Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review

Federal RegisterSep 24, 2019

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 60

[EPA-HQ-OAR-2017-0757; FRL-9999-50-OAR]

RIN 2060-AT90

Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Proposed rule.

SUMMARY:

This action proposes reconsideration amendments to the new source performance standards (NSPS). These amendments, if finalized, would remove sources in the transmission and storage segment from the source category, rescind the NSPS (including both the volatile organic compounds (VOC) and methane requirements) applicable to those sources, and rescind the methane-specific requirements (the “methane requirements”) of the NSPS applicable to sources in the production and processing segments. The U.S. Environmental Protection Agency (EPA) is also proposing, as an alternative, to rescind the methane requirements of the NSPS applicable to all oil and natural gas sources, without removing any sources from the source category. Furthermore, the EPA is taking comment on alternative interpretations of its statutory authority to regulate pollutants under the Clean Air Act (CAA), and associated record and policy questions.

DATES:

Comments.

Comments must be received on or before November 25, 2019. Under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before October 24, 2019.

ADDRESSES:

You may send comments, identified by Docket ID No. EPA-HQ-OAR-2017-0757, at

https://www.regulations.gov/,

by any of the following methods:

•

Federal eRulemaking Portal:

https://www.regulations.gov/

(our preferred method). Follow the online instructions for submitting comments.

•

Email:

a-and-r-docket@epa.gov.

Include Docket ID No. EPA-HQ-OAR-2017-0757 in the subject line of the message.

•

Fax:

(202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-2017-0757.

•

Mail:

U.S. Environmental Protection Agency, EPA Docket Center, Docket ID No. EPA-HQ-OAR-2017-0757, Mail Code 28221T, 1200 Pennsylvania Avenue NW, Washington, DC 20460.

•

Hand/Courier Delivery:

EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC 20004. The Docket Center's hours of operation are 8:30 a.m.-4:30 p.m., Monday-Friday (except federal holidays).

Instructions:

All submissions received must include the Docket ID No. for this rulemaking. Comments received may be posted without change to

https://www.regulations.gov/,

including any personal information provided. For detailed instructions on sending comments and additional information on the rulemaking process, see the

SUPPLEMENTAL INFORMATION

section of this document.

FOR FURTHER INFORMATION CONTACT:

For questions about this proposed action, contact Ms. Amy Hambrick, Sector Policies and Programs Division (E143-05), Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711; telephone number: (919) 541-0964; fax number: (919) 541-0516; and email address:

hambrick.amy@epa.gov.

For information about the applicability of the NSPS to a particular entity, contact Ms. Marcia Mia, Office of Enforcement and Compliance Assurance, U.S. Environmental Protection Agency, WJC South Building (Mail Code 2227A), 1200 Pennsylvania Avenue NW, Washington, DC 20460; telephone number: (202) 564-7042; and email address:

mia.marcia@epa.gov.

SUPPLEMENTARY INFORMATION:

Public hearing.

The EPA will hold a public hearing on the proposal. Details will be announced in a separate

Federal Register

document.

Docket.

The EPA has established a docket for this rulemaking under Docket ID No. EPA-HQ-OAR-2017-0757. All documents in the docket are listed in

Regulations.gov

. Although listed, some information is not publicly available,

e.g.,

Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy. Publicly available docket materials are available either electronically in

Regulations.gov

or in hard copy at the EPA Docket Center, Room 3334, EPA WJC West Building, 1301 Constitution Avenue NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the EPA Docket Center is (202) 566-1742.

Instructions.

Direct your comments to Docket ID No. EPA-HQ-OAR-2017-0757. The EPA's policy is that all comments received will be included in the public docket without change and may be made available online at

https://www.regulations.gov/,

including any personal information provided, unless the comment includes information claimed to be CBI or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through

https://www.regulations.gov/

or email. This type of information should be submitted by mail as discussed below.

The EPA may publish any comment received to its public docket. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (

i.e.,

on the Web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit

https://www.epa.gov/dockets/commenting-epa-dockets.

The

https://www.regulations.gov/

website allows you to submit your comment anonymously, which means the EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to the EPA without going through

https://www.regulations.gov/,

your email address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the internet. If you submit an electronic comment, the EPA recommends that you include your name and other contact information in the body of your comment and with any digital storage media you submit. If the EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, the EPA may not be able to consider your comment. Electronic files should not include special characters or any form of encryption and be free of any defects or

viruses. For additional information about the EPA's public docket, visit the EPA Docket Center homepage at

https://www.epa.gov/dockets.

Submitting CBI.

Do not submit information containing CBI to the EPA through

https://www.regulations.gov/

or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information on any digital storage media that you mail to the EPA, mark the outside of the digital storage media as CBI and then identify electronically within the digital storage media the specific information that is claimed as CBI. In addition to one complete version of the comments that includes information claimed as CBI, you must submit a copy of the comments that does not contain the information claimed as CBI directly to the public docket through the procedures outlined in

Instructions

above. If you submit any digital storage media that does not contain CBI, mark the outside of the digital storage media clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and the EPA's electronic public docket without prior notice. Information marked as CBI will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. Send or deliver information identified as CBI only to the following address: OAQPS Document Control Officer (C404-02), OAQPS, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711, Attention Docket ID No. EPA-HQ-OAR-2017-0757.

Preamble acronyms and abbreviations.

We use multiple acronyms and terms in this preamble. While this list may not be exhaustive, to ease the reading of this preamble and for reference purposes, the EPA defines the following terms and acronyms here:

AEO Annual Energy Outlook

BLM Bureau of Land Management

BSER best system of emission reduction

CAA Clean Air Act

CAIT Climate Analysis Indicators Tool

CBI Confidential Business Information

CCAC Climate and Clean Air Coalition

CFR Code of Federal Regulations

methane

CO carbon monoxide

carbon dioxide

Eq. carbon dioxide equivalent

CVS closed vent system

EAV equivalent annualized value

EGU Electricity Generating Units

EIA Energy Information Administration

EPA Environmental Protection Agency

ESRL Earth System Research Laboratory

GAO Government Accountability Office

GHG greenhouse gases

GHGI greenhouse gas inventory

GHGRP Greenhouse Gas Reporting Program

HAP hazardous air pollutant(s)

S hydrogen sulfide

ICR Information Collection Request

IR infrared

kt kilotons

MMT Million Metric Tons

NAAQS National Ambient Air Quality Standards

NAICS North American Industry Classification System

NEI National Emissions Inventory

NEMS National Energy Modeling System

NGL natural gas liquids

NOAA National Oceanic and Atmospheric Administration

NODA Notice of Data Availability

nitrogen oxides

NSPS new source performance standards

NTTAA National Technology Transfer and Advancement Act

OGI optical gas imaging

OMB Office of Management and Budget

PE professional engineer

PHMSA Pipeline and Hazardous Materials Safety Administration

PM particulate matter

2.5

PM with a diameter of 2.5 micrometers or less

PM with a diameter of 10 micrometers or less

PRA Paperwork Reduction Act

PV present value

REC reduced emissions completion

RFA Regulatory Flexibility Act

RIA Regulatory Impact Analysis

SC-CH

social cost of methane

SCF significant contribution finding

SIP state implementation plan

sulfur dioxide

tpy tons per year

TSD technical support document

UMRA Unfunded Mandates Reform Act

UNFCCC United Nations Framework Convention on Climate Change

U.S. United States

VOC volatile organic compounds

WRI World Resources Institute

Organization of this document.

