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.Chesapeake Energy 12/18/2008 1 :34 :15 PM PAGE 2/004 Fax Serverp,1



# (It 

# Chesa

~ 

# eake

lENERGV

December 18, 2008

VIA FACSIMILE (202) 556-9744

AND CERTIFIED MAIL # 7008 0150 0001 6908 2324

Water Docket

US EPA (2822T)

1200 Pennsylvania Ave

., NW Washington, DC 20460 

## DEC 1 8 2008

Re : Comments on EPA Federal Requirements under the Underground Injection

Control (UIC) Program for Carbon Dioxide (C02) Geologic Sequestration (GS)

Wells : Proposed Rule
EPA-HQ-OW-2008-0390

Gentlemen :

Chesapeake Energy appreciates the opportunity to make the following comments on
the referenced rulemaking

.

The primary focus of our comments is that additional language is needed in the proposed rule to clarify that existing and future Class II wells used for underground injection of naturally occurring acid gases, including C02, at gas production and/or gas processing sites are exempted from regulation under the new Class VI well designation

.

We have also made comments regarding (1) state primacy for Class VI wells, and (2) liability after "site closure"

.

We appreciate the opportunity to comment on this proposed regulation

.

Sincerely,

Grover R

. Campbell
Environmental Engineer 

## DEC 18 2008 Regulatory Department

Chesapeake Energy Corporation

P .O

. Box 18496 " Oklahoma City, UK 73154-0496 " 6100 N

. Western Avenue " Oklahoma City, OK 73118

405 .848 .8000 " fax 405 .879 .7908Chesapeake Energy 12/18/2008 1 :34 :15 PM PAGE 3/004 Fax Serverp,2

December 18, 2008
Comments on EPA-HQ-OW-2008-0390 Page 1



### Chesapeake Energy Comments on EPA's Proposed Rule for C02 GS

1

. Exemption of Class II Wells from the proposed Class VI Well Classification

Section G of the Preamble to the proposed rule (G

. How Would This Proposal Affect
Existing Injection Wells Under the U1C Program?) reads in part : "The requirements in today's proposal, if finalized, would not specifically apply to Class II injection wells

. . ."

Other statements in the preamble suggest that the EPA's intent is to not regulate existing or future Class II wells as Class VI wells unless an owner or operator of such a
well chooses to reclassify the well for geologic sequestration of a C02 stream

. However,

the applicability language and definitions in the proposed rule do not achieve that goal

. More specific language is needed in order for the public, regulatory agencies and courts

to know without a doubt that Class II wells used for underground injection of naturally occurring acid gases, including C02, at gas production and/or gas processing sites are exempt from the Class VI requirements

. The same applies for C02 injection wells at

Enhanced Oil or Gas Recovery (EORIEGR) field operations

. Therefore, the following language revisions should be made

.

Revise 40 CFR Part 144 Subpart H, 146 .81(b) to read :

This subpart applies to wells used to inject carbon dioxide specifically for the

purpose of geologic sequestration, i .e

., the long-term containment of a gaseous, liquid or supercritical carbon dioxide stream in subsurface geologic formations

.

(1) Unless applicability is requested by the owner or operator, existing and future

Class II wells that inject C02 and other fluids, which are brought to the surface in

connection with conventional oil or natural gas production operations, are exempt

from the requirements of this subpart

.

(2) Unless applicability is requested by the owner or operator, existing and future

Class 11 wells that inject C02 and other fluids, which are operated in connection

with an Enhanced Oil or Gas Recovery (EOR/EGR) field operation, are exempt

from the requirements of this subpart

.

2

. State Primacy for Class VI Wells

The EPA noted in the preamble to the proposed rule that it is seeking comment on the

merits and possible disadvantages of allowing primacy approval for Class VI wells independent of other well classes

.

We prefer that no state have primacy approval for Class VI wells unless that state also
has primacy approval for Class II wells

. Our concern is that a state with primacy for only
the new Class VI wells may assume that the only permitting option for injection of C02 underground for any purpose, including the injection of naturally occurring acid gases,Chesapeake Energy 12/18/2008 1 :34 :15 PM PAGE 4/004 Fax Serve~~3

December 18, 2008 Comments on EPA-NQ-OAR-2008-0318 Page 2

including COZ, at gas production and/or gas processing sites, would be a Class VI permit

. This could lead to confusion and delays in obtaining a Class II permit

. Any state granted primacy for the new Class VI wells should also have primacy for Class 11 wells

so that their permitting agency is familiar with the purpose of Class II wells and the less restrictive requirements for Class II wells

.

3

. Liability after "Site Closure"

In the preamble to the proposed rule, the EPA states that "Trust responsibility for potential impacts to USDWs remains with the owner or operator indefinitely under current SDWA provisions ." In essence, the EPA has chosen not to address the issue of long term liability after "site closure", which is the period of time after the end of the post-injection site care phase of the GS project

.

