On November 2, 2021, the U.S. Environmental Protection Agency (EPA) announced a proposed rule involving three separate actions aimed at establishing a comprehensive and more stringent regulatory regime to reduce emissions from oil and gas operations across the United States (the Proposed Rules). The Proposed Rules seek to reverse the Trump Administration’s relaxation of methane standards for new, modified, or reconstructed sources, regulate so-called midstream (transportation and storage) sectors, and impose more stringent new source rules for methane and volatile organic compounds (VOC) (more stringent even than rules under the Obama Administration). We have previously covered the various iterations of methane regulation here, here, here, and here. Under the Proposed Rules, EPA also proposes to regulate existing oil and gas for the first time. Further information on each of these points is provided below.

Background

EPA historically regulated VOC emissions from the oil and gas sector under New Source Performance Standards (NSPS) Subpart OOOO which were subsequently expanding to cover methane emissions from those sources under Subpart OOOOa. These regulations, commonly referred to as “Quad O” and “Quad Oa,” respectively, applied only to new sources or sources that were modified or reconstructed. In 2020, the Trump Administration issued a number of rules significantly curtailing the scope of Quad O and Quad Oa, notably excluding methane from regulation under Quad Oa and midstream sources from regulation under both subparts. In June 2021, the Biden Administration “disapproved” these curtailments, resulting – according to the Biden Administration – in the reinstatement of the original Quad O and Quad Oa rules.

Expansion of Quad O Subparts to Include Methane & Additional Standards For New & Existing Sources

Under the Proposed Rules, EPA would promulgate new subparts, OOOOb (Quad Ob) and OOOOc (Quad Oc). Quad Ob would expand upon existing VOC and methane standards for new, modified, and reconstructed sectors to, among other requirements, address fugitive emissions from well sites and compressor stations, storage vessels, pneumatic controllers, reciprocating compressors, pneumatic pumps, and equipment leaks at natural gas processing plants. In addition, Quad Ob would impose VOC and methane standards upon sources previously unregulated under Quad O or Oa (e.g., well liquids unloading operations and intermittent vent pneumatic controllers and oil wells with associated gas).

Existing sources (i.e., sources subject to regulation even if they are not new, modified, or reconstructed) would be regulated Quad Oc indirectly though so-called “emission guidelines” (EGs) to be issued later by EPA. The EGs would provide a framework for states to develop and submit their own regulations (subject to EPA approval) establishing standards of performance for existing oil and gas sources known as the best system of emission reductions (BSER). State standards of performance must reflect compliance with BSER.

Highlights of the Broadened Regulations for New/Modified Sources under Quad Ob

  • A comprehensive monitoring program to require companies to find and fix leaks (fugitive emissions) at new and existing well sites and compressor stations
    • Well sites with estimated emissions of three tons per year would be required to monitor for leaks using optical gas imagine or Method 21 quarterly and promptly repair any leaks found.
    • Well sites with estimated emissions of less than three tons per year would be required to promptly conduct a survey to demonstrate that they are free of leaks or malfunctions but are not required to undertake ongoing monitoring.
    • All new and existing compressor stations would monitor and repair leaks on a quarterly basis.
  • Flexibility to use advanced methane detection technologies
    • Owners and operators would have the flexibility to use advanced methane detection technologies for leaks surveys at well sites and compressor stations, including any technology that meets a rigorous minimum detection threshold.
    • Surveys using these technologies would be required at least once every two months, and any leaks found would have to be repaired.
  • New requirements for zero-emitting pneumatic controllers
    • All new and existing pneumatic controllers in production, processing, and transmission and storage facilities would be required to have zero methane and VOC emissions.
    • The proposed program would also regulate emissions from intermittent vent pneumatic controllers for the first time.
  • New requirements to eliminate venting of associated gas from oil wells
    • Venting of associated gas from oil wells, which is currently unregulated by EPA, would be prohibited.
    • Instead of venting the gas, producers would be required to capture the gas and send it to a sales line if one is available. If no sales line is available, producers must instead use the gas for power on site for another purpose or reduce methane and VOC emissions by 95 percent by sending the gas to a flare of a control device instead.
    • Monitoring of flares to detect malfunctions.
  • Strengthened requirements for emissions from storage tanks
    • Strengthened requirements for storage tanks by adding tank batteries (groups of tanks that are adjacent and receive fluids from the same source) to the definition of facilities that must reduce VOC and methane emissions.
  • Requirements for additional types of pneumatic pumps
    • Extension of current requirements for new pneumatic pumps to include all natural gas-driven diaphragm and piston pumps in the production segment of the industry and diaphragm pumps in the transmission segment. These standards require pneumatic pumps with access to an onsite control device to reduce emissions by 95 percent.

Lastly, under the Biden Administration, EPA has renewed its focus on environmental justice across nearly all of its rulemaking and policy efforts. The Proposed Rules are no different. EPA is proposing to require that states “meaningfully engage” members of the overburdened and underserved communities in the development of state regulations to establish EGs for existing sources under Quad Oc, including consideration of hazardous air pollutants from the oil and gas sector.

EPA intends to issue a supplemental proposal in 2022 that will provide proposed regulatory text and may expand on the 2021 proposal in response to public input provided during the comment period. The comment period for this regulation lasts 60 days from the time the proposal is published in the Federal Register. Please contact us with any questions about the Proposed Rules or if you seek assistance in drafting and submitting a comment.