The Federalist Regulations: The EPA and the Rush to Regulate Methane
By Joe Moeller*
In May of 2016, the Environmental Protection Agency issued the final rules in a series of three Clean Air Act regulations. The rules’ purpose was to increase monitoring of methane and prevent leakage into the atmosphere. The methane rules are also a useful, though flawed, example of the “experimentation” principle of federalism. An often-quoted dissent by Justice Louis Brandeis pointed out one of the few advantages of federalism not expounded upon in the Federalist Papers- “It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” Here, as in Justice Brandeis’ “laboratory” metaphor, the states experimented and the federal government implemented policy based on the results.
Federalism is one of the key organizing principles of American governance- it is the complex relationship between the state and federal governments. The idea of this “federalist experimentation” is that states, being smaller polities, are more capable of building consensus. They are thus able to adapt to changing conditions more quickly than the federal government, which can later adopt regulations that prove popular or effective. A modern (and controversial) example of the concept is that of the Affordable Care Act. It is now well-known that the Obama administration purposefully copied the universal healthcare system developed in Massachusetts under Governor Mitt Romney. At the time, Governor Romney penned an op-ed proclaiming that “One great thing about federalism is that states can innovate, demonstrate and incorporate ideas from one another. Other states will learn from our experience and improve on what we’ve done.” Governor Romney’s almost explicit echo of Brandeis’ “laboratory” language invited other states to attempt similar programs. Congress attempted to do just that in 2010. Though Brandeis and Romney had legislatures in mind, federal agencies can learn from their state counterparts, too.
Federalism is currently impacting federal environmental regulation in a big way. Climate change has received national attention for decades, but methane releases only became a focus of environmental policy in recent years. Previous efforts focused on better-known pollutants like carbon dioxide, but ignored methane- even though methane has an estimated pollution effect twenty-five times greater than that of carbon dioxide. Decreasing methane emissions has been a key part of the Obama administration’s environmental policy since 2012, though, and a particularly large methane leak in California’s Aliso Canyon in 2015 increased public awareness of the pollutant.
As the Obama administration turned toward methane regulation, western states took their own actions in the same area. Being smaller and more flexible, they were able to complete their regulations more quickly. In 2014, Colorado and California each passed legislation pertaining to methane reporting and leakage. Colorado was the first state to do so, with regulations intended to encourage recapture of methane that would otherwise leak into the atmosphere. California’s SB 1371 required its Public Utilities Commission to adopt new regulations for the monitoring and repair of methane leaking from transmission lines. The California plan yielded the first year of data in August of 2015, which (despite gaps in reporting) allowed experts to improve their understanding of the sources and amounts of methane leakage in the state.
The EPA regulations were proposed in September of 2015 and (after an exhaustive notice and comment period) finalized in May of 2016. Explicitly designed to complement state regulations, they built upon California and Colorado’s efforts by requiring increased monitoring and more stringent prevention of methane leakage. Given the cost and burden for those involved, the federal regulations apply only to new oil and natural gas producers- with an emphasis on reducing hydraulic fracturing (“fracking”) emissions that were previously less regulated. Predictably, both environmental activists and oil industry representatives took issue with the changes. The Environmental Defense Fund praised the changes, but disagreed with the decision not to apply them to existing sources of emissions. Meanwhile, the American Petroleum Institute felt that the rules were both too costly and unnecessary in light of the industry’s obvious financial incentive to contain all of the gas it extracts and transports.
In keeping with the experimentation principle of federalism, it would have been easier to come to an effective, practical solution had the EPA allowed the experimentation of Brandeis’ “courageous States” to run its course. For example, one of the oil industry’s complaints is that the regulations impose too high a cost. Waiting for the existing state regulations (and perhaps those of other states) to affect companies’ balance sheets would have made the EPA’s estimate more accurate. If the industry’s fears of excessive cost and insufficient benefit were realized, their case could be made more easily, and the EPA could have adapted accordingly. Additionally, environmental groups’ claims that the regulations were necessary and practical would have been more easily defended had other states followed California and Colorado’s lead in the months or years after those regulations took effect. Those additional states could have given regulators a look at more or less stringent emissions plans and the resulting emissions. Further, the imposition of nationwide rules means that, when the rules are inevitably challenged in court, the only hard data available will be from a single year of regulation in two western states.
