Proposed Rule2024-00938
Waste Emissions Charge for Petroleum and Natural Gas Systems
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 26, 2024
Issuing agencies
Environmental Protection Agency
Abstract
The Environmental Protection Agency (EPA) is proposing a regulation to implement the requirements of the Clean Air Act (CAA) as specified in the Methane Emissions Reduction Program of the Inflation Reduction Act. This program requires the EPA to impose and collect an annual charge on methane emissions that exceed specified waste emissions thresholds from an owner or operator of an applicable facility that reports more than 25,000 metric tons of carbon dioxide equivalent of greenhouse gases emitted per year pursuant to the petroleum and natural gas systems source category requirements of the Greenhouse Gas Reporting Rule. The proposal would implement calculation procedures, flexibilities, and exemptions related to the waste emissions charge and proposes to establish confidentiality determinations for data elements included in waste emissions charge filings.
Full Text
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[Federal Register Volume 89, Number 18 (Friday, January 26, 2024)]
[Proposed Rules]
[Pages 5318-5381]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-00938]
[[Page 5317]]
Vol. 89
Friday,
No. 18
January 26, 2024
Part II
Environmental Protection Agency
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40 CFR Parts 2 and 99
Waste Emissions Charge for Petroleum and Natural Gas Systems; Proposed
Rule
Federal Register / Vol. 89 , No. 18 / Friday, January 26, 2024 /
Proposed Rules
[[Page 5318]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 2 and 99
[EPA-HQ-OAR-2023-0434; FRL-10246.1-01-OAR]
RIN 2060-AW02
Waste Emissions Charge for Petroleum and Natural Gas Systems
ACTION: Proposed rule.
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SUMMARY: The Environmental Protection Agency (EPA) is proposing a
regulation to implement the requirements of the Clean Air Act (CAA) as
specified in the Methane Emissions Reduction Program of the Inflation
Reduction Act. This program requires the EPA to impose and collect an
annual charge on methane emissions that exceed specified waste
emissions thresholds from an owner or operator of an applicable
facility that reports more than 25,000 metric tons of carbon dioxide
equivalent of greenhouse gases emitted per year pursuant to the
petroleum and natural gas systems source category requirements of the
Greenhouse Gas Reporting Rule. The proposal would implement calculation
procedures, flexibilities, and exemptions related to the waste
emissions charge and proposes to establish confidentiality
determinations for data elements included in waste emissions charge
filings.
DATES:
Comments. Comments must be received on or before March 11, 2024.
Under the Paperwork Reduction Act (PRA), comments on the information
collection provisions are best assured of consideration if the Office
of Management and Budget (OMB) receives a copy of your comments on or
before February 26, 2024.
Public hearing. The EPA will conduct a virtual public hearing on
February 12, 2024. See SUPPLEMENTARY INFORMATION for information on
registering for a public hearing.
ADDRESSES:
Comments. You may submit comments, identified by Docket ID No. EPA-
HQ-OAR-2023-0434, by any of the following methods:
Federal eRulemaking Portal. <a href="https://www.regulations.gov">https://www.regulations.gov</a> (our
preferred method). Follow the online instructions for submitting
comments.
Mail: U.S. Environmental Protection Agency, EPA Docket Center, Air
and Radiation Docket, Mail Code 28221T, 1200 Pennsylvania Avenue NW,
Washington, DC 20460.
Hand Delivery or Courier (by scheduled appointment only): EPA
Docket Center, WJC West Building, Room 3334, 1301 Constitution Avenue
NW, Washington, DC 20004. The Docket Center's hours of operations are
8:30 a.m.-4:30 p.m., Monday-Friday (except Federal holidays).
Instructions: All submissions received must include the Docket ID
No. for this proposed rulemaking. Comments received may be posted
without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal
information provided. For detailed instructions on sending comments and
additional information on the rulemaking process, see the ``Public
Participation'' heading of the SUPPLEMENTARY INFORMATION section of
this document.
The virtual hearing will be held using an online meeting platform,
and the EPA has provided information on its website (<a href="https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program">https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program</a>-merp) regarding how to register and access the hearing. Refer
to the SUPPLEMENTARY INFORMATION section for additional information.
FOR FURTHER INFORMATION CONTACT: For questions about this proposed
action, contact Mr. Shaun Ragnauth, Climate Change Division, Office of
Atmospheric Programs (MC-6207A), Environmental Protection Agency, 1200
Pennsylvania Ave. NW, Washington, DC 20460; telephone number: (202)
343-9142; email address: <a href="/cdn-cgi/l/email-protection#1e737b6c6e5e7b6e7f30797168"><span class="__cf_email__" data-cfemail="ed80889f9dad889d8cc38a829b">[email protected]</span></a>.
World wide web (WWW). In addition to being available in the docket,
an electronic copy of this proposal will also be available through the
WWW. Following the Administrator's signature, a copy of this proposed
rule will be posted on the EPA's Inflation Reduction Act Methane
Emissions Reduction Program website at <a href="https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program">https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program</a>.
SUPPLEMENTARY INFORMATION:
Written comments. Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2023-0434, at <a href="https://www.regulations.gov">https://www.regulations.gov</a> (our preferred
method), or the other methods identified in the ADDRESSES section. Once
submitted, comments cannot be edited or removed from the docket. The
EPA may publish any comment received to its public docket. Do not
submit to the EPA's docket at <a href="https://www.regulations.gov">https://www.regulations.gov</a> any
information you consider to be confidential business information (CBI),
proprietary business information (PBI), or other information whose
disclosure is restricted by statute. Multimedia submissions (audio,
video, etc.) must be accompanied by a written comment. The written
comment is considered the official comment and should include
discussion of all points you wish to make. The EPA will generally not
consider comments or comment contents located outside of the primary
submission (i.e., on the web, cloud, or other file sharing system).
Commenters who would like the EPA to further consider in this
rulemaking comments relevant to this rulemaking that they previously
provided on any other rulemaking or request for information (e.g., the
Greenhouse Gas Reporting Rule: Revisions and Confidentiality
Determinations for Petroleum and Natural Gas Systems, Docket ID No.
EPA-HQ-OAR-2023-0234, the Methane Emissions Reduction Program Request
for Information, Docket ID No. EPA-HQ-OAR-2022-0875, and the Standards
of Performance for New, Reconstructed, and Modified Sources and
Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector
Climate Review, Docket ID No. EPA-HQ-OAR-2021-0317) must submit those
comments to the EPA during this proposal's comment period. Please visit
<a href="https://www.epa.gov/dockets/commenting-epa-dockets">https://www.epa.gov/dockets/commenting-epa-dockets</a> for additional
submission methods; the full EPA public comment policy; information
about CBI, PBI, or multimedia submissions, and general guidance on
making effective comments.
Participation in virtual public hearing. The EPA will begin pre-
registering speakers for the hearing no later than one business day
after publication in the Federal Register. To register to speak at the
virtual hearing, please use the online registration form available at
<a href="https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program">https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program</a> or contact us by email at <a href="/cdn-cgi/l/email-protection#5439312624143124357a333b22"><span class="__cf_email__" data-cfemail="5a373f282a1a3f2a3b743d352c">[email protected]</span></a>. The last day
to pre-register to speak at the hearing will be February 7, 2024. On
February 9, 2024, the EPA will post a general agenda that will list
pre-registered speakers in approximate order at <a href="https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program">https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program</a>.
The EPA will make reasonable efforts to follow the schedule as
closely as practicable on the day of the hearing; however, please plan
for the hearings to run either ahead of schedule or behind schedule.
Each commenter will have 4 minutes to provide oral testimony. The
EPA encourages commenters to provide the EPA with a copy of their oral
testimony electronically (via email) by emailing it to <a href="/cdn-cgi/l/email-protection#472a2235370722372669202831"><span class="__cf_email__" data-cfemail="adc0c8dfddedc8ddcc83cac2db">[email protected]</span></a>.
The EPA also recommends submitting the text of your oral testimony as
written comments to the rulemaking docket.
[[Page 5319]]
The EPA may ask clarifying questions during the oral presentations
but will not respond to the presentations at that time. Written
statements and supporting information submitted during the comment
period will be considered with the same weight as oral testimony and
supporting information presented at the public hearing.
Please note that any updates made to any aspect of the hearing will
be posted online at <a href="https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program">https://www.epa.gov/inflation-reduction-act/methane-emissions-reduction-program</a>. While the EPA expects the hearing
to go forward as set forth above, please monitor our website or contact
us by email at <a href="/cdn-cgi/l/email-protection#3558504745755045541b525a43"><span class="__cf_email__" data-cfemail="2c41495e5c6c495c4d024b435a">[email protected]</span></a> to determine if there are any updates. The
EPA does not intend to publish a document in the Federal Register
announcing updates.
If you require the services of an interpreter or special
accommodation such as audio description, please pre-register for the
hearing with the public hearing team and describe your needs by
February 2, 2024. The EPA may not be able to arrange accommodations
without advanced notice.
Regulated entities. This is a proposed regulation. If finalized,
the regulation would affect certain owners or operators of facilities
in certain segments of the petroleum and natural gas systems industry
that report more than 25,000 metric tons (mt) of carbon dioxide
equivalent (CO<INF>2</INF>e) pursuant to the requirements codified at
40 CFR part 98, subpart W (Petroleum and Natural Gas Systems)
(hereafter referred to as ``part 98, subpart W''). Per the requirements
of CAA section 136(d), the industry segments to which the waste
emissions charge may apply are offshore petroleum and natural gas
production, onshore petroleum and natural gas production, onshore
natural gas processing, onshore 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, and onshore natural gas
transmission pipeline. Regulated categories and entities include, but
are not limited to, those listed in Table 1 of this preamble:
Table 1--Examples of Affected Entities by Category
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North American Industry
Category Classification System Examples of affected facilities
(NAICS)
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Petroleum and Natural Gas Systems.............. 486210 Pipeline transportation of natural
221210 gas.
211120 Natural gas distribution facilities.
211130 Crude petroleum extraction.
Natural gas extraction.
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Table 1 of this preamble is not intended to be exhaustive, but
rather provides a guide for readers regarding facilities likely to be
affected by this proposed action. This table lists the types of
facilities that the EPA is now aware could potentially be affected by
this action. Other types of facilities than those listed in the table
could also be subject to reporting requirements. To determine whether
you would be affected by this proposed action, you should carefully
examine the applicability criteria found in 40 CFR part 99, subpart A
(General Provisions). If you have questions regarding the applicability
of this action to a particular facility, consult the person listed in
the FOR FURTHER INFORMATION CONTACT section.
Acronyms and abbreviations. The following acronyms and
abbreviations are used in this document.
AMLD Advanced Mobile Leak Detection
API American Petroleum Institute
ASTM American Society for Testing and Materials
BOEM Bureau of Ocean Energy Management
CAA Clean Air Act
CBI confidential business information
CEMS continuous emission monitoring system
CFR Code of Federal Regulations
CH<INF>4</INF> methane
CO<INF>2</INF> carbon dioxide
CO<INF>2</INF>e carbon dioxide equivalent
e-GGRT electronic Greenhouse Gas Reporting Tool
EF emission factor
EG emission guidelines
EIA Energy Information Administration
EPA U.S. Environmental Protection Agency
ET Eastern time
FAQ frequently asked question
FR Federal Register
GHG greenhouse gas
GHGRP Greenhouse Gas Reporting Program
GOR gas-to-oil ratio
GRI Gas Research Institute
GWP Global Warming Potential
IRA Inflation Reduction Act of 2022
ICR Information Collection Request
ISBN International Standard Book Number
ISO International Standards Organization
LDC local distribution company
LNG liquified natural gas
mmBtu million British thermal units
MMscf million standard cubic feet
mt metric tons
N<INF>2</INF>O nitrous oxide
NAICS North American Industry Classification System
NGLs natural gas liquids
NIST National Institute of Standards and Technology
NSPS new source performance standards
OEM original equipment manufacturer
OGI optical gas imaging
OMB Office of Management and Budget
PBI proprietary business information
ppm parts per million
PRA Paperwork Reduction Act
RFA Regulatory Flexibility Act
RY reporting year
scfh standard cubic feet per hour
TSD technical support document
U.S. United States
UMRA Unfunded Mandates Reform Act of 1995
UNFCCC United Nations Framework Convention on Climate Change
VOC volatile organic compound
WEC waste emissions charge
WWW World Wide Web
Table of Contents
I. Background
A. How is this Preamble Organized?
B. Executive Summary
C. Background and Related Actions
D. Legal Authority
II. Requirements To Implement the Waste Emissions Charge
A. Proposed Definitions To Support WEC Implementation
B. Waste Emissions Thresholds
C. Common Ownership or Control for Netting of Emissions
D. Exemptions to the Waste Emissions Charge
III. General Requirements of the Proposed Rule
A. WEC Reporting Requirements
B. Remittance and Assessment of WEC
C. Authorizing the Designated Representative
D. General Recordkeeping Requirements
E. General Provisions, Including Auditing and Compliance and
Enforcement
IV. Proposed Confidentiality Determinations for Certain Data Reporting
Elements
A. Overview and Background
B. Proposed Confidentiality Determinations
C. Proposed Amendments to 40 CFR Part 2
D. Proposed Changes to Confidentiality Determinations for Data
Elements Reported Under Subpart W
[[Page 5320]]
E. Request for Comments on Proposed Category Assignments,
Confidentiality Determinations, or Reporting Determinations
V. Impacts of the Proposed Rule
VI. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 14094: Modernizing Regulatory Review
B. Paperwork Reduction Act (PRA)
C. Regulatory Flexibility Act (RFA)
D. Unfunded Mandates Reform Act (UMRA)
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks
H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations and
Executive Order 14096: Revitalizing our Nation's Commitment to
Environmental Justice for All
K. Determination under CAA Section 307(d)
I. Background
A. How is this preamble organized?
The first section (section I.) of this preamble contains background
information regarding the proposed rule. This section also discusses
the EPA's legal authority under the Clean Air Act (CAA) to promulgate
implementing regulations for the waste emissions charge, proposed to be
codified at 40 CFR part 99 (hereafter referred to as ``part 99'').
Section I. of the preamble also discusses the EPA's legal authority to
make confidentiality determinations for new data elements included in
waste emissions charge filings (WEC filings) required by the proposed
rule. Section II. of this preamble contains detailed information on the
proposed provisions necessary to implement CAA section 136(c) through
(g), including exemptions. Section III. of this preamble describes the
general requirements for the proposed rule. Section IV. of this
preamble discusses the proposed confidentiality determinations for new
data reporting elements for the proposed part 99 and also discusses
confidentiality determinations for two data elements reported under
part 98, subpart W. Section V. of this preamble discusses the impacts
of the proposed part 99. Section VI. of this preamble describes the
statutory and Executive order requirements applicable to this proposed
action.
B. Executive Summary
In August 2022, Congress passed, and President Biden signed, the
Inflation Reduction Act of 2022 (IRA) into law. Section 60113 of the
IRA amended the CAA by adding section 136, ``Methane Emissions and
Waste Reduction Incentive Program for Petroleum and Natural Gas
Systems.'' CAA section 136(c) directs the Administrator of the EPA to
impose and collect a ``Waste Emissions Charge'' on methane emissions
that exceed statutorily specified waste emissions thresholds from
owners or operators of applicable facilities. The waste emissions
threshold is a facility-specific amount of metric tons of methane
emissions calculated using the segment-specific methane intensity
thresholds defined in CAA section 136(f)(1) through (3) and a
facility's natural gas throughput (or oil throughput in certain
circumstances). Facilities that have methane emissions below the
threshold would not be required to pay the charge; facilities that have
emissions above the threshold would be required to pay the charge. The
waste emissions charge, or WEC, is specified in CAA section 136 to
begin for emissions occurring in 2024 at $900 per metric ton of methane
exceeding the threshold, increasing to $1,200 per metric ton of methane
in 2025, and to $1,500 per metric ton of methane in 2026 and years
after. The WEC only applies to the subset of a facility's emissions
that are above the waste emissions threshold.
The WEC program applies to facilities that report more than 25,000
mt CO<INF>2</INF>e of greenhouse gases emitted per year pursuant to the
Greenhouse Gas Reporting Rule's requirements for the petroleum and
natural gas systems source category (codified as 40 CFR part 98,
subpart W).\1\ An applicable facility, as defined in CAA section
136(d), is a facility within the following industry segments (as the
following industry segments are defined in part 98, subpart W): onshore
petroleum and natural gas production, offshore petroleum and natural
gas production, onshore petroleum and natural gas gathering and
boosting, onshore natural gas processing, onshore gas transmission
compression, onshore natural gas transmission pipeline, underground
natural gas storage, liquefied natural gas import and export equipment,
and liquefied natural gas storage.\2\ Congress structured the WEC so
that it focuses on high-emitting oil and gas facilities (i.e., those
with emissions greater than 25,000 mt CO<INF>2</INF>e of greenhouse
gases emitted per year and that have a methane emissions intensity in
excess of the statutory threshold).
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\1\ 42 U.S.C. 7436(c) (``The Administrator shall impose and
collect a charge on methane emissions that exceed an applicable
waste emissions threshold under subsection (f) from an owner or
operator of an applicable facility that reports more than 25,000
metric tons of carbon dioxide equivalent of greenhouse gases emitted
per year pursuant to subpart W of part 98 of title 40, Code of
Federal Regulations, regardless of the reporting threshold under
that subpart.'').
\2\ 42 U.S.C. 7436(d).
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CAA section 136 defines three important elements of the WEC
program: (1) waste emissions thresholds; (2) netting of emissions
across different facilities; and (3) exemptions for certain emissions
and facilities. Facilities may owe a WEC obligation if their subpart W
reported emissions exceed facility-specific waste emissions thresholds
specified in CAA section 136(f).\3\ Facility efficiency in terms of
methane emissions per unit of production or throughput would have a
large impact on the amount of the WEC owed, with more efficient
facilities expected to have emissions falling below the specified
thresholds.
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\3\ 42 U.S.C. 7436(f)(1-3).
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Some facilities may have emissions that are below the waste
emissions thresholds, and some facilities may have emissions above the
thresholds. CAA section 136(f)(4) allows facilities under common
ownership or control to net emissions across those facilities, which
could result in a reduced total charge, or avoidance of the charge.\4\
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\4\ 42 U.S.C. 7436(f)(4) (``In calculating the total emissions
charge obligation for facilities under common ownership or control,
the Administrator shall allow for the netting of emissions by
reducing the total obligation to account for facility emissions
levels that are below the applicable thresholds within and across
all applicable segments identified in subsection (d).'').
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In addition, there are three exemptions that may lower a facility's
WEC or exempt the facility entirely from the charge. The first
exemption, found in CAA section 136(f)(5), exempts from the charge
emissions occurring at facilities in the onshore or offshore petroleum
and natural gas production industry segments that are caused by
eligible delays in environmental permitting of gathering or
transmission infrastructure.\5\ The second exemption, found in CAA
section 136(f)(6), exempts from the charge, if certain conditions are
met, those facilities that are subject to and in compliance with final
methane
[[Page 5321]]
emissions requirements promulgated pursuant to CAA sections 111(b) and
(d).\6\ This exemption becomes available only if a determination is
made by the Administrator that such final requirements are approved and
in effect in all states with respect to the applicable facilities, and
that the emissions reductions resulting from those final requirements
will achieve equivalent or greater emission reductions as would have
resulted from the EPA's proposed methane emissions requirements from
2021.\7\ The third exemption, found in CAA section 136(f)(7), exempts
from the charge reporting-year emissions from wells that are
permanently shut in and plugged.\8\ In this action, the EPA proposes
specific requirements for eligibility for each of these exemptions.
