Clean Water Act (CWA) section 402(l)(2) provides that EPA shall not require, nor force a state to require a CWA section 402 permit for discharges of stormwater runoff from oil and gas* exploration, production, processing or treatment operations, or transmissions facilities, composed entirely of flows that are from conveyances or systems of conveyances used for collecting and conveying precipitation runoff, and that are not “contaminated by contact with any overburden, raw material, intermediate products, finished product, byproduct or waste products located on the site of such operations.” This exemption applies to both construction and industrial activities associated with oil and gas exploration, production, processing or treatment operations, or transmission facilities.

*Note: The CWA exemption also applies to industrial stormwater discharges from mines. This exemption does not apply to 404 permits.

• Types of Oil and Gas Activities and Facilities that are Either Exempt or Non-Exempt from Stormwater Permitting
• When is a CWA Section 402 (Stormwater) Permit Required for an Oil or Gas Operation?
• Oil and Gas Stormwater Regulatory Background
• Additional Information

Types of Oil and Gas Activities and Facilities that are Either Exempt or Non-Exempt from Stormwater Permitting

Exempt Facilities and Activities

The types of oil and gas facilities and activities subject to the waiver for stormwater permitting fall under “exploration, production, processing or treatment operations, or transmission facilities”. These terms are further explained in 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 (bottom page 33635). The list of exempt facilities/activities includes (list not exhaustive):

• Well sites and drill pads
• Access and maintenance roads including haul / maintenance roads solely servicing exempt activities
• Local “borrow pits” to provide sand, gravel, and soil for maintenance of service roads and infrastructure necessary to operate producing oil and gas fields, crude oil pipelines, and natural gas transmission lines. To receive the exemption the facility can only supply material to the exempt oil and gas project.
• Gathering line systems
• Transmission line systems
• Staging areas for oil and gas operations that are contiguous to the exempt project (areas/locations where pipe, sand, etc., are staged for drilling activities)
• Water lines, electric utility lines and railroad infrastructure servicing field exploration and production activities
• Storage tanks and oil-water separators
• Midstream processing plants
• Gas and oil treatment and conditioning equipment (e.g., heater treaters, dehydrators, and CO2 scrubbers, cryogenic plants, fractionation plants) and the transmission lines leaving these facilities.
• Gas processing plants (natural gas liquids recovery facilities and/or H2S “gas sweetening” plants)
• Natural gas pipeline compressor stations
• Crude oil pipeline pump stations
• Crude oil pipelines (i.e., connecting producing fields with a refinery)
• Natural gas transmission lines (i.e., lower pressure lines from producing field to nearest energy “hub” and cross-country, high pressure intra- and interstate pipelines). The exemption ceases at the distribution center (often referred to as the “City Gate”). The distribution center is where the local gas utilities take delivery of the gas and distribute it via lower pressure service lines to customers.
• Dedicated natural gas pipelines connecting LNG terminals to nearest transmission pipeline “hub”
• Newly constructed offshore “islands” used as platforms for Alaskan exploration and production drilling operations
• Central liquid waste treatment set up on a drill pad even if it takes waste from other drill pads

Non-Exempt Facilities and Activities

The following facilities and activities (list may not be exhaustive) are not exempt and must have CWA section 402 permit coverage to discharge stormwater (if they do not qualify for the conditional no exposure waiver). These are typically downstream from an oil and gas exploration, production, processing or treatment operation, or transmission facility, and they involve or support the physical and/or chemical transformation of raw materials into final manufactured products for sale.

• Improvements to public roads for access to projects
• LNG re-gasification terminals
• Conventional petroleum and petrochemical refineries (as defined in 40 CFR 419)
• Fischer-Tropsche “Clean Fuels” synthetic fuel plants
• Ethanol plants
• Oil shale refineries, Cracking Plants
• Natural gas utility or city-owned “end-user” distribution systems connecting industrial, commercial and residential customers
• Offshore jack-up rigs, semi-submersible drill ships, dynamically positioned drill ships, production platforms and LNG re-gasification terminals subject to regulation of deck drainage (40 CFR 435) and Ocean Discharge Criteria (CWA 403)
• Refined products pipelines (connecting refineries with local and distant product storage facilities)
• Company and/or privately owned hotels, RV parks, campgrounds, worker camps, barracks and airport facilities servicing oil and gas exploration drilling and production operations
• Centralized equipment maintenance and storage facilities owned by oil and gas drilling contractors, oilfield service companies (for example, Halliburton, Baker-Hughes, Schlumberger) and operating companies (for example, Devon Energy, BP-Amoco, El Paso) that are not contiguous to an exempt facility/activity
• Support industries that supply materials and products to the oil and gas industry as well as other industries (for example, metal fabrication shops, sand suppliers, gravel suppliers, concrete suppliers, trucking companies, river barge terminals, etc.)

