Blog Post

States Push EPA to Regulate Methane from Oil & Gas Operations

Dec 14, 2012 | Nathan Richardson

New York and six other eastern states announced this week that they intend to sue the EPA, seeking to force the agency to regulate methane emissions from oil and natural gas operations. Specifically, they claim EPA is required by the Clean Air Act to issue new source performance standards (NSPS) for methane emissions from wells, based on the methane's status as a greenhouse gas that the agency has already linked to health and welfare impacts in other contexts. The move is interesting, both in its own right and because of its implications for the division of regulatory authority between states and the federal government.

If EPA were to issue such standards, they would be the second set of standards released this year for oil and gas operations, and the second set of standards aimed at GHGs for any sector. Earlier this year, EPA issued NSPS for VOCs and other pollutants from the oil and gas sector. The agency claims the green completion techniques required by these standards will also reduce methane emissions, but the states claim in their notice that this is insufficient, and that EPA has a legal duty to go further and target methane directly.

Earlier this year, EPA also proposed GHG peformance standards for the power sector. These have attracted criticism because they effectively ban construction of new coal plants, at least without carbon capture-and-storage technology. EPA proposed these standards only after significant delay and under legal pressure from states and environmental groups. The agency remains behind schedule in complying with a settlement agreement in that case, under the terms of which it promised to finalize standards for new and existing power plants and refineries by the end of this year.

A suit from states on standards for methane from oil and gas operations would proceed along similar lines. The settlement agreement means there was no precedent-setting judgment in the earlier case, however. EPA might argue that, while its 2009 endangerment finding establishes that GHGs have negative health and welfare effects, emissions from oil and gas operations are not sufficient to "cause or contribute" to these effects. Whether this position is defensible or on depends, of course, on the size of those emissions - which remains a matter of significant controversy. Persistent uncertainty alone may permit EPA to delay action until better data is available, though I hope we have a better sense of industry methane emissions by the time any litigation matures.

Even if the states here sue and win (or get a favorable settlement), it is likely to be years before any standards are proposed.

Oil and gas development is primarily regulated at the state level. One obvious response, therefore, is to ask why the states don't simply regulate methane emissions themselves. The simple answer is that the seven states behind the potential suit - New York, Maryland, Delaware, Vermont, Connecticut, Rhode Island, and Massachusetts - have very little natural gas development so far. Maryland has some, and New York has great potential but has halted development while it considers regulatory changes. The other states have little or no shale gas resources. These states, at least aside from New York, can't do much about methane emissions. Even if they did have development, a suit against EPA would still be a way to use the federal government to reduce emissions in other states with large development that are much less likely to do so - think Texas or North Dakota.

In this sense, the move is more like the state petitions to regulate vehicle emissions that led to Massachusetts v. EPA, and less like states' petitions for power-sector GHG NSPS. In the former case, states had little power to limit in-state emissions since, with the exception of California, they can't set vehicle emissions standards. In the latter case, states were already acting to reduce their emissions via trading programs (RGGI), renewable portfolio standards, and other policies - but wanted other states to do more. In the future, more of both types of petition are likely. Carbon is a global pollutant, and those states that are either more vulnerable or simply more aware of the problem are likely to use the federal government to push for action in areas that, for reasons of geography, are or law outside their control.