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U.S. ENVIRONMENTAL PROTECTION AGENCY

Public Hearing

Greenhouse Gas Mandatory Reporting Rule, Subpart W (Petroleum and Natural Gas Systems),

and Subpart RR (Carbon Dioxide Injection and Geologic Sequestration)

9:14 a.m. to 5:00 p.m. Monday, April 19, 2010

Lobby Level One Potomac Yard

(South Building) 2777 South Crystal Drive Arlington, VA 22202OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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C O N T E N T S

PAGE Welcoming Remarks Dina Kruger , Presiding Officer................3

Introductory Remarks Dina Kruger ...................................4

Morning Public Comments

Pamela Lacey , American Gas Association..........9 Bruce Hill , Clean Air Task Force...............16 Karin Obershain , Edison Electric Institute.....22 Daniel Klein , 21 s t Strategies...................27 Anne Harvey , Sierra Club.......................33 Karin Ritter , American Petroleum Institute.....44

Peter Zalzal , Environmental Defense Fund.......50 Carliane (Kipp) Coddington , North American Carbon CaptureOLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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and Storage Association.......................57 Phillip Marston , Marston Law...................61

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P R O C E E D I N G S 1 Welcoming Remarks 2 MS. KRUGER: Good morning again, 3 everybody. I think we’ve worked out our technical 4 difficulties and we are ready to get started. 5 On behalf of the Environmental Protection 6 Agency, I’d like to welcome you all to today’s 7 public hearing. My name is Dina Kruger. I am 8 the Director of the Climate Change Division in 9 the Air Office at EPA. It is my group working 10 with colleagues across the Agency that have 11 developed the proposals that you are here to 12 comment on today. 13 Introductory Remarks 14 I’m joined by Paul Gunning who runs the 15

Non-CO 2 Programs Branch and Rona Birnbaum who runs 16 the Climate Science and Impacts Branch. They are 17 both managing parts of the proposals that we’ll 18 be discussing today, Paul focusing primarily on 19 the oil and natural gas sector and Rona on 20 geologic sequestration. 21 I’d also like to emphasize that we have 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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worked very closely across the agency on these 1 proposals and in particular have collaborated 2 very closely with our Office of Water on a 3 proposal that relates to the injection of CO 2 4 underground. As many of you are I’m sure very 5 well aware, they are concurrently finalizing 6 their proposed regulations for the use of the 7 Underground Injection Control Program for 8 Geologic Sequestration and we are working very 9 closely with them as they finalize that and we 10 develop this proposal. 11 The purpose of today’s hearing is to 12 receive comments on two of the subparts that we 13 put out last month and that were published in the 14 Federal Register, I guess, just a week ago. 15 These are the subparts related to the petroleum 16 and natural gas sectors, Subpart W, and the 17 subpart related to CO 2 Injection and Geologic 18 Sequestration, Subpart RR. So we will be looking 19 for comments on those two subparts today and then 20 we’ll be having a second hearing tomorrow at our 21 offices on L Street related to the subpart 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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related to the fluorinated gases. 1 This hearing will be conducted in 2 accordance with the Clean Air Act under which EPA 3 provides interested parties the opportunity for 4 an oral presentation of views and arguments as 5 well as the opportunity to submit written 6 comments. So this is the forum for your oral 7 presentations. We are having this hearing 8 recorded and hopefully that is now working well 9 and there will be a transcript that will be 10 developed and made available for public 11 inspection at our docket. 12 And so if you’re interested, I can 13 quickly say what the docket numbers are if you 14 subsequently want to go and look for them. The 15

docket number for CO 2 Injection and Geologic 16 Sequestration Reporting Proposal is EPA-HQ-OAR17 2009-0926, and the docket number of the Petroleum 18 and Natural Gas Subpart is exactly the same up 19 until those last four numbers, so EPA-HQ-OAR20 2009, and the last four numbers are 0923. 21 The transcript will also be available on 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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Regulations.gov so you can also see it 1 electronically. 2 The hearing is conducted informally. 3 Formal rules of evidence do not apply. However, 4 as the Presiding Officer, I am authorized to 5 strike from the record statements which are 6 deemed irrelevant or needlessly repetitive and to 7 enforce reasonable time limits on your remarks. 8 Given the number of people that have signed up so 9 far, I think what we’re going to do is start with 10 five minutes. If you go substantially longer 11 than five minutes, I will cut you off. We’d like 12 to keep it to certainly no more than ten. But 13 you will also in addition to your oral 14 statements, be able to make written statements or 15 expand your remarks in writing for the record. 16 When you come up to speak, please first 17 state your name and affiliation. That helps us 18 with the transcription. When you’re finished 19 with your comments, this panel may ask clarifying 20 questions, but this is not the place where we’re 21 going to get into a discussion or a back and 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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forth about your comments. It’s our goal here to 1 hear from you your comments on the proposed rule. 2 Also because we are combining covering 3 two subparts in today’s hearing, please be clear 4 when you’re talking about Subpart W or when 5 you’re talking about Subpart RR. I’m guessing 6 that many of you may be here because you’re 7 particularly interested in commenting on one of 8 those subparts, but I recognize that there may be 9 others who are planning on covering both and 10 that’s absolutely fine. 11 If your oral comments are different from 12 your written comments, you should submit your 13 written comments to the docket. 14 The last little piece of business is to 15 ask everyone to turn off their cell phones so 16 that we won’t be interrupted by that. What I’m 17 going to do now is start taking – we’ll start 18 hearing from all of you in the order in which you 19 signed in. I’m going to basically call out three 20 names so you’ll know who’s up sort of first, 21 second, third and then when we finish we’ll do it 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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again. And we’ll be taking reasonable breaks 1 throughout the morning. 2 I’ll also say that I’m probably not going 3 to be your presiding officer all day. At some 4 point this morning, I’m going to have to head 5 back to my office and I will leave you with Rona 6

and Paul. 7 So with that, our first three commenters 8 in order are Pamela Lacey, Bruce Hill and Karen 9 Obenshain. So, Pam. 10 MS. LACEY: Good morning. My name is 11 Pamela Lacey. I’m the Senior Managing Counsel, 12 Environmental, for the American Gas Association. 13 My testimony today will relate to Subpart 14