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\5\ 42 U.S.C. 7436(f)(5). (``Charges shall not be imposed
pursuant to paragraph (1) on emissions that exceed the waste
emissions threshold specified in such paragraph if such emissions
are caused by unreasonable delay, as determined by the
Administrator, in environmental permitting of gathering or
transmission infrastructure necessary for offtake of increased
volume as a result of methane emissions mitigation
implementation.'')
\6\ 42 U.S.C. 7436(f)(6) (``Charges shall not be imposed
pursuant to subsection (c) on an applicable facility that is subject
to and in compliance with methane emissions requirements pursuant to
subsections (b) and (d) of section 7411 of this title upon a
determination by the Administrator that--(i) methane emissions
standards and plans pursuant to subsections (b) and (d) of section
7411 of this title have been approved and are in effect in all
States with respect to the applicable facilities; and (ii)
compliance with the requirements described in clause (i) will result
in equivalent or greater emissions reductions as would be achieved
by the proposed rule of the Administrator entitled ``Standards of
Performance for New, Reconstructed, and Modified Sources and
Emissions Guidelines for Existing Sources: Oil and Natural Gas
Sector Climate Review'' (86 FR 63110 (November 15, 2021)), if such
rule had been finalized and implemented.'').
\7\ Id.
\8\ 42 U.S.C. 7436(f)(7). ('' Charges shall not be imposed with
respect to the emissions rate from any well that has been
permanently shut-in and plugged in the previous year in accordance
with all applicable closure requirements, as determined by the
Administrator.'')
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The EPA proposes to require that the WEC would be quantified and
paid through a WEC filing submitted no later than March 31 of each
calendar year for methane emissions that occurred in the previous
calendar year (subpart W reporting year). The WEC filing would include
information relevant to calculating the WEC, such as identification of
facilities included in netting, eligibility for exemptions from WEC,
and supporting information necessary for the EPA to verify information
submitted regarding exemptions.
The proposed provisions of part 99 under this rulemaking are
described in further detail in sections II. and III. of this preamble.
C. Background and Related Actions
Congress designed the WEC to work in tandem with several related
EPA programs. The WEC provides an incentive for the early adoption of
methane emission reduction practices and technologies such as those
that required under the Standards of Performance for New,
Reconstructed, and Modified Sources and Emissions Guidelines for
Existing Sources: Oil and Natural Gas Sector Climate Review (NSPS
OOOOb/EG OOOOc), which Congress expected to be promulgated pursuant to
CAA section 111. The sooner facilities adopt the methodologies and
technologies required in those rules, the lower their assessed WEC; at
full implementation of those rules, the EPA expects many of the WEC-
affected facilities will be below the WEC emissions thresholds. To
further support the overall goal of reducing methane emissions, CAA
section 136(a) and (b) also provides $1.55 billion to, among other
things, help finance the early adoption of emissions reduction
methodologies and technologies and to support monitoring of methane
emissions. More detailed background information on the impacts of
methane on public health and welfare and the related regulatory
activities is provided in section I.C.1. of this preamble.
1. How does methane affect public health and welfare?
Elevated concentrations of greenhouse gases (GHGs) including
methane have been warming the planet, leading to changes in the Earth's
climate that are occurring at a pace and in a way that threatens human
health, society, and the natural environment. While the EPA is not
statutorily required to make any particular scientific or factual
findings regarding the impact of GHG emissions on public health and
welfare in support of the proposed WEC, the EPA is providing in this
section a brief scientific background on methane and climate change to
offer additional context for this rulemaking and to help the public
understand the environmental impacts of GHGs such as methane.
As a GHG, methane in the atmosphere absorbs terrestrial infrared
radiation, which in turn contributes to increased global warming and
continuing climate change, including increases in air and ocean
temperatures, changes in precipitation patterns, retreating snow and
ice, increasingly severe weather events, such as hurricanes of greater
intensity, and sea level rise, among other impacts. Methane also
contributes to climate change through chemical reactions in the
atmosphere that produce tropospheric ozone and stratospheric water
vapor. In 2022, atmospheric concentrations of methane increased by
nearly 17 parts per billion (ppb) over 2021 levels to reach 1,912
ppb.\9\ This was the largest increase since the start of the NOAA
atmospheric record in 1984, with current concentrations now more than
two and a half times larger than the preindustrial level.\10\ Methane
is responsible for about one third of all warming resulting from human
emissions of well-mixed GHGs,\11\ and due to its high radiative
efficiency compared to carbon dioxide, methane mitigation is one of the
best opportunities for reducing near-term warming.
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\9\ NOAA, <a href="https://gml.noaa.gov/webdata/ccgg/trends/ch4/ch4_annmean_gl.txt">https://gml.noaa.gov/webdata/ccgg/trends/ch4/ch4_annmean_gl.txt</a>.
\10\ Blunden, J. and T. Boyer, Eds., 2022: ``State of the
Climate in 2021.'' Bull. Amer. Meteor. Soc., 103 (8), Si-S465,
<a href="https://doi.org/10.1175/2022BAMSStateoftheClimate.1">https://doi.org/10.1175/2022BAMSStateoftheClimate.1</a>, 103 (8), Si-
S465, <a href="https://doi.org/10.1175/2022BAMSStateoftheClimate.1">https://doi.org/10.1175/2022BAMSStateoftheClimate.1</a>.
\11\ IPCC, 2021: Summary for Policymakers. In: Climate Change
2021: The Physical Science Basis. Contribution of Working Group I to
the Sixth Assessment Report of the Intergovernmental Panel on
Climate Change [Masson-Delmotte, V., P. Zhai, A. Pirani, S.L.
Connors, C. P[eacute]an, S. Berger, N. Caud, Y. Chen, L. Goldfarb,
M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K.
Maycock, T. Waterfield, O. Yelek[ccedil]i, R. Yu, and B. Zhou
(eds.)]. Cambridge University Press, Cambridge, United Kingdom and
New York, NY, USA, pp. 3-32, doi:10.1017/9781009157896.001.
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Major scientific assessments continue to be released that further
advance our understanding of the climate system and the impacts that
methane and other GHGs have on public health and welfare both for
current and future generations. According to the Intergovernmental
Panel on Climate Change (IPCC) Sixth Assessment Report, ``it is
unequivocal that human influence has warmed the atmosphere, ocean and
land. Widespread and rapid changes in the atmosphere, ocean, cryosphere
and biosphere have occurred.'' \12\ Recent EPA modeling efforts \13\
have also shown that impacts from these changes are projected to vary
regionally within the U.S. For example, large damages are projected
from sea level rise in the Southeast, wildfire smoke in the Western
U.S., and impacts to agricultural crops and rail and road
infrastructure in the Northern Plains. Scientific assessments, EPA
analyses, and updated observations and projections document the rapid
rate of current and future climate change and the potential range
impacts both
[[Page 5322]]
globally and in the United States,\14\ presenting clear support
regarding the current and future dangers of climate change and the
importance of GHG emissions mitigation.
---------------------------------------------------------------------------
\12\ Id.
\13\ (1) EPA. 2021. Technical Documentation on the Framework for
Evaluating Damages and Impacts (FrEDI). U.S. Environmental
Protection Agency, EPA 430-R-21-004.
(2) Hartin C., E.E. McDuffie, K. Novia, M. Sarofim, B. Parthum,
J. Martinich, S. Barr, J. Neumann, J. Willwerth, & A. Fawcett.
Advancing the estimation of future climate impacts within the United
States. EGUsphere doi: 10.5194/egusphere-2023-114, 2023.
\14\ (1) USGCRP, 2018: Impacts, Risks, and Adaptation in the
United States: Fourth National Climate Assessment, Volume II
[Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M.
Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change
Research Program, Washington, DC, USA, 1515 pp. doi: 10.7930/
NCA4.2018. Available at <a href="https://nca2018.globalchange.gov">https://nca2018.globalchange.gov</a>.
(2) IPCC, 2021: Summary for Policymakers. In: Climate Change
2021: The Physical Science Basis. Contribution of Working Group I to
the Sixth Assessment Report of the Intergovernmental Panel on
Climate Change [Masson-Delmotte, V., P. Zhai, A. Pirani, S.L.
Connors, C. P[eacute]an, S. Berger, N. Caud, Y. Chen, L. Goldfarb,
M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K.
Maycock, T. Waterfield, O. Yelek[ccedil]i, R. Yu and B. Zhou
(eds.)]. Cambridge University Press.
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2. Related Actions
As mandated by CAA section 136(c) and (d), the applicability of the
WEC is based upon the quantity of metric tons of CO<INF>2</INF>e
emitted per year pursuant to the requirements of subpart W. Further,
CAA section 136(e) requires that the WEC amount be calculated based
upon methane emissions reported pursuant to subpart W. As a result,
this proposed action builds upon previous subpart W rulemakings.
On August 1, 2023, the EPA proposed revisions to subpart W
consistent with the authority and directives set forth in CAA section
136(h) as well as the EPA's authority under CAA section 114 (88 FR
50282) (hereafter referred to as the ``2023 Subpart W Proposal''). In
that rulemaking, the EPA proposed revisions to require reporting of
additional emissions or emissions sources to address potential gaps in
the total methane emissions reported by facilities to subpart W. For
example, these proposed revisions would add a new emissions source,
referred to as ``other large release events,'' to capture large
emission events that are not accurately accounted for using existing
methods in subpart W. The EPA also proposed revisions to add or revise
existing calculation methodologies to improve the accuracy of reported
emissions, incorporate additional empirical data, and allow owners and
operators of applicable facilities to submit empirical emissions data
that could appropriately demonstrate the extent to which a charge is
owed in implementation of CAA section 136, as directed by CAA section
136(h). The EPA also proposed revisions to existing reporting
requirements to collect data that would improve verification of
reported data, ensure accurate reporting of emissions, and improve the
transparency of reported data. For clarity of discussion within this
preamble, unless otherwise stated, references to provisions of subpart
W (i.e., 40 CFR 98.230 through 98.238) reflect the language as proposed
in the 2023 Subpart W Proposal. The EPA's intention in this proposed
rulemaking is that the final WEC rule would update the proposed cross-
references to subpart W to be consistent with the final Subpart W rule
resulting from the 2023 Subpart W Proposal.
Under the Greenhouse Gas Reporting Program, the EPA also recently
issued a supplemental proposal to a 2022 proposed rule (88 FR 32852,
May 22, 2023), which included proposed updates to the General
Provisions of the Greenhouse Gas Reporting Rule to reflect revised
global warming potentials (GWPs), proposed reporting of GHG data from
additional sectors (i.e., non-subpart W sectors), and proposed
revisions to source categories other than subpart W that would improve
implementation of the Greenhouse Gas Reporting Rule. The proposed
revision to the GWP of methane (from 25 to 28) is expected to lead to a
small increase in the number of facilities that exceed the subpart W
25,000 mt CO<INF>2</INF>e threshold and thus become subject to the
proposed part 99 requirements. This supplemental proposed rule is not
expected to otherwise impact subpart W reporting requirements as they
pertain to the applicability or implementation of the proposed part 99
requirements.
In addition, on November 15, 2021 (86 FR 63110), the EPA proposed
under CAA section 111(b) standards of performance regulating emissions
of methane and volatile organic compounds (VOCs) for certain new,
reconstructed, and modified sources in the oil and natural gas source
category (proposed as 40 CFR part 60, subpart OOOOb) (hereafter
referred to as ``NSPS OOOOb''), as well as emissions guidelines
regulating emissions of methane under CAA section 111(d) for certain
existing oil and natural gas sources (proposed as 40 CFR part 60,
subpart OOOOc) (hereafter referred to as ``EG OOOOc''). The November
15, 2021 proposal (covering both NSPS OOOOb and EG OOOOc)--and which
Congress explicitly referred to in section 136--will be referred to
hereafter as the ``NSPS OOOOb/EG OOOOc 2021 Proposal.'' The NSPS OOOOb/
EG OOOOc 2021 Proposal sought to strengthen standards of performance
previously in effect under section 111(b) of the CAA for new, modified
and reconstructed oil and natural gas sources, and to establish
emissions guidelines under section 111(d) of the CAA for states to
follow in developing plans to limit methane emissions from existing oil
and natural gas sources.
On December 6, 2022, the EPA issued a supplemental proposal to
update, strengthen and expand upon the NSPS OOOOb/EG OOOOc 2021
Proposal (87 FR 74702). The December 6, 2022 supplemental proposal will
be referred to hereafter as ``NSPS OOOOb/EG OOOOc 2022 Supplemental
Proposal.'' This supplemental proposal modified certain standards
proposed in the NSPS OOOOb/EG OOOOc 2021 Proposal and added proposed
requirements for sources not previously covered. Among other things,
the supplemental proposal sought to: ensure that all well sites are
routinely monitored for leaks, with requirements based on the type and
amount of equipment on site; encourage the deployment of innovative and
advanced monitoring technologies by establishing performance
requirements that can be met by a broader array of technologies;
prevent leaks from abandoned and unplugged wells by requiring
documentation that well sites are properly shut-in and plugged before
monitoring is allowed to end; leverage qualified expert monitoring to
identify ``super-emitters'' for prompt mitigation; and strengthen
requirements for flares.
On December 2, 2023, in an action titled, ``Standards of
Performance for New, Reconstructed, and Modified Sources and Emissions
Guidelines for Existing Sources: Oil and Natural Gas Sector Climate
Review,'' the EPA finalized these two rules to reduce air emissions
from the Crude Oil and Natural Gas source category under section 111 of
the Clean Air Act. First, the EPA finalized NSPS OOOOb regulating GHG
(in the form of a limitation on emissions of methane) and VOCs
emissions for the Crude Oil and Natural Gas source category pursuant to
CAA section 111(b)(1)(B) (hereafter, ``NSPS OOOOb''). Second, the EPA
finalized presumptive standards in EG OOOOc to limit GHG emissions (in
the form of methane limitations) from designated facilities in the
Crude Oil and Natural Gas source category, as well as requirements
under the CAA section 111(d) for states to follow in developing,
submitting, and implementing state plans to establish performance
standards (hereafter, ``EG OOOOc'').\15\
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\15\ In this action, the EPA also finalized several related
actions stemming from the joint resolution of Congress, adopted on
June 30, 2021, under the CRA, disapproving the 2020 Policy Rule, and
also finalized a protocol under the general provisions for use of
Optical Gas Imaging.
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The NSPS OOOOb/EG OOOOc 2021 Proposal and Final NSPS OOOOb/EG OOOOc
are relevant to this WEC
[[Page 5323]]
proposal in two ways: first, WEC applicable facilities containing CAA
section 111(b) and (d) facilities that are in compliance with the
applicable standards are likely to have emissions below the thresholds
specified in section II.B. of this preamble due to mitigation resulting
from meeting the methane emissions requirements of NSPS OOOOb or EG
OOOOc-implementing state and Federal plans, and therefore would not be
expected to incur charges under the WEC program; and second, compliance
with applicable standards (if certain criteria are met) may exempt
facilities from the WEC under the regulatory compliance exemption
outlined at CAA section 136(f)(6) (discussed in section II.D.2. of this
preamble). As a part of the NSPS OOOOb/EG OOOOc 2022 Supplemental
Proposal, the EPA requested comment on the criteria and approaches that
the Administrator should consider in making the CAA section
136(f)(6)(A)(ii) equivalency determination, which is discussed at
section II.D.2. of this preamble.
The EPA also opened a non-regulatory docket on November 4, 2022 and
issued a Request for Information (RFI) seeking public input to inform
program design related to CAA section 136.\16\ As part of this request,
the EPA sought input on issues that should be considered related to
implementation of the WEC. The comment period closed on January 18,
2023.
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\16\ Docket ID No. EPA-HQ-OAR-2022-0875.
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The 2023 Subpart W Proposal, the NSPS OOOOb/EG OOOOc 2021 Proposal,
the NSPS OOOOb/EG OOOOc 2022 Supplemental Proposal, and the November
2022 request for information are relevant to this proposal. While the
EPA has reviewed or will review relevant comments submitted as part of
the rulemaking actions and request for information, the EPA is not
obligated to respond to those comments in this action since the comment
solicitations did not accompany a proposal regarding the WEC.
Commenters who would like the EPA to formally consider in this
rulemaking any relevant comments previously submitted must resubmit
those comments to the EPA during this proposal's comment period.
In addition to the WEC requirement, and the related revisions to
subpart W to facilitate accuracy of reporting and charge calculation,
as noted in section I.C. of this preamble, CAA sections 136(a) and (b)
provide $1.55 billion for the Methane Emissions Reduction Program,
including for incentives for methane mitigation and monitoring. The EPA
is partnering with the U.S. Department of Energy and National Energy
Technology Laboratory to provide financial assistance for monitoring
and reducing methane emissions from the oil and gas sector, as well as
technical assistance to help implement solutions for monitoring and
reducing methane emissions. As designed by Congress, these incentives
were intended to complement the regulatory programs and to help
facilitate the transition to a more efficient petroleum and natural gas
industry.
D. Legal Authority
The EPA is proposing this rule under its newly established
authority provided in CAA section 136. As noted in section I.B. of this
preamble, the IRA added CAA section 136, ``Methane Emissions and Waste
Reduction Incentive Program for Petroleum and Natural Gas Systems,''
which requires that the EPA impose and collect an annual specified
charge on methane emissions that exceed an applicable waste emissions
threshold from an owner or operator of an applicable facility that
reports more than 25,000 mt CO<INF>2</INF>e of greenhouse gases emitted
per year pursuant to subpart W of the GHGRP. Under CAA section 136, an
``applicable facility'' is a facility within nine of the ten industry
segments subject to subpart W, as currently defined in 40 CFR 98.230
(excluding natural gas distribution).
The EPA is also proposing elements of this rule under its existing
CAA authority provided in CAA section 114, as well as CAA section 301.
CAA section 114(a)(1) authorizes the Administrator to require emissions
sources, persons subject to the CAA, or persons whom the Administrator
believes may have necessary information to monitor and report emissions
and provide other information the Administrator requests for the
purposes of carrying out any provision of the CAA (except for a
provision of title II with respect to manufacturers of new motor
vehicles or new motor vehicle engines). Thus, CAA section 114(a)(1)
additionally provides the EPA broad authority to require the
information that would be required by this proposed rule because the
information is relevant for carrying out CAA section 136. Additionally,
CAA section 301(a)(1) provides that the EPA is authorized to prescribe
such regulations ``as are necessary to carry out [its] functions under
[the CAA].''
The Administrator has determined that this action is subject to the
provisions of section 307(d) of the CAA. Section 307(d) contains a set
of procedures relating to the issuance and review of certain CAA rules.
In addition, pursuant to sections 114, 301, and 307 of the CAA, the
EPA is publishing proposed confidentiality determinations for the new
data elements required by this proposed regulation.
II. Requirements To Implement the Waste Emissions Charge
This section summarizes the EPA's proposed approach to calculating
WEC, including how WEC would be calculated at the facility level, how
netting of emissions from facilities under common ownership or control
would be applied, the EPA's interpretation of common ownership or
control, and how the exemptions established in CAA section 136(f) would
be implemented.
