U.S. ENVIRONMENTAL PROTECTION AGENCY

	

	Public Hearing

Greenhouse Gas Mandatory Reporting Rule, 

Subpart W (Petroleum and Natural Gas Systems),

and Subpart RR (Carbon Dioxide

Injection and Geologic Sequestration)

	9:14 a.m. to 5:00 p.m.

	Monday, April 19, 2010

Lobby Level One Potomac Yard

(South Building) 

2777 South Crystal Drive

Arlington, VA 22202

	C O N T E N T S

                                        

                                             PAGE

Welcoming Remarks

  Dina Kruger, Presiding Officer................3

Introductory Remarks

  Dina Kruger...................................4

	Morning Public Comments

Pamela Lacey, American Gas Association..........9

Bruce Hill, Clean Air Task Force...............16

Karin Obershain, Edison Electric Institute.....22

Daniel Klein, 21st Strategies...................27

Anne Harvey, Sierra Club.......................33

Karin Ritter, American Petroleum Institute.....44

Peter Zalzal, Environmental Defense Fund.......50

Carliane (Kipp) Coddington, 

  North American Carbon Capture

 and Storage Association.......................57

Phillip Marston, Marston Law...................61

	- - -

	P R O C E E D I N G S

	Welcoming Remarks

	MS. KRUGER:  Good morning again, everybody. I think we’ve worked out
our technical difficulties and we are ready to get started.  

	On behalf of the Environmental Protection Agency, I’d like to welcome
you all to today’s public hearing.  My name is Dina Kruger.  I am the
Director of the Climate Change Division in the Air Office at EPA.  It is
my group working with colleagues across the Agency that have developed
the proposals that you are here to comment on today.  

Introductory Remarks

	I’m joined by Paul Gunning who runs the Non-CO2 Programs Branch and
Rona Birnbaum who runs the Climate Science and Impacts Branch.  They are
both managing parts of the proposals that we’ll be discussing today,
Paul focusing primarily on the oil and natural gas sector and Rona on
geologic sequestration. 

	I’d also like to emphasize that we have worked very closely across
the agency on these proposals and in particular have collaborated very
closely with our Office of Water on a proposal that relates to the
injection of CO2 underground.  As many of you are I’m sure very well
aware, they are concurrently finalizing their proposed regulations for
the use of the Underground Injection Control Program for Geologic
Sequestration and we are working very closely with them as they finalize
that and we develop this proposal.  

	The purpose of today’s hearing is to receive comments on two of the
subparts that we put out last month and that were published in the
Federal Register, I guess, just a week ago.  These are the subparts
related to the petroleum and natural gas sectors, Subpart W, and the
subpart related to CO2 Injection and Geologic Sequestration, Subpart RR.
 So we will be looking for comments on those two subparts today and then
we’ll be having a second hearing tomorrow at our offices on L Street
related to the subpart related to the fluorinated gases.

	This hearing will be conducted in accordance with the Clean Air Act
under which EPA provides interested parties the opportunity for an oral
presentation of views and arguments as well as the opportunity to submit
written comments.  So this is the forum for your oral presentations.  We
are having this hearing recorded and hopefully that is now working well
and there will be a transcript that will be developed and made available
for public inspection at our docket.

	And so if you’re interested, I can quickly say what the docket
numbers are if you subsequently want to go and look for them.  The
docket number for CO2 Injection and Geologic Sequestration Reporting
Proposal is EPA-HQ-OAR-2009-0926, and the docket number of the Petroleum
and Natural Gas Subpart is exactly the same up until those last four
numbers, so EPA-HQ-OAR-2009, and the last four numbers are 0923.

	The transcript will also be available on Regulations.gov so you can
also see it electronically. 

	The hearing is conducted informally.  Formal rules of evidence do not
apply.  However, as the Presiding Officer, I am authorized to strike
from the record statements which are deemed irrelevant or needlessly
repetitive and to enforce reasonable time limits on your remarks.  Given
the number of people that have signed up so far, I think what we’re
going to do is start with five minutes.  If you go substantially longer
than five minutes, I will cut you off.  We’d like to keep it to
certainly no more than ten.  But you will also in addition to your oral
statements, be able to make written statements or expand your remarks in
writing for the record.  

	When you come up to speak, please first state your name and
affiliation.  That helps us with the transcription.  When you’re
finished with your comments, this panel may ask clarifying questions,
but this is not the place where we’re going to get into a discussion
or a back and forth about your comments.  It’s our goal here to hear
from you your comments on the proposed rule.

	Also because we are combining covering two subparts in today’s
hearing, please be clear when you’re talking about Subpart W or when
you’re talking about Subpart RR. I’m guessing that many of you may
be here because you’re particularly interested in commenting on one of
those subparts, but I recognize that there may be others who are
planning on covering both and that’s absolutely fine.

	If your oral comments are different from your written comments, you
should submit your written comments to the docket.  

	The last little piece of business is to ask everyone to turn off their
cell phones so that we won’t be interrupted by that.  What I’m going
to do now is start taking – we’ll start hearing from all of you in
the order in which you signed in.  I’m going to basically call out
three names so you’ll know who’s up sort of first, second, third and
then when we finish we’ll do it again.  And we’ll be taking
reasonable breaks throughout the morning.  

	I’ll also say that I’m probably not going to be your presiding
officer all day.  At some point this morning, I’m going to have to
head back to my office and I will leave you with Rona and Paul.

	So with that, our first three commenters in order are Pamela Lacey,
Bruce Hill and Karen Obenshain.  So, Pam.

	MS. LACEY:  Good morning.  My name is Pamela Lacey.  I’m the Senior
Managing Counsel, Environmental, for the American Gas Association.

	My testimony today will relate to Subpart W alone.

	AGA represents 195 local energy companies that deliver clean natural
gas throughout the United States. There are more than 70 million
residential, commercial and industrial natural gas customers in the U.S.
of which 91 percent – more than 64 million customers – receive their
gas from AGA members.

	AGA appreciates EPA’s effort to reduce direct measurement in this
re-proposal of Subpart W.  As a general rule, engineering estimates and
emission factors provide a more workable approach for natural gas
facilities.  However, as always, the devil is in the details – we have
concerns about the specifics for underground storage and LNG facilities,
and we will address those concerns in our written comments and perhaps
in meetings with you given the shortness of the time today.  I won’t
get into that now.

