Howard J. Feldman

Senior Director

Regulatory and Scientific Affairs

1220 L Street, NW

Washington, DC 20005-4070

USA

Telephone 202-682-8340

Fax 202-682-8270

Email Feldman@api.org

www.api.org

July 8, 2015 

Mr. Dan Utech

Deputy Assistant to President Obama for Energy and Climate Change

Eisenhower Executive Office Building

Via Electronic Mail 

Dear Mr. Utech:

We greatly appreciate your taking time to meet with us on June 30th to discuss the 

Administration’s Climate Action Plan and its potential impacts to our members. The American 

Petroleum Institute (“API”) has had a long, successful working relationship with the U.S.

Environmental Protection Agency (“EPA”) and the U.S. Department of the Interior (“DOI”) on a 

number of efforts to address air emissions.

It is widely agreed that increased reliance on natural gas will significantly reduce total U.S.

greenhouse gas emissions and its continued production and use will be essential toward

advancing the goals of the Administration’s Climate Action Plan. EPA recently reported that 

total methane emissions from natural gas systems are down 11 percent since 2005 even as 

production has increased over the last decade.

As you know, the Administration’s January 14th strategy to address VOC and/or methane 

emissions from the oil and gas industry included many components across multiple agencies.

This multi-pronged approach, and the potential timing of its implementation, has created great 

uncertainty for the future operations of our members as each component will influence the others

and, in some cases, may be in direct conflict or create complications for other components. In 

addition, the potential tightening of the ozone ambient air quality standard, and its potential 

future impact on the feasibility and effectiveness of other programmatic components, greatly 

adds to this uncertainty. As the Administration is considering its next steps, we would like to 

reiterate several of the key points we discussed with you on regulatory programs, voluntary 

programs, and the need for significant interagency coordination. 

Direct Methane Regulation is Unnecessary to Realize Environmental Benefits 

Should EPA adopt additional controls as part of the ongoing reconsideration of NSPS OOOO, 

EPA should continue to regulate VOC emissions only. As has been demonstrated through the 

existing NSPS OOOO, EPA has been able to effectively achieve reductions of methane as a cobenefit of its VOC-focused requirements by regulating natural gas as a VOC surrogate. If EPA 

believes that additional controls are necessary for transmission and storage sources, EPA should 

propose a separate NSPS category for transmission and storage, and determine whether this new 

source category warrants regulatory controls. The industry has led the way in developing the 
July 8, 2015

Page 2 of 3

technologies to reduce VOC emissions (and methane as a co-benefit), and we look forward to 

working with EPA on the planned NSPS OOOO revisions to continue to make improvements in 

a rational, cost-effective way. 

Common Sense Voluntary Reductions and Incentives Will Lead to Increased Early 

Emission Reductions

If the Administration wishes to seek additional reductions through a federal framework, the best 

approach would be a voluntary program. The industry is interested in participating in a wellconstructed voluntary program, and has shared options for achieving substantial methane 

emissions reductions more rapidly than regulations would allow. While the uncertainty 

surrounding the various pending regulatory decisions may influence individual company 

decisions whether to participate in a federal voluntary program, API and its members continue to 

be committed to voluntarily reducing emissions, either on their own or through a government 

partnership. Attached are four documents that describe in more detail our thoughts on various 

elements associated with potential voluntary programs:

1. A detailed plan for a phase-out of high bleed on-shore pneumatic controller valves.

2. A detailed plan for an equipment leak “find and fix program” to effectively minimize 

leaks at oil and gas facilities.

3. A May 5, 2015 letter to EPA Acting Assistant Administrator Janet McCabe covering API 

Comments on the potential EPA Enhanced Natural Gas STAR (ENGS) program.

4. A June 12, 2015 letter to EPA Acting Assistant Administrator Janet McCabe covering the 

regulatory and voluntary programs, and including a paper entitled Incentivizing Voluntary

Participation in the Enhanced Natural Gas Star Program. 

Overlap or Conflict with EPA and BLM Methane Reduction Programs Will DisIncentivize Voluntary Reductions and Development on Federal Lands

As you know, the Bureau of Land Management (BLM) is considering control requirements on 

the very same sources EPA has historically addressed and plans to address in its revised rules. It 

is imperative that the BLM efforts not discourage participation in the ENGS. Further, any 

possible regulatory efforts by BLM should be cost effective, practical to implement, and 

designed to minimize waste. Overlapping, duplicative, or conflicting regulatory requirements on 

BLM-managed lands could further dis-incentivize development of oil and natural gas resources 

on federal lands as well as industry participation in a voluntary methane reduction program for 

existing sources. A clearer understanding is needed of how BLM’s and EPA’s efforts differ and 

need whether there is need for supplemental rulemaking from BLM.

