NGOs 1, Trump EPA 0: The First Skirmish in the Great Environmental Rollback War Goes to the Greens

Posted on July 11, 2017 by Seth Jaffe

Last week, the D.C. Circuit Court of Appeals handed environmentalists at least a temporary win in what I think was the first case to reach judicial decision in Scott Pruitt’s great environmental roll-back tour of 2017.  The Court rejected EPA’s effort to stay the effective date of the New Source Performance Standards for fugitive emissions from oil and natural gas operations, pending EPA’s reconsideration of certain aspects of the Obama-era rule.

Notwithstanding Judge Brown’s dissent, EPA’s position on the merits seemed barely credible.  I understand the argument that the stay was not final agency action and thus not judiciable.  It just doesn’t seem compelling to me.  If EPA had amended to rule to extend the compliance deadlines, that clearly would have been subject to judicial review.  Why should the answer be different because EPA styles its action as a stay, rather than a revision to the regulations?  The impact is exactly the same.

As to EPA’s position that the four issues which it was reconsidering could not have been addressed during the original rulemaking by the industry groups now seeking reconsideration, EPA’s position was almost embarrassing.  As the Court repeatedly demonstrated, not only could the industry groups have addressed the issues during the original rulemaking, but they actually did so.  Moreover, EPA did consider those comments and, at least in parts, adopted them in the final rule.  My favorite example is the court’s discussion regarding the criteria for exemption for well-site pneumatic pumps.  As the Court noted:

[The American Petroleum Institute] … proposed precisely the technical infeasibility language EPA adopted in the final rule, suggested that an engineer certify technical infeasibility, and justified its proposed exemption based on a lengthy description of why existing sites were not designed to “handle” EPA’s proposal.

The record thus belies EPA’s claim that no industry group had an opportunity to comment on the “scope and parameters” of the pneumatic pump exemption.

The real question at this point is whether this decision is any kind of harbinger.  Practitioners know that the record of the Bush EPA in rolling back Clinton rules was shockingly poor, given Chevron deference.  Are we going to see the same again?  The Court threw EPA what could prove to be a rather large fig leaf by noting that the decision does not prevent EPA from reconsidering the methane rule.  The Court also quoted FCC v. Fox Television Stations – the same case on which EPA is relying in its rollback of the WOTUS rule:

[EPA] is free to [reconsider the rule] as long as “the new policy is permissible under the statute.., there are good reasons for it, and … the agency believes it to be better.”

This is where the battles are going to be fought over the next several years.

LEAKS And PUMPS And TANKS, Oh My!!!

Posted on July 8, 2016 by Karen Crawford

In May 2016, EPA finalized updates to its New Source Performance Standards (NSPS) for the oil and gas industry which amended 40 CFR Part 60, Subpart OOOO and added new requirements (Subpart OOOOa) to those established for Volatile Organic Compounds (VOCs) and sulfur dioxide (SO2) established for this industry sector in 2012.  Importantly, the new requirements address reductions of greenhouse gas (GHGs) emissions, specifically methane.  In its Executive Summary, EPA discussed the efforts by the agency to “complement” and “improve” the existing rules issued in 2012, stressing the agency’s efforts to engage states and stakeholders and solicit comments prior to its 2015 proposal or the rule.  EPA also stressed it worked closely with the Bureau of Land Management to avoid conflicts and evaluated existing state and local programs to attempt to limit conflicts, where possible.

After promulgation of both the 2012 rule and 2013 amendments, the agency received petitions for reconsideration raising numerous issues, including the regulation of GHGs.  EPA has addressed some of petitioners’ issues in 2015 amendments addressing storage vessels as well as in this rule, adding standards for methane and addressing storage vessel control device monitoring and testing; initial compliance requirements for bypass devices that divert emissions from control devices; recordkeeping requirements for repair logs for control devices which fail a visible emissions test, clarification of the due date for the initial annual report; emergency flare exemptions from routine compliance tests; leak detection and reporting for open-ended valves or lines; compliance period for leak detection and repair (LDAR) for newly affected process units; exemption to notification requirement for reconstruction of most types of facilities; and disposal of carbon from control devices.   However, in a footnote, EPA makes clear it intends to complete its reconsideration process in a subsequent notice.

One interesting aspect of the 2016 rule publication is the extensive discussion of how the 1979 source category listing, “crude oil and natural gas production” is defined.  The agency takes great pains to justify its broad authority over the industry to include not only production, but also processing, transmission and storage equipment.  The EPA concludes that its category listing need not be revised to support the additions and amendments of this rule (even though it does clarify some wording), and sets out its justification for including the entire sector in its 2009 endangerment finding relating to GHGs.

