Company: GULTU
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001201
Chunk: 4

Company: Gulf Coast Ultra Deep Royalty Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 4
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 preparing for or responding to those effects.

The
threat of climate change continues to attract considerable attention globally. In response to its 2009 finding that emissions of carbon
dioxide, methane and other greenhouse gases (“ GHGs”) may present an endangerment to public health and the environment, the
EPA has issued regulations to restrict emissions of greenhouse gases under existing provisions of the CAA. These regulations include
limits on tailpipe emissions from motor vehicles, preconstruction and operating permit requirements for certain large stationary sources,
and methane emissions standards for certain new, modified and reconstructed oil and gas sources - as well as the EPA’s methane
emissions guidelines for existing oil and gas sources that were adopted in 2024. The EPA also has adopted rules requiring the reporting
of GHG emissions from specified large greenhouse gas emission sources in the United States, as well as certain onshore oil and natural
gas production facilities, on an annual basis. In addition to this direct regulation of oil and gas sources, the EPA has recently proposed
rules to implement the mandatory Waste Emissions Charge under the Inflation Reduction Act of 2022, which will charge a fee based on the
methane emissions from applicable facilities in the oil and gas sector starting in 2024.

On
January 20, 2025, President Trump announced the withdrawal of the United States from the Paris Climate Agreement. President Trump also
issued an executive order directing the EPA to review the legality and continuing applicability of its 2009 GHG endangerment finding.
The outcome of that review is not currently known; however, it has the potential to eliminate the basis for the EPA’s regulation
of GHGs under the CAA.

The
EPA has established GHG standards for oil and gas sources under the CAA based on its endangerment finding. In 2024, the EPA adopted a
final rule that will directly regulate volatile organic compound and methane emissions from new oil and gas sources and will require
further emissions reductions through its regulation of flaring, compressors, pumps, storage vessels, process controllers, well completions
and liquids unloading, and equipment leaks. At the same time, the EPA adopted emissions guidelines that will apply to existing oil and
gas sources and that require reductions in volatile organic compound and methane emissions that are largely equivalent to the requirements
for new sources. The existing source emissions guidelines are to be implemented through state plans, with expected compliance dates for
existing sources arriving in 2029.

The
Inflation Reduction Act