Julie A. Rosen
In February 2014, the Colorado Air Quality Control Commission adopted rules to directly regulate methane and volatile organic compounds (VOC) emissions from oil and gas sources.
Leading up the adoption of regulations, the Colorado Department of Public Health and Environment worked with several stakeholder groups. While having support of some industry, environmental, and local government stakeholders, many stakeholder groups were opposed to the adopted regulations. Colorado’s regulations, as discussed below, entail requirements for monitoring and inspections of storage tanks, compressors, and production facilities; storage tank emission management plans; leak detection and repair; and other provisions linked to methane emission reductions.
Giving accolades to Colorado for its methane regulations, the Environmental Protection Agency (EPA) issued a Clean Air Act Excellence Award to Colorado and described the methane regulations as an “innovative program” to minimize impacts from oil and gas operations.1 According to the EPA, the Colorado program “can serve as a model for responsible oil and gas development across the country.”
At the federal regulatory level, on January 14, 2015, the Obama administration announced a new goal with respect to methane emissions. The goal is to reduce methane emissions from the oil and gas industry by 40 to 45 percent by 2025, using 2012 as the baseline.2 In an attempt to reach the goal, the administration has indicated it is planning to take several actions, including issuing direct methane control regulations.3
These potential federal regulations are significant because they would be the first federal rules to directly regulate methane emissions from oil and gas operations. Currently, methane emissions from oil and gas operations are not directly regulated by the federal government. However, according to the EPA, certain existing EPA regulations or programs already address methane emissions from oil and gas facilities in indirect ways.4 For example, in 2012, the EPA promulgated VOC regulations, which, according to the EPA, have the additional benefit of reducing methane emissions.5 In addition, the EPA has recognized voluntary programs that some oil and gas source operators have been voluntarily implementing, such as the Natural Gas STAR program.6 The administration claims that its new plans to reach its goal would merely “build onto” existing regulations and voluntary programs. 7
Given the EPA’s goals and its praise of Colorado’s program, one should not be surprised if the EPA draws heavily from Colorado’s regulations in developing federal rules. Below is a review of some of the Colorado provisions as a preview of the types of provisions we may see nationwide in the near future.
Overall, Colorado’s regulations require the use of control devices and certain management practices to target aspects of operations that cause VOC and methane emissions, such as leaks and venting. For new sources, the provisions mostly require compliance upon installation or commencement of operation. For existing sources, the regulations generally take a phased approach, making certain requirements applicable at staggered dates over the couple years following adoption of the regulations. The regulations also take a tiered approach, providing varying degrees of stringency for certain requirements, such as inspection frequency, based on the level of emissions from the facility.
Within the oil and gas industry, the Colorado regulations apply to oil and gas exploration and production operations, well production facilities, natural gas compressor stations, and natural gas processing plants.8 The regulations mostly target upstream and midstream sources. In fact, when adopting the regulations, the Colorado Air Quality Control Commission clarified that the regulations do not directly apply to compressor stations at downstream well production and gas processing facilities.9
The following are samples of the types of methane and VOC emission-related requirements adopted by the Colorado Air Quality Control Commission last year.
An auto-igniter is a device that will automatically attempt to relight the pilot flame in the combustion chamber of a control device in order to combust VOC emissions.10
The following storage tank air emission provisions require emission reduction from storage tanks at exploration and production operations, well production facilities, compressor stations, and processing plants.11
The Colorado provisions require owners or operators to inspect natural gas compressor stations and well production facilities for leaks. If leaks are detected at a level that meets the leak threshold, the regulations require leak repairs.14
Well Production Facility AIMM Inspections and AVO Schedule and Frequency15
Well production facilities without storage tanks (tpy)
Well production facilities with storage tanks (tpy)
Approved Instrument Monitoring Method Inspection Frequency
AVO Inspection Frequency
> 0 and ≤ 6
January 1, 2016
> 6 and ≤ 12
> 12 and ≤ 20
> 12 and ≤ 50
January 1, 2015
Taken together, these Colorado regulations, along with related Colorado regulations not summarized herein, represent a comprehensive set of requirements on the oil and gas industry and foreshadow possible federal regulations, such as provisions targeting compressor stations, leaks, liquids unloading, and pneumatic devices.16
If the political and regulatory will exists, states could adopt their own programs to directly regulate methane from oil and gas sources, as did Colorado. To be clear, however, under current Clean Air Act programs, states are not mandated to develop such programs. Thus it is left up to the states to decide whether or not to do so and how to do so.
