EPA Grants Oil and Gas Exemption
August 1, 2006
A final U.S. Environmental Protection Agency (EPA) rule exempts storm water discharges of sediment from construction activities at oil and gas sites from the requirement to obtain a permit.
The 1987 Water Quality Act (WQA) added a section to the Clean Water Act (CWA) requiring the EPA to develop and implement a storm water-permitting program. EPA developed this program in two phases. Those regulations establish National Pollutant Discharge Elimination System (NPDES) permit requirements for municipal, industrial and construction site storm water runoff. The WQA also added a section to the CWA specifying that EPA and states shall not require NPDES permits for uncontaminated storm water discharges from oil and gas exploration, production, processing or treatment operations, or transmission facilities. Since 1992, EPA had interpreted the exemption as not applying to construction activities.
In 2002, shortly before the Phase II regulations took effect for small construction activities disturbing 1 to 5 acres, industry stakeholders notified EPA that the agency had incorrectly assumed that oil and gas activities would not be affected by these permit requirements. The industry noted that these regulations would apply to the approximately 30,000 sites annually and would have a significant economic impact on the industry. In response, EPA deferred the Phase II storm water requirements for small oil and gas construction activities disturbing 1 to 5 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 August 8, 2005. A new paragraph was added to 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.”
This final rule codifies the amendment to the CWA enacted in the Energy Policy Act of 2005 and clarifies that storm water discharges of sediment from oil and gas-related construction activities under Phase I and II are eligible for the statutory exemption from NPDES permit requirements found in the CWA, except in very limited instances.
Changes to the NPDES regulations promulgated by this rule are designed to maintain consistency with the new law. The final rule specifies that storm water discharges from oil and gas-related construction activities are eligible for the exemption 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 still are subject to permit coverage.
This final action also adds complementary 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.
This rulemaking applies to all states, federal lands and Indian country, regardless of whether EPA or a state is the NPDES-permitting authority. However, this rule is not intended to interfere with the states' authority to regulate any discharges, pursuant to state law, through a non-NPDES permit program.