### 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.

# V~g~·DAKOTA

A Division of MDU Resources Group, Inc.

400 North Fourth Street
Bismarck, ND 58501 (701) 222·7900

December 24, 2008

Submitted via internet on www.regulations.gov

Water Docket

U.S. Environmental Protection Agency

Mailcode: 2822T

1200 Pennsylvania Avenue, NW Washington, DC 20460

Attention: DocketlD o. EPA-HQ-OW-2008-0390

Subject: Federal Requirements Under the Underground Injection Control (VIC) Program

for Carbon Dioxide (C0 2 ) Geologic Sequestration (GS) Wells (73 Federal Register 43492, July 25,2008)

Montana Dakota Utilities Co., a division ofMDU Resources Group, Inc. (Montana-Dakota)

submits the following comments on the U.S. Environmental Protection Agency (EPA)'s proposed rule for regulating the injection and geologic storage (GS) of carbon dioxide (C0 2 )
under the Safe Drinking Water Act (SDW A)'s underground injection control program (VIC),

issued on July 25,2008. Montana-Dakota appreciates the opportunity to comment on EPA's proposed rule. The proposed regulation provides a critical lTamework for implementing future

CO 2 GS projects in which CO 2 is captured and sequestered from fossil-fired power generating

facilities.

At the outset, Montana-Dakota would incorporate by reference the comments made by the

Edison Electric Institute, Lignite Energy Council, University of North Dakota's Energy and

Environmental Research Center (EERC) and Western Bllsiness Roundtable.

Background

Montana-Dakota generates, transmits and distributes electricity in North Dakota, Montana, South

Dakota and Wyoming, and distributes natural gas in these same states, and also Minnesota. The

company owns and operates coal and natural gas fired electric generating facilities, as well as wind turbine and heat recovery electricity generation facilities. Currently, Montana-Dakota

generates a majority of its electricity through fossil-fired power plants. Therefore, the proposed
rule, in providing additional certainty in capturing and sequestering CO 2
, is expected to support

Montana-Dakota's continued utilization of the region's abundant fossil fuel resources in order to

continue generating affordable electricity for its customers. Montana-Dakota believes it isimportant to proceed with development of CO 2 GS projects while preventing potentially

undesirable impacts to drinking water resources.

Montana-Dakota strongly supports research and development efforts underway to facilitate

commercial-scale CO 2 capture and sequestration (CCS) projects, and shows this support specifically through its active membership in the Plains CO 2 Regional (PC OR) Partnership. Led by the EERC and assisted by its members, PC OR and has developed and is currently carrying

out two CO 2 geologic sequestration projects designed to demonstrate the effectiveness of CO 2 geologic sequestration. As these efforts increase, it is necessary to develop clear, flexible and appropriately tailored regulations to facilitate the development of and spur investment in carbon

capture and sequestration technology. The proposed rule assists with creating additional certainty

in approaching GS project development, however there are some concerns that need to be

addressed. Montana-Dakota offers comment on the following issues:

Potential Obstruction of Enhanced Oil Recoverv (EOR) Activities

EPA's search for a regulatory structure to manage geologic sequestration of CO 2
, in the context

of CO 2 capture initiatives contemplated in CCS initiatives, has resulted in this proposal to create

a new SDW A UIC "Class VI" category. This effort reflects the fact that geologic sequestration

wells do not fall neatly into any of the current SWDA UIC classes. Montana-Dakota understands

that rationale and generally supports the distinction being drawn. In fact, Montana-Dakota wants

to make sure that the distinction is drawn clearly enough that it does not confuse or impede the existing CO 2 uses, such as enhanced oil recovery (EaR), already covered under Class II of the

UiC regime.

Utilize Performance-based Standards for Proposed Sites

As proposed, EPA's regulations contain a number of default provisions that would apply universally to projects. Rather than imposing default provisions, those portions of the rulemaking

that address inherently site-specific issues should allow for site-specific, perfonnance-based

determinations as part of the permitting process. Sites will differ greatly geologically and

otherwise.

CO 2 Not to Be Considered a Hazardous Waste

Montana-Dakota believes it is critical that any regulation under the UlC program does not UlU1ecessarily characterize CO 2 as a waste, pollutant or contaminant or otherwise unduly stigmatize the injection and GS of CO 2

. While it is appropriate to consider the actual

characteristics of CO 2 and tailor regulations accordingly, unwarranted characterization of CO 2 as

a hazardous waste, for example, should be avoided.

Careful Characterization of Site Risks

It is, of course, crucial that the fmal rule meet EPA's objective of protecting drinking water supplies. We are concerned, however, that some of the more stringent requirements being proposed for Class VI wells are not supported by findings of unique risks actually posed by CCS

wells. EPA's regulations should be based upon an accurate characterization of the potential risks posed by the geologic sequestration of CO 2 and be specifically tailored accordingly to address

those identified risks. This will ensure that EPA meets its obligation to provide appropriate protection of underground sources of drinking water, while avoiding unnecessary regulations that

2may hamper CCS or EaR projects from going forward or call into question the general safety of

CO 2 storage.

Regulations tailored to ensure proper site selection will in tum minimize the need for regulations

crafted to respond to risks that, in such a context, would be extremely unlikely to occur. For example, simply limiting CO 2 injection to only beneath the lowemlost formation containing Underground Sources of Drinking Water (USDW) is unwarranted. The suitability of the receiving fomlation and the project's general protectiveness ofUSDW are already required to be

evaluated as a part of each GS permitting exercise in the proposed rule, and may prove that upper
fomlations are appropriate for GS of CO 2

.

Montana-Dakota believes that the properties of CO 2
, while unique in some respects, do not require or warrant such stringent treatment. Plainly adopting a requirement for CO 2 GS, such as used for hazardous waste, would be likely to create the misperception that CO 2 injection wells

are analogous to hazardous waste injection wells and thus carry analogous risks.

Secondary Containment Requirement Concerns

A proposal to require secondary contairunent, even in discretionary form, is unnecessary and

unwarranted for many of the same reasons that a blanket limitation on receiving formations is

unnecessary and unwarranted. The presumed purpose of secondary containment is better

addressed through proper site selection and well-designed plans to detect and contain leakage

from the primary containment system. Montana-Dakota believes that the physical and chemical propel1ies of CO 2 are not sufficiently unique, nor do they pose a sufficiently unique potential

threat to USDW, to warrant such unprecedented treatment under the VIC program.

Imposition ofa substantially more rigorous requirement on injection and storage of CO 2 strongly implies that such a project would be more dangerous than underground injection of a host of

other materials, including hazardous wastes. The final rules should be crafted to avoid creating

this public stigma for one of the most promising GHG-management strategies, and for a technology that can be employed safely and effectively in the absence of secondary containment requirements of any sort.

However, should the EPA choose to impose a discretionary requirement for program directors to

determine secondary containment requirements, the current proposal should be modified to

include such clear guidelines in order to provide some amount of certainty for operators and
investors, as well as to avoid the metamorphosis of what is a discretionary requirement on paper
into a default requirement in practice.

Periodic Reevaluation of Area of Review (AOR)

The proposed regulations would require operators to reevaluate the proper scope of the AOR periodically at a minimum fixed frequency to be set by the program director, currently proposed

as no less than once every 10 years, with the discretion to require more frequent reevaluation.

AOR reevaluation provisions should be triggered by reasonable parameters, taking into

consideration site-specific issues. AOR issues are inherently site-specific; different projects, and

even different geographical regions of the country, likely warrant different approaches.

3Montana-Dakota believes that tying reevaluation to the triggering of appropriate circumstances

will provide equivalent protection for USDW while also ensuring that those projects posing

greater relative risks receive greater scrutiny through more stringent reevaluation requirements,

and those projects posing fewer relative risks are relieved of unnecessary regulatory burdens. At

a minimum, any default period for reevaluation should be determined based on site-specific

characteristics at the time of project permitting.

