Give Us Regulation, Not a New Tax, Gas Groups Beg Congress

(Bloomberg) -- The threat of a new fee on methane emissions has put the oil and gas industry in the unusual position of pleading with lawmakers for more federal regulation instead. 

More than 100 trade groups, local chambers of commerce and other organizations from New Mexico to Pennsylvania are warning that the fee proposed to help pay for Democrats’ $3.5 trillion spending plan would roil energy markets and boost consumer bills nationwide. In a letter to Senate leaders Tuesday, they argued a far better approach is to rely on existing federal regulations and tougher new mandates the Environmental Protection Agency is set to propose within weeks.

“If the objective is to reduce methane emissions, direct regulation of methane is the best method to implement such a government policy and do so in an equitable manner that is tied to actual emissions,” the groups said. By contrast, the congressional plan “would levy an unreasonable, punitive fee on methane emissions only from oil and natural gas facilities that could jeopardize affordable and reliable energy with likely little reduction in greenhouse gas emissions.”

The letter, organized by the American Petroleum Institute, marks the escalation of energy and utility companies’ fight against the proposed fee on emissions of methane, the primary ingredient of natural gas, as congressional committees draft the legislative details of the broad tax-and-spending plan. Separately, the American Gas Association that represents natural gas utilities on Friday launched a campaign against the proposed fee it called “devastating for families and businesses.”

Industry allies are making appeals to moderate Democrats and those representing oil-and-gas-rich states, whose votes on the budget bill could be decisive in the evenly divided Senate. That includes Senator Joe Manchin, the powerful Democratic chairman of the energy committee who has argued the soaring national debt demands a significantly smaller plan -- and whose home state of West Virginia is the sixth-ranking U.S. natural gas producer. 

Senate Democrats included a placeholder for the fee in their budget plan but details are still being developed and there’s no guarantee it will pass the evenly divided chamber. The measure could be modeled on legislation proposed by Senator Sheldon Whitehouse of Rhode Island that would set the fee at $1,800 per ton starting in 2023.

Supporters say the fee could hasten industry efforts to keep a tighter lid on methane, which is 84 times more powerful than carbon dioxide at warming the atmosphere in the first two decades after its release. 

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