Setting aside theory, the EPA has good reason for rushing oil and gas regulations into place during 2016. The related Clean Power Plan rules have already been challenged in court, and the results of the 2016 election mean that the incoming administration will not follow through on President Obama’s promises to increase environmental regulation. In other words, in the real world, the federal government’s new priorities will almost certainly make this a non-issue. However, the happy incident that is federalism means that the new administration can look to current and future state regulations of methane emissions to find a regulatory regime that improves air quality without imposing excessive cost on businesses. States, meanwhile, can continue to perform novel environmental experiments to find the solutions that work best for their citizens.
The views and opinions expressed in this blog post are those of the authors and do not necessarily reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.
*Joseph Moeller is an Associate Editor of MJEAL. He can be reached at email@example.com.
 Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources 40 C.F.R. § 60 (2016); Source Determination for Certain Emission Units in the Oil and Natural Gas Sector, 81 Fed. Reg. 35,622 (June 3, 2016); Federal Implementation Plan for True Minor Sources in Indian Country in the Oil and Natural Gas Sector 40 C.F.R. §49 (2016).
 New State Ice Co. v. Liebmann 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).
 Avik Roy, How Mitt Romney’s Healthcare Experts Helped Design Obamacare, Forbes (Oct. 11, 2011, 10:28 AM), https://www.washingtonpost.com/blogs/right-turn/post/exclusive-interview-romneycare-author-jonathan-gruber/2011/03/04/AF2WJorB_blog.html?utm_term=.de2b8e016db7.
 Mitt Romney, Health Care for Everyone? We Found a Way., Wall St. J. (April 11, 2006, 12:01 AM), http://www.wsj.com/articles/SB114472206077422547.
 Amy Harder and Erin Ailworth, EPA Issues Final Rules Cutting Oil, Natural Gas Methane Emissions, Wall St. J., (May 12, 2016, 3:22 PM), http://www.wsj.com/articles/epa-issues-final-rules-cutting-oil-natural-gas-methane-emissions-1463067378.
 White House, Fact Sheet: Administration Takes Steps Forward on Climate Action Plan (Jan. 14, 2015), https://www.whitehouse.gov/the-press-office/2015/01/14/fact-sheet-administration-takes-steps-forward-climate-action-plan-anno-1.
 Matt McGrath, California methane leak ‘largest in US history’, B.B.C. News (Feb. 26, 2016), http://www.bbc.com/news/science-environment-35659947.
 K.C. Becker, Federal methane guidelines, modeled on Colorado’s rule, also necessary, The Denver Post (Aug. 4, 2016, 5:24 PM), http://www.denverpost.com/2016/08/04/federal-methane-guidelines-modeled-on-colorados-rule-also-necessary/; 5 Colo. Code Regs. § 1001-9 Sec. XII (2016).
 S.B. 1371, 2014 Leg. (Cal. 2014).
 Environmental Defense Fund Energy Exchange Blog, California Has Solid Data On Methane Leaks, Now They Need To Be Fixed, (Aug. 30, 2016, 10:00 AM), http://breakingenergy.com/2016/08/30/california-has-solid-data-on-methane-leaks-now-they-need-to-be-fixed/.
 Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources 40 C.F.R. § 60.II.A.I. (2016).
 Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources 40 C.F.R. § 60.II.B. (2016).
 Chris Mooney and Brady Dennis, Obama administration announces historic new regulations for methane emissions from oil and gas, Wash. Post, (May 12, 2016), https://www.washingtonpost.com/news/energy-environment/wp/2016/05/12/obama-administration-announces-historic-new-regulations-for-methane-emissions-from-oil-and-gas/?utm_term=.9c18409cb229.
 Valerie Volcovici, Obama power plant rules face key test in U.S. court, Reuters, Sept. 28, 2016 (West 2016).