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.Federal Requirements Under the Underground Injection Control Program for Carbon Dioxide Geologic Sequestration Wells

Docket No. EPA

- HQ

- OW

- 2008

- 0390 73 Fed. Reg. 43492 (July 25, 2008)

Comments of the National Rural Electric Cooperative A ssociation

The Nat ional Rural Electric Cooperative Association (NRECA”) submits these comments on the Proposal of the Environmental Protection Agency ("EPA" or "the Agency ") to establish the regulatory framework for geologic sequestration (“GS”) of carbon dioxide (“CO2”) un der the Underground Injection Control (“UIC”) Program pursuant to the Safe Drinking Water Act ("SDWA"). 73 Fed. Reg. 43492 (July 25, 2008).

NRECA greatl y appreciates EPA's work toward developing a regulatory framework for underground injection of CO2. E PA's decision to develop regulations under the UIC program and to develop a new Class VI for CO2 GS well is appropriate. NRECA also appreciates EPA's recognition that while the new regulations at hand must be within the scope of the SDWA, there are a numb er of very important issues (such as long term liability ) that are outside the scope of the act but are highl y p ertinent to developing a viable GS program and we are glad that EPA is willing to discuss these issues as part of this regulatory proposal.

I t appears that GS of CO2 from fossil

- fueled power plants will be a necessary part of an y national strateg y to control green house gas emissions. Many of NRECA's members operate coal

- fired power plants and these plants are likely to be directl y affected b y new GS regulations. NRECA has worked with our members to develop these comments and

we ask EPA to carefull y consider them because of the significant stake cooperative generating plants have in the outcome of this important rulemaking. NRECA is a

member of the Utility Solid Waste Activities Group (USWAG). USWAG will also be submitting comments on the proposed UIC rules. NRECA supports USWAG's comments, and incorporates them here b y r eference.

SUMMARY

NRECA applauds the efforts EPA has taken thus far t o instill "certaint y" and "transparency " into the future Class VI CO2 regulatory regime. 73 Fed. Reg. at 43496. The obvious challenge confronting EPA is to craft a Final Rule for commercial CO2 injection activities when large

- scale commercial operations are only at the nascent stage. In the process of developing regulations for activities that will largely be conducted in the future, EPA has had to confront man y t echnical uncertainties regarding the establishment and operation of GS wells. Because man y of the technical aspects are unknown, it is also

very difficult to develop a clear understanding of project risks and liabilities . As long as

risks and liabilities are largely unknown and open

- ended, private companies will not step

forward to offer insura nce and other risk management products, and it will not be possibl e to obtain the level of financ ing needed to undertake a costl y GS operation.The challenge confronting EPA in this rulemaking is twofold: 1) to establish clear,

reasonable and environmen tally protective regulations to cover a range of operations for which the technology will not be commerciall y deployed for a number of years , and 2) to the extent practicable establish a single, clear, reasonable and protective liability regime

for an act ivity where the nature of the risks are different from man y other industrial

activities and the full extent of possible risks from full scale CCS operations are presentl y unknown.

Again, NRECA admires the work EPA has done to take on these two, closely related challenges. NRECA will remain available to assist EPA as the agency moves forward

wi th this regulatory initiative. At this time, we offer our comments and suggestions in the following areas.

Principles for new regulations

§ Because of the difficu lty of regulating future activities, we urge EPA to continue

to use a "performance based" approach in developing the requirements for Class

VI UI C wells. This way , rules can be readily adjusted and fine

- tuned as industry and regulators alike gain experien ce with large

- scale CO2 sequestration.

§ Because information and technology related to carbon sequestration will evolve as industry and regulators gain experience with CCS, NRECA urges EPA to resist placing blanket prohibitions or detailed operational speci fications in the Final

Rule.

§ EPA should not automatically exclude placement of wells in particular geologic

structures. The Final Rule should leave the door open for a range of injection sites and methods provided the owner or operator can show that the i njection and storage will be protective of Underground Sources of Drinking Water (USDWs).

§ NRECA believes that the states will have the best knowledge of regional geology, existing projects, areas in need of special protection, etc. and that states should b e allowed to assume primacy for administration of the UIC Class VI well program

.

§ EPA should be careful not to stigmatize GS operations and to take positive measures to build public acceptance. EPA should avoid characterizing stored

CO2 as a waste.

§ EPA mus t settle the way GS activities will relate to RCRA and CERCL A. RCRA is simply the wrong tool to use to regulate GS of CO2 and EPA needs to find a

way to insure that the onerous requirements of CERCL A, (never intended for GS of CO2) , are not applied to thi s highly specialized gas storage operation

.

§ Dealing with these last two hazardous waste issues appears to NRECA to be o ne of the most difficult hurdles standing in the way of commercial deploy ment of full scale GS projects and we recognize that Congression al action may be needed.

Principles for Managing Liability

NRECA is a member of the Carbon Capture and Storage Alliance ( CCS or the Alliance) and this group is planning to submit comments on the proposed UIC rules for GS of CO2.The CCS Alliance is a c oalition of entities, spanning a number of economic sectors that

share a common interest in removing impediments to investment in and development of carbon capture and storage (“CCS”), as well as mitigating the potential risks associated with the deploy

men t of this technology . Its purpose is to promote development of policy by the states and the federal government to appropriately address risks and potential liabilities, thereby enabling the further development and increased deployment of CCS.

The CCS All iance believes these technologies can be developed while protecting underground water resources, significantl y r educing global and U.S. greenhouse gas (“GHG”) emissions, and enhancing U.S. energy security . The Alliance’s purpose is to consider way s of pro moting the development and use of CCS technologies and to support

efforts b y t he private sector, states, the federal government, non

- governmental organizations and others, to help ensure that these technologies can be developed and widely , efficiently and cost

- effectivel y deplo yed.

We support the comments of the Alliance and incorporate them here b y reference. NRECA is rely ing on the Alliance and USWAG to provide EPA with specific comments on the Financial Assurance and Long Term Liability issues dis cussed in the proposal. We are not experts on these matters, however we do believe that the following principles

for managing risk and liability associated with GS should be considered in the Final Rule.

§ It appears to NRECA that a t iered a pproach with a government back

- stop as used

in the framework of the Price

- Anderson Act for nuclear faculties could be a rational way of structuring liability management for GS of CO2. This is

discussed further below in the comments section.

§ EPA should consider a broad array of financial mechanisms owners or operators can use to meet financial responsibility requirements specified in the regulations.

§ While Self I nsurance mechanisms belong on EPA's menu of Financial Assurance options, many of NRECA's members are small bu siness and may have a

relativel y s mall capitalization so Corporate Guarantees or Self Insurance may not be an available option for them.

COMMENTS

1. NRECA a cknowledges EPA's efforts to use a "performance

- based" approach and to build flexibility into the Proposal, including the use of directorial discretion and the provision for forthcoming guidance to clarify other requirements. In general, we agree that these methods will help create a regulatory framework that can evolve as information and technologic al advancements are gained in the field of carbon capture and sequestration. It is important, however, that an y directorial discretion be clearl y defined and limited; this can be achieved while still maintaining a rule that is flexible and avoids

unnece ssary prohibitions. I n addition, guidance on any aspect of the Final Rule (for example, clarification of requirements for financial assurance mechanisms) must be developed in accordance with OMB’s Good Guidance Practices Bulletin, which directs

that notic e and comment be provided on “economically significant” guidance documents. See 72 Fed. Reg. 3432, 3438 (Jan. 25, 2007).2. It is counterproductive at this stage in the development of a CO2 GS regulatory

regime to categoricall y p reclude an y potentially f easible injection formations as possible long

- term storage sites. EPA recognizes that the commercial deplo ym ent of CO2 GS activities will result in the production of large volumes of CO2 for which Owners or Operators will have to locate new and environmen tally protective injection zones. Therefore, it makes sound policy sense for EPA to encourage the identification and utilization of as many protective zones as possible, with the prerequisite that any injection site be protective of USDWs. To achieve this result, the Final Rule should avoid absolute prohibitions on any category of injection site and instead keep all options open; injection should be allowed as long as it can be demonstrated that injection will be protective of USDWs and meet other applicab le conditi ons for Class VI CO2 GS wells.

