Guest essay by Eric Worrall
Much wailing from greens and big business, as President Trump’s EPA prioritises the economy, cutting red tape for small businesses and boosting US jobs over Obama era methane climate scares.
News Releases from Headquarters›Air and Radiation (OAR)
In Pittsburgh, Administrator Wheeler Announces Final Air Regulations for Oil and Gas Removing Redundant Requirements, Streamlining Implementation, and Reducing Burdens
08/13/2020Contact Information: EPA Press Office (firstname.lastname@example.org)
PITTSBURGH (August 13, 2020) — Today, U.S. Environmental Protection Agency (EPA) Administrator Andrew Wheeler announced two final rules for the oil and natural gas industry that removes ineffective and duplicative requirements while streamlining others. He made this announcement at the Energy Innovation Center in Pittsburgh, Pennsylvania with U.S. Department of Energy Deputy Secretary Mark W. Menezes, U.S. Congressman Guy Reschenthaler (PA-14), and EPA Mid-Atlantic Regional Administrator Cosmo Servidio.
These rulemakings will reduce regulatory burdens for oil and natural gas entities while protecting human health and the environment. Combined, the two final rules are estimated to yield net benefits of $750 to $850 million dollars from 2021 to 2030, the annualized equivalent of about $100 million a year. These final rules combined with other deregulatory actions have saved Americans an estimated $94 billion in unnecessary regulatory costs.
“EPA has been working hard to fulfill President Trump’s promise to cut burdensome and ineffective regulations for our domestic energy industry,” said EPA Administrator Andrew Wheeler. “Regulatory burdens put into place by the Obama-Biden Administration fell heavily on small and medium-sized energy businesses. Today’s regulatory changes remove redundant paperwork, align with the Clean Air Act, and allow companies the flexibility to satisfy leak-control requirements by complying with equivalent state rules.”
“I applaud Administrator Wheeler for taking decisive action today and continuing to replace the destructive and burdensome bureaucratic policies of the Obama Administration with commonsense policies,” said Deputy Secretary of Energy Mark W. Menezes. “I am proud to join the Administrator in Pennsylvania, a state that will greatly benefit from these actions taken by the EPA today. These new rules will provide relief to American energy companies by reducing the massive cost of complying with unnecessary overregulation from the federal government, allowing them to instead spend their resources on job creation and energy development.”
“As someone born and raised in southwestern Pennsylvania, I have seen firsthand the impact of the natural gas renaissance on our communities, including tremendous job creation and unprecedented wage growth,” said U.S. Congressman Guy Reschenthaler (PA-14). “The rules announced today by Administrator Wheeler will remove burdensome regulations while continuing to provide for cleaner and healthier air. Thank you to the Trump Administration for taking action and for their longstanding commitment to supporting Pennsylvania gas and oil operators, fighting for American energy independence, and fostering economic opportunities for workers and families.”
Today’s announcement is in response to President Trump’s Executive Order on Promoting Energy Independence and Economic Growth. The order directed EPA to review, and if appropriate revise, the 2016 Oil and Natural Gas New Source Performance Standards (NSPS) to ensure that the rule did not burden the development or use of domestically produced oil and natural gas.
The first rule, referred to as the “policy package,” determines that the Obama EPA’s addition of the transmission and storage segment was improper and removes it from the regulation while also rescinding emissions standards for that segment. The policy package also makes clear that oil and gas operators will still be required to reduce emissions of ozone-forming volatile organic compounds (VOCs) in the production and processing segment of the industry. The rule removes methane control requirements for the production and processing segments, because the pollution controls used to reduce VOC emissions also reduce methane emissions, making clear that the separate regulation of methane imposed by the 2016 rule was both improper and redundant.
In addition, the policy package establishes EPA’s position that the Clean Air Act requires EPA to make a finding that a pollutant contributes significantly to air pollution before setting NSPS requirements. The Obama EPA failed to properly make that finding for methane emissions from the production and processing segments, which is a second reason why the package removes those requirements.
The second rule, referred to as the “technical package” includes commonsense changes to the NSPS that will directly benefit smaller oil and gas operators who rely on straightforward regulatory policy to run their businesses and provide Americans with reliable, affordable energy.
