O’Melveny Worldwide

EPA Proposes Revisions to Greenhouse Gas Reporting Requirements for Petroleum and Natural Gas Systems

July 13, 2023


On July 6, 2023, the US Environmental Protection Agency (“EPA”) announced proposed amendments to the Greenhouse Gas Reporting Rule for the Petroleum and Natural Gas Systems source category.1 The proposal, which has not yet been published in the Federal Register, is intended to improve the calculation, monitoring, and reporting of greenhouse gas (“GHG”) data in accordance with the Methane Emission Reduction Program of the Inflation Reduction Act (“IRA”).

The IRA’s Methane Emission Reduction Program imposes a first-time federal fee on methane emissions for the oil and gas sector. In general, covered facilities that emit 25,000 metric tons of carbon dioxide equivalent (“CO2e”) or more per year will be required to pay for “excess” methane emissions. The EPA is required to revise the GHG reporting requirements for petroleum and natural gas systems to ensure that reporting is based on empirical data and accurately reflects total methane emissions. For more information on the IRA, see our prior alert.

The EPA proposes to include additional emissions and emissions sources to address potential gaps in total methane emissions reported by covered facilities. In particular, the EPA proposes to add a new emissions source, referred to as “other large release events,” to capture abnormal emission events, such as storage wellhead leaks and well blowouts, that are not accurately accounted for using existing methods. The EPA also proposes to add or revise other emission sources, including nitrogen removal units, produced water tanks, mud degassing, crankcase venting, and combustion slip.

In addition, the EPA proposes several revisions to add or revise calculation methodologies to improve the accuracy of reported emissions, incorporate additional empirical data, and to allow owners and operators of applicable facilities to submit empirical emissions data. For example, the EPA proposes new calculation methodologies for equipment leaks and natural gas pneumatic devices to allow for the use of direct measurement.

The EPA also proposes revisions to existing reporting requirements to collect data that would improve verification of reported data and ensure accurate reporting of emissions and improve the transparency of the data collected, and other technical amendments, corrections, and clarifications.

If adopted, the proposed amendments would become effective January 1, 2025.

40 C.F.R. Part 98, Subpart W.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. John Rousakis, an O'Melveny partner licensed to practice law in New York and John D. Renneisen, an O'Melveny senior counsel licensed to practice law in the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

© 2023 O’Melveny & Myers LLP. All Rights Reserved. Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York’s Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, T: +1 212 326 2000.