A phased corrective action approach as proposed in the rule has merit particularly where periodic

reevaluations of the AOR are to be required. A phased approach will help ensure that all

necessary corrective action is taken, but also that unnecessary corrective action is avoided.

Closure and Post Injection Site Care (PISC) Establishing a default time period for PISC, in particular a default time period as lengthy as 50

years as proposed in the rule, is unnecessary and undesirable, and the dual goals of protecting

USDW and supporting the commercialization of CCS technology are far better served through a site-specific, performance-based approach. Montana-Dakota believes that the unique

characteristics of CO 2 do not justi fy imposition of such a lengthy default PISC period for GS projects. Appropriately sited projects should demonstrate the absence of endangemlent to USDW

in substantially less than 50 years.

Further, imposing requirements on CO 2 storage projects that are far beyond those currently in place even for injection of hazardous wastes is unnecessary and will only engender public misperceptions regarding the safety of such projects. There is potential for an obligation to provide financial assurance for activities running through 70 years into the future (according to

EPA's assumption of a 20-year injection period), or more. Especially, given the ongoing credit
crisis, an unjustifiably lengthy PISC period may make obtaining the necessary financial

assurance impossible, stwlting or stopping commercial development of CCS.

Montana-Dakota urges EPA to implement a performance-based approach that considers the

circumstances of a particular project, bounded by appropriate parameters for its application, and

also encourages the EPA to establish clear parameters for such a performance-based approach,

and in pa11icular, a clear set of guidelines for demonstrating that the injectate has "stabilized",

and for meeting the non-endangerment standard.

Financial Assurance Provisions Requiring financial assurance for potential liabilities for more than 50 years in the future may
deter and even prevent investment in CCS projects. This timeframe exceeds what is currently in place even for injection of hazardous wastes, and there is significant concern raised regarding the perspective of promoting CCS development. Montana-Dakota questions whether any signi ficant showing has been made that the physical and chemical properties of CO 2 are sufficiently unique,

or that they pose a sufficiently unique potential threat to USDW, to warrant such unprecedented

treatment under the UTC program.

Financial assurance requirements should in no event go beyond what is currently required for

Class I hazardous waste injection wells (i.e., beyond requirements to assure corrective action in

4the AOR). Again, there is the concern that treating CO 2 more stringently than other injectate

would create undue public concern and potentially inhibit CCS implementation. MontanaDakota encourages EPA to consider the experience of current CCS demonstration projects in moving forward with financial assurance provisions.

Also, the proposed rules do not contain clear provisions for reducing fmancial assurance obligations over time in accordance with declining risk. Financial assurance requirements should

be based upon the actualities of the risk curve for CCS projects, and ideally the risk curve for a particular CCS project. Financial assurance requirements as proposed do not include provisions

that would allow site-specific characteristics to be taken into account. It is crucial that any
financial assurance requirements be sufficiently flexible to take into account the particular risks

associated with any given project and also, the type of financial assurance mechanism that can be

utilized.

The preamble indicates that EPA may be willing to consider a phased or staged approach to

financial assurance requirements, as well as separate financial assurance demonstrations for plugging and PISC activities at later points in time. Such provisions would ease some of the

difficulties with the financial assurance proposal in terms of estimating costs for future activities assuming that better estimation tools would become available.

It is understood that stakeholders have already reported some difficulty in obtaining insurance

coverage for CCS projects. Montana-Dakota encourages the EPA to evaluate this issue carefully

and ensure that it is not creating obligations with which operators simply cannot comply, or
which are so expensive that commercial development and deployment of CCS will be crippled at

the outset.

The preamble acknowledges that EPA is making no attempt to factor in circumstances in which a
state, for example, or other third party has assumed long-term risk or liability for or ownership of

stored CO 2 (as is contemplated in the Interstate Oil and Gas Compact Commission (IOGCC)

model statute and regulations issued in September 2007 and by some states). Montana-Dakota

encourages the EPA to consider that liability transfers may be effectuated under other laws and

to examine closely how the UIC rules can take such provisions into account, and consider how

these entities would be required to provide financial assurance.

Grandfathering Other Wells

EPA has proposed giving the DIC program discretion to "grandfather" the construction requirements for existing Class II and Class V experimental wells (as well as existing Class I

wells that were not intended to inject CO 2 originally, since well construction requirements for

Classes I and proposed VI are similar) where the UIC program director can determine that the

wells will not endanger USDW. Such grandfathering is soundly justified, as these wells have

been constructed specifically for injection and, particularly in the case of Class V experimental
wells, for storage of CO 2 and are suitable for the purpose for which they are designed. The promulgation of new regulations should not render them unfit for the purpose for which they

were intended.

Further, pemlittees of these wells presumably were required to satisfy the non-endangerment

5standard as part of the initial permitting process. However, under these circumstances, potential grandfathering likely would not provide the needed assurance, and thus the needed incentives, to project operators or investors that existing wells, or, perhaps more importantly, new wells that

may be permitted before the proposed rules take effect, will remain viable wells from a regulatory perspective going forward.

There is a concern that EaR operators faced with the proposition of 50 or more years of financial

assurance requirements may decide that the benefits of converting to a CCS operation are not

worth the costs and could deter CCS projects from implementation. It is understood that wells permitted to inject and store CO 2 have already been deemed safe and suitable for those purposes,
and a determination has already been made that no endangerment is posed to USDW.

The grand fathering provision in the rule should be as expansive as possible while balancing the

need for protection ofUSDW, and thus Montana-Dakota believes that a couple of modifications

should be made to the proposed rule. A preferable approach would be to expand the scope of

available grand fathering for existing wells, given that the wells were initially constructed for injection of CO 2

. Also, it would be preferable to allow grandfathering as a default, unless the

program director determines that, due to specific concerns, a project would not be suitable for

CO 2 storage.

State Primacy

Montana-Dakota agrees that states and tribes should playa key role in managing CCS projects.
Many states are moving ahead with developing their own legislation and regulations related to

CCS activities, as are a number of western states. The EPA should consider potential issues

related to projects that may span multiple states in light of primacy issues. The EPA should

consider provisions in the rule for establishing a primary state for permitting purposes, with

additional affected states provided an opportunity for notice and comment.

Other Law Implications

Montana-Dakota urges EPA to evaluate carefully any proposed treatment of the Comprehensive

Environmental Response, Compensation, and Liability Act (CERCLA) and Resource

Conservation and Recovery Act (RCRA), or other laws, that it may be considering under the

Class VI regulations to ensure that any such treatment is necessary and does not serve as an
unintended springboard for hampering the successful conunercialization of CCS. Unless CO 2 is categorized as a commodity, and not as a waste, there could be significant complications in implementing C02 GS projects.

Once a material is deemed to be a solid waste, an additional set of parameters applies to

determine whether that substance is also a hazardous waste and thus subject to further regulation.

Montana-Dakota recommends that EPA examine an approach to determining that CCS activities

which meet VIC permit requirements are not equated to discarding the CO 2

. Identifying CO 2 as a

waste could limit the use of stored CO 2 in any potential future applications.

The EPA jumps to an unnecessary and potentially confusing discussion in the preamble of

whether injected CO 2 may be a hazardous waste, potentially implying that CO 2 is a solid waste

to begin with. Montana-Dakota recommends that any characterization of potentially hazardous

6constituents in CO 2 injectate may be addressed, possibly through Toxicity Characteristic Leaching Procedures, as part of the DIC permitting process without addressing any potential RCRAjurisdictional issues. This should be examined further by EPA in regard to both RCRA

and CERCLA implications.

Limits on EPA Authority and Discretion

EP A should consider the significant interests and experience of the states in developing regulations. Montana-Dakota recognizes that in order to allow for effective site-specific

determinations and to maintain essential regulatory flexibility, some amount of discretion must

be vested in the UTC program director. At the same time, such discretion should be bounded by

the inclusion of relevant and appropriate considerations for making necessary determinations. in general, the rules should establish with sufficient clarity the factors to be taken into account and

leave the precise determinations to the permit process.

