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Energy Industry Urges Appeals Court to Rehear Obama-Era Methane Rules

Opponents of Obama-era rules governing new sources of methane emissions from the oil and gas industry are urging a federal appeals court to rehear a legal challenge to the rules, arguing that a three-judge panel erred when it lifted a stay last month.

Meanwhile, attorneys general for 13 states and the District of Columbia, along with lawyers for the City of Chicago and several environmental groups, filed a separate response urging the court to reject rehearing the case. A ruling is expected in the near future.

At issue are the U.S. Environmental Protection Agency's (EPA) proposed rules governing fugitive emissions, pneumatic pumps and professional engineer certification requirements as outlined in updates to the agency's New Source Performance Standards (NSPS). Last May, EPA Administrator Scott Pruitt proposed a 90-day stay over the rules, but a three-judge panel lifted the stay following a 2-1 vote on July 3.

On Thursday, the American Petroleum Institute (API) and other trade associations representing the oil and gas industry filed a reply in support of a petition to rehear the case en banc. They argue that the panel erred when it said Pruitt's 90-day stay constituted a reviewable final agency action.

"The petitioners fail to recognize that the stay here is a 'neutral, time-limited stay,' distinguishing it from other stay authorities," the respondents said, quoting parts of the argument outlined by Judge Janice Rogers Brown, the panel's lone dissenting judge. "The stay is not the end of EPA's decision making process.

"Merely hitting 'pause' does not end the process. If this limited, three-month stay to preserve the status quo is 'final agency action,' then 'every interlocutory action that leaves compliance to the discretion of the regulated party would justify judicial review.'"

The respondents include API, the GPA Midstream Association (GPA), the Interstate Natural Gas Association of America (INGAA), the Independent Petroleum Association of America (IPAA) and Western Energy Alliance (WEA), as well as numerous state organizations representing producers. The states of North Dakota and Texas are amici curiae in the case, which is Clean Air Council et al. v. EPA[No. 17-1145]. The same groups filed a petition for rehearing on July 27.

Massachusetts Attorney General Maura Healey and the Environmental Defense Fund filed a separate response on Wednesday that urges the court to reject rehearing the case.

"This case does not come close to satisfying the demanding standards for granting en banc rehearing," the petitioners said in their filing. "The panel correctly decided that Administrator Pruitt's stay of a duly promulgated regulation was reviewable and was arbitrary, capricious, and in excess of his authority."

The petitioners also pointed out that the EPA "has not even sought rehearing." They added that the oil and gas industry and other intervenors "do not raise any serious argument that casts doubt on the decision, much less show that this case presents a question worthy of en banc review."

Other environmental groups against rehearing the case include the Clean Air Council, Earthworks, the Natural Resources Defense Council and the Sierra Club. Attorneys general from 12 states -- Connecticut, Delaware, Illinois, Iowa, Maryland, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington -- are also opposed. The Pennsylvania Department of Environmental Protection is also on the list of petitioners.

It is unclear how long the updated NSPS rules would remain in effect. The EPA is accepting public comments until Wednesday (Aug. 9) over a proposed two-year stay of the rules. Environmental groups opposed to the two-year stay packed a public hearing on the proposal last month, while API testified in favor of the stay.

Last Monday, the court reaffirmed in a 9-2 ruling that Pruitt exceeded his authority when he proposed the 90-day stay. The ruling effectively put the updated NSPS rules into effect. Six conservation groups filed a lawsuit over Pruitt's stay last June.

Although it has not asked to rehear the case, the EPA took the unusual step last month of asking the court to recall its mandate, thereby giving the agency more time to weigh its options. Court records show API, GPA, INGAA, IPAA and WEA filed a motion in support of the EPA's request.

EPA first unveiled the 2016 NSPS during the Obama administration. The rules were designed to reduce methane, volatile organic compounds and toxic air pollutants.

Last April, the EPA said it would reconsider the rules to comply with an executive order (EO) signed by President Trump on March 28. The EO included a directive for EPA to immediately review regulations on energy sources, and then to either suspend, revise or rescind them.

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