NRECA supports alternative approaches that would allow injection between and/or above the lowermost USDW, increasing capacity for CO2 GS, as long as Owners or Operators

of Class VI wells can show that their CO2 GS operations will be protective of USDWs. Id. at 43512. This will be particularly important in areas of the country with deep USDWs, where an absolute requirement that Class VI wells be constructed beneath the lowermost USDW could render the program imprac tical. Id. NRECA also supports this alternative approach in areas where the Director determines

– or the Owner or Operator

can show

– that geologic conditions would prevent fluid movement into adjacent

USDWs. I d. For similar reasons, NRECA opposes an a bsolute prohibition on use of exempt aquifers for Class VI injection; use of exempt aquifers should be permitted where the specific aquifer exemption criteria are satisfied. I d.

3. NRECA believes that the Final Rule should not contain a blanket prohibit ion on injection of CO2 into coal seams (whether above or below the lowermost USDW) or into other formations such as basalts, salt domes, or shales. 73 Fed. Reg. at 43503. If it can be demonstrated that the injection of CO2 into such sites is protective of USDWs, then such activities should remain available options under the Class VI UI C program.

4. On a related subject, EPA requests comment on whether the Final Rule should require, or allow the Director to require at his discretion, the identification and characterization of additional confining and containment zones above the primary (i.e., lowermost) confining zone that could further impede vertical fluid movement and allow for pressure dissipation

– in effect, a "secondary containment" requirement. Id . at 43505

- 06. As a general

matter, NRECA opposes the inclusion of this secondary containment requirement, and believes that it will only be in the most unusual situations where the circumstances warrant the Director exercising his discretion and requi ring this additional protection in a

Class VI permit. While it is of course true that additional containment zones above the confining zone could impede vertical fluid movement, there is no basis for requiring

these additional zones if it has alread y b een demonstrated that the original confining is protective of USDWs.

5. State regulators have familiarity with local environmental, geologic, and financial concerns, and in man y c ases have pre

- existing relationships with the regulated community that will f

acilitate implementation of a new and complex regulatory program.For these reasons, NRECA believes it is appropriate to allow states to obtain primacy for

the entire UIC program or for only Class VI wells if a particular state so chooses. Id. at

43523. Such class

- specific primacy is consistent with the statutory authorization behind

the UI C Program, and as EPA predicts, states obtaining primacy for Class VI wells

– regardless of whether they have sought primacy under other aspects of the UI C program

– m ay be more likel y t o develop a comprehensive regulatory program for all aspects of carbon capture and storage. Id.; see also 42 U.S.C. § 300h

- 1 (SDWA § 1422).

6. NRECA urges EPA to issue more definitive direction in the Final Rule regarding the regulati on of CO2 injection activities that cross state boundaries. This issue is mentioned in the Preamble to the Proposal but receives little attention. See 73 Fed. Reg. at 43497. Rather, EPA simply observes that “some injection activities may raise cross

- stat e boundary issues that are bey ond the scope of this rulemaking.” Id. More guidance should be given regarding how such cross

- state activities should be regulated, including making clear in the Final Rule that Owners or Operators of Class VI CO2 GS project s will seek a Class VI permit for that operation from the state in which the wellhead is located; in other words, a given state is the permitting bod y for an y C lass VI CO2 GS project with a wellhead in that state. EPA should direct states to consult and c oordinate with other affected states (i.e., other states to which the underground portion of the well

may extend and/or those to which there could be a subsurface release or migration of injected material) in determining how to avoid duplicative or dueling regulatory sy stems.

NRECA urges EPA to play a leadership role and proactivel y address these issues by suggesting procedural guidelines for inter

- state regulation and cooperation.

7. EPA should v iew CCS a s a r esource, n ot a w aste

. NRECA endorses the v iew of the Interstate Oil and Gas Compact Commission (“I OGCC”) that CO2 should be treated in

any regulatory regime as a resource and not as a waste. As an initial matter, CO2 has a commercial value for EOR operators. A number of commercial operations exi st solely for the extraction and sale of natural CO2. Moreover, anthropogenic CO2 may have a commercial value for traders in carbon emissions reduction credits, once the CO2 is captured and stored. While the reason for capturing the CO2 may be to prevent it from entering the earth’s atmosphere, it nonetheless will have a commercial value when stored. Also, states that currentl y regulate CO2 injections for EOR operations do so under a resource management framework. Surface Transportation Boards, which ar e responsible for the economic regulation of CO2 interstate pipelines, also view CO2 as a commodity

. Characterization as a waste would have a chilling effect on the development of CCS projects.

8. The General Accounting Office (“GAO”) recently issued a report entitled "Climate Change

– Federal Actions Will Greatly Affect the Viability of Carbon Capture and Storage As a Key Mitigation Option" (GAO

- 08

- 1080, September 2008) (“GAO Report”)

. GAO cites a National Academ y of Sciences ("NAS") report emphasizi ng that a large

scale CO2 UIC program cannot be successful "if a significant fraction of the public views it as dangerous or unacceptable" and, therefore, CO2 storage technologies must not only be safe and effective, they must be presented "to the public a nd the regulatory community in such a way as to instill confidence that they are in fact safe and effective.” Id. at 49(citing NAS, Prospective Evaluation). This is another reason EPA should not

characterize CO2 as a waste.

*********

The CCS Alliance has evaluated technical, market, and policy risks associated with CCS deploy ment. On behalf of the CCS Alliance, Andrew Paterson of Econergy I nternational interviewed dozens of market participants earlier this year, including project developers,

utilities , technology vendors, risk managers, and financial providers to assess which risks were considered most likely to occur, and which, if they occurred, would be considered to have the greatest impact to the project. The CCS Alliance study showed that market participants identified one of the highest risk factors to be the lack of clarit y in EPA and state regulations dealing with the technical aspects of injection and with liabilit y.

NRECA believes that the largest and most important aspect of the proposed U IC regulations will be how GS activities are coordinated with RCRA and CERCLA. Currently we believe that this is one of the most difficult hurdles standing in the way of commercial deplo ym ent of full scale GS projects. One way of dealing with this issue to avoid classify ing injected CO2 as a waste.

********

9. Anecdotal evidence from pilot scale Carbon Sequestration and Storage projects seem to suggest that it is no t likely that CO2 removed from the flue gas stream of a coal

- fired power plant would be classified as a RCRA hazardous waste. NRECA believes that EPA should specificall y ex empt CO2 gas streams from coverage b y R CRA and develop requirements specificall y tailored to this material if necessary to assure further environmental protection bey ond t hat already provided by the UIC permitting process. RCRA is simply not the right tool to use in this situation.

In 2002, EPA found that "the existing hazardous waste regulations require the submittal of 334 notifications, reports, certifications, demons trations and plans from generators and TSDFs to demonstrate compliance with RCRA Regulations" ( See comments of the CCS

Alliance ). Reporting requirements are just one example of RCRA's burdens. Others

include TSD facilit y requirements generally , waste man ifesting, training requirements for transporters and handlers, citizen suit provisions, and the fact that hazardous waste regulations implicates Superfun d liability

. And to further expose potential CO2 GS facilities to open

- ended liabilities

, apply ing RCRA could expose all other waste management units at the facility, including units that are in no way related to the injection operations, to the full panoply of RCRA's Subtitle C corrective action program. If one considers that an injection well could be lo cated at an existing industrial site or power plant, it should be very clear how a private part y w ould be reluctant to insure or finance a GS project under these conditions

.

10. Li kewise the specter of regulation under S uperfund exposes a GS project to

p otentially unknown and open

- ended liabilities

. Obtaining a UI C permit and carefullydefining the AoR should go a long way toward protecting the environment. S ubjecting

the project to Superfund, may not significantl y i ncrease environmental protection, but it

would surely increase risks and liabilities for the owner/operator

. NRECA believe s that there may be no other answer than to exempt GS projects from superfund. EPA discuss es the availability of a shield from superfund liability being provided by the "federally permitted release " exclusion, however in the event of an y unforeseen circumstance or accident that is not explicitly identified in the permit, such protection would vanish.

Unfortunatel y, NRECA doubts that EPA can find a way to design reliable r egulatory and liability protection to save GS projects from unnecessary involvement with Superfund

while ensuring that they "do not authorize inappropriate hazardous releases " (ibid at 43504).

