U.S. EPA Proposes NSPS Rule Changes for the Oil & Natural Gas Industry

U.S. EPA Proposes NSPS Rule Changes for the Oil & Natural Gas Industry[1]

In response to President Trump’s Executive Order 13783, “Promoting Energy Independence and Economic Growth,” section 1(c) (March 28, 2017), EPA reviewed the 2012[2] and 2016[3] rules for new source performance standards (NSPS) and national emission standards for hazardous air pollutants (HAPs) that apply to the oil and natural gas industry.   On October 1, 2019, EPA proposed amendments to the rules for certain provisions that it determined were inappropriate or redundant. Proposed changes include a 2-part “Primary Proposal” and an “Alternative Proposal.” EPA is accepting public comments on the proposed amendments through November 25, 2019.[4]

First, the EPA proposes to rescind the NSPS standards applicable to sources in the transmission and storage segment of the oil and gas industry.  EPA has determined that the 2016 rule revision lumping the transmission and storage segment in with the pre-existing “Oil and Natural Gas” stationary source category was improper because the original rule encompassed only the crude oil and natural gas production industry.  EPA reasons that it could have listed the transmission and storage segment for regulation under CAA section 111(b) only by making a significant contribution and endangerment finding as required by the statue, which the EPA never did.

Next, the EPA is proposing to rescind the methane control requirements of the NSPS applicable to the production and processing segments.  Because the emission source control technologies for methane and volatile organic compounds (VOCs) are identical, the EPA proposal finds the methane requirements to be completely redundant to existing controls and, therefore, unnecessary.  In other words, the EPA believes that no additional health protections are provided by the redundant methane control requirements. Because the 2016 NSPS OOOOa requirements would remain applicable to VOC emissions, the proposed change will not affect the amount of methane emission reductions that those requirements will achieve.

Alternatively, the EPA is proposing to rescind the methane requirements of the NSPS applicable to all oil and natural gas sources,[5] without undoing the 2012 and 2016 interpretations or expansion of the source category to include the transmission and storage segment. EPA’s rationale for rescinding the methane requirements under this alternative proposal is based on the same observation noted above that they are entirely redundant with the existing VOC provisions of the rule.

Both EPA proposals rely on the agency’s interpretation of the CAA section 111(b)(1)(A) requirement that EPA must make a finding that a source category “causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare” when it lists the source category.  No such finding has ever been made with regard to the transmission and storage segment.