U.S. EPA's New Methane Emissions Charge – My Wallet Or Yours?

On January 12, 2024, the EPA announced a proposed new rule entitled Waste Emissions Charge for Petroleum and Natural Gas Systems (the "Proposed Rule"). As required by Congress pursuant to the Inflation Reduction Act ("IRA"), EPA has proposed to impose and collect an annual charge on methane emissions that exceed specified waste emissions thresholds from applicable oil and gas facilities.

For facilities subject to the Waste Emissions Charge ("WEC") with more than one owner or operator, contractual issues warrant consideration about responsibility for paying the WEC under existing agreements and opportunities to allocate WEC payment obligations in future agreements, especially if parties have the opportunity to net emissions to reduce the WEC across multiple facilities.