Financial Assurance and Liability

Private r isk mana gers ( in surers, sureties, banks, and others ), will determine whether to provide financial assurance for a project based on a calculation of the severity of risks and probability that they will occur over a given time period. The severit y and probability of risk i s defined not just by phy sical dimensions, such as fractures and leaks, but by the regulatory and liability structure that is in place.

11. EPA should, to the extent practicable, establish a single, clear, and reasonable regulatory structure for managin g risks and liabilities . Applicability of multiple statutes

- or, as discussed herein, detailed and inappropriately prescriptive command and control

statutes such as RCRA and CERCLA

- give rise to potential risk through additional cost and by increasing t he possibility of violations. CCS developers will be willing to abide by reasonable rules that protect human health and the environment, but they do not want to bear enhanced risks resulting from requirements that do not significantl y contribute to

health and environmental protection. Nor do developers and risk managers want to face liability via multiple State and federal statutory and common law pathway s, with the possibility of unnecessarily expensive and contentious remedies. As these goals likely

wi ll require some legislative action, EPA also should educate Congress on the need for regulatory and liability regimes with these characteristics.

12. It is clear, however, that regardless of EPA's success in establishing a clear regulatory structure for addressing site remediation risks, and site liability risks, at some point a government backstop for liability needs to be established. There is a clear role for private insurance / risk management firms for assuming certain categories of the risks

associ ated with a GS project. However, t hese projects are intended to sequester carbon long into the future. This presents a risk category with particularl y difficult

characteristics. Private companies cannot quantify risks for such an open

- ended

condition an d we are told they will not write policies fo r this stage of the GS project. Government is urging GS for protection of the public welfare and in order for it to occur

on a broad

- scale

, government will have to be willing to bear some of the low probability

, long time

- frame risks.13. NRECA appreciates the work EPA has done study ing possible approaches to GS site

stewardship. NRECA sees some promise in parts of the general framework of the first

model listed in the study for federal management of GS liabi lity

-- The Price

- Anderson

Act

. Specificall y, u sing three tiers for funding the liability regime would seem to be a good starting point for developing a similar regime for GS. The approach " requires a licensed nuclear facility to maintain both site

- speci fic liability insurance (Tier 1) and industry

- pooled liability insurance (Tier 2). In the event that the private claims against a

licensee exceed the amounts available in both the site

- specific, individual insurance and the industry

-

pooled insurance, the federal government (Tier 3) provides the licensee with indemnity ." EPA should consider a 3

- tier liability scheme for GS that incorporates private insurance, pooled industry insurance and a government backstop.

14. In considering financial assurance requ irements, EPA and stakeholders should distinguish financial assurance from liability. Regardless of the length of time EPA establishes in the final rule for a GS facility owner or operator to maintain financial instruments to pay to clean up potential USD W contamination, liability for such cleanup

may last longer, depending on which statutory provisions are applicable, as well as state law. While EPA is limited in its ability to address potential liability , it should seek to do so, as findings of the Risk Study conducted b y t he CCS Alliance (discussed above ) show that potential long

- term liability is a significant barrier to CCS development.

In considering FA instruments, EPA should allow as broad an array of tools as possible including :

§ Trust Funds

§ Insur ance

§ Surety Bonds

§ Letters of Credit

§ Corporate Guarantees / Self Insurance

Regarding S elf I nsurance mechanisms, however, while these should be one of the tools

on EPA's menu of FA options, many of NRECA's members are small business and may

have a small ca

pitalization compared with some of the other entities that may be interested in conducting GS projects. Because of the very make

- up of these companies, Corporate Guarantees / Self Insurance may not be an option for them.

*************

NRECA appreciates the opportunity to comment on these proposed regulations and we

look forward to working with EPA as the issue develops.Letter ID: 0163

Commenter: James Stine Organization: National Ru ral Electric Cooperative Association (NRECA)

Letter ID: 0163 Comment ID: 21309 Letter Lines: 56 to 58

Comment Code: 1420 1.2.1.1 Support the GS rulemaking

Comment Code: 2020 1.5.1 Support Class VI designation

Comment: NRECA greatly appreciates EPA's work to ward developing a re gulatory framework for underground injection of CO2. EPA's decision to de velop regulations under the UIC program and to develop a new Cla ss VI for CO2 GS well is appropriate.

Individual Response: EPA acknowledges the comment and agrees that tailored requirements for Class VI wells are necessary to address the unique nature of injecting large volumes of CO2 and to ensure that USDWs are protected from e ndangerment. The Class VI requirements are appropriate because of the unique nature and ri sks of CO2 injection for long-term storage (e.g., large injection volumes, long proj ect duration, and reservoir pressure conditions). The GS rule contains tailored requirements for the perm itting, geologic site ch aracterization, AoR and corrective action, well construc tion, operation, mechanical integr ity testing, monitoring, well plugging, post-injection site care, an d site closure of GS wells that directly address issues unique to the nature of large-scale CO2 injection for GS.

Letter ID: 0163 Comment ID: 21310 Letter Lines: 59 to 63

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

Comment: NRECA also appreciates EPA's recognition th at while the new regulations at hand must be within the scope of the SDWA, there are a number of very important issues (such as long term liability) that are outside the scop e of the act but are highly pertinent to developing a viable GS program and we are glad that EPA is willing to discuss these issues as part of this regulatory proposal.

Individual Response: EPA clarifies that the purpose of th e Class VI GS rule is to ensure consistency in permitting underground injection of CO2 at GS operations across the United States and provide requirement s to prevent endangerment of USDWs in anticipation of the

eventual use of GS to reduce CO2 emissions. EP A recognizes the importance of providing clear, flexible, scalable, and appropriate regulations. EP A believes that the Class VI GS regulation will provide certainty to industry and the public by providing consiste ncy in requirements across the U.S. and transparency about what requi rements apply to owners or operators.

EPA notes that long-term liabil ity is outside of the scope of the GS rulemaking and is not

addressed in the GS rule. SDWA does not contai n any express provisions addressing liability. An

1owner or operator will be held liable for any permit violations under SDWA §1423.

Under the final GS rule, once an owner or ope rator has met all regulatory requirements under

Part 146 for Class VI wells and th e Director has approved site cl osure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, thei r financial instrument as required under §146.85 will be released if it was not used. However, ev en if a site closure is approved under §146.93, an owner or operator may be held liable for re gulatory noncompliance (inc luding violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site clos ure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided 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 to financial responsibility for Class VI wells.

Letter ID: 0163 Comment ID: 21311 Letter Lines: 75 to 89

Comment Code: 1200 1.1 General comments about the rulemaking

Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements

Comment: SUMMARY

NRECA applauds the efforts EPA has taken thus far to instill "certainty" and "transparency" into the future Class VI CO2 regulatory regime. 73 Fed. Reg. at 43496. The obvious challenge confronting EP A is to craft a Final Rule for commercial CO2 injection activities when large-scale commercial operations are only at the nascent stage. In the pr ocess of developing regulations for activities that will largely be conducted in the future, EPA has had to confront many technical uncertainties regarding th e establishment and operation of GS

2wells. Because many of the technical as pects are unknown, it is also very difficult to develop a clear understanding of project risks an d liabilities. As long as risks and liabilities are la rgely unknown and open-ended, private companies will not step forward to offer insurance and other risk management products, and it will not be possible to obt ain the level of financing needed to undertake a costly GS operation.

Individual Response: To address concerns about certain ty, EPA has specified acceptable financial responsibility instruments and requi rements in the final regulation at §146.85. Additionally, EPA is deve loping guidance (available on EPA's website at http://water.epa.gov/type/groundwat er/uic/wells_sequest ration.cfm) that describes the types of financial instruments that owners or operato rs can use to meet financial responsibility requirements for GS wells.

EPA anticipates that the availability of thir d-party GS financial instruments will grow in response to demand for such instruments by GS we ll owners or operators as deployment of GS technology increases in the future. In addition, EPA plans to allow owners or operators to choose from a variety of financial instruments to meet their financial respons ibility needs, thereby allowing owners or operators flexibility. See the final rule and preamble fo r further discussion of EPA's final approach to financial responsibility. EP A is using an adaptive approach to regulating

GS.

