EPA Finalizes New Methane Standards for Oil and Gas Industry, Including Existing Sources

January 18, 2024
Katherine L. Vaccaro, Esq.
MGKF Special Alert - 2024 Federal Forecast

On his first day in office in 2021, President Biden signed an order directing the United States Environmental Protection Agency (EPA) to strengthen regulations under the Clean Air Act to reduce methane emissions from the oil and gas industry, the largest contributor of methane emissions in the United States at approximately 30 percent.  In December 2023, EPA released the final regulation, entitled “Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review” (Methane Rule).  EPA received nearly 1 million public comments on the proposed version of the rule.  Unlike prior air regulations targeting methane emissions from oil and gas facilities, the Methane Rule extends to existing sources.

A climate “super pollutant,” methane is many times more potent than carbon dioxide, and as a result, is responsible for almost one third of the warming from greenhouse gases occurring today.  Meaningful reductions in methane emissions are, therefore, expected to yield significant climate benefits, even in the near term.  EPA predicts the rule will reduce methane emissions from regulated sources by nearly 80 percent relative to what emissions would be without the rule, and by keeping that methane out of the atmosphere, natural gas that would otherwise be wasted will be able to be recovered and used.  The Methane Rule also regulates emissions of volatile organic compounds (VOC) and some air toxics co-emitted with methane.

The Methane Rule does two things.  First, it revises the prior New Source Performance Standards (NSPS) for oil and gas facilities (codified at 40 C.F.R. Part 60, Subparts OOOO and OOOOa) to incorporate more stringent standards for methane and VOC emissions, reflecting what EPA describes as newer technologies and solutions that leading gas-producing states and companies are already using.  The revised standards (to be codified at Subpart OOOOb) apply directly to “new” affected oil and gas sources.  Second, the Methane Rule establishes “Emission Guidelines” (to be codified at Subpart OOOOc) for states to follow in developing their own plans – due in early 2026 – for reducing methane and VOC emissions from “existing” sources.  States can adopt the model rules and presumptive standards in EPA’s Emission Guidelines, or states can develop their own standards as long as they are at least as stringent as EPA’s.  An affected source is “new” if it begins construction, modification, or reconstruction after December 6, 2022, and “existing” if it began construction, modification, or reconstruction before that date. 

For the most part, the Methane Rule applies to the same equipment and processes covered by the prior NSPS, with the following additions: compressors at centralized tank batteries, liquids unloading, and associated gas from oil wells located at oil and natural gas well sites; and process pumps located at natural gas gathering and boosting compressor stations and within the transmission and storage segment.  These source categories are not subject to Subparts OOOO or OOOOa.  Key standards under the Methane Rule include the phase out over two years of routine flaring of natural gas from new oil wells and a requirement that all well sites and compressor stations be routinely monitored for leaks.  Of particular note, the new rule also permits third parties to use remote-sensing technologies, such as those used on satellites or in aerial surveys, to find large “super-emitter” leaks.  When a third party identifies a “super-emitter leak”, and as long as EPA certifies the third party, then facility owners and operators will be notified and required to investigate to pinpoint the source of the leak and ultimately report the results of the inspection to EPA and repair any leaks or releases covered by the regulation.  EPA will make all super-emitter data available to the public.  We will be tracking this program closely to see how it plays out in practice, paying particular attention to the sufficiency of EPA’s third-party certification and data validation processes, as well as a potential corresponding uptick in citizen suits or other third-party challenges.