A. Proposed Definitions To Support WEC Implementation
In accordance with CAA section 136(d), applicable facilities under
part 99 are those facilities within certain industry segments as
defined under part 98, subpart W. Thus, we are proposing several
definitions within the general provisions of 40 CFR 99.2. First, as the
statute specifies, we are proposing a definition of ``applicable
facility'' to mean a facility within one or more of the following
industry segments: onshore petroleum and natural gas production,
offshore petroleum and natural gas production, onshore petroleum and
natural gas gathering and boosting, onshore natural gas processing,
onshore natural gas transmission compression, onshore natural gas
transmission pipeline, underground natural gas storage, LNG import and
export equipment, or LNG storage, as those industry segments are
defined in 40 CFR 98.230 of subpart W.\17\ A single reporting facility
under part 98, subpart W, typically consists of operations within a
single industry segment. However, for certain industry segments a
single reporting facility may represent operations in two or more
industry segments. Industry segments that potentially may exist within
the same reporting facility are onshore natural gas processing, onshore
natural gas transmission compression, underground natural gas storage,
LNG import and export equipment, and LNG storage. To accommodate for
such facilities, we are proposing within the definition of ``applicable
facility'' that such operations would be considered a single applicable
facility under part 99.
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\17\ See 42 U.S.C. 7436(d).
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[[Page 5324]]
We are also proposing a definition of ``WEC applicable facility''
in 40 CFR 99.2, which would mean an applicable facility for which the
owner or operator of the subpart W reporting facility reported GHG
emissions under subpart W of more than 25,000 mt CO<INF>2</INF>e--the
amount set in the statute. In cases where a subpart W facility reports
under two or more of the industry segments listed in the previous
paragraph, the EPA proposes that the 25,000 mt CO<INF>2</INF>e
threshold would be evaluated based on the total facility GHG emissions
reported to subpart W across all of the industry segments (i.e., the
facility's total subpart W GHGs). As discussed in section II.B.1. of
this preamble, the waste emissions threshold is the facility-specific
threshold, based upon an industry segment-specific methane intensity
threshold, above which the EPA must impose and collect the WEC. For the
purposes of determining the waste emissions threshold for a WEC
applicable facility that operates within multiple industry segments,
the EPA proposes that each industry segment would be assessed
separately (i.e., using industry segment-specific throughput and
methane intensity threshold) and then summed together to determine the
waste emissions threshold for the facility. The EPA proposes that this
approach would be used in all cases where a WEC applicable facility
contains equipment in multiple subpart W industry segments.
The EPA requests comment on an alternative definition of WEC
applicable facility as it applies to subpart W facilities that report
under two or more industry segments. This alternative approach would
assess these facilities against the 25,000 mt CO<INF>2</INF>e
applicability threshold using the CO<INF>2</INF>e reported under
subpart W for each individual segment at the facility rather than the
total facility subpart W CO<INF>2</INF>e reported across all segments.
CAA section 136(d) defines an applicable facility as one ``within'' the
nine industry segments subject to the WEC and does not specify that an
applicable facility is in one and only one industry segment. The EPA
understands this to mean that an applicable facility constitutes an
entire subpart W facility, including those that report under more than
one segment. Thus, based on the statutory text, the EPA proposes to
assess WEC applicability based on the entire subpart W facility's
emissions. Based on historic subpart W data, no more than two dozen
facilities report data for multiple segments, and when total subpart W
CO<INF>2</INF>e is summed across all segments at these facilities,
almost all of these facilities remain below the 25,000 mt
CO<INF>2</INF>e threshold. Historic data also show that the industry
segments (onshore natural gas processing, onshore natural gas
transmission compression, and underground natural gas storage) located
at these facilities generally have methane emissions below the waste
emissions thresholds. The proposed approach of using total subpart W
facility CO<INF>2</INF>e for determining WEC applicability therefore
would not result in a significant number of facilities being regulated
under WEC compared to an approach that assessed applicability using
subpart W CO<INF>2</INF>e for each individual industry segment at a
facility. Based on historic data, the EPA does not expect the very
small number of facilities with operations in multiple subpart W
segments that could be subject to the WEC under the proposed approach
to experience a substantially different financial impact under the
alternative approach.
We are also proposing a definition for ``WEC applicable emissions''
in 40 CFR 99.2, which would mean the annual methane emissions, as
calculated using equations specified in part 99, from a WEC applicable
facility that are either equal to, below, or exceeding the waste
emissions threshold for the facility after consideration of any
applicable exemptions. The proposed calculation methodology for WEC
applicable emissions is addressed in section II.B.2. of this preamble.
We are also proposing a definition for ``facility applicable
emissions'' in 40 CFR 99.2 which would mean the annual methane
emissions, as calculated using equations specified in part 99, from a
WEC applicable facility that are either equal to, below, or exceeding
the waste emissions threshold for the facility prior to consideration
of any applicable exemptions.
The proposed provisions of this part would apply to WEC obligated
parties and WEC applicable facilities. In addition to the proposed
definition for WEC applicable facility discussed earlier in this
section, we are proposing a definition for the term WEC obligated party
in 40 CFR 99.2. The term WEC obligated party refers to the owners or
operators of one or more WEC applicable facilities. For WEC applicable
facilities that have more than one owner or operator, we are proposing
that the WEC obligated party is an owner or operator selected by a
binding agreement among the owners and operators of the WEC applicable
facility. The EPA anticipates that such an agreement would be similar
to those used in carrying out 40 CFR 98.4(b) under the GHGRP.
For the purposes of submitting the WEC filing, we are proposing
that the WEC obligated party's WEC applicable facilities are the WEC
applicable facilities for which it is the owner or operator (including
through binding agreement as noted above), as of December 31 of each
reporting year. Under the proposed approach, the WEC obligated party
would be responsible for any WEC obligation from facilities for which
it was the facility owner or operator as of December 31 of the
reporting year. The EPA recognizes that facilities may be acquired or
divested at any time in the year, and that under the proposed approach
the year-end owner or operator would be responsible for data and any
corresponding WEC obligation for the entire reporting year. The EPA
believes that this approach is both reasonable and necessary for
implementation of the WEC program. First, subpart W data reporting uses
the same approach; the facility owner or operator as of December 31 is
responsible for emissions for the entire year. Because the subpart W
data is inextricably linked to the WEC filing, it would be
inappropriate to have different facility owners or operators under each
regulation. Specifically, different owners or operators for the same
facility under subpart W and the WEC program could lead to challenges
for WEC filings and associated data verification, and increase industry
burden by requiring significant coordination between different
companies. Second, subpart W data are reported on an annual basis, and
there is no means by which methane emissions could be accurately
allocated across multiple owners or operators in a single year. For
example, emissions could not be pro-rated based on time of ownership
over the reporting year because emissions do not occur uniformly over
time, and emissions from certain sources cannot be linked to specific
times. Similarly, there is not a direct relationship between methane
emissions and oil and natural gas production, so temporal data on
hydrocarbon production could not be used to accurately allocate
emissions. The EPA therefore believes it would be neither practical nor
accurate for the reporting responsibility and potential WEC obligation
for a single facility to be split among multiple WEC obligated parties.
The EPA also recognizes that a facility's owner or operator, and
thus its WEC obligated party, may change between December 31 and March
31. In such situations, under the proposed approach the WEC obligated
party associated with a facility as of December
[[Page 5325]]
31 would remain responsible for accounting for that facility in its WEC
filing and be responsible for any WEC obligation associated with that
facility.
The EPA invites comments on these proposed definitions and whether
additional definitions would help with the implementation of the WEC.
The EPA requests comment on the proposed definition of WEC obligated
party being responsible for all facilities for which it was the
facility owner or operator as of December 31, regardless of when in the
reporting year it became a facility's owner or operator. The EPA
requests comment on alternative definitions of WEC obligated party,
including those that would allocate facility subpart W data to multiple
WEC obligated parties and a definition that would place the WEC
obligation and reporting requirements on the WEC obligated party that
was a facility's owner or operator at the time of the WEC filing (i.e.,
as of March 31 of the year following the reporting year rather than
December 31 of the reporting year). For alternative definitions that
would allocate subpart W data, the EPA requests comment on potential
methodologies that would accurately split the annual subpart W data
across multiple WEC obligated parties.
B. Waste Emissions Thresholds
The CAA establishes a waste emissions threshold that is defined in
terms of industry segment-specific methane intensity thresholds
applicable to certain facilities that report GHG emissions under
subpart W of the GHGRP. The industry segment-specific methane intensity
thresholds specified in CAA 136(f) and listed in Table 2 of this
preamble are based on a rate of methane emissions per amount of natural
gas or oil sent to sale from or through a facility. The industry
segment-specific methane intensity thresholds are generally defined in
terms of a percentage of throughput (e.g., 0.002 percent of natural gas
sent to sale). However, since the WEC is based on metric tons of
methane (e.g., $900/metric ton) that exceed the threshold, for the
purposes of calculating the number of metric tons that are subject to
the WEC, we are proposing to calculate the facility waste emissions
thresholds in metric tons of methane.
For the onshore and offshore petroleum and natural gas production
industry segments, CAA section 136(f) differentiates based on whether
the facility is sending natural gas to sale or only sending oil to
sale, and if the facility does not send natural gas to sale, the
threshold is based on methane emissions per amount of oil sent to sale.
For facilities that are not in the onshore or offshore production
industry segments, the industry segment-specific methane intensity
thresholds are based on the amount of natural gas sent to sale from or
through the facility. The industry segment-specific methane intensity
thresholds are applied to the natural gas or petroleum throughput
attributable to that industry segment to calculate facility-specific
waste emissions thresholds. See Table 2 for an overview of how the
waste emissions thresholds are calculated. Facility waste emissions
thresholds are compared to reported methane emissions; facilities with
methane emissions that exceed the waste emissions threshold may be
subject to the WEC. For WEC applicable facilities under common
ownership or control of a single WEC obligated party, the WEC
applicable emissions for each facility are summed to calculate the net
emissions for that WEC obligated party.
Subpart W requires reporting of natural gas throughput by thousand
standard cubic feet, oil by barrels, and methane by metric ton. As a
practical matter, since the WEC is based on a dollar per metric ton of
methane, the waste emissions thresholds must generally be converted
into metric tons of methane for comparison against reported methane,
generally by multiplying the thresholds by the density of methane.
Table 2--Industry Segment Throughput Metrics and Methane Intensities
------------------------------------------------------------------------
Industry segment-
Industry segment Throughput metric \a\ specific methane
intensity
------------------------------------------------------------------------
Onshore petroleum and natural The quantity of 0.20 percent of
gas production. natural gas produced natural gas
Offshore petroleum and natural from producing wells sent to sale
gas production. that is sent to sale from facility;
in the calendar year, or 10 metric
in thousand standard tons of methane
cubic feet; or the per million
quantity of crude oil barrels of oil
produced from sent to sale
producing wells that from facility,
is sent to sale in if facility
the calendar year, in sends no
barrels, if facility natural gas to
sends no natural gas sale.
to sale.
Onshore petroleum and natural The quantity of 0.05 percent of
gas gathering and boosting. natural gas natural gas
transported through sent to sale
the facility to a from or through
downstream endpoint facility.
such as a natural gas
processing facility,
a natural gas
transmission
pipeline, a natural
gas distribution
pipeline, a storage
facility, or another
gathering and
boosting facility in
the calendar year, in
thousand standard
cubic feet.
Onshore natural gas processing The quantity of ................
residue gas leaving
that has been
processed by the
facility and any gas
that passes through
the facility to sale
without being
processed by the
facility in the
calendar year, in
thousand standard
cubic feet.
Onshore natural gas The quantity of 0.11 percent of
transmission compression. natural gas natural gas
transported through sent to sale
the compressor from or through
station in the facility.
calendar year, in
thousand standard
cubic feet.
Onshore natural gas The quantity of ................
transmission pipeline. natural gas
transported through
the facility and
transferred to third
parties such as LDCs
or other transmission
pipelines in the
calendar year, in
thousand standard
cubic feet.
Underground natural gas The quantity of ................
storage. natural gas withdrawn
from storage and sent
to sale in the
calendar year, in
thousand standard
cubic feet.
LNG import and export For LNG import 0.05 percent of
equipment. equipment, the natural gas
quantity of LNG sent to sale
imported that is sent from or through
to sale in the facility.
calendar year, in
thousand standard
cubic feet; for LNG
export equipment, the
quantity of LNG
exported that is sent
to sale in the
calendar year, in
thousand standard
cubic feet.
LNG storage................... The quantity of LNG ................
withdrawn from
storage and sent to
sale in the calendar
year, in thousand
standard cubic feet.
------------------------------------------------------------------------
\a\ Throughput metrics in this table are based on the proposed subpart W
reporting elements in the 2023 Subpart W Proposal (88 FR 50282).
1. Facility Waste Emissions Thresholds
CAA section 136(f)(1) through (3) establishes facility-specific
waste emissions thresholds above which the EPA must impose and collect
the WEC. The CAA defines waste emissions threshold requirements, and
establishes the method for calculation of the charge,
[[Page 5326]]
for nine segments of the oil and gas industry.
CAA section 136(f)(1) requires the EPA to impose and collect the
WEC on facilities in the onshore petroleum and natural gas production
and offshore petroleum and natural gas production industry segments
with methane emissions, in metric tons, that exceed either 0.20 percent
of the natural gas sent to sale from the facility or, if no natural gas
is sent to sale, 10 metric tons of methane per million barrels of oil
sent to sale from the facility. To determine the waste emissions
threshold from a WEC applicable facility in the onshore petroleum and
natural gas production and the offshore petroleum and natural gas
production industry segments, the EPA is proposing two equations based
on whether the facility sends natural gas to sale, which reflect the
statutory text at 136(f)(1)(A) and (B). For onshore and offshore
petroleum and natural gas production WEC applicable facilities that
send natural gas to sale, we are proposing to use equation B-1 of 40
CFR 99.20(a). This equation multiplies the annual quantity of natural
gas sent to sale from a WEC applicable facility by 0.002 (i.e., 0.20
percent) and the density of methane (0.0192 metric tons per thousand
standard cubic feet).\18\ For onshore and offshore petroleum and
natural gas production facilities that have no natural gas sent to
sale, we are proposing to use equation B-2 of 40 CFR 99.20(b). Similar
to proposed equation B-2, the annual quantity of oil sent to sale from
a WEC applicable facility would be multiplied by 10 metric tons of
methane per million barrels of oil.\19\
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\18\ Equation B-1 reflects the statutory text at 136(f)(1)(A),
which states: ``With respect to imposing and collecting the charge
under subsection (c) for an applicable facility [in the onshore
petroleum and natural gas production and offshore petroleum and
natural gas production industry segments], the Administrator shall
impose and collect the charge on the reported metric tons of methane
emissions from such facility that exceed (A) 0.20 percent of the
natural gas sent to sale from such facility . . .'' 42 U.S.C.
7436(f)(1)(A).
\19\ Equation B-2 reflects the statutory text at 136(f)(1)(B),
which states: ``With respect to imposing and collecting the charge
under subsection (c) for an applicable facility [in the onshore
petroleum and natural gas production and offshore petroleum and
natural gas production industry segments], the Administrator shall
impose and collect the charge on the reported metric tons of methane
emissions from such facility that exceed . . . (B) 10 metric tons of
methane per million barrels of oil sent to sale from such facility,
if such facility sent no natural gas to sale.'' 42 U.S.C.
7436(f)(1)(B).
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For WEC applicable facilities in the onshore petroleum and natural
gas gathering and boosting, onshore natural gas processing, LNG import
and export equipment, and LNG storage industry segments, CAA section
136(f)(2) requires the EPA to impose and collect WEC on facilities with
reported methane emissions, in metric tons, that exceed 0.05 percent of
the natural gas sent to sale from or through such facility. To
determine the waste emissions threshold from a WEC applicable facility
in these industry segments, we are proposing to use equation B-3 under
40 CFR 99.20(c). This equation would multiply the annual quantity of
natural gas sent to sale from or through a WEC applicable facility by
0.0005 (i.e., 0.05 percent) and the density of methane (0.0192 metric
tons per thousand standard cubic feet) to determine the facility-level
waste emissions threshold.\20\ The EPA notes that certain facilities in
the gathering and boosting and natural gas processing industry segments
may have zero throughput values using the proposed approach, because
these facilities either receive no natural gas, or process or dispose
of natural gas received, in a manner that results in sending zero
quantities of natural gas to sale. Treatment of these facilities is
discussed in section II.B.6. of this preamble.
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\20\ Equation B-3 reflects the statutory text at 136(f)(2),
which states: ``With respect to imposing and collecting the charge
under subsection (c) for an applicable facility in [the onshore
petroleum and natural gas gathering and boosting, onshore natural
gas processing, LNG import and export equipment, and LNG storage
industry segments], the Administrator shall impose and collect the
charge on the reported metric tons of methane emissions that exceed
0.05 percent of the natural gas sent to sale from or through such
facility.'' 42 U.S.C. 7436(f)(2).
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CAA section 136(f)(3) requires the EPA to impose and collect WEC on
WEC applicable facilities in the onshore natural gas transmission
compression, onshore natural gas transmission pipeline, and underground
natural gas storage industry segments with methane emissions, in metric
tons, that exceed 0.11 percent of the natural gas sent to sale from or
through such facility. We are proposing that equation B-4 under 40 CFR
99.20(d) be used to calculate the waste emissions threshold from a WEC
applicable facility in these industry segments. Using proposed equation
B-4 the EPA would multiply the annual quantity of natural gas sent to
sale from or through a WEC applicable facility by 0.0011 (i.e., 0.11
percent) and the density of methane (0.0192 metric tons per thousand
standard cubic feet) to determine the facility-level waste emissions
threshold.\21\
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\21\ Equation B-4 reflects the statutory text at 136(f)(3),
which states: ``With respect to imposing and collecting the charge
under subsection (c) for an applicable facility in [the onshore
natural gas transmission compression, onshore natural gas
transmission pipeline, and underground natural gas storage industry
segments], the Administrator shall impose and collect the charge on
the reported metric tons of methane emissions that exceed 0.11
percent of the natural gas sent to sale from or through such
facility.'' 42 U.S.C. 7436(f)(3).
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The annual quantity of natural gas sent to sale from or through a
facility reported under subpart W is reported in units of thousand
standard cubic feet of natural gas per year, while facility methane
emissions are reported in metric tons. The EPA is proposing to
interpret the industry segment-specific methane intensity thresholds
(i.e., 0.20 percent, 0.05 percent, and 0.11 percent) indicated in CAA
section 136(f)(1) through (3) to be in units of thousand standard cubic
feet of methane of emissions per thousand standard cubic feet of
natural gas. This requires reconciliation of methane emissions reported
on mass basis and throughput reported on a volumetric basis. Because
the waste emission charge is assessed using dollars per metric ton, the
amount by which a facility is below or exceeding the waste emissions
threshold must ultimately be converted to metric tons. The EPA's
proposed approach in equations B-1, B-3, and B-4 calculates facility
waste emissions thresholds in metric tons by calculating the volume of
gas at the given industry segment-specific methane intensity and then
calculating what the mass of that volume would be if it were methane by
multiplying by the density of methane (0.0192 metric tons per thousand
standard cubic feet at standard temperature and pressure of 60 [deg]F
and 14.7 psia). This allows the waste emissions threshold to be
directly compared to reported metric tons of methane. The proposed
approach is mathematically equivalent to, but simpler than, an approach
that would convert reported methane emissions to volume, subtract a
volumetric waste emissions threshold from that reported volume, and
then convert the resulting value back to metric tons methane. The EPA
notes that the proposed approach does not require information on the
constituents or density of natural gas throughput.
