Locked into Outdated, Ineffective Methane Rule: Taxpayers Will Lose

Locked into Outdated, Ineffective Methane Rule: Taxpayers Will Lose

The Bureau of Land Management (BLM) has postponed the date of when certain sections of its Methane Waste Rule will take effect, citing outstanding litigation and possible changes to the rule by the agency in the future.

The amount of natural gas vented, leaked, or flared on federal lands every year is worth approximately $400 million, and that value is only expected to increase. The Methane Waste Rule requires oil and gas operators on federal lands to begin capturing the natural gas that is now leaked or released into the atmosphere, most of it royalty-free, beginning in January 17, 2018. TCS is concerned the indefinite suspension of this rule will lead to an oil and gas giveaway, at the expense of U.S. taxpayers.

The existing rules, known as NTL-4A, have been shown by multiple governmental and non-governmental reviews to be inadequate at limiting waste of natural gas from modern drilling techniques. Further, TCS’s report Gone with the Wind revealed that 90 percent of gas vented or flared from federal lands from 2006 to 2015 did not incur a royalty. To simply sideline the recent, much-needed update to the old rules will lead to increased waste of natural gas and increasing losses of revenue to taxpayers from this public asset.

The new rule, among other things, requires operators to capture a certain percentage of the gas they produce, measure burned or flared volumes, upgrade or replace pneumatic equipment, capture or combust storage tank vapors, and implement a leak detection and repair (LDAR) program. Yesterday, the BLM indefinitely postponed these requirements, which are the backbone of the new rule. If these provisions are ultimately struck down or significantly weakened, it will undermine the new rule and result in more lost gas.

In January, the U.S. District Court of Wyoming denied a request by industry groups and several western states for a preliminary injunction of the BLM Methane Waste Rule. In that case, Judge Scott W. Skavdahl found: “…the States’ assertion of economic loss to be speculative and unsupported by facts.” Industry groups claimed the new rule would cause them irreparable harm through compliance costs and the disclosure of proprietary, confidential, and competitive information. The judge also dismissed these claims as speculative and concluded that “Petitioners have not clearly and unequivocally established a likelihood of success on the merits and irreparable harm…”

DOI should be allowed to collect royalties owed to the taxpayer

The federal court did find that the Methane Waste Rule “has potential conflict and inconsistency with the implementation and enforcement provisions of the [Clean Air Act] CAA,” highlighting places where the rule could potentially be revised or improved.

The Department of the Interior (DOI) initiated an internal review of the Methane Waste Rule pursuant to an Executive Order issued by President Trump that directs: “The heads of agencies shall review all existing regulations, orders, guidance documents, policies, and any other similar agency actions (collectively, agency actions) that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.” That review is ongoing.

TCS continues to watch for any future rulemaking proposed by the BLM to revise the existing Methane Waste Rule. Recent history has shown that irresponsible development and poor oversight has allowed billions of dollars’ worth of natural gas to be wasted, and it is the BLM’s job to stop it.