W alone. 15 AGA represents 195 local energy companies 16 that deliver clean natural gas throughout the 17 United States. There are more than 70 million 18 residential, commercial and industrial natural 19 gas customers in the U.S. of which 91 percent – 20 more than 64 million customers – receive their 21 gas from AGA members. 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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AGA appreciates EPA’s effort to reduce 1 direct measurement in this re-proposal of Subpart 2 W. As a general rule, engineering estimates and 3 emission factors provide a more workable approach 4 for natural gas facilities. However, as always, 5 the devil is in the details – we have concerns 6 about the specifics for underground storage and 7 LNG facilities, and we will address those 8 concerns in our written comments and perhaps in 9 meetings with you given the shortness of the time 10 today. I won’t get into that now. 11 More importantly, we have serious 12 concerns about your proposal for natural gas 13 distribution systems – which were not covered by 14 your earlier proposal and have been added in this 15 one. As I will briefly describe, the results 16 would not justify the level of effort and cost 17 required by this proposal. 18 First, we believe you cast your net too 19 broadly when defining the concept of “facility” 20 for natural gas distribution. As a result, the 21 proposed rule would likely apply to many more gas 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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utilities and require a much greater burden than 1 you estimate. It is not clear to us whether you 2 intend to define the facility as each 3 distribution system or as all of the distribution 4 systems owned by a single “Distribution Company.” 5 The two are not aligned all the time. If you 6 plan to combine all of the separate distribution 7 systems of a single company in one facility that 8 spans hundreds of communities if not thousands 9 across a state – some of our companies span 10 several states as well – you would have many more 11 utility companies that would be likely to exceed 12 your 25,000 ton per year threshold for reporting. 13 Once in, those utilities would then have to 14 estimate and report emissions for many small 15 meter and regulator stations and city gate 16 stations that are scattered across the state as 17 well as the combustion emissions from sources 18 that would otherwise not exceed the facility 19 reporting threshold. 20 Second, the proposal for leak detection 21 and reporting would impose significant additional 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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costs and overstate the actual level of 1 emissions. The proposed rule would require 2 utilities to conduct annual leak detection at 3 above grade M&R stations – that’s metering and 4 regulating – and to apply emission factors to 5 those leaking sources. While current practices 6 require regular leak detection, the current level 7 of detection does not nearly approach what would 8 be required by this proposal which calls for 9 optical imaging. We question whether there would 10 be enough equipment or trained operators to 11 conduct such annual surveys at all the M&R 12 stations across the country that would be 13 affected. Also, when utilities conduct leak 14 detection, they promptly repair leaks that can be 15 readily repaired. So reporting the repaired 16 components as if they were leaking for the entire 17 year would end up overstating actual emissions. 18

We’re concerned about that as well. 19 Third, we are concerned that your plan to 20 use emission factors that were developed over a 21 decade ago for another purpose by the Gas 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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Research Institute, GRI, that were based on 1 limited field work conducted nearly 20 years ago 2 beginning in 1992 – we’re concerned about that 3 because many things have changed since then. 4 Much of the old cast iron and steel pipe has been 5 replaced or lined with new plastic pipe. 6 And modern plastic pipe has significantly lower 7 fugitive emissions. Materials and construction 8 methods and practices for operations have changed 9 as well and improved. As you know, over the past 10 decade, our members have been working with your 11 EPA Natural Gas STAR program with Roger Fernandez 12 who’s here some place in the audience. And we’re 13 working through that program to develop and 14 implement practices that make our systems 15 tighter. Well, that work has been going on, but 16 those emission factors have not changed in the 17 meantime. Those old emissions factors represent 18 an old snapshot in time and they do not reflect 19 reality now. And they tend to vastly overstate 20 emissions from modern, tighter natural gas 21 distribution. 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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Fourth, we are worried that you are 1 trying to go too far down into the weeds at 2 distribution facilities asking for estimated 3 emissions from too long a list of individual 4 components. Our members do not typically keep a 5 comprehensive inventory of the number of 6 components that they have at any given metering 7 and regulator station. For example, one of our 8 companies – I’ll get to that in a moment. The 9 proposed rule apparently would require knowing 10 the number of each type of component in order to 11 apply a component-specific emission factor 12 multiplied by the number of components. And if 13 we don’t already have that list then we’re going 14 to have to go out to each of those stations out 15 at remote locations and make an inventory. 16 Now, I know that this sounded logical in 17 theory, but in practice, it would be onerous. It 18 would require our gas utility personnel to visit 19 thousands of remote facilities surveying 20 equipment for each station in minute detail just 21 to develop these lists of components. One 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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company for example operates at least 10,000 M&R 1 stations. This will require many hours of work 2 at great expense to go out and do these surveys. 3 And then for what result? Because in the 4 end all we can do with the old emission factors 5 is to calculate a fictional number that we all 6 know is seriously inaccurate and is likely to 7 vastly overstate and misrepresent the level of 8 actual emissions at distributional facilities. 9 And this all for a sector that contributes a tiny 10 portion of the total CO2e emissions in the 11 country – less than one percent of the total. 12 Therefore, we urge you to postpone 13 requiring fugitive emission reporting for natural 14 gas distribution under Subpart W. Instead, AGA 15 would like to finish the joint project we have 16 undertaken with EPA and others to conduct field 17 testing and to develop updated, modern, accurate 18 emission factors for natural gas distribution. 19 AGA and its members have already conducted work 20 in this area and developed some emissions factors 21 that are not reflected in this proposal. And we 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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are committed to further improvements in emission 1

factors. 2 Thank you for the opportunity to testify. 3 MS. KRUGER: Thank you, Pam. Any 4 questions? Roger? 5 MR. GUNNING: Thanks for your comments. 6 MS. KRUGER: Thank you very much. 7

MR. HILL: Test, test. 8 MS. KRUGER: Thank you for bearing with 9

us. 10 MR. HILL: Good morning. For the record, 11 my name is Bruce Hill. I’m a senior scientist 12 with Clean Air Task Force. Clean Air Task Force 13 is a Boston-based organization dedicated to 14 restoring clean air and healthy environments 15 through scientific research, public education and 16 legal advocacy. 17 We appreciate the opportunity to comment 18 on Subparts RR and W of the proposed Greenhouse 19 Gas Reporting Rule. First, I’ll comment on 20 Subpart RR, then on Subpart W. 21 Clean Air Task Force is generally pleased 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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with EPA’s Subpart RR proposal. We believe its 1 expeditious promulgation will provide a key 2 building block for the United States greenhouse 3 gas mitigation strategies especially in view of 4 the mounting evidence of irreversible changes in 5 the earth’s climate. We believe the rule also 6 represents an important step forward in ensuring 7 the secure geological sequestration of carbon 8 dioxide captured for fossil fuel combustion. 9 This technology must move forward as a 10 bridge to the clean energy technologies of the 11 future and as an essential step towards reducing 12

CO 2 emissions needed for climate stabilization. 13 CATF supports EPA’s general approach in 14 Subpart RR and believes that the air side 15 requirements embodied in the proposal can help 16 expedite the development of commercial scale 17 carbon capture and geologic sequestration in the 18 United States. 19 Carbon dioxide injection is a technology 20 that has a three-decade long track record. In 21 fact, hundreds of millions of tons of CO 2 have 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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been injected and effectively sequestered for 1 enhanced oil and gas recovery, ER, since the 2

