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Power & Pipes

FERC, CFTC, and State Energy Law Developments

A proposed rule by the US Environmental Protection Agency (EPA) could reduce costs for oil and gas producers and processors by eliminating certain air emission requirements. The EPA issued a proposed rule on August 29 to roll back new source performance standards (NSPS) established in 2012 and 2016 by removing sources in the transmission and storage segment from the source category; rescind the NSPS applicable to those sources, including methane and volatile organic compounds requirements; and rescind the methane-specific requirements of the NSPS applicable to sources in the production and processing segments. The proposed rule also includes an alternate proposal to rescind the methane-specific requirements of the NSPS applicable to all oil and natural gas sources, without removing any sources from the source category.

Through the proposed rule, the EPA stated it is recognizing its responsibilities under the Clean Air Act (CAA) to limit emissions from the oil and natural gas industry, while accounting for costs and other factors as Congress instructed in the statute. It stated it is primarily concerned with removing regulatory duplication caused by NSPS. The EPA also stated that the proposed rule is the product of a March 2017 presidential directive to review the NSPS 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, to appropriately “suspend, revise, or rescind” regulatory requirements.

The EPA proposed to determine that it erred when it purported to revise the source category to include sources in the transmission and storage segments without first making a separate finding that air pollution from the transmission and storage segments endangers public health. Without such a finding, the EPA stated, the category of oil and gas industry sources subject to NSPS should not have been expanded.

In addition to the proposed amendments, the EPA requested comments on alternate interpretations of the EPA’s statutory authority to regulate pollutants under Section 111(b) of the CAA, and on associated record and policy questions.

Read the proposed rule.