On January 16, 2025, Texas Attorney General Ken Paxton, along with attorneys general from 22 other Republican-led states, filed a lawsuit against the U.S. Environmental Protection Agency (EPA) aiming to block the implementation of a new methane emissions fee established under the Inflation Reduction Act (IRA). The legal action, lodged in the U.S. Court of Appeals for the District of Columbia Circuit, contends that the EPA’s rule exceeds its statutory authority and imposes undue burdens on the oil and gas industry, particularly affecting states with significant energy sectors like Texas.
The contested regulation introduces the Waste Emissions Charge, marking the first federal fee targeting methane emissions from the oil and gas industry. Set to take effect in 2024, the fee starts at $900 per metric ton of methane emissions exceeding specified thresholds, escalating to $1,500 per metric ton by 2026. The EPA estimates that this measure could lead to substantial reductions in methane emissions, a potent greenhouse gas contributing significantly to climate change.
Attorney General Paxton and the coalition argue that the EPA’s rule is “arbitrary and capricious,” asserting that it unlawfully extends the agency’s regulatory reach without clear congressional authorization. They express concerns that the fee could disproportionately impact smaller energy producers, potentially leading to increased operational costs and economic challenges within the industry.
In a statement, Paxton emphasized his opposition to what he perceives as federal overreach, stating, “Over the past four years, I have opposed the Biden Administration more than 100 times to stop its radical attempts to undermine the law. I am positive this last-minute effort to harm the energy industry will be halted as well.”
The lawsuit underscores the ongoing tension between federal environmental initiatives and state-level economic interests. Supporters of the EPA’s rule argue that implementing the methane fee is a critical step toward mitigating climate change impacts, as methane has a significantly higher heat-trapping capability than carbon dioxide over a 20-year period. They contend that financial incentives are necessary to encourage the adoption of technologies and practices that reduce emissions.
Conversely, opponents, including industry groups and the suing states, caution that the fee could lead to increased energy costs for consumers and hinder domestic energy production. They advocate for a more balanced approach that considers both environmental objectives and economic realities.
The legal challenge is poised to proceed through the federal court system, with potential implications for the future of environmental regulation and state-federal relations. Should the court side with the plaintiffs, it could result in the suspension or modification of the methane emissions fee, prompting the EPA to revisit its regulatory approach. Alternatively, a ruling in favor of the EPA would affirm the agency’s authority to implement such measures under existing legislation.
As the case unfolds, stakeholders across the energy sector, environmental advocacy groups, and policymakers will closely monitor developments, recognizing the broader significance of the outcome for national climate policy and regulatory frameworks.
