Explainer Episode 29 – The EPA’s Methane Emissions Rule

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Introduction:  Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker.

 

Jack Derwin:  Welcome to the Regulatory Transparency Project’s Explainer podcast, part of RTP’s Fourth Branch podcast series. My name is Jack Derwin, and I’m Assistant Director of RTP. 

Today I’m excited to be joined by Professor Jonathan Adler to discuss an Environmental Protection Agency rule regarding methane emissions. Professor Adler is the Johan Verheij Memorial Professor of Law and the Director of the Coleman P. Burke Center for Environmental Law at Case Western Reserve University School of Law. Professor Adler is the author or editor of seven books, and his articles have appeared in a range of publications, including the Harvard Environmental Law Review, the Supreme Court Economic Review, the Wall Street Journal, and USA Today. He has testified before Congress a dozen times and his work has been cited in the US Supreme Court.

 

Thank you so much for joining us today, Professor Adler.

 

Prof. Jonathan Adler:  It’s good to be here. And I’m happy to be here to talk about the tortured history of the EPA’s rule governing methane emissions from the oil and gas industry. As listeners might know, last month, President Biden signed a Congressional Review Act Resolution rescinding the Trump administration’s regulation governing methane emissions from oil and gas development, and this had the effect of restoring the prior regulation that had been adopted by the Environmental Protection Agency by the Obama administration in 2016. So, this is not only an important regulation but, kind of, the history and development of this regulation, I think, is also useful to look at in terms of what it tells us about the regulatory process. So, what I plan to do is to walk through the saga of this regulation and explain the current state of the law with regard to the EPA’s regulation of methane emissions from oil and gas.

 

So, under the Supreme Court’s decision in a case called Massachusetts v. EPA, the Environmental Protection Agency has the authority to regulate greenhouse gases as pollutants under the Clean Air Act. The precise question at issue in Massachusetts v. EPA was — or concerned emissions from mobile sources — but the Supreme Court’s decision has been understood to mean that the word ”air pollutant”—or the phrase ”air pollutant”—in the Clean Air Act is capacious enough to include greenhouse gases and that where the EPA administrator concludes that greenhouse gas emissions cause or contribute to air pollution reasonably anticipated to threaten health or welfare, the administrator has the authority and, in some cases, the duty to adopt regulations controlling such emissions.

The Obama administration used this authority to adopt a range of regulations governing greenhouses gas emissions from various sources, some of which are still in place and some of which are — have been challenged in — or were challenged in court. One rule that was adopted at the end of the Obama administration was one governing methane emissions from the oil and gas industry. And I should just note that this is distinct from a separate rule that had been adopted by the Bureau of Land Management governing leaks and flaring and venting of methane from oil and gas operations on federal lands. That was a separate regulation also adopted in 2016. The one we’re focused on is the one adopted by the Environmental Protection Agency under the Clean Air Act. 

 

One reason the Environmental Protection Agency wanted to focus on methane is because it is a particularly potent greenhouse gas. While we usually think of carbon dioxide as the dominating greenhouse gas because it’s the most common—it’s the most widely emitted —methane is a more potent greenhouse gas in that the climate forcing of methane is greater than an equivalent amount of carbon dioxide. It’s about 25 times more potent, and approximately one-third of methane emissions from the United States come from the oil and gas industry.

 

So, in May of 2016, the EPA issued a new source performance standard for methane emissions from oil and gas production that also covered processing, transmission, and storage under Section 111 of the Clean Air Act. This provision of the Clean Air Act allows the EPA to set emission standards for categories of sources—going category by category—or you could think of this as kind of industry by industry on new and modified sources of the emission in question. So, when something is constructed or when something is sufficiently modified, it is treated as a new source, and at that time of construction is when the relevant emission controls may be adopted. Separate provisions in the Clean Air Act then allow for the regulation of pre-existing sources, but that has to be preceded by—and, in fact, is triggered by—regulation of new sources. 

