Back in December 2023, The U.S. Environmental Protection Agency (EPA) announced a final rule aimed to reduce methane and other harmful air pollutants. That rule became effective May 7, 2024, and targeted methane “waste emissions charges (WEC)” from the oil and gas sector. The rule implements Section 60113 of the Inflation Reduction Act of 2022 (IRA), which gives the EPA the power to act as tax assessor, collector and enforcer.
For a summary recap of the new rules relating to the methane emissions charge, see Our Thoughts On the WEC charge.
Since then, the EPA has shown a continued focus on methane emission regulations, and moving forward to March 8, 2024, established a new rule on “Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review.”
These new rules became effective on May 7, 2024, alongside the new rules that included the methane emissions charge.
Most recently, on May 20, 2024, the EPA published a small entity compliance guide for the new emission standards that were part of the March 8, 2024 rules.
The purpose of the guide, while non-authoritative, was created to assist small entities in complying with the new rules for certain impacted facilities (or points of emissions).
The impacted facilities mentioned within the guide are included within Table 1-1 of the referenced guide linked below. A summary of these impacted facilities (or points of emission sources) includes:
- Well completions (including two separate subcategories based upon type)
- Well liquids unloading
- New wells with associated gas (including three subcategories based upon construction dates)
- Wells with associated gas reconstructed or modified after December 6, 2022
- Wet seal centrifugal compressors
- Dry seal centrifugal compressors
- Reciprocating compressors
- Process controllers
- Pumps
- Fugitive emissions from well sites and compressor stations
- Equipment leaks at natural gas processing plants
- Sweetening units
- Storage vessels
The guide goes on to outline steps for determining facility status, compliance timelines, testing and monitoring protocols, reporting obligations and recordkeeping/retention protocols.
As mentioned within the guide, certain requirements such as reporting and recordkeeping will likely be relevant for most, if not all, of the impacted facilities described above. If you own or operate more than one affected facility, you may submit one report for multiple affected facilities, provided the report contains all of its required information.
Have you read through the compliance guide to assess how these new rules could impact your operations? There are specific requirements for compliance for each of the above-mentioned points of emissions.
If you need further assistance in the evaluation of these new requirements, please see the final rule and small entity compliance guide linked below or contact one of us on the Schneider Downs Oil and Natural Gas team, if we can help.
About Schneider Downs Energy & Resources Services
The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.
To learn more, visit our Energy and Resources Industry Group page.
