CHAPTER 4 NEW SOURCE PERFORMANCE STANDARD OOOOA: LEGAL AND TECHNICAL IMPLEMENTATION ISSUES AND LESSONS LEARNED

• Jurisdiction: United States

Air Quality Issues Affecting Oil, Gas, and Mining Development and Operations (Feb 2018)
CHAPTER 4
NEW SOURCE PERFORMANCE STANDARD OOOOA: LEGAL AND TECHNICAL IMPLEMENTATION ISSUES AND LESSONS LEARNED
Joel Minor
Associate Attorney
Earthjustice
Denver, CO ¹
Shannon S. Broome
Partner
Hunton & Williams
San Francisco, CA & Washington, DC

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JOEL MINOR is an Associate Attorney with Earthjustice's Rocky Mountain Office in Denver, where he works to protect communities and ecosystems from the harmful impacts of energy development. His work focuses on reducing air pollution from the oil and gas sector. Prior to Earthjustice, Joel served as a law clerk for Hon. Carlos F. Lucero of the Tenth Circuit Court of Appeals. Joel earned a J.D. and an M.S. in Environment and Resources with an emphasis in Atmospheric Science from Stanford. He graduated from Colorado College with a B.A. in Environmental Policy and a minor in Southwest Studies.

SHANNON S. BROOME is the managing partner of Hunton & Williams' San Francisco office and also practices in its Washington, DC office. Splitting her time between the San Francisco and Washington offices allows her to serve clients nationally, and with a focus on California, a jurisdiction frequently at the forefront of environmental regulation. She counsels, advocates, and represents clients on a range of environmental statutes before state and federal courts and administrative agencies. Her practice has a particular emphasis on the Clean Air Act and climate change, and corresponding state and local statutes and regulations. Shannon is a nationally recognized authority on Clean Air Act matters, with more than 25 years of experience addressing all aspects of the act, representing clients in a variety of manufacturing and energy sectors. Chambers USA describes Shannon as "a veritable Clean Air Act encyclopedia," stating that "her strong technical engineering background has been an invaluable asset" and noting that her "record of success speaks for itself." Of particular relevance to today's topic, Shannon is representing the Texas Oil & Gas Association in challenges to EPA's oil and gas emission regulations (Quad 0 and Quad Oa). From 1994 to 2000, Shannon was counsel and manager of Clean Air Act programs for the General Electric Company, where she was responsible for CAA advocacy, compliance, and training for more than 200 manufacturing facilities. Previously, she was an environmental and construction engineer for Chevron, USA. Ms. Broome earned her B.S. in Chemical Engineering from UCLA and J.D. from UC Berkeley, where she is a member of the Order of the Coif (top 10%). Shannon is the immediate past Co-Chair of the American Bar Association's Climate Change, Sustainable Development, and Ecosystems Committee and currently serves as a Vice-Chair on the Air Quality Committee and the Climate Change, Sustainable Development, and Ecosystems Committee. In 2017, she was named to the California Daily Journal's list of the Top 100 Women Attorneys in the state.

I. Introduction

One of the cornerstones of President Obama's environmental legacy was action on climate change. In 2008, he stated on the campaign trail: "Few challenges facing America and the world are more urgent than combating climate change." He proclaimed that "Washington has failed to show the same kind of leadership. That will change when I take office." Indeed it did. His administration moved forward on a number of climate initiatives. One of the final was the Environmental Protection Agency (EPA) adopting "new source performance standards" under the Clean Air Act (CAA) for upstream and midstream oil and gas production operations. These standards are the subject of this article, which reviews the march towards issuing the standards that began in the Summer of 2011 with a proposed regulation that, although not explicitly regulating methane, a high global warming potential compound, had the effect of reducing much of the methane emitted from certain parts of the oil and gas sector. We begin with an overview of those standards, move on to the direct regulation of methane under the same provision of the Clean Air Act, and discuss recent regulatory developments.