As described in this section of the preamble, we are proposing to
calculate waste emissions thresholds at the facility level, using the
industry segment-specific methane intensity threshold given in CAA
sections 136(f)(1) through (3), and the industry segment throughput
reported under part 98, subpart W. The vast majority of facilities
report as a single subpart W facility to a single subpart W industry
segment. However, as discussed in section II.A. of this preamble, there
are
[[Page 5327]]
a small number of reporters that report as a single subpart W facility
to multiple subpart W industry segments. Specifically, for facilities
that report to multiple industry segments under a single subpart W
facility, we are proposing in 40 CFR 99.20(e) that the facility-level
waste emissions threshold is determined as the sum of the waste
emissions thresholds for each industry segment that the facility
operates within.
The EPA proposes to interpret ``natural gas sent to sale'' to mean
the amount of natural gas sent to sale from a facility in the onshore
or offshore petroleum and natural gas industry segments, as reported
under subpart W. The EPA proposes to interpret ``natural gas sent to
sale from or through'' to mean the natural gas throughput volume for a
facility not in the onshore or offshore petroleum and natural gas
industry segments that aligns with the movement of gas through a
facility (e.g., gas transported rather than gas received), as reported
under subpart W. For facilities in the onshore and offshore petroleum
and natural gas production industry segments that do not send natural
gas to sale, the EPA proposes to interpret ``barrels of oil sent to
sale'' to mean the quantity of crude oil sent to sale, as reported
under subpart W. The EPA is aware of other approaches for calculating
``methane intensity'' currently in use. These include methodologies
that allocate total methane emissions between the petroleum and natural
gas value chains and/or use methane rather than natural gas as the
throughput value. CAA section 136(f)(1) through (3) refers to reported
facility emissions and does not discuss allocation of emissions between
petroleum and natural gas. With the exception of production facilities
that only produce oil, the statutory text clearly lists natural gas as
the throughput value. Further, the proposed approach can be implemented
with data currently reported under subpart W, while alternative methane
intensity methodologies would require reporting of additional data and
increase the burden on the oil and gas industry. For example, an
approach that calculates intensity as methane emissions divided by the
methane in natural gas throughput would require facilities to collect
and report additional information of the methane content of natural
gas. An approach that calculates methane intensity as the mass of
methane emissions divided by the mass of natural gas would require
facilities to collect and report detailed information on all of the
constituents of natural gas throughput. Finally, an approach that
allocates methane emissions between the petroleum and natural gas value
chains based on energy content would require facilities to collect and
report detailed data on the constituents and energy content of all
hydrocarbon throughput. The EPA therefore believes that the proposed
approaches not only follow a plain reading of CAA section 136(f) but
are also the best and most reasonable approaches.
The EPA invites comments on our proposed approach for calculating
the waste emissions thresholds, particularly our proposed methodology
and the underlying assumptions used to calculate the waste emissions
threshold in metric tons of methane.
2. Facility Methane Emissions
To determine the total methane emissions from a WEC applicable
facility, the EPA proposes to use facility-level methane data as
reported under subpart W. On August 1, 2023, the EPA proposed revisions
to subpart W consistent with the authority and directives set forth in
CAA section 136(h) as well as the EPA's authority under CAA section 114
(88 FR 50282). Facility methane emissions (and any emissions associated
with exemptions from the WEC) would be calculated using methods and
data required by subpart W for the emissions year covered by the annual
WEC filing. For example, for the first year of the WEC (2024
emissions), WEC calculations would be based on the Subpart W
requirements effective in 2024, and emissions year 2025 emissions and
beyond would be based on Subpart W requirements effective in 2025 or
any future revisions. The proposed approaches for calculating waste
emissions thresholds and facility methane emissions align with the text
of CAA section 136(f). CAA section 136(f)(1) through (3) states that
the WEC is to be calculated based ``on the reported metric tons of
methane emissions from such facility that exceed'' specified
percentages of the ``natural gas sent to sale from such facility'' or
``natural gas sent to sale from or through such facility'' (or for
onshore and offshore petroleum facilities that do not send gas to sale,
``ten metric tons of methane per million barrels of oil sent to sale
from such facility''). The EPA proposes to interpret ``reported metric
tons of methane emissions'' to mean all reported methane emissions from
a facility, as reported under subpart W. This value is an input to
equation B-6.
3. Facility WEC Calculation
To calculate the amount by which a WEC applicable facility is below
or exceeding the waste emissions threshold, the EPA proposes to use
equation B-6 of 40 CFR 99.21, in which the facility waste emissions
threshold, as determined in 40 CFR 99.20, is subtracted from facility
total methane emissions. This calculation results in a value of metric
tons of methane, the total facility applicable emissions, that is
negative for facilities below the waste emissions threshold and
positive for facilities exceeding the waste emissions threshold. The
remainder of proposed 40 CFR 99.21 describes how to determine the WEC
applicable emissions below or exceeding the waste emissions threshold
considering any exemptions that may apply for WEC applicable facilities
with total facility applicable emissions greater than 0 mt
CH<INF>4</INF> (see section II.D. of this preamble for more information
on the exemptions). As discussed in section II.C.2.b. of this preamble,
the EPA proposes that WEC applicable facilities receiving the
regulatory compliance exemption would be exempted from the WEC, and
therefore would have zero WEC applicable emissions. For facilities in
the onshore petroleum and natural gas production and offshore petroleum
and natural gas production industry segments with total facility
applicable emissions greater than 0 mt CH<INF>4</INF>, any methane
emissions associated with applicable exemptions would be subtracted to
calculate WEC applicable emissions. For all other facilities, facility
applicable emissions would equal WEC applicable emissions (unless the
facility was receiving the regulatory compliance exemption).
The EPA invites comments on the proposed approach for calculating
WEC applicable emissions.
4. Netting
The metric tons of methane emissions equal to, below, or exceeding
the waste emissions threshold, or WEC applicable emissions, for each
WEC applicable facility would be determined as specified in 40 CFR
99.21. CAA section 136(f)(4) allows for the netting of emissions at
facilities below the waste emissions thresholds with emissions at
facilities exceeding the waste emissions thresholds for facilities
under common ownership or control within and across all applicable
industry segments identified in 136(d). The EPA proposes to implement
netting using equation B-8 at 40 CFR 99.22. Equation B-8 would sum the
WEC applicable emissions from all WEC applicable facilities under the
[[Page 5328]]
common ownership of control of a WEC obligated party to calculate net
WEC emissions for that WEC obligated party. The EPA's proposed
interpretation of common ownership and control and definition of WEC
obligated party are discussed in section II.C. of this preamble.
5. Waste Emissions Charge Calculation
CAA section 136(e) establishes annual $/metric ton charges for all
methane emissions from WEC applicable facilities exceeding the waste
emissions thresholds. The EPA proposes that a WEC obligated party's
total annual WEC, or WEC obligation, would be calculated by multiplying
its net WEC emissions, as determined by proposed Equation B-8, by the
annual $/metric ton charge. WEC obligated parties with net WEC
emissions less than or equal to zero would not have a WEC obligation.
WEC obligated parties with net WEC emissions greater than zero would
have a WEC obligation and be required to pay a waste emissions charge.
WEC obligation calculations would be made for calendar years 2024,
2025, 2026, and each year thereafter as per proposed 40 CFR 99.23.
6. Gathering and Boosting and Processing Facilities With Zero Reported
Throughput
The EPA is aware of a small number of gathering and boosting and
natural gas processing facilities that emit methane and report under
subpart W, but do not send gas to sale. As a result, these facilities
would report zero natural gas volumes for the throughput metrics used
in the proposed waste emissions threshold calculations. For the
gathering and boosting industry segment, these may be facilities that
receive natural gas but then reinject it underground or otherwise do
not transport any natural gas. For the processing industry segment,
these may be fractionation plants that only receive and process natural
gas liquids (NGLs) and do not handle natural gas. Under the proposed
approach, all reported methane emissions from facilities with no
reported throughput would be considered to be exceeding the waste
emissions threshold. The EPA notes that the proposed approach is based
on a plain reading of the statutory text; because these facilities
would have a calculated waste emissions threshold of zero, all reported
methane would by default be exceeding the threshold. The EPA requests
comment on the treatment of gathering and boosting and natural gas
processing facilities that do not report any volumes for the proposed
WEC throughput metrics. The EPA requests comment on the proposed
approach that would consider all reported methane from these facilities
to be above the waste emissions threshold. The EPA also requests
comment on an alternative approach that would consider all reported
methane emissions from these facilities to be below the waste emissions
threshold.
C. Common Ownership or Control for Netting of Emissions
1. EPA Interpretation and Proposal To Implement ``Common Ownership or
Control'' for the Purposes of Part 99
CAA section 136(f)(4) allows WEC applicable facilities under
``common ownership or control'' to net ``emissions by reducing the
total obligation to account for facility emissions levels that are
below the applicable thresholds within and across all applicable
segments'' listed in section 136(d) and as defined in subpart W. The
EPA interprets this to mean that for all eligible WEC applicable
facilities under common ownership or control, the amount of metric tons
of methane below the waste emissions thresholds (i.e., the difference
between emissions equal to the waste emissions threshold and reported
emissions) at facilities below the waste emissions threshold may be
used to net against the amount of metric tons of methane emissions that
exceed the waste emissions thresholds at facilities above the waste
emissions threshold. For the purposes of establishing common ownership
or control under CAA section 136(f)(4), the EPA proposes to define
``WEC obligated party'' in 40 CFR 99.2. The EPA proposes that each
subpart W facility would be associated with a single WEC obligated
party (though each WEC obligated party may be associated with multiple
subpart W facilities), which would be reported under the proposed
requirements at 40 CFR 99.7. As discussed in section II.B.4. of this
preamble and proposed in 40 CFR 99.22, all WEC applicable facilities
associated with a common WEC obligated party would be able to net
emissions for the purposes of calculating the WEC obligated party's net
emissions and total WEC obligation.
The EPA proposes that the WEC obligated party be the subpart W
facility ``owner or operator'' as reported under 40 CFR 98.4(i)(3). The
EPA proposes definitions for facility ``owner'' and ``operator'' that
are applicable to the offshore petroleum and natural gas production,
onshore natural gas processing, onshore natural gas transmission
compression, underground natural gas storage, LNG import and export
equipment, and LNG storage industry segments at 40 CFR 99.2. The
onshore petroleum and natural gas production, onshore petroleum and
natural gas gathering and boosting, and onshore natural gas
transmission pipeline industry segments each have separate definitions
for facility ``owner or operator'' proposed at 40 CFR 99.2. These
proposed definitions are identical to the corresponding definitions in
40 CFR part 98; the EPA proposes that the owner or operator associated
with a subpart W facility as reported under 40 CFR 98.4(i)(3)
(regarding the list of owners or operators of the facility for the
certification of representation of the designated representative) would
also be the WEC obligated party for that facility. The EPA believes
that the proposed approach for using facility owner or operator for the
purpose of defining common ownership or control aligns with a plain
reading of the statutory text. CAA section 136(c) states that a charge
on methane emissions that exceed the waste emissions threshold shall be
imposed and collected ``from an owner or operator of an applicable
facility.'' Further, in the context of required revisions to the
subpart W methodologies used to calculate methane emissions, CAA
section 136(h) states that those revisions must be made to ``allow
owners and operators of applicable facilities to submit empirical
emissions data, in a manner to be prescribed by the Administrator, to
demonstrate the extent to which a charge under subsection (c) is
owed.'' Thus, CAA section 136(c) requires the charge to be imposed and
collected on a facility owner or operator, and CAA section 136(h)
presumes that owners and operators are responsible for submitting
empirical data. Furthermore, since the list of owners or operators for
each facility is directly reported under 40 CFR 98.4(i)(3), an
established program at the time that Congress drafted CAA section 136,
the EPA proposes that under the best reading of the statutory text, the
facility owner or operator would be used as the entity for establishing
common ownership or control of subpart W facilities within and across
all applicable subpart W industry segments.
Although the EPA believes that the owner or operator approach is
the most appropriate for netting under WEC, we seek comment on an
alternative approach that would use the parent company of a facility's
owner or operator for the WEC obligated party and determining common
ownership or control of facilities. For each subpart W facility, the
facility owner or operator
[[Page 5329]]
and parent company are reported under 40 CFR 98.4(i)(3) and 40 CFR
98.3(c)(11), respectively. The parent company represents the highest-
level company based in the United States with an ownership interest in
the facility. For parent company reporting, the percent ownership in
the facility is also reported under 40 CFR 98.3(c)(11). Because a
parent company has an ownership interest in a subpart W facility,
multiple facilities may be said to be owned by the same parent company
and might also be considered as being under common ownership or control
of that parent company. So, one difference between using the owner or
operator rather than a parent company for establishing common ownership
or control is the number of facilities that may be brought under common
ownership or control in each approach. For most facilities, the
reported owner or operator is a subsidiary of the reported parent
company. A single parent company may have multiple different owners or
operators (i.e., subsidiaries) associated with facilities within and
across subpart W industry segments. For example, an onshore petroleum
and natural gas production facility and onshore natural gas processing
facility owned by the same parent company may each have a different
owner or operator. The number of ``common'' facilities is usually
higher when the parent company is used, and lower when the owner or
operator is used. The parent company approach would therefore provide a
broader interpretation of common ownership or control relative to use
of owner or operator. However, it is important to note that at the time
CAA section 136 was enacted in 2022, the term ``common ownership or
common control'' was a term used in the subpart W regulations. Under
the subpart W regulations, the EPA has used the term ``common ownership
or control'' to refer to the owner or operator, not to the parent
company. Congress was likely aware of this definition when it enacted
section 136. Therefore, the EPA is proposing to use facility owner or
operator for the purpose of establishing common ownership or control
based on a plain reading of CAA section 136(c), and believes that this
is the better reading of the text in context with subpart W. However,
the EPA requests comment on both the proposed approach using facility
owner or operator and on an alternative approach using facility parent
company for determining common ownership or control of WEC applicable
facilities.
In some cases, a WEC applicable facility may have multiple owners
or operators reported under 40 CFR 98.4(i)(3). In these situations, the
EPA proposes that the facility owners or operators would designate one
of the owners or operators as the WEC obligated party for that
facility, as proposed in 40 CFR 99.4. Under the proposed approach, the
process for selection of the WEC obligated party at facilities with
multiple owners or operators would be similar to the approach for
selecting a designated representative under 40 CFR part 98. This
process would require selection of a single WEC obligated party for the
facility by an agreement binding on each of the owners or operators
associated with the facility. The proposed approach for facilities with
multiple owners allocates all facility-level methane emissions below or
exceeding the waste emissions thresholds to a single WEC obligated
party. We request comment on the proposed approach of allocating all
methane emissions below or exceeding the waste emissions thresholds
from a facility with multiple owners or operators to a single WEC
obligated party. We request comment on other approaches that could be
used to allocate emissions to owners or operators at facilities with
multiple owners or operators. We request comment on the proposed
approach of requiring the group of facility owners or operators to
determine which owner or operator is the WEC obligated party, and
alternative approaches for designating the WEC obligated party, at
facilities with multiple owners or operators.
The EPA also evaluated an approach that would allocate facility
methane emissions below or exceeding the waste emissions thresholds at
facilities with multiple owners to parent companies based on their
reported percent ownership in the facility. Some subpart W facilities
with multiple owners have parent companies with very small (i.e., less
than one percent) equity shares. The minority owners may include
individuals and small oil and gas companies with no operational control
over the facility. Allocating methane emissions below or exceeding the
waste emissions thresholds based on facility ownership would expose a
larger number of individuals and small companies to potential WEC
obligations. We note that allocating methane emissions from facilities
with multiple owners to each owner based on facility ownership would
only be possible using a parent company approach and not using the
proposed owner or operator approach because GHGRP reporting does not
currently include data on owner or operator facility equity share or
include direct linkages between owners or operators and parent
companies that could be used to assign facility ownership percentages
to owners or operators. There may also be situations in which the
facility owner or operator is a third-party operator with no ownership
in the facility either directly or through their parent company.
We request comment on an alternate approach that would allocate
methane emissions to parent companies using percent ownership in the
facility as well as other possible allocation methodologies for
facilities with multiple parent companies. We request comment relevant
to understanding other appropriate approaches for allocating emissions
from a facility with multiple parent companies or owners or operators
to a single WEC obligated party or multiple WEC obligated parties. For
example, how are costs allocated at such facilities, and are they
usually shared by parent companies (e.g., based on percent ownership in
the facility), entirely borne by the facility operator, or does cost
sharing vary based on facility-specific contractual agreements?
2. Facilities Eligible for the Netting of Emissions
The EPA's proposed implementation of CAA section 136(f)(4) would
define which types of applicable subpart W facilities are eligible to
net emissions. We propose to establish netting eligibility criteria
based on a facility's total reported subpart W GHG emissions, status in
relation to the regulatory compliance exemption, and overall regulated
status under the GHGRP. In our proposed approach to netting, we chose
interpretations which were the most consistent with a plain reading of
the CAA, as well as the most transparent and straightforward to
implement. As described in more detail in the following sections, our
approach assumes that if a facility's emissions are not subject to the
WEC, either because the facility is not a WEC applicable facility, or
because a WEC applicable facility receives the regulatory compliance
exemption, that facility's emissions do not factor into the netting of
emissions for a WEC obligated party. In other words, only WEC
applicable facilities may net, and only WEC applicable emissions may be
netted. As will be explained further in section II.C.2.a. of this
preamble, we believe this interpretation is consistent with CAA section
136(f)(4) ``the Administrator shall allow for the netting of emissions
by reducing the total obligation to
[[Page 5330]]
account for facility emissions levels that are below the applicable
thresholds within and across all applicable segments identified in
subsection (d),'' since the reference to ``applicable thresholds'' and
``applicable segments,'' which reflect other subsections under CAA
section 136, implies that only WEC applicable emissions should be
considered in the netting calculation. We note that for applicable
facilities with unreasonable delay or plugged well exemptions, under
the proposal, emissions associated with these exemptions would be
removed from any emissions exceeding the waste emissions threshold
prior to netting calculations.
a. Facilities Required To Report To GHGRP and That Have Subpart W
Emissions Greater Than 25,000 Metric Tons of CO<INF>2</INF>e
In accordance with CAA section 136(c) and the proposed definition
of ``WEC applicable facility'' in 40 CFR 99.2, we are proposing that
subpart W facilities that have subpart W emissions greater than 25,000
mt CO<INF>2</INF>e are eligible for netting, with the exception of
those that are receiving the regulatory compliance exemption (as
discussed in section II.D.2. of this preamble). Facilities that report
less than 25,000 mt CO<INF>2</INF>e under subpart W are not subject to
the WEC, and the EPA proposes that such facilities would not be
eligible for netting. These types of facilities are discussed in
greater detail in section II.C.2.c. of this preamble. The EPA's
proposed approach follows what the agency considers to be the best
reading of the plain text of, and the relationship between CAA sections
136(d), 136(c), and 136(f) (which includes subsections 136(f)(4) and
136(f)(1)-(3)). The following sections will provide an overview of the
relevant statutory text, and the corresponding basis for the EPA's
belief that only WEC applicable facilities may net, and only WEC
obligated emissions may be netted, under CAA section 136(f)(4).
