Wednesday, September 6, 2017

Shale Law in the Spotlight: Timeline and Update of Litigation Involving the Federal Methane Emissions Rule

Written by Chloe Marie – Research Fellow

In June 2016, as part of President Obama’s Climate Action Plan to progressively reduce greenhouse gas emissions (GHG), including methane emissions, EPA issued the Final Rule “Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources” (81 FR 35824) – also known as Methane Emissions rule. The purpose of this Final Rule was to amend the 2012 New Source Performance Standards (NSPS) at subpart OOOO for the Oil and Natural Gas Industry by setting out new standards for methane and VOC emissions. More precisely, the Final Rule finalized GHG and VOCs standards at subpart OOOOa and included new requirements for methane emissions.

The Trump Administration, however, has revisited a number of Obama-era environmental and energy rules, including the Methane Emissions rule, pursuant to President Trump’s Executive Order on Promoting Energy Independence and Economic Growth issued in March 2017. In this regard, EPA Administrator Scott Pruitt announced on April 19, 2017, that EPA would reconsider the New Source Performance Standards for New, Reconstructed, and Modified Sources rule for methane fugitive emissions. This action followed petitions introduced to EPA in August 2016 by five industrial groups, including the American Petroleum Institute, Texas Oil and Gas Association, Independent Associations and GPA Midstream Association requesting reconsideration of the Methane Emissions rule under the Clean Air Act, section 307(d)(7)(B).

In a letter dated April 18, 2017, EPA Administrator Scott Pruitt addressed the industry petitioners by stating that “among the issues raised in the petitions that meet the requirements for reconsideration under CAA section 307(d)(7)(B) are objections regarding the provisions for requesting and receiving an alternate means of emission limitations and the inclusion of low-production wells.” EPA Administrator Pruitt also added that “these provisions, or certain aspects of these provisions, were not included in the proposed rule so the public could not have raised objections to these provisions during the public comment period.”

As a result, on June 5, 2017, EPA issued a notice granting reconsideration and a partial stay (82 FR 25730) of the Methane Emissions rule for a period of three months. EPA declared that it would reconsider the rule’s requirements for fugitive emissions, certification of closed vent systems by professional engineers, and the well site pneumatic pump standards.

Interestingly, EPA issued on June 16, 2017, another notice (82 FR 27645) proposing to stay certain requirements of the Methane Emissions rule for a term of two years because “during this time, the EPA also plans to complete its reconsideration process for all remaining issues raised in these reconsideration petitions regarding fugitive emissions, pneumatic pumps, and certification by professional engineer requirements.” On the same day, EPA issued yet another notice (82 FR 27641) proposing to stay certain requirements of the rule for three months. EPA explained that “while EPA intends to complete that rulemaking and take final action before the initial three-month stay expires, there may potentially be a gap between the two stays due to the sixty-day delay in effectiveness of that actions.” Therefore, this second three-month stay would avoid such a gap.

In response to EPA’s administrative stay, six environmental groups, including the Clean Air Council, Earthworks, Environmental Defense Fund, Environmental Integrity Project, Natural Resources Defense Council, and Sierra Club filed an Emergency Motion for a Stay on June 5, 2017, before the U.S. Court of Appeals for the District of Columbia Circuit seeking for a judicial stay of EPA’s initial three-month administrative stay of the Methane Emissions rule (see Clean Air Council v. Pruitt, docket no. 17-1145). The environmental groups claimed that such stay endangers the health of the entire community because of air pollution and that EPA had no authority to issue it pursuant to 42 U.S.C. §7607(d)(1)-(6).

On July 3, 2017, the U.S. Court of Appeals for the District of Columbia Circuit granted the environmental groups’ emergency motion to vacate EPA’s administrative stay. The D.C. Circuit Court of Appeals answered the question of whether the stay was legitimately authorized under the Clean Air Act, section 307(d)(7)(B) and held that it was “unreasonable.” Indeed, the Court held that EPA did not have authority to suspend the Methane Emissions Rule while reconsidering it under the Clean Air Act, section 307(d)(7)(B) and that, based on administrative record, the Court held that the industry groups had enough time to comment on the issues raised in their administrative petitions seeking reconsideration. The Court qualified EPA’s stay as “arbitrary, capricious [and] … in excess of [its] … statutory … authority.” On July 31, 2017, however, the environmental groups filed another motion seeking to compel EPA action. The motion highlighted that “while the Court afforded EPA a 14-day delay to consider its options for further appeals, the agency filed no petition for rehearing.” They declared that “each day of delay injures Petitioners’ members and similarly situated Americans.”

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