[Federal Register Volume 84, Number 129 (Friday, July 5, 2019)]
[Rules and Regulations]
[Pages 32094-32096]
[FR Doc No: 2019-14361]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 435

[EPA-HQ-OW-2016-0598; FRL-9995-74-OW]

Decision on Supplemental Information on the Effluent Limitations
Guidelines and Standards for the Oil and Gas Extraction Point Source
Category

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notification of decision.

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SUMMARY: The Environmental Protection Agency (EPA) is providing notice
of its decision to not revise the final rule establishing pretreatment
standards for discharges of pollutants into publicly owned treatment
works (POTWs) from onshore unconventional oil and gas (UOG) extraction
facilities. In 2016, the EPA promulgated the final rule, Effluent
Limitations Guidelines and Standards for the Oil and Gas Extraction
Point Source Category (the unconventional oil and gas or UOG rule),
based on record information indicating that all facilities subject to
the rule were meeting the zero discharge of pollutants requirement in
the rule. After promulgation, the EPA received information indicating
that certain facilities subject to the final rule were not meeting the
rule's zero discharge of pollutants requirement. This notice provides
new data and information, the EPA's analyses of that data and announces
the Agency's decision to not revise the final UOG rule in response to
the remand in Pennsylvania Grade Crude Oil Coalition v. EPA, No. 16-
4064 (3rd Cir., August 31, 2017), requiring the EPA to consider further
information and take any appropriate action with regard to the final
rule.

DATES: This decision shall be considered issued for purposes of
judicial review at 1 p.m. Eastern Standard Time on July 19, 2019.
Section 509(b)(1) of the CWA, judicial review of this decision can be
had only by filing a petition for review in the U.S. Court of Appeals
within 120 days after the decision is considered issued for purposes of
judicial review.

FOR FURTHER INFORMATION CONTACT: For more information, see the EPA's
website: https://www.epa.gov/eg/unconventional-oil-and-gas-extraction-effluent-guidelines. For technical information, contact Karen Feret,
Engineering and Analysis Division (4303T), Office of Water,
Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington,
DC 20460-0001; telephone:<PHONE_NUMBER>; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this notice apply to me?

    Entities potentially affected by this action include:

------------------------------------------------------------------------
                                                       North American
                                     Example of           Industry
            Category              regulated entity     Classification
                                                    System  (NAICS) code
------------------------------------------------------------------------
Industry.......................  Crude Petroleum                  211111
                                  and Natural Gas
                                  Extraction.
Industry.......................  Natural Gas                      211112
                                  Liquid
                                  Extraction.
------------------------------------------------------------------------

B. Obtaining Copies of This Document and Related Information

    The EPA has established a docket for this action under Docket ID
No. EPA-HQ-OW-2016-0598. All documents in the docket are listed on the
https://www.regulations.gov website. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available electronically through https://www.regulations.gov.

II. Why is EPA issuing this decision?

    The EPA promulgated the UOG rule on June 28, 2016. 81 FR 41845. The
UOG rule regulates wastewater pollutants from unconventional oil and
gas extraction activities under Subpart C (Onshore Subcategory) of the
oil and gas extraction effluent guidelines. The UOG rule is a national
rule that prohibits onshore unconventional oil and gas extraction
operations from discharging pollutants in wastewater to publicly owned
treatment works (POTWs), in other words, a ``zero discharge''
requirement. The UOG rule defines the term ``unconventional oil and gas
operations'' to include operations involving ``crude oil and natural
gas produced by a well drilled into a shale and/or tight formation
(including, but not limited to, shale gas, shale oil, tight gas, and
tight oil).'' See 40 CFR 435.33(a)(2)(i). In promulgating the rule, the
EPA explained that UOG wastewaters are not typical of POTW influent
wastewater, and as a result some UOG extraction wastewater pollutants:
Can be discharged untreated from a POTW to the receiving stream (i.e.,
the POTW is not designed to treat the pollutant); can cause the
disruption of the POTW treatment operations (e.g., biological treatment
is inhibited); can accumulate in biosolids, limiting their

