On April 17, 2012, the Environmental Protection Agency issued final rules regarding air emissions from oil and gas production and related facilities. The rules attracted some publicity, especially a key "green completion " provi whose effective date the agency delayed until January 1, 2015.

While press reports may have left the impression that the EPA delayed all requirements of the new regulations until January 1, 2015, this is not the case—there are significant requirements that become effective in 2012. Others become effective in 2013. A producer that thinks it can safely ignore the regulations until 2015 may be unpleasantly surprised by an enforcement action bringing severe penalties.

The EPA issued the regulations in accordance with a court order that resulted from litigation filed by environmental groups. Proposed in summer 2011, the regulations required newly drilled natural gas wells using hydraulic fracturing to employ a reduced emission completion (REC), often called a "green" completion.

The proposed rules were the subject of controversy, mainly because of industry concerns that equipment for green completions might not be available, resulting in drastically curtailed gas production. In response to these concerns, the agency's final rules do not require immediate compliance with the green completion requirement, in most cases. Rather, the general requirement to use green completions becomes effective January 1, 2015.

Effective in 2012 or 2013

Other requirements become effective before January 1, 2015, however, with some taking effect in 2012. Moreover, to the extent that states or localities require green completions before January 1, 2015, language in the new regulations provides the EPA or environmental groups with at least an argument that a state or local green completion requirement is federally enforceable and subject to the potentially large penalties for violating the federal Clean Air Act.

Publication of the final rules in the Federal Register was expected within a few weeks of their issuance, but as of press time, they had not yet appeared. Once the agency publishes the regulations, the implementation time frame varies, as noted below.

Requirements that become effective in 2012 or 2013 include:

Hydraulically fractured natural gas wells will need to route flowback emissions to a completion combustion device (flare), a requirement effective 60 days after publication in the Federal Register. For most natural gas wells with hydraulic fracturing, the regulations require green completions as of January 1, 2015, to accompany the completion combustion device.

However, for wildcat, delineation, and low-pressure wells, use of the completion combustion device, but not green completions, remains the requirement after January 1, 2015 (40 CFR § 60.5375).

Centrifugal compressors with wet seals, located in the natural gas production segment and the natural gas processing segment up to the point at which the gas enters the transmission and storage segment, must reduce emissions by 95%, a requirement effective 60 days after publication (40 CFR § 60.5380).

Owners or operators of reciprocating compressors located between the wellhead and the point of custody transfer to the natural gas transmission and storage segment must change the rod packing after 26,000 hours or after 36 months, a requirement effective 60 days after publication (40 CFR § 60.5385).

Continuous bleed, natural gas-driven pneumatic controllers at gas processing plants must have a natural gas bleed rate of zero, effective 60 days after publication (40 CFR § 60.5390).

Continuous bleed, gas-driven pneumatic controllers with a bleed rate greater than 6 standard cubic feet per hour (scfh) between the wellhead and natural gas processing plant must have a gas bleed rate less than 6 scfh, effective one year after publication (40 CFR § 60.5390).

Storage vessels in the production, gas processing or gas transmission or storage segments, with volatile organic compound (VOC) emissions equal to or greater than six tons per year, must reduce emissions by 95%, a requirement effective one year after publication (40 CFR § 5395).

Onshore gas processing plants must have a leak detection and repair (LDAR) program, a requirement effective 60 days after publication (40 CFR § 60.5400-5402).

Sweetening units at onshore natural gas processing plants must reduce sulfur dioxide (SO2) emissions based on sulfur feed rate and sulfur content of acid gas, a requirement effective 60 days after publication (40 CFR § 60.5405).

Small glycol dehydration units must comply with new control technology standards and submit an initial notification within one year and 60 days after publication. These and related requirements are at 40 CFR § 63.760-775.

Other rules affect gas processing plants and become effective on various dates, based on publication in the Federal Register (40 CFR § 60.5400-5423).

Owners and operators of facilities subject to these regulations will have significant compliance responsibilities in 2012; others are effective in later years, but still before January 2, 2015.

Green completion requirements

While the nationwide green completion requirement is delayed until January 1, 2015, owners and operators may need to use green completions before that date to comply with state or local requirements. The text and preamble of the new regulations specifically refer to such requirements, which may even be federally enforceable prior to 2015. To the extent a state green completion requirement is part of a state implementation plan (SIP) approved by the EPA, then that requirement may be federally enforceable.

The specific portion that extends the green completion requirement to 2015 states, "unless a more stringent state or local emission control requirement is applicable…" (40 CFR § 60.5375 a). As mentioned previously, this language provides at least an argument for the EPA or an environmental group that a state or local green completion requirement is federally enforceable, and subject to the full penalties in the federal Clean Air Act, even if not part of a SIP.

The provision referencing state and local requirements does not appear to be particularly well drafted, and judges generally defer to the EPA's interpretation if a regulation is ambiguous. Thus, the EPA would start from a place of advantage if it sought to enforce, under these rules, a local requirement for green completions.

Companies should strive to know and comply with state and local requirements in addition to the emissions rules.

They should also bear in mind that a local green completion ordinance, even one that has very minor penalties for noncompliance, could become the basis for serious federal enforcement. Thus, ongoing monitoring of local government activity regarding green completion requirements is essential.

Jim Smith is a partner in the environmental section of Houston law firm Porter Hedges. His practice principally focuses on environmental matters. He primarily represents companies in refining, petrochemical and other resource-related industries.