EPA Issues Final Methane Regulations for New and Existing Sources

The U.S. Environmental Protection Agency (EPA) announced its final rule on Dec. 2, 2023, to sharply reduce emissions of methane and other air pollution from oil and natural gas operations. The final action, which is more than 1,600 pages in length, includes updated and strengthened standards for methane and other air pollutants from new, modified and reconstructed sources, as well as emissions guidelines to assist states in developing plans to limit methane emissions from existing sources.

The Final Rule

Among other things, the final rule will:

• phase out routine flaring of natural gas from new oil wells
• require all well sites and compressor stations to be routinely monitored for leaks
• provide companies greater flexibility to use innovative and cost-effective methane detection technologies
• leverage data collected by certified third parties to identify and address "super emitting" sources and eliminate or minimize emissions from common pieces of equipment used in oil and gas operations such as process controllers, pumps and storage tanks

In response to feedback, the EPA adjusted several provisions of the proposed rule to provide more time for compliance.

• The rule provides a two-year phase-in period for eliminating routine flaring of natural gas that is emitted from new oil wells.
• The rule provides a one-year phase-in period for zero-emissions standards for new process controllers (previously referred to as "pneumatic controllers") and most new pumps outside of Alaska.
• The final rule also updates the "applicability date" to identify which sources are subject to the New Source Performance Standards (NSPS) in the rule. Sources constructed prior to Dec. 6, 2022, will be considered existing sources and will have later compliance dates under state plans. A list of covered sources and a summary of standards is available on the EPA's website.

The rule's Super-Emitter Program seeks outside help to detect large emissions events. The final rule leverages third-party expertise to find large leaks and releases known as "super emitters." Recent studies show that emissions from a small number of sources are responsible for as many as half of the methane emissions from oil and natural gas operations. The EPA expects that the final rule will reduce many sources of super emitters. The EPA adjusted the proposed rule to trigger compliance obligations identified by third parties to the date that the EPA provides notice to the producer, rather than the date the producer is notified by the third-party monitor.

Other notable provisions include:

• requiring documentation that wells are properly closed and plugged before monitoring is allowed to end
• requiring storage vessels (tanks) – including groups of adjacent tanks known as "tank batteries" – to reduce emissions by 95 percent
• setting emissions standards for dry seal compressors, which were not previously regulated
• requiring that state plans require compliance by no later than 36 months after the plans are due to the EPA; this means that existing sources could have up to five years after the effective date of the EPA's final rule before they must comply with requirements in state plans
• allowing federally recognized tribes the opportunity, but not the obligation, to develop their own plans to establish standards for methane for existing sources on their tribal lands; tribes that choose to develop plans must follow the requirements for state plans

Finally, oil and gas operators should be mindful of the new NSPS Subpart OOOOb requirements when permitting new covered sources that, if not subject to legally and practicably enforceable emissions limits below the NSPS Subpart OOOOb applicability thresholds, would be subject to the requirements of NSPS Subpart OOOOb. Operators may also need to reopen their permits – such as Permits By Rule in Texas – for oil and gas emissions sources constructed, reconstructed or modified after Dec. 6, 2022, and modify those permits to incorporate legally and practicably enforceable emissions limits below the NSPS Subpart OOOOb applicability thresholds if they want to claim non-applicability of the new NSPS Subpart OOOOb requirements.

Notably, the EPA also finalized criteria for a storage vessel permit limit or other requirement to be considered legally and practicably enforceable for purposes of compliance with NSPS Subpart OOOOb (and OOOOc). For example, to be considered legally and practicably enforceable, if a control device is relied upon to meet an operational limit, an initial performance test that establishes the parametric limits and ongoing monitoring, recordkeeping and periodic reporting that demonstrate continuous compliance must be part of the permit limit or other requirement.

Conclusion

For more information about the final rule or its impact on your business, contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.