Many in the industry believe that new federal rules are not needed, in part because existing federal VOC regulations, such as the 2012 revisions and additions to EPA’s NSPS Subpart OOOO, already constitute tools resulting in methane reductions.17 Moreover, oil and gas operations are typically subject to EPA and state air emission permitting requirements, as well as other types of requirements imposed by other regulatory agencies, such as, in Colorado, the Colorado Oil and Gas Conservation Commission.
Environmental groups claim that the federal rules are insufficient because they do not address VOC and methane emissions from all links in the chain of oil and gas operations and because they apply only to new or modified sources. In rebuttal, the voluntary programs, with which many oil and gas companies already comply, fill in many of the possible gaps in regulations. Potential EPA regulations may be viewed as unnecessary and reaching beyond even the voluntary program provisions.
The EPA plans to issue its proposed rules in the summer of 2015. At the time this article was written, the EPA had not yet issued any proposals to directly address methane emissions from oil and gas sources. Even once the proposal has been issued by the EPA, the Colorado rules may continue to be looked to for guidance during the federal rulemaking process and used as a reference by the public when evaluating and formulating comments to the EPA’s proposal, regardless of the direction EPA’s proposal takes.
Please contact Julie Rosen for a complimentary copy of this article as published in the August issue of the Natural Gas and Electricity Journal. Julie Rosen is an attorney in the Denver office of Ryley Carlock & Applewhite. Julie focuses her practice in the areas of environmental, energy resources and related litigation. She represents a wide variety of clients, including manufacturing companies, electric utilities, mining operations, agricultural operations, municipalities, individual landowners, real estate developers and financial institutions.
1 EPA. (2015). Clean Air Excellence Awards, 2015 award recipients. Retrieved from http://www.epa.gov/air/cleanairawards/winners-current.html.
2The White House Office if the Press Secretary. (2015, January 14). Fact sheet: administration takes steps forward on Climate Action Plan by announcing actions to cut methane emissions. Retrieved from https://www.whitehouse.gov/the-press-office/2015/01/14/fact-sheet-administration-takes-steps-forward-climate-action-plan-anno-1.
3 Other actions include, for example, exploring the possibility of enhancing leak detection reporting requirements and “leading by example” by updating standards for venting and flaring from oil and gas operations on public lands. See Note 2.
4 See Note 2.
5See Note 2; see e.g., EPA, Final Rule, Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews, 77 Fed. Reg. 49490 (Apr. 16, 2012) (revising and adding requirements to EPA’s New Source Performance Standards (NSPS) Subpart OOOO, pertaining to Standards of Performance for Crude Oil and Natural Gas Production, Transmission and Distribution).
6 See Note 2.
8 See Reg. 7, Section XVII.
9Reg. 7, Section XIX.N (the Colorado Air Quality Control Commission’s “Statement of Basis, Specific Statutory and Purpose” regarding the oil and gas methane and VOC regulations).
10Reg. 7, Section XVII.A.3 and XVII.B.2.d.
11 Reg. 7, Section XVII.C.
12The term “hydrocarbon emissions” may refer to emissions of constituents such as VOCs and methane.
13Colorado’s systemwide air emission control strategy applies to atmospheric condensate storage tanks that emit greater than 2 tons per year of actual uncontrolled VOCs and are in the 8-hour Ozone Control Area or any other Ozone Nonattainment area or Attainment/Maintenance Area. Reg. 7, Section XII.D.2.
14 Reg. 7, Section XVII.F.
15 Reg. 7, Section XVII.F.4.c, Table 4 – Well Production Facility Component Inspections (setting forth AIMM inspection and AVO thresholds).
16 EPA. (2014, October 28). Oil and natural gas air pollution standards, white papers. Retrieved from: http://www.epa.gov/airquality/oilandgas/whitepapers.html.
17 See EPA, Final Rule, Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews, 77 Fed. Reg. 49490 (Apr. 16, 2012).