Summary of Interagency Working Comments on Draft Language under 

EO12866/13563 Interagency Review. Subject to Further Policy Review.

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Environmental Protection Agency (EPA): Proposed Rule

Oil and Natural Gas Sector: Emission Standards for New and Modified Sources

Regulatory Impact Analysis

RIN 2060-AS30

General Comments:

1. Reviewer recommends additional explanation why EPA is not proposing the “less 

stringent” option provided in Table 1-2 as it provides an additional $100 million more net 

benefit than EPA’s proposed option.

EPA RESPONSE: Please see the discussion on this point in response to interagency 

comments on the preamble.

2. Reviewer recommends revising the options provided within the RIA to allow for 

differences in well completion controls and fugitive emissions monitoring and 

maintenance. For example, options should include REC only well completion control 

and fugitive emission annual monitoring and maintenance; REC only well completion 

control and fugitive emission semiannual monitoring and maintenance; REC only well 

completion control and fugitive emission quarterly monitoring and maintenance; REC 

and combustion well completion control and fugitive emission annual monitoring and 

maintenance; REC and combustion well completion control and fugitive emission 

semiannual monitoring and maintenance; and REC and combustion well completion 

control and fugitive emission quarterly monitoring and maintenance.

EPA RESPONSE: We have determined that it is not technically feasible to require only 

RECs at hydraulically fractured and refractured well completions. This rules out half of 

the suggested options. We are analyzing two of the three remaining options suggestions. 

While we are reluctant to add the remaining option to the RIA, the full details of the 

impacts of the various options can be found in the TSD supporting the proposal.

3. Reviewer recommends splitting out the gross cost of compliance from the net cost of 

compliance in the preamble followed by an explanation of the assumptions that were 

used to calculate the offset from the sale of the captured gas and offset for the final net 

cost. For example, a discussion should be included to describe the extent to which 

regulatory structures, infrastructure constraints and/or other unique circumstances may 

prevent regulated entities from readily monetizing the value of gas that is not emitted as a 

result of compliance with this proposed rule. The calculation of the offset should be as 

well defined as the initial cost itself.

EPA RESPONSE: We revised preamble section XI.C “What are the compliance costs?” 

to include more information about revenues from product recovery, as well as a simple 

sensitivity analysis.
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EO12866/13563 Interagency Review. Subject to Further Policy Review.

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4. Reviewer recommends providing an explanation why the “cost-effectiveness” metric is 

necessary within this rule. See Section 3.4.6.

EPA RESPONSE: We believe the discussions in the preamble (VIII.A) and in section 

3.4.6 of the multipollutant cost-effectiveness approach is thorough. Additionally, we are 

requesting comment on the approaches to estimate cost-effectiveness for emissions 

reductions using multipollutant controls assessed in this action.

5. Reviewer recommends quantifying uncertainty in emissions estimates instead of 

providing estimates as “single-point” estimates without margins of error; for example, by 

using the uncertainty analysis in the U.S. Greenhouse Gas Inventory upon which many 

estimates in this RIA are based. Reviewer also suggests including sensitivity analysis 

using a range of input parameters and scenarios, including a range of natural gas prices 

(used for calculating monetary benefits of recovered gas).

EPA RESPONSE: The uncertainty analysis in the U.S. Greenhouse Gas Inventory is 

largely performed at the national level and accounts for uncertainties in the numerous 

inputs to the national level emissions inventory. In addition, the Inventory is focused on 

current and historical emissions levels, rather than projecting to future years. To transfer 

the statistical results in the Inventory to the projection of new sources in this action,

which uses but does not rely exclusively on the Inventory, would be inappropriate. For 

sensitivity analysis of assumed natural gas prices, see response to #3 above.

6. Reviewer recommends providing the correct amount of significant digits to ensure that 

EPA is not providing the impression of false precision. For example, Table 3-4 and 3-5 

should be modified as it goes down to the dollar.

EPA RESPONSE: Thank you for the suggestion. We are re-presenting results rounded to 

2 or 3 significant digits as appropriate.

7. Reviewer recommends soliciting comment on whether EPA’s assumptions for the 

increase in number of sources is appropriate.

EPA RESPONSE: We have added a solicitation for comment on the projection 

methodology as well as solicited information to improve our understanding of the 

turnover rates of potentially affected sources.

8. Reviewer recommends providing a graphical presentation of the Sector Emissions 

Overview as it is difficult to read in a narrative format.

EPA RESPONSE: The Sector Emissions Overview mistakenly duplicated one paragraph, 

where one paragraph listed statistics from the 2014 GHG Inventory and then listed 

statistics from the 2015 Inventory, which was confusing. With the paragraph cleaned up, 

it reads much clearer.
Summary of Interagency Working Comments on Draft Language under 

EO12866/13563 Interagency Review. Subject to Further Policy Review.

