Regulatory Developments, Special Topics in Environmental Management

EPA’s Controversial O&G Methane Proposal

Seven years after the Obama administration issued major amendments to Clean Air Act (CAA) New Source Performance Standards (NSPS) affecting the oil and gas (O&G) sector and 3 years after it issued another set of amendments, the EPA is proposing to rescind substantial parts of both actions. First, the Agency wants to remove O&G storage and transmission sources from the O&G category. Under CAA Section 111, the Agency added that subcategory to the O&G NSPS in both the 2012 and 2016 amendments. But the Agency now states that these actions “exceed the reasonable boundaries of its authority to revise source categories.”
Oil Refinery
But the more consequential provision of the proposal would eliminate the part of the 2016 NSPS specifically written to control emissions of methane from O&G production and processing sources. According to the Agency, these limits are redundant because methane is a volatile organic compound (VOC), and O&G VOCs are already regulated under the 2012 NSPS.

Because methane is a VOC and the EPA is not rescinding the VOC NSPS for the O&G sector, the Agency asserts that rescinding the applicability to methane emissions will not affect the amount of methane reductions those requirements will achieve.

Industry stakeholders agreed with this assessment. But our Internet review did not find a single stakeholder or nonadministration government official who supports a strong federal role in controlling greenhouse gas (GHG) emissions who viewed the Agency’s assertion that there will be no increase in methane emissions as anything but a clever deception.

In the United States, methane comprises about 10% of all GHG emissions caused by human activity, second only to carbon dioxide (82%). The O&G sector accounts for about 30% of those methane emissions.

2012 and 2016 Rules

In 2012, the EPA established VOC NSPSs for several O&G emissions sources, including natural gas well completions, centrifugal and reciprocating compressors, natural gas-operated pneumatic controllers, and storage vessels. Using information available at the time, the EPA also evaluated methane emissions and reductions as a potential cobenefit of regulating VOC emissions.

In the 2016 action, the Agency went on to regulate sources that were not covered by the 2012 rule, specifically hydraulically fractured oil well completions, pneumatic pumps, and fugitive emissions from well sites and compressor stations. The rule also imposed methane emissions standards on sources that were regulated under the 2012 NSPS for VOC emissions but not for methane.

Executive Order

Upon taking office, the Trump administration issued an Executive Order (EO) directing federal agencies to reconsider rules that “unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest” and suspend, revise, or rescind those actions. In the current proposal, the EPA notes that it received petitions from states and industry organizations to reconsider the 2012 and 2016 O&G NSPS. The EPA determined that the rules fall squarely within the universe of federal regulations to which the EO was directed.

Removal of Storage and Transmission Sources

In 1979, the EPA determined that the O&G category comprised production and processing. In the 2012 and 2016 rules, the Agency expanded the category to include sources conducting transmission and storage. The EPA explained that inclusion of the transmission and storage segment into the original 1979 source category was warranted because equipment and operations at production, processing, transmission, and storage facilities are a sequence of functions that are interrelated and necessary for getting the recovered gas ready for distribution.

In its proposal, the EPA now says the 2012 and 2016 interpretations of the 1979 listing were erroneous. The Agency points to a 1985 rule addressing the O&G category in which it explicitly defined the source category as encompassing natural gas operations up to the point of distribution to gas pipelines—that is, up to the storage and transmission segments, and in that manner, indicated that these segments were not included in the source category.

In addition, the EPA asserts that in order to add storage and transmission sources to the O&G category, the Agency must make a finding that the transmission and storage segments in and of themselves “contribute significantly to air pollution which may reasonably be anticipated to endanger public health or welfare.” The EPA has not made this separate finding.

For these and related reasons, the proposal seeks to remove O&G storage and transmission sources from the O&G source category.

No Rational Basis

The EPA is also proposing to rescind the methane requirements of the NSPS applicable to sources in the production and processing segments. The Agency states that the 2016 rule lacked a rational basis to establish standards of performance for methane emissions from the production and processing segments because those requirements are entirely redundant with the existing NSPS for VOCs, establish no additional health protections, and are, thus, unnecessary.

“Rescinding the applicability to methane emissions of the 2016 NSPS, while leaving the applicability to VOC emissions in place, will not affect the amount of methane reductions that those requirements will achieve, given the 2016 NSPS compliance monitoring assurances, including technologies and frequency of monitoring,” states the EPA.


The EPA’s assertion that the proposed amendments will not lead to an increase in methane emissions from the O&G sector will likely be the most hotly discussed topic in public comments. Stakeholders have already zeroed in on this part of the proposal.

For example, the American Petroleum Institute (API) wrote that modifying the NSPS could reduce duplication with state programs, provide greater clarity for industry in its regulatory compliance and, ultimately, further lower methane and other emissions and protect the environment.

“Bottom line: methane is natural gas, and the industry is highly motivated to capture every molecule of it not only for environmental reasons, but for business reasons too,” said the API.

An opposing and more detailed response comes from David Doniger, director of the Climate & Clean Energy Program at the Natural Resources Defense Council (NRDC). Doniger states first that the methane standard curbs emissions from more equipment and operations “further down the line” than the VOC standard. But even if the reductions from both standards equally controlled emissions, rescinding the methane standard has other consequences. The reason, Doniger explains, is that a methane standard for new sources triggers EPA’s legal obligation to curb the even larger amount of methane coming from existing sources. Alone, the VOC standard creates no such obligation.

“By repealing the new source methane standard, [EPA Administrator Andrew Wheeler] is trying to erase his obligation to regulate methane from existing oil and gas sources,” says Doniger. “And [the] bulk of the industry’s climate pollution would go scot-free.”

Doniger also has little confidence in state programs and voluntary initiatives by industry to capture methane that would otherwise escape to the atmosphere.

“Only some companies have voluntary programs, only a few states regulate, and old equipment will take many years to turn over,” he writes. “None of these is a valid reason for EPA not to do its job.”

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