use; and can cause the formation of harmful disinfection by-products.
    The EPA's record at the time of promulgation indicated that all UOG
extraction facilities were meeting the zero discharge requirement, and
the EPA received no comments at proposal indicating otherwise. However,
after the UOG rule was promulgated, several interested parties notified
the EPA that a number of oil and gas operations in Pennsylvania covered
by the rule were in fact discharging wastewater to POTWs. These parties
stated that their operations are ``conventional'' under Pennsylvania
definitions, although they appear to meet the definition of
``unconventional'' in the UOG rule.
    Based on this post-promulgation information, the EPA extended the
compliance date for existing sources that were lawfully discharging to
POTWs on or between April 7, 2015, and June 28, 2016, to three years
from the effective date of the rule--to August 29, 2019, (compliance
date postponement rule). See 81 FR 88126-88127. That rule did not
change the compliance date for all other facilities subject to the
final UOG rule.
    Pennsylvania Grade Crude Oil Coalition (PGCC) also filed a petition
for review of the rule in the U.S. Court of Appeals for the Third
Circuit. PGCC indicated that the EPA incorrectly found that there were
no existing discharges to POTWs by facilities that meet the definition
of ``unconventional'' in the UOG rule. In response, the EPA filed a
motion (unopposed by PGCC) for voluntary remand without vacatur which
was granted by the Court in October, 2017. Pennsylvania Crude Oil
Coalition v. EPA, No. 16-4064 (3rd Cir., Aug. 31, 2017). In the motion,
the EPA discussed the post-promulgation information referenced above,
acknowledging that this new information was inconsistent with the
record for the rule. The EPA explained that the Agency requested the
remand to consider any additional evidence relevant to the UOG rule,
develop the record, and take any follow-up action as appropriate. This
notice provides the EPA's decision in accordance with this remand.
    As explained in this notice, the EPA recently gathered new data and
information and performed supporting analyses to update the 2016 record
for the final UOG rule. The scope of the data collection and analyses
discussed in this notice pertains only to those oil and gas extraction
facilities in the United States that the EPA has identified to be
discharging UOG wastewater to POTWs at the time it finalized the UOG
rule--in other words, those facilities defined as conventional by
Pennsylvania that meet the definition of unconventional in the UOG rule
and are thus likely subject to the EPA's 2016 UOG pretreatment standard
rule.
    EPA staff also met with producers in Pennsylvania to further
understand their concerns. As a result of this interaction, the EPA
learned that the scope of the Agency's 2016 UOG pretreatment standard
rule may not have been clear to certain producers. To clarify the scope
of the UOG rule, the UOG rule is not applicable to activities regulated
under the Stripper Subcategory (40 CFR 435 Subpart F). The UOG rule
applies to onshore unconventional oil and gas extraction facilities
regulated under Subpart C. Subpart C excludes facilities regulated
under Subpart F.

III. Summary of Analysis and Results

    A detailed description of the data sources, methodology, and
associated analyses can be found at: https://www.epa.gov/eg/unconventional-oil-and-gas-extraction-effluent-guidelines. This section
summarizes that information and provides results.
    First, the EPA conducted additional analyses to determine whether
wells discharging to POTWs in Pennsylvania would meet the definition of
``unconventional'' and thus be subject to the EPA's 2016 UOG rule. Oil
and gas operators in the Commonwealth of Pennsylvania must report to
the Pennsylvania Department of Environmental Protection information on
their wells, such as wastewater management and formation type. During
development of the 2016 UOG rule, the EPA used this Commonwealth-
compiled data to support the Agency's finding that there were no UOG
extraction facilities discharging wastewater to POTWs. However, based
on the information submitted to the EPA after promulgation of the rule,
the Agency came to understand that some facilities that would meet the
definition of unconventional in the 2016 UOG rule were categorized as
conventional in the Pennsylvania data that the EPA relied on, based on
the Commonwealth's narrower definition of unconventional. Accordingly,
the EPA has re-evaluated the available data. In particular, the EPA
used information that the oil and gas extraction facilities reported to
Pennsylvania for 2016 and well formation information from multiple
sources to identify those oil and gas extraction facilities that
discharged any wastewater to POTWs and that are defined as conventional
under Pennsylvania's definition, but are defined as unconventional
under the UOG rule's definition.\1\ As described above, oil and gas
extraction activities regulated under the Stripper Subcategory (Subpart
F) are not included in this rule, and therefore were not included in
the scope of analyses discussed in this notice. In the analysis of the
data, the EPA excluded any well that had less than a ratio of 15,000
cubic feet of gas per 1 barrel of oil and had less than an average of
10 barrels per day of oil over the year's reported production and
number of producing days. Based on the 2016 Commonwealth data, the EPA
determined that out of 879 oil and gas extraction entities reporting to
Pennsylvania in 2016 (and over 6,000 entities nationwide), 22 entities
discharged at least some portion of their wastewater to a POTW from UOG
operations as defined by the 2016 UOG rule. Based on the 2016 data, the
EPA concludes that this subset of entities may need to make changes to
comply with the 2016 UOG rule (and would incur any associated costs).
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    \1\ The EPA defines unconventional as: 40 CFR 435.33(a)(2)(i)
Unconventional oil and gas means crude oil and natural gas produced
by a well drilled into a shale and/or tight formation (including,
but not limited to, shale gas, shale oil, tight gas, tight oil).
Pennsylvania defines an unconventional formation as: A geological
shale formation existing below the base of the Elk Sandstone or its
geologic equivalent stratigraphic interval where natural gas
generally cannot be produced at economic flow rates or in economic
volumes except by vertical or horizontal well bores stimulated by
hydraulic fracture treatments or by using multilateral well bores or
other techniques to expose more of the formation to the well bore
(See DCN SGE01486).
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    For each well that generated wastewater that was sent to a POTW
from these 22 entities, the EPA determined the nearest wastewater
management alternative (centralized waste treatment (CWT) facility or
Class II underground injection control (UIC) well). The EPA found that
wastewater management alternatives were available to all of these
entities as many of them reported using another wastewater management
alternative in addition to a POTW in 2016. To estimate the potential
incremental costs of this rule to these entities (which represent the
only entities in the U.S. that may incur costs associated with the
nationally applicable rule), the EPA calculated any incremental
wastewater management costs for these entities to send their wastewater
to the nearest wastewater management alternative as well as any
associated incremental transportation costs. The EPA added incremental
wastewater management and transportation costs to determine the total
incremental costs to these entities to comply with the 2016 UOG rule.
    The EPA also evaluated incremental non-water quality environmental