Letter ID: 0163 Comment ID: 21312 Letter Lines: 91 to 97

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

Comment: The challenge confronting EPA in this ru lemaking is twofold: 1) to establish clear, reasonable and environmentally prot ective regulations to cover a range of operations for which the technology will not be commercially deployed for a number of years, and 2) to the extent practicable establish a single, clear, reasonable and protective liability regime for an activity where the nature of the risks are different from many othe r industrial activit ies and the full extent of possible risks from full scale CCS operations are presently unknown.

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

3subject to a §1431 response orde r even after proper site cl osure is approved under §146.93. Under §1431 the Administrator may require an ow ner or operator to take necessary response

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

which such violation occurs or failure to comply continues.

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

Letter ID: 0163 Comment ID: 21313 Letter Lines: 104 to 115

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

Comment: Principles for new regulations

§ Because of the difficulty of regulating future activities, we urge EPA to continue to use a "performance based" appr oach in developing the requirements for Class VI UIC wells. This way, rules can be readily adjusted and fine-tuned as industry and regulators alike gain experience with large-scale CO2 sequestration.

§ Because information and technology relate d to carbon sequestration will evolve as industry and regulators gain experience with CCS, NRECA urges EPA to resist placing blanket prohibitions or detailed operational specifications in the Final

Rule.

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

To address the comment that the rule should accommodate future technological developments related to GS, EPA adds that it is using an ad aptive approach to regulating GS under the UIC Program. Even after finalization of the GS regulat ion, EPA plans, every six years, to collect and

4review 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: 0163 Comment ID: 21314 Letter Lines: 117 to 120

Comment Code: 2100 1.6 Target Geologic Formations for GS

Comment: § EPA should not automatically exclude placem ent of wells in particular geologic

structures. The Final Rule should leave the door open for a range of injection sites and methods provided the owner or ope rator can show that the injection and storage will be protective of Underground Sources of Drinking Water (USDWs).

Individual Response: EPA clarifies that the GS rule does not categorically prec lude injection of CO2 into any non-USDW formation types. The purpose of the GS rule is to ensure protection of USDWs from endangerment, and the rule requires that owners or operators demonstrate that wells are sited in suitable systems with geologic formations to receive and confine injected CO2, required at §146.83 of the GS rule. The Cla ss VI siting, well cons truction and operation, monitoring and testing, and post-inj ection site care and site closur e requirements are designed to ensure that injected CO2 remains within the target formation. If an owner or operator can

demonstrate to the Director's satisfaction that GS in coal seams, basalts, salt domes, or shales can be accomplished in a manner that protects USDWs a nd meets all of the requirements of the GS rule, the project may be permitted as a Class VI well.

Letter ID: 0163 Comment ID: 21315 Letter Lines: 122 to 125

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

Comment: § NRECA believes that the states will have the best knowledge of regional geology, existing projects, areas in need of special protection, etc. and that states should be allowed to assume prim acy for administration of the UIC Class VI well program.

Individual Response: EPA agrees with commenters on the importance of states having primacy for GS wells given the variety of geologic settin gs in which GS will be applied. EPA recognizes that State, Tribal, Territorial, a nd DI UIC Program Direct ors are in the best position to evaluate the unique issues related to well depth, geol ogy, and hydrogeology that are posed by a Class VI well. Some degree of flexibility is needed for Cl ass VI wells because each decision made will be site-specific and conditions will di ffer from state to state. The GS rule balances the need for these site-specific decisions with the need for mi nimum standards to ensure national consistency.

The Agency believes that it is important for stat es to use their unique e fficiencies to promote adoption of this burgeoning and important tec hnology, while assuring that USDWs are protected from endangerment through the UIC regulatory framework. EPA encourages states to accept primacy for Class VI, and believes that, due to the importance of implementing an effective,

5comprehensive, and seamless CCS program, States should be provided the flexibility to obtain primacy for Class VI only.

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

Letter ID: 0163 Comment ID: 21316 Letter Lines: 127 to 129

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

Comment: § EPA should be careful not to stigmatiz e GS operations and to take positive measures to build public acceptance. EPA should avoid characte rizing stored CO2

as a waste.

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

EPA adds that the requirements of the GS rule ar e tailored to the nature of the CO2 itself and risks associated with the injec tion of CO2, and do not address th e status of CO2 as either a pollutant, commodity, or waste.

Letter ID: 0163 Comment ID: 21317 Letter Lines: 131 to 138

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

Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: § EPA must settle the way GS activitie s will relate to RCRA and CERCLA. RCRA

is simply the wrong tool to use to regulate GS of CO2 and EPA needs to find a way to insure that the onerous requirements of CERCLA, (never intended for GS of CO2), are not applied to this highly specialized gas storage operation.

§ Dealing with these last two hazardous wa ste issues appears to NRECA to be one

6of the most difficult hurdles standing in the way of commercial deployment of full scale GS projects and we recognize th at Congressional acti on may be needed.

Individual Response: EPA agrees that any requirements for the CO2 stream should be clearly identified. EPA received many comments regardi ng the applicability of the RCRA regulations

and statute to CO2 streams thatare geologically sequestered unde r 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 appl icability to CO2 streams being geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2 GS in Class VI wells. EPA will consider these comments as part of its development of that proposal. The Agency will consider issues pa rticular to RCRA in the context of that separate rulemaking, and recommends that the commenter read that proposed rule when it is published. The Agency notes that comment ers who wish to submit comments on the RCRA proposal will need to do so during the comment pe riod for that rule. Finall y, EPA also notes that the final GS rule, which adds ne w regulations for Class VI wells under the Safe Drinking Water Act (SDWA), is not making any changes to the RCRA regulations.

CO2 itself is not listed as a hazardous substan ce under CERCLA; however, the CO2 stream may contain a listed hazardous substance (such as mercury) or may mobilize substances in the subsurface that could react with ground water to produce listed hazardous substances (such as sulfuric acid). Whether such substances may result in CERCLA liability from a sequestration facility depends entirely on th e composition of the specific CO2 stream and the environmental media in which it is stored (e.g., soil or gr ound water). CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “feder ally permitted releases” (FPR) as defined in CERCLA, 42 U.S.C. 9601(10). Class VI permits will need to be carefully structured to ensure that they prevent potential releases from the we ll which are outside the scope of the Class VI permit.

Letter ID: 0163 Comment ID: 21318 Letter Lines: 140 to 164

Comment Code: 1000 1. General and Administrative Comments

Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements

Comment: Principles for Managing Liability

NRECA is a member of the Carbon Captur e and Storage Alliance (CCS or the Alliance) and this group is planning to submit comments on the proposed UIC

rules for GS of CO2.

The CCS Alliance is a coalition of en tities, spanning a num ber of economic

sectors that share a common interest in removing impediments to investment in and development of carbon capture and stor age ("CCS"), as well as mitigating the potential risks associated with the depl oyment of this technology. Its purpose is to promote development of policy by th e states and the federal government to appropriately address risks and potentia l liabilities, ther eby enabling the

7further development and increased deployment of CCS. The CCS Alliance believes these technologies can be develope d while protecting underground water resources, significantly reducing glob al and U.S. greenhouse gas ("GHG") emissions, and enhancing U.S. energy security. The Alliance’s purpose is to consider ways of promoting the developm ent and use of CCS technologies and to support efforts by the private sector, st ates, the federal government, nongovernmental organizations and others, to help ensure that these technologies can be developed and widely, effici ently and cost-effectively deployed.

We support the comments of the Alliance a nd incorporate them here by reference. NRECA is relying on the Alliance and USWAG to provide EPA with specific comments on the Financial Assurance and Long Term Liability issues discussed in the proposal. We are not expert s on these matters, however we do believe that the

Individual Response: EPA acknowledges the comment. Pleas e see the remainder of EPA's responses to this comment for further deta ils. For additional information on EPA's final regulatory approach, including fina ncial responsibility for GS wells , please see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0163 Comment ID: 21319 Letter Lines: 164 to 180

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

Comment: proposal. We are not expert s on these matters, however we do believe that the following principles for managing risk and liability associated with GS should

be considered in the Final Rule.

