On July 25, 2014, EPA’s Office of Inspector General (OIG) issued “Improvements Needed in EPA Efforts to Address Methane Emissions from Natural Gas Distribution Pipelines.” In this report, OIG cited President Obama’s Climate Action Plan, especially the portion of the plan that estimates methane as causing 9% of domestic greenhouse emissions, due to methane’s global warming potential of 20-25 times that of carbon dioxide.

OIG is an independent office within EPA, whose goal is to assist EPA in efficiently carrying out EPA’s duties. It issues reports on EPA programs with recommendations on how EPA can improve.

In this report, OIG recommended that EPA should:

1. Work with the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) to address methane leaks from a combined safety and environmental perspective.
2. Address financial and policy barriers to responding to methane leaks in pipelines. EPA should work with state public utility commissions to increase financial incentives for pipelines to minimize leaks. EPA should also encourage regional or statewide programs to upgrade infrastructure or develop other policies to reduce leaks.
3. Establish annual performance goals for pipelines to meet for reducing methane emissions under current voluntary programs, and report annual progress in meeting these goals.
4. Assess, annually, performance under voluntary programs, and determine if a regulatory program targeted at methane emissions from pipelines is appropriate.
5. Continue to evaluate and update methane emission factors.

In response to the OIG recommendations, EPA agreed in full with recommendations 1 and 2, and in part with 3, 4 and 5.

As a result of recommendation 1, EPA intends to complete a collaborative effort with PHMSA by the end of 2014. One possible result of this effort will be PHMSA citing greenhouse gas benefits, in addition to safety benefits, to justify ongoing or more stringent requirements.

As a result of recommendation 2, EPA intends to complete a collaborative effort with the states by October 1, 2015. This effort will attempt to encourage state agencies to include greenhouse gas considerations in the approach to state regulations. For example, many states have rate structures that give end users most or all of the benefit of leak reduction. EPA will encourage utility rate structures that give pipelines more economic incentive to reduce leaks.

As to the other recommendations, EPA indicated that its current programs largely accomplish these goals. Of particular note, some recent publications have expressed concern that EPA’s methane emission factors are too low. For more detail on this issue, see "EPA Shifts Focus in Fight to Deflate Methane Emissions," Law360. EPA reiterated that it continues to evaluate methane emission factors and estimates, especially as part of the Interagency Methane Strategy.

The OIG report provides further incentive for EPA to develop, and encourage others to develop, more stringent regulations for methane emissions from pipelines.

Click here to view the report.