The information presented in this preamble is organized as follows:

I. Executive Summary

A. Purpose and Summary of the Regulatory Action

B. Costs and Benefits

II. General Information

A. Does this action apply to me?

B. What should I consider as I prepare my comments to the EPA?

C. How do I obtain a copy of this document and other related information?

III. Background

A. Oil and Natural Gas Industry and Its Emissions

B. Statutory Background

C. What is the regulatory history and litigation background regarding performance standards for the oil and natural gas industry?

D. Other Notable Events

E. Related State and Federal Regulatory Actions

IV. Summary and Rationale of Proposed Actions

A. Revision of the Source Category To Remove Transmission and Storage Segment

B. Rescission of the NSPS for Sources in Transmission and Storage Segment

C. Status of Sources in Transmission and Storage Segment

D. Rescission of the Applicability to Methane of the NSPS for Production and Processing Segments

V. Rationale for Alternative Proposal To Rescind the Methane Standards for All Sources in the Oil and Gas Source Category Without Revising the Source Category

A. Alternative Proposed Action To Rescind the Methane Standards

B. Rationale for Rescinding the Methane Standards

VI. Solicitation of Comment on Significant Contribution Finding for Methane

A. Requirement for Pollutant-Specific Significant Contribution Finding

B. Significant Contribution Finding in 2016 NSPS OOOOa Rule

C. Criteria for Making a Significant Contribution Finding Under CAA Section 111

VII. Implications for Regulation of Existing Sources

A. Existing Source Regulation Under CAA Section 111(d)

B. Limited Impact of Lack of Regulation of Existing Oil and Gas Sources Under CAA Section 111(d)

VIII. Impacts of This Proposed Rule

A. What are the air impacts?

B. What are the energy impacts?

C. What are the compliance costs?

D. What are the economic and employment impacts?

E. What are the benefits of the proposed standards?

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review

B. Executive Order 13771: Reducing Regulations and Controlling Regulatory Costs

C. Paperwork Reduction Act (PRA)

D. Regulatory Flexibility Act (RFA)

E. Unfunded Mandates Reform Act (UMRA)

F. Executive Order 13132: Federalism

G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

H. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks

I. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

J. National Technology Transfer and Advancement Act (NTTAA)

K. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations

I. Executive Summary

A. Purpose and Summary of the Regulatory Action

Since the inception of the CAA, with its aim to promote the “public health

and welfare and the productive capacity” of the nation's population, the EPA has focused on air emissions from the oil and natural gas industry.

1 2

For nearly 40 years, the EPA has issued regulations under CAA section 111 to limit emissions from the oil and natural gas industry, while accounting for costs and other factors as instructed by Congress in the statute.

In this action, the EPA is recognizing its responsibilities under that section, performed in accordance with the statute and with national policy objectives. As such, the EPA here is proposing to amend its 2012 and 2016 rules affecting the industry, titled, respectively, “Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews; Final Rule” (“2012 NSPS OOOO”)

and “Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources; Final Rule” (“2016 NSPS OOOOa”).

Those rules established NSPS for VOC emissions from the oil and natural gas industry, and the 2016 rule also established NSPS for greenhouse gases (GHGs), in the form of limitations on methane, for that industry.

The amendments that the EPA is proposing are intended to continue existing protections from emission sources within the regulated source category, while removing regulatory duplication.

42 U.S.C. 7401(b)(1).

44 FR 49222 (August 21, 1979) (listing “Crude Oil and Natural Gas Production” under CAA section 111 as a source category subject to standards of performance).

50 FR 26122 (June 24, 1985) (promulgating NSPS that address certain VOC emissions); 50 FR 40158 (October 1, 1985) (promulgating NSPS that address certain sulfur dioxide (SO

) emissions).

77 FR 49490 (August 16, 2012).

81 FR 35824 (June 3, 2016).

Docket ID No. EPA-HQ-OAR-2010-0505.

As directed by the President in March 2017, the EPA has reviewed the 2012 NSPS OOOO and 2016 NSPS OOOOa with attention to whether the rules “unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest,” and if so, appropriately “suspend, revise, or rescind” regulatory requirements.

7 8

From this review, the EPA is now proposing to determine that some of the requirements under those rules are inappropriate because they affect sources that are not appropriately identified as part of the regulated source category, and some of the requirements under the 2016 NSPS OOOOa are unnecessary insofar as they impose redundant requirements. Accordingly, the EPA is acting to rescind those requirements while maintaining health and environmental protections from appropriately identified emission sources within the regulated source category.

Executive Order 13783, “Promoting Energy Independence and Economic Growth,” section 1(c) (March 28, 2017).

82 FR 16331 (April 4, 2017) (notice of review of 2016 NSPS OOOOa pursuant to Executive Order 13783, signed by the EPA Administrator).

We note that the EPA is addressing certain specific reconsideration issues—fugitive emissions requirements at well sites and compressor stations, well site pneumatic pump standards, and the requirements for certification of closed vent systems (CVS) by a professional engineer (PE)—in a separate proposal.

See

Docket ID Item No. EPA-HQ-OAR-2010-0505-7730 and 82 FR 25730.

Specifically, the EPA is co-proposing two potential actions: a primary proposal and an alternative proposal. The primary proposal contains two steps. In the first step, the EPA is proposing to revisit its 2012 and 2016 interpretations of, and its 2016 revision to, the regulated source category to cover sources in the transmission and storage segment, and to rescind the NSPS requirements applicable to those sources. Having reexamined the transmission and storage segment, the EPA has determined that the purported revision in 2016 of the pre-existing source category (which the EPA now proposes to conclude was originally intended to include only the production and processing segments) was not appropriate. Because the transmission and storage segment constitutes a separate source category from the production and processing segments, the EPA could have listed it for regulation under CAA section 111(b) only by making a significant contribution and endangerment finding as required by the statue, which the EPA never did. Accordingly, under the first step of the primary proposal, the EPA proposes to rescind the standards applicable to sources in the transmission and storage segment of the oil and gas industry.

As the second step, the EPA is proposing to rescind the methane requirements of the NSPS applicable to sources in the production and processing segments. The EPA proposed to conclude that those methane requirements are entirely redundant with the existing NSPS for VOC and, thus, establish no additional health protections. Indeed, due to the identical emission source control technologies for methane and VOC, the EPA, when establishing the 2016 NSPS OOOOa, found no need for any changes to the existing NSPS requirements for VOC when that rule explicitly examined regulation of methane emissions. Rescinding the applicability to methane emissions of the 2016 NSPS OOOOa requirements, while leaving the applicability to VOC emissions in place, will not affect the amount of methane emission reductions that those requirements will achieve.

Under the alternative proposal, the EPA is proposing to rescind the methane requirements of the NSPS applicable to all oil and natural gas sources in the source category as it is currently constituted, without undoing the 2012 and 2016 interpretations or expansion of the source category to include sources in the transmission and storage segment. The rationale for rescinding the methane requirements under this alternative proposal is the same as noted immediately above, that is, that they are entirely redundant with the existing NSPS for VOC.

Both the primary and alternative proposal rely on the EPA's previous interpretation of the requirement in CAA section 111(b)(1)(A) under which the EPA needs to make a finding that a source category “causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare” when it lists the source category, but that thereafter, when it regulates pollutants emitted from the source category, it needs only a rational basis to do so. The EPA proposes to retain that interpretation of this statutory provision. However, in section VI.A of this preamble, the EPA takes comment on an alternative interpretation, under which the Agency is required to make the significant-contribution finding each time that it regulates a pollutant from the source category. In section VI.B of this preamble, the EPA takes comment on whether, under this alternative interpretation, it made a valid finding in the 2016 NSPS OOOOa that methane emissions from the Crude Oil and Natural Gas Production source category met this statutory standard. In section VI.C of this preamble, the EPA takes comment on its proposed identification of certain factors which would inform its judgment, should it make a new determination whether methane emissions from the source category meet this statutory standard.

