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EPA overrides Obama-era methane regulation on oil, gas industry in final rules

The U.S. Environmental Protection Agency eased methane emission oversight on new and modified oil and natural gas sources in final rules released Aug. 13.

The rules no longer require oil and gas companies to monitor facilities for methane leaks, though the EPA would still require production and processing companies to monitor for volatile organic compounds, senior EPA officials told reporters Aug. 13. That requirement impacts methane emissions, too, since methane and volatile organic compounds are often co-emitted, according to the industry and agency.

One of the rules, called the "policy package," would no longer regulate methane or volatile organic compound emissions from large pipelines and other transmission and storage infrastructure, the agency officials said.

The other rule includes changes to an Obama-era regulation to benefit small oil and gas producers, according to an EPA news release. That rule exempts low-production wells, such as those producing less than 15 barrels of oil per day, from spending "significant funds" to monitor leaks. That rule, dubbed a "technical package," also reduces leak-monitoring requirements for gathering and boosting compressor stations from quarterly to twice a year, according to the release. Additionally, the regulation updates the required leak repair schedule, allowing repair deferrals if a fix is not "technically feasible" within 30 days.

Industry would also be allowed to comply with certain states' requirements rather than meet the EPA's regulations, allowing oil and gas companies to meet only one set of requirements. The rule adjusts recording-keeping requirements as well, reducing those costs by a projected 25% per site.

The regulation update takes the place of a rule the Obama administration finalized in 2016, which built on the EPA's 2012 New Source Performance Standards that regulate smog-forming volatile organic compounds from fracked gas wells and other infrastructure.

The EPA said the Obama administration violated the Clean Air Act by failing to determine that methane contributes significantly to air pollution before instating the 2016 regulation on the sector's production and processing segments.

The Trump administration's final rules includes elements from amendments proposed in 2018 as well a 2019 proposed rule to essentially roll back the 2016 regulation. The pair of final rules are expected to yield between $750 million and $850 million in net benefits from 2021 to 2030.

"Regulatory burdens put into place by the Obama-Biden administration fell heavily on small and medium-sized energy businesses," EPA Administrator Andrew Wheeler said in the release. "Today's regulatory changes remove redundant paperwork, align with the Clean Air Act, and allow companies the flexibility to satisfy leak-control requirements by complying with equivalent state rules."

Methane in the oil and gas sector

Methane, a greenhouse gas, is the primary component of natural gas. The industry has faced increased scrutiny in recent years for its methane emissions, which can escape or be vented during oil and gas production. Overall, methane emissions accounted for nearly 10% of all U.S. greenhouse gases emitted by human activities in 2018, according to the EPA.

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U.S. natural gas systems in 2018 accounted for the second-largest share of anthropogenic methane emissions in the country, releasing the equivalent of approximately 140 million tonnes of planet-warming carbon dioxide into the atmosphere, according to the EPA's latest data. For context, the same data showed that U.S. natural gas-fired generators produced about 577 million tonnes of carbon dioxide emissions in 2018.

The Environmental Defense Fund, or EDF, announced its intent to sue the Trump administration, saying the rule is "fundamentally flawed."

"Like so many other administration rollbacks that have already been rejected by the courts, this one ignores the science, the public health impacts and the low-cost solutions we have at hand," EDF President Fred Krupp said. "The administration has no scientific or public health basis for taking this action, and EDF will forcefully oppose it in court."

The president's rules could result in 4.5 million more tonnes of methane pollution annually, according to the environmental group's estimates. Those additional emissions, on a 20-year basis, have the climate-warming potential of nearly 400 million tonnes of carbon dioxide each year, equating to the emissions of roughly 100 coal-fired power plants annually, the EDF said.

Long road to rule replacement

The final rule released Aug. 13 is the culmination a multiyear effort by the Trump administration to revise and roll back Obama-era methane emission regulations.

Under the Obama administration, the EPA finalized the 2016 rule to limit methane emissions from new and modified oil and gas sources. The agency also issued an information collection request to the industry, seeking information on methane releases and mitigation technologies to help draft regulations on existing oil and gas sources.

President Donald Trump withdrew that information request shortly after his inauguration. He also issued an executive order that directed the EPA to reconsider the Obama administration's methane rule. In 2018, the EPA sought to amend the 2016 regulation before proposing a rule to roll back the Obama-era standards on new and modified oil and gas wells.

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On June 1, 2020, the agency announced that it had requested an expedited review from the U.S. Office of Management and Budget so the EPA could quickly finalize the new rule, dubbed the Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review.

Amid the fluctuating regulatory environment, the industry has sought to limit its emissions, implementing various coalitions and partnerships as well as working with universities and environmental groups to study leak detection technologies.

Howard Feldman, senior counselor of policy, economics and regulatory affairs for the American Petroleum Institute, or API, said the industry's actions have helped to drive down emissions.

"In this rulemaking, we expect EPA to still require emission reductions from oil and natural gas production, while now adhering to the requirements of the Clean Air Act," Feldman said in a statement. "API has not opposed cost-effective control programs of emissions from new and modified industry sources, such as those promulgated in 2012 that have the recognized benefit of simultaneously reducing methane emissions."

Former Vice President Joe Biden, the Democratic Party's presumptive presidential nominee, has said he plans to cap methane emissions for new and existing oil and gas operations if elected in November. Trump would likely need another term to defend any final methane regulations in court from almost certain legal challenges posed by environmental groups, experts said, noting that Biden would not likely continue defending his predecessor's rules.