EPA Proposes Significant Revisions to Oil and Natural Gas Methane Standards Under Clean Air Act

The U.S. Environmental Protection Agency (EPA) published a proposed rule on October 29, 2026, titled "Additional Reconsideration Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review" (Docket ID No. EPA-HQ-OAR-2025-0163) that would revise the agency's 2024 New Source Performance Standards (NSPS) for new, modified and reconstructed oil and natural gas sources (40 C.F.R. Part 60, Subpart OOOOb) and existing sources (Subpart OOOOc) issued under Section 111 of the Clean Air Act (CAA), 42 U.S.C. § 7411 (collectively, the 2024 Rule). The proposal is EPA's second reconsideration package for the 2024 Rule.

This Holland & Knight alert summarizes the regulatory background, describes key components of the proposal and identifies considerations for regulated entities as the rulemaking proceeds.

Background

CAA Section 111 requires EPA to establish standards of performance for new, modified and reconstructed stationary sources based on the "best system of emission reduction" that has been "adequately demonstrated," taking into account cost, non-air quality health and environmental impacts and energy requirements. It also requires EPA to issue emission guidelines that states use to develop plans establishing standards for existing sources in the same source categories for which NSPS have been issued. For the oil and natural gas sector, EPA has implemented these provisions through a succession of rules, including Subparts OOOO (2012) and OOOOa (2016), which regulate emissions of volatile organic compounds (VOCs), sulfur dioxide (SO2) and, with OOOOa, methane.

In the 2024 Rule finalized under the Biden Administration, EPA phased out routine flaring of associated gas from new oil wells, required zero-emitting process controllers in most scenarios, strengthened leak detection and repair (LDAR) requirements at well sites and established a Super Emitter Program under which EPA-certified third parties could use remote sensing to identify large emission events and notify operators. The 2024 Rule also established emission guidelines for methane from existing sources, which states must implement through state plans. (See Holland & Knight's previous alert, "EPA Issues Final Methane Regulations for New and Existing Sources," December 6, 2023.)

On March 12, 2025, EPA announced that it would reconsider the 2024 Rule as part of a broad set of deregulatory actions. (See Holland & Knight's previous alert, "EPA Announces Deregulatory Initiative to 'Power the Great American Comeback'," March 17, 2025.) Since then, EPA has taken several interim actions:

• On July 31, 2025, the agency issued an interim final rule (IFR) extending several compliance deadlines in the 2024 Rule.
• In December 2025, EPA finalized a rule reaffirming those extensions, providing an additional 180-day extension for compliance dates related to net heating value monitoring of flares and enclosed combustion devices and providing a 360-day extension for submission of initial annual reports.
• On April 9, 2026, EPA finalized revisions to provisions governing net heating value and the time limits and justifying circumstances for temporary flaring of associated gas.
• On May 1, 2026, EPA issued a clarification that existing federal regulations permit flaring of associated gas at new oil wells in limited circumstances after the May 7, 2026, phase-out deadline.

The Proposed Rule

In a press release announcing the proposal, EPA said the proposed changes to OOOOb and OOOOc would yield economic benefits of approximately $45 billion ¹ and allow production of an estimated 210 million additional barrels of oil and 1.41 trillion additional cubic feet of natural gas. In the proposed rule, EPA finds that the 2024 Rule delivered "more modest emissions reductions and more significant costs" than expected and significant parts of some of its best system of emission reduction (BSER) determinations are "inappropriate." EPA also notes that industry has raised concerns about compliance with the 2024 Rule.

Key changes proposed by EPA are summarized below.

Subcategorization of Well Sites

EPA co-proposes two alternative approaches to subcategorizing well sites in OOOOb and OOOOc and may finalize only one. Under the first option, wells would be subcategorized as "marginal" if their combined production is 15 barrels of oil equivalent (BOE) per day or less over the prior 12 months. Under the second option, wells would be subcategorized as "conventional" based on their well formation. EPA says subcategorization may be warranted for these wells based on the high cost of compliance for these types of sources.

