1. Storm Water Discharges from Oil and Gas Related Construction Activities EPA Public Meeting Dallas, Texas May 10, 2005

2. Overview History Rule deferral rationale Regulatory options EPA analysis Q&A

3. Chronology 1987Water Quality Act - 2 phase program to control storm water - Oil and gas storm water exempt 1990Storm Water Phase I 1999Storm Water Phase II March 10, 2003Deferral Rule March 9, 2005Deferral Rule September, 2005Notice of Proposed Rule Making June 12, 2006Final Action Required

4. Oil and Gas Exemption -CWA §402(l)(2) - The Administrator shall not require a permit … for discharges of stormwater runoff from … oil and gas exploration, production, processing, or treatment operations or transmission facilities, composed entirely of flows which are from conveyances or systems of conveyances … used for collecting and conveying precipitation runoff and which are not contaminated … -Construction activity, includes clearing, grading, and excavating -Since 1992, EPA has considered construction activity at oil and gas sites to require permit coverage – i.e., not considered to fall under exemption.

5. EPA as NPDES Permitting Authority Construction and Industrial Puerto Rico Virgin Islands Federal Facilities TribesOther Territories Oil and Gas

6. 2003 Facts and Figures ~28,000 new well sites in 29 states EPA administers the Storm Water program in AK*, TX, OK, and NM: –48% of the wells are drilled –66% of estimated compliance costs are accrued –Permit addresses ESA and NHPA * Vast majority of AK sites are >5 acres and covered by Phase I regulations.

7. Deferral Rationale Phase II Rule determined that few if any oil and gas sites exist between 1 and 5 acres EPA subsequently deferred requirement for small oil and gas sites to obtain permit coverage EPA performing: –Economic impact analysis, including cost/benefit analysis –BMP review Industry Standard Operating Procedures BLM Gold Book Guidelines State prescribed BMPs –Analysis of regulatory options

8. Regulatory Options EPA is currently evaluating 2 options (against the baseline) for regulating small oil and gas construction activity: (Baseline) - Regulate consistent with Phase II Rule (Option 1) – Create New Waiver (Option 2) - Non-permitting program [CWA 402(p)(6)]

9. Regulatory Options (Baseline) Baseline Approach: –Requirements include: Coverage under Construction General Permit Develop site-specific Storm Water Pollution Prevention Plan (SWPPP) Perform routine inspections ESA/NHPA considerations (for EPA permits)

10. Baseline Approach GAO-05-240, February 2005

11. Baseline – Construction SWPPP Site Description Controls to Reduce Pollutants –Erosion and Sediment Controls –Stabilization Practices –Storm Water Management Maintenance Inspections

12. Baseline- SWPPP: Site Description Description of construction activity Sequence of major soil disturbing events Total and disturbed area (acreage) Storm water discharges (location) Site map Storm water controls (location) Receiving waters (name, location) Endangered species; historic preservation

13. Baseline- SWPPP: Erosion and Sediment Controls Properly select and install controls to: –Minimize erosion –Retain sediment on-site –Remove any sediment that accumulated off-site Remove sediment from sediment traps Prevent litter from entering streams

14. Baseline- SWPPP: Stabilization Practices Temporary Seeding Permanent Seeding Mulching Sod Stabilization Vegetative Buffer Strips Tree Preservation Contouring and Protecting Sensitive Areas

15. Baseline- SWPPP: Structural Controls Earth Dike Subsurface Drain Silt Fence Pipe Slope Drain Drainage SwalesTemporary Storm Drain Diversion Sediment Traps Storm Drain Inlet Protection Check Dams Rock Outlet Protection Level Spreader

16. Maintenance and Inspections BMPs must be maintained in effective operating condition Any repairs must be performed before next anticipated storm event, if possible. Inspect at least every 14 calendar days and within 24 hours after any storm event of 0.5 inches or greater (or every 7 days) until permit coverage terminated.

17. Regulatory Option #1- Waiver –Sites <5 acres would be waived from permit coverage under certain conditions –Sites 5 acres and above would still be required to obtain permit coverage –Possible waiver eligibility requirements: Short term (<30 days) construction Proximity to water body Slope, region, and other site-specific considerations BMP implementation

18. Regulatory Option #2- Non-Permitting NPDES Program –Comprehensive program under CWA section 402(p)(6) –Develop a program for O&G construction activity –Likely similar BMP requirements as baseline and Option 1 –Evaluate legal authorities and responsibilities

19. Economic Analysis: Purpose Evaluate the costs and benefits of the requirements under the Phase II Storm Water Rule Follow analytical approach using relevant data from the Phase II analysis (1998). Examine the costs and benefits for 3 rulemaking options: –Baseline (expiration of deferral after 6/12/06) –Waiver –Non-permitting program under CWA 402(p)(6)

20. Economic Analysis: Impacts Direct costs –Notice of Intent –SWPPPs –BMPs –Potential ESA & NHPA Considerations Indirect costs –Revenue delay –Forgone lease bonus payments –Idle rig contract payments –Project cancellation

21. Next Steps Gather additional information Complete Economic Analysis Notice of Proposed Rulemaking (9/05) Comment period Final Rulemaking (6/06) Questions?