Oil and Natural Gas Industry
Update — EPA issues final New Source Performance Standards for Oil and Gas with significant new compliance requirements
On June 3, 2016, U.S. Environmental Protection Agency (EPA) finalized amendments to the Standards of Performance for Crude Oil and Natural Gas Production, Transmission and Distribution (Quad O) and a new subpart at 40 CFR 5360a et seq. (Quad Oa) for post-September 18, 2015, affected facilities. As noted in a previous CEC blog on this topic, U.S. EPA received nearly one million comments following the initial proposal. The new Quad Oa rule establishes emission standards for both methane and volatile organic compounds (VOC) at natural gas and oil well sites, production gathering and boosting stations, natural gas processing plants, and compressor stations. There are several new requirements for oil and natural gas production-related activities in these new federal rules, and it is important to understand how these rules might impact ongoing compliance activities under existing state rules and permit requirements already in effect. In this update, we focus on two of these new requirements due to their history and interrelatedness.
It is clear in reading both the proposed and final rules that U.S. EPA has expanded its understanding of oil and natural gas operations, particularly with respect to upstream E&P. Notably, the requirement for a professional engineer (PE) to evaluate and certify closed vent system design brings a new level of scrutiny borne out of a consent decree with a major oil and gas producer, and placed into practice in both the September 2015 Compliance Alert and the ongoing enforcement initiative targeting “energy extraction activities.” Not only is this new requirement intended to bring industry resources to bear on what the Agency views as a significant issue, but it also attaches professional liability to any subsequent violations attributed to closed vent system design. Further, with additional attention being focused on closed vent system design, the next obvious move on the Agency’s part was either construction practices (which are in many cases guided by industry consensus standards) or the operator’s preventative maintenance program.
From an air pollution control perspective, one focus of an upstream E&P maintenance program is to minimize or eliminate fugitive emissions from production facility equipment. As addressed by the industry during the comment period, there is an economic incentive to minimize losses of otherwise saleable products. Rather than dictate the contents of a preventative maintenance program, the Agency has instead required operators to survey for and repair fugitive emissions at well sites. While not a maintenance program per se, the new rule will require operators to engage in some routine maintenance and communication planning to ensure that fugitive leaks discovered during a survey are repaired and verified within the allotted timeframe.
Many producers operating in the Utica and Marcellus plays already had some form of fugitive emissions survey requirements in effect, as does Colorado. In other states, this will be the first time operators will have to grapple with leak detection and repair programs. This new requirement will have a disparate impact on upstream E&P operators that do not have the resources to employ full-time environmental staff or purchase the equipment needed to perform these required fugitive leak surveys in-house.
A summary of the new requirements discussed above is provided here. In the meantime, if you have questions on any aspects of the NSPS for the oil and natural gas source category, please contact the post authors: John McGreevy (firstname.lastname@example.org), Kris Macoskey (email@example.com), or Ben Blasingame (firstname.lastname@example.org).
For those interested in exploring this topic further:
Final NSPS OOOO and OOOOa rule from the Federal Register
U.S. EPA National Enforcement Initiatives
CEC’s previous blog: EPA Receives Nearly One Million Comments on Proposed New Source Performance Standards for Oil and Gas
On June 3, 2016, U.S. Environmental Protection Agency (EPA) published a proposed Information Collection Request (ICR) for the oil and natural gas industry in the Federal Register for notice and comment. Once the comment period ends and EPA provides responses to all significant comments, the amended proposal will be sent to the Office of Management and Budget (OMB) for review and approval. If approved, and U.S. EPA is issued a valid OMB control number, U.S. EPA would begin collecting information from oil and natural gas companies. The Agency envisions the collection process to begin in October 2016.
The purpose of the ICR is to collect detailed information to support regulation of existing oil and natural gas stationary sources. This is in contrast with recent regulatory efforts, which have focused (primarily) on new or modified sources. The information from the proposed ICR will be used to develop a pathway for the phase-in of new standards, rather than making those standards become effective for all affected sources at once.
Based on the proposal, the ICR will be divided into two parts. The first part will be sent to all oil and natural gas operators and requires information with respect to the company and its operations. The second part requires more detailed information with respect to specific sources and could involve a significant time investment from environmental and operations teams to complete. In addition, the second part of the ICR may require information that many organizations would consider confidential. Companies with confidentiality concerns may want to involve their legal teams in this process.
Also, keep in mind that this ICR will be issued under U.S. EPA’s authority under Section 114 of the Clean Air Act. This means that the Agency has the legal authority to require all responses to the ICR be certified by a responsible official and establish a deadline for providing a response.
For those interested in reading more about the proposed ICR, the U.S. EPA has a dedicated website here. Civil & Environmental Consultants, Inc. will be following the ICR approval process closely, and plans on updating this post as events unfold. In the meantime, if you have any questions with respect to the ICR or other recent federal air pollution regulatory activity, please contact John McGreevy at 888-598-6808 or email@example.com.