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.December 24, 2008

Via Email

Water Docket Environmental Protection Agency

Mailcode: 2822T 1200 Pennsylvania Avenue, N.W. Washington, D.C. 20460

RE: Comments on Proposed Safe Drinking Water Act Regulations regarding the Underground Injection Control Program for Carbon Dioxide Geological Sequestration Wells; Docket ID No. EPA-HQ-OW-2008-0390-0001

Dear Environmental Protection Agency,

Thank you for the opportunity to review the proposed regulations concerning the Underground Injection Control (“ UIC”) Program for carbon dioxide (“CO 2 ”) geological sequestration wells. Pl ease accept the following comments

submitted on behalf of the Sierra Club including chapters, groups and its members throughout the nation.

INTRODUCTORY STATEMENT

We agree with EPA that CCS could play an important role in allowing deep greenhouse gas emission reductions from electric generation and industrial

facilities. In order to achieve the cuts necessary to avoid the worst consequences of climate change, CCS must be integrated within a larger climate policy that includes legislat ion limiting greenhouse gas emissions, investment in efficiency improvements and renewable energy sources such as solar, wind, biomass and geothermal. 1

1 IPCC Special Report on Carbon Dioxide Capture and Storage, 2005 (hereinafter “IPCC CCS”) Section 1.1, 1.3.CCS must be deployed on a very large- scale to enable deep cuts in worldwide greenhouse gases. To deploy this nascen t technology in a short timeframe, it must be managed very proficiently from the start to minimize ecological, human health, and financial risks. Any CCS regulatory regime must establish clear incentives for respon sible site selection, appropriate monitoring, safe and environmentally sound operation, and financially responsible site closure.

Overall, the proposed rule makes good strides at addressing some of the key issues for geological sequestration. However, there are several areas that need improvement as we discuss belo w. First we briefly provide background on the infancy of large-scale CCS deployment, technical complexities, and the import of rapid development of CCS to tackle the global warming crisis

CCS is an Emerging Technolo gy and Many Hurdles Remain

CCS is an evolving technology and ma ny uncertainties remain. CCS employs a combination of known and emerging technologies and processes. 2 Known storage technologies generally rely on experience injecting CO 2 into depleted

oil fields for enhanced oil re covery (“EOR”). Emerging CO 2 storage approaches include the injection of CO 2 into deep saline geological formations and a variety of other geologies, and are needed on a much larger scale than is the practice for EOR.

Burning fossil fuel to generate electricit y is the largest single source of CO2 emissions, and therefore the CCS syst em’s major contribution to climate change mitigation would come from deployment in the electricity sector and most importantly, on coal-fired electricity plants. 3 However, there are currently no coal power plants with CCS in operation or under construction. In the US, there is one small 1.7 MW project currently testing capture (but not sequestration) using pulverized coal . One project under construction will capture and store a small percent of the existing power plant emissions. 4

Since there is considerable lack of ex perience with CCS, there are also significant gaps in knowledge. The rule must reflect these uncertainties, and be flexible enough to adapt to new in formation produced by the first major demonstration projects. The IPCC Special Report on Carbon Capture and Storage devoted a section of their repo rt to the current gaps in knowledge

2 “The technical maturity of speci fic CCS system components varies greatly. Some technologies are extensively deployed in mature markets, primarily in oil and gas industry, while others are still in the research, development or demonstration ph ase.” IPCC CCS Technical Summary p. 19. See also Table TS.1 (charting maturity of CCS system components).

3 IPCC CCS Summary for PolicyMakers at 11.

4 http://sequestration.mit.edu/tools/pr ojects/aep_alstom_mountaineer.html (last visited December 15, 2008).

2regarding CCS. The relevant gaps incl ude (from IPCC CCS section 5.10, p. 264):

• need for more development and agreement on assessment methodologies.

• capacity estimates.

• kinetics of geochemical trapping and the long-term impact of CO 2 on reservoir fluids and rocks.

• the fundamental processes of CO 2 adsorption and CH4 desorption on coal during storage operations.

• risks of leakage from abandoned wells caused by material and cement degradation.

• reliable coupled hydrogeological-geochemical-geomechanical simulation models to predict long-term storage performance accurately.

• experience with mitigating and remediating a leakage event.

• requirements for decommissioning a storage project.

Additionally, the IPCC reports that large-scale demonstration of CO 2 capture is needed, “a better understanding of long-term storage, migration and leakage processes,” and “an enhanced ability to monitor and verify the behaviour [sic] of geologically stored CO 2 .” 5 The IPCC, a collaboration of the foremost experts in CCS-related fields from across the globe, then concluded that “[t]he implementation of more pilot and demonstration storage projects in a range of geological, geographic al and economic settings would be important to improve our understanding of these issues.” 6

CCS Must be Deployed Quickl y on a Very Large Scale

Scientists agree that in order to av oid the worst consequences of climate change, the United States must cut greenhouse gas emissions at least 80 percent below 2000 levels by 2050. 7 The scale of CCS projects necessary in the electricity sector to achieve this objective is enormous. To store the two

billion tons of CO 2 emissions from annual fossil fuel electrical generation in

5 IPCC CCS Technical Summary 48.

6 Id.

7 Luers, A.L. et al. 2007, How to Avoid Dangerous Climate Change: A target for U.S.

emissions reductions . Union of Concerned Scientists, online at http://www.ucsusa.org/assets/documents/glo bal_warming/emissions-target-report.pdf

3the U.S. will require at least two hundre d CCS projects, each 10 times larger than the largest sequestration pr ojects currently in operation. 8 Worldwide, an estimated 6,000 of these projects would be needed. 9 Currently, only four large-scale commercial carbon seques tration projects exist worldwide. 10

There is no time to waste to achieve this Herculean task. To have any meaningful role in curbing greenhouse gas emissions, CCS projects must proceed quickly while cognizant that there is no room for missteps. A team of international experts recently explai ned that “a single major accident, resulting from inadequate regulatory oversight, anywhere in the world, could seriously endanger the future viabilit y of GS [geologic sequestration].” 11

There is broad agreement that CCS sh ould proceed by undertaking a few large demonstration projects in the U.S. the next few years, which must be carefully selected and monitored to learn from performance to incorporate into the next generation. 12 The EPA’s proposed rule should enable selection of the lowest-risk, best overall sites fo r these initial projects, and be adaptive to the changes that will occur after know ledge is gleaned from those projects.

CCS Permitting Requires Specialized Technical Expertise

Permitting a Class VI well involves many complicated technical issues across a range of disciplines. Site selection alone involves characterization of geology, hydrogeology, geochemistry and geomechamics. 13 Well construction, interpreting monitoring data, and proper site closure are a few other highly technical areas. EPA’s proposed rule recognizes these complexities by requiring submission of numerous types of data with a permit application and continuous monitoring and reporting. But the rule does not provide for technical analysis of this information. It entrusts evaluation of this data to the state administrator or to the EPA in non-delegated states.

A Few Critical Changes Are N eeded in the Proposed Rule

8 Benson, S, 2004. Carbon Dioxide Capture and Storage in Underground Geologic Formations , Lawrence Berkeley National Laboratory, p. 15, available at http://www.pewclimate.org/docUploads/10- 50_Benson.pdf (last visited Nov. 25, 2008).

9 International Energy Agency, Near-term Opportunities for Carbon Dioxide Capture and Storage, Global Assessments Workshop in Support of the G8 Plan of Action, June 2007 at p. 7

10 The offshore Sleipner natural gas project in Norway , Snohvit in the North Sea, the InSalah natural gas project in Algeria, and the Weyburn Enhanced Oil Recovery project in Canada. IPCC CCS Technical Summary at 19; Wilson, E., Morgan, M. et al., Regulating the Geological Sequestration of CO 2 , Environmental Science & Technology, Apr. 15, 2008, at p. 4.

11 Wilson, E., Morgan, M. et al., Regulating the Geological Sequestration of CO 2 , Environmental Science & Technology, Apr. 15, 2008, at p. 5.

12 IPCC CCS Technical Summary 48 ; Wilson, E., Morgan, M. et al., Regulating the Geological Sequestration of CO 2 , Environmental Science & Technology, Apr. 15, 2008, at p. 4; Union of Concerned Scientists, Coal Power in a Warming World , Oct. 2008, p. 19-21.

13 IPCC CCS 5.4.1.1, Table 5.3.

4EPA must be applauded for taking a critical step toward climate change goals by proposing the first rule to regulate carbon injection and storage. However, the proposed rule does not fully refl ect the current emerging state of CCS technology. EPA recognizes the rule must strengthen science, technology, and institutions in order to support a strategy to address climate change. 14 The suggestions outlined below would do just that:

• EPA – advised by experts and re gional stakeholders – and not individual states, should make permitting decisions on CCS projects, at least for the first few years.

• Permits should be issued in stages, to be adaptive to advances in knowledge, science and regulation, no t for the operating life of the well.

• Initial Class VI wells should only be permitted in oil and gas reservoirs and deep saline formations until othe r formations are further studied.

The rule also lacks opportunities for pu blic participation, ignores the very important question of liability, and requ ires a few definition tweaks. Finally, CCS is not exclusively a groundwater issue, and regulating CCS with the proposed rule under SDWA is insufficien t to address other risks. CCS should be regulated through a comprehensive statutory regime.

14 Proposed rule at p. 23.

5TABLE OF CONTENTS

I. A Comprehensive Statutory and Regulatory Scheme fo r CCS is Required. .......................................................................................................... 7

II. The EPA should create a liability scheme for the CCS program. ............ 7

III. The EPA Should Revise the Regulations to Provide for Adequate Financial Assurance for Long-Term Stewardship ...................................... 9

A. Financial Assurance Under the Proposed SDWA Rule ................. 9

B. Financial Assurance Mechanisms .................................................... 10

C. Sierra Club’s Recommendation for Adequate Financial Assurance Under the Proposed Rule ................................................ 13

D. Accurate Cost Estimates are Nece ssary for Adequate Financial

Assurance ............................................................................................... 14

E. Congress Should Create a Trust Fund to Cover Closure, PostClosure, and Remediation Costs for Cases When a Financial

Assurance Mechanism Fails. ............................................................. 16

IV. The EPA Should Administer the CCS Program with the Help of a Specially Formed CCS Technical Advisory Committee. .......................... 16

V. The EPA Should Issue Class VI Staged Permits, Rather Than Permits for the Operating Life of the Well. ................................................................ 19

VI. Class VI Wells Should Be Permitted Only in Oil and Gas Reservoirs and Deep Saline Formations. ......................................................................... 20

VII. The Rule Should Specify That an Intrusion Into a USDW is Not a “Federally Permitted Release” Under CERCLA. ...................................... 21

VIII. The Definition of the Area of Review Should Include Monitoring and Modeling. ............................................................................................................ 21

IX. Additional Well Identification Method s that do not rely on the Public Record Should be Required in Certain Provisions .................................... 22

IX. Opportunities for Public Participat ion in the Proposed Rule are Not

Sufficient. ........................................................................................................... 23

6I. A Comprehensive Statutory and Re gulatory Scheme for CCS is Required.

It is critical that a CCS regulatory structure be comprehensive. Given the myriad of risks associated with CCS , Sierra Club believes that the Safe Drinking Water Act is not of sufficien t scope and enforceability to handle a regulatory field as broad as CCS. Spec ifically, the Safe Drinking Water Act only protects “underground sources of drinking of water” and any CCS program raises many potential issues other than groundwater impacts. EPA acknowledges in the rule :

[t]he SDWA does not provide authority to develop regulations for all

areas related to GS. These areas include, but are not limited to, capture and transport of CO 2 ; determining property rights (i.e., to permit its use for GS and for possib le storage credits); transfer of liability from one entity to another; and accounting or certification for greenhouse gas (“GHG”) reductions.

73 Fed. Reg. 43,492, 43,495 (July 25, 2008).

Sierra Club cannot emphasize strongly enough the absolute need that the government regulates CCS in a comprehensive and inclusive manner that accounts for all potential environmental and health impacts, and the universe of issues involved with larg e-scale CCS implementation such as capture, transportation and pipeline standards, interstate boundary issues, and liability. Moreover, it is simply not possible for the government to adequately regulate such a complex process through piecemeal regulations. A comprehensive regime, as opposed to a patchwork of regulations under different statutes, would be more adapti ve to emergent information on this budding program as it becomes available.

II. The EPA should create a liability scheme for the CCS program.

There is a long list of potent ial risks associated with CO 2 injection and sequestration. Most prominently for purp oses of the proposed rule, injected

CO 2 could cause groundwater contaminatio n by leaking into potable aquifers or causing saline intrusion. 15

When CO 2 is injected underground it will naturally migrate through the pore space. This natural migration could lead CO 2 to travel upward throughout

the reservoir into undetected or abandone d portions of the re servoir, or into

15 Wilson et al., World Resources Institute Issue Brief, Liability and Financial Responsibility Frameworks for Carbon Capture and Sequestration at 3 (Dec. 2007).

7portions of the reservoir not owned by the operator, resulting in potential liability for subsurface trespass. 16

Surface leakage out of the storage fo rmation through faults and fractures may lead to other types of potential liability. It could endanger human health by leaking into indoor air and basements. 17 Although unlikely, a large surface release could pose health risks to humans, in the form of asphyxiation or the other effects from prolonged expo sure to high concentrations of CO2. 18 Such other effects include difficulty breathing, loss of consciousness, and death. In addition, CO 2 seepage could harm flora and fauna, and could potentially ruin nearby ecosystems and agriculture. 19 CO 2 also could make sources of oil and gas unattainable, create pressure changes causing ground heave, and even trigger seismic events. 20

Given the potential impacts to the envi ronment, public health, and private property, the proposed rule’s approach of ignoring liability issues is improper. Large-scale CO2 sequestration should no t begin until liability is definitively determined. EPA should thus revise the regulations and adopt a liability scheme that encompasses the “polluters pay” principle.

The polluters pay principle derives from the fundamental, fair, and logical proposition that the party responsible fo r producing pollution should also be responsible for paying for any damage to the natural environment. Utilizing the polluters pay principle provides an incentive for owners, operators and

CO 2 generators to use precaution in their operations. Potentially liable parties have an incentive to avoid risk and damage, which often manifests in parties undertaking additional investment in research and development to improve knowledge and technologies.

The EPA should revise the regulations to impose joint and several liability on Class VI well owners and operators and the generator of the injected CO 2 for contamination of underground sources of drinking water, property damage, personal injury or any other injury aris ing from the injection. In addition, the EPA should require that an operator has complete liability coverage from a private insurance company before commencing injection. “Pollution legal liability insurance” coverage protects the insured party from claims arising from unknown conditions or problems, such as property damage or public health impacts from CO 2 leakage.

16 Id. at 2.

17 Id . at 3; see also IPCC CCS 5.7.7.

18 Id. at 3.

19 Id

. 20 Id

.

8III. The EPA Should Revise the Regu lations to Provide for Adequate Financial Assurance for Long-Term Stewardship

Under the proposed rule, 73 Fed. Reg. 43,492, 43,537 (proposed 40 C.F.R. 146.85), the owner or operator of an injection well must demonstrate and maintain financial responsibility and re sources for corrective action, injection well plugging, post-injection site care and emergency and remedial response in a manner prescribed by the Director. The proposed rule, however, does not contain a long-term liability plan; it only gives the Director a general duty to ensure financial responsibility of the operator and states that the EPA will develop guidance at a later date to re commend types of financial mechanisms Directors can use to meet this requirement. Details of a liability scheme for CCS should not be left to a future date and should not rely on a corporate entity over the long term.

Effective financial assurance mechanis ms are necessary to ensure that closure and post-closure site care, such as monitoring, are conducted. When an owner or operator becomes insolvent without an adequate financial assurance mechanism, significant de lays could occur, increasing the

likelihood of environmental contamination and adverse human health effects. Moreover, when these failures occur, federal or state governments (and ultimately the general public) would become financially responsible for the

closure and post-closure site care co sts. Consequently, any uncertainties about the adequacy of financial assu rances need to be minimized.

A. Financial Assurance Unde r the Proposed SDWA Rule

If an owner or operator declares bankr uptcy and the financial assurances are inadequate, drinking water sources are at risk and the public shoulders the cost of post-closure operations. Thes e risks are unacceptable. EPA needs to take action before finalizing this ru le and improve the financial assurance requirements by prohibiting the use of certain financial mechanisms, providing a list of appropriate fi nancial assurance mechanisms, and providing guidance on how those approv ed mechanisms should be structured.

Numerous federal agencies have docume nted the deficiencies with providing the Director with complete discreti on to determine whether financial assurances are sufficient. In 2003, th e United States General Accounting Office investigated whether the financ ial assurance requirements for Class I

wells were sufficient. The GAO note d that since 1980, when the deep injection well program began, only four sites had ceased operation. Two of those facilities did not have adequate financial resources to plug and abandon the wells, resulting in additional costs to taxpayers. For the two other sites,

9the financial assurance mechanism was not tested because other companies purchased and continued operating the wells. 21

Uncertainties exist about the adequacy of financial assurance requirements in other federal waste disposal prog rams. For instance, EPA officials and EPA’s Office of Inspector General questioned the adequacy of RCRA’s financial assurance requirements, which we describe further below. 22

These studies underscore that EPA must take affirmative action in the final rule by providing concrete guidance to Directors. EPA should prohibit the use of inadequate financial assurance me chanisms, provide a list of accepted

mechanisms and a list of situations to avoid with the accepted mechanisms.