EPA should adhere to its limited authority at this juncture under SDW A and should avoid exceeding that authority. The value of developing a clear regulatory regime will be undermined

if that regime is potentially unstable or subject to lengthy delays because of potential susceptibility to attack for failure to adhere to EPA's authority. On the other hand, EPA should

strive to anticipate future statutory and regulatory developments in the climate change arena so
that any rulemaking has a reasonable chance of melding with such developments.

Much of the experience and expertise associated with injection and storage of CO 2 that currently

exists is the result of several decades of experience with EOR and enhanced gas recovery operations through Class II UTC permits. As CCS gains momentum as a GHG mitigation tool,

EOR operators may provide not only this wealth of experience and expertise, but also the first push toward commercial CCS by seeking to convert existing EOR operations to purely storage operations to take advantage of whatever credits may eventually become available under climate change legislation or regulation.

Public Education

Montana-Dakota supports the development of regulations and policies that will serve to educate

the public and provide for appropriate public input on projects, however, public participation provisions like those currently applicable under RCRA are unnecessary and undesirable for GS projects. Otherwise, Montana-Dakota believes that the rule provides a rational public participation approach for GS projects. The EPA is recommended, as it indicates its interest in

the preamble, to provide education about this topic on their website regarding the benefits and

true risks of CCS projects.

Conclusion

Montana-Dakota encourages the EPA to consider carefully the link between each proposed provision and its authority to regulate under SDW A. Where the link is more tenuous, the proposed provision may be subject to greater risk of legal challenge, posing uncertainty for those

who desire to move ahead with CCS projects. Montana-Dakota believes that the EPA has proposed a rule that, pending the consideration of the above recommendations, should provide

additional certainty for further CCS project development.

7Thank you for the opportunity to comment on this proposal. If you have any questions, please

contact me at (70 I) 222-7844.

Sincerely,

Abbie Krebsbach

Environmental Manager

cc: Andrea Stoll1berg, Vice President of EJect ric Supply

Alan Welte, Generation Manager

Geoff Simon, MDU Resources Governmental Affairs

Joe Icenogle, Fidelity Exploration

8

### Letter ID: 0235

Commenter: Abbie Krebsbach Organization: Montana- Dakota Utilities Co.

Letter ID: 0235 Comment ID: 23175 Letter Lines: 35 to 38

Comment Code: 1420 1.2.1.1 Support the GS rulemaking

Comment: Dakota appreciates the opportunity to comment on EPA's proposed rule. The proposed regulation provides a critical fr amework for implementing future CO2 GS projects in which CO2 is captured and sequestered from fossil-fired power generating facilities.

Individual Response: EPA agrees that the UIC Program, under the authority of the SDWA, provides a strong framework for regulating injec tion of CO2 for GS and adds that the GS regulation tailors the UIC requireme nts to address the unique issues associated with large-scale 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.

Letter ID: 0235 Comment ID: 23176 Letter Lines: 51 to 58

Comment Code: 1330 1.1.3.1 Support use of GS in general

Comment: electricity generation facilities. Cu rrently, Montana-Dakota generates a majority of its electricity through fossil-fired power plants. Therefore, the proposed rule, in providing additional cer tainty in capturing and sequestering CO2, is expected to support Montana-Da kota's continued util ization of the region's abundant fossil fuel resources in order to continue generating affordable electricity for its custom ers. Montana-Dakota believes it is important to proceed with development of CO2 GS projects while preventing potentially undesirable impacts to drinking water resources.

Individual Response: EPA acknowledges the comment. Pleas e see the remainder of EPA’s responses to this letter for further details. Fo r additional information on EPA’s final regulatory approach, please see the final rule and pr eamble as well as the rulemaking docket.

Letter ID: 0235 Comment ID: 23177 Letter Lines: 60 to 70

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

Comment Code: 1410 1.2.1 Comments in support of EPA/rulemaking

Comment Code: 1850 1.4.2 CO2 GS Field Research

Comment: Montana-Dakota strongly supports research and development efforts underway to

1

### facilitate commercial-scale CO2 capture and sequestration (CCS) projects, and shows this support specifica lly through its active member ship in the Plains CO2 Regional (PCOR) Partnership. Led by the EE RC and assisted by its members, PCOR and has developed and is currently carry ing out two CO2 geologic sequestration projects designed to demonstrate th e effectiveness of CO2 geologic sequestration. As these efforts increase , it is necessary to develop clear, flexible and appropriately ta ilored regulations to facili tate the development of and spur investment in carbon capture and sequestration technology. The proposed rule assists with creating additional cer tainty in approach ing GS project development, however there are some concerns that need to be addressed. MontanaIndividual Response: EPA acknowledges the value of the DOE pilot projects a nd resultant data and information generated by such projects. EPA has evaluated permits and reviewed operational

data and information associated with the seve n RCSPs funded by the U.S. Department of Energy and coordinated through the National Energy Te chnology Laboratory (NETL). In addition to the information cited in the preamble to the pr oposed rule, EPA published a Notice of Data Availability and Request for Comment on A ugust 31, 2009 (74 FR 44802) in which the Agency

described the results of research at three DOE partnership sites: the Escatawpa, Mississippi project; the Aneth Field project in Paradox Basin, Southeast Ut ah; and the Pump Canyon Site,

New Mexico.

EPA agrees that flexibility to address new research is important. Even after finalizing the rule, the Agency plans to collect and review data every six years on GS projects, including research by the DOE Partnerships, to determine whether th e appropriate amount and types of information and appropriate documentation are being collecte d, and to determine if modifications to the requirements are appropriate or necessary.

EPA agrees that the implementation of the GS rule in a manner that ensures protection of USDWs from endangerment is impo rtant to establishing a foundation for further advances in the field of CO2 GS. EPA acknowledges the need for regulatory certaint y: the final GS requirements provide a level of certainty by setting forth unique requirement s for GS. These requirements

include: the tailored AoR delin eation process at §146.84, the types of monitoring appropriate to GS projects (§146.90) and the post-injection site care process (§146.93). For additional information on these requirements, please also see the discussion of EPA’s Final Regulatory Approach in the preamble to the final GS rule.

EPA agrees that an adaptive and flexible a pproach is appropriate. To protect USDWs from endangerment and meet the potentially fast pace of GS deployment, EPA is using an adaptive approach to regulating CO2 injection for GS. The Agency plans to collect and review data every six years on GS projects to dete rmine whether the appropriate am ount and types of information and appropriate documentation are being collecte d, and to determine if modifications to the requirements are appropriate or necessary. An adaptive approach will allow regulatory development to proceed in time to meet the cu rrent and future demands for Class VI permits while EPA continues to gather data from p ilot projects and other re search as it becomes

available.

2

### Letter ID: 0235 Comment ID: 23178 Letter Lines: 73 to 83

Comment Code: 2046 1.5.2.3 Continuing to classify CO2 in jection for EOR/EGR as Class II/ dividing line between Class II and Class VI (seeking comment)

Comment: Potential Obstruction of Enhanced Oil Recovery (EOR) Activities

EPA's search for a regulatory structure to manage geologic sequestration of CO2, in the context of CO2 capture initiatives contemplated in CCS initiatives, has resulted in this proposal to create a new SDWA UIC "Class VI" category. This effort reflects the fact that geologic sequestration wells do not fall neatly into any of the current SWDA UIC cla sses. Montana-Dakota understands that rationale and generally suppor ts the distinction being dr awn. In fact, MontanaDakota wants to make sure that the dis tinction is drawn cl early enough that it does not confuse or impede the existing CO2 uses, such as enhanced oil recovery (EOR), already covered under Cl ass II of the UIC regime.

Individual Response: EPA agrees that tailored requirements for Class VI wells are necessary to address the unique nature of in jecting large volumes of CO2 a nd to ensure that USDWs are protected from endangerment. The GS rule c ontains tailored requirements for the permitting, geologic site characterization, AoR and corre ctive action, well construction, operation, mechanical integrity testing, monitoring, well plu gging, post-injection site care, and site closure of GS wells that directly addre ss issues unique to the nature of large-scale CO2 injection for GS.

