Oil and Natural Gas Industry ‘Morph’ Definitions to Skirt Regulation

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To aggregate, or not to aggregate – that is the question…

When issuing permits to release pollutants into the air, a state or local authority must determine whether those pollutants are a single source or part of a larger source group of emissions. Grouping sources that are “contiguous” or “adjacent” is called “aggregation” and these terms have been loosely defined for years, allowing the oil and natural gas industry to ‘morph’ definitions within regulations to obtain permits.

Both the US Environmental Protection Agency (EPA) and state regulators are now narrowing definitions in order to deal with the oil and gas sector, which contributes 40 percent of the greenhouse gas methane in the United States and is responsible for the worst ozone pollution in the country. Read the Public Herald’s report about EPA regulatory updates and public testimonies regarding air emissions.

Recently, the Pennsylvania Department of Environmental Protection (DEP) submitted technical guidance for single source, or “air aggregation” determinations for public comment. The public comment period will close Nov. 21.

When Polluters Rule, Who’s Responsible?

Lack of aggregation has allowed one natural gas driller to contaminate air in northcentral Pennsylvania. Ultra Resources, based in Houston, Texas, is being sued by public interest organization, PennFuture for “emitting dangerous and illegal air pollution and operating without the required permits,” said Jan Jarrett, president and CEO of PennFuture,” according to a July 21, 2011 press release.

“Ultra’s drilling operations in Tioga and Potter counties are emitting dangerous and illegal air pollution and operating without the required permits,” said Jan Jarrett, president and CEO of PennFuture, in the July 21 release.

PennFuture also requested that DEP ” open the books on its assessment of air pollution at other drilling operations throughout the Commonwealth” to ensure compliance with clean air regulations such as the federal Clean Air Act, that requires states to properly regulate air polluting industries.

Aggregation Interpretations

Air aggregation determinations are used to decide whether two or more stationary air emission sources should be added together and treated as a “single source” when issuing permits — “allowances” — for oil and gas operations. Federal law states that to be aggregated, different sources must belong to the same industrial grouping; be located on one or more contiguous or adjacent properties; and must be under the control of the same person. All three conditions must be met if the sources are to be aggregated.

“Over time, there was a tendency by some regulators to morph the meaning of ‘contiguous’ or ‘adjacent’ properties to mean only that operations on the properties be ‘interdependent,’” DEP Secretary Michael Krancer stated in an October 12 press release. “This view has been expressed in various federal Environmental Protection Agency (EPA) recommendation letters” or policy statements in recent years after a court case on this topic in 1979 and after the EPA’s adoption of the regulations in 1980.

“That interpretation is not supported by the court decision, the EPA or state regulations.”

According to the press release, natural gas-producing states like Texas, Oklahoma and Louisiana consider sources located a quarter mile apart to be contiguous or adjacent. The new DEP guidance advises it’s permitting staff to use the same distance.

“Every case remains, as it always has, unique, with its own facts and circumstances,” Krancer said in the release. “The single source determination test will continue to be applied on a case-by-case basis, depending on the facts of each particular case.”

What Technical Guidance Has Been Given?

In DEP’s technical guidance document, recommendations for determining whether to aggregate when issuing air emission permits are not required. “Nothing in the policies or procedures shall affect regulatory requirements,” disclaims the Guidance for Performing Single Stationary Source Determinations for Oil and Gas.

The guidance suggests “permit reviewers consider the following questions to assist them in determining whether there is common control:”

Do the facilities share common workforces, plant managers, security forces, corporate executive officers or board executives?

Will managers or other workers frequently shuttle back and forth to be involved actively in both facilities?

Do the facilities share common payroll activities, employee benefits, health plans, retirement funds, insurance coverage, or other administrative functions?

Are there any financial arrangements between the two entities?

These considerations should supplement the following factors when making a single source determination:

(1) the surface areas on which a stationary source has been located, including any immediate area graded or cleared for such stationary sources, is considered property; (2) properties located within a quarter mile are considered contiguous or adjacent; (3) sources within this quarter mile distance should be aggregated so long as they meet the other two regulatory criteria (same industrial grouping and common control); (4) emission units on two or more seperate, but near-by, properties and separated by an intervening railroad, road, or some other obstacle may be considered contiguous or adjacent; (5) facilities should not be “daisy-chained” together to establish a contiguous grouping; and (6) properties located outside a quarter mile may be considered contiguous or adjacent on a case-by-case basis.

How to Submit Public Comment

DEP plans to immediately start implementing the technical guidance in permitting decisions on an interim basis during the public comment period. According to DEP’s website, “Each notice of a proposed regulation, policy or permit application available for public review will have instructions on where to send your public comments.” There are no instructions in the October 12 public comment announcement. Visit DEP’s Public Participation Center for further instructions about submitting comments.

  • There is a growing need to counter act the Conoco-Phillips ad campaign that portrays CNG (compressed Natural Gas) as the clean energy source which is good for our energy needs, economic prosperity and job creation.

    Most Americans don’t understand the drastic difference between what these companies say and what they are actually doing. Unfortunately it will take the absolute destruction of remote places such as Potter and Tioga counties to bring this subject to light.