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EPA Adopts Construction Storm Water Permitting Exemption For Oil & Gas Industry

Beveridge & Diamond, P.C., June 12, 2006

The U.S. Environmental Protection Agency (EPA) has issued its long awaited construction stormwater permitting exemption rule for the oil and gas industry.  The rule was published in the Federal Register, and became immediately effective, on June 12, 2006.[1]

The new construction stormwater exemption was issued in response to the Energy Policy Act of 2005 (the Energy Policy Act), which expanded the existing oil and gas sector permitting exemption in Section 402(l)(2) of the Clean Water Act.  From 1987 until 2005, the Section 402 exemption provided that no Clean Water Act permit was required for storm water runoff at oil and gas exploration, production, processing and treatment operations and transmission facilities where the runoff consisted entirely of flows from conveyances such as pipes and ditches for rainwater collection, provided that the runoff was not contaminated by contact with raw materials or wastes.

EPA’s two prior phases of storm water permitting, Phase I[2] and Phase II, [3] asserted the authority to regulate storm water discharges from oil and gas sector construction sites, on the basis that sediment from construction sites constituted a pollutant.  The Phase I rule regulated activities disturbing five or more acres of land, and the Phase II rule regulated activities disturbing one to five acres of land.  The applicability of the Phase II rule to oil and gas sites was deferred from 2003 until June 12, 2006, at which time it was specifically superceded by the construction stormwater permitting exemption.

The Energy Policy Act modified the Clean Water Act Section 402(l)(2) exemption by defining the excluded oil and gas sector operations more broadly than in the past. The new exemption includes all oil and gas field activities and operations, including those necessary to prepare a site for drilling and for the movement and placement of drilling equipment.  EPA now indicates that “all covered oil and gas-related construction activities are eligible for the NPDES permitting exemption for their uncontaminated storm water discharges without regard to the amount of acreage disturbed.”[4] 

The new exemption applies to a wide scope of oil and gas field activities, including “all field activities or operations”, “processing”, “treatment operations”, and “transmission”. The preamble to the regulatory amendment clarifies EPA’s interpretation of these phrases and the wide scope of the exemption. “Field activities or operations” include “the construction of drilling sites, drilling waste management pits, access roads, in-field treatment plants and the transportation infrastructure (e.g., crude oil and natural gas pipelines, natural gas treatment plants and both natural gas pipeline compressor and crude oil pump stations) necessary for the operation of most producing oil and gas fields.”[5]  “Processing” includes both oil and gas field activities and involves removal of contaminants, gas liquids or rare gases.  It does not include creating finished products in the petroleum and petrochemical refining sectors.  “Treatment” includes the removal of contaminants such as salt water, sediment, pipe scale, rust and organic material, most commonly in a separator. “Transmission” includes all necessary infrastructure to deliver natural gas or crude oil from the producing fields to the final distribution center (for natural gas) or refinery (for crude oil).[6]

The construction storm water permitting exemption for the oil and gas sector is not without controversy.  A recent national press article has tied the exemption to “intense industry pressure”, and lobbying of White House senior advisor Karl Rove by “a well-connected Texas oil executive.”[7] The article also indicates that opponents of the EPA rule change believe that the exemption exceeds the Congressional mandate in the Energy Policy Act.  In addition, Senator James Jeffords (I-Vt), the ranking member of the Senate Environment and Public Works Committee, has criticized EPA for removing sediment from regulation as a contaminant that would otherwise require a permit.[8]

While the EPA storm water permitting rule now contains a broad exclusion for oil and gas sector construction activities, it is important to note that individual states and Indian Tribes may still regulate storm water associated with these activities.  EPA has clarified its position that states and tribes may not regulate such storm water discharges under their Clean Water Act authority, but are free to regulate under their own independent authorities.[9]

The authority of states and Tribes to regulate these discharges is of critical importance, as several states that feature prominently in the oil and gas sector have robust state-driven construction storm water permitting requirements that are not reliant upon the federal Clean Water Act. As examples, in both Colorado and Wyoming, a discharge permit is required for all storm water construction activities at oil and gas sites disturbing one acre or more, independent of the federal Clean Water Act.

For more information about the construction storm water permitting rule, please contact Stephen Richmond at srichmond@bdlaw.com.



[1] 71 Fed. Reg. 33628 (June 12, 2006).

[2] 55 Fed. Reg. 47990 (November 16, 1990).

[3] 64 Fed. Reg. 68721 (December 8, 1999).

[4] 71 Fed. Reg. at 33631-33632. 

[5] 71 Fed. Reg. at 33635-33636.

[6] 71 Fed. Reg. at 33635-33636.

[7] EPA Rule Loosened After Oil Chief’s Letter to Rove, Los Angles Times, June 13, 2006.

[8] EPA Adopts Rule to Exempt Oil, Gas Sites, BNA Environment Reporter, June 9, 2006.

[9] EPA states that “”(t)his final rule is not intended to interfere with the ability of States, Tribes, or local governments to regulate any discharges through a non-NPDES permit program.” 71 Fed. Reg. at 33635.