1970s. 3 We believe EPA’s opt in provision 4 recognized the important role of ER in improving 5 sequestration technologies and that it will 6 provide new data leading to a more robust 7 understanding of geological CO 2 retention 8

processes. 9 CATF supports the all in approach but 10 believes it should go further to include 11 federally funded research and development 12 facilities. These R&D projects which the 13 proposal specifically excludes represent early 14 opportunities to test and verify EPA’s approaches 15 to monitoring verification reporting, MVR. 16 CATF also supports the case by case 17 approach to MVR embodied in this proposal, 18 however, it’s our position that EPA should 19 reserve the right to prescribe certain universal 20 MVR methods, for example, above injection zone 21 monitoring. 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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A robust underground injection control 1 rule, UIC rule, governing permitting of GS 2 facilities finalized in parallel with the 3 Greenhouse Gas Reporting Rule is critical to 4 ensuring integrated water and airside 5 environmental health protections. 6 Air side MVR requirements must be 7 carefully cross-linked with the final UIC rule as 8 under the UIC proposal, states are the permitting 9 authorities. 10 While EPA’s Airside Monitoring and 11 Reporting Rule does allow the GS facility to rely 12 on its UIC permit monitoring reporting 13 requirements, we think the rule could go further 14 to engage the state agencies and MVR development 15 for GS facilities. That’s because the states 16 that have regional and local expertise and 17 geology underground injection control history and 18 atmospheric monitoring that must serve as a 19 foundation for robust case by case MVR plans. 20 Because permitting will largely be 21 overseen by the states and because airside 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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monitoring tools are largely the same as those 1 for ground water protection under the UIC 2 program, EPA’s rules should harmonize the 3 development and approval of airside and UIC MVR 4 strategies. 5 State participation would not only 6 provide more efficiency in MVR development, but 7 will be key to safeguarding the local 8 environment. 9

We understand that the rule cannot offer 10 remedies to airside impacts of CO 2 injection, but 11 through the rule EPA should direct that all 12 information collected by the MVR program be 13 reported to the UIC permitting authorities in a 14 timely manner. Immediate reporting will be 15 particularly important where there is evidence of 16 leakage or pressure front migration such that the 17 shutdown triggers and airside mitigation measures 18 in the permits can be put in place by the state 19 agencies in addition to the revision of the MVR 20 plan that’s required under the proposal. 21 In addition CATF encourages EPA to 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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consider public participation by incorporating 1 notice and comment in the MVR development 2

process. 3 We are also pleased that EPA has issued 4 the supplemental proposal to EPA’s Subpart W Rule 5 governing monitoring and reporting of fugitive, 6 vented and flared greenhouse gas emissions from 7 the oil and gas industry. 8 We believe the inclusion of oil and gas 9 facilities is well within the authority provided 10 by Section 114 of the Clean Air Act. Accurate 11 accounting for these emissions is important in 12 establishing comprehensive greenhouse gas 13 inventories and for developing reduction 14 strategies. 15 In particular, we believe quantifying 16 sources of methane emissions is critical in 17 pinpointing areas where reductions and climate 18 forcing can be expeditiously achieved. Because 19 methane is a short-lived pollutant with a global 20 warming potential many times greater than carbon 21 dioxide, a methanes emissions reduction strategy 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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informed by this data could have significant near 1 term benefits. 2 Finally, we applaud EPA’s proposed 3 reporting for onshore petroleum and natural gas 4 production and distribution facilities. Taken 5 together, the fugitive, vented and flared methane 6

and CO 2 emissions represent one of the largest 7 sources of greenhouse gas emissions from the 8 industry. 9 Thank you for the opportunity to comment 10 and we’ll be providing detailed written comments 11 by the deadline. 12 MS. KRUGER: Thank you very much. Our 13 next speaker is Karen Obenshain. 14 MS. OBENSHAIN: Good morning. My name is 15 Karen Obenshain. I am with the Edison Electric 16 Institute. I am the Director of Fuels Technology 17 and Commercial Policy and I also facilitate EEI 18 CCS workgroup. We really appreciate being able 19 to give oral comments here today. 20 EEI, Edison Electric Institute, is an 21 association of the shareholder-owned electric 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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utilities in the United States. Our members 1 represent 70 percent of the industry. And the 2 lights going out were not our problem. 3 [laughter] 4 Again, EEI appreciates being able to come 5 here this morning and we will be filing written 6

comments. 7 EEI believes that it is appropriate for 8 EPA to have proposed a separate rule for 9 reporting possible emissions from CCS rather than 10 include it with another source category. EEI 11 notes, however, EPA treats CCS very differently 12 from other source categories. Instead of 13 providing methods to collect and report 14 emissions, EPA is proposing rules that tend to 15 prevent emissions. In other words, EPA is using 16 this rule to demonstrate the efficacy of long17 term storage. 18 While EEI supports efforts to demonstrate 19 that storage works – which we believe it does – 20 EEI’s initial review of the proposed reporting 21 and monitoring requirements indicates that the 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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burdens might not be commensurate with the risk 1 of emissions to the air of stored CO 2 . As EPA has 2 noted, properly sited and managed geologic 3 storage formations have very little chance of 4 emissions. Accordingly, EPA regulations should 5 approach the reporting rule for CCS from the 6 assumption that leakage is unlikely. 7 The UIC program ensures storage sites 8 will be properly sited and monitored. EPA should 9 recognize this in the context of possible air 10 emissions. 11 Moreover, EPA should recognize that the 12 minimus fugitive emissions do not undercut the 13 value or efficiency of storage as a climate 14 mitigation tool, especially when one considers 15 the millions of tons that could be stored over 16 the life of our project. 17 EEI urges EPA to keep in mind that the 18 actual risk of large leaks from storage sites is 19 extremely small as it moves forward with its 20 rulemaking. 21 That being said EPA [sic] supports EPA’s 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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proposal that MRV plants be site-specific. 1 Different sites have different risks, and lower 2 risk sites should be rewarded with appropriately3 tailored regulatory requirements. 4 EEI is still reviewing all elements of 5 the CCS proposal, but offers the following 6 comments now. EEI appreciates EPA’s efforts to 7 eliminate overlap between the UIC requirements 8 and the proposed mandatory reporting rule 9 requirements and supports EPA’s decision to allow 10 storage sites to use their UIC permit to 11 demonstrate compliance with portions of the 12 reporting rule. 13 Consistent with the approach taken in the 14 UIC program, storage operators should be allowed 15 to take a phased approach to characterizing 16 potential leakage pathways. 17 EEI notes that EPA proposes to require 18 characterization of all surface leakage pathways 19 for the life of the project at the time the MRV 20 is drafted and submitted. Instead, EPA should 21 allow storage operators to update their MRV plans 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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and perform additional characterization of 1 leakage pathways if needed on the same schedule 2 as reevaluation of the area of review. 3 EEI is concerned about the accuracy of 4 environmental baselines. Given the atmospheric 5

