D.C. Circuit Strikes Down EPA’s 90-day Stay – New Standards for Oil & Gas Sector
On July 3, 2017, in Clean Air
Council, et al. v. E. Scott Pruitt, No. 17-1145, the D.C. Circuit struck
down EPA’s 90-day stay on the 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 C.F.R. Part 60 or “Quad Oa.” The D.C.
Circuit later recalled its mandate in Clean
Air Council, et al. v. E. Scott Pruitt, No. 17-1145, giving EPA until July
27, 2017 to file a petition for rehearing or petition for rehearing en banc. On July 31, 2017, after EPA
failed to file a timely petition, the D.C. Circuit reissued its mandate.
Consequently, all Quad Oa provisions are now in effect.
On June 16, 2017, the United States Environmental Protection Agency
(EPA) published a proposed
rule that would stay for two years parts of Quad Oa. EPA’s proposed two-year
stay was intended to be an extension of the 90-day stay that EPA announced on
June 3, 2016 to delay implementation of Quad Oa and that was struck down by the
D.C. Circuit. Like the 90-day stay, the proposed two-year stay covers aspects
of Quad Oa related to leak detection and reporting requirements for (1)
fugitive emissions at well sites and compressor stations and (2) fugitive emissions
from pneumatic pumps as well as (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). If finalized, the proposed
two-year stay would effectively suspend Quad Oa’s compliance deadlines. In
addition to proposing a two-year stay on these aspects of Quad Oa, EPA’s July
16, 2017 proposed rule would include a review of Quad Oa in its entirety. EPA
has held open the June 16, 2017 proposed comment rule period until August 9,
2017 because it received and granted a request for hearing on the proposed
rule. EPA held the hearing in question on July 10, 2017.
When the D.C. Circuit issued its mandate, two main deadlines under Quad
Oa became effective. First, Quad Oa
requires that facilities covered by the rule conduct an initial monitoring
survey by June 3, 2017. 40 C.F.R. § 60.5397a(f). Second, Quad Oa requires
facilities covered by the rule to submit their initial annual monitoring by 90
days after the “initial compliance period” defined under the rule ended. This
compliance period ended, at the latest, on August 2, 2017, meaning that
facilities covered by Quad Oa have 90 days from that date to submit their
initial annual monitoring report. See 40
C.F.R. §§ 60.5420a and 60.5410a. It remains to be seen (1) whether EPA will finalize
its proposed two-year stay before the reporting deadline in Quad Oa passes and
(2) whether EPA’s two-year stay withstands judicial scrutiny.
TAMEST Report Concludes that Hydraulic Fracturing Has Not Induced Seismicity in Texas
On June 19, the Academy of Medicine, Engineering, and Science of Texas (“TAMEST”) issued its report titled Environmental and Community Impacts of Shale Development in Texas. The report includes several noteworthy findings, including that:
- Potentially-induced, felt seismicity in Texas to date has been associated with Class II disposal wells, not with hydraulic fracturing operations;
- Direct fracturing into drinking water zones has not been observed in Texas, and such a result is unlikely given the depth separation between oil-bearing formations and drinking water zones; an
- Shale development “primarily contributes positively to local, regional, and state economies.”
In addition to the above, the report includes other findings and recommendations on geology and earthquake activity, land resources, air quality, water quantity and quality, transportation, and economic and social impacts.
Other of the report’s recommendations call on the industry to more closely track the environmental and ecological impact of shale operations, and make information surrounding shale development more transparent. For example, as to land resources, the report suggests that “baseline land and habitat conditions at the oil and gas play level should be characterized, and changes to wildlife populations and vegetation should be tracked over time where there are opportunities on both private and public lands,” and that “the existing, nonproprietary information about land impacts of shale development that is collected and evaluated by multiple state and federal agencies should be assembled and made available online to the public.”
The report is the culmination of the efforts of TAMEST’s Shale Task Force, which was convened in 2015 and consists of multiple academic and scientific representatives from institutions and organizations throughout Texas. Read the report in full
EPA Proposes 2-Year Stay on Key Parts of Quad Oa — the 2016 Methane NSPS Rule for the Oil and Gas Industry
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.
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.
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).
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 Vinson & Elkins 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.