By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
The Trump administration is poised to roll back rules on release of methane, a potent greenhouse gas estimated to be 25 more potent than carbon dioxide and which accounts for about 10% of U.S. greenhouse gas emissions.
The weaker Trump rule, expected no later than Friday, would replace a tougher standard set by his predecessor’s EPA, according to the New York Times.
The new rules would eliminate requirements that oil and gas producers have systems and procedures to detect methane leaks in their systems, according to the WSJ:
The rule changes will apply to wells drilled since 2016 and going forward, and remove the largest pipelines, storage sites and other parts of the transmission system from EPA oversight of smog and greenhouse-gas emissions. The changes also ease reporting requirements for the industry and, for some facilities, how often a plant must check for leaks of other pollutants, the officials said.
The new rules, expected to be signed and issued this week, adopt most of the core elements of two proposals from 2018 and 2019. Agency officials are fulfilling a directive by President Trump to ease regulations on U.S. energy producers, and have said the rules being eliminated are duplicative of other federal and state rules.
They were adopted in 2016 under former President Obama amid concerns about methane-gas leaks contributing to climate change.
Most of US emissions arise from the oil and gas industry, a situation that predates the shale oil boom (and now, subsequent bust).
The 2016 rule was in part a response to the surge in natural gas production, according to the WSJ:
As the drilling boom sent natural-gas production surging, the EPA responded in 2016 with requirements for companies to make plans for reducing emissions at new wells and the pipelines they feed. That included regular checks to close leaky valves, pipelines and tanks in the sprawling network covering millions of miles that supplies home furnaces, power plants, industrial sites and other consumers.
The Trump administration never seems to have met a fossil fuel regulation it didn’t try to circumvent, eliminate, or weaken. And Trump seeks to roll back every element that he can of his predecessor’s climate change policy – weak and over-rated as it may be – and of course, in many instances goaded, aided, and abetted by at least some of the producers in the fossil fuel industry.
Status Under the Congressional Review Act (CRA)
First up, a short aside on abbreviations: the earlier and still-valid use of CRA is as an abbreviation for the Community Reinvestment Act (1977 ), but the same three letters also stand for the Congressional Review Act (1996). I will use CRA in this post only to refer to the 1996 statute, the Congressional Review Act.
The question then arises: what would be its status under the CRA? Readers might recall that the Trump administration used this statute aggressively and effectively during the initial days of his administration this statute multiple times to roll back “midnight rules” enacted by his predecessor that had not met the deadline for being invulnerable to CRA review. The statue allows for a simple majority vote, in both houses of Congress, not subject to normal Senate procedures such as the filibuster, and a Presidential signature, to overturn any rule passed within 60 session days of the seating of a new Congress (see Trump and Congress Use Congressional Review Act to Roll Back 14 ‘Midnight’ Rules; More to Follow?).
The CRA was invoked in many areas, as I wrote at the time. most significantly, to overturn the Consumer Financial Protection Board’s (CFPB) mandatory arbitration ban, and rules on abortion, environmental protection, government procurement, gun control, and land use.
CRA is a one-way deregulatory ratchet, and rules overturned under its auspices may not be easily revisited by the incoming administration. Many legal issues related to the CRA scope of the are unresolved, however. Although the statute dates to 1996, and was part of Newt Gingrich’s Contract with America, it had only been used once before Trump, by the George W. Bush administration to rescind a workplace ergonomics rule promulgated during the Clinton administration.
The Congressional Research Service determines what date the CRA deadline kicks in. It can move to later in the year Congress add is more days to its legislative session.
What is now certain is that the 60-session days deadline has already passed, regardless of what day the actual deadline attached.
Now, just as with its overhaul a few weeks ago of the Nixon-era National Environmental Policy Act, applying to highway, pipeline, and power plant construction, among other issues, rescinded a requirement that policymakers consider climate change when making a decision, this latest Trump methane action is not insulated from CRA review.
Confusion arises, however, as to whether an incoming non-Trump administration, even if supported by Congressional majorities, would choose to use the CRA -as it might limit further freedom of action to institute rules in the same policy area.
Given that the Trump administration was the first to use the statute aggressively, the limitts of its preclusive effect are not yet defined by judicial decisions.
Big Producers Favour the Tighter Rule?
