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.Representing the Interests of America’s Industrial Energy Users since 1978

Council Of Industrial Boiler Owners

6035 Burke Centre Parkway, Suite 360, Burke, VA 22015-3757• Phone: 703-250-9042 Fax: 703-239-9042 E-Mail: cibo@cibo.org November 26, 2008

VIA E-DOCKET

U.S. Environmental Protection Agency

Water Docket 1200 Pennsylv ania Ave. NW, Ma il Code 2822T Washington, DC 20460 Attn: Docket ID No. EPA-HQ-OW-2008-0390

Re: Proposed Rule "Federal Requirements Under the Underground Injection Control (UIC) Program for Carbon Dioxide (CO 2 ) Geologic Sequestration (GS) Wells" 73 Fed. Reg. 43492 (July 25, 2008)

Dear Sir or Madam:

The Council of Industrial Boiler Owners (CIBO) appreciates the opport unity to comment on proposed requirements under the Safe Dr inking Water Act (SDW A) for geologic sequestration (GS) of CO 2 , as well as EPA's newly propos ed class of well and minimum

technical criteria establis hed to protect underground sources of drinking water.

CIBO is a broad-based association of industri al boiler owners, arch itect-engineers, related equipment manufacture rs, and University affiliates with over 100 members representing 20 major industrial sectors. CIBO members have facilities in every regi on of the country and a representative distribution of almost every type of boiler and fuel co mbination currently in operation. CIBO was formed in 1978 to promote th e exchange of information within the industry and between indust ry and government relating to energy and environmental equipment, technology, oper ations, policies, law a nd regulations affecting industrial boilers.

Since its formation, CIBO ha s been active in the develo pment of technically sound, reasonable, cost-effective energy and environmental regulations fo r industrial bo ilers. CIBO supports regulatory pr ograms that provide in dustry with enough flexib ility to modernize – effectively and without penalty – the nation's ag ing energy infrastructure, as modernization is the key to cost-effective environmental protection.November 26, 2008 Page 2 of 6

I. GENERAL COMMENTS

CIBO notes generally th at the proposed rule raises many questions fo r facilities that are potentially regulated under this rule. In fact , it is unclear from the proposal what facilities may be regulated directly and even more unclear wh at facilities may ul timately shoulder some liability for the obliga tions outlined in the proposal . Throughout th e proposal EPA identifies significant areas needing basic res earch. Risks are not sufficiently defined and therefore not adequately quantified. Costs are outright unquantifiable , based in part on the unquantified risk. EP A notes that it intends to fi nalize a rule in 2010 or 2011. 1 Given the high degree of uncertainty on si gnificant elements of this regulation, and the long period of time before EPA expect s to finalize a rule, CIBO strongl y urges EPA to seek additional notice and comment on subsequent developmen ts in its data colle ction, analysis and decisions on this pro posed approach. CIBO does belie ve, however, that rules covering underground injection of CO 2 need to be implemented prior to significant demonstration project activity.

II. SPECIFIC COMMENTS

A. Owner/Operator Liability

The proposed regulations a ffect owners and operator s of injection wells th at will be used to inject CO 2 into the subsurface for purposes of ge ological sequestration. Owners and operators will be responsible for numerous siting, construction, test ing, and monitoring requirements enumerated in the regulations, as well as long-term ma intenance and financial requirements not ye t wholly defined by the proposed regu lations. The current regulations define "owner or operat or" as "the owner or op erator of any 'facility or activity' subject to regulation under the UIC program." 2 The current definitions ar e insufficient to provide certainty on the key question of what activitie s are subject to regula tion, or could impose some future liability. For example, does "activity" include any pi pelines, pumps, or other

infrastructure used to deliver CO 2 to the injection well?

In this new field of technolo gy, the role of the initial CO 2 source is not yet fully understood. A September 2008 GAO repo rt identifies the te chnological barriers to the CCS approach proposed here, which must be addressed for any such pr ogram to become a reality. 3 For example, an emission source that chooses to engage in carbon capt ure and sequestration may contract with a third party to construct and operate its well , thus separati ng the owner and operator functions. Unde r the proposed regulations, it is unclear which of the parties would

1 Carbon Sequestration: Risks, Opportunities, and Prot ection of Drinking Water: Hearing Before the

Subcomm. on Environment and Hazardous Materi als of the H. Comm. on Energy and Commerce,

110 th Cong. (2008) (statement of Benjamin H. Grumbles, Assistant Administrator for the U.S. Environmental Protection Agency).