	More importantly, we have serious concerns about your proposal for
natural gas distribution systems – which were not covered by your
earlier proposal and have been added in this one.  As I will briefly
describe, the results would not justify the level of effort and cost
required by this proposal.

	First, we believe you cast your net too broadly when defining the
concept of “facility” for natural gas distribution.  As a result,
the proposed rule would likely apply to many more gas utilities and
require a much greater burden than you estimate.  It is not clear to us
whether you intend to define the facility as each distribution system or
as all of the distribution systems owned by a single “Distribution
Company.” The two are not aligned all the time.  If you plan to
combine all of the separate distribution systems of a single company in
one facility that spans hundreds of communities if not thousands across
a state – some of our companies span several states as well – you
would have many more utility companies that would be likely to exceed
your 25,000 ton per year threshold for reporting. Once in, those
utilities would then have to estimate and report emissions for many
small meter and regulator stations and city gate stations that are
scattered across the state as well as the combustion emissions from
sources that would otherwise not exceed the facility reporting
threshold.

	Second, the proposal for leak detection and reporting would impose
significant additional costs and overstate the actual level of
emissions.  The proposed rule would require utilities to conduct annual
leak detection at above grade M&R stations – that’s metering and
regulating – and to apply emission factors to those leaking sources. 
While current practices require regular leak detection, the current
level of detection does not nearly approach what would be required by
this proposal which calls for optical imaging.  We question whether
there would be enough equipment or trained operators to conduct such
annual surveys at all the M&R stations across the country that would be
affected.  Also, when utilities conduct leak detection, they promptly
repair leaks that can be readily repaired.  So reporting the repaired
components as if they were leaking for the entire year would end up
overstating actual emissions.  We’re concerned about that as well.  

	Third, we are concerned that your plan to use emission factors that
were developed over a decade ago for another purpose by the Gas Research
Institute, GRI, that were based on limited field work conducted nearly
20 years ago beginning in 1992 – we’re concerned about that because
many things have changed since then.  Much of the old cast iron and
steel pipe has been replaced or lined with new plastic pipe.  

And modern plastic pipe has significantly lower fugitive emissions. 
Materials and construction methods and practices for operations have
changed as well and improved.  As you know, over the past decade, our
members have been working with your EPA Natural Gas STAR program with
Roger Fernandez who’s here some place in the audience.  And we’re
working through that program to develop and implement practices that
make our systems tighter.  Well, that work has been going on, but those
emission factors have not changed in the meantime.  Those old emissions
factors represent an old snapshot in time and they do not reflect
reality now.  And they tend to vastly overstate emissions from modern,
tighter natural gas distribution. 

	Fourth, we are worried that you are trying to go too far down into the
weeds at distribution facilities asking for estimated emissions from too
long a list of individual components.  Our members do not typically keep
a comprehensive inventory of the number of components that they have at
any given metering and regulator station.  For example, one of our
companies – I’ll get to that in a moment.  The proposed rule
apparently would require knowing the number of each type of component in
order to apply a component-specific emission factor multiplied by the
number of components.  And if we don’t already have that list then
we’re going to have to go out to each of those stations out at remote
locations and make an inventory.

	Now, I know that this sounded logical in theory, but in practice, it
would be onerous. It would require our gas utility personnel to visit
thousands of remote facilities surveying equipment for each station in
minute detail just to develop these lists of components.  One company
for example operates at least 10,000 M&R stations.  This will require
many hours of work at great expense to go out and do these surveys. 

	And then for what result?  Because in the end all we can do with the
old emission factors is to calculate a fictional number that we all know
is seriously inaccurate and is likely to vastly overstate and
misrepresent the level of actual emissions at distributional facilities.


And this all for a sector that contributes a tiny portion of the total
CO2e emissions in the country – less than one percent of the total.

	Therefore, we urge you to postpone requiring fugitive emission
reporting for natural gas distribution under Subpart W.  Instead, AGA
would like to finish the joint project we have undertaken with EPA and
others to conduct field testing and to develop updated, modern, accurate
emission factors for natural gas distribution.  AGA and its members have
already conducted work in this area and developed some emissions factors
that are not reflected in this proposal.  And we are committed to
further improvements in emission factors.  

	Thank you for the opportunity to testify.

	MS. KRUGER:  Thank you, Pam.  Any questions?  Roger?

	MR. GUNNING:  Thanks for your comments. 

	MS. KRUGER:  Thank you very much.

	MR. HILL:  Test, test.

	MS. KRUGER:  Thank you for bearing with us.

	MR. HILL:  Good morning.  For the record, my name is Bruce Hill.  I’m
a senior scientist with Clean Air Task Force.  Clean Air Task Force is a
Boston-based organization dedicated to restoring clean air and healthy
environments through scientific research, public education and legal
advocacy.

	We appreciate the opportunity to comment on Subparts RR and W of the
proposed Greenhouse Gas Reporting Rule.  First, I’ll comment on
Subpart RR, then on Subpart W.  

	Clean Air Task Force is generally pleased with EPA’s Subpart RR
proposal.  We believe its expeditious promulgation will provide a key
building block for the United States greenhouse gas mitigation
strategies especially in view of the mounting evidence of irreversible
changes in the earth’s climate.  We believe the rule also represents
an important step forward in ensuring the secure geological
sequestration of carbon dioxide captured for fossil fuel combustion.

	This technology must move forward as a bridge to the clean energy
technologies of the future and as an essential step towards reducing CO2
emissions needed for climate stabilization.

	CATF supports EPA’s general approach in Subpart RR and believes that
the air side requirements embodied in the proposal can help expedite the
development of commercial scale carbon capture and geologic
sequestration in the United States.  

	Carbon dioxide injection is a technology that has a three-decade long
track record.  In fact, hundreds of millions of tons of CO2 have been
injected and effectively sequestered for enhanced oil and gas recovery,
ER, since the 1970s. 

	We believe EPA’s opt in provision recognized the important role of ER
in improving sequestration technologies and that it will provide new
data leading to a more robust understanding of geological CO2 retention
processes.  

