OFFICE OF ATTORNEY GENERAL STATE OF OKLAHOMA May 2, 2013 VIA CERTIFIED MAIL E-MAIL Acting Administrator Bob Perciasepe Gina McCarthy Of?ce of the Administrator Assistant Administrator United States Environmental Of?ce of Air and Radiation Protection Agency US. Environmental Protection Agency Ariel Rios Building EPA West 1200 Avenue, NW. 1200 Avenue, NW Mail Code:1101a Mail Code: 6102T Washington, DC 20460 Washington, DC 20460 perciasene.bob@ena. gov McCarthy. gina@Epa. gov Re: A COMMUNICATION FROM THE STATES OF ALABAMA, ARIZONA, INDIANA, KANSAS, MONTANA, NEBRASKA, NORTH DAKOTA, OHIO, OKLAHOMA, SOUTH DAKOTA, TEXAS, WEST VIRGINIA AND WYOMING REGARDING POTENTIAL EPA SETTLEMENT NEGOTIATIONS WITH SEVEN NORTHEASTERN STATES REGARDING THE REGULATION OF METHANE EMISSIONS Dear Acting Administrator Perciasepe and Assistant Administrator McCarthy: We are writing to express our very great concern that the Environmental Protection Agency (EPA), may consider negotiations with the States of New York, Connecticut, Delaware, Maryland, Rhode Island, Vermont and Massachusetts (collectively, the ?Northeastern States?) to resolve their notice of intent (N01) to ?le suit under section 304 of the Clean Air Act for decision not to regulate methane emissions from new and existing oil and natural gas drilling, production and processing facilities (?oil and gas facilities?) under the New Source Performance Standards (NSPS) program. EPA should not enter into negotiations with the Northeastern States because, as discussed below, their claims are entirely Without merit. EPA has appropriately declined to regulate methane emissions from new and existing oil and gas facilities under the Clean Air Act. NSPS are promulgated pursuant to Clean Air Act ?111 (42 U.S.C. 7411). Under of the Clean Air Act, EPA must review and revise, ?if appropriate,? NSPS standards every eight years. In 313 NE. 21ST STREET OKLAHOMA CITY, OK 73105 (405) 5216921 FAX: (405) 52145246 0? recycled paper May 2, 2013 Page 2 its recent review of oil and gas facility emissions and promulgation of new NSPS Subpart 0000, EPA declined to regulate methane emissions from oil and gas facilities, stating that it would continue to evaluate these emissions. In their NOI, the Northeastern States claim on several grounds that the EPA has erred. They first rely on language from Clean Air Act ?109, and a court decision interpreting this ?109 language, to argue that EPA was required to articulate a decision on whether or not regulation of methane under Subpart 0000 was appropriate. Section 109(d) requires EPA to ?complete a thorough review? of air quality criteria and national ambient air quality standards (NAAQS) at ?ve-year intervals. This argument fails in light of the language of While the ?109(d) requirement that EPA ?complete? a review may support a conclusion that EPA is required to articulate a determination at the conclusion of such review, the more permissive language of that EPA simply review and revise NSPS standards, ?if appropriate,? compels no such conclusion. Moreover, speci?cally provides that EPA need not review a NSPS standard if EPA determines that review ?is not appropriate in light of readily available information on the ef?cacy of such standard.? It is clear that the CAA ?111 NSPS review requirements are quite different from the NAAQS ?109(d) review requirements, and that EPA has much more discretion under ?111 to review and revise NSPS standards. decision to continue to evaluate methane emissions from oil and gas facilities is entirely ?appropriate? and consistent with the language of ?1 The Northeastern States also argue in their that EPA was required to review and evaluate methane emissions from oil and gas facilities in their eight-year review of oil and gas facility emissions. But this argument cannot be squared with the law or existing practice. The intent of ?1 11 arguably is, and the historical implementation of ?1 11 by EPA certainly has been, focused on promulgation of standards for the criteria pollutants (NOX, SOX, CO, PM, ozone and lead) not methane. It is quite telling that the only examples cited by the Northeastern States in their NOI of EPA revising existing NSPS to include additional air pollutants were examples of EPA regulating additional criteria pollutants under an existing NSPS. In addition, it is not clear that methane emissions