The Nickel Report

In the latest of a series of moves reflecting the state’s intention to double down on its climate change agenda in the wake of President Trump’s inauguration, the California Air Resources Board (CARB) recently approved a new regulation aimed at curbing methane emissions from oil and gas operations. This measure, characterized by CARB as “the most comprehensive of its kind in the country,” comes on the heels of several actions recently announced by the United States Environmental Protection Agency (US EPA) to reassess the climate change programs of the previous administration, specifically those targeted at oil and gas sector emissions.

The regulation is broad in scope, covering new and existing oil and gas sector facilities, both onshore and offshore. It targets emissions from upstream (production, gathering and boosting stations, and processing) and some downstream facilities (natural gas storage and transmission compressor stations), complementing a rulemaking effort currently under way by the California Public Utilities Commission (CPUC) to address emissions from oil and gas pipelines and related facilities. CARB’s new regulation will cover natural gas underground storage sites such as the Aliso Canyon facility, the site of a major leak in Los Angeles County last year. The regulation adds to emergency regulations that were put in place by the state’s Department of Conservation in response to the Aliso Canyon facility leak.

The measure contains several stringent provisions requiring regulated entities to take actions to limit intentional (vented) and unintentional (leaked or fugitive) emissions from active and idle equipment and operations. Among the notable aspects of the rule are its leak detection and repair (LDAR) provisions, which require daily inspections and quarterly leak testing, as well as its requirements for vapor control and collection systems, equipment replacement, and enhanced monitoring and reporting.

Oil and gas operations are also subject to performance standards promulgated by the US EPA under the Clean Air Act (CAA), 40 C.F.R. Part 60, Subpart OOOO (Quad O) and OOOOa (Quad Oa). In June 2016, the US EPA issued standards under CAA Section 111(b) applicable to methane emissions from new, reconstructed and modified sources in the oil and gas sector. In March 2016, the agency announced its intention to develop standards applicable to existing sources and, in furtherance of this initiative, issued an information request to existing sources in November 2016. Last month, however, US EPA announced that it was withdrawing the November 2016 information request for existing sources, and President Trump ordered the agency to review the June 2016 new source emissions standards to determine whether to suspend, revise or rescind them (among other federal environmental regulations applicable to oil and gas sector sources).

The California methane regulation, which will be fully implemented by 2020, stands in contrast to these recent developments at the federal level and is one of a series of measures enacted as part of the state’s aggressive strategy for reducing greenhouse gas (GHG) emissions. In particular, the state has set a goal of 40 percent methane emissions reductions by 2030, with a 40-45 percent reduction from the oil and gas sector as a whole by 2025. The recently approved methane regulation is the first major environmental regulation enacted by the state since the Trump administration took office, and it is the first of a series of steps the state is expected to take to enhance its environmental regulations in the face of a federal reassessment. Time will tell if other states follow suit..