Regulation Database – Oil and Gas Sector
New Source Performance Standard for Oil and Gas Sector
Pre-Trump Status Quo:
On June 3, 2016, EPA published a final rule setting NSPS for greenhouse gases (namely methane) and volatile organic compounds, applicable to new, modified, and reconstructed facilities in the oil and gas sector. Affected facilities include well sites, gathering and boosting stations, processing plants, and compressor stations.
- Final Rule (June 3, 2016) [Update 11-20-17]
- Proposed Rule (Sept. 18, 2015)
Litigation:
The methane emission standards were challenged in North Dakota v. EPA, No. 16-1242 (D.C. Cir. 2016). State and industry petitioners argued that the rule exceeded EPA’s statutory authority, was unconstitutional, and was arbitrary, capricious, an abuse of discretion, and not in accordance with law. On January 4, 2017 the case was consolidated with American Petroleum Institute v. EPA, No. 13-1108 (D.C. Cir. 2013) and Independent Petroleum Association of America, et al. v. EPA, No. 15-1040 (D.C. Cir. 2015). On January 24, 2017 state and industry petitioners filed a motion asking the D.C. Circuit Court of Appeals to delay the briefing schedule to “allow time for new administration personnel to be briefed on the rules, issues, and history of this litigation, and it would allow them to provide meaningful input on the parties’ discussions regarding the briefing schedule and format.” On April 7, 2017, EPA filed a motion to hold the case in abeyance in light of its review of the rule (discussed below), which the Court granted. As of March 2021 the case continues to be held in abeyance.
Deregulatory Action:
On March 28, 2017, President Trump issued an executive order instructing EPA to review the oil and gas rule and to rescind or rewrite the rule as needed to promote the President’s goals of energy independence and economic growth. EPA immediately submitted a motion to the D.C. Circuit Court of Appeals to hold the case in abeyance pending EPA’s reconsideration of the rule. The court granted EPA’s request on May 18, 2017.
On April 4, 2017, EPA published a notice in the Federal Register announcing that it is reviewing and, if appropriate, will initiate proceedings to suspend, revise or rescind the rule.
On April 18, 2017, EPA sent a letter to fossil fuel companies stating that it intended to reconsider the fugitive emission standards in the NSPS (the companies had petitioned EPA for reconsideration of those standards). On June 5, 2017, EPA issued a federal register notice stating that it is granting reconsideration of additional requirements in the NSPS, specifically the well site pneumatic pumps standards and the requirements for certification by professional engineer. The EPA indicated that it was staying the requirements for three months pending reconsideration. On June 16, 2017, EPA proposed a two-year stay of the NSPS requirements.
On July 3, 2017, the U.S. Court of Appeals for the District of Columbia Circuit vacated the initial three month stay of the rules, holding that the EPA lacked authority under the Clean Air Act to issue the stay. The court issued a mandate, requiring EPA to begin implementing the rules. The mandate was delayed for 14 days on July 13, 2017, “to give EPA time to determine whether to seek panel rehearing, rehearing en banc, or pursue other relief.” The 14 day period ended on July 28, 2017.
On July 31, 2017, a majority of the full court of the U.S. Court of Appeals for the District of Columbia Circuit ordered “the Clerk to issue the mandate . . . forthwith,” requiring EPA to begin implementing the rules.
On November 8, 2017, EPA issued a notice of data availability in support of its proposed two year stay of the NSPS requirements. The notice provides additional information on topics raised in comments on the stay, including challenges associated with implementing the NSPS requirements, and EPA’s authority to stay implementation.
On October 15, 2018, EPA proposed significant changes to the methane leak detection and repair requirements contained within the methane NSPS for oil and gas sources. The two key changes are: (i) reductions in how frequently oil and gas operators would be required to survey for methane leaks, and (ii) an extension of time provided for leak repair. Both changes will ultimately increase gas losses and associated methane emissions. Learn More>>
On August 29, 2019, EPA proposed revisions to the NSPS that would effectively eliminate controls on methane emissions from new oil and gas sources. The proposal would rescind the NSPS requirements applicable to sources involved in the transmission and storage of oil and gas, and rescind the methane requirements applicable to sources in the production and processing segments. In the alternative, EPA proposes to rescind the methane requirements of the NSPS applicable to all oil and natural gas sources, without altering the source category.
On August 13, 2020, EPA finalized a rule rescinding the NSPS for methane from oil and gas sources, and in a separate rule, EPA finalized various changes to the volatile organic compound standards that limit their effectiveness in controlling pollution. Learn More>>.
On September 14, 2020, a coalition of states challenged the rule in the D.C. Circuit Court of Appeals. The following day, a coalition of environmental groups filed their own challenge. On February 12, 2021 the court granted the government's motion to stay the case pending review of both new rules.
Reregulatory Action:
2021 Reregulation
On April 28, 2021 the Senate passed a resolution to repeal the EPA's NSPS revisions that eliminated methane controls on the oil and gas sector. The resolution was passed under the Congressional Review Act, which allows the House and Senate to nullify any recently finalized federal regulation by a simple majority vote in both chambers (subject to presidential approval). On June 30, 2021, President Biden signed the joint resolution.
