Opinion ID: 3052091
Heading Depth: 3
Heading Rank: 3

Heading: The CWA as Amended by the Energy Policy Act of

Text: 2005 Prior to the NPDES permit deadline, Congress addressed the issue of permit requirements for storm water discharges from oil and gas construction sites in the Energy Policy Act of 2005, which was signed into law on August 8, 2005. Section 323 of the Energy Policy Act amended section 503 of the CWA to include the following revised definition: (24) Oil and gas exploration and production: The term “oil and gas exploration, production, processing, or treatment operations or transmission facilities” means all field activities or operations associated with exploration, production, processing, or treatment operations, or transmission facilities, including activities necessary to prepare a site for drilling and for the movement and placement of drilling equipment, whether or not such field activities or operations may be considered to be construction activities. Pub. L. No. 109-58, § 323, 119 Stat. 694 (codified as amended at 33 U.S.C. § 1362(24)) (emphasis added). In this manner, the Energy Policy Act amended the CWA by defining “oil and gas exploration, production, processing, or treatment operations, or transmission facilities” to specifically include related construction activities, thereby bringing such activities within the CWA section 402(l)(2) exemption from marily due to delays in the permitting process resulting in lost production, that it had not yet taken into account. 71 Fed. Reg. at 33,630. EPA therefore further postponed the NPDES deadline by 15 months for small construction sites associated with oil and gas operations in order to complete its economic impact, legal, and procedural analyses and continue to evaluate practices and methods operators may employ to control storm water discharges. 70 Fed. Reg. 11,560. 5962 NRDC v. USEPA the NPDES permitting requirement. It is important to note that, in addition to the newly amended definitional section 503(24), the term “oil and gas exploration, production, processing, or treatment operations or transmission facilities” appears in only one other place in the CWA — in section 402(l)(2). 33 U.S.C. § 1342(l)(2). The Energy Policy Act amendment of the definition did not, however, change the statutory language of section 402(l)(2).
In January 2006, EPA gave notice of proposed rulemaking that would modify EPA’s NPDES storm water permit regulations to reflect the Energy Policy Act’s change to the definition of oil and gas operations and facilities and the related impact on section 402(l)(2).13 71 Fed. Reg. 894, 897 (Jan. 6, 2006). Based on its interpretation of section 402(l)(2), as amended by the Energy Policy Act, EPA proposed to clarify in 40 C.F.R. § 122.26(a)(2)(ii) that a “water quality standard violation for sediment alone does not trigger a permitting requirement.” 71 Fed. Reg. at 898. EPA explained that it had initially codified its interpretation of section 402(l)(2)’s phrase “contaminated by contact with” at § 122.26(c)(1)(iii) by providing that oil and gas operations were exempt from permit requirements except where their discharges (1) contribute reportable quantities of oil, grease, or hazardous substances to waters of the United States or (2) contributed to a violation of a water quality standard. 71 Fed. Reg. at 897-98. However, upon reexamination of the unchanged statutory text of section 402(l)(2) of the CWA, EPA determined that “a plain reading of [that section] suggests that oil and gas sites where runoff is not contaminated by contact with raw mate13 A second stated purpose for the proposed rulemaking was “to encourage voluntary application of best management practices (BMPs) for oil and gas field activities and operations, including construction, to provide additional protection of water quality from potential storm discharges.” 71 Fed. Reg. at 897. NRDC v. USEPA 5963 rial, intermediate products, finished product, byproduct or waste products located at the site are not required to obtain NPDES permits, even in situations where the runoff might be contributing to a violation of water quality standards (the term overburden is applicable only to mining).” 71 Fed. Reg. at 898. EPA stated that when it promulgated the Phase I rule (codified at 40 C.F.R. § 122.26(c)(1)(iii)) in 1990, it “believed it reasonable to presume that causing or contributing to a violation of water quality standards was an indication of contamination as envisioned under the statute.” 71 Fed. Reg. at 898. EPA explained, however, that “now that Congress has explicitly extended the exemption to construction activities associated with oil and gas operations, EPA believes this presumption may no longer be valid in some instances.” 71 Fed. Reg. at 898.
In June 2006, EPA promulgated the challenged final rule — entitled “Amendments to the National Pollutant Discharge Elimination System (NPDES) Regulations for Storm Water Discharges Associated With Oil and Gas Exploration, Production, Processing, or Treatment Operations or Transmission Facilities”—codifying changes to the CWA resulting from the Energy Policy Act of 2005. 71 Fed. Reg. 33,628 (codified at 40 C.F.R. § 122.26(a)(2)(ii)). The final rule added the following provision: (2) The Director may not require a permit for dis- charges of storm water runoff from the following: ... (ii) All field activities or operations associated with oil and gas exploration, production, processing, or treatment operations or transmission facilities, including activities necessary to prepare a site for drilling and for the movement and placement of 5964 NRDC v. USEPA drilling equipment, whether or not such field activities or operations may be considered to be construction activities, except in accordance with paragraph (c)(1)(iii) of this section. Discharges of sediment from construction activities associated with oil and gas exploration, production, processing, or treatment operations or transmission facilities are not subject to the provisions of paragraph (c)(1)(iii)(C) of this section. 40 C.F.R. § 122.26(a)(2)(ii) (emphasis added). Thus, pursuant to this rule, EPA cannot require permits for storm water discharges comprised solely of sediment from oil and gas construction activities, even if such discharges contribute to a violation of a water quality standard. As it had done in its notice of proposed rulemaking, EPA provided its rationale for its new interpretation of section 402(l)(2) of the CWA to specifically exclude from NPDES permitting requirements sediment-laden storm water discharges from construction activities. Noting that the Energy Policy Act amendment to the CWA does not specifically address sediment, EPA nevertheless reasoned that sediment, being the “pollutant most commonly associated with construction activity,” is the “very pollutant being exempted from permitting by the Energy Policy Act of 2005.” 71 Fed. Reg. at 33630-31, 33,634. EPA further explained that “discharges of sediment . . . do not necessarily indicate contamination through contact with raw material, intermediate products, finished product, byproduct, or waste products.” 71 Fed. Reg. at 33631. Accordingly, EPA claimed that “exempting storm water discharges of sediment from oil and gas construction sites from NPDES permitting requirements reflects a reasonable (and EPA believes, the best) interpretation of Congressional intent in limiting the 402(l)(2) exemption to discharges not contaminated by contact with raw material, intermediate products, finished product, byproduct, or waste products.” 71 Fed. Reg. at 33634. NRDC v. USEPA 5965