temperatures without relief. Furthermore, individuals within EJ
populations of concern face greater housing and clean water insecurity
and bear disproportionate economic impacts and health burdens
associated with climate change effects. They also have less or limited
access to healthcare and affordable, adequate health or homeowner
insurance. The urban heat island effect can add additional stress to
vulnerable populations in densely populated cities who do not have
access to air conditioning.\130\ Finally, resiliency and adaptation are
more difficult for economically disadvantaged communities: They tend to
have less liquidity, individually and collectively, to move or to make
the types of infrastructure or policy changes necessary to limit or
reduce the hazards they face. They frequently face systemic,
institutional challenges that limit their power to advocate for and
receive resources that would otherwise aid in resiliency and hazard
reduction and mitigation.
---------------------------------------------------------------------------

    \130\ USGCRP, 2016.
---------------------------------------------------------------------------

    The assessment literature cited in the EPA's 2009 Endangerment
Finding, as well as Impacts of Climate Change on Human Health, also
concluded that certain populations and people in particular stages of
life, including children, are most vulnerable to climate-related health
effects. The assessment literature produced from 2016 to the present
strengthens these conclusions by providing more detailed findings
regarding related vulnerabilities and the projected impacts youth may
experience. These assessments--including the NCA4 (2018) and The
Impacts of Climate Change on Human Health in the United States (2016)--
describe how children's unique physiological and developmental factors
contribute to making them particularly vulnerable to climate change.
Impacts to children are expected from air pollution, infectious and
waterborne illnesses, and mental health effects resulting from extreme
weather events. In addition, children are among those especially
susceptible to allergens, as well as health effects associated with
heat waves, storms, and floods. Additional health concerns may arise in
low-income households, especially those with children, if climate
change reduces food availability and increases prices, leading to food
insecurity within households. More generally, these reports note that
extreme weather and flooding can cause or exacerbate poor health
outcomes by affecting mental health because of stress; contributing to
or worsening existing conditions, again due to stress or also as a
consequence of exposures to water and air pollutants; or by impacting
hospital and emergency services operations.\131\ Further, in urban
areas in particular, flooding can have significant economic
consequences due to effects on infrastructure, pollutant exposures, and
drowning dangers. The ability to withstand and recover from flooding is
dependent in part on the social vulnerability of the affected
population and individuals experiencing an event.\132\
---------------------------------------------------------------------------

    \131\ Ebi, K.L., J.M. Balbus, G. Luber, A. Bole, A. Crimmins, G.
Glass, S. Saha, M.M. Shimamoto, J. Trtanj, and J.L. White-Newsome,
2018: Human Health. In Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, pp. 539-571. doi: 10.7930/
NCA4.2018.CH14.
    \132\ National Academies of Sciences, Engineering, and Medicine
2019. Framing the Challenge of Urban Flooding in the United States.
Washington, DC: The National Academies Press. https://doi.org/10.17226/25381.
---------------------------------------------------------------------------

    The Impacts of Climate Change on Human Health (USGCRP, 2016) also
found that some communities of color, low-income groups, people with
limited English proficiency, and certain immigrant groups (especially
those who are undocumented) live with many of the factors that
contribute to their vulnerability to the health impacts of climate
change. While difficult to isolate from related socioeconomic factors,
race appears to be an important factor in vulnerability to climate-
related stress, with elevated risks for mortality from high
temperatures reported for Black or African-American individuals
compared to White individuals after controlling for factors such as air
conditioning use. Moreover, people of color are disproportionately
exposed to air pollution based on where they live, and
disproportionately vulnerable due to higher baseline prevalence of
underlying diseases such as asthma, so climate exacerbations of air
pollution are expected to have disproportionate effects on these
communities. Locations with greater health threats include urban areas
(due to, among other factors, the ``heat island'' effect where built
infrastructure and lack of green spaces increases local temperatures),
areas where airborne allergens and other air pollutants already occur
at higher levels, and communities experienced depleted water supplies
or vulnerable energy and transportation infrastructure.
    The recent EPA report on climate change and social vulnerability
\133\ examined four socially vulnerable groups (individuals who are low
income, minority, without high school diplomas, and/or 65 years and
older) and their exposure to several different climate impacts (air
quality, coastal flooding, extreme temperatures, and inland flooding).
This report found that Black and African-American individuals were 40%
more likely to currently live in areas with the highest projected
increases in mortality rates due to climate-driven changes in extreme
temperatures, and 34% more likely to live in areas with the highest
projected increases in childhood asthma diagnoses due to climate-driven
changes in particulate air pollution. The report found that Hispanic
and Latino individuals are 43% more likely to live in areas with the
highest projected labor hour losses in weather-exposed industries due
to climate-driven warming, and 50% more likely to live in coastal areas
with the highest projected increases in traffic delays due to increases
in high-tide flooding. The report found that American Indian and Alaska
Native individuals are 48% more likely to live in areas where the
highest percentage of land is projected to be inundated due to sea
level rise, and 37% more likely to live in areas with high projected
labor hour losses. Asian individuals were found to be 23% more likely
to live in coastal areas with projected increases in traffic delays
from high-tide flooding. Those with low income or no high school
diploma are about 25% more likely to live in areas with high projected
losses of labor hours, and 15% more likely to live in areas with the
highest projected increases in asthma due to climate-driven increases
in particulate air pollution, and in areas with high projected
inundation due to sea level rise.
---------------------------------------------------------------------------

    \133\ EPA. 2021. Climate Change and Social Vulnerability in the
United States: A Focus on Six Impacts. U.S. Environmental Protection
Agency, EPA 430-R-21-003.
---------------------------------------------------------------------------

    Impacts of Climate Change on Indigenous Communities. Indigenous
communities face disproportionate risks from the impacts of climate
change, particularly those communities impacted by degradation of
natural and cultural resources within established reservation
boundaries and threats to traditional subsistence lifestyles.
Indigenous communities whose health, economic well-being, and cultural
traditions depend upon the natural

environment will likely be affected by the degradation of ecosystem
goods and services associated with climate change. The IPCC indicates
that losses of customs and historical knowledge may cause communities
to be less resilient or adaptable.\134\ The NCA4 (2018) noted that
while indigenous peoples are diverse and will be impacted by the
climate changes universal to all Americans, there are several ways in
which climate change uniquely threatens indigenous peoples' livelihoods
and economies.\135\ In addition, there can be institutional barriers
(including policy-based limitations and restrictions) to their
management of water, land, and other natural resources that could
impede adaptive measures.
---------------------------------------------------------------------------

    \134\ Porter et al., 2014: Food security and food production
systems.
    \135\ Jantarasami, L.C., R. Novak, R. Delgado, E. Marino, S.
McNeeley, C. Narducci, J. Raymond-Yakoubian, L. Singletary, and K.
Powys Whyte, 2018: Tribes and Indigenous Peoples. In Impacts, Risks,
and Adaptation in the United States: Fourth National Climate
Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R.
Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C.
Stewart (eds.)]. U.S. Global Change Research Program, Washington,
DC, USA, pp. 572-603. doi: 10.7930/NCA4. 2018. CH15.
---------------------------------------------------------------------------

    For example, indigenous agriculture in the Southwest is already
being adversely affected by changing patterns of flooding, drought,
dust storms, and rising temperatures leading to increased soil erosion,
irrigation water demand, and decreased crop quality and herd sizes. The
Confederated Tribes of the Umatilla Indian Reservation in the Northwest
have identified climate risks to salmon, elk, deer, roots, and
huckleberry habitat. Housing and sanitary water supply infrastructure
are vulnerable to disruption from extreme precipitation events.
Confounding general Native American response to natural hazards are
limitations imposed by policies such as the Dawes Act of 1887 and the
Indian Reorganization Act of 1934, which ultimately restrict Indigenous
peoples' autonomy regarding land-management decisions through Federal
trusteeship of certain Tribal lands and mandated Federal oversight of
management decisions. Additionally, NCA4 noted that Indigenous peoples
are subjected to institutional racism effects, such as poor
infrastructure, diminished access to quality healthcare, and greater
risk of exposure to pollutants. Consequently, Native Americans often
have disproportionately higher rates of asthma, cardiovascular disease,
Alzheimer's disease, diabetes, and obesity. These health conditions and
related effects (e.g., disorientation, heightened exposure to
PM2.5, etc.) can all contribute to increased vulnerability
to climate-driven extreme heat and air pollution events, which also may
be exacerbated by stressful situations, such as extreme weather events,
wildfires, and other circumstances.
    NCA4 and IPCC's Fifth Assessment Report \136\ also highlighted
several impacts specific to Alaskan Indigenous Peoples. Coastal erosion
and permafrost thaw will lead to more coastal erosion, rendering winter
travel riskier and exacerbating damage to buildings, roads, and other
infrastructure--impacts on archaeological sites, structures, and
objects that will lead to a loss of cultural heritage for Alaska's
indigenous people. In terms of food security, the NCA4 discussed
reductions in suitable ice conditions for hunting, warmer temperatures
impairing the use of traditional ice cellars for food storage, and
declining shellfish populations due to warming and acidification. While
the NCA4 also noted that climate change provided more opportunity to
hunt from boats later in the fall season or earlier in the spring, the
assessment found that the net impact was an overall decrease in food
security.
---------------------------------------------------------------------------

    \136\ Porter et al., 2014: Food security and food production
systems.
---------------------------------------------------------------------------

B. Impacted Stakeholders

    Based on analyses of exposed populations, the EPA has determined
that this action, if finalized in a manner similar to what is proposed
in this document, is likely to help reduce adverse effects of air
pollution on minority populations, and/or low-income populations that
have the potential for disproportionate impacts, as specified in E.O.
12898 (59 FR 7629, February 16, 1994) and referenced in E.O. 13985 (86
FR 7009, January 20, 2021). The EPA remains committed to engaging with
communities and stakeholders throughout the development of this
rulemaking and continues to invite comments on how the Agency can
better achieve these goals through this action. For this proposed rule,
we assessed emissions of HAP, criteria pollutants, and pollutants that
cause climate change.
    For HAP emissions, we estimated cancer risks and the demographic
breakdown of people living in areas with potentially elevated risk
levels by performing dispersion modeling of the most recent NEI data
from 2017, which indicates nationwide emissions of approximately
110,000 tpy of over 40 HAP (including benzene, toluene, ethylbenzene,
xylenes, and formaldehyde) from the Oil and Natural Gas Industry. Table
12 gives the risk and demographic results for the Oil and Natural Gas
Industry from this screening-level assessment. We estimate there are
39,000 people with cancer risk greater than or equal to 100-in-1
million attributable to oil and natural gas sources, with a maximum
estimated risk of 200-in-1 million occurring in three census blocks (10
people). We estimate there are about 143,000 people with estimated risk
greater than or equal to 50-in-1 million, and about 6.8 million people
with estimated cancer risk greater than 1-in-1 million. It is important
to note that these estimates are subject to various types of
uncertainty related to input parameters and assumptions, including
emissions datasets, exposure modeling and the dose-response
relationships.\137\
---------------------------------------------------------------------------

    \137\ See `Risk Report Template' at Docket ID No. EPA-HQ-OAR-
2021-0317.
---------------------------------------------------------------------------

    As shown in Table 12, Hispanic and Latino populations and young
people (ages 0-17) are disproportionately represented in communities
exposed to elevated cancer risks from oil and natural gas sources,
while the proportion of people in other demographic groups with
estimated risks above the specified levels is at or below the national
average. The overall percent minority is about the same as the national
average, but the percentage of people exposed to cancer risks greater
than or equal to the 100-in-1 million and 50-in-1 million thresholds
who are Hispanic or Latino is about 10 percentage points higher than
the national average. The overall minority percentage is not elevated
compared to the national average because the African-American
percentage is much lower than the national average. The demographic
group of people aged 0-17 is slightly higher than the national average.