2 40 C.F.R. §144.3

3 U.S. Government Accountability Office, Climate Change: Federal Acti ons Will Greaty Affect the

Viability of Carbon Capture and Storage as a Key Mitigation Option , GAO-08-1080, Sep. 30, 2008,

at 15.November 26, 2008 Page 3 of 6

be responsible for meeting the new requirements, and therefore would also be liable if the requirements were not met. Given the exte nt of the responsibilitie s and potential liability imposed on potentially liable CO 2 sources, the regulations should define this term with much greater precision. Precisely de fined liabilities are especially important in a rulemaking regarding gas injection into storage fields. Comp ared to wastewater or other liquid injection and storage, gas has the capability of migrating mo re easily, quickly and farther, and risks of leakage are not only potentially grea ter, but also well documented.

Practical considerations must guide the regulatio n of these activities. For example, the rules must be set up in such a way as to not preclude 3rd party owne rship and operation of a field and associated wells for undergr ound sequestration. Genera tors are not likely to own pipelines, compressor st ations, injection wells, properties, and the CO 2 itself for any extended period of time. Far superior would be the ex istence of a pipeline system (similar to the natural gas pipeline system) that would be owned by others. CO 2 from many different sources would be piped to appropriate disposal sites (for a fee, of course). At the sequestration site, there would li kely be two entities . One of these is the operator and well superintendent (a company that provides field services). The other entity will be the owner (or owners) that would be much like wildcat dr illers. These owners would offer the service

to take the CO 2 and properly inject it underground and adhere to the various safety and regulatory requirement s (much like existing waste management companies). There would

have to be a means for moneti zing this service and a means for handling issues such as leakage, etc. There would probab ly have to be a reserve of CO 2 allowances set up to cover events such as a pipeline brea k or an unexpected fa ult in the cap rock that allowed some CO 2 to escape. This is a possible approach th at would address the pr actical realities for generators, and ensu re that generators can shift those li abilities to companie s experienced in handling them.

B. Flexibility in Mate rials Selection

In the carbon capture and sequestration proc ess, accompanying impur ities will likely be incorporated into the carbon dioxid e stream and injected in the geologic seques tration zone.

As EPA notes, these ac companying particles may have a corrosive effect on the tubing and casing used to contain the ca rbon dioxide, compromising the sa fety and security of the sequestration zone. CIBO s upports the propose d regulations allowing for variability in setting standards for casing, cementing, and tubing of the Class VI wells. Under the regulations, the Director will determine the standards for these materials on a case-by-case basis, taking into consideration the chemic al composition of the carbon dioxide stream. 4

CIBO supports this provision is imperative to the safety and securi ty of the carbon capture and sequestration process.

4 Proposed Rule, Federal Requirements Under the Underground Injection Control Program for Carbon

Dioxide Geologic Sequestration Wells, 73 Fed. Reg. 43492, 43509-10 (July 25, 2008) (to be codified

at 40 C.F.R. §46.86).November 26, 2008 Page 4 of 6

C. Long-term Stewards hip and Liability

The proposed regulations impose a default care period of 50 years, subject to the discretion of

the Director and demonstr ation of non-endangerment of US drinking waters. 5 The proposed regulations do not extend the financial responsibilities of the owners or operator s after this point. SDWA authorizes the EPA to impose liability for the site only to the ex tent that it endangers drinking water. After the EPA dete rmines the site is no longer a danger to drinking water and "clo ses" the site, it cannot as sign liability for the site. In short, the owners and operators are no longer responsible for th e injection site once it is closed, which by default is fifty years af ter the injectio n period. However, the sites do not disappear after fifty years; the risks inherent in lo ng-term carbon storage remain, including risk s of leakage into

air, and other non-drinking wa ter impacts.

Given the potential for lawsuits to arise after si te closure, the regulatio ns must address which party takes over responsibility for the site from the owner/operat or post-closure. Because the EPA lacks the authority under SDWA to enforce regulation of these site s after a default fiftyyear period, other enforcemen t mechanisms such as RCRA an d Superfund may attach. EPA attempts to address these concerns, but states th at it "cannot make a categorical determination as to whether injected CO 2 is hazardous under RCRA." 6 CIBO disagree s that EPA cannot make such a determination, or provide some regulatory mechanism to rule out potential RCRA liability for actions that unde r other regulations pa rties will be requir ed to undertake. Again, practical considerations demand clear an swers to basic questions. These injection aquifers will be severa l thousand feet underground. They may run for miles in any direction. It is entirely possible that the CO 2 could be injected in one st ate and carried underground to another state by the course of the aquifer. Ther e must be some consistent regulatory policy

about this.

EPA should expect little or no CO 2 to be stored if states can sue other States because somewhere underground there is CO 2 entrapped. Ga ses have been tr apped underground, including CO 2 , for hundreds of millions of years. We wouldn't be able to use natural gas today if they were not. The key to this proposed rule is to set it up so that these undesirable possibilities do not arise a nd that the potentially more reasonable structur es are not precluded.

