Regulatory Developments, Special Topics in Environmental Management

EPA’s Two Final NSPS Rules Considered Win for Oil and Gas Industry

On August 13, 2020, EPA Administrator Andrew Wheeler announced two final rules related to the New Source Performance Standards (NSPS) for the oil and natural gas industry.

RefineryThe “policy package” is the first rule finalized. The EPA determined “the Obama EPA’s addition of the transmission and storage segment was improper and removes it from the regulation while also rescinding emissions standards for that segment,” according to the Agency’s news release. “The policy package also makes clear that oil and gas operators will still be required to reduce emissions of ozone-forming volatile organic compounds (VOCs) in the production and processing segment of the industry.”

Based on the reasoning that the pollution controls used to reduce VOC emissions will also reduce methane emissions, the policy package “removes methane control requirements for the production and processing segments.”

According to the Trump administration, “The separate regulation of methane imposed by the 2016 rule was both improper and redundant.”

The rollback was first proposed in 2019 and accused the “Obama administration of enacting a legally flawed rule, and agency officials said it would save companies tens of millions of dollars a year in compliance requirements without changing the trajectory of methane emissions,” according to WFMJ.com.

The “technical package” comprises the second rule, which “includes commonsense changes to the NSPS that will directly benefit smaller oil and gas operators who rely on straightforward regulatory policy to run their businesses and provide Americans with reliable, affordable energy,” according to the Agency.

States, including California, and a coalition of environmental activists claim the changes are illegal and harmful to climate change efforts and state they will quickly take legal action to challenge the new rules.

“It’s not only negligent, it’s unlawful,” California Attorney General Xavier Becerra said in a statement to WFMJ.com. “We won’t sit silently while the EPA allows this super pollutant to rapidly warm our atmosphere.”

Wheeler continues to cite the Trump administration’s party line of reducing “burdensome and ineffective regulations for our domestic energy industry” as the reasoning behind many of the EPA’s deregulatory activities.

Methane has been identified as a major greenhouse gas (GHG) emissions problem, meaning regulators have focused on preventing methane leaks from pipelines and on-site well equipment.

According to the EPA, the oil and gas industry was responsible for nearly 30% of the nation’s methane emissions in 2018, and methane accounted for 10% of the nation’s GHG emissions.

These rule changes will eliminate “twice-yearly requirement for companies to inspect for methane leaks on equipment installed after 2015 at well sites and downstream segments, such as pipelines, compressor stations and storage tanks,” according to wmcactionnews5.com. “Leaks must be fixed.”

Supporters of the final rule changes applaud the expected reduction of methane emissions and note that the EPA’s analysis acknowledges that there will be an increase of smog and methane-forming compound emissions because of these final rules, according to wmcactionnews5.com.

“Operators will still have to check equipment for leaks of smog-forming compounds at some higher-producing well sites, but Thursday’s changes relaxed those standards and producers won’t have to inspect pipelines or downstream equipment anymore,” according to WCM5.

“These rulemakings will reduce regulatory burdens for oil and natural gas entities while protecting human health and the environment,” according to the Agency. “Combined, the two final rules are estimated to yield net benefits of $750 to $850 million dollars from 2021 to 2030, the annualized equivalent of about $100 million a year. These final rules combined with other deregulatory actions have saved Americans an estimated $94 billion in unnecessary regulatory costs.”

To learn more, see the EPA’s Final Policy Amendments Fact Sheet.