Week Ending June 16, 2017

Industry Pleased With Two Year Delay on Methane Emission Rules

This Article Appears as Published in Foster Report No 3153

Oil and natural gas producers are pleased with the Environmental Protection Agency’s (EPA) June 13 announcement that it will delay for two years methane emission standards while it considers a proposed rule on fugitive emission requirements for oil and gas production facilities, pneumatic pumps and compressor stations.

The American Petroleum Institute (API) and the Independent Petroleum Association of America (IPAA) praised the move, along with that of the Department of Interior (DOI) to halt for two years compliance with the Methane and Waste Prevention Rule.

In a June 15 Federal Register notice,[1] DOI said it will postpone compliance with the Bureau of Land Management’s (BLM) Methane and Waste Prevention Rule that is being reconsidered by the agency. Similar to the EPA methane emissions standards, which previously were halted for 90 days, the BLM rule addresses venting and flaring at production facilities and required operators to reduce accidental leaks of natural gas into the atmosphere.

Shortly after the rule was issued in November 2016, petitions for judicial review were filed by industry groups that included the Western Energy Alliance, IPAA, and several states. An attempt to overturn the BLM rule in Congress via the Congressional Review Act came up one vote shy in the Senate in May.[2]

Given the legal uncertainty of the rule as petitioners have raised questions about the validity of certain provisions of the rule, “operators should not be required to expend substantial time and resources to comply with regulatory requirements that may prove short-lived as a result of pending litigation or the administrative review that is already under way,” DOI said in the notice.

Postponing the compliance dates of the rule for two years will help preserve the regulatory status quo while the litigation is pending and DOI reviews and reconsiders the rule, DOI said.

API deemed the move by DOI an important step in the process to ensure that regulations are cost-effective, feasible, and lawful. BLM’s redundant and flawed rule overlaps with existing state and EPA regulations and could reduce production activity on federal lands, where natural gas production already is down 18% from 2010 to 2015, API said.

“Any rule that could impede U.S. energy production while reducing local and federal government revenues could slow a growing U.S. economy and run counter to a balanced approach to environmental management,” said Erik Milito, director of the upstream and industry operations group at API.

The DOI notice drew a statement from Sen. Maria Cantwell (D-Wash.), ranking member on the Senate Energy and Natural Resources Committee, about the agency’s intent to ignore the rule and the will of Congress following the Senate vote in early May. “The BLM Methane Rule now has the force of law – and President Trump is breaking it. Congress voted for people over polluters and the administration must respect that outcome,” Cantwell said.

In its Federal Register notice, EPA said it is reconsidering emission standards for the oil and gas sector under the Clean Air Act. It previously granted reconsideration based on industry objections and called for a three-month stay of the standards. The notice extends the stay for two years while EPA looks broadly at its 2016 rule and addresses new source performance standards for greenhouse gas emissions and volatile organic compounds from the oil and gas sector.

The standards in the rule would require companies to capture leaking emissions at production sites and pipeline compressor stations, obtain engineer certifications and install leak detection devices that EPA previously announced.

“We’re very pleased that EPA has taken this action,” which allows for a realistic reconsideration of the rule’s feasibility, said an IPAA spokesman. The EPA rule “would create an extreme economic burden, particularly on smaller, marginal wells. The only certainty that this rule provided was certainty that these wells would be shut down,” he said.

The additional two years should allow EPA time to collect data and look at the impacts of the rule that the agency failed to address previously, the IPAA spokesman added.

“The data is clear – methane emissions from the natural gas industry have fallen 18.6% even as production increased by 50% between 1990 and 2015,” a spokesman for API said.

EPA’s 2012 rule provides a solid roadmap for addressing emission questions and has been getting the job done in collaboration with industry innovations, the API spokesman said. “EPA’s focus should be on cost-effective regulations that target emissions of volatile organic compounds, providing the co-benefit of methane emission reductions,” he said.

The EPA and DOI moves drew a backlash from a collection of environmental groups, some of which have sued the Trump administration over EPA’s stay of its rule, which was scheduled to take effect June 3. The Natural Resources Defense Council (NRDC), Sierra Club, Clean Air Council, Environmental Defense Fund, and others filed a lawsuit with the U.S. Court of Appeals for the District of Columbia Circuit, asking the court to block EPA Administrator Scott Pruitt’s stay of federal standards to curb methane leaks.

The legal action taken in early June marked the first lawsuit against EPA’s rollbacks of federal efforts to fight climate change, NRDC said in a statement.

“In its haste to do favors for its polluter cronies, the Trump EPA has broken the law,” said Meleah Geertsma, senior attorney at NRDC. “The Trump administration does not have unlimited power to put people’s health in jeopardy with unchecked, unilateral executive action like this. Stopping methane leaks is a no-brainer—avoiding wasted gas, creating jobs, fighting climate change, and cutting cancer-causing pollution all at once,” Geertsma said in a statement.

By Tom Tiernan TTiernan@fosterreport.com

[1]   Waste Prevention, Production Subject to Royalties, and Resource Conservation; Postponement of Certain Compliance Dates, 82 Fed. Reg. 27,430.

[2]   See, Senate Vote to Overturn Dept. of Interior’s Methane Rule Comes Up Short, FR No. 3148, pp. 1-2.

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