Methane Emissions Reduction Act of 2021
Bill: S.645 | Sponsor: Sen. Whitehouse, Sheldon (D-RI)
Policy area: Environmental Protection

Summary:
Methane Emissions Reduction Act of 2021
This bill requires the Department of the Treasury to estimate annual methane emissions from each oil and natural gas producing basin and levy a fee for such emissions on each company that produces, gathers, processes, or transmits oil or natural gas. The fees must be used to provide grants through the National Coastal Resilience Fund of the National Fish and Wildlife Foundation.

To require the Secretary of the Treasury to levy a fee on methane 
 emissions from oil and natural gas facilities, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Methane Emissions Reduction Act of 
2021''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) methane is a potent heat-trapping gas that absorbs 28 
        to 36 times the quantity of energy that carbon dioxide absorbs 
        over a 100-year period;
            (2) increased methane concentrations in the atmosphere are 
        responsible for approximately 25 percent of observed global 
        warming;
            (3) approximately \1/3\ of global anthropogenic methane 
        emissions are produced by the production and transmission of 
        fossil fuels;
            (4) recent estimates suggest that methane emissions from 
        oil and natural gas operations in the United States are 60 
        percent higher than previously believed, representing 2.3 
        percent of natural gas production;
            (5) methane emissions from oil and natural gas operations 
        in the United States represent approximately $2,000,000,000 in 
        lost natural gas that could be used to fuel 10,000,000 homes;
            (6) estimates from the International Energy Agency suggest 
        that \1/2\ of methane emissions from global oil and natural gas 
        supply chains may be eliminated at zero net cost;
            (7) some oil and natural gas companies have announced plans 
        to reduce methane emissions from the operations of those 
        companies to below 0.2 percent of production, demonstrating 
        that significant reductions in methane emissions are 
        technically and economically feasible; and
            (8) numerous companies in the United States are developing 
        innovative technologies to allow oil and natural gas companies 
        to more cost-effectively detect and reduce methane emissions.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Basin.--The term ``basin'' means a geologic province 
        (as defined by the American Association of Petroleum 
        Geologists).
            (2) Empirically determined.--The term ``empirically 
        determined'' means determined through the collection of 
        sufficient data in situ, including measurement on the ground or 
        by drone, airplane, or satellite, for the purpose of accurately 
        estimating the quantity of methane emissions from a basin.
            (3) Methane.--The term ``methane'' means a chemical 
        compound with the chemical formula CH<INF>4</INF>.
            (4) Methane emission.--The term ``methane emission'' means 
        the release of methane from the extraction, production, 
        gathering, processing, compression, transmission, or storage 
        of--
                    (A) oil; or
                    (B) natural gas.
            (5) Methane fee factor.--The term ``methane fee factor'' 
        means the amount calculated under section 4(b)(2)(D) for the 
        applicable calendar year.
            (6) Natural gas.--The term ``natural gas'' has the meaning 
        given the term in section 3 of the Deepwater Port Act of 1974 
        (33 U.S.C. 1502).
            (7) Oil.--The term ``oil'' has the meaning given the term 
        in section 3 of the Deepwater Port Act of 1974 (33 U.S.C. 
        1502).
            (8) Percentage of volume lost to the atmosphere.--The term 
        ``percentage of volume lost to the atmosphere'' means, for any 
        1 company with respect to any 1 basin--
                    (A) for companies that use the fee calculated under 
                section 4(b)(2)(B)(i), the percentage determined for 
                the basin under the program established under section 
                4(a); and
                    (B) for companies that use the fee calculated under 
                clause (iii) of section 4(b)(2)(C), the quotient 
                obtained by dividing--
                            (i) the methane emissions in the basin 
                        during the applicable calendar year, as 
                        determined by the company using a protocol 
                        validated by the Secretary under clause (ii) of 
                        that section; by
                            (ii) the total quantity of natural gas 
                        produced, gathered, processed, transmitted, or 
                        released and lost to the atmosphere by the 
                        company in the basin during the applicable 
                        calendar year, as determined by the company 
                        using a protocol validated by the Secretary 
                        under clause (ii) of that section.
            (9) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

SEC. 4. FEE ON METHANE EMISSIONS.

