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.DUKE ENERGY CORPORATION

526 South Church Street.
Charlotte, NC 28202 Mailing Address:

PO Box 1006
Charlotte, NC 28201-1006

COMMENTS OF DUKE ENERGY

ON THE ENVIRONMENTAL PROTECTION AGENCY’S

PROPOSED RULEMAKING UNDER THE SAFE DRINKING WATER A CT’S

UNDERGROUND INJECTION CONTROL PROGRAM FOR CARBON DI OXIDE

GEOLOGIC SEQUESTRATION WELLS

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

December 22, 2008

Duke Energy Shared Services (“Duke Energy”), on beh alf of Duke Energy Carolinas,

LLC., Duke Energy Indiana, Inc., Duke Energy Ohio I nc., and Duke Energy Kentucky Inc.

submits the following comments in response to the a bove-referenced proposed rule and request

for comment from the Environmental Protection Agenc y (“EPA”). Duke Energy, one of the

largest electric power companies in the United Stat es, supplies and delivers electricity to

approximately 4 million U.S. customers and natural gas service to approximately 520,000

customers in its regulated jurisdictions. The compa ny has approximately 35,000 net megawatts

of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution

services in Ohio and Kentucky. In addition, Duke En ergy has more than 4,000 net megawatts of

electric generation in Latin America, and is a join t-venture partner in a U.S. real estate company.

Duke Energy supports EPA’s efforts to develop a reg ulatory framework for geologic

sequestration (“GS”) of carbon dioxide (“CO 2 ”). Coal, the nation’s most abundant natural

energy resource, accounts for approximately 50% of the electricity consumed in the U.S. today.

Development of a workable GS regulatory program is critical to this country’s ability to make

substantial reductions in CO 2 emissions while keeping coal as a viable energy re source that

contributes to the nation’s energy independence.

As one of the largest coal-fired generators of elec tricity in the U.S., and as a likely user of

GS to reduce CO 2 emissions, this rulemaking will have a direct impa ct on Duke Energy and its2

customers. As an entity whose operations will be directly impacted by the rule, Duke Energy

encourages EPA to provide as much flexibility as po ssible while maintaining appropriate

environmental safeguards. For example, the charact eristics of potential GS sites will be highly

variable. EPA should provide flexibility by avoidi ng a one-size-fits-all approach. This can be

done by incorporating performance-based standards i nto the final rule that would allow for sitespecific project design, monitoring and closure. A dditionally, the technology associated with

large scale injection and storage of CO 2 associated with electricity generation is still dev eloping.

EPA should provide flexibility by designing the UIC program for GS of CO 2 so the program

requirements can evolve along with the technology o ver time rather than lock-in regulatory

requirements that will likely become obsolete.

In addition to the following comments, Duke Energy supports the comments submitted

by the Utility Solid Waste Activities Group, the Ed ison Electric Institute, the Electric Power

Research Institute, and the Gasification Technologi es Council.



### Specific Comments

Rule Must Provide Flexibility

The technologies described in the proposal will not likely be commercially deployed on a

widespread basis for some time; therefore EPA’s rul e must remain flexible in order to

accommodate technological developments related to t he GS of CO 2 as they occur. It is also

essential that performance-based standards be incor porated into the Final Rule to reflect the fact

that the characteristics of GS sites will vary wide ly. The use of performance-based standards

rather than a one-size-fits-all approach will resul t in better performing and more cost-effective

projects because they will have been tailored to a specific site’s characteristics.

The rule should not be made unnecessarily stringent by requiring detailed information for

Class VI permit applications that may not be availa ble during the early phases of the permit

application process. A better approach would be t o require the reporting of detailed information

over time as it becomes available through operation of the well, site reevaluation, and corrective

action.3

RCRA and CERCLA Applicability

To encourage adoption and use of the Class VI wells by the regulated community EPA

must resolve policy and legal issues regarding the applicability of RCRA and CERCLA

regulation and liabilities to projects permitted an d operated under the proposed rule. Subjecting

any CO 2 GS project to RCRA controls, and failure to adequat ely mitigate the potential for

unlimited CERCLA liability will pose a serious obst acle to the commercial deployment of GS

technology.

Injection of CO 2 into a Cass VI well should not be viewed as dispos al of a waste subject

to RCRA regulation. Alternative scenarios may inv olve temporary storage of a commodity, or

containment of a material in an industrial process. If CO 2 is deemed a waste under the rule, the

current RCRA regulations and testing guidelines wil l need to be revised to address

characterization of supercritical fluids.

Injection of CO 2 into vast areas underlying multiple political juri sdictions and surface

properties owned by multiple parties was not antici pated when “Superfund liability” was initially

conceived. Failure to address liability uncertaint ies via a permitted injection exemption or by a

mechanism for transfer of long-term liability to go vernment bodies will be a disincentive to

commercial deployment of GS technology.