If the rule is written such th at the generato r owns the CO 2 until the governme nt takes over the liability 50 to 100 years la ter, there wi ll be no CO 2 sequestration. That is not a desirable outcome. Additionally, EPA attempts to pr eclude Superfund liab ility through permitting requirements, but th is issue must be addressed clearl y and unequivocall y. Emission sources

are hesitant to take re sponsibility for su ch a project with these unknowns.

The 50-year post-closure pe riod for continuing li ability, from a practical perspective, is not workable. For example, some CIBO members gene rate power for a range of applications. It

is difficult to im agine a generator taking on liability that woul d include the cons truction of a generating plant, the long term operation of that plant, and then the 50-year period after closing the well site. Compoundi ng that difficulty is the poss ibility that the closure of the

5 73 Fed. Reg. 43519-20.

6 73 Fed. Reg. 43503.November 26, 2008 Page 5 of 6

well does not coincide with th e shut down of the po wer plant, potentially extending liability to 100 years or beyond, per th e discretion of the Director. 7 This raises th e question of why a company would take on a 100-year liability that is essentially out of their control and not really a part of their business. The insurance issue is also a ma jor concern. Nothing will be

done without some kind of insuranc e. It will likely be necessary to set up an insurance pool in advance so that there is time to gain adeq uate experience to allow insurance companies to assess the proper risks. This co ncern of public acce ptance and other related concerns are the focus of an NAS report, whic h concludes that they must be addressed be fore the CCS strategy can be fully developed.

The high degree of uncertainty regarding any liability makes insurance companies unwilling to insure these projects. For example, there is potential for problems to exist thousands of years into the future when these owners/opera tors no longer exist. Any regulations must address liability issues to be effective.

D. Cost Prohibitive Requirements

Owners and operators will be responsible for numerous requirements under the proposed regulations. Specifically, they must provide financial assurances that they will be responsible for any corrective action, we ll plugging, emergency and remedial respon ses, and the postinjection site closure. Thes e assurances will be cost-prohibitive for all but the most financially sound owners and oper ators. Moreover, the true co st of owning and operating an injection well is inca lculable because the liability remains unknow n and, consequently,

insurers are unwilli ng to take the risk of ba cking the project. The probability that costs will

balloon out of contro l make carbon capture a nd sequestration infeasib le, even for the most

dedicated of owners a nd operators. In January 2008, the De partment of Energy cancelled its $1.8 billion in funding for the FutureGen CCS pr oject because costs ha d soared to almost double the estimate provided in 2004. The proposed regulations place to o high a financial burden on potential owners and operators and will actually discourage new projects.

E. Other Areas of Concern

The proposed UIC regulations raise many other quest ions, creating additi onal uncertainty. These concerns include but are not limited to the following:

• Economic liability re lated to selling carb on credits, and how it relates to this regulation. • Impact on underground coal mines, conf licts regarding mine ral ownership, and possible mineral takings. • Development of geol ogical horizons below the carbon sequestration horizon but in

the same area. EPA should re tain the flexibility currently available in the other UIC programs. EPA's Class VI program should not interfere with mi neral extraction (oil and gas specifically) th rough the imposition of restrictions in CO 2 storage fields. • Potential liability of landowner with CO 2 storage area beneath the property.

7 73 Fed. Reg. 43519-20.November 26, 2008 Page 6 of 6

If you have any questi ons concerning our comments or requ ire clarification, please contact

me at 703.250.9042. Thank you for y our consideration.

Sincerely yours,

/s/ Robert D. Bessette

Robert D. Bessette

PresidentLetter ID: 0139

Commenter: Robert Bessette Organization: Council of Indus trial Boiler Owners (CIBO)

Letter ID: 0139 Comment ID: 23079 Letter Lines: 54 to 58

Comment Code: 1200 1.1 General comments about the rulemaking

Comment: CIBO notes generally that the proposed rule raises many questions for facilities that are potentially regulated under this rule. In fact, it is unclear from the proposal what facilities may be regulated directly and even more unclear what facilities may ultimately shoulder some lia bility for the obligations outlined in the proposal. Throughout the propos al EPA identifies si gnificant areas

Individual Response: EPA clarifies that the GS rule applies to owners or operators of wells that will be used to inject CO2 into the subs urface for the purpose of long-term storage.

