How Republican lawsuits could force oil companies to pay higher methane fees

If poorer states challenge the EPA’s methane rules, it could leave the oil industry facing a new levy on excess emissions.

Twenty-three state attorneys general are urging courts to overturn EPA standards aimed at curbing methane leaks at existing oil and gas facilities. The litigation could drag on until 2026, delaying implementation of the rule and giving states more time to plan.

But that delay could also mean that oil and gas companies across the country will not be able to qualify for an exemption from the new methane fee until the 2030s, leaving high-carbon emitting facilities facing high fees for much longer than Congress or the EPA anticipated.

The Inflation Reduction Act allows plants that comply with EPA’s methane rules to pay the “waste emissions fee,” which takes effect next year based on this year’s emissions. It charges for emissions of the climate-warming gas above certain methane intensity thresholds set in the law.