On November 18, 2024, the U.S. Environmental Protection Agency (EPA) published rules in 40 CFR Part 99 – Waste Emissions Charge. This final rule is effective January 17, 2025.
The rule establishes a Waste Emissions Charge (WEC) for CH4 emissions that exceed specified thresholds from the oil and natural gas industry. It is mandated by the Clean Air Act, as amended by the Inflation Reduction Act of 2022. The rule details the methods for calculating and collecting the charge and includes provisions for netting emissions, exemptions, confidentiality of certain data, and compliance mechanisms.
Link to EPA final rule information
Applicability of the Waste Emissions Charge (WEC)
The Waste Emissions Charge (WEC) applies to oil and natural gas (O&G) facilities that report annual greenhouse gas (GHG) emissions exceeding 25,000 metric tons of CO2e under 40 CFR Part 98, Subpart W.
The calculation of the WEC fee is exclusively based on a facility’s CH4 emissions reported under Subpart W, and does not include any Subpart C GHG emissions from stationary fuel combustion.
For example, gas processing and gas transmission facilities may report GHG emissions under both Subpart W and Subpart C. However, only the CH4 emissions reported under Subpart W will determine the facility’s WEC applicability and fee calculation.
EPA Subpart W Segments Included
The applicable facilities for the WEC include 9 of the 10 subpart W industry segments. Subpart W industry segment (8) Natural gas distribution is not included in WEC rules. The list of industry segments include:
- (1) Offshore production
- (2) Onshore production
- (3) Onshore gas processing
- (4) Onshore natural gas transmission compression
- (5) Underground natural gas storage
- (6) Liquified natural gas storage
- (7) Liquefied natural gas import and export equipment
- (9) Onshore gas gathering and boosting
- (10) Onshore natural gas transmission pipeline
WEC Calculation
For facilities that report more than 25,000 metric tons CO2e per year of subpart W emissions, the WEC calculation is based on the following:
- Facility subpart W segment type
- Intensity factor (%)
- Natural gas sales/throughput (Mscf)
- Conversion of natural gas sales/throughput to CH4 metric tons/year (0.0192 metric ton/Mscf)
- Crude oil throughput – if no sales gas (bbls)
- CH4 emissions reported in subpart W (metric ton/yr)
- Applicable CH4 fee ($/metric ton CH4)
The regulation includes equations to use for calculating the WEC for each segment type. The equations calculate net WEC emissions based on annual emissions exceeding the waste emissions threshold adjusted for:
- Delays in environmental permitting exemption
- Regulatory compliance (OOOOb/OOOOc) exemption
- Plugged and abandoned well exemption
The e-GGRT system will have an online system or calculation spreadsheet with necessary inputs to calculate WEC fee required.
WEC Obligated Party
The WEC obligated party is responsible for submitting and paying the WEC. This party must be the owner or operator of the facility, selected through a binding agreement among all owners and operators.
The obligated party is the facility’s owner(s) or operator(s) as of December 31 of the reporting year. However, if the facility changes ownership after the reporting year and prior owners/operators no longer exist by the filing date, the new owners/operators must mutually designate the obligated party.
WEC Filing
The company’s subpart W data reported using the e-GGRT system will be the basis for calculating the WEC. The e-GGRT system will also be used for the annual WEC filings.
- WEC reporting year: January 1 – December 31 (same as GHG reporting year).
- WEC filing/payment deadline: August 31 of the year following the reporting year.
- WEC resubmittal deadline: December 15 of the year following the reporting year.
If the deadline date falls on a weekend or Federal holiday, the deadline is the next business day.
Note that annual GHG reports for 40 CFR 98 are due on March 31 of each year following the reporting year.
If there are one or more substantive errors in the WEC then within 30 days of discovery, a refiling of the WEC is required.
For subpart W submissions to e-GGRT, the EPA (or EPA consultant) reviews the data for completeness and accuracy. As needed, GHG reporters must respond to EPA questions and resubmit reports into e-GGRT. The August 31 and December 15 deadlines allow for time to finalize the e-GGRT files.
