EPA Unveils Finalized Methane Rule

Date: May 16, 2016

Regulations To Cost Oil, Gas Producers Hundreds Of Millions Annually

The Environmental Protection Agency has issued its final rule aimed at regulating methane emissions from the US oil and gas industry. In a press release announcing the finalized rule, the agency said it received “more than 900,000 comments” after the rule was initially proposed in August 2015, and has since made several adjustments, “including removing an exemption for low production wells” as well as mandating “leak monitoring surveys twice as often at compressor stations.” The EPA says it expects the regulations “to reduce 510,000 short tons of methane in 2025, the equivalent of reducing 11 million metric tons of carbon dioxide.” The New York Times reports that the regulation “would require oil and gas companies to plug and capture leaks of methane from new and modified drilling wells and storage tanks, not older, existing wells.” Bloomberg News says the rule will require companies “to upgrade pumps and compressors, while expanding the use of so-called ‘green completion’ technology meant to capture the surge of gas that can spring out of newly fracked wells.” According to the EPA, the regulations “will add an estimated $530 million in additional costs per year by 2025,” which is “at least 25 percent higher than the preliminary version released in August.” The administration claims those costs “will be offset by savings from averting severe storms, floods and other consequences of climate change.” According to EPA Administrator Gina McCarthy, the rule will have “very little impact in terms of the cost of natural gas and literally no impact on the cost of oil production,” The Hill reports. Instead, McCarthy expects that drillers will “recover enough natural gas to make it work their while.” However, the Washington Times says those opposed to the rule argue it is an “unscientific, punitive gesture intended to mollify the climate change movement even though the industry has shown significant progress in voluntarily reducing methane emissions.” House Science, Space, and Technology Committee Chairman Lamar Smith (R-TX) said that the rule is “the latest regulatory hit to the private sector as President Obama nears the end of his second term, following the Waters of the United States, the Clean Power Plan, and the Ozone National Ambient Air Quality Standards.”

What This Means For Small Businesses

The EPA in particular has a history of crafting excessive, aggressive regulations that are harmful to the small business community. The agency’s finalization of its methane rule will cost the oil and gas industry hundreds of millions annually. These costs will end up harming small businesses that contract with larger oil and gas companies or otherwise provide goods or services for the oil and gas industry and its workers.

Additional Reading

The Wall Street Journal, the Albuquerque (NM) Journal, Fuel Fix (TX), and Bloomberg News are among the additional outlets covering the final regulation.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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