CAA section 136(d) introduces the nine industry segments within
which all subpart W facilities must fall in order to be evaluated for
WEC applicability. Importantly, facilities within these segments are
``applicable facilities'', per CAA section 136(d), but they are not
necessarily ``WEC applicable facilities'', subject to possible WEC
obligation, unless they report over 25,000 mt CO<INF>2</INF>e per year
under subpart W. CAA section 136(c) clarifies this point. Specifically,
CAA section 136(c) requires the Administrator to impose and collect a
charge on the owner or operator ``of an applicable facility that
reports more than 25,000 metric tons of carbon dioxide equivalent of
greenhouse gases emitted per year pursuant to subpart W''. Thus,
building upon the CAA section 136(d) definition, CAA section 136(c)
establishes that only facilities which both fall within one or more of
the nine CAA section 136(d) industry segments and report more than
25,000 mt CO<INF>2</INF>e under subpart W are subject to the WEC
program. For clarity, in this rulemaking the EPA refers to these
facilities as ``WEC applicable facilities''.
CAA section 136(f), which is entitled ``Waste Emissions
Threshold'', includes a series of subsections under this heading.
Subsections 136(f)(1)-(3) illustrate the meaning of ``waste emissions
threshold'' in this context, and explain that these are actually a
series of thresholds which determine when and how to impose a charge on
methane emissions from WEC applicable facilities, depending on which
industry segment or segments they fall under. Specifically, the nine
CAA section 136(d) industry segments are categorized into four groups,
and a waste emissions threshold is applied to each of the four. CAA
section 136(f)(1) covers offshore and onshore petroleum and natural gas
production (industry segments (1) and (2) under CAA section 136(d)),
and further divides this category depending on whether or not natural
gas is sent to sale: ``With respect to imposing and collecting the
charge under subsection (c) for an applicable facility in an industry
segment listed in paragraph (1) or (2) of subsection (d), the
Administrator shall impose and collect the charge on the reported
metric tons of methane emissions from such facility that exceed (A)
0.20 percent of the natural gas sent to sale from such facility; or (B)
10 metric tons of methane per million barrels of oil sent to sale from
such facility, if such facility sent no natural gas to sale.'' \22\
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\22\ 42 U.S.C. at 7436(f)(1).
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CAA sections 136(f)(2) and (3) follow the same model: section
136(f)(2) establishes thresholds for nonproduction petroleum and
natural gas systems (industry segments (3), (6), (7), and (8) under
section 136(d)),\23\ and imposes a charge on ``the reported metric tons
of methane emissions that exceed 0.05 percent of the natural gas sent
to sale from or through such facility;'' \24\ and section 136(f)(3)
establishes thresholds for natural gas transmission (industry segments
(4), (5), and (9)) \25\ and imposes a charge on ``the reported metric
tons of methane emissions that exceed 0.11 percent of the natural gas
sent to sale from or through such facility.'' \26\ But each industry-
specific threshold is introduced in the same way: ``With respect to
imposing and collecting the charge under subsection (c) for an
applicable facility in an industry segment listed in paragraph (x) of
subsection (d), [charges shall be imposed as follows]''. Following this
plain text, it is clear that the CAA section 136(f) waste emission
thresholds apply only to WEC applicable facilities-that is, facilities
within one or more of the nine WEC industry segments listed in CAA
section 136(d) which emit more than 25,000 mt per year CO<INF>2</INF>e
under subpart W, and thus may be subject to charge under CAA section
136(c).
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\23\ Specifically: (3) onshore natural gas processing; (6)
liquefied natural gas storage; (7) liquefied natural gas import and
export equipment; and (8) onshore petroleum and natural gas
gathering and boosting.
\24\ Id. at section 7436(f)(2).
\25\ Specifically, (4) onshore natural gas transmission
compression; (5) underground natural gas storage; and (9) onshore
natural gas transmission.
\26\ Id. at section 7436(f)(3).
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Finally, in the netting provision itself, CAA section 136(f)(4),
states that ``in calculating the total emissions charge obligation for
facilities under common ownership or control, the Administrator shall
allow for the netting of emissions by reducing the total obligation to
account for facility emissions levels that are below the applicable
thresholds within and across all applicable segments identified in
subsection (d)''. As noted above, the EPA is proposing that this
netting provision applies to WEC applicable facilities and WEC
applicable emissions only, for three compelling reasons.
First, the EPA believes that per the best reading of the statute,
the term ``applicable thresholds'' refers to the waste emission
thresholds outlined in CAA section 136(f)(1)-(3). This is important
because, as noted above, the waste emissions thresholds apply only to
WEC applicable facilities--they determine whether, and how, a charge
shall be imposed on methane emissions from a facility which has already
been triggered into the WEC program by virtue of its 25,000 mt per year
CO<INF>2</INF>e in subpart W. The thresholds do not apply to facilities
which emit fewer than 25,000 mt per year of CO<INF>2</INF>e under
subpart W, because under CAA section 136(c), no charge may be imposed
or collected on such facilities. Facilities which emit less than 25,000
mt per year of CO<INF>2</INF>e under subpart W may emit any amount of
methane, but these methane emissions are not WEC applicable emissions:
they cannot be evaluated according to the waste emissions
[[Page 5331]]
thresholds, and they cannot be considered to fall either above or below
these thresholds. Thus, in ``account[ing] for facility emissions levels
that are below the applicable thresholds'', the EPA understands that it
must account for WEC applicable emissions from WEC applicable
facilities which fall below the waste emissions thresholds, and produce
a negative value under Equation B-6 (see above at section II.B.3.).
As previously stated, EPA's conclusion that the term ``applicable
thresholds'' in CAA section 136(f)(4) refers to the waste emissions
thresholds outlined in CAA section 136(f)(1)-(3) is supported by both
the text and structure of the statute. First, the structure of the
statute strongly supports the presumption that CAA section 136(f)(4)
refers to netting based on a facility's relationship to the waste
emissions thresholds because CAA section 136(f)(4) appears as part of
CAA section 136(f), under the ``waste emissions threshold'' heading,
and immediately following CAA section 136(f)(1)-(3)'s establishment of
the specific waste emissions thresholds for each industry segment. It
follows that CAA section 136(f)(4)'s reference to ``applicable
thresholds'' refers to these industry segment-specific requirements,
and accordingly ``applicable segments'' refers to the industry segments
identified in CAA section 136(f)(1)-(3).
A close reading of the text also strongly supports our presumption
regarding the waste emissions thresholds, because CAA section 136(f)(4)
refers to facility emissions levels that are ``below the applicable
thresholds,'' plural. The use of the plural, and the use of the term
``applicable,'' both indicate that Congress was referring here to the
multiple waste emissions thresholds introduced in CAA sections
136(f)(1) through (3), which specifically and separately apply to WEC
applicable facilities within various subsets of industry segments,
defined in CAA section 136(d). Again, these separate thresholds only
apply to WEC applicable facilities, which emit over 25,000 tons per
year of CO<INF>2</INF>e per year.
In addition to the ``applicable thresholds'' question, the EPA
believes that Congress's use of the term ``applicable segments'' in
stating that EPA may ``redu[ce] the total obligation to account for
facility emissions levels that are below the applicable thresholds
within and across all applicable segments identified in subsection
(d),'' is significant here. While CAA section 136(d) introduces the
nine relevant ``industry segments'' within which all WEC applicable
facilities must fall, CAA section 136(f)(4) classes these segments into
four groups, and is the only provision to use the term ``applicable
segments''. As noted above, CAA section 136(f) establishes a set of
requirements determining when and how to impose a charge on those
facilities triggered into the program, depending on their industry
segment and the amount of methane they emit. It follows that CAA
section 136(f)(4)'s reference to ``applicable thresholds'' refers to
these four group-specific thresholds, and ``applicable segments''
refers to the nine segments within the four segment groups. In other
words, each group of segments constitutes the ``applicable'' segments
to their corresponding applicable threshold. This is important, again
because the four groups laid out under CAA section 136(f) include only
WEC applicable facilities.
Finally, Congress's statement that netting shall be employed ``in
calculating the total emissions charge obligation for facilities under
common ownership or control'', further indicates that only WEC
applicable facilities may be netted. Logic indicates that only WEC
applicable facilities, with WEC applicable emissions, would be relevant
to a determination of total emissions charge obligation. As regards the
WEC program, WEC obligated parties are concerned with methane emissions
for the WEC applicable facilities for which they are responsible--not
various other subpart W facilities for which a WEC charge can never be
imposed. Accordingly, the EPA believes that under the best reading of
this provision WEC obligated parties may net WEC applicable methane
emissions between facilities in different segments, as long as all
facilities are WEC applicable facilities.
b. Facilities With Subpart W Emissions Greater Than 25,000 Metric Tons
of CO<INF>2</INF>e That Are Receiving the Regulatory Compliance
Exemption
The EPA proposes that during such time that a facility receives the
regulatory compliance exemption, that facility would have zero WEC
applicable emissions and thus would not be able to participate in the
netting of methane emissions across facilities under common ownership
or control of a WEC obligated party. The EPA's proposed approach is
based on a plain reading of the statutory text, and follows the same
reasoning outlined in section II.C.2.a. of this preamble, which
explains that under the best reading of the text, only WEC applicable
facilities may net.. This section will further expand upon EPA
reasoning that only WEC applicable emissions may be netted, and clarify
this point for purposes of the regulatory compliance exemption.
CAA section 136(f)(6)(A) states that ``[c]harges shall not be
imposed pursuant to subsection (c) on an applicable facility that is
subject to and in compliance with methane emissions requirements
pursuant to subsections (b) and (d) of section 111'' if specific
criteria are met (these criteria are discussed in section II.D.2. of
this preamble). The EPA's interpretation of the regulatory compliance
exemption is that, for a WEC applicable facility meeting the exemption
criteria, the entire facility is exempted, and therefore the facility
does not generate WEC-applicable emissions. In order to net, facilities
must be WEC applicable facilities (they must emit over 25,000
CO<INF>2</INF>e per year under subpart W) and they must also generate
WEC applicable emissions (methane emissions below or above the WEC
emissions thresholds that are subject to charge.) Again, this follows
from the text. Section 136(f)(4) applies ``in calculating the total
emissions charge obligation'' only. Emissions which are subject to an
exemption are by definition not subject to charge. WEC applicable
emissions are only those emissions subject to charge under section
136(c). Because, under the proposed approach WEC applicable facilities
with the regulatory compliance exemption would have zero WEC applicable
emissions, these facilities would by default not be able to participate
in netting (i.e., they would have no emissions to net). The proposed
approach of facilities with the regulatory compliance exemption having
zero WEC applicable emissions allows for the practical implementation
of the exemption within the broader framework of the proposed WEC
calculations. Assigning exempted facilities zero WEC applicable
emissions ensures that charges shall not be imposed on these facilities
without interfering with netting calculations or removing facility-
specific reporting elements necessary for WEC implementation. Such
facilities would continue to be included in WEC filings reported under
part 99 as long as they remain WEC applicable facilities. Further, if
such facilities fall out of compliance such that the regulatory
compliance exemption no longer applies and they again generate WEC
applicable emissions, such facilities would again be included in
netting.
The EPA notes that under the proposed approach, facilities with
emissions below the waste emissions
[[Page 5332]]
threshold would not receive the regulatory compliance exemption (see
discussion in section II.D.2.f. of this preamble), and thus these
facilities would always have WEC applicable emissions and would be able
to participate in netting across facilities under common ownership or
control.
The EPA requests comment on the proposed approach in which WEC
applicable facilities receiving the regulatory compliance exemption
would have zero WEC applicable emissions. The EPA requests comment on
other options for WEC applicable facilities receiving the regulatory
compliance exemption and their treatment in the context of netting.
c. Exclusion of Facilities Reporting 25,000 or Fewer Metric Tons of
CO<INF>2</INF>e to Subpart W of Part 98
Per CAA section 136(c), the WEC shall only be imposed on owners or
operators of applicable facilities that report more than 25,000 mt
CO<INF>2</INF>e under subpart W. A large number of facilities that
report under the GHGRP have subpart W emissions below 25,000 mt
CO<INF>2</INF>e. A part 98 subpart W facility is generally allowed to
cease reporting or ``offramp'' due to meeting either the 15,000 mt
CO<INF>2</INF>e level or the 25,000 mt CO<INF>2</INF>e level for the
number of years specified in 40 CFR 98.2(i) based on the
CO<INF>2</INF>e reported, as calculated in accordance with 40 CFR
98.3(c)(4)(i) (i.e., the annual emissions report value as specified in
that provision). Some facilities have dropped below 25,000 mt
CO<INF>2</INF>e in total reported emissions to part 98 and are
continuing to report while on the reporting offramp. Other facilities
report emissions under multiple subparts (e.g., subpart W and subpart
C) and have total emissions equal to or greater than 25,000 mt
CO<INF>2</INF>e across both subparts, but subpart W emissions below
25,000 mt CO<INF>2</INF>e. The latter category includes processing
plants, transmission compressor stations, underground storage
facilities, LNG storage facilities, and LNG import and export
facilities that report their combustion emissions under subpart C. Many
of these facilities have total GHGRP emissions exceeding 25,000 mt
CO<INF>2</INF>e, but subpart W emissions that alone fall below this
threshold.
We are proposing that subpart W facilities with subpart W emissions
equal to or below 25,000 mt CO<INF>2</INF>e are not WEC applicable
facilities and are therefore excluded from netting. This proposed
approach aligns with a plain reading of the requirement in CAA section
136(c) that only applicable facilities with subpart W emissions
exceeding 25,000 mt CO<INF>2</INF>e are subject to the WEC--facilities
below this threshold are not subject to the WEC and therefore do not
generate WEC applicable emissions and are not able to net emissions.
d. Exclusion of Facilities Not Required To Report to the GHGRP
Per CAA section 136(c) and (d), CAA section 136(f)(4), and the
proposed definition of ``WEC Applicable Facility'' in 40 CFR 99.2,
which reflects the statutory text at CAA section 136(d), we are
proposing that facilities that are not required to report to the GHGRP,
and thus are not WEC applicable facilities, would not be eligible for
netting. Again following the reasoning outlined in section II.C.2.a. of
this preamble, the EPA's proposed approach is based on a plain reading
of CAA section 136(f)(4), which states that netting is allowed within
and across the nine subpart W industry segments identified in CAA
section 136(d); section 136(d), which states that ``applicable
facility(ies)'' are facilities within industry segments ``as defined in
subpart W''; and section 136(c), which states that the WEC is only
applicable to subpart W facilities that report more than 25,000
CO<INF>2</INF>e per year. Following the plain text, only facilities
subject to subpart W may be evaluated as possible WEC applicable
facilities, and only WEC applicable facilities (subpart W facilities
emitting over 25,000 CO<INF>2</INF>e) can have WEC applicable emissions
that may be subject to charge. As explained in section II.C.2.a. of
this preamble, only WEC applicable facilities may net, and only WEC
applicable emissions may be netted. Further, CAA section 136(c) states
that the WEC is only applicable to certain facilities that report under
subpart W of the GHGRP.
D. Exemptions to the Waste Emissions Charge
1. Exemption for Emissions From Eligible Delays in Environmental
Permitting Under CAA Section 136(f)(5)
CAA section 136(f)(5) establishes an exemption for emissions
resulting from delay in environmental permitting by stating, ``Charges
shall not be imposed pursuant to paragraph (1) on emissions that exceed
the waste emissions threshold specified in such paragraph if such
emissions are caused by unreasonable delay, as determined by the
Administrator, in environmental permitting of gathering or transmission
infrastructure necessary for offtake of increased volume as a result of
methane emissions mitigation implementation.''
This provision would exempt from the charge certain emissions
occurring at facilities in the onshore and offshore production
segments. Paragraph (1) referenced in the exemption refers to CAA
section 136(f)(1), which establishes the waste emissions threshold for
applicable facilities in the production sector, as discussed in section
II.B. of this preamble. The exemption is limited to emissions occurring
as a result of certain delays in permitting of gathering or
transmission infrastructure necessary for offtake of increased volume
as a result of methane emissions mitigation implementation.
Infrastructure necessary for offtake would include gathering and
transmission pipelines and compressor stations. Increased volume as a
result of methane emissions mitigation implementation would include
increased natural gas amounts available for transport that would have
otherwise been emitted.
a. Emissions Eligible for the Permitting Delay Exemption
Given the complexity of defining and determining ``unreasonable
delay'' related to environmental permitting, the EPA is proposing a
simplified approach of establishing a set of four criteria for applying
the unreasonable delay exemption established by CAA section 136(f)(5).
These criteria would only apply in the context of determining eligible
emission exemptions for the implementation of CAA 136(f)(5) and this
proposed rulemaking; they are not intended to speak to the
reasonableness of a permitting delay in any other context. The EPA
understands that the issue of what constitutes an unreasonable delay is
multi-faceted and may be quite different under different factual
circumstances. At the same time, the EPA believes it is important in
the context of this program to propose a definition that is both
consistent with the statutory charge and administrable within the
capabilities of the EPA. With those caveats in mind, the EPA proposes
the following four criteria for implementing this exemption: (1) the
facility must have emissions that exceed the waste emissions threshold;
(2) neither the entity seeking the exemption, nor the entity
responsible for seeking the permit, may have contributed to the delay;
(3) the exempted emissions must be those (and only those) resulting
from the flaring of gas that would have been mitigated without the
permit delay, and the flaring that occurs must be in compliance with
all applicable local, state, and Federal regulations regarding flaring
emissions; and (4) a set period of months must have passed from the
time a submitted permit application was
[[Page 5333]]
determined to be complete by the applicable permitting authority.
The EPA believes this approach meets the Congressional intent of
this exemption while creating a program that can be implemented
annually allowing for collection of WEC in a timely manner. The
proposed approach is intended to reduce burden on the companies and
government compared with an approach that would not specify a timeframe
or other criteria but would rely on decisions made on a case-by-case
basis to determine whether the timing and other circumstances of an
individual permitting action constitutes an unreasonable delay. We
note, however, that these criteria outlined above, including the
timeframe, are proposed for the purpose of defining the emissions
eligible for an exemption for the purposes of the implementation of CAA
136(f)(5) and this proposed rulemaking only and are not applicable for
defining an unreasonable delay outside of this context. The criteria
introduced in this section do not apply to the determination of
unreasonable delay for purposes of the National Environmental Policy
Act (NEPA), the Administrative Procedure Act (APA), or any other law
involved in permitting processes or any other agency actions. In
particular, the timeline criterion should not be considered applicable
or informative to the determination of unreasonable delay in any
context other than determining emission exemptions for the
implementation of CAA 136(f)(5) and this proposed rulemaking.
The first criterion, that the facility must have emissions that
exceed the waste emissions threshold, is based on CAA 136(f)(5), which
states that ``charges shall not be imposed pursuant to paragraph (1) on
emissions that exceed the waste emissions threshold specified in such
paragraph if such emissions are caused by unreasonable delay.'' A
straightforward reading of this language limits the exemption to
emissions exceeding the waste emissions threshold. In addition, since
charges would not be imposed on emissions below the threshold, an
exemption is unnecessary in cases where facility emissions are below
the threshold. The EPA proposes that emissions from facilities that are
below the waste emissions threshold would not be exempted. The EPA
proposes that for facilities that exceed the waste emissions threshold,
emissions eligible for the permitting delay exemption would be
subtracted from the facility emissions that exceed the waste emissions
threshold. The exempted emissions would not be used to reduce emissions
totals below the threshold (i.e., the lowest possible WEC applicable
emissions for a facility with the exemption would be zero).
