EPA Methane Regs: Solution in Search of a Problem?

By Cameron Smith

In January, the Environmental Protection Agency (EPA) announced forthcoming proposed regulations designed to control methane emissions from industrial sources in the oil and gas industry. While that might sound as interesting as watching paint dry, such regulations may actually represent a federal solution in search of a problem.

The EPA argues that regulating methane is critical to reducing greenhouse gas levels because the gas has “a global warming potential more than 25 times greater than that of carbon dioxide.”
Despite a 16 percent decline of methane emissions from the oil and gas industry since 1990, the EPA projects them to “increase by about 25 percent over the next decade if additional steps are not taken to reduce emissions.”

These regulations have found opposition from opposite ends of the political spectrum.

Because the forthcoming proposed rules will only regulate methane emissions from new and modified oil and gas wells, the Natural Resources Defense Council claims that the proposed regulations do not go far enough. They argue that President Obama’s climate agenda “will require the EPA to curb methane pollution from all existing oil and gas operations across the nation, not just those in some parts of the country.”

On the other hand, some conservative politicians like Senate Environment and Public Works Chairman James Inhofe (R-OK) see the EPA’s announcement as “plans to impose a mandate designed to stifle…domestic energy industries despite the successful voluntary steps…to reduce methane emissions.”

The irony is that both industry and environmental groups may already be getting what they want. At least in the area of reducing methane emissions, industry seems to have been more than willing to innovate and tackle the problems themselves.

Even EPA Administrator Gina McCarthy has conceded that oil and natural gas companies have “indicated on their own volition that they’re looking at closing the leaks and trying to make sure that they recapture methane.” McCarthy stated, “I don’t want folks to think that we’re not working with the existing industry to reduce methane, because we clearly are, and much of that work has been very successful.”

In fact, McCarthy suggested that the new methane standards should communicate to existing oil and gas producers where their methane leaks are occurring, where they might reduce emissions, and ensure that operators are “putting in the right type of equipment and making the changes they need.”

McCarthy also noted that beginning to regulate all of the wells in the U.S. is a real logistical problem for the EPA. More than 1.1 million domestic wells are “in very different types of formations, all very differently designed.” Crafting a one-size-fits-all regulatory scheme could prove challenging.

If the EPA concedes that methane emissions are declining, that industry is already addressing the issues with methane, and that regulation will be logistically challenging, why do we need another federal regulatory scheme?

The Wall Street Journal offered the explanation that the proposed regulations “are designed to help the administration meet a commitment it made in Beijing in November to reduce U.S. greenhouse-gas emissions, as well as to bring political momentum to a United Nations summit this year where world leaders will decide whether to create a new climate agreement.”

In other words, the regulations may simply be serving as a type of climate change hood ornament for President Obama. For many in the oil and gas industry, the hood ornament regulation may seem innocuous, but it is undeniably an invitation for further and more aggressive regulation in the future.

Perhaps the larger point is that we do not need to regulate activity that is already being kept in check. If the EPA is conceding that industry is already responding to its concerns, why create more bureaucracy? Why create a legal paradigm where new companies are forced, by law, to deal with the cost of the methane regulation while existing operations are not?

If methane emissions begin to cause serious health issues, if industry is unwilling to police itself, or if existing judicial remedies cannot compensate for any harm, then discussing a regulatory scheme might make sense. Crafting a regulatory hood ornament for the President does not.

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