On July 25, 2008, EPA published proposed regulatory amendments that would establish a new class of wells that may be permitted pursuant to its Underground Injection Control (UIC) Program authorized by the federal Safe Drinking Water Act. The regulations establishing the criteria and standards for issuance of Class VI Wells (to be codified at 40 CFR Part 146, Subpart H) will apply to wells that are used for the purpose of injecting carbon dioxide from an emission source into a deep subsurface rock formation for long-term storage (a.k.a. “Geologic Sequestration”). This Geologic Sequestration of CO2 is a part of the process that is commonly referred to as “Carbon Capture and Storage,” or “CCS” - which is widely acknowledged to be one of the primary mitigative tools that will be required in connection with any climate change legislation on the federal level.

Typically, CO2 is captured from a power plant or industrial facility, compressed to convert it to a supercritical fluid, and then transported to a sequestration site (normally by pipeline). In order to maintain the CO2 in storage as a supercritical fluid, it will likely will have to be injected at depths greater than 2,625 feet. EPA’s proposed rule applies only to wells that would be used for the injection of such CO2; it does not address the capture and conversion of CO2, or the transport of CO2 to a sequestration site.

Likewise, EPA’s proposed rule does not address the injection of CO2 that is already taking place pursuant to well permits issued under other existing UIC regulations. For example, under the UIC Class I program, many oil and gas developers have used CO2 in connection with the enhanced recovery of oil and gas reserves, and the proposed Class VI rules will not affect those projects. In addition, pursuant to guidance issued by EPA in 2007, some state authorities have issued Class V “Experimental” Well Permits in connection with the pilot studies of CCS. As that guidance recognized, such pilot studies are limited in scope and duration, and it would be expected that those proposals which are proven to be viable under a previously-issued Class V permit would be the subject of a new Class VI well permit application (in order to convert them into an authorized Geologic Sequestration project).

EPA has proposed a new class of wells under its UIC authority because it recognizes the unique nature of CO2 injection for long-term storage and that additional requirements that should apply to this activity, and in order to ensure the application of a consistent framework for approval of such projects. As more than 30 states currently administer their own EPA-approved UIC programs, EPA expects that many states will assume primary regulatory authority with respect to the Class VI Well program. However, the agency also acknowledges that there may be projects in which the sequestered carbon dioxide is expected to cross state borders, and the issues to be addressed in those situations are not encompassed within this proposed rulemaking.

Among the requirements that are discussed in EPA’s detailed regulations include geologic site characterization; the proper construction of wells, including demonstration that the materials to be used are compatible with handling carbon dioxide (which, in the presence of water, forms a corrosive carbonic acid); computerized designation of the “area of review” around the injection wells, including periodic re-evaluation using monitoring and operational data to confirm movement of CO2 as predicted within the subsurface; mechanical integrity testing of the wells; groundwater monitoring; tracking the location of injected CO2; extended post-monitoring site care; and additional financial responsibility requirements in order to demonstrate that funds would be available for well plugging, site care, closure, and emergency and remedial response.

EPA is seeking comment on a range of potential monitoring methods, including indirect geophysical monitoring and surface air (i.e., LIDAR) and soil gas monitoring.

With respect to site closure, EPA has proposed a default 50-year time frame for post-injection site care (monitoring), while vesting Regional Directors with discretion to lengthen or shorten that period, based on data from modeling and monitoring results. For example, if modeling and monitoring results demonstrate that the plume and pressure front have ceased to move and the injectate does not pose a risk to underground drinking water supplies, the EPA Regional Director (or applicable state agency) may grant a petition to reduce the 50-year time frame. On the other hand, EPA notes that post-injection site care requirements could be extended for 100 years (or longer) if monitoring and modeling information indicates that the plume may still endanger underground drinking water supplies throughout that period. EPA considers the 50-year time frame to represent a “reasonable mid-point” for a default time frame. For the convenience of those who are interested in this topic, EPA notes that it has compiled (and made available in the docket) information on a variety of alternative instruments for addressing financial responsibility after the post-injection site care period, including indemnity programs.

Comments on the proposed pule must be received on or before November 24, 2008. They may be submitted by on-line procedures, regular mail, or hand-delivery. In addition, all documents in the docket for the proposed rule are listed (and many are available for download) on the internet at: http://www.regulations.gov