The second criterion relates to responsiveness on the part of the
production sector WEC applicable facility reporting emissions caused by
a delay in gathering or transmission infrastructure and the gathering
or transmission infrastructure permit applicant: neither the entity
potentially eligible for the exemption (i.e., a WEC applicable facility
in the onshore or offshore production sector) nor the entity seeking
the environmental permit (e.g., an entity seeking a permit for
gathering or transmission infrastructure) has contributed to the delay
in permitting.
The EPA is proposing that contributions to the delay by either the
production entity potentially eligible for the exemption or the entity
seeking the environmental permit would be determined based upon the
timeliness of response to requests for additional information or
modification of the permit application. Delays in response exceeding
the response time requested by the permitting agency, or requested by
the relevant production or gathering or transmission infrastructure
entity seeking the permit, or responses that exceed 30 days from the
request if no specific response time is requested, would be considered
to contribute to the delay in processing the permit application. Note
that this proposed determination of what would constitute a delay
eligible for the exemption in environmental permitting would be
specific solely to implementation of CAA section 136(f)(5) and this
proposed rulemaking for part 99, and would not necessarily be
applicable to any other section of the CAA, or any permitting program
administered by the EPA or by a state or local permitting authority.
The third criterion is that the exempted emissions must be those
resulting from the flaring of gas that would have been mitigated
without the permit delay--and that exempted emissions must be in
compliance with all applicable local, state, and Federal regulations
regarding flaring emissions. The EPA believes that this approach
reasonably follows from the text of section 136(f)(5), which exempts
emissions caused by unreasonable delay in the permitting of ``gathering
or transmission infrastructure necessary for offtake of increased
volume as a result of methane emissions mitigation implementation.''
\27\ Following this statutory directive, the EPA is proposing that
exempted emissions are flaring emissions which (1) would otherwise be
captured in accordance with applicable regulations but (2) are not
captured due to a delay in the permitting necessary for offtake. It is
anticipated that operations seeking the exemption could include oil
production sites planning to send gas to sale, rather than flaring the
emissions, or facilities that produce natural gas, condensate or
natural gas liquids and that expand operations and are flaring gas
because a pipeline is not yet available. Only flaring emissions caused
by the unreasonable delay in permitting, and occurring in compliance
with all applicable regulations, would be exempt. Other emissions
occurring at the wellsite would not be exempt because they are not
associated with the delay or because they do not occur in compliance
with applicable regulations. For example, fugitive emissions from leaks
would occur with or without the delayed infrastructure, and venting
emissions is widely restricted due to Federal, state, or local
regulations on venting.
---------------------------------------------------------------------------
\27\ 42 U.S.C. 7436(f)(5) (emphasis added).
---------------------------------------------------------------------------
Flaring emissions that occur as a result of flaring that is not in
compliance with applicable regulations are ineligible for the
exemption. This approach accords with the text of section 136(f)(5),
which states that the exemption is for emissions occurring as a result
of unreasonable delay in permitting required for the build out of
infrastructure ``necessary for offtake of increased volume as a result
of methane emissions mitigation.'' \28\ Regulations limiting flaring
and venting will result in an increased volume of gas that must be
captured and transmitted, compared with a circumstance without methane
emissions mitigation implementation, in which gas is flared or vented
on site. Thus, the EPA understands that this provision is designed to
exempt flaring done in compliance with regulations, where sources are
prepared to capture gas but cannot yet do so due to lack of offtake
infrastructure. However, a delay in permitting does not allow exemption
from other applicable local, state, and Federal regulations regarding
flaring. Thus, the flaring emissions exempt under 136(f)(5) cannot
exceed flaring emissions allowable under other applicable local, state,
and Federal regulations.
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\28\ 42 U.S.C. 7436(f)(5)
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The fourth criterion is that an eligible ``unreasonable delay''
would be a delay that exceeds a set period of months specified in the
final rule. The EPA's current assessment is that this time period would
likely fall somewhere between 30 and 42 months from the date that a
submitted permit application
[[Page 5334]]
was determined to be complete by the relevant permitting authority.
This time period is not tied to the timing of the WEC; a facility that
meets all four criteria would be eligible for the exemption in the
first year of the WEC if the time period requirement has been met. The
relevant permitting authority could be the United States Federal Energy
Regulatory Commission (FERC), or other federal, state or local agencies
that issue environmental permits. The environmental permitting process
can require multiple steps including, but not limited to: the entity
preparing and submitting a permit application; the entity responding to
comments with supporting information; the regulatory agency preparing a
draft permit; public comment; and preparation and issuance of the final
permit. Target dates for permit actions can vary by regulatory agency
and depend, for example, on whether the relevant permit is for a new or
existing source, or whether the action is a major or minor
modification. The EPA is proposing to set a timeframe for unreasonable
delay that is not specific to particular permitting actions or agency
timelines.
The EPA is proposing to set a timeline somewhere in the range of 30
to 42 months, with the default to be specified in the final rule after
consideration of comments received. This preliminary range is based on
the EPA's current understanding of timelines for oil and gas permitting
across Federal agencies. In particular, the preliminary range is
informed by the EPA's review of data made available through the Federal
Permitting Improvement Steering Council (FPISC) through Title 41 of the
Fixing America's Surface Transportation Act (FAST-41). The
``Recommended Performance Schedules for 2020'' released by FPISC
contains data for the Federal review and permitting of 18 pipeline
projects under the FAST-41 program.\29\ For these projects, the mean
time from receipt by FERC of a complete application to the issuance of
a certificate of public convenience and necessity for interstate
natural gas pipelines was 23 months, with three of the 18 projects (17
percent) exceeding 30 months. Criteria for inclusion in the FAST-41
program include projects that are considered likely to require
investment exceeding $200,000,000 and that do not qualify for
abbreviated review under applicable law; or projects of a size and
complexity that the FPISC determines are likely to benefit from
inclusion.\30\ On this basis, the EPA believes the FAST-41 dataset may
be a conservative population (i.e., require more complex environmental
review and permitting) when compared to the total of all gathering or
transmission infrastructure projects.
---------------------------------------------------------------------------
\29\ Federal Permitting Improvement Steering Council, ``2020
Recommended Performance Schedules.'' Federal Infrastructure
Permitting Dashboard. April 6, 2020. <a href="https://www.permits.performance.gov/fpisc-content/recommended-performance-schedules">https://www.permits.performance.gov/fpisc-content/recommended-performance-schedules</a>. Accessed August 28, 2023.
\30\ Federal Permitting Improvement Steering Council, ``FAST-41
Fact Sheet.'' Federal Infrastructure Permitting Dashboard. September
13, 2022. <a href="https://www.permits.performance.gov/documentation/fast-41-fact-sheet">https://www.permits.performance.gov/documentation/fast-41-fact-sheet</a>. Accessed August 28, 2023.
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The proposed range of 30 to 42 months also takes into account the
2023 Fiscal Responsibility Act, which set a limit under the National
Environmental Policy Act of 1 year for completion of an Environmental
Assessment and 2 years for completion of an Environmental Impact
Statement unless extended by the lead agency in consultation with the
applicant or project sponsor. However, the amount of time necessary to
complete an Environmental Assessment or Environmental Impact Statement
will vary depending on the specific agency action at issue, and this
proposed timeline is not intended to reflect a determination of the
reasonable length of a time necessary to complete such analysis in any
specific instance. For projects requiring approval or permitting from a
federal agency, completion of an Environmental Assessment or
Environmental Impact Statement must occur prior to the agency taking a
final agency action. Additional steps in the process that must be
completed following completion of review under NEPA may add several
months to the overall timeframe (e.g., convening of FERC to approve or
deny a certificate of public convenience and necessity).
We note that all four criteria must have been met for the EPA to
determine that for the purpose of this exemption, emissions were caused
by an unreasonable delay. No single factor, including timing, would be
determinative as to whether a delay unreasonable in the context of this
exemption. We are not assessing whether a delay of any particular
period of months alone (i.e., in the absence of the other three
criteria) should be considered unreasonable in the context of this
exemption, and we are not assessing the reasonableness of a particular
timeframe or collection of conditions outside of the context of this
exemption specific to CAA section 136. An assessment of reasonableness
in any other context depends on the circumstances specific to that
context, which can vary considerably and there is no straightforward
way to determine whether a delay is reasonable or unreasonable that
applies to all contexts. We note that using the approach of requiring
four criteria to be met may not fully capture case-by-case
circumstances and therefore may not always produce the same
determination as a more holistic evaluation would. We have proposed
this approach of using four criteria, including one specifying a set
timeframe, for the purposes of this exemption only to simplify this
process, and for clarity and administrability; we understand that
longer permitting timeframes are often not unreasonable in other
contexts.
As an alternative to specifying that an ``unreasonable delay''
requires a set period of months to have elapsed since a permit
application is deemed complete (in addition to the other three
criteria), the EPA considered adopting a case-by-case process for
determining whether an unreasonable delay in permitting has occurred.
Under such an approach, the exemption for unreasonable delay could only
be utilized by a facility that has obtained a facility-specific finding
of unreasonable delay from the EPA. The EPA would evaluate
documentation provided by a WEC obligated party to determine if there
was an unreasonable delay. A WEC obligated party would not exclude
emissions it claimed are associated with the unreasonable delay
exemption until such time as it obtained an unreasonable delay finding
from the EPA. In other words, emissions associated with a claim of
unreasonable delay for which there is not an unreasonable delay
determination by the EPA could not be subtracted from the emissions
totals in the initial WEC filing. If the EPA subsequently were to make
such a finding, the EPA would authorize a refund in accordance with its
determination. Documentation could include information such as that
currently proposed to be reported, such as information on mitigation
activities, permitting timing, and regulations relevant to flaring, and
information currently proposed as recordkeeping requirements, such as
detailed records on responsiveness, in addition to other documentation
specific to the relevant gathering or transmission infrastructure
environmental permit, such as on the expected timing for the specific
environmental permit(s) sought and the type of information that would
be needed to support the claim that the permit(s) is delayed beyond
what could be considered a reasonable timeframe. A case-by-case
approach for reviewing and
[[Page 5335]]
approving the unreasonable delay exemption would help ensure the
validity of individual claims, and ensure that all applicable waste
emissions for each facility are subject to charge, as directed by
Congress. However, the EPA decided not to propose such an approach due
to the time and resource burden that would be required to administer
such a process, for both covered entities and for the EPA. We expect
that many types of permitting situations can arise, with many
permutations. If industry were required to demonstrate unreasonable
delay on a case-by-case basis, the EPA anticipates this review process
would result in uncertainty for industry and could lead to a
significant backlog, thus making the annual calculation of the WEC
unduly burdensome. Therefore, in the interest of simplicity and making
the exemption available in an efficient manner and without significant
additional burden, the EPA proposes to rely on this threshold of a set
period of months, in addition to the three other criteria, which can be
more easily applied without detailed investigation. The EPA notes that
in its verification process under the proposed approach it would review
the submitted documentation to confirm that requirements are met for
each facility reporting an unreasonable delay, and facilities
determined to have not met the requirements would be required to submit
any additional owed WEC obligation and relevant penalties.
Section II.D.1.c. below details the reporting requirements for this
exemption which provide information necessary for verification of the
exemption eligibility and exempted emission quantities.
We seek comment on these four criteria, each required to be met to
determine emissions eligible for the unreasonable delay exemption. We
seek comment on the use of responsiveness to requests regarding
permitting by the permit applicant or the production segment facility
experiencing delayed mitigation as a criterion. We seek comment on the
use of 30 days to assess responsiveness where a specific timeframe for
response is not provided. We seek comment on the criterion that
exempted emissions are those resulting from flaring of gas that would
have been mitigated without the permit delay, and that only flaring
emissions that are in compliance with applicable regulations are
eligible. We seek comment on the appropriate timeframe to be used as
part of the four-factor test proposed today--specifically, what would
be the best period of time (even if it is below or above the 30-42-
month range EPA is leaning towards now) to use as a trigger for
assessing unreasonable delay for the purposes of CAA section 136(f). We
seek comment on the proposed use of one timeframe for eligibility
versus an approach that might use different time frames for different
types of permits. We seek comment on whether specific types of delays
should be eligible or ineligible, which could be included as additional
criteria or used in place of all or some of the proposed criteria. For
example, we seek comment on whether we should establish that delays due
to litigation regarding pipeline development are ineligible. We also
seek comment on an alternative case-specific approach in which each
facility with exempt emissions from unreasonable delay would provide
additional facility- and permit-specific information, and in which the
exemption would not be granted unless approved by the EPA. Finally, we
seek comment on whether EPA should include additional criteria when
defining the unreasonable delay exemption. For example, we seek comment
on whether, in addition to the four criteria, we should add a criterion
that entities show the flaring is necessary (i.e., other options for
beneficially use or reinject of gas were infeasible).
b. Calculation of Emissions Resulting From an Unreasonable Delay
Through the provisions proposed at 40 CFR 99.32, the EPA is
proposing that exempted emissions are flaring emissions caused by the
delay. We are proposing that exempted flaring emissions are the methane
emissions (or a subset of the methane emissions) from flaring reported
under subpart W.
To calculate the exempted emissions quantity, the entity must
determine the time period associated with the emissions that occurred
as a result of the delay within the filing year. The EPA is proposing
that the delay begins when emissions would have been avoided through
the operation of the gathering or transmission infrastructure, not when
construction would begin, as in many cases the infrastructure would not
be immediately in place and operational at the time of permitting
approval. For example, a permit to construct might be needed before
construction begins, and construction could take months or more before
the infrastructure would be in place.
Where the exempted emissions cover the entire reporting year, the
exempted flaring emissions would be the total reported to part 98 for
flare stacks, associated gas flaring, and the portion of offshore
methane emissions attributable to flaring. Where exempted emissions
occur in only a fraction of a reporting year, the facility is to use
data on flaring emissions over that time frame if available, and if
unavailable, the facility is to adjust part 98 flaring emissions using
the fraction of the year that the exemption is available. Where flared
emissions impacted by permitting delay only account for a portion of
the total flared emissions, the facility is to adjust their part 98
reported flaring emissions using company records and/or engineering
calculations.
We seek comment on the provisions proposed, including the use of
reported flaring emissions to determine exempted emissions, the use of
part 98 data, and the approaches for quantifying emissions for
fractions of the reporting year.
c. Reporting and Recordkeeping Requirements for the Exemption for
Emissions Resulting From a Permit Delay
Through the provisions proposed at 40 CFR 99.31, the EPA is
proposing that the WEC obligated party receiving the exemption would
provide information on each well pad or offshore platform impacted by
the delay. This includes the type of permit, permitting authority, and
the date that the permit application was complete. The WEC obligated
party must report the planned timing of the commencement of the offtake
of gas had the permit not been delayed. This includes a listing of the
methane emissions mitigation activities that are impacted by the delay
and the flaring emissions associated with natural gas that would have
been directed to gathering or transmission infrastructure as a result
of the methane emissions mitigation activities. This also includes
information on all applicable local, state, and Federal regulations
regarding flaring emissions and the facility's compliance with each.
The WEC obligated party must report the time period associated with the
emissions that occurred as a result of the delay within the filing
year. The WEC obligated party must also affirm that neither the
production segment entity impacted by the delay nor the gathering or
transmission infrastructure entity seeking the permit contributed to
the unreasonable delay.
The EPA requires this information for the verification of exemption
eligibility and of exempted emission quantity. Reported information
will be used to conduct verification as discussed in section III.A.4.,
and reported information, records and other information as applicable
will be used
[[Page 5336]]
to conduct any auditing that occurs under section III.E.1.
The EPA seeks comment on the reporting and recordkeeping
requirements for the exemption for unreasonable delay in environmental
permitting. We seek comment on whether additional information should be
collected or retained to allow for verification of the quantity of
emissions eligible for the exemption.
2. Regulatory Compliance Exemption Under CAA Section 136(f)(6)
CAA section 136(f)(6) establishes a regulatory compliance exemption
for subpart W facilities that are ``subject to and in compliance with
methane emissions requirements pursuant to subsections (b) and (d) of
section 111'' upon an Administrator determination that the criteria at
CAA section 136(f)(6)(A) have been met. In this action, the EPA is
proposing: when the Administrator determinations will be made; the time
at which the regulatory compliance exemption would become available to
eligible facilities; the process for how the Administrator
determinations will be made; how to interpret CAA section 136(f)(6)(A)
to govern the interaction between WEC applicable facilities and CAA
section 111(b) affected facilities and CAA section 111(d) designated
facilities (collectively referred to in this preamble as ``CAA section
111(b) and (d) facilities'') for the purposes of the regulatory
compliance exemption; how ``compliance'' with the methane emissions
requirements promulgated under CAA sections 111(b) and (d) will be
defined for the purposes of the regulatory compliance exemption;
reporting requirements for the regulatory compliance exemption; and the
process for resumption of the WEC pursuant to CAA section 136(f)(6)(B)
if the criteria for the regulatory compliance exemption are no longer
met.
The EPA believes the Congressional intent of this exemption was
twofold: (1) to be implemented such that the WEC acts as a bridge to
full implementation of the Final NSPS OOOOb and EG OOOOc by encouraging
methane reductions in the near term while state plans are being
developed, and thereafter exempting from the charge facilities that are
in compliance with the requirements pursuant to the final NSPS OOOOb
and EG-OOOOc-implementing state and Federal plans,\31\ and (2) to
encourage timely implementation of requirements in the final NSPS OOOOb
and EG OOOOc-implementing state and Federal plans in order to ensure
that those requirements achieve meaningful emissions reductions. The
EPA's proposed approach for implementing the regulatory compliance
exemption is based on a plain reading of the statutory text in CAA
section 136(f)(6). The EPA strives to create a program that is
straightforward to implement and enforce.
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\31\ Under the Tribal Authority Rule (TAR), eligible Tribes may
seek approval to implement a plan under CAA section 111(d) in a
manner similar to a state. See 40 CFR part 49, subpart A. Tribes
may, but are not required to, seek approval for treatment in a
manner similar to a state for purposes of developing a Tribal
implementation plan (TIP) implementing the EG codified in 40 CFR
part 60, subpart OOOOc. The TAR authorizes Tribes to develop and
implement their own air quality programs, or portions thereof, under
the CAA. However, it does not require Tribes to develop a CAA
program. Tribes may implement programs that are most relevant to
their air quality needs. If a Tribe does not seek and obtain the
authority from the EPA to establish a TIP, the EPA has the authority
to establish a Federal CAA section 111(d) plan for designated
facilities that are located in areas of Indian country. A Federal
plan would apply to all designated facilities located in the areas
of Indian country covered by the Federal plan unless and until the
EPA approves a TIP applicable to those facilities. In this proposal,
all uses of the phrase ``state and Federal plans'' are intended to
include any Tribal plans, to the extent that any Tribal plans are
developed to implement EG OOOOc.
