The Honorable Gina McCarthy 

Administrator 

U.S. Environmental Protection Agency 

1200 Pennsylvania Avenue, NW 

Washington, DC 20460 

Dear Administrator McCarthy: 

Enclosed for your consideration is the Report of the Small Business Advocacy Review Panel (SBAR 

Panel or Panel) convened for the EPA’s planned proposed rulemaking entitled “Emission Standards for 

New and Modified Sources in the Oil and Natural Gas Sector.” This notice of proposed rulemaking is 

being developed by the U.S. Environmental Protection Agency (EPA) under the Clean Air Act (CAA). 

On January 14, 2015, the Obama Administration announced its next steps to cut methane emissions 

under the March 2014 Strategy to Reduce Methane Emissions. That strategy, part of the Administration’s 

Climate Action Plan, identified the oil and gas industry as a key source of methane emissions and set out 

a series of steps to reduce those emissions while allowing continued responsible growth in U.S. oil and 

natural gas production. 

The EPA is developing a rule that proposes to reduce emissions of greenhouse gases, including 

methane, and volatile organic compounds (VOCs) under its New Source Performance Standards (NSPS) 

for the oil and natural gas industry. Those cost-effective standards, issued in 2012, currently are reducing 

VOC emissions from several sources in the oil and natural gas industry. The EPA is considering adding 

equipment and processes to those sources currently covered by the standards. Equipment and 

processes the agency is considering adding to the NSPS include hydraulically fractured oil wells, 

pneumatic controllers and pumps, leaks from new and modified sites, and compressor stations. 

On June 16, 2015, the EPA’s Small Business Advocacy Chairperson convened this Panel under section 

609(b) of the Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory 

Enforcement Fairness Act (SBREFA). In addition to its chairperson, the Panel consists of the Director of 

the Sector Policies & Programs Division of the EPA Office of Air Quality Planning & Standards, the 

Administrator of the Office of Information and Regulatory Affairs within the Office of Management and 

Budget (OMB), and the Chief Counsel for Advocacy of the Small Business Administration (SBA). It is 

important to note that the Panel’s findings and discussion are based on the information available at the 

time this report was drafted. The EPA is continuing to conduct analyses relevant to the proposed rule, 

and additional information may be developed or obtained during this process as well as from public 

comment on the proposed rule. The options the Panel identified for reducing the rule’s economic impact 

on small entities will require further analysis and/or data collection to ensure that the options are 

practicable, enforceable, protective of public health, environmentally sound and consistent with the CAA. 

SUMMARY OF SMALL ENTITY OUTREACH 

Prior to convening the Panel, the EPA conducted outreach with small entities that will potentially be 

affected by these regulations. In May 2015, the EPA invited SBA, OMB, and 16 potentially affected small 

entity representatives to a conference call and solicited comments from them on preliminary information 

sent to them. The EPA shared the small entities’ written comments with the Panel as part of the Panel 

convening document. 

After the SBAR Panel was convened, the Panel distributed additional information to the small entity 

representatives (SERs) on June 15, 2015, with additional materials sent on June 17, 2015, for their 

review and comment and in preparation for another outreach meeting. On June 18, 2015, the Panel met 

with the SERs to hear their comments on the information distributed in these mailings. The SERs were 

asked to provide written feedback on ideas under consideration for the proposed rulemaking. The Panel 

received written comments from the SERs in response to the discussions at this meeting and the 

outreach materials. See Section 6 of the Panel Report for a complete discussion of SER comments. 
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Their full written comments are also included in Appendix B. In light of these comments, the Panel 

considered the regulatory flexibility issues specified by RFA/SBREFA and developed the findings and 

discussion summarized below. 

PANEL FINDINGS AND DISCUSSION 

Under section 609(b) of the RFA, the Panel is to report its findings related to these four items: 

1) A description of and, where feasible, an estimate of the number of small entities to which the 

proposed rule will apply. 

2) A description of the projected reporting, recordkeeping and other compliance requirements of 

the proposed rule, including an estimate of the classes of small entities which will be subject 

to the requirement and the type of professional skills necessary for preparation of the report 

or record. 

