Federal Court Rules EPA Cannot Stay Obama-Era Methane Rules

Federal Court Rules EPA Cannot Stay Obama-Era Methane Rules

By Miguel Suazo and Chelsea Allen

            This July, the United States Court of Appeals for the District of Columbia ruled that the Trump administration cannot freeze or suspend enforcement of Obama-era methane restrictions on new oil and gas wells. (See our earlier article here for more background on this topic.) This ruling causes additional uncertainty for those impacted by the outcome, leaving oil and gas producers across the U.S. wondering, “what now?”

Prior to the Appeals Court’s ruling, EPA administrator Scott Pruitt attempted to order a delay in enforcement of the Obama-era methane emissions regulations, first by 90 days, and later by two years. Pruit’s extended delay caused legal problems the Administration. Several environmental groups brought suit and the court ultimately found that such a significant delay really amounted to a rule change and that the rule change did not follow the proper administrative procedures.

While the court acknowledged that the EPA does indeed have the authority to change the emissions rule, it held that it must do so through the proper rule-making method and that it does not have the authority to merely block the rule from taking effect. The court also acknowledged that the agency is certainly given broad discretion in interpreting its own rules, but cautioned that, in so doing, it must nonetheless comply with the Administrative Procedures Act.

It was not merely the timing issue relating to the methane rules that was contested. The U.S. Court of Appeals decision also concluded that Pruitt lacked the legal authority to keep the methane regulations from coming into effect. Pruitt and the EPA tried to argue that “an agency’s decision to grant reconsideration of a rule is unreviewable because it does not constitute ‘final action’,” but the court was not persuaded. “The imposition of the stay,” said the court, “…is essentially an order delaying the rule’s effective date, and this court has held that such orders are tantamount to amending or revoking a rule.”

What does this ruling mean for U.S. oil and gas production? Put simply, the ruling isn’t a death knell to attempts to roll back Obama-era environmental regulations, but will likely mean a delay in their potential undoing. The practical implication of this decision is that the oil & gas industry will likely have to comply with the regulations in the meantime. But before too much wringing of hands occurs, oil and gas producers should remember that the regulations only apply to new oil and gas wells, and that the regulations may yet be changed or amended in future. Producers should also take some solace in the fact that while the official rule-changing process might be rather slow, so too would be any subsequent attempt to reinstate the altered regulations.


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