More specifically, the rule:
· Exempts low-production wells from expending significant funds to monitor leaks (leaks are called “fugitive emissions” in the rule). These low-producing wells are usually owned and operated by small businesses that do not have the same access to capital as larger companies. This change respects the differences between wells that produce large amounts of oil per day and those that produce less than 15 barrels a day of oil instead of treating them the same.
- Reduces monitoring of leaks at gathering and boosting compressor stations from quarterly to twice a year a more cost-effective approach that also aligns with other monitoring requirements.
- Improves cooperation with states by allowing industry to meet certain states’ requirements instead of complying with EPA’s requirements. This change means that owners and operators in those states only have to comply with one set of regulations.
- Removes burdens to utilize new and more efficient emissions reductions technologies to allow industry to innovate.
- Updates the required schedule for repairing leaks to respect the realities of the oil and gas industry, such as allowing repair deferral if a repair within 30-days is not technically feasible.
- Changing recordkeeping and removing certain convoluted reporting requirements, reducing the cost burden by an estimated 25 percent per site.; and
- Other technical changes that will simplify compliance.
More information, including pre-publication versions of the Federal Register notices and related fact sheets, is available at https://www.epa.gov/controlling-air-pollution-oil-and-natural-gas-industry
EPA announced the proposed technical fixes on September 11, 2018. The Agency received more than 500,000 public comments during a 60-day comment period, including at a public hearing in Denver. On August 29, 2019, EPA announced the proposed policy package, which received nearly 300,000 public comments during a 60-day public comment period, including at a public hearing in Dallas.
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Greens and big business are not happy about the changes.
Energy Companies Set to Get Reprieve on Methane Rules
Plan to end Obama-era regulations is likely to draw protests from environmental groups
Rescinding these requirements was a priority for small-and midsized oil-and-gas producers, which say the requirements were so costly to meet that it would be unprofitable to drill in some places.
But larger producers, including international giants Exxon Mobil Corp., Royal Dutch ShellPLC and BP PLC, favored retaining the rules, saying a lack of climate regulation undermines their promise that the U.S. natural gas they sell is a cleaner source of energy.
Several states and environmental groups are likely to fight the decision. Basil Seggos, commissioner of New York’s Department of Environmental Conservation, reacted to The Wall Street Journal’s article on Twitter, saying his agency would challenge the new rule. The Environmental Defense Fund, a nonprofit that has often collaborated with major oil companies on reducing methane emissions, warned that the rule changes would create a risk for U.S. gas sales into Europe, which is moving to tighten laws on greenhouse-gas emissions.
“The Trump EPA’s methane rollbacks aren’t just bad climate policy, they’re a competitive disadvantage for American gas in a world demanding cleaner energy,” said Ben Ratner, a senior director at the fund who works with companies on methane reduction. “For EPA to wipe out methane regulation makes a risky situation even worse for U.S. companies counting on exports.”
You can understand the wailing from greens, but why would big business oppose a rollback of red tape?
I guess it is possible big businesses genuinely care about the environment more than small business, but another possible explanation is excessive red tape helps big businesses maintain their market dominance, not through being the best at what they do or offering customers a better deal, but by creating barriers which make it difficult for smaller businesses to compete.
As a businessman, all too often I have seen cases where small businesses, if they get an opportunity to operate at all, are forced to share their profits with larger businesses in return for administrative cover; in return for access to big business’ ability to handle excessive red tape.
Forced sharing of profits and management oversight in return for protection from bureaucrats stifles innovation, and dramatically shifts the balance of economic power in favour of big business, to the detriment of customers who might have benefited from a little more competition. Big businesses frequently demand small businesses which enter into such arrangements avoid doing anything which cuts into the profits of their overseer business, such as undercutting their prices.
By cutting red tape in such a key economic activity, President Trump has signalled once again that he wants to liberate the US economy from bureaucrats and stagnant red tape driven cartels, so anyone with an ounce of initiative can share in the USA’s great opportunities by offering customers the best possible deal.