Update on Greenhouse Gas Emissions Reporting

The White House Office of Management and Budget has reportedly completed its review of the draft final rule to set greenhouse gas emissions reporting requirements for oil and natural gas wells and related equipment, as well as locations that produce fluorinated greenhouse gases. Completion of OMB review is typically the final step before a proposed rule is released by the Environmental Protection Agency for publication.

Readers may recall these rules were proposed in Spring, 2010, and would require oil and natural gas wells and related equipment that emit more than the equivalent of 25,000 metric tons per year of carbon dioxide to report their greenhouse gas emissions. EPA estimates that the proposal would apply to about 3,000 facilities, which would be required to begin collecting data on Jan. 1, 2011.  According to EPA, fluorinated gases account for about 2 percent of U.S. greenhouse gas emissions.

The proposed rule for oil and natural gas systems, like many related rules, seem to impose burdensome testing requirements on natural gas systems rather than calling for use of arguably more cost-effective estimating techniques.  Also controversial is EPA's effort to include smaller facilities by aggregating multiple facilities of a company in a region.

The Nov. 2 elections put Republicans in charge of the House and reduced the Democratic margin in the Senate; this may impact greenhouse gas regulation, and climate change legislation (such as cap and tax) is probably off the table for the next two years. Industry groups may seek to lobby for delay in EPA's greenhouse emissions rules through a variety of techniques, including via the EPA spending bill. Several top House Republicans have been quoted as saying such rules are a priority target.  On the Senate side, Sen. Jay Rockefeller (D-W.Va.) and a few other Democrats have favored a delay in implementing the EPA regulations for two years, so the new math there may also create road blocks.

Another aspect of this is seen in statements, such as those by Rep. Darrell Issa (R-Calif.), who may be in line to chair the House Oversight and Government Reform Committee; he has stated that he will call for oversight hearings on EPA activities, including in this area. Organizations such as the National Association of Manufacturers have argued that if the EPA is allowed to continue forward with an "overreaching agenda" on greenhouse gasses that puts additional and unnecessary burdens on manufacturers and drives up energy costs, it will cause economic harm and instill even more uncertainty into our already fragile economy, and will destroy jobs.