3) Identification, to the extent practicable, of all relevant federal rules which may duplicate, 

overlap or conflict with the proposed rule. 

4) A description of any significant alternatives to the planned proposed rule which would 

minimize any significant economic impact of the proposed rule on small entities consistent 

with the stated objectives of the authorizing statute. 

The Panel’s most significant findings and discussion with respect to each of these items are summarized 

below. To read the full discussion of the Panel findings and recommendations, see Section 7 of the Panel 

Report. 

A. Number and Types of Entities Affected 

Section 3 of the Panel Report presents a definition of the small entities to which the proposed rule may 

apply. 

B. Recordkeeping, Reporting, and Other Compliance Requirements 

SERs made a general request for reduced recordkeeping and reporting requirements. However, apart 

from requesting limited fugitives tagging and reporting requirements, the SERs did not provide specific 

recommendations. The EPA did not present specific information about the potential reporting, 

recordkeeping, and compliance requirements. The Panel agrees that recordkeeping and reporting 

requirements should be minimized wherever possible. 

C. Related Federal Rules 

Section 2.3 of the Panel Report contains a discussion of the related federal rules. 

D. Regulatory Flexibility Alternatives 

Oil Well Exemptions 

SERs encouraged the EPA to exempt stripper wells, low pressure oil wells, and any well that requires 

artificial lift. SERs recommended that the EPA establish an overall applicability threshold based on 

production, emissions, well depth, well type (horizontal), well pressure, formation, or revenue to limit 

potential impact of future regulations on small entities. 

The SERs offered several threshold alternatives to be applied to the oil well completion requirements 

which would significantly reduce compliance costs and burden to small entities that the SERs asserted 

would not affect gas recovery benefits. Some of these comments are described below. Advocacy believes 
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the EPA had a greater opportunity to advance the discussion by evaluating these alternatives through 

analysis of the available data. Advocacy further believes that there is enough information to conduct 

analysis of alternatives now. Advocacy notes that there are several types of thresholds that could be 

explored by the EPA, such as average production of nearby wells (by oil field, reservoir, or basin), well 

length or depth, and gas and water pressure characteristics. Advocacy encourages the EPA to do so in 

the future, in advance of proposal, to facilitate more informed and productive comments from the public 

which will lead to a better rulemaking. 

The EPA has production and well characteristic data on thousands of oil wells through DrillingInfo, which 

aggregates all well data in the U.S. reported by operators to state agencies. In this database, the EPA 

could develop thresholds to target geographical areas or well characteristics with greater gas recovery 

potential than areas or characteristics where costs imposed would achieve little to no benefit. Advocacy 

believes the EPA should examine the data in DrillingInfo and the studies identified in the White paper for 

potential alternatives that minimize small entity costs, while achieving significant methane emission 

benefits. For example, Advocacy performed its own preliminary analysis of the DrillingInfo data, which led 

us to recommend a production threshold (see below). Advocacy believes the EPA also should consider 

the peer review and public comments on the white paper and reassess the size and diversity of the oil 

well completions in a more comprehensive fashion. Advocacy believes the EPA should have provided 

additional analysis since the publication of the white paper. 

The EPA believes that it has reasonably analyzed the available data for this draft proposed rule, and 

sufficiently documented this analysis through the rule, the technical support document (TSD), and the 

SBREFA process. However, the EPA notes information gaps and has requested additional data and 

information through the public comment process. 

Gas to Oil Ratio 

Advocacy is concerned that the EPA estimate of ten tons of methane reduction per event for oil well 

completions may be significantly overestimated, based on its analysis of the 2012 Drilling Info database 

and SER comments. The 2012 analysis includes hydraulically fractured oil well completions with GORs 

between 300 and 100,000, whereas the 2011 analysis was limited to GORs up to 12,500. 