EPA clarifies that projects that inject CO2 for the primary purpose of long-term storage will be permitted as Class VI wells and will be subject to the specific requirements in the final GS rule. The GS rule contains tailored requirements that directly address issues unique to large-scale CO2 injection for GS.

In response to the comment that establis hing a new well class will create economic and operational barriers, EPA clarifies that this comment is outside the scope of this rulemaking. The purpose of the GS rule is to ensure protection of USDWs from endangerment and not to promote or incentivize GS deployment. Howver, the Agen cy believes that establishing a regulatory framework for the future development and deployment of CCS tec hnology may provide the regulatory and jurisdicti onal certainty needed to foster development and deployment of CCS while ensuring USDW protection.

Letter ID: 0235 Comment ID: 23179 Letter Lines: 85 to 91

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

Comment: Utilize Performance-based Standards for Proposed Sites

As proposed, EPA's regulations contain a num ber of default provisions that would apply universally to projects. Rather than imposing default provisions, those portions of the rulemaking that address i nherently site-specific issues should

3

### allow for site-specific, performance-ba sed determinations as part of the permitting process. Sites will differ great ly geologically and otherwise.

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

Letter ID: 0235 Comment ID: 23180 Letter Lines: 93 to 100

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

Comment: CO2 Not to Be Considered a Hazardous Waste

Montana-Dakota believes it is critical th at any regulation under the UIC program does not unnecessarily characte rize CO2 as a waste, pollutant or contaminant or otherwise unduly stigmatize th e injection and GS of CO2. While it is appropriate

to consider the actual charac teristics of CO2 and tailor regulations accordingly,

unwarranted characterization of CO2 as a hazardous waste, for example, should be

avoided.

Individual Response: The GS rule does not address the st atus of CO2 as a pollutant or commodity. While the Class I requirements fo rmed the basis of many of the specific requirements for GS wells, EPA clarifies that the GS rule is tailored to th e unique nature of GS. EPA based many of the GS requirements on the Cla ss I regulations because, like Class VI wells, Class I wells are typically deep and involve wa ste streams that, if not properly managed, can

harm the well and lead to contamination.

With respect to RCRA, EPA has decided to initi ate a separate proposed rulemaking specifically

to examine the issue of RCRA a pplicability to CO2 streams be ing geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2

GS in Class VI wells. EPA will consider these comments as part of its development of that proposal. The Agency will consider issues particular to RCRA in the context of that separate rulemaking, and recommends that the commenter r ead that proposed rule when it is published. The Agency notes that commenters who wish to submit comments on the RCRA proposal will need to do so during the comme nt period for that rule.

Letter ID: 0235 Comment ID: 23181 Letter Lines: 102 to 117

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

Comment Code: 3100 2.1 Proposed Geologic Siting Requirements (40 CFR 146.83)

4

### Comment: Careful Characterization of Site Risks

It is, of course, crucial th at the final rule meet EPA's objective of protecting drinking water supplies. We are concerne d, however, that some of the more stringent requirements being proposed fo r Class VI wells are not supported by findings of unique risks actually posed by CCS wells. EPA's regulations should be based upon an accurate characterizati on of the potential risks posed by the geologic sequestration of CO2 and be sp ecifically tailored accordingly to address those identified risks. This will ensure that EPA meets its obligation to provide appropriate pr otection of underground sour ces of drinking water, while avoiding unnecessary regulations that may hamper CCS or EOR projects from going forward or call into question the general safety of CO2 storage.

Regulations tailored to ensure proper s ite selection will in turn minimize the need for regulations crafted to respond to risks that, in such a context, would be extremely unlikely to occur. For exam ple, simply limiting CO2 injection to

Individual Response: EPA believes that a detailed, site-speci fic, geologic site characterization (required under §146.82) is essential to evaluatin g the presence and adeq uacy of the various geologic features necessary to receive and conf ine injected CO2 for GS . The requirements for geologic site characterization are based on a long standing UIC regulatory framework developed to address specific risks to USDWs posed by injection. The Class VI GS requirements are tailored so that they are appropr iate for the unique nature of inje cting large volumes of CO2 into a variety of geological formations for long-term storage.

Letter ID: 0235 Comment ID: 23182 Letter Lines: 117 to 128

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

USDWs in certain circumstances

Comment: be extremely unlikely to occur. For exam ple, simply limiting CO2 injection to only beneath the lowermost formation cont aining Underground Sources of Drinking Water (USDW) is unwarranted. The suitabil ity of the receiving formation and the project's general protectiveness of USDW ar e already required to be evaluated as a part of each GS permitting exercise in the proposed rule, and may prove that upper formations are appropr iate for GS of CO2.

Montana-Dakota believes that the prope rties of CO2, while unique in some respects, do not require or warrant such stringent treatment. Plainly adopting a requirement for CO2 GS, such as used fo r hazardous waste, would be likely to create the misperception that CO2 inject ion wells are analogous to hazardous waste injection wells and thus carry analogous risks.

Individual Response: EPA acknowledges that there are lim ited circumstances where injection above the lowermost USDW can be performe d in a manner that protects USDWs from

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### endangerment, as long as appropriate protections are in place. The final GS rule at §146.95 establishes a process by which owne rs or operators can seek a waiv er of the Class VI injection depth requirements for injecti on into non-USDW formations above and/or between USDWs. The waiver approach requires the submission of exte nsive, site-specific information (in conjunction with the permit application submission) to dem onstrate that injection of CO2 into a non-USDW

that is above or between USDW s can be done in a manner that is protective of USDWs. The requirements are designed to ensu re that the owner or operator, the Director, and the Regional Administrator consider, on a site -specific basis, the implications, benefits, and challenges associated with GS and ensuring water availability and USDW protection. EPA believes that the additional procedures for public notice of a waiver application and for Director-Regional Administrator communication at §146.95 will improve public confidence in and acceptance of GS projects opera ting under injection depth waivers. EPA clarifies that, due to the unique nature of the injection depth waiver process and in an effo rt to ensure national consistency and application of the requirements, the requirement at §146.95( d) indicates that the Regional Administrator makes the final determin ation regarding waiver issuance following an evaluation of all site-specific information, pub lic notice, and recommendations from the UIC

Director. For additional information on the waiv er approach, please s ee the final rule and preamble, as well as EPA's responses to comments on the Notice of Da ta Availability and Request for Comment.

Letter ID: 0235 Comment ID: 23183 Letter Lines: 130 to 155

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

Comment: Secondary Containment Re quirement Concerns

A proposal to require secondary containment, even in discretionary form, is unnecessary and unwarranted for many of the same reasons that a blanket limitation on receiving formations is unn ecessary and unwarranted. The presumed purpose of secondary containment is better addressed thr ough proper site selection and well-designed pl ans to detect and contain leakage from the primary containment system. Montana-Dakota believes that the physical and chemical propel1ies of CO2 are not sufficiently uni que, nor do they pose a sufficiently unique potential threat to USDW, to wa rrant such unprecedented treatment under the UIC program.

Imposition of a substantially more rigorous requirement on injection and storage of CO2 strongly implies that such a pr oject would be more dangerous than underground injection of a host of other materials, including hazardous wastes.

The final rules should be crafted to avoi d creating this public stigma for one of the most promising GHG-management stra tegies, and for a technology that can be employed safely and effectively in the absence of secondary containment requirements of any sort.

However, should the EPA choose to impose a discretionary requirement for program

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### directors to determine secondary containm ent requirements, the current proposal

should be modified to include such clear guidelines in order to provide some amount of certainty for operators and i nvestors, as well as to avoid the metamorphosis of what is a discretionar y requirement on paper into a default requirement in practice.