§ It appears to NRECA that a tiered approach with a gove rnment back-stop as used

in the framework of the Price-Anderson Act for nuclear faculties could be a rational way of structuri ng liability management fo r GS of CO2. This is

discussed further below in the comments section.

§ EPA should consider a broad array of financial mechanis ms owners or operators can use to meet financial responsibi lity requirements specified in the regulations.

§ While Self Insurance mechanisms bel ong on EPA's menu of Financial Assurance options, many of NRECA's members are sma ll business and may have a relatively small capitalization so Corporate Guarantees or Self Insurance may not be an available option for them.

Individual Response: Under SDWA, EPA has the genera l authority to set financial responsibility requirements for injection well owne rs or operators to ensure that adequate resources are available to protect USDWs throughout the life of the GS pr oject. However, this authority does not extend to allowing the Agency to create a financial instrument with EPA as the trustee, due to the restrict ions of the Miscellaneous Receipts Act (MRA). The MRA requires

8that EPA deposit the funds it receives for the use of the Govern ment into the Treasury, therefore funds would not necessarily be availa ble for GS financial responsibility.

Additionally, EPA does not have authority under SDWA to establis h a trust fund for purposes of financial responsibility for Class VI projects. The Agency clarifie s that the trust funds that are addressed as financial responsibility instruments on the GS rule are set up by individual owners or operators and are different from a national-le vel trust described by th e commenters that would cover large numbers of GS projects.

Owners or operators may choose from a variety of financial instruments to meet their financial responsibility obligations under the rule, provided the Director de termines that the operator's proposed financial responsibility demonstrat ion is adequate to protect USDWs from endangerment, which means the ability of the owner or operator to pay for each activity for which financial responsibility must be demonstr ated, including correctiv e action on wells in the AoR, injection well plugging, PISC and site cl osure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instru ments. See the final rule and pr eamble for further discussion of EPA's final approach to financial responsibility.

EPA will retain self insurance as an option for financial responsibility for Class VI wells. EPA believes that if properly used, the financial test can be an appropriate option for some owners or operators. EPA recognizes that it is important fo r self-insurers to be credit-worthy, otherwise USDWs may not be adequately protected. Owner or operators who choose to self-insure and use

the financial test must be able to demonstrate profitability, with a margin sufficient to cover contingencies and unknown obligations, and stabilit y. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy financial obligations based solely on the strength of the company’ s financial condition. If an operator or operator is not ab le to meet the corporate financ ial test criteria may arrange a corporate guarantee by demonstrating that its cor porate parent meets the financial requirements

on its behalf.

Under SDWA authority, owners or operators of injection well s must ensure protection of USDWs from endangerment and are subject to liab ility for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Directorapproved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that th e geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Letter ID: 0163 Comment ID: 21320 Letter Lines: 182 to 196

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

Comment: COMMENTS

1. NRECA acknowledges EPA's efforts to use a "performance-based" approach and to

9build flexibility into the Proposal, incl uding the use of dire ctorial discretion and the provision for forthcoming guidance to clarify other requirements. In general, we agree that these methods will help create a regulatory framework

that can evolve as information and technol ogical advancements ar e gained in the field of carbon capture and sequestration. It is important, however, that any

directorial discretion be clearly defined and limited ; this can be achieved while still maintaining a rule that is flexible and avoids unnecessary prohibitions. In addition, guidance on any aspect of the Final Rule (for example, clarification of requirements fo r financial assurance mechanisms) must be developed in accordance with OMB’s G ood Guidance Practices Bulletin, which

directs that notice and co mment be provided on "ec onomically significant" guidance documents. See 72 Fed. Reg. 3432, 3438 (Jan. 25, 2007).

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

EPA is developing guidances for States that describe the process of applying for and receiving primary enforcement authority (primacy) for GS Class VI wells under Section 1422 of SDWA,

as well as the technical and administrative issu es on developing GS regul ations that are the equivalent of minimum federal criteria and requirements. The gui dance will describe areas of

Directorial discretion and consid erations for how that discre tion would be exercised. This guidance will be available on EPA’s website at http://water.epa.gov/type/groundw ater/uic/wells_seque stration.cfm. EPA has taken OMB’s Good

Guidance Manual into consideration as it de veloped the guidance. OMB’s Good Guidance Manual establishes policies and procedures for the development, issuance, and use of significant guidance documents by Executive Bran ch departments and agencies.

Letter ID: 0163 Comment ID: 21321 Letter Lines: 198 to 210

Comment Code: 2100 1.6 Target Geologic Formations for GS

Comment: 2. It is counterproductive at this stag e in the development of a CO2 GS regulatory regime to categorically preclude any potentially feasible injection formations as possible long-term stor age sites. EPA recognizes that the commercial deployment of CO 2 GS activities will result in the production of large volumes of CO2 for which Owners or Operators will have to locate new and environmentally protective injection z ones. Therefore, it makes sound policy sense for EPA to encourage the identi fication and utilization of as many protective zones as possible, with the prerequisite that any injection site be protective of USDWs. To achieve this result, the Final Rule should avoid

10absolute prohibitions on any category of injection site and instead keep all options open; injection should be allowed as long as it can be demonstrated that injection will be protective of USDWs and meet other applicable conditions for

Class VI CO2 GS wells.

Individual Response: As described above, EPA clarifies that the GS rule does not categorically preclude injection of CO2 into any non-USDW formation types.

Letter ID: 0163 Comment ID: 21322 Letter Lines: 212 to 220

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

USDW

Comment Code: 4410 2.4.4.3.1 Comments in favor of allowing injection above/between

USDWs in certain circumstances

Comment: NRECA supports alternative approaches that would allow injecti on between and/or above the lowermost USDW, increasing capac ity for CO2 GS, as long as Owners or Operators of Class VI wells can show th at their CO2 GS ope rations will be protective of USDWs. Id. at 43512. This will be particularly important in areas of the country with deep USDWs, where an absolute requirement that Class VI

wells be constructed beneath the lowerm ost USDW could render the program impractical. Id. NRECA also supports this alternative approach in areas where

the Director determines -- or the Owner or Operator can show -- that geologic conditions would prevent fluid movement into adjacent USDWs. Id. For similar

Individual Response: EPA acknowledges that there are lim ited circumstances where injection above the lowermost USDW can be performe d in a manner that protects USDWs from endangerment, as long as appropriate protections are in place. The final GS rule at §146.95 establishes a process by which owne rs or operators can seek a waiv er of the Class VI injection depth requirements for injecti on into non-USDW formations above and/or between USDWs. It establishes: 1) requirements spec ifying information that owners or operators must submit, and Directors must consider, in consultation with PW SS Directors; 2) procedures for public notice of a waiver application and for Director-Regiona l Administrator communicat ion; 3) the waiver issuance process; and, 4) additiona l requirements that apply to owne rs or operators of Class VI wells granted a waiver of the in jection depth requirements to en sure USDW protection above and below the injection zone.

EPA believes that these requirements will ensure USDW protection while providing flexibility to UIC program Directors and owne rs or operators who undertak e CO2 injection for GS. The Agency believes this approach: 1) responds to co ncerns about local and re gional geologic storage capacity limitations imposed by th e proposed injection depth require ments; 2) allows for a more site-specific assessment of injection depth for GS projects; 3) accommodates injection into different formation types; 4) a llows for injection of CO2 for GS into non-USDWs above and/or between USDWs when appropriate and where it can be demonstrated that USDWs will be protected; and 5) responds to concerns about the use of aqui fer exemptions for GS. Finally, EPA’s approach to addressing injection depth va riability through a waiver process responds to

11concerns about future drinking wa ter resource availability and the need to ensure that high quality water remains available in sufficient qua ntities to supply drinking water needs. For additional information on the waiver approach, pleas e see the final rule and preamble, as well as EPA's responses to comments on the Notice of Data Availability and Request for Comment.

Letter ID: 0163 Comment ID: 21323 Letter Lines: 221 to 223

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

circumstances

Comment: reasons, NRECA opposes an absolute prohibition on use of exempt aquifers for Class VI injection; use of exempt aquifers should be permitted where the specific aquifer exemption criteria are satisfied. Id.