	CATF supports the all in approach but believes it should go further to
include federally funded research and development facilities.  These R&D
projects which the proposal specifically excludes represent early
opportunities to test and verify EPA’s approaches to monitoring
verification reporting, MVR.  

	CATF also supports the case by case approach to MVR embodied in this
proposal, however, it’s our position that EPA should reserve the right
to prescribe certain universal MVR methods, for example, above injection
zone monitoring.

	A robust underground injection control rule, UIC rule, governing
permitting of GS facilities finalized in parallel with the Greenhouse
Gas Reporting Rule is critical to ensuring integrated water and airside
environmental health protections. 

	Air side MVR requirements must be carefully cross-linked with the final
UIC rule as under the UIC proposal, states are the permitting
authorities.

	While EPA’s Airside Monitoring and Reporting Rule does allow the GS
facility to rely on its UIC permit monitoring reporting requirements, we
think the rule could go further to engage the state agencies and MVR
development for GS facilities.  That’s because the states that have
regional and local expertise and geology underground injection control
history and atmospheric monitoring that must serve as a foundation for
robust case by case MVR plans.

	Because permitting will largely be overseen by the states and because
airside monitoring tools are largely the same as those for ground water
protection under the UIC program, EPA’s rules should harmonize the
development and approval of airside and UIC MVR strategies.

	State participation would not only provide more efficiency in MVR
development, but will be key to safeguarding the local environment.

	We understand that the rule cannot offer remedies to airside impacts of
CO2 injection, but through the rule EPA should direct that all
information collected by the MVR program be reported to the UIC
permitting authorities in a timely manner.  Immediate reporting will be
particularly important where there is evidence of leakage or pressure
front migration such that the shutdown triggers and airside mitigation
measures in the permits can be put in place by the state agencies in
addition to the revision of the MVR plan that’s required under the
proposal.

	In addition CATF encourages EPA to consider public participation by
incorporating notice and comment in the MVR development process.

	We are also pleased that EPA has issued the supplemental proposal to
EPA’s Subpart W Rule governing monitoring and reporting of fugitive,
vented and flared greenhouse gas emissions from the oil and gas
industry.  

	We believe the inclusion of oil and gas facilities is well within the
authority provided by Section 114 of the Clean Air Act.  Accurate
accounting for these emissions is important in establishing
comprehensive greenhouse gas inventories and for developing reduction
strategies.  

	In particular, we believe quantifying sources of methane emissions is
critical in pinpointing areas where reductions and climate forcing can
be expeditiously achieved.  Because methane is a short-lived pollutant
with a global warming potential many times greater than carbon dioxide,
a methanes emissions reduction strategy informed by this data could have
significant near term benefits.

	Finally, we applaud EPA’s proposed reporting for onshore petroleum
and natural gas production and distribution facilities.  Taken together,
the fugitive, vented and flared methane and CO2 emissions represent one
of the largest sources of greenhouse gas emissions from the industry.

	Thank you for the opportunity to comment and we’ll be providing
detailed written comments by the deadline.

	MS. KRUGER:  Thank you very much.  Our next speaker is Karen Obenshain.

	MS. OBENSHAIN:  Good morning.  My name is Karen Obenshain.  I am with
the Edison Electric Institute.  I am the Director of Fuels Technology
and Commercial Policy and I also facilitate EEI CCS workgroup.  We
really appreciate being able to give oral comments here today.  

	EEI, Edison Electric Institute, is an association of the
shareholder-owned electric utilities in the United States.  Our members
represent 70 percent of the industry.  And the lights going out were not
our problem.  [laughter]

	Again, EEI appreciates being able to come here this morning and we will
be filing written comments.

	EEI believes that it is appropriate for EPA to have proposed a separate
rule for reporting possible emissions from CCS rather than include it
with another source category.  EEI notes, however, EPA treats CCS very
differently from other source categories.  Instead of providing methods
to collect and report emissions, EPA is proposing rules that tend to
prevent emissions.  In other words, EPA is using this rule to
demonstrate the efficacy of long-term storage.  

	While EEI supports efforts to demonstrate that storage works – which
we believe it does – EEI’s initial review of the proposed reporting
and monitoring requirements indicates that the burdens might not be
commensurate with the risk  of emissions to the air of stored CO2.  As
EPA has noted, properly sited and managed geologic storage formations
have very little chance of emissions.  Accordingly, EPA regulations
should approach the reporting rule for CCS from the assumption that
leakage is unlikely.  

	The UIC program ensures storage sites will be properly sited and
monitored.  EPA should recognize this in the context of possible air
emissions.  

	Moreover, EPA should recognize that the minimus fugitive emissions do
not undercut the value or efficiency of storage as a climate mitigation
tool, especially when one considers the millions of tons that could be
stored over the life of our project.  

	EEI urges EPA to keep in mind that the actual risk of large leaks from
storage sites is extremely small as it moves forward with its
rulemaking.  

	That being said EPA [sic] supports EPA’s proposal that MRV plants be
site-specific.  Different sites have different risks, and lower risk
sites should be rewarded with appropriately-tailored regulatory
requirements.  

	EEI is still reviewing all elements of the CCS proposal, but offers the
following comments now.  EEI appreciates EPA’s efforts to eliminate
overlap between the UIC requirements and the proposed mandatory
reporting rule requirements and supports EPA’s decision to allow
storage sites to use their UIC permit to demonstrate compliance with
portions of the reporting rule.

	Consistent with the approach taken in the UIC program, storage
operators should be allowed to take a phased approach to characterizing
potential leakage pathways. 

	EEI notes that EPA proposes to require characterization of all surface
leakage pathways for the life of the project at the time the MRV is
drafted and submitted.  Instead, EPA should allow storage operators to
update their MRV plans and perform additional characterization of
leakage pathways if needed on the same schedule as reevaluation of the
area of review. 

	EEI is concerned about the accuracy of environmental baselines.  Given
the atmospheric CO2 background concentrations very widely which EPA does
acknowledge, it is not clear that it is feasible or useful to collect
and report information about pre-injection environmental baselines. 