    (a) Estimate of Methane Emissions.--Not later than December 31, 
2022, the Secretary, in consultation with the Administrator of the 
Environmental Protection Agency and the Administrator of the National 
Oceanic and Atmospheric Administration, shall establish and implement a 
program to estimate, based on empirically determined, peer-reviewed 
methane emission rates, annual methane emissions, and methane emission 
rates (expressed in percentage of natural gas production), from each 
oil and natural gas producing basin.
    (b) Fee.--
            (1) In general.--For calendar year 2023 and each calendar 
        year thereafter, the Secretary shall levy a fee on methane 
        emissions on each company that produces, gathers, processes, or 
        transmits oil or natural gas.
            (2) Amount.--
                    (A) In general.--The fee under paragraph (1) shall 
                be calculated in accordance with subparagraph (B) or 
                (C), as applicable.
                    (B) Proportional fee calculation.--
                            (i) In general.--Subject to subparagraph 
                        (C), the fee under paragraph (1) for a basin in 
                        which a company produces, gathers, processes, 
                        or transmits oil or natural gas for a calendar 
                        year shall be the sum obtained by adding--
                                    (I) the product obtained by 
                                multiplying--
                                            (aa) the difference 
                                        between--

                                                    (AA) the percentage 
                                                of volume lost to the 
                                                atmosphere in the basin 
                                                during the calendar 
                                                year; and

                                                    (BB) 0.2 percent;

                                            (bb) the total quantity of 
                                        natural gas produced or 
                                        released and lost to the 
                                        atmosphere during oil or 
                                        natural gas production by the 
                                        company in the basin during the 
                                        calendar year; and
                                            (cc) the methane fee factor 
                                        for the applicable calendar 
                                        year; and
                                    (II) the product obtained by 
                                multiplying--
                                            (aa) the difference 
                                        between--

                                                    (AA) the percentage 
                                                of volume lost to the 
                                                atmosphere in the basin 
                                                during the calendar 
                                                year; and

                                                    (BB) 0.1 percent;

                                            (bb) the total quantity of 
                                        natural gas gathered, 
                                        processed, or transmitted by 
                                        the company in the basin during 
                                        the calendar year; and
                                            (cc) the methane fee factor 
                                        for the applicable calendar 
                                        year.
                            (ii) Requirement.--The fee calculated under 
                        clause (i) for a company shall be determined on 
                        a basin-by-basin basis for each basin in which 
                        the company produces, gathers, processes, or 
                        transmits oil or natural gas.
                    (C) Alternative fee calculation.--
                            (i) Opt out.--A company may opt out of the 
                        fee calculated under subparagraph (B) if--
                                    (I) the company submits to the 
                                Secretary a peer-reviewed protocol for 
                                empirically determining, on a basin-by-
                                basin basis for all basins, the total 
                                amount of methane emissions that result 
                                from oil and natural gas facilities--
                                            (aa) that the company 
                                        operates; or
                                            (bb) in which the company 
                                        has an ownership interest; and
                                    (II) the Secretary validates the 
                                protocol in accordance with clause 
                                (ii).
                            (ii) Validation.--
                                    (I) In general.--The Secretary may 
                                validate a protocol submitted under 
                                clause (i)(I) if--
                                            (aa) the Secretary 
                                        determines that the protocol is 
                                        an accurate and comprehensive 
                                        empirical method for 
                                        calculating the methane 
                                        emissions of the company 
                                        submitting the protocol;
                                            (bb) the protocol--

                                                    (AA) is peer-
                                                reviewed by independent 
                                                scientists;

                                                    (BB) is available 
                                                to the public in its 
                                                entirety; and

                                                    (CC) requires the 
                                                regular collection of 
                                                data;

                                            (cc) all underlying data 
                                        collected under the protocol 
                                        are available to the public; 
                                        and
                                            (dd) the Secretary 
                                        determines that--

                                                    (AA) to the maximum 
                                                extent practicable, the 
                                                company has installed 
                                                state-of-the-art 
                                                technologies to detect 
                                                and eliminate methane 
                                                leaks from all oil and 
                                                natural gas facilities 
                                                the company owns or 
                                                operates; and

                                                    (BB) subject to 
                                                subclause (III), the 
                                                company has prohibited 
                                                the venting and flaring 
                                                of methane, except in 
                                                emergency 
                                                circumstances.