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9. Reviewer recommends a clearer, disaggregated presentation of the cost-benefit analysis 

for each of five broad operational/equipment categories because both the estimated 

compliance costs and benefits appear to vary considerably across those categories.

EPA RESPONSE: The RIA presents benefit-cost analysis on the entire regulatory 

proposal, not the component parts. That said, the RIA and particularly the TSD present 

ample information on the costs and emissions reductions across regulatory options.

10. Reviewer recommends that EPA more explicitly delineate how modified sources are 

treated vis-à-vis new sources in terms of forecasting incremental changes, underlying 

assumptions, etc. The RIA provides such information on the new source side but not on 

the modified source side. The reviewer also cannot gauge the significance of modified 

sources relative to the new sources due to a lack of info.

EPA RESPONSE: We added a discussion of this issue after Table 3-2 in the RIA. We 

have also clarified in the RIA that our estimates of newly affected source include both 

new and modified sources. As mentioned in response to comment #7 above, we have 

added a solicitation for comment for information on turnover and modification rates.

11. Reviewer recommends that EPA clarify which of the estimated impacts were based on 

the analysis of the 2012 rulemaking and how they were applied for this rulemaking. 

Based on what EPA said during the RIA briefing, EPA based many of the impact 

assessments in this RIA on the 2012 RIA which did include ranges for estimated impacts 

and sensitivity analyses for items pertaining to both rulemakings. It is not clear however 

how doing so suffices for the current rulemaking; for instance, how did EPA update the 

relevant estimates for the current rulemaking?

EPA RESPONSE: The TSD supporting this proposal indicates technical information 

drawn (and updated, when appropriate) from analysis and data supporting the 2012 

rulemaking. The 2012 RIA contained sensitivity analyses on the assumed price of natural 

gas and the impacts of cost and emission assumptions for reduced emission completions 

of hydraulically fractured and refractured natural gas well completions. We performed 

that analysis because assumptions around these factors influenced the net compliance 

costs greatly. While important, these assumption do not have as great leverage on net 

results as in 2012, so we have opted in this RIA for a simple sensitivity discussion on 

assumed natural gas prices. See comment #3 above.

12. Reviewer recommends referencing the four studies below in considering the health 

impacts of exposure to VOC and HAPs air pollution from the oil and gas sector.

a. ATSDR, Health Consultation: Public Health Implications of Ambient Air 

Exposures to Volatile Organic Compounds as Measured in Rural, Urban, and Oil 

& Gas Development Areas Garfield County, Colorado, 2008, 

http://www.cdphe.state.co.us/dc/ehs/GarfieldCounty.pdf.
Summary of Interagency Working Comments on Draft Language under 

EO12866/13563 Interagency Review. Subject to Further Policy Review.

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b. Bunch, A.; Perry, C.; Abraham, L.; Wikoff, D.; Tachovsky, J.; Hixon, J.; Urban, 

J.; Harris, M.; Haws, L. Evaluation of impact of shale gas operations in the 

Barnett Shale region on volatile organic compounds in air and potential human 

health risks Sci. Total Environ. 2014, 468, 832– 842. 

http://www.sciencedirect.com/science/article/pii/S0048969713010073?.

c. L. McKenzie, R. Witter, L. Newman, J. Adgate. Human health risk assessment of 

air emissions from development of unconventional natural gas resources. Sci 

Total Environ, 424 (2012), pp. 79–87. 

http://www.sciencedirect.com/science/article/pii/S0048969712001933

d. McKenzie LM, Guo R, Witter RZ, Savitz DA, Newman LS, Adgate JL. 2014. 

Birth outcomes and maternal residential proximity to natural gas development in 

rural Colorado. Environ Health Perspect 122:412–417. 

http://dx.doi.org/10.1289/ehp.1306722

EPA RESPONSE: Without conducting a full literature review, it would not be 

appropriate to cite a handful of studies in the RIA. In addition, it is not clear to what 

extent these limited case studies can be generalized to represent potential health impacts 

near oil and gas operations across the country. 

13. Reviewer notes that the margin of error has a direct bearing on the cost-benefit analysis. 

For the most part, the benefits vary directly and linearly with the quantities of methane or 

HAP reduction that are actually achieved. Indeed, most of those benefits are derived 

from factors that are expressed in units of dollars per ton of pollutant. Thus, if the actual 

emissions reductions are only half of what was estimated, the benefits will 

correspondingly only be half. On the other hand, if the actual emissions are greater than 

estimated, the benefits will also be greater, in direct proportion to the emission 

reductions.

