Summary:The EPA's and the Bureau of Land Management's new rules regulating methane emissions and fracking on public lands will face challenges.
The advent of hydraulic fracturing or “fracking” has been a boon for the energy industry and the bane of the environmental community. Fracking technology quickly outpaced regulations and environmental statutes, allowing fracking companies to operate mostly unimpeded. The Environmental Protection Agency and the Bureau of Land Management are issuing new rules to regulate methane emissions and fracking on public lands respectively. Both rules tread new ground in fracking regulation and in turn invite litigation from industry and environmental advocates. Where these rules settle in 2016 will set the tone for future energy industry regulations.
When most people think of greenhouse gases, they think of carbon dioxide. Yet, methane (aka natural gas) is 25 times more potent at trapping heat in the atmosphere than its better known gaseous cousin. The Obama administration’s Clean Power Plan has set lofty goals to cut greenhouse gas emissions. Now for the first time, the EPA will regulate methane emissions from natural gas and oil production. The proposed rule creates New Source Performance Standards (NSPS) for new and modified sources in the natural gas, and oil industries. These industries, as well as environmental advocates, may challenge the EPA’s actions under the Clean Air Act.
Under Section 111(b) of the Clean Air Act, the EPA may propose nationwide performance standards for new or modified stationary sources. A stationary source is any building, structure, facility or installation that emits or may emit any air pollutant. Under the new rule, methane emissions from new and modified sources will be regulated in all stages of production, from extraction and processing, to transmission and storage. According to the EPA, there are more than 11,000 new fracked wells each year.
The industry argues the rule is unnecessary and prefers the existing voluntary “Methane Challenge Program,” which has shown some success in reducing emissions. On the other side, environmental advocates argue the EPA has not gone far enough. The proposed rule will be insufficient to meet emissions reduction goals because of its exclusive focus on new and modified sources. A study from ICF International found that in 2018, 90 percent of methane emissions will come from pre-2011 sources, rendering this rule ineffective. Some environmental advocates claim it will be impossible to meet emissions reduction goals without regulating existing sources.
While the EPA’s proposed rule focuses on one specific pollutant, the BLM has taken the opposite approach and set out to regulate a wider range of issues fracking presents on public lands. The new rule, issued in March 2015, addresses a slew of issues ranging from disclosure requirements, disposal techniques and drilling on tribal lands. However, in October 2015, a Wyoming federal district court judge granted an injunction against the rule, on the grounds that regulation falls solely within the states’ police powers and outside of the BLM’s statutory authority. The challenge came from the Independent Petroleum Association of America (IPAA), the Western Energy Alliance, the Ute Indian Tribe, and the states of North Dakota, Wyoming, Colorado, and Utah. The states and tribes say the rule strips them of their ability to manage the industry as they see fit. The BLM will appeal the case to the 10th Circuit, hoping to solidify its power to regulate fracking on public lands.
Ultimately, these two rules are apt to face several challenges on their way to implementation. The EPA may have to expand beyond its current action and issue an additional rule to make a serious impact on methane emissions. Conversely, the BLMs rule may need narrowing to survive its legal battle. In 2016 fracking with either find its place within the federal regulatory scheme or cements its place as an outlier industry, escaping meaningful federal oversight.