US EPA’s deregulatory sweep extends to rules impacting oil and gas sector

The US Environmental Protection Agency announced plans to reconsider multiple regulations impacting the oil and gas sector, saying it would review the Biden-era rules "to ensure they do not prevent America from unleashing energy dominance."

The steps are among 31 actions that EPA Administrator Lee Zeldin touted March 12 as the "biggest deregulatory action in US history." Still to come, however, are the formal steps to carry out the approach through notice-and-comment rulemaking procedures.

The EPA will revisit the 2024 final rule for controlling methane and volatile organize compounds from new and existing oil and gas facilities, as well changing course on its Good Neighbor Plan meant to slash smog-forming nitrogen oxide pollution from power plants and other industrial facilities in 23 states. Zeldin also promised to revise wastewater rules for oil and gas extraction.

The EPA's final methane rule issued in March 2024 required states to ensure that oil and gas producers detect and prevent equipment leaks, limit flaring and curb so-called super-emitting events.

That regulation drew mixed responses from the industry, with some groups seeking relatively targeted tweaks, while others broadly criticized the impacts on smaller oil and gas producers. The US Supreme Court Oct. 4 rejected emergency requests to stay the regulation amid legal challenges.

The EPA in its March 12 statement condemned the rule as "strangling American energy producers." That contrasts with the Biden administration's emphasis on a need for sharp cuts in emissions from the largest industrial source of methane pollution in the US.

The Independent Petroleum Association of America has argued that the 2024 rule could shutter many of the small, marginal wells in the US.

Other oil and gas trade have pushed for targeted changes while supporting the notion that having a central federal regulation is beneficial, as the sector operates across multiple states and seeks to market natural gas as part of a lower-carbon future.

The American Petroleum Institute has cautioned against restarting the rule development process outright and has petitioned EPA for reconsideration of targeted elements.

Also backing the need for a federal rule, the Interstate Natural Gas Association of America, March 12 welcomed EPA's reconsideration, noting the group previously has petitioned EPA "seeking corrections to certain unworkable aspects."

"The agency will now be able to make these much-needed changes, which will result in a clear and reasonable federal methane standard for gas pipeline operators," Amy Andryszak, INGAA president and CEO, said in a statement.

Other pieces of the Biden administration's methane agenda also face rollback attempts. Congress on Feb. 27 voted to repeal the EPA's rule for implementing a fee on methane emissions above a certain threshold, although the fee requirement is still in effect under the Inflation Reduction Act. And the EPA also is revisiting a related section of its greenhouse gas reporting program.

Unwinding smog rule

INGAA separately applauded EPA for starting down the path to "unwinding" what it called the "harmful" Good Neighbor Rule and "returning implementation to the states."

EPA's Good Neighbor Plan in March 2023 originally set a federal implementation plan for 23 states using the agency's interstate transport framework for smog-forming NOx emissions. It sought state plans for emissions cuts not only from electric generation, but also from reciprocating internal combustion engines at compression facilities. That extended the impacts to interstate gas pipelines.

The Supreme Court last June voted 5-4 to stay the Biden administration plan.

The EPA March 12 said it was "tackling the troubled" ozone plan. Suggesting a retreat from the Biden administration's approach that imposed a federal plan on some states, the EPA promised to "advance cooperative federalism and more work with states whose plans were rejected by the prior administration."

ClearView Energy Partners noted that the EPA signaled its intent to reconsider three key aspects of the rule when it sought a voluntary remand on March 10 before the US Court of Appeals for the District of Columbia Circuit.

According to the court filing, "EPA presently intends to focus its review on several core aspects of the rule, including: the scope of states included in the rule, the scope of sources subject to the rule, and what constitutes 'significant contribution" (State of Utah v. EPA, 23-1157).

INGAA, in filings at the Supreme Court, had warned of gas system reliability implications. The timeframe for implementation would result in gas service disruption during times of year then downstream users needed energy the most, the pipeline trade group had said.

The about-face on the Good Neighbor Plan was roundly condemned by environmental groups.

"Administrator Zeldin is promising to undo scores of health and safety standards, pulling from a wish-list from lobbyists," Amanda Leland, Environmental Defense Fund executive director, said in a statement.

Wastewater discharges

Elsewhere, the EPA promised to "modernize outdated regulations" on wastewater discharges for oil and gas extraction facilities, in an effort to "lower energy costs while supporting environmentally sustainable water reuse."

The agency promised to evaluate modern technologies and strategies to allow produced water "to be treated for beneficial reuse, including for Artificial Intelligence and data center cooling, rangeland irrigation, fire control, power generation, and ecological needs."

The new flexibility could include expanding the geographic scope where treated wastewater can be used or considering use for extraction of lithium and other critical minerals, the agency said. It could also entail more flexibility for discharges from centralized treatment facilities that manage wastewater produced from oil and gas extraction, EPA said.