Grandfathering Class I, Class II and Class V Inject ion Wells

Duke Energy supports EPA’s proposed provision allow ing for the potential

grandfathering of construction requirements for per mitted Class I, Class II and Class V wells that

request a Class VI permit for GS of CO 2 . Duke Energy also recommends that grandfathering be

expanded beyond construction for Class V experiment al CO 2 injection wells.

The permitting of experimental wells includes makin g a determination about the

protection of underground sources of drinking water (“USDW”). Changing wells from

experimental to regular injection of CO 2 should not change the determination. Owners/opera tors

of experimental wells that wish to have them reclas sified as Class VI injection wells should be

allowed to do so with minimal addition submittals. However, if the Director determines that4

conversion of a well to Class VI would endanger USD W, grandfathering should not be

permitted.

Duke Energy recognizes that there are differences b etween Class II and Class V wells.

Class II wells are associated with enhanced oil and gas recovery. The strata that contained the

oil and gas for millions of years should be good ca ndidates for GS of CO 2 . While long term GS

of CO 2 was not the goal during the permitting of Class II wells, the Director should nonetheless

consider grandfathering them for reclassification t o Class VI wells. Owners/operators of Class

II wells used for long-term GS of CO 2 would still need to demonstrate that doing so woul d not

pose a danger to USDW. Before a Class II well is p ermitted as a Class VI well, however, the

owner/operator should be required to meet all other permitting requirements for a Class IV well.

The construction requirements for Class I wells is very similar to what EPA proposes for

Class VI wells. Duke Energy feels that once the in tegrity and stability of the well have been

demonstrated in a CO 2 rich environment by the owner/operator the constru ction of a Class I well

should be grandfathered. As with Class II wells, all other requirements for a Class VI well

would have to be met before an injection permit wou ld be issued.

Duke Energy recommends that the Final Rule allow pe rmitted Class V experimental CO 2
injection wells to be re-classified as Class VI wel ls based on initial permitting information unless

the Director determines that the project would enda nger USDWs. Class II wells should be

considered for reclassification once all requiremen ts for a Class VI well are met. Class I well

construction should be grandfather upon demonstrati on that the well construction has and will

maintain mechanical integrity while being used for GS of CO 2 . All other requirements of the

final rule would apply for reclassification to Clas s VI.

Reevaluation of Area of Review (“AoR”)

Current UIC regulations require the owner/operator of a proposed injection site to

determine the AoR based on the area necessary to in clude the calculated cone of pressure

influence. The amount of CO 2 that will be injected at a GS site over the life o f a project will be

tens if not hundreds of millions of tons. This qu antity of CO 2 along with uncertain dispersion5

characteristics makes it next to impossible to dete rmine the correct AoR utilizing a fixed radius

or simple mathematical method.

Acceptable methods for determining the AoR should i nclude but not be limited to

multiphase fluid flow models. It is anticipated t hat modeling will improve over time as

experience with CO 2 sequestration increases. Demonstration projects s hould not be constrained

by allowing only the use of current models. Any mo del based on accepted science that has been

validated should be acceptable. Models should be c alibrated using actual site data once it

becomes available.

The AoR for a GS site for CO 2 will be dynamic and in all probability irregular i n shape.

Based on the quantity of CO 2 to be sequestered at a site, the AoR could be hund reds of square

miles. A significant amount of time and money woul d be needed to complete an up-front

evaluation of the life of a project AoR. A large p ortion of this effort could be wasted since the

injection plumb may not travel as anticipated. As a result of this uncertainty, Duke Energy

recommends a phased evaluation for the AoR. The Ao R should be reviewed periodically (every

ten years or as agreed upon by the Director). This would allow any necessary corrective actions

to be focused where needed. This approach would al low projects to proceed more expeditiously,

reduce start-up costs and because of the periodic r eview, provide greater protection to USDW.

Transference between CO 2 Sequestration Methods

Duke Energy recognizes that there are differences b etween Class II and Class VI wells.

Class II wells are associated with enhanced oil and gas recovery which can be an avenue for CO 2
sequestration. Aside from deep saline formations, other potential sequestration areas include

coal seams (Enhanced Coal Bed Methane – ECBM), and shale layers. Since EPA’s proposed

rule addresses CO 2 volumes in millions of tons per year, Duke Energy recommends providing as

much flexibility as possible when addressing potent ial CO 2 sequestration areas so that the rules

governing CO 2 sequestration are fully transferable should more t han one sequestration method be

selected or should circumstances dictate a change f rom GS to the EOR market or vice versa.

Duke Energy believes that allowing grandfathering o f the proposed provisions to address this6

type of transfer should be allowed except when the Director determines that conversion of a well

between Class II and Class VI would endanger USDW.

