Washington Update From the U.S. Oil & Gas Association - 3.1.2025

Stuff That Matters

February 28, 2025

Yes, it is two updates in one week but stuff that matters is happening…

EPA To Reverse GHG Endangerment Finding

Somewhere between DOGE and Epstein Files, there is a lot to follow in Washington, DC, right now. Time will tell how much will really matter in the long run. However, one thing that certainly could is if the EPA can reverse its “endangerment finding”—the Obama-era finding that greenhouse gases “endanger” human health and welfare. Almost all of EPA’s greenhouse gas regulations since 2009, including for power plants and cars, directly result from the endangerment finding.

The backstory begins with the Supreme Court’s 2007 decision in Massachusetts v. EPA. In that case, the Court ruled that greenhouse gases qualify as "air pollutants" under the Clean Air Act. This determination required EPA to assess whether greenhouse gas emissions pose a danger to public health and welfare. The legal obligation stems from Section 202(a) of the Clean Air Act, which requires EPA to regulate any air pollutants that "cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare."

It will not be easy for the Trump administration to reverse EPA’s endangerment finding. The endangerment finding has been upheld against various legal challenges over the years, and the Supreme Court has declined to hear various challenges to the endangerment finding—one as recently as December 11, 2023.

But if EPA reverses course, it is likely the Supreme Court will have to take up the ensuing case, and hopefully, that would lead to overturning Massachusetts v. EPA. The good news is that Chief Justice Roberts was in the minority in Massachusetts v. EPA, and the arguments he made in dissent are still valid. For example, he explained that with global warming, there is a lack of “particularized harm” and a lack of a “causal connection” between the specific injury and EPA’s regulation. This continues to be true today. One can accept that carbon dioxide emissions are a problem, but this is a global issue, not a local or even national issue. The Clean Air Act was written to address local and regional air quality issues, not global emissions of greenhouse gases.

The House and Senate Repeal Biden’s Methane Tax (partially)

The House and Senate have begun to use the Congressional Review Act (CRA) to repeal regulations from late in the Biden administration. Here’s the Washington Examiner:

The Senate on Thursday reversed a Biden-era Environmental Protection Agency rule that imposes a methane emissions fee on oil and natural gas facilities, sending it to President Donald Trump to sign.

Senators voted 52-47 to pass Sen. John Hoeven's (R-ND) bill to undo the EPA’s “Waste Emissions Charge for Petroleum and Natural Gas Systems: Procedures for Facilitating Compliance, Including Netting and Exemptions.” The rule imposes an annual fee on oil and gas facilities that emit methane emissions exceeding a certain threshold.

The House on Wednesday voted to pass a companion bill introduced by Rep. August Pfluger (R-TX). The bill will now be sent to the Oval Office for Trump to sign. Republicans argue that the regulation is an attack on domestic energy production by the previous administration.

“American households and businesses depend every day on access to affordable and reliable energy,” Hoeven said in a press release.

President Trump will soon sign this with much fanfare. However – the methane fee remains on the books. The Methane Emissions Reduction Program (MERP) – Methane Tax – was enacted in 2022 as a part of the Inflation Reduction Act (IRA). Unfortunately - the tax remains on the books because it was implementing a year before the regulation was written.

The Biden Administration “Tax Now/Explain Later” policy now puts Congress in a tough spot – where Budget Reconciliation is our next option to repeal or acquire exemptions to the methane fee.

More on that to come.

The House Moves to Protect Hot Water….

In other Congressional Review Act news, the House also voted to disapprove of the Biden administration’s regulation of instantaneous (tankless) water heaters. At its core, the regulation was an attack on the direct use of natural gas. The rule essentially banned non-condensing natural gas-fired tankless water heaters. Because condensing natural gas-fired tankless water heaters are more expensive, the Biden administration’s goal was to increase the cost of natural gas-fired water heaters, thereby making electric water heaters more attractive.

The good news is that all Republicans in the House, along with 11 Democrats, voted to repeal Biden’s regulation. This resolution should quickly pass the Senate and be sent to President Trump to sign.

The Energy Addition and Net Zero

The great Daniel Yergin writes about the reality of the energy transition and the unobtainability of near-term net-zero in Foreign Affairs:

…what has been unfolding is not so much an “energy transition” as an “energy addition.” Rather than replacing conventional energy sources, the growth of renewables is coming on top of that of conventional sources. And with Donald Trump’s return to the U.S. presidency, priorities will focus again on conventional energy production and what his administration calls “energy dominance.”

This was not how the energy transition was expected to proceed. Concern about climate change had raised expectations for a rapid shift away from carbon-based fuels. But the realities of the global energy system have confounded those expectations, making clear that the transition—from an energy system based largely on oil, gas, and coal to one based mostly on wind, solar, batteries, hydrogen, and biofuels—will be much more difficult, costly, and complicated than was initially expected. What’s more, the history of past energy transitions suggests that this should not come as a surprise: those were also “energy additions,” with each adding to rather than eliminating prior sources.

As a result, the world is far from on track to achieve the often-stated target of reaching, by 2050, “net-zero emissions”—a balance in which any residual emissions are offset by removals of emissions from the atmosphere. And there is no clear plan for getting on track or for delivering the magnitude of investment that would be required to do so.

It is a good reminder of the energy reality—oil and natural gas are going to be with us for a long time because they are difficult to replace and provide the United States with much-needed energy security.