Because the industry is facing a number of regulatory and non-regulatory initiatives from several 

agencies at the same time, we need more time at the front end to comment as effectively and as 

helpfully as we can on these initiatives. API and its members stand ready to engage the 

Administration and the agencies to identify cost-effective and timely emission reductions, but to 

be successful this will require full coordination and open communication from the regulatory 

agencies. We hope you will do all you can to ensure coordination between the EPA and DOI and 

encourage the open communication we seek. 
July 8, 2015

Page 3 of 3

In conclusion, we seek your direct engagement with all affected stakeholders to openly chart a 

regulatory and voluntary path forward that provides our members greater operational certainty 

that allows us to continue meeting our nation’s energy needs while providing an important part 

of the solution to address these emissions. We look forward to future conversations to determine 

how we might chart this course forward on these important issues. 

Sincerely,

Howard J. Feldman
Program to Phase-out High-bleed Pneumatic Controllers - Implementation Principles

General

 5-year replacement goal for all onshore continuous high-bleed pneumatic controllers

 Create a new and separate Gas STAR Pneumatics Program (separate from the proposed Gas 

STAR Gold program and the old Gas STAR program)

 Work together to develop the program specifics

Participation

 Industry leadership would publically endorse and promote the program to other trade 

associations

 Individual company participation 

Program Specifics

 Replace all onshore continuous-high-bleed controllers with one of the following:

o continuous–low-bleed controllers,

o intermittent-vent controllers,

o electrically operated controllers and valve actuators or mechanical controllers,

o convert to instrument air to replace natural gas as the motive gas, or

o remove from service where feasible with no replacement.

 Support annual reporting and alignment with timing of GHG reporting – March 31streporting

deadline for the previous calendar year. Reports would include the following regarding a 

company’s onshore continuous-high-bleed controllers:

o Number replaced

o Number swapped to instrument air

o Number eliminated

o Number remaining

 Individual company commitment/annual targets to meet 100% replacement goal within 5 years

 Only affects controllers located at upstream onshore production and gathering facilities as well 

as natural gas processing plants.

 EPA may make program details and submitted company-specific data publically available

 Maintain Subpart OOOO exemption based on functional needs, including but not limited to 

response time, safety, and positive actuation. 
Voluntary Leak Program for Oil and Gas Production Sources - Implementation Principles

General

 Targeted toward higher emissions sources

 Applies to new and existing onshore sites upstream of gas processing plant (as defined in 

OOOO)

 Applies to onshore production sites with onsite storage vessel or compressor

 Incorporates five-year phase-in schedule to implement initial monitoring for participating 

existing sites based on individual company plan 

 Instrument-based monitoring programs within existing state regulatory and permit 

requirements or participation in voluntary program should satisfy future regulatory 

requirements (i.e., NSPS OOOO)

 Allow flexibility in leak detection methods and technologies (e.g., Method 21, IR camera, or 

other equivalent) to satisfy the voluntary program requirements 

 Committed to reasonable, cost-effective reporting that tracks progress

Program Specifics

Target Broad facility survey

Target Components Significant emission sources such as malfunctioning fugitive emission 

components, pneumatic controllers not functioning as designed, and 

controlled hydrocarbon storage vessels

Method IR camera, or equivalent

Initial Survey

Existing Site Phased in, initiated within no later than 18 months and concluded over no 

more than a 5 year period

New Site Within 180 days of start of production following installation of new 

hydrocarbon storage vessel or compressor

Subsequent Surveys Annual after initial survey

Repair Period  1

st attempt within 15 days

 Repair within 60 days (pending part availability)

 Delay of repair (at next shutdown or pending part availability)

Reporting 

Frequency Annual

Contents  Number of new sites monitored

 Number of existing sites monitored

 Number of leaks repaired (excluding those repaired during survey)

 Number of leaks not repaired and reason for delay

Tagging/Other 

Identification

Only of leaking components not repaired during survey
May 5, 2015

The Honorable Janet McCabe

Acting Assistant Administrator 

Office of Air and Radiation

U.S. Environmental Protection Agency

Via Electronic Mail 

Re: API Comments on the potential EPA Enhanced Natural Gas STAR (ENGS) 

program

Dear Ms. McCabe:

The American Petroleum Institute has had a long, successful working relationship with 

EPA on a number of air emissions programs. The oil and gas industry has also been 

successful in significantly reducing emissions from our operations. The EPA has 

recently reported that methane emissions from hydraulically fractured natural gas wells 

are down 79 percent since 2005 and total methane emissions from natural gas systems 

are down 11 percent since 2005 despite significant growth in oil and gas production. 

We do not believe that additional EPA regulation of our emissions is necessary.

As you are aware, industry has a long history of supporting the Natural Gas STAR 

Program and remains interested in addressing methane emissions through voluntary 

action. Recently we were briefed on EPA’s thoughts on the potential EPA Enhanced 

Natural Gas STAR (ENGS) program and would like to share our thoughts with you and 

your team. We are raising our comments to you given the interrelationship of this 

program with other existing and contemplated EPA air programs. Our four primary 

concerns revolve around 1) flexibility, 2) clear commitments and assurances with 

respect to benefits that would accrue to participants through their participation, 3) 

regulatory overlap and 4) recordkeeping, quantification, and verification. We believe 

these concerns need to be addressed within the confines of the potential program if 

such a program is to be a success and we are happy to discuss these further with you 

and/or your staff.

