Widely anticipated on both sides of the aisle, on May 12, 2016, the U.S. Environmental Protection Agency (“EPA”) released final regulations to curb emissions of methane and volatile organic compounds (“VOC”) from additional new, modified, and reconstructed sources in the oil and gas industry. The Final Rule, titled, ‘Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources’ (“Final Rule”), amends the new source performance standards (“NSPS”) for the oil and natural gas source category. This action follows EPA’s publication of proposed regulations in August 2015, and is extremely significant because it is the first instance of such regulation of VOC and methane emissions by the EPA. In addition to yesterday’s announcement, the EPA is completing final Control Techniques Guidelines for reducing VOC emissions from existing oil and gas sources in ozone nonattainment areas, which are expected to be released later this spring.
Background: The Climate Action Plan
Over the past few years, the Obama Administration has taken an aggressive stance on climate change regulation, and the Final Rule is the Administration’s most recent action to specifically address methane and short-lived climate pollutants. In June 2013, the Administration released the Climate Action Plan which directed the EPA and other federal agencies to develop a comprehensive regulatory scheme to reduce methane emissions. In March 2014, as a follow-up to the Climate Action Plan, the Obama Administration issued the Climate Action Plan: Strategy to Reduce Methane Emissions.