Injection Activities that Cross State Boundaries

In view of the likelihood that CO 2 injection activities on GS projects will cross sta te

boundaries, Duke Energy joins other stakeholders in urging EPA to reconsider its position of not

addressing cross-state boundary issues in this rule -making. Instead, EPA should provide

directives to states and corresponding certainty to owners and operators of GS projects when the

AoR crosses state lines. At a minimum, the Final R ule should provide that the state in which the

well head is located should be the primary state fo r purposes of permitting the Class VI well for

GS of CO 2 . EPA should also direct the primary state to cons ult, coordinate and cooperate with

each state within the AoR. The Final Rule should e stablish guidelines for the consultation,

coordination and cooperation between the primary st ate and each state within the AoR.

Financial Responsibility and Appropriate Risk Manag ement Approaches

EPA is proposing a default time period of fifty yea rs for post-injection activities.

Although the proposed rules would gives the Directo r the discretion to adjust the default time

period, such a provision will create tremendous unc ertainty and impose unnecessary regulatory

burden and cost on regulators. Protecting USDW and commercializing GS technology for CO 2
would be better served by focusing on site characte rization and a site-specific performance based

approach to well closure that takes into considerat ion the particular needs of each CO 2
sequestration site. In addition, a fifty-year defa ult period could actually discourage owners or

operators from undertaking proper site characteriza tion and working to develop innovative ways

to safety close wells in a shorter time period. It would also introduce significant financial

uncertainty that could make actually obtaining nece ssary financial assurances difficult if not

impossible.

State Primacy

The proposed rule seeks comment on whether states s hould be permitted to seek primacy

for Class VI wells, noting the Agency’s belief that “the most effective approach for the7

comprehensive management of CO 2 GS projects would be achieved at the State and Tri bal

level.” Duke Energy believes it is appropriate to allow States to obtain primacy for only Class

VI wells. States should play a key role in managin g CO 2 GS projects going forward, as they

have with Class II wells for decades. The experien ce states have gained by regulating CO 2
injection through the existing programs can offer m any benefits in the context of Class VI wells.

State regulators have familiarity with local enviro nmental, geologic, and financial concerns, and

in many cases have pre-existing relationships with the regulated community that can facilitate

implementation of a new and complex regulatory prog ram. Further, some states are moving

ahead with developing their own legislation and reg ulations related to carbon capture and storage

(“CCS”) activities—in many cases developing laws an d rules that include unique provisions and

provide incentives for the development of new CCS p rojects. Allowing those states to take on

primacy for Class VI wells (in particular, allowing them to take on primacy for Class VI wells

without assuming the regulatory burden that may be associated with other well classes) will help

ensure that they are given credit and recognition f or their groundbreaking work in this area.

Conclusion

Duke Energy appreciates the opportunity to provide comments on this important

rulemaking. Having a workable regulatory program i n place for the geologic sequestration of

CO 2 is absolutely essential to this country’s ability to reduce greenhouse gas emissions at a

reasonable cost and without eliminating coal as a v iable energy resource.Letter ID: 0209

Commenter: Michael Stroben Organization: Duke Energy

Letter ID: 0209 Comment ID: 22676 Letter Lines: 34 to 40

Comment Code: 1420 1.2.1.1 Support the GS rulemaking

Comment: Duke Energy supports EPA’s efforts to develop a regulatory framework for geologic sequestration ("GS") of carbon dioxide ("CO2"). Coal, the nation’s most abundant natural energy resource, acc ounts for approximately 50% of the electricity consumed in the U.S. today. De velopment of a workable GS regulatory program is critical to this country’s ab ility to make substantial reductions in CO2 emissions while keeping coal as a viab le energy resource th at contributes to the nation’s energy independence.

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 agrees 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.

Letter ID: 0209 Comment ID: 22677 Letter Lines: 42 to 55 ; 64 to 74

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

Comment: As one of the largest coal-fired generators of electricity in the U.S., and as a likely user of GS to reduce CO2 emissions , this rulemaking will have a direct impact on Duke Energy and its customers. As an entity whose operations will be directly impacted by the rule, Duke Ener gy encourages EPA to provide as much flexibility as possible while maintaining appropriate environmental safeguards. For example, the characteristics of potenti al GS sites will be highly variable. EPA should provide flexibility by avoiding a one-size-fits-all approach. This can be done by incorporating performance- based standards into the final rule that would allow for site-specific pr oject design, monitoring and closure. Additionally, the technology a ssociated with large scal e injection and storage of CO2 associated with electricity gene ration is still developing. EPA should provide flexibility by designi ng the UIC program for GS of CO2 so the program requirements can evolve along with the tec hnology over time rather than lock-in regulatory requirements that wi ll likely become obsolete.

RULE MUST PROVIDE FLEXIBILITY

1The technologies described in the propos al will not likely be commercially deployed on a widespread basis for some tim e; therefore EPA’s rule must remain flexible in order to accommodate technologica l developments related to the GS of CO2 as they occur. It is also essentia l that performance-based standards be incorporated into the Final Rule to reflect the fact that the characteristics of GS sites will vary widely. The use of perf ormance-based standards rather than a one-size-fits-all approach will result in better performing and more costeffective projects because they will have been tailored to a specific site’s

characteristics.

