On April 17, the U.S. Environmental Protection Agency (EPA) promulgated the first-ever final regulation setting limits on air pollution from natural gas production aimed at reducing toxic air pollution from the natural-gas drilling process called fracking. EPA updated its New Source Performance Standards (NSPSs) and National Emission Standards for Hazardous Air Pollutants (NESHAPs) to include emissions from oil and gas production. The new standards will reduce the amount of methane, volatile organic compounds, and other emissions coming from fracking operations by requiring that all newly fractured or refractured wells incorporate reduced emissions controls (RECs). The regulations will also target emissions from compressors, oil storage tanks and other oil-and-gas sector equipment.
The biggest news is that, under the final rules, EPA delayed the deadline for requiring the use of RECs or “green completions”. In its proposed rule, “green completions” were required 60 days after final publication of the rule in the Federal Register. Now, under the final rule, well operator and owners have until January 1, 2015 before they need to conduct green completions. Between now and 2015, compliance with the rules can be achieved via reductions using flaring or other approved combustion methods, although early adoption of green completion is "encouraged".
In addition, there are a few other exemptions from compliance under the final rules. For example, wells drilled in low-pressure areas, such as coal-bed methane reserves, are exempt because these wells release less pollution during completion. And companies that choose to re-fracture wells using the pollution-reducing equipment prior to the January 2015 deadline would not be covered by the NSPS. These are significant changes from the rule as proposed in July 2011.
Despite these changes, industry still remains concerned about federal regulation of the oil and gas industry, including issues of “regulation overlap” (that is, where one federal agency will require one thing while another federal agency will regulate the industry another way). As we reported on the blog last week, President Obama announced the formation of a high-level task force last week charged with coordinating oversight of fracking in an effort to reassure industry groups that are concerned about overlapping federal regulations. Of course, it remains to be seen whether this will be successful.