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EPA Proposes to Approve Texas State Implementation Plan

by Ari Peskoe

The U.S. Environmental Protection Agency (EPA) recently proposed to approve revisions to Texas’s air pollution permitting program.  These revisions, which requires EPA’s approval pursuant to the Clean Air Act, would bring Texas’s State Implementation Plan (SIP), in compliance with federal standards and additionally establish a Plant-wide Applicability Limits (PALs) program in the state. 

Under the federal Clean Air Act, states are authorized to develop their own permitting programs, as long as they meet minimum national standards set by Congress and EPA.  The proposed revisions to Texas’s SIP will update its New Source Review (NSR) Program, which requires that entities constructing or modifying major air pollution sources obtain a permit prior to construction.  The state’s proposed revisions include an update to the method for evaluation of ozone standards in NSR applications to bring it into compliance with a 2006 D.C.  Circuit Court decision, an administrative timing change that may change which air quality standards are applied to a permit, and the establishment of a PALs program. 

A PAL establishes a site-wide emissions limit for an existing source. By using a PAL, an owner or operator can make changes that increase an individual units’ pollutant emissions so long as plant-wide actual emissions do not exceed its PAL.  PALs provide increased operating flexibility for owners and operators, and create an incentive for owners and operators to employ innovative control technologies and pollution control measures to reduce emissions and enable economic expansion.  According to the EPA, the the Texas PALs program will reduce emissions because a PAL is based on actual emissions, which are generally less than the emissions allowed under current permits.  EPA concluded that Texas’s new rules were at least as stringent as the applicable federal regulations and should have the same impact as the federal PAL rules. 

Existing major stationary sources that meet certain criteria will be eligible for a PAL. PALs are pollutant-specific and issued for ten-year terms.  Baseline emissions under a PAL are established using any consecutive 24-month period in the last ten years. Emissions calculations include emissions from startups, shutdowns and malfunctions and are adjusted to account for units that have been permanently shut down and potential emissions from units constructed after the baseline period.  To obtain a PAL, a facility owner or operator must submit a permit application to the Texas Commission on Environmental Quality. PAL applications are subject to public notice and comment.

Once EPA’s proposed approval of Texas’s revised SIP is published in the Federal Register, EPA will accept public comments for 30 days. 

*Jessica Bayles, a summer associate in the McDermott’s Washington D.C. office, contributed to this article.

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EPA Releases Final Fracturing Air Rule

by James A. Pardo and Brandon H. Barnes

The U.S. Environmental Protection Agency (EPA) released final regulations on April 17 to reduce certain emissions at hydraulically fractured wells by 95 percent.  The rule, a product of a February 2010 consent decree with WildEarth Guardians and the San Juan Citizens Alliance, adds New Source Performance Standards (NSPS) and amends existing National Emissions Standards for Hazardous Air Pollutants (NESHAPS) for the oil and gas industry.

NSPS Standards

The NSPS standards will reduce by 95 percent volatile organic compound (VOC) emissions during the completion phase of hydraulically fracturing a well.  In addition, although not a regulated substance under NSPS, the new rules have the effect of reducing fugitive methane emissions by 25 percent.  These VOC and methane emissions reductions will be attained by requiring that all newly fractured or refractured wells incorporate reduced emissions controls (RECs).  In total, EPA estimates that the rule will result in reductions of 11,000 tons of Hazardous Air Pollutants (HAPs), 190,000 tons of VOCs, and 1 million tons of methane, with a net benefit of $15 million as a result of the increased profit from captured methane sales. 

The final rule adopts several changes suggested during the public comment period, most important of which is the delayed deadline of  January 1, 2015 for requiring the use of RECs.  While REC technology currently exists, EPA recognized that the number of REC units required to meet the new regulations far exceeds those actually in existence today.  Until then, well operators or owners can achieve specified VOC reductions using flaring or other approved combustion methods. 

The final rule also modifies the definition of "well completions," limiting the REC requirement to that period when fracing operations end and flowback begins.  The requirement remains in effect until the well is either continuously flowing to the flow line or storage vessel for collection (in which case there should be no fugitive emissions) or shut in, whichever occurs first. 

In addition, EPA has exempted low-pressure wells from the REC requirement in response to comments that it is unfeasible to require RECs for low-pressure wells.  For low-pressure wells, as well as wildcat (or exploratory) and delineation wells, which are also exempted from the REC requirement, operators can continue to use flaring to achieve specified reductions.

EPA also has rewarded early adopters of REC technology, and encourages others to join early, by redefining actions that constitute "modifications" triggering NSPS requirements.  Some states require that any source subject to federal NSPS must get a state minor source air permit.  This new definition allows owners and operators of existing wells employing RECs to refracture without changing state permit status, thus avoiding delays and costs associated with the state permitting process.

Finally, but importantly, the rest of EPA’s new rules are not delayed, and take effect 60 days from publication in the Federal Register.

NESHAPS Standards

While EPA adopted many of the comments about the NSPS rules, stakeholders were less successful in obtaining changes to the proposed [...]

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