Following yesterday's release by U.S. EPA of a final rule on methane emissions from new sources, and a proposal on existing-source emissions, how will the agency proceed with its existing-source rule? On today's The Cutting Edge, Greenwire reporter Amanda Reilly discusses the reaction to EPA's highly anticipated announcement and explains how the presidential election will affect the agency's next steps on existing sources.
Monica Trauzzi: Welcome to The Cutting Edge. EPA released its final rule for regulating methane emissions from new sources yesterday. The agency also took a big step in regulating emissions from existing sources, but how far will the agency get on that rule before the president leaves office? Greenwire's Amanda Reilly joins me with all the details. Amanda, a much-anticipated release. What made it into the final rule on new source emissions?
Amanda Reilly: Well, the rule itself, as you know, targets methane emissions and volatile organic compounds, which are precursors to smog from new wells and modified sources from the oil and gas industry. EPA made several changes that environmentalists had asked for, including increasing the frequency of leak detection requirements for some types of equipment. EPA also eliminated this one provision. It had proposed to allow companies to do checks less frequently if a prior check had showed up clean, so EPA got rid of that. The agency also eliminated an exemption for low-producing wells. Those are wells that produce less than 15 barrels of oil equivalent a day. There are a lot of them in the industry. Environmentalists had argued that, you know, collectively they could be a big source of emissions, and they had asked EPA to get rid of that exemption, and the agency complied. EPA also made some changes that says we'll make the rule more flexible for oil and gas companies. Included that is -- they're allowing companies to use an alternative to sort of the standard lead detection repair equipment that's out there. So there's a little bit of give and take in the rule, but overall, environmentalists and the agency says the rule's a lot stronger from its -- from the proposal.
Monica Trauzzi: And so the agency also took this big step, as I mentioned at the top, on existing source methane emission. What is the realistic timeline we're looking at for things to get moving on that rule?
Amanda Reilly: Right, so what EPA did yesterday was it released a draft. It's called an information collection request. Sounds kind of boring, but it's sort of the first step for regulating existing sources. EPA's draft request is in two parts. One is a sort of broader request asking companies to submit basic information. Second drills down on some sections of the industry. It may require some field testing. EPA says it knows a lot about emissions from the industry already, but it doesn't know as much about sort of the technologies that are out there and the costs of them, so that's sort of what EPA is looking at here. It's a lot more substantial than prior information collection requests that EPA has issued. The first part likely will -- information from that will likely come in in the fall. For the second, more specific part, we probably won't see all the information until early next year. So this -- so we're probably not looking at a proposed rule, certainly not finalizing any rule before the Obama administration leaves office.
Monica Trauzzi: As you said, the first part in the fall, right around the presidential election. How will the presidential election impact what EPA does?
Amanda Reilly: Well, obviously there's a big gap between Republican candidate Donald Trump and the Democratic presidential contenders on environmental regulations, generally in climate change. Hillary Clinton and Bernie Sanders, if either of them are elected, will likely make reducing methane emissions from the oil and gas industry a top priority. In fact, just last week, Clinton campaign chief John Podesta said -- specifically said that at an event at Stanford University. On the other hand, Donald Trump has said that climate change is a hoax perpetuated by the Chinese. He has also talked about maybe getting rid of EPA, definitely reducing regulation, so it's probably unlikely you see him really go after tackling methane emissions from the oil and gas industry.
Monica Trauzzi: How do these regulations ultimately impact the oil and gas sector, and what were some of the reactions that you heard yesterday?
Amanda Reilly: Well, I guess the reactions were pretty much what you would have expected to hear. Sort of the overriding theme of industry objections is that, you know, EPA really doesn't understand the oil and gas industry and what's going on with emissions, and this is sort of a one-size-fits-all approach, but that really doesn't get into the nuances in the industry. They -- industry has long argued that the companies are reducing methane emissions voluntarily, that emissions are going down, and that regulations are unnecessary. EPA's recent inventory still found that the oil and gas sector was the No. 1 source of methane in the nation. Sort of what the impact on companies would be, obviously it's going to cost something to put in place leak detection and repair equipment. One source has said that, you know, this equipment itself can cost up to $100,000. EPA raised the expected costs of its -- from the proposal to the final rule. It now expects the final rule will cost about $530 million in 2025, but it says that that will be offset by climate benefits. I guess with both the new source rule and the information collection request, you'll definitely see some more reporting and sort of paperwork requirements too that companies will have to do. The, you know, industry is sort of -- is arguing that those paperwork requirements in and of itself will be very burdensome.
Monica Trauzzi: We'll end it right there. Thank you so much for coming on the show. Nice to see you.
Monica Trauzzi: Thank you.
Amanda Reilly: More Cutting Edge coming next Friday. We'll see you then.
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