A burst of new emissions regulations that affect the oil and natural gas industry has cheered the environmental community while distressing the industry and opponents of government regulation.
The Obama administration is rushing to finalize regulations before the Paris climate change meeting and the 2016 election.
Viewed from the industry perspective, the timing of new, costly regulations is an excessive burden on top of low oil prices. Presidential candidates have said little about environmental issues, but many senators and representatives have voiced their support or opposition to environmental regulations - and some conservative candidates propose to eliminate regulations if they are elected.
Therefore, it seems like a good time to look at both the recently proposed regulations as well as the options available for a new president or Congress to counteract them.
However, this is not wholly a politicians’ show. Every citizen can submit comments about planned regulations - and these often affect the final rule.
The U.S. Environmental Protection Agency (EPA) draft rules to reduce methane and volatile organic carbon (VOC) emissions from new and modified oil and gas operations were issued in mid-August and are open for public comment through mid-October at www.Regulations.gov (search EPA-HQ-OAR-2013-0685).
Industry groups have called the rules unnecessary because of industry’s success in voluntarily reducing methane emissions while boosting natural gas production. In addition, upcoming standards to reduce ozone will further reduce methane emissions.
On the other hand, environmental groups express concerns that the August rule will not be adequate to meet the Obama administration’s commitment to cut methane emissions from the oil and gas sector by 40 to 45 percent from 2005 to 2025.
In addition, the late November-early December Paris meeting of the United Nations Conference on Climate Change may prompt additional emissions regulation by the Obama administration.
The proposed methane- and VOC-emission rules would:
- Require new and modified emission sources in the oil and gas industry to find and repair leaks, use reduced-emission completions on hydraulically fractured oil wells, limit emissions from new and modified pneumatic pumps, and limit emissions from equipment at compressor stations and gas storage facilities.
- Provide recommendations to states on control technologies for use in ozone non-attainment areas and the northeast states Ozone Transport Region.
- Clarify some existing permitting requirements.
- Issue a federal implementation plan incorporating new emissions standards for the oil and gas production industry in Indian Country.
Given the strong conservative opposition to EPA emissions regulations, an interesting question is what Congress or a new president could do to reverse these rules. What follows is a discussion of options, not the opinions or decisions of any particular candidate.
As the 2016 elections get closer it is worth noting that oil and gas, and coal emissions regulations have specific state impacts, and candidates’ positions on the regulations could influence the vote: Ohio, Colorado and Pennsylvania are major oil and gas producers and may be competitive in the 2016 election.
Presidential Options.
A president has two approaches to dealing with regulations with which he or she disagrees: lax enforcement or a new rule-making process.
In the past, lax enforcement has led to lawsuits by a regulation’s supporters.
An example of political and legal Ping-Pong with regulations is the EPA 2012 Mercury and Air Toxic Standards (MATS). The Clean Air Act of 1990 and multiple lawsuits prompted the rule. The EPA under President Bill Clinton’s EPA decided that MATS regulation was necessary; the EPA under President George W. Bush disagreed. A court challenge tossed out the Bush administration policy and the regulatory process was restarted, although the courts are still considering some parts of the regulation.
The second option, a new rule-making process, would be slow and probably complicated.
Congressional Options.
Congress has many options to reduce or delay environmental regulations; few of their options, however, are long lasting - and most will provoke strong opposition.
♦ Congressional hearings are an opportunity to hear from expert witnesses and ask questions that publicize legislators’ opinions about a regulation or the regulating agency.
Congress has no formal role in developing regulations, but regulating agencies pay attention to congressional opinions that may be reflected in future agency appropriations or legislation restricting agency activities.
♦ Members of Congress can and do lobby the EPA during the development of a rule. Legislators may have access to information important to revising draft rules.
♦ Congress passed the Clean Air Act and other environmental protection laws, which are the basis for many controversial regulations, and Congress can modify the law. In fact, the Clean Air Act was modified several times, although not in ways that would reduce its impact.
Existing congressional and presidential opposition to weakening the Clean Air Act would preclude weakening these laws.
♦ Congress can pass legislation that restricts the implementation of a law. For example, H.R. 1030 (and S. 544), the Secret Science Reform Act of 2015, passed the House in March and has been introduced in the Senate. It would prohibit the EPA from issuing any regulations unless all underlying science is publically available for independent analysis and reproduction.
The bill would effectively prohibit EPA air emissions regulations, which are based on research on human exposure to toxics. Some of this research was conducted many years ago and cannot be replicated because of changes in air quality or lack of public access to protected personal health information.
♦ Congress can withhold funds needed to implement a law; this is a common approach. Under the current fiscal year (FY2015) appropriation law the Fish and Wildlife Service is prohibited from listing the sage grouse as threatened or endangered under the Endangered Species Act. In addition, the House version of the FY 2016 Interior, Environment and Related Agencies appropriation would prohibit the EPA from enforcing a number of regulations, including lowering the ozone standard or requiring states to participate in restricting greenhouse gases emissions.
These restrictions only apply to one year but can be reinstated. For example, the House proposes to extend the prohibition on listing the sage grouse as endangered or threatened.
♦ The Congressional Review Act (1996) allows Congress 60 days to review and overrule new federal regulations by passage of a joint regulation. The congressional resolution would need to be signed by the president or Congress would have to override a presidential veto.
This law was successfully used - only once, in 2001 - to rescind a Department of Labor ergonomics regulation.
The current Congress may not have sufficient votes to override a presidential veto, which is likely for any attempt to weaken environmental regulations.
In December 2014 the Obama administration announced plans to tighten ozone limits (from 75 parts per billion, ppb, down to 65-70 ppb). The rules will require states to reduce VOC emissions and have the ancillary impact of reducing methane, which is a greenhouse gas that does not contribute to ozone.
At the end of August the proposed regulation went to the White House Office of Management and Budget (OMB) for the final interagency consultations and review of the regulation’s impacts. Normally the OMB review takes 60 to 90 days, but EPA is under a court order to release the regulation before Oct. 1.
EPA estimates that the regulation will yield health benefits of $1 billion-$4 billion annually. However, a study conducted for the National Association of Manufacturers estimates that the regulation will cost the U.S. economy $270 billion a year - and raise the cost of natural gas and electricity.
Additional rules to reduce methane emissions in final review by the White House and expected to be released later this year include:
- Pipeline safety rules (Department of Transportation).
- EPA restrictions on toxic air pollutants from refineries.
- Methane venting and flaring restrictions on federal lands (Bureau of Land Management with EPA).