                     Table 12--Cancer Risk and Demographic Population Estimates for 2017 NEI Nonpoint Oil and Natural Gas Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Risks >=100-in-1 million
                                              Risks >=50-in-1 million
                                               Risks >1-in-1 million        Nationwide
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Population                                      39,000
                                                      143,000
                                                     6,805,000            ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Population               %      Population               %      Population               %               %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minority................................          13,268            34.1          52,154            36.5       2,010,161            29.5            39.9
African American........................             140             0.4           1,434             1.0         535,055             7.9            12.2
Native American.........................              77             0.2             465             0.3          59,087             0.9             0.7
Other and Multiracial...................           1,443             3.7           5,148             3.6         323,397             4.8             8.2
Hispanic or Latino......................          11,608            29.9          45,107            31.6       1,092,621            16.1            18.8
Age 0-17................................          10,679            27.5          37,487            26.2       1,463,907            21.5            22.6
Age >=65................................           4,272            11.0          17,188            12.0       1,085,067            15.9            15.7
Below the Poverty Level.................           2,000             5.1          13,455             9.4         902,472            13.2            13.4
Over 25 Without a High School Diploma...           2,788             7.2          11,320             7.9         488,372             7.2            12.1
Linguistically Isolated.................             808             2.1           4,418             3.1         179,739             2.6             5.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    For criteria pollutants, we assessed exposures to ozone from Oil
and Natural Gas Industry VOC emissions across races/ethnicities, ages,
and sexes in a recent baseline (pre-control) air quality scenario.
Annual air quality was simulated using a photochemical model for the
year 2017, based on emissions from the most recent NEI. The analysis
shows that the distribution of exposures for all demographic groups
except Hispanic and Asian populations are similar to or below the
national average or a reference population. Differences between
exposures in Hispanic and Asian populations versus White or all
populations are modest, and the results are subject to various types of
uncertainty related to input parameters and assumptions.
    In addition to climate and air quality impacts, the EPA also
conducted analyses to characterize potential impacts on domestic oil
and natural gas production and prices and to describe the baseline
distribution of employment and energy burdens. Section XVI.d describes
the results for our analysis of prices and production. For the
distribution of baseline employment, we assessed the demographic
characteristics of (1) workers in the oil and gas sector and (2) people
living in oil and natural gas intensive communities.\138\ Comparing
workers in the oil and natural gas sector to workers in other sectors,
oil and natural gas workers may have higher than average incomes, be
more likely to have completed high school, and be disproportionately
Hispanic. People in some oil and gas intensive communities concentrated
in Texas, Oklahoma, and Louisiana have lower average income levels,
lower rates of high school completion, and higher likelihood of being
non-Whites or hispanic than people living in communities that are not
oil and gas intensive. Regarding household energy burden, low-income
households, Hispanic, and Black households' energy expenditures may
comprise a disproportionate share of their total expenditures and
income as compared to higher income, non-Hispanic, and non-Black
households, respectively. Results are presented in detail in the RIA
accompanying this proposal.
---------------------------------------------------------------------------

    \138\ For this analysis, oil and natural gas intensive
communities are defined as the top 20% of communities with respect
to the proportion of oil and natural gas workers.
---------------------------------------------------------------------------

    In a proximity analysis of Tribes living within 50 miles of
affected sources, we found 112 unique Tribal lands (Federally
recognized Reservations, Off-Reservation Trust Lands, and Census
Oklahoma Tribal Statistical Areas (OTSA)) located within 50 miles of a
source with 32 Tribes having one or more sources located on Tribal
land.
    Finally, the EPA has also analyzed prior enforcement actions
related to air pollution from storage vessels, and identified
improvements in air quality resulting from these actions as
particularly important in communities with EJ concerns (identified
using EJSCREEN).\139\ In a 2021 analysis of resolved enforcement
matters, the EPA determined that communities with EJ concerns
experience a disproportionate level of air pollution burden from
storage vessel emissions. Although only about 25 percent of storage
vessels were located in these communities with EJ concerns, 67 percent
of the total emission reductions of VOCs, methane, PM, and
NOX (about 95 million pounds) achieved through these
enforcement resolutions occurred in communities with EJ concerns. This
analysis suggests that the provisions of this proposed rule requiring
installation of controls at storage vessels and monitoring and
mitigation of fugitive emissions and malfunctions at storage vessels,
would have particular benefits for these communities.
---------------------------------------------------------------------------

    \139\ See Memorandum ``Analysis of Environmental Justice Impacts
of EPA's Historical Oil and Gas Storage Vessel Enforcement
Resolutions (40 CFR part 60 subpart OOOO and OOOOa),'' located at
Docket ID No. EPA-HQ-OAR-2021-0317.
---------------------------------------------------------------------------

C. Outreach and Engagement

    The EPA identified stakeholder groups likely to be interested in
this action and engaged with them in several ways including through
meetings, training webinars, and public listening sessions to share
information with stakeholders about this action, on how stakeholders
may comment on the proposed rule, and to hear their input about the
industry and its impacts as we were developing this proposal.
Specifically, on May 27, 2021, the EPA held a webinar-based training
designed for communities affected by this rule.\140\ This training
provided an overview of the Crude Oil and Natural Gas Industry and how
it is regulated and offered information on how to participate in the
rulemaking process. The EPA also held virtual public listening sessions
June 15 through June 17, 2021, and heard various community and health
related themes from speakers who participated.\141\ \142\ Community
themes

included concerns about protecting communities adjacent to oil and gas
activities, providing monitoring and data so communities know what is
in the air they are breathing, and upholding Tribal trust
responsibilities. Community speakers urged the EPA to adopt stringent
measures to reduce oil and natural gas pollution, and frequently cited
an analysis suggesting such measures could achieve reductions of 65
percent below 2012 levels by 2025.
---------------------------------------------------------------------------

    \140\ https://www.epa.gov/sites/default/files/2021-05/documents/us_epa_training_webinar_on_oil_and_natural_gas_for_communities.5.27.2021.pdf.
    \141\ June 15, 2021 session: https://youtu.be/T8XwDbf-B8g; June
16, 2021 session: https://www.youtube.com/watch?v=l23bKPF-5oc; June
17, 2021 session: https://www.youtube.com/watch?v=R2AZrmfuAXQ.
    \142\ Full transcripts for the listening sessions are posted at
EPA Docket ID No. EPA-HQ-OAR-2021-0295.
---------------------------------------------------------------------------

    Community Access to Emissions Information. Several stakeholders
requested that the rule include requirements that provide communities
with information, including fence line monitoring or ``better
monitoring so people will know the air they are breathing.'' A few
speakers expressed concerned about the correct placement of existing
air monitors. Speakers from Texas described local air monitors
monitoring meteorology and ozone, but not hazardous air pollutants, and
called on the EPA to consider alternative monitoring for oil and
natural gas sources such as fence-line monitors, along with guidance
from the EPA to require monitors of oil and natural gas facilities in
close proximity to parks, schools, and playgrounds.
    Health Concerns in Adjacent Communities. Speakers raised concerns
about impacts on frontline communities and those communities adjacent
to oil and natural gas operations. These stakeholders called on the EPA
to propose and promulgate stricter standards or alternative
requirements for sources adjacent to urban communities and close to
where people live and work. Several speakers used the term ``energy
sacrifice zone'' when discussing the disproportionate impacts of oil
and natural gas operations on frontline communities. Speakers advocated
that when developing this regulatory effort, consultation with
frontline communities is essential, and some speakers cited a Center
for Investigative Reporting report stating that 30,000 children in
Arlington, Texas, attend school within half a mile of active oil and
gas sites. Speakers discussed concerns about methane as a formaldehyde
precursor and related health effects and cited examples of health
effects including hydraulic fracturing chemicals being measured in
blood or urine; increases in nosebleeds in people in areas of oil and
natural gas development; headaches and cancer. These speakers included
teenagers from Pennsylvania, who said they live within 1 mile of 33
wellheads and 500 feet of a pipeline. Several people cited a February
2018 blowout and explosion in Belmont County, Ohio, that was reported
to release 60,000 tons of methane in 20 days and said that is more than
some countries emit in a year. Speakers also expressed related
environmental concerns such as water contamination and fresh drinking
water being diverted for hydraulic fracturing. One speaker urged that
information on local water use be provided in languages other than
English, stating that in Big Spring (Howard County), Texas, the local
government only provided information to use tap water ``at your own
risk'' in English.
    Additional concerns raised by communities included: Local
compressor stations having numerous planned and unplanned releases into
adjacent communities, which appear to be during startup; whether the
EPA will use a robust cost analysis to address the economic impacts of
labor loss and gas costs resulting from any regulation; if plugged and
abandoned wells included in this action, will this regulation apply to
BLM land; will States be required to use the same emissions calculation
used by the EPA for methane GWP; will there be disclosure of necessary
data collection or technology to be used by the Oil and Natural Gas
Industry to track and reduce methane emissions; and will the EPA
consider the necessity of venting and flaring from a safety standpoint.
Communities also discussed concerns about excess emissions from storage
vessels and the need for clarifying the applicability of the standard
in addition to improving enforceability and compliance at this type of
facility.
    In addition to the trainings and listening sessions, the EPA
engaged with community leaders potentially impacted by this proposed
action by hosting a meeting with EJ community leaders on May 14, 2021.
As noted above, the EPA provided the public with factual information to
help them understand the issues addressed by this action. We obtained
input from the public, including communities, about their concerns
about air pollution from the oil and gas industry, including receiving
stakeholder perspectives on alternatives. The EPA considered and
weighed information from communities as the agency developed this
proposed action.
    In addition to the engagement conducted prior to this proposal, the
EPA is providing the public, including those communities
disproportionately impacted by the burdens of pollution, opportunities
to engage in the EPA's public comment period for this proposal,
including by hosting public hearings. This public hearing will occur
according to the schedule identified in the DATES and SUPPLEMENTARY
INFORMATION section of this preamble to discuss:
     What impacts they are experiencing (i.e., health, noise,
smells, economic),
     How the community would like the EPA to address their
concerns,
     How the EPA is addressing those concerns in the
rulemaking, and
     Any other topics, issues, concerns, etc. that the public
may have regarding this proposal.
    For more information about the EPA's pre-proposal outreach
activities, please see EPA Docket ID No. EPA-HQ-OAR-2021-0295. Please
refer to EPA Docket ID No. EPA-HQ-OAR-2021-0317 for submitting public
comments on this proposed rulemaking. For public input to be considered
during the formal rulemaking, please submit comments on this proposed
action to the formal regulatory docket at EPA Docket ID No. EPA-HQ-OAR-
2021-0317 so that the EPA may consider those comments during the
development of the final rule.

D. Environmental Justice Considerations

    The EPA considered EJ implications in the development of this
proposed rulemaking process, including the fair treatment and
meaningful involvement of all people regardless of race, color,
national origin, or income. As part of this process, the EPA engaged
and consulted with frontline communities through interactions such as
webinars, listening sessions and meetings. These opportunities gave the
EPA a chance to hear directly from the public, especially overburdened
and underserved communities, on the development of the proposed rule.
The EPA considered these community concerns throughout our internal
development process that resulted in this proposal which, if finalized
in a manner similar to what is being proposed, will reduce emissions of
harmful air pollutants, promote gas capture and beneficial use, and
provide opportunity for flexibility and expanded transparency in order
to yield a consistent and accountable national program. The EPA's
proposed NSPS and EG are summarized in sections XI and XII below.
Anticipated impacts of this action are discussed further in section XVI
of this preamble.
    In recognizing that minority and low-income populations often bear
an unequal burden of environmental harms and risks, the EPA continues
to consider

ways to protect them from adverse public health and environmental
effects of air pollution emitted from sources within the Oil and
Natural Gas Industry that are addressed in this proposed rulemaking.
For these reasons, in section XIV.C the EPA is proposing to include an
additional requirement associated with the adoption and submittal of
State plans pursuant to EG OOOOc (in addition to the current
requirements of Subpart Ba) by requiring States to meaningfully engage
with members of the public, including overburdened and underserved
communities, during the plan development process and prior to adoption
and submission of the plan to the EPA. The EPA is proposing this
specific meaningful engagement requirement to ensure that the State
plan development process is inclusive, effective, and accessible to
all.
    Details of the EPA's assessment of EJ considerations can be found
in the RIA for this action. The EPA seeks input on the EJ analyses
contained in the RIA, as well as broader input on other health and
environmental risks the Agency should assess in the comprehensive
development of this proposed action. In particular, the EPA is
soliciting comment on key assumptions underlying the EJ analysis as
well as data and information that would enable the Agency to conduct a
more nuanced analysis of HAP and criteria pollutant exposure and risk,
given the inherent uncertainty regarding risk assessment. More broadly,
the EPA seeks information, analysis, and comment on how the provisions
of this proposed action would affect air pollution and health in
communities with environmental justice concerns, and whether there are
further provisions that EPA should consider as part of a supplemental
proposal or a final rule that would enhance the health and
environmental benefits of this rule for these communities.