	EEI is concerned that EPA has included no standards by which the agency
or other regulators are to assess proposed MRV plans.  EPA’s goal
should be to ensure a streamlined approach to approval so that the
projects can move forward without delay. 

	EEI notes that EPA’s definition of research and demonstration
facilities would encompass all CCS demonstration projects currently
operating today or planned in the near future because all receive some
level of federal funding.  R&D projects should be allowed to opt in to
reporting requirements regardless of whether they receive federal
funding.  

	Thank you for the opportunity to comment on the proposal today.  EEI
looks forward to working with EPA as it continues to develop legal and
regulatory structure for permitting CCS projects.  Thank you.

	MS. KRUGER:  Thank you very much for your remarks.  

	Okay, our next three speakers in order are Dan Klein, Anne Harvey and
Karin Ritter.

	MR. KLEIN:  Thank you and good morning.  My name is Dan Klein.  I’m
an energy and environmental consultant and my company is 21st
Strategies.  

	I have just a couple of comments I’d like to offer this morning on
Subpart RR, specifically going to the cost of the proposal and then
within that specifically to the cost of the commercial saline projects. 
These would be the projects which would have a second [inaudible].  

	[Pause.] 

	The commercial saline projects would be those who would have the
additional second tier of data required to be reported.  I’ve looked
at this a little bit from the aspect of the potential total cost and the
cost per ton reported and how that might compare to the rest of the
categories under the Mandatory Greenhouse Gas Reporting Rule.  

	I’m not going to comment on the environmental soundness of the
proposal or inadequacies of the UIC proposed rule.  Those are not areas
in which I claim expertise.

	EPA did an economic analysis to support Subpart RR and presented its
national cost estimates.  But generally, the scenarios that were
presented do not include commercial saline projects in the economic
analysis.  That is the scenarios picked a sample of 89 projects and the
high and low scenarios varied the amount of projects which would shift
from the ER projects to those who would opt into the additional tier of
reporting.  Those scenarios did not have commercial saline projects in
them possibly because there was no way of estimating how many there
might be.  

	There was in EPA’s analysis, an estimate that commercial saline
projects would have additional costs approaching $300,000 per project
per year.  And EPA provided the math that would show if you have either
three, six or nine projects, what that would amount to.  But if we want
to think about what the total national cost is, it’s reasonable to
think about how big a commercial program could be.  

	Under some of the proposals for national legislation, we’re looking
at total national reductions of emissions in the order of billions of
tons per year.  It’s not unreasonable to at least hypothesize a
commercial sequestrations program approaching one billion tons a year. 
And if your average site is two or three million tons per year, we’re
looking at several hundred sites nationally, at least potentially.  

	If you have a cost per project of $300,000 per project per year, then
we are potentially looking at over $100 million for this aspect of the
program, $100 million per year.  That actually is more than the rest of
the reporting rules categories combined which as I recall were about $98
million for the first year reporting and $72 million for the rest.

	So potentially, these incremental requirements for commercial storage
could more than double the cost of EPA’s program.  

	So if we turn to the cost per ton, what do you get for this?  Well, you
take the total cost and you divide by how many additional tons you
expect to be kept as part of this.  As was pointed out before, we’re
expecting effective storage and so your best estimate for a single site
might actually be zero tons in which case dividing something by zero
gives you an unreal number.  

	But if we take a reasonable worst case, if we take the program goal
which EPA, DOE and others have stated of 99 percent sequestration over
100 years, and apply that to a commercial storage facility of a couple
million tons per year, you’re probably looking at a reasonable worst
case of 10,000, maybe a couple 10s of thousands of tons per year.  If
you can detect that and if you divide that into $300,000 per year per
facility, we’re looking at a program cost of over $10 a ton simply for
the measurement and reporting of the presumed leakage.  This compares
poorly to the rest of EPA’s [inaudible].

	EPA looked, I think, very carefully and very effectively at what the
cost would be for reporting at different thresholds per year.  And
settling on the 25,000 ton per year threshold, EPA took note of the
extra cost it would be if they lowered the threshold to 10,000 tons
instead.  Going from 25,000 tons down to 10,000 tons for the reporting
rule, would have cost an extra $30 million per year for an estimated
gain of 37 million tons of emissions identified and reported.  That is
something under one dollar per ton to report was rejected, I think, at
least in part because of the cost per ton effectiveness.

	We’re looking here at geologic storage facilities that would be at
least ten times that much.  

	So, just to conclude, in a widespread commercial program if we’re
looking at one billion tons a year perhaps as a possibility, we’re
looking at a reporting requirement which would more than double the cost
of the entire Greenhouse Gas Reporting Program and at a cost per ton
which is at least ten times that of a threshold which has already been
rejected. 

	Thank you.

	MS. KRUGER:  What we’re going to do is we’re going to take just a
five minute break so that – I’m sorry – yeah, we’ll take a five
minute break just to see if we can get this audio stuff worked out and
then we’ll turn to you.  Thanks.

	[Break.] 

	MS. KRUGER:  So what I think we’re going to do going forward, we have
Anne Harvey up next followed by Karin Ritter, followed by Peter Zalzal
and Kippp Coddington.  Those are the speakers that signed up to make
remarks this morning.  We will at the conclusion of Kipp’s remarks, I
will invite anyone who has come today and did not identify themselves as
wanting to speak but is so moved to come up and give us comments if you
want.  We will then have a break after that and we’ll keep the room
open for the period of time that we said.  But if others haven’t
signed up, then we’ll just be waiting to see if any other speakers
come and make themselves known to us.

	So with that, I’m going to ask Anne Harvey to come up and give it
another try.

	MS. HARVEY:  Okay.  How’s that?  It’s not on?  Hello?  Okay.  I’m
Anne Harvey from the Sierra Club and I’ll be offering comments on both
subparts today.  

	Thank you for the opportunity to speak with you.  The Sierra Club is
pleased that EPA is extending the Mandatory Greenhouse Gas Reporting
Rule to embrace oil and gas systems and carbon capture and
sequestration.  Although both categories should have been included when
the rule was first released, if EPA sticks to its plans to require this
additional data collection beginning in 2011, they will only lose a
year.  It’s important that EPA stay the course as sound
source-specific data on these industries bears centrally on our energy
future and belongs in the comprehensive reporting system that Congress
requested EPA to develop.  