II. Background: EPA's 2012 New Source Performance Standards, Subpart OOOO.

A. Background: Why EPA Adopted Subpart OOOO.

The CAA includes a range of regulatory requirements applicable to a wide range of emissions from stationary and mobile sources. With respect to so-called criteria pollutants (ozone, NO₂, SO₂, lead, particulate matter, and carbon monoxide), EPA sets ambient, health-based standards.² Under CAA Section 111, Congress mandated technology-based emissions standards for specific source categories.³ This article focuses on standards adopted pursuant to Section 111 for emissions sources in the oil and gas sector. CAA Section 111 requires the EPA Administrator to "publish (and from time to time thereafter . . . revise) a list of categories of

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stationary sources" that, in his or her judgment, "cause[] or contribute[] significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare."⁴ EPA published this list in 1979, and included Crude Oil and Natural Gas Production in its "priority list" of source categories which the Administrator determined cause or contribute significantly to air pollution that may endanger public health and welfare.⁵

Once a source category is listed, EPA must promulgate "Federal standards of performance for new sources within such category" following notice and comment--these standards are generally known as New Source Performance Standards (NSPS).⁶ EPA promulgated two fairly narrow NSPS for the oil and gas sector in 1985.⁷ Both standards applied only to onshore natural gas processing plants. One required leak detection and repair (LDAR) to reduce volatile organic compound (VOC) emissions from leaking.⁸ The other standard set sulfur dioxide (SO₂) emissions limits.⁹

CAA § 112 includes a distinct set of requirements for EPA to set emissions standards for both new and existing sources of hazardous air pollutant (HAP) emissions that endanger human health.¹⁰ CAA § 112 specifically allows EPA 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 HAPs emissions from the wells "present more than a negligible risk of adverse effects to public health."¹¹ On July 16, 1992, EPA published its list of source categories, including "oil and natural gas production," that are subject to § 112.¹² In 1999, EPA promulgated National Emission Standards for Hazardous Air Pollutants (NESHAP) limiting emissions of several HAPs from facilities in the natural gas transmission and storage sector, including benzene, ethyl benzene, xylene, and toluene (collectively, BTEX) from process vents at glycol dehydrator units, storage tanks with flash emissions, and equipment leaks at natural gas processing plants.¹³ The standards applied only to major sources in the upstream oil and gas sector, from the wellhead through the processing

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plant.¹⁴ EPA deferred setting emissions standards for BTEX emissions from triethylene glycol dehydrator units at area sources in the oil and gas sector until 2007.¹⁵

After EPA sets a NSPS, the CAA requires that "[t]he Administrator shall, at least every 8 years, review and, if appropriate, revise such standards following the procedure required by this subsection for promulgation of such standards."¹⁶ Similarly, after EPA sets a NESHAP, Section 112(d)(5) states that EPA is to "review, and revise as necessary (taking into account developments in practices, processes, and control technologies), emission standards promulgated under this section no less often than every 8 year years."¹⁷

EPA did not meet the eight-year deadlines for either NSPS or NESHAPs for the oil and gas sector. Accordingly, on July 2, 2008, two conservation groups, San Juan Citizens Alliance and WildEarth Guardians, sent EPA a notice of their intent to sue the agency for its failure to meet the eight-year deadlines.¹⁸ After EPA failed to take action, the groups sued EPA for its failure to meet the statutory eight-year deadline.¹⁹ Recognizing that it had violated federal law, EPA entered into a consent decree with the plaintiffs, and agreed to fulfill its obligations to review its current NSPS and NESHAP standards for the oil and gas sector, and to determine whether or not it would revise the NSPS and NESHAPs for the oil and gas sector by January 31, 2011.²⁰

B. EPA Adopts Subpart OOOO.

On August 23, 2011, EPA proposed to update both the NSPS and NESHAPs for the oil and gas sector.²¹ After receiving public comments, EPA promulgated its final Rule on August 16, 2012.²² Because the final NSPS regulations are codified in 40 C.F.R. part 60 subpart OOOO, the 2012 Rule is often referred to as "OOOO" or "quad-O."²³

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The 2012 Rule represented a significant expansion of EPA's prior NSPS for the oil and gas sector, though the NESHAPs remained largely unchanged. Although EPA had previously regulated VOC emissions from equipment leaks in processing plants, it extended its VOC emission standards to other equipment within the oil and gas sector.²⁴ EPA explained that "the currently listed Oil and Natural Gas source category covers all operations for which we are setting standards. That the original NSPS's only set standards for a limited set of sources within the category cannot be taken to imply that other units were not within the scope of this original listing."²⁵ EPA also updated its preexisting SO₂ emissions requirements for sweetening units at gas processing plants.²⁶

The NSPS portion of the 2012 Rule applies to "well completions, pneumatic controllers, equipment leaks from natural gas processing plants, sweetening units at...