With the presidential election looming, EPA has finalized a three-year effort to revise, amend or repeal the 2012 and 2016 New Source Performance Standards (NSPS) regulating VOC and methane emissions from the oil and gas production, processing, and transmission and storage segments. EPA has issued two rules that make sweeping changes to these Obama-era regulations.
The 2012 rule established NSPS for VOC emissions from these three segments of the oil and natural gas industry. The 2016 rule established NSPS for greenhouse gases for these three segments in the form of limitations on methane. In the 2012 and 2016 rules, EPA interpreted the source category to also include, for the first time, the natural gas transmission and storage segment.
EPA issued two rules to address the 2012 and 2016 rules. The "policy" rule addresses the regulation of the natural gas transmission and storage segment and the regulation of methane from all three segments. The "technical" rule addresses VOC requirements in the oil and gas production and processing segments.
The policy rule contains three main parts. First, EPA determined the source category should only include the production and processing segments. The original scope of the category did not include these segments, and EPA found that a segment is its own source category. EPA explained that it can only list a source category for regulation by making a cause-or-contribute and endangerment finding, which the agency never did. As a result, EPA rescinded the VOC and methane standards applicable to the transmission and storage segment of the industry.
Second, EPA rescinded the methane requirements of the NSPS applicable to sources in the production and processing segments because they are redundant with existing NSPS for VOC. EPA stated that rescinding the methane requirements while leaving the VOC emission requirements in place will not affect the amount of methane emission reductions.
Third, EPA included an interpretation of Clean Air Act Section 111, which specifies the agency must find that the emissions of any air pollutant it did not originally consider when regulating a source category causes or significantly contributes to air pollution as a prerequisite for enjoining any new regulation of the pollutant. While seemingly innocuous, this interpretation would appear to require a finding that methane would "cause or contribute" prior to re-regulating it for the transmission and storage segment, an unlikely finding under the current administration.
The technical rule is somewhat more straightforward and applies to existing requirements applicable in the oil and gas production and processing segments. In general, the rule revises requirements associated with fugitive emissions requirements, pneumatic pump standards, storage vessel standard applicability determinations and engineer certifications.
The policy rule is effective when published in the Federal Register, and the technical rule is effective 60 days after publication. With the presidential election pending, the provisions of the Congressional Review Act may play a role in the survival of the two rules. In general terms, the act allows Congress to vote to disapprove of the regulation -- preventing it from going into effect -- within 60 days after Congress receives the rule.
Taken together, the two rules free the transmission and storage segment from NSPS regulation, establish a framework for regulating new source categories, and substantially revise existing regulations in the production and processing segments. However, it remains to be seen whether these rules could survive a change in administration.
John B. King is a partner with Breazeale, Sachse & Wilson LLP in Baton Rouge, Louisiana. His practice relates mainly to environmental regulatory permitting and compliance. Prior to joining the firm in 2003, he served as chief attorney of enforcement for the Louisiana Department of Environmental Quality.
For more information, visit www.bswenviroblog.com, or contact John B. King at jbk@bswllp.com or (225) 381-8014.