Looking Ahead: Regulating Methane from the Oil and Natural Gas Sector

Legal Sidebari

Looking Ahead: Regulating Methane from the

Oil and Natural Gas Sector

July 14, 2021

Congress and the Biden Administration are considering their next steps after enacting a joint resolution

disapproving the 2020 regulation—known as the 2020 Policy Rule—that removed some methane

emission standards for oil and natural gas production activities. Congress passed the joint resolution under

the Congressional Review Act (CRA), a law that allows Congress to overturn certain agency actions in

the form of a joint resolution of disapproval. President Biden signed the resolution into law (Pub. L. No.

117-23) on June 30, 2021, effectively restoring the U.S. Environmental Protection Agency’s (EPA’s) 2016

methane requirements.

Although most of EPA’s 2016 methane rule is back in force, its fate remains unclear because of pending

legislative, executive, and judicial actions. This Sidebar examines (1) the history of regulating methane

emissions from the oil and gas sector under the Clean Air Act (CAA); (2) the effect of the CRA

disapproval of the 2020 Policy Rule; (3) the status of related litigation; and (4) considerations for

Congress.

History of Regulating Methane from the Oil and Gas Sector under the CAA

The crude oil and natural gas sector is one of the highest-emitting industrial sectors of methane, a

greenhouse gas (GHG), and volatile organic compounds (VOCs) in the United States. EPA has regulated

air pollution from the oil and gas sector, in part, under CAA Section 111. Section 111 requires EPA first to

establish a list of industrial source categories to be regulated. EPA must list a source category if, “in [the

EPA Administrator’s] judgment it causes, or contributes significantly to, air pollution which may

reasonably be anticipated to endanger public health or welfare.” EPA commonly refers to this

determination as an “endangerment finding.” Once EPA lists a source category, EPA establishes

“standards of performance” for new, modified, and reconstructed sources in that source category (known

as new source performance standards) under CAA Section 111(b).

In 1979, EPA issued an endangerment finding and listed “crude oil and natural gas production” as a

source category under Section 111 based on its emissions of VOC, nitrogen oxides, particulate matter,

sulfur dioxide, carbon monoxide, lead, fluorides, acid mist, and hydrogen sulfide. In 2012, EPA issued

standards under CAA Section 111(b) limiting VOC emissions from certain new, modified, and

reconstructed sources in the oil and gas sector (2012 Rule).

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In an effort to achieve the Obama Administration’s goal of reducing methane emissions from the oil and

gas sector, EPA issued a rule revising and updating the 2012 Rule on June 3, 2016 (2016 Rule). EPA’s

2016 Rule expanded the emission sources covered by the 2012 Rule and added performance standards for

methane emissions. The final rule established, among other things,

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methane and VOC standards for emission sources and equipment in the transmission and

storage segments of oil and gas systems not regulated under the 2012 Rule, including

hydraulically fractured oil well completions, pneumatic pumps, and fugitive emissions

from well sites and compressor stations; and

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methane standards for hydraulically fractured gas well completions and equipment leaks

at natural gas processing plants that are currently regulated under the 2012 Rule for

VOCs, but not for methane emissions.

The final rule took effect on August 2, 2016 for new sources that were constructed, modified, or

reconstructed after September 18, 2015 and that are subject to the rule. EPA noted that sources complying

with the 2012 Rule likely would not be required to install additional controls for methane, as VOC

controls also curb methane emissions for those sources.

During the Trump Administration, EPA issued several rules revising requirements in the 2016 Rule. In

March 2018, EPA amended the 2016 Rule to extend deadlines to repair fugitive emission leaks and reduce

the monitoring frequency for fugitive emissions for well sites located on the Alaskan North Slope (2018

Rule). In September 2020, EPA’s 2020 Technical Rule, revised, among other things, leak detection and

repair requirements for fugitive emissions, well site pneumatic pump standards, and engineer certification

requirements for closed vent systems. To complement the 2020 Technical Rule, EPA also issued the 2020

Policy Rule, rescinding methane and VOC emission standards applicable to sources in the transmission

and storage segments and methane standards that applied to sources in the production and processing

segments of oil and gas systems.

In the 2020 Policy Rule, EPA argued that the 2016 VOC and methane emission standards were based on

errors in defining the scope of the oil and gas source category. EPA claimed that it improperly expanded

the scope of the source category in its 2012 and 2016 Rules to include the transmission and storage

segments. EPA concluded that sources in the transmission and storage segments are not subject to

regulation under CAA Section 111 because the 1979 listing of the “crude oil and natural gas production”

as a source category under CAA Section 111 did not include the transmission and storage segments.

EPA also asserted in the 2020 Policy Rule that the methane standards were based on a flawed

“endangerment finding” for methane emissions from the oil and gas source category. EPA reasoned that

its endangerment finding improperly considered methane emissions from the transmission and storage

segments, which are outside the scope of the source category. EPA also explained that it failed to identify

criteria to assess the “significance” of the source category’s methane emissions contribution to air

pollution that endangers public health and welfare. Without a methane-specific “endangerment finding,”

EPA concluded that it does not have authority to promulgate methane emission standards from oil and gas

production and processing sources under CAA Section 111.

