Natural Gas Case Sparks Change in Air Pollution Assessments

November 11, 2009

If your audience is anywhere near a natural gas or petroleum well-field, a new EPA policy may affect the air they breathe — and help you build a compelling local story.

EPA recently issued an administrative ruling and policy change that could plausibly lead to a 95% reduction of important air pollutants at oil and gas drilling and production facilities in 32 states, according to one advocacy group. However, the magnitude of any reduction is uncertain, in part because it is going to be up to each state to subjectively implement the new ruling.

Dogging the resulting developments could lead to many stories that focus on both the specific cases and the underlying principle of cumulative assessments of pollutants.

EPA's ruling dealt with the state of Colorado's renewal in 2007 and 2008 of a permit for the Frederick Natural Gas Compressor Station operated by Kerr-McGee/Anadarko Petroleum Corp. in Weld Co. The advocacy group Rocky Mt. Clean Air Action (which merged in September 2008 with the group WildEarth Guardians) challenged the permit on the grounds that it didn't appropriately address the cumulative effects of all the wells, pipes, and other equipment associated with the compressor station.

General guidelines for assessing such interlinked operations had been provided in the Clean Air Act since 1980, but a Jan. 12, 2007, EPA memorandum by Acting Assistant Administrator William Wehrum had allowed states to interpret the conditions of such aggregation differently, allowing states that chose to do so to cherry pick the criteria and consider a far smaller set of interacting facilities together as one air pollution source.

Doing so would lead to far fewer instances in which a company would be required to use pollution controls to limit emissions of important natural gas field pollutants such as volatile organic compounds and nitrogen oxides (which are significant pollutants in their own right, and which are precursors for ground-level ozone), as well as pollutants such as particulates, carbon monoxide, and sulfur dioxide. That's because emissions from each individual facility, such as a pipeline or a well, typically wouldn't exceed the regulatory threshold requiring such pollution control equipment, whereas all such facilities considered together, in this case as part of natural gas drilling, gathering, processing, and related operations, would.

As part of the required steps for such a challenge, Rocky Mt. Clean Air Action appealed Colorado's approval of the permit to EPA.

On Oct. 8, 2009, EPA agreed with the group and directed the state of Colorado to reconsider the permit.

Shortly before that, on Sept. 22, 2009, EPA instructed all 10 of its regional administrators to disregard the Wehrum ruling and return to the original Clean Air Act guidelines, and provided some additional information on how to interpret them.

One key part of the Clean Air Act guidelines is that a state must consider three facets together when considering a permit. Those are whether a) the activities are under control of the same person or company, b) the activities are contiguous or adjacent, and c) the activities belong to the same major Standard Industrial Classification (SIC) code.

Interpretation of these criteria over the years (notwithstanding the 2007 Wehrum memo) has led to a compendium of case-by-case determinations that offer states some direction. Nonetheless, much remains subjective, such as what exactly is contiguous, and what constitutes a person who exerts control over multiple activities. Each state will continue to use its subjective interpretation of these factors on a case-by-case basis.

WildEarth Guardians Climate and Energy Program Director Jeremy Nichols (303-573-4898 x1303, cell 303-437-7663, email), who was with Rocky Mt. Clean Air Action when the Anadarko case began, interprets the EPA ruling to mean that a state should consider together all the facilities that are under the ownership of a corporation or its subsidiaries, are in the same natural gas field (even if it's quite large), are in the major SIC codes of 13 (Oil And Gas Extraction), 46 (Pipelines, Except Natural Gas), or pertinent portions of 49 (Electric, Gas, And Sanitary Services), and are dependent on each other for their existence. For example, it would apply to a situation in which a gas well that is owned by one company must deliver its gas for processing to a compressor station owned by another company, since that gas well's existence is fully dependent on its connection to the compressor station. He thinks aggregation of sources would not apply to facilities in gas fields that are geographically and geologically separate, even if they're in the same airshed.