impacts associated with alternative wastewater management approaches.
These include changes in air emissions, solid waste generation, and
energy consumption. The incremental change depends on the alternative
wastewater management approach. For example, sludge generation would
likely decrease if a UOG facility sends its wastewater to a UIC well
and would likely increase if it sends its wastewater to a CWT facility.
Even if each UOG operator that currently sends its wastewater to a POTW
elected to use a wastewater management approach that incrementally
increased air emissions, sludge generation or energy usage, these
changes would be small relative to U.S. totals for this industry as a
whole.
    The EPA then conducted a discounted cash flow analysis (modeled
future revenue and operation costs) over 10 years to estimate the
potential financial impacts on these entities. Based on this analysis,
the EPA determined that seven of the 22 entities would have negative
profits irrespective of the UOG rule's incremental costs. For the
remaining entities, when adding in the incremental costs of the rule,
the EPA's analysis shows that none of the 15 entities would be at risk
of closure as a result of complying with the UOG rule.
    In light of the model predictions based on 2016 reported data that
some of these entities would have negative profits irrespective of the
UOG rule's incremental costs, the EPA also reviewed oil and gas
production data for all 22 entities as reported to Pennsylvania in
2017. All 22 entities continued to report oil and gas production to
Pennsylvania, demonstrating that they remain in business. Therefore,
the EPA is reporting cost information as a range with the lower value
representing information for the 15 modeled profitable entities and the
upper value representing information for all 22 entities. The EPA's
analysis shows that for 2016, the median incremental costs would be
$131 to $279 per entity and the total costs of the UOG rule for 2016
would be approximately $33,000 to $65,000 (in 2016$).

IV. Findings

    At the time the EPA promulgated the 2016 UOG rule, it established a
zero discharge of pollutant pretreatment standard for UOG extraction
facilities based on alternative wastewater management approaches.
Consistent with the factors identified in the Clean Water Act and
described in the preamble to the 2016 rule, the EPA found these
alternatives to be available, have acceptable non-water quality
environmental impacts, and be economically achievable, based in part on
its findings that no existing UOG facilities were discharging
pollutants to POTWs at the time of the 2016 rule. The EPA concluded
that such standards would prevent some UOG extraction wastewater
constituents from largely ``passing through'' the POTW untreated, and
then discharged from the POTW to the receiving stream.
    The EPA has supplemented that rulemaking record to account for the
UOG facilities in Pennsylvania that were in fact discharging wastewater
to POTWs at the time of the rulemaking. Based on the EPA's analysis of
the new information described above, the EPA concludes that the zero
discharge of pollutants standard is technologically available,
economically achievable, and has acceptable non-water quality
environmental impacts. Based on this information, the EPA will not
revise the 2016 UOG rule.

    Dated: June 20, 2019.
David P. Ross,
Assistant Administrator, Office of Water.
[FR Doc. 2019-14361 Filed 7-3-19; 8:45 am]
 BILLING CODE 6560-50-P