EPA Amends Tank Requirements in Oil & Gas NSPS

On August 5, 2013, EPA released a prepublication copy of amendments to the oil and gas new source performance standards, 40 C.F.R. Part 60 ("the oil and gas NSPS"). The amendments primarily modify the requirements pertaining to volatile organic compound ("VOC") emissions from storage tanks. EPA modified these requirements to respond to issues raised in petitions for reconsideration of the 2012 oil and gas NSPS, published in 77 Fed. Reg. 49,490 (Aug. 16, 2012). Interested parties may challenge these new requirements by filing a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit within 60 days of publication of the rule in the Federal Register.

Affected Tanks

The amendments clarify that the oil and gas NSPS applies to vessels at affected facilities - meaning those vessels that hold crude oil, condensate, hydrocarbon intermediates or produced water and that have a potential to emit ("PTE") emissions of 6 tons per year or more of VOCs. Only tanks of a certain age must comply with the oil and gas NSPS.

The regulated tanks have been broken up into two groups:

  Construction or Modification Date
Group 1 After Aug. 23, 2011 and on or before Apr. 12, 2013
Group 2 After Apr. 12, 2013

 

These dates were set based upon the proposal date for the 2012 NSPS, 76 Fed. Reg. 52,738 (Aug. 23, 2011), and the proposal date for the amendments to the tank requirements, 78 Fed. Reg. 22,126 (Apr. 12, 2013).

Once a tank is subject to the rule, it continues to be subject to the requirements even if its PTE drops below the 6 ton per year threshold. The only exception to this rule is if the tank is no longer used to hold crude oil, condensate, hydrocarbon intermediates or produced water. In that case, the tank ceases to meet the definition of a storage vessel under the rule and would no longer be subject to the standards.

Tank Amendments

The 2012 oil and gas NSPS required all storage vessels constructed after August 23, 2011 at affected facilities to reduce their VOC emissions by 95.0 percent. EPA previously anticipated that the supply of emissions control devices would not catch up with the demand until 2016. Therefore, the April 12, 2013 rule proposed that Group 1 tanks at affected facilities would not need to comply with the 95 percent reduction requirement unless they experienced an emissions increase event. However, EPA received new information indicating that projected control device supply is greater than originally anticipated.

Despite this information, EPA continues to have concerns about whether manufacturers will actually be able to ramp up their manufacturing in time to meet the demand. Therefore, EPA still adopted a phased-in approach. EPA explained that if Group 1 and Group 2 tanks had the same compliance deadline, approximately 30,000 affected facilities would be competing for available combustors and installation services. To alleviate this concern, the amendments impose an earlier compliance date for newer vessels, which presumably have higher emissions. Thus, Group 2 vessels will need to reduce VOC emissions by 95 percent on or before April 15, 2014 or 60 days after startup, whichever is later. Group 1 vessels will not need to reduce emissions to the 95 percent standard until April 15, 2015.

EPA also made amendments to address vessels that are removed from service. If a vessel is removed from service, the owner or operator must notify EPA of that change in its next annual report. If that vessel is later returned to service and its use is associated with well fracturing or refracturing, the vessel is immediately subject to the control requirements upon return to service. However, if the vessel's return to service is not associated with well fracturing or refracturing, the owner or operator must determine the PTE of the vessel within 30 days of returning the vessel to service. If the vessel's PTE is 4 tons per year VOCs or greater, the vessel must comply with the emissions control requirements within 60 days of returning to service.

Owners and operators have 90 days after the end of the compliance period to submit their annual report and compliance certification. See 40 C.F.R. § 60.5420.

Alternative 4 Ton Per Year Emission Rate

In order to alleviate the potential shortage of emission control equipment, the amendments provide an alternative to the 95 percent emission reduction requirement. Under this alternative, an owner or operator would not be required to install control equipment if monthly records establish that the actual emission rate for each of the 12 consecutive preceding months has been below 4 tons per year. EPA provided this alternative compliance option because the Agency determined that was not cost-effective to operate combustion control devices where emissions are less than 4 tons per year. Companies using this alternative will still need to conduct monitoring to verify that the uncontrolled monthly VOC emissions do not exceed the 4 ton per year threshold. If emissions do increase to 4 tons per year or more, the owner or operator would need to meet the 95 percent control requirement within 30 days.

Unresolved Issues

EPA received numerous petitions for reconsideration of the 2012 oil and gas NSPS. The Agency is still considering several of these issues. By the end of 2014, EPA plans to complete its reconsideration of issues related to implementing the compliance monitoring requirements and field testing protocol requirements.