Howard J. Feldman

Senior Director

Regulatory and Scientific Affairs

1220 L Street, NW

Washington, DC 20005-4070

USA

Telephone 202-682-8340

Email feldman@api.org

www.api.org
Page 2 of 5

Flexibility

 A growing body of research indicates “fat tail” emissions distribution for a variety 

of sources, where a small number of sites and sources are responsible for a high 

percentage of emissions. A voluntary program that targets lowering fat tail 

emissions is appealing to industry, results in the greatest cost-effective 

reductions, and produces significant reductions in emissions more quickly. EPA 

should provide program flexibility to allow for cost-effective emission reductions. 

Adhering to rigid protocols or requiring company-wide implementation of specific 

technologies could limit participation, which defeats EPA’s ultimate objectives. 

 In most instances, application of Best Management Practices (BMPs) is a more 

practical and effective path to implementing reductions. Standardized practices 

and associated pollutant reductions will make it easier for agency/industry 

agreement on practices to be implemented. However, companies/basins will 

need the ability to amend the standard practices to make implementation 

practical (i.e., variability in operations due to type and amount of product, specific 

equipment operated as well as accounting for future potential changes of these 

items).

 Standard BMP protocols are bound to contain details that will make them 

inefficient in a given geographic area. For example, an equipment leak protocol 

may call for monitoring at all sites, but this would be inefficient in an area that 

uses centralized gathering facilities to process production from broadly dispersed 

facilities consisting of only a well head. It would be costly to pay for travel time to 

routinely monitor the wellhead facilities with little environmental benefit. 

Companies can increase the emissions reductions with the available resource by 

customizing BMP protocols to initially monitor the well head facilities, while 

routinely monitoring the centralized facilities. The ability to customize the BMPs 

for efficiency should be considered permissible.

 Within any area, some of the facilities will have regulatory requirements (i.e., 

state permits including potential need for offsets, CTGs for existing sources, 

NSPS, or NESHAP) that will parallel and potentially conflict with employing 

voluntary BMPs. The voluntary BMPs should not apply in these instances, 

unless provisions are available that exempt the facility from the regulatory 

requirements due to the voluntary BMP protocols.

Benefits of Participation

 As a general matter, participants in the program will need to have a 

comprehensive understanding of what they will receive in exchange for their 

participation in ENGS in the way of EPA commitments and assurances. 
Page 3 of 5

 It is a win for EPA, industry and the environment if EPA makes participation in a 

revised voluntary program attractive to a large percentage of industry. A 

successful voluntary program benefits the environment and has reputational 

value for both Administration and industry. Linking participation in the voluntary 

program to the generation of emission reduction credits or offsets encourages 

industry participation. In particular:

 The voluntary program should be coordinated with other regulatory action, 

including any Control Technique Guidance to the states, to preserve 

industry’s ability to generate Emissions Reduction Credits (ERCs) for VOCs 

to the maximum extent permissible under the Clean Air Act and to preserve 

any credits they have. Voluntary reductions of other ozone precursors such 

as NOX currently generate ERCs. EPA may want to consider incentivizing 

further reductions from these precursors in its voluntary framework to make 

the program appealing to producers who may not have VOC-rich gas. 

 EPA should consider the generation and use of credits for methane emission 

reductions as well. 

 EPA should explore crediting early action in recognition of the significant 

reductions industry has already made.

 EPA’s voluntary program should include guidance and ensuing provisions for 

the banking and selling of credits or offsets in nonattainment areas or 

methane, if regulated. 

 Offices such as Office of Air Quality Policy and Standards (OAQPS) and Office of 

Atmospheric Programs (OAP) are likely to have regulatory programs that impact 

ENGS participation. As such, EPA management should actively support 

regulatory efforts to include incentives (or remove disincentives) for participation 

in the ENGS.

 EPA should provide guidance to allow for limiting potential to emit (PTE) for 

regulatory and permit requirements based on ENGS participation. EPA can 

include a potentially effective incentive in ENGS by allowing ENGS BMP 

commitments to limit PTE of a facility, as long as maintaining the BMP for the 

facility is documented.

 

Regulatory Overlap

 Participation in ENGS should inform the necessity for further regulation of 

existing sources. It is unclear how participation will inform the agency’s decision 

on whether to regulate VOC or methane (which will lead to regulation of existing 
Page 4 of 5

sources and potentially create additional permitting burdens) in the NSPS OOOO 

rule. 

 EPA should not regulate methane directly under 111(b) or 111(d) but rather 

pursue a path that allows the ENGS to address existing source emissions. 

 Industry is facing a suite of proposed regulatory changes in the coming years. 

EPA should consider delaying implementation of the program until the new rules 

are finalized and some regulatory certainty for industry is restored. To gauge 

industry commitment and, thereby, inform the necessity to regulate methane from 

existing sources, perhaps EPA should first seek a revocable letter of intent to 

participate rather than a commitment to immediate implementation. 

 Voluntary BMPs and regulatory requirements will overlap in many cases. The 

agency should incentivize ENGS participation by including exemptions from the 

regulatory requirements in new or revised regulations and permits, including 

Control Technique Guidelines, when implementation of an equivalent ENGS 

BMP is documented. 

