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.
12012 Wickchester Lane, Suite 660 Houston, Texas 77079

PH: 281-688-8475 FAX: 281-531-8481

December 23, 2008

Cynthia C. Dougherty

Director

Office of Ground Water and Drinking Water

U. S. Environmental Protection Agency

1200 Pennsylvania Ave., NW.

Washington, DC 20460

Dear Director Dougherty:

COMMENTS OF BLUE SOURCE LLC 

ON THE ENVIRONMENTAL PROTECTION AGENCY’S

PROPOSED RULEMAKING UNDER THE SAFE DRINKING WATER ACT’S 

UNDERGROUND INJECTION CONTROL PROGRAM FOR CARBON 

DIOXIDE GEOLOGIC SEQUESTRATION WELLS

DOCKET ID NO. EPA-HQ-OW-2008-0390

December 23, 2008

Blue Source LLC (Blue Source) is pleased to submit these comments on the 

Environmental Protection Agency’s (EPA) proposed regulations for the injection and 

geologic storage of carbon dioxide (CO2) under the authority of the Safe Drinking Water 

Act (SDWA)’s underground injection control (UIC) program, issued in July 2008 

(Docket ID No. EPA-HQ-OW-2008-0390).
12012 Wickchester Lane, Suite 660 Houston, Texas 77079

PH: 281-688-8475 FAX: 281-531-8481

I. About Blue Source

Blue Source (.bluesource.com) offers businesses multiple approaches for 

reducing greenhouse gas emissions associated with climate change. We provide access 

to capital to fund project development, work with companies on developing projects and 

oversees production of long-term verified emission reductions. We are a portfolio 

company of First Reserve Corporation, a leading private equity investor in the energy 

industry, who since 2006 has been a major equity partner in the company, and certain 

affiliated investment funds of Och-Ziff Capital Management Group LLC.

Blue Source is specifically interested in EPA’s proposal because we have

significant knowledge and experience in developing carbon capture and storage (CCS) 

systems across North America. Our management is in the unique position of having 

developed, designed, constructed, operated or owned nearly all of the commercially 

developed, anthropogenic CO2-sourced pipelines for enhanced oil recovery (CO2-EOR) 

in North America during the last 20 years. These projects have successfully sequestered 

carbon dioxide emissions that were previously vented into the atmosphere. 

II. Specific Comments on the Proposed Regulations

a. Background

Blue Source’s comments here are focused on a narrow, but critical, aspect of 

EPA’s proposal – namely, whether CO2-EOR operators should have the option of 

participating in EPA’s forthcoming CCS regulatory scheme.1

 1 We believe that adoption of our comments is a necessary component of ensuring that CO2-EOR flourishes 

as CCS, but other steps need to be taken, too. For example, we also believe that EPA needs to ensure that 

carbon dioxide is not regulated as a hazardous waste or substance under statutes such as RCRA and 

CERCLA during storage operations; in a future rulemaking EPA perhaps could do so by expanding current 

exemptions which apply to oil & gas operations to include “storage” operations.
12012 Wickchester Lane, Suite 660 Houston, Texas 77079

PH: 281-688-8475 FAX: 281-531-8481

The preamble to EPA’s proposal suggests that as long as production is occurring 

and reservoirs are not depleted, Class II permitting provisions apply; only when a 

reservoir is depleted may the new proposed Class VI CCS provisions apply.2

The inadvertent impact of EPA’s proposal is to strand CO2-EOR by not giving it 

the option of being included in CCS. This would be an unfortunate outcome for the 

environment and CCS. According to a recent study by the U.S. Department of Energy 

(DOE), CO2-EOR has the potential to provide a significant storage market for carbon 

dioxide.

 Because 

the grandfathering of the Class VI requirements is relatively narrow, we interpret EPA’s 

proposal to mean that CO2-EOR operators (and others associated with such projects, 

including industrial sources) effectively will be disqualified from participating in CCS. 

This disqualification, in turn, suggests that: (i) capped industrial sources who intend to 

use CO2-EOR as their means of compliance with likely forthcoming cap-and-trade 

legislation will be deprived of the ability to do so, and (ii) uncapped industrial sources 

under cap-and-trade legislation may be disqualified from seeking treatment as providers 

of offsets to regulated sources. 