VII. Other Stakeholder Outreach

A. Educating the Public, Listening Sessions, and Stakeholder Outreach

    The EPA began the development of this proposed action to reduce
methane and other harmful pollutants from new and existing sources in
the Crude Oil and Natural Gas source category with a public outreach
effort to gather a broad range of stakeholder input. This effort
included: Opening a public docket for pre-proposal input; \143\ holding
training sessions providing overviews of the industry, the EPA's
rulemaking process and how to participate in it; and convening
listening sessions for the public, including a wide range of
stakeholders. The EPA additionally held roundtables with State
environmental commissioners through the Environmental Council of the
States, and oil and gas commissioners and staff through the Interstate
Oil and Gas Compact Commission (IOGCC), and met with non-governmental
organizations (NGOs), industry, and the U.S. Climate Alliance, among
others.\144\
---------------------------------------------------------------------------

    \143\ EPA Docket ID No. EPA-HQ-OAR-2021-0295.
    \144\ A full list of pre-proposal meetings the EPA participated
in is included at EPA Docket ID No. EPA-HQ-OAR-2021-0317.
---------------------------------------------------------------------------

    In addition to the trainings and listening sessions noted in
section VI above, on May 25 and 26, 2021, the EPA held webinar-based
trainings designed for small business stakeholders \145\ and Tribal
nations.\146\ The training provided an overview of the Oil and Natural
Gas Industry and how it is regulated and offered information on how to
participate in the rulemaking process. A combined total of more than
100 small business stakeholders and Tribal nations participated. During
the training, small business stakeholders expressed interest in
learning more about the EPA's plan to either modify the 2016 NSPS OOOOa
or take more substantial action in this proposal. For Tribal nations,
the EPA has assessed potential impacts on Tribal nations and
populations and has engaged with Tribal stakeholders to hear concerns
associated with air pollution emitted from sources within the Oil and
Natural Gas Industry that are addressed in this proposed rulemaking.
Tribal members mentioned the need for the EPA to uphold its trust
responsibilities, propose and promulgate rules that protect
disproportionately impacted communities, and asked that the EPA
allocate resources for Tribal governments to implement regulations
through Tribal air quality programs.
---------------------------------------------------------------------------

    \145\ https://www.epa.gov/sites/default/files/2021-05/documents/oil_and_gas_training_webinar_small_businesses_05.25.21.pdf.
    \146\ https://www.epa.gov/sites/default/files/2021-05/documents/usepa_training_webinar_on_oil_and_natural_gas_for_tribes.5.26.2021.pdf.
---------------------------------------------------------------------------

    As noted above, the EPA also heard from a broad range of
stakeholders during virtual public listening sessions held from June 15
through June 17, 2021,\147\ which featured a total of 173
speakers.\148\ Many speakers stressed the urgent need to address
climate change and the importance of reducing methane pollution as part
of the nation's overall response to climate change. In addition to the
community perspectives described above, the Agency also heard from
industry speakers who were generally supportive of the regulation and
stressed the need to provide compliance flexibility and allow industry
the ability to use cutting-edge tools, including measurement tools, to
implement requirements. Technical comments from other speakers also
focused on a need for robust methane monitoring and fugitive emissions
monitoring, a need to strengthen standards for flares as a control for
associated gas, and suggestions to improve compliance. The sections
below provide additional details on the information presented by
stakeholders during these listening sessions.
---------------------------------------------------------------------------

    \147\ June 15, 2021 session: https://youtu.be/T8XwDbf-B8g; June
16, 2021 session: https://www.youtube.com/watch?v=l23bKPF-5oc; June
17, 2021 session: https://www.youtube.com/watch?v=R2AZrmfuAXQ.
    \148\ Full transcripts for the listening sessions are posted in
at EPA Docket ID No. EPA-HQ-OAR-2021-0295.
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1. Technical Themes
    Measurement and Monitoring. Stakeholders advocated that the EPA
modernize the rule by employing next-generation tools for methane
identification and quantification, particularly for large emission or
``super-emissions'' events. Stakeholders particularly focused on
allowing the use of remote sensing to help industry more easily comply
with monitoring requirements at well pads, which are numerous and
geographically spread out in some States. Stakeholders specified the
desire to use innovative remote sensing technologies to monitor
fugitive emissions and large emission events, including aerial, truck-
based, satellite, and continuous monitoring. Several speakers focused
on the need for regular monitoring, repair, and reporting, including
ambient air monitoring in oil and natural gas development areas, as
well as suggesting that the EPA pursue more robust methane monitoring
for fugitive emissions, ensure that repair is completed, and pursue
robust monitoring and reporting to verify the efficacy of the
regulations.
    Implementation, Compliance, and Enforcement. Numerous stakeholders
raised concerns about flaring of associated gas and advocated for more
stringent standards to ensure that flares used as control devices
perform effectively. One speaker, an OGI expert, noted seeing many
flares that were not operating the way they were intended to and that
were not adequately designed (e.g., unlit flares and ignition gas not
being close enough to the waste gas stream to properly ignite). The
speaker suggested that the EPA consider the concept of `thermal tuning'
of flares by

using OGI to see if a plume of unburned hydrocarbons extends downwind
from the flare, to ensure that flares are actually operating
effectively; the speaker suggested that this use of OGI could be done
in conjunction with fugitive emissions monitoring to make sure controls
are working. Stakeholders further emphasized the need for recordkeeping
of any inspections that are made (e.g., looking for flare damage from
burned tips, lightning strikes). Some stakeholders also requested that
the EPA consider reducing or eliminating flaring of associated gas and
incentivizing capture. Lastly, one speaker raised concerns about
flaring of associated gas in Texas and how flaring is permitted by the
State. In response to these concerns, the EPA is proposing to reduce
venting and flaring of associated gas and to require monitoring of
flares to detect malfunctions. Further, the EPA is soliciting comment
on whether to adopt additional measures to assure proper design and
operation of control devices, including flares, as discussed in section
XIII.
    Stakeholders raised other implementation, compliance, and
enforcement concerns, including calls for the EPA to develop rules that
are easy to apply and implement given States' limited budgets.
Stakeholders cautioned that ``flexibility'' in a rule can be
interpreted as a ``loophole,'' and opined that a rule that sets clear
and uniform expectations will help avoid confusion. At the same time,
speakers stated that a ``prescriptive checklist'' does not work in
today's environment and recommended that the EPA modernize the
regulatory approach. Several speakers, including speakers from Texas
and North Dakota, raised concerns about the limited enforcement
capacity of local and State governments, as well as the EPA and its
regional officials and stated that this may result in implementation
gaps. Speakers called on the EPA to have a third-party verification or
audit requirements for fugitive emissions and cited to Texas's
requirement for third-party audits to evaluate operator LDAR programs
for highly reactive VOC. Speakers also cited to the public-facing
Environmental Defense Fund (EDF) methane map \149\ with geotags of
sources with observed hydrocarbon emissions, which provides operators
an opportunity to respond to posted leak videos and measurements.
Lastly, one speaker requested that the EPA not allow exemptions for
start-up and shutdown emissions events. The EPA is soliciting comment
on ways to utilize credible emissions information obtained from
communities and others, as discussed in section XI.A.1.
---------------------------------------------------------------------------

    \149\ https://www.permianmap.org.
---------------------------------------------------------------------------

    Wells and Storage. Some stakeholders requested that the EPA
consider a program for capping abandoned wells to ensure those wells
are properly closed and not leaking. Speakers called on the EPA to
consider abandoned and unplugged wells in the context of EJ communities
adjacent to affected facilities and requested that the EPA incentivize
appropriate well closure. In response to this input and to gather
information that will be needed to inform possible future actions, the
EPA is soliciting comment on ways to address abandoned wells, including
potential closure requirements. See section XIII.B. Stakeholders also
focused on marginal wells and asked that the EPA consider system-wide
reductions be allowed, for example, at the basin level, and expressed
challenges of retrofitting existing well sites and low production well
sites where addition of control devices or closed vent systems would be
necessary. Some speakers raised concern about ensuring that facilities
are engineered for the basin or target formation from which they
produce.
    Job Creation. Some speakers stated that this rulemaking is a job
creation rule and encouraged a ``next generation'' approach to methane
standards, such as incentivizing continuous monitoring. Other speakers
cited a study about job creation in the methane mitigation
industry.\150\
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    \150\ Stakeholders submitted the following studies to the pre-
proposal docket: https://www.regulations.gov/comment/EPA-HQ-OAR-2021-0295-0016 and https://www.regulations.gov/comment/EPA-HQ-OAR-2021-0295-0017.
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    Inventory, Loss Rates, and Methane Global Warming Potential.
Several speakers criticized the EPA's emission inventories stating that
the EPA is not using the correct data in its inventory, that the GHGI
data is inaccurate because it relies on facility reporting of emissions
from calculations and estimation methods rather than measurement and
monitoring, and suggested that the EPA rely on monitoring and
measurement of actual emissions and subsequently make the monitoring
data publicly available. Speakers raised issues with differences in
inventories across Federal agencies, contrasting DOE's Environmental
Impact Statements and EPA's NEI. Stakeholders suggested that the EPA
use data collected by EDF and other researchers, which calculated
methane emissions to be 60 percent higher than the EPA's
estimates.\151\ Speakers also mentioned the amount of methane that is
lost from wells each year, providing varying estimates of these
emissions. Lastly, stakeholders called on the EPA to use the 20-year
GWP for methane, instead of the 100-year value the agency uses.
---------------------------------------------------------------------------

    \151\ Alvarez et al. 2018. Assessment of methane emissions from
the U.S. oil and gas supply chain. Science 13 Jul 2018: Vol. 361,
Issue 6398, pp. 186-188.
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2. Climate and Other Themes
    Several speakers mentioned the effects of climate change from oil
and natural gas methane emissions, such as impacts on farmland,
wildfires, and transmission of tick-borne pathogens. Many speakers
pointed out the extreme heat and drought that currently are affecting
the western U.S. Stakeholders asked that the EPA examine the impacts of
the Oil and Natural Gas Industry on small businesses that are not part
of the regulated community, such as businesses that rely on outdoor
recreation or water flow that could be affected by oil and natural gas
operations. A speaker raised concerns about the impact of the industry
on tourism, saying that 30 percent of their local economy relies on
tourism and outdoor recreation. Lastly, a speaker discussed pipeline
weatherization needs and suggested that the EPA and other Federal
agencies account for seasonal variability.
    In addition to the public listening sessions, on June 29, 2021, the
EPA met with environmental commissioners and staff through the
Environmental Council of the States (ECOS). Subsequently, on July 12,
2021, the EPA participated in a roundtable with members of the IOGCC.
The discussions in both roundtables included air emissions monitoring
technologies and interactions between the EPA's requirements and State
rules. For the ECOS roundtable, the EPA also sought feedback on and
implementation of the EPA's current NSPS; for the IOGCC roundtable, the
EPA also requested feedback on compliance with the rules.
    Key themes from both roundtables included the following: Allowing
for the use of broad types of methane detection technologies; improving
and streamlining the EPA's AMEL process, such as by structuring it so
it could apply broadly rather than on a site-by-site basis; requests
that expanded aspects of States' rules be deemed equivalent to the
EPA's rule, and requests that the EPA's rule complement State
regulations in a way that would not interrupt the work of State
agencies requiring them to request State legislative approvals. Other
common themes were requests that the rule

provide flexibility and be easy to implement, particularly for marginal
or low production wells owned by independent small businesses, and that
the EPA coordinate its rules with those of other Federal agencies,
notably the DOI's BLM.
    Other input included the need to fill gaps by addressing additional
opportunities to reduce emissions beyond the 2016 NSPS OOOOa, concerns
about the complexity of the calculation for the potential to emit for
storage vessels, a desire that the EPA's rule not slow momentum of
voluntary efforts to reduce emissions, and a desire for regulations
that recognize geographic differences.

B. EPA Methane Detection Technology Workshop

    The EPA held a virtual public workshop on August 23 and 24, 2021,
to hear perspectives on innovative technologies that could be used to
detect methane emissions from the Oil and Natural Gas Industry.\152\
The workshop focused on methane-sensing technologies that are not
currently approved for use in the NSPS for the Oil and Natural Gas
Industry, and how those technologies could be applied in the Crude Oil
and Natural Gas sector. Panelists provided twenty-four live
presentations during the workshop. The panelists all had firsthand
experience evaluating innovative methane-sensing technologies or had
used these technologies to identify methane emissions and presented
about their experience. The live presentations were broken into six
panel sessions, each focused on a particular topic, e.g., satellite
measurements, methane sensors, aerial technologies. At the end of each
panel session, the set of panelists participated in a question-and-
answer session. In addition to the live presentations, the workshop
included a virtual exhibit hall for technology vendors to provide video
presentations on their innovative technologies, with a focus on
technology capability, applicability, and data quality. Forty-two
vendors participated in the virtual vendor hall.
---------------------------------------------------------------------------

    \152\ https://www.epa.gov/controlling-air-pollution-oil-and-natural-gas-industry/epa-methane-detection-technology-workshop.
---------------------------------------------------------------------------

    Nine hundred sixty stakeholders registered to participate in the
workshop. The workshop was also livestreamed, so stakeholders who could
not attend could watch the recorded livestream later at their
convenience. The registrants included a wide range of stakeholders
including, academics, methane detection technology end-user and
vendors, governmental employees (local, State, and Federal), and NGOs.