CH4 Fee Schedule
The table below outlines the CH4 fee structure.
WEC Payment
The WEC filing must include payment of any WEC fee. The WEC must be paid electronically in U.S. dollars by the obligated party to the Department of the Treasury using an online payment service designated by the Administrator.
If resubmittals of WEC filings result in more WEC fees, the company will receive an invoice payable within 30 days of the invoice date. If a resubmitted report shows a lower WEC obligation than previously paid, the Administrator will authorize a refund for the difference.
Netting
The rules allow facilities under common ownership or control with a shared parent company to net emissions by offsetting emissions from facilities below the waste emissions thresholds against those from facilities exceeding the thresholds, both within and across applicable industry segments.
Only WEC applicable facilities will be used in netting calculations. A WEC applicable facility only includes facilities that have subpart W emissions greater than 25,000 metric tons CO2e per year.
Netting cannot result in net emissions being reduced below zero.
WEC Fee Exemptions
The following exemptions are included in WEC rules.
- Exempts emissions resulting from eligible delays in obtaining environmental permits for gathering and transmission infrastructure (e.g., pipelines).
- Excludes facilities from the WEC if they demonstrate compliance (via annual reports) with NSPS OOOOb and EG OOOOc. Available to facilities in States that have EPA approved EG OOOOc rules.
- Exempts emissions from wells that have been permanently shut-in and plugged.
The WEC rule provides equations for determining exempt emissions, which are then used to calculate the net WEC emissions required for determining the reporting year’s WEC fee.
Third-Party Audits
Under the Waste Emissions Charge (WEC) program, audits may be required by EPA. Audits must be carried out by an independent third-party. The chosen auditor must be a qualified professional engineer with relevant experience in petroleum engineering or the oil and gas industry’s production, processing, transmission, or storage sectors. A qualified professional engineer is a state-licensed individual in good standing with the education, expertise, and experience to review and interpret records under the rule.
Summary and Conclusions
The U.S. Environmental Protection Agency (EPA) finalized the Waste Emissions Charge (WEC) rule on November 18, 2024, effective January 17, 2025. These rules assess a fee on methane (CH4) emissions from the oil and natural gas industry. This regulation, established under 40 CFR Part 99, introduces a financial mechanism to incentivize the reduction of methane emissions that exceed specified thresholds. Key elements of the rule include detailed methodologies for calculating the WEC, exemptions for specific emission sources, and a robust reporting and compliance structure.
The Waste Emissions Charge represents a significant regulatory development for the oil and natural gas industry, emphasizing the need for CH4 emissions tracking, reporting, and management. Compliance will require collaboration across facility operations, accurate reporting through the e-GGRT system, and strategic planning to manage financial impacts. Engineers and operators should familiarize themselves with the rule’s specifics and integrate WEC requirements into their emissions management strategies to ensure compliance and mitigate costs.
Cimarron – Who We Are
With decades of operating history and innovation across our trusted brands, Cimarron provides technology-driven emissions management solutions for the global energy system. Our leading-edge products, services, and real-time monitoring systems reduce emissions, optimize operations, ensure regulatory compliance, and drive sustainability progress for our customers operating in oil & natural gas production, energy storage & distribution, renewables & biogas, coal mine methane, and certain industrial end markets.
Cimarron boasts a collection of well-established technologies which have been assembled and innovated from trusted industry brands. Our vast global experience, spanning tens of thousands of equipment installations, serves as a testament to our ability to achieve success in every project upon which we embark.
Cimarron is headquartered in Houston, Texas with approximately 550 employees serving our global customer base. In addition to being present in all major regions in the U.S., Cimarron operates across more than 45 countries around the world. We support our customers from sales, engineering, manufacturing, and field service locations across the United States, Italy, India, England, and the United Arab Emirates, further supported by our network of international partners.
Please contact us to learn more about our emissions mitigation solutions and how we can support WEC regulatory compliance at sales@cimarron.com or visit our website www.cimarron.com.