CO 2 background concentrations very widely which 6 EPA does acknowledge, it is not clear that it is 7 feasible or useful to collect and report 8 information about pre-injection environmental 9 baselines. 10 EEI is concerned that EPA has included no 11 standards by which the agency or other regulators 12 are to assess proposed MRV plans. EPA’s goal 13 should be to ensure a streamlined approach to 14 approval so that the projects can move forward 15 without delay. 16 EEI notes that EPA’s definition of 17 research and demonstration facilities would 18 encompass all CCS demonstration projects 19 currently operating today or planned in the near 20 future because all receive some level of federal 21 funding. R&D projects should be allowed to opt 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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in to reporting requirements regardless of 1 whether they receive federal funding. 2 Thank you for the opportunity to comment 3 on the proposal today. EEI looks forward to 4 working with EPA as it continues to develop legal 5 and regulatory structure for permitting CCS 6 projects. Thank you. 7 MS. KRUGER: Thank you very much for your 8

remarks. 9 Okay, our next three speakers in order 10 are Dan Klein, Anne Harvey and Karin Ritter. 11 MR. KLEIN: Thank you and good morning. 12 My name is Dan Klein. I’m an energy and 13 environmental consultant and my company is 21 s t 14 Strategies. 15 I have just a couple of comments I’d like 16 to offer this morning on Subpart RR, specifically 17 going to the cost of the proposal and then within 18 that specifically to the cost of the commercial 19 saline projects. These would be the projects 20 which would have a second [inaudible]. 21 [Pause.] 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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The commercial saline projects would be 1 those who would have the additional second tier 2 of data required to be reported. I’ve looked at 3 this a little bit from the aspect of the 4 potential total cost and the cost per ton 5 reported and how that might compare to the rest 6 of the categories under the Mandatory Greenhouse 7 Gas Reporting Rule. 8 I’m not going to comment on the 9 environmental soundness of the proposal or 10 inadequacies of the UIC proposed rule. Those are 11 not areas in which I claim expertise. 12 EPA did an economic analysis to support 13 Subpart RR and presented its national cost 14 estimates. But generally, the scenarios that 15 were presented do not include commercial saline 16 projects in the economic analysis. That is the 17 scenarios picked a sample of 89 projects and the 18 high and low scenarios varied the amount of 19 projects which would shift from the ER projects 20 to those who would opt into the additional tier 21 of reporting. Those scenarios did not have 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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commercial saline projects in them possibly 1 because there was no way of estimating how many 2 there might be. 3 There was in EPA’s analysis, an estimate 4 that commercial saline projects would have 5 additional costs approaching $300,000 per project 6 per year. And EPA provided the math that would 7 show if you have either three, six or nine 8 projects, what that would amount to. But if we 9 want to think about what the total national cost 10 is, it’s reasonable to think about how big a 11 commercial program could be. 12 Under some of the proposals for national 13 legislation, we’re looking at total national 14 reductions of emissions in the order of billions 15 of tons per year. It’s not unreasonable to at 16 least hypothesize a commercial sequestrations 17 program approaching one billion tons a year. And 18 if your average site is two or three million tons 19 per year, we’re looking at several hundred sites 20 nationally, at least potentially. 21 If you have a cost per project of 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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$300,000 per project per year, then we are 1 potentially looking at over $100 million for this 2 aspect of the program, $100 million per year. 3 That actually is more than the rest of the 4 reporting rules categories combined which as I 5 recall were about $98 million for the first year 6 reporting and $72 million for the rest. 7 So potentially, these incremental 8 requirements for commercial storage could more 9 than double the cost of EPA’s program. 10 So if we turn to the cost per ton, what 11 do you get for this? Well, you take the total 12 cost and you divide by how many additional tons 13 you expect to be kept as part of this. As was 14 pointed out before, we’re expecting effective 15 storage and so your best estimate for a single 16 site might actually be zero tons in which case 17 dividing something by zero gives you an unreal 18

number. 19 But if we take a reasonable worst case, 20 if we take the program goal which EPA, DOE and 21 others have stated of 99 percent sequestration 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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over 100 years, and apply that to a commercial 1 storage facility of a couple million tons per 2 year, you’re probably looking at a reasonable 3 worst case of 10,000, maybe a couple 10s of 4 thousands of tons per year. If you can detect 5 that and if you divide that into $300,000 per 6 year per facility, we’re looking at a program 7 cost of over $10 a ton simply for the measurement 8 and reporting of the presumed leakage. This 9 compares poorly to the rest of EPA’s [inaudible]. 10 EPA looked, I think, very carefully and 11 very effectively at what the cost would be for 12 reporting at different thresholds per year. And 13 settling on the 25,000 ton per year threshold, 14 EPA took note of the extra cost it would be if 15 they lowered the threshold to 10,000 tons 16 instead. Going from 25,000 tons down to 10,000 17 tons for the reporting rule, would have cost an 18 extra $30 million per year for an estimated gain 19 of 37 million tons of emissions identified and 20 reported. That is something under one dollar per 21 ton to report was rejected, I think, at least in 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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part because of the cost per ton effectiveness. 1 We’re looking here at geologic storage 2 facilities that would be at least ten times that 3

much. 4 So, just to conclude, in a widespread 5 commercial program if we’re looking at one 6 billion tons a year perhaps as a possibility, 7 we’re looking at a reporting requirement which 8 would more than double the cost of the entire 9 Greenhouse Gas Reporting Program and at a cost 10 per ton which is at least ten times that of a 11 threshold which has already been rejected. 12 Thank you. 13 MS. KRUGER: What we’re going to do is 14 we’re going to take just a five minute break so 15 that – I’m sorry – yeah, we’ll take a five minute 16 break just to see if we can get this audio stuff 17 worked out and then we’ll turn to you. Thanks. 18 [Break.] 19 MS. KRUGER: So what I think we’re going 20 to do going forward, we have Anne Harvey up next 21 followed by Karin Ritter, followed by Peter 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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Zalzal and Kippp Coddington. Those are the 1 speakers that signed up to make remarks this 2 morning. We will at the conclusion of Kipp’s 3 remarks, I will invite anyone who has come today 4 and did not identify themselves as wanting to 5 speak but is so moved to come up and give us 6 comments if you want. We will then have a break 7 after that and we’ll keep the room open for the 8 period of time that we said. But if others 9 haven’t signed up, then we’ll just be waiting to 10 see if any other speakers come and make 11

themselves known to us. 12 So with that, I’m going to ask Anne 13 Harvey to come up and give it another try. 14 MS. HARVEY: Okay. How’s that? It’s not 15 on? Hello? Okay. I’m Anne Harvey from the 16 Sierra Club and I’ll be offering comments on both 17 subparts today. 18 Thank you for the opportunity to speak 19 with you. The Sierra Club is pleased that EPA is 20 extending the Mandatory Greenhouse Gas Reporting 21 Rule to embrace oil and gas systems and carbon 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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capture and sequestration. Although both 1 categories should have been included when the 2 rule was first released, if EPA sticks to its 3 plans to require this additional data collection 4 beginning in 2011, they will only lose a year. 5 It’s important that EPA stay the course as sound 6 source-specific data on these industries bears 7 centrally on our energy future and belongs in the 8 comprehensive reporting system that Congress 9 requested EPA to develop. 10