C. How is this information being considered in this proposal?

    The EPA's pre-proposal outreach effort was intended to gather
stakeholder input to assist the Agency with developing this
proposal.\153\ The EPA recognizes that tackling the dangers of climate
change will require an ``all-hands-on deck'' approach through
regulatory, voluntary, and community programs and initiatives.
Throughout the development of this proposed rule, the EPA considered
the stakeholders' experiences and lessons learned to help inform how to
better structure this proposal and consider ongoing challenges that
will require continued collaboration with stakeholders. The EPA will
continue to consider the information obtained in developing this
proposal as we take the next steps on the proposed regulations.
---------------------------------------------------------------------------

    \153\ The EPA opened a non-regulatory docket for stakeholder to
submit early input. That early input can be found at EPA Docket I.D.
Number EPA-HQ-OAR-2021-0295.
---------------------------------------------------------------------------

    With this proposal, the EPA seeks further input from the public and
from all stakeholders affected by this rule. Throughout this action,
unless noted otherwise, the EPA is requesting comments on all aspects
of this proposal, including on several themes raised in the pre-
proposal outreach (e.g., innovative technologies for methane detection
and quantification). Please see section XI.A.1 of this preamble for
specific solicitations for comment regarding advanced measurement
technologies and section XIII for solicitations for comments on
additional emission sources. For public input to be considered on this
proposal,\154\ please submit comments on this proposed action to the
regulatory docket at EPA Docket ID No. EPA-HQ-OAR-2021-0317 so that the
EPA may consider those comments during the development of the final
rule.
---------------------------------------------------------------------------

    \154\ Information submitted to the pre-proposal non-regulatory
docket at Docket ID No. EPA-HQ-OAR-2021-0295 is not automatically
part of the proposal record. For information and materials to be
considered in the proposed rulemaking record, it must be resubmitted
in the rulemaking docket at EPA Docket ID No. EPA-HQ-OAR-2021-0317.
---------------------------------------------------------------------------

VIII. Legal Basis for Proposal Scope

    The EPA proposes in this rulemaking to revise certain NSPS and to
promulgate additional NSPS for both methane and VOC emissions from new
oil and gas sources in the production, processing, transmission and
storage segments of the industry; and to promulgate EG to require
States to regulate methane emissions from existing sources in those
segments. The large amount of methane emissions from the Oil and
Natural Gas Industry--by far, the largest methane-emitting industry in
the nation--coupled with the adverse effects of methane on the global
climate compel immediate regulatory action. This section explains EPA's
legal justification for proceeding with this proposed action, including
regulating methane and VOCs from sources in all segments of the source
category. The EPA first describes the history of our regulatory actions
for oil and gas sources in 2016 and 2020--including the key legal
interpretations and factual determinations made--as well as Congress's
action in 2021 in response. The EPA then explains the implications of
Congress's action and why we would come to the same conclusion even if
Congress had not acted.
    This proposal is in line with our 2016 NSPS OOOOa rule, which
likewise regulated methane and VOCs from all three segments of the
industry. The 2016 NSPS OOOOa rule explained that these three segments
should be regulated as part of the same source category because they
are an interrelated sequence of functions in which pollution is
produced from the same types of sources that can be controlled by the
same techniques and technologies. That rule further explained that the
large amount of methane emissions, coupled with the adverse effects of
GHG air pollution, met the applicable statutory standard for regulating
methane emissions from new sources through NSPS. Furthermore, the rule
explained, this regulation of methane emissions from new sources
triggered the EPA's authority and obligation to set guidelines for
States to develop standards to regulate the overwhelming majority of
oil and gas sources, which the CAA categorizes as ``existing'' sources.
In the 2020 Policy Rule, the Agency reversed course, concluding based
upon new legal interpretations that the rule concluded the EPA had not
made the proper determinations necessary to issue such regulations.
This action eliminated the Agency's authority and obligation to issue
EG for existing sources. In 2021, Congress adopted a joint resolution
to disapprove the EPA's 2020 Policy Rule under the CRA. According to
the terms of CRA, the 2020 Policy Rule is ``treated as though [it] had
never taken effect,'' 5 U.S.C. 801(f), and as a result, the 2016 Rule
is reinstated.
    In disapproving the 2020 Policy Rule under the CRA, Congress
explicitly rejected the 2020 Policy Rule interpretations and embraced
EPA's

rationales for the 2016 NSPS OOOOa rule. The House Committee on Energy
& Commerce emphasized in its report that the source category ``is the
largest industrial emitter of methane in the U.S.,'' and directed that
``regulation of emissions from new and existing oil and gas sources,
including those located in the production, processing, and transmission
and storage segments, is necessary to protect human health and welfare,
including through combatting climate change, and to promote
environmental justice.'' H.R. Rep. No. 117-64, 3-5 (2021) (House
Report). A statement from the Senate cosponsors likewise underscored
that ``methane is a leading contributing cause of climate change,''
whose ``emissions come from all segments of the Oil and Gas Industry,''
and stated that ``we encourage EPA to strengthen the standards we
reinstate and aggressively regulate methane and other pollution
emissions from new, modified, and existing sources throughout the
production, processing, transmission and storage segments of the Oil
and Gas Industry under section 111 of the CAA.'' 167 Cong. Rec. S2282
(April 28, 2021) (statement by Sen. Heinrich) (Senate Statement).\155\
The Senators concluded with a stark statement: ``The welfare of our
planet and of our communities depends on it.'' Id. at S2283.
---------------------------------------------------------------------------

    \155\ Sen. Heinrich stated that he made this statement on behalf
of ``[Majority [l]eader Chuck Schumer, Chairman Tom Carper of the
Committee on Environment and Public Works, Senator Angus King,
Senator Edward Markey and [himself],'' who he described as ``leading
supporters and sponsors of S.J. Res. 14. . . .'' Senate Statement at
S. 2282. Thus, the Senate Statement should be considered an
authoritative piece of the legislative history. It should be noted
that the Joint Resolution was referred to the Senate Committee on
Environment and Public Works and discharged from the committee by
petition pursuant to 5 U.S.C. 802(c), https://www.congress.gov/bill/117th-congress/senate-joint-resolution/14/all-actions. As a result,
the resolution was not accompanied by a report from the Senate
committee.
---------------------------------------------------------------------------

    This proposal comports with the EPA's CAA section 111 obligation to
reduce dangerous pollution and responds to the urgency expressed by the
current Congress. With this proposal, the EPA is taking additional
steps in the regulation of the Crude Oil and Natural Gas source
category to protect human health and the environment. Specifically, the
agency is proposing to revise certain of those NSPS, to add NSPS for
additional sources, and to propose EG that, if finalized, would impose
a requirement on States to regulate methane emissions from existing
sources. As the EPA explained in the 2016 Rule, this source category
collectively emits massive quantities of the methane emissions that are
among those driving the grave and growing threat of climate change,
particularly in the near term. 81 FR 35834, June 3, 2016. As discussed
in section III above, since that time, the science has repeatedly
confirmed that climate change is already causing dire health,
environmental, and economic impacts in communities across the United
States.
    Because the 2021 CRA resolution automatically reinstated the 2016
Rule, which itself determined that the Crude Oil and Natural Gas Source
Category included the transmission and storage segment and that
regulation of methane emissions was justified, the EPA is authorized to
take the regulatory actions proposed in this rule. As explained below,
we are reaffirming those determinations as clearly authorized under any
reasonable interpretation of section 111. Because the reinstatement of
the 2016 Rule provides the only necessary predicate for this rule, and
because, as described, the interpretations underlying this rule are
sound, the EPA is not reopening them here.

A. Recent History of the EPA's Regulation of Oil and Gas Sources and
Congress's Response

1. 2016 NSPS OOOOa Rule
    As described above, the 2016 NSPS OOOOa rule extended the NSPS for
VOCs for new sources in the Crude Oil and Natural Gas source category
and also promulgated NSPS for methane emissions from new sources. This
rule contained several interpretations that were the bases for these
actions, and that are important for present purposes. First, the EPA
confirmed its position in the 2012 NSPS OOOO rule that the scope of the
oil and gas source category included the transmission and storage
segment, in addition to the production and processing segments that the
EPA had regulated since 1984. The agency stated that it believed these
segments were included in the initial listing of the source category,
and to the extent they were not, the agency determined to add them as
appropriately encompassed within the regulated source category. The EPA
based this latter conclusion on the structure of the industry. In
particular, the EPA emphasized that ``[o]perations at production,
processing, transmission, and storage facilities are a sequence of
functions that are interrelated and necessary for getting the recovered
gas ready for distribution,'' and further explained, ``[b]ecause they
are interrelated, segments that follow others are faced with increases
in throughput caused by growth in throughput of the segments preceding
(i.e., feeding) them.'' 81 FR 35832, June 3, 2016. The EPA also
recognized ``that some equipment (e.g., storage vessels, pneumatic
pumps and compressors) are used across the oil and natural gas
industry.'' Id. Having made clear that the Crude Oil and Natural Gas
source category includes the transmission and storage segment, the EPA
proceeded to promulgate NSPS for sources in that segment. Id. at 35826.
    Second, in promulgating NSPS for methane emissions for new sources
in the source category, the EPA explained its decision to regulate GHGs
for the first time from the source category. Noting that the plain
language of CAA section 111 requires a significant-contribution
analysis only when EPA regulates a new source category, not a new
pollutant, the Agency stated that it ``interprets CAA section
111(b)(1)(B) to provide authority to establish a standard for
performance for any pollutant emitted by that source category as long
as the EPA has a rational basis for setting a standard for the
pollutant.'' 81 FR 35842, June 3, 2016. In the alternative, if a
rational-basis analysis were deemed insufficient, the EPA explained
that it also concluded that GHG emissions, in the form of methane
emissions, from the regulated Crude Oil and Natural Gas source category
significantly contribute to dangerous pollution. Id. at 81 FR 35843,
and 35877. In making the rational basis and alternative significant
contribution findings, the EPA focused on ``the high quantities of
methane emissions from the Crude Oil and Natural Gas source category.''
Id. The EPA emphasized, among other things, that ``[t]he Oil and
Natural Gas source category is the largest emitter of methane in the
U.S., contributing about 29 percent of total U.S. methane emissions.''
Id. The EPA added that ``[t]he methane that this source category emits
accounts for 3 percent of all U.S. GHG emissions . . . [and] GWP-
weighted emissions of methane from these sources are larger than
emissions of all GHGs from about 150 countries.'' Id. The EPA concluded
that ``the[se] facts . . . along with prior EPA analysis'' concerning
the effect of GHG air pollution on public health and welfare,
``including that found in the 2009 Endangerment Finding, provide a
rational basis for regulating GHG emissions from affected oil and gas
sources . . .'' as well as for concluding in the alternative that oil
and gas methane significantly contributes to dangerous pollution. Id.
at 35843.
    In addition, in the 2016 NSPS OOOOa Rule, EPA recognized that
promulgation of NSPS for methane emissions under

