August 31, 2014
The US Environmental Protection Agency, environmental groups, and other federal agencies are increasingly targeting upstream oil and gas operations according to a July 18, 2014 report in the Oil & Gas Journal. At the center of these disputes sits the Clean Air Act (CAA) . All too often, O&GJ says, interested stakeholders use the CAA to delay projects and increase costs, without any corresponding benefit to public health.
Regulatory relief from the act may have arrived. On May 30, 2014 the US Court of Appeals for the District of Columbia Circuit decided National Environmental Development Association’s Clean Air Project v. EPA. This is a game-changing decision that makes it far more difficult for regulators and citizens to force companies to obtain “major source” permits for minor sources of emissions that are not adjacent to one another, but happen to be physically connected in some way – i.e., as a well and a compressor station. Specifically, the DC Circuit vacated an EPA policy that allowed EPA to add together – or “aggregate” – minor sources of emissions to determine whether the combination of sources could collectively be considered a “major emitting facility” or source required to meet major source permitting and control requirements.
Under EPA’s policy, minor emissions sources with any “functional interrelationship” could have been aggregated, regardless of whether these sources were physically adjacent. But, the DC Circuit’s ruling means that EPA may only aggregate emissions from minor sources that are physically proximate, regardless of any functional interdependence between the sources.
Limiting aggregation to physical adjacency promotes greater certainty and makes it less likely that a major source permit would be required for upstream minor emission sources such as wells, storage tanks, compressor stations and dehydrators that tend to be spread over large areas. Of course, these geographically dispersed sources could still be required to obtain “minor source” permits, but costs, delays, and litigation risks will be reduced.
Major or minor permits – it matters.
The Clean Air Act generally divides permits into two camps: minor and major. Minor permits impose far fewer restrictions and conditions in light of their limited emissions. States administer minor source permitting programs, except in American Indian Tribal Lands and a limited number of federal areas. EPA grants states a great deal of latitude in creating minor source permit programs, generally only requiring that states fashion minor source permit conditions to avoid exceeding federal air quality standards. As a result, securing minor source permits generally costs far less than major source permits.
At issue: Aggregating minor upstream sources to require a major permit.
The act generally steers companies into major or minor permits based on potential emissions. In general, sources with the potential to emit of at least 100 tons per year of certain pollutants qualify as a “major” source for a Title V operating permit, while such sources in the oil and gas sector that have the potential to emit at least 250 tons per year of certain pollutants qualify as a major source for New Source Review permitting. Most wells, compressor stations, dehydrators, processing plants, and other upstream emission sources individually emit far less than this threshold, qualifying them as only minor sources. Yet, EPA and certain states have directed some companies to obtain “major” permits for their upstream operations by requiring aggregation of emission sources spread over miles of their operations.
The industry has taken the position that “adjacency” requires physical proximity. But EPA has argued that adjacency means “functionally interdependent,” a nebulous test that, in theory, allowed the agency to consider a number of factors on a case-by-case basis.
What this means to you
Minor source emission permits impose far fewer restrictions and conditions in light of their limited emissions. States administer minor source permitting programs, except in Indian Tribal Lands and a limited number of federal areas. The oil and gas industry has taken the position that “adjacency” requires physical proximity. EPA argues that adjacency means “functionally interdependent.”
MIRATECH can help
Contact MIRATECH to learn about the emission control products that will help your facility achieve or maintain its status as a minor source of emissions.