Individual Response: EPA believes that the Class VI requirements balance site-specific flexibility with USDW protection. Rather than setting performance or technology-based standards for GS projects, EPA is adopting a flex ible approach, where operators of GS projects would develop and implement site-specific plans for delineating the AoR, testing and monitoring the site, performing corrective actio n, and post-injection site care . EPA believes that the plans— which would be reviewed and approved by the Director and periodical ly updated throughout the life of the project—promote an ongoing dialogue between the operato r and the Director that will encourage use of the most appropriate t echnologies for a particular project.

To address the comment that the rule should accommodate future technological developments related to GS, EPA adds that it is using an ad aptive approach to regulating GS under the UIC Program. Even after finalization of the GS regulat ion, EPA plans, every six years, to collect and review project data on GS research projects to determine whether the appropriate amount and types of information and appropriate documenta tion are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Letter ID: 0209 Comment ID: 22678 Letter Lines: 57 to 60

Comment Code: 1000 1. General and Administrative Comments

Comment: In addition to the following comments, Duke Energy supports the comments submitted by the Utility Solid Waste Ac tivities Group, the Edison Electric Institute, the Electric Power Research Institute, and the Gasification Technologies Council.

Individual Response: EPA acknowledges the comment. Pleas e see the remainder of EPA's responses to this comment and USWAG’s co mment, Edison Electric Institute’s comment,

Electric Power Research Institute’s comment , and the Gasification Technologies Council 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: 0209 Comment ID: 22679 Letter Lines: 76 to 81

Comment Code: 4710 2.7.1 Proposed submissions required for permit applications (seeking

2comment)

Comment: The rule should not be made unnecessa rily stringent by requiring detailed information for Class VI permit applicatio ns that may not be available during the early phases of the permit applicati on process. A better approach would be to require the reporting of detailed in formation over time as it becomes available through operation of the well, site reevaluation, and corrective

action.

Individual Response: EPA believes that the unique charact eristics of CO2 injection (e.g., its relative buoyancy, the large volum e that may be injected, or the potential for chemical interaction with the subsurface) warrant the additional information required to be submitted by GS operators under §146.82. These requirements are not unnecessarily stringent or burdensome. In order to protect USDWs from endangerment, Di rectors must have all the data they need to

make well-informed decisions on establis hing permit conditions and granting permits.

In response to concerns that some data will not be available until the well has been drilled, EPA acknowledges that not all of the information listed at §146.82 of the proposed regulation will be available at the time the owner or operator de velops the permit application. Based on comments and evaluation of the proposed requirements, EPA re vised this subpart so th at the final regulation specifies separate requirements for information to be submitted for approval with the permit application before well construction, as requi red at §146.82(a), and information to be submitted after the well is constructed; however all information must be submitted before injection is authorized, as required at §146.82(c).

Letter ID: 0209 Comment ID: 22680 Letter Lines: 83 to 90

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

Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: RCRA AND CERCLA APPLICABILITY

To encourage adoption and use of the Cla ss VI wells by the regulated community EPA must resolve policy and legal issues re garding the applicabili ty of RCRA and CERCLA Regulation and liabilities to pr ojects permitted and operated under the proposed rule. Subjecting any CO2 GS project to RCRA c ontrols, and failure to adequately mitigate the potential for unlimited CERCLA liability will pose a

serious obstacle to the commerci al deployment of GS technology.

Individual Response: EPA received many comments regardi ng the applicability of the RCRA regulations and statute to CO2 st reams that are geologically seque stered under the final Class VI UIC well requirements. As a result, EPA has deci ded to initiate a sepa rate proposed rulemaking specifically to examine the issue of RCRA appl icability to CO2 streams being geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2 GS in Class VI wells. EPA will consider these comments as part of its development of that proposal. The Agency will consider issues pa rticular to RCRA in the context

3of 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: 0209 Comment ID: 22681 Letter Lines: 92 to 97

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

Comment: Injection of CO2 into a Cass VI well should not be viewed as disposal of a waste subject to RCRA regulation. Alternative scenar ios may involve temporary storage of a commodity, or containment of a material in an industrial process. If CO2 is deemed a waste under the rule, the cu rrent RCRA regulations and testing guidelines will need to be revised to a ddress characterization of supercritical

fluids.

Individual Response: EPA received many comments regardi ng the applicability of the RCRA regulations and statute to CO2 st reams that are geologically seque stered under the final Class VI UIC well requirements. As a result, EPA has deci ded to initiate a sepa rate proposed rulemaking specifically to examine the issue of RCRA appl icability to CO2 streams being geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2 GS in Class VI wells. EPA will consider these comments as part of its development of that proposal. The Agency will consider issues pa rticular to RCRA in the context of that separate rulemaking, and recommends that the commenter read that proposed rule when it is published. The Agency notes that comment ers who wish to submit comments on the RCRA proposal will need to do so during the comment pe riod for that rule. Finall y, EPA also notes that the final GS rule, which adds ne w regulations for Class VI wells under the Safe Drinking Water Act (SDWA), is not making any ch anges to the RCRA regulations.