3

The commercial aspects of CO2-EOR in helping to finance, fund, and build firstmover CCS infrastructure which, in turn, could be used by broader CCS operations 

(including deep saline, for example) cannot be overlooked. DOE has estimated that CO2

 DOE estimates that the size of this market is on the order of 7,500 million 

metric tons of carbon dioxide between 2008 and 2030. CO2-EOR, in other words, is not 

a niche in the battle to combat climate change; it instead is poised to play a critical role, 

particularly in the early years of the deployment of CCS technology.

 2 See discussion in Preamble at 48-49. 3 See “Storing CO2 With Enhanced Oil Recovery,” DOE/NETL-402/1312/02-0708, at 1 (Feb. 7, 2008) 

(available at http://www.netl.doe.gov/energy-analyses/pubs/storing%20co2%20w%20eor_final.pdf).
12012 Wickchester Lane, Suite 660 Houston, Texas 77079

PH: 281-688-8475 FAX: 281-531-8481

sales for EOR would support the “early market entry” of up to forty-nine (one GW size) 

installations of CCS technology in the coal-fired utility sector alone.4

Blue Source is concerned that these (and other) significant CO2-EOR benefits 

could be squandered if EPA proceeds with its proposed treatment of this proven 

technology.

 Given that Europe 

is looking at funding twelve demonstration CCS projects in the years ahead, we believe 

that forty-nine projects is a significant number of projects that could jump-start CCS as a 

climate mitigation solution.

Giving CO2-EOR operators the option of participating in storage would not 

imperil drinking water aquifers as such assessments are already part of the Class II 

approval process. Indeed, since CO2-EOR operations are by definition brownfields, not 

greenfields, it might be expected that the risk profile of such projects – in terms of 

potential drinking water impacts – might be lower initially than other sites, although site 

assessments would of course still need to be done.

5

b. Suggested Solution

Blue Source encourages EPA to provide CO2-EOR operators with the option of 

participating in CCS. Such participating could take several forms. For example, 

operators (and other project participants) could be given the right to “opt into” what 

might be called an “EOR-plus” regulatory option under the existing Class II well 

program. The EOR-plus regulatory option would of course be limited to anthropogenic 

 4 Id. 5 A large volume of literature, which won’t be repeated here, documents the successful, safe and 

environmentally sound use of CO2-EOR through the US for many decades. Moreover, a significant portion 

of US domestic oil production is the result of CO2-EOR: according to the 2006 EOR survey published by 

the Oil & Gas Journal, approximately 237,000 barrels per day of incremental oil production is being 

produced by eighty six CO2-EOR projects that are distributed broadly across the United States. CO2-EOR 

is not just about the Permian Basin, in other words.
12012 Wickchester Lane, Suite 660 Houston, Texas 77079

PH: 281-688-8475 FAX: 281-531-8481

CO2 and might include the following additional requirements: (i) up-front suitability 

assessment for storage operations, including an analysis of the reservoir’s risk profile and 

an assessment of whether appropriate storage rights have been obtained (if necessary); 

and (ii) measuring, monitoring and verification requirements.

This option could be selected by the operator at any time – e.g., prior to, during, 

or at the conclusion of a CO2-EOR flood.

This option also could be implemented by the primacy States under the existing 

Class II program. This makes sense because the States already have decades of 

experience in regulating Class II; State regulators also possess the necessary geologic 

data and expertise to ensure that CO2-EOR storage operations did not imperil 

environmental end points of concern.

In lieu of a more formalistic EOR-plus regulatory option, EPA could provide even 

greater flexibility by indicating that CO2-EOR operations would have the ability, on a 

case-by-case basis, to demonstrate that they were engaged in storage by meeting a 

performance-based storage and environmental standard, focused on drinking water 

aquifers. Alternatively, the preamble to the final rule could provide that the rule’s 

applicability was limited to deep saline, and that nothing in the rule was intended to 

impact the ability of CO2-EOR to qualify as storage, but that this topic would be 

addressed in a separate rulemaking, which EPA then would undertake expeditiously.