section 111(b)(1)(B) triggered the requirement that EPA promulgate EG
to require States to regulate methane emissions from existing sources
under section 111(d)(1), and described the steps it was taking to lay
the groundwork for that regulation. 81 FR at 35831.
2. 2020 Policy Rule
    The 2020 Policy Rule rescinded key elements of the 2016 NSPS OOOOa
rule based on different factual assertions and statutory
interpretations than in the 2016 Rule. Specifically, the 2020 Policy
Rule stated that it ``contains two main actions,'' 85 FR 57019,
September 14, 2020 which it identified as follows: ``First, the EPA is
finalizing a determination that the source category includes only the
production and processing segments of the industry and is rescinding
the standards applicable to the transmission and storage segment of the
industry. . . .'' Id. The rule justified this first action in part on
the grounds that ``the processes and operations found in the
transmission and storage segment are distinct from those found in the
production and processing segments,'' because ``the purposes of the
operations are different'' and because ``the natural gas that enters
the transmission and storage segment has different composition and
characteristics than the natural gas that enters the production and
processing segments.'' Id. at 57028. ``Second, the EPA is separately
rescinding the methane requirements of the NSPS applicable to sources
in the production and processing segments.'' Id. EPA justified the
rescission of the methane NSPS on two grounds. One was the EPA's
``conclu[sion] that those methane requirements are redundant with the
existing NSPS for VOC and, thus, establish no additional health
protections.'' Id. at 57019. The second was a statutory interpretation:
the EPA rejected the rational basis interpretation of the 2016 Rule,
and stated that instead, ``[t]he EPA interprets [the relevant
provisions in CAA section 111] . . . to require, or at least to
authorize the Administrator to require, a pollutant-specific SCF as a
predicate for promulgating a standard of performance for that air
pollutant.'' Id. at 57035. The rule went on to ``determine that the SCF
for methane that the EPA made in the alternative in the 2016 [NSPS
OOOOa] Rule was invalid and did not meet this statutory standard,'' for
two reasons: (i) ``[t]he EPA made that finding on the basis of methane
emissions from the production, processing, and transmission and storage
segments, instead of just the production and processing segments''; and
(ii) ``the EPA failed to support that finding with either established
criteria or some type of reasonably explained and intelligible standard
or threshold for determining when an air pollutant contributes
significantly to dangerous air pollution.'' Id. at 57019. The rule
recognized that ``by rescinding the applicability of the NSPS . . . to
methane emissions for [oil and gas] sources . . . existing sources . .
. will not be subject to regulation under CAA section 111(d).'' Id. at
57040.
3. CRA Resolution Disapproving the 2020 Policy Rule and Reinstating the
2016 NSPS OOOOa Rule
    On June 30, 2021, the President signed into law a joint resolution
adopted by Congress under the CRA disapproving the 2020 Policy Rule. By
the terms of the CRA, this disapproval means that the 2020 Policy Rule
is ``treated as though [it] had never taken effect.'' 5 U.S.C. 801(f).
As a result, upon the disapproval, by operation of law, the 2016 NSPS
OOOOa rule was reinstated, including the inclusion of the transmission
and storage segment in the source category, the VOC NSPS for sources in
that segment, and the methane NSPS for sources across the source
category. And with the reinstatement of the methane NSPS, the EPA's
obligation to issue EG to require States to regulate existing sources
for methane emissions was reinstated as well. Moreover, the CRA bars an
agency from promulgating ``a new rule that is substantially the same
as'' a disapproved rule. 5 U.S.C. 801(b)(2).
    The accompanying legislative history, specifically a House
Committee report (H.R. Rep. 117-64) and a statement on the Senate floor
by the sponsors of the CRA resolution (Senate Statement at S2282-83),
provides additional specificity regarding Congress's intent in
disapproving 2020 Policy Rule and reinstating the 2016 Rule with regard
to the scope of the source category and the regulation of methane.
a. Regulation of Transmission and Storage Sources
    The House Report rejected the 2020 Policy Rule's removal of the
transmission and storage segment from the Crude Oil and Natural Gas
Source Category, and its rescission of the VOC and methane NSPS
promulgated in the 2012 NSPS OOOO and 2016 NSPS OOOOa rules for
transmission and storage sources. House Report at 7; 85 FR 57029,
September 14, 2020 (2020 Policy Rule). The Report recognized that in
authorizing the EPA to list for regulation ``categories of sources''
under section 111(b)(1)(A) of the CAA, Congress ``provided the EPA with
wide latitude to determine the scope of a source category . . . and to
expand the scope of an already-listed source category if the agency
later determines that it is reasonable to do so.'' House Report at 7.
The Report stated that in the 2016 NSPS OOOOa, ``EPA correctly
determined that the equipment and operations at production, processing,
and transmission and storage facilities are a sequence of functions
that are interrelated and necessary for the overall purpose of
extracting, processing, and transporting natural gas for
distribution.'' Id.; see 81 FR 35832, June 3, 2016 (2016 Rule). The
Report added that the 2016 NSPS OOOOa also ``correctly determined that
the types of equipment used and the emissions profile of the natural
gas in the transmission and storage segments do not so distinctly
differ from the types of equipment used and the emissions profile of
the natural gas in the production and processing segments as to require
that the EPA create a separate source category listing.'' House Report
at 7; see 81 FR 35832, June 3, 2016. The Report went on to reject the
2020 Policy Rule's basis for excluding the transmission and storage
segment, finding that the functions of the various segments in the
Crude Oil and Natural Gas sector are all ``interrelated and necessary
for the overall purpose'' of the industry, House Report at 7, and that
EPA correctly determined in 2016 that the source types and emissions
found in the transmission and storage segment are sufficiently similar
to production and processing as to justify regulating these segments in
a single source category. Id.
    The Senate Statement was also explicit that the 2020 Policy Rule
erred in rescinding NSPS for sources in the transmission and storage
segment:

[T]he resolution clarifies our intent that EPA should regulate
methane and other pollution emissions from all oil and gas sources,
including production, processing, transmission, and storage segments
under the authority of section 111 of the CAA. In addition, we
intend that section 111 . . . obligates and provides EPA with the
legal authority to regulate existing sources of methane emissions in
all of these segments.

Senate Statement at S2283 (paragraphing revised).
b. Regulation of Methane--Redundancy
    The House Report and Senate Statement made clear Congress's view
that in light of the large amount of methane emissions from oil and gas
sources and their impact on global climate, the EPA must regulate those

emissions under section 111. House Report at 5; Senate Statement at
S2283. Both pieces of legislative history specifically rejected the
2020 Policy Rule's rescission of the methane NSPS. House Report at 7;
Senate Statement at S2283. Moreover, the legislative history
specifically rejected the statutory interpretations of section 111 that
formed the bases of EPA's 2020 rationales for rescinding the methane
NSPS. House Report at 7-10; see Senate Statement at S2283; see 85 FR
57033, 57035-38 (September 14, 2020).
    The House Report began by recognizing the critical importance of
regulating methane emissions from oil and gas sources, emphasizing both
the potency of methane in driving global warming, and the massive
amounts of methane emitted each year by the oil and gas industry. House
Report at 3-4. The House Report was clear that the amount of these
emissions and their impact compelled regulatory action. Id. at 5. The
Senate Statement was equally clear:

[M]ethane is a leading contributing cause of climate change. It is
28 to 36 times more powerful than carbon dioxide in raising the
Earth's surface temperature when measured over a 100-year time scale
and about 84 times more powerful when measured over a 20-year
timeframe.
    Industrial sources emit GHG in great quantities, and methane
emissions from all segments of the Oil and Gas Industry are
especially significant in their contribution to overall emissions
levels and surface temperature rise. . . .
    In fact, with the congressional adoption of this resolution, we
encourage EPA to strengthen the standards we reinstate and
aggressively regulate methane and other pollution emissions from
new, modified, and existing sources throughout the production,
processing, transmission, and storage segments of the Oil and Gas
Industry under section 111 of the Clean Air Act.
    The welfare of our planet and of our communities depend on it.

Senate Statement at S2283.
    Turning to the 2020 Policy Rule, the House Report rejected the
rule's position that the methane NSPS were redundant to the VOC NSPS,
and therefore unnecessary. House Report at 7. The House Report rejected
the 2020 Policy Rule's ``redundancy'' rationale, explaining that in the
2016 NSPS OOOOa, the EPA had consciously ``formulated [the two sets of
NSPS so as] to impose the same requirements for the same types of
equipment,'' and that the co-extensive nature of the NSPS mean that
``sources could comply with them in an efficient manner,'' not that the
NSPS were redundant. Id. The House report further rejected the 2020
Policy Rule's assertion that it need not take into account the
implications of regulating methane for existing sources, calling it a
``fundamental misinterpretation of section 111, and the critical
importance of section 111(d) in Congress [sic: Congress's] scheme.''
House Report at 8 & n. 27 (The EPA's 2020 ``misinterpretation . . . was
glaring and enormously consequential'' because it precluded regulation
of methane from existing sources). The House Report emphasized that
``existing sources emit the vast majority of methane in the oil and gas
sector,'' id. and pointed out that while the 2016 NSPS ``covered
roughly 60,000 wells constructed since 2015[, t]here are more than
800,000 existing wells in operation. . . .''Id. n.28.
    The Senate Statement also made clear that the resolution of
disapproval ``reaffirms that the CAA requires EPA to act to protect
Americans from sources of . . . methane,'' ``reject[s] the [2020 Policy
Rule's] misguided legal interpretations,'' and ``clarifies our intent
that EPA should regulate methane . . . from all oil and gas sources. .
. .'' Senate Statement at 2283.
c. Regulation of Methane--Significant Contribution Finding
    The legislative history was explicit that, contrary to the EPA's
statutory interpretation in the 2020 Policy Rule, section 111 of the
CAA, by its plain language, does not require, or authorize the EPA to
require, as a prerequisite for promulgating NSPS for a particular air
pollutant from a listed source category, a separate finding by the EPA
that emissions of the pollutant from the source category contribute
significantly to dangerous air pollution. House Report at 9-10; Senate
Statement at S2283. The House Report rejected this interpretation. It
made clear that instead, consistent with the EPA's statements in the
2016 NSPS OOOOa and the plain language of the CAA, section 111 requires
that the agency must make a SCF only at ``the first step of the
process, the listing of the source category,'' and further requires
that this finding ``must apply to the impact of the `category of
sources' on `air pollution' '' as opposed to individual pollutants.
House Report at 9. The House Report went on to explain that this
provision ``does not require the EPA to make a SCF for individual air
pollutants emitted from the source category, nor does it even mention
individual air pollutants,'' id. at 9. The House Report went on to
explain in some detail the meaning that the EPA should give to section
111, which, consistent with the 2016 Rule, is that section 111
authorizes the agency to promulgate NSPS for particular pollutants as
long as it has a rational basis for doing so. House Report at 8-9. The
report explained that after the EPA lists a source category for
regulation under section 111(b)(1)(A), it is required to determine for
which pollutants to promulgate NSPS, and this determination is subject
to CAA section 307(d)(9)(A) (``In the case of review of any [EPA]
action . . . to which [section 307(d)] applies, the court may reverse
any such action found to be arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law'').\156\ The Report
further noted that the U.S. Supreme Court affirmed this interpretation
in American Electric Power Co. Inc. v. Connecticut, 564 U.S. 410, 427
(2011) (American Electric Power) (``EPA may not decline to regulate
carbon-dioxide emissions from powerplants if refusal to act would be
`arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law'' (citing section 307(d)(9)(A)). The Report went on
to note that the 2016 NSPS OOOOa had stated that the EPA was authorized
to promulgate a NSPS for a particular pollutant if it had a ``rational
basis'' for doing so, and the Report emphasized that this ``rational
basis'' standard is ``fully consistent with'' the arbitrary and
capricious standard under section 307(d)(9)(A) of the CAA. House Report
at 9.\157\
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    \156\ Section 307(d) applies to the promulgation of NSPS, under
section 307(d)(1)(C).
    \157\ The House Report dismissed the 2020 Policy Rule's
criticism of the rational basis test as unduly vague by noting that
a court could enforce it. House Report at 11.
---------------------------------------------------------------------------

    The House Report further explained that, in contrast, the 2020
Policy Rule's statutory interpretation of section 111 to require a
pollutant-specific SCF as a predicate for promulgating NSPS was
foreclosed by ``the plain language of'' section 111--noting that this
interpretation ignored the distinction between the text of section 111
and that of other CAA provisions which do explicitly require a
pollutant-specific cause-or-contribution finding. Id. at 10. Moreover,
the Report added, ``[g]iven that the statute is not ambiguous, the EPA
cannot interpret section 111 to authorize the EPA to exercise
discretion to require . . . a pollutant-specific SCF as a predicate for
promulgating a [NSPS] for the pollutant.'' Id. at 10. The Report went
on to note several other supports for its statutory interpretation,
including the legislative history of section 111. Id. at 10-11.
    The Senate Statement took the same approach, stating: ``we do not
intend that section 111 of [the] CAA requires EPA to make a pollutant-
specific

significant contribution finding before regulating emissions of a new
pollutant from a listed source category. . . .'' Senate Statement at
S2283.\158\
---------------------------------------------------------------------------

    \158\ Both the House Report and the Senate Statement recognized
that EPA could, if it chose to, make a finding that a particular
pollutant contributes significantly to dangerous air pollution, in
order, for example, to inform the public about the risks of a
pollutant. House Report at 10, Senate Statement at S2283. However,
the House Report made clear that ``it is the rational basis
determination as to the risk a pollutant poses to endangerment of
human health or welfare [and not any such SCF] that remains the
statutory basis for the EPA's action.'' House Report at 10.
---------------------------------------------------------------------------

    The House Report also expressly disapproved of the 2020 Policy
Rule's interpretation of section 111 to require that the SCF must be
based on some ``identif[ied] standard or established set of criteria,''
and not the facts-and-circumstances approach that EPA has used in
making that finding for the source category. House Report at 10-11; see
2020 Policy Rule at 57038. The Report stated, ``[i]t is fully
appropriate for EPA to exercise its discretion to employ a facts-and-
circumstances approach, particularly in light of the wide range of
source categories and the air pollutants they emit that EPA must
regulate under section 111.'' House Report at 11.
    Finally, in reinstating the methane regulations, the legislative
history for the CRA resolution clearly expressed the intent that the
EPA proceed with regulation of existing sources. The House Report was
explicit in this regard, stating that ``[p]assage of the resolution of
disapproval indicates Congress' support and desire to immediately
reinstate . . . EPA's statutory obligation to regulate existing oil and
natural gas sources under [CAA] section 111(d).'' House Report at 3;
see id. at 11-12. The report added that upon enactment of the
resolution of disapproval, ``the Committee strongly encourages the EPA
to take swift action to . . . fulfill its statutory obligation to issue
existing source guidelines under [CAA] section 111(d).'' Id. The Senate
Statement was substantially similar. Senate Statement at S2283 (``By
adopting this resolution of disapproval, it is our view that Congress
reaffirms that the CAA requires EPA to act to protect Americans from
sources of climate pollution like methane, which endangers the public's
health and welfare. . . . [W]e intend that [CAA] section 111 . . .
obligates and provides EPA with the legal authority to regulate
existing sources of methane emissions in [the Crude Oil and Natural Gas
source category].'').

