UNITED STATES ENVIRONMENTAL PROTECTIONAGENCY 

### REGION 8 99918TH STREET- SUITE 200

DENVER, CO 80202-2466 Phone 800-227-8917 http://www.epa.gov/region08
Ref: 8P-AR Board Secretary Montana Board ofEnvironmental Review P.O. Box 200901 Helena, MT 59620-0901 DearBoard Secretary: The purpose ofthis letter is to provide EPA's comments on proposed revisions to the Administrative Rules ofMontana (ARM) that were announced in MAR Notice No. 17-2238,24­ 12/22/05. In the MARnotice the Board is proposing to adopt new, and amend existing, air quality rules establishing a registration system for certain oil and gas well facilities that presently require an air qualitypermit. This letter also contains comments onmodifications to the new rule the Department proposed at the January 23,2006public hearing.
EPA has recognized that for certain source categories, involving relatively few operations that are relatively similar in nature, case-by-case permitting may not be the most administratively efficient approach to establishing federally-enforceable restrictions. One approachthat has been used is to establish a general rule which sourcesregister to create federally enforceable restrictions. States submit such rules as a SIP revision. We have several concerns with the proposed newrules. Our concerns pertain to assuring that the national ambient air quality standards (NAAQS) and prevention ofsignificant deterioration (PSD) increments are met and thatthe rules are practicably enforceable. These concerns should be addressed for EPA approval ofthe new rules as a SIP-approvedrule. We have also identified some general concerns with the proposedNewRule. Enclosure Ito this letter discusses in detail all ofourconcerns. We have discussed these concerns with the Department ofEnvironmental Quality.Please notethat this letter and Enclosure I contain our current views based on a preliminaryreview ofthedraft rules. These views should not be considered ourfinal position, which we will onlyreach through notice and comment rulemaking afterthe state has submitted the rules for our approval as a SIP revision. Ifyou have any questions regarding this letterplease contact me or Laurie Ostrand at (800) 227-8917.
Sincerely,

Richard R. Long, Director Air and Radiation Program

Enclosures (2)