	These remarks focus on the broad structure of the overall proposal.
We’re developing detailed technical comments on both of the proposed
rules, but for now offer the following observations.

	With regard to carbon dioxide injection and geological sequestration,
using long-term geological sequestration to rapidly control carbon
dioxide emissions is a risky strategy.  It is far from clear that an
appreciable portion of the power plant fleet could be cost effectively
retrofitted with carbon-capturing sequestration technology or that
long-term storage will succeed.  Moreover, to the extent that CCS
extends the lives of existing coal power plants, it maintains American
dependence on a fuel with enormous public health and environmental
costs.  For these reasons, the Sierra Club generally favors energy
strategies that instead primarily emphasize efficiency, renewable power
and shifts to lower carbon fossil fuel sources.  If CCS is to be
implemented at all, the Club believes it will be most useful for lower
carbon gas power plants rather than for coal facilities.  

	Nonetheless, if CCS is to play a role, it must be conducted and
monitored with the utmost care.  The regulatory framework to ensure CCS
is properly controlled is incomplete, but should ultimately cover at the
least proper subsurface injection practices under the Safe Drinking
Water Act, airside monitoring under the Clean Air Act and a detailed
liability and enforcement structure.  

	The airside protocols in this role which focus on detecting and
reporting atmospheric leaks from CCS facilities, are a necessary
supplement to EPA’s proposed Safe Drinking Water Act underground
injection control rules which focus on protecting underground sources of
drinking water.  

	We encourage EPA to consider how both of these rules would interact
with and support a liability and enforcement system. 

	We support EPA’s decision to require basic monitoring for all
enhanced oil recovery and injection operations and to enhance monitoring
for CCS projects.  

	To ensure this airside protocol works, we ask that EPA carefully think
through several issues in their proposed rule – first, national
standards and local geology.  EPA based its system upon monitoring,
reporting and verification plans which set out a facility strategy for
detecting leaks and verifying their reported injection quantities are
accurate. Because variation in regional geology makes designing a
uniform national plan difficult, EPA proposes to review MRV plans on a
case by case basis.  

	While we agree that these plans should be tailored to regional
conditions, we’re concerned that the rule may not provide sufficient
guidance to guarantee a consistent level of quality across plans or to
ensure the reports from different facilities are readily comparable.  We
would urge EPA to provide further structure to the case by case plan
requirement by, for instance, identifying baseline accuracy and
provision standards that all plans must meet, ranking preferred
monitoring technologies which may be used in many instances, and
providing regulatory standards charting out in some detail, elements all
plans must contain and questions all plans must consider.  EPA should,
in other words, ensure that regional variations do not inadvertently
diminish the rigor of overall reporting structure. 

	Regarding public involvement and EPA review, both Congress’s original
Request for Reporting Rule and Section 114 of the Clean Air Act on which
the Reporting Rule is based, recognize the public’s vital interest in
emissions data.  

	Because CCS projects bear directly on efforts to control global climate
change, a matter of enduring public concern, the CCS reporting systems
must be particularly transparent.  Unfortunately, the proposed rule
lacks some of this transparency.  The crucial MRV plans in particular
appear to be developed entirely without public involvement or review. 
Similarly, the proposed rules preamble posits that CCS operators might
be able to challenge inappropriate plans before the Environmental
Appeals Board, but does not discuss public challenges.  

	This is a major oversight.  EPA has a strong interest in ensuring that
MRV plans are strong and effective.  Public review supports this
interest.  Allowing only operator challenges to MRV plans would bias the
review process away from rigor.  

	The final rule should ensure that MRV plans are offered for public
comment and that the public and CCS operators have parallel rights to
challenge EPA’s approval of an MRV plan.  

	Regarding timing and comprehensiveness, CCS operations should only go
forward if monitoring and reporting procedures are in place before
injection, and monitoring should continue well after injection has
finished.  The proposed rule raises some concerns but also has some
success in this regard.  

	First, the proposed rule gets one big picture point exactly right and
includes every CCS facility.  That choice makes sense.  EPA needs a
comprehensive picture of the industry.

	Second, on an unfortunate note, the proposed rule allows facilities to
put off finalizing their MRV permits for as much as a year after they
receive an injection permit.  That’s unacceptable particularly because
MRV plans are supposed to include baseline monitoring of pre-injection
condition.  Monitoring needs to be in place before the final UIC permit
issues, making sure that that happens is a good opportunity to
coordinate air and drinking water programs.  

	Third, we are concerned that the rule misses data by exempting research
and development projects.  R&D is an unusually important category for
CCS plans as so much of this technology is experimental or being
developed through specific test facilities.  These projects are likely
collectively a large section of the sector and should not be exempted
from the rule.

	Finally, the proposed rule arguably does not require reporting for a
sufficiently long period.  CCS is useful only if it permanently
sequesters greenhouse gases.  EPA needs to know if long after injection
ceases, leaks continue or commence.  Yet the rule currently allows
operators to cease reporting once a facility is closed and the CO2 plume
and pressure front have stabilized.  EPA assumes, apparently, that leaks
will not appear after that point.  To be sure of this assertion, though,
EPA needs data that a longer term monitoring plan would provide.  We
must be aware of the containment failures even long after closure to
assess whether CCS practices are effective.  EPA should therefore
consider a long term, relatively low cost leakage monitoring requirement
which would be permanently applicable to all facilities.  

	Regarding oil and gas systems, EPA’s expanded oil and gas monitoring
programs is a major – systems category is a major step forward.
Tracking emissions from well to pump for this industry is critical.  We
are particularly pleased that EPA is moving toward comprehensive
reporting for the entire life cycle of onshore oil and gas.  This is
particularly important because onshore gas development and shale gas is
being touted as a way to replace coal fired power plants, with natural
gas.  Accurately measuring the emissions from these fields including
fugitive emissions of high global warming potential methane, provides a
way to critically assess these claims and to constrain the greenhouse
gas impacts of this potential transitional fuel.  

	We are carefully reviewing the technical details of EPA’s proposal. 
On first review, though, three issues seemed particularly worth
flagging.

