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Gas Groups Decry Potential Impact of EPA Tailoring Rule

The Environmental Protection Agency's (EPA) proposed tailoring rule, which sets the stage for the agency to regulate greenhouse gas (GHG) emissions from stationary sources, could cause significant permitting delays for the natural gas industry, three major gas groups told the EPA.

"We believe that the proposed tailoring rule will negatively impact the production, delivery and use of natural gas to the detriment of our shared emission-reduction goals," wrote the Interstate Natural Gas Association of America (INGAA), Independent Petroleum Association of America (IPAA) and the Natural Gas Supply Association (NGSA) in a recent letter to EPA Administrator Lisa Jackson.

The proposed tailoring rule calls for the EPA to begin regulating stationary sources emitting 25,000 tons/year (new threshold) of carbon dioxide-equivalent greenhouse gases under two programs central to the Clean Air Act (CAA) -- the Prevention of Significant Deterioration (PSD) and the Title V operating permit programs. The PSD program currently applies to sources emitting 100 to 250 tons/year, while Title V program permitting requirements apply to emitters of 100 tons/year.

Absent the increase in the existing threshold of 100-250 tons per year, the PSD and Title V requirements would subject millions of previously unregulated entities -- hospitals, apartments and shopping malls -- to the requirements under the CAA, and the EPA would find itself in the midst of a regulatory blockage.

"Though intended to relieve small stationary sources of regulatory burdens, the proposed tailoring rule would still encumber a large number of natural gas infrastructure projects with a time-consuming permitting process that will be of doubtful environmental benefit," the interstate pipeline and producer groups said.

According to the EPA, approximately 45% of the gas compression stations in the U.S. transmission system would be "major sources" under the proposed tailoring rule, and thus would be subject to PSD regulation for GHGs. INGAA calculates that the actual number of affected transmission-related compressor stations will be much higher.

"It appears that the proposed tailoring rule woefully underestimates the number of facilities affected, and there is no indication that the permitting authorities are prepared to handle an increase in workload of this magnitude," the gas groups said.

If the proposed tailoring rule is adopted, "the application of PSD and Title V to natural gas infrastructure will cause permitting delays impeding capital projects for all segments of the natural gas industry," they noted. In addition, the application of best available control technology (BACT) standard for GHG emissions from natural gas combustion will be "difficult given that natural gas combustion in itself represents BACT when it is used in power generation and industrial applications."

With no history of permitting GHG emissions, "we expect that the initial years of PSD permitting for GHGs will be plagued by lengthy data-gathering and BACT analyses, as well as litigation over individual permitting decisions. The resulting delay and legal uncertainty will fall heavily on natural gas infrastructure facilities, which already face significant regulatory hurdles," the gas groups said.

They further said they believe BACT has "limited applicability" to GHG emissions from natural gas facilities. "Natural gas combustion units, such as the large engines used in pipeline compressor stations, are already designed to operate at an optimal level of efficiency.

"With carbon capture and sequestration technology still years from being widely available, there is no available 'add on' control technology to mitigate GHG emissions from these sources. Other alternatives -- such as mandating the use of electric power compressors in lieu of compressors driven by natural gas -- would likely not reduce GHG emissions; it simply transfers them to the local electric utility," they said. "Therefore natural gas facilities should be presumed to comply with BACT."

INGAA, IPAA and NGSA requested a meeting with EPA officials to "discuss the role of natural gas as part of U.S. climate and energy policy."

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