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

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,
 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
 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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