	In our comments on the full reporting role, we discussed how
engineering estimates and emissions factor-based approaches had often
underestimated emissions, and in particular, fugitive emissions from oil
and gas facilities.  We’re concerned that EPA has moved too far away
from direct measurement in this proposed role in favor of a range of
estimation approaches.  We encourage EPA to carefully consider whether
this decision causes any loss in accuracy and precision and whether such
losses can be justified given the reporting rules focus on comprehensive
and detailed information.

	We also urge EPA to carefully ground truth estimation methods with
regular direct measurement tests at selected facilities.  

	With regard to fugitive emissions, we’re concerned that EPA’s
proposal allows companies to fix fugitive emission sources before
quantifying emissions for the reporting rule.  While we understand that
this approach may provide an incentive for quick repairs, it may also
lead to significant underreporting.  We encourage EPA to consider ways
to document such repairs and to account for emissions that escape before
faulty equipment is fixed. 

	With regard to life cycle accounting, EPA’s decision to require
production and processing reporting is particularly important because
oil and gas companies are increasingly promoting high carbon products
like tar sands oil, liquefied natural gas and oil shale.

	We encourage EPA to ensure that the reporting system accurately
captures the large emissions footprint that producing and distributing
these fuels requires.  

	Thank you again for considering these remarks.  We look forward to
working with EPA to strengthen and extend their reporting [inaudible].

	MS. KRUGER:  Thank you very much, Anne.

	MR. GUNNING:  Thank you.

	MS. KRUGER:  Okay.  Now, Karin Ritter, American Petroleum Institute.

	MS. RITTER:  Good morning.  I’m Karin Ritter.  I’m Regulatory and
Scientific Affairs Department at API.  Can everyone hear me?  Need to
speak louder?  

	API is the premier trade association in the oil and natural gas
industry with about 400 member companies engaged in all aspects of the
industry.  API and its members have been at the forefront of developing
methodologies and standards for greenhouse gas emissions estimation and
reporting for the industry and beyond for over a decade, and have
provided detailed comments to EPA during all stages of the development
of applicable mandatory reporting approaches for all industry sectors.

	API is pleased to provide initial comments regarding the proposed
subparts W and RR.  API looks forward to providing additional details
throughout the comment period to help develop a reporting program that
is both practical to implement and that recognizes the limitations of
resources and methods for quantifying emissions from the vast number of
exceedingly small sources which even when taken in total will not
significantly impact the national GHG Emissions Inventory.  

	In reference to the newly proposed Subpart W, the monitoring and
quantification methods are an improvement from those proposed in April
2009.  Still, API would like to make five points on the proposal today. 

	First, the proposed requirements will be more costly to implement than
EPA has estimated. Because they apply to vastly more industry activities
and sources, EPA’s cost estimates for impact on the industry are too
low by an order of magnitude.

	Second, API concurs with EPA’s statement that, quote, “the facility
definitions proposed in this rule do not impact requirements under other
EPA regulations, for example, new source review,” end of quote.  While
here in Subpart W, there may be a need to cluster equipment in
activities for reporting, the terms used in conjunction with the
facility definitions under Subpart W should not impact any current or
future aggregation determinations.  

	EPA should define a simple and innovative system that balances the data
collection and reporting burden against the amount of emissions
quantified.  To achieve this simplification and balance, API suggests
that EPA allow operators to identify rational reporting units within a
basin that have similar operations, equipment, fluid properties and
physical parameters and enable a broader use of population average
emission factors and approaches for emissions quantification.  API
recognizes that the reporting threshold determination may still rest
with the basin level facility and the construct of the reporting units
below the basin level will be implemented in such a manner that they
will cover all relevant operations of a given owner or operator within
the defined basin.

	Third, API is concerned that the rule includes inconsistencies and
overlap in the demarcation of the different industry segments subject to
Subpart W.  It would be better if the industry segments were to be
defined along typical ownership and operating arrangements such as
producing well sites and associated equipment, gathering lines in
lateral compression, and natural gas processing.  This would avoid
duplicative reporting.  API suggests that EPA look to the definition of,
quote, “transportation” in NESHAP’s Subpart HHH to define where
natural gas production and processing ends and where natural gas
transmission begins.

	Fourth, another key issue for the industry is its ability to track and
estimate emissions from field portable combustion devices that are
stationed at a wellhead for more than 30 days in a reporting year.  EPA
should require a less resource intensive and complicated approach that
recognizes that this equipment is moved from well to well or between
operators several times during the year.  Similarly, API does not agree
with EPA’s extension of the reporting requirements to include rental
and other equipment that is neither owned nor operated by the reporter.

˚F and 14.7psia) since these are the units used in all the referenced
industry standards and are the common units used for calibrating
industry devices for custody transfer.

	As far as the proposed Subpart RR, API has two points.  First, API
agrees with statements in the preamble to the proposed rule that CO2 EOR
operations are a, quote, “closed system” and non-emissive. 
Therefore, EPA’s focus on the amounts of CO2 injected would provide a
distorted view of the CO2 material balance and hence emissions.  CO2 EOR
is an enhanced oil and gas production technique in the same vein as
water injection or thermal enhancement.  Therefore, there is no need to
define separate reporting requirements for CO2 EOR under this subpart,
unless the CO2 EOR operator elects to declare their operations as
providing for geological storage.

	Second, due to the special nature of geological storage facilities, API
recommends that a separate facility definition be applied for operations
that are solely dedicated to the geological storage of CO2.  Such a
facility definition should be consistent with requirements under other
regulatory programs for similar operations.  Also, API recommends that
EPA extend the GS facility R&D exemption beyond federally funded R&D
programs.

	In conclusion, API looks forward to working with the agency to develop
efficient, practical and cost-effective reporting requirements.  Our
written comments will include further details on these and other points
I’ve made today.  Thank you.

	MS. KRUGER:  Thank you, Karin.  Peter Zalzal.

	MR. ZALZAL:  Good morning.  My name is Peter Zalzal and I’m an
attorney with the Environmental Defense Fund.  I’m going to provide
brief comments on both Subpart W and Subpart RR.

	On behalf of the Environmental Defense Fund and our more than 700,000
members nationwide, I sincerely thank you for the opportunity to testify
today.