Letter ID: 0209 Comment ID: 22682 Letter Lines: 99 to 104

Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: Injection of CO2 into vast areas underlying multiple political jurisdictions and surface properties owned by multiple partie s was not anticipated when "Superfund liability" was initially conceived. Failur e to address liability uncertainties via a permitted injection exemption or by a mechanism for transfer of long-term liability to government bodies will be a disincentive to commercial deployment of GS technology.

Individual Response: CERCLA exempts from liability, un der 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 n eed to be carefully structured to ensure that they do not “authorize” inappropriate releases, and would need to prevent potential releases from

4the well which are outside the scope of the Class VI permit.

Regarding long term liability, once an owner or operator has met all regu latory requirements

under Part 146 for Class VI wells and the Dire ctor has approved site closure pursuant to requirements at §146.93, the owner or operato r 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 SD WA 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 adds that promoting the use of GS is outsi de the scope of the GS rule. Rather, the purpose of the GS regulation is to ensu re that, where deployed, GS is c onducted in a manner that protects USDWs from endangerment.

Letter ID: 0209 Comment ID: 22683 Letter Lines: 106 to 147

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

Comment: GRANDFATHERING CLASS I, CLASS II AND CLASS V INJECTION WELLS

Duke Energy supports EPA’s proposed pr ovision allowing for the potential grandfathering of construction requirement s for permitted Class I, Class II and Class V wells that request a class VI permit for GS of CO2. Duke Energy also recommends that grandfathering be e xpanded beyond construction for Class V experimental CO2 injection wells.

5The permitting of experimental wells incl udes making a determination about the protection of underground sources of dri nking water ("USDW"). Changing wells from experimental to regular inject ion of CO2 should not change the determination. Owners/operators of experime ntal wells that wish to have them

reclassified as Class VI in jection wells should be allowed to do so with minimal addition submittals. However, if the Direct or determines that conversion of a well to Class VI would endanger USDW, grandfathering should not be permitted.

Duke Energy recognizes that there are diffe rences between Class II and Class V

wells. Class II wells are associated with enhanced oil and gas recovery. The strata that contained the oil and ga s for millions of years should be good candidates for GS of CO2. While long term GS of CO2 was not the goal during the permitting of Class I wells, the Dire ctor should nonetheless consider grandfathering them for reclassification to Class VI wells. Owners/operators of Class II wells used for long-te rm GS of CO2 would still n eed to demonstrate that doing so would not pose a danger to USDW. Be fore a Class II well is permitted as a Class VI well, however, the owner/opera tor should be requir ed to meet all other permitting requirements for a Class IV well.

The construction requirements for Class I wells is very similar to what EPA proposes for Class VI wells. Duke Ener gy feels that once the integrity and stability of the well have been demonstr ated in a CO2 rich environment by the owner/operator the construction of a Class I well should be grandfathered. As with Class II wells, all other requirements for a Class VI well would have to be met before an injection permit would be issued.

Duke Energy recommends that the Final Ru le allow permitted Class V experimental CO2 injection wells to be re-classifie d as Class VI wells based on initial permitting information unless the Director determines that the project would endanger USDWs. Class II wells should be considered for reclassification once all requirements for a Class VI well are met. Class I well construction should be grandfather upon demonstration that the well construction has and will maintain mechanical integrity while be ing used for GS of CO2. All other requirements of the final rule would a pply for reclassificat ion to Class VI.

Individual Response: EPA agrees that many Class I, Cl ass II, and Class V experimental technology wells are designed and constructed to withstand exposure to CO2. The final GS rule provides for the construction of these wells to be grandfathered per §146.81(c), provided the owner or operator can demonstrate to the Director that the wells were en gineered and constructed to meet the requirements at §146.86(a) and ensure protection of USDWs, in lieu of requirements at §146.86(b) and §146.87(a).

EPA disagrees that other requirements (e.g., MITs, siting, monitoring, operational, and AoR requirements) should also be grandfathered. Following re-permitting of the project as GS, many of the unique factors of GS s ites (e.g., increased reservoir pr essures associated with large

6volumes of stored CO2 and the corrosivity of CO 2 in the presence of water) will result in an increased risk profile, warranti ng the specific requirements in the final GS rule. Therefore, following re-permitting as Class VI wells, these proj ects must be subject to the operational, 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 the GS rule for additional detail on these requirements.

Letter ID: 0209 Comment ID: 22684 Letter Lines: 149 to 176

Comment Code: 3300 2.2.1 Delineating the AoR/M odeling CO2 movement

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

Comment: REEVALUATION OF AREA OF REVIEW ("AoR")

Current UIC regulations require the owner/ operator of a proposed injection site to determine the AoR based on the area necessary to include the calculated cone of pressure influence. The amount of CO2 th at will be injected at a GS site over the life of a project will be tens if not hundreds of millions of tons. This quantity of CO2 along with uncertain dispersi on characteristics makes it next to impossible to determine the correct AoR utilizing a fixed radius or simple

mathematical method.

