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E&P Stormwater Exemption

By Vorys

In the Energy Policy Act of 2005, Congress clarified that storm water discharges from field activities associated with E&P operations, including construction activities, are exempt from NPDES permitting requirements absent a contaminated discharge.  The next year, U.S. EPA completed a rulemaking codifying that statutory exemption in its regulations; and further establishing an exemption for storm water discharges containing sediment only, finding that such discharges did not constitute a violation of a water quality standard.

The U.S. Court of Appeals for the Ninth Circuit in Natural Resources Defense Council v. United States Environmental Protection Agency, vacated the E&P exemption for storm water sediment-only discharges.  While noting that "an agency 'is not disqualified from changing its mind,'" the court found that EPA's interpretation of the CWA to allow for the exemption was "arbitrary and capricious because of the agency's changed position on what constitutes 'contamination' under [CWA section 402(l)(2)]."  (Emphasis in the original).  Accordingly, the court remanded the matter to U.S. EPA for further consideration.
 
The Department of Justice filed a petition for rehearing en banc, challenging the court's failure to defer to the EPA's interpretation.  That petition was opposed by the NRDC, and denied by the court in a brief order filed November 3, 2008.
 
What does all this mean for producers?  According to U.S. EPA, effective November 10, 2008, "the applicable regulations * * * revert[ed] back to the regulations in place prior to the 2006 rule."  More specifically, they again state:

122.26(a)(2) The Director may not require a permit for discharges of storm water runoff from mining operations or oil and gas exploration, production, processing or treatment operations or transmission facilities, composed entirely of flows which are from conveyances or systems of conveyances (including but not limited to pipes, conduits, ditches, and channels) used for collecting and conveying precipitation runoff and which are not contaminated by contact with or that has not come into contact with, any overburden, raw material, intermediate products, finished product, byproduct or waste products located on the site of such operations.

122.26(e)(8) For any storm water discharge associated with small construction activity identified in paragraph (b)(15)(i) of this section, see 122.21(c)(1). Discharges from these sources, other than discharges associated with small construction activity at oil and gas exploration, production, processing, and treatment operations or transmission facilities, require permit authorization by March 10, 2003, unless designated for coverage before then. Discharges associated with small construction activity at such oil and gas sites require permit authorization by June 12, 2006. 
The statutory exemption - while not yet codified in the regulations - still applies, however.  For many operators in the Appalachian Basin, this may mean a revisiting of the small construction program's applicability (often referred to a "Phase II" of the NPDES storm water program), involving activities disturbing between 1 and 5 acres of land, or site activities disturbing less than 1 acre of land but part of a larger common plan of development.

 

Tags: Environment

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Vorys Energy and Environmental Services

Vorys, Sater, Seymour and Pease LLP provides business and legal counsel to clients throughout the United States and around the world. Since its founding in 1909, our firm has grown into one of the largest law firms in the country, with nearly 375 attorneys who are located in nine offices in Ohio, Washington, D.C., Texas, Pennsylvania, California and London.

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