Methane, one of the more potent greenhouse gases, is short-lived in the atmosphere compared to carbon dioxide. Thus, as the United States noted at COP28 last year, “Sharp cuts in methane emissions are among the most critical actions” that can be taken “in the short term to slow the rate of climate change.” Indeed, as environmental practitioners know, there is no shortage of legal, policy, and technology developments on methane control.
One of the most important COP28 outcomes was the launch of the Oil and Gas Decarbonization Charter, joined by 50-plus oil and gas companies, representing more than 40 percent of global oil production, with nationally owned oil companies, or NOCs, representing over 60 percent of signatories—the largest number of NOCs to commit to a decarbonization initiative of this kind. The signatories aim to end routine flaring, achieve near-zero upstream methane emissions, and reduce the methane intensity of their oil and gas production to 0.2 percent—all by 2030.
Back home, March saw a different type of launch, to great fanfare, of MethaneSAT, an $88 million surveillance satellite pioneered in part by the Environmental Defense Fund. Shot into space on the back of a SpaceX rocket, the satellite will be scanning the globe for large-scale leaks of methane into the atmosphere, known as “super-emitting” events.
Meanwhile, EPA is working on not one but three methane rulemakings. Most important, in March, EPA published landmark rules under Clean Air Act’s Section 111 to control methane emissions from the oil and gas industry (the “OOOO rules”). The OOOO rules set new standards for new or modified sources, and emissions guidelines for states to implement similar standards for existing sources. New and modified sources will be required to comply with federal requirements beginning in May. States will have up to two years to submit for EPA approval State Implementation Plans for thousands of existing sources.
Practitioners will be keeping an eye on three issues as implementation of the OOOO rules unfolds: First, third-party monitoring of facilities through the Super-Emitter Program. Second, the use of advanced methane monitoring and detection technologies to replace earlier generation technologies and approaches. Finally, intersection with the new methane fee established under the Inflation Reduction Act.
Under SEP, certified third parties will be authorized to use advanced technologies, like overflights and satellites, to search for and notify EPA of potential “super emitter” events, defined as emissions with a mass rate of 100 kilograms per hour or greater. If a third party provides EPA with data identifying such an event, which meet the agency’s reliability criteria, EPA will notify the operator, who will then be required to determine the source of the emissions and whether corrective action is needed.
The super-emitter concept is also relevant to new methane emissions reporting requirements under Subpart W of EPA’s Greenhouse Gas Reporting Program. The agency recently proposed to establish a category of “large emissions events,” essentially mirroring the super-emitter category from the OOOO rules.
Finally, EPA is working on regulations to implement the Inflation Reduction Act’s newly established methane fee, known as the Waste Emissions Charge. The WEC establishes thresholds for various types of facilities based on methane intensity, and then charges an annual fee for every ton of methane emissions that exceeds the threshold. Starting at $900 per ton in 2024, the fee ratchets up to $1,500 per ton in 2026.
Congress created a novel interface between the WEC and the OOOO rules. Once state plans are approved by EPA, a facility’s compliance with OOOO standards creates an exemption from the WEC—so long as the standards remain at least as stringent as they were when first proposed by EPA. This provision is designed to encourage states to promptly submit their plans, incentivize operators to ensure compliance, and deter future administrations from repealing or weakening the rules.
Several states have already announced their intention to seek judicial review of the OOOO rules. Practitioners will have to keep an eye on the litigation while they assist clients in developing compliance plans and considering which technologies to deploy to catch leaks.
In March, the Bureau of Land Management announced new methane regulations for operations on public lands. And the Pipeline and Hazardous Materials Safety Administration has proposed controlling methane leaks from natural gas pipelines, underground natural gas storage facilities, and Liquefied Natural Gas facilities.
These new regulatory regimes will create both challenges and opportunities, with long-term implications for energy markets, climate policy, and the energy transition.
Copyright ©2024, Environmental Law Institute®, Washington D.C. www.eli.org. Reprinted by permission from The Environmental Forum®, May/June.