METHANE

With Obama EPA rule in force, compliance clash may loom

The Trump administration is giving scant details on how or whether it plans to enforce restrictions on greenhouse gas emissions from the oil and gas industry after a federal court revived the standards last month.

U.S. EPA has been tight-lipped since the U.S. Court of Appeals for the District of Columbia Circuit blocked the agency's efforts to delay the Obama-era rule for methane emissions from oil and gas operations. The agency said yesterday that it may make enforcement decisions on a "case-by-case basis."

"EPA may elect to exercise its enforcement discretion on a case-by-case basis with respect to the fugitive emissions monitoring requirements," an EPA spokeswoman said in an email. "Companies that have specific questions regarding their compliance obligations should contact the appropriate EPA regional office."

Finalized last year, the Obama administration's standards aim to reduce emissions of methane, a powerful greenhouse gas, from new and modified oil and gas sites.

Trump's EPA is working to roll back the rule as part of a broader effort to streamline domestic oil and gas production and is expected to finalize a proposed two-year delay of requirements in the coming months.

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But the D.C. Circuit's recent decision to strike down a related 90-day delay means that, for now, the Obama rule is alive and well (Energywire, Aug. 11).

Environmental watchdogs are concerned EPA and the oil and gas industry aren't as committed to compliance as they should be.

Matt Watson, associate vice president of the Environmental Defense Fund's Climate and Energy Program, said EPA's "case-by-case" approach is unsurprising but could be legally problematic.

"No surprise there, given that it's clear that their goal is to do away with methane regulation altogether," he said. "What's also unsurprising is the lack of respect for the rule of law that you see in that statement."

EDF attorney Peter Zalzal added that many environmental groups will be monitoring industry and EPA closely and are prepared to take legal action if needed.

"If we just look at the facts of these requirements, my hope would be that companies are out there complying as they're legally required to do," he said.

"That being said," he added, "the Clean Air Act provides a pathway for citizen enforcement. The citizen groups concerned about non-compliance have availed themselves of it in the past, so it's certainly something that's available here, too."

Compliance commitments

For their part, many in the oil and gas industry have already committed to full compliance.

The American Petroleum Institute, Independent Petroleum Association of America and Western Energy Alliance — influential trade groups — all told E&E News they are urging their members to follow every requirement on the books.

"The ruling effectively put the updated rules governing new sources of methane emissions into effect," API spokesman Reid Porter said in an email. "API members follow these rules and all rules to keep their projects compliant."

Exxon Mobil Corp. and Royal Dutch Shell PLC have already reported compliance with the rule's initial requirements, Watson said.

Western Energy Alliance President Kathleen Sgamma said her group is also advising members to comply, and IPAA Executive Vice President Lee Fuller noted that companies would be legally vulnerable if they don't.

"People are exposed legally if they don't comply, so they're going to choose to comply," he told E&E News.

'It's confounding'

Porter, the API spokesman, said his group is maintaining a "collaborative working relationship" with EPA and is providing information about operations and emissions "to inform the agency as they continue to reconsider these important rules."

But industry representatives are far from enthusiastic about being subject to the standards in the meantime.

In an interview, IPAA's Fuller lamented the regulatory uncertainty that accompanied recent regulatory and legal shuffling. He said he's particularly frustrated that the D.C. Circuit did not institute a grace period that would have given industry more time to plan for compliance.

"That's probably the part that creates most of the confusion," he said. "It's confounding to you as a regulated entity."

Fuller said some uncertainty still exists over compliance expectations for oil and gas wells that were completed in late 2015, which are covered by the rule.

"I don't think the expectation was that all of those wells would immediately have to have their first fugitive emissions analysis on June 3 or June 4," he said, referring to the compliance deadline. EPA's 90-day stay, since overturned by the court, kicked in just after the deadline.

"The question is, are they technically in compliance with the requirements given all the confusion associated with the stay and the litigation?" Fuller asked.

For now, he said, operators should "err on the side of caution" and get in compliance quickly if they are not already.

"We're also hoping to get some clarity from EPA on how it wants to re-engage or restart this process — whether the schedule's going to be different, how they're going to choose to enforce," he said. "We don't have that information at this point in time."

Sgamma said her group hasn't received guidance either.

Citizen suits

Environmentalists appear cautiously optimistic that oil and gas operators will stick to their commitments to comply with the rule.

But Watson, of EDF, warned that compliance will likely vary across the industry.

"You're going to have leaders in industry who view compliance as a totally non-negotiable question and, further, that have it as part of their corporate ethos to run a tight ship," he said. "And then I think you'll see a range of responses going downhill from there."

That's where legal action comes in, said Sierra Club attorney Andres Restrepo.

"If [EPA Administrator] Scott Pruitt truly cares about the rule of law like he claims to, he will vigorously enforce EPA's methane standards, which are the law of the land," Restrepo said. "If he doesn't, then those of us in the environmental community will fully explore our legal options, including possible citizen enforcement actions under the Clean Air Act."

To bring a citizen suit, affected environmentalists or landowners would have to show that a company is failing to meet its obligation to find and repair methane leaks. Several groups and individuals routinely use methane detection equipment to monitor emissions in the field.

"We have the capacity," Watson said. "We have some of the best methane scientists in the world and important partnerships with not only researchers but local leaders, including concerned landowners."

Industry groups have criticized EDF and other environmental organizations, arguing that their real goal is to simply shut down all oil and gas development.

"I'm sure EDF would love to file citizen suits," Fuller said. "Their agenda is: Litigate, raise money, litigate."

Watson responded that industry leaders oppose methane standards at their own risk.

"It's these companies, these leaders, who have the greatest risk in all of these because their social license goes down with the ship if this EPA and these trade associations have their way," he said. "It's time for them to stand up and demonstrate real leadership."

Twitter: @ellengilmer Email: egilmer@eenews.net

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