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When is a CWA Section 402 (Stormwater) Permit Required for an Oil or Gas Operation?

Under CWA section 402(l), its implementing regulations, and applicable court decisions, the permitting waiver for an oil or gas operation is not available and the operator must obtain coverage under a CWA section 402 permit covering stormwater discharges from construction (for at least one acre of land disturbance and less than one acre if part of a common plan of development/sale) and/or a permit covering stormwater discharges from industrial activities. See 40 CFR 122.26(c)(1)(iii). These circumstances are tied to the “contaminated by contact with, or do not come into contact with” threshold for permitting. For EPA, the permits typically used are the Construction General Permit (CGP) and the Multi-Sector General Permit (MSGP).

The trigger for stormwater from an oil or gas operation needing CWA section 402 permit coverage is a discharge of stormwater that:

1. Results in the discharge of a “reportable quantity” (RQ) for which notification is or was required under 40 CFR 117.21 or 40 CFR 302.6 at any time since Nov 16, 1987; or
2. Results in the discharge of a RQ for which notification is or was required under 40 CFR 110.6 at any time since Nov 16, 1987; or
3. Contributes to a violation (that is to say, an exceedance) of a water quality standard.

Reportable Quantity

The kind of pollutants to which RQ requirements apply are oil (including grease) or a hazardous substance.

• A RQ for oil is a discharge of oil in such quantities that the Administrator has determined may be harmful to the public health or welfare or the environment of the United States and includes discharges of oil that violate applicable water quality standards or causes a film or sheen upon, or a discoloration of the water surface or adjoining shorelines, or cause a sludge or emulsion to be deposited beneath the water surface or upon adjoining shorelines (see 40 CFR 110.3 (PDF)(1 pp, 180 K, About PDF)).
• For hazardous substances, RQ levels are expressed in terms of pounds released over any 24-hour period and are listed at 40 CFR 117.3 (PDF)(6 pp, 198 K, About PDF) and 40 CFR 302.4 (PDF)(47 pp, 416 K, About PDF).

Water Quality Standards Violation (Exceedance)

The pollutant of concern during oil and gas-related construction is usually sediment (expressed as total suspended solids or turbidity). Regardless of the type of pollutant(s) in a discharge, all water quality standards of the receiving waterbody must be protected.

Typically, water quality standards are exceeded when:

• A water quality criterion is exceeded; and/or
• The water’s designated use is adversely impacted (that is to say, not attained). Any time one of these triggering events occurs, the operator is required to comply with CWA section 402 stormwater permit requirements, meaning, determine or establish permit eligibility, develop a SWPPP, and submit an NOI to be covered (if using one of the general permits). If the discharger is not eligible for a general permit, apply for an individual permit.

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Oil and Gas Stormwater Regulatory Background