from oil and gas facilities are major contributors of greenhouse gases. The Northeastern States admit in their NOI that oil and gas facilities are responsible for only 5 percent of the C026 annual emissions in the United States. More recent information from industry studies and state evaluations g. the 2012 Texas Commission on Environmental Quality oil and gas emission factors study), May 2, 2013 Page 3 indicates that methane emissions from oil and gas facilities may be signi?cantly lower than previous estimates. In fact, since the Northeastern States ?led their NOI, the EPA Greenhouse Gas Inventory staff has reduced its methane emission estimates related to natural gas exploration and production signi?cantly. However, the reductions are in only two of the thirty three relevant emission categories. Not yet addressed is estimate for methane emissions from well completions with hydraulic fracturing which are related to the recent NSPS Subpart rulemaking cited by the Northeastern States. This single category represents the largest contribution to the overall natural gas production sector emissions estimate, but it has been assessed by industry and academia to be inaccurate. The justi?cation for those estimates has been challenged by mounting evidence, including voluminous data, and investigation of potential ?aws in the statistical methodology. Finally, the Northeastern States? NOI does not adequately acknowledge the extent to which methane emissions from oil and gas facilities are controlled by existing EPA NSPS and other regulations. reduced emission completion requirements for gas wells in the recently promulgated Subpart 0000 would certainly capture and reduce methane emissions, as would the Subpart emission control requirements for storage vessels. Emissions from compressors and engines are already subject to separate NSPS (Subparts 1111 and and methane emissions from compressor blowdowns are regulated under EPA or state startup, shutdown and maintenance (SSM) regulations or permits. In fact, the Northeastern States NOI admits that methane emissions from oil and gas facilities are adequately controlled by including an EPA statement that many of the (over 100) methane control technologies and practices identi?ed by the joint EPA and industry Natural Gas STAR program have been implemented by industry. In sum, regulation of methane emissions from oil and gas facilities is not ?appropriate? under the analysis contemplated by 111(b)(l)(B) and methane emissions from oil and gas facilities are being controlled in any event, in compliance with existing regulations implemented by producing states and as a result of voluntary industry efforts. Given all this, it is abundantly clear that EPA should not succumb to the pressure intended by the Northeastern States? N01 and undertake negotiations with them on this issue. But even should EPA disagree on the merits of the Northeastern States? claims, any negotiations should include other states that actually have oil and gas operations and facilities. Any discussions or negotiations with the Northeastern States to regulate methane emissions from oil and gas facilities would obviously have a signi?cant impact on the economy and citizens of those States. Moreover, regulating methane emissions under the NSPS program would be a marked departure from historical practice and could May 2, 2013 Page 4 therefore require signi?cant additional resources to implement at a time when state resources are already strained and overburdened. For all these reasons, EPA must at a minimum include Oklahoma and other states with similar interests in any negotiations with the Northeastern States. Sincerely, E. Scott Pruitt OKLAHOMA ATTORNEY GENERAL Luther Strange Attorney General State of Alabama Tom Horne Arizona Attorney General r/K' Thomas W. Easterly, Commissioner Indiana Department of Environmental Management :Dw. isle?r? Derek Schmidt Attorney General State of Kansas z; - i! if I wk Tim Fox Attorney General State of Montana Jon Bruning Attorney General State of Nebraska Wayne Stenehjem Attorney General State of North Dakota MICHAEL DEWENE ATTORNEY GENERAL STATE OF OHIO Marty Jackley Attorney General State of South Dakota Gregg Abbott Attorney General State of Texas Patrick Morrisey Attorney General State of West Virginia q?maw Gregory A. Phillips Attorney General State of Wyoming