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The EPA interprets the intent of the WEC to be to incentivize
reduction of methane emissions across the oil and gas industry. For
industry segments not covered by NSPS OOOOb/EG OOOOc, the WEC
incentivizes, but does not require, early and sustained emissions
mitigation activity. For WEC applicable facilities in industry segments
that are covered by NSPS OOOOb/EG OOOOc, the WEC incentivizes, but does
not require, methane emissions reductions earlier than may otherwise be
required pursuant to NSPS OOOOb and EG OOOOc-derived state and Federal
plans. Once those requirements are in effect, the EPA believes the
purpose of the regulatory compliance exemption is to provide relief
from the WEC to owners or operators that are fully complying with those
requirements, and to broadly encourage compliance. This structure
ensures that there is an incentive (or requirement) for methane
emission reductions from new and existing sources in place at all
times, while also avoiding regulation of the same emissions under both
the WEC and the NSPS OOOOb and EG OOOOc-implementing state and Federal
plans once the regulatory compliance exemption becomes available.
The EPA expects that, as CAA section 111(b) and (d) facilities
implement and comply with the methane emissions requirements of NSPS
OOOOb and EG OOOOc-implementing state and Federal plans, many of the
WEC applicable facilities that contain those emissions sources subject
to NSPS OOOOb and EG OOOOc-derived state and Federal plans would be
expected to fall below the waste emissions thresholds, and thus not be
subject to the WEC. However, the regulatory compliance exemption
recognizes that certain WEC applicable facilities may remain above the
waste emissions thresholds even after implementation of the
requirements in the final NSPS OOOOb and approved state and Federal
plans under EG OOOOc; the regulatory compliance exemption would shield
such owners or operators that are in compliance with those requirements
from additional regulation under the WEC.
Congress provided that the regulatory compliance exemption would
only come into effect after ``(i) methane emissions standards and plans
pursuant to subsections (b) and (d) of section 111 have been approved
and are in effect in all States with respect to the applicable
facilities'' and ``(ii) compliance with the requirements described in
clause (i) will result in equivalent or greater emissions reductions as
would be achieved by [the NSPS OOOOb/EG OOOOc 2021 Proposal], if such
rule had been finalized and implemented.'' The EPA's understanding of
these provisions is that Congress intended to provide an incentive for
states to move promptly in adopting their plans, and to encourage those
plans to achieve meaningful emissions reductions. These two drivers are
manifested in the Administrator determinations that must be made before
the regulatory compliance exemption becomes available: the first
Administrator determination, per CAA section 136(f)(6)(A)(i), that the
final NSPS OOOOb and all EG OOOOc-implementing state and Federal plans
are ``approved and in effect''; and the second Administrator
determination, per section 136(f)(6)(A)(ii), that the emissions
reductions achieved by these requirements are equal to or greater than
the reductions that would have been achieved by the NSPS OOOOb/EG OOOOc
2021 Proposal, had that rule been finalized and implemented as proposed
(the ``equivalency determination''). These requirements mean that if
the final NSPS OOOOb or EG OOOOc-implementing state or Federal plans
are delayed, or the requirements therein are collectively less
stringent than those in the NSPS OOOOb/EG OOOOc 2021 Proposal, the
exemption would not be available and WEC applicable facilities that
exceed
[[Page 5337]]
the waste emissions threshold would not be eligible for the regulatory
compliance exemption from the WEC until the conditions are met.
Here, we summarize the proposed approach for the regulatory
compliance exemption. Elements of the proposal, other options
considered, and requests for comment are discussed in more detail in
the sections below.
The EPA is proposing that the prerequisite Administrator
determinations for the regulatory compliance exemption would be made
after all state and Federal plans pursuant to CAA section 111(d) are
approved and in effect. Separate from the timing of the Administrator
determinations, the WEC program must establish when the regulatory
compliance exemption becomes available at the facility level (i.e.,
when eligible facilities can be exempted from the WEC), by defining
when WEC applicable facilities that are subject to methane emissions
requirements pursuant to NSPS OOOOb and EG OOOOc-implementing state and
federal plans are in compliance with those requirements. The EPA
believes that the regulatory compliance exemption is intended to
provide relief from the WEC when the requirements in the final NSPS
OOOOb and EG OOOOc-implementing state and Federal plans are in effect
in all states. In this interest, the EPA is proposing that WEC
applicable facilities would be eligible for the regulatory compliance
exemption as soon as the Administrator determinations have been made,
rather than when the applicable requirements in state and Federal plans
are fully implemented. Thus, under the EPA's proposed approach, the
regulatory compliance exemption would become available to facilities as
soon as the Administrator determinations are made under CAA section
136(f)(6)(A)(i) and (ii).
The EPA is also proposing further elements of the process for the
Administrator determinations under CAA section 136(f)(6)(A)(i) and
(ii), including establishing the relative points of comparison for the
equivalency determination, in order to ensure that those elements align
with the statutory requirements. Because the Administrator
determinations cannot be made until all plans are approved and in
effect, and because the timing for both Administrator determinations is
aligned, the EPA proposes that two the determinations be made together
via a single future administrative action.
The EPA is proposing that a WEC applicable facility's eligibility
for the regulatory compliance exemption would be based on the
compliance status of all of the CAA section 111(b) and (d) facilities
contained within that WEC applicable facility. To be eligible for the
exemption, the EPA proposes that all of the regulated emissions sources
must be in full compliance with their respective methane emissions
requirements under the NSPS and EG-implementing state and Federal
plans.
The EPA is also proposing reporting requirements for the regulatory
compliance exemption. In order to reduce the burden on industry, the
EPA proposes that only WEC applicable facilities that are eligible for
the exemption would be required to report all associated data elements.
Finally, the EPA is proposing how access to the regulatory compliance
exemption would be removed for all WEC applicable facilities if the
criteria associated with the Administrator determinations were no
longer met. The EPA's proposed approach for removing access to the
exemption mirrors the conditions that must be met in order for it to
become available.
a. Timing for Regulatory Compliance Determinations
Before the regulatory compliance exemption becomes available to
facilities, CAA section 136(f)(6)(A) requires determinations to be made
by the Administrator that (1) ``methane emissions standards and plans
pursuant to subsections (b) and (d) of section 111 have been approved
and are in effect in all States with respect to the applicable
facilities'' and (2) that ``compliance with the requirements described
in clause (i) will result in equivalent or greater emissions reductions
as would be achieved by the [NSPS OOOOb/EG OOOOc 2021 Proposal], if
such rule had been finalized and implemented.'' The EPA believes that
Congress intended these prerequisites to exemption availability to
encourage timely implementation of the requirements in the final NSPS
and state and Federal plans and to ensure that those requirements
achieve meaningful emissions reductions.
The first Administrator determination is related to the timing of
final methane emissions standards under CAA section 111(b) and state
and Federal plans pursuant to an EG issued under CAA section 111(d).
The EPA proposes to interpret the language in CAA section
136(f)(6)(A)(i) to mean that this temporal requirement is only met when
both (1) emission standards for new sources under CAA section 111(b)
are promulgated and in effect and (2) all state plans for existing
sources pursuant to an EG issued under CAA section 111(d) have been
approved by the EPA and are in effect. As to the latter element, the
EPA also proposes to interpret the reference to ``plans pursuant to
subsection. . . (d) of section 111'' to include the promulgation of a
Federal plan where the EPA determines that one or more states have
failed to submit an approvable state plan, as that is the only way a
plan pursuant to CAA section 111(d) would take effect in those states.
The EPA further proposes to interpret ``all states'' in CAA section
136(f)(6)(A)(i) to mean that every state with an applicable facility
(i.e., all states with subpart W facilities containing CAA section
111(b) or (d) facilities) must have an approved plan (state or Federal)
before the determination can be made. Accordingly, because the
emissions standards for new sources under CAA section 111(b) will be
finalized before the submittal of state plans for existing sources
under CAA section 111(d), approval of the final state (or Federal) plan
for states with designated facilities would determine the timing for
when the determination could be made under the proposed approach. The
EPA proposes that this determination would be made after all CAA
section 111(d) plans (i.e., state or Federal plans) have been approved
and are in effect. The EPA believes that the proposed approach and
interpretation of ``all states'' is aligned with a plain reading of the
statutory text. In particular, the EPA notes the relationship between
the use of the singular in section 136(f)(6)(A), directing the EPA to
make ``a determination'', and the requirements outlined in
136(f)(6)(A)(ii) and (ii), providing that this determination is
dependent on EPA finding that (1) standards and plans ``have been
approved and are in effect in all states'' and that (2) compliance with
the standards and plans ``will result in equivalent or greater
emissions reductions as would be achieved by the [2021] proposed rule.
. .'' \32\ The text strongly indicates that the EPA must make one
determination after all standards and plans are in place in all states
in order to make the exemption available, and further that the
determination cannot be made until standards and plans are in place in
all states because the equivalency determination must be made on a
nationwide scale.\33\
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\32\ 42 U.S.C. 7436(f)(6)(A).
\33\ Note that while the EPA believes that the statute instructs
us to make a determination after the plans are collectively in place
(rather than making multiple state-by-state determinations), that
does not preclude the EPA from reviewing and revising the
determination if a standard or plan is later revised, to ensure that
the conditions of section 136(f)(6)(A) are still met, consistent
with the resumption of charge language in section 136(f)(6)(B).
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[[Page 5338]]
The EPA considered an alternative approach for the determination
that methane emissions standards and plans have been approved and are
in effect in all states. This alternative would involve a determination
for methane emissions standards after the promulgation of final
emissions standards for CAA section 111(b) facilities and then
determinations on a state-by-state basis as each state plan containing
emissions standards for CAA section 111(d) facilities were submitted
and approved by the EPA (or a Federal plan was promulgated where a
state did not submit an approvable plan). The EPA believes that this
state-by-state approach is inconsistent with a plain reading of CAA
section 136(f)(6)(A)(i), which mandates that emissions standards and
plans must be approved and in effect in all states with respect to the
applicable facilities (i.e., all states with subpart W facilities
containing CAA section 111(b) or (d) facilities). The EPA requests
comment on the proposed approach and an alternative approach that would
make determinations on a state-by-state basis as each state plan was
approved.
The second determination that must be made before the regulatory
compliance exemption becomes available is whether the final ``methane
emissions standards and plans'' provide equivalent or greater emissions
reductions than would have been achieved by the NSPS OOOOb/EG OOOOc
2021 Proposal, had that proposal been finalized and implemented as
proposed. Based on a plain reading of the statutory text, because plans
pursuant to CAA section 111(d) will not be finalized for several years,
the EPA cannot propose an equivalency determination in this action.
Instead, we propose that the equivalency determination will be made via
an administrative action after all CAA section 111(d) plans (i.e.,
state or Federal plans) have been approved. This proposed timing would
allow evaluation of the emissions reductions achieved by the final NSPS
and by all final state and Federal plans.
The EPA also assessed making the equivalency determination for CAA
section 111(b) affected facilities before making it for CAA section
111(d) designated facilities. In this proposal, the EPA interprets CAA
section 136(f)(6)(ii) as requiring a comparison of the emissions
reductions that will be achieved by the final NSPS OOOOb/EG OOOOc and
the reductions that would have been achieved by the NSPS OOOOb/EG OOOOc
2021 Proposal if finalized as proposed. Separate equivalency
determinations for CAA section 111(b) facilities and CAA section 111(d)
facilities would not provide for a comparison of the total emissions
reductions achieved by both rules, and therefore the EPA believes that
an approach with separate equivalency determinations would be
inconsistent with a plain reading of the statutory text. Further,
because both determinations must occur before the exemption becomes
available, and because under the proposed approach the determination
required by CAA section 136(f)(6)(i) would occur after all plans are
approved and in effect, there would be no practical reason for making
the equivalency determination for CAA section 111(b) facilities before
making it for CAA section 111(d) facilities. Finally, the only purpose
for making the equivalency determination for CAA section 111(b)
facilities before CAA section 111(d) facilities would be in support of
an approach that would make the regulatory compliance exemption
available to CAA section 111(b) facilities before CAA section 111(d)
facilities. As discussed below in section II.D.2.b of this preamble,
such an approach would not align with other elements of this proposal,
would not be aligned with the statutory text, and would not be
technically feasible. The EPA requests comment on this alternative
approach.
b. Timing of Regulatory Compliance Exemption Availability
Separate from the timing of the Administrator determinations, the
WEC program must also establish when the regulatory compliance
exemption will become available for facilities. Different states will
have different start dates and in some cases, phased-in requirements,
in state or federal plans under 111(d), resulting in some facilities
being in compliance with the methane emissions requirements pursuant to
CAA section 111(b) and (d) before others. The EPA believes the
inclusion of the regulatory compliance exemption at CAA section
136(f)(6)allows for relief from the WEC when the requirements in the
final NSPS and state and Federal plans are in effect. The EPA therefore
proposes that the regulatory compliance exemption would become
available to all applicable facilities meeting the criteria when the
Administrator determinations required by CAA section 136(f)(6)(A)(i)
and (ii) have both been made. Both determinations are required before
the exemption becomes available, and the determination under CAA
section 136(f)(6)(A)(i) would indicate that the requirements
promulgated under CAA sections 111(b) and (d) have been approved and
are in effect. Because the availability of the exemption is linked to
the CAA section 136(f)(6)(A)(i) and (ii) determinations, which the EPA
is proposing could only be made after all states with an applicable
facility have an approved state or Federal plan in effect, the EPA is
proposing that the exemption would become available to all eligible WEC
applicable facilities in all states at the same time. Moreover, because
methane emissions standards for CAA section 111(b) facilities would be
expected to come into effect earlier than those required for CAA
section 111(d) facilities in state or Federal plans, the timing for
exemption availability would be largely driven by the approval and
effective date for the final state or Federal plan (i.e., the last
state with CAA section 111(d) facilities to have a plan approved and in
effect).
The EPA believes the proposed approach is consistent with the
statutory text. CAA section 136(f)(6)(A) states that charges shall not
be imposed on an applicable facility ``that is subject to and in
compliance with methane emissions requirements pursuant to subsections
(b) and (d) of section 111.'' In order to receive the exemption, all
CAA section 111(b) and (d) facilities contained within a WEC applicable
facility would need to demonstrate compliance, as discussed in section
II.D.2.f. of this preamble.
This proposal makes the exemption available upon adoption of all
plans pursuant to CAA section 111(d) and the issuance of the
Administrator's findings under CAA section 136(f)(6)(A). The EPA
proposes that the exemption be available as soon as all state or
federal plans are in effect, because facilities can be in compliance
with the requirements in plan even if full implementation of those
requirements is not required until a future date. Provided that
facilities subject to the WEC are in compliance with OOOOb requirements
and the requirements in EG OOOOc-implementing plans, the proposed
approach also allows such facilities to benefit from the regulatory
compliance exemption much earlier than the alternative, described
below, of making the regulatory compliance exemption available only
once applicable compliance deadlines have passed.
The EPA notes that implementation of the requirements included in
state or Federal plans may not be mandated immediately upon the date at
which the plan goes into effect. In other words, the plans may include
compliance
[[Page 5339]]
schedules with compliance dates that occur at a future date after plan
approval, and such requirements could be implemented over multiple
compliance dates in a phased manner or include deadlines for various
increments of progress. It is therefore possible for CAA section 111(d)
facilities to be in compliance with the methane emissions requirements
in a plan even if not all compliance dates included in the plan have
come to pass. For example, if an approved state plan were to require a
specific type of designated facilities to install emissions controls
within a year of the effective date of the state plan, those facilities
would be considered in compliance with those requirements for that
first year. By providing the exemption as soon as the Administrator's
determinations are made after state or Federal plans are approved and
in effect rather than when the requirements in those plans must be
implemented, the proposed approach would provide relief from the WEC
once CAA section 111(d) facilities are effectively subject to federally
enforceable methane emissions requirements pursuant to CAA section 111.
The EPA requests comment on the proposed approach of making the
regulatory compliance exemption available to all WEC applicable
facilities at the time when the two determinations required by CAA
section 136(f)(6)(A) have been made.
The EPA considered alternative approaches in developing this
proposal for implementing the regulatory compliance exemption but found
they would not be consistent with the statutory text, would be more
challenging to implement, would unfairly advantage specific facilities
and companies, or would not be technically feasible.
First, the EPA considered an approach that would make the exemption
available to WEC applicable facilities meeting the criteria at a state-
by-state level as the plan pursuant to CAA section 111(d) for each
state was approved and became effective. For WEC applicable facilities
that span multiple states, the exemption would be available when plans
for all states in which the facility is located were approved and in
effect. This alternative approach would likely make the exemption
available earlier for certain WEC applicable facilities compared to the
proposed approach, which would not make the exemption available until
plans are approved and in effect in all states. The EPA believes that
making the regulatory compliance available at a state-by-state level is
inconsistent with the statutory text. As discussed in section II.D.2.a.
of this preamble, the EPA's interpretation of CAA section 136(f)(6)(A)
in this proposal is that neither of the determinations that are
prerequisites to the regulatory compliance exemption's availability
could be made until plans for CAA section 111(d) facilities have been
approved and are in effect for all states. Based on this
interpretation, it would not be possible for the exemption to become
available on a state-by-state basis as state plans were approved and
became effective because the prerequisite determinations could not
occur until all state plans were approved and in effect. The EPA also
believes the proposed approach will simplify implementation and
administration of the regulatory compliance exemption compared to an
approach in which the exemption would become available to states at
different times. Further, a state-by-state application of the exemption
could unfairly advantage and disadvantage WEC applicability facilities
or companies based on their geographic location. WEC obligations for
operations in states that take longer to develop state plans could be
higher than those in states that are able to develop and have plans
approved earlier, and thus have access to the exemption. Conversely,
the proposed approach of making the exemption available to all states
at the same time would be equitable and provide the industry with
better regulatory certainty. The EPA requests comment on making the
regulatory compliance exemption available on a state-by-state basis
based on the finalization of plans for individual states.
Second, the EPA considered an approach that would make the
regulatory compliance exemption available to WEC applicable facilities
meeting the criteria when the methane requirements for all CAA section
111(b) and (d) facilities have been fully implemented. Under this
alternative approach, WEC applicable facilities would only become
eligible for the regularly compliance exemption once the compliance
dates for the NSPS and the state and Federal plans have passed. Because
the compliance deadlines under the final EG OOOOc may occur at some
point after the timeline for state plan approval and issuance of a
Federal plan, this alternative approach would make the regulatory
compliance exemption available later than under the proposed approach.
This would require the EPA to interpret the phrase ``subject to and in
compliance with methane emissions requirements'' in CAA section
136(f)(A) to mean that the exemption from the charge is available only
after all of the requirements for CAA section 111(d) facilities have
been fully implemented. In other words, the EPA would read ``in
compliance with methane emissions requirements'' to mean that all
compliance dates in the NSPS and the state and Federal plans have
passed. That might serve to give independent effect to both elements of
the statutory phrase ``subject to and in compliance with'', but the EPA
believes that this alternative approach is not as well aligned with the
statutory directive. This is because compliance with the standards may
occur at different points in time, both across the NSPS and the state
and Federal plans, and even within standards that have phased
compliance requirements. This interpretation may have the result of
delaying availability of the regulatory compliance exemption for many
years, even as facilities are otherwise complying with all applicable
methane emissions requirements, thus extending the period for which
many oil and gas operations would be subject to concurrent regulation
under WEC and CAA section 111. Rather, the EPA proposes to conclude
that CAA section 111(b) and (d) facilities can be considered to be in
compliance with all applicable methane emissions requirements, even
prior to the final compliance deadlines, for purposes of the regulatory
compliance exemption. While the EPA is not proposing that the exemption
would become available when the requirements of all state and Federal
plans are fully implemented rather than when all state and Federal
plans have been approved and are in effect, the agency requests comment
on whether such an approach would be legally and practically justified.