The Panel recommends that the EPA continue analyzing current data, and assess the alternatives 

mentioned by SERs. In an effort to contribute to the panel process, Advocacy analyzed the EPA data 

provided. Advocacy found that geographical patterns and well characteristics exist in the data to suggest 

common sense thresholds. While a 300 gas to oil ratio (GOR) threshold provides some relief for small 

entities, it is problematic because GOR is not known at time of fracturing when a completion takes place. 

Advocacy further recommends that the EPA develop a scheme based on the well characteristics of 

nearby wells in the basin or reservoir to provide an estimate for the GOR parameter. However, the 

location of the well, and the drill direction are known parameters that could be used. In concert with these 

other considerations, Advocacy recommends the EPA consider a GOR cutoff closer to 900, as one SER 

suggested. 

The EPA believes that a gas-to-oil ratio (GOR) of 300 scf of gas per barrel of oil produced is an 

appropriate threshold for facilities to be subject to the well completion provisions of the NSPS. The reason 

for the proposed threshold GOR of 300 is that separators typically do not operate at a GOR less than 

300, which is based on industry experience rather than a vetted technical specification for separator 

performance. Though, in theory, any amount of free gas could be separated from the liquid, the reality is 

that this is not practical given the design and operating parameters of separation units operating in the 

field. The EPA is soliciting comment on whether a GOR of 300 is the appropriate applicability threshold. 

Additionally, the EPA understands that GOR is not known at the time of well completion, and is soliciting 

comment on whether the GOR of nearby wells would be a reliable indicator in determining the GOR of a 

new or modified well. 
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Low Production Wells 

When mapping average daily associated gas of 90 Mcf or above (isolating stripper wells) using county 

level data, Advocacy found that most (85%) of these greater gas recovery oil well completions occur in 

about a third of the counties analyzed. Advocacy contends that there are potentially large areas that could 

be exempted from this requirement without forgoing significant methane emission reduction, or at least 

phased in to allow time to design proper data collection. For example, PIOGA comments report an 

average gas volume of only 74 MCFD in Pennsylvania stripper oil wells in contrast to Pennsylvania 

stripper gas wells averaging 532 MCFD. 

The EPA understands that low production wells have inherently low emissions from well completions and 

many are owned and operated by small businesses. However, the EPA recognizes that identification of 

these wells prior to completion events is difficult, especially considering that drilling of a low production 

well may be unintentional and may be infrequent, but production may nevertheless proceed due to 

economic reasons. The EPA is soliciting comment and information on emissions associated with low 

production wells, characteristics of these wells and supporting information that would help 

owners/operators and enforcement personnel identify these wells prior to completion. 

Because of these preliminary findings about low production and a lack of evidence that there will be 

sufficient gas recovery, the Panel recommends that the EPA further analyze and consider exempting low 

production wells (with an average daily production of less than 15 barrel equivalents) from a REC or 

combustion requirement during oil well completions. 

Vertical Wells

According to a SER comment, vertical wells lack sufficient wellhead pressure or quantity of gas to be 

separated during completion. Advocacy recommends that since the white papers laid the foundation to 

the materials prepared for the Panel, the EPA should revisit the information learned through this process, 

especially as it relates to the specific characteristics of vertical wells. Therefore, as a regulatory 

alternative, Advocacy recommends the EPA consider exempting vertical wells from oil well completion 

requirements. 

The EPA clarifies that both the 2014 white paper analysis of oil well completions and DrillingInfo data 

analysis include vertical wells that are hydraulically fractured. However, the EPA understands that there 

are certain physical well characteristics that may inhibit the operation of a separator, and notes that the 

rule does not require RECs where their use is not feasible. However, the EPA has not seen sufficient data 

to support the characterization that a separator will not be able to function for all or the majority of vertical 

wells that are hydraulically fractured. However, the EPA recommends soliciting comment on the types of 

oil wells that will not be capable of performing a REC or combusting completion emissions due to 

technical considerations such as low pressure or low gas content, or other physical characteristics such 

as location, well depth, length of hydraulic fracturing, or drilling direction (e.g., horizontal, vertical, 

directional). 