B. Effect of Congress's Disapproval of the 2020 Policy Rule

    Under the CRA, the disapproved 2020 Policy Rule is ``treated as
though [it] had never taken effect.'' 5 U.S.C. 801(f). As a result, the
preceding regulation, the 2016 NSPS OOOOa rule, was automatically
reinstated, and treated as though it had never been revised by the 2020
Policy Rule. Moreover, the CRA bars EPA from promulgating ``a new rule
that is substantially the same as'' a disapproved rule. 5 U.S.C.
801(b)(2), for example, a rule that deregulates methane emissions from
the production and processing sectors or deregulates the transmission
and storage sector entirely.
    The legislative history of the CRA gives further content to
Congress's disapproval and the bar on substantially similar rulemaking.
The legislative history rejected the EPA's statutory interpretations of
section 111 in the 2020 Policy Rule and endorsed the legal
interpretations contained in the 2016 NSPS OOOOa rule. Specifically,
Congress expressed its intent that the transmission and storage segment
be included in the source category, that sources in that segment remain
subject to NSPS, and that all oil and gas sources be subject to NSPS
for methane emissions.\159\
---------------------------------------------------------------------------

    \159\ See generally ``Federal-State Unemployment Compensation
Program; Establishing Appropriate Occupations for Drug Testing of
Unemployment Compensation Applicants Under the Middle-Class Tax
Relief and Job Creation Act of 2012: Final Rule,'' 84 FR 53037,
53083 (Oct. 4, 2019) (citing legislative history of CRA resolution
disapproving prior rule in explaining scope of new rule).
---------------------------------------------------------------------------

    The EPA is now proceeding to propose additional requirements to
reduce emissions from oil and gas sources, consistent with the
statutory factors the EPA is required to consider under section 111 and
with section 111's overarching purpose of protecting against pollution
that endangers health and welfare. While the reinstatement of the 2016
Rule through the CRA joint resolution of disapproval provides the
predicate for this action, the EPA notes that, for the reasons
discussed next, the EPA would reject the positions concerning legal
interpretations taken in the 2020 Policy Rule and reaffirm the
positions the Agency took in the 2016 Rule even absent the CRA
resolution. The EPA provides this information for the purposes of
informing the public and is not re-opening these positions for comment.

C. Affirming the Legal Interpretations in the 2016 NSPS OOOOa Rule

    The Agency has reviewed all of the information and analyses in the
2016 NSPS OOOOa and 2020 Policy Rule, and fully reaffirms the positions
it took in the 2016 Rule and rejects the positions taken in the 2020
Policy Rule.\160\ For this rulemaking, the EPA has reviewed its prior
actions, along with newly available information, including recent
information concerning the dangers posed by climate change and the
impact of methane emissions, as described in section III above. Based
on this review, the EPA affirms the statutory interpretations
underlying the 2016 Rule and rejects the different interpretations
informing the congressionally voided 2020 Policy Rule. This section
explains the EPA's views. These views are confirmed by Congress's
reasoning in the legislative history of the CRA resolution and so, for
convenience, this section occasionally refers to that legislative
history.
---------------------------------------------------------------------------

    \160\ Under F.C.C. v. Fox Television Stations, Inc., 556 U.S.
502 (2009), an agency may revise its policy, but must demonstrate
that the new policy is permissible under the statute and is
supported by good reasons, taking into account the record of the
previous rule. To the extent that this standard applies in this
action--where Congress has disapproved the 2020 Policy Rule--the EPA
believes the explanations provided here satisfy the standard.
---------------------------------------------------------------------------

    In particular, the EPA reaffirms that the Crude Oil and Natural Gas
Source Category appropriately includes the transmission and storage
segment, along with the production and processing segments. The EPA has
broad discretion in determining the scope of the source category, and
the 2016 Rule correctly identified the most important aspect of the
industry, which is the interrelatedness of the segments and their
common purpose in completing the multi-step process to prepare natural
gas for marketing. 81 FR 35832, June 3, 2016. The 2020 Policy Rule's
objection that the chemical composition of natural gas changes as it
moves from the production and processing segments to the transmission
and storage segment, 85 FR 57028, September 14, 2020, misses the mark
because in every segment methane predominates and the refining of
natural gas in the processing segment, which is what changes its
chemical composition, is appropriately viewed simply as one of the
steps in the marketing of the gas. Further, while it is true that some
of the equipment in each segment differs from the equipment in the
other segments, as the 2020 Policy Rule pointed out, 85 FR 57029
(September 14, 2020), that too simply results from the fact that the
segments represent different steps in the process of preparing natural
gas for marketing. The more salient fact is that most of the polluting
equipment, such as storage

vessels, pneumatic pumps, and compressors, are found throughout the
segments and emit the same pollutants that can be controlled by the
same techniques and technologies, 81 FR 35832 (June 3, 2016),
underscoring the interrelated functionality of the segments and the
appropriateness of regulating them together as part of a single source
category. The scope of the source category as defined in 2016, and
proposed to be affirmed in this rule, is well within the reasonable
bounds of the EPA's past practice in defining source categories, which
sometimes even contain sources that are located in multiple distinct
industries. See 40 CFR part 60, subpart Db (industrial-commercial-
institutional steam generating units), 40 CFR part 60, subpart IIII
(stationary compression ignition internal combustion engines). In this
regard, the House Report correctly noted that ``even the presence of
large distinctions in equipment type and emissions profile across two
segments would not necessarily preclude EPA from regulating those
segments as a single source category, so long as the EPA could identify
some meaningful relationship between them,'' House Report at 7, as the
EPA did in the 2016 Rule. Thus, the 2020 Policy Rule failed to
articulate appropriate reasons to change the scope of the source
category from what the EPA determined in the 2016 Rule. Having properly
identified the scope of the source category as including the
transmission and storage segment in the 2016 Rule, the EPA lawfully
promulgated NSPS for sources in that segment.
    The EPA also affirms that the 2016 Rule established an appropriate
basis for promulgating methane NSPS from oil and gas sources, and that
the 2020 Policy Rule erred on all grounds in rescinding the methane
NSPS. The importance of taking action at this time, in accordance with
the requirements of CAA section 111, to reduce the enormous amount of
methane emissions from oil and gas sources, in light of the impacts on
the climate of this pollution, cannot be overstated. As stated in
section I, the Oil and Natural Gas Industry is the largest industrial
emitter of methane in the U.S. Human emissions of methane, a potent
GHG, are responsible for about one third of the warming due to well-
mixed GHGs, the second most important human warming agent after carbon
dioxide. According to the IPCC, strong, rapid, and sustained methane
reductions are critical to reducing near-term disruption of the climate
system and a vital complement to CO2 reductions critical in
limiting the long-term extent of climate change and its destructive
impacts.\161\ The EPA previously determined, in the 2016 NSPS OOOOa
rule, both that it had a rational basis to regulate methane emissions
from the source category, and, in the alternative, that methane
emissions from the Crude Oil and Natural Gas Source Category,
contribute significantly to dangerous air pollution. 81 FR 35842-43,
(June 3, 2016). The EPA is not reopening those determinations for
comment in the present rulemaking.
---------------------------------------------------------------------------

    \161\ See preamble section III for further discussion on the
Crude Oil and Natural Gas Emissions and Climate Change, including
discussion of the GHGs, VOCs and SO2 Emissions on Public
Health and Welfare.
---------------------------------------------------------------------------

    Contrary to the statements in the 2020 Policy Rule, the methane
NSPS promulgated in the 2016 Rule cannot be said to be redundant with
the VOC NSPS and therefore unnecessary. The large contribution of
methane emissions from the source category to dangerous air pollution
driving the grave and growing threat of climate change means that, in
the agency's judgment, it would be highly irresponsible and also
arbitrary and capricious under CAA section 307(d)(9)(A) for the EPA to
decline to promulgate NSPS for methane emissions from the source
category. See American Electric Power, 564 U.S. at 426-27. The fact
that the EPA designed the methane NSPS so that sources could comply
with them efficiently, through the same actions that the sources needed
to take to comply with the VOC NSPS, did not thereby create redundancy.
Further, the fact that methane NSPS but not the VOC NSPS trigger the
regulatory requirements for existing sources makes clear that the two
sets of requirements are not redundant. Indeed, if EPA had only
regulated VOCs, it would only have been authorized to regulate new and
modified sources, which comprise a small subset of polluting sources.
By contrast, because the 2016 Rule also regulated methane, EPA was
authorized and obligated to regulate hundreds of thousands of
additional ``existing'' sources that comprise the vast majority of
polluting sources. Accordingly, methane regulation was not
``redundant'' of VOC regulation. The 2020 Policy Rule's contrary
position was based on a misinterpretation of CAA section 111 which
overlooked that the provision integrates requirements for new and
existing sources. See Nat'l Lime Ass'n v. EPA, 627 F.2d 416, 433 n.48
(D.C. Cir. 1980) (CAA section 111(b)(1)(A) listing of a source category
is based on emissions from new and existing sources).
    The EPA also reaffirms the 2016 Rule's statutory interpretation
that the EPA is authorized to promulgate a NSPS for an air pollutant
under CAA section 111(b)(1)(B) in a situation in which the EPA has
previously determined that the source category causes or contributes
significantly to dangerous air pollution and where the EPA has a
rational basis for regulating the particular air pollutant in question
that is emitted by the source category. 81 FR 35842 (June 3, 2016). The
2016 Rule noted the precedent in prior agency actions for the position
that--following the listing of a source category--the EPA need provide
only a rational basis for its exercise of discretion for which
pollutants to regulate under section 111(b)(1)(B). See id. (citing
National Lime Assoc. v. EPA, 627 F.2d 416, 426 & n.27 (D.C. Cir. 1980)
(court discussed, but did not review, the EPA's reasons for not
promulgating standards for NOX, SO2, and CO from
lime plants). In addition, the Supreme Court in American Electric Power
provided support for the rational basis statutory interpretation. 564
U.S. at 426-27 (``EPA [could] decline to regulate carbon-dioxide
emissions altogether at the conclusion of its . . . [CAA section 111]
rulemaking,'' and such a decision ``would not escape judicial review,''
under the ``arbitrary and capricious'' standard of section
307(d)(9)(A)). As the House Report noted, the EPA's rational basis
interpretation ``is fully consistent with the provision[s] of section
111 and the section 307(d)(9) `arbitrary and capricious' standard.''
House Report at 9.
    The 2020 Policy Rule correctly noted that the CAA section
111(b)(1)(B) requirement that the EPA ``shall promulgate . . .
standards [of performance]'' for air pollutants, coupled with the CAA
section 111(a)(1) definition for ``standard of performance'' as, in
relevant part, a ``standard for emissions of air pollutants,'' does not
by its terms require that EPA promulgate NSPS for every air pollutant
from the source category. But the rule erred in seeking to graft the
CAA section 111(b)(1)(A) requirement for a SCF into CAA section
111(b)(1)(B). The language of CAA section 111(b)(1)(A) is clear: It
requires the EPA Administrator to ``include a category of sources in
[the list for regulation] if in his judgment it causes, or contributes
to, air pollution which may reasonably be anticipated to endanger
public health or welfare.'' (Emphasis added.) Congress thus specified
that the required SCF is made

