Colorado Business Group: Repealing Obama’s Methane Rule ‘Is The Right Thing To Do’ For Western Communities

One of Colorado’s top business leaders is calling on the U.S. Senate to swiftly repeal a last-minute regulation from the Obama administration targeting oil and natural gas development on federal lands.

Using the Congressional Review Act (CRA) to overturn the so-called “venting and flaring” rule is a pro-growth move that will help the economy, encourage energy development, create jobs and boost tax revenues in the West, Jeff Wasden, president of the Colorado Business Roundtable, told Western Wire. The rule, imposed by the U.S. Bureau of Land Management (BLM) in the final months of the Obama administration, restricts methane emissions from oil and gas development on tribal and federal lands.

“Repealing this midnight methane rule from the Obama administration is the right thing to do,” Wasden said. “The rule imposes higher costs and more red tape on energy companies who want to develop oil and gas on federal lands. But the rule carries no environmental benefit. Methane is already regulated at the state and federal level and the oil and gas sector has done a remarkable job at cutting emissions,” he said.

Methane is the primary constituent of natural gas. Supporters of the new BLM rule claim it will prevent natural gas from being wasted and result in more royalty revenue to federal, state and local governments. But critics of the rule say just the opposite will occur: The extra red tape will block many wells from being drilled and force others to prematurely shut down due to higher costs, they argue.

Wasden and other opponents of the venting and flaring rule also point to major reductions in methane emissions – 21 percent below 1990 levels – that have already occurred without the BLM’s intervention. At the same time, domestic oil and natural gas production have soared by 28 percent and 52 percent respectively, according to data from the U.S. Energy Information Administration.

“The venting and flaring rule won’t result in more natural gas being captured and sold,” Wasden told Western Wire. “It will make it harder to drill new wells on federal land and the rule will shut down some existing wells too. That means less energy, less economic growth, and less tax revenue for communities across the West. It also means fewer jobs in one of the region’s most important economic sectors – energy.”

A CRA disapproval motion, which would effectively repeal the BLM rule, passed the U.S. House last month. The repeal measure should get a vote in the Senate this week or next, U.S. Sen. John Hoeven (R-N.D.) told Politico, though it will be close.

“I am hoping that western leaders in the U.S. Senate will do what is necessary and get the venting and flaring rule repealed,” Wasden said. “The Congressional Review Act is the right tool and now is the right time.”

As Western Wire has previously reported, other Colorado stakeholders to speak out against the venting and flaring rule include the Southern Ute Indian Tribe, Colorado Association of Commerce and Industry, Club 20, and the Grand Junction Chamber of Commerce.

“The Tribe relies on revenues from Reservation energy development to fund important government services,” Clement Frost, chairman of the Southern Ute Indian Tribe, told Western Wire. “BLM’s rule is unnecessary and would further negatively impact the Tribe’s energy development revenue.”

Recently, the Republican majority in the Colorado State Senate also endorsed the repeal effort. “It is clear in many cases operators will be forced to prematurely abandon wells, consequently reducing royalties to the Federal government and severance tax to the States,” Senate President Kevin Grantham, Senate Pro Tem Jerry Sonnenberg and Senator Ray Scott, chairman of the chamber’s select committee on energy, wrote in a letter to U.S. Sens. Cory Gardner (R) and Michael Bennet (D).

“We will not stand for additional shortages in these types of funding due to a flawed rule recklessly put in place in the last days of the Obama administration,” the state lawmakers said.

The state’s energy industry – which supports more than $30 billion in economic activity and over 100,000 jobs, according to the University of Colorado – has also weighed in. Earlier this month, the Colorado Petroleum Council, Colorado Oil & Gas Association, West Slope Colorado Oil & Gas Association and Western Energy Alliance sent a joint letter to Gardner and Bennet urging them to supporting the CRA disapproval motion.

“The BLM methane rule will have damaging consequences not only for our industry, but for rural communities across the West,” the four trade associations wrote. BLM claims the rule will increase federal royalties for natural gas by $17 million per year, but even this small figure is inflated, the groups said. An economic analysis by John Dunham & Associates “estimates the BLM rule would capture less than $4 million in new royalties but at a staggering cost of $1.26 billion,” they said. The analysis was commissioned by the Alliance, which is a supporter of Western Wire.