In order to comply with a court-ordered schedule, EPA Administrator Lisa Jackson on July 28 signed a 604-page package that proposes to subject additional oil and gas operations to regulation under the New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAPS) programs and to impose new and amended requirements under both programs. This proposed rulemaking has significant ramifications for the oil and gas industry. As a result of the court order, this proposed rulemaking will proceed in an expedited manner with final action due no later than February 28, 2012.

Under the proposal, EPA would amend existing NSPS applicable to natural gas processing plants to address leaks of volatile organic compounds (VOCs) and emissions of sulfur dioxide. Additionally, EPA would modify NSPS to include all oil and gas operations (production, processing, transmission, storage and distribution), imposing requirements on those operations, in a new NSPS subpart that would also include the existing standards. EPA also would address startup, shutdown and maintenance (SSM) emissions under NSPS.

EPA also is proposing NSPS standards for completions of hydraulically fractured gas wells. The proposed standards include the reduced emission completion (REC) techniques developed in EPA’s Natural Gas STAR program along with pit flaring of gas not sent to the gathering line. The standards would be applicable to newly drilled and fractured wells as well as existing wells that are refractured.

The NESHAPS proposal includes maximum achievable control technology (MACT) standards for those glycol dehydrators and storage vessels at major sources of hazardous air pollutants not currently subject to MACT standards. The proposal also includes revised applicability provisions, an alternative test protocol, and elimination of the SSM exemption.

There will be a sixty-day (from the date of publication in the Federal Register) public comment period, which will include public hearings in Dallas, Pittsburgh, and Denver at dates yet to be scheduled. Operators in the oil and gas industry should evaluate the potential impacts of the proposed rules and consider whether to participate in the public comment process to protect their interests.

Please feel free to contact us if you have any questions regarding these matters.