EPA Proposes Rulemaking to Modify Methane Regulations

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The U.S. Environmental Protection Agency ("EPA") has proposed rulemaking revisions to the regulation of methane and volatile organic compounds ("VOCs"). The proposed rulemaking was published in the Federal Register on September 24, 2019, and established November 25, 2019 as the deadline for comments. However, the notice also suggests that comments on the information collection request will be better assured of consideration if received by October 24, 2019.

The rulemaking proposes reconsideration amendments to the new source performance standards ("NSPS"). These amendments, if finalized, would remove sources in the transmission and storage segment from the source category, rescind the NSPS (including both the VOC and methane requirements) applicable to those sources, and rescind the methane-specific requirements (the “methane requirements”) of the NSPS applicable to sources in the production and processing segments. The EPA is also proposing, as an alternative, to rescind the methane requirements of the NSPS applicable to all oil and natural gas sources, without removing any sources from the source category. Furthermore, the EPA is taking comment on alternative interpretations of its statutory authority to regulate pollutants under the Clean Air Act, and associated record and policy questions.

More specifically, the EPA is proposing to amend its 2012 and 2016 rules affecting the oil and gas industry, titled, respectively, “Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews; Final Rule” (“2012 NSPS OOOO”) and “Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources; Final Rule” (“2016 NSPS OOOOa”). Those rules established NSPS for VOC emissions from the oil and natural gas industry, and the 2016 rule also established NSPS for greenhouse gases ("GHGs"), in the form of limitations on methane, for that industry. The amendments the EPA is proposing are intended to continue existing protections from emission sources within the regulated source category, while removing regulatory duplication.

The EPA is now proposing to determine that some requirements under those rules are inappropriate because they affect sources that are not appropriately identified as part of the regulated source category, and some requirements under the 2016 NSPS OOOOa are unnecessary insofar as they impose redundant requirements. Accordingly, the EPA is acting to rescind those requirements while maintaining health and environmental protections from appropriately identified emission sources within oil and gas industry.

The EPA is proposing two potential actions: a primary proposal and an alternative proposal. The primary proposal contains two steps. In the first step, the EPA proposes to rescind the standards applicable to sources in the transmission and storage segment of the oil and gas industry. As the second step, the EPA is proposing to rescind the methane requirements of the NSPS applicable to sources in the production and processing segments. The EPA asserts those methane requirements are entirely redundant with the existing NSPS for VOCs and, thus, establish no additional health protections. Rescinding the applicability to methane emissions of the 2016 NSPS OOOOa requirements, while leaving the applicability to VOC emissions in place, will not affect the amount of methane emission reductions those requirements will achieve.

Under the alternative proposal, the EPA is proposing to rescind the methane requirements of the NSPS applicable to all oil and natural gas sources in the source category as it is currently constituted, without undoing the 2012 and 2016 interpretations or expansion of the source category to include sources in the transmission and storage segment. The rationale for rescinding the methane requirements under this alternative proposal is the same -- they are entirely redundant with the existing NSPS for VOCs.

The EPA is also taking comments on a number of alternative interpretations under the Clean Air Act such as whether it (i) is required to make the significant-contribution finding each time it regulates a pollutant from the source category, (ii) made a valid finding in the 2016 NSPS OOOOa that methane emissions from the Crude Oil and Natural Gas Production source category met this statutory standard, and (iii) should make a new determination whether methane emissions from the source category meet this statutory standard.

This proposed rulemaking could result in significantly reduced regulatory requirements related to methane emissions. However, it will likely be next year before we will know more about the extent of the changes, if any.

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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