Prior to issuing a final rule on C02 sequestration, the EPA must address this liability issue

. While we do not offer a specific approach to the problem of "site stewardship after site closure", we do believe that the approach taken should be in line with the basic recommendations of the Interstate Oil and Gas Compact Commission (IOGCC) as outlined in "C02 Storage : A Legal and Regulatory Guide for States"

.

The IOGCC has proposed a two-stage Closure Period and Post-Closure Period

. The Closure Period is defined as that period of time when the plugging of the injection well has been completed and continuing for a defined period of time (10 years unless otherwise designated by the State Regulatory Agency) after injection activities cease and the injection well is plugged

. During this Closure Period, the operator of the storage site would be responsible to maintain an operational bond and individual well bonds

. The individual well bonds would be released as the wells are plugged

. At the conclusion of the Closure Period, the operational bond would be released and the liability for ensuring that the site remains a secure storage site during the Post-Closure Period would transfer to the state

. During the Post-Closure Period, the financial resources necessary for the state or a state contracted entity to engage in future monitoring, verification, and remediation activities would be provided by a state-administered trust fund

. The IOGCC proposed the creation of an industry-funded and state-administered trust fund as the most effective and responsive "care-taker" program to provide the necessary oversight during the Post-Closure Period

. The trust fund would be funded by

an injection fee assessed to the site operator and calculated on a per-ton basis, at the point of custody transfer of the C02 from the generator to the site operator

.Letter ID: 0271 Commenter: Grover Campbell Organization: Chesapeake Energy

Letter ID: 0271 Comment ID: 22892 Letter Lines: 40 to 44 ; 58 to 89

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: The primary focus of our comments is that additional language is needed in the proposed rule to clarify that existing and future Class II wells used for underground injection of na turally occurring acid gases, including CO2, at gas production and/or gas processing sites ar e exempted from regulation under the new Class VI well designation.

1 . Exemption of Class II Wells from th e proposed Class VI Well Classification

Section G of the Preamble to the proposed rule (G. How Woul d This Proposal Affect Existing Injection Wells Under th e U1C Program?) reads in part: "The requirements in today's proposal, if finali zed, would not specifically apply to Class II injection wells. . ." Other statements in the preamble suggest that the EPA's intent is to not regulate existing or future Class II wells as Class VI wells unless an owner or ope rator of such a well chooses to reclassify the well for geologic sequestration of a CO2 stream . However, the app licability language and definitions in the proposed rule do not achieve that goal. More specific language is needed in order for the pub lic, regulatory agencies and courts to

know without a doubt that Class II wells used for underground injection of naturally occurring acid gases, includi ng CO2, at gas production and/or gas processing sites are exempt from the Class VI requirements. The same applies for CO2 injection wells at Enhanced Oil or Ga s Recovery (EOR/EGR) field operations . Therefore, the following language revisions should be made.

Revise 40 CFR Part 144 Subpa rt H, 146.81(b) to read:

This subpart applies to wells used to in ject carbon dioxide sp ecifically for the purpose of geologic sequestra tion, i.e., the long-term c ontainment of a gaseous, liquid or supercritical carbon dioxide str eam in subsurface geologic formations.

(1) Unless applicability is requested by the owner or operator, existing and future Class II wells that inject CO 2 and other fluids, wh ich are brought to

the surface in connection with conventi onal oil or natural gas production operations, are exempt from the requirements of this subpart.

(2) Unless applicability is requested by the owner or operator, existing

and future Class 11 wells that inject CO2 and other flui ds, which are operated in

1connection with an Enhanced Oil or Gas Recovery (EOR/EGR) field operation, are exempt from the requirements of this subpart.

Individual Response: EPA agrees that injection of CO2 for the primary purpose of enhancing oil and gas recovery should remain under the Cl ass II Program. The Agen cy believes that the nature and risks of CO2 inject ion for the primary purpose of long term storage pose different risks than injection for the primary purpose of EOR, and therefore has developed new Class VI regulations to address these unique risks. For example, the volu me of CO2 anticipated to be injected for long term storage is significan tly greater than for EO R operations. Reservoir pressure conditions will also be different, with Class VI injection ope rations involving large volumes of CO2 and likely having higher pressures w ithin their storage formations than Class II EOR projects.

The GS rule language, at §146.81(b), clearly states that the rule applies to wells that inject carbon dioxide for the purpose of long term sequestration. Wells that inject carbon dioxide primarily for the purpose of enhanced recovery or oil or gas are considered Class II wells, and they are not required to meet the requirements in the final GS rule.

Letter ID: 0271 Comment ID: 22893 Letter Lines: 92 to 107

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

Comment: 2. State Primacy for Class VI Wells

The EPA noted in the preamble to the proposed rule that it is seeking comment on the merits and possible disadvantages of allowing primacy approval for Class VI wells independent of other well classes.