The EPA solicits public comment on all aspects of this proposal.

B. Costs and Benefits

The EPA has projected the cost savings, emissions increases, and forgone benefits that may result from rescinding requirements from sources in the transmission and storage segment (

i.e.,

the primary proposal). The projected cost savings and forgone

benefits are presented in the regulatory impact analysis (RIA) supporting this proposal. The primary proposal action also rescinds methane requirements from sources in the production and processing segments and leaves the VOC regulations in place. As the methane control options are redundant with VOC control options, there are no expected cost or emissions effects from removing the methane requirements in the production and processing segments with respect to these sources. Similarly, there are no expected cost or emissions impacts under the alternative proposed option of rescinding the methane requirements for all affected sources for the same reason: Methane control options on all sources are redundant with VOC control options. The RIA estimates impacts for the analysis years 2019 through 2025. All monetized impacts of these amendments are presented in 2016 dollars. All sources in the transmission and storage segment that are affected by the 2016 NSPS OOOOa, starting at the promulgation of the 2016 NSPS OOOOa, are sources that are affected by this action.

II. General Information

A. Does this action apply to me?

Categories and entities potentially affected by this action include:

Table 1—Industrial Source Categories Affected by This Action

see also

49 FR 2658.

As noted above, the 1978 “Priorities for New Source Performance Standards Under the Clean Air Act Amendments of 1977” analysis aggregated the emissions from “oil and gas production fields” and “natural gas processing” as part of what was then labeled as the “Crude Oil and Natural Gas Production Plants” source category. This aggregated source category was identified as a source of HC and SO

emissions. The EPA listed the “Stationary Pipeline Compressor Engines” source category separately, which included emissions specific to engines used at compressor stations (

i.e.,

, SO

and carbon

monoxide (CO)). EPA-450/3-78-019 (April 1978).

The revised priority list that the EPA promulgated in 1979 and its associated support document, “Revised Prioritized List of Source Categories for Promulgation,”

included the aggregated “Crude Oil and Natural Gas Production Plants” source category. The support document also included a separate study of “stationary pipeline compressor engines” emissions. The record makes clear that, at the time, the EPA was distinguishing between oil and natural gas production plants and natural gas processing on the one hand, and stationary pipeline compressor engines on the other, and that it intended to promulgate separate standards for HC and SO

emissions from those two source categories. EPA-450/3-79-023 (March 1979). The record for the 1979 action indicates that, at the time, the EPA clearly considered the “Crude Oil and Natural Gas Production” source category to include but be limited to production and processing operations. In addition, the record makes clear that the EPA also considered stationary pipeline compressor engines to be part of a separate source category.

Other parts of the record indicate that the EPA intended to promulgate standards separately for HC and SO

emissions from those two sets of sources. EPA-450/3-79-023 (March 1979). In contrast, the record does not specifically address the transmission and storage segment.

U.S. EPA. “Revised Prioritized List of Source Categories for NSPS Promulgation.” March 1979. EPA-450/3-79-023.

The EPA promulgated NSPS for stationary spark ignition internal compressor engines under the “Standards of Performance for Stationary Spark Ignition Internal Combustion Engines and National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines.” (40 CFR part 60, subpart JJJJ; 73 FR 3568, 3569, January 18, 2008). These standards applied to engines located at compressor stations at natural gas transmission and storage facilities, as well as engines located in other industry sectors.

As has already been noted, in 1984-85, the EPA developed the first two NSPS for the source category (40 CFR part 60, subparts KKK and LLL) by establishing standards to address VOC and SO

emissions for sources in the production and processing segments alone, and in so doing, indicated that it considered the scope of the source category to be limited to those segments. Specifically, the EPA promulgated standards at 40 CFR part 60, subpart KKK for onshore natural gas processing plants in 1985, which were the first standards promulgated for the source category. In the 1984 proposal preamble, the EPA clarified the scope of the source category as follows:

The crude oil and natural gas production industry encompasses the operations of exploring for crude oil and natural gas products, drilling for these products, removing them from beneath the earth's surface, and processing these products from oil and gas fields for distribution to petroleum refineries and gas pipelines.

49 FR 2636.

Thus, in the sentence just quoted, the EPA explicitly defined the source category as encompassing the natural gas operations up to the point of distribution to gas pipelines, that is, up to the storage and transmission segment, and in that manner, indicated that this segment was not included in the source category. (Similarly, in the same sentence, the EPA defined the scope of the source category as encompassing oil operations up to the point of distribution to petroleum refineries, which are a separate source category.) In this manner, the EPA indicated that the Crude Oil and Natural Gas Production source category includes operations from well sites (exploration, drilling, and removal) and natural gas processing plants (processing). While gathering and boosting compressor stations were not specified, it is reasonable to conclude that they are also included because they are located between two covered sites, the well site and the processing plant. However, to reiterate, subsequent operations, such as transmission, storage, and distribution were not included. Thus, the EPA is now proposing to find that its earlier view that the original listing in 1979 of the Crude Oil and Natural Gas Production source category already included the transmission and storage segment was in error, as the record of the 1979 listing action, and subsequent rulemaking actions by the EPA, described above, make clear.

As noted above, we had stated in the 2016 NSPS OOOOa rule our view that the “1979 listing of [the Crude Oil and Natural Gas Production] source category provides sufficient authority for this action,” but we then added that, “to the extent that there is ambiguity in the prior listing, the EPA hereby finalizes, as an alternative, its proposed revision of the category listing to broadly include the oil and natural gas industry.”

“As revised,” we went on to say, “the listed oil and natural gas category includes oil and natural gas production, processing, transmission, and storage.”

As discussed next, the EPA is further proposing to find that this “alternative” approach—

i.e.,

“revising” the previously-established Crude Oil and Natural Gas Production source category to include sources within the storage and transmission segment—was in error.

81 FR 35833.

Id.

(footnote omitted).

While CAA section 111(b)(1)(A) and (B), respectively direct the EPA to “revise,” where warranted, both the “list of source categories” and the “standards of performance” that the EPA has promulgated, nothing in CAA section 111 expressly authorizes or directs the EPA to “revise” a “source category,” by altering its scope, once the EPA has listed that source category. However, the EPA has inherent authority to reconsider, repeal, or revise past decisions to the extent permitted by law so long as the Agency provides a reasoned explanation.

See Motor Vehicle Manufacturers Association of the United States

State Farm Mutual Automobile Insurance Co.,

463 US 29, 56-57 (1983) (“an agency changing its course must supply a reasoned analysis,” quoting

Greater Boston Television Corp.

FCC,

143 F.2d 841, 842 (D.C. Cir.)). The CAA complements the EPA's inherent authority to reconsider prior rulemakings by providing the Agency with broad authority to prescribe regulations as necessary.

See

42 U.S.C. 7601(a).

See Clean Air Council

Pruitt,

862 F.3d 1, 8-9 (D.C. Cir. 2017) (“[a]gencies obviously have broad discretion to reconsider a regulation at any time”). Even so, the EPA proposes that the authority to revise the scope of a source category must be exercised only within reasonable boundaries and cannot be employed in such a way as to result in an unreasonable expansion of an existing source category,

i.e.,

one that purports to expand a source category to cover a new set of sources that are sufficiently unrelated to the sources in the pre-existing category that they constitute a separate source category for which the EPA is required to make a new contribute-significantly-and-endangerment finding as a prerequisite to regulating them. Otherwise, expanding the source category by including new sources could be used to circumvent that requirement. The EPA proposes to conclude that the 2016 expansion of the source category to include sources in the transmission and storage segment did, in fact, exceed the reasonable boundaries of its authority to revise source categories.