The 2020 Policy Rule was disapproved under the CRA, effective June 30, 2021.

The Effect of the CRA Joint Resolution to Disapprove of 2020 Review Rule

The enacted CRA joint resolution disapproving the 2020 Policy Rule has two main effects. First, as of

June 30, 2021, the 2020 Policy Rule is deemed no longer to have been in effect. Under the CRA, if a rule

has taken effect by the time it is disapproved, the rule has “no force or effect” and “shall be treated as

though such rule had never taken effect.” The enactment of the CRA resolution disapproving the 2020

Policy Rule restores most but not all provisions in the 2016 Rule. Oil and gas sources that were

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constructed, modified, or reconstructed after September 18, 2015 will again be subject to the VOC and

methane emission standards and other requirements in the 2016 Rule, to the extent those standards and

requirements were rescinded or revised in the 2020 Policy Rule. EPA has issued a guidance document on

the effect of the CRA resolution on compliance and enforcement of the 2016 Rule and the 2020 Technical

Amendments.

Other revisions to the 2016 Rule remain in effect, including the 2018 Rule and the 2020 Technical Rule

discussed above. The time periods for Congress to take action on CRA joint resolutions of disapproval

overturning the 2018 Rule and the 2020 Technical Rule have expired. Generally, Members of Congress

have 60 calendar days (excluding days on which either house has adjourned by concurrent resolution)

after an agency submits its rule to Congress, to introduce joint resolutions disapproving the rule. Because

the 2020 Technical Rule was issued in September 2020 near the end of the Trump Administration, the

time period for consideration under the CRA was extended to account for Congress’s adjournment; it

expired in mid-May 2021 without action from Congress.

Second, the enacted CRA joint resolution prohibits EPA from issuing a rule that is substantially similar to

the 2020 Policy Rule. Specifically, the CRA prohibits an agency from reissuing a rule in “substantially the

same form” or issuing a “new rule that is substantially the same” as the disapproved rule “unless the

reissued or new rule is specifically authorized by a law enacted after the date of the joint resolution

disapproving the original rule.” The CRA does not define “substantially the same.” Whether a reissued or

new rule is “substantially the same” as the disapproved rule could depend upon a number of factors. A

new or reissued rule would also be subject to disapproval under the CRA. Further, most reviewing courts

have interpreted the CRA to bar judicial review based on alleged CRA violations, leaving the political

branches to resolve CRA-related issues.

EPA’s Next Steps

As directed by Executive Order (E.O.) 13990, EPA has begun the process to propose rules to reduce

methane and VOCs emissions from the oil and gas sector. E.O. 13990, “Protecting Public Health and the

Environment and Restoring Science to Tackle the Climate Crisis,” instructs EPA to consider taking two

actions by September 2021: (1) strengthen 2016 methane and VOC emission standards for new sources,

and (2) propose emission guidelines for existing sources in the oil and gas sector. In May 2021, EPA

began a public outreach effort to gather stakeholder input prior to proposing rules. In a September 2021

rulemaking, EPA plans to propose changes to resolve any discrepancies in regulatory requirements

between the 2016 NSPS and 2020 Technical Rule.

The reinstatement of the 2016 Rule triggers EPA’s duty under CAA Section 111(d) to regulate existing oil

and gas sources constructed prior to September 18, 2015. When EPA sets CAA Section 111(b) emission

standards for new, modified, and reconstructed sources for specific air pollutants, EPA must issue a

“procedure” requiring states to submit plans that establish emission standards for existing sources for

those same pollutants in their jurisdictions. EPA refers to these Section 111(d) procedures as “emission

guidelines.” After issuing the 2016 Rule, EPA sent an Information Collection Request (ICR) to oil and

natural gas companies seeking information on their existing sources to begin the Section 111(d)

rulemaking process. EPA withdrew the ICR in 2017 when it began its process to revise and reconsider the

2016 Rule. EPA has not, to date, reissued a new ICR for existing oil and gas sources.

Litigation Next Steps

The CRA disapproval of the 2020 Policy Rule could affect various legal challenges to EPA’s actions to

address methane emissions from the oil and gas sector. The current status of the litigation is highlighted

below:

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2020 Policy Rule. On February 14, 2021, the U.S. Court of Appeals for the District of

Columbia Circuit paused the litigation challenging the rule while EPA was reconsidering

it. California v. Regan, No. 20-1357 (D.C. Cir.). The petitioners argued, among other

things, that the 2020 Policy Rule was arbitrary and capricious because EPA failed to

provide a reasoned and detailed explanation to reverse the policies in the 2016 Rule. On

July 1, 2021, EPA notified the court that it had terminated its reconsideration of the 2020

Policy Rule upon the enactment of the CRA joint resolution and plans to submit a motion

by July 30, 2021 on how to proceed in the litigation. EPA could move to dismiss the case

as moot now that the rule is no longer in effect.

