Waste Emissions Charge for Petroleum and Natural Gas Systems (Final Rule)

In August 2022, Congress passed, and President Biden signed, the Inflation Reduction Act of 2022 (IRA) into law. Section 60113 of the IRA amended the Clean Air Act (CAA) by adding section 136, Methane Emissions and Waste Reduction Incentive Program for Petroleum and Natural Gas Systems. CAA section 136(c) directs the Administrator of the EPA to impose and collect a Waste Emissions Charge (hereafter referred to as WEC or charge) on methane emissions that exceed statutorily specified waste emissions thresholds from an owner or operator of an applicable facility. CAA section 136(g) directs the EPA to begin imposition and collection of charge with respect to emissions reported for calendar year 2024 and for each year thereafter. The waste emissions threshold is a methane intensity metric, therefore facilities that have methane emissions per unit of throughput below the threshold would not be required to pay the charge. The Waste Emissions Charge applies to facilities that report more than 25,000 metric tons (mt) carbon dioxide equivalent (CO2e) of greenhouse gases (GHG) emitted per year pursuant to the Greenhouse Gas Reporting Rules (GHGRP) requirements for the petroleum and natural gas systems source category (codified as 40 CFR part 98, subpart W). An applicable facility, as defined in CAA section 136(d), is a facility within the following segments (as the following industry segments are defined in part 98, subpart W): onshore petroleum and natural gas production, offshore petroleum and natural gas production, onshore natural gas processing, onshore petroleum and natural gas gathering and boosting, onshore gas transmission compression, onshore natural gas transmission pipeline, underground natural gas storage, liquefied natural gas import and export equipment, and liquefied natural gas storage. Congress structured the charge so that it focuses on large oil and gas facilities (i.e., those with emissions greater than 25,000 mt CO2e of GHG emitted per year). CAA section 136(f)(4) allows for the netting of charge obligation for applicable facilities under common ownership or control. CAA section 136(f)(5), (f)(6), and (f)(7) provide for certain exemptions from charge for applicable facilities, or portions of methane emissions from applicable facilities, that meet specified requirements. The Waste Emissions Charge applies to facilities that report more than 25,000 metric tons (mt) carbon dioxide equivalent (CO2e) of greenhouse gases (GHG) emitted per year pursuant to the Greenhouse Gas Reporting Rules (GHGRP) requirements for the petroleum and natural gas systems source category (codified as 40 CFR part 98, subpart W). An applicable facility, as defined in CAA section 136(d), is a facility within the following segments (as the following industry segments are defined in part 98, subpart W): onshore petroleum and natural gas production, offshore petroleum and natural gas production, onshore natural gas processing, onshore petroleum and natural gas gathering and boosting, onshore gas transmission compression, onshore natural gas transmission pipeline, underground natural gas storage, liquefied natural gas import and export equipment, and liquefied natural gas storage. Congress structured the charge so that it focuses on large oil and gas facilities (i.e., those with emissions greater than 25,000 mt CO2e of GHG emitted per year). CAA section 136(f)(4) allows for the netting of charge obligation for applicable facilities under common ownership or control. CAA section 136(f)(5), (f)(6), and (f)(7) provide for certain exemptions from charge for applicable facilities, or portions of methane emissions from applicable facilities, that meet specified requirements.

The latest form for Waste Emissions Charge for Petroleum and Natural Gas Systems (Final Rule) expires 2026-12-31 and can be found here.