Individual Response: EPA recognizes that there are lim ited circumstances where aquifer exemptions for GS may be warranted, and the final GS rule allows for the expansion of the areal extent of existing aquifer exemptions for Cl ass II EOR/EGR wells tran sitioning to Class VI injection for GS pursuant to requirements at §§146.4 and 144.7(d). Class VI owners or operators granted expansions of existing Class II EOR/EGR aquifer exemptions for GS projects must meet all of the tailored requirements for GS wells in the final GS rule.

EPA clarifies that the final rule precludes the issuance of new aquifer exemptions for Class VI GS wells; that is, aquifer exemptions will only be granted for projects that are transitioning from

Class II EOR/EGR wells to Class VI.

EPA adds that any Class II well ow ner or operator seeking to inj ect CO2 for the purpose of GS would need to have their well re-permitted as Cl ass VI. The final Class VI regulations require that any owner or operator injecting CO2 for th e primary purpose of long term storage obtain a Class VI permit with some special consideration fo r 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 re quired 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 ev aluate in making this determination, at §144.19. EPA believes that this approach provides sufficient pr otection of USDWs when there is an increased risk to USDWs as compared to traditional Cla ss II operations while allowing for site-specific flexibility. See the preamble and final rule for additional information on EPA's approach transitioning of Class II wells for GS.

The Agency clarifies that the aquifer exempti on requirements and the injection depth waiver requirements serve different purposes. Class VI owners or operators granted expansions of existing Class II EOR/EGR aquifer exemptions fo r GS projects must meet all of the tailored requirements for GS wells in the final GS ru le, including the requirements at §146.83 for site criteria. EPA believes that, in most cases, the inj ection depth waiver is a more appropriate option than aquifer exemptions for Class VI injection, and believes that aquifer exemption expansions for GS should be granted in limited circumstances.

12For additional information on aquifer exemptions for Class VI wells, please see the final rule and preamble, as well as EPA's responses to comments on the Notice of Da ta Availability and Request for Comment.

Letter ID: 0163 Comment ID: 21324 Letter Lines: 225 to 230

Comment Code: 2163 1.6.3.1 Comments in favor of injection into unmineable coal seams

Comment Code: 2200 1.6.4 Other formation types

Comment: 3. NRECA believes that the Final Rule s hould not contain a bl anket prohibition on injection of CO2 into coal seams (whether above or below the lowermost USDW)

or into other formations such as basa lts, salt domes, or shales. 73 Fed. Reg. at

43503. If it can be demonstrated that the in jection of CO2 into such sites is protective of USDWs, then such activiti es should remain available options under the Class VI UIC program.

Individual Response: The final GS rule does not precl ude injection into any non-USDW formations, including coal seams, provided the site -suitability requirements in the GS rule are met, and owners or operators can demonstrate that GS can be performed in a manner that protects USDWs from endangerment.

EPA acknowledges that there are un knowns regarding GS into formations such as coal seams, which have been the subject of limited experiment al projects in the past. For this reason, the Agency is using an adaptive approach to regu late GS injection. EPA will collect and review project data on early GS projects , including those that inject into various formation types, to determine whether the appropriate amount and t ypes of information and documentation are being collected. EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modificatio ns to the requirements are appropriate or

necessary.

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

the final rule.

Letter ID: 0163 Comment ID: 21325 Letter Lines: 232 to 244

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

Comment: 4. On a related subject, EPA requests comm ent on whether the Final Rule should require, or allow the Director to requir e at his discretion, the identification and characterization of additional confining and containment zones above the primary (i.e., lowermost) confining zone that could further impede vertical

13fluid movement and allow for pressure dissipation -- in e ffect, a "secondary containment" requirement. Id. at 43505- 06. As a general matter, NRECA opposes the inclusion of this secondary containm ent requirement, and believes that it will only be in the most unusual situations where the circumstances warrant the Director exercising his disc retion and requiring this a dditional protection in a Class VI permit. While it is of course true that additional containment zones above the confining zone could impede vert ical fluid movement, there is no basis for requiring these additional zones if it has already been de monstrated that the original confining is protective of USDWs.

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

Letter ID: 0163 Comment ID: 21326 Letter Lines: 246 to 258

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

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

Comment: 5. 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 will facilitate implementation of a new and complex regulatory program.

For these reasons, NRECA believes it is appr opriate to allow states to obtain primacy for the entire UIC program or fo r only Class VI wells if a particular

state so chooses. Id. at 43523. Such class- specific primacy is consistent with the statutory authorization behind the UIC Program, and as EPA predicts, states obtaining primacy for Class VI wells -- regardless of whether they have sought primacy under other aspects of the UIC program -- may be more likely to develop a comprehensive regulatory program fo r all aspects of carbon capture and storage. Id.; see also 42 U. S.C. § 300h-1 (SDWA § 1422).

Individual Response: EPA acknowledges the expertise of exis ting State, Tribal, Territorial, and DI UIC programs including programs that impl ement the UIC requirements under Section 1422 of the SDWA (Class I, III, IV, and V wells) an d state oil and gas agencies that have been regulating Class II UIC wells for decades under Section 1425 of SDWA. Th ese agencies already

14understand the technical and administrative issues involved in constructi on, operation, injection and permitting as well as, in the case of Class II operators issues related to CO2 injection, subsurface operations, and pipeline transport. EP A believes that existing programs can adapt this 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.

Many of the tools, resources, expertise, and infr astructure currently exist within States to effectively and efficiently manage GS projects. Additionally, States can use multiple authorities beyond those afforded under the SDWA including surface access and land ri ghts, unitization of fields, pore space ownership, mineral rights, si te safety and emergency preparedness, and maximization of State oil and gas resource exploitation.

Throughout the GS regulatory development process, EPA has made it a priority to engage States and State organizations. EPA work s with State co-regulators on regul atory issues related to GS – including state representation on the GS regulatory developmen t workgroup. The Agency has

also conducted a series of stakeholder and tec hnical workshops, and public hearings, and EPA met with national organizations including the Ground Water Protection Co uncil, the Interstate Oil and Gas Compact Commission, and the Ameri can Association of St ate Geologists. EPA values coordination with States and State co-regul ators and will continue an open dialogue as the Agency moves forward in the regulatory development process.

As described above, EPA plans to allow States to apply for primacy for the Class VI program independently of primacy for other well classes.

Letter ID: 0163 Comment ID: 21327 Letter Lines: 260 to 276

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

Comment Code: 1530 1.2.3.1 State regulatory effort s on GS (seeking comment)

Comment: 6. NRECA urges EPA to issue more definitive direction in the Final Rule regarding the regulation of CO2 injection activi ties that cross state

boundaries. This issue is mentioned in th e Preamble to the Pr oposal but receives

little attention. See 73 Fed. Reg. at 43497. Rather, EPA simply observes that "some injection activities may raise cro ss-state boundary issues that are beyond the scope of this rulemaking." Id. More guidance should be gi ven regarding how

such cross-state activities should be re gulated, including making clear in the Final Rule that Owners or Operators of Class VI CO2 GS projects will seek a Class VI permit for that operation from the state in which the wellhead is located; in other words, a given state is the permitting body for any Class VI CO2 GS project with a wellhead in that state. EPA should direct states to

consult and coordinate with other affected states (i.e ., other states to which the underground portion of the well may extend and/or thos e to which there could be a subsurface release or migration of in jected material) in determining how to avoid duplicative or dueling regulatory systems. NRECA urges EPA to play a leadership role and proactively address these issues by suggesting procedural

15guidelines for inter-state regulation and cooperation.

Individual Response: EPA understands that the CO2 plumes for large GS projects may cross state, tribal, EPA Regional, or national boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territo rial boundaries within the AoR. Based on this information, the Director must provi de written notification to all States, Tribes, and Territories to inform them of the permit application §146.82(b) and ensure that they are involved in any necessary processes (e.g., develo pment of the emergency and remedial response plan (146.94)). The Agency encourages transpar ency in the permitting process and anticipates

that State-State/State-Tribal communication on GS permitting will facilitate information sharing and encourage safe, protective projects.

