS. EPA received a number of comments indicating that the Agency should further explore environmental and regulatory issu es beyond the scope of the GS rule as proposed. This comment is outside the scope of this rulemaking. EPA acknowledges that GS falls within the broade r context of CCS and the need for regulatory clarity to ensure that USDWs are protected from endangerment. In develo ping the final GS rule, the Office of Water coordinated with other Agency program offices and across federal agencies (e.g., with the Department of Energy; United Stat es Geological Survey; Bureau of Ocean Energy Management, Regulation, and Enforcement, formerly the Minerals Management Service; Bureau of Land Management). The Agency continues to evaluate areas of potential applicability of other Federal environmental statutes including, but not limited to: the Clean Air Act; the Resource Conservation and Recovery Act; the Comprehe nsive Environmental Response, Compensation, and Liability Act; and the Marine Protection, Research and Sanctuaries Act to various aspects of GS and CCS. The Agency will continue to coordinate on GS and CCS related issues to minimize redundancy and maximize efficiencies for owners or operators. For additional information, please see the discussion entitle d "How Does This RulemakingRelate to Other Federal Authorities and GS and CCS Activities?" in the preamble to the final GS rule. EPA recognizes that liability is an important issue to owners or operators but the Agency does

8788 not have authority under the SDWA to transfer long term liability from owners or operators to the state or federal government. Therefore, liability remains with the owner or operator.