Amidst a historically busy methane regulatory agenda, the White House will hold its first-ever methane summit on July 26. The few details available about the summit state that the event will convene “state, local and federal leaders” to spotlight how governments are detecting and responding to methane emissions.
Notably, the American oil and natural gas industry – the sector responsible for, and committed to, achieving methane emissions reductions – is absent from the invitee list.
Throughout President Biden’s term, the White House has consistently conveyed mixed messages on domestic energy production and pursued a patchwork of disordered and often duplicative methane regulations that leave the domestic energy industry with more questions than answers.
MERP Continues to Mystify
First, the passage of the Inflation Reduction Act (IRA) last August established the Methane Emissions Response Program (MERP), which tasked Environmental Protection Agency with charging oil and gas producers, pipeline companies, and other emitters up to $1,500 per ton on methane emissions. Critics of MERP pointed out that the EPA has no experience or processes in place to collect tax dollars from American companies, and the tax would present a new, costly burden to smaller producers.
Independent Petroleum Association of America President and CEO Jeff Eshelman pushed back on the tax established under MERP during a congressional hearing earlier this year, saying:
“[The methane fee] is an inappropriate and unworkable methane emissions tax … This tax was included despite not ever being considered in a hearing, receiving expert testimony in favor or opposition, no economic analysis, and no consideration of efficacy.”
The IRA also authorized $1 billion in grant funds under MERP to distribute to oil and natural gas companies to help producers reduce methane emissions and comply with the new regulations. However, the administration delayed awarding the grants for nearly a year after the program was enacted, prompting criticism from bipartisan congressional leaders. Senator Manchin wrote:
“The Congressional intent behind this provision is crystal clear: the EPA was directed to provide financial support to energy companies to reduce methane emissions before any new fees would be assessed. Unfortunately, nearly 10 months later, not a single penny of funding has gone out the door.”
Just this week, EPA and the Department of Energy announced that the agencies will begin distributing an initial $350 million of MERP funds in proportion to states’ concentration of low-producing wells in order to “improve the economic competitiveness of small and medium sized producers” while reducing methane emissions.
While the grant funding announcement was celebrated as a positive step, IPAA pointed out that there is still significant ambiguity around the MERP program, as the EPA has not finalized the regulatory framework or tax structure set to begin in January 2024:
“IPAA views EPA’s collaboration with DOE on the Methane Emissions Reduction Program as a positive step. But there remains much ambiguity because from what we’re reading, DOE would grant funding to states to assist marginal well producers to comply with regulations. Yet there are no federal regulations yet, and the timing for those regulations is uncertain.”
EPA Proposes Outsourcing Methane Detection to Activists
But oil and natural gas companies also point out that MERP is duplicative with a separate set of controversial and transformative methane regulations that EPA is still finalizing.
Although the EPA’s own 2023 Draft Emissions Inventory shows that U.S. oil and natural gas methane emissions continue to decline, in November 2022, EPA published a supplemental proposal to the agency’s proposed rules to reduce methane emissions at oil and natural gas facilities. The supplemental proposal introduced the highly controversial Super-Emitter Response Program (SERP), which would allow private citizens and activist groups to police oil wells and pipelines for methane leaks and compel oil and gas facilities to act on data collected by third parties.
Industry and government leaders have spoken out against SERP, flagging credibility, safety and security concerns over the program which Bloomberg Law called a “test case for citizen air monitoring.”
The program, if enacted, is certain to invite legal, regulatory, and oversight scrutiny. In April, House Oversight Committee Chair James Comer (R-KY) led a letter to EPA Administrator Regan notifying him of an investigation into the agency’s proposed methane rule:
“The delegation of enforcement duties to third-parties and the EPA’s determination that oversight is an ‘unnecessary task’ raises serious concerns that these ‘Super-Emitter’ determinations will be biased and improper… Allowing third-party activist groups and environmental organizations the legal authority to function as deputized enforcers of an arbitrary emissions threshold is not prescribed within the CAA [Clean Air Act] statute.” (Emphasis added)
EPA’s proposed rules to further regulate the oil and natural gas industry’s methane emissions are due to be finalized as soon as August of this year, but EPA is already adjusting other rules in anticipation that SERP will cause an influx of emissions reporting. Just this month, the agency moved forward with a 600-plus page amendment that proposes to create a new category in the agency’s GHG reporting program for “large emissions events” and “super-emitters.”
The proposed amendment would require companies to quantify and report emissions based on a new definition of “credible information” that includes data collected from SERP. This change would put a reporting burden on companies to catalog and investigate SERP data, which could be obtained by private citizens or activists using unreliable technologies like aerial monitoring and satellite imagery.
Given the White House methane summit’s stated focus on highlighting emissions detection technologies, with a specific focus on pipeline leaks, the event will likely bring the highly controversial SERP program to the forefront as the EPA’s methane regulations are finalized.
Bottom Line: Oil and natural gas companies are ultimately the actors who will be responsible for significant methane emissions reductions – and they’re already doing it. Significant strides have been made through initiatives like the Environmental Partnership, a voluntary initiative to reduce methane emissions whose members make up more than 70 percent of the domestic onshore oil and natural gas industry. Unfortunately, the Biden administration has taken a punitive and duplicative approach to methane regulation to date. As the White House kicks off its first methane summit, leaders in the administration should involve the domestic energy industry in any policy discussion regarding emissions reductions in order to ensure success.
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