This is a continuing series of posts on the latest environmental and legal developments affecting oil and gas operations and development and other industries in Los Angeles and adjacent counties, as well as the southern San Joaquin Valley. In this post, we provide an update on regulatory developments at the California Air Resources Board, the California Geologic Energy Management Division, the U.S. Environmental Protection Agency and the South Coast Air Quality Management District.
STATE AGENCIES
California Air Resources Board (CARB)
CARB’s ongoing regulatory actions affect industry generally and are focused more heavily on the oil and gas industry. Actions potentially affecting all industries include the AB 617 program, termed by CARB as the Community Air Protection Program, CRT, an evolving regulation requiring substantially increased reporting of both criteria and toxic air emissions and the Low Carbon Fuel Standard, calculating carbon intensity based on Stanford’s OPGEE model.
AB 617, CARB’s Community Air Protection Program (CAPP): CARB’s CAPP action under AB 617, implements Assembly Member Cristina Garcia’s 2017 bill, requiring CARB to identify annually communities that they find impacted by disproportionate air emissions. These communities then assemble Community Steering Committees, and the local air districts must work with these Committees to develop Community Emission Reduction Plans (CERPs). For more background on AB 617 implementation by CARB and the local air district, see Stoel’s California Environmental blogs for October 4, 2019 and May 11, 2018.
Statewide, the communities chosen so far are:
Year 1, 2018: Richmond; West Oakland; Calexico, El Centro, Heber; South Sacramento – Florin; Portside Environmental Justice Neighborhoods (West National City, Barrio Logan, Logan Heights, and Sherman Heights); Shafter; South Central Fresno; East Los Angeles, Boyle Heights, West Commerce; Muscoy, San Bernardino; and Wilmington, West Long Beach, Carson.
Year 2, 2019: South East Los Angeles, Eastern Coachella Valley and Southwest Stockton.
Year 3, 2020: Candidates: South Los Angeles, including Inglewood; Salton See Communities – Northern end of Imperial County; and Arvin, Lamont, La Viña, Lindsay. CARB will consider these candidates at the next Board Meeting, which has been switched from December 10, 2020 to February 25, 2021 at or after 4 pm).
CERPs so far have primarily involved increased air district monitoring and funding for community activists. For example, the CERP for Wilmington, Carson & West Long Beach focused on:
- Neighborhood truck traffic
- Railyards
- Impacts on schools, childcare centers, and homes
- Refineries, with increased fenceline monitoring and development of SCAQMD Proposed Rule 1109.1, which is proposed to require best available retrofit control technology (BARCT) and monitoring, reporting and recordkeeping for refinery equipment
- Ports
- Oil drilling and production, with anticipated tightening of SCAQMD Rule 1148.2 requirements, requiring notification and reporting of well working activities (Board consideration date remains “to be determined” as of December 4, 2020)
Note that if new rules limiting emissions come out of the AB 617 process, these will apply to all similar facilities, and will not be limited to the facilities within the selected communities.
CARB’s Regulation for Reporting of Criteria Pollutant and Toxic Air Contaminant Emissions (CRT): This CARB program took effect January 1, 2020 and was to potentially require reporting by businesses statewide on up to 1,500 new chemical compounds with a zero emission threshold after the first year. Thanks to industry lobbying, including by the California Small Business Alliance, CARB Staff will now recommend only 200 compounds in the first phase and will retain the threshold of four TPY of emissions beyond the first year.
Most of these compounds have no health risk evaluations or emission factors. CARB recently told the Scientific Review Panel that CARB would exercise enforcement discretion for at least the first few years and assign provisional values to compounds that are put on the priority list. Nonetheless, reporting provisional values could put facility owners at risk for third-party lawsuits. CARB will now propose to tier the reporting requirements, starting with >4 TPY facilities. <4TPY will be in Phase 2, reporting 2024 emissions in 2025. Phase 3 – 2025 emissions in 2026. Phase 4 – all facilities/all compounds.
CARB’s Study of Neighborhood Air Near Petroleum Sources (SNAPS): Initial data has shown no significant impacts or health effects of concern.
CARB’s Methane Rule: CARB is opening its Low Carbon Fuel Standard (LCFS) to update the Stanford University Oil Production Greenhouse Emissions Estimator (OPGEE) model used to calculate the carbon intensity (CI) of oil production worldwide. CARB held a public workshop on the LCFS and Stanford representatives discussed the OPGEE model. A major industry concern is that the CI of California crude oil production does not adequately consider emission reductions from California’s extensive greenhouse gas (GHG) regulation of the oil industry. The Stanford representatives acknowledged that the data on emissions from foreign oil production is scanty, since governments are often reluctant to provide such information. Stanford and CARB Staff also acknowledged the gap between CI calculation and emission reductions achieved from California’s GHG regulations. The revised LCFS rule is expected in two to three years. Carbon capture and sequestration is gaining increasing attention.
