3. Discussion

NRDC et al. acknowledge the potential role for carbon capture and geologic sequestration (CCS) technology in California's electric energy future, particularly as a tool to permit carbon-intensive coal or petroleum coke to meet the EPS. These parties state that viable projects are being developed now and therefore, to ensure "true compliance" with the EPS, they ask the Commission to modify D.07-01-039 to require subsurface monitoring of the injected CO_2, together with verification and reporting.⁴ NRDC et al. recognize that regulation of geologic sequestration is evolving but they contend that a "regulatory gap" exists at present -- regulation at the federal level by the Environmental Protection Agency currently focuses on ground water, and not atmospheric impacts, and no other California agency is poised to address the risk of CO₂ leaking from CCS projects, they state.

For these reasons, NRDC et al. propose that the Commission add a single sentence to D.07-01-039 in six different places (two textual references, a conclusion of law, two ordering paragraphs, and the Interim EPS Rules in the decision's Appendix 7). The sentence they propose would provide additional guidance about the content of an LSE's CCS plan, as follows:

The plan must include sufficient ongoing monitoring and reporting activities, which are enforceable under Federal and/or State law, to determine the subsurface extent and behavior of the injected CO₂, verify the permanence of sequestration, and account for any releases from the subsurface.⁵

DRA supports the proposal advanced by NRDC et al., as does HECA, though HECA suggests certain revisions. SCE opposes the proposal. SCPPA opposes it as well, though SCPPA also includes a proposal for alternative language.

SCE's substantive objection, essentially, is that because CCS plans are still evolving, it is too early to know if a regulatory gap will exist, and furthermore, that other regulatory bodies are better positioned than the Commission to step in to fix such a gap. SCE observes that D.07-01-039 already requires LSEs to submit plans that address the permanence of sequestration, among other things, and suggests that other agencies are better positioned to address the concerns raised, once those concerns are ripe. SCE also argues that the petition is untimely and we address that issue in Section 4. While SCPPA generally agrees with SCE, it also weighs in with recommendations to modify the language proposed by NRDC et al. SCPPA states that its revisions are intended to increase clarity, avoid unintended consequences, and ensure that the additional measures do not mandate the impossible. SCPPA proposes:

The plan must include sufficient ongoing monitoring and reporting activities, which are enforceable under Federal and/or State law, to determine to the extent technically feasible the subsurface extent and behavior of the injected CO₂, verify that the injected CO₂ continues to be sequestered the permanence of sequestration, and report account for any measurable releases from the subsurface.⁶

HECA also suggests modifications to the language proposed by NRDC
et al., as follows:

The plan must include sufficient ongoing monitoring and reporting activities, which are enforceable under Federal and/or State law as required by a Federal or State agency, to determine the subsurface extent and behavior of the injected CO₂, verify the permanence of sequestration, and report as to the quantity of known account for any releases, if any, from the subsurface.⁷

In addition, HECA requests two further clarifications from the Commission: (1) agreement that a plan issued by a federal or state agency that includes on-going monitoring complies with the EPS Rules (as modified) and, therefore, will not be subject to de novo review by the Commission; and
(2) agreement to revise the current loading order so that CCS technologies are no longer included within the same group as all other fossil fuel technologies. With respect to the latter, HECA proposes that the Commission "create a preference within the loading order category for fossil fuel generation for clean energy with CCS attributes, or establish an intermediate category for clean energy with CCS between renewable energy and fossil fuel generation."⁸

In their reply, NRDC et al. state that they do not intend for "the Commission to write, adopt or administer any regulations governing the operation of GS [geologic sequestration] projects."⁹ They reiterate their view that "the potential for compromising the integrity of the EPS is very real, and we argue that projects should not be deemed compliant with the emissions threshold without the necessary monitoring, verification and accounting requirements in place - all of which can be administered by the most appropriate State or Federal agency in each case."¹⁰ NRDC et al. suggest the following revisions to their initial proposal, given the alternative language from SCPPA and HECA:

The plan must include sufficient ongoing monitoring and reporting activities, which are enforceable under Federal and/or State law and administered by the relevant Federal and/or State Agencies, to determine the subsurface extent and geophysical, geochemical and hydrogeological behavior of the injected CO₂, verify the permanence of sequestration, and detect and report account for any releases from the subsurface, if any.¹¹

The threshold question for our consideration is whether, given the evolving state of CCS regulation, D.07-01-039 contains insufficient guidance regarding the content of an LSE application that seeks a Commission finding of EPS compliance for a CCS project. Focusing on the language in Conclusion of Law 47 (which is identical or similar to the language found elsewhere in
D.07-01-039), we agree with NRDC et al. that ongoing monitoring, reporting and enforcement are critically important aspects of D.07-01-039's specification that an LSE develop a "reasonable and economically and technically feasible plan that will result in the permanent sequestration of CO₂ once the injection project is operational." We also agree with NRDC et al. and other parties that our own jurisdictional charge does not include the development of regulations governing ongoing monitoring, reporting and enforcement of CCS.

Therefore, because we believe we must act within our jurisdiction to ensure the integrity of the EPS, but at this point do not know exactly how regulation of CCS will unfold at either the state or federal level, in order to avoid any regulatory gap we agree we should modify D.07-01-039 to clarify our expectation of the contents of any LSE plan. In our view, the various proposals that reference federal or state laws and agencies fail to adequately address
two things relevant to the Commission's responsibilities for LSE compliance with the EPS: (1) the LSE plan must comply with federal and/or state monitoring, verification and reporting requirements applicable to projects designed to permanently sequester CO₂ (that is, prevent CO₂ releases into the atmosphere) and, (2) the absence of such state and/or federal monitoring, verification and reporting requirements, or the fact that they have yet to be finalized, should not prevent an LSE from filing an application for a Commission finding of EPS compliance for a CCS project. Finally, since D.07-01-039 already specifies that a plan must be technically feasible as well as reasonable and economically feasible, we add no additional language on that point.

The following modification clarifies our intent.

The plan must comply with Federal and/or State monitoring, verification and reporting requirements applicable to projects designed to permanently sequester CO₂ by preventing its release from the subsurface. If at the time the application is filed Federal and/or State requirements have not been finalized, the plan must include monitoring activities to detect releases of injected CO₂ from the subsurface, must provide for verification of any detected releases and must include a schedule for reporting any detected releases to the Commission or other Federal and/or State agencies requesting that information.

This language should be added to D.07-01-039, in lieu of the language that NRDC et al. have proposed, in each of the six places where NRDC et al. have asked us to modify the decision. Given the evolving state of CCS regulation, we decline to be more prescriptive at this time. HECA's request that we modify the loading order is beyond the scope of the petition and we need not address it further.

⁴ Petition of NRDC et al. at 2.

⁵ Petition of NRDC et al. at 6-8.

⁶ SCPPA Response at 3.

⁷ HECA Response at 5.

⁸ HECA Response at 7.

⁹ Reply of NRDC et al. at 2-3.

¹⁰ Reply of NRDC et al. at 3.

¹¹ Reply of NRDC et al. at 7.