Proposed Rule Would Exempt Oil, Gas Development From CWA Permits

On Dec. 30, 2005, EPA announced it is proposing revisions to stormwater regulations under the Clean Water Act to advance the comprehensive energy policy recently enacted by Congress.

The proposed action, required by the Energy Policy Act of 2005, would modify National Pollutant Discharge Elimination System (NPDES) regulations to state that uncontaminated stormwater discharges from oil and gas field activities do not require federal Clean Water Act permits.

The 1987 Water Quality Act (WQA) added a section 402(p) to the Clean Water Act (CWA) requiring EPA to develop and implement a stormwater permitting program. The agency developed this program in two phases (Phase I: 1990; Phase II: 1999). Those regulations establish NPDES permit requirements for municipal, industrial, and construction site stormwater runoff. The WQA also added section 402(l)(2) to the CWA specifying that EPA and states shall not require NPDES permits for uncontaminated stormwater discharges from oil and gas exploration, production, processing or treatment operations, or transmission facilities. Since 1992 EPA has interpreted the 402(l)(2) exemption as not applying to construction activities (i.e., permit coverage is required).

In 2002, shortly before the Phase II regulations took effect for small construction activities disturbing one to five acres, industry stakeholders notified EPA that the agency had incorrectly assumed that oil and gas activities would not be affected by these permit requirements. Industry noted that these regulations would apply to approximately 30,000 sites annually and would have a significant economic impact on the industry. In response, EPA deferred (until June 12, 2006) the Phase II stormwater requirements for small oil and gas construction activities disturbing one to five acres to analyze the costs and benefits associated with those regulations. EPA planned to propose an action in the Federal Register in late 2005 and finalize this action before the June 12, 2006 deferral expiration.

Before the agency proposed an action, Congress passed the Energy Policy Act of 2005, which became law on Aug. 8, 2005. Section 323 of this Act added a new paragraph (24) to Section 502 of the CWA to define the term "oil and gas exploration, production, processing, or treatment, or transmission facilities" to mean "all field activities or operations associated with exploration, production, processing, or treatment operations, or transmission facilities, including activities necessary to prepare a site for drilling and for the movement and placement of drilling equipment, whether or not such field activities or operations may be considered to be construction activities." The term "oil and gas exploration, production, processing, or treatment, or transmission facilities" is the term used in 402(l)(2) of the CWA and in the NPDES regulations to define those types of activities not required to obtain NPDES permit coverage for stormwater discharges. This statutory change broadened the scope of the 402(l)(2) exemption and rendered EPA's ongoing Phase II analysis unnecessary. It also altered the Phase I regulatory requirements.

The proposed rule specifies that storm water discharges from oil and gas-related construction activities are exempt from NPDES permit coverage, except in very limited instances. EPA 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.

This action also encourages voluntary application of best-management practices for oil and gas field construction activities to minimize erosion and control sediment, officials said.

The proposed rule will be available for public comment for 45 days after publication in the Federal Register (which has not been published yet as of press time). For further information, including a copy of the proposed rule, visit http://www.epa.gov/npdes/stormwater/oilgas.

This article originally appeared in the 01/01/2006 issue of Environmental Protection.

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