cc: DonVidrine, Montana Department of Environmental Quality John Wardell, 8MO

2Enclosure I A. Evaluation ofProposed Rule The following concerns shouldbe addressed for EPA approval as a SIP revision.
1. Impact on Attainment and Maintenance ofthe NAAQS and PSD Increments The DEQ mustprovide a quantitative analysis showing that the proposed new rule will not impact the NAAQS orPSD incrementsbefore EPA could approve this rule as a SIP revision. Section 110(1) ofthe Act indicates that EPAcannot approve a revision ofa planifthe revision would interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in section 171), or any other applicable requirement ofthis Act. Specifically, a quantitative analysis should be completed that (1) evaluates the cumulative impacts ofthe existing oil and gas well facilities, and (2) estimates the cumulative impacts of new oil and gas well facilities expected each year. Finally, the State must commit to evaluate the NAAQS and PSD increments in the future. Wewould be more than happyto work with the DEQ and suggest the type ofquantitative analysis necessary for us to determine that section 110(1) ofthe Acthasbeenmet. We note that Department'sproposed modifications to New Rule IX(6), presented at the January 23,2006 hearing, indicate that an owner or operator ofa registration eligible oil and gas well facility, with a detectible level ofhydrogen sulfide from the well, shall submit, with the registration form, an air qualitymodeling analysis demonstrating compliance withthe S02 and H2S ambient air quality standards. The rule should also indicate that the owner oroperatorneeds to demonstrate compliance with S02 increments. Regarding demonstrating compliance withthe S02 ambient airquality standards, we understand that an oil and gas well facility cannot register (and must obtain a permit) if demonstration ofcompliance with the S02 air quality standards can onlybe assured by installing/using control technologynot identified in the rule. Ourunderstanding is based on discussions withDEQ staff. However, this is not clear in the rule. Therule should be clearthat ifcompliance with ambient air quality standards and increments cannotbe achieved with the controls specified in the rule then the source is not registration eligible. 2. Short Term Limits
Ifthe DEQ envisions that some oil and gas well facilities that emit less than 100 tpyof S02 maybe registration eligible, the rule must includeprovisions for short term S02limits to assure that the S02NAAQS and increment are met. 3. Practical Enforceability Review
For guidance on exclusionaryorprohibitoryrules, we look inpart to a January 25, 1995 memorandum entitled "Options for Limiting the Potential to Emit (PTE) ofa Stationary Source 3Under Section 112 and Title V ofthe Clean AirAct (Act)," from John S. Seitz, Director, Office ofAir QualityPlanning and Standards, and Robert 1. Van Heuvelen, Director, Office of Regulatory Enforcement, to Regional AirDivision Directors. See Enclosure II. One ofthe main tenets ofanyrule used to limit the potential to emit ofsources is that the rule be enforceable as a practical matter. Therefore, ourreview has focused on the practical enforceabilityofthe proposed new rule. Attachment #4 to the**Ja~1Uary** 25, 1995 memorandum mentioned above describes six enforceability criteriawhich a rule must meet to make limits enforceable as a practical matter. In general, practical enforceability for a source-specific permit term means that the provision must specify: (1) a technically accurate limitation and the portions ofthe source subject to the limitation; (2) the time period for the limitation (hourly, daily, monthly, annually); and (3) the method to determine compliance including appropriate monitoring, recordkeeping and reporting. Forrules that apply to categories ofsources, practical enforceability additionallyrequires that the provisions (4) identify the categories ofsources that are covered bythe rule; (5) where coverage is optional, provide for notice to the permitting authority ofthe source's election to be covered by the rule; and (6) recognize the enforcement consequencesrelevant to the rule. Below we review the proposed new rule against the six criteria contained in the guidance. Ourreview addresses requirements (4) and (5) first as they are concepts that are unique to rules.

a. Specific Applicability Guidance: Rules must be specific to the emission units or sources covered by the rule. In otherwords, the rule must clearly identify the categoryofsources that qualify for the rule's coverage. The rule must applyto categories ofsources that are defined specificallyornarrowly enough so that specific limits and compliance monitoring techniques canbe identified and achieved byall sources in the categories defined. Review: Forthe mostpart, the draft new rule meets the guidance with respect to specific applicability. However, the definition ofoil and gas well facility from Montana Code Annotated (MCA), indicates in (b) that "equipmentreferred to in subsection (13)(a) includes but is not limited to wellhead assemblies, amine units, prime mover engines, phase separators, heater treater units, dehydratorunits, tanks, and connecting tubing." The draft new rule should develop criteriadetermining how it will include the equipment not identified in the definition. As an alternative to developing criteria, the draft new rule could instead include a definition of"oil and gas well facility" ratherthan referring to the MCA definition. The new definition could identify the equipment currentlyregulated bythe rule (and not include thephrase "but is not limited to") and could be revised as needed in the future when new equipment is included. b. Reporting or Notice to Permitting Authority Guidance: The rule should provide that a source notifythe permitting authority ofits coverage bytherule.

4Review: New Rule VI(l) shouldbe clarified. The rule indicates that owner oroperators "may" submit a registration form. It should beclarified that owners oroperators have the option ofregisteringbut ifthey chose not to register underthis rule they needto obtain apermit. Otherwise, it appears that this requirement hasbeenmet



