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On June 3, 2016, the Environmental Protection Agency (EPA) published a final rule titled 'Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources; Final Rule.’ Following promulgation of the final rule, the Administrator received petitions for reconsideration on several provisions in the rule. In a previous action, the EPA proposed those specific reconsideration issues on October 15, 2018. A number of states and industry associations sought judicial review of the 2016 rule, and the litigation is currently being held in abeyance. On March 28, 2017, newly elected President Donald Trump issued Executive Order 13783 titled 'Promoting Energy Independence and Economic Growth,’ which directs agencies to review existing regulations that potentially burden the development of domestic energy resources, and appropriately suspend, revise or rescind regulations that unduly burden the development of U.S. energy resources beyond what is necessary to protect the public interest or otherwise comply with the law. In 2017, the EPA provided notice to initiate the review of the 2016 rule and stated that, if appropriate, will initiate proceedings to suspend, revise or rescind the rule. Subsequently, in a notice dated June 5, 2017, the EPA further committed to look broadly at the entire 2016 rule. On August 28, 2019, the EPA Administrator signed proposed amendments to the 2012 and 2016 NSPS that would remove regulatory duplication and save the industry millions of dollars in compliance costs each year, while maintaining health and environmental protection from oil and natural gas sources that the Agency considers appropriate to regulate. The proposed amendments would remove all sources in the transmission and storage segment of the industry from regulation for both volatile organic compounds and for greenhouse gases. The amendments also would rescind the greenhouse gas requirements that apply to sources in the production and processing segments of the industry. As an alternative, EPA proposed to rescind the greenhouse gas requirements that apply to all sources in the industry without removing any sources from the current source category. EPA is seeking comment on alternative interpretations of EPA’s legal authority to regulate pollutants under section 111(b) of the Clean Air Act. EPA will take public comment on the proposed amendments for 60 days after they are published in the Federal Register.

Statement of Need:

On June 3, 2016, the EPA published a final rule titled Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources; Final Rule. On March 28, 2017, newly elected President Donald Trump issued Executive Order 13783 titled Promoting Energy Independence and Economic Growth, which directs agencies to review existing regulations that potentially burden the development of domestic energy resources, and appropriately suspend, revise or rescind regulations that unduly burden the development of U.S. energy resources beyond what is necessary to protect the public interest or otherwise comply with the law. In 2017, the EPA provided notice to initiate the review of the 2016 rule and stated that, if appropriate, will initiate proceedings to suspend, revise or rescind the rule. Subsequently, in a notice dated June 5, 2017, the EPA further committed to look broadly at the entire 2016 rule. On August 28, 2019, the EPA Administrator signed proposed amendments to the 2012 and 2016 NSPS that would remove regulatory duplication and save the industry millions of dollars in compliance costs each year, while maintaining health and environmental protection from oil and natural gas sources that the Agency considers appropriate to regulate. The proposed amendments would remove all sources in the transmission and storage segment of the industry from regulation for both volatile organic compounds and for greenhouse gases. The amendments also would rescind the greenhouse gas requirements that apply to sources in the production and processing segments of the industry. As an alternative, EPA proposed to rescind the greenhouse gas requirements that apply to all sources in the industry without removing any sources from the current source category. EPA is seeking comment on alternative interpretations of EPA’s legal authority to regulate pollutants under section 111(b) of the Clean Air Act. EPA will take public comment on the proposed amendments for 60 days after they are published in the Federal Register.

Summary of the Legal Basis:

The review of the 2016 rule is an exercise of the EPA's authority under section 111(b)(1)(B), section 307(d)(7)(B) and section 301(a) of the Clean Air Act.

Alternatives:

For the 2016 review proposal, we anticipate soliciting comment on a lead policy option for the regulation of greenhouse gases and the sector regulatory structure and an alternative policy option under consideration.

Anticipated Costs and Benefits:

These values are estimates that are likely to change. Note all values at 7-percent discount rate in 2016 dollars (2019 to 2025).

Present Value Benefits (Total Cost Savings): $81-97 million

Annualized Value Benefits (Total Cost Savings): $14-17 million

Present Value Costs (Forgone Domestic Climate Benefits): $13 million

Annualized Value Costs (Forgone Domestic Climate Benefits): $2.2-2.3 million

Present Value Net Benefits: $69-83

Annualized Value Net Benefits: $12-14

The costs and benefits for the alternative policy option are zero.

Risks:

This is a deregulatory action that could result in forgone emissions reductions.