Acceptable methods for determining the AoR should include but not be limited to multiphase fluid flow models. It is antic ipated that modeling will improve over time as experience with CO2 sequestrati on increases. Demonstration projects should not be constrained by allowing only the use of current models. Any model based on accepted science that has been va lidated should be acceptable. Models

should be calibrated usin g actual site data once it becomes available.

The AoR for a GS site for CO2 will be dyna mic and in all prob ability irregular in shape. Based on the quantity of CO2 to be sequestered at a site, the AoR could be hundreds of square miles. A si gnificant amount of time and money would be needed to complete an up-front eval uation of the life of a project AoR. A large portion of this effort could be wasted since th e injection plumb may not travel as anticipated. As a result of th is uncertainty, Duke Energy recommends a phased evaluation for the AoR. The AoR shoul d be reviewed periodically (every ten years or as agreed upon by the Director). This would allow any necessary

corrective actions to be focused where needed. This approach would allow projects to proceed more expeditiously, reduce start-up costs a nd because of the periodic review, provide gr eater protection to USDW.

Individual Response: EPA clarifies that the AoR must be delineated as part of the permit application, as required at §§146.82(a)(2) and 146 .82(c)(1). The Agency believes that AoR delineation using computational modeling that accounts for the multiphase flow of CO2 and native fluids (i.e., naturally occurring salty water), including dens ity-driven flow (i.e.,

7buoyancy), is necessary to ensure protection of USDWs from endangerment. The computational models used for this purpose are required to pr edict the fate of injected CO2 and changes in formation pressure. EPA believes that the re quirements at 146.84(c)(1) to delineate the AoR using computational modeling are appropriate a nd encompass the significant processes that could affect the location of the CO2 pl ume and associated pressure front.

EPA agrees that modeling technology is likely to improve over time, and EPA believes that future AoR reevaluations, as required at 146.84(e), should incorporate the best modeling

available. Periodic reevaluations al so ensure that a deliberative effo rt is made to verify, based on monitoring and operational data, that the CO2 plume is moving within the subsurface as predicted. However, EPA clarifies that the Ao R delineation process will not be phased. Owners or operators must delineate the en tire AoR of the project prior to receiving an operating permit.

This evaluation must include the entire re gion surrounding the geologi c sequestration project where USDWs may be endangere d by the injection activity.

EPA agrees that phased corrective action may pr ovide many benefits to a project including, but not limited to, spreading the burden of cost, avoi ding delays in project start-up, allowing for use of future, improved corrective act ion techniques and addressing unanticipated changes in the movement of the CO2 plume or pressure front.

Letter ID: 0209 Comment ID: 22685 Letter Lines: 178 to 192

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 Code: 2100 1.6 Target Geologic Formations for GS

Comment: TRANSFERENCE BETWEEN CO2 SEQUESTRATION METHODS

Duke Energy recognizes that there are diffe rences between Class II and Class VI

wells. Class II wells are associated with enhanced oil and ga s recovery which can be an avenue for CO2 sequestration. Asid e from deep saline formations, other potential sequestration areas include coal seams (Enhanced Coal Bed Methane -- ECBM), and shale layers. Since EPA’s pr oposed rule addresses CO2 volumes in millions of tons per year, Duke Energy reco mmends providing as much flexibility as possible when addressing potential CO2 sequestration areas so that the rules governing CO2 sequestration are fully tr ansferable should more than one sequestration method be selected or shoul d circumstances dictate a change from

GS to the EOR market or vice versa. Duke Energy believes that allowing grandfathering of the proposed provisions to address this type of transfer should be allowed except when the Director determines that conversion of a well

between Class II and Class VI would endanger USDW.

Individual Response: EPA acknowledges that site-suitability for 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 any non- USDW formation type, including unmineable coal seams,

8provided owners or operators can demonstrate that GS can be performed in a manner that protects USDWs from endangerment. The Agency an ticipates that in the near-term, most GS in

unmineable coal seams will continue to be e xperimental. Such projects may be permitted as Class V experimental technology wells if they are of an experiment al nature (i.e., to test GS technologies and collect data). EPA will continue to review data on early GS projects, including those in unmineable coal seams, to determin e whether the appropriate amount and types of information and documentation are required and bei ng collected. EPA plans, every six years, to 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.

With respect to grandfathering, EPA recognizes that the oil and gas i ndustry has decades of experience injecting CO2 for ER and that ma ny Class V experimental technology wells are specifically designed for injec tion of CO2 and are being cons tructed to Class I non-hazardous waste well specifications. In the final rule, at §146.81(c), owners or operators seeking to grandfather existing Class I, II, or V wells for GS must demonstrate that the grandfathered wells were engineered and constructed to meet the re quirements at §146.86(a) and ensure protection of USDWs from endangerment in lieu of requirements at §146.86(b) and §146.87(a).

