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Biden would need to tackle methane on day 1 to impose lasting oil, gas rules

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Biden would need to tackle methane on day 1 to impose lasting oil, gas rules

President-elect Joe Biden could enact enduring methane regulations on the oil and natural gas sector, so long as he sticks to his campaign promise to make such rules a day-one priority, attorneys said.

"I think if he was efficient and this was one of the priorities, he could," Christine Wyman, senior principal with Bracewell LLP, said in an interview. "I think it probably is about four-years worth of work."

The former vice president included "requiring aggressive methane pollution limits for new and existing oil and gas operations" among his top priorities heading into his first day on the job, according to Biden's clean energy revolution plan.

The Trump administration finalized several rules that effectively rolled back the bulk of the Obama-era methane regulations from the U.S. Environmental Protection Agency and the U.S. Bureau of Land Management, or BLM. Biden's upcoming four-year term could afford the president-elect enough time to repeal and replace President Donald Trump's methane rules on new and existing methane sources in the oil and gas sector, according to several attorneys.

Specifically, the EPA finalized two rules in August that no longer require oil and gas companies to monitor facilities for methane leaks and removed volatile organic compound regulations from transmission and storage infrastructure. In doing so, the agency effectively rescinded its authority to regulate methane emissions from existing oil and gas sources. The Obama administration initiated the process to begin developing a regulation for existing sources in late 2016, but the Trump administration scrapped those efforts a few months later.

The Biden administration would have to justify imposing EPA methane regulations on the oil and gas sector just months after the agency explained its rationale for no longer regulating the greenhouse gas, Wyman said. In putting forth a replacement rule, the incoming administration may have to devote more resources to "trying to respond to what the Trump administration did and bolster the record there," she said.

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Under Biden, the EPA could finalize durable rules by strengthening regulations on new sources, reversing Trump's rollbacks and simultaneously beginning a rulemaking for existing methane sources, according to Rosalie Winn, senior attorney with the Environmental Defense Fund.

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"The new administration has a tremendous opportunity to move forward with existing source standards for the oil and gas sector, which will dramatically expand upon the benefits in the new source rule to reach the vast majority of sources that are old or existing facilities," Winn said. "I don't think that the regulatory back and forth between the Obama-era standards and then these Trump rollbacks has really helped anyone and has instead just created tremendous amounts of regulatory uncertainty."

On the BLM front, a federal court in Wyoming recently vacated the Obama-era methane regulation pertaining to production on federal lands months after a federal court in California tossed out the Trump administration's replacement rule. The Trump administration and industry appealed the California ruling, and attorneys expect that environmental groups will appeal the Wyoming decision. The appellate courts in both cases could rule on the Trump and Obama regulations sometime in 2021.

Biden could start a new BLM methane rulemaking, decline to defend Trump's regulations in court, and defend the Obama-era rules, according to Paul Seby, an attorney with Greenberg Traurig LLP who is representing North Dakota in the challenge to the Obama-era BLM rule. Should the appellate courts strike down the Trump and Obama rules, the Biden administration would have a "clean slate" to put new rules in place on the industry, he said.

The ever-changing federal methane regulations pose a "real challenge" to oil and gas companies, Seby said.

"Certainty is what the industry, I think, prefers from the ability to manage costs, and when it's changing all the time, costs get increased," Seby said. "Planning one year is totally changed by a new rule, that kind of thing. And then you've got state developments on top of that. … There is no certainty for the industry. There's a lot of uncertainty."

While more stringent methane regulations have faced significant legal challenges from the industry in recent years, there may be weakening appetite for such challenges in the near-term, according to John Morton, a partner with the climate change advisory and investment firm Pollination Group who served as White House senior director for energy and climate change under the Obama administration. Smaller oil and gas producers will likely continue to push back on such regulations under the Biden administration, but much of the sector views methane emissions as a growing liability, he said.

Biden's climate team will likely take a hard look at how to curb methane regulations to meet the president-elect's decarbonization targets, he said.

"Methane has to be a large part of that equation because of just how potent a greenhouse gas source it is and, frankly, how relatively easy and cost-effective it is to address leakages and flaring in the broader system," Morton said.