EPA concluded that the Best System for Emissions Reduction (BSER) is the same for GHGs as it is for VOCs, so there are no changes required for equipment that was covered by the 2012 rule.  Newly regulated sources covered by the 2016 rule include: heretofore unregulated hydraulically fractured oil well completions, pneumatic pumps, fugitive emissions from well sites and compressor stations; sources regulated under the 2012 regulation for VOCs for which GHGs are now also regulated (hydraulically fractured gas well completions and equipment leaks at natural gas processing plants); and certain equipment that is used across the source category for which subpart OOOO regulates emissions of VOCs from only a subset (pneumatic controllers, centrifugal compressors and reciprocating compressors), with the exception of compressors located at well sites.

In addition to emission reductions, LDAR utilizing optical gas imaging semi-annually is required for well sites and compressor stations. (Method 21 at a repair threshold of 500 ppm may be used.)  Initial monitoring surveys must take place by June 3, 2017 or within 60 days of the startup of production, whichever is later.  Repairs must be made within 30 days and a resurvey is required within 30 days of repair. Also, a monitoring plan that covers collection of fugitive emissions components is required to be developed and implemented for well sites and compressor stations. At natural gas processing plants, equipment leaks of methane (GHGs) are subject to the same requirements as those for VOCs.  The compliance period begins on November 30, 2016.

And, the rule embraces “next generation” electronic reporting via EPA’s CDX, for enhanced accessibility and transparency to the public, as soon as the forms and systems are available.  Professional engineers are required to provide certifications of technical infeasibility of connecting a pneumatic pump to an existing control device and to design closed vent systems.

Finally, there is a complicated discussion of EPA’s interpretation of UARG v. EPA, which merely results in EPA concluding that the rule should not affect applicability of Title V permit or PSD/NSR applicability determinations for “anyway” sources, even though, if not otherwise required to obtain and comply with a Title V permit, emissions of GHGs (methane) alone will not subject a source to Title V permit requirements.

U.S. EPA Updates Air Standards for Tanks Used in Oil and Natural Gas Sector

Posted on October 4, 2013 by Chester Babst

EPA is still working the kinks out of its New Source Performance Standards (NSPS) for the Oil and Natural Gas Sector, i.e., 40 C.F.R. 60 Subpart OOOO, referred to by many as the “Oil and Gas NSPS” and by some as simply “Quad O”.  EPA first published the proposed Oil and Gas NSPS on August 23, 2011, in conjunction with proposed revisions to three other air regulations affecting various segments of oil and natural gas operations.  The proposal prompted more than 150,000 public comments and kindled a national discussion on emissions at natural gas well sites.  The final Oil and Gas NSPS rule was published in August 2012.  Although the rule is most famous for establishing the first federal air standards for hydraulically-fractured natural gas wells, the rule also set significant volatile organic compound (VOC) standards for “storage vessels” used by the oil and natural gas industries.

Several stakeholders responded to the August 2012 rulemaking by filing petitions for administrative reconsideration of the Oil and Gas NSPS.  On April 12, 2013, EPA published a notice granting reconsideration for a number of issues and proposing revisions to the storage vessel standards, in particular.  Evidently, EPA significantly underestimated the number of storage vessels coming online in the field when it developed the August 2012 final rule, which required individual storage tanks with VOC emissions of 6 tons or more per year to achieve at least 95% reduction in VOC emissions.  Tanks are commonly used at natural gas well sites, for example, to store condensate, crude oil, and produced water.  In light of an updated tank estimate, EPA recognized that additional time would be needed for manufacturers to produce a sufficient number of VOC control devices. 

Most recently, on September 23, 2013, EPA published final revisions to the storage vessel requirements in the 2012 Oil and Gas NSPS.  Per the revised rule, which was immediately effective, an individual tank may be considered an affected facility if its construction, modification or reconstruction commenced after August 23, 2011; it has potential VOC emissions of 6 tons or more per year; and it contains crude oil, condensate, intermediate hydrocarbon liquids, or produced water.  EPA made a number of important adjustments in the revised rule, chief among them an extension of the compliance date to give tank owners and operators more time to purchase and install controls.  For the so-called “Group 1” storage vessels (which were constructed, modified or reconstructed between the August 2011 original proposal and the April 2013 proposal), the deadline to control VOC emissions is now April 15, 2015.  For “Group 2” storage vessels (i.e., vessels that come online after April 12, 2013), the compliance deadline is April 15, 2014.  Notably, pursuant to the revised Oil and Gas NSPS, operators only have until October 15, 2013 to estimate potential VOC emissions of Group 1 storage vessels for purposes of determining whether the rule applies.

Meanwhile, the agency is continuing to evaluate other issues raised in the reconsideration petitions that were submitted in response to the August 2012 rulemaking.  EPA has stated in the past that it intends to address the remaining issues by the end of 2014.

Petroleum Refinery Enforcement Initiative 2.0

Posted on August 5, 2013 by Paul Seals

Enforcement with a Flair

EPA has seen the smoke.
This certainly is no joke.
Benzene is a neighborhood scare,
With upsets going to the flare.

