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

recent ly 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 d o 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 existin g 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) recordke eping, 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.orgPage 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 a ppealing 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 implementatio n 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

ineffi cient 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 con sisting 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 protocol s 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 requ irements (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 provi sions 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 wi ll 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 industr y. 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 partic ipation. 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 maximu m 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 v oluntary 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 th e 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 disinc entives) 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 E NGS 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 participa tion will inform the agency’s decision on whether to regulate VOC or methane (which will lead to regulation of existingPage 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 commitme nt 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 E NGS

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 incor porated 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 alr eady 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 em issions 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 docum ented.Page 5 of 5

Again, w e 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: Jo seph Goffman Paul Gunning Carey Bylin