• The 1987 Water Quality Act (WQA) added § 402(l)(2) to the CWA. This new section forbade EPA and the states from requiring NPDES permits for uncontaminated stormwater discharges from oil and gas exploration, production, processing or treatment operations, or transmission facilities:
  CWA § 402(l)(2) The administrator shall not require a permit under this section, nor shall the Administrator directly or indirectly require any State to require a permit, for discharges of stormwater runoff from mining operations or oil and gas exploration, production, processing, or treatment operations or transmission facilities, composed entirely of flows which are from conveyances or systems of conveyances (including but not limited to pipes, conduits, ditches, and channels) used for collecting and conveying precipitation runoff and which are not contaminated by contact with, any overburden, raw material, intermediate products, finished product, byproduct, or waste products located on the site of such operations.
• To address 402(l)(2), EPA codified the permitting exemption in its National Pollutant Discharge Elimination System (NPDES) stormwater regulations on 11/16/1990 in the following two sections in the Code of Federal Regulations:
  40 CFR 122.26(a)(2) The Director may not require a permit for discharges of stormwater runoff from mining operations or oil and gas exploration, production, processing or treatment operations or transmission facilities, composed entirely of flows which are from conveyances or systems of conveyances (including but not limited to pipes, conduits, ditches, and channels) used for collecting and conveying precipitation runoff and which are not contaminated by contact with or that has not come into contact with, any overburden, raw material, intermediate products, finished product, byproduct or waste products located on the site of such operations. 122.26(c)(1)(iii) The operator of an existing or new discharge composed entirely of stormwater from an oil or gas exploration, production, processing, or treatment operation, or transmission facility is not required to submit a permit application in accordance with paragraph (c)(1)(i) of this section, unless the facility: (A) Has had a discharge of stormwater resulting in the discharge of a reportable quantity for which notification is or was required pursuant to 40 CFR 117.21 or 40 CFR 302.6 at any time since November 16, 1987; or (B) Has had a discharge of stormwater resulting in the discharge of a reportable quantity for which notification is or was required pursuant to 40 CFR 110.6 at any time since November 16, 1987; or (C) Contributes to a violation of a water quality standard.
• Since 1992, when EPA began permitting stormwater discharges, the Agency interpreted “oil or gas exploration, production, processing, or treatment operation, or transmission facility” as applying only to the active exploration, extraction and post-extraction activities at an oil or gas extraction facility, meaning, to the activities covered under the industrial stormwater permit, and not to exploration or pre-extraction construction activities.
• As a result, EPA required oil or gas-related construction (for example, access roads, drill pads) of five acres or greater to obtain coverage under an NPDES stormwater permit.
• With the promulgation of the Phase II stormwater small construction regulations in 1999, oil or gas construction that disturbed one to five acres would also have had to obtain permit coverage.
• In 2002, shortly before the Phase II regulations took effect, oil and gas industry stakeholders notified EPA that the Agency had incorrectly assumed that oil and gas activities would not be affected by these permit requirements. Industry noted that these regulations would apply to approximately 30,000 sites annually and would have a significant economic impact on the industry.
• In response, EPA deferred until June 12, 2006, the Phase II stormwater requirements for small oil or gas construction activities disturbing one to five acres to analyze the costs and benefits associated with those regulations. EPA intended to propose an action in late 2005 and finalize the action before the June 12, 2006, deferral expiration. This was codified in the CFR:
  122.26(e)(8) For any stormwater discharge associated with small construction activity identified in paragraph (b)(15)(i) of this section, see 122.21(c)(1). Discharges from these sources, other than discharges associated with small construction activity at oil and gas exploration, production, processing, and treatment operations or transmission facilities, require permit authorization by March 10, 2003, unless designated for coverage before then. Discharges associated with small construction activity at such oil and gas sites require permit authorization by June 12, 2006.
• § 323 of the Energy Policy Act of 2005 added a new provision to the CWA § 502 defining the term "oil and gas exploration, production, processing, or treatment operations or transmission facilities" to mean:
  CWA § 502 ”… 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 activity."
• On June 12, 2006, EPA published a final rule to address the new provision added by the Energy Policy Act of 2005. This regulation specifically exempted from NPDES permit requirements stormwater discharges containing sediment (the pollutant most commonly associated with construction; a consequence of the Office of Management and Budget’s inter-agency review) from construction activities associated with oil and gas exploration, production, processing, or treatment operations or transmission facilities unless the relevant facility had a discharge of stormwater resulting in a discharge of a reportable quantity of oil or hazardous substances or caused/contributed to a water quality standards exceedance.
• Shortly thereafter, the Natural Resources Defense Council (NRDC) petitioned the Ninth Circuit Court of Appeals for review of EPA's action. On May 23, 2008, the Ninth Circuit issued an opinion in Natural Resources Defense Council v. United States Environmental Protection Agency, 526 F.3d 591 (9th Cir. 2008), vacating and remanding EPA's 2006 oil and gas construction stormwater regulation.
• Since EPA’s 2006 Oil and Gas Stormwater Rule was vacated, the regulations in place prior to 2006 have been in effect. As a result, the regulations and statutory language currently in effect are:
  • 40 CFR 122.26(a)(2)
  • 40 CFR 122.26(c)(1)(iii)
  • Revised 122.26(e)(8):
    For any storm water discharge associated with small construction activities identified in paragraph (b)(15)(i) of this section, see §122.21(c)(1). Discharges from these sources require permit authorization by March 10, 2003, unless designated for coverage before then.
  • CWA § 402(l)(2)
  • CWA § 502

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Additional information

• Fact Sheet on the Final Rule
• Demonstrating the Impacts of Oil and Gas Exploration on Water Quality and How to Minimize these Impacts Through Targeted Monitoring Activities and Local Ordinances - In 2005, EPA awarded a grant to the City of Denton, Texas, to monitor and assess the impact of gas well drilling on stormwater runoff, and to provide, if necessary, regulatory and management strategies for these activities. This study, completed in 2007, focused on three nearby gas well sites where pad construction and drilling were occurring. Runoff, primarily from the sites’ well pad areas, was monitored and analyzed, as were the contents of on-site drilling mud pits.
• Summary of the Results of the Investigation Regarding Gas Well Site Surface Water Impacts

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