President Has Signed Methane Rule Repeal, Next Steps On EPA Methane Regs

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Chris Kearney | NSWA Vice President, Governmental Affairs

On June 30,  President Biden signed the Congressional Review Act (CRA) Resolution which repealed the Trump Administration’s methane “policy” rule  (i.e., the 2020 EPA regulations revising the targeted emissions for regulation under New Source Performance Standards (NSPS) for oil and natural gas production facilities).

The primary effect of this change is to reinstate the portion of 2016 NSPS that regulates many components for methane emissions rather than only volatile organic compounds (VOC).

A separate Trump Administration rule on methane, known unofficially as the methane “technical” rule, which provided an offramp from its leak detection and repair (LDAR) provisions when wellsite production fell below 15 barrels/day, was not directly repealed and is legally still in place.

However, EPA has now made its own regulatory – not legislatively directed – determination that because the rescinded policy rule applied to VOC emissions and the CRA resolution eliminated that regulation, such well sites are now returned to their status under the 2016 methane-based rule.

This means that low production wells will again be subject to the semi-annual LDAR program. An EPA question and answer document that explains the agency’s rationale can be found here.

It’s notable that NSPS regulations apply to new and modified sources. A modified source would be, for example, a refractured well. There are no current federal regulations on existing sources, including low production wells. Existing sources are currently regulated by states and some states may have low production well requirements.

It’s also important to note that the CRA action is just the beginning of a long EPA regulatory process.

In September 2021, for example, EPA is expected to propose: 1) revisions to the 2020 technical changes to relevant subpart sections of the NSPS and, 2) emissions guidelines under Section 111(d) of the Clean Air Act that would apply to all existing sources. The emissions guidelines would ultimately become state regulations unless the state defers to EPA for implementing a federal program.

Both of these actions will be developed through the federal rulemaking process, which includes public notice and comment.

However, ahead of the release of the proposed changes, NSWA board members and other members have been, and will continue to be, actively engaged with the agency as it conducts outreach to small oil and gas operators, having met with senior political appointees at EPA earlier this year, participated in the public workshops focused on small businesses last month, and continuing to engage in ongoing dialogue with the agency by various means (informal meetings, sharing of data, responding to EPA requests for information, etc.).     

A final rule regarding the changes discussed above is expected to be issued in October 2022. 

NSWA encourages members to provide any and all information they believe would be informative for EPA to consider in terms potential impact stemming from regulation of low producing wells as they develop the rule. Details can be found on how to do so here.  

Legislation Classifying Produced Water As Hazardous: Update        

In early March, House Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ), and other Democrat leaders, introduced the Climate Leadership and Environmental Action for our Nation’s (CLEAN) Future Act – ambitious new climate legislation that reflects the House Democrat Caucus’ primary legislation to address climate change. At almost 900 pages, it proposes a slew of measures designed to achieve a net zero greenhouse gas pollution no later than 2050, with an interim target of reducing pollution by 50% from 2005 levels no later than 2030.  The bill presents both sector-specific and economy-wide solutions to meet those targets.

Buried in the bill are a number of provisions that would adversely affect the oil and gas industry. Of particular concern is a provision that would apply extremely strict standards to produced water emitting from small operations. Specifically, under the bill, water produced from new oil and gas wells would be reclassified as hazardous waste, which in turn would change the requirements for its disposal and make this disposal much more difficult.

Currently, produced water is disposed of in a fairly common type of injection wells – known as Class II wells, of which there are about 180,000 in the US. However, if produced water is reclassified as hazardous waste, it would need to be disposed of in Class I wells.  There are only an estimated 300 in the country.  

Rumors are swirling in DC that the committee may mark up the bill and report it out of committee before the August Recess (currently scheduled for August 1), though that has not been officially confirmed.

Chris Kearney, NSWA vice president of governmental affairs continues to monitor movement on the bill.      

Senate Energy Infrastructure Bill Action/Possible Senate Floor Action Soon     

In advance of a legislative bill mark up this week, Sen. Joe Manchin (D-WV), chair of the Senate Energy and Natural Resource ENR) Committee, has released the latest version of a draft bill that authorizes billions of dollars for energy infrastructure, environmental projects, and water infrastructure projects.

Of note, title six of the bill (beginning on page 386) would direct the Secretary of Interior – in coordination with the Secretary of Agriculture and in consultation with the Interstate Oil and Gas Compact Commission as applicable – to establish a program for orphan well plugging, remediation, and restoration program on federal lands aimed at reducing methane emissions  through the authorization of a five billion dollar grant (both short-term and long-term funding)  program targeted at states and Indian tribes that would prioritize abandoned well site clean-up  by the greatest need, intending to create tens of thousands of jobs in the process. The bill would also establish a federal grants program for states to fund clean-up on state and private lands. 

The Manchin provisions are consistent with the broad proposal outlined by the administration in the American Jobs Plan.

Also in the bill is a provision that that would establish a research and development program at the Department of Energy (DOE) to advance clean hydrogen in the transportation, utility, industrial, commercial, and residential sectors. DOE would be required to establish cost goals and advance clean hydrogen from diverse energy sources, including fossil fuels with carbon capture, hydrogen-carrier fuels, renewable energy sources, and nuclear energy.

Recently, the Committee held a hearing on the measure. The bill was voted out of committee this week. 

With committee action complete, the future of Chairman Machin’s bill is uncertain given that the politics of the infrastructure debate are quite fluid at the moment; however, the current expectation is that it will be included in a the bipartisan “hard infrastructure” legislative package – the  basis of which was agreed to in late June by the bipartisan “Group of 20” Senators and the White House in the form of a $579 framework – currently slated for the Senate Floor by the start of the Senate’s August Recess (currently scheduled for early August).         

Corporate Support for a Clean Electricity Standard Increases

Approximately 80 major corporate entities have signed a letter urging Congress to enact a federal clean electricity standard. The businesses have indicated the power sector should strive for hitting the goal of an 80% reduction in carbon emissions – from 2005 levels by 2030 – and meet President Joe Biden’s goal of 100% clean electricity by 2035.

Passage of a federal clean electricity standard will drive large amounts of new renewable generation and do so in a way that provides businesses with a clear path and expectations to make needed investments at the scale and speed necessary,” states the letter.

Among the notable signatories to the letter areApple, eBay, Etsy, Exelon, General Motors, HP, Johnson Controls, Levi Strauss, PayPal, Salesforce, TechNet, and Unilever.

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