The final Class VI regulations re quire that any owner or operato r injecting CO2 for the primary purpose of long term storage obtain a Class VI pe rmit with some special consideration for the fact that they are transitioning from a well not or iginally designed to meet Class VI requirements. The Director has the authority to determine at wh at point a Class VI permit is required for those projects that are transitioning from the primar y purpose of EOR to long term storage of CO2. The final regulation provides a set of technical factors for the Direct or to evaluate in making this determination, at §144.19. EPA believes that this approach provides su fficient protection of

USDWs when there is an increased risk to USDWs as compared to traditi onal Class II operations while allowing for site-specific flexibility. For more information, please see the discussion on transition of Class II wells in the preamble to the final GS rule.

EPA is developing guidance on transitioning perm its 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 change s in risk to USDWs from projects, and how the Director may determine whether a project should be regulated within th e Class II or Class VI UIC program. This guidance will be available on EPA’s website at http://water.epa.gov/type/groundwat er/uic/wells_sequest ration.cfm. For more information, please

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

EPA agrees that many Class I, Class II, and Cl ass V experimental tec hnology wells are designed and constructed to withstand exposure to CO2. The final GS rule allows the construction of these wells to be grandfathered per §146.81(c), provided the owner or operator can demonstrate to the Director that the wells were engineered and constructed to meet the requirements at §146.86(a) and ensure protection of USDWs, in lieu of requirements at §146.86(b) and §146.87(a).

9Letter ID: 0209 Comment ID: 22686 Letter Lines: 194 to 206

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

Comment: INJECTION ACTIVITIES THAT CROSS STATE BOUNDARIES

In view of the likelihood that CO2 injection activities on GS projects will cross state boundaries, Duke Energy joins other stakeholders in urging EPA to reconsider its position of not addressing cross-state boundary issues in this rule-making. Instead, EPA should provide di rectives to states and corresponding certainty to owners and operators of GS projects when the AoR crosses state lines. At a minimum, the Final Rule shoul d provide that the state in which the well head is located should be the prim ary state for purposes of permitting the

Class VI well for GS of CO2. EPA should also direct the primary state to consult, coordinate and coope rate with each state within the AoR. The Final Rule should establish guidelines for the cons ultation, coordinati on and cooperation between the primary state and ach state within the AoR.

Individual Response: EPA acknowledges that CO2 plumes may cross state or ev en international boundaries and encourages cooperation and coor dination among permitting authorities. The final Class VI GS rule, at §146.82(a)(2), requires the ow ner or operator to identi fy all State, Tribal,

and Territorial boundaries within the AoR. Based on this information, the Director must provide written notification to all States, Tribes, and Territories to inform them of the permit application and ensure that they are involve d in any necessary processes; th is new requirement was added to the final rule at §146.82(b). The Agency encourag es transparency in the permitting process and anticipates that State-State/State-Tribal communication on Class VI permitting will facilitate information sharing and encourag e safe, protective projects.

EPA clarifies that the Class VI permit must be issued by the permitting authority in the state where the wellhead is located pu rsuant to UIC regulations.

Letter ID: 0209 Comment ID: 22687 Letter Lines: 208 to 222

Comment Code: 5240 2.8.2.2 Post injection timeframe (seeking comment)

Comment: FINANCIAL RESPONSIBIILITY AND RI SK MANAGEMENT APPROACH

EPA is proposing a default time period of fifty years for post-injection activities. Although the proposed rules would gives the Director the discretion to adjust the default time period, such a provision will create tremendous uncertainty and impose unnecessary regulat ory burden and cost on regulators. Protecting USDW and commercializing GS tec hnology for CO2 would be better served by focusing on site characterization and a site-specific performance based approach to well closure that takes into consideration the par ticular needs of each CO2 sequestration site. In addition, a fifty-year default period could

10actually discourage owners or operato rs from undertaking proper site characterization and working to develop innova tive ways to safety close wells in a shorter time period. It would also intr oduce significant financial uncertainty that could make actually obtaining necessa ry financial assurances Difficult if not impossible.

Individual Response: EPA agrees with commenters that th ere will be circumstances where it can be demonstrated in less than 50 years that the plume and pressure front no longer pose a risk of endangerment to USDWs. For this reason, the GS 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 pos t-injection period based on site-specific data, pursuant to requirements at §146.93(b) ; or (2) affording the Director discretion to allow a Class VI well owner or operator to demonstrate, during the permitting process based on substantial data, that an alternative PISC timeframe may be appropriate if it ensu res non-endangerment of USDWs pursuant to requirements at §146.93(c).

EPA believes however, that to ensure USDW protection from enda ngerment, a default timeframe for post-injection site care will be necessary in al l but a limited number of cases. This default 50 year post-injection site care ti meframe represents a reasonable and protective monitoring period based on a review of research studies, industr y reports, and existing environmental programs, and evaluation of public comments.