 EPA should provide guidance to the States to avoid redundancy / overlap of 

voluntary programs and other programs and regulations.

 EPA communicated that one important aspect of ENGS, the leak monitoring 

program, will not be incorporated into the program until after amendments to the 

NSPS OOOO rule are final in 2016. It will be difficult for companies to commit to 

a voluntary leak monitoring program until program details are known, and the 

decision to regulate methane will have already been made. 

Recordkeeping & Quantification

 Recordkeeping/reporting and verification requirements of ENGS need to be 

simple as possible and not impose requirements that are more burdensome than 

any equivalent regulatory program. Quantification of emissions reductions is 

likely to be part of the program and EPA should engage industry to develop a 

simplified approach to quantify emission reductions. 

 EPA should provide guidance or establish streamlined mechanisms for limiting 

potential to emit (PTE) with regards to regulatory and permit requirements based 

on ENGS participation. EPA can include a potentially effective incentive in 

ENGS by allowing ENGS BMP commitments to limit PTE of a facility, as long as 

maintaining the BMP for the facility is documented. 
Page 5 of 5

Again, we look forward to engaging with you and your staff on these issues. Please 

contact me if you have any questions.

Sincerely,

Howard J. Feldman

Cc: Joseph Goffman

Paul Gunning

Carey Bylin
June 12, 2015

The Honorable Janet McCabe

Acting Assistant Administrator 

Office of Air and Radiation

U.S. Environmental Protection Agency

Via Electronic Mail 

Re: Oil and gas emissions sources

Dear Ms. McCabe:

The American Petroleum Institute (“API”) has had a long, successful working 

relationship with the US Environmental Protection Agency (“EPA”) on a number of air 

emissions programs. The oil and gas industry has also been successful in significantly 

reducing emissions from our operations. As we have indicated previously, we do not 

believe that additional EPA regulation of the emissions from our industry is necessary. 

Increased exploration, production and use of natural gas are both essential to meeting 

the goals of the Administration’s Climate Action Plan and an objective of US energy 

policy. Furthermore, there is wide agreement that increased reliance upon natural gas 

as a cleaner fuel can significantly reduce US greenhouse gas emissions. Below, we 

touch on our positions on regulation and voluntary programs, and provide a more 

detailed discussion of an API framework for emissions reduction credits.

Additional Revisions to NSPS OOOO

Should EPA adopt additional controls as part of the ongoing reconsideration of NSPS 

OOOO, EPA should continue to regulate only VOC emissions. If EPA believes that

additional controls are necessary for transmission and storage sources, EPA must 

propose a separate NSPS category for transmission and storage, and determine 

whether this new source category warrants regulatory controls. Additionally, EPA should

minimize the reporting, recordkeeping, quantification, and verification burden on 

industry in any regulatory program. 

Howard J. Feldman

Senior Director

Regulatory and Scientific Affairs

1220 L Street, NW

Washington, DC 20005-4070

USA

Telephone 202-682-8340

Email feldman@api.org

www.api.org
Page 2 of 3

EPA Voluntary Program

As indicated in my May 5, 2015 letter to you (attached), it is a win for EPA, industry and 

the environment if EPA ensures that any voluntary program is embraced by all 

stakeholders. As described in that letter, our four primary concerns revolve around 1) 

flexibility, 2) clear commitments and assurances with respect to benefits that would 

accrue to participants through their participation, 3) regulatory overlap and 4) 

recordkeeping, quantification, and verification. We believe these concerns need to be 

addressed within the confines of the potential program if such a program is to be a 

success and we are happy to discuss these further with you and/or your staff. As you 

are aware, industry is facing a suite of proposed regulatory changes in the coming 

years. EPA should make it clear that robust participation in the onshore equipment leak 

and high bleed pneumatic controller programs by operators will obviate the need for 

direct regulation of methane for new sources.

Emission Reduction Credits

As EPA moves in the direction of additional regulations of oil and gas operations, 

potentially more stringent ozone standards, and development of new voluntary 

emissions reduction programs, the establishment of a framework for emissions 

reduction credits (“ERCs”) would be a win-win for all parties.

ERCs provide important compliance flexibility to industry in areas where a more 

stringent ozone standard could jeopardize continued industry operations.

As indicated, it is beneficial for all parties if EPA ensures that any voluntary program is 

coordinated with other regulatory action, including any Control Technique Guideline

(“CTG”) to the states. This would preserve industry’s ability to generate ERCs for VOCs 

to the maximum extent permissible under the Clean Air Act and to preserve those

credits. Voluntary reductions of other ozone precursors such as NOX currently generate 

ERCs. EPA may want to consider incentivizing further reductions from these precursors 

in its voluntary framework to make the program appealing to producers who may not 

have VOC-rich gas. Also, EPA should consider the generation and use of credits for 

methane emission reductions as well and crediting early action in recognition of the 

significant reductions industry has already made.

