U.S. Storm Water Rules Revised to Exempt Oil and Gas Development

WASHINGTON, DC, January 4, 2006 (ENS) - The U.S. Environmental Protection Agency (EPA) has issued a new regulation that exempts most storm water discharges from oil and gas exploration, production, processing, treatment operations, or transmission facilities from the requirement to obtain National Pollutant Discharge Elimination System (NPDES) permit coverage. The exemption also covers associated construction activities.

The revision to storm water regulations, proposed by the EPA on December 30, 2005, seeks to implement a provision of the Energy Policy Act of 2005.

In a fact sheet issued with the revision, the EPA says it interprets this exclusion to apply to construction of drilling sites, waste management pits, and access roads, as well as construction of the transportation and treatment infrastructure such as pipelines, natural gas treatment plants, natural gas pipeline compressor stations, and crude oil pumping stations.

Construction activities that result in a discharge of a reportable quantity release or that contribute pollutants - other than non-contaminated sediments - to a violation of a water quality standard are still subject to permit coverage, the agency says.

This action also proposes to add text encouraging operators of oil and gas field activities or operations to implement and maintain Best Management Practices to minimize erosion and control sediment during and after construction activities to help ensure protection of surface water quality during storm events.

Shortly after issuance of EPA’s first general permit specific to storm water discharges associated with construction activity - Final NPDES General Permits for Storm Water Discharges From Construction Sites, September 9, 1992 - EPA Region 8 raised a question to EPA Headquarters about the applicability of the permit requirements for oil and gas-related construction activities.

Coalbed methane gas development in the Powder River Basin of Wyoming. This aerial photo shows ridge-top roads, infrastructure and drilling pads for a few of the 51,000 wells forecast for this area by 2008. (Photo by Ann Fuller, Powder River Basin Resource Council)

On December 10, 1992, EPA Headquarters sent a memorandum to Region 8 stating that all construction activities that disturb five or more acres must apply for a permit, including those construction activities associated with oil and gas activities.

This memo was legally challenged by a collection of trade associations, the Appalachian Energy Group, who asserted that the memorandum was unlawful and requested that the court set it aside as inconsistent with the Clean Water Act.

The U.S. Court of Appeals for the Fourth Circuit dismissed this challenge on the grounds that the internal EPA memorandum itself did not constitute an action reviewable by the courts.

The EPA promulgated the final Phase II storm water rule on December 8, 1999 with a requirement that storm water discharges from small construction activities disturbing between one and five acres obtain NPDES permit coverage beginning on March 10, 2003.

Based on public comments on the January 9, 1998, proposed Phase II rule, EPA had considered including oil and gas exploration sites in its economic analysis for the rulemaking, but further analysis suggested that few, if any, of these sites would actually disturb more than one acre of land. EPA decided that separate analysis of this sector was unnecessary.

After promulgating the final Phase II rule, EPA says the agency "became aware that close to 30,000 oil and gas sites annually may, in fact, be affected."

Gas well in the southern Piceance Basin of Colorado (Photo courtesy USGS)

In view of this information, on March 10, 2003, the EPA postponed for two years the permit authorization deadline for NPDES storm water permits for oil and gas construction activity that disturbs one to five acres of land.

Between 2003 and 2005, EPA gathered information on size, location and other site characteristics to better evaluate compliance costs associated with the control of storm water runoff from oil and gas construction activities.

After visiting oil and gas production sites and conferring with stakeholders, the EPA says its preliminary analysis indicated that there could be "significant and potentially costly administrative delays in the permitting process for oil and gas construction sites that were not considered in the original economic analysis for the 1999 Phase II rulemaking."

As a result, on March 9, 2005, the EPA postponed the date for NPDES regulation for an additional 15 months until June 12, 2006, to provide additional time for the agency to complete its evaluation of the economic and legal issues that were raised and to assess procedures and methods for controlling storm water discharges from these sources to mitigate impacts on water quality.

The Texas Independent Producers and Royalty Owners Association petitioned the U.S. Court of Appeals for the Fifth Circuit for review of the March 10, 2003 deferral rule, asserting that the deferral rule represents the agency's first acknowledgment that the NPDES regulations apply to construction activities associated with oil and gas activities, but that such regulations are inconsistent with the Clean Water Act. On June 16, 2005, the Fifth Circuit dismissed the petition on the grounds that the issue is not ripe for review because of the EPA’s ongoing analysis of the issue.

The Energy Policy Act of 2005, enacted in August 2005, put an end to this maneuvering by specifying that uncontaminated storm water discharges from oil and gas field activities do not require federal Clean Water Act permits.

This proposed rulemaking applies to all states, federal lands and Indian Country regardless of whether EPA or a state is the NPDES permitting authority.

However, the EPA says, the proposal "is not intended to interfere with the states' authority to regulate any discharges, pursuant to state law, through a non-NPDES program."

Public comment is welcome for 45 days after publication of the revision in the Federal Register, which is expected within the next several days.

For further information, including a copy of the proposed rule, and instructions on how to file public comments, visit: http://www.epa.gov/npdes/stormwater/oilgas