on a category basis, not a pollutant-specific basis, and that once that
finding is made (as it was for the Crude Oil and Natural Gas source
category in 1979), the EPA may establish standards for pollutants
emitted by the source category. In determining for which air pollutants
to promulgate standards of performance, the EPA must act rationally,
which, as noted above, essentially must ensure that the action does not
fail the ``arbitrary and capricious'' standard under CAA section
307(d)(9)(A). The 2020 Policy Rule's objections to the rational basis
standard on grounds that is ``vague and not guided by any statutory
criteria,'' 85 FR 57034 (September 14, 2020), is incorrect. In making a
rational basis determination, the EPA has considered the amount of the
air pollutant emitted by the source category, both in absolute terms
and by drawing comparisons, as well as the availability of control
technologies. See National Lime Assoc. v. EPA, 627 F.2d 416, 426 & n.27
(D.C. Cir. 1980) (discussing EPA's reasons for not promulgating
standards for NOX, SO2 and CO from lime plants);
80 FR 64510, 64530 (October 23, 2015) (rational basis determination for
GHGs from fossil fuel-fired electricity generating power plants); 73 FR
35838, 35859-60 (June 24, 2008) (providing reasons why the EPA was not
promulgating GHG standards for petroleum refineries). Courts routinely
review rules under the ``arbitrary and capricious'' standard, as noted
in the House Report, at 11.
    When the EPA is required to make an endangerment finding, the EPA
also affirms that that finding should be made in consideration of the
particular facts and circumstances, not a predetermined threshold.
Accordingly, the EPA rejects the 2020 Policy Rule's position to the
contrary. Section 111(b)(1)(A) of the CAA does not require that the SCF
for the source category be based on ``established criteria'' or
``standard or threshold.'' See Coal. for Responsible Regulation, Inc.
v. EPA, 684 F.3d 102, 122-23 (D.C. Cir. 2012) (``the inquiry [into
whether an air pollutant endangers] necessarily entails a case-by-case,
sliding-scale approach. . . . EPA need not establish a minimum
threshold of risk or harm before determining whether an air pollutant
endangers''). During the 50 years that it has made listing decisions,
the EPA has always relied on the individual facts and circumstances.
See Alaska Dep't of Envtl. Conservation, 540 U.S. 461, 487 (2004)
(explaining, in a case under the CAA, ``[w]e normally accord particular
deference to an agency interpretation of longstanding duration''
(internal quotation marks omitted) (citing Barnhart v. Walton, 535 U.S.
212, 220 (2002)). This approach is appropriate because Congress
intended that CAA section 111 apply to a wide range of source
categories and pollutants, from wood heaters to emergency backup
engines to petroleum refineries. In that context, it reasonable to
interpret section 111 to allow EPA the discretion to determine how best
to assess significant contribution and endangerment based on the
individual circumstances of each source category. On this point, as
well, the EPA is in full agreement with the statements in the House
Report. House Report at 9-10.
    Finally, under CAA section 111(d)(1), once the EPA promulgates NSPS
for certain air pollutants, including GHGs, the EPA is required to
promulgate regulations, which the EPA terms EG, 40 CFR 60.22a, that in
turn require States to promulgate standards of performance for existing
sources of those air pollutants. The EPA agrees with the House Report
and Senate statement that it is imperative to regulate methane
emissions from the existing oil and gas sources that comprise the vast
majority of polluting sources expeditiously under the authority of CAA
section 111(d) and is proceeding with the process to do so in this
rulemaking by publishing proposed EG. See section III.B.2. In 2019, the
GHGI estimates for oil and natural gas production, and natural gas
processing and transmission and storage segments that methane emissions
equate to 182 MMT CO2 Eq.\162\ In the U.S. the EPA has
identified over 15,000 oil and gas owners and operators, around 1
million producing onshore oil and gas wells, about 5,000 gathering and
boosting facilities, over 650 natural gas processing facilities, and
about 1,400 transmission compression facilities.
---------------------------------------------------------------------------

    \162\ The 100-year GWP value of 25 for methane indicates that
one ton of methane has approximately as much climate impact over a
100-year period as 25 tons of CO2. The most recent IPCC
AR6 assessment has estimated a slightly larger 100-year GWP of
methane of almost 30 (specifically, either 27.2 or 29.8 depending on
whether the value includes the CO2 produced by the
oxidation of methane in the atmosphere). As mentioned earlier,
because methane has a shorter lifetime than CO2, the
emissions of a ton of methane will have more impact earlier in the
100-year timespan and less impact later in the 100-year timespan
relative to the emissions of a 100-year GWP-equivalent quantity of
CO2. See preamble section III for further discussion on
the Crude Oil and Natural Gas Emissions and Climate Change,
including discussion of the GHGs, VOCs and SO2 Emissions
on Public Health and Welfare.
---------------------------------------------------------------------------

    Some stakeholders have raised issues concerning the scope of
pollutants subject to CAA section 111(d) by arguing that the exclusion
in CAA section 111(d) for HAP covers not only those pollutants listed
for regulation under CAA section 112, but also precludes the EPA from
regulating a source category under CAA section 111(d) for any pollutant
if that source category has been regulated under CAA section 112. The
EPA agrees with its longstanding legal interpretation spanning multiple
Administrations that the 111(d) exclusion does not preclude the agency
from regulating a non-HAP pollutant from a source category under
section 111(d) even if that source category is regulated under section
112. See American Lung Ass'n v. EPA, 980 F.3d 914, 980 (D.C. Cir. 2019)
(referring to ``EPA's three-decade-old . . . reading of the statutory
amendments''), petition for cert. pending No. 20-1530 (filed April 29,
2021); 70 FR 15994, 16029 (March 29, 2005) (Clean Air Mercury Rule); 80
FR 64662, 64710 (Oct. 23, 2015) (Clean Power Plan); 84 FR 32520 (July
8, 2019) (Affordable Clean Energy Rule). The House Report agreed with
this interpretation, noting that the contrary position is flawed
because it ignores the overall statutory structure that Congress
created in the CAA and would create regulatory gaps in which the EPA
would not be able to regulate existing sources for some pollutants
(such as methane) under CAA section 111(d) if those sources (but not
pollutants) were already regulated for different pollutants under CAA
section 112. House Report at 11-12. Moreover, the D.C. Circuit recently
considered this precise issue and held that the EPA may both regulate a
source category for HAP under CAA section 112 and regulate that same
source category for different pollutants under CAA section 111(d). Am.
Lung Assoc., 985 F.3d at 977-988. Accordingly, both Congress and the
court have come to the same conclusion after reviewing the statutory
language, a conclusion that is aligned with the EPA's longstanding
position. We therefore proceed in the proposal to propose EGs for
existing sources in the oil and gas source category.

IX. Overview of Control and Control Costs

A. Control of Methane and VOC Emissions in the Crude Oil and Natural
Gas Source Category--Overview

    As described in this action, the EPA reviewed the standards in the
2016 NSPS OOOOa pursuant to CAA section 111(b)(1)(B). Based on this
review, the EPA is proposing revisions to the standards for a number of
affected facilities to reflect the updated BSER for those affected
facilities. Where our analyses show that the BSER for an

affected facility remains the same, the EPA is proposing to retain the
current standard for that affected facility. In addition to the actions
on the standards in the 2016 NSPS OOOOa described in this section, the
EPA is proposing standards for GHGs (in the form of limitation on
methane) and VOCs for a number of new sources that are currently
unregulated. The proposed NSPS OOOOb would apply to new, modified, and
reconstructed emission sources across the Crude Oil and Natural Gas
source category for which construction, reconstruction, or modification
is commenced after November 15, 2021.
    Further, pursuant to CAA section 111(d), the EPA is proposing EG,
which include presumptive standards for GHGs (in the form of
limitations on methane) (designated pollutant), for certain existing
emission sources across the Crude Oil and Natural Gas source category
in the proposed EG OOOOc. While the proposed requirements in NSPS OOOOb
would apply directly to new sources, the proposed requirements in EG
OOOOc are for States to use in the development of plans that establish
standards of performance that will apply to existing sources
(designated facilities).

B. How does EPA evaluate control costs in this action?

    Section 111 of the CAA requires that the EPA consider a number of
factors, including cost, in determining ``the best system of emission
reduction . . . adequately demonstrated.'' CAA section 111(a)(1). The
D.C. Circuit has long recognized that ``[CAA] section 111 does not set
forth the weight that [ ] should [be] assigned to each of these
factors;'' therefore, ``[the court has] granted the agency a great
degree of discretion in balancing them.'' Lignite Energy Council v.
EPA, 198 F.3d 930, 933 (D.C. Cir. 1999) (``Lignite Energy Council'').
In Essex Chemical Corp. v. Ruckelshaus, 486 F.2d 427 (D.C. Cir. 1973)
(``Essex Chemical''), the court noted that ``it is not unlikely that
the industry and the EPA will disagree on the economic costs of various
control techniques'' and that it ``has no desire or special ability to
settle such a dispute.'' Id. at 437. Rather, the court focused its
review on ``whether the standards as set are the result of reasoned
decision-making.'' Id. at 434. A standard that ``is the result of the
exercise of reasoned discretion by the Administrator [ ] cannot be
upset by this Court.'' Id. at 437.
    As noted, CAA section 111 requires that the EPA consider cost in
determining such system (i.e., ``BSER''), but it does not prescribe any
criteria for such consideration. The courts have recognized that the
EPA has ``considerable discretion under [CAA] section 111,'' Lignite
Energy Council, 198 F.3d at 933, on how it considers cost under CAA
section 111(a)(1). For example, in Essex Chemical, the D.C. Circuit
stated that to be ``adequately demonstrated,'' the system must be
``reasonably reliable, reasonably efficient, and . . . reasonably
expected to serve the interests of pollution control without becoming
exorbitantly costly in an economic or environmental way.'' 486 F.2d at
433. The court has reiterated this limit in subsequent case law,
including Lignite Energy Council, in which it stated: ``EPA's choice
will be sustained unless the environmental or economic costs of using
the technology are exorbitant.'' 198 F.3d at 933. In Portland Cement
Association v. Train, the court elaborated by explaining that the
inquiry is whether the costs of the standard are ``greater than the
industry could bear and survive.'' \163\ 513 F.2d 506, 508 (D.C. Cir.
1975). In Sierra Club v. Costle, the court provided a substantially
similar formulation of the cost factor: ``EPA concluded that the
Electric Utilities' forecasted cost was not excessive and did not make
the cost of compliance with the standard unreasonable. This is a
judgment call with which we are not inclined to quarrel.'' 657 F.2d
298, 343 (D.C. Cir. 1981). We believe that these various formulations
of the cost factor--``exorbitant,'' ``greater than the industry could
bear and survive,'' ``excessive,'' and ``unreasonable''--are
synonymous; the D.C. Circuit has made no attempt to distinguish among
them. For convenience, in this rulemaking, we will use the term
``reasonable'' to describe that our evaluation of costs is well within
the boundaries established by this case law.
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    \163\ The 1970 Senate Committee Report on the Clean Air Act
stated: ``The implicit consideration of economic factors in
determining whether technology is `available' should not affect the
usefulness of this section. The overriding purpose of this section
would be to prevent new air pollution problems, and toward that end,
maximum feasible control of new sources at the time of their
construction is seen by the committee as the most effective and, in
the long run, the least expensive approach.'' S. Comm. Rep. No. 91-
1196 at 16.
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    In evaluating whether the cost of a control is reasonable, the EPA
considers various costs associated with such control, including capital
costs and operating costs, and the emission reductions that the control
can achieve. As discussed further below, the agency considers these
costs in the context of the industry's overall capital expenditures and
revenues. Cost-effectiveness analysis is also a useful metric, and a
means of evaluating whether a given control achieves emission reduction
at a reasonable cost. A cost-effectiveness analysis also allows
comparisons of relative costs and outcomes (effects) of two or more
options. In general, cost-effectiveness is a measure of the outcomes
produced by resources spent. In the context of air pollution control
options, cost-effectiveness typically refers to the annualized cost of
implementing an air pollution control option divided by the amount of
pollutant reductions realized annually. A cost-effectiveness analysis
is not intended to constitute or approximate a benefit-cost analysis in
which monetized benefits are compared to costs, but rather provides a
metric to compare the relative cost and emissions impacts of various
control options.
    The estimation and interpretation of cost-effectiveness values is
relatively straightforward when an abatement measure is implemented for
the purpose of controlling a single pollutant, such as for the controls
included as presumptive standards in the proposed EG OOOOc to address
methane emissions from existing sources in the Crude Oil and Natural
Gas source category. In other circumstances, air pollution reduction
programs require reductions in emissions of multiple pollutants, as
with the NSPS for the Crude Oil and Natural Gas source category, which
regulates both GHG and VOC. In such cases, multipollutant controls
(controls that achieve reductions of both pollutants through the same
techniques and technologies) may be employed, and consequently, there
is a need for determining cost-effectiveness for a control option
across multiple pollutants (or classes of multiple pollutants).
    During the rulemaking for NSPS OOOOa, we evaluated a number of
approaches for considering the cost-effectiveness of the available
multipollutant controls for reducing both methane and VOC emissions.
See 80 FR 56593, 56616 (September 18, 2015). In that rulemaking, we
used two approaches for considering the cost-effectiveness of control
options that reduce both VOC and methane emissions; we are proposing to
use these same two cost-effectiveness approaches, along with other
factors discussed further below, in considering the cost of requiring
control for the proposed NSPS OOOOb. One approach, which we refer to as
the ``single pollutant cost-effectiveness approach,'' assigns all costs
to the emission reduction of one pollutant and zero to all other
concurrent reductions. If the cost is reasonable for reducing any of
the

