Under the Obama Administration, EPA issued rules for new sources in the oil and gas sector, both to expand the kinds of sources covered and to begin regulating a new pollutant—methane.  Although those rules were not expected to achieve significant new reductions in emissions, they triggered a requirement for EPA to expand its methane regulations further to existing sources.

Under the Trump Administration, EPA now believes the rule expansion was unlawful and the regulation of methane was duplicative and unnecessary.  As a result, EPA has proposed to reverse the Obama EPA rules and eliminate the trigger for additional methane regulations.  In doing so, EPA also dodges certain questions regarding its authority to issue regulations to address climate change.

In the first step of its proposal, EPA plans to reverse its 2012 decision to expand the oil and gas source category to add “transmission/storage” activities to the “producing/processing” activities that have been regulated for many years.  In essence, EPA claims that “transmission/storage” is a different industrial source category.  As such, EPA concludes that it has not made the prerequisite “endangerment finding” for regulating that previously unregulated category, and thus EPA proposes to repeal the regulations for that segment of the industry.

The second step of EPA’s proposal seeks to rescind the methane rules for the entire oil and gas sector for a simple reason—the same requirements EPA has already imposed to reduce emissions of “volatile organic compounds” (VOCs), a precursor to ozone, are also the best means of controlling methane emissions.  In other words, the industry is already well-controlled for methane because it is well-controlled for VOCs, given that the same controls work equally well for both pollutants.  Since the regulation of methane in addition to VOCs would not result in any further emission reductions, EPA concludes it has the discretion to refrain from regulating methane from the source category.

With this approach, EPA has largely avoided several key legal issues.  First, EPA avoided the questions of whether methane endangers human health and welfare and whether EPA must issue a new “endangerment finding” to regulate new pollutants from already regulated source categories.  EPA’s proposal also “obviates” the need for a Section 111(d) rule for the oil and gas industry similar to the one already imposed on electric utilities under EPA’s recently-finalized “Affordable Clean Energy” rule.

The comment period on EPA’s proposal will last until November 25th, which means EPA will likely issue the final rule sometime in mid-2020, with litigation sure to follow.  For more information on this proposal, please contact Mack McGuffey at 404-885-3698.