[co-author: Kaitlyn Richard]*
The Inflation Reduction Act (“IRA”) gave the federal government new authority to “tackle” the problem of methane emissions.[1] On May 6, 2024, the United States Environmental Protection Agency (“EPA”) issued final revisions to the methane emission reporting requirements for oil and gas companies.[2] These most recent revisions impact two sources of this authority, including the Greenhouse Gas Reporting Program and the methane fee.[3]
Enhancing the Precision of Reporting
The Greenhouse Gas Reporting Program requires entities to report greenhouse gas (“GHG”) emission data and other information.[4] At present, about 8,000 facilities in the U.S. are required to report their emissions annually.[5] In recent years, studies have shown that the emissions of methane, “a short-lived but potent greenhouse gas,” are “higher” than what has been reported to the program—prompting concerns over potentially inaccurate methods of measurement and under-reporting.[6]
To combat this problem, the EPA has approved the use of “satellite data to identify super-emitters and quantify large emissions events.”[7] Additionally, the revisions require strict monitoring of key emission sources and updating methods of calculation.[8] Under the direction of Congress, the EPA is working toward “finalizing new methodologies that allow for the use of empirical data for quantifying emissions,”[9] and is giving entities the option for “earlier use” of empirical data collection methods if they wish to quantify their 2024 emissions that way.[10]
One purpose of the revision is to “improve the accuracy” and “boost transparency” of reporting, as well as help oil and gas companies demonstrate they are actively reducing methane emissions.[11] The EPA’s goal is to “close the gap” between observed emissions and those reported.
Determining Who Pays the Methane Fee
The final rule will also help determine who will pay the emissions fee.[12] The IRA mandated that certain oil and gas companies reporting “more than 25,000 metric tons of carbon dioxide equivalent per year to the GHG program…” are required to pay the fee which starts at $900 per metric ton of emissions above that threshold this year, and increases to $1,200 and $1,500 per metric ton in the years 2025 and 2026 respectively.[13] However, an exemption may apply. The IRA has stated that if the EPA “accepts state plans to implement the agency’s recently finalized methane emissions standards,” oil and gas companies within those states may be able to avoid the fee.
Not Without Pushback
The American Petroleum Institute, among others, is calling for Congress to repeal the revisions to the GHG reporting program, claiming “flawed methodologies” that could result in “inaccurate emission reports.”[14] Additionally, Republican-led states and others are challenging the methane fee in the courts.[15]
Key Takeaways:
- The revisions’ objective is to improve the accuracy of emission reporting by implementing new measurement techniques.
- The reported information will help identify which oil and gas companies will be subject to the methane fee for surpassing emission limits.
- As expected, these regulations are being challenged, so stay tuned for further updates on whether these will be repealed or withstand such challenges.
References:
[1] Keith Goldberg, EPA Finalizes Methane Reporting Regs For Oil and Gas Cos., (last visited May 22, 2024).
[2] Environmental Protection Agency, Announcement: “Final Rule to Cut Methane Emissions…”, (May 6, 2024), Biden-Harris Administration Announces Final Rule to Cut Methane Emissions, Strengthen and Update Greenhouse Gas Emissions Reporting for the Oil and Gas Sector | US EPA (May 22, 2024).
[3] Id.
[4] 40 C.F.R. § 98
[5] Environmental Protection Agency, Announcement: “Final Rule to Cut Methane Emissions…”, (May 6, 2024), Biden-Harris Administration Announces Final Rule to Cut Methane Emissions, Strengthen and Update Greenhouse Gas Emissions Reporting for the Oil and Gas Sector | US EPA (May 22, 2024).
[6] Keith Goldberg, EPA Finalizes Methane Reporting Regs For Oil and Gas Cos., (last visited May 22, 2024).
[7] Id.
[8] Id.
[9] Environmental Protection Agency, Announcement: “Final Rule to Cut Methane Emissions…”, (May 6, 2024), Biden-Harris Administration Announces Final Rule to Cut Methane Emissions, Strengthen and Update Greenhouse Gas Emissions Reporting for the Oil and Gas Sector | US EPA (May 22, 2024).
[10] Id.
[11] Id.
[12] Keith Goldberg, EPA Finalizes Methane Reporting Regs For Oil and Gas Cos., (last visited May 22, 2024).
[13] Environmental Protection Agency, Announcement: “Final Rule to Cut Methane Emissions…”, (May 6, 2024), Biden-Harris Administration Announces Final Rule to Cut Methane Emissions, Strengthen and Update Greenhouse Gas Emissions Reporting for the Oil and Gas Sector | US EPA (May 22, 2024).
[14] Id.
[15] Keith Goldberg, EPA Finalizes Methane Reporting Regs For Oil and Gas Cos., (last visited May 22, 2024).
* Summer 2024 Law Clerk