B. Financial Assurance Mechanisms

Financial assurance mechanisms ensure that facilities will have sufficient funds to properly close their permitted units and maintain the site for the duration of post-closure responsibility. These mechanisms are meant to prevent default to federal or state fund s in the event that facilities are unable or unwilling to cover closure and post-clo sure costs. EPA has not developed a guidance document for financial assura nces for the Class VI wells, but there is an EPA guidance document on financial assurances for UIC injection. 23 The following is a list of the different mechanisms that EPA recommends for UIC injection and the problems associated with each one:

1. Financial Test – If a facility meets corporate financial test criteria, it may satisfy financial assurance obligatio ns solely on the strength of its financial condition. For instance, und er the current UIC regulations, a firm must have a minimum of $10 millio n in tangible net worth to pass the corporate financial test. Net wort h is not the only financial test requirement. Additional requirements include financial ratios or bond ratings.

Risks : A firm using the financial test to satisfy obligations cannot guarantee it will have funds for closure and post-closure activities in

21 United States General Accounting Office, Deep Injection Wells, EPA Ne eds to Involve Communities Earlier and Ensure that Financial Assurance Requirements Are Adequate , Report No. GAO-03-761 (June 2003).

22 U.S. Environmental Protection Agen cy, Office of Inspector General, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance , Report No. 2005-P00026 (Sept. 26, 2005); U.S. Environmental Protection Agency, Office of Inspector General, RCRA Financial Assurance for Closure and Post-Closure , Report No. 2001-P-007 (March 30, 2001).

23 Victor J Kim, Director of th e Office of Drinking Water, U.S. Environmental Protection Agency, Guidance for Financial Assurance for Federally-Administered UIC Programs, Underground Injection Control Branch Guidance #39 (May 29, 1985).

10the event it becomes insolvent. Taxp ayers bear the risk of the firm’s insolvency.

2. Corporate Guarantee – A corporate pa rent, sibling corporation, or firm

with a substantial business relation ship with the facility can meet the financial test requirement on its behalf.

Risks : For the same reasons as the financial test, a firm using the

corporate guarantee cannot guarant ee it will have funds for closure and post-closure activities in the event its corporate parent, sibling or

firm with a substantial business re lationship with becomes insolvent. Taxpayers bear the risk of the firm’s insolvency.

3. Trust Fund – Owners and operat ors are required to deposit money according to a phased-in schedule (k nown as a pay-in period). At the end of the pay-in period, the faci lity should have enough money set aside to cover its financial assurance requirements.

Risks : Risks from trust funds include bank failures and the trust will not be fully funded before the facility becomes insolvent. This later risk can be mitigated by shortening the pay-in-period.

4. Letter of Credit – A letter of credit is a credit document issued to an owner or operator by a financial in stitution, covering the costs of closure and post-closure.

Risks : Risks from a letter of credit is that the bank that issued the credit becomes insolvent. The letter of credit is no longer in effect because, unlike a bank deposit, a letter of credit is not guaranteed by the Federal Deposit Insurance Corporation when a bank fails.

5. Surety Bond – Two types of sure ty bonds guarantee that closure and post-closure obligations will be fulfilled:

Payment Bond – If an owner or oper ator fails to fulfill closure or post-closure requirements, a payment bond funds a standby trust fund in the amount equal to the face value of the bond.

Performance Bond – A performance bond guarantees performance of closure and post-closure requirements. A performance bond can also be paid into a standby trust fund.

Risks : The main risk is the surety company becomes insolvent. This risk can be mitigated by imposing regulations on surety bonds. For

11instance, the U.S. Treasury issues a list of acceptable sureties and regulations could require that the surety be on this list.

6. Insurance – Owner or operator ta kes out an insurance policy to cover the costs of closure and post-closure. The policy must guarantee that funds up to the face amount of th e policy will be available for payment of closure or post-closure care up on the direction of the permitting authority. (It should be noted that, to date, insurance is rarely used as

a financial assurance mechanism for injection wells so it has a less developed space in the marketplace.)

Risks : Insurance presents a number of issues, including (1) policy

terms and exclusions may be are in consistent with regulations; (2)

regulators may have to pursue litiga tion in order to secure payment; and (3) regulators fail to receive ca ncellation notices or late notices even if required by regulations. Sin ce insurance is primarily regulated by states, differences in state insurance regulations contribute to the complexities in evaluating insura nce policies. A standardized insurance policy form would mitigate those risks.

7. Captive Insurance – Captive insu rance is insurance issued by a wholly-owned subsidiary of the company being insured.

Risks : Even though the captive may be a legally separate corporation, the financial strength of the captive is dependent upon the parent corporation. Therefore, the risk of insolvency of a captive insurance company and the risk of insolvency of a facility insured by a captive are not independent but instead are positively correlated. Since the failure of the one is closely tied to the failure of the other, the assurance risk is high.

8. Combinations – Trust funds, letters of credit, surety bonds guaranteeing payment, and insurance can be combined for a facility if together their value is at least eq ual to the closure or post-closure estimate. Surety bonds guaranteeing performance, financial tests, and corporate guarantees cannot be combined.

EPA’s Office of Inspector General l ooked at these different financial assurance mechanisms, determined the regu latory risk versus facility cost of each option with regard to the RCR A program, and ranked the risks and costs as the following: 24

24 U.S. Environmental Protection Agency, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance , Report No. 2005-P-00026 (Sept. 26, 2005).

12Mechanism Regulatory Risk Cost to Facility

Letter of Credit Low High

Trust Fund Low High

Insurance Medium Medium Surety Bond Medium Low Medium High

Financial Test High Low Corporate Guarantee High Low Captive Insurance Very High Very Low

C. Sierra Club’s Recommendation for Adequate Financial Assurance Under the Proposed Rule

There are several actions that the EPA sh ould take in the proposed rule to ensure that Class IV owners and operators have adequate financial assurance. First, EPA should prohibit the use of certain mechanisms that present too great a risk. The strength of third party mechanisms depends largely on the independence between risk s of financial failure of the facility and the third-party providing that mech anism. EPA should thus prohibit reliance on captive insurance, financ ial test, and corporate guarantee.

Captive insurance is insurance issued by a wholly-owned subsidiary of the

insured. The financial health of the ca ptive insurance company is closely tied to the parent company, so if the co mpany encounters financial difficulties there is no guarantee that the captive insurance company would retain the necessary resources to fund closure and post-closure. This is counter to the basic purpose of an insurance, which di stributes risk among different parties.

The risks associated with this mech anism are too great and EPA should prohibit reliance on captive insurance in its regulations.

The EPA should also revise the regulati ons to prohibit use of the financial test and corporate guarantee. As wi th captive insurance, there is no diversification of risk. If the firm, its parent or sibling corporation becomes insolvent, then the taxpayer must cover these costs. Given the current financial landscape it is naïve to a ssume that this mechanism provides adequate safeguards to the environment and tax payers. Many firms that would have passed the financial or corporate guarantee test (a net worth of more than $10 million) have recently collapsed. The reality of the current

financial crisis, in addition to the fact that these facilities will be operating for upwards of 50 years, indicate th at the financial test and corporate guarantee present too great a risk.

In addition to prohibiting certain financial assurance mechanisms, EPA should revise the regulations to specif y that trust funds, letters of credit, surety bonds and insurance (not captive insurance) are acceptable

13mechanisms. These mechanisms should be selected because they provide a medium to low regulatory risk.

The regulations should specifically define the terms ‘trust funds’, ‘letters of credit’, ‘surety bonds’ and ‘insurance’ so that the safety of these mechanisms does not become distorted. The regula tions should provide this definition backstop because states have sometimes approved variations on these mechanisms that were fiscally imprudent, as noted in the Office of Inspector General report on RCRA financial assurances. 25 For instance, the report noted that sometimes regulators allowed trust funds to be funded with stock, including stock of the regulated company or with real estate. 26 In addition, if an owner or operator is going to use insurance, it should be required to submit a copy of the insurance policy, an d not just a certificate of insurance, so that the permit reviewer can ensure the policy coverage is sufficient.

D. Accurate Cost Estimates are Necessary for Adequate Financial

Assurance

One of the most critical aspects of ensu ring that owners or operators have the resources to pay for injection-well plugging and post-injection site care is cost estimation. Sound cost estimation requ irements ensure that sufficient funds

are set aside in the financial assuranc e instrument to properly undertake covered activities at any time during the operating life of the facility and during post-injection site care period.

Corporate actors, however, have an inherent incentive to underestimate these costs. Owners and operators ca n save money by underestimating the closure and post-closure care costs because the price of the financial

assurance mechanism is correlated to these closure costs.

Under the proposed rule, there are no guidelines on how the owner or operator should prepare the initial cost estimate. For instance, there is no prohibition against the owner or operator preparing its own cost-estimate. In addition, the proposed rule hardly has any requirements for when and how the cost estimate should be adjusted over time. The proposed rule provides that the owner or operator must prov ide to the Director, at a frequency determined by the Director, written updates of adjustments to the cost estimate. 73 Fed. Reg. 43,492, 43,537 (p roposed 40 C.F.R. § 146.85(b)). In

addition, the operator must provide a cost estimate adjustment if the Director

has reason to believe the initial estima te is no longer valid. 73 Fed. Reg.

25 U.S. Environmental Protection Agency, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance , Report No. 2005-P-00026 at 11 (Sept. 26, 2005).

26 Id

.

1443,492, 43,537 (proposed 40 C.F.R. § 146. 85(d)). This approach has not

worked for EPA under RCRA, and it will not work for Class VI wells.

In its review of the RCRA financial a ssurance mechanisms, EPA’s Office of Inspector General spoke with many state administrators regarding the difficulty of assessing cost estimates. Many state administrators agreed that it was difficult to estimate costs for closure and post-closure activities. As this report explained, “the accuracy of each cost estimate review was subject to the level of expertise and knowledge of the individual inspectors performing

the reviews.” 27 In addition, regulators noted that it was difficult to challenge cost estimates because they did not have the resources to research and look up costs in different forms of documentation. 28

To address problems with reviewing cost estimates for RCRA post-closure activities, EPA provided regulators with two tools – a manual, which provided a consistent, accurate, and rapid method for evaluating cost estimates, and software, which incorp orated the manual’s methodology.

In light of incentives to underestimate costs and the problems with reviewing such estimates under other regulatory programs, EPA should revise its cost estimation section to reduce the possib ility of undervalued cost estimates and ensure adequate money is available for closure and post-closure care. Specifically, the final rule should incorporate these revisions:

o EPA should specifically set out the elem ents to be included in an initial cost estimate. If the information is standardized, agency employees will have an easier time evaluating the sufficiency of such estimates.

o When an owner or operator prepares its own cost estimate, EPA should require independent third-party review and cost certification.

o The final rule should have a standard cost-estimate adjustment process. The cost estimate should be adjusted annually to account for inflation. In turn, the initial financial assurance mechanism should be

structured to account for these in flation increases. In addition, the Director should be required to assess the adequacy of the cost estimate at five year intervals.

In addition, EPA should also publish a manual that provides permit writers with a consistent, accurate and rapid method for evaluating cost estimates for closure and post-closure care of Class VI wells, as well as a software

27 U.S. Environmental Protection Agen cy, Office of Inspector General, RCRA Financial Assurance for

Closure and Post-Closure , Report No. 2001-P-007 at page 47 (March 30, 2001).

28 Id

.

15program that incorporates the manual’ s methodology, which will save more time and prevent errors in assessing the adequacy of cost estimates.

E. Congress Should Create a Trust Fund to Cover Closure, PostClosure, and Remediation Costs for Cases When a Financial

Assurance Mechanism Fails.

Even if EPA revises the regulations to incorporate all of these suggested improvements to the financial assuranc e program, there will undoubtedly be instances when a facility becomes in solvent and the financial assurance mechanism fails. In addition, there co uld be instances were the financial assurance mechanism does not fail, but is insufficient to cover costs because

the cost estimate was too low. To ensure that citizens do not have to pick up the tab in such situations, Congress sh ould create a fee payment system that funds a trust, which would be used to fund these closure, post-closure and

remediation actions. The trust must be created so that its funds cannot be drawn for any other purposes. Congress should assess fees on all owners, operators, generators and transporters of the injected CO 2. These fees should be assessed based on a pricing system that reflects the risk profile of each particular injection site, which will also influence selection of the safest sites for large scale CCS, especially for the earliest projects.

IV. EPA Should Administer the CCS Program with the Help of a Specially Formed CCS Technical Advisory Committee.

Under the Safe Drinking Water Act, de legated states can administer their own underground injection control (“UIC” ) programs once approved by EPA. Thirty-three states have primacy to run the UIC program and 7 states have authority to administer some UIC permits. 29 In states without primacy and on tribal lands, EPA administers the program.

The proposed CCS rule would give the enormous responsibility of regulating CCS at this early stage to state administrators. As provided in the rule: “States with primacy must develop a program incorporating all new Federal requirements for Class VI wells if they wish to regulate CO 2 GS, and all programs will be subject to EPA approval . If States do not develop a program for Class VI wells, EPA will oversee CO 2 GS in those States.” 73 Fed. Reg.

43,492, 43,530; see 42 U.S.C. § 300h-1(b)(1)(B) (requiring state showing of conformity to new requirements).

29 U.S. Environmental Protection Agency. UIC Program Primacy , available at http://www.epa.gov/OGWDW/uic/primacy.html

16Permit decisions require evaluation of many complicated technical issues that demand a high level of expertise an d there are scores of uncertainties at this early stage of CCS development, as explained above in the introduction

to these comments. There is also caus e for concern over the capacity and competency of some state regulatory agencies to properly regulate a CCS program. State permitting decisions can contradict science and logic and produce dangerous results for local health and welfare. The Florida Department of Environmental Protection approved the construction and operation of a facility designed to inject more than 112 million gallons of treated sewage a day, erroneously believing that the subsurface geology would prevent the injected sewage from migrating into the overlying Floridan Aquifer. Most experts agreed that the injection program should not have been permitted, and eventually the injected sewage migrated upward into the Floridan Aquifer. Even after evidence of contamination was well-established, Florida continued to expand its injection program.

Federal administration coupled with a technical advisory board would ensure the initial implementation of a nation al CCS program will be based on the best science, insulate decisions from profit and political motives, facilitate good public perception of CCS and would ensure the long-term integrity of the program. The International Risk Governance Council stressed that “[a]ssignment of regulatory responsi bility to competent and trustworthy bodies or agencies will be paramount in assuring the public that the technology is deployed with adequate oversight and safeguards.” 30 A nationally administered program will also enable federal coordination of information for this young program, ensure information-sharing to other states and developing nations, and help manage regional issues that

transcend state lines.

Over the last few years, there has been a global CCS dialogue among a wide range of stakeholders– with top sc ientists, engineers, industry and environmental groups working together to contribute to reports and policy suggestions. The IPCC is an international scientific body that provides an objective source of information. The comprehensiveness of the scientific content is achieved through contribution s from experts in all regions of the world and all relevant disciplines. 31 The World Resources Institute, an environmental think tank, convened a di verse group of over 80 stakeholders, including representatives from academia, business, government, and environmental nongovernmental organiza tions to craft its Guidelines for Carbon Dioxide Capture, Transport, and Storage. 32 A technical advisory

30 IRGC, Regulation of Carbon Capture and Storage, p. 24, available at http://www.irgc.org/IMG/pdf/Policy_Brief_CCS.pdf (last visited December 17, 2008).

31 http://www.ipcc.ch/about/index.htm (last visited Dec. 15, 2008).

32 http://pdf.wri.org/ccs_guidelines.pdf (last visited Dec. 15, 2008).

17board would ensure this diversity of op inion and viewpoint is considered, and the expertise acquired in this dialogue is reflected, in the initial development and implementation of the United States’ CCS program.

The CCS technical board should include a diverse group of experts in CCSrelated fields with CCS experience, incl uding geology, geophysics, structural geology, hydrogeology, and geochemist ry. Additionally, the board should dedicate a few flexible positions to include members with site-specific knowledge at the state, regional, and national levels that will rotate depending on project location. Alternatively, for local information, the technical board could coordinate with regional advisory boards formed pursuant to 40 C.F.R. § 25.7.

The CCS technical board should have the following responsibilities, among other appropriate functions:

• review technical data and make recommendations for site selection and permit terms

• review monitoring data and make recommendations for permit

revisions

• fact checking

• ensuring coordination among permits

• accelerating and disseminating best practices

• make decisions regarding delegation of primacy

Technical advisory boards are well-respected by the public and environmental community and work well in other contexts. The Desert Tortoise Recovery Committee is made up of a diverse group of scientific experts and serves an advisory role to agency administers to ensure species’ recovery plans, revisions, monitoring , effectiveness, etc. meet rigorous

scientific standards. 33 The Independent Scientific Advisory Board serves the National Marine Fisheries Service (NOAA Fisheries), Columbia River Indian Tribes, and Northwest Power and Conservation Council by providing independent scientific advice and recommendations regarding scientific issues that relate to the respective agencies' fish an d wildlife programs. 34

The success or failure of CCS canno t rest on the decisions of state

administrators like the ones in Florid a responsible for the sewage injection debacle. “[A] single major accident, re sulting from inadequate regulatory oversight, anywhere in the world, could seriously endanger the future

33 http://www.fws.gov/nevada/desert_tortoise/dt_sac.html (last visited Dec. 15, 2008).

34 http://www.nwcouncil.org/ fw/isab/background.htm and http://www.nwcouncil.org/fw/isab/members.htm (last visited Dec. 15, 2008).

18viability of GS [geologic sequestration].” 35 EPA must take responsibility for administration of the nation’s CCS prog ram, at least for the first few years

until the task becomes less extraordinar y. Agency officials will need help interpreting and understanding the technical data that will accompany permit decisions, and it should enlist the help of a diverse group of CCS experts on a technical advisory board.