	Emissions data is the cornerstone of effective air quality management. 
Moreover, an effective emissions reporting program promotes
transparency, raising awareness of emissions among reporters and other
stakeholders and contributing to efforts to identify and to carry out
reductions.  EPA’s petroleum and natural gas and injection and
geological sequestration reporting rules allow EPA to collect essential
information providing data for policymakers and transparency for
reporters and the public at large.

	As to Subpart W, the U.S. petroleum and natural gas industry is
sizeable encompassing hundreds of thousands of wells, hundreds of
processing facilities and over a million miles of transmission and
distribution pipelines.  Collectively, these facilities produce
significant greenhouse gas emissions which EPA estimated 351 million
metric tons of CO2 equivalent or roughly 11 percent of all emissions
covered by EPA’s final mandatory greenhouse gas reporting rule.  Given
the considerable scope of these emissions, collecting facility level
greenhouse gas emissions data from this sector is essential.  Moreover,
to maximize the benefits of the reporting rule, the rule must reinforce
the two pillars of any well-designed reporting scheme.  The rule must
capture the proper scope of emissions and it must produce accurate data.
 

	EPA’s proposal requires reporting from industry segments that are
critical for a rigorous, comprehensive reporting scheme.  For example,
EDF strongly supports EPA’s inclusion of the onshore oil and natural
gas production segment of the industry in the reporting rule which EPA
estimates accounts for 66 percent of fugitive emissions.  

	Inclusion of this data is critical to ensure that overall data from the
oil and gas sector accurately represents emissions and to provide robust
information for policy makers deciding among different GHG mitigation
strategies.

	EDF likewise supports EPA’s definition of an onshore production
facility.  By requiring facilities to report at the basin level, EPA has
captured roughly 81 percent of emissions from the onshore production
segment.  While the alternatives EPA considered would provide
substantially less emissions coverage without significant methodological
differences.

	We are concerned, however, that the agency excluded waste pit
facilities from the proposal, and we are eager to look more closely at
this issue and provide EPA with additional detail in our written
comments.  

	In all, EPA’s proposed oil and gas reporting rule is an important
step in providing policymakers and the public with data from the oil and
gas sector facilitating sound greenhouse gas policy decisions.  

	Accuracy is also an essential element of a robust reporting scheme. 
And EDF hopes that in its final rule, EPA will select monetary methods
that strengthen the accuracy of emissions data providing policymakers
with the best possible information.  

	As a general rule, emissions data derived from direct measurement is
more accurate than data derived from engineering estimates and emissions
factors.  In the oil and gas sector, this rings especially true because
emissions factors tend to be based on older sources of data and
considerable variability can exist between sites due to differences in
operations and maintenance conditions.  For example, although two oil
and gas sites may have the same number of components and types of
equipment, if the operator of one site invests considerably more
resources into maintenance and leak detection of his equipment, the
overall leak rate on a per-component basis for that site will be much
less than alternative sites.  Components with higher occurrence of
leaking such as compressors and equipment with less rigorous or dated
emissions factors, should therefore be required to utilize direct
measurement over engineering estimates.

	As to Subpart RR, EDF likewise greatly appreciates the Agency’s
leadership in requiring reporting from facilities engaged in injection
and geologic sequestration of CO2.  EPA’s proposed rule provides
important data in addition to the information provided in Subpart PP of
the final reporting rule.

	Enhanced oil recovery provides key data on the efficacy of
sequestration.  Moreover, a key issue with geologic sequestration and
carbon capture and storage is the durability and permanence of the
storage.  Durability is especially important given that 67 percent of
total CO2 emissions come from fossil fuel combustion and 95 percent of
the 500 largest stationary sources are within 50 miles of a candidate GS
reservoir. 

	Data from EPA’s proposed reporting rule will likewise provide much
needed transparency on the amount of CO2 injected and geologically
sequestered in the U.S. and will allow EPA to track the flow of CO2
across the CCS system.  

	This information will allow EPA to monitor the efficacy of GS and CCS
over time aiding policymakers and evaluating mitigation options.  EDF
likewise notes that monitoring verification and reporting is an
important element of the CCS reporting rule.  And we encourage the
agency to bring the same transparency to the MVR process as the agency
has brought to the rest of the final reporting rule. This will allow for
public participation in the MVR process and will ensure public awareness
of monitoring and verification at specific sites.

	EDF greatly appreciates the Agency’s efforts to cover this important
source of GHG emissions.  We greatly appreciate the Agency’s
leadership in developing greenhouse gas reporting rules reflected in the
oil and gas and geologic sequestration and CCS proposals.  These rules
will provide additional foundational data to the agency policymakers and
the public allowing informed policy decisions and addressing
American’s right to know regarding the largest greenhouse gas
emitters.  

	Thank you again for the opportunity to provide testimony today and we
look forward to offering more detailed comments on the agency’s
proposed rulemakings in our written submissions.

	MS. KRUGER:  Thank you very much, Peter. Kipp Coddington.  While Kipp
is coming up here, I’ll say it again.  If anyone is interested after
he finishes, I’ll open the floor and we can have any additional
remarks that people might want to make.  

	MR. CODDINGTON:  And I’ll be exceedingly brief.  I’m Kipp
Coddington.  I’m outside counsel to the North American Carbon Capture
and Storage Association.  And NACCSA is pleased to offer this brief
statement on the proposed Subpart RR rule only.  

	Just a brief note about NACCSA.  NACCSA is a nonprofit organization of
companies in North America that support the development of a sustainable
CCS industry in the United States and Canada.  The members of NACCSA
include companies involved in developing commercial processes to
mitigate greenhouse gas emissions through CCS and specialists engaged in
the technical, commercial, financial and development aspects of carbon
capture and storage activities in both the U.S. and Canada. 

	We would first like to thank EPA for its work that it’s done on
carbon capture and storage to date.  And we recognize your recognition
of the important role that carbon capture and storage can play in carbon
management schemes going forward.  The reporting proposal marks the
latest effort by EPA to shed critical regulatory clarity on the topic.  

