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Executive, Legislative and Judicial Powers Impact NSPS Subparts for Oil and Gas Industry

May 24, 2019

By Jeffrey W. Schwarz, Guest Writer
Carver Schwarz McNab Kamper & Forbes, LLC

This article was originally published in Currents, POWER’s quarterly Environmental newsletter.

The review, modification or repeal of Obama era Clean Air Act (CAA) rules were a focus of the Republican-controlled 115th Congress, and the executive and judicial branches in 2017 and 2018. With the House of Representatives now being controlled by the Democrats, the focus of the 116th Congress on the regulation of greenhouse gas (GHG) emissions from the oil and gas sector is likely to intensify as the parties seek to differentiate their climate change policy positions in advance of the 2020 elections.

Reducing GHG emissions to address climate change was a major Obama Administration goal, yet Congress passed no comprehensive legislation to address that goal. As a consequence, federal CAA rulemakings intensified to advance GHG emissions reductions targets in Obama’s June 2013 Climate Action Plan and March 2014 Strategy to Reduce Methane Emissions. While these actions have been upheld by the courts, they were, and continue to be, divisive.

On June 3, 2016, EPA promulgated a New Source Performance Standard (NSPS) under Section 111 of the CAA, known as “Subpart OOOOa,” that controls, for the first time, methane emissions from onshore oil and gas production and natural gas transmission and storage sources. The 2012 NSPS Subpart OOOO is the foundation for Subpart OOOOa and was, itself, a modernization of the nearly 30-year-old NSPS Subpart KKK, which took effect on January 20, 1984. Subpart OOOOa, however, extends methane and VOC emissions control requirements beyond the scope of Subparts OOOO/KKK to also include new or modified hydraulically fractured oil wells, pneumatic pumps, compressor stations, and leak detection and repair at well sites, gathering and boosting stations, and processing plants.

The EPA estimated that Subpart OOOOa would reduce methane emissions by 510,000 tons by 2025 (equating to 11 million metric tons of CO2 equivalent). The rule cost-benefit analysis estimated costs of $530 million and climate benefits of $690 million. The Obama Administration viewed Subpart OOOOa as critical to its Climate Action Plan/Strategy to Reduce Methane Emissions, which sought to reduce methane emissions from the oil and gas sector by 40–45% from 2012 levels by 2025, and to reduce all domestic greenhouse gas emissions by 26–28% from 2005 levels by 2025.

North Dakota, Texas, a coalition of 13 states, and industry associations filed petitions for judicial review of Subparts OOOO and OOOOa. Eleven states, the City of Chicago, and environmental groups intervened on behalf of EPA to support the final rule(s). All petitions were consolidated with the lead case, North Dakota v. EPA. In May 2017, the court granted EPA’s request to hold the case in abeyance while the agency reviews and acts on the reconsideration petitions.

Additionally, President Trump signed Executive Order (EO) 13783 on March 28, 2017, which requires the review of regulations and policies that burden the development or use of domestically produced energy. The EO directed EPA to review rules like Subparts OOOO and OOOOa for consistency with policies that the EO enumerates and, as soon as practicable, to “suspend, revise, or rescind the guidance, or publish for notice and comment proposed rules suspending, revising, or rescinding those rules.”

In March 2018, EPA revised Subpart OOOOa to remove the requirement that leaking components be repaired during unplanned or emergency shutdowns and to provide separate monitoring requirements for well sites located on the Alaskan North Slope. EPA proposed another set of Subpart OOOOa revisions on October 15, 2018, to:

EPA states in the proposal that it “continues to consider broad policy issues in the 2016 rule [Subpart OOOOa], including the regulation of greenhouse gases in the oil and natural gas sector,” and that “these issues will be addressed in a separate proposal at a later date.”

How Subpart OOOOa and OOOO weather the next two years will depend on how EO 13783 is implemented, EPA’s ongoing response to petitions for reconsideration, and the courts’ response to the pending challenges to the rules. In the meantime, Subpart OOOOa and OOOO are in effect and will provide a focal point for how the political parties will differentiate their respective views on GHG emissions reductions and climate change as the 2020 election approaches.

About the Author:

Jeff Schwarz’s law practice focuses on environmental issues pertinent to the metallic and nonmetallic minerals extraction industry, the oil and natural gas industry, utilities, and various manufacturing and chemical operations. Jeff has developed a specialized expertise in practice under the federal Clean Air Act (and various states’ implementation of the same), Sections 402 and 404 of the Clean Water Act (including stream and riparian habitat restoration), National Environmental Policy Act, Resource Conservation Recovery Act, petroleum storage tank regulation (including SPCC planning and implementation), the Endangered Species Act, the Emergency Planning and Community Right-to-Know Act, and various state remediation programs. In addition, Jeff routinely assists clients with their mergers and acquisitions, purchase and sale of real estate, and various land use and permitting issues.

Jeff graduated cum laude from The Colorado College in 1984 and obtained his J.D. from the University of California Hastings College of Law in 1989. He has been licensed to practice law in California since 1989 and licensed in Colorado since 1991. He is a member of the American Bar Association, Section of Natural Resources, Energy, and Environmental Law, the Rocky Mountain Mineral Law Foundation, the Colorado Bar and California Bar Associations.