CARB’s Cap and Trade Program: Credit prices have risen recently. CARB has in the past stated its goal for the Program as setting a price of $90 per ton by 2030. CARB issued on December 4, 2020 its reserve (minimum) price for the 2021 annual action, raising that price to $17.71 from the 2020 price of $16.68. CARB’s Independent Emissions Market Advisory Committee (IEMAC) will meet December 10, and discussion will include: Climate Policy Portfolio, Allowance Supply, Free Allocation to Refineries and Other Businesses, Adjustments to Allocation and/or Auction Rules and Transportation. The draft of the IEMAC annual report highlights oversupply of credits, revisiting provision of free allocations, reducing supply of allocations and increasing the cost of allocations. CARB has balanced these potential changes with concerns about leakage of regulated activity to other jurisdictions and direct and full pass-through of increased costs to consumers.
CARB’s Carbon Neutrality Review: There is some evolution away from sole opposition to fossil fuels and an acknowledgment in workshops that California can’t get away from liquid fuels for several decades. In addition, there is increased potential for CARB to grant incentives for carbon capture.
California Geologic Energy Management Division (CalGEM)
UIC Projects: As of mid-November, CalGEM had not approved any projects for underground injection of produced water (UIC) in the past year. Sixty-five applications were pending. Lawrence Livermore Laboratories had approved only a couple applications.
Well Abandonment: CalGEM is the lead agency for CEQA, and this process has been holding up well abandonment.
U.S. ENVIRONMENTAL PROTECTION AGENCY
The Biden Administration will take a much different course at EPA, especially on climate change, environmental justice and deregulation. A coalition of about 70 environmental justice and environmentalist groups have called on President-elect Biden not to appoint CARB Chair Mary Nichols as head of the USEPA. These groups cite CARB’s market-based programs as harming EJ communities and some also fault any incremental approach toward environmental protection, calling on the Biden administration to “blitz.”
LOS ANGELES COUNTY AND CITY
LA County Regional Sustainability Plan: Most goals require no fossil fuel. A draft Plan for comment is expected in mid-February 2021, and will incorporate the Oil &Gas Ordinance and the Just Transition Plan. Industry is concerned about a push for “a fossil fuel free County.” Responding to industry and other concerns, the County’s report on energy resiliency, which will depend on fossil fuels, is due in mid-December 2020. Concern is that this will be a rehash of existing literature and not reach the core of the energy resiliency issues.
LA County Climate Action Plan: The County’s goal for its unincorporated areas is carbon neutrality by 2045. The County is still working on comments provided in April, and a new draft for comment is expected in the near future. This will be key, since the Plan will be adopted into the County’s land use general plan.
LA County Strike Team Report: The full report deadline is September 2021. There is an issue of jurisdiction, since much under discussion is within the jurisdiction of CalGEM. Idle wells and well abandonment are key issues. All abandonments in recent years had been fully paid for by the oil industry. There is some potential for further funding, including from the federal government.
LA County Ordinance Revisions: The ordinance, which currently proposed setbacks from oil and gas wells of 600 feet for new wells and 300 feet for existing wells, is on hold until next year. Activists are pushing for 1,500 foot setbacks.
LA City Green New Deal: This proposal has been significantly delayed or thwarted by concern re jobs and housing.
LA City Setbacks: Prior setback from oil wells recommendations of the City’s former Petroleum Administrator: 600 feet for existing wells and 1,500 feet for new. It would impose huge costs. At the November 19, 2020 meeting of the City Council’s Energy, Climate Change and Environmental Justice Committee, a representative of City Attorney Mike Feuer said they would defend a setback ordinance: “Any zoning ordinance enacted by the city will likely result in litigation, but our office will defend in court a carefully crafted setback ordinance backed up by a strong administrative record.” To this, City Council Member Krekorian raised the specter of lawsuits costing the public money: “I do not want to be the one that has to approve a settlement with oil companies, where we take general fund money that would otherwise be spent on services in front-line communities in the city of Los Angeles.”
LA City Working to Appoint a New Petroleum Administrator: Received 138 applications, now reviewing 30. Wants to fill by end of year, but may face further delay. County is also hiring a Petroleum Administrator, but the time is uncertain.
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT
Appointed a Second Deputy Executive Officer for Equity, Diversity and Inclusion.
The transition from RECLAIM to Command-and-Control has been “stuck in neutral” for the past few months, yet work on the “landing rules” moves forward. Rule 1178, VOC Emissions from Storage Tanks at Petroleum Facilities, is up for Board adoption at the December meeting.