 

And back in 2016, EPA was beginning to work on adopting regulations that would apply to existing sources to complement the regulation we’re talking about, which is the new source performance standard that would apply to new reconstructed and modified oil and gas facilities. And this regulation significantly expanded the extent to which the Clean Air Act imposed emission controls on oil and gas production, processing, transmission, and storage; also included some monitoring requirements, including requirements designed to detect methane leaks. And in terms of emission reductions, the EPA’s estimate at the time was that over a decade this would reduce about a half-a-million short tons of methane, which would have been the equivalent of about 11 million metric tons of carbon dioxide, so a significant reduction of methane emissions from the oil and gas industry.

 

Suits were filed against the rule after it was adopted, but after the 2016 election, a new administration comes in with a very different regulatory philosophy and those lawsuits were held in abeyance so that the Trump administration could review the Obama rule and decide whether to keep it. The Trump administration had announced plans very early in the administration to reconsider this rule. It had tried to stay the application of the Obama rule to prevent it from applying while the EPA was reconsidering the rule, but that was rejected by the DC Circuit. And so the Trump administration, instead, began a rulemaking process to reconsider the Obama administration regulation.

 

While beginning the process of scoping out a new rule in 2017—and then in 2018 making clear that he was going to go ahead with adopting a new regulation governing methane emissions from oil and gas production—the Trump administration didn’t finalize this new rule until August of 2020, And that’s notable because that, I think, highlights how long and laborious and time consuming adopting a new regulation, or even rescinding an old regulation, can be. It took, effectively, the entire term for the EPA to go through this full process.

 

The August 2020 rule rescinded the methane New Source Performance Standard adopted by the Obama administration and also loosened controls on methane emissions as a volatile organic compound as opposed to as greenhouse gases. Under the Trump administration rule, methane from oil and gas production would only continue to be regulated insofar as it contributed to ozone formation as a volatile organic compound. And the scope of the regulations, in terms of its application on downstream portions of the industry and smaller entities, were also relaxed. Smaller emitters were excused and the Trump administration interpreted the Clean Air Act and the provisions in Section 111 to make adoption of additional greenhouse gas controls more difficult. In particular, the EPA concluded in the Trump administration rule that the Clean Air Act required pollutant-specific endangerment findings. So a pollutant-specific conclusion that emissions of the pollutant in question would cause or contribute to air pollution that could be reasonably anticipated to endanger public health or welfare—and that sort of pollutant-specific finding—would make new regulations more difficult to adopt.

 

As you might expect, suits were filed against this rule as well, although by different folks, whereas the Obama administration rule had been challenged by the industry and by a red state attorneys general, the Trump administration rule was challenged by environmental groups and blue state attorneys general. Now, because the Trump administration rule was adopted in August 2020, in the fall or late summer of the last year of the administration, this made the regulation vulnerable to repeal under the Congressional Review Act. 

 

The Congressional Review Act creates an expedited process whereby Congress may repeal or reject a regulation adopted by a federal agency within a short period of time after that regulation is adopted. And because the resolution rejecting the regulation is a law—it goes through the law-making process—it can be subject to a presidential veto. So, in practice, this means that the Congressional Review Act is really only ever used to reject or rescind regulations adopted by a prior administration. Basically, it’s a way of clearing the deck — or used as a way of clearing the deck of midnight regulations adopted by the prior administration when a new administration comes in if they have a Congress that wants to go along. 

 

So, at the beginning of the Trump administration, quite a few of Congressional Review Act resolutions were adopted, repealing Obama administration regulations adopted in the last few months of the Obama administration. Similarly, this year Congress passed three resolutions under the Congressional Review Act repealing regulations adopted in the final months of the Trump administration. And this is useful to a new administration because it means that that administration does not have to spend the time going through a rule-making process to rescind a regulation with which it disapproves. If Congress passes a resolution of disapproval, the presidential signature can wipe that regulation from the books. And that is what happened to the Trump administration regulation governing methane emissions. 