Finally, Blue Source is not proposing that any changes be made to the existing 

Class II regulations, which would remain available for those operators who did not elect 

to opt into the EOR-plus regulatory (or comparable) scheme. Blue Source also is not 
12012 Wickchester Lane, Suite 660 Houston, Texas 77079

PH: 281-688-8475 FAX: 281-531-8481

suggesting that business-as-usual CO2-EOR qualify as storage because we recognize that 

existing Class II requirements fall short of what may be required to demonstrate storage.

Conclusion

Blue Source encourages EPA to provide CO2-EOR operators with the option of 

participating in CCS because doing so would provide the most environmentally sensitive 

method of jump-starting CCS, a critical climate mitigation technology. Failure of EPA to 

do so could stall the development, deployment and funding of critical CCS infrastructure 

and lead to unnecessary further industrial emissions of carbon dioxide.

Thank you

Michael E. Moore

Vice President External Affairs

Blue Source
Letter ID: 0232 

Commenter: Michael E. Moore 

Organization: Blue Source 

Letter ID: 0232 Comment ID: 21896 Letter Lines: 63 to 77 

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

Comment Code: 1640 1.3.4 CERCLA issues (seeking comment) 

Comment Code: 2046 1.5.2.3 Continuing to classify CO2 injection for EOR/EGR as Class II/ 

dividing line between Class II and Class VI (seeking comment) 

Comment: II. Specific Comments on the Proposed Regulations 

a. Background 

Blue Source’s comments here are focused on a narrow, but critical, aspect of 

EPA’s proposal - namely, whether CO2-EOR operators should have the option of 

participating in EPA’s forthcoming CCS regulatory scheme. [FN1] 

[FN1: We believe that adoption of our comments is a necessary component of ensuring 

that CO2-EOR flourishes as CCS, but other steps need to be taken, too. For 

example, we also believe that EPA needs to ensure that carbon dioxide is not 

regulated as a hazardous waste or substance under statutes such as RCRA and 

CERCLA during storage operations; in a future rulemaking EPA perhaps could do so 

by expanding current exemptions which apply to oil & gas operations to include 

"storage" operations.] 

Individual Response: EPA clarifies that the Class VI GS rule is designed to ensure the 

protection of USDWs from endangerment, and does not aim to promote GS deployment. 

EPA notes that the GS rule is not promulgated under the RCRA or CERCLA statutes, and 

further, the applicability of those statutes 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 received many comments regarding the applicability of the RCRA 

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

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

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

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

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

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

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

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

proposal will need to do so during the comment period for that rule. 

EPA clarifies that CO2 itself is not listed as a hazardous substance under CERCLA; however, the 

1
CO2 stream may contain a listed hazardous substance (such as mercury) or may mobilize 

substances in the subsurface that could react with ground water to produce listed hazardous 

substances (such as sulfuric acid). Whether such substances may result in CERCLA liability 

from a sequestration facility depends entirely on the composition of the specific CO2 stream and 

the environmental media in which it is stored (e.g., soil or ground water). CERCLA exempts 

from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “federally permitted 

releases” (FPR) as defined in CERCLA, 42 U.S.C. 9601(10). Class VI permits will need to be 

carefully structured to ensure that they prevent potential releases from the well which are outside 

the scope of the Class VI permit. 

The Agency acknowledges the commenter's concerns regarding the scope and possible impacts 

of CERCLA liability on CCS activities, however EPA notes that the GS rule is not promulgated 

under CERCLA, therefore the applicability of that statute will not be determined under the 

SDWA or the terms of the GS rule, but rather according to the CERCLA statute itself and any 

implementing regulations that may apply. 

EPA adds that, if it develops regulations in the future, stakeholders will be provided opportunity 

for public comment. 

