February 18th, 2025 by Dakota Software Staff
Update: On March 14, 2025, the President signed a joint Congressional resolution that disapproved the 2024 Waste Emissions Charge (WEC) final rule. Based on this action, the WEC rule which established a charge for excess methane emissions from certain petroleum and natural gas facilities is no longer enforceable and is not in effect.
The EPA recently finalized a rule governing waste emissions charges for the oil and gas sector (40 CFR 99). With this methane fee rule, Congress directed the EPA to collect a waste emissions fee on methane emissions that exceed Congressionally mandated thresholds. These thresholds differ depending upon the type of facility.
Effective January 17, 2025, the final rule applies to oil and gas companies reporting more than 25,000 metric tons of carbon dioxide equivalent per year in emissions to the Greenhouse Gas Reporting Program (GHGRP), beginning with methane emissions reported in calendar year 2024.
Facilities required to report under the GHGRP include:
Offshore petroleum and natural gas production
Onshore petroleum and natural gas production
Onshore natural gas processing
Onshore natural gas transmission compression
Underground natural gas storage
Liquefied natural gas storage
Liquefied natural gas import and export equipment
Onshore petroleum and natural gas gathering and boosting
Onshore natural gas transmission pipelines
The Clean Air Act (CAA) was amended in 2022 when the Inflation Reduction Act (IRA) passed. This amendment added Section 136, which is the Methane Emissions Reduction Program. In Section 136, Congress directs the EPA to collect a Waste Emissions Charge on methane waste emissions from applicable oil & gas facilities.
Congress specified the following Waste Emissions Charges (WECs) per calendar year (CY):
CY 2024: $900 per metric ton
CY 2025: $1,200 per metric ton
CY 2026: $1,500 per metric ton
With its fee-based incentives, EPAs new methane rule's structure may establish a precedent for future policy making, further incentivizing Environmental, Health, and Safety (EHS) professionals to stay ahead of regulatory changes to mitigate the financial and operational risk to their organizations.
The EPA’s waste emissions charge is designed to work hand-in-hand with two rules the Agency finalized last spring:
Final standards under the CAA to sharply reduce methane emissions and other harmful air pollution from new and existing oil and gas operations.
A final rule revising 40 CFR 98, Subpart W, which regulates the GHG Reporting Program from the oil and natural gas industry, to increase the accuracy of reported methane emissions.
The CAA final standards aim to reduce methane and other harmful pollutants emitted at oil and gas facilities.
The rule includes a two-year phase-in period for eliminating routine flaring of natural gas from new oil wells, and a one-year phase-in of zero-emissions standards for new process controllers and pumps, with some exceptions for certain facilities located in Alaska.
It also:
requires comprehensive monitoring for leaks of methane from well sites and compressor stations;
establish standards that require reductions in emissions from high-emitting equipment like controllers, pumps and storage tanks;
includes a Super Emitter Program that will utilize third-party expertise in remote sensing to detect large methane releases or leaks known as “super emitters,” and
clarifies how states can use their existing programs in plans for limiting methane emissions from existing sources and gives states two years to submit their plans for EPA approval.
The revisions to 40 CFR 98, Subpart W were to ensure that reporting is based on empirical data, accurately reflects total methane emissions and waste emissions from applicable facilities, and allows owners and operators of applicable facilities to submit empirical emissions data that appropriately demonstrate the extent to which a charge is owed under the Waste Emissions Charge.Industry analysts report many oil & gas facilities are already in compliance with the congressionally mandated emission threshold, meaning they will not be required to pay the WEC.
A joint resolution of disapproval under the Congressional Review Act (CRA) has already been introduced for the waste emissions charge.
The CRA allows Congress to pass a resolution striking down a regulation that was passed within 60 “legislative days.” It also has a “lookback” clause that allows additional time for review of final actions passed near the end of the previous administration’s term. When a CRA is passed and signed by the President, agencies are required to retract the regulation and are prohibited from passing any “substantially similar" regulations.
The EPA’s methane emissions suite of regulations encourages investments in methane capture technologies and financially rewards those who make those investments and reduce emissions at their facilities.
Overall, oil and gas companies support practices resulting in less pollution.
These rules also create financial penalties for those who choose to stay with harmful pollution practices.
Stepping back to look at broader implications of this shift in the legislative process could mean that similar fee-based regulations are introduced across a variety of industries from other federal regulatory agencies.
The methane emissions rules provide a litmus test for the role of financial incentives and penalties in shaping future environmental policies.
The current suite of methane emissions regulations provides a blueprint for additional durable, behavior-driven regulations.
This new approach is a warning beacon for industry to remain alert to stay ahead of the ever-evolving regulatory landscape. It also incentivizes EHS leadership to stay ahead of regulatory changes to mitigate the financial and operational risks to their organizations.
Dakota’s Regulatory Alerts can help you keep up with changing EHS requirements. Visit our demo library to learn more.
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