We prefer that no state have primacy a pproval for Class VI wells unless that state also has primacy approval for Class II wells. Our concern is that a state with primacy for only the new Class VI wells may assume that the only permitting option for injection of CO2 underground fo r any purpose, including the injection of naturally occurring acid gases, incl uding CO2, at gas production and/or gas processing sites, would be a Class VI perm it. This could lead to confusion and delays in obtaining a Class II permit. A ny state granted primacy for the new Class VI wells should also have prim acy for Class 11 wells so that their permitting agency is familiar with the purpose of Class II wells and the less restrictive requirements for Class II wells.

Individual Response: EPA disagrees that Class VI primacy should only be granted to states with Class II programs. Many stat es that intend to sequester CO2 may not have oil and gas programs (e.g., states with extensive saline fo rmations and no oil and gas resources). Furthermore, states with primacy for other we ll classes (e.g., Class I or deep Class V wells) would also possess a great deal of technical expertise regarding inje ction technology and an understanding of S ection 1422 of SDWA.

2While EPA acknowledges that states that ha ve not obtained primacy under SDWA Section 1422 for other well classes may be less familiar w ith implementing the UIC program under that section of the Act, the Agency does not believe this would preclude their ability to effectively obtain and implement primacy for Class VI wells . EPA does not intend to limit primacy of Class VI wells to only states with primacy for Class II wells—any state that can demonstrate in its primacy application that they ha ve developed regulations that ar e at least as stringent as the minimum Federal requirements (e.g., perm itting, inspection, operation, monitoring, and recordkeeping requirements) provided in the final GS rule will be granted primacy for Class VI

wells.

EPA also plans to support states as needed to help them develop and implement their Class VI programs. EPA will allow states to apply for pr imacy for Class VI independent of other well classes regardless of whether or not they have primacy for other well classes. EPA is developing guidance materials and plans to conduct on-line and in-person training for States, Tribes, and Territories to describe the process of a pplying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the

technical and administrative issues on developing GS regulations that are the equivalent of

minimum Federal criteria a nd requirements. The guidance will be available at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

Letter ID: 0271 Comment ID: 22894 Letter Lines: 109 to 142

Comment Code: 5460 2.9.2 Comments on transfer of lia bility for long-term care

Comment: 3. Liability after "Site Closure"

In the preamble to the proposed rule, the EPA states that "Trust responsibility for potential impacts to USDWs remains w ith the owner or operator indefinitely under current SDWA provisions." In essen ce, the EPA has chosen not to address the issue of long term liab ility after "site closure", which is the period of time after the end of the post-injection site care phase of the GS project.

Prior to issuing a final rule on CO2 seque stration, the EPA must address this liability issue. While we do not offer a sp ecific approach to the problem of "site stewardship after site closure", we do belie ve that the approach taken should be

in line with the basic recommendations of the Interstate Oil and Gas Compact Commission (IOGCC) as outlined in "CO2 St orage: A Legal and Regulatory Guide for

States".

The IOGCC has proposed a two-stage Closur e Period and Post-Closure Period. The Closure Period is defined as that pe riod of time when the plugging of the injection well has been completed and con tinuing for a defined period of time (10 years unless otherwise designated by the State Regulatory Agency) after injection activities cease and the in jection well is pl ugged. During this Closure Period, the operator of the storage si te would be responsible to maintain

34 an operational bond and individual well bonds .The individual well bonds would be released as the wells are plugged. At the conclusion of the Closure Period, the operational bond would be released and the liability for ensuring that the site remains a secure storage site during the Post-Closure Period would transfer to the state. During the Post-C losure Period, the financial resources necessary for

the state or a state contracted entity to engage in future monitoring, verification, and remediati on activities would be provided by a

state-administered trust fund. The IOGCC proposed the creation of an industryfunded and state-administered trust fund as the most effective and responsive "care-taker" program to pr ovide the necessary oversigh t during the Post-Closure Period . The trust fund would be funded by an injection fee assessed to the site operator and calculated on a per-ton basis, at the point of custody transfer of the CO2 from the generato r to the site operator.

Individual Response: Under the final GS rule, once an owne r or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or opera tor will generally no longer be subject to enforcement for regulatory noncompliance. Furtherm ore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in ce rtain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even afte r site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provid ed by the owner or 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 ow ner or operator to take necessary response

measures if he or she receives information that a contaminant is present or is likely to enter a public water system or an USDW, which may pres ent an imminent and s ubstantial endangerment to the health of persons, and the appropriate Stat e and local authorities ha ve not acted to protect the health of such persons. Th e action may include issuing admi nistrative orders or commencing a civil action for appropriate relief against the ow ner or operator of a Class VI well. If the owner or operator fails to comply with the order, they may be subject to a civil penalty for each day in

which such violation occurs or failure to comply continues.

Furthermore, after site closure an owner or ope rator may remain liable under tort and other remedies, or under other federal statutes includi ng, but not limited to, Clean Air Act, 42 U.S.C. §§ 7401-7671; CERCLA, 42 U.S.C. § 9601-9675; and RCRA, 42 U.S.C. § 6901-6992. EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal government or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.