Please see the remainder of EPA's responses to th is comment for further details. For additional information on EPA's final regulatory approach, pl ease see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0139 Comment ID: 23080 Letter Lines: 58 to 61

Comment Code: 1810 1.4.1 Research on identify ing risks to USDWs

Comment: in the proposal. Throughout the proposal EPA identifies significant areas needing basic research. Risks are not su fficiently defined and therefore not adequately quantified. Costs are outright unquantifiable, based in part on the unquantified risk. EPA notes that it in tends to finalize a rule in 2010 or

Individual Response: EPA is working with DOE, national laboratories (such as Lawrence Berkeley National Laboratories) , the USGS, and internal Agency Offices (e.g., Office of Research and Development) on research on variou s aspects of GS, including potential risks to USDWs. EPA published a Notice of Data Availa bility and Request for Comment on August 31, 2009 (74 FR 44802), in which the Agency descri bed two studies by the Lawrence Berkeley National Laboratory on the potentia l effects of CO2 injection on USDWs and human health in the event that a GS project is not properly s ited, operated, or managed. These studies are in the rulemaking docket and on LBNL's website at http://esd.lbl.gov/GCS/project s/CO2/index_CO2.html.

The Agency will continue to track GS proj ect developments and evaluate new and ongoing research and information to ensure USDW prot ection. EPA is using an adaptive approach to regulating GS under the UIC Program. Even after finalization of the GS regulation, the Agency plans to collect and review da ta every six years on GS proj ects to determine whether the appropriate amount and types of information a nd appropriate documentation are being collected,

1and to determine if modifications to the requirements are appropriate or necessary.

Letter ID: 0139 Comment ID: 23081 Letter Lines: 61 to 70

Comment Code: 2400 1.8 Comments on EPA's adaptive rulemaking process

Comment: unquantified risk. EPA notes that it in tends to finalize a rule in 2010 or 2011.[FN1 1 Carbon Sequestration: Risks, Opportunities, and Protection of Drinking Water: Hearing Before the S ubcomm. on Environment and Hazardous Materials of the H. Comm. on Energy and Commerce, 110th Cong. (2008) (statement of Benjamin H. Grumbles, Assistant Admi nistrator for the U.S. Environmental Protection Agency).] Given the high de gree of uncertainty on significant elements of this regulation, and the long period of time before EPA expects to finalize a rule, CIBO strongly urges EPA to seek additional notice and comment on subsequent developments in its data collection, analysis and decisions on this proposed approach. CIBO does believe, however, that rules covering

Individual Response: If EPA determines that changes to th e regulations are appropriate based on its review of GS project data, the Agency will provide an opportunity for the public to comment on the proposed changes as well as any data on which the changes were based. EPA did provide more opportunity for public notice and comment when it presented new data in its Notice of Data Availability and Request for Comment.

EPA disagrees that there is a high degree of un certainty associated with GS. EPA considered information from laboratory, modeling, and field research as it developed the requirements for GS wells. In addition to laboratory studies a nd modeling research that provide relevant information on GS, the Agency is also involved in collecting and analyzing GS project data and permit information from a variety of sources. Most notably, EPA has evaluated permits and reviewed operational data and information associated with the seven regional carbon sequestration partnerships funded by the U.S. De partment of Energy and coordinated through the National Energy Technology Laboratory (NETL), and several international projects. In addition to the information cited in the preamble to the proposed rule, EPA published a Notice of Data Availability and Request for Comment (NODA) on August 31, 2009 (74 FR 44802), in which the Agency described the preliminary results of research at three DOE partnership sites (in Escatawpa, Mississippi; the Aneth Field in Pa radox Basin, Southeast Utah; and the Pump Canyon Site, New Mexico). EPA sought comment on th is data and used it to inform the final

rule.

Letter ID: 0139 Comment ID: 23082 Letter Lines: 76 to 129

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

2Comment: A. Owner/Operator Liability

The proposed regulations affect owners a nd operators of injection wells that will be used to inject CO2 into the subsurface for purposes of geological sequestration. Owners and operators will be responsible for numerous siting, construction, testing, and monitoring requirements enumerated in the regulations, as well as long-term maintena nce and financial requirements not yet wholly defined by the proposed regulati ons. The current regulations define "owner or operator" as "the owner or operator of any 'facility or activity' subject to regulation under the UIC progr am." [FN2 40 C.F.R. §144.3] The current definitions are insufficient to provide certainty on the key question of what activities are subject to regulation, or c ould impose some future liability. For example, does "activity" include any pipeli nes, pumps, or other infrastructure used to deliver CO2 to the injection well?

In this new field of technology, the role of the initial CO2 source is not yet fully understood. A September 2008 GAO repor t identifies the technological barriers to the CCS approach proposed here, which must be addressed for any such program to become a reality.[FN3 U.S. Government Accountability Office, Climate Change: Federal Actions Will Greaty Affect the Viability of Carbon Capture and Storage as a Key Mitigation Opti on, GAO-08-1080, Sep. 30, 2008, at 15.] For example, an emission source that chooses to engage in carbon capture and sequestration may contract with a third pa rty to construct and operate its well, thus separating the owner and opera tor functions. Under the proposed regulations, it is unclear wh ich of the parties would be responsible for meeting the new requirements, and therefore woul d also be liable if the requirements

were not met. Given the extent of the responsibilities and potential liability imposed on potentially liable CO2 sources, the regulations shoul d define this term with much greater pr ecision. Precisely defined liabi lities are especially important in a rulemaking regarding gas in jection into storage fields. Compared

to wastewater or other li quid injection and storage, gas has the capability of migrating more easily, quickly and farther, and risks of leakage are not only potentially greater, but also well documented.