targeted pollutants alone, the cost of such control is clearly
reasonable for the concurrent emission reduction of all the other
regulated pollutants because they are being reduced at no additional
cost. While this approach assigns all costs to only a portion of the
emission reduction and thus may overstate the cost for that assigned
portion, it does not overstate the overall cost. Instead, it
acknowledges that the reductions of the other regulated pollutant are
intended as opposed to incidental. This approach is simple and
straightforward in application: If the multipollutant control is cost
effective for reducing emissions of either of the targeted pollutants,
it is clearly cost effective for reducing all other targeted emissions
that are being achieved simultaneously.
    A second approach, which we term for the purpose of this rulemaking
a ``multipollutant cost-effectiveness approach,'' apportions the
annualized cost across the pollutant reductions addressed by the
control option in proportion to the relative percentage reduction of
each pollutant controlled. In the case of the Crude Oil and Natural Gas
source category, both methane and VOC are reduced in equal proportions,
relative to their respective baselines by the multipollutant control
option (i.e., where control is 95 percent reduction, methane and VOC
are both simultaneously reduced by 95 percent by the multipollutant
control). As a result, under the multipollutant cost-effectiveness
approach, half of the control costs are allocated to methane and the
other half to VOC. Under this approach, control is cost effective if it
is cost effective for both VOC and methane.
    We believe that both the single pollutant and multipollutant cost-
effectiveness approaches discussed above are appropriate for assessing
the reasonableness of the multipollutant controls considered in this
action for new sources. As such, in the individual BSER analyses in
section XII below, if a device is cost-effective under either of these
two approaches, we find it to be cost-effective. The EPA has considered
similar approaches in the past when considering multiple pollutants
that are controlled by a given control option.\164\ The EPA recognizes,
however, not all situations where multipollutant controls are applied
are the same, and that other types of approaches might be appropriate
in other instances.
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    \164\ See, e.g., 73 FR 64079-64083 and EPA Document I.D. EPA-HQ-
OAR-2004-0022-0622, EPA-HQ-OAR-2004-0022-0447, EPA-HQ-OAR- 2004-
0022-0448.
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    As mentioned above, as part of its consideration of control costs
in the individual BSER analyses in Section XII, the EPA evaluated cost-
effectiveness using the single pollutant and multipollutant cost-
effectiveness approaches. We estimated the cost-effectiveness values of
the proposed control options using available information, including
various studies, information submitted in previous rulemakings from the
affected industry, and information provided by small businesses. The
EPA provides the cost effectiveness estimates for reducing VOC and
methane emissions for various control options considered in section
XII. As discussed in that section, the EPA finds cost-effectiveness
values up to $5,540/ton of VOC reduction to be reasonable for controls
that we have identified as BSER in this proposal. These VOC values are
within the range of what the EPA has historically considered to
represent cost effective controls for the reduction of VOC emissions,
including in the 2016 NSPS, based on the Agency's long history of
regulating a wide range of industries. With respect to methane, the EPA
finds the cost-effectiveness values up to $1,800/ton of methane
reduction to be reasonable for controls that we have identified as BSER
in this proposal. Unlike VOC, the EPA does not have a long regulatory
history to draw upon in assessing the cost effectiveness of controlling
methane, as the 2016 NSPS OOOOa was the first national standard for
reducing methane emissions. However, as explained below, the EPA has
previously determined that methane cost-effectiveness values for the
controls identified as BSER for the 2016 NSPS OOOOa, which range up to
$2,185/ton of methane reduction, represent reasonable costs for the
industry as a whole to bear; and because the cost-effectiveness
estimates for the proposed standards in this action are comparable to
the cost-effectiveness values estimated for the controls that served as
the basis (i.e., BSER) for the standards in the 2016 NSPS OOOOa, we
consider the proposed standards to also be cost effective and
reasonable.
    The BSER determinations from the 2016 NSPS OOOOa also support the
EPA's conclusion that the cost-effectiveness values associated with the
proposed standards in this action are reasonable. As mentioned above,
for 2016 NSPS OOOOa, the highest estimate that the EPA considered cost
effective for methane reduction was $2,185/ton, which was the estimate
for converting a natural gas driven diaphragm pump to an instrument air
pump at a gas processing plant. 165 166 80 FR 56627; see
also, NSPS OOOOa Final TSD at 93, Table 6-7. The EPA estimated that the
cost-effectiveness of this option, a common practice at gas processing
plants, could be up to $2,185/ton of methane reduction under the single
pollutant cost-effectiveness approach and $1,093/ton under the
multipollutant cost effectiveness approach; the EPA found ``the control
to be cost effective under either approach.'' Id. Accordingly, the EPA
finalized requirements in the 2016 NSPS OOOOa that require zero
emissions from diaphragm pumps at gas processing plants, consistent
with the Agency's BSER determination.
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    \165\ As discussed in section X.A, the EPA incorrectly stated in
the 2020 Technical Rule that $738/ton of methane reduction was the
highest cost-effectiveness value that the EPA determined to be
reasonable for methane reduction in the 2016 NSPS OOOOa.
    \166\ While in that rulemaking the EPA found quarterly
monitoring of fugitive emissions at well sites not cost effective at
$1,960/ton of methane reduced using the single pollutant approach
(and $980 using the multi-pollutant approach), the EPA emphasized
that this conclusion was not intended to ``preclude the EPA from
taking a different approach in the future including requiring more
frequent monitoring (e.g., quarterly).'' 81 FR 35855-6 referencing
Background Technical Support Document for the New Source Performance
Standards 40 CFR part 60 subpart OOOOa (May 2016), at 49, Table 4-11
and 52, Table 4-14. Further, several states have issued regulations
and industry has voluntarily taken steps to reduce emissions. This
combined with greater knowledge and understanding of the industry
leads us to find these values cost-effective. As discussed in this
section IX.B, cost-effectiveness is one--not the only--factor in
EPA's consideration of control costs. In fact, in this action, the
EPA is proposing different monitoring frequencies based on well site
baseline emissions, even though the EPA found quarterly monitoring
to be cost effective for all well sites. Please see section XII.A
for a detailed discussion on this proposal.
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    The 2016 NSPS OOOOa also requires 95 percent methane and VOC
emission reduction from wet-seal centrifugal compressors. The BSER for
this standard was capturing and routing the emissions to a control
combustion device, a widely used control in the oil and gas sector for
reducing emissions from storage vessels and pumps, in addition to
centrifugal compressors. 80 FR 56620. The EPA estimated cost-
effectiveness values of up to $1,093/ton of methane reduction for this
option. See NSPS OOOOa Final TSD at 114, Table 7-9. With respect to
other controls identified as BSER in the 2016 NSPS OOOOa, their cost-
effectiveness estimates were comparable to or well below the estimates
from the 2016 NSPS OOOOa rulemaking discussed above. In light of this,
and because sources have been complying with the 2016 NSPS OOOOa for
years, we believe that the cost-effectiveness values for the controls

identified as BSER for the 2016 NSPS OOOOa, which range up to $2,185/
ton of methane reduction, represent reasonable, rather than excessive,
costs for the industry as a whole to bear. As shown in the individual
BSER analyses in Section XII and the NSPS OOOOb and EG OOOOc TSD for
this proposal, the cost-effectiveness values for the proposed standards
in this action are comparable to the cost-effectiveness values for the
standards in NSPS OOOOa. We, therefore, similarly consider the cost-
effectiveness values for the proposed standards to be reasonable. That
the proposed standards reflect the kinds of controls that many
companies and sources around the country are already implementing
underscore the reasonableness of these control measures.
    In addition to evaluating the annual average cost-effectiveness of
a control option, the EPA also considers the incremental costs
associated with increasing the stringency of the standards from one
level of control to another level of control that achieves more
emission reductions. The incremental cost of control provides insight
into how much it costs to achieve the next increment of emission
reductions through application of each increasingly stringent control
options, and thus is a useful tool for distinguishing among the effects
of more and less stringent control options. For example, during the
rulemaking for the 2012 NSPS OOOO, the EPA considered the incremental
cost effectiveness of changing the originally promulgated standards for
leaks at gas processing plants, which were based on NSPS subpart VV, to
the more stringent NSPS subpart VVa-level program. See 76 FR 52738,
52755 (August 23, 2011). The EPA generally finds the incremental cost-
effectiveness to be reasonable if it is consistent with the costs that
the Agency considers reasonable in its evaluation of annual average
cost-effectiveness.
    As shown in the NSPS OOOOb and EG OOOOc TSD for this action, the
EPA estimated control costs both with and without savings from
recovered gas that would otherwise be emitted. When determining the
overall costs of implementation of the control technology and the
associated cost-effectiveness, the EPA reasonably takes into account
any expected revenues from the sale of natural gas product that would
be realized as a result of avoided emissions that result from
implementation of a control. Such a sale would offset regulatory costs
and so should be included to accurately assess the overall costs and
the cost-effectiveness of the standard. In our analysis we consider any
natural gas that is either recovered or that is not emitted as a result
of a control option as being ``saved.'' We estimate that one thousand
standard cubic feet (Mcf) of natural gas is valued at $3.13 per
Mcf.\167\ Our cost analysis then applies the monetary value of the
saved natural gas as an offset to the control cost.\168\ This offset
applies where, in our estimation, the monetary savings of the natural
gas saved can be realized by the affected facility owner or operator
and not where the owner or operator does not own the gas and would not
likely realize the monetary value of the natural gas saved (e.g.,
transmission stations and storage facilities). Detailed discussions of
these assumptions are presented in section 2 of the RIA associated with
this action, which is in the docket.
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    \167\ This value reflects the forecasted Henry Hub price for
2022 from: U.S. Energy Information Administration. Short-Term Energy
Outlook. https://www.eia.gov/outlooks/steo/archives/may21.pdf.
Release Date: May 11, 2021.
    \168\ While the EPA presents cost-effectiveness with and without
cost savings, the BSER is determined based on the cost-effectiveness
without cost savings in all cases.
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    We also completed two additional analyses to further inform our
determination of whether the cost of control is reasonable, similar to
compliance cost analyses we have completed for other NSPS.\169\ First,
we compared the capital costs that would be incurred to comply with the
proposed standards to the industry's estimated new annual capital
expenditures. This analysis allowed us to compare the capital costs
that would be incurred to comply with the proposed standards to the
level of new capital expenditures that the industry is incurring in the
absence of the proposed standards. We then determined whether the
capital costs appear reasonable in comparison to the industry's current
level of capital spending. Second, we compared the annualized costs
that would be incurred to comply with the standards to the industry's
estimated annual revenues. This analysis allowed us to evaluate the
annualized costs as a percentage of the revenues being generated by the
industry.
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    \169\ For example, see our compliance cost analysis in
``Regulatory Impact Analysis (RIA) for Residential Wood Heaters NSPS
Revision. Final Report.'' U.S. Environmental Protection Agency,
Office of Air Quality Planning and Standards. EPA-452/R-15-001,
February 2015.
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    The EPA has evaluated incremental capital costs in a manner similar
to the analyses described above in prior new source performance
standards, and in those prior standards, the Agency's determinations
that the costs were reasonable were upheld by the courts. For example,
the EPA estimated that the costs for the 1971 NSPS for coal-fired
electric utility generating units were $19 million for a 600 MW plant,
consisting of $3.6 million for particulate matter controls, $14.4
million for sulfur dioxide controls, and $1 million for nitrogen oxides
controls, representing a total 15.8 percent increase in capital costs
above the $120 million cost of the plant.\170\ See 1972 Supplemental
Statement, 37 FR 5767, 5769 (March 21, 1972). The D.C. Circuit upheld
the EPA's determination that the costs associated with the final 1971
standard were reasonable, concluding that the EPA had properly taken
costs into consideration. Essex Chemical, 486 F. 2d at 440. Similarly,
in Portland Cement Association v. Ruckelshaus, the D.C. Circuit upheld
the EPA's consideration of costs for a standard of performance that
would increase capital costs by about 12 percent, although the rule was
remanded due to an unrelated procedural issue. 486 F.2d 375, 387-88
(D.C. Cir. 1973). Reviewing the EPA's final rule after remand, the
court again upheld the standards and the EPA's consideration of costs,
noting that ``[t]he industry has not shown inability to adjust itself
in a healthy economic fashion to the end sought by the Act as
represented by the standards prescribed.'' Portland Cement Assn. v.
Train, 513 F. 2d at 508.
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    \170\ Assuming these costs were denominated in 1971 dollars,
converting the costs from 1971 to 2019 dollars using the Gross
Domestic Product-Implicit Price Deflator, the costs for the 1971
NSPS for coal-fired electric utility generating units were $94
million for a 600 MW plant, consisting of $18 million for
particulate matter controls, $71 million for sulfur dioxide