EPA believes that a default post-injection site car e timeframe of 50 years, with flexibility to adjust the timeframe for a limited number of GS projects during the permitting process where

substantial data exists to demonstrate that an alternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to ac commodate site-specific circumstances and various geologic conditions, and addre sses commenters’ concerns, wh ile ensuring USDW protection. Both approaches will utilize si te-specific data, and be based on pressure monitoring and USDW impacts. To the comment expressing concern about financia l responsibility, EPA rec ognizes that there are challenges associated with assuring funding for activities that will occur far in the future. However, the Agency believes 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 adds that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

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.

11Letter ID: 0209 Comment ID: 22688 Letter Lines: 224 to 245

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

Comment: STATE PRIMACY

The proposed rule seeks comment on whethe r states should be permitted to seek primacy for Class VI wells, noting the Agen cy’s belief that "the most effective approach for the comprehensive management of CO2 GS projects w ould be achieved

at the State and Tribal level." Duke Ener gy believes it is appropriate to allow States to obtain primacy for only Class VI wells. States should play a key role in managing CO2 GS projects going forward, as they have with Class II wells for decades. The experience states have ga ined by regulating CO2 injection through the existing programs can offer many benef its in the context of Class VI wells. State regulators have familiarity with local environmental, geologic, and financial concerns, and in many cases have pre-existing relati onships with the regulated community that can facilitate implementation of a new and complex regulatory program. Further, some states are moving ahead with developing their own legislation and regulations related to carbon capture and storage ("CCS") activities--in many cases developing la ws and rules that include unique provisions and provide incentives for th e development of new CCS projects. Allowing those states to ta ke on primacy for Class VI wells (in particular, allowing them to take on primacy for Class VI wells without assuming the regulatory burden that may be associated with other well classes) will help ensure that they are given credit and recognition for their groundbreaking work

in this area.

Individual Response: EPA agrees that states should be al lowed to obtain primacy for Class VI wells independently of other well classes, and wi ll allow independent primacy for Class VI wells under §145.1(i) of the final GS rule. In the past , EPA has not accepted UIC primacy applications

for individual well classes unde r Section 1422 of SDWA. In other words, if a State wanted primacy for Class I wells, the State would also ne ed to accept responsibilit y for Class III, IV, and V wells. This policy has been in place since the initiation of the UIC Program in the early 1980s and was intended to encourage states to take full responsibility fo r UIC programs, avoid duplication of efforts, and provide for administrative efficiencies.

However, given the potential for CCS (encom passing capture, transportation, and geologic sequestration) to be an important part of a na tional priority to address climate change, EPA believes that providing states the flexibility to obtain primacy for Class VI wells independently of other well classes can help foster effective management of CCS. EPA believes that allowing independent Class VI primacy may encourage states to take res ponsibility for implementation of Class VI regulations and provide for a more co mprehensive approach to managing CCS projects by promoting the integration of GS activities under SDWA in to a broader framework for managing CCS. Furthermore, GS operations involve ancillary activities (e.g., pipeline operations, pore space ownership, land use rights, and surface access) for which states can call upon other authorities that exist at the state leve l (but outside UIC author ity) to provide a more

12comprehensive CCS management approach.

The Agency believes that it is important for stat es to use their unique e fficiencies to promote adoption of this burgeoning and important tec hnology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA believe s that, due to the importance of implementing an effective, comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

EPA also believes that allowing states to apply only for Class VI primacy will shorten the primacy approval process for states. EPA's willingness to accept independent primacy applications for Class VI wells represents a shift in its longstandi ng policy of discouraging "partial primacy." It is very important to note that this shift in policy allowing for Class VI primacy does not apply to any other well Cl ass under Section 1422. EPA will continue to discourage applications for pa rtial primacy for all other well types under Section 1422.

EPA clarifies that states should be able to obtain primacy for Cla ss VI wells independent of other well classes provided they devel op regulations that are at leas t as stringent as the minimum Federal requirements (e.g., permitting, inspec tion, operation, monitoring, and recordkeeping requirements) provided in the final GS rule. EPA believes that existing programs can adapt their expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under section 1422 of SDWA and en sure that their GS programs integrate into national climate change priori ties and protect USDWs from endangerment.

EPA recognizes that some states have already begun legislative e fforts that are wider in scope

than the Federal GS rule and believes that allo wing Class VI primacy (i ndependent of other well classes) may encourage states to take responsibility for implemen tation of a more comprehensive approach to managing CCS proj ects (e.g., capture, transportati on, and geologic sequestration).

Letter ID: 0209 Comment ID: 22689 Letter Lines: 247 to 253

Comment Code: 1420 1.2.1.1 Support the GS rulemaking

Comment: CONCLUSION

Duke Energy appreciates the opportunity to provide comments on this important rulemaking. Having a workable regulatory program in place for the geologic sequestration of CO2 is absolutely essent ial to this country’s ability to reduce greenhouse gas emissions at a reasonable co st and without eliminating coal as a viable energy resource.

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 agrees 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

1314 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.