Practical considerations must guide th e regulation of these activities. For example, the rules must be set up in such a way as to not preclude 3rd party ownership and operation of a field a nd associated wells for underground sequestration. Generators ar e not likely to own pipeline s, compressor stations, injection wells, properties, and the CO2 itself for any extended period of time. Far superior would be the ex istence of a pipeline system (similar to the natural gas pipeline system) that would be owne d by others. CO2 from many different sources would be piped to a ppropriate disposal sites (for a fee, of course). At the sequestration site, there would likely be two entities. One of these is the operator and well superintendent (a compa ny that provides field services). The other entity will be the owner (or owners) that would be much like wildcat

drillers. These owners would offer the service to take the CO2 and properly

3inject it underground and adhere to the various safety and regulatory requirements (much like existing waste mana gement companies). There would have to be a means for monetizing this servi ce and a means for handling issues such as leakage, etc. There would probably have to be a reserve of CO2 allowances set up to cover events such as a pipeline br eak or an unexpected fault in the cap rock that allowed some CO2 to escape. Th is is a possible approach that would address the practical realities for genera tors, and ensure that generators can shift those liabilities to companie s experienced in handling them.

Individual Response: EPA clarifies that the GS require ments, including the financial responsibility requirements at §146.85, apply to the owner or ope rator of a GS project, which includes the Class VI injection well or wells, and includes the subsurface three-dimensional extent of the carbon dioxide plume, associated pre ssure front, and displaced brine, as well as the surface area above that delineated region. EPA a dds that regulation of CO2 generators and transportation/pipelines is outsi de the scope of EPA’s author ity under the SDWA and the GS rulemaking. See the final rule and preamble for further discussion of EPA's final approach to financial responsibility.

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

4does 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: 0139 Comment ID: 23083 Letter Lines: 131 to 146

Comment Code: 3862 2.3.3.1 Use of corrosion-resistant construction materials (seeking comment)

Comment Code: 3864 2.3.3.2 Use of corrosion-resistant cements (seeking comment)

Comment: B. Flexibility in Materials Selection

In the carbon capture and sequestrati on process, accompanying impurities will likely be incorporated into the carbon dioxide stream and injected in the geologic sequestration zone. As EPA notes , these accompanying particles may have a corrosive effect on the tubing and casing used to contain the carbon dioxide, compromising the safety and security of the sequestration zone. CIBO supports the proposed regulations allowing for va riability in setting standards for casing, cementing, and tubing of the Class VI wells. Under the regulations, the

Director will determine the standards for these materials on a case-by-case basis, taking into consideration the ch emical composition of the carbon dioxide stream.[FN4 Proposed Rule, Federal Require ments Under the Underground Injection Control Program for Carbon Dioxide Ge ologic Sequestration Wells, 73 Fed. Reg. 43492, 43509-10 (July 25, 2008) (to be codifi ed at 40 C.F.R. §46.86).] CIBO supports this provision is imperative to th e safety and security of the carbon capture and sequestration process.

Individual Response: EPA agrees that cement that is co mpatible with the CO2 and formation fluids will enhance Class VI well integrity. EPA also agrees that developing technology in the field of acid-resistant cement will provide the indus try with future benefits. In the interest of USDW protection, the Agency requires that the materials used in Class VI wells must be compatible with fluids with which they may come in contact, as sp ecified in §146.86(b)(1).

EPA adds that the requirements at §146.86(b)(1) st ate that materials must meet or exceed standards developed for such materials by the American Petroleum Institute, ASTM International, or comparable standards acceptable to the Director. This requirement invokes the expertise of these bodies and allows the use of technologies that are yet to be developed.

See the discussion of Class VI well construction requirements in the preamble to the final GS rule for additional information. Additionally, EPA is developing guidance on the construction of Class VI wells. This guidance will be available on EPA’s website at http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm.