Letter ID: 0232 Comment ID: 21897 Letter Lines: 79 to 187 

Comment Code: 2046 1.5.2.3 Continuing to classify CO2 injection for EOR/EGR as Class II/ 

dividing line between Class II and Class VI (seeking comment) 

Comment Code: 2064 1.5.3.2 Grandfathering construction of Class II wells (seeking comment) 

Comment: The preamble to EPA’s proposal suggests that as long as production is occurring 

and reservoirs are not depleted, Class II permitting provisions apply; only when 

a reservoir is depleted may the new proposed Class VI CCS provisions apply. 

[FN2] Because the grandfathering of the Class VI requirements is relatively 

narrow, we interpret EPA’s proposal to mean that CO2-EOR operators (and others 

associated with such projects, including industrial sources) effectively will be 

disqualified from participating in CCS. This disqualification, in turn, 

suggests that: (i) capped industrial sources who intend to use CO2-EOR as their 

means of compliance with likely forthcoming cap-and-trade legislation will be 

deprived of the ability to do so, and (ii) uncapped industrial sources under 

cap-and-trade legislation may be disqualified from seeking treatment as 

providers of offsets to regulated sources. 

[FN2: See discussion in Preamble at 48-49.] 

The inadvertent impact of EPA’s proposal is to strand CO2-EOR by not giving it 

the option of being included in CCS. This would be an unfortunate outcome for 

the environment and CCS. According to a recent study by the U.S. Department of 

Energy (DOE), CO2-EOR has the potential to provide a significant storage market 

for carbon dioxide. [FN3] DOE estimates that the size of this market is on the 

order of 7,500 million metric tons of carbon dioxide between 2008 and 2030. 

2
CO2-EOR, in other words, is not a niche in the battle to combat climate change; 

it instead is poised to play a critical role, particularly in the early years of 

the deployment of CCS technology. 

The commercial aspects of CO2-EOR in helping to finance, fund, and build firstmover CCS infrastructure which, in turn, could be used by broader CCS operations 

(including deep saline, for example) cannot be overlooked. DOE has estimated 

that CO2 sales for EOR would support the "early market entry" of up to fortynine (one GW size) installations of CCS technology in the coal-fired utility 

sector alone. [FN4] Given that Europe is looking at funding twelve 

demonstration CCS projects in the years ahead, we believe that forty-nine 

projects is a significant number of projects that could jump-start CCS as a 

climate mitigation solution. 

[FN3: See "Storing CO2 With Enhanced Oil Recovery," DOE/NETL-402/1312/02-0708, 

at 1 (Feb. 7, 2008) (available at 

http://www.netl.doe.gov/energy-analyses/pubs/storing%20co2%20w%20eor_final.pdf) 

.] 

[FN4 Id.] 

Giving CO2-EOR operators the option of participating in storage would not 

imperil drinking water aquifers as such assessments are already part of the 

Class II approval process. Indeed, since CO2-EOR operations are by definition 

brownfields, not greenfields, it might be expected that the risk profile of such 

projects - in terms of potential drinking water impacts - might be lower 

initially than other sites, although site assessments would of course still need 

to be done. 

Blue Source is concerned that these (and other) significant CO2-EOR benefits 

could be squandered if EPA proceeds with its proposed treatment of this proven 

technology.[FN5] 

[FN5: A large volume of literature, which won’t be repeated here, documents the 

successful, safe and environmentally sound use of CO2-EOR through the US for 

many decades. Moreover, a significant portion of US domestic oil production is 

the result of CO2-EOR: according to the 2006 EOR survey published by the Oil & 

Gas Journal, approximately 237,000 barrels per day of incremental oil production 

is being produced by eighty six CO2-EOR projects that are distributed broadly 

across the United States. CO2-EOR is not just about the Permian Basin, in other 

words.] 

b. Suggested Solution 

Blue Source encourages EPA to provide CO2-EOR operators with the option of 

participating in CCS. Such participating could take several forms. For 

example, operators (and other project participants) could be given the right to 

3
"opt into" what might be called an "EOR-plus" regulatory option under the 

existing Class II well program. The EOR-plus regulatory option would of course 

be limited to anthropogenic CO2 and might include the following additional 

requirements: (i) up-front suitability assessment for storage operations, 

including an analysis of the reservoir’s risk profile and an assessment of 

whether appropriate storage rights have been obtained (if necessary); and (ii) 

measuring, monitoring and verification requirements. 