In the 2016 NSPS OOOOa rule, the EPA purported to “support” its “revision” of the source category by making the “requisite finding under section 111(b)(1) that, in the Administrator's judgment, this source

category,

as defined above,

contributes significantly to air pollution which may reasonably be anticipated to endanger public health or welfare.”

The EPA is now proposing to find that this approach was erroneous.

81 FR 35833 (emphasis added).

Specifically, we are proposing that the EPA was required to make a finding that the

transmission and storage segment in and of itself

“contributes significantly to air pollution which may reasonably be anticipated to endanger public health or welfare,” not simply that the source category, “as defined above”—

i.e.,

defined to include “oil and natural gas production, processing, transmission, and storage”

—“contributes significantly.” Nowhere in the course of promulgating the 2016 NSPS OOOOa rule did the EPA make a finding that sources in the transmission and storage segment, in themselves, “contribute[ ] significantly to air pollution which may reasonably be anticipated to endanger public health or welfare.” The EPA avoided making such a finding by purporting to have “revised” the source category by including that transmission and storage segment and then proceeding to find that the expanded source category “contributes significantly.”

Id.

See

80 FR 35837-35840 (explaining “how GHG, VOC and SO

emissions” from the source category

as revised

to include the oil and natural gas production, processing, transmission, and storage segments, and not the transmission and storage segment itself, “are `air pollution' that may reasonably be anticipated to endanger public health and welfare.”).

This approach, the EPA now proposes to find, was not appropriate. Had the EPA chosen to revise the source category

list

to include the “transmission and storage” segment as a separate source category, it could have done so only after making a finding that emissions from sources within that source category “cause[ ], or contribute significantly to air pollution which may reasonably be anticipated to endanger public health or welfare.” Thus, if transmission and storage sources are sufficiently distinct from production and processing sources such that it would not be appropriate to include them in the Crude Oil and Natural Gas source category via revising of that source category, then the EPA could promulgate NSPS for them only if it first listed them as a separate source category, a step that the EPA has not taken.

In prior actions to expand a previously listed source category to include additional sources when the Agency considers the newly added sources to be logically connected to the sources already in the source category, the EPA has taken different approaches, ranging from making a significant contribution finding for the newly added sources, making such a finding for the newly expanded source category, and not making such a finding at all.

Compare

“Standards of Performance for New Stationary Sources; Priority List—Final Rule,” 47 FR 31875, 31876 (July 23, 1982), “Standards of Performance for New Stationary Sources; Priority List—Proposed Amendment,” 45 FR 76427, 26427-28 (November 18, 1980) (expanding the “asphalt roofing source category” to include “asphalt blowing stills and storage tanks at asphalt processing facilities and petroleum refineries;” explaining that “[i]t is . . . reasonable to treat the asphalt processing and roofing manufacture industry as a single category of sources” because the processing and refinery sources are sites for “initial steps in the preparation of asphalt for roofing manufacture” and “[t]he emissions, processes, and applicable controls for blowing stills and asphalt storage tanks at oil refineries and asphalt processing plants are the same as those at asphalt roofing plants;” determining that the added sources “contribute significantly to air pollution which may reasonably be anticipated to endanger public health or welfare”)

with

“Standards of Performance for New Stationary Sources; Industrial-Commercial-Institutional Steam Generating Units—Final Rule,” 51 FR 42794, 42794-95 (November 25, 1986) (expanding the source category of “industrial fossil fuel-fired steam generators” to “cover all steam generators, including both fossil and nonfossil fuel-fired steam generators, as well as steam generators used in industrial, commercial, and institutional applications;” explaining that “fossil and nonfossil fuel-fired industrial, commercial, and institutional steam generating units should be classified together as one source category . . . [because they] emit similar pollutants, fire the same fuels, and may employ the same emission control techniques [and] [t]heir impacts on human health are similar;” determining that the source category as expanded “is a significant contributor and an appropriate source category for regulation;” and adding that “[t]here is no requirement that each subcategory of a listed category . . . also be significant contributors”)

and

“Standards of Performance for New Stationary Sources, Volatile Organic Liquid Storage Vessels (Including Petroleum Liquid Storage Vessels) Constructed After July 23, 1984—Proposed Rule,” 49 FR 29698, 29700 (July 23, 1984), “Standards of Performance for New Stationary Sources: Volatile Organic Liquid Storage Vessels (Including Petroleum Liquid Storage Vessels)—Final Rule,” 52 FR 11420, 11420 (April 8, 1987) (expanding the “synthetic organic chemical manufacturing industry” (SOCMI) source category to include “storage vessels emitting VOC's located at plants other than SOCMI plants, such as liquid bulk storage terminals;” explaining that those facilities “store the same or similar liquids as those at SOCMI plants and . . . can be controlled with the same effectiveness, the same costs . . . and the same control technology as storage vessels located at SOCMI plants;” not making any determination concerning significant contribution).

The EPA proposes to determine that transmission and storage sources are, in fact, sufficiently distinct from production and processing sources that the EPA erred when, in the 2016 NSPS OOOOa rule, it purported to revise the source category to include sources in the transmission and storage segment. Specifically, the EPA proposes to determine that its determination in the 2016 NSPS OOOOa rule that equipment and operations at production, processing, and transmission and storage facilities are a sequence of functions that are interrelated and necessary for getting the recovered gas ready for distribution, was unreasonable. We now propose that the transmission and storage operations are distinct from production and processing operations because the natural gas that enters the transmission and storage segment has different composition and characteristics than the natural gas that enters the production and processing segments.

The primary operations of the production and processing segments are the exploration of crude oil and natural gas products beneath the earth's surface, drilling wells that are used to extract these products, and processing the crude oil and field gas for distribution to petroleum refineries and gas pipelines. As stated previously in this section, the EPA described this source category's operations similarly when proposing 40 CFR part 60, subpart KKK in 1984. 49 FR 2637. The primary purpose of these segments is to remove impurities from the extracted product. At a well site (production segment), crude oil and natural gas are extracted from the ground. Some processing can take place at the well site, such as the physical separation of gas, production fluids, and condensate. The separated gas (“field gas”) is then sent through gathering pipelines to the natural gas processing plant (processing segment). At the processing plant, the field gas is converted to sales gas or pipeline quality gas. This involves several steps including the extraction of natural gas liquids (

e.g.,

a mixture of propane, butane, pentane) from the field gas, the fractionation of these natural gas liquids into individual products (

e.g.,

liquid propane), or both extraction and fractionation. The final natural gas that exits the processing plant is sales gas, which is predominantly methane, as discussed above. In these segments, the field gas has physically changed such that it is a usable product.

Analysis of the composition of gas on a nationwide basis in the various industry segments confirms the different character of the segments. In 2011 and subsequently in 2018, the EPA conducted an analysis of the composition, expressed in percent volume, of natural gas based on the methane, VOC, and hazardous air pollutant (HAP) content across the various industry segments.

