On February 12, Taxpayers for Common Sense provided oral comments to the Environmental Protection Agency (EPA) on the proposed rule “Waste Emissions Charge for Petroleum and Natural Gas Systems.”

Statement from Michael Surrusco, Director of Campaigns at Taxpayers for Common Sense

“Good evening, members of the EPA and fellow stakeholders. I am Michael Surrusco, Director of Campaigns at Taxpayers for Common Sense. Our organization, a nonpartisan budget watchdog established in 1995, is committed to responsible government spending and ensuring taxpayer dollars are used efficiently. For over a decade, we’ve focused on methane waste, advocating for responsible energy resource management to protect the interests of American taxpayers.

We appreciate the EPA’s initiative in organizing this public hearing. The Waste Emissions Charge, under the Methane Emissions Reduction Program in the Inflation Reduction Act, marks a crucial step for taxpayer interests. An effectively implemented emissions charge can help reduce methane waste, mitigate climate liabilities, and safeguard American taxpayers.

The financial burden of climate change falls heavily on taxpayers. Methane, with a global warming potential vastly exceeding carbon dioxide in the short term, significantly amplifies the costs and taxpayer burdens of climate change. Our recent study revealed that from 2018 to 2022, taxpayers annually shouldered an average of $62 billion in federal climate change mitigation costs—a 35% increase from the preceding five years. Limiting methane emissions is therefore crucial in protecting taxpayers from escalating costs.

We are pleased the Administration is addressing methane waste on many fronts. This proposed rule is a key component of the Methane Emissions Reduction Program, intersecting with various proposed rules at the EPA.

We’re encouraged that adherence to the EPA’s “New Source Performance Standards and Emissions Guidelines” could exempt facilities from this charge, incentivizing early compliance with methane regulations. We are also encouraged that the proposed Waste Emissions Charge reflects the proposed changes to the GHG Reporting Rule. Utilizing precise and comprehensive data is essential to the success of this program.

The Waste Emissions Charge encompasses a range of operations in the petroleum and natural gas sectors. It’s vital that the rule addresses the complexity of these multi-faceted facilities and the industry’s varied activities.

We recommend that the EPA mandate detailed reporting from regulated parties and ensure this information is publicly available. Transparency is essential for public trust and industry accountability. Vigilant oversight by the EPA is necessary to validate reported data.

While we understand the rationale behind the program’s exemptions, there must be stringent monitoring to prevent misuse and maintain the program’s credibility. We support the EPA’s requirement for exhaustive information from entities seeking exemptions. Additionally, we advocate for a balanced approach in granting exemptions to preserve environmental standards and taxpayer interests.

TCS is also concerned with natural gas flaring, which not only carries environmental liabilities but also wastes valuable gas resources. We propose an additional criterion for the permitting delay exemption, mandating entities to demonstrate that flaring is a last resort after exploring other options like beneficial use and gas reinjection.

We believe a strong final rule will not overly burden industry. The proposed rule will apply to a limited number of large facilities and a limited quantity of emissions. Additionally, there are a variety of cost-effective and successful technologies already implemented across the industry that can help operators avoid the fee.

As representatives of taxpayer interests, we stress the importance of a fair and effective implementation of the Waste Emissions Charge. We trust the EPA will consider our insights to refine this rule, benefiting both our environment and our nation’s fiscal well-being. We look forward to presenting further details in our written submission. Thank you.”

Background

The Methane Emissions Reduction Program (MERP) was established by the FY 2022 Budget Reconciliation Bill, known as the Inflation Reduction Act (IRA, P.L. 117-169), to reduce the amount of methane released into the atmosphere from oil and gas development.

One of the primary components of this program is a waste emissions charge. The MERP will impose a fee for lost gas from large oil and gas facilities – those that emit more than 25,000 metric tons of carbon dioxide equivalent of greenhouse gases annually. Starting in 2024, facilities will be charged $900 per ton of methane emitted over a pre-determined threshold, which is based on the amount of oil or natural gas sent for sale, with the fee increasing in 2025 and again in 2026.

There are several exemptions for the rule, including:

• Emissions caused by eligible delays in environmental permitting of gathering or transmission infrastructure
• Emissions from facilities in compliance with the final EPA methane emissions rule for Clean Air Act section 111(b) or (d) facilities
• Wells that are permanently shut in and plugged

If implemented with clear goals and sufficient oversight, the MERP stands as a promising opportunity for taxpayers and the environment. TCS will be submitting written comments to the agency at a later date.

Additional Resources on Methane Waste

• TCS Comments on EPA Supplemental Proposal on Methane: TCS comments on the proposed supplemental rule, “Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review.”
• Taxpayer and Climate Costs of Methane Emissions Fact Sheet: TCS factsheet on the taxpayer costs and climate impacts of methane released into the atmosphere during oil and gas production.
• Gas Giveaways II: Methane Waste on Federal Lands is Business as Usual: TCS report on the billions of cubic feet of methane that is vented, flared, and leaked by oil and gas operators on federal lands every year.
• Budget Watchdog AF (All Federal) — Ep. 29: Venting & Flaring: TCS podcast on how methane waste from oil and gas development on federal lands is causing economic damage to all taxpayers – and the climate.