Major Air Regulatory Developments Anticipated for Pennsylvania Natural Gas Operators

The Legal Intelligencer

(by Gary Steinbauer)

Changes are coming to federal and state air quality regulations affecting new and existing upstream and midstream natural gas operations.  Congress is in the midst of finalizing legislation to undo a Trump administration Clean Air Act (CAA) rule, which rolled back Obama-era CAA requirements.  Separately, the U.S. Environmental Protection Agency (EPA) has begun developing rules for existing air emissions sources within the natural gas sector.  At the state level, the Pennsylvania Department of Environmental Protection (PADEP) is poised later this year to finalize its own set of air regulations for existing sources within the natural gas sector.  Any of these regulatory developments alone would be noteworthy; combined, they likely signal increased oversight, scrutiny, and regulation of new and existing air emission sources within Pennsylvania’s natural gas sector.

Congress Set to Disapprove Trump EPA Oil and Natural Gas CAA Rule

In March 2021, Congress invoked its rarely used Congressional Review Act (CRA) authority to rescind a Trump EPA rule that excluded emission sources in the transmission and storage segments and rescinded methane emission limits for the production and processing segments in New Source Performance Standards for the Crude Oil and Natural Gas Industry at 40 C.F.R. Part 60, Subparts OOOO and OOOOa (NSPS).  Oil and Natural Gas Sector: Emissions Standards for New, Reconstructed, and Modified Sources Review, 85 Fed. Reg. 57018 (Sept. 14, 2020).  Reinstating the NSPS methane requirements means that EPA would be statutorily required to regulate methane emissions from existing affected sources within the natural gas sector.  See 42 U.S.C. § 7411(d)(1).

While U.S. Senate voted to pass a joint resolution revoking the Trump administration’s revisions to these NSPS in April 2021, a vote in the House of Representatives has yet to be scheduled.  News outlets are reporting that the delay in the House is because EPA is asking for a debate on the resolution before bringing it to a vote.  Emma Dumain and Kelsey Brugger, E&E News, Why is the House taking so long to undo Trump methane rule? (May 25, 2021).  According to this E&E News coverage, EPA reportedly stepped in to encourage the Committee to create a legislative record on the resolution so that Congressional revocation does not unintentionally constrain EPA’s ability to regulate methane emissions from the natural gas sector in the future.

With Democrats holding a majority in the House, it likely is only a matter of time before a CRA-based revocation of the Trump administration’s NSPS revisions becomes law.  Legally, a CRA-based revocation treats the rule in question “as though such rule had never taken effect” and prevents EPA from promulgating a new rule that is “substantially the same,” absent express Congressional authorization.

EPA Launches Efforts to Issue CAA Rules for Existing Oil and Natural Gas Sources

While the CRA process unfolds in Congress, EPA has started implementing a directive included in a sweeping inauguration-day Executive Order issued by President Joseph R. Biden Jr.  See Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, E.O. 13390 (Jan. 20, 2021) (E.O. 13390).  E.O. 13390 requires EPA to, among other things, consider proposing “new regulations to establish comprehensive standards of performance and emission guidelines for methane and volatile organic compound [VOC] emissions from existing operations in the oil and gas sector, including the exploration and production, transmission, processing, and storage segments, by September 2021.”

In May 2021, EPA launched a public docket to accept comments before it proposes a rule establishing methane emission requirements for new and existing sources within the oil and natural gas sector.  In addition, EPA scheduled training sessions for communities, tribes, or small businesses that occurred in late-May 2021, and it has scheduled three public listening sessions in mid-June 2021, each of which focus on different stakeholder groups.  Following these outreach efforts, EPA will have roughly three months to issue a formal proposed rule regulating methane and VOC emissions from existing sources within the oil and natural gas sector by the September 2021 target in E.O. 13990.

PADEP Nears Finish Line On Existing Source Regulations

PADEP is finalizing a set of requirements adopting Reasonably Available Control Technology (RACT) requirements and limits to control VOC emissions from existing sources within the oil and natural gas sector.  Control of VOC Emissions from Oil and Natural Gas Sources, 50 Pa. B. 2633 (May 23, 2020).  PADEP’s proposed RACT rule is based on Control Technique Guidelines (CTGs) for the Oil and Gas Industry that the Obama EPA issued in October 2016.  CTGs are not themselves regulations, but rather, they are EPA’s recommendations to states and local air agencies as they develop RACT requirements for existing sources that are later included in State Implementation Plans (SIPs).  The CAA requires states to submit SIP revisions to EPA for sources covered by CTGs.  See 42 U.S.C. § 7511a(b)(2)(A).

PADEP’s proposed CTG RACT rule would affect many different types of air emission sources involved in natural gas operations.  While PADEP indicates that the proposed rule is intended to reduce VOC emissions, it acknowledges, as EPA did when it issued the original NSPS OOOOa in 2016, that methane emissions are reduced incidentally as a co-benefit.  Notably, PADEP’s proposed CTG RACT rule is more stringent than what EPA recommended as RACT in the CTGs.  For storage vessels and unconventional well sites installed on or after August 10, 2013 and a storage vessel at a gathering and boosting station, natural gas processing plant, or a facility within the natural gas transmission and storage segment, PADEP proposes a VOC applicability threshold of 2.7 tons per year, less than half of EPA’s recommended applicability threshold of 6.0 tons of VOC per year.  In addition, PADEP proposes to require more stringent leak detection and repair requirements, consisting of monthly audio, visual, and olfactory inspections and quarterly instrument monitoring.

PADEP’s proposed RACT CTG rule has garnered significant interest by a wide-range of stakeholders.  According to PADEP’s Air Quality Technical Advisory Committee website, PADEP received more than 4,000 different comments from over 36,000 commenters.  PADEP currently is drafting responses to these comments and projects that it will issue a final rulemaking package later in 2021.  PADEP has pledged to finalize the CTG RACT rule in 2021.

Conclusion

Expected Congressional action and overlapping EPA and PADEP air regulations are likely to impose additional regulatory burdens and costs on Pennsylvania natural gas operators.  Potentially stringent regulatory requirements and increased scrutiny may also present operational risks for natural gas operators.  Upstream and midstream natural gas operators must remain informed, engaged, and vigilant, as the air emissions regulatory landscape could be contentious and uncertain over the next several years.

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Reprinted with permission from the June 10, 2021 edition of The Legal Intelligencer© 2021 ALM Media Properties, LLC. All rights reserved.