2020 Technical Rule. On February 19, 2021, the D.C. Circuit paused the litigation

challenging the rule while EPA is reconsidering it. Environmental Defense Fund v. Regan,

No. 20-1360 (D.C. Cir.). The parties had not briefed the court on the merits before the

litigation was paused. On June 21, 2021, EPA submitted a status report indicating that its

review of the rule is ongoing. The court could continue to pause the litigation until EPA

completes its reconsideration of the 2020 Technical Rule.

2016 Rule. The D.C. Circuit paused the challenge to the 2016 Rule in 2017 while the

Trump Administration reconsidered the rule. North Dakota v. EPA, No. 16-1242 (D.C.

Cir.). The petitioners claimed that EPA failed to make the required “endangerment

finding” for methane emissions from the oil and gas sector under CAA Section 111. They

also argued that EPA had “unlawfully” expanded the listed “crude oil and natural gas

production” source category to transmission and storage sources not previously regulated.

(For a summary of the legal challenges to the rule, see this CRS report.) As discussed

above, EPA relied upon similar arguments in promulgating the 2020 Policy Rule. The

petitioners could seek to resume the litigation now that the CRA disapproval has restored

the methane and VOC emissions standards in the 2016 Rule, or the court could continue

to pause the litigation until EPA completes its rulemaking to strengthen the 2016 Rule

and to clarify what provisions of that rule remain in place.

In addition to litigation of EPA’s rules, in 2018, various states and stakeholders filed suit in the U.S.

District Court for the District of Columbia claiming that EPA failed to establish emission guidelines

regulating methane from existing sources in the oil and gas sector under CAA Section 111(d). New York v.

EPA, No. 1:18-cv-773 (D.D.C.). The plaintiffs asked the federal district court to order EPA to propose and

promulgate emissions guidelines. On July 7, 2021, EPA notified the court that the CRA joint resolution

was enacted, and that it will file a report on how the parties would like to proceed in the litigation.

Considerations for Congress

As EPA plans to reduce methane emissions from the oil and gas sector further under the CAA,

stakeholders will continue to debate the legal issues raised in the 2020 Policy Rule and in the litigation

challenging the 2016 Rule. Without legislative action, the courts and the Biden Administration could

determine the extent of EPA’s authority to regulate methane emissions under CAA Section 111.

Congress could address these legal issues that often recur when EPA regulates GHG emissions under

CAA Section 111. Congress could clarify whether or when EPA must make separate endangerment

findings for each pollutant regulated under CAA Section 111. Stakeholders raised similar legal arguments

when challenging the GHG regulations under the Clean Power Plan (CPP) and Affordable Clean Energy

(ACE) Rule, claiming that EPA failed to make the required endangerment finding for GHG emissions

from power plants under CAA Section 111 and that EPA cannot rely on previous endangerment findings

in the context of GHG emissions from motor vehicles. In 2021, the D.C. Circuit ruled that EPA was not

required to make an endangerment finding for GHG emissions from power plants because power plants

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had already been listed as a CAA Section 111(b) regulated source category in 1971 (fossil fuel-fired

steam generators) and in 1977 (fossil fuel-fired combustion turbines).

Congress could also define the scope of the “crude oil and natural gas production” source category subject

to regulation under CAA Section 111. This legislative approach is illustrated in H.R. 1492, the “Methane

Waste Prevention Act of 2021,” which would require EPA to finalize regulations under CAA Section 111

by December 31, 2022 to restrict national methane emissions from oil and gas sector to 65% below 2012

levels by 2025, and 90% by 2030. The bill specifically defines “covered sources” to include “sources of

methane from every segment of oil and natural gas systems, including oil and natural gas production,

processing, transmission, distribution, and storage.” In April 2021, the House Natural Resources

Committee voted to advance the legislation.

Other Members of Congress have taken different approaches to address methane emissions that do not

rely on the EPA’s authority under the CAA. For example, S. 645, “Methane Emissions Reduction Act of

2021,” would direct the Secretary of the Treasury, working with EPA and the National Oceanic and

Atmospheric Administration, to levy a fee on methane emissions from oil and natural gas facilities

beginning in 2023. The fees would be transferred to the National Coastal Resilience Fund, which is used

to protect coastal communities and habitats for fish and wildlife. Other legislation would work to reduce

methane leaks from abandoned wells. S. 1076, the “Revive Economic Growth and Reclaim Orphaned

Wells Act of 2021,” would amend the Energy Policy Act of 2005 to require the Secretary of the Interior to

establish a program and to provide funds to state and tribal governments to plug, remediate, and reclaim

orphaned oil and gas wells and surrounding land.

Author Information

Linda Tsang

Legislative Attorney

Disclaimer

This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff

to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of

Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of

information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.

CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United

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as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the

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