Attached, please find a paper entitled INCENTIVIZING VOLUNTARY PARTICIPATION 

IN THE ENHANCED NATURAL GAS STAR PROGRAM, that proposes a framework for 

the continued generation of emission reduction credits for use as offsets to help attain 

the ozone NAAQS. This framework would assure that industry has incentives to 

participate in EPA's voluntary methane emissions reduction program ("Enhanced 

Natural Gas Star" or “ENGS”) by enabling VOC reductions achieved as co-benefits of 
Page 3 of 3

voluntary methane controls to be treated as ERCs. This would thereby preserve

industry's compliance flexibility under the NAAQS being developed for ground level 

ozone. We anticipate that the framework would be incorporated into the Control 

Technique Guidelines ("CTGs") EPA is developing for oil and gas production sources, 

so that the CTGs do not "mandate" reductions that will be made voluntarily under the 

ENGS and thus preclude their use as ERCs. 

 

Since preserving ERC opportunities for companies that wish to use them may 

significantly inform and influence industry's perspective on the ENGS, we strongly urge 

EPA to review and respond to the proposed framework before the draft ENGS is 

released for comment. Affirming EPA's willingness to preserve ERC opportunities will 

help lay the groundwork for a positive dialogue on the draft ENGS and clarify one of the 

potential benefits to industry of participating in the ENGS. 

We encourage the EPA to take the necessary time to address our proposal before it 

releases a draft ENGS. Incorporating the proper incentives into the ENGS from the 

start will greatly assist companies in justifying their participation and the costs 

involved. Obviously, wide industry participation is important to the success of the 

ENGS. We believe that, with the right incentives in place, a significant portion of the 

production industry would be encouraged to join, which would obviate the need for an 

additional regulatory program. 

Thank you for your consideration. We look forward to discussing these issues with you

and your staff at your earliest convenience. Please contact me if you have any 

questions.

Sincerely,

Howard J. Feldman

Cc: Joseph Goffman

Paul Gunning

Carey Bylin

Peter Tsirigotis
June 8, 2015 Page 1

INCENTIVIZING VOLUNTARY PARTICIPATION IN

THE ENHANCED NATURAL GAS STAR PROGRAM

One important element of EPA’s methane reduction strategy is the development of the 

Enhanced Natural Gas STAR (ENGS) program, the agency’s voluntary program to 

reduce further methane emissions from existing sources across the oil and gas sector. 

Successful implementation of the ENGS program, however, is dependent on the 

willingness of oil and gas producers to participate. A critical consideration will be 

whether participating companies will receive emissions reduction credits (ERCs) under 

the Clean Air Act (CAA or Act) for the voluntary VOC emission reductions achieved as 

a co-benefit of controlling methane under the ENGS program. 

The incentive for companies to participate in the ENGS program could be significantly 

undercut by EPA’s proposed plan to issue Control Technique Guidelines (CTGs) that 

would require state regulation of VOC emissions from existing oil and gas sources 

located in ozone nonattainment areas (classified as moderate and above) and potentially 

transport regions. As described below, if the VOC reductions accompanying methane 

reductions under the ENGS are considered “mandatory” because they are required by 

states pursuant to the CTGs, then they would not be available to use as ERCs for 

meeting CAA requirements in areas designated nonattainment for ozone. This would 

eliminate an important benefit that industry could obtain from voluntary reductions 

under the ENGS and thereby create a major disincentive for participation in the 

voluntary program.

1

EPA has the ability to address these concerns. The discussion below outlines a federal

framework for ensuring that companies can participate in a voluntary methane 

reduction program and, at the same time, generate VOC ERCs that can be used for CAA 

compliance.

2

 These comments reflect our initial thinking; we expect to have further 

input once we have had the opportunity to review the design elements of the upcoming

EPA proposals for establishing the ENGS program and CTGs for the oil and gas sector.

 

1 The importance of generating VOC ERCs will not only be for the benefit of permitting new oil and gas 

projects in nonattainment areas, but also for the benefit of other industrial sectors that may need these 

ERCs for CAA compliance. While many new minor source oil and gas projects may not need VOC 

emission offsets as condition for obtaining their air construction permits, ERCs generated by existing oil 

and gas sources could be useful to other sectors that need them and have limited opportunities to 

generate ERCs.

2 The federal framework proposed in this paper would apply equally to oil and gas sources located on

either state or tribal lands.
June 8, 2015 Page 2

CAA REQUIREMENTS

The CAA establishes specific rules for the generation of ERCs. One key requirement is 

that the emission reductions must not otherwise be required by some other CAA 

program or regulation.3 EPA has also established federal guidance providing that to the 

extent that the emission reductions are in fact required by CAA, those reductions are 

not “surplus” and consequently may not be used to generate ERCs.

4

As discussed below, there is concern that voluntary VOC emission reductions achieved 

under the ENGS program will not be considered surplus if they are made now or in the 

future by existing oil or gas sources that are subject to new VOC emission reduction 

requirements over the next few years. 

In releasing its methane strategy of January 14, 2015, EPA announced its plan to 

develop CTGs that will guide states toward adopting VOC controls for those existing

sources located in ozone nonattainment areas under the CAA. In particular, 

section 182(b)(2) of the CAA requires states to set performance standards based on

“reasonably available control technology” (RACT) for each category of existing VOC 

emission sources for which EPA has developed CTGs for controlling VOC emissions. 

