EPA has published a proposed rule to regulate methane and other emissions from new and existing oil and gas production sites and other portions of the oil and gas industry.
The proposed rules are to be revisions and additions to the rules in Subparts OOOO and OOOOa and are the Biden administration's first entry into the back-and-forth regulation of the sector that occurred during the Obama and Trump administrations. The proposed rules, however, go further and are more expansive than even the Obama-era regulations.
In Executive Order 13990, President Biden required agencies to review "all existing regulations, orders, guidance documents, policies, and any other similar agency actions promulgated, issued, or adopted between Jan. 20, 2017 and Jan. 20, 2021." He specifically ordered EPA to consider publishing a "proposed rule suspending, revising or rescinding" the technical rule.
EPA has now published a 577-page comprehensive and detailed proposal, for which it is seeking comments. There is no specific regulatory text on which to comment, which EPA indicates will be provided in a supplemental proposal. Nevertheless, EPA has explained the actions it plans to take.
In general, EPA is proposing to strengthen and expand current requirements for methane and VOC emissions from new, modified and reconstructed facilities; establish new limits for methane and VOC emissions from new, modified and reconstructed facilities that are not currently regulated; and establish the first nationwide emission guidelines (EGs) to limit methane pollution from existing facilities in the source category. To do so, EPA will revise Subparts OOOO and OOOOa and add Subparts OOOOb and OOOOc.
Under the proposal, Subpart OOOO will apply to new, modified or reconstructed sources between Aug. 23, 2011 and Sept. 18, 2015. Subpart OOOOa will apply to new, modified or reconstructed sources between Sept. 18, 2015 and the date of publication. Subpart OOOOb will apply to new, modified or reconstructed sources after the date of publication. Subpart OOOOc will apply to existing sources.
The proposal has several key components. Fugitive emissions at new and existing well sites and compressor stations will be subject to a comprehensive monitoring program. Well sites with estimated emissions greater than 3 tons per year must monitor for leaks using optical gas imaging or Method 21 on a quarterly basis and promptly repair any leaks found. All new and existing compressor stations must monitor and repair leaks at least once every three months. All new and existing pneumatic controllers at production, processing, and transmission and storage facilities must have zero methane and VOC emissions. Venting of associated gas from oil wells will be eliminated, and owners and operators must route the gas to a sales line where available. Tank batteries will also be required to reduce methane and VOC emissions. EPA is also proposing to establish nationwide requirements to minimize methane and VOC emissions from liquids unloading for the first time.
EPA estimates annual compliance costs will be $1.2 billion. However, product recovery is estimated to offset that amount by $520 million per year, for a net annual compliance cost of $680 million. EPA also calculated the climate benefits of the rule using the social cost of methane, estimating an annual benefit of $5.2 billion. Thus, based on the social cost of carbon, EPA concluded the benefits of the rule outweigh the compliance costs by $4.5 billion per year.
EPA established a comment period of 60 days from the date of publication. Oil and gas producers should evaluate this proposed rule to determine if its provisions are in their best interests and determine if comments should be submitted.
John B. King is a partner with Breazeale, Sachse & Wilson LLP in Baton Rouge, Louisiana. His practice relates mainly to environmental regulatory permitting and compliance. Prior to joining the firm in 2003, he served as chief attorney of enforcement for the Louisiana Department of Environmental Quality.
For more information, visit www.bswenviroblog.com, or contact John B. King at jbk@bswllp.com or (225) 381-8014.