V. EPA Should Issue Class VI Staged Permits, Rather Than Permits for the Operating Life of the Well.

Selecting an underground CO2 storage site and determining an appropriate injection rate necessarily contains uncertainties because underground geology is heterogeneous and impossible to map. There is a considerable lack of CCS experience and significant gaps in knowledge, including modeling storage capacity and plume behavior and monitoring storage performance

and movement. The rule must reflect these uncertainties, and be flexible enough to adapt to the new information that will be learned through the first few major demonstration projects. At this early stage, Class VI permits should not be granted for the operating life of the well.

An adaptive management approach (m easuring while managing) is a sound, well-established method for dealing with scientific uncertainty. Adaptive regulatory design permits progressive regulatory action in response to improvements in information. 36 The adaptive management model envisages an initial regulatory approval based on available information (estimations and modeling) followed by a period of monitoring and reporting with reassessment of the appropriateness of the initial regulatory action and adjustment as required in light of new information, and presumably the resolution of previously identified uncertainties. 37

The Class VI program should implement an adaptive management approach that acknowledges the scientific unc ertainty regarding large-scale CCS. Under the proposed rule, initial Class VI permit limits are based on modeled predictions of plume behavior and move ment, storage capacity, and suitable injection rates for the geologic formatio n. Under the proposed rules, based on these predictions, a Class VI operator rece ives a permit for the life of the well.

Operating a CCS well over a period of years, however, provides more accurate, site-specific data on the formation’s characteristics and plume

35 Wilson, E., Morgan, M. et al., Regulating the Geological Sequestration of CO 2 , Environmental Science & Technology, Apr. 15, 2008, at p. 5.

36 Judith Jones, Regulatory Design for Scientific Uncertainty, J OURNAL OF E NVTL

. L AW , 19 JENVTLL 347 (2007).

37 Id

.

19behavior. To ensure the most current in formation is reflected in the permit terms, and thereby in well operation, EPA should issue permits in phases. As explained in comment VII regarding necessary changes in the AOR definition, EPA should also require the operator to submit an annual affidavit certifying that the permit terms and accompanying plans (monitoring, emergency response, etc.) do not require a change.

We recommend a three phase permitting system. The first phase will mirror the current permitting structure, except that the permit will not be for the life of the well, but rather for 5 years. Five years after the initial permit is issued, the owner or operator will be required to apply for the second phase. The Director would re-evaluate the permit to determine whether, based on the most current information, it is appropriate to continue injection at the site and, if so, whether the permit te rms should be modified. The third and final phase of the permit would be 10 years after the second phase permit is issued. Again, the Director would re-evaluate the permit to determine whether, based on the most current inform ation, it is appropriate to continue injection at the site and, if so, whethe r the permit terms should be modified. The Director’s periodic reevaluation wo uld allow advances in regulation and science to be incorporated into the permit.

VI. Class VI Wells Should Be Permitted Only in Oil and Gas Reservoirs and Deep Saline Formations.

EPA should not permit injection into unmineable coal seams, basalts, salt domes, and shales until further studies are completed and CCS potential in

these formations is better understood. EP A lacks an adequate scientific basis to develop regulations for commercial-sca le sequestration projects in these formations: “[T]he process of CO 2 adsorption to coal has not been proven and the chemical reactions of supercritical CO 2 within coal formations are not well understood.” 73 Fed. Reg. 43,492, 43, 503. Sequestration in coal seams is “an emerging technology that is in the demonstration phase.” Id . As far as basalts, shales and salt domes, EPA has noted that their “technical or economic viability as GS sites have not been demonstrated.” Id

.

The IPCC CCS report supports EPA’s co nclusions and goes a step further, concluding that “basalts appear unlikely to be suitable for CO 2 storage” 38 The IPCC agrees that coalbed storage technology “is not well developed and a better understanding of injection and st orage processes in coals is needed.” 39

Precautionary principles demand that the first Class VI permits are issued for injection into geological formations with the greatest degree of scientific

38 IPCC CCS § 5.3.5.1.

39 IPCC CCS Chapt. 5 Exec. Summary; see also § 5.3.4.

20certainty, where any damages would be minimal – namely, depleted oil and gas reservoirs and deep saline formations. Accordingly, initial Class VI wells should not include coal seams, basalts, shales, and salt caverns regardless of whether they are above or below the deepest USDW. Continued research is appropriate for GS projec ts in these formations.

VII. The Rule Should Specify That an Intrusion Into a USDW is Not a “Federally Permitted Release” Under CERCLA.

The rule itself, rather than individual permits, should assure that Class VI permits do not allow responsible parties to avoid CERCLA liability on grounds that a release constitutes a “federally permitted release.”

EPA notes in the preamble to the pr oposed rule, 73 Fed. Reg 43504, that CERCLA exempts from liability certain “federally permitted releases, including releases in compliance in a UIC permit under the Safe Drinking

Water Act.” EPA further notes that “C lass VI requirements and permits will need to be carefully structured to ensure that they do not ‘authorize’ inappropriate hazardous releases.” EPA should go further and effectively prohibit Class VI permit conditions that would make the “federally permitted release” defense available should injected fluids or displaced formation fluids enter or endanger USDWs. This prohibition should be added to Subpart E – Permit Conditions, or to any other appropriate section of the rule.

VIII. The Definition of the Area of Re view Should Include Monitoring and Modeling.

The definition of Area of Review (A OR), Fed. Reg 43536, CFR §146.84, Part (a) states that the Area of Review is “based on computational modeling”. It is not appropriate for the Area of Review to be based solely on computational modeling. Instead, it should be based on computational modeling, monitoring and operational data and updated until cl osure is approved. All references to computational modeling in relation to the Area of Review in this section, as

well as in the definition of Area of Review in §146.81 should be amended as appropriate to read “based on compu tational modeling, monitoring and operational data and updated until closure is approved”.

An update or redefinition of the AO R at a minimum fixed frequency of ten years is not sufficient. The operator sh ould be required to submit an annual assessment under stating whether they deem a revision of the AOR necessary, explaining their reasoning based on site-specific operational and

other data. The Director should ex amine and approve or reject this submission, requiring a revision of the AOR as needed. The same updating procedure should apply to all other plans: monitoring, closure, etc. We believe

21that this arrangement encourages honest and truthful reporting of data and site performance without placing excessive burdens on redefining the AOR if

such revision is not needed. It also le aves a clear accountability trail for both operator and Director in case of disputes.

IX. Additional Well Identification Meth ods that do not re ly on the Public Record Should be Required in Certain Provisions

The proposed rule at CFR§146.82(b) requ ires a map to be submitted with the permit that shows wells within the area of review, but only information of public record is required to be incl uded on this map. CFR§146.82(e) also requires a tabulation of all wells with in the area of review which penetrate the injection or confining zone(s), which includes information on the well’s type, construction, date drilled, location, depth, record of plugging and/or completion and any additional information that the Director may require.

Relying on information of public record in (b) is sufficient, but additional

diligence is needed when it comes to wells that penetrate the injection or confining zone in (e). Information of pu blic record is often incomplete and/or inaccurate. There are numerous orphaned or abandoned wells that are not listed on the public record that could affect the integrity of the confining zone. While it is possible to intercept some of these problems during operation, there are methods available today to identify wells not listed on the public

record 40 , which could identify potentially pr oblematic wells in advance. Such a requirement should be included in th e rule, and be made more general than

“tabulation” to allow the Director discre tion for other data formats as needed:

§146.82(e): “A tabulation compilation of all wells within the area of review which penetrate the in jection or confining zone(s). To supplement and/or verify information of public record, operators

shall use reasonable methods to identify the presence wells within the area of review that penetrate the injection or confining zone(s). Such data must include a description [...]”

Additionally, to delineate the Area of Review, CFR§146.84(c)(2) requires operators to “...identify all penetrations, including active and abandoned wells and underground mines, in the ar ea of review that may penetrate the confining zone”. Again, the public record may not be sufficient to provide

accurate information in all cases. Prob lematic wells may not be limited to the confining zone, as would be the case if confinement were to be breached, or if pressure effects caused by the injection caused fluid movement outside the defined confining zone. We recommend the following modification:

40 NETL , for example, has developed an electromagnetic system that can be used for aerial or groundbased identification of wells (casings).

22“Using methods approved by the Director, identify all penetrations, including active and abandoned wells and underground mines, in the area of review that may penetrate the confining zone or otherwise act as conduits for fluid movement inside or outside the confining zone ”.

IX. The Proposed Rule’s Public Participation Opportunities are

Insufficient.

Public acceptance of CCS is a ma jor issue. Innumerable reports and recommendations from the federal government and top scientists, institutions and workgroups stress that the success of a CCS program will depend heavily on public acceptance. The National Academy of Sciences cautioned “the storage program cannot be successful if a significant fraction of the public views it as dangerous or unacceptable. Thus, CCS technologies must not only be safe and effective, it must be explainable to the public in such as way as to instill confidence that they are in fact safe and effective.” 41 The International Risk Governance Council recommends that regulatory

frameworks must includ e “effective risk communication to engage and educate the public, involve all stakehol ders in risk-related decisions, and build confidence in the institutions governing CCS.” 42 The Clean Air Act Advisory Committee’s Advanced Coal Technology Work Group’s January 2008 report similarly highlighted the need for public outreach. 43 The need to gain public acceptance will be especia lly crucial with early projects, which supports our earlier recommendation that EPA make these crucial early decisions with the help of a technical advisory board.

EPA should ensure that the proposed ru le includes ample public involvement at the earliest possible stages to gain public trust and acceptance of its decisions. This gives the community time to process the complicated and voluminous information involved in a siting decision and contact other officials about issues not within EPA’s authority. It also will mitigate some controversial issues and potentially avoid litigation and other delays.

Opportunities for public participation in the proposed rule are not sufficient; the following changes are necessary:

41 U.S. GAO Report. CLIM ATE CHANGE: Federal Actions will Grea tly Affect the Viability of Carbon Capture and Storage As a Key Mitigation Option, GAO-08-1080, September 2008 (quoting National Academy of Sciences, Pr ospective Evaluation).

42 IRGC, Regulation of Carbon Capture and Storage, p. 24, available at http://www.irgc.org/IMG/pdf/Policy_Brief_CCS.pdf (last visited December 17, 2008).

43 January 29, 2008 Final Report, available at http://www.epa.gov/air/caaac/coalt ech/2008_01_fina l_report.pdf (last visited December 17, 2008).

231. The proposed rule has a 30-day public comment period on a proposed Class VI site-specific permit. This is t oo little too late. Thirty days is not sufficient time for the public to identify and raise concerns, and given the comment period falls at th e end of a long negotiating process with the applicant, it is unlikel y EPA could meaningfully address concerns at that point in the process. The public should be informed as soon as the EPA begins working with a permit applicant, and make the application materials publicly ava ilable and easily accessible. EPA and the permit applicant should hold public information sessions in the affected community and work to address public concerns throughout the process. The form al comment period should be extended to at least 90 days becaus e the permit will contain a range of complicated issues that will likely require expert consultation.

2. The proposed rule allows an app licant to use proprietary modeling software to submit predictions of plume behavior and movement, storage capacity, and injection rates. Use of proprietary software would hinder public participation because th e public could not test applicant’s modeling predictions. To ensure transparency in the application process, publicly available modelin g programs must be required.

3. Each stage of the Club’s recommended permit process should incorporate application transparency , public hearings and a comment period. EPA should maintain a list of interested persons in each proposed/completed project and inform this list of every new application change, hearing, comme nt period, annual report, etc. These materials should be posted on the internet.

4. All remediation plans should be subject to notice and public comment.

Respectfully Submitted,

__ s/Andrea Issod

_____________________ SIERRA CLUB Kristin Henry

Andrea Issod Sierra Club Environmental Law Program

85 Second Street, 2d Floor

San Francisco, CA 94105-3441 Phone: (415) 977-5544 Fax: (415) 977-5793 kristin.henry@sierraclub.org andrea.issod@sierraclub.org

24Letter ID: 0242 Commenter: Kristin Henry Organization: Sierra Environmen tal Law Program, Sierra Club

Letter ID: 0242 Comment ID: 23307 Letter Lines: 42 to 58

Comment Code: 1280 1.1.2.1 General comments on climate change/ global warming

Comment: We agree with EPA that CCS could play an important role in allowing deep greenhouse gas emission reductions from electric generation and industrial

facilities. In order to achieve the cuts necessary to avoid the worst consequences of climate change, CCS must be integrated within a larger climate policy that includes legislation limiting greenhouse gas emissions, investment in efficiency improvements and renewable energy sources such as solar, wind, biomass and geothermal. [FN1]

[FN1: 1 IPCC Special Report on Carbon Dioxide Capture and Storage, 2005 (hereinafter "IPCC CCS ") Section 1.1, 1.3.]

CCS must be deployed on a very large-scal e to enable deep cuts in worldwide greenhouse gases. To deploy this nascen t technology in a short timeframe, it must be managed very proficiently from the start to minimize ecological, human health, and financial risks. Any CCS re gulatory regime must establish clear incentives for responsible site select ion, appropriate monitoring, safe and environmentally sound operation, and fi nancially responsible closure.

Individual Response: EPA agrees that GS is one technology in a portfolio of options, including energy conservation, efficiency improvements, a nd the use of alternative fuels and renewable energy sources, that could be deployed to re duce CO2 emissions. However, the use of and investment in these technologies is outside the scope of the Class VI GS rulemaking. The Class VI GS requirements are designed to ensure that , where GS is deployed, projects are permitted, sited, constructed, operated, and closed in a ma nner that protects USDWs from endangerment.

The GS regulation builds upon the long-standing protective framework of the UIC program, which has been regulating the injection of billions of gallons of liquids for decades. The Class VI GS regulation enhances this exis ting framework with requirements for Class VI wells that are tailored to the unique nature of large scale GS of CO2. These additional protective requirements include more extensive geologic testing, deta iled computational modeling of the AoR and periodic re-evaluations, detailed requirements for monitoring and tracking the CO2 plume and pressure front, and extended post-inj ection monitoring and site care.

Letter ID: 0242 Comment ID: 23308 Letter Lines: 60 to 64

Comment Code: 1200 1.1 General comments about the rulemaking

1Comment: Overall, the proposed rule makes good st rides at addressing some of the key issues for geological sequestration. Howeve r, there are several areas that need improvement as we discuss below. Firs t we briefly provide background on the infancy of large-scale CCS deployment, te chnical complexities, and the import of rapid development of CCS to tack le the global warming crisis

Individual Response: EPA acknowledges the comment. The fi nal rule is based on the most recent GS-related data, information, and scientific re search available. EPA intends to continue to collect data on GS and to incorporate such data as it implements its adaptive approach to GS rulemaking to incorporate new research, data, an d information about GS. An adaptive approach provides Class VI owners or operators the fl exibility to use and apply newly developed technologies for GS as they become available in the future. Please see the remainder of EPA's responses to this comment for further deta ils. For additional information on EPA's final regulatory approach, please see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0242 Comment ID: 23309 Letter Lines: 66 to 132

Comment Code: 1510 1.2.2.3 Need for additional study

Comment: CCS is an Emerging Technology and Many Hurdles Remain

CCS is an evolving technology and many un certainties remain. CCS employs a combination of known and emerging technol ogies and processe s. [FN2] Known storage technologies generally rely on experience injecting CO2 into depleted oil fields for enhanced oil recovery (" EOR"). Emerging CO2 storage approaches include the injection of CO2 into deep saline geological formations and a variety of other geologies, and are needed on a much larger scale than is the practice for EOR.

[FN2: "The technical maturity of specific CCS system components varies greatly. Some technologies are extens ively deployed in mature ma rkets, primarily in oil and gas industry, while others are still in the research, development or demonstration phase." IPCC CCS Technica l Summary p. 19. See also Table TS.1 (charting maturity of CCS system components).]

Burning fossil fuel to generate electricit y is the largest sing le source of CO2 emissions, and therefore the CCS system’s major contribution to climate change mitigation would come from deployment in the electricity sector and most importantly, on coal-fired electricity plants. [FN3] However, there are currently no coal power plants with CCS in operation or under construction. In the US, there is one small 1.7 MW projec t currently testing capture (but not sequestration) using pulverized coal. One project under construction will capture and store a small percent of th e existing power plant emissions. [FN4]

[FN3: IPCC CCS Summary fo r PolicyMakers at 11.] [FN4: http://sequestration.mit.edu/tools/ projects/aep_alstom_mountaineer.html

2(last visited December 15, 2008).]

Since there is considerable lack of experience with CCS, there are also significant gaps in knowledge. The rule must reflect these uncertainties, and be flexible enough to adapt to new information produced by the first major demonstration projects. The IPCC Special Report on Carbon Capture and Storage devoted a section of their report to th e current gaps in knowledge regarding CCS. The relevant gaps include (f rom IPCC CCS section 5.10, p. 264):

• need for more development and agreement on assessment methodologies.

• capacity estimates.

• kinetics of geochemical trapping and the long-term impact of CO2 on reservoir

fluids and rocks.

• the fundamental processes of CO2 adsorp tion and CH4 desorption on coal during storage operations.

• risks of leakage from abandoned wells caused by material and cement degradation.

• reliable coupled hydrogeological-geochemi cal-geomechanical simulation models to predict long-term storage performance accurately.

• experience with mitigating and remediating a leakage event.

• requirements for decommissioni ng a storage project.

Additionally, the IPCC reports that large-s cale demonstration of CO2 capture is needed, "a better understanding of long-te rm storage, migration and leakage processes," and "an enhanced ability to monitor and verify the behaviour [sic] of geologically stored CO2." [FN5] The IPCC, a collaboration of the foremost experts

in CCS-related fields from across the globe, then concluded that "[t]he implementation of more pilot and demonstr ation storage projects in a range of geological, geographical and economic settings would be important to improve our understanding of these issues." [FN6]

[FN5: IPCC CCS Technical Summary 48.] [FN6: Id.]

