Fast and Furious

On March 8, 2024, the EPA released the Final rule to regulate methane emissions, with an effective date of May 7, 2024. The rule, titled Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review, is actually a finalization of multiple actions and regulatory requirements for the oil and gas sector, all intended to monitor and reduce emissions.

On March 8, 2024, Ken Paxton, the Attorney General of Texas, filed a lawsuit (petition for review) with the U.S. Circuit Court of Appeals for the D.C. Circuit to challenge those rules and revisions.

Additionally, another lawsuit by 24 states to challenge the EPA final methane rule was filed on March 18, 2024, in the U.S. Court of Appeals for the District of Columbia Circuit.

Final Four

The EPA methane rules have been a work in progress, and a tentative final rule was released in December 2023 at the COP28 conference in Dubai, UAE.

Specifically, the EPA rule finalizes four items that regulate oil and gas industry emissions:

• “Revisions to the new source performance standards (NSPS) regulating greenhouse gases (GHGs) and volatile organic compounds (VOCs) emissions” (under the Clean Air Act)
• “Emission guidelines (EG) under the CAA for states to follow in developing, submitting, and implementing state plans to establish performance standards to limit GHG emissions from existing sources (designated facilities)”
• Actions related to a Congress resolution (June 30, 2021) which disapproved the EPA's Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review of September 14, 2020, aka “2020 Policy Rule”
• A protocol for optical gas imaging (OGI)

Framework for Compliance

The new EPA rules call for a ban on routine flaring at new well sites, mandate company monitoring for leaks from well sites and compressor stations, and allow for third-party remote sensing programs and reporting of methane releases, particularly “super-emitter” releases. The EPA claims the rules will prevent ~58 million tons of methane from being released into the atmosphere (estimates for 2024-2038 curtailment in CH⁴ emissions).

Federal Overreach

The Texas lawsuit states that the EPA’s new methane rules impose onerous emissions standards for the oil and gas industry, and implementation to meet the methane emissions rules would require extensive updates to infrastructure. The legal challenge claims that each state, rather than federal government, has the right to set its own standards for existing methane sources, and the EPA rules are an unlawful federal overreach that usurp state rights in establishing emission standards. The Texas suit says the EPA final rule violates federalism principles by forcing states to comply with federal standards.

There is also a second Texas legal challenge, contesting EPA’s air quality and particulate matter standards final rule, the Quality Reconsideration of the National Ambient Air Quality Standards for Particulate Matter, released March 6, 2024. This air quality rule targets Permian basin operations, which are already reducing emissions and flaring intensity.

These state lawsuits argue that the EPA is exceeding its regulatory authority by expanding oversight and regulations without Congressional approval and authorization, and that the rules will eliminate jobs, increase energy costs, and diminish U.S. energy stability.

Sealed Well

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