EPA proposes the same reduced standards for "marginal" and "conventional" wells:

• quarterly audio, visual and olfactory inspections for fugitive component emissions
• low-bleed devices for continuous bleed natural gas-driven pneumatic controllers
• routing VOC and methane emissions from natural gas-driven pumps to a control device that reduces emissions by at least 95 percent where such a device is already available onsite
• routing associated gas emissions to control devices only if their potential to emit exceeds certain thresholds (20 tons per year (tpy) methane for associated gas and 20 tpy methane or six tpy VOCs for storage vessels)

"Marginal" status would be based on the site's average daily oil and gas production over the prior 12 months. Modifications and other actions that increase production would require a new determination within 45 days, based on the first 30 days of production. Triggering activities would include drilling, fracturing or refracturing, stimulation or workovers, shutting in one well to boost another, adding even one gas-driven controller or pump, and certain tank battery changes. Zero-emission controllers and pumps already installed would have to stay, and any new units would also have to be zero-emission. Sites below the 20 tpy associated gas threshold would still need to demonstrate it. If EPA splits the subcategory at six BOE per day, the lower tier will likely avoid the associated gas control requirement, while larger sites in the upper tier would likely face annual optical gas imaging (OGI) plus quarterly audio, visual and olfactory. EPA noted in the proposal that subcategorizing as "conventional" rather than "marginal" wells would provide more regulatory certainty over time because it would avoid the additional and ongoing requirement to determine BOE per day to justify a marginal well classification.

EPA further proposes what would constitute "modification" of an existing conventional well and trigger applicability of OOOOb – for example, if a new well is drilled at an existing conventional well site, an existing conventional well is hydraulically fractured, or there is an increase in natural gas-driven process controllers.

EPA estimates that this co-proposal could result in compliance cost savings of approximately $39 billion (present value 2027-2050, at a 3 percent discount rate) but may also result in an additional 88 million short tons of methane emissions and 25 million short tons of VOC emissions.

EPA seeks comment on numerous aspects of this subcategorization co-proposal, including whether marginal wells should be subcategorized further based on average production levels of six BOE and 15 BOE and with respect to EPA's proposed BSER for these sources and the costs and assumptions used to determine the BSER for these sources.

Rescission of the Super Emitter Program

EPA proposes to rescind the Super Emitter Program for all NSPS Subpart OOOO programs (OOOO, OOOOa and OOOOb and OOOOc). EPA says the rescission is warranted because the program relies on "insufficient evidence of the nature and duration of super-emitter events";" adds little value on top of existing requirements; is overly broad and ineffective; and lacks adequate statutory authority, particularly for the role that third parties play. EPA notes that it can still use its CAA Section 114 information-collection authority to track compliance and that people may still submit methane data to the agency.

Storage Vessels and Centralized Production Facilities

EPA proposes to treat tank batteries at centralized production facilities the same as those at compressor stations and gas processing plants so that a reassessment of potential emissions would be triggered only if actual throughput exceeds the projected maximum average daily throughput or the throughput in a legally and practically enforceable (LPE) limit. EPA acknowledges that the 2024 modification provisions caused far more midstream storage vessels to be treated as modified than it had estimated and upstream changes unknown to the midstream operator could put sources out of compliance. EPA would also redefine "well site" and "centralized production facility" and base fugitive emissions modification triggers at centralized production facilities on actions within the operator's control. EPA solicits comments on whether the 2024 LPE criteria should be repealed and temporary shut-in sites could recalculate potential emissions for storage vessel control.

Covers and Closed Vent Systems

EPA proposes to divide the "no identifiable emissions" standard for covers and closed vent systems into separate design requirements and operational requirements. Under the proposal, the operational requirements would allow for repairs, rather than treating any identifiable emission as a potential deviation. That relief comes with new obligations that operators should plan for going forward. Routine leaks will have to be repaired within 24 hours, and sources not fixed on the spot would have to be tagged or otherwise documented and then resurveyed. Three or more events in a year would trigger an investigative analysis that EPA suggests could identify design flaws. The same approach would apply to self-contained process controllers. Because these provisions reach covers and closed vent systems at well sites, compressor stations and gas plants, they may significantly affect compliance and enforcement exposure across upstream and midstream operations. EPA has asked whether 24 hours is workable, making this a key comment issue.