Individual Response: EPA agrees that continued research in all GS associated fields will be integral to development of GS technology, and adds that much of the research on terrestrial and geologic sequestration is being c onducted by other federal agencies, particularly DOE's Office of Science and Technology (www.energy.gov/sciencetech /carbonsequestration.htm). Other federal agencies involved in research include the US Department of Agriculture, US Geological Survey,

3and others. EPA's Office of Res earch and Development is also researching issues related to global climate change, including geol ogic and terrestria l sequestration.

EPA believes that large scale GS can be done safely: the GS regulation builds upon the longstanding protective framework of the UIC program, which has been regulating the injection of billions of gallons of fluids for decades. Th e GS regulation enhances this framework with requirements for GS wells that are tailored to ad dress the unique issues associated with largescale GS including large injection volumes, the re lative buoyancy of CO2, its corrosivity in the presence of water, the potential presence of impu rities in captured CO2, and its mobility within subsurface geologic formations. These additional protective requirements include more extensive geologic testing, detailed computational modeli ng of the AoR and periodic re-evaluations, detailed requirements for monitoring and tr acking the CO2 plume and pressure front, and extended post-injection mon itoring and site care.

To protect USDWs from endangerment and meet the potentially fast pace of GS deployment, EPA is using an adaptive approach to regula ting CO2 injection for GS. The Agency plans to, every six years, collect and review data on GS projects to determine whether the appropriate amount and types of information and appropria te documentation are being collected, and to determine if modifications to the requiremen ts are appropriate or necessary. An adaptive approach will allow regulatory development to pr oceed in time to meet the current and future demands for Class VI permits, while EPA continues to gather data from pilot projects and other

research as it becomes available.

Letter ID: 0242 Comment ID: 23310 Letter Lines: 134 to 172

Comment Code: 1350 1.1.3.3 Comments on the need for GS technology

Comment: CCS Must be Deployed Quickl y on a Very Large Scale

Scientists agree that in order to avoi d the worst consequences of climate change, the United States must cut gree nhouse gas emissions at least 80 percent below 2000 levels by 2050. [FN7] The scale of CCS projects necessary in the electricity sector to achie ve this objective is enor mous. To store the two

billion tons of CO2 emissions from annual fossil fuel electrical generation in the U.S. will require at least two hundre d CCS projects, each 10 times larger than the largest sequestration projec ts currently in operation. [FN8] Worldwide, an estimated 6,000 of these projects would be needed. [FN9] Currently, only four large- scale commerc ial carbon sequestrati on projects exist worldwide. [FN10]

[FN7: Luers, A.L. et al. 2007, How to Avoi d Dangerous Climate Change: A target

for U.S. emissions reductions. Union of Concerned Scientists, online at http://www.ucsusa.org/assets/documents /global_warming/emissions-targetreport.pdf] [FN8: Benson, S, 2004. Carbon Dioxide Capture and Storage in Underground Geologic Formations, Lawrence Berkeley Na tional Laboratory, p. 15, available at

4http://www.pewclimate.org/docUploads/ 10-50_Benson.pdf (last visited Nov. 25, 2008).] [FN9: International Energy Agency, Nea r-term Opportunities fo r Carbon Dioxide Capture and Storage, Global Assessments Workshop in Support of the G8 Plan of Action, June 2007 at p. 7] [FN10: The offshore Sleipner natural gas pr oject in Norway, Snohvit in the North Sea, the InSalah natural gas project in Algeria, and the Weyburn Enhanced Oil Recovery project in Canada. IPCC CCS Technical Summary at 19; Wilson, E., Morgan, M. et al., Regulating the Geologica l Sequestration of CO2, Environmental Science & Technology, Apr. 15, 2008, at p. 4.]

There is no time to waste to achieve this Herculean task. To have any meaningful role in curbing greenhouse gas emissions , CCS projects must proceed quickly while cognizant that there is no room fo r missteps. A team of international experts recently explained that "a single major accident, resulting from inadequate regulatory oversight, anywhere in the world, could seriously endanger the future viability of GS [geo logic sequestration]." [FN11]

[FN11: Wilson, E., Morgan, M. et al., Regulating the Geologi cal Sequestration of CO2, Environmental Science & Technology, Apr. 15, 2008, at p. 5.]

Individual Response: EPA agrees that GS is one technology in a portfolio of options, including energy conservation, efficiency improvements, a nd the use of alternative fuels and renewable energy sources, that could be deployed to redu ce CO2 emissions. However, EPA clarifies that the Class VI regulation does not promote or en courage the use of GS, but, instead ensure protection of USDWs from endangerment where GS technologies are deployed.

EPA believes that the GS regulation will prov ide regulatory certainty and oversight that operators have requested, and allow for the deployment of this key climate change mitigation technology that could be deploye d to reduce CO2 emissions. EPA adds that the GS regulation builds upon the long-standing prot ective framework of the UIC Program, which has been regulating the injection of billions of gallons of fluids for decades. 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: 0242 Comment ID: 23311 Letter Lines: 174 to 184

Comment Code: 1510 1.2.2.3 Need for additional study

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

Comment: There is broad agreement that CCS s hould proceed by undertaking a few large demonstration projects in the U.S. the ne xt few years, which must be carefully selected and monitored to learn from perf ormance to incorporat e into the next generation. [FN12] The EPA’s proposed ru le should enable selection of the lowest-risk, best overall sites for these initial projects, and be adaptive to the changes that will occur after knowle dge is gleaned from those projects.

5[FN12: IPCC CCS Technical Summary 48 ; W ilson, E., Morgan, M. et al., Regulating the Geological Sequestration of CO2, Envi ronmental Science & Technology, Apr. 15, 2008, at p. 4; Union of Concerned Scient ists, Coal Power in a Warming World, Oct. 2008, p. 19-21.]

Individual Response: As described above, EPA agrees that continued research will be integral to development of GS technology, and is using an adaptive approach to regulating CO2 injection

for GS.

EPA adds that it considered information from laboratory, modeling, and field research as it developed the requirements for GS wells. In additi on to laboratory studies and modeling research that provide relevant information on GS, the Agen cy 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. Department of Energy and coordinated through the Nati onal Energy Technology Laboratory (NETL), and several international projects. In addition to the informa tion 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 th e preliminary results of research at three DOE partnership sites (in Escat awpa, Mississippi; the Aneth Fi eld in Paradox Basin, Southeast Utah; and the Pump Canyon Site, New Mexico). EPA sought comment on this data and used it to

inform the final rule.

Letter ID: 0242 Comment ID: 23312 Letter Lines: 186 to 198

Comment Code: 3150 2.1.5 Comments on required permit information (40 CFR 146.82)

Comment: CCS Permitting Requires Speciali zed Technical Expertise

Permitting a Class VI well involves many co mplicated technical issues across a range of disciplines. Site selection alone involves characterization of geology, hydrogeology, geochemistry and geomechamics. [FN13] Well construc tion, interpreting monitoring data, and proper site closure ar e a few other highly technical areas. EPA’s proposed rule recognizes these co mplexities by requiring submission of numerous types of data with a permit a pplication and continuous monitoring and reporting. But the rule does not provid e for technical analysis of this

information. It entrusts evaluation of this data to the state administrator or to the EPA in non-delegated states.

[FN13: IPCC CCS 5.4.1.1, Table 5.3.]

Individual Response: EPA clarifies that permit information is subject to technical review. Permitting authority staff will evaluate the extens ive data that owners or operators submit under §146.82 to determine the suitability of a potential proj ect site for GS. EPA adds that the staff in

6state primacy agencies and EPA regional offices (who will review permit applications in states that do not have primacy) have years of experience with the current UIC injection well classes, have permitted deep injection wells in the pa st, and have relevant specialties in geology, engineering, and re lated disciplines.

EPA is developing guidance on site characterization for GS projects to assist owners or operators and Directors in evaluating permit requirements and applications under §146.82. The guidance provides recommendations regard ing characterizing the region al geology and hydrogeology of a proposed GS site as well as performing th e necessary geochemical, geomechanical, and geophysical analyses of the injection and confin ing zone. Additionally, EPA expects that this guidance will assist permitting authorities in evaluating initial permits for Class VI injection

wells with technical assistance as needed. The guidance can be found on EPA’s website at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

Letter ID: 0242 Comment ID: 23313 Letter Lines: 200 to 207 ; 217 to 217

Comment Code: 1200 1.1 General comments about the rulemaking

Comment: A Few Critical Changes Are Need ed in the Proposed Rule

EPA must be applauded for ta king a critical step toward climate change goals by proposing the first rule to regulate carbon injection and storag e. However, the proposed rule does not fully reflect the current emerging state of CCS technology. EPA recognizes the rule must strengthen sc ience, technology, and institutions in order to support a strate gy to address climate change. [FN14] The suggestions outlined below would do just that:

[FN14: Proposed rule at p. 23.]

Individual Response: The final rule is based on the most recent GS-related data, information,

and scientific research available. EPA intends to continue to colle ct data on GS and to incorporate such data as it implements its adap tive approach to GS rulemaking to incorporate new research, data, and information about GS. An adaptive approach provides Class VI owners or operators the flexibility to use and apply newly developed tec hnologies for GS as they become

available in the future. EPA clarifies that the intent of the GS rule is not to promote or encourage the use of GS; rather, its purpose is to ensure consistency in permitting underground injection of CO2 at GS operations across the United Stat es and provide requirements to prevent endangerment of USDWs in anticipation of the ev entual use of GS to reduce CO2 emissions.

Letter ID: 0242 Comment ID: 23314 Letter Lines: 209 to 213

Comment Code: 3150 2.1.5 Comments on required permit information (40 CFR 146.82)

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

Comment Code: 5700 2.12 Comments on the proposed durati on of Class VI permits (seeking

7comment)

Comment: • EPA - advised by experts and regional stakeholders - and not individual states, should make permitting decisions on CCS projects, at least for the first few years. • Permits should be issued in stages, to be adaptive to advances in knowledge, science and regulation, not for the operating life of the well.

Individual Response: EPA agrees that an adaptive approach to address the availability of new information and technology is appropriate. EPA plans to, every six year s, collect and review project data on early GS projec ts, including site characteriza tion, operational, monitoring, and modeling data, to determine wh ether the appropriate amount a nd types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

EPA disagrees that it should be the only entity to issue permits during the first few years after promulgation. EPA acknowledges the expertise of existing State, Tribal, and Territorial programs that implement the UIC requirements under Section 1422 of the SDWA (Class I, III, IV, and V wells) and state oil and gas agencies th at have been regulating Class II UIC wells for decades under section 1425 of SDWA. These ag encies already understa nd the technical and administrative issues involved in construction, operation, injection and permitting as well as, in the case of Class II operators issu es related to CO2 injection, s ubsurface operations, and pipeline transport. EPA believes that existing programs can adapt this expertise to the new requirements for Class VI wells and will be able to develop a primacy application for Class VI wells under

section 1422 of SDWA.

Additionally, States can use multiple authorities beyond those afforded under the SDWA including surface access and land rights, unitizati on of fields, pore space ownership, mineral rights, site safety and emergenc y preparedness, and maximization of State oil and gas resource exploitation.

EPA expects that both Headquarters and the Regions will work closely with the states during the early permitting process to ensure that flexibility is applied in a manner that ensures a consistent level of USDW protection from endangerment. EP A designed flexibility into the regulations to ensure that site-specific factors can be account ed for and expects that permit writers will use discretion where site-specific fact ors are important. As part of its adaptive approach, EPA also plans to review initial permits (after they are granted) to ensure that USDW protection goals have been consistently met across differing geologi c situations. If necessary, EPA will reevaluate the flexibility granted to states in the rule. As part of its adaptive approach, if EPA finds that there is not sufficient consistency in the perm its so that USDWs are not being sufficiently protected from endangerment, it will consider cha nges to the permit requirements in the future.

Regarding the commenter's request that permits be issued in stages, EPA cl arifies that the final rule maintains the lifetime permit provision and that the permit extends through the postinjection site care period (144.36(a)). However, it also adds a requirement that the Director review each Class VI permit at least once ever y 5 years to determine whether it should be

8modified, revoked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review w ill be informed by the owners’ or operators’ iterative reevaluation of the project. Specifically, the fi nal rule includes a requirement

that the AoR be reevaluated at l east every five years, and also requires owners or operators to review and update the AoR and co rrective action plan, the testi ng and monitoring plan, and the emergency and remedial response plan throughou t the life of the proj ect (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments

or demonstrate to the Director that no amendm ent is needed. In no case can reviews occur less often than once every five years. The iterative pr ocess and subsequent plan reevaluations ensure

that time and resources are committed to the most critical aspects of the permit in preventing endangerment to USDWs.

Letter ID: 0242 Comment ID: 23315 Letter Lines: 214 to 215

Comment Code: 2100 1.6 Target Geologic Formations for GS

Comment: • Initial Class VI wells should only be permitted in oil and gas reservoirs and deep saline formations until other formations are further studied.

Individual Response: EPA clarifies that the GS rule does not categorically prec lude injection of CO2 into any non-USDW formation types, provided owners or operators can demonstrate that GS can be performed in a manner that prot ects USDWs from endangerment. EPA recognizes that research on the feasibility of various types of geologic formations is underway, and it continues to track the progress of this rese arch. For example, while developing the GS regulation, EPA evaluated projects conducted by the seven regional carbon sequestration partnerships funded by the U.S. Department of Energy and coordinated through the National Energy Technology Laboratory (NETL), as well as several international projects. In addition, DOE's RCSPs are conducting numerous pilot projects that inject CO2 into a variety of formation types, including saline, basalt, coal seams, and oil and gas reservoirs.

EPA acknowledges that there may be risks associated with GS into certain formation types. For this reason, the Agency is using an adaptive appr oach to regulate GS injection. EPA will collect and review project data on early GS projects, including those that inject into various formation types, to determine whether the appropriate am ount and types of information and documentation are being collected. EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount a nd types of information and appropriate documentation are being collected, and to determ ine if modifications to the requirements are appropriate or necessary.

Letter ID: 0242 Comment ID: 23316 Letter Lines: 219 to 220

Comment Code: 1200 1.1 General comments about the rulemaking

Comment: The rule also lacks opportunities for public participation, i gnores the very

9important question of liability, and requi res a few definition tweaks. Finally,

Individual Response: EPA acknowledges the comment and di sagrees that the rule lacks opportunities for public participatio n. GS permitting authorities must follow the existing public participation requirements for UIC permits as specified in 40 CFR 25 and 40 CFR Part 124. These regulations lay out the pr ocedures for decision making and include requirements such as requiring the Director to notify th e public regarding the availabili ty of the draft permit and allow him or her to request a public hearing on the draft permit. En couraging public participation allows the permitting authority to understand public viewpoints, preferences, and concerns about the project, which might help avoid public misper ceptions about the nature and safety of GS projects and forestall resistance later in the permitting effort.

Please see the remainder of EPA's responses to th is comment for further details. For additional information on EPA's final regulatory appr oach, including the discussion of the public participation requirements and long-term liability, please see the final rule and preamble as well as the rulemaking docket.

Letter ID: 0242 Comment ID: 23317 Letter Lines: 220 to 223 ; 268 to 293

Comment Code: 1500 1.2.2.2.4 Some other agency should regulate GS

Comment: important question of liability, and requi res a few definition tweaks. Finally, CCS is not exclusively a groundwater issue, and regulating CCS with the proposed

rule under SDWA is insufficient to addre ss other risks. CCS should be regulated through a comprehensive statutory regime.

I. A Comprehensive Statutory and Regul atory Scheme for CCS is Required.

It is critical that a CCS regulatory st ructure be comprehensive. Given the myriad of risks associated with CCS, Sie rra Club believes that the Safe Drinking Water Act is not of sufficient scope and enforceability to handle a regulatory field as broad as CCS. Specifically, the Safe Drinking Water Act only protects "underground sources of dr inking of water" and any CCS program raises many potential issues other than groundwater impacts. EPA acknowledges in the rule:

[t]he SDWA does not provide authority to develop regulations for all areas related to GS. These areas include, but are not limited to, capture and transport of CO2; determining property ri ghts (i.e., to permit its use for GS and for possible storage credits); transfer of liability from one entity to another; and accounting or certificati on for greenhouse gas ("GHG") reductions.

73 Fed. Reg. 43,492, 43,495 (July 25, 2008).

Sierra Club cannot emphasize strongly enough the absolute need that the government regulates CCS in a comprehens ive and inclusive manner that accounts for all potential environmental and health impacts, and the universe of issues

10involved with large-scale CCS implementation such as capture, transportation and pipeline standards, inters tate boundary issues, and lia bility. Moreover, it is simply not possible for the government to adequately regulate such a complex process through piecemeal regulations. A co mprehensive regime, as opposed to a patchwork of regulations under different statutes, would be more adaptive to emergent information on this budding program as it becomes available.

Individual Response: EPA clarifies that the scope of the GS regulation is limited to injection of CO2, and that all requirements in the GS rule are designed for the purpose of protecting USDWs from endangerment. The SDWA does not provide th e UIC Program with the authority to develop regulations for all areas related to GS, such as releases to the at mosphere, and therefore

comments related to such efforts are out side the scope of this rulemaking.

In developing the final GS rule, the Office of Water coordinated with other Agency program offices and across federal agencies (e.g., with the Department of Energy; United States Geological Survey; Bureau of Ocean Energy Management, Regulation, and Enforcement, formerly the Minerals Management Service; Bureau of Land Management). The Agency

continues to evaluate areas of potential applicability of other Federal environmental statutes including, but not limited to: the Clean Air Act; the Resource Conservation and Recovery Act; the Comprehensive Environmental Response, Comp ensation, and Liability Act; and the Marine Protection, Research and Sanctuaries Act to vari ous aspects of GS and CCS. The Agency will

continue to coordinate on GS and CCS rela ted issues to minimize redundancy and maximize efficiencies for owners or opera tors. For additional information, please see the discussion entitled "How Does This Rulemaking Relate to Other Fe deral Authorities and GS and CCS Activities?" in the preamble to the final GS rule.

