Cheers and Jeers - Reality and the EPA

Mark Green
Posted August 7, 2013

Now for a change of pace: Kudos to EPA for deciding to give the oil and natural gas industry more time to install emissions controls on storage tanks.

Phasing in the deadline for controls on volatile organic compounds emitted by storage tanks – through April 2015 instead of the original deadline about two months from now – is encouraging because it recognizes industry’s willingness to make its operations cleaner under realistic and fair regulation, while also suggesting the agency can be responsive to industry’s reasonable points of view (more below).

Concerning storage tanks used during the production and transmission of natural gas and oil, EPA wisely eased up on the original compliance deadline after learning the regulation would involve more than 11,000 tanks per year instead of the 304 the agency had projected. Bloomberg BNA has more here.

It’s a constructive move, one that API pushed for by petitioning EPA. API’s Howard Feldman, director of regulatory and scientific affairs (to BNA):

“API never opposed the control requirements, but additional time is needed to implement the rule potentially affecting thousands of new sources.”

Simply put, EPA put out a proposal, industry pointed out the physical and economic difficulties with compliance this fall and the agency made an adjustment. That’s the way things should work. Another example: EPA’s recent decision to change its mind on implementing wastewater controls in coalbed methane (CBM) extraction. Industry pointed out that such controls would make CBM extraction uneconomical. EPA:

“After reviewing financial data pertaining to this industry (including natural gas price projections from the U.S. Energy Information Administration), wastewater quality/quantity data and the cost of available wastewater treatment options, it appears that EPA may not be able to identify a wastewater treatment technology that would be economically achievable for this industrial subcategory. Although potential treatment technologies may exist, these technologies do not appear to be economically achievable due, in part, to the decrease in gas prices as a result of the recent boom in development of shale gas resources. Therefore, the Agency is proposing to delist its CBM rulemaking …

So – two instances where EPA showed an ability to be flexible when presented with real-world facts. Unfortunately, there isn’t a third example of the same in EPA’s final 2013 renewable fuel volume standards announced this week.

As noted here, when EPA considered the facts on the approaching blend wall wrought by the Renewable Fuel Standard (RFS), it passed on a chance to do something about the problem this year. And EPA knows there are problems, acknowledging as much when it pledged to use “flexibilities in the RFS statute to reduce both the advanced biofuel and total renewable volumes” for 2014. No such flexibility in the face of reality this year. API’s Bob Greco, group director of downstream and industry operations, to a gathering of reporters this week:

“We do think this was a missed opportunity for 2013. EPA chose not to utilize the regulatory flexibility that they had available. Instead, they in effect made promises to do so next year. ... Fundamentally, the (RFS) is still broken. At a minimum EPA needs to use the tools it’s got.”

Ethanol supporters pointed to EPA’s decision to reduce the 2013 target for cellulosic biofuel  from 14 million gallons to 6 million as proof of RFS and EPA elasticity. That’s absurd when you consider the fact there was no commercial cellulosic production in 2011 and 2012 and that the commercial cellulosic market so far this year amounts to just 73,000 gallons, or 1.2 percent of the just-announced final mandate. Greco:

“What the history of the RFS has shown is that mandates to produce these fuels don’t drive the production of these fuels. What we ought to be doing is letting the market determine that – let companies, oil and gas and otherwise, invest in these, do the research, make the breakthroughs and determine which fuels will move forward.”