                                    (II) Timeline.--A protocol 
                                described in clause (i)(I) shall be 
                                submitted to the Secretary for 
                                validation under subclause (I) not 
                                later than June 30 of the calendar year 
                                before the calendar year for which the 
                                company is seeking to opt out of the 
                                fee calculated under subparagraph (B).
                                    (III) Emergency circumstances.--An 
                                emergency circumstance for which the 
                                venting or flaring of methane is 
                                authorized under subclause (I)(dd)(BB) 
                                does not include--
                                            (aa) venting or flaring of 
                                        methane from oil wells because 
                                        the company has failed to 
                                        develop the infrastructure 
                                        necessary to capture, process, 
                                        and transmit methane associated 
                                        with oil production; or
                                            (bb) any claim of economic 
                                        necessity.
                            (iii) Calculation.--For a company that has 
                        opted out of the fee calculated under 
                        subparagraph (B) in accordance with clause (i), 
                        the fee under paragraph (1) for a basin in 
                        which the company produces, gathers, processes, 
                        or transmits oil or natural gas for a calendar 
                        year shall be the sum obtained by adding--
                                    (I) the product obtained by 
                                multiplying--
                                            (aa) the difference 
                                        between--

                                                    (AA) the percentage 
                                                of volume lost to the 
                                                atmosphere in the basin 
                                                during the calendar 
                                                year; and

                                                    (BB) 0.2 percent;

                                            (bb) the total quantity of 
                                        natural gas produced or 
                                        released and lost to the 
                                        atmosphere during oil or 
                                        natural gas production by the 
                                        company in the basin during the 
                                        calendar year; and
                                            (cc) the methane fee factor 
                                        for the applicable calendar 
                                        year; and
                                    (II) the product obtained by 
                                multiplying--
                                            (aa) the difference 
                                        between--

                                                    (AA) the percentage 
                                                of volume lost to the 
                                                atmosphere in the basin 
                                                during the calendar 
                                                year; and

                                                    (BB) 0.1 percent;

                                            (bb) the total quantity of 
                                        natural gas gathered, 
                                        processed, or transmitted by 
                                        the company in the basin during 
                                        the calendar year; and
                                            (cc) the methane fee factor 
                                        for the applicable calendar 
                                        year.
                            (iv) Requirement.--The fee calculated under 
                        clause (iii) for a company that opted out of a 
                        fee calculated under subparagraph (B) shall be 
                        determined on a basin-by-basin basis for each 
                        basin in which the company produces, gathers, 
                        processes, or transmits oil or natural gas.
                    (D) Methane fee factor.--
                            (i) Initial cost.--For calendar year 2023, 
                        the methane fee factor shall be $1,800 per ton.
                            (ii) Annual adjustment.--For each calendar 
                        year after 2023, the methane fee factor shall 
                        be adjusted to an amount that is equal to the 
                        product obtained by multiplying--
                                    (I) the methane fee factor for the 
                                preceding calendar year; and
                                    (II) the percentage obtained by 
                                adding--
                                            (aa) 102 percent; and
                                            (bb) the percentage by 
                                        which the Consumer Price Index 
                                        for the calendar year exceeds 
                                        the Consumer Price Index for 
                                        the preceding calendar year.
            (3) Timing.--Not later than July 1 of each year, the 
        Secretary shall calculate and levy the fee under paragraph (1) 
        for the preceding calendar year.
            (4) National coastal resilience fund.--Notwithstanding 
        section 10(b)(2) of the National Fish and Wildlife Foundation 
        Establishment Act (16 U.S.C. 3709(b)(2)), the Secretary shall, 
        on an annual basis, transfer an amount equal to the amounts 
        collected under the fee under paragraph (1) to the National 
        Fish and Wildlife Foundation to provide grants through the 
        National Coastal Resilience Fund of the National Fish and 
        Wildlife Foundation (or a successor program).

SEC. 5. SAVINGS.

    Nothing in this Act--
            (1) affects the ability to regulate methane emissions under 
        any other provision of law; or
            (2) preempts a State from regulating or assessing a fee on 
        methane emissions from oil and gas facilities.
                                 <all>