Could EPA Regulate Methane And Ethane As Volatile Organic Compounds Under The Clean Air Act?

Vinson & Elkins LLP
Contact

Vinson & Elkins LLP

On April 6, 2021, more than 400 environmental non-governmental organizations (ENGOs) submitted to EPA a “Petition for Rulemaking to Remove Methane and Ethane from ‘Negligibly Reactive’ Volatile Organic Compounds List.” If granted, the petition could have greater consequence for Clean Air Act regulation than has the “endangerment finding” EPA issued for greenhouse gases in 2009 following Massachusetts v. EPA. This is because the Clean Air Act was built to regulate volatile organic compounds (VOCs) in ways it was not built to regulate “greenhouse gases,” and so calling methane and ethane VOCs would unleash the regulation of those two compounds under effectively all available Clean Air Act programs. Existing regulatory programs are not equipped to bear that load.

What are VOCs and How do they Fit into Federal Regulations?

Congress used Title I of the 1970 Clean Air Act to obligate EPA to adopt national ambient air quality standards (NAAQS) for the so-called “criteria air pollutants,” those typically associated with localized, urban air pollution. The Act further compels each state to adopt and obtain EPA approval of implementation plans sufficient to bring each area within the state into attainment of those NAAQS. In addition to controlling the existing source population in such a way as to demonstrate attainment of the standards, the state implementation plans also must include permitting programs to ensure (1) that new and modified major sources in attainment areas don’t cause significant air quality deterioration (so-called “PSD permits”), and (2) that new source construction in nonattainment areas is offset by further reductions emissions from the existing source population. The Act also requires various levels of control technology review as a pre-condition of permit issuance.

It is the NAAQS for ozone (EPA’s chosen indicator for “smog”) that has proven most intractable.1 Ozone is formed by the photochemical reaction of volatile organic compounds and NOx in sunlight, and so achieving the ozone NAAQS requires regulation of VOCs. Given that it is the photochemical reactivity of the organic compound that justifies its regulation under Title I of the Act, EPA has long maintained a list of organic compounds that are NOT photochemically reactive, so that they are excluded from regulation. The list includes such relative rarities as, for example, 2-amino-2-methyl-1-propanol, as well as all CFCs,2 but the rest of the list is swamped in terms of ubiquity and volume by just two, methane and ethane, which EPA recognized as “negligibly reactive” as far back as 1977.

New Petition to Regulate Methane and Ethane as VOCs

The April 6 petition claims that methane and ethane’s current exemption no longer serves what the ENGOs describe as the exemption’s intended functions, (1) focusing control efforts on regulation of the most ozone-inducing compounds, and (2) incentivizing industry to develop and use less reactive compounds to reduce ozone formation (e.g., switch to water-based paints). While acknowledging that methane and ethane are indeed of negligible reactivity, they nonetheless should now be regulated because what they lack in potency, they make up for in volume. According to the ENGOs, this volume of methane and ethane emissions “significantly contribute to ozone formation along Colorado’s Front Range and other parts of the country.”3 Further, given the asserted nature of their origin in the atmosphere (from oil and gas extraction), the incentivization of substitutes is not a factor. (One can’t choose to drill for oil and gas that contains no organic compounds.) Accordingly, say the ENGOs, the exemption no longer serves its asserted purposes.

The Intended and Unintended (?) Consequences of Regulating Methane and Ethane as VOCs

The petition presumably is motivated by its stated belief that methane and ethane should be counted as VOC for purposes of advancing attainment of the ozone NAAQS. But whatever the merits may be of the claims that methane and ethane contribute to ozone formation, the cure the ENGOs prescribe would not only fail, but yield serious side effects. Stated another way, it is not as though the exclusion of methane and ethane as VOCs has caused oil and gas production or any other emission source to remain unregulated or unregulatable.4 But deeming non-volatile organic compounds to be VOC will confound every existing regulatory program, diverting public and private resources to “a glorious mess” of the type that Representative John Dingell (rightly) predicted in 2008, when EPA deigned to use the Clean Air Act to regulate carbon dioxide, a constituent of clean air vital to life on Earth.

As the ENGO petition itself acknowledges, there is no ability to substitute other, less volatile alternatives to oil- and gas-related emissions of methane and ethane. And because almost all methane and ethane streams are accompanied by listed VOCs, the regulation of those streams already is either required or at least allowed, or occurs as a inevitable consequence of regulating true VOCs. Further, even assuming that adding methane and ethane to the definition of “VOC” would authorize new regulation, it is not at all clear what that regulation would be: They are not susceptible to additional control except by combustion, which many of these same ENGOs oppose.