On July 10, the Department of Justice and EPA announced the lodging of a consent decree with Shell Oil Company to resolve alleged Clean Air Act violations at Shell’s refinery and chemical plant in Deer Park Texas.  This agreement represents the fourth “refinery flare consent decree” in the past year.  More are expected.

Shell will spend $115 million to control emissions from flares and other processes, and will pay a $2.6 million civil penalty.  EPA alleged that Shell was improperly operating its flaring devices resulting in excessive emissions of benzene and other hazardous air pollutants.  Shell will spend $100 million to reduce flare emissions.

These flare consent decrees represent a new chapter in EPA’s national Petroleum Refinery Initiative (“PRI”), which, beginning in 2000, resulted in the entry of 31 settlements covering 107 refineries in 32 states, affecting 90% of the domestic refining capacity.  EPA did address refinery flares as one of the marquee issues in PRI consent decrees – compliance with the New Source Performance Standards (“NSPS”) for Petroleum Refineries.

EPA is now pushing the envelope to impose “regulatory requirements plus.”  Through an enforcement alert in August of last year, EPA warned industry that there were significant issues with flare efficiency and excessive emissions.  EPA Enforcement Alert:  EPA Enforcement Targets Flaring Efficiency Violations.

What is EPA doing?  What is the basis of this Petroleum Refinery Initiative 2.0 and the imposition of “regulatory requirements plus”?

EPA bases this new initiative on the “general duty” requirements.  NSPS requires that at all times owners and operators should operate and maintain a facility or source consistent with “good air pollution control practices.”  In addition, Section 112r of the CAA requires owners and operators to maintain a safe facility by taking such steps as are necessary to prevent releases of hazardous air pollutants (“HAP”), and to minimize the consequences of accidental releases which do occur.  Accordingly, with no threshold amount, any release of a listed HAP (e.g. benzene) that could have been prevented violates this general duty.  If a flare smokes, there must be a violation.

This general duty is used to require control measures that go beyond those specified in the regulations.  The consent decrees include conditions addressing flare combustion efficiency limits incorporating automated controls with complex and expensive monitoring systems, flaring caps for individual flares and the overall refinery, and flare gas recovery systems for individual flares.

The enforcement train has left the station.  Who will be next in line?  How much will the ticket cost?  Are there rulemaking or other actions that may be taken to slowdown or stop the train?  Flares are not unique to petroleum refineries and petrochemical plants (e.g. flaring in oil and gas production facilities).  Will EPA provide other industries the opportunity to go for a train ride?

Congress Seeks to Reverse EPA’s Utility Climate NSPS

Posted on February 29, 2012 by Deborah Jennings

By Deborah Jennings and Andrew Schatz

In the wake of expected Greenhouse Gas New Source Performance Standards (NSPS) for Electric Generating Units pursuant to Section 111 of the Clean Air Act, Congress has shown some early resistance.  On November 4, 2011, EPA submitted to the Office of Management and Budget (OMB) its proposed rule for regulatory review.  The proposed rule would require new and modified electric utilities to meet potentially stringent performance standards and emissions guidelines for greenhouse gases at a level that has been “adequately demonstrated” by existing technology.  42 U.S.C. § 7411(a)(1).  Although the stringency of such standards is uncertain, they could require installation of expensive technology controls for fossil fuel combustion power plants. 

In response, a group of 221 Congressmen submitted a letter on February 23, 2012 to OMB urging the White House to bar EPA from issuing its proposed NSPS rule.  The letter cited, among other things, concerns that the rules could require installation of costly technology, such as carbon-capture and storage, which they feared would increase electricity costs.  The 221 figure is significant, because it constitutes a majority of the House of Representatives, who along with the Senate, could pass a resolution overturning the rule (with Presidential approval or Congressional override of a veto) under the Congressional Review Act (CRA), 5 U.S.C. §§ 801-808.

Yet, history suggests it is very unlikely that Congress will reverse an EPA climate change regulation using the Congressional Review Act.  For starters, the CRA allows Congress to pass a disapproval resolution seeking to reverse a recently promulgated federal regulation by a simple majority vote (no filibusters) within 60 days of receiving the final rule or its date of publication in the federal register.  Thus, Congress has a very short-time frame to pass such resolutions in both the House and the Senate.  Moreover, the President can still veto the disapproval resolution.  At that point, Congress would need a two-thirds majority to override the veto.  In fact, Congress has only successfully used the CRA once, overturning a Department of Labor rulemaking on ergonomics passed in the waning days of the Clinton Administration. 

Such a scenario could shape up this time around.  EPA originally planned on issuing the proposed utility standards in July 2011 and the final standards in May 2012.  Since EPA has yet to issue its proposed rule, a final rule may not be expected until late 2012 or early 2013, at the conclusion of President Obama’s first term.