March 2025
AXPC Supports the Repeal of the Punitive Methane Tax
Bottom Line Up Front: Methane regulation (OOOOb/c) remains the primary way the federal government regulates methane. While the methane tax was repealed, methane regulation remains intact. The Environmental Protection Agency (EPA) has announced it will revisit the methane regulation, and we support targeted fixes while maintaining a strong regulatory framework.
What’s Happened: On March 14, 2025, President Trump signed a Congressional Review Act resolution of disapproval to nullify the prior administration’s rule that implemented the waste emissions charge (WEC), also known as the “methane tax” or “natural gas tax.” This policy was an unnecessary tax that raised costs on American energy producers and ignored their significant investment to identify, mitigate, and reduce emissions.
AXPC supported this resolution.
What’s Next: Since the statutory mandate for the methane tax remains intact under the Inflation Reduction Act (IRA) of 2022, EPA is still legally required to develop a regulation to implement it, despite the nullification of the 2024 rule. Because of this, AXPC continues to advocate for a repeal of the underlying statutory authority through the budget reconciliation process.
The Facts: America leads the world in emissions reductions from the oil and natural gas sector. The Clean Air Taskforce estimates that the upstream sector has reduced its methane intensity by 61% and overall methane emissions by 42% since 2015 (see below image). Additionally, millions of dollars have been invested by U.S. energy producers in voluntary efforts and innovations to further reduce emissions in production and pipeline operations.
American energy producers have proven it can achieve continued reductions while meeting growing energy demand — leading the efforts to lower methane emissions and positioning the U.S. as a global leader in responsible production.
With one of the world’s lowest methane intensities, the U.S. outperforms nearly all other producers — only five other producing countries have a lower methane intensity than the U.S., but the U.S. produces more oil and natural gas than all five of these countries combined, according to the International Energy Administration (IEA).
To continue lowering emissions while responsibly producing the energy America and the world needs, we need smart, workable regulations, especially when it comes to methane.
What Was the Methane Tax? Established under the IRA, the methane tax was a fee imposed on oil and natural gas companies that emit methane beyond specific thresholds. The fee was set to start at $900 per metric ton of methane in 2024, increasing to $1,500 by 2026. While the concept seemed straightforward, its effectiveness – or lack thereof – was in the details. This was where both the IRA language and the EPA rule fell short. The result was a skewed policy that unfairly penalizes certain regions over others and was more likely to create “paper” emissions reductions rather than meaningful reductions in methane.
Dive Deep on Methane Regulations: In the U.S., the principal regulation requiring the control of methane from oil and natural gas operators is the New Source Performance Standards (NSPS) OOOOb and Emission Guidelines OOOOc (collectively referred to as OOOOb/c or “The Methane Rule”). These regulations set stringent standards for both new and existing sources, including requirements for conducting regular leak detection and repair, phasing out routine flaring, and eliminating the use of pneumatic devices that vent methane.
The Methane Rule incorporates feedback from our oil and natural gas producers in many areas where there was critical need for practical improvements. However, significant flaws persist in the final regulatory text that are practically infeasible and/or likely to increase production costs, burdens, and uncertainties without delivering meaningful environmental benefits.
AXPC’s Position on The Methane Rule: While we’re seeking targeted improvements to the rule, AXPC member companies are also broadly supportive of many of the requirements that allow us to maintain one of the most stringent methane regulatory frameworks in the world. We can be global leaders in both energy production and emissions reduction.
The Final Take: U.S. oil and gas producers remain committed to reducing methane emissions. AXPC supports federal methane regulation when it is practical and accounts for global energy demand. Overlapping regulations that increase costs without benefits or hinder innovation will slow progress. AXPC continues to work with industry and the administration to enact effective, balanced policies that cut emissions, enhance U.S. emissions reporting, and meet the growing global demand for affordable, reliable, and cleaner energy.