The compliance costs, on the other hand, are not as closely related to emissions 

reductions. Compliance costs are based on two principal factors. The first is the number 

of methane-emitting components in a particular system (e.g., compressors, pneumatic 

devices, valves, seals, tanks, etc.) or the number of well completions that are performed 

in a given time period. The second is the nature and frequency of methane emissions 

surveys that are performed in order to monitor the effectiveness of the mitigation 

measures that have been implemented. A third factor is the extent to which emissions are 

mitigated, in which case the company may or may not be able to monetize the value of 

any conserved natural gas.

EPA RESPONSE: The monetized climate benefits are estimated using the social cost of 

methane, a metric that estimates the monetary value of impacts associated with marginal 

changes in methane emissions in a given year. However, if they had been monetized, the 

health benefits resulting from reduced VOC and HAP emissions would be dependent 

upon the location of emissions and populations and local and regional air quality 

condition. As result, these health benefits would not likely vary linearly with emissions 

reductions. As the variation in compliance costs may follow a different distribution than 
Summary of Interagency Working Comments on Draft Language under 

EO12866/13563 Interagency Review. Subject to Further Policy Review.

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climate and health benefits, estimation of the variance of net benefits or the benefit cost 

ratio is very challenging.

Specific Comments:

1) Page 1-2. Reviewer recommends revising the sentence to state:

a. This analysis estimates regulatory impacts for the analysis years of 2020 and 

2025, with the analysis period of 10 years.

EPA RESPONSE: We think the paragraph on 1-2 presenting the analysis years and 

reasoning supporting the choices is complete.

2) Page 1-3. Bullets provided within “Summary of Results” is difficult to read and seems 

duplicative of Table 1-1, 2, and 3. Reviewer recommends providing the intuition behind 

the results in these bullets rather than repeating the numbers.

EPA RESPONSE: The summary of results presented in bullets is somewhat duplicative of 

the tables of results in the executive summary. That said, it would be difficult to provide 

more details on the results with it continuing to be an executive summary.

3) Page 1-4, paragraph 2: “...when using a 7 percent discount rate.” To be consistent with the 

discount rate used for engineering costs, it would be useful to show the social benefits at a 

7 percent discount rate.

EPA RESPONSE: The social cost of methane values were estimated using the same 

methodology used in the social cost of CO2, which uses discount rates of 2.5, 3, and 5 

percent. See the OMB/Interagency Working Group’s Response to Comments on social 

cost of CO2 for detailed discussion about why a 7 percent rate is not used, page 21 at

https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-response-to-commentsfinal-july-2015.pdf.

4) Page 1-5. Reviewer recommends providing the revenue offset in the benefits and present 

the costs estimates without the revenue offset

EPA RESPONSE: We are following our traditional practice in economic analysis 

stationary source air rules by treating estimates of revenues from product recovery as a 

reduction in compliance costs. 

5) Page 1-5, paragraph 3: “We note that this type of FTE estimate cannot be used to identify 

the specific number of people involved or whether new jobs are created for new 

employees, versus displacing jobs from other sectors of the economy.” It would be useful 

if a net job estimate were available. The real employment benefit of a proposal is on net, 

whether jobs are created or lost.

EPA RESPONSE: Regulatory employment impacts are difficult to disentangle from other 

economic changes affecting employment decisions over time and across regions and 

industries. Net employment impacts are composed of a mix of potential declines and gains 
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in different areas of the economy (e.g., the directly regulated sector, the environmental 

protection sector, related and upstream and downstream sectors, etc.) over time, and 

economic theory indicates an ambiguous effect on employment even in the regulated 

sector. Data limitations and a lack of robust peer-reviewed methods for estimating net 

employment effects in the regulated sector present challenges to accurately estimating net 

employment impacts.

Therefore, this analysis describes potential employment impacts within the oil and gas 

sector, including both in-house employees and contractors, and estimates partial 

employment impacts for affected entities in the oil and gas industry using engineering cost 

information. These bottom-up, engineering-based estimates represent one portion of 

potential employment impacts within the regulated industry, and are not net employment 

impact estimates.

6) Page 4-38, Paragraph 1: “While EPA is not accounting for the CO2 disbenefits at this 

time...” At the end of the previous page, estimates of disbenefits per ton are estimated, 

thus it seems worthwhile to include in the RIA.

