Emergency O&G Emission Regulation Attempts to Head off Sanctions

In a 16-2 vote on Nov. 30, Pennsylvania’s Environmental Quality Board (EQB) approved emergency regulations capping emissions from conventional oil and gas operations in a last-ditch effort to save millions in federal highway funds. The rules are now being challenged as industry representatives filed a lawsuit against the EQB and Department of Environmental Protection (DEP), alleging violations of the rulemaking processes. The lawsuit contends that the DEP and EQB did not comply with Act 52 of 2016 and question the use of emergency powers defined by the Regulatory Review Act. Act 52 of 2016 dictates that rulemaking concerning conventional and unconventional oil and gas operations must be “separate and independent” of one another, as well as mandating a review by the Independent Regulatory Review Commission (IRRC). The Regulatory Review Act, however, has emergency provisions allowing state agencies to implement rules before the IRRC analysis is complete if the governor or attorney general consents. The rules for both conventional and unconventional well emissions are required by the Environmental Protection Agency (EPA) for the Commonwealth to receive federal highway funding. If the state fails to comply, it risks losing $450 million in federal funding for highways. Conventional gas industry groups strongly oppose the emissions rules, arguing that under state law the two categories must be regulated independently; that the rules will be a financial burden to small operators; and that other alternatives should be considered Conventional wells tend to be older and emit methane at a higher rate than unconventional wells. This is the second time these rules have been voted on though. After a 15-3 vote in October approving the rules, members of the state House Environmental Resources and Energy Committee wrote a letter to the IRRC opposing the regulations, which prevents further consideration of the rules until after an additional review. However, in order to prevent sanctions for noncompliance with the EPA’s requirements, the EQB called for an emergency vote and approved the rules for conventional emissions, an unprecedented move by the Board. This action prompted the recently filed lawsuit by a collective of industry groups. Though it is now in the courts, the rules are currently in effect as of December 2 and can remain in effect until it is resolved in court. It remains to be seen if the action will prevent the federal government from withholding highway funds.