As for some of the inevitable side effects of this futile prescription:

Distorting Air Quality Permitting Obligations. The Clean Air Act itself defines a major source as one with a potential to emit 100 or 250 tons per year (depending on source category). If methane and ethane were included in that total (as they would have to be if these compounds were classified as VOC), and depending on estimation techniques, every well pad could be deemed a major source subject to preconstruction permitting as a major source. Or consider that 100 tons/year is about 800 cows worth of methane emissions, meaning that a typical Texas feed lot would exceed the major source threshold by a factor of about fifty. The years-long time frames and demonstrations required to get permitted as a major source or modification will overwhelm permitting bureaucracies almost as much as did the decision to call CO2 a regulated air contaminant, leading to the so-called “tailoring rule” and all of the litigation that rule fostered. Efforts to adapt the Act’s prescribed permitting thresholds to include methane and ethane as pollutants may not receive a warm judicial reception. As Justice Scalia warned in his opinion in the UARG case disposing of the last tailoring rule, EPA “may not rewrite clear statutory terms to suit its own sense of how the statute should operate. We are not willing to stand on the dock and wave goodbye as EPA embarks on a multiyear voyage of discovery.”

Reconsideration of all Existing VOC-Related Requirements Established under Clean Air Act. By requiring inclusion of methane and ethane as VOC in any determination of VOC emissions, sources of methane and ethane would immediately be out of compliance with the limits on VOC established in all rules and permits. This includes not just the VOC limits established in the state plans for achieving the ozone NAAQS, but in permits issued pursuant to the Act, and in all of the new source performance standards adopted under Section 111 of the Act, and any standards for hazardous air pollutants established under Section 112 that use VOC emissions as a surrogate for HAPS.5 EPA might try to find some way of grandfathering or phasing in the new definition, but many of the same ENGOs petitioning here have proven uncooperative partners in efforts to allow transition periods of compliance when obligations change (e.g., appealing permits when the standards applicable to issuing permits change weeks before the end of a years-long permits process). At the very least, the consideration of methane and ethane as VOC will require a comprehensive review of the achievability of “VOC” limits, when adding in methane and ethane emissions. These innumerable reconsiderations would occur in an atmosphere of uncertainty over whether and how to enforce the limits as originally intended (considering only truly volatile organic compounds is assessing VOC emissions). In such uncertainty, it is very likely that targeted citizen suits in favored federal district courts will advance enforcement claims.

The ENGOs do not address these consequences in their petition, but no doubt they are aware of them. The petition also confirms that it is motivated as much by the desire to regulate methane and ethane as “greenhouse gases” as it is for purposes of affecting tropospheric ozone concentrations. Accordingly, the petitioners may view these side effects as a feature, not a bug, because they will lead to another “glorious mess” sufficient to motivate Congress to directly address GHG in the Clean Air Act. And in the meantime, the (un)regulated community will be open to citizen suits for having failed to permit their methane and ethane emissions, and for methane and ethane emissions that cause their sources to exceed limits on “VOC” emissions.

Possible Dispositions of the Petition

EPA’s stance on the low reactivity of these compounds has not changed since 1977, even as it adopted various models for measuring reactivity over the years. Accordingly, EPA is well positioned to deny the petition, and that seems the more likely disposition. But EPA leadership instead may view the side effects to be beneficial to motivating a Congressional response, and it is aware that technical judgments, such as the definition of a pollutant, are given deference by reviewing courts. (The decision to call methane or ethane a VOC does not involve any strictly legal question.) Accordingly, EPA leadership may conclude that the redefinition of “VOC” is the cleanest path to removing pending impediments and disputes concerning the scope of regulation of these two GHGs under the Act. Further, even if EPA denies the petition, we need look no further than Massachusetts v. EPA for an example of how ENGOs can get even the discretionary decision to deny a petition before the reviewing courts (the D.C. Circuit and the Supreme Court) for surprising outcomes.

1 Although EPA has identified five other criteria pollutants and established NAAQS for them (NOx, lead, sulfur dioxide, carbon monoxide, and particulate matter), relatively few remaining nonattainment areas remain for these pollutants. To the extent that areas remain in nonattainment, it is almost invariably because EPA has moved the goal posts by reducing the applicable NAAQS one or more times over the past fifty years.

2 CFCs — chloro-fluorocarbons — are non-reactive in the lower atmosphere, allowing them to reach the stratosphere and there to react with and break down stratospheric ozone, with deleterious effects on protection from ultraviolet radiation. As such, CFCs are instead regulated under Title VI of the Clean Air Act and limited under international agreements.

3 The petition cites only a law review article in support of this proposition.

4 As but one clear example, the new source performance standards adopted for oil and gas operations consist of two separate subparts, Subpart OOOO to regulate “VOC” and Subpart OOOOa, added in 2015 to nominally regulate “GHG” (methane and ethane). They do not in any meaningful way differ in what they require of the regulated source population; rather, EPA adopted Subpart OOOOa for the primary purpose of declaring “GHG” to be regulated, thereby triggering the obligation of states to adopt existing source performance standards for the upstream oil and gas industry.

5 The limits for mobile sources under Title II of the Act might escape as drastic a revolution because they regulate “non-methane organic compounds” instead of “VOC,” and the petition does not (yet) seek to disturb that definition.

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.

© Vinson & Elkins LLP | Attorney Advertising

Written by:

Vinson & Elkins LLP
Contact
more
less

Vinson & Elkins LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.