Third, the EPA considered an approach that would make the
regulatory compliance exemption available to WEC applicable facilities
meeting the criteria at a state-by-state level as the final compliance
deadline in a state or Federal plan for CAA section 111(d) facilities
was reached. Under this alternative approach, WEC applicable facilities
in a given state would have access to the exemption upon the final
compliance date for CAA section 111(d) facilities in that state.
Because state and Federal plans may establish different compliance
timelines for CAA section 111(d) facilities, this approach could make
the exemption available to states at different times. For WEC
applicable facilities that span multiple states, the exemption would be
available when the final compliance date passed in all
[[Page 5340]]
states in which the facility is located. As with the alternative
approach that would make the exemption available after the final
compliance deadline for CAA section 111(d) facilities had passed in all
states, the EPA does not believe an approach that provides the
exemption at a state-by-state level based on compliance dates is as
consistent with the statutory text and purpose of the exemption for the
reasons discussed in the prior paragraph. The EPA requests comment on
an approach that would make the exemption available at a state-by-state
level based on each state's final compliance deadline for CAA section
111(d) facilities.
The EPA also assessed an approach that would make the regulatory
compliance exemption available to CAA section 111(b) facilities before
CAA section 111(d) facilities. Because compliance with emission
standards for CAA section 111(b) affected facilities generally apply
upon the effective date of the final NSPS and would be required before
emission standards for CAA section 111(d) designated facilities are
fully implemented (once state or Federal plans are finalized and in
effect), there would likely be several years between compliance with
methane emissions requirements for CAA section 111(b) and (d)
facilities. The EPA rejected this approach for this proposal, however,
based on a plain reading of the statutory text. First, as discussed in
section II.D.2.e. of this preamble, the exemption is applied to an
entire WEC applicable facility, not the CAA section 111(b) and (d)
facilities within that WEC applicable facility, and therefore
individual CAA section 111(b) or (d) facilities within a WEC applicable
facility cannot be exempted. Second, CAA section 136(f)(6)(A) states
that waste emission charges shall not be imposed ``on an applicable
facility that is subject to and in compliance with methane emissions
requirements pursuant to subsections (b) and (d) of section 111.'' The
EPA believes that a plain reading of this text indicates that
compliance with regulations pursuant to both CAA section 111(b) and (d)
must be achieved before the exemption becomes available, and that the
statute therefore does not, by its terms, permit application of the
exemption to CAA section 111(b) facilities before it becomes available
to CAA section 111(d) facilities. As discussed in section II.D.2.a. of
this preamble, the EPA proposes to make the determinations required by
CAA section 136(f)(6)(A)(i) and (ii) after all state or Federal plans
have been approved and are in effect. Because the determinations that
are required for the exemption to become available would not be made
separately for CAA section 111(b) facilities and CAA section 111(d)
facilities, the exemption would not be available to CAA section 111(b)
facilities before CAA section 111(d) facilities under the proposed
approach.
Further, even assuming that this statutory text allowed for some
ambiguity, there are practical limitations to implementing the
regulatory exemption in a phased manner for CAA section 111(b) and (d)
facilities. The WEC calculations are based on methane emissions and
natural gas or oil throughput data for subpart W facilities that may
contain both CAA section 111(b) and (d) facilities. Because reporting
under subpart W does not distinguish between CAA section 111(b) and (d)
facilities, there is currently no practical means of implementing a
phased implementation of the regulatory compliance exemption. Revising
the subpart W reporting requirements to make such distinctions would
significantly increase the reporting complexity and burden for the oil
and gas industry and would not be possible for certain emissions
sources due to different definitions of individual emissions source
types in subpart W and at CAA section 111(b) and (d) facilities.
Further, while it may be feasible to distinguish emissions from new and
existing sources for certain emission source categories, there is no
means to distinguish natural gas throughput from CAA section 111(b) and
(d) facilities at subpart W facilities that contain both CAA section
111(b) and (d) facilities.
c. Emissions Year in Which Exemption Takes Effect
While the data collected under subpart W for the purposes of WEC
calculation are reported on a calendar-year basis (i.e., a reporting
year is a calendar year), the date at which all of the criteria for the
regulatory compliance exemption will be met is not yet known and could
fall at any point in the course of a reporting year. The EPA is
proposing that the regulatory exemption will take effect in the
reporting year in which the required conditions are met. For example,
if all exemption requirements are met in June 2027, all eligible
facilities meeting the proposed compliance requirements discussed in
section II.D.2.f. of this preamble would be exempt from the WEC for the
entire 2027 reporting year. The proposed approach is aligned with the
EPA's interpretation that the regulatory compliance exemption is
intended to prevent WEC applicable facilities from being subject to the
WEC when their constituent CAA section 111(b) and (d) facilities are in
compliance with their applicable standards. The EPA requests comment on
the proposed approach, as well as an approach in which the regulatory
compliance exemption became effective for eligible facilities in the
next calendar year after which all required conditions are met (e.g.,
if requirements are met in October 2027, the exemption would come into
effect for the 2028 reporting year). The EPA also requests comment on
an approach that would apply the regulatory exemption for a portion of
the reporting year based on when all exemption requirements were met,
and how reported emissions and throughput data could be quantified,
such as through prorating.
d. Approach for Regulatory Compliance Determinations
In this action, the EPA is proposing certain elements related to
the approach for the CAA section 136(f)(6)(A) Administrator
determinations that must occur before the regulatory compliance
exemption becomes available. The EPA is proposing that both
determinations would be made simultaneously via a future administrative
action. For the equivalency determination, the EPA is proposing the
geographic scale at which the equivalency determination would be
conducted and the specific elements that would be compared. The EPA
proposes to address all other elements (e.g., cumulative versus year-
by-year) of the equivalency determination in a future administrative
action when the analysis is conducted.
The EPA proposes that when the criteria for both determinations are
met, the determinations would be made through a single administrative
action. As discussed in section II.D.2.a. of this preamble, under the
proposed approach neither determination could be made until all state
and Federal plans pursuant to CAA section 111(d) have been approved and
are in effect. Because the timing for both determinations would be
aligned, the EPA believes that making both determinations via a single
administrative action will facilitate timely access to the regulatory
compliance exemption after the CAA section 136(f)(6)(A)(i) and (ii)
requirements have been met. The EPA requests comment on the proposed
approach for making both determinations via a single future
administrative action, as well as on alternative approaches for making
the determinations.
Section 136(f)(6)(A)(ii) of the CAA requires an Administrator
determination
[[Page 5341]]
that compliance with the requirements in the final CAA section 111(b)
and (d) rules ``will result in equivalent or greater emissions
reductions as would be achieved by the [NSPS OOOOb/EG OOOOc 2021
Proposal], if such rule had been finalized and implemented.'' The EPA
is proposing to conduct the analysis for the purposes of this
equivalency determination at a national level, comparing the national-
level emissions reductions that would have been achieved under the NSPS
OOOOb/EG OOOOc 2021 Proposal (if finalized as proposed) against those
that will be achieved upon implementation of the final NSPS OOOOb/EG
OOOOc.
The EPA believes that a national evaluation is the most appropriate
geographic scale for the purposes of the equivalency determination. The
primary concern for the emissions reductions achieved by the NSPS
OOOOb/EG OOOOc in the context of the WEC regulatory compliance
exemption are methane emissions. Because the climate impacts of these
emissions are dependent on their aggregate quantity rather than where
they occur, a national-level evaluation will provide an appropriate
comparison of the overall impact of the reductions that would have been
achieved under the NSPS OOOOb/EG OOOOc 2021 Proposal and those that
will be achieved upon implementation of the final NSPS OOOOb and state
and Federal plans implementing OOOOc. The EPA also considers a national
evaluation to be consistent with the statutory text in CAA section
136(f)(6)(A)(ii), which requires the Administrator's determination to
be based on ``compliance with the requirements described in clause
(i),'' where clause (i) describes the collective ``methane emissions
standards and plans'' required by CAA sections 111(b) and (d).
The EPA assessed alternative approaches that would conduct the
equivalency determination at the state-by-state level (i.e., each state
would need to demonstrate equivalent or greater emissions reductions)
and at both the national and state-by-state levels. However, the EPA is
not proposing an approach that would conduct the equivalency at the
state-by-state level because the EPA believes that this approach is
less consistent with the statutory text and purpose. Determinations for
individual states would not indicate if the emissions reductions that
will be achieved by the final NSPS and state and Federal plans are
equivalent or greater than the reductions that would have been achieved
by the NSPS OOOOb/EG OOOOc 2021 Proposal, had that rule been finalized
and implemented. In other words, if the EPA were to make determinations
for individual states and make the exemption available on a state-by-
state basis, that could result in not achieving emission reductions
equivalent to the NSPS OOOOb/EG OOOOc 2021 Proposal, thus undermining
Congress' intent in drafting this provision to incentivize a minimum
level of methane emission reductions via the CAA section 111(b) and (d)
regulations. The EPA requests comment on the proposed approach of
conducting the equivalency determination at the national scale. The EPA
requests comment on conducting the equivalency determination at other
geographic scales, such as a state-by-state level, as well as an
approach that would require an equivalency determination at both the
national and state-by-state levels.
The EPA also considered an alternative approach that would conduct
the equivalency analysis at a source-by-source level (at either a
national or state-by-state scale). Under this alternative approach, the
EPA would compare the reductions achieved by individual sources under
the NSPS OOOOb/EG OOOOc 2021 Proposal, had that rule be finalized and
implemented, and the final NSPS OOOOb/EG OOOOc. As described above, the
climate impacts of methane emissions are based on their aggregate
quantity, and it is that quantity, therefore, that is necessary for
conducting the equivalency determination. Within the specific context
of the equivalency determination, it does not matter if the emissions
reductions achieved by an individual source under the final NSPS OOOOb/
EG OOOOc achieves fewer reductions than it would have under the NSPS
OOOOb/EG OOOOc 2021 Proposal, as long as the total emissions reductions
achieved by implementation of the final NSPS OOOOb and EG OOOOc-derived
state or federal plans across all sources are equivalent or greater
than those that would have been achieved across all sources by the NSPS
OOOOb/EG OOOOc 2021 Proposal. The EPA therefore believes that it is not
reasonable to conduct the equivalency analysis on a source-by-source
level and such an approach is not required by the statutory text.
However, the EPA requests comment on using a source-by-source approach
for the equivalency determination and requests comment on how such an
analysis could be conducted.
Because the NSPS OOOOb/EG OOOOc 2021 Proposal was not itself a
final rule at the time Congress enacted this Waste Emissions Charge
program, no new source emissions standards or emission guidelines had
been finalized for CAA section 111(b) and (d) facilities based on the
NSPS OOOOb/EG OOOOc 2021 Proposal, no requirements had been finalized
for what constitutes an approvable state plan, and no states had
submitted state plans pursuant to such hypothetical finalized
requirements. As such, the EPA proposes to use the standards proposed
in NSPS OOOOb and the presumptive standards proposed in EG OOOOc as the
basis for evaluating emissions reductions that would have been achieved
had the NSPS OOOOb/EG OOOOc 2021 Proposal been finalized and
implemented. In other words, the EPA understands the inclusion of the
NSPS OOOOb/EG OOOOc 2021 Proposal as the baseline for the equivalency
demonstration to mean that Congress intended for the EPA to assume, for
purposes of this analysis, that the proposed standards were finalized
as drafted in the NSPS OOOOb/EG OOOOc 2021 Proposal and implemented
nationwide. Further, because Congress directs the EPA to compare the
emissions that would have been achieved if the NSPS OOOOb/EG OOOOc 2021
Proposal were finalized and implemented against actual CAA section
111(b) and (d) standards once these are finalized and in effect, the
EPA believes that Congress must have meant the EPA to assume that the
NSPS OOOOb/EG OOOOc 2021 Proposal was finalized and implemented as
proposed, which is the only way to use it as a point of comparison.
Accordingly, for CAA section 111(b) facilities under the NSPS OOOOb/EG
OOOOc 2021 Proposal, the EPA proposes to assess the reductions that
would have been achieved had the proposed NSPS OOOOb been finalized and
implemented. For CAA section 111(d) facilities under the NSPS OOOOb/EG
OOOOc 2021 Proposal, the EPA proposes to assess the reductions that
would have been achieved had the proposed emissions guidelines been
adopted and implemented by all states as proposed.
The EPA believes the proposed points of comparison between the NSPS
OOOOb/EG OOOOc 2021 Proposal and the final NSPS OOOOb and final
requirements in state and Federal plans derived from EG OOOOc for the
equivalency is aligned with a plain reading of CAA section
136(f)(6)(A), and with Congressional intent. The EPA requests comment
on the proposed approach. The EPA recognizes that if the NSPS OOOOb/EG
OOOOc 2021
[[Page 5342]]
Proposal had been finalized as proposed, the requirements for CAA
section 111(d) facilities, and the emissions reductions associated with
those requirements, would have been based on approved state or Federal
plans. In those plans, it is possible that some states may have set
different standards of performance than the presumptive standards
proposed in EG OOOOc based on a provision of CAA section 111(d)(1)
permitting states to ``take into consideration, among other factors,
the remaining useful life of a source.'' (The EPA refers to this
provision as the ``remaining useful life and other factors'' provision,
or RULOF.) The EPA regulations at 40 CFR part 60 subpart Ba permit
states to consider several factors to, with an adequate demonstration,
establish standards less stringent than the degree of emission
limitation otherwise required by an EG. In such circumstances, the
emissions reductions achieved by those state plans would have been less
than if the state plans had adopted and implemented the presumptive
standards in the final emissions guidelines, had they been finalized.
However, because state plans were never developed pursuant to the NSPS
OOOOb/EG OOOOc 2021 Proposal, there is no means of reasonably
estimating the requirements that may have been included in those state
plans and what emissions reductions they would have achieved. The text
also counsels against making RULOF assumptions in this case. Because
Congress directs the EPA to compare the emissions that would have been
achieved if the NSPS OOOOb/EG OOOOc 2021 Proposal were ``finalized and
implemented'' against actual CAA section 111(b) and (d) standards once
these are ``approved and in effect,'' the EPA believes that Congress
meant the Agency to assume that the NSPS OOOOb/EG OOOOc 2021 Proposal
was finalized and implemented as proposed, because that will allow for
comparison with emissions reductions achieved under the final CAA
section 111(d) plans, which may differ from the proposal in a variety
of ways, including as a result of RULOF analysis. It is also reasonable
to infer that Congress wanted to guarantee the level of reductions
(i.e., ``equivalent or greater'' \34\ than expected by the NSPS OOOOb/
EG OOOOc 2021 Proposal) that would ultimately be achieved by the final
NSPS OOOOb and EG OOOOc-derived state and Federal plans by only
allowing for the exemption if it is determined that the Final NSPS
OOOOb/EG OOOOc would achieve at least the level of reductions that were
expected from the proposed rule in place at the time CAA section 136
was written and passed. Thus, the EPA believes the intent of CAA
section 136(f)(6)(A) is to use the proposed approach of assessing the
reductions that would have been achieved had the proposed emissions
guidelines in the NSPS OOOOb/EG OOOOc 2021 Proposal been adopted and
implemented by all states as proposed. The EPA requests comment on
other approaches that could be used to estimate the emissions
reductions from CAA section 111(d) facilities had the NSPS OOOOb/EG
OOOOc 2021 Proposal been finalized and implemented.
---------------------------------------------------------------------------
\34\ 42 U.S.C. 7436(f)(A)(ii) (requiring a determination by the
Administrator that ``compliance with the requirements described in
clause (i) will result in equivalent or greater emissions reductions
as would be achieved by [the 2021 proposal]''.)
---------------------------------------------------------------------------
The EPA also recognizes that in the proposed approach for the
equivalency determination, analysis of the reductions from CAA section
111(d) facilities under the NSPS OOOOb/EG OOOOc 2021 Proposal would be
based on universal adoption of the presumptive standards in the
proposed emissions guidelines, while analysis of the reductions
achieved by state and Federal plans developed pursuant to the final EG
OOOOc would account for any states' use of the RULOF provision to set
less stringent standards. The EPA believes the proposed approach of
assessing the reductions achieved by final state and Federal plans is
aligned with the statutory text and Congressional intent. CAA section
136(f)(6)(A)(ii) states that the point of comparison for the emissions
reductions that would have been achieved by the NSPS OOOOb/EG OOOOc
2021 Proposal are those resulting from ``compliance with the
requirements described in clause (i).'' CAA section 136(f)(6)(A)(i) in
turn refers to the ``methane emissions standards and plans pursuant to
subsections (b) and (d) of section 111.'' The EPA's proposed approach
to use the reductions that will be achieved by approved state and
Federal plans in the equivalency determination is based on the use of
``plans'' in CAA section 136(f)(6)(A)(i). Further, CAA section
136(f)(6)(A)(ii) establishes that EPA may not make the equivalency
determination unless and until it can establish that ``compliance with
the requirements described in clause (i) will result in equivalent or
greater emissions reductions as would be achieved by the [NSPS OOOOb/EG
OOOOc 2021 Proposal].'' \35\ As similarly noted above, it is reasonable
to infer from this language that Congress intended to guarantee that a
minimum level of emissions reduction would be achieved by
implementation of the CAA section 111 standards before the exemption
became available--and because application of the RULOF provision may
result in less stringent standards, Congress could not guarantee this
minimum level would be achieved unless the equivalency determination
considered the reductions actually achieved by the final NSPS and the
standards actually set in state plans, including any standards set
pursuant to the RULOF provision.
---------------------------------------------------------------------------
\35\ 42 U.S.C. 7436(f)(6)(A)(ii) (emphasis added).
---------------------------------------------------------------------------
The EPA considered an approach which would compare the NSPS OOOOb/
EG OOOOc 2021 Proposal, as proposed, with the final NSPS OOOOb/EG OOOOc
as finalized but before implementation and consideration of RULOF, but
ultimately rejected this approach. Although this approach would be
relatively simple to apply, not taking into account the actual
standards adopted in the state plans cannot lead to a sound conclusion
about whether the emission reduction target that the statute sets will
actually be met in practice. In other words, this approach could not
guarantee that the ``result'' of implementation of the plans will be
equivalent reductions, as the statute requires the EPA to determine.
Further, CAA section 136(f)(6)(A)(ii) states that ``compliance'' with
the standards should result in equivalent emissions reductions, but in
practice, sources are not required to comply with the EG; instead,
sources must comply with standards later established in state or
federal plans. For these reasons, the EPA believes that comparing the
NSPS OOOOb/EG OOOOc 2021 Proposal with the final NSPS OOOOb/EG OOOOc as
finalized, but before implementation, is not as well aligned with the
statutory text and intent of Congress. The EPA requests comment on its
proposed approach and other approaches that could be used to estimate
the emissions reductions that will be achieved by plans pursuant to CAA
section 111(d), including comparing the NSPS OOOOb/EG OOOOc 2021
Proposal with the final NSPS OOOOb/EG OOOOc before implementation and
consideration of RULOF.
The EPA reviewed comments on this topic submitted in response to
the NSPS OOOOb/EG OOOOc 2022 Supplemental Proposal. Those comments
informed the EPA's proposed approach and alternative approaches. While
those comments were considered in the development of this proposal,
because they were submitted in response to a
[[Page 5343]]
separate rulemaking, any duplicative or additional comments on this
topic must resubmitted in response to this
[…truncated; see source link]Indexed from Federal Register on January 26, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.