The current bill contains several provisions which would significantly alter the requirements of National Environmental Policy Act review, but it remains to be seen whether those changes will survive House review.
The Biden Administration is looking to make good on its promises to significantly curtail methane emissions in an EPA proposed rule that would significantly expand obligations for the oil and natural gas sector. The new regulations would amend and strengthen existing oil and gas regulations, commonly referred to as “Quad O” and “Quad Oa” because they are located in the federal regulations at 40 CFR Part 60, Subparts OOOO and OOOOa.
EPA’s last effort at reducing methane emissions from the oil and gas sector took place in 2016. However, the regulations covered only new sources—leaving roughly one million oil and gas wells uncovered. The Biden Administration’s regulations would, for the first time, direct states to impose new standards for existing sources, meaning that every oil and gas production facility that meets certain threshold criteria set forth in the regulations will be required to comply.
In recent enforcement actions, EPA and the Department of Justice have taken the position that the 2016 regulations require owners of oil and gas production facilities to prevent essentially all emissions leaks. This has been a challenging standard that has been questioned as unrealistic, particularly given that production facilities must safely control high-pressure gases. However, the proposed regulations only double down on the aim of requirement facilities to be emissions-free.
Strengthening New Source Regulations
The proposed rule would create a new set of regulations, Quad Ob (Subpart OOOOb), that would be focuses on both strengthening and expanding current requirements for new sources as well as standards for emissions sources previously not regulated under Quad Oa. Some key new requirements include a first-time, nationwide requirement to minimize emissions from liquids unloading and new leak detection and repair requirements.
Directing States to Regulate Existing Sources
Perhaps the most important change proposed by EPA is its regulatory expansion to cover existing oil and gas sources. New Quad Oc (Subpart OOOOc) would require states to implement plans for limiting methane emissions for existing sources under Section 111(d) of the Clean Air Act. The rule would establish “Emissions Guidelines” on methane reduction, providing “presumptive standards” for states to incorporate into their individual plans. Most of these presumptive standards for existing sources mirror the standards EPA is proposing for new sources. States would not be required to adopt the presumptive standard, but otherwise will need to develop their own plan that will be approved by EPA only if it is generally as strict as the presumptive standard.
Establishing a New Monitoring Program
The proposed rule also includes a new comprehensive monitoring plan that would require companies to find fugitive emissions and fix leaks at new and existing well sites and at compressor stations. Well sites with emissions of at least three tons per year will need to monitor for leaks and promptly repair them. EPA expects this requirement to apply to roughly 300,000 well sites nationwide. Sites with emissions below three tons per year will have to conduct and submit an initial survey demonstrating that they are free of leaks and malfunctions. This is a change from the current monitoring program, which includes a low-production well site exclusion that many oil and gas production facilities have invoked over the years.
Other Proposed Changes
The rule also proposes changes to how emissions from pneumatic controllers and storage tanks are regulated, as well as changes to how associated gas can be vented from oil wells.
Impacted companies are strongly encouraged to participate in the rulemaking process by submitting comments, including input on whether the proposed requirements are practicable and whether there are additional sources that should be covered. The public comment period is scheduled to end January 14, 2022.
These comments are likely to be critical in EPA’s consideration, given that EPA’s proposed rule did not include specific regulatory text as is typical and that EPA is expected to issue a supplemental proposal with proposed regulatory text in 2022.