The Environmental Protection Agency is preparing to weaken key Biden-era methane controls on oil and gas operations. EPA Administrator Lee Zeldin announced the proposal Wednesday at the New Mexico Oil and Gas Association’s annual meeting in Santa Fe, New Mexico, stating the changes address the burden on marginal wells and operators.

The agency targets requirements for marginal wells, large-leak detection, and associated-gas flaring. EPA estimates the planned rollback could save $45 billion annually. The move extends a broader deregulatory push that has also targeted the greenhouse-gas endangerment finding underpinning vehicle rules.

Marginal wells drive regulatory fight

Marginal wells produce relatively little fuel while emitting disproportionately large amounts of methane. EPA data from 2021 shows these low-producing wells accounted for just 7% of U.S. oil and gas production but roughly 60% of natural-gas production emissions and 40% of oil-production emissions.

Zeldin stated Americans cannot afford producers being weighed down by unnecessary burdens. The administration has linked regulatory relief to energy affordability, including recent fuel-rule waivers aimed at easing pump prices.

Key regulatory changes proposed

The EPA will create separate categories of marginal well sites with different standards and seek to rescind the Super Emitter Program. This program currently allows certified third parties to identify major methane releases and requires operators to investigate EPA notifications.

Additionally, the agency will revisit rules governing associated gas, which producers often burn through flaring when they cannot capture or transport it. The Biden administration’s 2023 methane rule sought to phase out routine flaring at new oil wells and tighten controls on new and existing sources.

Impact on major producers

Publicly traded U.S. oil and gas producers with significant onshore footprints could see lower compliance costs. These include:

• Exxon Mobil Corp (NYSE: XOM)
• Chevron Corp (NYSE: CVX)
• ConocoPhillips (NYSE: COP)
• Occidental Petroleum Corp (NYSE: OXY)
• Diamondback Energy Inc (NASDAQ: FANG)
• Chord Energy Corp (NASDAQ: CHRD)

What the numbers show

The EPA’s original 2023 rule estimated it would prevent 58 million tons of methane emissions between 2024 and 2038, representing an 80% reduction versus projected emissions without standards. However, marginal wells represent only 7% of production volume yet account for the majority of natural-gas production emissions. This disparity suggests that rolling back rules specifically targeting these low-yield sites could significantly reduce compliance costs for operators while removing controls on the sector's most disproportionate emission source.

Methane is the second-largest contributor to climate change after carbon dioxide. The Sierra Club called the rollback foolish and short-sighted, while Zeldin said the EPA is responding to producer concerns that the rules are unworkable.

NATSO, SIGMA, and NACS urged the Environmental Protection Agency to preserve existing guidance on diesel exhaust fluid (DEF) to protect emissions reductions. The groups warned that proposed regulatory changes could disrupt supply and increase costs.

Regulatory Context

The associations represent truck stops, fuel marketers, and convenience stores across North America. They support the current framework that addressed concerns about commercial vehicles using Selective Catalytic Reduction (SCR) technology. This technology relies on DEF to reduce nitrogen oxide emissions from heavy-duty vehicles.

Nitrogen oxide emissions from these vehicles have declined 76 percent since 2010 through the use of SCR technology and DEF. The widespread adoption of DEF is considered a significant environmental success for liquid fuels in the trucking sector.

Market Impact

The existing regulatory framework encouraged fuel retailers to invest in a DEF distribution network. Today, more than 100,000 retail locations in North America offer DEF. This includes more than 95 percent of North American truck stops.

David Fialkov, Executive Director of Government Affairs for NATSO and SIGMA, stated that the current system functions as a competitive and reliable market. He noted that SCR and DEF demonstrate how targeted innovation can improve environmental attributes of liquid fuels.

Proposed Changes

The groups argue that EPA’s proposed changes would create confusion about DEF requirements. They warn this could decrease availability and increase prices. If drivers believe DEF is optional, they may stop purchasing it. Reduced volumes could harm competitive supply, leading to higher costs for compliant drivers.

Matt Durand, NACS Deputy General Counsel, said the EPA should let the existing guidance be fully implemented before making changes. He recommended putting the rule on hold while the industry realizes the full benefits of these engine systems.

Key Recommendations

The associations urged the EPA to take specific actions regarding the inducement framework:

• Permit the August 2025 and March 2026 Guidance to fully penetrate the market before amending diesel engine inducement requirements.
• Clearly communicate that DEF and SCR requirements remain in effect and that operating without DEF damages the vehicle.
• Expand access to low-cost vehicle repairs so independent shops can service DEF sensor faults.
• Retain derates as an enforcement backstop paired with robust notifications.
• Refrain from restricting which derates manufacturers choose to protect their equipment.
• Retain 32.5 percent as the DEF quality reference concentration.
• Remove the provision suspending inducements in cold weather.
• Treat nonroad and highway applications separately.