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

Letter ID: 0242 Comment ID: 23318 Letter Lines: 295 to 351

Comment Code: 1600 1.3 Risk Associated with CO2 GS

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

Comment: II. The EPA should create a liability scheme for the CCS program.

There is a long list of potential risks associated with CO2 injection and sequestration. Most prominently for purposes of the proposed rule, injected CO2 could cause groundwater contamination by leaking into potable aquifers or

11causing saline intrusion.[FN15]

When CO2 is injected underground it w ill naturally migrate through the pore space. This natural migration could lead CO2 to travel upward throughout the

reservoir into undetected or abandoned portions of the reservoir, or into portions of the reservoir not owned by the operator, resulting in potential liability for subsurf ace trespass.[FN16]

Surface leakage out of the storage forma tion through faults and fractures may lead to other types of potential liability. It could endanger human health by leaking into indoor air and basements. [FN17] Although unlikely, a large surface release could pose health risks to humans , in the form of asphyxiation or the other effects from prolonged exposure to hi gh concentrations of CO2.[FN18] Such other effects include difficulty breathing, loss of consci ousness, and death. In addition, CO2 seepage could harm flora a nd fauna, and could potentially ruin nearby ecosystems and agriculture.[FN19] CO2 al so could make sources of oil and gas unattainable, create pressure changes causing ground heave, and even trigger seismic events.[FN20]

[FN15: Wilson et al., World Resources In stitute Issue Brief, Liability and Financial Responsibility Frameworks for Carbon Capture and Sequestration at 3 (Dec. 2007).] [FN16: Id. at 2.] [FN17: Id. at 3; see also IPCC CCS 5.7.7.] [FN18: Id. at 3.] [FN19: Id.] [FN20: Id.]

Given the potential impacts to the envi ronment, public health, and private property, the proposed rule’s approach of ignoring liability issu es is improper. Large-scale CO2 sequestration should not begin until liability is definitively

determined. EPA should thus revise the re gulations and adopt a liability scheme that encompasses the "polluters pay" principle.

The polluters pay principle derives from the fundamental, fair, and logical proposition that the party responsible for producing pollution should also be responsible for paying for any damage to the natural environment. Utilizing the polluters pay principle provides an in centive for owners, operators and CO2 generators to use precauti on in their operations. Potentially liable parties have an incentive to avoid risk and damage, which often manifests in parties undertaking additional investment in re search and development to improve knowledge and technologies.

The EPA should revise the regulations to impose joint and several liability on Class VI well owners and operators and th e generator of the injected CO2 for contamination of underground sources of drinking water, property damage,

12personal injury or any other injury aris ing from the injection. In addition, the EPA should require that an operator ha s complete liability coverage from a private insurance company before commencing injection. "Pollution legal liability insurance" covera ge protects the insured part y from claims arising from unknown conditions or problems, such as property damage or public health impacts from CO2 leakage.

Individual Response: EPA believes that the GS rule requirements appropriately address the risk associated with long-term storag e of CO2. EPA agrees that cauti on is warranted and has, as a result, developed a new well class with requirements tailored to address the unique challenges posed by GS and potential risks associated long- term injection of CO 2. These requirements include the tailored AoR delineation process pe r §146.84, monitoring that is appropriate to GS projects per §146.90, and extended post-injection site care per §146.93. Failure to meet these requirements would be considered a violation of the permit and w ould be subject to applicable civil, criminal, or administ rative penalties under SDWA §1423.

EPA agrees that owners or operato rs of Class VI wells must ensure that resources are available to prevent endangerment of USDWs from imprope r plugging, remediation, and management of wells. For this reason, the GS rule requires that owners or oper ators demonstrate and maintain financial responsibility for corrective action on wells in the AoR, injection well plugging, postinjection site care and site closure, and emergenc y and remedial response at GS sites as specified in §146.85. EPA clarifies that this de monstration must be made befo re injection can begin. In the

event of contamination or other adverse event that endangers a USDW during the life of the project, the financial instrument(s), such as insurance, bonds, etc., rather than public monies, would cover necessary response actions to remedi ate the USDW. EPA clarif ies that it is the owner or operator of the well who will be required to demonstrate financial responsibility, not the generator of the CO2, cons istent with EPA’s authority under SDWA. Furthermore, EPA

notes that tort and other remedies will continue to be available after site closure. Other Federal environmental statutes, e.g. Clean Air Act, 42 U.S.C. §§7401-7671; CERCLA, 42 U.S.C. §9601- 9675; and RCRA, 42 U.S.C. §6901-6992, potentially a pply as well to the risks created by the long-term storage of CO2.

EPA disagrees that the GS rule ignores liability is sues but is working within the confines of its statutory authority under the SDWA. EPA notes that comments regarding liability for

contamination of the environment outside of endangerment of USDWs (e.g., CO2 leakage into basements, harm to flora and fauna, etc.) are outside of EPA’s authority under the SDWA and

are therefore outside the sc ope of this rulemaking.

Letter ID: 0242 Comment ID: 23319 Letter Lines: 353 to 417

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

Comment: III. The EPA Should Revise the Regulations to Provide for Adequate Financial Assurance for Long-Term Stewardship

13Under the proposed rule, 73 Fed. Reg. 43,492, 43,537 (proposed 40 C.F.R. 146.85), the owner or operator of an in jection well must demonstrate and maintain financial responsibility and re sources for corrective action, injection well plugging, post-injection si te care and emergency and remedial response in a manner prescribed by the Director. The pr oposed rule, however, does not contain a long-term liability plan; it only gives the Director a general duty to ensure financial responsibility of the operator and states that the EPA will develop guidance at a later date to recommend t ypes of financial mechanisms Directors can use to meet this requirement. Details of a liability scheme for CCS should

not be left to a future date and should not rely on a corporat e entity over the long term.

Effective financial assurance mechanisms are necessary to ensure that closure and post-closure site care, such as mon itoring, are conducted. When an owner or operator becomes insolvent without an ade quate financial assurance mechanism, significant delays could occur, increa sing the likelihood of environmental

contamination and adverse human health e ffects. Moreover, when these failures occur, federal or state governments (and ultimately the general public) would become financially responsible for the clos ure and post-closure si te care costs. Consequently, any uncertaintie s about the adequacy of fi nancial assurances need

to be minimized.

A. Financial Assurance Under the Proposed SDWA Rule

If an owner or operator declares bankr uptcy and the financial assurances are inadequate, drinking water sources are at risk and the public shoulders the cost of post-closure operations. These risks ar e unacceptable. EPA needs to take action before finalizing this rule a nd improve the financial assurance requirements by prohibiting the use of certa in financial mechanisms, providing a list of appropriate financial assurance mechanisms, and providing guidance on how those approved mechanisms should be structured.

Numerous federal agencies have document ed the deficiencies with providing the Director with complete discretion to dete rmine whether financia l assurances are sufficient. In 2003, the United States Ge neral Accounting Office investigated whether the financial assurance requirement s for Class I wells were sufficient. The GAO noted that since 1980, when the deep injection well pr ogram began, only four sites had ceased operation. Two of t hose facilities did not have adequate financial resources to plug and abandon the wells, resulting in additional costs to taxpayers. For the two other sites, th e financial assurance mechanism was not tested because other companies purchas ed and continued operating the wells. [FN21]

[FN21: United States General Accounting Office, Deep Injection Wells, EPA Needs

to Involve Communities Earlier and Ensure that Financial Assurance Requirements Are Adequate, Report No. GAO-03-761 (June 2003).]

14Uncertainties exist about the adequacy of financial assurance requirements in other federal waste disposal programs. For instance, EPA officials and EPA’s Office of Inspector General questioned the adequacy of RCRA’s financial assurance requirements, which we de scribe further below. [FN22]

[FN22: U.S. Environmental Protection Ag ency, Office of Inspector General, Continued EPA Leadership Will Support State Needs for Information and Guidance on RCRA Financial Assurance, Report No. 2005- P-00026 (Sept. 26, 2005); U.S. Environmental Protection Agency, Office of Inspector General, RCRA Financial

Assurance for Closure and Post-Closure , Report No. 2001-P-007 (March 30, 2001).]

These studies underscore that EPA must take affirmative action in the final rule by providing concrete guidance to Direct ors. EPA should prohibit the use of inadequate financial assurance mechanisms, provide a list of accepted mechanisms

and a list of situations to a void with the accepted mechanisms.

Individual Response: EPA agrees that financial responsibility for GS projects is important. The goal of financial responsibility is to ensure that financial resources are available to prevent the 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 minimum financial responsibility requireme nts are necessary to hold well ow ners or operators accountable for the safe operation and site closure of the well while protecting USDWs and avoiding extra expense to the public. See the final rule and preamb le for further discussion of EPA's approach to financial responsibility.

The Agency has clarified the rule by specifying acceptable financial respons ibility instruments in the final regulation, at §146.85(a). Additionall y, EPA is developing guidance (available on EPA's website at http://wat er.epa.gov/type/groundwater/uic/ wells_sequestration.cfm) that describes the types of financial instruments th at owners or operator s may choose to meet financial responsibility requirements for Cl ass VI wells. EPA has reviewed OIG and GAO perspectives and is consideri ng all comments in the guidance development process, including recommendations made by OIG and GAO.

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

USDWs. For additional information about the PI SC 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 unde r §146.93, the owner or oper ator will generally no longer be subject to enforcement for regulat ory noncompliance. The financial instrument required under §146.85 will be released if it has not been used. However, even if a site closure is

15approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in certain circumstances. For example, an owner or operator may be held liable even after site cl osure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provided by the owner or operator when approving site closure.

An owner or operator may always be subject to any action the Administrator deems necessary to protect the health of persons unde r §1431 of the SDWA after site cl osure if there is unanticipated migration towards or into a USDW that cau ses or threatens imminent and substantial endangerment to public health. If th e owner or operator fails to comp ly with the order, he or she may be subject to a civil penalty for each day in wh ich 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, includ ing all potential liabilities a ssociated with meeting the requirements of that permit.

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

Letter ID: 0242 Comment ID: 23320 Letter Lines: 419 to 546

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

Comment: B. Financial Assurance Mechanisms

Financial assurance mechanisms ensure that facilities will have sufficient funds to properly close their permitted units and maintain the site for the duration of post-closure responsibilit y. These mechanisms are meant to prevent default to

federal or state funds in the event that facilities are una ble or unwilling to cover closure and post-closure costs. EPA has not developed a guidance document

for financial assurances for the Class VI wells, but there is an EPA guidance document on financial assurances for UIC injection. [FN23]

[FN23: Victor J Kim, Director of the Office of Drinking Water, U.S. Environmental Protection Agency, Guidance fo r Financial Assurance for FederallyAdministered UIC Programs, Underground Injection Control Branch Guidance #39 (May 29, 1985).]

The following is a list of the different mechanisms that EPA recommends for UIC

16injection and the problems associated with each one:

1. Financial Test - If a fa cility meets corporate fina ncial test criteria, it may satisfy financial assurance obligations solely on the strength of its

financial condition. For inst ance, under the current UI C regulations, a firm must have a minimum of $10 million in tang ible net worth to pass the corporate financial test. Net worth is not the only financial test requir ement. Additional requirements include financ ial ratios or bond ratings.

Risks: A firm using the fi nancial test to satisfy ob ligations cannot guarantee it will have funds for closure and post- closure activities in the event it becomes insolvent. Taxpayers bear th e risk of the firm’s insolvency.

2. Corporate Guarantee - A co rporate parent, sibling cor poration, or firm with a

substantial business relations hip with the facility can meet the financial test requirement on its behalf.

Risks: For the same reasons as the financial test, a firm using the corporate guarantee cannot guarantee it will have f unds for closure and post-closure activities in the event its corporate parent , sibling or firm with a substantial business relationship with becomes insolven t. Taxpayers bear the risk of the firm’s insolvency.

3. Trust Fund - Owners and operators are required to deposit money according to a phased-in schedule (known as a pay-in period). At the end of the pay-in period, the facility should have enough money set aside to cover its financial assurance requirements.

Risks: Risks from trust funds include bank failures and the trust will not be fully funded before the facility becomes insolvent. This later risk can be mitigated by shortening the pay-in-period.

4. Letter of Credit - A letter of credit is a credit document issued to an owner or operator by a financial institution, c overing the costs of closure and postclosure.

Risks: Risks from a letter of credit is that the bank that issued the credit

becomes insolvent. The letter of credit is no longer in effect because, unlike a bank deposit, a letter of credit is no t guaranteed by the Federal Deposit Insurance Corporation when a bank fails.

5. Surety Bond - Two types of surety bonds guarantee that closure and postclosure obligations will be fulfilled:

Payment Bond - If an owner or operator fa ils to fulfill closure or post-closure requirements, a payment bond funds a sta ndby trust fund in the amount equal to

17the face value of the bond.

Performance Bond - A performance bond guara ntees performance of closure and post-closure requirements. A performance bond can also be paid into a standby

trust fund.

Risks: The main risk is the surety compa ny becomes insolvent. This risk can be mitigated by imposing regulations on surety bonds. For instance, the U.S. Treasury issues a list of acceptable sureti es and regulations could require that the surety be on this list.

6. Insurance - Owner or operator takes out an insurance polic y to cover the costs of closure and post-closure. The policy must guarantee that funds up to the face amount of the policy will be avai lable for payment of closure or postclosure care upon the directi on of the permitting authorit y. (It should be noted that, to date, insurance is rarely used as a financial assurance mechanism for injection wells so it ha s a less developed space in the marketplace.)

Risks: Insurance presents a number of issues, including (1) policy terms and exclusions may be are inconsistent with regulations; (2) regula tors may have to pursue litigation in order to secure paym ent; and (3) regulators fail to receive

cancellation notices or late notices ev en if required by regulations. Since insurance is primarily re gulated by states, differences in state insurance regulations contribute to the complexities in evaluating insurance policies. A standardized insurance policy form would mitigate those risks.

7. Captive Insurance - Captive insurance is insurance issued by a wholly-owned subsidiary of the company being insured.

Risks: Even though the captive may be a legally separate corporation, the financial strength of the captive is de pendent upon the parent corporation. Therefore, the risk of insolvency of a cap tive insurance company and the risk of insolvency of a facility insured by a cap tive are not independent but instead are positively correlated. Since the failure of the one is closely tied to the failure of the other, the assurance risk is high.

8. Combinations - Trust funds, letters of credit, surety bonds guaranteeing payment, and insurance can be combined for a facility if together their value is at least equal to the closure or pos t-closure estimate. Surety bonds guaranteeing performance, financial test s, and corporate guarantees cannot be

combined.

EPA’s Office of Inspector General looked at these different financial assurance mechanisms, determined the regulatory risk versus facility cost of each option with regard to the RCRA program, and ranked the risks and costs as the following: [FN24]

18[FN24: U.S. Environmental Protection Agency, Continued EPA Leadership Will Support State Needs for Information and Gu idance on RCRA Financial Assurance, Report No. 2005-P-00026 (Sept. 26, 2005).]

Mechanism Regulatory Risk Cost to Facility

Letter of Credit Low High

Trust Fund Low High

Insurance Medium Medium

Surety Bond Medium Low Medium High

Financial Test High Low

Corporate Guarantee High Low

Captive Insurance Very High Very Low

Individual Response: Under the final GS rule, owners or operators may choose from a variety

of financial instruments to meet their financial responsibility obligations under the rule, provided the Director determines that the operator's pr oposed financial responsib ility demonstration is adequate to protect USDWs from endangerment. Th e ability of the owner or operator to pay for each GS activity must be demonstrated, incl uding corrective action on wells in the AoR, injection well plugging, PISC and site closure, and emergency and remedial response throughout the life of the project. The final GS rule specifies at §146.85(a)(1) the permitted types of financial responsibility instruments. The Agency clarifies that the trus t funds that are addressed as fi nancial responsibility instruments in the GS rule are set up by indivi dual owners or operato rs and are different from a national-level trust described by the commenters that would cover large numbers of GS projects. EPA does not have authority to set up a nationa l-level trust fund under the SDWA.

EPA will retain self insurance and corporate guara ntee as options for financial responsibility for

Class VI wells. EPA believes that if properly used, these can be appropriate options for some owners or operators. EPA recogni zes that it is important for self -insurers to be credit-worthy, otherwise USDWs may not be adequately protec ted. Owner or operators who choose to selfinsure and use the financial test must be able to demonstrate profita bility, with a margin sufficient to cover contingencie s and unknown obligations, and stab ility. If the owner or operator meets corporate financial test criteria, this is an indication that the owner or operator can guarantee its ability to satisfy fi nancial obligations based solely on the strength of the company’s

financial condition. If an operator or operator is not able to meet the corporate financial test criteria may arrange a corporate guarantee by dem onstrating that its corporate parent meets the financial requirements on its behalf.

19EPA also acknowledges the commenters' concern regarding potential in solvency of surety companies, but notes that such unpredictable ev ents are outside of the Agency's control or authority. However, EPA requires under §146.85 th at a Director may only approve instruments determined to be sufficient to address endangerment of USDWs and has the discretion to disapprove of instruments that they determine are not sufficient. Furthermore, owners or operators or their guarantor must notify the Di rector no later than 10 days after filing for bankruptcy.