Because some GS projects will require coordina tion across State and Tribal jurisdictions and plans, EPA will work with the appropriate entiti es to facilitate communication among States and Tribes interested in obtaining Primacy during the implementation phase of the GS regulation. Such communication may involve other organi zations such as the Sierra Club, NDWAC, associations, and other experts. However, the responsibility for addressing such subjects ultimately rests with the States and Tribes with primacy.

EPA is developing a series of guidance docum ents to support the GS rulemaking. These are

available on EPA’s website at http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm.

Letter ID: 0163 Comment ID: 21328 Letter Lines: 278 to 291

Comment Code: 1480 1.2.2.2.2 CO2 is not a pollutant

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

Comment: 7. EPA should view CCS as a resource, not a waste. NRECA endorses the view of the Interstate Oil and Gas Compact Comm ission ("IOGCC") that CO2 should be treated in any regulatory regime as a resour ce and not as a waste. As an initial matter, CO2 has a commercial value for EO R operators. A number of commercial operations exist solely for the extracti on and sale of natural CO2. Moreover, anthropogenic CO2 may have a commercial value for traders in carbon emissions reduction credits, once the CO2 is capture d and stored. While the reason for capturing the CO2 may be to prevent it from entering the earth’s atmosphere, it

nonetheless will have a commercial valu e when stored. Also, states that currently regulate CO2 injections for EOR operations do so under a resource management framework. Surface Transportati on Boards, which are responsible for the economic regulation of CO2 intersta te pipelines, also view CO2 as a commodity. Characterization as a waste would have a chilling effect on the development of CCS projects.

Individual Response: EPA clarifies that the requirements of the GS rule are tailored to the

nature of the CO2 itself and risks associated w ith the injection of CO 2, and do not address the status of CO2 as either a polluta nt, commodity or waste. In add ition, whether or not a fluid could

16be sold on the market as a commodity does not override EPA's authority under the SDWA to protect USDWs from endangerment.

Under the SDWA, the injection of any "fluid" is subject to the requirements of the UIC program. "Fluid" is defined under 40 CFR 144.3 as any mate rial or substance which flows or moves, whether in a semisolid, liquid, slud ge, gas or other form or state, and it includes liquids, gases, and semisolids (i.e., slurries) in jected into the subsurface.

EPA stresses that the focus of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs.

Letter ID: 0163 Comment ID: 21329 Letter Lines: 293 to 303

Comment Code: 1480 1.2.2.2.2 CO2 is not a pollutant

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

Comment: 8. The General Accounting Office ("GAO") r ecently issued a report entitled "Climate Change -- Federal Actions Will Gr eatly Affect the Viability of Carbon Capture and Storage As a Key Mitigat ion Option" (GAO-08- 1080, September 2008) ("GAO Report"). GAO cites a National Acad emy of Sciences ("NAS") report emphasizing that a largescale CO2 UIC pr ogram cannot be successful "if a significant fraction of the public views it as dangerous or unacceptable" and, therefore, CO2 storage technologies must not only be safe and effective, they must be presented "to the public and the regulatory community in such a way as to instill confidence that they are in fact safe and effective." Id. at 49 (citing NAS, Prospective Evaluation). Th is is another reason EPA should not

characterize CO2 as a waste. *********

Individual Response: As described above, EPA clarifies that the GS rule does not address the status of CO2 as either a polluta nt or a commodity or a waste.

EPA believes that the creation of a new inject ion well class (VI) under th e existing UIC Program is necessary to enable deployment of GS as a climate change mitigation technology in a manner that protects USDWs from endangerment. EPA ag rees that the UIC Program, under the authority of the SDWA, provides a strong fr amework for regulating injection of CO2 for GS and adds that the GS regulation tailors the UIC requirements to address the unique i ssues associated with large-scale GS including large injection volumes, the relative buoya ncy of CO2, its corrosivity in the presence of water, the potential presence of impurities in captured CO2, and its mobility within subsurface geologic formations.

Letter ID: 0163 Comment ID: 21330 Letter Lines: 305 to 318

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

Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)

17Comment: The CCS Alliance has evaluated technical, market, and policy risks associated with CCS deployment. On behalf of the CCS Alliance, Andrew Paterson of Econergy

International interviewed dozens of mark et participants earlier this year, including project developers , utilities, technology vendors, risk managers, and financial providers to assess which risks were considered most likely to occur, and which, if they occurred, would be cons idered to have the greatest impact to the project. The CCS Alliance study showed th at market participants identified one of the highest risk factors to be the lack of clarity in EPA and state regulations dealing with th e technical aspects of injection and with liability. NRECA believes that the larg est and most important aspect of the proposed UIC regulations will be how GS activities ar e coordinated with RCRA and CERCLA. Currently we believe that this is one of the most difficult hurdles standing in the way of commercial deployment of full scale GS projects. One way of dealing with this issue to avoid classify ing injected CO2 as a waste. ********

Individual Response: EPA agrees that any requirements for the CO2 stream should be clearly identified. EPA received many comments regardi ng the applicability of the RCRA regulations

and statute to CO2 streams thatare geologically sequestered unde r 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 appl icability to CO2 streams being geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2 GS in Class VI wells. EPA will consider these comments as part of its development of that proposal. The Agency will consider issues pa rticular to RCRA in the context of that separate rulemaking, and recommends that the commenter read that proposed rule when it is published. The Agency notes that comment ers who wish to submit comments on the RCRA proposal will need to do so during the comment pe riod for that rule. Finall y, EPA also notes that the final GS rule, which adds ne w regulations for Class VI wells under the Safe Drinking Water Act (SDWA), is not making any changes to the RCRA regulations.

CO2 itself is not listed as a hazardous substan ce under CERCLA; however, the CO2 stream may contain a listed hazardous substance (such as mercury) or may mobilize substances in the subsurface that could react with ground water to produce listed hazardous substances (such as sulfuric acid). Whether such substances may result in CERCLA liability from a sequestration facility depends entirely on th e composition of the specific CO2 stream and the environmental media in which it is stored (e.g., soil or gr ound water). CERCLA exempts from liability, under CERCLA section 107, 42 U.S.C. 9607, certain “feder ally permitted releases” (FPR) as defined in CERCLA, 42 U.S.C. 9601(10). Class VI permits will need to be carefully structured to ensure that they prevent potential releases from the we ll which are outside the scope of the Class VI permit.

Letter ID: 0163 Comment ID: 21331 Letter Lines: 320 to 342

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

Comment: 9. Anecdotal evidence from pilot scale Car bon Sequestration and Storage projects

18seem to suggest that it is not likely that CO2 removed from the flue gas stream of a coal-fired power plant would be clas sified as a RCRA hazardous waste. NRECA believes that EPA should specifically exem pt CO2 gas streams from coverage by RCRA and develop requirements specifically tailored to this material if necessary to assure further environm ental protection beyond that already provided by the UIC permitting process. RCRA is simply not the right tool to use

in this situation.

In 2002, EPA found that "the existing h azardous waste regulations require the submittal of 334 notifications, reports, certifications, demonstrations and plans from generators and TSDFs to dem onstrate compliance with RCRA Regulations" (See comments of the CCS Alliance). Reporting requirements are just one example

of RCRA's burdens. Others include TSD facility requirements generally, waste manifesting, training requirements for tr ansporters and handl ers, citizen suit provisions, and the fact that hazardous waste regulations implicates Superfund liability. And to further expose potentia l CO2 GS facilities to open-ended liabilities, applying RCRA coul d expose all other waste management units at the facility, including units that are in no way related to the injection operations, to the full panoply of RCRA's Subtitle C corrective action program. If one considers that an injection we ll could be located at an existing industrial site or power plant, it should be very clear how a private party

would be reluctant to insure or fina nce a GS project under these conditions.

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: 0163 Comment ID: 21332 Letter Lines: 344 to 357

Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: 10. Likewise the specter of regulation unde r Superfund exposes a GS project to potentially unknown and open-ended liab ilities. Obtaining a UIC permit and carefully defining the AoR should go a long way toward protecting the environment. Subjecting the project to Superfund, may not signi ficantly increase environmental protection, but it would sure ly increase risks and liabilities for the owner/operator. NRECA believes that th ere may be no other answer than to

19exempt GS projects from superfund. EPA di scusses the availabi lity of a shield from superfund liability bei ng provided by the "federal ly permitted release" exclusion, however in the event of any unfor eseen circumstance or accident that is not explicitly identified in the pe rmit, such protection would vanish. Unfortunately, NRECA doubts that EPA can find a way to design reliable regulatory and liability protection to save GS projects from unnecessary involvement with Superfund while ensu ring that they "do not authorize inappropriate hazardous rele ases" (ibid at 43504).