53 54

For

example, in 2011, the nationwide composition for the production segment, which included wells and unprocessed natural gas, consisted of approximately 83 percent methane, 4 percent VOC, and less than 1 percent HAP. In contrast, the transmission segment, which included pipeline and sales gas (

i.e.,

post processing), consisted of approximately 93 percent methane, 1 percent VOC, and less than 0.01 percent HAP. In 2018, the EPA reviewed new studies available and found similar results. The nationwide composition for the production segment consisted of approximately 88 percent methane and 4 percent VOC. In addition, the EPA determined the data was insufficient to include HAP in the final analysis. Limited updated natural gas composition data were available for the transmission and storage segment. These differences in the gas composition demonstrate that the emissions profile is different following gas processing; however, the EPA recognizes that these numbers are nationwide and that variations can occur from basin-to-basin within each segment. The fact that the original listing was specific to VOC and SO

emissions and that emissions of these pollutants are lower downstream of the natural gas processing plant further support our interpretation that the 1979 listing included only the production and processing segments.

Memorandum to Bruce Moore, U.S. EPA from Heather Brown, EC/R. “Composition of Natural Gas for use in the Oil and Natural Gas Sector Rulemaking.” July 2011. Docket ID Item No. EPA-HQ-OAR-2010-0505-0084.

Memorandum to U.S. EPA from Eastern Research Group. “Natural Gas Composition.” November 13, 2018. Docket ID No. EPA-HQ-OAR-2017-0757.

The operations of the transmission and storage segment differ from production and processing because in the former, the natural gas does not undergo changes in composition, except for some limited removal of liquids that condensed during the temperature and pressure changes as the gas moves through the pipeline. Therefore, the natural gas that enters the transmission and storage segment has approximately the same composition and characteristics as the natural gas that leaves the segment for distribution. The segment includes natural gas transmission compressor stations, whose primary operation is to move the natural gas through transmission pipelines by increasing the pressure. Dehydration, which can also occur at compressor stations, is a secondary operation used when the natural gas has collected water during transmission. At storage facilities, natural gas is injected into underground storage for use during peak seasons.

When demand increases, the natural gas is extracted from the underground storage, dehydrated to remove water that has entered during storage, compressed, and moved through distribution pipelines. It is the EPA's understanding that processing of field gas generally occurs within the production and processing segments. Operators within the transmission and storage segment typically do not operate within the production and processing segments and vice-versa.

Storage can also take place in above ground storage vessels; however, it is our understanding that these are more commonly used after the city gate, which has not been included in the source category at any point.

These distinct differences in the operations, the physical transformation of the field gas to sales gas, and the physical movement of sales gas through pipelines establish that two separate categories are necessary. This distinction is similar to the distinction the EPA has made between other source categories with segments that handle the production and processing of a material and subsequent transport of the product. One example is the petroleum industry. In that industry, crude oil is produced through the extraction of material at well sites from beneath the earth's surface. Crude oil is then transferred to refineries where it undergoes chemical and physical changes that result in various formulations of gasoline. The refined gasoline is transmitted by pipeline, ship, barge, or rail to bulk gasoline terminals that store the product in large above ground tanks until it is loaded for transport to distribution networks. The segments of the petroleum industry are also demarcated by product composition, the physical, and in the case of the petroleum industry, chemical transformation of crude oil to refined gasoline products such as gasoline, jet aircraft fuels, diesel fuel, motor oil, kerosene, asphalt, and sulfur. Production facilities,

refineries,

and bulk gasoline terminals

all have operational differences, and the EPA placed them in three different source categories. Those operational differences are similar to the operational differences between the production and processing segments and the transmission and storage segment at issue in this proposal.

U.S. EPA. “Revised Prioritized List of Source Categories for NSPS Promulgation.” March 1979. EPA-450/3-79-023.

38 FR 15406 (May 4, 1973); 39 FR 9315 (March 8, 1974).

45 FR 83126 (December 12, 1980); 48 FR 37578 (August 18, 1983).

It should be noted that in the 2016 NSPS OOOOa rule, the EPA justified including the transmission and storage segment in the Crude Oil and Natural Gas source category partly because some similar equipment (

e.g.,

storage vessels, pneumatic pumps, compressors) is used across the industry. While that is true, the differences in the operations of, and the emission profiles of, the different segments are more significant and support our proposal to exclude the transmission and storage segment from the source category. A review of 2016 NSPS OOOOa compliance reports from sources in the EPA Regions (3, 6, 8, 9, and 10) with the greatest oil and natural gas activity indicates that there were no storage vessels emitting more than 6 tons per year (tpy) VOC reported in the transmission and storage segment.

This supports our understanding that VOC emissions are lower in the transmission and storage segment and supports our understanding that any gas processing that occurs in the transmission and storage segment generally is limited to removing liquids that condensed during the temperature and pressure changes as the gas moves through the pipeline.

These reports have since been made available for public viewing at

https://www.foiaonline.gov/foiaonline/action/public/submissionDetails?trackingNumber=EPA-HQ-2018-001886&type=request.

In summary, the EPA has not identified information from the original source category listing that indicates the transmission and storage segment was included in the Crude Oil and Natural Gas Production source category. In fact, in 1985, the date of the first standards that the EPA promulgated for the source category, the EPA clearly indicated that the source category was limited (and should be limited) to the production and processing segments. Further, there are distinct differences in operations and differences in the emissions profiles between the production and processing segments and the transmission and storage segment. We are, therefore, proposing to exclude transmission and storage sources from the Crude Oil and Natural Gas Production source category.

B. Rescission of the NSPS for Sources in Transmission and Storage Segment

A prerequisite for the EPA to promulgate an NSPS applicable to new sources is that the new sources must be in a source category that the EPA has listed under CAA section 111(b)(1). For the reasons stated in section IV.A immediately above, the EPA is proposing to rescind as improper the 2012 and 2016 rules' interpretations or extension of the source category to encompass sources in the transmission and storage segment. Under the proposed rescission, transmission and storage sources would not be contained

within a listed source category. Accordingly, the promulgation of NSPS for transmission and storage sources was contrary to law, and as a result, the EPA is also proposing to rescind the NSPS in OOOO and OOOOa for emission sources in the transmission and storage segment. Specifically, we are proposing to rescind the requirements for compressor affected facilities located downstream of the natural gas processing plant; pneumatic controllers located downstream of the natural gas processing plant; storage vessel affected facilities located downstream of the natural gas processing plant; and the affected facility that is the collection of fugitive emission components located at a compressor station.

C. Status of Sources in Transmission and Storage Segment

If this proposal is finalized, the transmission and storage segment will revert to the status of a segment of the oil and natural gas industry not listed as a source category under CAA section 111(b)(1)(A) and, thus, will not be subject to regulation under CAA section 111(b) (for new sources) or CAA section 111(d) (for existing sources that emit certain air pollutants). The emission sources in the transmission and storage segment will be in the same position as emissions sources in other industries that the EPA has not listed as a source category under CAA section 111(b)(1)(A).

In the future, the EPA may evaluate these emissions more closely and determine whether the transmission and storage segment should be listed as a source category under CAA section 111(b)(1)(A).

Methane emissions from the transmission and storage segment are 32 MMT CO

Eq. (1,295 kt methane) per the Inventory of United States Greenhouse Gas Emissions and Sinks: 1990-2017 (published April 11, 2019), which amounts to 5 percent of United States methane emissions and 0.5 percent of total U.S. GHG emissions on a CO

equivalent basis (using a GWP of 25 for methane). With respect to VOC emissions, the transmission and storage segment emitted 16,252 tons in 2014, which amounts to just 0.51 percent of national VOC emissions from that year. With respect to SO

emissions, there were 663 tons emitted from the transmission and storage segment in 2014, or just 0.79 percent of national SO

emissions. For HAP emissions, the transmission and storage segment emitted 1,143 tons in 2014, or just 0.01 percent of national HAP emissions for that year.