Individual Response: EPA believes that the Class VI requir ements, including the level of site characterization required under §§146.82 and 146.83, appropria tely address the unique challenges posed by large-scale GS including large injection vol umes, the relative buoyancy of CO2, its corrosivity in the presence of water, th e potential presence of impurities in captured CO2, and its mobility within subsurface geologic formations. The Agency believes that in some geologic settings, the presence and identification of additional confining and containment zones above the primary (i.e., lowermost) confining zone can improve USDW protection. These formations could further impede vertical flui d movement, allow for pressure dissipation, and provide additional sites for monitoring, mitigatio n, and remediation, while also affording the greatest protection of USDWs from endangerment.

EPA retains the requirement to identify additi onal containment/confining zones, if required by the Director, as proposed (e.g., §146.83(b)). The Agency's decision is supported by commenters representing states, water associations, and an elec tric utility who assert that these requirements (at §146.83(b)) promote a flexible, risk-based, si te-specific approach to characterizing and permitting a site for GS projects.

The Agency believes that providing the Director di scretion will allow consideration of a range of sites for GS, based on site-specific conditions, and ensure USDW protection. EPA believes that requiring appropriate site ch aracterization by the owner or operator (under §146.82) and providing an appropriate de gree of flexibility to the Director to evaluate site-specific geologic data will afford the greatest protec tion of USDWs from endangerment.

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. EPA expects that this guidance will assist permit writers in making an objective deci sion about requiring additional confining layers. The guidance can be found on EPA’s website at http://water.epa.gov/type/groundwat er/uic/wells_se questration.cfm.

Letter ID: 0235 Comment ID: 23184 Letter Lines: 157 to 174

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

Comment: Periodic Reevaluation of Area of Review (AOR)

The proposed regulations would require opera tors to reevaluate the proper scope

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### of the AOR periodically at a minimum fi xed frequency to be set by the program director, currently proposed as no less than once every 10 years, with the discretion to require more frequent re evaluation. AOR reeval uation provisions should be triggered by reasonable paramete rs, taking into consideration sitespecific issues. AOR issues are inherently site-specific; di fferent projects, and even different geographical regions of the country, likely warrant different approaches.

Montana-Dakota believes that tying reeval uation to the triggeri ng of appropriate circumstances will provide equivalent pr otection for USDW wh ile also ensuring that those projects posing greater rela tive risks receive greater scrutiny through more stringent reevaluation requi rements, and those projects posing

fewer relative risks are re lieved of unnecessary re gulatory burdens. At a minimum, any default period for reevaluati on should be determined based on sitespecific characteristic s at the time of project permitting.

Individual Response: EPA agrees that site-specific inform ation is an important factor in determining when AoR reevaluations are appropr iate, per §146.84(e), and e xpects that the owner or operator's and Director's combined knowledge of the local geologic conditions will be a critical element in developing plans th at protect USDWs from endangerment.

EPA also believes that periodic AoR reevaluation at a set fre quency is necessary to ensure protection of USDWs from endangerment and addr ess the uncertainties inherent in predictive modeling. Periodic AoR reevaluati ons at §146.84(e) ensure that a deliberate effort is made to verify, based on monitoring and operational data, that the CO2 plume is moving within the subsurface as predicted.

EPA 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.

Letter ID: 0235 Comment ID: 23185 Letter Lines: 176 to 179

Comment Code: 3630 2.2.4.1 Comments in favor of allowing phased corrective action

Comment: A phased corrective action approach as proposed in the rule has merit particularly where periodic reevaluati ons of the AOR are to be required. A phased approach will help ensure that all necessary corrective action is taken, but also that unnecessary co rrective action is avoided.

Individual Response: EPA acknowledges the commenter’s s upport of phased corrective action

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### and agrees that phased corrective action may provide many benefits to a project including, but not limited to, spreading the burden of cost, avoi ding delays in project start-up, allowing for use of future, improved corrective act ion techniques, and addressing unanticipated changes in the movement of the CO2 plume or pressure front . EPA believes that the phased corrective action approach is appropriate for GS projects, and retained it at §146.84(b)(2)(iv) in the final GS regulation.

Regarding the comment that some wells may not need corrective action, EPA clarifies that, if monitoring or modeling data indicate a change in the AoR, the owner or operator would need to review and amend the AoR and corrective action plan and follow the amended plan. EPA

clarifies that all wells in the Ao R of a GS project that need corrective action must receive it at some point.

Letter ID: 0235 Comment ID: 23186 Letter Lines: 181 to 207

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

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

Comment: Closure and Post Injectio n Site Care (PISC)

Establishing a default time period for PISC , in particular a default time period as lengthy as 50 years as proposed in th e rule, is unnecessary and undesirable, and the dual goals of protecting USDW and supporting the commercialization of CCS technology are far better served through a site-specific, performance-based approach. Montana-Dakota believes that the unique characteristics of CO2 do not justify imposition of such a lengthy default PISC period for GS projects. Appropriately sited projects should demons trate the absence of endangerment to USDW in substantially less than 50 years.

Further, imposing requirements on CO2 stor age projects that are far beyond those currently in place even for injection of hazardous wastes is unnecessary and will only engender public misperceptions rega rding the safety of such projects. There is potential for an obligation to provide financial assurance for activities running through 70 years into the future (according to EPA's assumption of a 20-year injection peri od), or more. Especially, given the ongoing credit crisis, an unjustifiably le ngthy PISC period may make obtaining the necessary financial assurance impossi ble, stunting or st opping commercial development of CCS.

Montana-Dakota urges EPA to implement a performance-based approach that considers the circumstances of a partic ular project, bounded by appropriate parameters for its application, and also encourages the EPA to establish clear parameters for such a performance-based a pproach, and in particular, a clear set of guidelines for demonstrating that th e injectate has "stabilized", and for

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### meeting the non-endangerment standard.

Individual Response: EPA disagrees that a post-injection si te care timeframe of 50 years is excessive. EPA proposed a default post-injectio n site care timeframe of 50 years based on a review of research studies, indus try reports, and existing environm ental programs. This analysis was included in an EPA background document in the federal docket, "Computational Modeling of Underground Injection of Carbon Dioxide for De termination of Area-of-Review and Potential Risk to Underground Sources of Drinking Water. " While numerous commenters suggested that EPA shorten the monitoring timeframe, none of the commenters provided sufficient data to warrant a change in the proposed timeframe. Wh ile the 10- or 30-year timeframe suggested by some of these commenters may be within the timeframe suggested in some studies, there are circumstances (e.g., little development of mine ral trapping of CO2) under which the potential risks of endangering USDWs will likely not declin e within these timeframes. EPA believes that a 50-year default post-injection s ite care timeframe, as required at §146.93(b)(1), is not overly burdensome, does not exaggerate the risks asso ciated with GS, is consistent with other environmental programs, and sufficiently protects USDWs from endangerment.

EPA acknowledges that there will be circumstances where it can be demonstrated in less than 50 years that the plume and pressure front no longe r pose a risk of endangerment to USDWs. For this reason, the final GS regulation allows the Di rector to shorten the po st-injection site care timeframe if the owner or operator can demonstrat e that the GS project does not pose a risk to USDWs, as specified in §146.93(b)(2). Such a dem onstration will be site-specific, and based on pressure monitoring and USDW impacts. EP A believes however, that to ensure USDW protection from endangerment, a default timeframe for post-injection site care is necessary.

EPA adds that the purpose of the GS rule is not to incentivize the use of GS; rather, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manner that protects USDWs from endangerment.

EPA also recognizes the concerns associated with assuring fina ncial responsibil ity for the long time-frames over which post-injection site care will be conducted. EPA is developing guidance on financial responsibility to a ssist owners or operators in evaluating the requirements of §146.85 and to assist Directors in evaluating fi nancial responsibility demonstrations. The guidance describes the types of financial mechanisms that operators may choose to use when evaluating the financial responsibility requirements for GS wells and it will also include a section

on how to estimate costs to s upport accurate financial respon sibility demonstrations. The guidance will be available at h ttp://water.epa.gov/type /groundwater/uic/wells_sequestration.cfm.

