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Dirty secret: EPA & CDPHE coercion, not collaboration, led to CO methane rules

Dirty secret: EPA & CDPHE coercion, not collaboration, led to CO methane rules

Just as President Trump and new Environmental Protection Agency (EPA) Administrator Scott Pruitt begin dialing back Obama-era regulations, Governor John Hickenlooper is erroneously trying to paint Colorado’s “model” methane rules as some sort of industry-environmental Kumbaya.


A week ago Sunday on Meet the Press the Democrat and possible 2020 presidential campaign contender told host Chuck Todd “we brought all the oil and gas industry, together with the environmental community, and we found a way to regulate methane…”


On Colorado Public Radio (CPR), the Governor said the state’s largest producers think the “methane regulations were a good thing.” That is true. Anadarko Petroleum, Noble Energy, and Encana did support the news rules that came from an Environmental Defense Fund (EDF) led “stakeholders” group.


But the Governor is omitting a huge part of the story.  Over objections from many in the oil and gas industry, Colorado became the first state to regulate methane from new and existing wells. Then last May, the EPA issued its own rules modeled after Colorado’s but not quite as stringent.


Fast forward to November. With a Donald Trump victory, Colorado’s regulatory zealotry is without its biggest ally – the EPA. Even though President Obama’s Bureau of Land Management (BLM) rushed through midnight methane regulation, known as the “venting and flaring” rule, it’s likely to be rescinded. In addition, Administrator Pruitt announced that the prior administration’s formal oil and gas emissions and equipment information requests can be tossed into the circular file.


While Colorado became the regulatory overachiever to “get ahead of the EPA,” other energy-producing states rebelled against costly job-killing regulations. Now, the state may find itself at a competitive disadvantage.


How did Colorado find itself in this methane mess? Here’s the rest of the story.


It began in 2012 when EPA, specifically Region 8 which includes Colorado, Utah, Wyoming, Montana, North Dakota, and South Dakota, and CDPHE investigators armed with “optical gas-imaging infrared cameras” went in search of leaks not visible to naked eye among Noble Energy storage tanks in the Denver-Julesburg (D-J) Basin. Noble representatives weren’t present for the investigations and weren’t informed of the results until 2014.


In the meantime, the 2012 investigation led EPA and CDPHE to initiate what is known as “Clean Air Act Section 114 Information Requests” of several operators in the D-J Basin. A source close to the investigation provided a detailed account of how the process worked:


EPA Region took what it learned from its experience with Noble and in 2013 began filing Clean Air Act Section 114 requests of more operators in Colorado and North Dakota.  A total of perhaps 9 additional operators were served with these requests.  The requests eventually lead to enforcement action and the threat of unimaginably large penalties.    Settlement would entail agreeing to standards that far exceed the state’s operating standards, including Colorado’s already very stringent regulations.  Facing an EPA with an unlimited budget and a legal process that already favors them, an operator’s compulsion to settle is strong.  In the meantime, EPA has moved forward with a parallel national strategy, demanding information from every operator in the country through the Information Collection Request or ICR process.


As mentioned earlier, Administrator Pruitt has put a halt to the nationwide ICR. While the halt will help other states, Colorado already used information gleaned from operators to draft additional draconian regulations with CDPHE acting as the EPA’s henchmen as our source describes:


Instead of pushing back on EPA’s tacit challenge of its air quality program, as North Dakota has done, CDPHE has filed parallel enforcement actions.  Essentially every significant operator in Colorado’s DJ basin is currently involved in such an action.  CDPHE asserts that practically every leak  from a tank is subject to enforcement , including those that operators self report in conformance with the State’s stringent leak detection program and leaks from tanks that are not even subject to the leak detection program.  This operational standard is unachievable and exceeds even that of the national regulations that were patterned after Colorado’s.


In the case of Noble Energy, Colorado’s second largest oil and gas producer entered into what the United States Justice Department called the “first-of-its-kind” settlement with the EPA and CDPHE that included a record $73.4 million fine. Further, the 162-page Consent Decree described how Noble actively participated in the development of the rules to which most of the industry objected:


Noble cooperated fully with EPA and CDPHE to provide information, develop new data, and address concerns associated with VOC emissions from Condensate tanks;…Noble committed extensive resources in (i) working cooperatively with the State and certain other stakeholders in developing the proposed 2014 Reg. 7 requirements, (ii) participating in the subsequent two-month long rulemaking process, and (iii) providing critical testimony and evidence during the three-day long Air Quality Control Commission hearing at which the 2014 Reg. 7 provisions were adopted.


This seems more like coercion than the Kumbaya industry-environmental collaboration that Hickenlooper described. That’s the dirty secret of Colorado’s methane rules. Fortunately, Administrator Pruitt seems to be correcting it in his agency. The next question is what will Colorado do to correct it at CDPHE?


I’d like to say the methane rules were an isolated incident, but it’s not. I’ll have another post later in the week about an entirely different industry suffering under the heavy-hand of CDPHE and EPA Region 8.


Lastly, those who want to undermine President Trump and Administrator Pruitt have threatened to leak information, but leaks work both ways. More on that as well.