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The Fight Continues: CATF Challenges EPA Methane Rescission Rules

September 23, 2020 Work Area: Methane

Last week, CATF, on behalf of our clients Earthworks and NPCA, challenged two new EPA rules that aim to rescind critical aspects of its 2016 methane and VOC standards for the oil and natural gas sector.  While both of the new rules are legally and technically flawed, and we look forward to our day in court, it’s helpful to understand what exactly EPA’s rescission efforts are trying to take away.

In 2012, EPA updated the oil and natural gas sector’s standards under section 111 of the Clean Air Act for the first time since 1985 by issuing VOC-based standards for various facilities and sources in the production, processing, and transmission and storage segments. Four years later, EPA further updated the sector’s standards by imposing the first-ever nationwide methane pollution standards, extending the 2012 standards to more sources downstream in the transmission and storage segment, and imposing critical leak detection and repair (“LDAR”) requirements on the industry (collectively the “2016 Rule”).

This was an important step forward because while the 2016 Rule was only applicable to new and modified sources, the finalization of methane standards triggered an obligation under the Clean Air Act for EPA to address existing oil and natural gas sources, which emit the majority of the sector’s emissions. The LDAR provisions further forced operators to find and fix leaky equipment or components at well pads or compressor stations. When combined with the extension of requirements to downstream sources, the 2016 Rule represented a comprehensive methane regulation program for the entire source category (albeit one that is ripe for improvement), that has been in place for over four years despite the Trump Administration’s many attempts to kill it.

Fast forward to today, though, and it’s clear we’re moving backwards.

In the first rule, published on September 14, EPA has reversed course on a number of positions it took in 2016.  First, EPA removed all of the air pollution standards for the downstream sources in the transmission and storage segment, despite the significant overlap in sources and pollution controls between the upstream and downstream segments and the fact that there are low-cost, feasible measures to reduce emissions from transmission facilities that have been required for years. Second, EPA rescinded methane regulations for the remaining source category (which is just upstream sources), thereby removing EPA’s obligation to regulate existing sources. Third, and finally, EPA finalized a new interpretation of section 111’s “significant contribution finding.” Under section 111(b)(1)(A), EPA is required to list a source category if it “causes, or contributes significantly to, air pollution that endangers human health or welfare.” EPA now, for the first time, has taken the position that the agency must make a separate finding for each new pollutant that was not part of that source category’s original listing, rather than have a rational basis for regulating such pollutant from an already-listed source category.

What’s Left?

In the second rule, published on September 15, EPA finalized two changes to the LDAR requirements. The first provides an exemption for well pads once they produce less than 15 barrels of oil equivalent per day (or, in terms industry often uses, becomes a “marginal” or “low-producing” well). This is a significant departure from the 2016 Rule, which required inspections twice a year at all wellpads with no exemption for low-producing wells. The second change is a reduction of the required frequency of inspections at compressor stations from quarterly to semi-annual.  These changes – if not overturned by litigation – will result in huge increases in pollution.  We estimate that emissions in 2025 will increase by over 4 million tons of methane, over one million tons of ozone-smog causing VOC pollution, and 40,000 tons of toxic hazardous air pollutants.[1]  This despite the fact that the standards have been in place for over four years now.

The result is nothing short of a hollowing-out of the 2016 methane standards.  Where we once had methane and VOC standards for the entire supply chain, we now are left with VOC-only standards governing upstream emission sources only from the wellpad to the processing plant. Not only does this mean there is no requirement to issue existing source standards, but a significant number of sources in the transmission and storage segment will now have no regulations at all. And, where we previously had strong LDAR standards for the industry, we are now left with weak requirements that are only applicable to sources in the production and processing segments, and with a gaping exemption for well pads when they are low producing.

At a time where, more than any other point in our nation’s history, we need to be making forward progress to battle the ills caused by climate change, EPA is ignoring the problem and moving backward.

We will continue to fight.

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