American Oil and Gas Reporter - June 2014 - 33

WASHINGTONWATCH
New Threats
Come From EPA
Under CAA
Although congressional inaction continues, federal regulatory agencies are hard at work. Agencies don't necessarily need new
laws; they can interpret existing laws to justify new regulations.
Of major concern to the oil and natural gas industry are efforts
by the Environmental Protection Agency to issue new rules under the Clean Air Act.
Initially, the CAA focused on large sources of hydrocarbon
emissions in urban areas, such as refineries in Houston. These large
areas most often were classified as ozone nonattainment areas.
But now, ozone nonattainment presents a future threat to oil
and natural gas production because EPA is under a court order
to determine whether to lower the national ambient air quality standard. One of its options would classify 95 percent or more of the
country as nonattainment. This ozone standard would translate
to restrictions on emissions from new equipment, including offsetting reductions for any new emissions, as well as a decrease
in the size of sources regulated. These tighter requirements will
include oil and natural gas production.
The push to regulate and reduce greenhouse gas emissions presents another dilemma. What emission sources can be tapped to
reduce GHG emissions?
Oil and natural gas production also would be impacted by new
regulations on methane emissions. Although methane is a minor
precursor to ozone, it has been shown to be 25 times more active
than carbon dioxide over 100 years. The Obama administration
is committed to enacting policy on climate change. Stronger efforts were anticipated for early June, when EPA was scheduled
to issue new regulations to limit CO2 emissions under the CAA
for existing power plants.
The agency also has announced its intent to look at methane
emissions from oil and natural gas operations, building off of its
New Source Performance Standard for fractured natural gas wells.
But, beyond that internal push is outside pressure from environmental groups, which are petitioning EPA to take action in another arena: hazardous air pollutants (HAPs). This petitioning strategy is similar to the tactic environmentalists have employed successfully with respect to the Endangered Species Act: Outside
groups petition a federal agency, and either the agency complies
or the groups sue the agency and settle the suit by garnering an
agency commitment to promulgate new regulations.
In a May 13 petition to EPA's Office of Air and Radiation,
Earthjustice, the Sierra Club, Natural Resources Defense Council, and almost 70 national, state and regional groups contend EPA
must list oil and gas wells and associated equipment as an area
source category and set national air toxics standards to protect public health. The petition argues that EPA should exercise its authority
under the CAA "to list oil and gas wells . . . in the appropriate
geographical areas as area sources, and set limits on (HAPs)."
The petitioners contend, "EPA has the authority to establish
an area source category 'for oil and gas production wells located in any metropolitan statistical area or consolidated metropolitan statistical area with a population in excess of 1 million if the
(EPA) administrator determines that emissions of (HAPs) from

"Environmental groups are petitioning
EPA to take action in the area of

hazardous air pollutants.

such wells present more than a negligible risk of adverse effects
to public health.'"
Given the population growth in metropolitan areas, and increased oil and natural gas development in urban areas, the action requested would encompass a large number of areas and oil
and gas wells.
However, the basis for the petition is not structurally sound,
in part, because it appears to rely heavily on data from Ventura
County, Ca., and focuses on external combustion equipment such
as boilers, heaters and steam generators. The petition attributes
the HAPs to flaring from wells, which is not discussed in the Ventura County study. But such a petition may provide sufficient justification for EPA to implement new regulations or expand the
scope of existing regulations. Unfortunately, the only defense for
industry is to submit comments and then, if necessary, sue.
Industry must urge EPA to recognize its responsibility to the
American public to use its authority wisely and to balance efforts
to attain air quality levels with reality. Are the levels requested
in the Earthjustice petition attainable? Can we achieve the CO2
limits that were to be proposed in early June?
EPA may consider the broader economic well-being in addressing such petitions. However, if overly aggressive regulation
is imposed, industry must embark on a lengthy and costly battle to ensure that reasonable regulation prevails.
❒

SUSAN GINSBERG is vice
president of crude oil and natural gas regulatory affairs for
the Independent Petroleum
Association of America. She
covers legislation and regulation, focusing on the CFTC
and FERC. Her experience in
natural gas regulatory affairs
spans 25 years.
JUNE 2014 33

American Oil and Gas Reporter - June 2014

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