EPA RESPONSE: EPA has not presented disbenefit estimates in tabular form due to the 

uncertainties. Please see the RIA pages 4-37 to 38, which provides EPA’s rationale for not 

monetizing the CO2 disbenefits and presents one potential approach (including details of 

the alternative calculation) for estimating those disbenefits. This section also lists the 

estimated adjusted amount in the text. EPA is taking comment on this approach and will 

consider the comments received. Based on that input, EPA will determine whether it is 

appropriate to include the estimates in tabular form and in the rulemaking’s primary 

benefit-cost comparison.

7) First annual report is listed as being due January 15, 2014 – date has passed but no 

language indicates it will be changed. Most other places there is language inserted to 

identify the date will be changed or inserted as it becomes necessary.

EPA RESPONSE: This comment relates specifically to the preamble, not the RIA. We 

have moved the comment and response to the document containing the response to 

interagency comments on the Preamble.

8) Page 1-4, paragraph 1: “... in an estimate of about $660 million” should instead read 

“...in an estimate of about $210 million” in order to be consistent with Table 1-1 and 

Table 6-1.

EPA RESPONSE: Thank you. We corrected.

9) Page 3-5. Reviewer recommends providing additional explanation that may be located in 

the TSD that explains the engineering cost analysis steps.

EPA RESPONSE: The RIA provides an overview of the engineering cost analysis. There 

are aspects of the engineering cost analysis which have slight variations for each source, 
Summary of Interagency Working Comments on Draft Language under 

EO12866/13563 Interagency Review. Subject to Further Policy Review.

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and it would be duplicative to add all this information to the RIA, when it is explained in 

full detail in the TSD. In addition, the RIA also has numerous pointers to the TSD.

10) Page 3-11, Table 3-4 and Page 3-15, Table 3-6: Are the dollar figures in real or nominal 

dollars?

EPA RESPONSE: All dollar figured are in 2012 dollars. We have added (2012$) in the 

tables notes, as well as some other tables where the dollar year was not included. 

11) Page 4-4. Reviewer recommends clarifying the paragraph that starts “In implementing 

this rule, emission controls may” and “By contrast, the emission reductions . . .” as it is 

unclear how this rule is different than other air quality rules in relation to helping states 

comply with applicable NAAQS. If this rule does not help states comply with PM and 

Ozone NAAQS more than other rules, than the reviewer recommends deleting these 

paragraphs.

EPA RESPONSE: This is standard language for all non-NAAQS RIAs that helps explain 

the difference between illustrative NAAQS RIAs and rules like this one. VOC emission 

reductions anticipated by this proposed rule can help states attain the Ozone and PM 

NAAQS. 

12) Page 4-7, Paragraph 2, lines 6-7: “These reductions in 2020 and 2025 represent about 2 

percent and 5 percent, respectively, of the GHG emissions for this sector. . . .” It would be 

useful to know what percent of overall U.S. GHG emissions these reductions represent, in 

order to see what magnitude difference this rule will have on the U.S. environment.

EPA RESPONSE: We believe the comparison of the reductions anticipated from the 

proposed rule is best compared to the sector’s emissions. The comparison to overall 

emissions does not speak to the magnitude difference the proposal rule might have on the 

U.S. environment.

13) Page 4-26. Reviewer recommends focusing on HAPs that are specifically affected by this 

proposed regulation instead of a general overall discussion. If there are specific HAPs that 

EPA is concerned about in regard to these sources, they should be discussed in more 

detail.

EPA RESPONSE: Section 4.6 only includes a qualitative discussion of six HAP that are 

known to be part of oil and emissions: benzene, toluene, ethylbenzene, carbonyl sulfide, 

mixed xylenes, and n-hexane. By reducing 2,500 tons of HAP in 2025, we anticipate 

reduced exposure to each of these pollutants as a result of this rulemaking, but we do not 

have data to quantify the associated monetized benefits. The NATA discussion provides 

context for evaluating these qualitative HAP benefits.

14) Page 4-38, Table 4-8. It is unclear why the CO2 Eq. for Option 1 and Option 2 are 

different in metric tons when they are the same for short tons (i.e., 4.4 and 9.9).
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EPA RESPONSE: Thank you. There was an error on Table 4-8 for the CO2 Eq. reductions 

in short tons for Option 1. It is 4.1 and 8.2 million tons for 2020 and 2025, respectively. 

We made this correction in the RIA. 

Typographical Comments:

1) Page 4-1, Paragraph 1, line 7: “and 2,500 tons of HAP. .” Delete one of the periods.

EPA RESPONSE: Done, thank you.

2) Page 4-1, Paragraph 2, lines 7-8: “for these rule” Change “these” to “this”

EPA RESPONSE: Done, thank you.

3) Page 4-18, Paragraph 2, line 2: “...we were did not. . .” Delete typo. 

EPA RESPONSE: Done, thank you.