D. Rescission of the Applicability to Methane of the NSPS for Production and Processing Segments

As the second of the two steps of its primary proposal, the EPA also is proposing to rescind the methane requirements of the NSPS applicable to sources in the production and processing segments. The EPA is proposing to find that, in the specific circumstances presented here, the EPA lacked a rational basis to establish standards of performance for methane emissions from the production and processing segments because those requirements are entirely redundant with the existing NSPS for VOC, establish no additional health protections, and are, thus, unnecessary. Rescinding the applicability to methane emissions of the 2016 NSPS OOOOa requirements, while leaving the applicability to VOC emissions in place, will not affect the amount of methane reductions that those requirements will achieve, given the 2016 NSPS OOOOa compliance monitoring assurances, including technologies and frequency of monitoring.

It is rational for the EPA to determine that requirements that are redundant to other requirements are not necessary because they do not result in emission reductions beyond what would otherwise occur. For example, in its 1977 proposed NSPS for Lime Manufacturing Plants, the EPA proposed (and later promulgated) NSPS for particulate matter (PM) from lime plants, but not SO

, and explained that the particulate controls would have the effect of adequately controlling SO

. 42 FR 22506, 22507 (May 3, 1977).

See National Lime Assoc.

EPA,

627 F.2d 416, 426 n.27 (D.C. Cir. 1980) (quoting statements in the EPA's proposal). In effect, the EPA recognized that SO

requirements would be redundant to PM requirements, and, for that reason, declined to impose SO

requirements.

Similarly, the EPA declined to propose NSPS for (i) nitrogen oxides because they are emitted in low concentrations or (ii) carbon dioxide because, among other things, regulation would produce little environmental benefit, 42 FR 22507. These rationales for not proposing controls for air pollutants are similar to the redundancy rationale—in all cases, the essential point is that any controls would not result in meaningful emission reductions.

The current NSPS requirements as applied to methane are redundant with the NSPS requirements as applied to VOC. Indeed, for each emission source in the source category subject to the NSPS, the requirements overlap completely. To understand this, it is important to recognize the emissions profile and control technology for these emission sources. Each emission source in the source category emits methane and VOC as co-pollutants through the same emission points and processes. The requirements of the NSPS, including the emission limits, required controls or changes in operations, monitoring, recordkeeping, reporting, and all other requirements, apply to each emission source's emission points and processes and, therefore, to each emission source's methane and VOC emissions, in precisely the same way. The capture and control devices that the emission sources use to meet the NSPS requirements are the same for these co-pollutants and are not selective with respect to either VOC or methane emissions (though the concentration of VOC and methane in the gas emitted from any particular source will vary across types of affected facilities and geographic basins).

Similarly, the capture and control technologies used to reduce VOC and methane emissions are also effective in reducing each source's emissions of volatile HAP. Please note that while co-control is a favorable result, 40 CFR part 60, subpart OOOOa does not apply to HAP emissions from the source category.

As a result, rescinding the applicability of the NSPS requirements to methane emissions will have no impact on the amount of methane emissions. Each affected facility in the production and processing segments will remain subject to the same NSPS requirements for VOC to which it was subject prior to the rescission, and those requirements will have the same impact in reducing the emission source's methane emissions as before the rescission of the methane requirements.

For example, the requirements for the collection of fugitive emissions components located at a well site include the periodic monitoring for fugitive emissions using an optical gas imaging (OGI) instrument. This instrument provides real-time visual images of HC gas emissions by using spectral wavelength filtering and an array of infrared (IR) detectors to visualize the IR absorption of HC and other gaseous compounds. As the gas absorbs radiant energy at the same waveband that the filter transmits to the detector, the motion of the gas is imaged. Since VOC and methane emissions can be imaged within the same waveband, the OGI instrument does not allow differentiation or speciation of the content of the emissions. Once a fugitive emission is identified with OGI, it must be repaired. Therefore, the same components are monitored and repaired, regardless of the content of the emissions from the affected facility. Thus, the proposed rescission of the applicability to methane will not change the applicability of the fugitive emissions requirements. The same is true for the other NSPS requirements.

Other examples include the requirements for pneumatic controllers, pneumatic pumps, and compressors.

Pneumatic controllers are automated instruments used for maintaining a process condition such as liquid level, pressure, pressure differential, and temperature. Pneumatic controllers make use of the available high-pressure natural gas to operate or control a valve. Natural gas may be released from these “gas-driven” pneumatic controllers with every valve movement and continuously from the valve control pilot. Continuous bleed pneumatic controllers can be classified into two types based on their emissions rates: (1) High-bleed controllers and (2) low-bleed controllers. Replacing high-bleed controllers with low-bleed controllers (or no-bleed and non-gas-driven controllers) non-selectively reduces methane and VOC emissions. Pneumatic pumps are devices that use gas pressure to drive a fluid by raising or reducing the pressure of the fluid by means of a positive displacement, a piston or a set of rotating impellers. Gas powered pneumatic pumps are generally used at oil and natural gas production sites where electricity is not readily available (Gas Research Institute/EPA, 1996) and can be a significant source of methane and VOC emissions. Routing pneumatic pump emissions to a pre-existing on-site control device, which combusts the gas, reduces methane and VOC emissions non-selectively. Emissions from compressors occur when natural gas leaks around moving parts in the compressor. In a reciprocating compressor, emissions occur when natural gas leaks around the piston rod when pressurized natural gas is in the cylinder. Over time, during operation of the compressor, the rod packing system becomes worn and will need to be replaced to prevent excessive leaking from the compression cylinder. Replacement of the compressor rod packing, replacement of the piston rod, and the refitting or realignment of the piston rod reduces methane and VOC emissions non-selectively. Emissions from centrifugal compressors depend on the type of seal used: Either “wet,” which uses oil circulated at high pressure, or “dry,” which uses a thin gap of high-pressure gas. The use of dry gas seals substantially reduces emissions. Routing emissions to the combustion device is also an option for reducing emissions from centrifugal compressors. In either case, the use of dry seals or combustion device reduces methane and VOC non-selectively. The proposed rescission of applicability to methane will not change the applicability of these requirements or that methane will be reduced as a co-reduction of VOC.

Furthermore, any fugitive detection and measurement approach currently approved or approved under the Alternative Means of Emissions Limitations that speciates emissions, would still identify fugitive emissions as defined by any visible emissions observed using OGI and require repair. That is, the NSPS requirements as applied to VOC will reduce methane in the same amounts as those requirements, as applied to methane, would as long as OGI with current levels of sensitivity to methane continue to be used. The EPA is aware that several new technologies are under development that would detect speciated fugitive emissions from oil and natural gas operations. We solicit comment on these new technologies and the need to evaluate the current fugitive emission detection technology specifications to determine that the level of control remains as protective.

As the EPA noted in the proposal for the 2016 NSPS OOOOa rule, the EPA has discretion to determine which pollutants emitted from a listed source category warrant regulation. The EPA has historically considered, among other things, the amount of the pollutant and “ha[s] ‘historically declined to propose standards for a pollutant [that] is emit[ted] in low amounts. . . .’ ” 80 FR 56599 (quoting 75 FR 54970, 54997 (September 9, 2010).

In the case of the Oil and Natural Gas source category, there are no methane emissions from the sources subject to the NSPS beyond those emissions already subject to control by the provisions to control VOC in the NSPS. Accordingly, there is no need to add NSPS requirements applicable to methane.

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This discussion assumes that the EPA will retain the statutory interpretation set forth in the 2016 NSPS OOOOa rule of its authority under CAA section 111 to add new regulations to previously-regulated source categories, and that it will not adopt the alternative statutory interpretation on which it solicits comment in section VI.A below.