Letter ID: 0139 Comment ID: 23084 Letter Lines: 148 to 190

5Comment Code: 5460 2.9.2 Comments on transfer of lia bility for long-term care

Comment: C. Long-term Stewardship and Liability

The proposed regulations impose a default care period of 50 years, subject to

the discretion of the Director and dem onstration of non-enda ngerment of US drinking waters.[FN5 73 Fed. Reg. 43519-20.] The proposed regulations do not extend the financial responsibilities of the owners or operators after this point. SDWA authorizes the EPA to impose liability for the site only to the extent that it endangers dr inking water. After the EPA de termines the site is no longer a danger to drinking water and "closes" the site , it cannot assign liability for the site. In short, th e owners and operators are no longer responsible for the injection site once it is closed, which by default is fifty years after the injection period. Howeve r, the sites do not disappear after fifty years; the risks inhe rent in long-term carbon st orage remain, including risks of leakage into air, and ot her non-drinking water impacts.

Given the potential for lawsuits to aris e after site closure, the regulations must address which party takes over re sponsibility for the site from the owner/operator post-closure. Because the EPA lacks the authority under SDWA to enforce regulation of these sites afte r a default fiftyyear period, other

enforcement mechanisms such as RCRA a nd Superfund may attach. EPA attempts to address these concerns, but states th at it "cannot make a categorical determination as to whether injected CO2 is hazardous under RCRA." [FN6 73 Fed. Reg. 43503.] CIBO disagrees that EPA cannot make such a determination, or provide some regulatory mechanism to rule out potential RCRA liability for actions that under other regulations part ies will be required to undertake. Again, practical considerations demand cl ear answers to basic questions. These injection aquifers will be several thou sand feet underground. They may run for miles in any direction. It is entirely possible that the CO2 could be injected in one state and carried underground to another state by the course of the aquifer. There must be some consis tent regulatory policy about this.

EPA should expect little or no CO2 to be st ored if states can sue other States because somewhere underground there is CO2 entrapped. Gases have been trapped underground, including CO2, for hundreds of millions of years. We wouldn't be able to use natural gas toda y if they were not. The key to this proposed rule is to set it up so that these undesirable po ssibilities do not arise and that the potentially more reasonable structures are not precluded. If the rule is written such that the generator owns the CO2 until the government takes over the liability 50 to 100 years later, there w ill be no CO2 sequestration. That is not a desirable outcome. Additionally, EPA atte mpts to preclude Superfund liability through permitting requirements, but this i ssue must be addressed clearly and unequivocally. Emission sources are hesitant to take re sponsibility for such a project with these unknowns.

6Individual 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. With re gard to commenter’s statement about non-USDW impacts related to long term liability, EPA clar ifies that its authority under the SDWA is to protect USDWs from endangerment, which does not include other risks associated with air emissions and non-drinking water impacts.

Additionally, EPA clarifies that the 50 year timefra me for PISC is based on review of research studies, industry reports, and exis ting environmental programs. Under the approach that is part of the final rule it is possible th at the PISC may be extended be yond 50 years if the owner or operator is unable to demonstrate that USDWs will not be endangered by the CO2 plume and/or pressure front at 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. Please note that EPA does not have authority to transfer SDWA or other legal liability for Class VI wells to the State or federal gove rnment or a third-party fund. See the final rule preamble for further discussion of EPA's final approach.

Letter ID: 0139 Comment ID: 23085 Letter Lines: 191 to 202

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

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

Comment: The 50-year post-closure period for con tinuing liability, from a practical

7perspective, is not workable. For example, some CIBO members generate power for a range of applications. It is difficu lt to imagine a generator taking on liability that would include the construc tion of a generating plant, the long term operation of that plant, and then the 50-year period after closing the well site. Compounding that difficulty is the possibility that the closure of the

well does not coincide with the shut dow n of the power plant, potentially extending liability to 100 years or beyond, per the discretion of the Director.[FN7 73 Fed. Reg. 43519-20.] This ra ises the question of why a company would take on a 100-year liability that is essentially out of their control and not really a part of their business. The insurance issue is also a major

Individual Response: EPA disagrees that a post-injection si te care timeframe of 50 years is excessive for most Class VI wells. EPA proposed a default post-injection s ite care timeframe of 50 years based on a review of research studies , industry reports, and existing environmental programs. This analysis was included in an EPA- prepared background document that is available in the federal docket, titled "Computationa l Modeling of Underground Injection of Carbon

Dioxide for Determination of Area-of-Review a nd Potential Risk to Underground Sources of Drinking Water." EPA assessed various default timeframes based on additional review of research studies and evaluation of public commen ts. While numerous commenters suggested that EPA shorten the monitoring timeframe, none of the commenters provided suffi cient data or other evidence to warrant a change in the proposed timeframe. While the 10- or 30-year timeframe suggested by some of these commenters may be within the timeframe suggested in some studies, EPA believes that the potential risks of endange ring USDWs will likely no t decline within these timeframes and available data, including da ta submitted by commenters, do not support a

different default timeframe.

