On June 13, 2017, the United States Environmental Protection Agency (EPA) published a proposed rule that would stay for two years parts of EPA’s June 3, 2016 final rule entitled “Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources,” which amended and established updated new source performance standards (NSPS) for the oil and natural gas sector. This final rule was codified in EPA’s NSPS regulations as Subpart OOOOa to 40 CFR Part 60 or “Quad Oa.” Detailed information about Quad Oa can be found here.
Background on the Stay
EPA has been signaling some form of stay on parts of Quad Oa for several months in connection with President Trump’s March 28, 2017 Executive Order on Promoting Energy Independence and Economic Growth (Climate Change Executive Order), which specifically called for EPA to review Quad Oa in connection with a mandate for agencies to review any regulations that “potentially burden the safe, efficient development of domestic energy sources.” On April 18, 2017, EPA Administrator Scott Pruitt announced by letter that EPA would be convening regulatory proceedings to reconsider Quad Oa. On June 5, 2017, EPA published a notice in the Federal Register stating that EPA would be staying for three months certain aspects of Quad Oa. On June 13, 2017, EPA issued its proposed rule requesting a two-year stay on parts of Quad Oa to allow EPA to review Quad Oa in connection with several petitions for reconsideration submitted to EPA regarding Quad Oa in August 2016.
Scope of the Stay
EPA’s proposed rule does not stay Quad Oa in its entirety but instead stays only the parts of Quad Oa that relate to (1) fugitive emissions at well sites and compressor stations, (2) emissions from pneumatic pumps, and (3) the requirement of a professional engineer certification in relation to the closed vent system design and capacity for a number of affected facilities (e.g.., centrifugal compressors, reciprocating compressors, pneumatic pumps, and storage vessels). Notably, this stay does not appear to apply to Quad Oa’s well-completion control requirements and emission requirements related to storage vessels, among other requirements, meaning that these regulatory requirements will still be in effect, even if EPA’s proposed stay is finalized and upheld in court.
Litigation Involving the Stay
On June 5, 2017, several environmental non-governmental organizations (ENGOs) filed suit in the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in connection with EPA’s three-month stay of Quad Oa. It appears likely that these ENGOs will seek to broaden this suit or file a separate suit in connection with EPA’s proposed two-year stay of Quad Oa. As noted elsewhere on the Climate Change Blog, this litigation represents only the beginning of “the legal battles that will certainly ensue” in relation to agencies’ implementation of the Climate Change Executive Order. More information about the ENGOs’ motion in this litigation can be found on the Vinson & Elkins Shale & Fracking Tracker.
EPA’s efforts to stay Quad Oa, pending review, may be a test case for EPA’s and other agencies’ efforts to implement the Climate Change Executive Order. On the one hand, if EPA is successful, this could lead to other lengthy stays on final regulations that EPA and other agencies determine “potentially burden the safe, efficient development of domestic energy sources.” On the other hand, if EPA’s proposed stay is invalidated, this could require EPA and other agencies to seek other avenues for implementing the Executive Order. In either case, the results of EPA’s efforts in relation to Quad Oa appear likely to set the course for future agency actions taken in relation to the Climate Change Executive Order.