Control Devices

Finally, EPA is proposing technical changes to provide flexibility, where appropriate, for continuous burning pilot flames, flame monitoring data deviations, control device alerts, visible emissions test conditions, control devices used on a temporary or backup basis and control device categories, and requests comment on whether automatic igniters perform comparably to continuously lit pilots. EPA would also allow temporary control devices during liquids unloading with streamlined compliance requirements and would let operators submit well closure notifications after closure is complete. The package also revises requirements for pumps and fugitives. These provisions have been a frequent source of operational difficulty and potential deviations under the 2024 Rule, and the proposed revisions could reduce the volume of reportable deviations associated with routine monitoring anomalies.

Associated Gas

EPA is proposing to drop "route to sales" as the BSER for associated gas from oil wells. In EPA's view, the 2024 approach depends on third-party midstream infrastructure that operators "cannot compel," making it "not an allowable form of BSER." For non-marginal wells, EPA would instead require routing associated gas to a control device or flare that achieves a 95 percent reduction, while associated gas at sites in the new subcategory would be subject to control only above the applicable threshold. EPA also requests comment on whether flaring during pipeline construction should be limited in duration (e.g., three years from when the well begins operation) and whether operators should report contractual arrangements and compliance schedules in annual reports. These are issues of direct interest to producers awaiting gathering capacity and midstream companies building it. The proposal would also remove the temporary flaring provisions addressed in EPA's April 2026 final rule.

Process Controllers at Transmission Compressor Stations

EPA is proposing to create a new subcategory for process controllers on high-pressure systems at transmission compressor stations, concluding that retrofitting to zero-emission controllers is not technically feasible or cost-effective. EPA's revised analysis estimates $2.4 million in capital costs and $33,100 per ton of methane reduced to convert these controllers to compressed air. Under the proposal, operators could either route controller emissions through a closed vent system to a control device achieving a 95 percent reduction or use low-bleed controllers in combination with intermittent vent controllers that are periodically monitored. Separately, temporary process controllers could use a low-bleed alternative for up to 60 additional operational days per site per year after the first 30 days, with recordkeeping.

Equipment Leaks at Gas Plants

For onshore natural gas processing plants, EPA proposes to allow a "first attempt at repair" of a leaking valve (such as tightening bolts or packing gland nuts) before requiring replacement or repacking with low-emission valves or packing. EPA also proposes to limit leak detection and repair applicability to equipment "in VOC service" (10 percent VOC by weight) or "in methane service" (1 percent methane by weight), restore "in wet gas service" to the equipment definition and allow OGI surveys under Appendix K.

Takeaways for Regulated Entities

• The 2024 Rule Remains in Effect for Now. Companies' obligations under the 2024 Rule remain unchanged until this proposed rule is finalized.
• Subcategorization Will Drive Applicability. Owners and operators should consider evaluating their well site portfolios under both co-proposed options, including the 15 BOE per day threshold and the potential six BOE per day split. The choice between a production-based and a formation-based approach and the specific thresholds and definitions EPA ultimately adopts may materially affect which sites qualify for the reduced standards. Stakeholders should also consider whether EPA's new profit-based cost reasonableness analysis is adequately supported.
• Midstream Operators Should Review Modifications and Controller Provisions. Gathering, processing and transmission companies should evaluate the proposed throughput-based storage vessel modification triggers, high-pressure controller subcategory at transmission compressor stations, gas plant leak repair and applicability changes and 24-hour closed vent system repair timeline and consider submitting data supporting their positions.
• State Plans. States developing plans to implement the Subpart OOOOc emission guidelines will need to assess how the proposal would affect their plan development and timelines.
• Commenting Opportunity. Comments on the proposed rule are due December 16, 2026, and EPA will hold a virtual public hearing on November 13, 2026 (speaker preregistration closes November 10, 2026). Comments on information collection provisions are best submitted to the U.S. Office of Management and Budget by November 30, 2026. Given the short timeline and the dozens of specific comment questions posed, companies should consider preparing technical and economic data now to support their positions on the numerous issues for which EPA seeks input.

How Holland & Knight Can Help

Holland & Knight's Environmental Team regularly advises oil and natural gas producers, midstream companies and other stakeholders on CAA compliance, rulemaking participation and related litigation. For questions regarding EPA's proposal or assistance preparing comments, please contact the authors.

Notes

¹ Present value for 2027-50 at 3 percent discount rate. In EPA's regulatory analysis, this figure represents net surplus, consisting of $42 billion in compliance cost savings and $3 billion in savings from energy market impacts.

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