In the 2016 NSPS OOOOa final rule, the EPA stated: While the controls used to meet the VOC standards in the 2012 NSPS also reduce methane emissions incidentally, in light of the current and projected future GHG emissions from the oil and natural gas industry, reducing GHG emissions from this source category should not be treated simply as an incidental benefit to VOC reduction; rather, it is something that should be directly addressed through GHG standards in the form of limits on methane emissions under CAA section 111(b) based on direct evaluation of the extent and impact of GHG emissions from this source category and the emission reductions that can be achieved through the best system for their reduction. The standards detailed in this final action will achieve meaningful GHG reductions and will be an important step towards mitigating the impact of GHG emissions on climate change. 81 FR 35841.

After further consideration, the EPA proposes to come to a different conclusion about the need for methane requirements, for the reasons discussed in this section and below.

The EPA notes that removing the applicability of the NSPS to methane emissions does not alter the basis for the applicability of the NSPS to VOC emissions for affected sources in the source category, which for some affected sources have been regulated since the 2012 NSPS OOOO rule. To determine BSER, the EPA assesses a set of factors, which include the amount of emissions reduction, costs, energy requirements, non-air quality impacts, and the advancement of particular types of technology or other means of reducing emissions, and retains discretion to weight the factors differently in any case. In the 2016 NSPS OOOOa, the EPA gave primary weight to the amount of emission reductions and cost. The EPA describes this analysis in depth in the 2015 NSPS OOOOa proposal at 80 FR 56618-56620 and 80 FR 56625-56627. For the source types in the production and processing segments, the NSPS requirements, considered on a VOC-only basis, are cost effective (relatively low cost and relatively high emissions reductions).

See

memorandum titled “Draft Control Cost and Emission Changes under the Proposed Amendments to 40 CFR part 60, subpart OOOOa Under Executive Order 13783,” in the public docket for this action. The EPA provides this information for the benefit of the public and is not reopening the above-described determination in the 2016 NSPS OOOOa that the VOC-only requirements for sources in the production and processing segments meet the requirements of CAA section 111.”

The EPA recognizes that in proposing to rescind one set of standards in part for its redundancy with another set, the EPA is choosing to rescind the applicability of those standards to methane emissions and not VOC emissions, rather than vice-versa. Rescinding the methane-specific standards is reasonable because the requirements for VOC and correspondingly, sources' compliance with those requirements, are longer established than those for methane. As described earlier, the EPA regulated VOC first, beginning in 1985 and continuing in 2012, and then added regulation of methane for some sources in 2016.

Additionally, redundancy is not uniform across affected facilities in the sector. Some sources, such as storage vessels, are subject only to VOC requirements and not methane requirements. For those sources, it cannot be said that regulation of VOC is redundant to regulation of methane because the EPA has not regulated methane from them. For these reasons, in choosing between the two requirements, the EPA considers it appropriate and less disruptive to rescind the methane standards.

V. Rationale for Alternative Proposal To Rescind the Methane Standards for All Sources in the Oil and Gas Source Category Without Revising the Source Category

A. Alternative Proposed Action To Rescind the Methane Standards

In this action, the EPA is proposing in the alternative to rescind the methane

requirements in the 2016 NSPS OOOOa without any action that would address the scope of the industry segments covered by these requirements or to alter the VOC requirements applicable to those industry segments. In contrast to the proposal discussed above in section IV, this alternative proposal does not affect the scope of the source category, including the types of sources included in the source category. Thus, this alternative proposal would not eliminate sources in the transmission and storage segment from the source category. This alternative proposal is based on the rationale described below.

B. Rationale for Rescinding the Methane Standards

Under this alternative proposal, the EPA's basis for proposing to rescind the applicability to methane of the NSPS for all sources in the source category is essentially the same as the EPA's basis for proposing the same action for sources in the production and processing segments, described in section IV above. Briefly, the EPA is proposing to rescind the methane requirements applicable to the source category because they are wholly redundant with the existing VOC requirements.

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As noted above, in the 2015 proposal for the 2016 NSPS OOOOa rule, we justified regulating methane emissions on grounds that “reducing methane emissions from this source category cannot be treated simply as an incidental benefit to VOC reduction,” 80 FR 56599, but our current view is that what is important is that the VOC requirements will assure that the methane emissions reductions occur. In addition, as noted above, the cost effectiveness of the VOC requirements for sources in the production and processing segments supports retaining those requirements for those sources, and we are not reopening our determination in the 2016 OOOOa NSPS that, on a VOC-only basis, the requirements for sources in the production and processing segments meet CAA section 111 requirements. The same is true for the sources in the transmission and storage segment under this alternative proposal. We consider VOC emissions regulation alone to qualify as NSPS based on the BSER. As we noted with respect to sources in the production and processing segments, removing the applicability of the NSPS to methane emissions does not alter the basis for the applicability of the NSPS to VOC emissions for affected sources in the source category, which for some affected sources have been regulated since the 2012 NSPS OOOO rule. To determine BSER, the EPA assesses a set of factors, which include the amount of emissions reduction, costs, energy requirements, non-air quality impacts, and the advancement of particular types of technology or other means of reducing emissions; this assessment requires the EPA to exercise discretion in weighing these factors against each other. In the 2016 NSPS OOOOa, the EPA gave primary weight to the amount of emission reductions and cost. The EPA describes this analysis in depth in the 2015 proposal at 80 FR 56616 to 56645. The EPA provides this information for the benefit of the public and is not reopening the above-described VOC-only BSER determination for the production, processing, transmission, and storage segments made in the 2016 NSPS OOOOa.

80 FR 56616 to 56645, 83 FR 52056, and memorandum titled “Draft Control Cost and Emission Changes under the Proposed Amendments to 40 CFR part 60, subpart OOOOa Under Executive Order 13783,” in the public docket for this action.

VI. Solicitation of Comment on Significant Contribution Finding for Methane

As noted above, the primary and alternative proposals set forth in this notice rely on the EPA's previous position, which it took in the 2016 NSPS OOOOa rule, that (1) CAA section 111 does not require the Agency to make a pollutant-specific determination that the Crude Oil and Natural Gas Production source category's emissions of methane cause or contribute significantly to air pollution that may reasonably be anticipated to endanger public health or welfare, as a prerequisite to promulgating an NSPS for methane; and (2) in the alternative, if CAA section 111 were interpreted to require such a determination for the 2016 NSPS OOOOa rule, the source category's emissions do cause or contribute significantly to air pollution that may reasonably be expected to endanger public health or welfare.

Although the determination that CAA section 111(b)(1)(A) requires is commonly referred to as an “endangerment finding,” it entails two separate elements: (1) A finding that certain air pollution may reasonably be anticipated to endanger public health or welfare, and (2) a finding that the source category's emissions of air pollutants cause or contribute significantly to that air pollution. This section focuses on the latter element, which we refer to as the “significant contribution finding” (SCF). It should also be noted that in prior contexts in which the EPA has made these findings with regard to GHG, including the 2016 NSPS OOOOa rule, the EPA has considered the “air pollution” that may reasonably be anticipated to endanger public health or welfare to be the elevated concentration in the atmosphere of six well-mixed gases (of which, CO

and methane are emitted in the largest quantities); and the EPA has considered the “air pollutants” that may cause or contribute to that air pollution to be the same six GHG.

See

81 FR 35843. In the 2016 NSPS OOOOa rule, for convenience, the EPA sometimes referred to the “air pollutants” as methane, in recognition of the fact that methane is the largest quantity of GHG emitted by the Oil and Natural Gas source category. We take the same approach and use the same terminology in this rulemaking.