These remarks focus on the broad 11 structure of the overall proposal. We’re 12 developing detailed technical comments on both of 13 the proposed rules, but for now offer the 14 following observations. 15 With regard to carbon dioxide injection 16 and geological sequestration, using long-term 17 geological sequestration to rapidly control 18 carbon dioxide emissions is a risky strategy. It 19 is far from clear that an appreciable portion of 20 the power plant fleet could be cost effectively 21 retrofitted with carbon-capturing sequestration 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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technology or that long-term storage will 1 succeed. Moreover, to the extent that CCS 2 extends the lives of existing coal power plants, 3 it maintains American dependence on a fuel with 4 enormous public health and environmental costs. 5 For these reasons, the Sierra Club generally 6 favors energy strategies that instead primarily 7 emphasize efficiency, renewable power and shifts 8 to lower carbon fossil fuel sources. If CCS is 9 to be implemented at all, the Club believes it 10 will be most useful for lower carbon gas power 11 plants rather than for coal facilities. 12 Nonetheless, if CCS is to play a role, it 13 must be conducted and monitored with the utmost 14 care. The regulatory framework to ensure CCS is 15 properly controlled is incomplete, but should 16 ultimately cover at the least proper subsurface 17 injection practices under the Safe Drinking Water 18 Act, airside monitoring under the Clean Air Act 19 and a detailed liability and enforcement 20

structure. 21 The airside protocols in this role which 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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focus on detecting and reporting atmospheric 1 leaks from CCS facilities, are a necessary 2 supplement to EPA’s proposed Safe Drinking Water 3 Act underground injection control rules which 4 focus on protecting underground sources of 5 drinking water. 6 We encourage EPA to consider how both of 7 these rules would interact with and support a 8 liability and enforcement system. 9 We support EPA’s decision to require 10 basic monitoring for all enhanced oil recovery 11 and injection operations and to enhance 12 monitoring for CCS projects. 13 To ensure this airside protocol works, we 14 ask that EPA carefully think through several 15 issues in their proposed rule – first, national 16 standards and local geology. EPA based its 17 system upon monitoring, reporting and 18 verification plans which set out a facility 19 strategy for detecting leaks and verifying their 20 reported injection quantities are accurate. 21 Because variation in regional geology makes 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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designing a uniform national plan difficult, EPA 1 proposes to review MRV plans on a case by case 2 basis. 3 While we agree that these plans should be 4 tailored to regional conditions, we’re concerned 5 that the rule may not provide sufficient guidance 6 to guarantee a consistent level of quality across 7 plans or to ensure the reports from different 8 facilities are readily comparable. We would urge 9 EPA to provide further structure to the case by 10 case plan requirement by, for instance, 11 identifying baseline accuracy and provision 12 standards that all plans must meet, ranking 13 preferred monitoring technologies which may be 14 used in many instances, and providing regulatory 15 standards charting out in some detail, elements 16 all plans must contain and questions all plans 17 must consider. EPA should, in other words, 18 ensure that regional variations do not 19 inadvertently diminish the rigor of overall 20 reporting structure. 21 Regarding public involvement and EPA 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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review, both Congress’s original Request for 1 Reporting Rule and Section 114 of the Clean Air 2 Act on which the Reporting Rule is based, 3 recognize the public’s vital interest in 4 emissions data. 5 Because CCS projects bear directly on 6 efforts to control global climate change, a 7 matter of enduring public concern, the CCS 8 reporting systems must be particularly 9 transparent. Unfortunately, the proposed rule 10 lacks some of this transparency. The crucial MRV 11 plans in particular appear to be developed 12 entirely without public involvement or review. 13 Similarly, the proposed rules preamble posits 14 that CCS operators might be able to challenge 15 inappropriate plans before the Environmental 16 Appeals Board, but does not discuss public 17 challenges. 18 This is a major oversight. EPA has a 19 strong interest in ensuring that MRV plans are 20 strong and effective. Public review supports 21 this interest. Allowing only operator challenges 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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to MRV plans would bias the review process away 1 from rigor. 2 The final rule should ensure that MRV 3 plans are offered for public comment and that the 4 public and CCS operators have parallel rights to 5 challenge EPA’s approval of an MRV plan. 6 Regarding timing and comprehensiveness, 7 CCS operations should only go forward if 8 monitoring and reporting procedures are in place 9 before injection, and monitoring should continue 10 well after injection has finished. The proposed 11 rule raises some concerns but also has some 12 success in this regard. 13 First, the proposed rule gets one big 14 picture point exactly right and includes every 15 CCS facility. That choice makes sense. EPA 16 needs a comprehensive picture of the industry. 17 Second, on an unfortunate note, the 18 proposed rule allows facilities to put off 19 finalizing their MRV permits for as much as a 20 year after they receive an injection permit. 21 That’s unacceptable particularly because MRV 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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plans are supposed to include baseline monitoring 1 of pre-injection condition. Monitoring needs to 2 be in place before the final UIC permit issues, 3 making sure that that happens is a good 4 opportunity to coordinate air and drinking water 5

programs. 6 Third, we are concerned that the rule 7 misses data by exempting research and development 8 projects. R&D is an unusually important category 9 for CCS plans as so much of this technology is 10 experimental or being developed through specific 11 test facilities. These projects are likely 12 collectively a large section of the sector and 13 should not be exempted from the rule. 14 Finally, the proposed rule arguably does 15 not require reporting for a sufficiently long 16 period. CCS is useful only if it permanently 17 sequesters greenhouse gases. EPA needs to know 18 if long after injection ceases, leaks continue or 19 commence. Yet the rule currently allows 20 operators to cease reporting once a facility is 21

