Energy, Regulatory Developments, Special Topics in Environmental Management

Emergency Stay Ordered on EPA’s New Methane Rules

On September 17, 2020, the U.S. Court of Appeals for the District of Columbia Circuit granted an administrative stay on the EPA’s implementation of its rollback of oil and gas methane and volatile organic compound (VOC) emissions limits.

Oil RefineryThe order for the stay followed a multitude of legal filings, including a coalition of almost two dozen states led by California seeking federal review of the Agency’s rollback. The September 17 order was in response to a petition filed by 10 environmental groups, including the Sierra Club, the Environmental Defense Fund, and the Natural Resources Defense Council (NRDC). The request for an emergency stay was combined with a request for the court to stay or vacate the regulation.

The rollbacks, announced by EPA Administrator Andrew Wheeler in August, would “remove direct federal methane restrictions for the (oil and gas) industry and loosen monitoring and repair regulations aimed at preventing leaks” of methane, according to eenews.net.

In granting the stay, in its two-page orders, the court said, “The purpose of this administrative stay is to give the court sufficient opportunity to consider the emergency motion for stay and should not be construed in any way as a ruling on the merits of that motion.”

In addition to granting the stay on the EPA’s rule, the court’s order also set a briefing schedule to conclude the briefing by October 5.

In the environmental groups’ motion, in addition to seeking the emergency stay, they also requested summary vacatur of the rule, arguing that the final rule would cause immediate harm by removing emissions control and reporting obligations on numerous sources and that it could also potentially moot litigation by states and environmentalists seeking to force methane limits on existing oil and gas facilities.

Included in their motion was the standard three-part legal justification to file the motion: petitioners expect to succeed on the merits of their suit, a demonstration of irreparable harm that would occur if the court does not act on their request for a stay, and a stay is in the public interest.

“The core rationales of the Recission Rule are transparently flimsy, counterfactual and outcome driven,” and the Agency’s flexibility to change its positions “has limits,” the petition states. “In fact, the arbitrary and capricious nature of the Recission Rule is so clear that summary vacatur is warranted.”

At the heart of most of the current legal challenges the EPA is seeing on its policy revisions is the huge difference in policies from the Obama administration to those held by the Trump administration, said Mark McPherson, an environmental attorney at Dallas-based McPherson Law Firm.

“Radical change in policy at the White House level is the problem,” McPherson said. “Obama said, as a matter of public policy we think this is unhealthy, there shouldn’t be any methane emissions. Trump comes along and says it’s not that big a deal, we don’t want to impose those costs on the industry, and they list a number of reasons to justify the policy change.”

Granting a stay provides the court with more time to study the issue to determine if the Agency is properly following policy, he said.

Utilizing the “arbitrary and capricious” argument is a standard challenge, McPherson said, but it’s a hard standard to prove.

“I do not believe the Sierra Club will be successful in utilizing this challenge,” McPherson said. “There is case law that says an agency can change policy. They are not beholden to their prior rules.”

Industry Split on Methane Emissions Rules

Smaller producers have pushed for changes, claiming current emissions standards are too costly. Several large oil and gas companies have gone on record in favor of the previous Obama-era policies.

“Last year we announced our support for the direct regulation of methane emissions for new and existing oil and gas facilities. That hasn’t changed,” wrote Exxon Mobil Corp. Senior Vice President Staale Gjervik in the company blog. “Our experience shows that methane emissions can be mitigated in a cost-effective manner.… Full industry participation is required to maximize the benefits to society.”

Susan Dio, former chairman and president of BP America, agrees.

“First, it’s the right thing to do for the planet. Methane is the primary component of natural gas. It has a shorter lifetime in the atmosphere than carbon dioxide (CO2), but it has higher global warming potential. So, we must strive to prevent it from escaping into the air.

“Second, we need to protect natural gas’ license to operate. When used in electricity generation, natural gas has less than half the CO2 emissions of coal, and it also can be a vital backup to renewables. But to maximize the climate benefits of gas—and meet the dual challenge of producing more energy with fewer emissions—we need to address its Achilles’ heel and eliminate methane emissions,” she said.

The D.C. Circuit Court’s final ruling on this matter will likely impact the California-led state litigation also seeking review of the methane rollback. Industry, states, and environmental groups anxiously await the court’s final decision, expected in the next few weeks.