Low Pressure Oil Wells

Advocacy recommends that “low pressure wells” should be categorically exempt and could be based on a 

threshold sales line/gathering line of approximately 250 psi or a simple water gradient formula of 0.465 

psi/foot. The emissions associated with these types of wells are so low that even if a separator can be 

operated for some short period of time, the value of gas does not exceed the cost associated with 

bringing equipment to the site. As the SERs indicated, these oil completion requirements can be very 

costly on small firms, particularly with respect to small production wells. The expected gas recovery 

benefits from oil well completions are expected to be a small fraction of the benefits obtained by the gas 

wells under the current version of the NSPS rule. 

The EPA is aware that oil wells cannot perform a REC if there is not sufficient well pressure or gas 

content during the well completion to operate the surface equipment required for a REC. In the 2012 

NSPS the EPA did not require low pressure gas wells to perform REC, but operators were required to 
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control those well completions using combustion. However, the EPA recommends soliciting comment on 

the types of oil wells that will not be capable of performing a REC or combusting completion emissions 

due to technical considerations such as low pressure or low gas content, or other physical characteristics 

such as location, well depth, length of hydraulic fracturing, or drilling direction (e.g., horizontal, vertical, 

directional). The EPA defines low pressure wells as a well with reservoir pressure and true vertical well 

depth such that 0.445 times the reservoir pressure (in psia) minus 0.038 times the vertical well depth (in 

feet) minus 67.578 psia is less than the flow line pressure at the sales meter. The EPA recommends 

soliciting comment on whether this definition is appropriate for low pressure oil wells. 

Substitution of Combustion over Green Completion / REC Requirements

Advocacy recommends that the EPA substitute flaring for the green completion requirement (REC), in 

addition to the consideration of thresholds. This alternative is much more cost-effective, and particularly 

important for small firms to have a lower cost alternative that achieves a 95% reduction. The PIOGA 

comments also stated that the use of RECs would adversely impact the productivity and longevity of the 

stripper oil wells. Alternatively, the EPA could require larger firms to perform the RECs, while allowing 

smaller firms (using a firm revenue cutoff or other small business size indicator) to combust the remaining 

gas. 

The EPA recommends that RECs be implemented on oil wells, except where their use is not feasible 

(e.g., technically infeasible for a separator to function, availability of gathering lines). Compared to 

combustion alone, the EPA believes that the combination of REC and combustion will maximize the 

recovery of natural resources and minimize venting to the atmosphere. However, the EPA notes that 

although the flaring in lieu of RECs may be less costly, flaring contributes secondary environmental 

impacts, nuisance impacts to nearby communities and complicates compliance for owners/operators. 

Phase – In Requirements 

The Panel recommends that the EPA consider phasing in the well completion requirement over a period 

of years. The Panel agrees that the EPA solicit comment on whether the well completion provisions of the 

proposed rule can be implemented on the effective date of the rule in the event of potential shortage of 

REC equipment and, if not, how a phase in could be structured. The Panel agrees that a phased in 

approach could be structured to provide for control of the potentially highest emitting wells first, with other 

wells being included at a later date. The Panel recommends that the EPA solicit comment on whether 

GOR of the well and production level of the well should be bases for the phasing of requirements for 

RECs, and if so, what an appropriate threshold for phase-in should be. 

Fugitives 

Leak Detection Methods 

SERs encouraged the EPA to allow a variety of leak detection technologies, including Method 21, AVO, 

and soap testing. The EPA asserts that use of OGI can reduce the amount of time necessary to conduct 

fugitive emissions monitoring since multiple fugitive emissions components can be surveyed 

simultaneously, reducing the cost of identifying fugitive emissions compared to alternative leak detection 

technologies that require a manual screening of each fugitive emissions component. Advocacy 

recommends the EPA propose Method 21 or OGI as allowable alternatives. The EPA contends that while 