These RACT requirements would then be incorporated in State Implementation Plans

(SIPs) and be enforceable against covered sources. EPA is now working on draft CTGs

and intends to release them for comment in the next few months.

Viewed in this context, there is concern that the voluntary VOC reductions achieved 

under the ENGS program may not be surplus and thus be ineligible for the generation 

of ERCs. This could occur if EPA or states were to determine that these voluntary VOC 

reductions were otherwise required by another provision of the CAA – specifically, as 

discussed above, the VOC RACT requirements imposed through section 182(b)(2) of 

the Act.

 

3 Section 173 (c)(2) of the CAA (providing that “Emission reductions otherwise required by this chapter 

shall not be creditable as emissions reductions for purposes of any such offset requirement”). See also

Emissions Trading Policy Statement; General Principles for Creation, Banking and Use of Emission

Reduction Credits, 51 Fed. Reg. 43,814, (December 4, 1986) [hereinafter “EPA ERC Policy”].

4 EPA ERC Policy at 43,832. In addition to being surplus, the emission reductions must meet other criteria 

in order for the emission reductions to generate ERCs. These criteria include requirements for the 

reductions to be actual, quantifiable, enforceable, and permanent. Id.
June 8, 2015 Page 3

PROPOSED FRAMEWORK FOR GENERATION OF VOC ERCS

So that EPA’s development of the CTGs does not undermine the incentives for industry 

participation in the ENGS program, EPA should provide clarification that VOC 

reductions that occur as a co-benefit of voluntary methane reductions under the ENGS 

program will be deemed to be “surplus” and thereby be able to generate VOC ERCs

under the CAA. 

The most straightforward way for providing certainty on this issue is through the 

definition of the CTG source category. Specifically, EPA should define the oil and gas

source category covered by the CTGs to exclude those existing oil and gas sources that 

have implemented “best management practices” (BMPs) for methane under the ENGS 

program and have thereby reduced their VOC emissions to low levels that would meet

or exceed the minimum VOC RACT control levels that, as noted above, states would 

need to adopt in response to the CTGs under CAA section 182(b)(2).

5

 

In this case, the establishment of an exemption for existing sources controlling VOCs 

through ENGS-specified BMPs would mean that states would not be required to set

VOC RACT standards for these sources based on the control measures specified in the

CTGs. Since such sources would be excluded from the oil and gas source category to 

which the CTGs would apply, states would have no legal obligation to establish VOC 

RACT standards for these sources under the CAA. This means that the VOC emission 

reductions achieved by these sources would not result from the imposition of any 

mandatory CAA reduction requirement imposed by states or EPA. Rather, the 

reductions will be achieved through the voluntary implementation of BMPs or other 

equivalent work practice measures under the ENGS program and thereby would be 

“surplus” reductions for purposes of generating ERCs under the CAA.

6

In addition to demonstrating that the emissions reductions are surplus, owners and 

operators of existing oil and gas sources would have to meet the other criteria for 

generating creditable VOC ERCs under the CAA. These other criteria include

 

5 Notably, this approach is similar to the exemption that EPA has provided for new and modified sources

under the NSPS Subpart OOOO regulations. In the case of the Subpart OOOO regulations, EPA has 

defined the “affected facility” to exclude “highly-controlled” sources that meet certain performance 

criteria specified in the NSPS regulation.

6 Furthermore, by providing this guidance in the CTGs, states would also have the assurance that EPA 

would approve their nonattainment SIP RACT provisions with respect to the adoption of a BMP 

exemption for ENGS participation. It would also provide EPA regions with oversight of tribal lands 

needed assurance to include equivalent provisions in nonattainment federal implementation plans that 

EPA must adopt for ozone nonattainment areas.
June 8, 2015 Page 4

requirements for the associated VOC reductions to be actual, quantifiable, enforceable, 

and permanent.7 For companies participating in the ENGS program that wish to 

generate creditable VOC ERCs as co-benefits of methane reductions, a process for 

quantifying and documenting these voluntary VOC reductions would be helpful and 

reduce uncertainties down-the-road. EPA should, therefore, develop federal guidance 

for the quantification and accounting of voluntary VOC reductions from oil and gas 

sources that could be used to generate ERCs under the CAA. This guidance would not 

only be helpful to companies wishing to obtain VOC ERCs but would also encourage 

consistency in quantifying and crediting VOC reductions by states (and EPA regions 

managing tribal lands) that are responsible for establishing ERC programs as part of 

NAAQS implementation. Adherence to these procedures in the federal guidance could 

then be considered sufficient for generating creditable VOC ERCs so long as the 

reductions also voluntarily become federally enforceable through a permit condition or 

other applicable regulatory requirement imposed by the state or EPA. 

VOLUNTARY METHANE EMISSION REDUCTIONS

The primary objective of the ENGS program is to encourage participating companies to 

achieve significant voluntary reductions in methane emissions from their existing oil 

and gas sources. To encourage maximum participation under the ENGS program, EPA 

should establish a clear and straight forward process for participating companies to 

receive ERCs for the co-benefit VOC emissions reductions achieved under the ENGS 

program. The generation of such VOC credits is therefore a critical component of the 

ENGS program that should be included in order to preserve industry’s ability to meet

its ozone compliance obligations under the CAA.