### c. Specific Technically Accurate Limits Guidance: Therule must specifytechnically accurate limits on the potential to emit. The rule must clearly specifythe limits that apply, and include the specific associated compliance monitoring. The standards orlimits mustbetechnically specific and accurate to limit potential to emit, identifying any allowed deviations. Further, for potential to emit limitations, the standards set must be technically sufficient to provide assurances to EPA and the public that they actually represent a limitation on the potential to emit. A rule that allows sources to submit the specific parameters and associated limits to bemonitored maynot beenforceablebecause the rule itself does not set specificlimits. Review: The rule does not meet this requirement. Below are several options for revising the rule to meet this requirement. i) Have the rule establish production limits, hours ofoperation limits or fuel consumption limits to ensurethat the PTE levels inNewRule VI(2) are met. ii) Have the rule indicate that production limits, hours ofoperation limits orfuel consumption limits submitted as part oftheregistration packetbythe sourcebecome enforceable limits for both synthetic and true minors. Such limits should be derived from equations/calculations set forth in the rule and chemical composition ofthe crude (based on, at least, the first 30 days after completion ofthe well) and ensure that the PTE level in NewRule Vl(2) are met. Additionally, the rule should specifythe combustion efficiencythat "smokeless combustion devices must achieve" (We note that the rule references 40 CFR 60.18. However, 40 CFR 60.18 does not contain a combustion efficiency for flares. Without a specified combustion efficiencythere appears to be apractical enforceabilityproblem; the January 23,2006, Departmentmodified New Rule VII(1)(a)) indicates that other control equipment "with equal or greater control efficiency than the smokeless combustion device" maybe used.) 

### d. Specific Compliance Monitoring Guidance: The rule must specifythe methods to determine compliance. Specifically, the rule must state the monitoring requirements, recordkeeping requirements, reportingrequirements, and test methods as appropriate for eachpotential to emit limitation; and which methods are used for making a direct determination ofcompliance with the potential to emit limitations. Review: Althoughthe new rule requires certain recordkeeping and reporting, to be SIPapprovable, the new rule should also: 5i) ensure consistency and accuracy inthe calculations that oil and gas well facilities conduct, for examplebyincluding the calculations in the rule orreferencing, for example, specific AP42 orASTM methods to determine emissions from the various emission unit at the oil and gas well facility (ifspecific constants are to be used in the equations then they should be specified as well); ii) require that the assumptions used inthe calculations (e.g., chemical composition ofthe crude) are still accurate; iii) require sources to keep dailyrecords offuel consumption (in New Rule V(3)) because fuel consumption is mentioned in New Rule VI(2) as apotentiallylimiting factor; iv) require that the information/reports submitted to the Department are certifiedbythe owner/operator (we note that the modifications proposed bythe Department at the January 23,2006 hearing now contain such a requirement at New Rule !X(7), however, it appears that the certificationrequirement in New Rule !X(7) onlyapplies to synthetic minors and should applyto all registered sources); and v) provide aprovision for source owners or operators to selfreport (within a time period, i.e., within 7 days or some othertime), whenthey have exceeded the confirmed PTE limits. Therule also requires the source inspect monthly all VOC piping components for leaks and repair such leaks within a specified period oftime. The rule should specifymethods more reliable than sight, sound and smell to detect leaks, for example, field gas chromatography; photo ionization air monitoring; orportable gas detection instrumentation. In addition, the rule should require the oil and gas well facility to conduct a first attempt at repair for leaks that exceed a certain specification (e.g., 500 ppm). Under the Inspection and RepairRequirements, the New Rule should require also owners/operators to test/monitor all control equipment (e.g., monitoring for the presence ofa continuouspilot flame using a thermocouple and continuous recording device) to assure that they are operating correctly.

e. Practicably Enforceable Averaging Times Guidance: The averaging time for all limits must bepracticablyenforceable. In other words, the averaging time period must readily allow for determination ofcompliance. EPA policy expresses a preference for short term limits, generally daily, but not to exceed one month. Review: Although we agree that 12-monthrolling limits satisfythis requirement for most pollutants, shorterterm S02 limits (e.g., 3-hour and 24-hour) need to be established to assure that the S02 NAAQS and increment will be met. f. Clearly Recognized Enforcement Guidance: Violations ofthe potential to emit levels imposed bythe rule constitute violations ofpermitting and SIP requirements.

6Review: Theproposed new rule should indicate the consequences ofviolating the rule. For example, the rule should indicate the potential consequences ifa registered source exceeds the potential to emit thresholds. Alternatively, the DEQ can explain how existing state rules will address this concern. Also, the rule should mention that"ifa HAP level is exceeded, the oil and gas well facility maybe subject to multiple MACT standards and maybecome a Title V source.