Method 21 is lacking because it does not allow the detection of malfunctioning equipment that may not be 

the focus of the survey, and it is not as cost-effective as OGI, the Panel recommends the EPA solicits 

comment on whether to allow EPA Method 21 as an alternative to OGI for monitoring, including the 

appropriate EPA Method 21 level repair threshold. The EPA notes that the proposed rule would allow the 

use either OGI or Method 21 for resurvey because the resurvey would focus solely on ensuring repairs 

resolved the leak at the individual component. 
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Survey Frequency 

SERs recommended leak surveys be conducted no more than once per year. Advocacy has questions 

about the costs of repair and the emission reductions that be achieved through increased survey 

frequency which Advocacy believes the EPA was unable to address satisfactorily. Advocacy urges the 

EPA to improve the record basis for its emission reduction estimates and the cost of repairs for Method 

21 and OGI, in order to permit more informed comment on the alternatives. Advocacy believes the EPA 

was unable to adequately explain the basis for the different repair costs vs. frequency for Method 21 and 

OGI, or the basis for the 40/60/80% emission reductions based on increasing survey frequency from 

annual to quarterly. 

The EPA determined that semiannual monitoring will result in identification and repair of significant 

fugitive emissions from components, and that using OGI, an operator can survey multiple fugitive 

emissions components simultaneously reducing the cost of identifying fugitive emissions. Additionally, if 

fugitive emissions are detected at less than one percent of the fugitive emission components at a well site 

during two consecutive semiannual monitoring surveys, the proposed rule allows for the monitoring 

survey frequency for that well site to be reduced to annually. Advocacy had no information upon which to 

base a recommendation related to the proportion of leaking components, but supports analysis of such an 

approach. Advocacy also recommends that the EPA provide more analysis and factual foundation for the 

record to allow commenters to provide more informed advice. 

The Panel agrees that the EPA should solicit comment on an alternate proposal option based on an initial 

annual survey frequency. The Panel recommends the EPA solicit comment on the appropriateness of 

semiannual monitoring frequency and the proposed provisions for increasing and decreasing the 

monitoring frequency. 

Fugitive Emissions at Well Sites 

The Panel recommends not requiring fugitive emission surveys at well production sites, unless there are 

potentially significant sources of emissions, such as storage tanks. The Panel further agrees that well 

sites with low production wells (i.e., a well with an average daily production of 15 barrel equivalents or 

less) should not require fugitive emission surveys. 

Fugitive Emissions at Production and Processing Sites, and Compressor Stations at 

Transmission and Storage Sites 

Under Subpart W, gas production and processing sites and compressor stations at transmission and 

storage sites are required to annually monitor for fugitive emissions and to quantify such emissions. The 

only missing regulatory component to be considered is to add a requirement to repair detected leaks as 

appropriate. This is already covered by the May 2015 INGAA Directed Inspection and Maintenance 

voluntary Program for Transmission and Storage Compressor Stations. The EPA is already considering 

this program in its recent request for comment on the voluntary methane reduction program for the oil and 

gas sector. Advocacy recommends that the EPA retain the annual requirement, as Advocacy believes 

this requirement is entirely duplicative of a fugitives survey requirement, and consider the specific repair 

requirements for repair identification and repair delay in the DI&M voluntary program as the components 

of a mandatory program. Furthermore, the EPA’s most recent evaluation of the survey cost-effectiveness 

shows that annual surveys are more cost-effective than semi-annual surveys. Therefore, the Panel 

recommends the EPA propose options based on semi-annual and annual monitoring. Advocacy 

recommends that the EPA should also consider allowing each facility to tailor the specific program to sitespecific considerations, rather than apply the same requirements uniformly to each plant. The EPA 

recognizes that Subpart W serves as an emissions inventory, while this rule’s intent is to minimize 

pollution. The EPA believes that the additional survey with semiannual OGI monitoring provides additional 

leak detection, and cost-effective emission reductions. The EPA recognizes that fugitive emissions may 

be underestimated based on emerging studies and will continue to evaluate these studies. The Panel 

recommends the EPA propose an alternate option based on an initial annual frequency for well sites. The 

Panel recommends that the EPA continue to consider the INGAA DI&M recommendations for leak repairs 

in the rulemaking.