However, EPA recognizes that there may be site s where the 50 year post injection site care timeframe may be either not appropriate or more burdensome than necessary based on sitespecific conditions. For this reason, the GS rule o ffers owners or operators flexibility regarding

the duration of the PISC timefra me by: (1) allowing the Direct or discretion to shorten or lengthen the PISC timeframe during the post-in jection period based on site-specific data, pursuant to requirements at §146.93(b) ; or (2) affording the Director discretion to allow a Class VI well owner or operator to demonstrate, during the permitting process based on substantial data, that an alternative PISC timeframe may be appropriate if it ensu res non-endangerment of USDWs pursuant to requirements at §146.93(c).

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

substantial data exists to demonstrate that an alternative timeframe would be protective of USDWs, or based on data collected during the PISC period, is appropriate to address the range of sites where GS is anticipated to occur, to ac commodate site-specific circumstances and various geologic conditions, and addre sses commenters’ concerns, wh ile ensuring USDW protection. Both approaches will utilize si te-specific data, and be based on pressure monitoring and USDW impacts. EPA believes however, that to ensure USDW protection from enda ngerment, a default timeframe for post-injection site care will be necessary in al l but a limited number of cases. This default 50

8year post-injection site care ti meframe represents a reasonable and protective monitoring period based on a review of research studies, industr y reports, and existing environmental programs, and evaluation of public comments.

EPA also recognizes the concerns associated with ensuring fina ncial responsibil ity for the long time frames over which post-injection site care will be conducted. EPA is developing guidance on financial responsibility to a ssist owners or operators in evaluating the requirements of §146.85 and to assist Directors in evaluating fi nancial responsibility demonstrations. The guidance describes the types of financial mechanisms that operators may choose to use when evaluating the financial responsibility requirements for GS wells and it will also include a section on recommended approaches to estimate costs to support accurate financial responsibility demonstrations. The guidance will be available at http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm.

As described above, the GS regulat ion applies to the owner or operator of the GS project, not the generator of the CO2.

Letter ID: 0139 Comment ID: 23086 Letter Lines: 202 to 213

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

Comment: not really a part of their business. The insurance issue is also a major concern. Nothing will be done without some kind of insurance. It will likely be necessary to set up an insura nce pool in advance so that there is time to gain adequate experience to allow insurance companies to assess the proper risks. This concern of public acceptance and other related concerns are the focus of an NAS report, which concludes that they must be addressed before the CCS strategy can be fully developed.

The high degree of uncertainty regarding a ny liability makes insurance companies unwilling to insure these projects. For exam ple, there is potential for problems to exist thousands of years into the fu ture when these owne rs/operators no longer exist. Any regulations must addre ss liability issues to be effective.

Individual Response: EPA recognizes the commenter's concern over the availabil ity of funds to

cover the costs of financial re sponsibility. However, EPA does not have authority under SDWA to require insurance companies to set up an insu rance "pool" of resources. EPA anticipates that, as GS is deployed, insurers will refine their products to meet the needs of these projects.

EPA is developing guidance that describes th e types of financial instruments, including insurance, which owners or operators can use to meet financial responsibility requirements for GS wells; this guidance document will be available to insurance providers as well. This guidance

will be available on EPA's website at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

9Under 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.

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.

10Letter ID: 0139 Comment ID: 23087 Letter Lines: 215 to 230

Comment Code: 5430 2.9.1 Comments on proposed financia l responsibility requirements (40 CFR 146.85)

Comment Code: 6100 3.1 Comments on the cost estimates

Comment: D. Cost Prohibitive Requirements

Owners and operators will be responsible for numerous requirements under the proposed regulations. Specifically, they must provide financial assurances that they will be responsible for any correc tive action, well plugging, emergency and remedial responses, and the postinjection si te closure. These assurances will be cost-prohibitive for all but the most financially sound owners and operators. Moreover, the true cost of owning a nd operating an injection well is incalculable because the liability rema ins unknown and, consequently, insurers are unwilling to take the ri sk of backing the project. The probability that

costs will balloon out of control ma ke carbon capture and sequestration infeasible, even for the most dedicated of owners and operators. In January 2008, the Department of Energy cancelled its $1.8 billion in funding for the FutureGen CCS project because costs had soared to almost double the estimate provided in 2004. The proposed regulations place too high a financial burden on potential owners and operators and w ill actually discourage new projects.

Individual Response: EPA notes that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensu re that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

The goal of financial responsibility is to assu re that resources are available to prevent endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties. EPA believes that assuring financial responsibility for corr ective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial res ponse at GS sites is an important component of ensuring that USDWs are protected. EPA has sp ecified acceptable financial responsibility instruments in the final regulation.

EPA anticipates that the availability of thir d-party GS financial instruments will grow in response to demand for such instruments as de ployment of GS technology increases in the future. In addition, EPA plans to allow owners or operators to c hoose from a variety of financial instruments to meet their financial responsibility needs, allowing them to select instruments they find easiest to obtain. See the final rule and pr eamble for further disc ussion of EPA's final approach to financial responsibility.

