Consistent with its continuing efforts to combat climate change through executive action, the White House recently released its “Strategy to Reduce Methane Emissions.” This document, part of the administration’s larger Climate Action Plan, puts forth a plan to reduce domestic methane emissions. The strategy targets four sources of emissions for methane reductions: landfills, coal mines, agriculture, and oil and gas. While the methane reduction strategy focuses heavily on voluntarily measures for most of the target sources, the document strongly suggests that the oil and gas industry could be subject, for the first time, to federal methane emissions regulations by 2016.
Methane is a greenhouse gas with 20 times the global warming potency of carbon dioxide in the atmosphere. Methane’s relatively high global warming potential makes it an attractive target for GHG reduction efforts. Moreover, the availability of cost-effective technologies for the capture of methane, combined with concerns over increased methane emissions stemming from the fracking boom, have increased attention in recent years on reducing methane emissions as part of overall efforts to combat climate change.
The four key sources that are the focus of the administration’s strategy account for the vast majority of methane emissions in the United States. For landfills, coal mines, and agriculture, the strategy largely focuses on methane reductions that can be achieved through voluntary programs and limited rulemaking. However, with regards to the oil and gas sector, the strategy calls for a potentially more aggressive regulatory posture and indicates that the EPA is considering issuing regulations under the federal Clean Air Act (“CAA”) to compel reductions in methane emissions. This would be a significant development as EPA has not directly regulated methane emissions under the CAA previously. Moreover, if EPA establishes its regulatory authority over methane under the CAA, such an action would ostensibly provide the legal groundwork for additional regulation of methane emissions in the future.
The plan calls for EPA to release a series of white papers in the spring of 2014 on several sources of methane emissions in the oil and gas sector, including oil and co-producing wells, liquids unloading, leaks, pneumatic devices and compressors. In the fall of 2014, EPA will make a determination about what, if any, regulatory action it will take with regards to methane emissions from the oil and gas sector. If EPA decides to take regulatory action, it will culminate with regulations in place by the end of 2016.
The plan offers some clues about how EPA may proceed with regulation of oil and gas related methane emissions, but many of the key details regarding the scope and requirements of these regulations are left unanswered. The strategy specifically mentions two sections of the CAA that EPA is considering using to regulate methane emissions. The first, Section 111 (New Source Performance Standards) gives EPA the authority to set emissions standards for new and modified stationary sources of emissions within a particular industrial category. Key to understanding the impact of any methane New Source Performance Standards is to what stationary sources in the oil and gas industry these standards would apply. Oil and gas wells seem to be a likely target for methane New Source Performance Standards; however, EPA could take a more expansive approach and promulgate standards for other segments of the oil and gas industry, such as pipelines, storage facilities, or refineries. If such standards are issued, it could lead to the required use of well-completion technologies, measures to prevent venting and flaring of methane, or enhanced technologies to detect and prevent leaks. It is worth noting that since natural gas is a valuable commodity, higher rates of capture could help offset some of the costs of compliance with any regulations.
The second section of the CAA put forth as a potential route for CAA regulation of methane is Section 182. This section gives EPA authority to require enhanced pollution prevention measures for areas of the country that are in nonattainment of ozone pollution standards. This section gives EPA the authority to issue Control Techniques Guidelines (“CTG”), which are documents that provide states with EPA’s technical recommendations on how to control Volatile Organic Compound (“VOC”) emissions from a specific type of product or category of emissions sources. While reductions in VOC emissions from oil and gas installations often results in a reduction in methane emissions too, it is unclear how EPA would use this section of the CAA to substantially reduce methane emissions from the oil and gas sector. This is due to the fact that these regulations would only apply in areas of the country that are in nonattainment for ozone pollution, a relatively small portion of the country.
The administration’s focus on methane emissions is not surprising and the Strategy to Reduce Methane Emissions provides valuable, if limited, insight into how the administration intends to reduce methane emissions through executive action during the remainder of Barack Obama’s presidency. While the strategy indicates that the administration will take a relatively modest and collaborative approach to reducing emissions from landfills, coal mines and agriculture, the oil and gas industry very well could be subject to new methane emissions regulations by 2016, at the latest.
Adam Riedel is an associate with the Energy, Environment and Natural Resources practice in the Washington, D.C., office of law firm Manatt, Phelps & Phillips. His practice focuses on the resolution of environmental enforcement matters, compliance counseling, climate change regulation and the management and resolution of environmental issues in transactional contexts. Mr. Riedel previously served as the Associate Director of the Columbia Law School Center for Climate Change Law. He can be reached at (202) 585-6522 or ariedel@manatt.com.
This column is part of a series of articles by law firm Manatt, Phelps & Phillips, LLP’s Energy, Environment & Natural Resources practice. Earlier columns in the fourth edition of this series discussed the US Ban on Oil Exports and Environmental Risks in Buying Contaminated Properties.