EPA disagrees that the requirements for financial responsibility are overly stringent. The goal of financial responsibility is to ensure that fi nancial 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 th roughout the life of the project.

EPA believes that minimum financial responsibi lity requirements are necessary to prevent endangerment of USDWs by holding well owners or operators accountable for the safe operation

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### and closure of the well and to avoid expense and risk to the public. See the final rule and preamble for further discussion of EPA's final a pproach to financial responsibility. EPA adds that the purpose of the GS rule is not to enc ourage the use of GS; rath er, the purpose of the GS rule is to ensure that, where GS is deployed, it is conducted in a manne r that protects USDWs from endangerment.

Letter ID: 0235 Comment ID: 23187 Letter Lines: 209 to 226

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

Comment: Financial Assurance Provisions

Requiring financial assurance for potential liabilities for more than 50 years in the future may deter and even preven t investment in CCS projects. This timeframe exceeds what is currently in pl ace even for injection of hazardous wastes, and there is significant concern raised regarding the perspective of promoting CCS development. Montana-Dakot a questions whether any significant showing has been made that the physical and chemical properties of CO2 are sufficiently unique, or that they pose a sufficiently uni que potential threat to USDW, to warrant such unprecedented treatment under the UTC program.

Financial assurance requirements should in no event go beyond what is currently required for Class I hazardous waste inje ction wells (i.e., be yond requirements to assure corrective action in the AOR). Again, there is the concern that treating CO2 more stringently than othe r injectate would create undue public concern and potentially inhibit CCS imple mentation. MontanaDakota encourages EPA to consider the experience of current CCS demonstration projects in moving forward with financial assurance provisions.

Individual Response: As described above, EPA disagrees th at the requirements on financial responsibility are overly stri ngent. The goal of financial responsibi lity is to ensure that financial resources are available to prevent or remedi ate the endangerment of USDWs from improper plugging, remediation, and management of wells in the event that the owner or operator experiences financial difficulties . EPA disagrees that the requirements equate GS wells with Class I hazardous waste wells; rather, the financia l responsibility requirements for Class VI wells

are tailored to account for the un ique nature of the long-term GS of CO2, wh ile providing flexibility for site-specific implementation. EPA a dds that the purpose of the GS rule is not to incentivize or promote GS; rather, it is to ensure that where GS is deployed, it is done in a manner that ensures USDW protection from endangerment.

Letter ID: 0235 Comment ID: 23188 Letter Lines: 228 to 249

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

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### Comment: Also, the proposed rules do not contain cl ear provisions for reducing financial assurance obligations over time in accord ance with declining risk. Financial assurance requirements should be based upon the actualities of the risk curve for CCS projects, and ideally the risk curve for a particular CCS project. Financial assurance requirem ents as proposed do not include provisions that would allow site-specific characteristics to be taken into account. It is crucial that any financial assurance requi rements be sufficiently flexible to take into account the particular risks a ssociated with any given project and also, the type of financial assuran ce mechanism that can be utilized.

The preamble indicates that EPA may be w illing to consider a phased or staged approach to financial assurance requireme nts, as well as separate financial assurance demonstrations for plugging and PISC activities at later points in time. Such provisions would ease some of the difficulties with the financial assurance proposal in terms of estimating costs for future activities assuming

that better estimation tools would become available.

It is understood that stakeholders have already reported some difficulty in obtaining insurance coverage for CCS projects. Montana-Dakota encourages the EPA to evaluate this issue carefully and ensu re that it is not creating obligations with which operators simply cannot comp ly, or which are so expensive that commercial development and deployment of CCS will be crippled at the outset.

Individual Response: EPA agrees that it is appropriate to al low a flexible approach for financial responsibility. Under the final GS rule owners or operators may c hoose from a variety of financial instruments listed in §146.85(a) to m eet their financial responsibility obligations, provided the Director determines that the owner or operator's proposed financial responsibility demonstration is adequate to protect USDWs from endangerment by demonstrating the ability to pay for each activity for which financial res ponsibility must be demonstrated, including corrective action on wells in the AoR, injecti on well plugging, PISC a nd site closure, and emergency and remedial response.

However, EPA will not allow for a separate (or " phased") financial responsibility demonstration for well plugging and PISC (i.e., a demonstration submitted prior to well plugging and the beginning of the post-injection si te care period rather than with the permit application). A demonstration of financial responsibility for all ph ases of the GS project will be required prior to

the issuance of a Class VI permit (§146.85(a)(5)(i)).

The GS rule allows owners or operators to use separate or multiple financial responsibility instruments for different GS activities. However, owners or operators must demonstrate adequate financial responsibility for al l required activitie s with their permit application per §146.82(a)(14). In addition, on an annual basis, th e owner or operator mu st adjust the cost estimate for inflation, increase or decrease the value of the financial instrument to match the cost estimate, and provide any updated information related to their financial responsibility instrument(s), or at any other time deemed a ppropriate by the Director. These annual reviews

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### provide a mechanism for revising cost estima tes up or down to account for changes in the project, including the execution of environmental obligations as phases of a GS project are completed.

EPA is developing guidance on financial responsibility for Class VI wells. The guidance will include a discussion on recommended approaches to estimate costs to assist Class VI 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 activities. EPA will also discuss how best to evaluate the appr opriateness of single and multiple bonding and phased release of bonds in the guidance. EPA will revi ew the requirements under SMCRA as it develops the guidance and incorporate any relevant inform ation. This guidance will be available on EPA's website at http://water.epa.gov/type/gr oundwater/uic/wells_se questration.cfm.

Regarding tying financial responsibility requirement s to site-specific risk, EPA clarifies that the cost of securing financial responsibility instrume nts will be based on whether or not a third party financial institution is used and the agreement be tween the financial institution and the owner or operator. EPA expects that some third party prov iders, such as insurers, will take risk into account when determining the cost of coverage. Ho wever, cost is expected to depend heavily on

the estimated cost of covered activities as well as certain site-specific factors. In order to assist owners or operators and financial institutions in achieving accurate cost estimates, EPA plans to include in the financial responsib ility guidance a discussion of how to estimate costs, including how to adjust cost estimates for inflation, in its guidance on meeting financial responsibility requirements for Class VI wells.

Letter ID: 0235 Comment ID: 23189 Letter Lines: 251 to 259

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

Comment: The preamble acknowledges that EPA is making no attempt to factor in circumstances in which a state, for exam ple, or other third party has assumed long-term risk or liability for or owners hip of stored CO2 (as is contemplated in the Interstate Oil and Gas Compact Commission (IOGCC) model statute and regulations issued in September 2007 a nd by some states). Montana-Dakota encourages the EPA to consider that liab ility transfers may be effectuated under other laws and to examine closely how th e UIC rules can take such provisions into account, and consider how these en tities would be required to provide

financial assurance.

Individual Response: Under the final GS rule, once an owne r or operator has met all regulatory requirements under Part 146 for Class VI wells and the Director has approved site closure pursuant to requirements at §146.93, the owner or opera tor will generally no longer be subject to enforcement for regulatory noncompliance. Furtherm ore, their financial instrument as required under §146.85 will be released if it was not used. However, even if a site closure is approved under §146.93, an owner or operator may be held liable for regulatory noncompliance (including violation of 40 CFR 144.12) in ce rtain circumstances. For example, an owner or operator may be held liable for regulatory noncompliance even afte r site closure was approved if the Director

13

### relied on erroneous information (e.g., erroneous modeling data) provid ed by the owner or operator when approving site closure.

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

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

which such violation occurs or failure to comply continues.

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

Letter ID: 0235 Comment ID: 23190 Letter Lines: 261 to 296

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

Comment: Grandfathering Other Wells

EPA has proposed giving the UIC program discretion to "grandfather" the construction requirements for existing Cl ass II and Class V e xperimental wells (as well as existing Class I wells that were not intended to inject CO2 originally, since well construction requir ements for Classes I and proposed VI are similar) where the UIC program direct or can determine that the wells will not endanger USDW. Such grandfathering is s oundly justified, as these wells have been constructed specifically for injec tion and, particularly in the case of Class V experimental wells, for storage of CO2 and are suitable for the purpose for which they are designed. The promul gation of new regulations should not render them unfit for the purpose fo r which they were intended.