	As NACCSA commented in its submittal on the agency’s proposed
rulemaking for the commercial scale injection and storage of CO2 under
the underground injection control program of the Safe Drinking Water
Act, establishment of a stable, predictable and workable regulatory
framework for CCS that appropriately encourages the development of a CCS
industry to manage missions and maximize energy recovery is of paramount
importance.  Including reporting on CCS within the scope of the existing
GHG reporting rule is a prudent next step in reassuring regulators and
the public alike that geologic storage is in well-sited and well-managed
formations results in sequestration.

	Now just some brief general observations about the proposal.  NACCSA is
still evaluating the details of the proposal and we will be submitting
more detailed written comments during the rulemaking period.  Also, our
comments are restricted here to the so-called Tier 2 reporting that only
applies to sequestration sites.  

	First, overall, we commend EPA for creating an opt in mechanism for
geologic storage sites as opposed to dictating an overly prescriptive
one-size fits all approach that might endeavor to apply to any entity
that was injecting CO2 regardless of whether sequestration was claimed
to be occurring.

	Secondly, we also support EPA’s efforts to tie Tier 2 reporting to
the extent possible into the pending UIC CCS proposed rule.  It is
important that geologic storage site owners and operators not be
subjected to duplicative or potentially conflicting reporting
requirements under various regulatory programs.  And at first blush, it
appears that EPA has endeavored to mitigate those concerns here.

	Lastly, we expect to have further comments on the monitoring, reporting
and verification aspects of Tier 2 reporting which of course we will
provide in written comments during the comment period on the proposal.  

	Our initial reaction to the MRV reporting, however, is that it could be
somewhat prescriptive and may not leave room for other approaches, for
example, such as standards and protocols developed through
consensus-based procedures that industry may have already done or may be
conducting in the future.

	So with these comments, NACCSA appreciates the opportunity to be here
today and again, we commend the Agency for the excellent work it’s
done to date on advancing carbon capture and storage.  Thank you for
your time.

	MS. KRUGER:  Thank you very much for those remarks.  Thank you.

	So now there’s an opportunity if there’s anyone else who wants to
speak. I did hear from someone during the earlier break.  Phillip
Marston, if you would like to say a few words.

	MR. MARSTON:  Good morning.  Thank you.  My name is Phillip Marston on
behalf of Marston Law.  And I’m presenting just a few very brief
comments on behalf of Denbury Resources.  As you know, Denbury Resources
is one of the larger players in CO2-based EOR injections, and we’ll be
following the rulemaking very closely.

	We appreciate the fact that there’s an effective recognition of
CO2-based EOR as one of if not the most likely paths forward towards the
actual application of CCS technologies and practices.  And I think that
that’s a very important aspect of your proposed rule.  We anticipate
providing more detailed and technical comments in June, but I think that
the broad structure that you’ve put forward is a reasonable and
sensible one and we look forward to providing you details to try to help
you get where you’re trying to go on this.

	That’s all.  Thank you very much.  

	MS. KRUGER:  Thank you for those comments.  Thank you. 	

	Is there anyone else who did not make themselves known to the person at
the registration desk that wants to make remarks at this time?  Going
once, going twice.  Okay. If not, then what we’re going to do is take
a break until 11:15 at which time we’ll go into a holding mode to see
if anyone else shows up that would like to speak.  But as of now,
we’ve heard from everyone who had signed up on the web and made
themselves available to give comments to us.  And I would like to thank
all of the commenters this morning.  There was a great deal of insight
and technical richness in the comments.  And we very much appreciate the
chance to hear them from you. I know you’ll be following up in writing
and lastly I’ll say that we have throughout this entire rulemaking
exercise, had an open door policy to people who want to come in and
offer us more information about your experiences and what you’re
doing.  We continue to have that policy, and so we hope that if you’ve
got something you’d like to tell us, you will avail yourself of that
opportunity.  It is through this kind of input that we can do a better
job and have rules that meet our objectives for reporting that are also
not burdensome and make good technical sense.  

	So thank you everybody and if you want to see what happens in the
afternoon, you can come back at 11:15. 

	[Break.]

	MR. GUNNING:  So, good morning.  It’s approximately 11:15.  We are
now reopening the floor.  Is there anybody who wants to offer additional
comments on either Subpart W or Subpart RR?  

	Noting that there are no additional comments at this particular point
in time, I will be transitioning the chairmanship of the hearing over to
my colleague, Akachi.  We will keep the floor open for an additional 45
minutes or so and will be breaking for lunch at noon for approximately
one hour, and reopen the floor again at 1:00. 

	Thank you.

	[Break.]

	MS. IMEGWU:  All right.  Right now it’s 12:00 noon.  There is no one
here in the room for the public hearing for Subparts W and RR, so
we’re going to take a one hour break for lunch.  We will resume
opening the floor at 1:00 p.m. at which point I’ll turn it over to
Katie Sibold who will chair the rest of the hearing. Thank you.

	[Break.]

	MR. FERNANDEZ:  It’s now one o’clock on April 19th.  We are opening
the public comment for Subpart W and RR for the Mandatory Greenhouse Gas
Reporting Rule.  Currently there are no participants in the audience and
therefore no one who is going to give public comments immediately, but
we will be here until approximately five o’clock such that we meet all
obligations as per the regulations and rules regarding the open public
comment period.

	[Break.]

	MR. FERNANDEZ:  It is currently 4:52 on April 19th, 2010.  My name is
Roger Fernandez.  We have had the public comment period open since 9:00
a.m. today in regard to Subpart W and Subpart RR for the Mandatory
Greenhouse Gas Reporting Rule draft rules which are currently out for
public comment.  There have been no individuals who have come to the
public hearing since 11:00 a.m. today.  We had an open forum from 9:00
a.m. until 11:00, took all comments and have remained here in place per
the public notice stating that we would have an open meeting for public
comment until 5:00 p.m. on April 19th, today.

	As I stated, it currently now 4:55 and no individuals have come since
11:00 a.m. and therefore we are going to close this meeting for public
comment for Subparts W and RR for the open comment period.  

	The written comments still are open per the instructions that were
issued in the Federal Register and this concludes the open comment
period session for these subparts for oral comments.

	Thank you very much.

	[Whereupon, at 5:00 p.m., the Public Hearing concluded.]

 

 

 

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