In addition to the ability to generate VOC ERCs, the extent to which companies 

participate in the voluntary program will depend on a variety of other important

considerations, including the overall mix of incentives and benefits provided for 

achieving voluntary methane emissions reductions. Although outside the scope of this 

paper, there will undoubtedly be further dialogue regarding these incentives and 

benefits once the draft ENGS program is released for comment with the goal of crafting 

a program that encourages robust industry participation in the ENGS program and

thereby the achievement of substantial methane reductions. We look forward to 

discussing with EPA possible approaches to achieving this important objective once we 

have had the opportunity to review the proposed design elements of the ENGS 

program.

 

7 EPA ERC Policy at 43,832.
June 8, 2015 Page 1

INCENTIVIZING VOLUNTARY PARTICIPATION IN

THE ENHANCED NATURAL GAS STAR PROGRAM

One important element of EPA’s methane reduction strategy is the development of the 

Enhanced Natural Gas STAR (ENGS) program, the agency’s voluntary program to 

reduce further methane emissions from existing sources across the oil and gas sector. 

Successful implementation of the ENGS program, however, is dependent on the 

willingness of oil and gas producers to participate. A critical consideration will be 

whether participating companies will receive emissions reduction credits (ERCs) under 

the Clean Air Act (CAA or Act) for the voluntary VOC emission reductions achieved as 

a co-benefit of controlling methane under the ENGS program. 

The incentive for companies to participate in the ENGS program could be significantly 

undercut by EPA’s proposed plan to issue Control Technique Guidelines (CTGs) that 

would require state regulation of VOC emissions from existing oil and gas sources 

located in ozone nonattainment areas (classified as moderate and above) and potentially 

transport regions. As described below, if the VOC reductions accompanying methane 

reductions under the ENGS are considered “mandatory” because they are required by 

states pursuant to the CTGs, then they would not be available to use as ERCs for 

meeting CAA requirements in areas designated nonattainment for ozone. This would 

eliminate an important benefit that industry could obtain from voluntary reductions 

under the ENGS and thereby create a major disincentive for participation in the 

voluntary program.

1

EPA has the ability to address these concerns. The discussion below outlines a federal

framework for ensuring that companies can participate in a voluntary methane 

reduction program and, at the same time, generate VOC ERCs that can be used for CAA 

compliance.

2

 These comments reflect our initial thinking; we expect to have further 

input once we have had the opportunity to review the design elements of the upcoming

EPA proposals for establishing the ENGS program and CTGs for the oil and gas sector.

 

1 The importance of generating VOC ERCs will not only be for the benefit of permitting new oil and gas 

projects in nonattainment areas, but also for the benefit of other industrial sectors that may need these 

ERCs for CAA compliance. While many new minor source oil and gas projects may not need VOC 

emission offsets as condition for obtaining their air construction permits, ERCs generated by existing oil 

and gas sources could be useful to other sectors that need them and have limited opportunities to 

generate ERCs.

2 The federal framework proposed in this paper would apply equally to oil and gas sources located on

either state or tribal lands.
June 8, 2015 Page 2

CAA REQUIREMENTS

The CAA establishes specific rules for the generation of ERCs. One key requirement is 

that the emission reductions must not otherwise be required by some other CAA 

program or regulation.3 EPA has also established federal guidance providing that to the 

extent that the emission reductions are in fact required by CAA, those reductions are 

not “surplus” and consequently may not be used to generate ERCs.

4

As discussed below, there is concern that voluntary VOC emission reductions achieved 

under the ENGS program will not be considered surplus if they are made now or in the 

future by existing oil or gas sources that are subject to new VOC emission reduction 

requirements over the next few years. 

In releasing its methane strategy of January 14, 2015, EPA announced its plan to 

develop CTGs that will guide states toward adopting VOC controls for those existing

sources located in ozone nonattainment areas under the CAA. In particular, 

section 182(b)(2) of the CAA requires states to set performance standards based on

“reasonably available control technology” (RACT) for each category of existing VOC 

emission sources for which EPA has developed CTGs for controlling VOC emissions. 

These RACT requirements would then be incorporated in State Implementation Plans

(SIPs) and be enforceable against covered sources. EPA is now working on draft CTGs

and intends to release them for comment in the next few months.

Viewed in this context, there is concern that the voluntary VOC reductions achieved 

under the ENGS program may not be surplus and thus be ineligible for the generation 

of ERCs. This could occur if EPA or states were to determine that these voluntary VOC 

reductions were otherwise required by another provision of the CAA – specifically, as 

discussed above, the VOC RACT requirements imposed through section 182(b)(2) of 

the Act.

 

3 Section 173 (c)(2) of the CAA (providing that “Emission reductions otherwise required by this chapter 

shall not be creditable as emissions reductions for purposes of any such offset requirement”). See also

Emissions Trading Policy Statement; General Principles for Creation, Banking and Use of Emission

Reduction Credits, 51 Fed. Reg. 43,814, (December 4, 1986) [hereinafter “EPA ERC Policy”].