closed and the CO 2 plume and pressure front have 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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stabilized. EPA assumes, apparently, that leaks 1 will not appear after that point. To be sure of 2 this assertion, though, EPA needs data that a 3 longer term monitoring plan would provide. We 4 must be aware of the containment failures even 5 long after closure to assess whether CCS 6 practices are effective. EPA should therefore 7 consider a long term, relatively low cost leakage 8 monitoring requirement which would be permanently 9 applicable to all facilities. 10 Regarding oil and gas systems, EPA’s 11 expanded oil and gas monitoring programs is a 12 major – systems category is a major step forward. 13 Tracking emissions from well to pump for this 14 industry is critical. We are particularly 15 pleased that EPA is moving toward comprehensive 16 reporting for the entire life cycle of onshore 17 oil and gas. This is particularly important 18 because onshore gas development and shale gas is 19 being touted as a way to replace coal fired power 20 plants, with natural gas. Accurately measuring 21 the emissions from these fields including 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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fugitive emissions of high global warming 1 potential methane, provides a way to critically 2 assess these claims and to constrain the 3 greenhouse gas impacts of this potential 4 transitional fuel. 5 We are carefully reviewing the technical 6 details of EPA’s proposal. On first review, 7 though, three issues seemed particularly worth 8 flagging. 9 In our comments on the full reporting 10 role, we discussed how engineering estimates and 11 emissions factor-based approaches had often 12 underestimated emissions, and in particular, 13 fugitive emissions from oil and gas facilities. 14 We’re concerned that EPA has moved too far away 15 from direct measurement in this proposed role in 16 favor of a range of estimation approaches. We 17 encourage EPA to carefully consider whether this 18 decision causes any loss in accuracy and 19 precision and whether such losses can be 20 justified given the reporting rules focus on 21 comprehensive and detailed information. 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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We also urge EPA to carefully ground 1 truth estimation methods with regular direct 2 measurement tests at selected facilities. 3 With regard to fugitive emissions, we’re 4 concerned that EPA’s proposal allows companies to 5 fix fugitive emission sources before quantifying 6 emissions for the reporting rule. While we 7 understand that this approach may provide an 8 incentive for quick repairs, it may also lead to 9 significant underreporting. We encourage EPA to 10 consider ways to document such repairs and to 11 account for emissions that escape before faulty 12 equipment is fixed. 13 With regard to life cycle accounting, 14 EPA’s decision to require production and 15 processing reporting is particularly important 16 because oil and gas companies are increasingly 17 promoting high carbon products like tar sands 18 oil, liquefied natural gas and oil shale. 19 We encourage EPA to ensure that the 20 reporting system accurately captures the large 21 emissions footprint that producing and 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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distributing these fuels requires. 1 Thank you again for considering these 2 remarks. We look forward to working with EPA to 3 strengthen and extend their reporting 4 [inaudible]. 5 MS. KRUGER: Thank you very much, Anne. 6 MR. GUNNING: Thank you. 7 MS. KRUGER: Okay. Now, Karin Ritter, 8 American Petroleum Institute. 9 MS. RITTER: Good morning. I’m Karin 10 Ritter. I’m Regulatory and Scientific Affairs 11 Department at API. Can everyone hear me? Need 12 to speak louder? 13 API is the premier trade association in 14 the oil and natural gas industry with about 400 15 member companies engaged in all aspects of the 16 industry. API and its members have been at the 17 forefront of developing methodologies and 18 standards for greenhouse gas emissions estimation 19 and reporting for the industry and beyond for 20 over a decade, and have provided detailed 21 comments to EPA during all stages of the 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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development of applicable mandatory reporting 1 approaches for all industry sectors. 2 API is pleased to provide initial 3 comments regarding the proposed subparts W and 4 RR. API looks forward to providing additional 5 details throughout the comment period to help 6 develop a reporting program that is both 7 practical to implement and that recognizes the 8 limitations of resources and methods for 9 quantifying emissions from the vast number of 10 exceedingly small sources which even when taken 11 in total will not significantly impact the 12 national GHG Emissions Inventory. 13 In reference to the newly proposed 14 Subpart W, the monitoring and quantification 15 methods are an improvement from those proposed in 16 April 2009. Still, API would like to make five 17 points on the proposal today. 18 First, the proposed requirements will be 19 more costly to implement than EPA has estimated. 20 Because they apply to vastly more industry 21 activities and sources, EPA’s cost estimates for 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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impact on the industry are too low by an order of 1 magnitude. 2 Second, API concurs with EPA’s statement 3 that, quote, “the facility definitions proposed 4 in this rule do not impact requirements under 5 other EPA regulations, for example, new source 6 review,” end of quote. While here in Subpart W, 7 there may be a need to cluster equipment in 8 activities for reporting, the terms used in 9 conjunction with the facility definitions under 10 Subpart W should not impact any current or future 11 aggregation determinations. 12 EPA should define a simple and innovative 13 system that balances the data collection and 14 reporting burden against the amount of emissions 15 quantified. To achieve this simplification and 16 balance, API suggests that EPA allow operators to 17 identify rational reporting units within a basin 18 that have similar operations, equipment, fluid 19 properties and physical parameters and enable a 20 broader use of population average emission 21 factors and approaches for emissions 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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quantification. API recognizes that the 1 reporting threshold determination may still rest 2 with the basin level facility and the construct 3 of the reporting units below the basin level will 4 be implemented in such a manner that they will 5 cover all relevant operations of a given owner or 6 operator within the defined basin. 7 Third, API is concerned that the rule 8 includes inconsistencies and overlap in the 9 demarcation of the different industry segments 10 subject to Subpart W. It would be better if the 11 industry segments were to be defined along 12 typical ownership and operating arrangements such 13 as producing well sites and associated equipment, 14 gathering lines in lateral compression, and 15 natural gas processing. This would avoid 16 duplicative reporting. API suggests that EPA 17 look to the definition of, quote, 18 “transportation” in NESHAP’s Subpart HHH to 19 define where natural gas production and 20 processing ends and where natural gas 21 transmission begins. 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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Fourth, another key issue for the 1 industry is its ability to track and estimate 2 emissions from field portable combustion devices 3 that are stationed at a wellhead for more than 30 4 days in a reporting year. EPA should require a 5 less resource intensive and complicated approach 6 that recognizes that this equipment is moved from 7 well to well or between operators several times 8 during the year. Similarly, API does not agree 9 with EPA’s extension of the reporting 10 requirements to include rental and other 11 equipment that is neither owned nor operated by 12 the reporter. 13 And fifth on Subpart W, API requests that 14 EPA conform the definitions and terminology used 15 throughout the proposed rule to make them more 16 consistent to those used by industry. This is 17 particularly applicable to the rules confusing 18 mix of expressions used for gas volumes and mass. 19 For example, the proposed rule uses in its 20 different sections, industry conditions, ambient 21 conditions, actual conditions and STP. API 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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continues to recommend that the rule should stick 1 with, quote, “industry standard conditions” (60  ̊ F 2 and 14.7psia) since these are the units used in 3 all the referenced industry standards and are the 4 common units used for calibrating industry 5 devices for custody transfer. 6 As far as the proposed Subpart RR, API 7 has two points. First, API agrees with 8 statements in the preamble to the proposed rule 9

that CO 2 EOR operations are a, quote, “closed 10 system” and non-emissive. Therefore, EPA’s focus 11

on the amounts of CO 2 injected would provide a 12 distorted view of the CO 2 material balance and 13 hence emissions. CO 2 EOR is an enhanced oil and 14 gas production technique in the same vein as 15 water injection or thermal enhancement. 16 Therefore, there is no need to define separate 17 reporting requirements for CO 2 EOR under this 18 subpart, unless the CO 2 EOR operator elects to 19 declare their operations as providing for 20 geological storage. 21 Second, due to the special nature of 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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geological storage facilities, API recommends 1 that a separate facility definition be applied 2 for operations that are solely dedicated to the 3 geological storage of CO 2 . Such a facility 4 definition should be consistent with requirements 5 under other regulatory programs for similar 6 operations. Also, API recommends that EPA extend 7 the GS facility R&D exemption beyond federally 8 funded R&D programs. 9 In conclusion, API looks forward to 10 working with the agency to develop efficient, 11 practical and cost-effective reporting 12 requirements. Our written comments will include 13 further details on these and other points I’ve 14 made today. Thank you. 15 MS. KRUGER: Thank you, Karin. Peter 16

