CHAPTER 2 REGULATION OF AIR IMPACTS ASSOCIATED WITH THE EXPLORATION, DEVELOPMENT, PRODUCTION, AND TRANSPORTATION OF OIL AND GAS

• Jurisdiction: United States

Environmental Regulation of the Oil and Gas Industry II
(Feb 1994)
CHAPTER 2
REGULATION OF AIR IMPACTS ASSOCIATED WITH THE EXPLORATION, DEVELOPMENT, PRODUCTION, AND TRANSPORTATION OF OIL AND GAS
James A. Holtkamp
Stoel Rives Boley Jones & Grey
Salt Lake City, Utah

Historically, the exploration and production of oil and gas have not been considered to generate significant air pollution. Indeed, the principal issues relating to atmospheric releases from oil and gas facilities have revolved around conservation, i.e., whether to vent or flare gas, and protection of workers from hydrogen sulfide. However, with the Federal Clean Air Act Amendments signed by President Bush on November 15, 1990, oil and gas exploration, development, production, and transportation facilities will be subject to a wide variety of new requirements, including the need to obtain operating permits and the need to conform to strict standards for the control of emissions of hazardous air pollutants. In addition, the Act and other federal and state statutes require the development of plans to prepare for, report and remediate releases of contaminants to the atmosphere from oil and gas operations.

I. Permitting Requirements.

The Title V of the Clean Air Act, as amended, 42 U.S.C. §§ 7661-7661f , establishes a comprehensive operating permit program for virtually all sources of any significance. The program is to be administered by the states pursuant to

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EPA-approved operating permit programs which conform to the regulations in 40 C.F.R. Part 70. Many states already have operating permit programs in place; others do not. Until the 1990 amendments, the only permit requirements in the Act were in the provisions governing prevention of significant deterioration ("PSD"). 42 U.S.C. §§ 7470 -7479. Under title V, however, all sources will be required to obtain an operating permit if they meet or exceed certain threshold emissions amounts.

A. Sources Requiring Permits.

An oil and gas facility will be required to apply for an operating permit under an EPA approved state plan if it is a "major source" of air emissions. The term "major source" is defined in 42 U.S.C. § 7661(1) to incorporate the definitions of "major source" in 42 U.S.C. § 7412 and "major stationary source" in 42 U.S.C. § 7602j and Part D of Subchapter I of the Act, 42 U.S.C. §§ 7501 -7515. Section 7412(a)(1) defines "major source" as:

Any stationary source or group of stationary sources located within a contiguous area and under common control that emits or has the potential to emit considering controls, in the aggregate, 10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combination of hazardous air pollutants. The Administrator may establish a lesser quantity, or in the case of radionuclides specified in the previous sentence, on the basis of the potency of the air pollutant, persistence, potential for bioaccumulation, other characteristics of the air pollutant, or other relevant factors.

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Section 7602(j) defines "major stationary source" as:

Any stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant (including any major emitting facility or source of fugitive emissions of any such pollutant, as determined by rule by the Administrator).

Part D of Subpart I sets different thresholds for determining whether a source is "major", depending on the type of non-attainment area (i.e., which pollutant has triggered the non-attainment area designation) and the classification of the area. Specifically, for purposes of Part D of Title I, the thresholds for "major stationary sources" in non-attainment areas are as follows:

Pollutant	Classification	Threshold
Ozone	Marginal or moderate	100 tpy or more of volatile organic compounds ("VOC") or oxides of nitrogen ("NOx")
Ozone	Serious	50 tpy or more of VOC or NOx
Ozone	Severe	25 tpy or more of VOC or NOx
Ozone	Extreme	10 tpy or more of VOC or NOx
Ozone Transport Regions	50 tpy or more of VOC or NOx
Carbon Monoxide ("CO")	Serious	50 tpy or more of CO if stationary sources contribute significantly to CO levels
Particulate Matter ("PM-10")	Serious	70 tpy or more of PM-10

Sources exceeding the foregoing thresholds are defined as "major sources" and are required to obtain an operating permit, 42 U.S.C. § 7661b . However, the operating permit regulations provide that the states may exempt "non-major"

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sources from permitting requirements for up to five years from the date of the state program approval. 40 C.F.R. § 70.3(b)(1). Major sources are required to submit permits within one year following the date of approval of the state program, after which the state may phase in its permit review over a three-year schedule. 40 C.F.R. § 70.4(b)(11).

The final operating permit regulations provide that a source may modify its practices or operations without triggering the requirement to apply for modification of its operating permit if it does not exceed certain allowable emissions. The states may allow for emissions trading to meet emissions limits set forth in the applicable state plan and must allow emissions trading to comply with any federally-enforceable emissions. 40 C.F.R. § 70.4(b)(12).

Permits are to be issued for terms not to exceed five-years. Existing sources, even those with current state permits, will be subject to the operating permit program.

II. Hazardous Air Pollutants ("HAPs").

Title III of the Clean Air Act Amendments, now codified in Section...