Articles, Newsletters and Advisories
This article is an excerpt of The 2017 Babst Calland Report, a report which represents the collective legal perspective of Babst Calland’s energy, environmental and pipeline safety attorneys addressing the most current business and regulatory issues facing the oil and natural gas industry. A full copy is available by writing firstname.lastname@example.org.
The second half of 2016 was marked by several significant federal air program developments as the Environmental Protection Agency (EPA) raced to implement President Barack Obama’s Climate Action Plan before the change in administration. The final New Source Performance Standards (NSPS) for oil and natural gas production, processing, transmission and storage activities, which established first-time methane requirements, went into effect on August 2. By then, lawsuits were already well underway to challenge the 2016 NSPS and EPA’s authority to regulate methane emissions.
In October, EPA finalized the “Control Techniques Guide – lines” (CTG) directing state and local air agencies to reduce volatile organic compound (VOC) emissions from existing oil and natural gas industry sources in areas with ozone problems (including all of Pennsylvania). It is anticipated that Pennsylvania will adopt regulations to implement the CTG in the Commonwealth within the next few years.
In November, EPA issued a final Information Collection Request (ICR) to gather information for the agency to develop a federal rule to limit methane emissions from existing sources. The final ICR set in motion a flurry of activity as more than 15,000 owners and operators were tasked with submitting extensive information to EPA in a short timeframe. For many companies, the ICR presented an enormous challenge due to its broad scope, complex EPA reporting forms and significant compliance costs. Also in November, EPA finalized additional revisions to the Petroleum and Natural Gas Systems source category of its Greenhouse Gas Reporting Rule.
The Trump administration acted quickly to reverse course on climate change initiatives and reduce regulatory burdens. By early March, the new administration had withdrawn the controversial ICR and announced that owners and operators were no longer required to respond. On March 28, President Donald Trump signed an executive order entitled, “Promoting Energy Independence and Economic Growth,” to promote do mes tic energy development and avoid regulatory burdens that “unnecessarily encumber energy production, constrain economic growth, and prevent job creation.” This executive order revoked President Obama’s 2013 Climate Action Plan and 2014 Strategy to Reduce Methane Emissions and also directed EPA to review the 2016 NSPS. The same day, Administrator Scott Pruitt an nounced that EPA was initiating review of the 2016 NSPS and “providing advanced notice of forthcoming rulemaking proceedings consistent with [President Trump’s] policies.” More recently, EPA granted industry requests to reconsider certain requirements of the 2016 NSPS and announced a stay of the relevant provisions.
In light of this trend, it is foreseeable that the Trump administration could rescind other Obama-era Clean Air Act initiatives such as the CTG later this year. In a similar vein, on June 1, President Trump announced that the United States will withdraw from the Paris Agreement adopted at the United Nations Climate Change Conference in December 2015.
Pennsylvania: More stringent air permitting requirements proposed
Despite the recent trend at the federal level, Pennsylvania continues to implement the methane reduction strategy launched by Governor Tom Wolf in early 2016. On February 4, the Department of Environmental Protection announced the beginning of a public comment period for an air permitting proposal that, if finalized, would result in significant changes to the status quo for oil and gas industry sources. Among other things, the proposal would narrow the scope of a longstanding air permitting exemption known as “Exemption 38,” such that it would not apply to new or modified unconventional well sites. Instead, unconventional operators would be required to obtain an air permit prior to constructing, modifying or operating a well site.
DEP proposed a new general permit known as GP-5A to authorize the construction and operation of unconventional natural gas well site operations and remote pigging stations. DEP also proposed significant changes to the terms and conditions of the existing general permit for natural gas compression and processing facilities, known as GP-5.[x] Together GP-5A and the revised GP-5 present myriad issues for comment and debate, such as the proposed requirement to control methane emissions from pigging operations by at least 98 percent. The public comment period regarding the proposal closed on June 5.
Apart from the pending air permitting proposal, it remains to be seen whether DEP will undertake a rulemaking to reduce methane or VOC emissions from oil and natural gas facilities. Governor Wolf’s methane strategy announcement in 2016 anticipated that DEP would eventually develop such a regulation.