Zalzal. 17 MR. ZALZAL: Good morning. My name is 18 Peter Zalzal and I’m an attorney with the 19 Environmental Defense Fund. I’m going to provide 20 brief comments on both Subpart W and Subpart RR. 21 On behalf of the Environmental Defense 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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Fund and our more than 700,000 members 1 nationwide, I sincerely thank you for the 2 opportunity to testify today. 3 Emissions data is the cornerstone of 4 effective air quality management. Moreover, an 5 effective emissions reporting program promotes 6 transparency, raising awareness of emissions 7 among reporters and other stakeholders and 8 contributing to efforts to identify and to carry 9 out reductions. EPA’s petroleum and natural gas 10 and injection and geological sequestration 11 reporting rules allow EPA to collect essential 12 information providing data for policymakers and 13 transparency for reporters and the public at 14 large. 15 As to Subpart W, the U.S. petroleum and 16 natural gas industry is sizeable encompassing 17 hundreds of thousands of wells, hundreds of 18 processing facilities and over a million miles of 19 transmission and distribution pipelines. 20 Collectively, these facilities produce 21 significant greenhouse gas emissions which EPA 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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estimated 351 million metric tons of CO 2 1 equivalent or roughly 11 percent of all emissions 2 covered by EPA’s final mandatory greenhouse gas 3 reporting rule. Given the considerable scope of 4 these emissions, collecting facility level 5 greenhouse gas emissions data from this sector is 6 essential. Moreover, to maximize the benefits of 7 the reporting rule, the rule must reinforce the 8 two pillars of any well-designed reporting 9 scheme. The rule must capture the proper scope 10 of emissions and it must produce accurate data. 11 EPA’s proposal requires reporting from 12 industry segments that are critical for a 13 rigorous, comprehensive reporting scheme. For 14 example, EDF strongly supports EPA’s inclusion of 15 the onshore oil and natural gas production 16 segment of the industry in the reporting rule 17 which EPA estimates accounts for 66 percent of 18 fugitive emissions. 19 Inclusion of this data is critical to 20 ensure that overall data from the oil and gas 21 sector accurately represents emissions and to 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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provide robust information for policy makers 1 deciding among different GHG mitigation 2 strategies. 3 EDF likewise supports EPA’s definition of 4 an onshore production facility. By requiring 5 facilities to report at the basin level, EPA has 6 captured roughly 81 percent of emissions from the 7 onshore production segment. While the 8 alternatives EPA considered would provide 9 substantially less emissions coverage without 10 significant methodological differences. 11 We are concerned, however, that the 12 agency excluded waste pit facilities from the 13 proposal, and we are eager to look more closely 14 at this issue and provide EPA with additional 15 detail in our written comments. 16 In all, EPA’s proposed oil and gas 17 reporting rule is an important step in providing 18 policymakers and the public with data from the 19 oil and gas sector facilitating sound greenhouse 20 gas policy decisions. 21 Accuracy is also an essential element of 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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a robust reporting scheme. And EDF hopes that in 1 its final rule, EPA will select monetary methods 2 that strengthen the accuracy of emissions data 3 providing policymakers with the best possible 4 information. 5 As a general rule, emissions data derived 6 from direct measurement is more accurate than 7 data derived from engineering estimates and 8 emissions factors. In the oil and gas sector, 9 this rings especially true because emissions 10

factors tend to be based on older sources of data 11 and considerable variability can exist between 12 sites due to differences in operations and 13 maintenance conditions. For example, although 14 two oil and gas sites may have the same number of 15 components and types of equipment, if the 16 operator of one site invests considerably more 17 resources into maintenance and leak detection of 18 his equipment, the overall leak rate on a per19 component basis for that site will be much less 20 than alternative sites. Components with higher 21 occurrence of leaking such as compressors and 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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equipment with less rigorous or dated emissions 1 factors, should therefore be required to utilize 2 direct measurement over engineering estimates. 3 As to Subpart RR, EDF likewise greatly 4 appreciates the Agency’s leadership in requiring 5 reporting from facilities engaged in injection 6 and geologic sequestration of CO 2 . EPA’s proposed 7 rule provides important data in addition to the 8 information provided in Subpart PP of the final 9 reporting rule. 10 Enhanced oil recovery provides key data 11 on the efficacy of sequestration. Moreover, a 12 key issue with geologic sequestration and carbon 13 capture and storage is the durability and 14 permanence of the storage. Durability is 15 especially important given that 67 percent of 16

total CO 2 emissions come from fossil fuel 17 combustion and 95 percent of the 500 largest 18 stationary sources are within 50 miles of a 19 candidate GS reservoir. 20 Data from EPA’s proposed reporting rule 21 will likewise provide much needed transparency on 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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the amount of CO 2 injected and geologically 1 sequestered in the U.S. and will allow EPA to 2

track the flow of CO 2 across the CCS system. 3 This information will allow EPA to 4 monitor the efficacy of GS and CCS over time 5 aiding policymakers and evaluating mitigation 6 options. EDF likewise notes that monitoring 7 verification and reporting is an important 8 element of the CCS reporting rule. And we 9 encourage the agency to bring the same 10 transparency to the MVR process as the agency has 11 brought to the rest of the final reporting rule. 12 This will allow for public participation in the 13 MVR process and will ensure public awareness of 14 monitoring and verification at specific sites. 15 EDF greatly appreciates the Agency’s 16 efforts to cover this important source of GHG 17 emissions. We greatly appreciate the Agency’s 18 leadership in developing greenhouse gas reporting 19 rules reflected in the oil and gas and geologic 20 sequestration and CCS proposals. These rules 21 will provide additional foundational data to the 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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agency policymakers and the public allowing 1 informed policy decisions and addressing 2 American’s right to know regarding the largest 3 greenhouse gas emitters. 4 Thank you again for the opportunity to 5 provide testimony today and we look forward to 6 offering more detailed comments on the agency’s 7 proposed rulemakings in our written submissions. 8 MS. KRUGER: Thank you very much, Peter. 9 Kipp Coddington. While Kipp is coming up here, 10 I’ll say it again. If anyone is interested after 11 he finishes, I’ll open the floor and we can have 12 any additional remarks that people might want to 13

make. 14 MR. CODDINGTON: And I’ll be exceedingly 15 brief. I’m Kipp Coddington. I’m outside counsel 16 to the North American Carbon Capture and Storage 17 Association. And NACCSA is pleased to offer this 18 brief statement on the proposed Subpart RR rule 19 only. 20 Just a brief note about NACCSA. NACCSA 21 is a nonprofit organization of companies in North 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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America that support the development of a 1 sustainable CCS industry in the United States and 2 Canada. The members of NACCSA include companies 3 involved in developing commercial processes to 4 mitigate greenhouse gas emissions through CCS and 5 specialists engaged in the technical, commercial, 6 financial and development aspects of carbon 7 capture and storage activities in both the U.S. 8