Regarding concerns that the su rety industry may be reluctant to underwrite bonds for the long term, EPA notes that the GS regulation provides flexibility for owners or operators to choose from a variety of financial instruments to meet their financial responsib ility needs. EPA cannot, under the SDWA, require that the surety be in cluded on the U.S. Treasury's list of acceptable sureties. However, EPA notes that the preamble to the final rule clar ifies the conditions under which the Director can disprove instruments that he/she dete rmines may not be sufficient.

EPA emphasizes that, with comprehensive financia l responsibility requirements in place (i.e., to cover corrective action on wells in the AoR, inje ction well plugging, PISC and site closure, and emergency and remedial response at GS sites) , no taxpayer money should be necessary to address endangerment of USDWs throughout the lifetime of the site.

EPA is developing guidance (a vailable on EPA's website at http://water.epa.gov/type/groundwat er/uic/wells_sequest ration.cfm) that describes the types of financial instruments that owners or operato rs can use to meet financial responsibility requirements for GS wells. The financial responsib ility guidance will include considerations for Directors regarding how to evalua te the appropriateness of a sp ecific financial responsibility instrument for a sp ecific project.

Letter ID: 0242 Comment ID: 23321 Letter Lines: 549 to 601

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

Comment Code: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment: C. Sierra Club’s Recommendation for Adequate Financial Assu rance Under the Proposed Rule

There are several acti ons that the EPA should take in the proposed rule to ensure that Class IV owners and operators have adequate financial assurance. First, EPA should prohibit the use of certa in mechanisms that present too great a risk. The strength of third party mechanisms depends largely on the independence between risks of financial fa ilure of the facility and the thirdparty providing that mechanism. EPA s hould thus prohibit reliance on captive insurance, financial test, and corporate guarantee.

20Captive insurance is insurance issued by a wholly-owned subsidiary of the insured. The financial health of the cap tive insurance company is closely tied to the parent company, so if the company encounters financial difficulties there is no guarantee that the captive insuran ce company would retain the necessary resources to fund closure and post-closure. This is counter to the basic purpose of an insurance, which distributes ri sk among different parties. The risks

associated with this mechanism are too great and EPA should pr ohibit reliance on captive insurance in its regulations.

The EPA should also revise th e regulations to prohibit us e of the financial test and corporate guarantee. As with captive in surance, there is no diversification of risk. If the firm, its parent or sib ling corporation becomes insolvent, then the taxpayer must cover these costs. Give n the current financial landscape it is

naïve to assume that this mechanism provides adequate safeguards to the environment and tax payers. Many firms that would have passed the financial or corporate guarantee test (a net worth of more than $10 million) have recently collapsed. The reality of the current financial crisis, in addition to the fact

that these facilities will be operating for upwards of 50 years, indicate that the financial test and corporate gu arantee present too great a risk.

In addition to prohibiting certain financ ial assurance mechanisms, EPA should revise the regulations to specify that trust funds, letters of credit, surety bonds and insurance (not cap tive insurance) are acceptable mechanisms. These

mechanisms should be selected because th ey provide a medium to low regulatory

risk.

The regulations should specifically define the terms ‘trust funds’, ‘letters of credit’, ‘surety bonds’ and ‘insurance’ so that the safety of these mechanisms does not become distorted. The regulati ons should provide this definition backstop because states have sometimes a pproved variations on these mechanisms that were fiscally imprudent, as noted in the Office of Inspector General report on RCRA financial assurances. [FN25] Fo r instance, the report noted that sometimes regulators allowed trust funds to be funded with stock, including stock of the regulated company or with re al estate. [FN26] In addition, if an owner or operator is going to use insura nce, it should be requ ired to submit a copy of the insurance policy, and not just a certificate of insu rance, so that the permit reviewer can ensure the policy coverage is sufficient.

[FN25: U.S. Environmental Protection Agency, Continued EPA Leadership Will Support State Needs for Information and Gu idance on RCRA Financial Assurance, Report No. 2005- P-00026 at 11 (Sept. 26, 2005).] [FN26: Id.]

Individual Response: EPA has clarified the financial responsibility requirements in the final GS rule, and has included at §146.85(a) a list of qualifying financia l responsibility instruments, including trust funds, surety bonds, letters of cred it, insurance, self insurance, escrow accounts,

21or any other instrument(s) sa tisfactory to the Director.

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

EPA retains the use self-insurance as an option to demonstrate fi nancial responsibility for Class VI wells. EPA believes, based on input by commenter s, that self-insurance, if properly used, can be an appropriate option for certain owners or operators. Self-insur ance has been used successfully in the past (e.g., under the Class I and RCRA programs). EPA recognizes that there

are some concerns about the use of self insura nce, including those men tioned by the commenters, and is developing guidance to assi st Directors in evaluating the a ppropriateness of self-insurance in specific circumstances, such as evaluation of owners or operators' dem onstrations of financial

worthiness or evaluation of whethe r certain owners or operators pos e too great a financial risk to use self-insurance as a financial responsibility instrument. States have the discretion under the rule to prohibit the use of specific financial in struments if they feel they are inadequate.

EPA will also retain the financial test and the corporate guarantee as options to demonstrate financial responsibility for Class VI wells. EPA be lieves that if properly used, the financial test and corporate guarantee can be appropriate opt ions for some owners or operators. EPA recognizes that it is important for self-insurer s to be credit-worthy; otherwise USDWs may not be adequately protected. Since there are some concerns about the use of financial tests and corporate guarantees, including those mentioned by the commente r, EPA is developing guidance to assist Directors in evaluating the appropr iateness of these instruments in specific

circumstances.

EPA acknowledges that states may not be authorized under state law to allow for self insurance

or other financial instruments. Th erefore, states may prohibit the use of any financial instruments included in the rule, including self insurance, for Class VI wells. See the final rule and preamble

for further discussion of EPA's final approach to financial responsibility.

Finally, EPA is developing guidance that describes the types of financial instruments, including insurance, which owners or operators can use to meet financial responsibility requirements for GS wells and will take the commenter's suggesti on into consideration. The guidance will discuss the strengths and weaknesses of various instrume nts. The guidance will be available on EPA's website at http://water.epa.gov/type/gr oundwater/uic/wells_sequestration.cfm.

As described above, EPA has taken commenter’s concerns about long- term liability into account. See the final rule preamble for furt her discussion of EPA’s approach.

Letter ID: 0242 Comment ID: 23322 Letter Lines: 603 to 673

22Comment Code: 5400 2.9 Proposed Financial Respons ibility and Long-Term Care Requirements

Comment: D. Accurate Cost Estimates are Necessa ry for Adequate Financial Assurance

One of the most critical aspects of ensu ring that owners or operators have the resources to pay for injection-well pl ugging and post-injectio n site care is cost estimation. Sound cost estimation requi rements ensure that sufficient funds

are set aside in the financial assuran ce instrument to properly undertake covered activities at any time during th e operating life of the facility and during post-injection site care period.

Corporate actors, however, have an inhere nt incentive to underestimate these costs. Owners and operators can save m oney by underestimating the closure and post-closure care costs because the price of the financial assurance mechanism

is correlated to these closure costs.

Under the proposed rule, there are no guidelines on how the owner or operator should prepare the initial cost estimate . For instance, there is no prohibition against the owner or operator preparing its own cost-estimate. In addition, the proposed rule hardly has any requirement s for when and how the cost estimate should be adjusted over time. The propos ed rule provides that the owner or operator must provide to the Director , at a frequency determined by the Director, written updates of adjustment s to the cost estimate. 73 Fed. Reg. 43,492, 43,537 (proposed 40 C.F.R. § 146.85(b)). In addition, the operator must provide a cost estimate adjustment if the Director has reason to believe the initial estimate is no longer va lid. 73 Fed. Reg. 43,492, 43,537 (proposed 40 C.F.R. § 146.85(d)). This approach has not worked for EPA under RCRA, and it

will not work for Class VI wells.

In its review of the RCRA financial a ssurance mechanisms, EPA’s Office of Inspector General spoke with many state ad ministrators regarding the difficulty of assessing cost estimates. Many state administrators agreed that it was

difficult to estimate costs for closure a nd post-closure activities. As this report explained, "the accuracy of each cost estimate re view was subject to the level of expertise and knowledge of th e individual inspectors performing the reviews." [FN27] In addition, regulators noted that it was difficu lt to challenge cost estimates because they did not have the resources to research and look up costs in different forms of documentation.[FN28]

[FN27: U.S. Environmental Protection Agen cy, Office of Inspector General, RCRA

Financial Assurance for Closure and Post- Closure, Report No. 2001-P-007 at page 47 (March 30, 2001).] [FN28: Id.]

To address problems with reviewing co st estimates for RCRA post-closure

23activities, EPA provided regulators with two tools -- a manual, which provided a consistent, accurate, and rapid method for evaluating cost estimates, and software, which incorporated the manual’s methodology.

In light of incentives to underestimate costs and the problems with reviewing such estimates under other regulatory pr ograms, EPA should revise its cost estimation section to reduce the possibility of undervalued cost estimates and ensure adequate money is available for closure and post-closure care. Specifically, the final rule shoul d incorporate these revisions:

-EPA should specifically set out the elements to be included in an initial cost estimate. If the information is standardized, agency employees will have an easier time evaluating the sufficiency of such estimates.

-When an owner or operator prepares its own cost estimate, EPA should require independent third-party review and cost certification.

-The final rule should have a standard cost-estimate adjustme nt process. The cost estimate should be adjusted annually to account for inflation. In turn, the

initial financial assurance mechanism shoul d be structured to account for these inflation increases. In addition, the Direct or should be required to assess the adequacy of the cost estimate at five year intervals.

In addition, EPA should also publish a manua l that provides permit writers with a consistent, accurate and rapid method for evaluating cost estimates for closure and post-closure care of Class VI wells, as well as a software program that incorporates the manual’s methodol ogy, which will save more time and prevent errors in assessing the adequacy of cost estimates.

Individual Response: EPA agrees that sound financial re sponsibility cost estimates are important to properly regulating Class VI wells. For this reas on, EPA has provided requirements for adjusting cost estimates to reflect change s to the project plans. Furthermore, EPA is developing guidance on financial responsibility fo r Class VI wells. The guidance will include a discussion on how best to estimate costs, to a ssist GS well owners or operators, third party insurers or providers of financial instruments, and permitting authorities in developing estimates

of the costs associated with various GS activ ities. The guidance will be available on EPA's website at http://water.epa.gov/type/gr oundwater/uic/wells_se questration.cfm.

EPA agrees that it is importan t to periodically update cost estimates that support financial responsibility determinations. EP A clarifies that the GS rule, at §146.85(c) requires the owner or operator to provide annual updates to the cost estimate to account for any amendments to the AoR and corrective action plan, the injection well plugging plan, the PISC and site closure plan, and the emergency and remedial response plan. EPA adds that the Director can also require the owner or operator to provide an adjustment of the cost estimate if the Director determines that the original demonstration is no longer adequate , as specified at §146.85(e). The cost estimation methodology guidance will also contain instructions on how to adjust cost estimates for inflation

24to help account for the long-term nature of geolog ic sequestration, as required in the final rule at §146.85(c)(2).

EPA is not requiring independent or third-party revi ew and cost certification of operatorprepared cost estimates.

Letter ID: 0242 Comment ID: 23323 Letter Lines: 675 to 691

Comment Code: 5432 2.9.1.1 Need to adjust financial responsibility mechanisms (seeking comment)

Comment: E. Congress Should Create a Trust Fund to Cover Closure, Post-Closure, and

Remediation Costs for Cases When a Fi nancial Assurance Mechanism Fails.

Even if EPA revises the regulations to incorporate all of these suggested improvements to the financial assuran ce program, there will undoubtedly be instances when a facility becomes insolvent and the financial assurance mechanism fails. In addition, there coul d be instances were the financial assurance mechanism does not fail, but is insufficient to cover costs because

the cost estimate was too low. To ensure that citizens do not have to pick up

the tab in such situations , Congress should create a fee payment system that funds a trust, which would be used to fund these closure, post-closure and

remediation actions. The trust must be crea ted so that its funds cannot be drawn for any other purposes. Congress should a ssess fees on all owners, operators, generators and transporters of the inj ected CO2. These fees should be assessed based on a pricing system that reflects the risk profile of each particular injection site, which will also influence selection of the safest sites for large scale CCS, especially for the earliest projects.

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

the trustee due to the restrictions of the Mi scellaneous Receipts Act (MRA). The MRA requires that EPA deposit the funds it receives for the use of the Govern ment into the Treasury, therefore funds would not necessarily be availa ble for GS financial responsibility.

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

Under SDWA authority, owners or operators of injection well s must ensure protection of USDWs from endangerment and are subject to liab ility for enforcement under the Act. The final rule requires that an owner or operator must conduct monitoring as specified in the Director25approved 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.

To prevent incidents in which the cost estimate is too low, the final rule requires frequent updating of cost estimates at §146.85( c)(2). The owner or operator must update the cost estimate

after amendments to the AoR and corrective acti on plan, well plugging plan, post-injection site care and site closure plan, and the emergenc y and remedial response plan. (The AoR and corrective action plan and the emergency and remedial response plan must be updated at least every five years.) In addition, th e cost estimate must be updated annually for inflation. The rule also requires updates when the Dire ctor determines the original co st estimate is insufficient.

Letter ID: 0242 Comment ID: 23324 Letter Lines: 693 to 811

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

Comment: IV. EPA Should Administer th e CCS Program with the Help of a Specially Formed CCS Technical Advisory Committee.

Under the Safe Drinking Water Act, dele gated states can administer their own underground injection contro l ("UIC") programs once approved by EPA. Thirtythree states have primacy to run the UIC program and 7 states have authority to administer some UIC permits. [FN29] In stat es without primacy a nd on tribal lands, EPA administers the program.

[FN29: U.S.Environmental Pr otection Agency. UIC Program Primacy, available at http://www.epa.gov/OGWDW/uic/primacy.html]

The proposed CCS rule would give the enormous responsibility of regulating CCS at this early stage to stat e administrators. As provided in the rule: "States with primacy must develop a program inco rporating all new Fede ral requirements for Class VI wells if they wish to re gulate CO2 GS, and all programs will be subject to EPA approval. If States do not develop a program for Class VI wells,

EPA will oversee CO2 GS in those St ates." 73 Fed. Reg. 43,492, 43,530; see 42 U.S.C. § 300h-1(b)(1)(B) (requiring st ate showing of conformity to new requirements).

Permit decisions require evaluation of ma ny complicated technical issues that demand a high level of expertise and there are scores of uncertainties at this early stage of CCS development, as expl ained above in the in troduction to these

comments. There is also cause for concer n over the capacity and competency of some state regulatory agencies to pr operly regulate a CCS program. State permitting decisions can contradict scie nce and logic and produce dangerous

results for local health and welfare. Th e Florida Department of Environmental Protection approved the construction and ope ration of a facility designed to

26inject more than 112 million gallons of treated sewage a day, erroneously believing that the subsurface geology woul d prevent the injected sewage from migrating into the overlying Floridan Aquifer. Most e xperts agreed that the injection program should not have been pe rmitted, and eventually the injected sewage migrated upward into the Floridan Aquifer. Even after evidence of contamination was well-established, Florid a continued to expand its injection

program.

Federal administration coupled with a technical advisory board would ensure the initial implementation of a national CCS program will be based on the best science, insulate decision s from profit and political motives, facilitate good public perception of CCS and would ensu re the long-term integrity of the program. The International Risk Governan ce Council stressed that "[a]ssignment of regulatory responsibility to competent and trustworthy bodies or agencies will be paramount in assuring the public that the technology is deployed with adequate oversight and safeguards." [FN30] A nationally administered program will

also enable federal coordination of in formation for this young program, ensure information-sharing to other states and developing nations, and help manage regional issues that tr anscend state lines.

[FN30: IRGC, Regulation of Carbon Captur e and Storage, p. 24, available at http://www.irgc.org/IMG/pdf/Policy_Brie f_CCS.pdf (last visited December 17, 2008).]

Over the last few years, there has been a global CCS dialogue among a wide range of stakeholders--with top scientists, engineers, industry and environmental groups working together to contribute to reports and policy suggestions. The

IPCC is an international scientific bo dy that provides an objective source of information. The comprehensiveness of the scientific content is achieved through contributions from experts in all regi ons of the world and all relevant disciplines. [FN31] The World Resources In stitute, an enviro nmental think tank, convened a diverse group of over 80 stakehol ders, including representatives from academia, business, government, and environmental nongovernmental organizations

to craft its Guidelines for Carbon Dioxide Capture, Transport, and Storage. [FN32] A technical advisory board would ensure this diversity of opinion and viewpoint is considered, and the expe rtise acquired in this dialogue is reflected, in the initial development a nd implementation of the United States’ CCS program.

[FN31: http://www.ipcc.ch/about/index.ht m (last visited Dec. 15, 2008).] [FN32: http://pdf.wri.org/ccs_guidelin es.pdf (last visited Dec. 15, 2008).]

The CCS technical board should include a diverse group of expe rts in CCS-related fields with CCS experience, including geology, geophysics, st ructural geology, hydrogeology, and geochemistry. Additionall y, the board should dedicate a few flexible positions to include members with site-specific knowledge at the state,

27regional, and national levels that will rotate depe nding on project location. Alternatively, for local information, the te chnical board could coordinate with regional advisory boards formed pursuant to 40 C.F.R. § 25.7.

