American Oil and Gas Reporter - February 2017 - 29

WASHINGTONWATCH
Good Regulation
Takes Partnership Between
Feds And States
Over the course of the Obama administration, a number of
agencies enacted rules to federalize regulation. Given congressional
gridlock, agencies had a relatively easy path to asserting a
federal role. The Environmental Protection Agency initiated
new rules and enforcement actions targeting emissions under
the Clean Air Act. The Department of Interior's Bureau of Land
Management intruded on state regulation when it enacted rules
governing drilling on federal lands.
Such actions run counter to the basis for most environmental
laws, which call for federal agencies to enact broad, national
standards, and leave day-to-day regulation and permitting to the
states. For effective regulation that still allows for the production
of oil and natural gas, it is critical that states step up to urge the
federal government to delegate the appropriate environmental
authorities, and in turn, develop programs that conform to that
federally delegated authority.
State implementation of environmental regulations governing
the oil and natural gas industry makes sense. States are in the
best position to understand the specifics of operations within
their borders. Relying on state regulation eliminates unnecessary
duplication, which can result when a federal agency layers additional regulation on top of state rules.
However, these arguments were ignored in December 2010
when EPA Region 6 used its emergency response authority
under the Safe Drinking Water Act to go over the Texas Railroad
Commission to issue an endangerment order to Range Resources
in Parker County, Tx. Despite urging from the RRC that its
actions were premature, EPA alleged Range Resources' drilling
operations had caused methane to enter groundwater. As many
will recall, the alleged methane contamination came from a
garden hose hooked to a gas vent. With its so-called findings refuted, EPA dropped the endangerment order.
While this incident occurred even in the presence of a longstanding state program, Parker County serves as an example of
the abuse that can occur when a politically-motivated federal
program runs roughshod over state regulation.
A more troubling overreach by EPA has occurred in North
Dakota, which has not been delegated authority to permit oil
and natural gas production facilities under the Clean Air Act's
New Source Performance Standard regulations. EPA stepped in
to monitor crude oil storage tanks and measure methane
emissions. According to EPA, it conducted inspections of 41
well pads owned by Slawson Exploration Company from June
through August 2014.
EPA observed that storage tanks at many well pads were
emitting vapors directly to the atmosphere from the tanks' thief
hatches. However, EPA did not undertake any tests to determine
whether the emissions exceeded allowed limits. Armed with the
threat of onerous penalties, EPA pushed Slawson into settlement
negotiations that ultimately resulted in a consent decree, lodged
on Dec. 1, 2016.
In public comments on the decree submitted Jan. 6, the Independent Petroleum Association of America and the Western

"States must urge the federal
government to delegate the environmental
authorities, and in turn, develop programs
that conform to that authority.

Energy Alliance note, "The measures Slawson would be required
to implement under the consent decree are not commensurate
with the allegations contained in the complaint that the Justice
Department filed. Rather than attempting to enforce specific
provisions of the Clean Air Act, the consent decree reflects an
improper attempt on the part of (EPA) to legislate-through an
enforcement action-air quality standards distinct from those
that existing law imposes. (If) the consent decree, as written,
was to become a model of an acceptable enforcement approach,
it would impose a threat to the entire regulated community."
The potential for abuse, and the real-world examples of such
abuse, reinforce the importance of state regulators exercising
control over their environmental regulations. States must:
* Identify requirements for delegation, which vary by law;
* Ensure their programs conform to those delegation requirements; and
* Seek approval from EPA, subjecting the state programs
to periodic reviews.
This primacy role for state regulators is a position espoused
by the incoming Trump administration. Scott Pruitt, whom
Trump has nominated to head EPA, advocated for a strong state
role as Oklahoma's attorney general. In his opening statement
in hearings before the Senate Environment and Public Works
Committee on Jan. 18, Pruitt stated, "Federalism matters. It
matters because Congress says so, and because we need to
achieve good outcomes as a nation for air and water quality. We
need the partnership of the states to achieve that."
r

SUSAN GINSBERG is vice

president of crude oil and natural gas regulatory affairs for
the Independent Petroleum Association of America. She covers legislation and regulation,
focusing on the CFTC and
FERC. Her experience in natural gas regulatory affairs
spans 25 years.
FEBRUARY 2017 29

American Oil and Gas Reporter - February 2017

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