However, the state of Colorado may interpret things differently in the Kerr-McGee/Anadarko case, and others it reviews, just as every other state may apply different interpretations. And the EPA may also use different interpretations as it reviews state actions, or responds to other challenges by outside parties. An important part of this story will be following developments to see if interpretations of the new EPA ruling lead to major air pollution reductions, or little change.

As you track this issue, keep in mind that EPA isn't interpreting its new ruling to mean that states must retroactively review existing permits. The new direction would primarily come into play only when permits are being renewed, or issued for a new facility or one that is being significantly altered (under New Source Review criteria, which themselves have considerable room for interpretation regarding what is a qualifying alteration of an existing facility, even though there are some tangible criteria).

However, groups can continue to challenge existing permits, as Rocky Mt. Clean Air Action/WildEarth Guardians did. And some states may choose to do retroactive reviews.

Natural gas drilling is ongoing in 32 states and the Gulf of Mexico, according to the Dept. of Energy's Energy Information Administration. As of 2007, there were more than 450,000 wells.

The states with the most existing wells, in descending order, are TX, PA, WV, NM, OK, OH, WY, CO, KS, LA, KY, MI, MT, NY, AL, VA, and UT. Controversies over various aspects of natural gas drilling, including both air and water quality issues, are particularly prominent in states such as NM, CO, WY, MT, TX, PA, and NY.

Petroleum extraction is ongoing in and offshore of 31 states, according to EIA:

Among the leading production areas, as of May 2009, in descending order, are the Gulf of Mexico, AK, TX, CA, LA, ND, NM, WY, KS, MT, UT, CO, and MS.

For contact information on 22 advocacy groups working around the country on oil and gas issues, and state officials dealing with oil and gas facilities, see the Oct. 27, 2009, press release by WildEarth Guardians announcing its interpretation of EPA's ruling:

There is no formal avenue for companies or industry organizations to appeal the EPA ruling or policy change. However, as each state reviews any pertinent permits, the industry (and others) can legally challenge any new determinations.

In addition to oil and gas facilities, EPA says the same criteria for assessing aggregated air pollution sources described in its Sept. 22 memo to regional administrators apply to other facilities that are closely linked to each other, such as a cement source, a cement processing facility, and the conveyor system between the two, or a coal mine, a power plant, and the mode of transport, such as a rail line or conveyor belt, between them. EPA acknowledges that other cases beyond Anadarko that deal with a similar underlying aggregation
principle have been under review.

However, EPA says the Sept. 22 memo does not directly apply to similar interrelated water pollution sources. But it raises the issue of whether such sources should be considered collectively when establishing regulations or issuing permits. That could apply in many instances, such as the contaminated water released in natural gas fields; runoff from agricultural fields; discharges from waste treatment plants; or discharges from industrial sources.

These developments also raise the issue of whether the three criteria described in the Clean Air Act continue to be appropriate. For instance, from a pollution perspective, the toxicity impact for a given concentration of a pollutant is the same whether it came from one company's source or another's, but that accumulation of pollutants generally can't be considered at this time when issuing permits (although there can be an indirect consideration if the standard for an individual pollutant is exceeded, potentially leading to subsequent crackdowns on multiple sources in an area; however, even this version of cumulative effects assessment doesn't address the adverse health effects of multiple pollutants, which is a serious flaw in all
toxicity regulation, and most research, that many scientists and health officials are becoming increasingly concerned about). A similar limitation of current law is that drawing boundaries such as the limits of a natural gas field, or some other artificial boundary, without evaluating the entire airshed does not account for all contributors of a toxic substance. On the other hand, defining an airshed is also subjective, and a matter of scale.

Addressing some of these broader issues of cumulative effects, by including in your stories the thoughts of experts familiar with the legal, geographic, regulatory, health, and environmental ramifications of existing laws, and how they often are variably interpreted, can lead to substantial enhancement of your work.