The CCS technical board should have the following responsibilities, among other appropriate functions:

• review technical data a nd make recommendations for site selection and permit

terms • review monitoring data and make r ecommendations for permit revisions • fact checking • ensuring coordination among permits • accelerating and dissemina ting best practices • make decisions regardi ng delegation of primacy

Technical advisory boards are well-resp ected by the public and environmental community and work well in other contex ts. The Desert Tortoise Recovery Committee is made up of a diverse group of scientific experts and serves an advisory role to agency administers to ensure species’ recovery plans, revisions, monitoring, effectiveness, etc. meet rigorous scientific standards. [FN33] The Independent Scientific Adviso ry Board serves the National Marine Fisheries Service (NOAA Fish eries), Columbia River Indi an Tribes, and Northwest Power and Conservation Council by providi ng independent scien tific advice and recommendations regarding scientific i ssues that relate to the respective agencies' fish and wildlife programs. [FN34]

[FN33: http://www.fws.gov/nevada/desert_tort oise/dt_sac.html (last visited Dec. 15, 2008).] [FN34: http://www.nwcouncil. org/fw/isab/background.htm and http://www.nwcouncil.org/fw/isab/members .htm (last visited Dec. 15, 2008).]

The success or failure of CCS cannot rest on the decisions of state

administrators like the ones in Florida responsible for the sewage injection debacle. "'[A] single major accident, re sulting from inadequate regulatory oversight, anywhere in the world, could se riously endanger the future viability of GS [geologic sequestration]." [FN35] EPA must take responsibility for administration of the nation’s CCS program, at least for the first few years until the task becomes less extraordinary. Agency officials will need help interpreting and understanding the technical data that will accompany permit decisions, and it should enlist the help of a diverse group of CCS experts on a technical advisory board.

[FN35: Wilson, E., Morgan, M. et al., Re gulating the Geological Sequestration of CO2, Environmental Science & T echnology, Apr. 15, 2008, at p. 5.]

Individual Response: As described above, EPA disagrees that it should be the only entity to

28issue permits during the first few years after pr omulgation and believes it is contrary to the

SDWA.

EPA will consult with the National Drinking Water Advisor Committee, associations and organizations, EPA’s Office of Research and De velopment, and experts; review permits; and continue to hold workshops to build expertise and ensure that implem entation of the national program is based on the best available science. Th e Agency plans, every six years, to collect and review data on GS projects to determine wh ether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appropriate or necessary.

Regarding unintended consequences related to muni cipal disposal wells in Florida, EPA clarifies that this is outside the scope of this rulemaking and that GS is quite different from the injection of wastewater in Florida. An owner or operator s eeking to characterize a site similar to one used for municipal disposal in Florid a for GS (pursuant to the requir ements at §146.82) and to identify both injection formations and suit able confining units (per §146.83) might not be able to meet the requirements and ensure protection of USDWs due to th e nature of karst formations/geology. In addition, the computati onal modeling required to delineate the AoR at §146.84 for a GS project would likely predict inappr opriate buoyant flow in this example and eliminate such formations as potential GS sites.

Letter ID: 0242 Comment ID: 23325 Letter Lines: 813 to 868

Comment Code: 5700 2.12 Comments on the proposed durati on of Class VI permits (seeking comment)

Comment: V. EPA Should Issue Class VI Staged Permits, Rather Than Permits for the Operating Life of the Well.

Selecting an underground CO2 storage site and determining an appropriate injection rate necessarily contains un certainties because underground geology is heterogeneous and impossible to map. Ther e is a considerable lack of CCS experience and significant gaps in knowledge, including modeling storage capacity and plume behavior and monitoring storage performance and movement. The rule must reflect these uncertainties, a nd be flexible enough to adapt to the

new information that will be learned th rough the first few major demonstration projects. At this early st age, Class VI permits should not be granted for the operating life of the well.

An adaptive management approach (measur ing while managing) is a sound, wellestablished method for dealing with scie ntific uncertainty. Adaptive regulatory design permits progressive regulatory ac tion in response to improvements in information. [FN36] The adaptive management model envisages an initial regulatory approval based on available information (estimations and modeling) followed by a period of monitoring and reporting with r eassessment of the appropriateness of the initial regulatory action and adjustme nt as required in light of new

29information, and presumably the reso lution of previous ly identified uncertainties. [FN37]

[FN36: Judith Jones, Regulatory Design fo r Scientific Uncertainty, JOURNAL OF ENVTL. LAW, 19 JENVTLL 347 (2007).] [FN37: Id.]

The Class VI program should implement an adaptive management approach that acknowledges the scientific uncertainty regarding large-scale CCS. Under the proposed rule, initial Class VI permit lim its are based on modeled predictions of plume behavior and movement, storage capacity, and suitable injection rates for the geologic formation. Under the proposed rules, based on these predictions, a Class VI operator receive s a permit for the life of the well.

Operating a CCS well over a period of year s, however, provides more accurate, site-specific data on the formation’s ch aracteristics and plume behavior. To

ensure the most current information is reflected in the permit terms, and thereby in well operation, EPA should issue permits in phases. As explained in comment VII regarding necessa ry changes in the AOR de finition, EPA should also require the operator to submit an annual affidavit certifying that the permit terms and accompanying plans (monitori ng, emergency response, etc.) do not require a change.

We recommend a three phase permitting system. The first phase will mirror the current permitting structure, except that th e permit will not be for the life of the well, but rather for 5 years. Five y ears after the initial permit is issued, the owner or operator will be required to apply for the second phase. The Director would re-evaluate the permit to determine whether, based on the most current information, it is appropriate to c ontinue injection at the site and, if so, whether the permit terms should be m odified. The third and final phase of the permit would be 10 years after the second phase perm it is issued. Again, the Director would re-evaluate the permit to determine whether, based on the most current information, it is appropriate to c ontinue injection at the site and, if so, whether the permit terms should be modified. The Director’s periodic reevaluation would allow advances in regu lation and science to be incorporated into the permit.

Individual Response: EPA appreciates the commenter’s appr oach and believes the final rule addresses concerns about adaptability. The final rule maintains the lifetime permit provision and clarifies that the permit extends through the post-injection site care period (144.36(a)). It also adds a requirement that the Director review each Class VI permit at least once every 5 years to determine whether it should be modified, re voked and reissued, terminated or a minor modification made as provided in §§144.39, 144.40, or 144.41. The Director’s review will be informed by the owners’ or operato rs’ iterative reev aluation of the project. Specifically, the final rule includes a requirement that the AoR be reev aluated at least every five years, and also requires owners or operators to review and update the AoR and corrective action plan, the testing

30and monitoring plan, and the emergency and reme dial response plan th roughout the life of the project (146.84(e), 146.90(j), and 146.94(d)). Owners or operators must review each plan and identify necessary amendments or demonstrate to the Director that no amendment is needed. In

no case can reviews occur less often than once ev ery five years. The iterative process and subsequent plan reevaluations ensure that time and resources are committed to the most critical aspects of the permit in preven ting endangerment to USDWs.

EPA believes that the iterative process of develo ping and executing the va rious plans required of GS well operators in the final rule (e.g., for AoR and corrective action, testing and monitoring, injection well plugging, pos t-injection site care, and emergency and remedial response) is tailored to the unique aspects of —and is more appropriate for– GS than establishing a finite permit duration (e.g., ten years as suggested by some commenters). EPA believes that its approach will allow advances in regulation and science to be incorporated into the permit.

EPA emphasizes that Director has the authority to revise the perm it if project operations change

or if the Director believes ba sed on monitoring or operational data that the project may endanger

USDWs. EPA has also added text to 144.39(a)(5) that permit modifi cations would be required if

the Director determines that a modification is necessary based on an AoR reevaluation, amendments to any of the project plans, or a review of the testing a nd monitoring results. The Director may also choose to require mi nor permit modifications under 40 CFR 144.41, depending on the extent of the plan amendm ent. All permit modifications, except minor modifications under 40 CFR 144.41, require an oppor tunity for public comment on the portion of the permit that is being reopened pursuant to requirements under 40 CFR Part 124.

The Agency plans to collect and review data on GS projects every six years to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modifications to the requirements are appr opriate or necessary.

Letter ID: 0242 Comment ID: 23326 Letter Lines: 870 to 899

Comment Code: 2100 1.6 Target Geologic Formations for GS

Comment: VI. Class VI Wells Should Be Permitted Only in Oil and Gas Reservoirs and Deep

Saline Formations.

EPA should not permit injection into unmineab le coal seams, basa lts, salt domes, and shales until further studies are completed and CCS potential in these

formations is better understood. EPA lack s an adequate scie ntific basis to develop regulations for commercial-scal e sequestration projects in these formations: "[T]he process of CO2 adsorpti on to coal has not been proven and the chemical reactions of supercritical CO2 within coal formations are not well understood." 73 Fed. Reg. 43,492, 43,503. Sequestration in coal seams is "an emerging technology that is in the demonstr ation phase." Id. As far as basalts, shales and salt domes, EPA has noted that their "technical or economic viability

as GS sites have not been demonstrated." Id.

31The IPCC CCS report supports EPA’s conc lusions and goes a step further, concluding that "basalts app ear unlikely to be suitable for CO2 storage" [FN38] The IPCC agrees that coalbed storage tec hnology "is not well developed and a better understanding of injection and storag e processes in coal s is needed." [FN39]

[FN38: IPCC CCS § 5.3.5.1.] [FN39: IPCC CCS Chapt. 5 Exec. Summary; see also § 5.3.4.]

Precautionary principles demand that the fi rst Class VI permits are issued for injection into geological formations with the greatest degree of scientific certainty, where any damages would be mi nimal - namely, depleted oil and gas reservoirs and deep saline formations. Accordingly, initial Class VI wells should not include coal seams, basalts, shales, and salt caver ns regardless of whether they are above or below the d eepest USDW. Continued research is appropriate for GS projects in these formations.

Individual Response: EPA disagrees with this comment and believes that site-suitability for GS is dependent on a number of factors and that many formation types may be suitable for GS. The final GS rule does not preclude injection into an y formation type provided owners or operators can demonstrate that GS can be performe d in a manner that protects USDWs from endangerment. The Agency acknowledges that GS into basalts, salt domes, shales, limestone formations, and fractured karst wi ll likely have limited applicati on, or that owners or operators seeking Class VI permits for injection into these fo rmations may not be able to meet the final GS requirements by demonstrating protection of USDWs.

The purpose of the GS rule is to ensure protect ion of USDWs, and the ru le includes requirements to ensure that the geologic formations are adeq uate to receive and confine injected CO2, at §146.83. The siting, well constructio n, operational, and other requirements in the GS rule are designed to ensure that injected CO2 remains within the target formation.

EPA acknowledges that there may be risks associat ed with GS, particularly regarding GS into coal seams and basalts. EPA anticipates that in the short-term, GS into basalts, salt domes, shales, limestone formations, and fractured karst w ill continue to be experimental in nature (i.e., if they are to test GS technologies and collect data), and will likely be permitted as Class V experimental technology wells and be subjec t to UIC Program Guidance #83. EPA will continue to review data on early GS project s, including those in such form ations, to determine whether the appropriate amount and types of informati on and documentation are required and being collected. EPA plans, every six years, to collect and review data on GS projects to determine whether the appropriate amount and types of information and appropriate documentation are being collected, and to determine if modificatio ns to the requirements are appropriate or

necessary.

Letter ID: 0242 Comment ID: 23327 Letter Lines: 901 to 917

32Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: VII. The Rule Should Specify That an Intr usion Into a USDW is Not a "Federally

Permitted Release" Under CERCLA.

The rule itself, rather than individual permits, should assure that Class VI permits do not allow responsible parties to avoid CERCLA liability on grounds that a release constitutes a "federally permitted release."

EPA notes in the preamble to the propos ed rule, 73 Fed. Reg 43504, that CERCLA exempts from liability certain "federally permitted releases, including releases in compliance in a UIC permit under the Safe Drinking Water Act." EPA further notes that "Class VI requirements and permits will need to be carefully structured to ensure that they do not ‘authorize’ inappropriate hazardous releases." EPA should go further and effectively prohibit Class VI permit conditions that would make the "federally permitted release" defense available should injected fluids or displaced form ation fluids enter or endanger USDWs. This prohibition should be added to Subpa rt E - Permit Conditions, or to any other appropriate sec tion of the rule.

Individual Response: CERCLA exempts from liability, un der CERCLA section 107, 42 U.S.C. 9607, certain “federally permitted releases” (FPR ) as defined in CERCLA, 42 U.S.C. 9601(10). Therefore, Class VI requirements and permits will n eed to be carefully structured to ensure that they do not “authorize” inappropriate releases, and would need to prevent potential releases from the well which are outside the scope of the Cla ss VI permit. Furthermore, EPA is promulgating

the GS rule under the authorit y of the SDWA. To the extent the commenter is seeking interpretations of CERCLA and its related provi sions, such as the definition of a federally permitted release, such interpretations are beyond the scope of this rulemaking.

The UIC program Director has authority under SDWA §1423 to address potential compliance issues (e.g., potential releases that may endanger USDWs) resulting from injection violations in the unlikely event that a remedi al response is necessary. Although EPA anticipates that the need for emergency or remedial actions at GS sites wi ll be rare, the GS rule requires, at §146.94, that emergency and remedial response plans be deve loped and updated to address such events and that owners or operators demonstr ate that financial resources are set aside to implement the plans if necessary, per §146.85.

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

under Part 146 for Class VI wells and the Dire ctor has approved site closure pursuant to requirements at §146.93, the owner or operato r will generally no longer be subject to enforcement for regulatory noncompliance. Furtherm ore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in ce rtain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even afte r site closure was approved if the Director relied on erroneous information (e.g., erroneous modeling data) provid ed by the owner or

33operator when approving site closure.

Separate from EPA’s authority to enforce regul atory compliance, an owner or operator may be subject to a §1431 response orde r even after proper site cl osure is approved under §146.93. Under §1431 the Administrator may require an ow ner or operator to take necessary response

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

which such violation occurs or failure to comply continues.

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

Letter ID: 0242 Comment ID: 23328 Letter Lines: 919 to 930

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

Comment: VIII. The Definition of the Area of Re view Should Include Monitoring and Modeling.

The definition of Area of Review (A OR), Fed. Reg 43536, CFR §146.84, Part (a)

states that the Area of Review is "based on computational modeling". It is not appropriate for the Area of Review to be based solely on com putational modeling. Instead, it should be based on comput ational modeling, monitoring and operational data and updated until closur e is approved. All references to computational modeling in relation to the Area of Review in this section, as

well as in the definition of Area of Re view in §146.81 should be amended as appropriate to read "based on computati onal modeling, monitoring and operational data and updated until cl osure is approved".

Individual Response: Based on review of all public comments on the AoR definition at 146.84(a), the Agency has modified it to read as follows: The region surrounding the geologic sequestration project where USDWs may be e ndangered by the injecti on activity. The area of review is delineated using computational mode ling that accounts for the physical and chemical properties of all phases of the injected CO2 stream and is based on available site characterization, monitoring, and operational data. The definition in the proposed rule accounted for the varying physical and chemical propertie s of the CO2 including free-phase and waterdissolved CO2, as the commenter suggests. The defin ition in the final rule wi ll continue to do so.

34EPA is developing guidance on AoR and corrective act ion at GS Class VI s ites to assist owners or operators and Directors in evaluating requi rements and proposed AoR and corrective action plans under 146.84. The guidance describes EPA's reco mmended approaches for the data to be

considered in an initial AoR delineation, how to apply computat ional modeling to delineate the AoR, performing corrective action at GS sites, and, when appropriate, completing AoR reevaluations. The guidance will be available on EPA's web site, at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

EPA clarifies that the initial AoR delineation required unde r 146.84(c) is performed prior to injection, and therefore no mon itoring or operational data woul d yet exist. The AoR delineation models will incorporate all avai lable site data and anticipat ed operating procedures (e.g., injection rates and volumes).

The AoR reevaluation process required at 146.84(e) requires owners or oper ators to incorporate monitoring or operational data and make any needed adjustments to corrective action or monitoring at the site. EPA believe s that the iterative process of AoR reevaluation is appropriate to verify that the CO2 plume and pressure fr ont are moving through the subsurface as predicted, verify the accuracy of the delineat ion model (or identify needed ch anges), and refine testing and monitoring activities to ensure that USDWs are protected fro m endangerment and that there would be adequate warning of potential problem s at the site before any endangerment could

occur.

Letter ID: 0242 Comment ID: 23329 Letter Lines: 932 to 942

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

Comment Code: 4750 2.7.5 Comments on the merit of a nnual reports (seeking comment)

Comment: An update or redefinition of the AOR at a minimum fixed freque ncy of ten years is not sufficient. The operator shoul d be required to submit an annual assessment under stating whether they d eem a revision of the AOR necessary, explaining their reasoning based on site -specific operational and other data. The Director should examine and approve or reject this subm ission, requiring a

revision of the AOR as needed. The same updating procedure should apply to all other plans: monitoring, closure, etc. We believe that this arrangement encourages honest and truthf ul reporting of data and site performance without placing excessive burdens on redefining the AOR if such revision is not needed. It also leaves a clear accountability tr ail for both operator and Director in case of disputes.

Individual Response: EPA agrees with commenters that reevaluations of the AoR every ten years may not be sufficient to appropriately model plume and pressure front movement, establish conditions for corrective action, and ensure prot ection of USDWs from endangerment. For these reasons, the Agency changed the minimum freq uency for the AoR reevaluation at §146.84(e) from 10 years to at least every 5 years in the final GS rule. EPA belie ves that this revised frequency addresses commenters' concerns about the inherent uncertainties in modeling CO2

35movement, the emerging nature of GS technology, risk-based targeting of monitoring activities, and the unique nature of CO2 GS. In addition, the Director has discre tion to require more frequent AoR reevaluation if he or she has reason to believe, based on site-specific information, that a five-year reevaluation schedule is not sufficiently protective of USDWs.

EPA also agrees that periodic reviews of th e other plans based on the AoR reevaluation is appropriate. The final GS rule in cludes provisions that owners or operators review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and remedial response plan throughout the life of th e project, as specified in §146.84(c), §146.90(j), and §146.94(d). Owners or operators must review each plan and identify necessary amendments to the plan or demonstrate to the Director that no amendment is needed. These reviews must be performed within one year of an AoR reeval uation, following any significant changes to the facility (e.g., the additio n of monitoring or injection wells), or when required by the Director.