In the 2016 NSPS OOOOa rule, the EPA stated: Some commenters have argued that the EPA is required to make a new endangerment finding before it may set limitations for methane from the oil and natural gas source category. We disagree. . . . Moreover, even if CAA section 111 required the EPA to make an endangerment finding as a prerequisite for this rulemaking, then, the information and conclusions described above . . . should be considered to constitute the requisite finding (which includes a finding of endangerment as well as a cause-or-contribute significantly finding). More specifically, . . . [t]he facts [that the EPA marshaled in support of the 2009 Endangerment Finding] have only grown stronger and the potential adverse consequences of GHG to public health and the environment more dire [since 2009]. The facts also demonstrate that the current methane emissions from oil and natural gas production sources and natural gas processing and transmission sources contribute substantially to nationwide GHG emissions. 81 FR at 35843.

In this proposal, the EPA proposes to retain its current interpretation that it is not required to make a pollutant-specific SCF, for the same reasons that it noted in the 2016 NSPS OOOOa rule. 81 FR at 35841-43. However, the EPA solicits comment on whether it should revise its positions in the 2016 NSPS OOOOa rule concerning the requirement to make a pollutant-specific SCF under CAA section 111(b), as well as, in light of the statutory term “significantly contributes to,” the level of contribution that methane from oil and natural gas sources makes to GHG air pollution. In particular, in subsections A, B, and C of this section, the EPA solicits comment on (A) whether CAA section 111 requires the EPA to make a pollutant-specific SCF for GHG emissions (again, primarily methane) from the source category as a prerequisite to regulating those emissions; (B) if so, whether the SCF for methane emissions from the source category that the EPA made in the alternative in the 2016 NSPS OOOOa rule properly satisfied that requirement; and (C) what criteria are appropriate for the EPA to consider in making a SCF, both as a general matter and with particular reference to GHG emissions generally and to methane emissions from this source category most particularly. Further, the EPA solicits comment on whether, should we determine (1) that it was necessary as a matter of law for the EPA to have made a pollutant-specific SCF finding for GHG emissions (or, if the statute does not compel that interpretation, whether that is a reasonable interpretation); and (2) that the SCF for methane emissions

from the source category that the EPA made in the alternative in the 2016 NSPS OOOOa rule did not properly satisfy that requirement, those determinations, in and of themselves, would either compel us or authorize us to repeal the 2016 NSPS OOOOa rule.

A. Requirement for Pollutant-Specific Significant Contribution Finding

As noted earlier, CAA section 111(b)(1) sets out a multi-step process for the EPA to promulgate NSPS. First, the EPA is required to list a source category if “in [the Administrator's] judgment it causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare.” CAA section 111(b)(1)(A). Then, the EPA is required to propose and then promulgate “standards of performance for new sources within such category.” CAA section 111(b)(1)(B). A “standard of performance” is defined as “a standard for emissions of air pollutants” that the EPA is required to calculate through a particular methodology. CAA section 111(a)(1). The EPA has interpreted these provisions to require that it make a SCF for the combined air pollutant emissions, taken as a whole, from the source category in order to list the source category, and then to require it to promulgate standards of performance for the emissions once it has listed the source category, but not require it to make pollutant-specific SCFs as another prerequisite to promulgating those standards of performance. 80 FR 64529-31 (Electricity Generating Units (EGU) CO

NSPS rule), 81 FR 35841-42 (2016 NSPS OOOOa rule).

The EPA articulated this interpretation of CAA section 111(b)(1)(A) during the course of two rulemakings to promulgate NSPS for GHG, completed in 2015-2016, but commenters called it into question. In those rulemakings, the EPA promulgated, for the first time, NSPS for GHG, primarily CO

, from fossil-fuel fired EGUs (including steam-generating boilers and combustion turbines), “Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units—Final Rule,” 80 FR 64510, 64530 (October 23, 2015) (EGU CO

NSPS rule),

and methane from the Crude Oil and Natural Gas Production source category, 81 FR 35843 (the 2016 NSPS OOOOa rule). In the proposal for the EGU CO

NSPS rule, the EPA took the position that it was not required to make a pollutant-specific SCF for CO

emissions from EGUs in order to promulgate an NSPS regulating those emissions. 79 FR 1430, 1452-55 (January 8, 2014). Commenters stated that under the EPA's interpretation, the EPA would have the authority to promulgate an NSPS for a air pollutant that a source category emits in relatively small amounts (or, with respect to the endangerment finding, that is relatively benign in its effect on public health or welfare). This is because, under the EPA's interpretation, once the Agency lists a source category, it proceeds to regulate a particular air pollutant emitted from the category without being required to make a SCF for the source category's emissions of that air pollutant.

See generally

81 FR 35843; 80 FR 64530. These concerns about the two GHG NSPS rulemakings are highlighted by the fact that when the EPA listed the source categories—EGU Steam-Generating Boilers in 1971, Combustion Turbines in 1977, and Crude Oil and Natural Gas Production in 1979—and first began to regulate them, the EPA did not mention GHG. Rather, the SCFs for the source categories did not identify the air pollutants, and the initial regulations—which were largely contemporaneous with the listing notices—concerned emissions of other air pollutants.

See

36 FR 5931 (March 31, 1971), 36 FR 24876 (December 23, 1971) (EGU Steam-Generating Boilers; (PM, SO

); 42 FR 53657, 42 FR 53782 (October 3, 1977), (EGU Combustion Turbines; SO

, NO

); 44 FR 49222 (August 21, 1979) (Crude Oil and Natural Gas Production; HC and SO

). Thus, there is no indication that the EPA considered GHG in listing the source categories.

In the EGU CO

NSPS rule, the EPA considered the “air pollutants” relevant for the SCF to be GHGs, but because CO

was the GHG emitted in the greatest quantity by EGUs, the EPA often described that finding as referring to CO

. 80 FR 64531 and n.110; 64537.

In both the EGU CO

NSPS rule and the 2016 NSPS OOOOa rule, the EPA asserted that CAA section 111 authorizes it to regulate a source category's emissions of an air pollutant without a pollutant-specific SCF as long as the EPA has a “rational basis” for doing so. The EPA based this view on previous rulemakings, in which the EPA had declined to promulgate NSPS for certain air pollutants from various source categories on grounds that the amounts of emissions of those air pollutants were so small that regulating them would not be rational, and on D.C. Circuit caselaw.

In the EGU CO

NSPS rule and the 2016 NSPS OOOOa rule, the EPA went on to determine that it did have a rational basis for regulating CO

and methane, respectively, which consisted of assessing the amount of emissions of the GHG from the source category in the light of various metrics, coupled with the fact that the EPA had previously determined, in the 2009 Endangerment Finding, that six well-mixed gases constitute GHG air pollution that may reasonably be anticipated to endanger public health and welfare under section 202(a) of the CAA. “Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act—Final rule,” 74 FR 66496 (December 15, 2009) (2009 Endangerment Finding). It should be noted that in both the EGU CO

NSPS rule and the 2016 NSPS OOOOa rule, the EPA also stated that, in the alternative, if it were required to make a pollutant-specific SCF for GHG (with a focus on CO

and methane, respectively), it was making that finding, citing the same information that it relied on for the rational basis determinations.

See

80 FR 64529-31 (EGU CO

NSPS rule), 81 FR 35841-43 (2016 NSPS OOOOa rule) (both citing the 2009 Endangerment Finding).

Specifically, in the 2016 NSPS OOOOa rule, the EPA stated that in

National Lime Assoc.

EPA,

627 F.2d 416 (D.C. Cir. 1980), the Court had “discussed, but did not review, the EPA's reasons for not promulgating standards for NO

, SO

, and CO from lime plants.”

See

81 FR 35842;