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, the financial instrument required under §146.85 will be released if it was not used.

11However, even if a site closure is approve d under §146.93, an owner or operator may be held liable for regulatory noncompliance (includi ng 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, along with all po tential liabilities associated w ith meeting the requirements of that permit. Please see further clarification 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.

The Agency clarifies that sequestration costs are expected to be a small component of total CCS project costs. EPA estimates that the GS rule requirements amount to approximately 2 percent of the total CCS project costs, according to the cost analysis for the final GS rule, which is in the rulemaking docket.

Letter ID: 0139 Comment ID: 23088 Letter Lines: 232 to 245

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

Comment: E. Other Areas of Concern

The proposed UIC regulations raise many other questions, creating additional uncertainty. These concerns include but are not limited to the following:

- Economic liability related to selling carbon credits, and how it relates to this regulation. - Impact on underground coal mines, conf licts regarding mineral ownership, and possible mineral takings.

12- Development of geological horizons belo w the carbon sequestrati on horizon but in

the same area. EPA should retain the flexibil ity currently available in the other UIC programs. EPA's Class VI program should not interfere with mine ral extraction (oil and gas specifically) through the imposition of restrictions in CO 2 storage fields. - Potential liability of la ndowner with CO2 storage area beneath the property.

Individual Response: The purpose of the Class VI GS rule is to ensure consistency in permitting underground injection of CO2 at GS operations across the US and prevent endangerment of USDWs in anticipation of the eventual use of GS to reduce CO2 emissions. EPA clarifies that carbon crediting, mining, por e space ownership, and surface and subsurface property and mineral rights are outside the scop e of the GS rulemaking. EPA clarifies that many of these issues are under the purview of states, an d any of these issues as they relate to GS will need to be addressed though state regulations.

However, the Agency acknowledges that these issu es are important and is addressing them using other regulatory authorities. For example, in a separate rulemaking under authority of the Clean Air Act, EPA is amending the GHG Reporting Program at 40 CFR Part 98 to add reporting requirements for CO2 injection and GS. The gr eenhouse gas reporting requirements build on the requirements outlined in the GS rule with the additional goals of verifying the amount of CO2 sequestered and collecting data on any CO2 em issions to the surface from GS facilities.

With regard to whether CO2 is considered a commodity, EPA clarifies that the GS rule does not address the status of CO2 as a pollutant or co mmodity and that EPA regulates both pollutants and commodities under the UIC provisions. In add ition, whether or not a fluid could be sold on the market as a commodity is outside the scope of EPA’s authority under the SDWA to protect USDWs. The Class VI GS rulemaking is promul gated under Safe Drinking Water Act authority and does not relate to any endangerment and cau se or contribute findings under the Clean Air Act. The Class VI GS requirements do not depend upon, and are unaffected by, Clean Air Act endangerment and cause or contribute findings.

The Agency clarifies that the final GS rule doe s not require owners or operators to use GS technologies, nor does it impact business as us ual for Class II owners or operators that are injecting CO2 to enhance production of oil or gas. Owners or operators that choose to transition from EOR to GS may do so, provided they m eet the requirements for Class VI wells.

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.

13Separate 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.

Letter ID: 0139 Comment ID: 23979 Letter Lines: 76 to 89

Comment Code: 1220 1.1.1.1 Terminology and definitions

Comment: A. Owner/Operator Liability

The proposed regulations affect owners a nd operators of injection wells that will be used to inject CO2 into the subsurface for purposes of geological sequestration. Owners and operators will be responsible for numerous siting, construction, testing, and monitoring requirements enumerated in the regulations, as well as long-term maintena nce and financial requirements not yet wholly defined by the proposed regulati ons. The current regulations define "owner or operator" as "the owner or operator of any 'facility or activity' subject to regulation under the UIC progr am." [FN2 40 C.F.R. §144.3] The current definitions are insufficient to provide certainty on the key question of what activities are subject to regulation, or c ould impose some future liability. For example, does "activity" include any pipeli nes, pumps, or other infrastructure used to deliver CO2 to the injection well?

Individual Response: The final Class VI GS regulations apply to owners or operators of injection wells that will be us ed to inject CO2 into the s ubsurface for the purposes of GS. Generators and transporters of CO2 are not aff ected by the Class VI GS rule. The UIC program’s authority under the SDWA focuses on ensuring that GS projects are permitted, sited, constructed, operated, monitored, and closed in a manner th at protects USDWs from endangerment.

Based on its evaluation of all public comments and input on the proposed rule and the NODA and Request for Comment, EPA has made many revisions to the Cla ss VI GS rule. Please see the final rule and preamble for additional information.

14