4 EPA ERC Policy at 43,832. In addition to being surplus, the emission reductions must meet other criteria 

in order for the emission reductions to generate ERCs. These criteria include requirements for the 

reductions to be actual, quantifiable, enforceable, and permanent. Id.
June 8, 2015 Page 3

PROPOSED FRAMEWORK FOR GENERATION OF VOC ERCS

So that EPA’s development of the CTGs does not undermine the incentives for industry 

participation in the ENGS program, EPA should provide clarification that VOC 

reductions that occur as a co-benefit of voluntary methane reductions under the ENGS 

program will be deemed to be “surplus” and thereby be able to generate VOC ERCs

under the CAA. 

The most straightforward way for providing certainty on this issue is through the 

definition of the CTG source category. Specifically, EPA should define the oil and gas

source category covered by the CTGs to exclude those existing oil and gas sources that 

have implemented “best management practices” (BMPs) for methane under the ENGS 

program and have thereby reduced their VOC emissions to low levels that would meet

or exceed the minimum VOC RACT control levels that, as noted above, states would 

need to adopt in response to the CTGs under CAA section 182(b)(2).

5

 

In this case, the establishment of an exemption for existing sources controlling VOCs 

through ENGS-specified BMPs would mean that states would not be required to set

VOC RACT standards for these sources based on the control measures specified in the

CTGs. Since such sources would be excluded from the oil and gas source category to 

which the CTGs would apply, states would have no legal obligation to establish VOC 

RACT standards for these sources under the CAA. This means that the VOC emission 

reductions achieved by these sources would not result from the imposition of any 

mandatory CAA reduction requirement imposed by states or EPA. Rather, the 

reductions will be achieved through the voluntary implementation of BMPs or other 

equivalent work practice measures under the ENGS program and thereby would be 

“surplus” reductions for purposes of generating ERCs under the CAA.

6

In addition to demonstrating that the emissions reductions are surplus, owners and 

operators of existing oil and gas sources would have to meet the other criteria for 

generating creditable VOC ERCs under the CAA. These other criteria include

 

5 Notably, this approach is similar to the exemption that EPA has provided for new and modified sources

under the NSPS Subpart OOOO regulations. In the case of the Subpart OOOO regulations, EPA has 

defined the “affected facility” to exclude “highly-controlled” sources that meet certain performance 

criteria specified in the NSPS regulation.

6 Furthermore, by providing this guidance in the CTGs, states would also have the assurance that EPA 

would approve their nonattainment SIP RACT provisions with respect to the adoption of a BMP 

exemption for ENGS participation. It would also provide EPA regions with oversight of tribal lands 

needed assurance to include equivalent provisions in nonattainment federal implementation plans that 

EPA must adopt for ozone nonattainment areas.
June 8, 2015 Page 4

requirements for the associated VOC reductions to be actual, quantifiable, enforceable, 

and permanent.7 For companies participating in the ENGS program that wish to 

generate creditable VOC ERCs as co-benefits of methane reductions, a process for 

quantifying and documenting these voluntary VOC reductions would be helpful and 

reduce uncertainties down-the-road. EPA should, therefore, develop federal guidance 

for the quantification and accounting of voluntary VOC reductions from oil and gas 

sources that could be used to generate ERCs under the CAA. This guidance would not 

only be helpful to companies wishing to obtain VOC ERCs but would also encourage 

consistency in quantifying and crediting VOC reductions by states (and EPA regions 

managing tribal lands) that are responsible for establishing ERC programs as part of 

NAAQS implementation. Adherence to these procedures in the federal guidance could 

then be considered sufficient for generating creditable VOC ERCs so long as the 

reductions also voluntarily become federally enforceable through a permit condition or 

other applicable regulatory requirement imposed by the state or EPA. 

VOLUNTARY METHANE EMISSION REDUCTIONS

The primary objective of the ENGS program is to encourage participating companies to 

achieve significant voluntary reductions in methane emissions from their existing oil 

and gas sources. To encourage maximum participation under the ENGS program, EPA 

should establish a clear and straight forward process for participating companies to 

receive ERCs for the co-benefit VOC emissions reductions achieved under the ENGS 

program. The generation of such VOC credits is therefore a critical component of the 

ENGS program that should be included in order to preserve industry’s ability to meet

its ozone compliance obligations under the CAA.

In addition to the ability to generate VOC ERCs, the extent to which companies 

participate in the voluntary program will depend on a variety of other important

considerations, including the overall mix of incentives and benefits provided for 

achieving voluntary methane emissions reductions. Although outside the scope of this 

paper, there will undoubtedly be further dialogue regarding these incentives and 

benefits once the draft ENGS program is released for comment with the goal of crafting 

a program that encourages robust industry participation in the ENGS program and

thereby the achievement of substantial methane reductions. We look forward to 

discussing with EPA possible approaches to achieving this important objective once we 

have had the opportunity to review the proposed design elements of the ENGS 

program.

 

7 EPA ERC Policy at 43,832.