The following rulemaking is upcoming on the horizon, with potential adoption timing in bold italics updated per the agenda for the December Governing Board meeting:
Rules 218.1, 218.2 and 218.3, Continuous Emission Monitoring – March 2021. Staff wants to require that if more than 1% of your CEMS data is above the readable level of a single system, you would have to install an additional sensor. Some producers are shifting to a dual system to respond to this issue. Staff also wants to require that one-minute data be stored for a year. Not currently required – required to give least 48 hours, plus 15 minute and hourly data. AQMD Description: The revised provisions that enhance requirements for Continuous Emissions Monitoring Systems (CEMS) will be included in separate rules, Proposed Rules 218.2 and 218.3, to streamline implementation. (AQMD LEAD: Michael Krause)
Rule 462, Organic Liquid Loading – To be determined. Will incorporate the use of advanced techniques to detect fugitive emissions and facility vapor leak. Other amendments may be needed to streamline implementation and add clarity.
PAR 463, Organic Liquid Storage – To be determined. Will address the current test method and improve the effectiveness, enforceability, and clarity of the rule. Proposed amendments may also be needed to ensure consistency with Rule 1178.
Rule 1118.1, Non-Refinery Flares– adopted January 4, 2019. Current issue: Technology Assessment due two years from adoption date for beneficial use from produced gas, i.e., energy producing alternatives to flaring. Most recent activity: Fifth Working Group meeting: April 23, 2020: Staff confirmed recently that there has been no action since then, and that the Assessment cannot be completed by the current deadline. District Staff time has been diverted to other rulemaking.
Rule 1146.1, Emissions of Oxides of Nitrogen from Small Industrial, Institutional, and Commercial Boilers, Steam Generators, and Process Heaters – To be determined. Proposed amendments to Rule 1146.1 may be needed to clarify provisions for industry-specific categories and to incorporate comments from U.S. EPA.
Rule 1146.2, Emissions of Oxides of Nitrogen from Large Water Heaters and Small Boilers and Process Heaters – December 2021. Proposed Amended Rule (PAR) 1146.2 will be revised to lower the NOx emission limit to reflect BARCT.
Rule 1147, Proposed Amendments, NOx from Miscellaneous Sources and Rule 1100, Implementation Schedule for NOx Sources (transition to command-and-control for RECLAIM sources) – June 2021. PAR 1147 will revise NOx emission limits to reflect BARCT for miscellaneous combustion sources, and that will apply to RECLAIM and non-RECLAIM facilities. PAR 1100 will establish the implementation schedule for Rule 1147 equipment at NOx RECLAIM and former NOx RECLAIM facilities. (PAR 1147.1 will apply to aggregate facilities and PAR 1147.2 will apply to metal melting and heating furnaces.)
Rule 1148.1, Oil and Gas Production Wells – To be determined. PAR 1148.1 will evaluate exemptions under Rule 463 to harmonize implementation for low producers. Other proposed amendments may be needed to further reduce emissions from operations, implement early leak detection, put odor minimization plans in place, and increase enhanced emissions and chemical reporting from oil and drilling sites consistent with the AB 617 Community Emission Reduction Plan.
Rule 1148.2, Notification and Reporting Requirements for Oil and Gas Wells and Chemical Suppliers – To be determined. Proposed amendments to Rule 1148.2 may be needed to improve notifications of well working activities to the community.
Rule 1173, Control of Volatile Organic Compound Leaks and Releases from Components at Petroleum Facilities and Chemical Plants – November 2021. Proposed revisions are being considered based on recent U.S. EPA regulations and CARB oil and gas regulations and revisions to improve the effectiveness, enforceability, and clarity of the rule. Other proposed amendments may be needed to further reduce emissions from operations, implement early leak detection, put odor minimization plans in place, and increase enhanced emissions and chemical reporting from oil and drilling sites consistent with the AB 617 Community Emission Reduction Plan.
Rule 1176, VOC Emissions from Wastewater Systems – To be determined. Proposed amendments will clarify the applicability of the rule to include bulk terminals under the definition of “Industrial Facilities,” and streamline and clarify provisions.
Rule 1178, Further Reductions of VOC Emissions from Storage Tanks at Petroleum Facilities – December 2021. Proposed amendments will incorporate use of more advanced detection methods for earlier leak detection and improve leak detection and repair programs for storage tanks to further reduce VOC emissions. Proposed amendments will implement one of the actions in the AB 617 Community Emission Reduction Plan.
Rule 1470, Diesel-Fueled IC and Other Compression Ignition Engines – August 2021. PAR 1470 will establish additional provisions to reduce the exposure to diesel particulate from new and existing small (≤ 50 brake horsepower) diesel engines located near sensitive receptors. Proposed amendments may be needed to address use of engines during Public Safety Power Shutoffs.
Be Alert re PAR 1403 – Asbestos Emissions from Demolition/Renovation Activities – To be determined. Applies to underground pipe. PAR 1403 will enhance implementation, improve rule enforceability, and align provisions with the applicable U.S. EPA National Emission Standard for Hazardous Air Pollutants (NESHAP) and other state and local requirements as necessary.