American Oil and Gas Reporter - July 2023 - 23
EPA Dragging Its Feet On
Statutory Obligation To
Assist Methane Mitigation
From blocking permits that enable carbon capture to leveling
a methane tax on oil and natural gas producers, the U.S. Environmental
Protection Agency continues to pursue counterproductive
regulations that limit both U.S. energy production and
productive climate action.
Now lawmakers from both sides of the aisle are taking aim at
the EPA's novel methane tax. Last year, without any standalone
evaluation or economic analysis, the methane tax was signed
into law by Congress as part of the Inflation Reduction Act's
Methane Emissions Reduction Program (MERP). The program
tasks EPA-an agency unfamiliar with collecting tax revenue-
with charging oil and gas producers, pipeline companies and
other emitters as much as $1,500 per ton for methane emissions.
As a result of partisan negotiations around the IRA, MERP
also set aside $1.55 billion in grant funding for EPA to distribute
to companies for methane mitigation efforts before the methane
tax takes effect. That compromise did not diminish skepticism
of the program, as E&E News reported:
" Republicans and industry leaders say the methane fee
program, as currently constituted, is unworkable and potentially
unconstitutional. Democrats, meanwhile, argue that the fee,
which is paired with a grant program to help implementation, is
friendly to industry concerns. "
However, the trade-off is even less appealing if the massive
grant program to help finance companies' emission reductions
efforts never actually materializes. According to Senator Joe
Manchin, D-W.V., that is exactly what is happening. In June,
Manchin sent a letter to EPA Administrator Michael Regan that
urged the agency to delay implementation of the methane tax.
Although the tax is set to begin in January 2024, the letter
observes, EPA has not yet provided any MERP funds to support
companies' efforts to bring down methane emissions.
" The congressional intent behind this provision is crystal
clear: The EPA was directed to provide financial support to
energy companies to reduce methane emissions before any new
fees would be assessed, " the senator wrote. " Unfortunately,
nearly 10 months later, not a single penny of funding has gone
out the door. "
Manchin also urged EPA to issue guidance promptly to help
energy companies understand how and when to comply with
MERP. At the top of the senator's list is a request for clear
language affirming that smaller producers are exempt from the
methane tax under MERP, as stated in the IRA:
" The statute clearly intends to exempt marginal wells and
smaller producers from the fee. EPA must make it clearly understood
that those entities not subject to the current Subpart W
Greenhouse Gas Reporting Program are not subject to EPA
fees under MERP. "
Manchin's full letter to Regan can be found on the senator's
website.
Republican leaders on the House Energy and Commerce
Committee also are paying close attention to EPA's actions in
" However, the trade-off is even less
appealing if the massive grant program to
help finance companies' emission reductions
efforts never actually materializes. According
to Senator Joe Manchin, D-W.V., that is
exactly what is happening.
"
this area. Only days after Manchin sent his letter, Representatives
Cathy McMorris Rogers, R-Wa., and Bill Johnson, R-Oh.,
authored a letter to Regan that requested information about the
agency's expansive and burdensome methane regulatory agenda.
" The EPA's regulatory proposal for methane creates substantial
legal and regulatory uncertainty, which discourages energy production
and increases energy prices, " it says. " The EPA is also
planning to add to the regulatory burden with a new tax on
methane emissions. "
The letter from McMorris Rogers and Johnson also points
out that MERP-which would put EPA in the unprecedented
position of collecting private tax dollars-would " dramatically
expand EPA's regulatory reach " and undercut rules meant to remove
duplicative regulation. E&E News previously reported on
congressional leaders' and the U.S. energy industry's concerns
with EPA's disjointed methane regulatory agenda:
" Both the American Petroleum Institute and the Independent
Petroleum Association of America argue that, instead of the
fee, EPA should focus on implementing another set of methane
rules scheduled to be finalized later this year. Those rules
focus more on regulating production activities rather than a
lump fee on emissions by having officers do things like inspect
wells on a regular basis, find and fix leaks, and swap out pieces
of equipment. "
I previously characterized the methane tax under MERP as
inappropriate and unworkable-both as written and in its manner
of implementation-in my testimony at a February House
Energy and Commerce Subcommittee hearing. My testimony
is posted on IPAA's website.
That bottom line is that concerns about the EPA's farreaching
regulatory agenda are catching the attention of congressional
leaders from both parties. Now they are raising
important questions about the legality and practical implementation
of EPA's new methane tax.
❒
JEFF ESHELMAN is president
and chief executive officer of the Independent
Petroleum Association
of America and the founder/executive
vice president of Energy in
Depth. Along with more than two
decades at IPAA, he previously
worked at the Defense Logistics
Agency, the White House Office of
National Drug Control Policy and
three public affairs firms.
JULY 2023 23
American Oil and Gas Reporter - July 2023
Table of Contents for the Digital Edition of American Oil and Gas Reporter - July 2023
Contents
American Oil and Gas Reporter - July 2023 - Intro
American Oil and Gas Reporter - July 2023 - Cover1
American Oil and Gas Reporter - July 2023 - Cover2
American Oil and Gas Reporter - July 2023 - Contents
American Oil and Gas Reporter - July 2023 - 4
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