and Canada. 9 We would first like to thank EPA for its 10 work that it’s done on carbon capture and storage 11 to date. And we recognize your recognition of 12 the important role that carbon capture and 13 storage can play in carbon management schemes 14 going forward. The reporting proposal marks the 15 latest effort by EPA to shed critical regulatory 16 clarity on the topic. 17 As NACCSA commented in its submittal on 18 the agency’s proposed rulemaking for the 19 commercial scale injection and storage of CO 2 20 under the underground injection control program 21 of the Safe Drinking Water Act, establishment of 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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a stable, predictable and workable regulatory 1 framework for CCS that appropriately encourages 2 the development of a CCS industry to manage 3 missions and maximize energy recovery is of 4 paramount importance. Including reporting on CCS 5 within the scope of the existing GHG reporting 6 rule is a prudent next step in reassuring 7 regulators and the public alike that geologic 8 storage is in well-sited and well-managed 9 formations results in sequestration. 10 Now just some brief general observations 11 about the proposal. NACCSA is still evaluating 12 the details of the proposal and we will be 13 submitting more detailed written comments during 14 the rulemaking period. Also, our comments are 15 restricted here to the so-called Tier 2 reporting 16 that only applies to sequestration sites. 17 First, overall, we commend EPA for 18 creating an opt in mechanism for geologic storage 19 sites as opposed to dictating an overly 20 prescriptive one-size fits all approach that 21 might endeavor to apply to any entity that was 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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injecting CO 2 regardless of whether sequestration 1 was claimed to be occurring. 2 Secondly, we also support EPA’s efforts 3 to tie Tier 2 reporting to the extent possible 4 into the pending UIC CCS proposed rule. It is 5 important that geologic storage site owners and 6 operators not be subjected to duplicative or 7 potentially conflicting reporting requirements 8 under various regulatory programs. And at first 9 blush, it appears that EPA has endeavored to 10 mitigate those concerns here. 11 Lastly, we expect to have further 12 comments on the monitoring, reporting and 13 verification aspects of Tier 2 reporting which of 14 course we will provide in written comments during 15 the comment period on the proposal. 16 Our initial reaction to the MRV 17 reporting, however, is that it could be somewhat 18 prescriptive and may not leave room for other 19 approaches, for example, such as standards and 20 protocols developed through consensus-based 21 procedures that industry may have already done or 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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may be conducting in the future. 1 So with these comments, NACCSA 2 appreciates the opportunity to be here today and 3 again, we commend the Agency for the excellent 4 work it’s done to date on advancing carbon 5 capture and storage. Thank you for your time. 6 MS. KRUGER: Thank you very much for 7 those remarks. Thank you. 8 So now there’s an opportunity if there’s 9 anyone else who wants to speak. I did hear from 10 someone during the earlier break. Phillip 11 Marston, if you would like to say a few words. 12 MR. MARSTON: Good morning. Thank you. 13 My name is Phillip Marston on behalf of Marston 14 Law. And I’m presenting just a few very brief 15 comments on behalf of Denbury Resources. As you 16 know, Denbury Resources is one of the larger 17 players in CO 2 -based EOR injections, and we’ll be 18 following the rulemaking very closely. 19 We appreciate the fact that there’s an 20 effective recognition of CO 2 -based EOR as one of 21 if not the most likely paths forward towards the 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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actual application of CCS technologies and 1 practices. And I think that that’s a very 2 important aspect of your proposed rule. We 3 anticipate providing more detailed and technical 4 comments in June, but I think that the broad 5 structure that you’ve put forward is a reasonable 6 and sensible one and we look forward to providing 7 you details to try to help you get where you’re 8 trying to go on this. 9 That’s all. Thank you very much. 10 MS. KRUGER: Thank you for those 11 comments. Thank you. 12 Is there anyone else who did not make 13 themselves known to the person at the 14 registration desk that wants to make remarks at 15 this time? Going once, going twice. Okay. If 16 not, then what we’re going to do is take a break 17 until 11:15 at which time we’ll go into a holding 18 mode to see if anyone else shows up that would 19 like to speak. But as of now, we’ve heard from 20 everyone who had signed up on the web and made 21 themselves available to give comments to us. And 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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I would like to thank all of the commenters this 1 morning. There was a great deal of insight and 2 technical richness in the comments. And we very 3 much appreciate the chance to hear them from you. 4 I know you’ll be following up in writing and 5 lastly I’ll say that we have throughout this 6 entire rulemaking exercise, had an open door 7 policy to people who want to come in and offer us 8 more information about your experiences and what 9 you’re doing. We continue to have that policy, 10 and so we hope that if you’ve got something you’d 11 like to tell us, you will avail yourself of that 12 opportunity. It is through this kind of input 13 that we can do a better job and have rules that 14 meet our objectives for reporting that are also 15 not burdensome and make good technical sense. 16 So thank you everybody and if you want to 17 see what happens in the afternoon, you can come 18

back at 11:15. 19 [Break.] 20 MR. GUNNING: So, good morning. It’s 21 approximately 11:15. We are now reopening the 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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floor. Is there anybody who wants to offer 1 additional comments on either Subpart W or 2 Subpart RR? 3 Noting that there are no additional 4 comments at this particular point in time, I will 5 be transitioning the chairmanship of the hearing 6 over to my colleague, Akachi. We will keep the 7 floor open for an additional 45 minutes or so and 8 will be breaking for lunch at noon for 9 approximately one hour, and reopen the floor 10 again at 1:00. 11 Thank you. 12 [Break.] 13 MS. IMEGWU: All right. Right now it’s 14 12:00 noon. There is no one here in the room for 15 the public hearing for Subparts W and RR, so 16 we’re going to take a one hour break for lunch. 17 We will resume opening the floor at 1:00 p.m. at 18 which point I’ll turn it over to Katie Sibold who 19 will chair the rest of the hearing. Thank you. 20 [Break.] 21

MR. FERNANDEZ: It’s now one o’clock on 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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April 19 t h . We are opening the public comment for 1 Subpart W and RR for the Mandatory Greenhouse Gas 2 Reporting Rule. Currently there are no 3 participants in the audience and therefore no one 4 who is going to give public comments immediately, 5 but we will be here until approximately five 6 o’clock such that we meet all obligations as per 7 the regulations and rules regarding the open 8 public comment period. 9 [Break.] 10 MR. FERNANDEZ: It is currently 4:52 on 11 April 19 t h , 2010. My name is Roger Fernandez. We 12 have had the public comment period open since 13 9:00 a.m. today in regard to Subpart W and 14 Subpart RR for the Mandatory Greenhouse Gas 15 Reporting Rule draft rules which are currently 16 out for public comment. There have been no 17 individuals who have come to the public hearing 18 since 11:00 a.m. today. We had an open forum 19 from 9:00 a.m. until 11:00, took all comments and 20 have remained here in place per the public notice 21 stating that we would have an open meeting for 22OLENDER REPORTING, INC. 1100 Connecticut Ave., N.W., Suite 810, Washington, D.C. 20036 Washington: (202) 898-1108 / Baltimore: (410) 752-3376

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public comment until 5:00 p.m. on April 19 t h , 1 today. 2 As I stated, it currently now 4:55 and no 3 individuals have come since 11:00 a.m. and 4 therefore we are going to close this meeting for 5 public comment for Subparts W and RR for the open 6 comment period. 7 The written comments still are open per 8 the instructions that were issued in the Federal 9 Register and this concludes the open comment 10 period session for these subparts for oral 11

comments. 12 Thank you very much. 13 [Whereupon, at 5:00 p.m., the Public 14 Hearing concluded.] 15