Further, permittees of these wells presum ably were required to satisfy the nonendangerment standard as part of the in itial permitting process. However, under these circumstances, potential grandfat hering likely would not provide the needed assurance, and thus the needed incentives, to proj ect operators or investors that existing wells, or, perhaps more importantly, new wells that may be permitted before the proposed rules ta ke effect, will remain viable wells from a regulatory perspe ctive going forward.

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### There is a concern that EOR operators f aced with the proposition of 50 or more years of financial assuran ce requirements may decide that the benefits of converting to a CCS operation are not worth the costs and could deter CCS projects from implementation. It is unde rstood that wells permitted to inject and store CO2 have already been deemed sa fe and suitable for those purposes, and a determination has already been made th at no endangerment is posed to USDW.

The grandfathering provision in the rule should be as expansive as possible while balancing the need for protecti on of USDW, and thus Montana-Dakota believes that a couple of modifications s hould be made to the proposed rule. A preferable approach would be to expand th e scope of available grandfathering for existing wells, given that the wells were initially constructed for injection of CO2. Also, it would be preferable to allo w grandfathering as a default, unless the program director determines that, due to specific concerns, a project would not be suitable for CO2 storage.

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

EPA disagrees with commenters who suggest that the other Class VI requirements (e.g., MITs, siting, monitoring, operational, financial responsib ility, and AoR requirements) should also be grandfathered. Following re-permitting of the project as GS, many of the unique factors of GS sites (e.g., increased reservoir pr essures associated with large volumes of stored CO2 and the corrosivity of CO2 in the presence of water) wi ll result in an increased risk profile, warranting the specific requirements in the final GS rule. Therefore, following re-permitting as Class VI wells, these projects must be subject to th e operational, MIT, monitoring, reporting, plugging, and post-injection site care and s ite closure requirements in the final GS rule. See the discussion of EPA's final regulatory approach in the preamble to the GS rule for additional detail on these requirements.

In response to the comment that ER operators will be discouraged from pursuing GS, EPA clarifies that this comment is outside the scope of the rule. The purpose of the GS rule is not to incentivize the use of GS or to address the use of pore space, but to ensure that, where GS is deployed, it is conducted in a manne r that does not e ndanger USDWs.

Letter ID: 0235 Comment ID: 23191 Letter Lines: 298 to 306

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

Comment: State Primacy

Montana-Dakota agrees that states and trib es should play a key role in managing

15

### CCS projects. Many states are moving ahead with developing thei r own legislation and regulations related to CCS activities, as are a number of western states. The EPA should consider potential issues related to projects that may span multiple states in light of primacy issu es. The EPA should consider provisions in the rule for establishing a primary state for permitting purposes, with additional affected states provided an opportunity for notice and comment.

Individual Response: EPA understands that the CO2 plumes for large GS projects may cross State, Tribal, Territorial, or EPA Regional boundaries. The final GS rule, at §146.82(a)(2), requires the owner or operator to identify all State, Tribal, and Territorial boundaries within the AoR. Based on this information, the Director mu st provide written notif ication to all States, Tribes, and Territories to inform them of the permit application, as specified in §146.82(b), and ensure that they are involved in any necessary processes (e.g., devel opment of the emergency and remedial response plan, as specified in §146. 94. The Agency encourages transparency in the permitting process and anticipates that State-St ate/State-Tribal communication on GS permitting will facilitate information sharing and en courage safe, protective projects.

Because some GS projects will require coordi nation across State, Tribal, and Territorial jurisdictions, the Agency will work with the appropriate entities to facilitate communication among States, Tribes, and Territori es interested in obtaining Pr imacy during the implementation phase of the GS regulation. Such communication may involve other organizations such as the Sierra Club, NDWAC, associations, and other experts. However, the responsibility for addressing such subjects ultimately rests with the States, Tribes, and Territories with primacy. In addition, EPA is developing guidances for states that describe the proc ess of applying for and receiving primary enforcement responsibility (p rimacy) for GS Class VI wells under Section 1422 of SDWA, as well as the tech nical and administrative issues on developing GS regulations that are the equivalent of mi nimum federal criteria and requ irements. The guidance will be available at http://water.epa.gov/type/g roundwater/uic/wells _sequestration.cfm.

Letter ID: 0235 Comment ID: 23192 Letter Lines: 308 to 333

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

Comment Code: 1640 1.3.4 CERCLA issues (seeking comment)

Comment: Other Law Implications

Montana-Dakota urges EPA to evaluate carefully any proposed treatment of the Comprehensive Environmental Response, Co mpensation, and Liability Act (CERCLA) and Resource Conservation and Recovery Act (RCRA), or other laws, that it may be considering under the Class VI regulations to ensure that any such treatment is necessary and does not serve as an un intended springboard for hampering the

successful commercialization of CCS. Unle ss CO2 is categorized as a commodity, and not as a waste, there could be signif icant complications in implementing C02 GS projects.

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### Once a material is deemed to be a solid waste, an additional set of parameters applies to determine whether that substa nce is also a hazardous waste and thus subject to further regulation. Montana-Da kota recommends that EPA examine an approach to determining that CCS activit ies which meet UIC permit requirements are not equated to discarding the CO2. Id entifying CO2 as a waste could limit the use of stored CO2 in any potential future applications.

The EPA jumps to an unnecessary and poten tially confusing discussion in the preamble of whether injected CO2 may be a hazardous waste, potentially implying that CO2 is a solid waste to begin wit h. Montana-Dakota reco mmends that any characterization of potentially hazardous constituents in CO2 injectate may be addressed, possibly through Toxicity Charact eristic Leaching Procedures, as part of the UIC permitting process without addressing any potential RCRA jurisdictional issues. This should be exam ined further by EPA in regard to both RCRA and CERCLA implications.

Individual Response: As described above, the GS rule does not affect the regulatory status of CO2 under RCRA. Furthermore, EPA has decided to initiate a separate proposed rulemaking specifically to examine the issue of RCRA appl icability to CO2 streams being geologically sequestered, including the possible option of a conditional exemption from the RCRA requirements for CO2 GS in Class VI wells. EPA will consider these comments as part of its development of that proposal. The Agency will consider issues pa rticular to RCRA in the context of that separate rulemaking, and recommends that the commenter read that proposed rule when it is published. The Agency notes that comment ers who wish to submit comments on the RCRA proposal will need to do so during the comment period for that rule.

Letter ID: 0235 Comment ID: 23193 Letter Lines: 335 to 344

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

Comment Code: 1930 1.4.4.2 Consultations with State, Tr ibal, and local A ssociations (e.g., GWPC, IOGCC)

Comment: Limits on EPA Authority and Discretion

EPA should consider the significant intere sts and experience of the states in developing regulations. Mont ana-Dakota recognizes that in order to allow for effective site-specific determinations and to maintain essential regulatory flexibility, some amount of discretion must be vested in the UIC program director. At the same time, such disc retion should be bounded by the inclusion of relevant and appropriate considerati ons for making necessary determinations. In general, the rules should establish w ith sufficient clarity the factors to be taken into account and leave the precise determinations to the permit process.

Individual Response: The GS rule provides flexibility to de termine the suitability of a proposed site based on extensive, site-specific data . EPA believes that requiring appropriate site characterization by the owner or operator and provid ing an appropriate degree of flexibility to

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### the Director to evaluate site-specific geologic da ta will afford the greatest protection of USDWs. The issuance of a UIC Class VI permit is determined based on evaluation of site-specific permit information pursuant to the requirements at §§146.82 and 146.83.