This change would occur despite the backing by the largest oil and gas industry for the tighter Obama-era methane rule. Small and medium producers argue that production is uneconomic, with the rule in place, but larger producers actually supported retaining the tougher rule, according to the WSJ:
Rescinding these requirements was a priority for small-and midsized oil-and-gas producers, which say the requirements were so costly to meet that it would be unprofitable to drill in some places.
But larger producers, including international giants Exxon MobilCorp., Royal Dutch Shell PLC and BP PLC, favored retaining the rules, saying a lack of climate regulation undermines their promise that the U.S. natural gas they sell is a cleaner source of energy.
The NYT makes a similar point:
Oil and gas companies have had mixed responses to the rollback. Some major companies have spoken out against the weakening of methane regulations — joining some automakers, electric utilitiesand other industrial giants that have opposed other administration initiatives to dismantle climate change and environmental rules.
But smaller, independent oil companies are expected to applaud the rule as a welcome measure of relief when many are struggling to stay afloat.
Yet the Times goes further and suggests that the largest oil and gas producers would opt to strengthen rather than weaken the methane rule:
Several of the biggest oil and gas companies have called on the Trump administration to tighten restrictions on methane, not loosen them. Larger energy companies have invested millions of dollars to promote natural gas as a cleaner option than coal in the nation’s power plants, because natural gas produces about half as much carbon dioxide when burned. They fear that unrestricted leaks of methane could undermine that marketing message and hurt demand.
In a 2019 public comment on a draft of the rule, Joe Ellis, a vice president at BP, urged the E.P.A. “to continue to regulate methane emissions from new sources and to adopt a rule for existing sources. E.P.A. regulation of methane across the value chain is the right thing to do for the environment, will support consistent regulation across the U.S. and can be cost-effectively achieved with new technology.”
Exxon urged the E.P.A. in 2018 to maintain core elements of the Obama administration’s policy. Gretchen Watkins, the United States chairwoman for Shell, which has urged the Trump administration to regulate methane emissions, said, “The negative impacts of methane have been widely acknowledged for years, so it’s frustrating and disappointing to see the administration go in a different direction.”
This situation reminds me of the Trump machinations over fuel economy standards, where the new administration weakened the standards, and then initially pursued some auto manufacturers on antitrust grounds for “voluntarily” negotiating with California to back the higher standard. California enjoys a special role under the Clean Air Act for setting emissions standards, and auto manufacturers have accepted California’s role in de facto setting the floor for national emissions standards, as they don’t want to produce two product lines: a tougher one that meets California standards, and another for at least some of the rest of the country.
Moreover, as many of these producers had long ago started to take steps to comply with the tighter standards, they did not want to see Trump subsequently weaken them, as now that they had made substantial nvestments to comply, they wanted the tougher standards to stand as a potential barrier to entry to other automakers (see Trump Drops Antitrust Probe of Four Automakers Which Adopted Tougher Cal Tailpipe Emissions Standards).
I should also mention it’s not just some of the largest oil and gas companies, but some of the environmental groups they have converted also emphasize the industry benefits that would follow a tougher methane standard; again, according to the NYT::
The Environmental Defense Fund, a nonprofit that has often collaborated with major oil companies on reducing methane emissions, warned that the rule changes would create a risk for U.S. gas sales into Europe, which is moving to tighten laws on greenhouse-gas emissions.
“The Trump EPA’s methane rollbacks aren’t just bad climate policy, they’re a competitive disadvantage for American gas in a world demanding cleaner energy,” said Ben Ratner, a senior director at the fund who works with companies on methane reduction. “For EPA to wipe out methane regulation makes a risky situation even worse for U.S. companies counting on exports.”
The Bottom Line
The methane rule is only the latest gift the Trump administration is attempting to bestow on some oil and gas producers. It joins a long litany of environmental deregulation, which continues apace despite the COVID-19 pandemic. Just some recent examples, according to the NYT:
In April, the E.P.A. weakened rules on the release of toxic chemicals from coal-fired power plants, loosened curbs on climate-warming tailpipe pollution and opted not to strengthen a regulation on industrial soot emissions that have been linked to respiratory diseases, including Covid-19.
The methane rule would likely be the subject of a successful CRA challenge, if Democrats can sweep both the White House and both houses of Congress in November. Yet exactly how successful CRA action might constrain their own subsequent climate change policymaking, particularly with respect to methane, might raise some novel legal issues, however, as the legal limits of the CRA’s preclusive effect have yet to be plumbed.