On November 15, 2021, the Environmental Protection Agency published a proposed rule to limit methane emissions from U.S. oil and gas infrastructure under the Clean Air Act. EPA’s proposed rule includes three distinct groups of actions. First, EPA is proposing to revise the new source performance standards for methane and volatile organic compound emissions for the Crude Oil and Natural Gas source category. Second, EPA is proposing nationwide emissions guidelines for states to follow in developing, submitting, and implementing state plans to establish performance standards for limiting methane emissions from existing sources in the Crude Oil and Natural Gas source category. Finally, EPA is proposing to reverse the Trump administration's “Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review,” which had substantially weakened the regulation of methane emissions in the oil and gas industry.
Among other actions, EPA’s proposed rule would establish a monitoring program to require companies to address fugitive emissions at new and existing well sites and compressor stations; would require all new and existing pneumatic controllers at production, processing, and transmission and storage facilities to produce zero methane and volatile organic compound emissions (with limited exceptions for certain Alaska facilities); would eliminate the venting of associated gas from oil wells; would add storage tank batteries to the definition of facilities that must reduce methane and volatile organic compound emissions; and would broaden the types of pneumatic pumps covered by the rule.
2022 Reregulation
On October 7, 2022, the EPA provided preliminary notice that it was planning to propose revisions to the Clean Air Act’s New Source Review (NSR) permitting regulations. This action would require facility owners/operators of all existing industrial facilities considered “major sources” to include “fugitive” emissions of air pollutants when determining whether a physical or operational change at their facility is a “major modification” which would need a major NSR permit before starting construction. The permit would include required emission control measures to ensure that changes at the facility would not degrade air quality. “Fugitive emissions” are emissions that could not reasonably pass through a stack, chimney, vent, or similar opening.
As part of this action, the EPA has reconsidered a 2008 rule requiring only certain types of industrial source categories to include fugitive emissions when determining whether a change is a major modification. In response to a 2009 petition for reconsideration of the 2008 Fugitive Emissions rule, EPA stayed the rule’s effectiveness and later amended portions of the agency’s NSR regulations to reflect earlier requirements. To bring closure to the reconsideration proceeding, the EPA is proposing to fully repeal the 2008 rule by removing certain remaining stayed provisions of the regulations adopted in 2008. EPA also is proposing to remove a related exemption for modifications that would be considered major solely due to the inclusion of fugitive emissions. As a result of the proposed changes, all existing major stationary sources would be required to include fugitive emissions in determining whether a project is a major modification. These changes would more effectively carry out the purposes of the NSR program to preserve and/or improve air quality and will provide greater clarity to all stakeholders.
On December 6, 2022, the EPA released a supplemental notice of proposed rulemaking that updates, strengthens, and expands the methane emissions rulemaking that EPA proposed in 2021.
2024 Reregulation
On March 8, 2024, the EPA finalized multiple rulemakings to reduce air pollution emissions from the Crude Oil and Natural Gas category of emissions sources. The actions finalized in this rulemaking were first proposed in a notice of proposed rulemaking published on November 15, 2021, and were later expanded in a supplemental notice of proposed rulemaking published on December 6, 2022. EPA's March 8th actions regulate greenhouse gases (GHGs) and volatile organic compounds ("VOCs") emitted from the "Crude Oil and Natural Gas" source category. Among other changes, the final rule revises performance standards under the CAA regulating GHG and VOC emissions from new and modified pollution sources in the Crude Oil and Natural Gas category, and promulgates emission guidelines under the CAA for states to follow in establishing state performance standards to limit GHG emissions from existing sources in the category.
In addition, the rule makes some regulatory amendments to fill gaps left by Congress's disapproval of a regulation passed late in the Trump Administration. On September 14, 2020, under the Trump Administration, EPA (the "2020 Policy Rule"), which rescinded a number of CAA regulations on Crude Oil and Natural Gas sources. On June 30, 2021, President Biden signed a joint resolution of Congress under the Congressional Review Act that rejected the 2020 Policy Rule. This prevented the 2020 Policy Rule from taking effect, but left some inconsistencies in the regulatory regime because some sources were subject to conflicting standards under another 2020 Trump Administration regulation that was not rejected by Congress. Together, these new regulatory actions are expected to have a significant impact. Between 2024 and 2038, these new rules are expected to reduce approximately 58 million short tons of methane emissions (based on methane's 100-year global warming potential, the equivalent to reducing 1.5 billion tons of carbon dioxide emissions). This represents a 79 percent reduction in projected emissions from the sources covered by the final rule.
2024 Litigation
On March 8, 2024, two petitions for review were filed in the D.C. Circuit Court of Appeals to challenge EPA's March 8, 2024 CAA rule revising new source performance standards for greenhouse gas and volatile organic compound emissions in the oil and natural gas sector and establishing emission guidelines for greenhouse gas emissions from existing sources in that sector. The first petition was filed by the State of Texas and the Texas Commission on Environmental Quality. The second petition was filed by 24 states, led by Oklahoma, along with the Arizona Legislature. The Oklahoma petition contended that the final rule exceeded EPA’s authority and was arbitrary, capricious, an abuse of discretion, and not in accordance with law.
As of April 12, 2024, these petitions remain pending.