EPA is developing guidance materials that descri be the process of applying for and receiving primary enforcement responsibility (primacy) for GS Class VI wells under Section 1422 of SDWA, as well as the technical and administrativ e issues on developing GS regulations that are the equivalent of minimum fe deral criteria and requirements. This guidance and training

addresses areas where the Direct or is given discretion in impl ementing the requirements. Such requirements where the Director has discretion include: whether to require owners or operators to identify and characterize additional confin ing zones under §146.83, whether to require surface air monitoring and/or soil gas monitoring unde r §146.90, and whether to extend or shorten the post-injection site care period or approve an alternative post-inject ion site care timeframe as part of the permitting process under §146.93

Letter ID: 0235 Comment ID: 23194 Letter Lines: 346 to 353

Comment Code: 1400 1.2 Comments on EPA's Authority to Regulate Injection of CO2

Comment: EPA should adhere to its limited authority at this juncture under SDWA and should avoid exceeding that authority. The value of developing a clear regulatory regime will be undermined if th at regime is potentially unstable or subject to lengthy delays because of pot ential susceptibility to attack for failure to adhere to EPA's authority. On the other hand, EPA should strive to anticipate future statutory and regulatory developments in the climate change arena so that any rulemaking has a reas onable chance of meld ing with such developments.

Individual Response: The final GS rule, which addresses the injection of CO2 for the purpose of protecting USDWs from endangerment, is with in EPA's authority under Part C of the SDWA.

The SDWA mandates EPA to establish federal minimum requirements for state programs in order to prevent underground injection that en dangers USDWs. See 42 U.S.C. §300h et. seq. Under the SDWA, the injection of any "fluid" is subject to the requirements of the UIC program. "Fluid" is defined under 40 CFR 144.3 as any mate rial or substance which flows or moves, whether in a semisolid, liquid, slud ge, gas or other form or state, and includes liquids, gases, and semisolids (i.e., slurries) injected into the subs urface. EPA clarifies that CO2 injected for the purpose of GS is subject to the SDWA.

While EPA agrees with commenters that a stab le, predictable, nati onally consistent, and workable regulatory framework is important, EPA st resses that the focus of the GS rule is to ensure that, where GS is deployed, it is conduc ted in a manner that protects USDWs from endangerment.

EPA acknowledges that GS falls within the broade r context of CCS and the need for regulatory clarity to ensure that USDWs are protected from endangerment. In develo ping the final GS rule,

the Office of Water coordinated with other Agency program offices and across federal agencies

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### (e.g., with the Department of Energy; United Stat es Geological Survey; Bureau of Ocean Energy Management, Regulation, and Enforcement, formerly the Minerals Management Service; and the Bureau of Land Management). The Agency continue s to evaluate areas of potential applicability

of other Federal environmental statutes incl uding, but not limited to: the Clean Air Act; the Resource Conservation and Recovery Act; th e Comprehensive Environmental Response, Compensation, and Liability Act; and the Marine Protection, Rese arch, and Sanctuaries Act to various aspects of GS and CCS. The Agency will continue to coordinate on GS and CCS related issues to minimize redundancy and maximize efficien cies for owners or ope rators. For additional information, please see the discussion entitled "How Does This Rulemaking Relate to Other

Federal Authorities and GS and CCS Activities? " in the preamble to the final GS rule.

Letter ID: 0235 Comment ID: 23195 Letter Lines: 355 to 362

Comment Code: 1940 1.4.4.3 Consultations with Industry; experience with other wells

Comment: Much of the experience and expertise asso ciated with injectio n and storage of CO2 that currently exists is the result of several decades of experience with EOR and enhanced gas recovery operations through Class II UIC permits. As CCS gains momentum as a GHG mitigation tool, EOR operators may provide not only this wealth of experience and expertise, but also the first push toward commercial CCS by seeking to convert existing EOR ope rations to purely storage operations to take advantage of whatever credits may eventually become available under climate change legisl ation or regulation.

Individual Response: EPA recognizes that the oil and gas industry has decades of experience injecting CO2 for the purpose of ER, and that site s used for ER may be suitable for GS and may be among the first GS sites. EPA also recognizes that a by-product of ER activities is that a certain percentage of the CO2 is trapped in th e receiving formation. Some of the research that

informs the final GS rule was conducted at ER sites.

EPA clarifies that comments rela ted to climate change legislati on or regulations are outside the scope of the GS rulemaking.

Letter ID: 0235 Comment ID: 23196 Letter Lines: 364 to 373

Comment Code: 5520 2.10.1 Appropriateness of existing p ublic participation requirements (Part 25 and Part 124) for GS (seeking comment)

Comment: Public Education

Montana-Dakota supports the development of regulations and policies that will serve to educate the public and prov ide for appropriate public input on projects, however, public participa tion provisions like those currently applicable under RCRA are unnecessary and undesirable fo r GS projects.

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### Otherwise, Montana-Dakota believes that the rule provides a rational public participation approach for GS projects. Th e EPA is recommended, as it indicates its interest in the preamble, to provide education about this topic on their website regarding the benefits a nd true risks of CCS projects.

Individual Response: EPA agrees that informing the public on all aspects of GS projects is important. The Agency encourages permitting author ities and GS operators to provide the public, including residents near the proj ect, with as much project-specifi c 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.

EPA agrees that the existing UIC public particip ation requirements as specified in 40 CFR 25 and 40 CFR 124 are appropriate for GS projects. In addition, because of the unique nature of GS projects, and the anticipated level of public intere st in GS projects, EPA encourages early public involvement in GS projects. Providing the public with accurate, project-specific information in the early stages of each GS project can he lp clarify project details and avoid public misperceptions about the nature and safety of GS projects, and will allo w a potential GS owner or operator and the permitting agency to addres s the public's concerns before the permitting process is complete.

In response to comments regarding the requirements in 40 CFR Parts 25 and 124 applicable under RCRA, EPA clarifies that only the public pa rticipation requirements pertaining to the UIC program apply to Class VI wells.

Letter ID: 0235 Comment ID: 23197 Letter Lines: 375 to 381

Comment Code: 1400 1.2 Comments on EPA's Authority to Regulate Injection of CO2

Comment: Conclusion

Montana-Dakota encourages the EPA to cons ider carefully the link between each proposed provision and its authority to re gulate under SDWA. Where the link is more tenuous, the proposed provision may be subject to greater risk of legal challenge, posing uncertainty for those who desire to move ahead with CCS projects. Montana-Dakota believes that the EPA has pr oposed a rule that, pending

Individual Response: EPA believes that the SDWA provides EPA with adequate authority to regulate injection of CO2 for GS and that the GS rule does not overstep its authority under the SDWA. The GS regulation, which addresses the in jection of CO2 for th e purpose of protecting USDWs from endangerment, is within EPA's authority under the SDWA. The SDWA mandates EPA to establish federal minimum requirement s for state programs in order to prevent

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### underground injection that e ndangers USDWs. See 42 U.S.C. §300h et. seq. Under the SDWA, the injection of any "fluid" is subject to the re quirements of the UIC program. "Fluid" is defined under 40 CFR 144.3 as any material or substance which flows or m oves, whether in a semisolid, liquid, sludge, gas or other form or state, a nd includes liquids, gases, and semisolids (i.e., slurries) injected into the subsurface. EPA clarifie s CO2 injected for the purpose of GS is subject

to the SDWA.

Letter ID: 0235 Comment ID: 23198 Letter Lines: 381 to 383

Comment Code: 1420 1.2.1.1 Support the GS rulemaking

Comment: projects. Montana-Dakota believes that the EPA has pr oposed a rule that, pending

the consideration of the above reco mmendations, should provide additional certainty for further CCS project development.

Individual Response: EPA agrees that the implementation of the GS rule in a manner that ensures protection of USDWs from endangerment is important to establishing a foundation for

further advances in the field of CO2 GS. EPA acknowledges the need for regulatory certainty: the final GS requirements provide a level of cer tainty by setting forth unique requirements for GS. These requirements include: the tailored Ao R delineation process (p er §146.84), the types of monitoring appropriate to GS pr ojects (per §146.90), and the post-in jection site care process (per §146.93).

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