Individual Response: The Agency thanks the commenter for their detailed comments regarding the scope and possible impacts of CERCLA liability on CCS activities, and in particular comments related to the CERCLA exemption for federally-permitted releases. EPA notes that the GS rule is not promulgated under CERCLA, therefore the applicability of th at 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 implem enting regulations that may apply.

EPA agrees that proper site characterizati on and AoR studies are important for USDW protection. In addition, the UIC program Director has authority under SDWA §1423 to address potential compliance issues (e.g., potential releases that may endanger USDWs) resulting from violations of the Class VI permit in the unlikel y event that a remedial response is necessary. Although EPA anticipates that the need for emerge ncy or remedial actions at GS sites will be rare, the GS rule requires, at §146.94, that emerge ncy and remedial respon se plans be developed and updated to address such events and that ow ners or operators demonstrate that financial resources are set aside to implemen t the plans if necessary, per §146.85.

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

20which 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.

Letter ID: 0163 Comment ID: 21335 Letter Lines: 359 to 381

Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements

Comment: Financial Assurance and Liability

Private risk managers (insurers, suretie s, banks, and others), will determine whether to provide financial assurance fo r a project based on a calculation of the severity of risks and probability that they will occur over a given time period. The severity and probability of ri sk is defined not just by physical dimensions, such as fractures and leak s, but by the regulatory and liability structure that is in place.

11. EPA should, to the extent practicab le, establish a single, clear, and reasonable regulatory structure for managing risks and liabilities. Applicability of multiple statutes - or , as discussed herein, detailed and inappropriately prescriptive command a nd control statutes such as RCRA and CERCLA - give rise to pot ential risk through additional cost and by increasing the possibility of violations. CCS devel opers will be willing to abide by reasonable rules that protect human health and the environment, but they do not want to bear enhanced risks resulting from requirements that do not significantly contribute to health an d environmental protection. Nor do developers and risk managers want to face liability via multiple State and federal statutory and common law pathways, with the possibility of unnecessarily expensive and contentious remedies. As these goals likely will require some legislative action, EPA also should educat e Congress on the need for regulatory and liability regimes with these characteristics.

Individual Response: EPA acknowledges the commenter's con cerns regarding the applicability of multiple statutes to GS projects and the need for a single clear liability regime for owners or operators. As a federal agency, EPA is working to create a nationally consistent financial responsibility regime within its statutory aut hority while providing permitting authorities an appropriate level of flexibilit y. EPA is finalizing financial re sponsibility requirements under the SDWA . EPA believes that the general authoriti es provided under SDWA include the authority to set minimum federal requirements for financ ial responsibility to en sure that financial resources are available to protect USDWs throughout the life of the GS project.

21Under SDWA authority, owners or operators of injection well s must ensure protection of USDWs from endangerment and are subject to liab ility for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Directorapproved PISC and site closure plan following the cessation of injection until the owner or operator can demonstrate to the Director that th e geologic sequestration project no longer poses an endangerment to USDWs. For additional information about the PISC and site closure requirements, see the preamble to the final GS rule.

Once an owner or operator has met all regulator y requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or operator will generally no longer be subject to enforcement for regulatory noncompliance. Furthermore, their financial instrument as re quired under §146.85 will be released if it was not used. However, even if a site closure is a pproved under §146.93, an owner or operator may be held liable for regulatory noncompliance (inc luding violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even after site closure was a pproved if the Direct or relied on erroneous information (e.g., erroneous modeling data) provi ded by the owner or operator when approving

site closure.

Additionally, an owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons under §1431 of the SD WA after site closure if there is unanticipated migration towards or into a US DW that causes or threatens imminent and substantial endangerment to public health. The action may include issuing administrative orders or commencing a civil action for appropriate relief. If the owner or operator fails to comply with the order, they may be subject to a civil penalt y for each day in which such violation occurs or failure to comply continues.

The Agency clarifies that Class VI well permits may be transferred to another owner or operator pursuant to §144.38 whereby generally all other regulatory re sponsibilities are transferred to that new owner and operator, which includes all poten tial liabilities associat ed with meeting the requirements of that permit. Please see further clar ification on the issue of long term liability in the preamble of the final rule.

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

Letter ID: 0163 Comment ID: 21336 Letter Lines: 383 to 394

Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements

22Comment: 12. It is clear, however, that regardle ss of EPA's success in establishing a clear regulatory structure for addressi ng site remediation risks, and site liability risks, at some point a governme nt backstop for liability needs to be established. There is a clear role for priv ate insurance / risk management firms for assuming certain categories of the risks associated with a GS project. However, these projects are intended to sequester carbon long into the future. This presents a risk cate gory with particularly diff icult characteristics. Private companies cannot quantify risks for such an open-ended condition and we are told they will not write policies for this stage of the GS project. Government is urging GS for protection of the public welfare a nd in order for it to occur on a broad-scale, government will ha ve to be willing to bear some of the low probability, long time-frame risks.

Individual Response: EPA notes that SDWA does not co ntain any provisions addressing liability. Under the final GS ru le, once an owner or operator ha s met all regulatory 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 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 to financial responsibility for Class VI wells.

Letter ID: 0163 Comment ID: 21337 Letter Lines: 396 to 430

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

23Comment: 13. NRECA appreciates the work EPA has done studying possible approaches to GS site stewardship. NRECA sees some promise in parts of the gene ral framework of the first model listed in the study for fe deral management of GS liability -- The Price-Anderson Act. Specifically, using three tiers for funding the liability regime would seem to be a good starting point for developing a similar regime for GS. The approach "requires a licensed nuclear facility to maintain both site-specific liability insurance (T ier 1) and industry- pooled liability insurance (Tier 2). In the event that the private claims against a licensee

exceed the amounts available in both the site -specific, individual insurance and the industry-pooled insurance, the fede ral government (Tier 3) provides the licensee with indemnity." EPA should consid er a 3-tier liability scheme for GS that incorporates private insurance, p ooled industry insurance and a government backstop.

14. In considering financial assurance requirements, EPA and stakeholders should distinguish financial assurance from liab ility. Regardless of the length of time EPA establishes in the final rule for a GS facility owner or operator to maintain financial instruments to pay to clean up potential USDW contamination, liability for such cleanup may last longer, depending on which statutory provisions are applicable, as well as state law. While EPA is limited in its ability to address potential liability, it should seek to do so, as findings of the Risk Study conducted by the CCS A lliance (discussed above) show that potential long-term liability is a signif icant barrier to CCS development. In considering FA instruments, EPA should al low as broad an array of tools as possible including:

§ Trust Funds § Insurance § Surety Bonds § Letters of Credit § Corporate

Guarantees / Self Insurance

Regarding Self Insurance mechanisms, however, while these should be one of the tools on EPA's menu of FA options, many of NRECA's members are small business and may have a small capitalization compar ed with some of the other entities that may be interested in conducting GS pr ojects. Because of the very make-up of these companies, Corporate Guarantees / Se lf Insurance may not be an option for

them.

Individual Response: As described above, owners or opera tors may choose from a variety of financial instruments, as listed in §146.85(a), to meet their financial responsibility needs, provided the Director determines that the operator's proposed financial responsibility demonstration is adequate to pay for each activ ity for which financial responsibility must be demonstrated, including correctiv e action on wells in the AoR, in jection well plugging, PISC and site closure, and emergenc y and remedial response.

EPA recognizes that there are some concerns about the use of self insurance, including those mentioned by the commenter. EPA also recognizes the commenter's concern over the availability

2425 of funds to cover the costs of financial responsibility. However, EPA does not have authority under SDWA to require insurance companies to set up an insurance " pool" of resources.

EPA clarifies that the financial instrument the owner or operator provided to meet the requirements under §146.85 will be released when the phase of the project for which the instrument was required is complete and all financ ial obligations for that instrument have been met, pursuant to §146.85(b)(2) and §146.93.