EPA Suggests Methane Fee and Confidentiality Rule for Oil, Gas Sector
TL/DR –
The proposed rule from the EPA falls under the Methane Emissions Reduction Program and applies to facility owners/operators in the petroleum and natural gas industry who report over 25,000 metric tons of CO2e. The rule includes a Waste Emissions Charge (WEC) across three different years, with exemptions for emissions related to unreasonable permitting delays and facilities complying with Clean Air Act Section 111(b) and (d) methane requirements. The EPA also proposes confidentiality determinations for certain data elements and is seeking comments on these proposals from owners/operators.
Key Takeaways
The WEC, under the IRA, is central to the Biden Administration’s drive for methane emission reductions. It works with the newly finalized Clean Air Act and encourages states to submit EG OOOOc implementation plans at the earliest.
The proposed rule includes confidentiality determinations for specific data in WEC filings and impacts facility owners/operators who report more than 25,000 metric tons of CO2e under Subpart W in the petroleum and natural gas industry segments.
- Potential exemptions could reduce a facility’s WEC or exempt the facility. The proposed terms for permitting delay and regulatory compliance exemptions are extensive and stringent, potentially limiting their reach.
Owners/operators affected should consider giving feedback to the docket (Docket ID No. EPA-HQ-OAR-2023-0434) by March 11, 2024 and register for a virtual public hearing on February 12, 2024 by February 7, 2024.
They also need to examine the proposed confidentiality determinations and monitor developments with this proposed rule and the proposed revisions to Subpart W of the GHG Reporting Program.
Analysis and Notable Elements of the Proposed Rule
The Clean Air Act Section 136(c) imposes charges on methane emissions exceeding the waste emissions thresholds under Section 136(f). Facilities with emissions below the thresholds don’t pay the WEC, while those above pay $900 to $1,500 per metric ton of methane above the threshold in 2024-2026.
Key WEC program elements include waste emissions thresholds, netting emissions across different facilities, and exemptions for specific emissions and facilities.
Owners/operators can reduce their total WEC obligations by taking into account WEC applicable emissions below the waste emissions thresholds. Emissions related to the exemptions below would be excluded from the emissions exceeding the waste emissions thresholds prior to any netting.
- Exemptions for certain emissions and facilities. The proposed rule would implement three exemptions specified in Section 136, namely Permitting Delay Exemption, Regulatory Compliance Exemption, and Plugged Well Exemption.
EPA is also proposing changes to confidentiality determinations for certain Subpart W data elements that were previously confidential. The proposed rule’s comment period will be the only opportunity for WEC reporters to substantiate confidentiality claims before EPA finalizes these determinations.
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