EPA agrees that the AoR reevaluations offer a good opportunity to promote a dialogue between the owner or operator and the permitting authority. The final GS rule, at §§146.84(c), 146.90(j), and 146.94(d), requires owners or op erators to review and update the AoR and corrective action plan, the testing and monitoring plan, and the emergency and re medial response plan throughout the life of the project. Owners or operators must review each plan and identify necessary amendments to the plan or demonstrate to the Director that no amendment is needed. These reviews must be performed within one year of an AoR reevaluation, following any significant changes to the facility (e.g., the addition of mon itoring or injection wells) , or when required by the Director. In no case can reviews occur less often than once every five years. For additional information, please see the final rule and the prea mble for a discussion of EPA's final approach to recordkeeping and reporting.

Letter ID: 0242 Comment ID: 23330 Letter Lines: 944 to 964 ; 974 to 975

Comment Code: 3420 2.2.2.1 Scope of the inventory pr ocess (e.g., reliance on publicly available information, depth of wells)

Comment: IX. Additional Well Identification Methods that do not rely on the Public Record Should be Required in Certain Provisions

The proposed rule at CFR§146.82(b) requires a map to be submitted with the permit that shows wells within the area of review, but only information of public record is required to be included on this map. CFR§146.82(e) also requires a tabulation of all wells within the area of re view which penetrate the injection or confining zone(s), which in cludes information on the well’s type, construction, date drilled, locati on, depth, record of plugging and/or completion and any additional informati on that the Director may require.

Relying on information of public record in (b) is sufficient, but additional diligence is needed when it comes to we lls that penetrate the injection or confining zone in (e). Info rmation of public record is often incomplete and/or inaccurate. There are numerous orphaned or abandoned wells that are not listed

36on the public record that could affect the integrity of th e confining zone. While it is possible to inte rcept some of these proble ms during operation, there are methods available today to identify wells not listed on the public record [FN40], which could identify potentially pr oblematic wells in advance. Such a requirement should be included in the ru le, and be made more general than

"tabulation" to allow the Director discre tion for other data formats as needed:

[FN40: NETL , for example, has developed an electromagnetic system that can be used for aerial or ground-based iden tification of wells (casings).]

Individual Response: EPA acknowledges that public record s may not contain data on every artificial penetration in the AoR (or all of th e data on each well that is required for the tabulation), particularly in area s with many older wells. However, EPA notes that the inventory and review process for GS wells required at §146.84(c)(2) is similar to what is required of Class I and Class II injection well ope rators, and that the AoR and co rrective action process for these well types has been successful for many years.

In response to comments suggesting that areas with extensive oil and gas exploration may be the most likely to have older, undocumented wells, EPA notes that states with long histories of hydrocarbon production tend to have invested the most resources into their well databases and, as a result, have detailed information about location and construction of wells within hydrocarbon fields. In addition, older wells, wh ile likely to have the least sophisticated construction, also tend to be relatively shallow an d would therefore be less likely to penetrate the confining zone.

EPA adds that the Director has the discretion to require the owner or operator to supplement a data records search, including re quiring ground or airborne surveys for wells, if there is reason to believe, based on knowledge of the site or of avai lable data bases, that the incompleteness of available information could compromise USDW pr otection. EPA adds that all corrective action must be performed pursuant to the approved Ao R and corrective action plan, which affords the Director the discretion to require any additional information need ed (including information that is not publically available) to ensure that all necessary co rrective action is performed.

Letter ID: 0242 Comment ID: 23331 Letter Lines: 966 to 972

Comment Code: 1240 1.1.1.3 Suggested changes/ed its to rule language

Comment Code: 3420 2.2.2.1 Scope of the inventory pr ocess (e.g., reliance on publicly available information, depth of wells)

Comment: [In the paragraph below the text in all CAPS denotes added text.] §146.82(e): "A tabulation COMPILATION of all wells within the area of review which penetrate the injection or confining zone(s). TO SUPPLEMEN T AND/OR VERIFY INFORMATION OF PUBLIC RECORD, OPERATORS SHALL USE REASONABLE

METHODS TO IDENTIFY

37THE PRESENCE WELLS WITHIN THE AREA OF REVIEW THAT PENETRATE THE

INJECTION OR CONFINING ZONE(S). Such data mu st include a desc ription [...]"

Individual Response: EPA is retaining the requirement, which is now found in §146.82(a)(4), as proposed. EPA notes that the Director has the discretion in §146.84(c)(2) to require the owner or operator to supplement a data records sear ch—including the use of ground, airborne, or geophysical (e.g., magnetic) surveys—if there is r eason to believe that the incompleteness of available information could compromise USDW protection from endangerment. EPA adds that all corrective action must be pe rformed pursuant to the approved AoR and corrective action plan, which affords the Director the discretion to requi re any additional inform ation needed (including information that is not publically available) to ensure that all necessary corrective action is performed. EPA is developing guidance on AoR and corrective action at GS Class VI sites to assist owners or operators and Directors in evaluating requirements and proposed AoR and corrective action plans under 146.84. The guidan ce describes EPA's recommended approaches

for the data to be considered in an initial Ao R delineation, how to apply computational modeling to delineate the AoR, performing corrective action at GS sites, and, when appropriate, completing AoR reevaluations. The guidance will be available on EPA's web site, at http://water.epa.gov/type/groundwater /uic/wells_sequestration.cfm.

Letter ID: 0242 Comment ID: 23332 Letter Lines: 977 to 984

Comment Code: 3420 2.2.2.1 Scope of the inventory pr ocess (e.g., reliance on publicly available information, depth of wells)

Comment: Additionally, to delineate the Area of Review, CFR§146.84(c)(2) requires operators to "...identify a ll penetrations, in cluding active and abandoned wells and underground mines, in the area of revi ew that may penetrate the confining zone". Again, the public record may not be sufficient to provide accurate

information in all cases. Problematic wells may not be limited to the confining zone, as would be the case if confinemen t were to be breached, or if pressure effects caused by the injection caused fl uid movement outside the defined confining zone. We recommend the following modification:

Individual Response: The requirements at §146.84(c)(2) are designed to afford owners or operators flexibility to identify and use appropriate resources to identify artificial penetrations in

the AoR. EPA notes that the Director has the discretion to require th e owner or operator to supplement a data records search—including th e use of ground, airborne, or geophysical (e.g., magnetic) surveys—if there is reason to believe that the incompleteness of available information could compromise USDW protection from e ndangerment. Regarding the concern about identifying wells other than thos e that penetrate the confining z one, EPA adds that the Director the discretion to require any additi onal information needed to ensu re that all necessary corrective action is performed, including information on wells that are above the confining zone, if sitespecific information indicates such a need to ensure USDW protection.

38Letter ID: 0242 Comment ID: 23333 Letter Lines: 986 to 991

Comment Code: 1240 1.1.1.3 Suggested changes/ed its to rule language

Comment Code: 3420 2.2.2.1 Scope of the inventory pr ocess (e.g., reliance on publicly available information, depth of wells)

Comment: [In the paragraph below the text in all CAPS denotes added text.] "Using methods approved by the Director, id entify all penetrations, including active and abandoned wells and underground mine s, in the area of review that may penetrate the confining zone OR OT HERWISE ACT AS CONDUITS FOR FLUID

MOVEMENT

INSIDE OR OUTSIDE THE CONFINING ZONE".

Individual Response: For the reasons described in the re sponse above, EPA is retaining the requirement as proposed.

Letter ID: 0242 Comment ID: 23334 Letter Lines: 993 to 1027

Comment Code: 1970 1.4.4.6 Need for other consultations

Comment: IX. The Proposed Rule’s Public Particip ation Opportunities are Insufficient.

Public acceptance of CCS is a majo r issue. Innumerable reports and recommendations from the federal governme nt and top scientists, institutions and workgroups stress that the success of a CCS program will depend heavily on public acceptance. The National Academy of Sciences cautioned "the storage program cannot be successful if a signifi cant fraction of the public views it as dangerous or unacceptable. Thus, CCS tec hnologies must not only be safe and effective, it must be explai nable to the public in such as way as to instill confidence that they are in fact safe a nd effective." [FN41] The International

Risk Governance Council recommends that regulatory framewor ks must include "effective risk communication to engage and educate the pub lic, involve all

stakeholders in risk-relate d decisions, and build confidence in the institutions governing CCS." [FN42] The Clean Air Act Advisory Committee’s Advanced Coal Technology Work Group’s January 2008 report similarly highlighted the need for public outreach. [FN43] The need to ga in public acceptance w ill be especially crucial with early projects, which sup ports our earlier recommendation that EPA make these crucial early decisions with th e help of a technica l advisory board.

[FN41: U.S. GAO Report. CLIMATE CHANGE: Fe deral Actions will Gr eatly Affect the Viability of Carbon Capture and Storag e As a Key Mitigation Option, GAO-08-1080, September 2008 (quoting National Academy of Sciences, Prospective Evaluation).] [FN42: IRGC, Regulation of Carbon Captur e and Storage, p. 24, available at http://www.irgc.org/IMG/pdf/Policy_Brie f_CCS.pdf (last visited December 17, 2008).]

39[FN43: January 29, 2008 Final Report, available at http://www.epa.gov/air/caaac/coaltech/2008_01 _final_report.pdf (last visited December 17, 2008).]

EPA should ensure that the proposed rule includes ample public involvement at the earliest possible stages to gain public trust and acceptance of its decisions. This gives the community tim e to process the complicated and

voluminous information involved in a siti ng decision and contact other officials

about issues not within EPA’s aut hority. It also will mitigate some controversial issues and potentially avoid litigation and other delays.

Individual Response: EPA disagrees that the public partic ipation requirement provided for in the rule is insufficient. However, EPA recognize s that the initial phases of site evaluation and site selection may begin in advance of perm it application submission. The public may become aware of these activities and begi n to have questions or concer ns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process—can help cl arify project details and avoid public misperceptions about the nature and safety of GS projects. This may al so benefit the owner or operator by improving local acceptance of the site.

EPA encourages but does not require operators and permitting agencies to begin involving the public by providing information as early in the GS project development process as possible. Involving the public in the permitting process is an important aspect of both UIC Program requirements and EPA's overall mission. The public will also have the opportunity to submit written comments and, in many cases, attend hear ings on proposed GS projects during formal public comment periods. Although permit application information will not be made available as it is submitted to the Director, permitting aut horities must follow the public participation requirements for UIC permits specified in 40 CFR Part 124 which generally requires that owners or operators publish a public noti ce that includes information about where interested parties can obtain copies of the draft permit and application.

Letter ID: 0242 Comment ID: 23335 Letter Lines: 1029 to 1043

Comment Code: 5540 2.10.2 Need for additional public partic ipation requirements/ use of new information technology (seeking comment)

Comment: Opportunities for public participation in the proposed rule are not sufficient; the following changes are necessary:

1. The proposed rule has a 30-day public comment period on a proposed Class VI site-specific permit. This is too little too late. Thirty days is not sufficient time for the public to identif y and raise concerns, and given the comment period falls at the end of a long negotiating pr ocess with the applicant, it is unlikely EPA could meani ngfully address concer ns at that point in the process. The public should be inform ed as soon as the EPA begins working

40with a permit applicant, and make the a pplication materials publicly available and easily accessible. EPA and the pe rmit applicant should hold public

information sessions in the affected co mmunity and work to address public concerns throughout the process. The formal comment period should be extended to at least 90 days because the permit will c ontain a range of complicated issues that will likely requir e expert consultation.

Individual Response: EPA agrees that that public partic ipation and education are important parts of the UIC permitting process. EPA encour ages (but does not require) operators and permitting agencies to begin involving the public by providing information as early in the GS project development process as possible. Involv ing the public in the permitting process is an important aspect of both UIC Program require ments and EPA's overall mission. The public will also have the opportunity to submit written co mments and, in many cases, attend hearings on proposed GS projects during formal public comment periods. Although permit application

information will not be made available as it is submitted, permitting authorities must follow the public participation requirements for UIC perm its specified in 40 CF R 124 section §124.10(d) which require that owners or operators publish a public notice that in cludes information about where interested parties can obtain copies of the draft permit and application. Generally, see 40

CFR Part 124.

Furthermore, the Agency recognizes that the ini tial phases of site evalua tion and site selection may begin in advance of permit application s ubmission. The public may become aware of these activities and begin to have questions or conc erns about the pending project. For this reason, outreach and education—which are outside of, but complementary to, the public notification process—can help clarify project details and a void public misperceptions about the nature and safety of GS projects. This may also benef it the owner or operator by improving local acceptance

of the site.

EPA disagrees that a 90-day comment period sh ould be required for all GS projects. EPA believes that the existing public comment period requirements at §124.10, which require a minimum 30-day comment period for draft permits, are appropriate for GS projects. The Agency does not believe it is appropria te to impose longer time frames if they are unnecessary, but supports the Directors' discretion and aut hority under 40 CFR 124.10 to extend the public comment period if he or she determines that such an extension is warranted. Circumstances that may affect a Director's determination may include the level of public interest in a GS project, specific permit details, or proj ect-specific considerations.

Letter ID: 0242 Comment ID: 23336 Letter Lines: 1045 to 1050

Comment Code: 3350 2.2.1.5 Use of proprietary models for GS sites (seeking comment)

Comment Code: 5540 2.10.2 Need for additional public partic ipation requirements/ use of new information technology (seeking comment)

Comment: 2. The proposed rule allows an applicant to use proprietary modeling software to submit predictions of plume behavior and movement, storage capacity, and

41injection rates. Use of proprietary soft ware would hinder public participation because the public could not test appli cant’s modeling predictions. To ensure transparency in the application process, publicly available modeling programs must be required.

Individual Response: EPA expects that permitting authorities would make some information

about the model available to th e public, such as information about the model used and the parameters modeled. However, EPA does not expect that members of the public would evaluate

the AoR delineation models themselves. The models and their inputs will, by necessity, entail an

extensive amount of technical information that may not be easily understood by the public. EPA believes that it is the Director's responsibility, as a steward of public health and the environment, to review models, model inputs, and results and to determine whether the model is appropriate for predicting the AoR, and to distribute inform ation that may be easily understood by the public (e.g., in the form of a fact sheet).

In response to comments about the need for addi tional public participatio n and the use of new information technology, EPA shares the commenter’ s concern about the need to evaluate the inputs and assumptions used, but disagrees that the use of proprietary models should be disallowed. EPA intends to allow the use of propr ietary models in meeting the requirements for the GS regulation, as long as GS well operators us ing a proprietary model clearly disclose, to the Director's satisfaction, the code assumptions, relevant equations, and scientific basis.

EPA believes that operators should have the flexib ility to select models with which they are familiar and that are most appropriate to the site conditions and available data types and amounts. EPA also recognizes that a standardized model for AoR delineations could be effective as long as the model accounts for the expected varia tions in site conditions, and adds that a state or regional UIC Dir ector could select one standard model if it took site-specific variations into account. EPA has evaluated technical documents regarding several computational models that may be used for GS sites. Based on this review (as documented in the preamble to the proposed GS regulation and the background document "Computational Modeli ng of Underground Injection of Carbon Dioxide for Determinati on of Area-of-Review and Potential Risk to Underground Sources of Drinking Water"), EPA be lieves that several models meet the minimum requirements for models in the GS regulati on. EPA adds that its Confidential Business Information requirements at 40 CFR 144.5 will apply to the use of proprietary models.

Letter ID: 0242 Comment ID: 23337 Letter Lines: 1052 to 1058

Comment Code: 5540 2.10.2 Need for additional public partic ipation requirements/ use of new information technology (seeking comment)

Comment: 3. Each stage of the Club’s recommende d permit process sh ould incorporate application transparency, public hearings and a comment period. EPA should maintain a list of interested persons in each proposed/completed project and inform this list of every new applicat ion change, hearing, comment period, annual report, etc. These materials should be posted on the internet.

4243 4. All remediation plans should be subj ect to notice and public comment.

Individual Response: EPA agrees that informing the public on all aspects of GS projects is important. GS permitting authorities must follow the existing public partic ipation requirements for UIC permits as specified in 40 CFR Part 124. These regulations lay ou t the procedures for decision making and include requirements such as requiring the Director to notify the public regarding the availability of th e draft permit and allow him or he r to require a public hearing on the draft permit.

The Agency encourages permitting authorities and GS operators to provide the public, including residents near the project, with as much pr oject-specific information as possible. This information may include, but is not limited to, speci fic technologies used at the GS injection site, potential/new GS projects, and opportunities fo r public involvement. In addition to requiring public notice of all draft permits under §124.10(a)(1)(ii), stakeholders can request that they be notified about draft permits. In addition, §124.10(d) requires that the pu blic notice state how stakeholders can obtain a copy of the permit a pplication and draft permit. GS operators and permitting authorities are also encouraged to make this information available on the Internet.

Regarding the comment that remediation plans should be included in th e public participation requirements, EPA notes that emergency and remedial response plan s are required under §146.94(a) as part of the permit application and c opies of the permit appl ication are available upon request during the draft permit public comme nt period. In addition, EPA added text to §144.39(a)(5) that permit modifications would be re quired if the Director determines that a modification is necessary based on amendments to any of the project plans, among other situations. In such cases, the revised plan would be available for public comment.

EPA also encourages permitting authorities to notify and involve as many stakeholders as possible including drinking water organizati ons and local water utilities. 40 CFR §124.10(c)(1)(x)(A) requires notification "to any unit of local government having jurisdiction over the area where the facility is proposed to be located; and (B) to ea ch State agency having any authority under State law with respect to the construction or operation of such facility."