This option could be selected by the operator at any time - e.g., prior to, 

during, or at the conclusion of a CO2-EOR flood. 

This option also could be implemented by the primacy States under the existing 

Class II program. This makes sense because the States already have decades of 

experience in regulating Class II; State regulators also possess the necessary 

geologic data and expertise to ensure that CO2-EOR storage operations did not 

imperil environmental end points of concern. 

In lieu of a more formalistic EOR-plus regulatory option, EPA could provide even 

greater flexibility by indicating that CO2-EOR operations would have the 

ability, on a case-by-case basis, to demonstrate that they were engaged in 

storage by meeting a performance-based storage and environmental standard, 

focused on drinking water aquifers. Alternatively, the preamble to the final 

rule could provide that the rule’s applicability was limited to deep saline, and 

that nothing in the rule was intended to impact the ability of CO2-EOR to 

qualify as storage, but that this topic would be addressed in a separate 

rulemaking, which EPA then would undertake expeditiously. 

Finally, Blue Source is not proposing that any changes be made to the existing 

Class II regulations, which would remain available for those operators who did 

not elect to opt into the EOR-plus regulatory (or comparable) scheme. Blue 

Source also is not suggesting that business-as-usual CO2-EOR qualify as storage 

because we recognize that existing Class II requirements fall short of what may 

be required to demonstrate storage. 

Conclusion 

Blue Source encourages EPA to provide CO2-EOR operators with the option of 

participating in CCS because doing so would provide the most environmentally 

sensitive method of jump-starting CCS, a critical climate mitigation technology. 

Failure of EPA to do so could stall the development, deployment and funding of 

critical CCS infrastructure and lead to unnecessary further industrial emissions 

of carbon dioxide. 

Individual Response: EPA recognizes that the oil and gas industry has decades of experience 

injecting CO2 for the purpose of ER, and that sites used for ER may be suitable for GS and may 

be among the first GS sites. However, the Agency believes that the nature and risks of CO2 

4
5

injection for the primary purpose of long term storage poses different risks than injection for the 

primary purpose of ER, and therefore has developed new Class VI regulations to address these 

unique risks. For example, the volume of CO2 anticipated to be injected for long term storage is 

significantly greater than for ER operations. Reservoir pressure conditions will also be different, 

with Class VI injection operations involving large volumes of CO2 and likely having higher 

pressures within their storage formations than Class II ER projects, which may lead to fluid 

movement that endangers a USDW. 

The final Class VI regulations require that any owner or operator injecting CO2 for the primary 

purpose of long term storage obtain a Class VI permit with some special consideration for the 

fact that they are transitioning from a well not originally designed to meet Class VI requirements. 

The Director has the authority to determine at what point a Class VI permit is required for those 

projects that are transitioning from the primary purpose of EOR to long term storage of CO2. 

The final regulation provides a set of technical factors for the Director to evaluate in making this 

determination, at §144.19. EPA believes that this approach provides sufficient protection of 

USDWs when there is an increased risk to USDWs as compared to traditional Class II operations 

while allowing for site-specific flexibility. 

EPA is developing guidance on transitioning permits from Class II to Class VI. The guidance 

will assist Directors in determining whether an injection project should be transitioned from 

Class II where the primary purpose is oil and gas production to Class VI where the primary 

purpose is long-term storage of large volumes of CO2. The guidance describes recommended 

methods the Director may use to evaluate changes in risk to USDWs from projects, and how the 

Director may determine whether a project should be regulated within the Class II or Class VI 

UIC program. This guidance will be available on EPA’s website at 

http://water.epa.gov/type/groundwater/uic/wells_sequestration.cfm. For more information, please 

see the discussion on transition of Class II wells in the preamble to the final GS rule. 

EPA clarifies that the purpose of the GS rule is to ensure protection of USDWs from 

endangerment and not to promote or incentivize GS deployment. However, the Agency believes 

that establishing a regulatory framework for the future development and deployment of CCS 

technology may provide the regulatory and jurisdictional certainty needed to foster development 

and deployment of CCS while ensuring USDW protection.