DISPUTE RESOLUTION: Oil & Gas Litigation: Seven States Threaten to Sue to Force EPA to Address Methane Emissions from Oil and Gas Operations by Harold Shaw

by King & Spalding
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New York, Connecticut, Delaware, Maryland, Massachusetts, Rhode Island, and Vermont recently sent EPA Administrator Jackson a Clean Air Act Notice of Intent to Sue based on the Agency’s failure to take certain actions addressing the oil and gas industry’s methane emissions. See Letter from Seven State Attorneys General to Lisa P. Jackson dated December 11, 2012. The Notice asserts that, with regard to those methane emissions, EPA failed to perform specific non-discretionary duties under the Clean Air Act and unreasonably delayed other Agency actions related to those methane emissions.

The Notice describes the specific nature of the Agency’s alleged shortcomings concerning the oil and gas industry’s methane emissions. It first criticizes EPA’s failure to determine, within the applicable eight-year statutory review period, whether it is appropriate to require standards of performance limiting methane emissions from new oil and gas sector emissions sources. The letter explains that EPA also had a duty to issue, within that same eight-year period, any methane emissions standards that EPA determines to be appropriate for the industry. Finally, the letter criticizes EPA’s failure to establish methane emission guidelines for existing sources of air pollution within the oil and gas sector. These guidelines would have been directly connected to the missing methane standards the States felt were appropriate for EPA to have issued.

The States believe that the Agency previously should have regulated the industry’s methane emissions because the available data are particularly strong. They observed EPA already has determined methane emissions endanger public health and welfare. To underscore the urgent need for action, they cited EPA’s prior statements indicating methane has a much more significant global warming effect than does carbon dioxide. The States also pointed to various EPA materials showing that the oil and gas sector’s processes and equipment emit large quantities of methane, are the largest source of methane in the United States, and are the second largest industrial source of any greenhouse gases in the country. The Notice observed that readily available methods for controlling the industry’s methane emissions already exist, are cost effective, and may even be profitable for the industry. The States noted that these facts have been available to EPA for some time, yet EPA failed to address methane emissions in the Agency’s recently promulgated rule setting national emissions standards for oil and gas operations. See 77 Fed. Reg. 49490 (Aug. 16, 2012).

By filing this Notice demanding EPA action on the industry’s methane emissions, the seven northeastern States have increased the pressure on EPA to impose additional new environmental requirements on the oil and gas sector. As reported regularly in the press, there are a number of ongoing efforts to regulate various environmental aspects of the oil and gas industry’s fracking operations. Some of these proposed regulatory activities focus on the contents of fracking fluids, water use, wastewater disposal, and related waste and pollution matters. The sector’s air emissions have also been in the regulatory crosshairs as evidenced by the oil and gas industry emissions regulations EPA issued this summer. Even EPA’s explanatory materials accompanying those newly promulgated oil and gas sector air emission rules indicated the Agency would “continue to evaluate the appropriateness of regulating methane with an eye toward taking additional steps if appropriate.” 77 Fed Reg. at 49513.

Like the seven States that filed the Notice of Intent to Sue, environmentalists also consider EPA’s newly issued oil and gas industry air regulations to be inadequate. Environmental organizations previously filed suit challenging various aspects of those new EPA rules, including EPA’s failure to regulate the sector’s methane emissions directly. See Natural Defense Council v. U.S. Environmental Protection Agency (D.C. Cir. No. 12-1409, Oct. 15, 2012); Earthjustice Press Release, NY Attorney General Challenges EPA to Address Methane Emissions from Oil and Gas Industry (Dec. 11, 2012); Earthjustice Blog. Your Lungs Will Thank Us (Nov. 19, 2012).

While it is unclear how EPA will respond to the Notice of Intent to Sue, the seven States have expressed a willingness to negotiate with EPA. If EPA fails to reach an agreement with the States or otherwise fails to act within the allotted time periods set out in the Clean Air Act and EPA’s rules, the States have said they intend to press on and file suit. Based on these recent developments, the day of reckoning for direct methane regulation in the oil and gas industry may be fast approaching.


 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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