B. General Issues We stronglyrecommend that the DEQ revise the draft new rule to address the following concerns: 1. New Rule VII(l)(d) and (e) should be revised to require stationaryinternal combustion engines greater than 35 BHP (rather than 85 BHP) be equipped with nonselective catalytic reduction or its equivalent (for rich-bum) and oxidation catalytic reduction or its equivalent (for lean-bum) engines. EPA is aware oflower HP engines being controlled for NOx emissions. The Oil and Gas Initiative effortbeing conductedbyEPA Region 8 and the Region 8 states has specified an Existing Engines Proposal for 4-Stroke Engines to require controls on all engines greater than 35 HP. Control ofthese engines to 35 BHP has been shown to be technically and economicallyfeasible in SW Wyoming and the Federal Land Managers are recommending control ofengines 40 BHP and greater inthe San Juan Basin. 2. New Rule VII(l)(a) should indicate that anyVOC vapors, within a halfmile ofa pipeline must be routed to a gas pipeline, regardless ofthe BTUcontent ofthe vapors. We note that the Departmentproposed modifications presented at the January 23,2006 hearing no longer require VOC vapors to be routed to a pipeline. We also note that there appears to be a gap in the rule between the requirement to treat VOC vapors greater 500 BTU/scfand the referenced 40 CFR 60.18. That is, 40 CFR 60.18 indicates that flares can treat VOC vapors down to 300 BTU/scfif steam assisted and 200 BTU/scfifnon-assisted. The rule should address this gap. 3. The rule itselfshould indicate that sources have to meet other SIP requirements, for example, state rules for minimizing fugitive emissions, opacityrequirements, etc. We note in the MAR proposal notice, under Reason, that registered facilities would still be required to complywith any other applicable requirements not listed in the rules. However, to make it clear to registered facilities, such language should also be in the rule. 4. Regarding emission control requirements, the rule should indicate that any control equipment used be operated to providethe maximum air pollution control for which it was designed. We note that the Departmentproposed modifications presented at the January 23,2006 hearing now include this requirement. 5. The rule should define "VOC piping components." The term is used in New Rule VIII(I). We note that the Departmentproposed modifications presented at the January 23,2006 hearing now include the following definition ofVOC piping components to mean "VOC emissions from valves, pumps, compressors, flanges, pressurereliefvalves, and connectors, and otherpiping 7components" However, it's not clearto us why a piping component would mean VOC emissions from the various pieces ofequipment mentioned. 6. The rule should contain a definition for "emission minimizing technology" similarto the language in the 

### 8895 rule. However, we note that the 

### 8895 definition ofemissions minimizing technology indicates "ortechnology that results in significantly lower emissions ofVOCs through the use ofvapor capture and introduction into apipeline." We question the starting point for determining "significantlylower emissions"; significantly lower than what? We recommend clarifying this in a new definition for the oil and gas registration rule. We note that the Departmentproposed modifications no longer contain a reference to "emissionminimizing technology." Therefore, such a definition is not necessary. 7. We note that the modifications to the draft new rule that the Department proposed at the January 23,2006hearing, contain a new reference to "potential to emit" in New Rule VI(2). The draft new rule itselfcontains a definition of"potential to emit" at New Rule 1(2), yet as used in New Rule VI(2), "potential to emit" is as defined in the operating permit rules at ARM 17.8.1201(26). We question whyyou've added this new reference to New Rule VI(2).**""~_"_._.,~_.~~~._** ..**_~~~~_------** 8Laurie To ber@mt.gov Ostrand/P2/R8/USEPAlUS 01/30/200611 :26 AM ee viwalsh@mt.gov bee Subject Comments on Oil and Gas Registration Rule
Board Secretary Montana Board of Environmental Review Attached are EPA's comments on the draft Oil and Gas Registration rule.