EPA's Final Rule Limiting Air Emissions From Fracking Operations

On April 17, 2012, the US EPA released a final rule that establishes, under new Subpart OOOO in the New Source Performance Standards (NSPS) program of the Clean Air Act (CAA), the first-ever federal emissions standards for hydraulically fractured or re-fractured completions for natural gas wells, as well as new or revised rules relating to controlling other emission sources associated with oil and natural gas industry activities.

Starting 60 days after the final rule is published in the Federal Register (probably in early- to mid-July), owners or operators of fractured or re-fractured natural gas wells must reduce flowback emissions through flaring and route salable quality gas to a flowline “as soon as practicable.”

Starting January 1, 2015, owners or operators must, where feasible, utilize reduced emission completions (also known as “green completions”) for non-wildcat, non-delineation wells with sufficient pressure.

The proposed version of the rule faced significant opposition due, in part, to concerns regarding a lack of available equipment for conducting green completions.

Although the EPA has added significant flexibility to the timing of rule requirements, such as pushing the applicability of the green completion requirement to 2015, a number of criticisms remain. Prominent issues include the application of NSPS to temporary, construction-related emissions and allegations that the EPA’s true intent is to regulate methane, a greenhouse gas, and not VOCs.

Another issue that bears watching is how the regulation of flowback emissions under NSPS factors into preconstruction permit authorizations under the New Source Review (NSR) program. Generally, new stationary sources that are subject to the NSPS program are also subject to NSR.

New Subpart OOOO has placed in the forefront for the first time the issue of whether flowback emissions following the hydraulic fracturing of a natural gas well or other wellhead activities are subject to NSR permitting requirements.

Historically, the EPA has not explicitly required such emissions to be authorized in a NSR permit, apparently viewing these emissions as temporary and de minimis in nature. Some states do require NSR authorization for well emissions; many have assumed that these emissions are covered under permits by rule or exemptions.

At this time, the EPA has provided no real indication of whether it will now consider flowback emissions to be subject to NSR preconstruction review.

The agency did provide an exemption in the rule to prevent automatic major source NSR permitting due to NSPS applicability from re-fracturing of an existing well. (Rather paradoxically, the exemption requires doing everything that the rule would have required if it were applicable).

However, this exemption does not apply to new wells and the EPA’s discussion in the rule preamble falls far short of a declaration that minor NSR permitting should not apply to these types of emissions.

Additional information regarding control requirements imposed by the rule can be found in Fulbright’s Client Alert.