USA – TEXAS Trends and Developments Contributed by: Gerald J. Pels, Elizabeth E. Mack, Gerald D. Higdon, Susan Rainey, Elizabeth Corey and Brett A. Miller, Troutman Pepper Locke LLP
mented, the maturation of technology should enable more cost-effective emissions reductions, thereby reducing the capital costs necessary to mitigate the tax. Obviously, the industry will also have a more rea- sonable timetable to prepare for the complex methane accounting necessary for WEC calculations. Delayed implementation of Quad Ob/Oc standards Quad Ob and Oc were Biden-era rules establishing standards of performance for new (and modified/ reconstructed) oil and gas industry sources, emis- sion sources, and guidelines for existing ones. The rules’ breadth was substantial, establishing emission standards and practices for equipment not previously covered and imposing more stringent standards on certain equipment covered by prior rules. In addition, Quad Oc created guidelines for existing sources con- sistent with the stringent Quad Ob standards intended to be implemented through state plans. In response to the massive rules package, commenters advised the EPA that not only could equipment unavailability affect timely compliance, but also that labs and testing companies lacked the capacity to conduct analyses and performance testing nationwide within the rules’ timeframes. Another challenge presented by the rules is the no identifiable emissions (“NIE”) standard appli- cable to closed vent systems. Commentators advised the EPA that NIE presented, among other issues, practicality challenges based on fugitive emissions caused by normal wear and tear. EPA’s proposal is not a pass for industry. Rather, it proposes extensions with more realistic compliance time frames, including for the states. The EPA is signalling that it expects the oil and gas industry to mitigate emissions, but will allow the industry to do so in a manner that is not crip- pling to business prospects or operations. The social cost of carbon The Office of Management and Budget provided offi- cial guidance making clear that agencies must modify their regulations and/or rescind guidance to eliminate GHG considerations, except where necessary to meet a statutory requirement. Hence, a monetary value of the SSC may not be considered in rule-making. This is logical. The SCC was often used to justify the regu- lations’ benefits, even if compliance costs could, in some instances, be business-shattering. Ascribing a dollar value to carbon has always been more voo-
doo than science. The Obama EPA pegged the SCC at about USD73/ton, while the first Trump Adminis- tration revised it to be around USD3-5/ton, and the succeeding Biden administration revised the number to USD51/ton, escalating to USD190/ton by 2023. There was no true formula. Now, regulatory decisions will likely be grounded in more verifiable cost/benefit analyses. The Evolution (or Revolution) in Wetlands Regulation In the ongoing tug-of-war between environmental and business/private property interests regarding wetlands, the US Supreme Court and the current administration have tipped the scales decidedly in favour of business and private property interests. For many, this shift is a breath of fresh air. Developers, for example, will continue to benefit from an increas- ingly tailored definition of wetlands and waters of the US. In Texas, where wetlands are not independently regulated, federal loosening of wetlands regulation is the final word. But that is not the case everywhere: for example, Florida and Massachusetts have their own state and local regulations. As a result, some wetlands in those and other similarly situated states will remain protected even as federal oversight fades. Why the fuss about wetlands? Wetlands protections are derived from the federal Clean Water Act (“CWA”), 33 U.S.C. 1251, in recognition of the many benefits that wetlands provide: acting as natural filters against water pollution, capturing greenhouse gases like car- bon dioxide and methane, reducing flooding potential by filling during significant water events, and providing habitat for certain important plants and animals. Take cattails, for example, which anchor soil and help chan- nel surface water into groundwater, a critical drinking water source for many Texans and Americans. Nota- bly, even when regulated, many wetland areas are still developable. In most instances, federal permits authorising impacts to regulated wetlands and other waters of the US are and have been available, often with mitigation requirements (creating wetlands else- where or contributing to a wetlands mitigation bank for restoration). The US Supreme Court’s decision in Sackett v Unit- ed States Environmental Protection Agency, 598 US
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