Transcript Environmental and Clean Air Regulations

December 7, 2012
Benjamin Rhem
Jackson Walker L.L.P.
[email protected]• 512.236.2012
Environmental and Clean Air Regulations
MIDSTREAM ENERGY LAW CONFERENCE: MEETING
DEMAND FOR INFRASTRUCTURE
HOUSTON, TEXAS
THE
Presentation Outline
•
•
•
•
•
Federal Clean Air Act Basics
Greenhouse Gas Regulations
Texas Air Permitting Structure
Aggregation of Oil and Gas Sites
EPA and TCEQ Legal Conflict Regarding
Regulation of Oil and Gas Operations
• Compliance Best Practices
Federal Clean Air Act Basics
• National Ambient Air Quality Standards
• New Source Performance Standards
• National Emission Standards for
Hazardous Air Pollutants
• State Implementation Plans
Recent EPA Oil and Gas
Regulations
• On August 16, 2012, the following new air
regulations were published in the Federal
Register
– NSPS Subpart OOOO, Crude Oil and Natural Gas
Production, Transmission and Distribution
– NESHAP Subpart HH, Oil and Natural Gas
Production
– NESHAP Subpart HHH, Natural Gas Transmission
and Storage
Recent EPA Oil and Gas
Regulations
• What facilities are covered under Subpart
OOOO?
– Production sites
– Gathering stations
– Natural gas plants
– Transmission compression
– Underground natural gas storage
Recent EPA Oil and Gas
Regulations
• NSPS OOOO
– LDAR – natural gas processing
plants are subject to more
stringent definition of “leak,” more
frequent monitoring, and
monitoring of more components
– SO2 Emissions – natural gas processing plants with
sulfur feed rates of more than 2 long tons/day must
control emissions up to 99% depending on feed rate
and concentration
Recent EPA Oil and Gas
Regulations
• NSPS OOOO
– Natural gas wells using hydraulic fracturing must
control VOC emissions with green completions by
2015, but until then may use flares
– Centrifugal and reciprocating compressors are
subject to certain seal and packing requirements
– All storage vessels are required to control VOC
and HAPS emissions to 95%
Recent EPA Oil and Gas
Regulations
• NESHAP HHH
– Retains requirement that Large Glycol
Dehydrators must reduce benzene emissions
to less than 1 ton per year or reduce total air
toxics by 95%
– Small Glycol Dehydrators must meet unit
specific limits for BTEX based on throughput
and gas composition
Program Conflicts
• NSPS (40 CFR, Subpart OOOO)
– EPA’s recently finalized NSPS for oil and gas facilities require
flaring of emissions associated with flowback from hydraulic
fracturing operations.
– When this flowback contains high concentrations of sulfur
compounds, the flaring process can actually create significant
SO2 emissions.
• NAAQS (CAA § 109)
– In some areas with a high density of fracking operations, TCEQ
is concerned that the required flaring operations may cause an
exceedance of the SO2 NAAQS.
Greenhouse Gas Regulations
• Reporting Rule
• GHG Permitting
a. Mass. v. EPA
b. Endangerment
Finding
c. Tailpipe Rule
d. Tailoring Rule
e. Texas’ Challenge
TCEQ Permitting Structure
•
•
•
•
•
De Minimis Sources
Permits By Rule
Standard Permits
New Source Review Permits
MSS Authorizations
TCEQ Permitting Structure
• Title V
– Federal Program – delegated to TCEQ
– Only applies to “major sources”
• NSPS
• NESHAPS
Aggregation of Oil and Gas
Sites
• EPA regulations, 40 C.F.R. 52.21(b)(6),
require
– aggregation into a single source based upon:
• Common control, by the same person
• Located on contiguous or adjacent properties
• Same Industrial SIC grouping
Summit v. EPA
Nos. 09-4348,10-4572, Decided August 7, 2012, 6th Circuit Court of Appeals
• EPA determined that 100 sour gas wells that were within
a roughly 40 square mile area constituted a single
stationary source because they were "adjacent."
– Some of the wells and flares were located up to 8 miles from the
sweetening plant
– Furthermore, the operator did not own all the land between the
plants and wells
• The 6th Circuit found that EPA's reliance on whether
sources were functionally related in determining whether
those sources should be aggregated was contrary to the
plain meaning of "adjacent."
EPA and TCEQ Legal Conflicts
and the SIP Gap
• Legal Challenges
– On October 12, 2012, Texas filed a petition
for review of the EPA’s Final Oil and Gas
NSPS and NESHAP rules
• SIP Gap
– TCEQ adopts rules and incorporates them
into the SIP, but the EPA has not approved
EPA and TCEQ Legal Conflicts
and the SIP Gap
• What is an operator supposed to do when
presented with differing regulations from the
federal and state environmental agencies, or
when a state challenges federal regulations?
– Example of the TCEQ Flex Permitting Program
– Texas and other petitioners have been winning a
fair share of their challenges to EPA regulations,
further complicating the decision operators face
Best Practices
• No easy solution
• Environmental-specific compliance
manager
– Don’t assume safety manager will be
knowledgeable about and able to handle all
environmental issues
• Proactive approach
– Waiting for a TCEQ or EPA investigator to
show up at your site is rarely the right answer
Texas Environmental, Health,
and Safety Audit Privilege Act
Notice of Audit
+ Conduct Audit
+ Disclosure of Violations
+ Corrective Action Plan
Immunity from penalties associated with those
disclosed violations
EPA to greatly reduce its implementation of its
audit policy.
QUESTIONS?
[email protected]