On 13 May 2014, Earthjustice filed a petition on behalf of 64 groups requesting that the EPA initiate a rulemaking to establish stringent emission limits for oil and gas production wells and associated equipment located in metropolitan statistical areas with populations greater than one million (a term that petitioners seek to broadly define), including wells in California, Colorado, Louisiana, Ohio, Pennsylvania, and Texas. Petitioners request that the EPA initiate the rulemaking under Section 112 of the Clean Air Act (CAA or Act), 42 U.S.C. § 7412, the provision of the Act regulating “hazardous air pollutants” (HAPs). Significantly, the petition requests that the EPA target so-called “area source” wells, meaning wells that emit only minor amounts of HAPs. Despite these minor emissions, the petitioners seek to impose emissions limits that reflect the maximum achievable control technology (MACT). The petition raises important issues for companies managing legal risks for their upstream operations. These issues and background on the petition are discussed below.

Background

Under the CAA, the EPA has recently issued at least two significant rules for oil and gas wells, specifically a National Emission Standard for Hazardous Air Pollutants (NESHAP) governing oil and natural gas production facilities, 40 C.F.R. Part 63, Subpart HH, and a New Source Performance Standard (NSPS) for crude oil and natural gas production, transmission, and distribution, 40 C.F.R. Part 60, Subpart OOOO. Petitioners allege that these rules leave a vast majority of HAP emissions uncontrolled because they purportedly do not address emissions from oil wells, conventional gas wells, certain hydraulically fractured gas wells, and most equipment associated with wells, including many storage vessels, pneumatic controllers, compressors, and equipment leaks. However, petitioners understate the scope of the NSPS and NESHAP regulations regarding oil and natural gas production facilities and ignore the EPA’s current efforts related to evaluation of methane reduction from these same oil and natural gas production facilities.

Importantly, the CAA contains a specific provision governing the regulation of “area source” oil and gas wells under Section 112:

The administrator shall not list oil and gas production wells (with its associated equipment) as an area source category . . . except that the administrator may establish an area source category for oil and gas production wells located in any metropolitan statistical area or consolidated metropolitan statistical area with a population in excess of one million, if the administrator determines that emissions of hazardous air pollutants from such wells presents more than a negligible risk of adverse effects to public health. CAA § 112(n)(4)(B).

Petitioners assert that HAP emissions from oil and gas wells near populated areas present more than a “negligible risk” because studies have allegedly found health impacts associated with emissions from oil and gas wells (and associated equipment). Specifically, petitioners argue that well pads allegedly pose an estimated lifetime excess cancer risk well above one-in-one million, and that HAP emissions from these sources cause acute and chronic (non-cancer) health impacts.

Significant Issues Raised by the Petition

While the petition raises several issues, three deserve particular scrutiny. First, the petition relies on speculative and unreliable emissions studies to demonstrate the wells pose a purported public health risk. Several of these studies use top-down emissions estimations that are not derived from site-specific or source measurements from the oil and natural gas sector. Instead, these studies seek to estimate emissions from the oil and natural gas sector based on often limited monitoring data and computer-simulated models. Importantly, the studies and emissions estimates frequently do not account for the reductions in emissions since implementation of NSPS OOOO and NESHAP (MACT) HH or other relevant regulations, such as the recent Colorado rulemaking. With respect to impacts to public health from these sources, petitioners rely heavily on several studies that fail to contain the necessary scientific analysis and rigor to demonstrate public health impacts and have been questioned even by state and local officials as to their validity and scope of their broad conclusions. Information and studies debunking the petition will be vital to demonstrating that oil and gas wells are safe and pose no risk to public health. 

Second, the petition represents the latest in a broader wave of environmental groups’ efforts to impose stringent emissions regulations on oil and gas wells. In fact, many of the studies relied upon in the petition are the same studies that environmental groups have cited in support of more stringent state and local regulation of methane and volatile organic compounds from oil and gas wells. These prior battles at the state and local level provide direct insight into the strategies and tactics of the environmental groups, including an understanding of the economic and technical analysis needed to counter the aggressive environmental attacks on oil and gas operations. Simply relying on lofty policy rebuttals and generalized statements present the risk of creating a one-sided record in the environmental groups’ favor.

Finally, the petition raises important issues of the EPA’s discretionary use of limited agency resources. By coincidence, the petition was filed the same day that the D.C. Circuit Court of Appeals affirmed the EPA’s denial of another environmental organization’s petition for a rulemaking to control emissions from coal mines. WildEarth Guardians v. EPA, No. 13-1212, at 3 (D.C. Cir. 13 May 2014). In affirming the EPA’s denial of the petition, the court reasoned that the “EPA has discretion to determine the timing and priorities of its regulatory agenda … ” Id. Constructive engagement with the EPA on the petition will be important to ensuring the appropriate exercise of discretion. Carefully balanced and thoughtful discussions, backed up by the appropriate analysis, can be far more effective when working with the agency.