 

Now, because the Trump administration regulation both rescinded the Obama rule and adopted a replacement, the effect of a Congressional Review Act resolution was to reinstate the prior regulation—to reinstate the Obama administration’s rule. The language of the Congressional Review Act specifies that if a resolution of disapproval is adopted, that it is as if the disapproved rule had never taken effect. So, since the Trump rule did these two things—both rescinded the Obama rule and adopted a replacement—if it never had an effect, then that means the Obama rule was in place the entire time. And so that means that all facilities—oil and gas facilities, production, storage, transmission—that were constructed or modified after the effective date of the Obama administration rule are subject to the Obama administration restrictions, and that means that even those facilities that were constructed or modified during the period of time that the Trump administration rule was in place. So, from September 2020 through June 2021, those facilities now have to rather quickly seek to comply because, as far as the Congressional Review Act is concerned, it is as if the old regulation had never been taken away.

 

Now, the Congress took some time in adopting this resolution—or this approval—in part because there was some concern about whether or not adopting a regulation of disapproval to repeal the Trump administration methane rule in favor of the Obama methane rule would hamper the ability of the Biden administration or a future administration to adopt a more stringent rule governing methane emissions from oil and gas production in the future. So let’s say, for example, as a consequence of technological development, additional control measures are — become possible or become economical and the EPA wants to adopt more stringent rules, there was a question about whether or not the Congressional Review Act resolution would get in the way of that. And the reason for this concern is that the Congressional Review Act provides that if a resolution of disapproval is adopted, the agency in question cannot readopt a new rule that is substantially the same as the one that was rescinded. 

 

In this case, what I think that means is that a new conservative administration—an administration that wants less regulation of the oil and gas sector—could not readopt a regulation substantially the same as the Trump administration rule—could not adopt a new rule scaling back the application of the Clean Air Act, Section 111 to oil and gas industry—because that would be fairly equivalent to what has been rescinded. But I do not believe that the Congressional Review Act resolution would get in the way of the Biden administration from adopting a more stringent rule than the current ones in place because that would not be substantially the same as what was repealed or rescinded by the Congressional Review Act resolution of disapproval, and so the EPA would retain that authority. And the EPA has announced that it is considering adopting additional rules, both to clarify the Obama administration rule in light of things that may have transpired over the last 5 years, but also, potentially, to tighten further the regulatory requirements of oil and gas production. 

 

But the bottom line that people need to recognize is that as of now, of the rule that is in place governing oil and gas production—governing methane emissions from oil and gas production, which includes storage and transmission—is the rule that was adopted under the Obama administration. And under the terms of the Congressional Review Act, it is as if that regulation was never rescinded. So even though the EPA acted to take that regulation off the books between September 2020 and June 2021, under the Congressional Review Act, it is as if that did not occur, and the Obama administration regulation has been in place the entire time. 

 

And the last thing I would note is that I do think it’s a likely interpretation of the Congressional Review Act that if a future conservative administration wanted to restore the Trump administration approach or do something similar to that, the fact of the Congressional Review Act resolution would make that very difficult to do absent some sort of Congressional authorization. So, that’s a quick summary of what’s happened with the regulation of methane from oil and gas production and where the law stands now.

 

Jack Derwin:  Well, thank you so much, Professor Adler, for joining us. I think that was a great explanation that our listeners will certainly appreciate. And thank you so much to our audience for tuning in to this episode of RTP’s Explainer podcast. You can subscribe to this podcast on any major podcast platform and check out our website www.regproject.org or our social media accounts @FedSocRTP to learn more.

 

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Conclusion:  On behalf of The Federalist Society’s Regulatory Transparency Project, thanks for tuning in to the Fourth Branch podcast. To catch every new episode when it’s released, you can subscribe on Apple Podcasts, Google Play, and Spreaker. For the latest from RTP, please visit our website at www.regproject.org.

 

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This has been a FedSoc audio production.

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