U.S. Department of the Interior
In light of recent court rulings involving Obama-era rules that are being rewritten by the Trump Administration, it is unclear if oil and gas companies will have to start complying with the Bureau of Land Management (BLM) methane and hydraulic fracturing rules. The possibility remains, but appears unlikely due to the trajectory in both court cases and progress the agency is making.
These developments indicate that compliance is not a foregone conclusion.
In the hydraulic fracturing rule, court observers can look to the decision from the Tenth Circuit Court of Appeals, which dismissed environmentalists’ appeal of a lower court’s ruling that the federal government does not have authority to regulate hydraulic fracturing. The Tenth Circuit found it unnecessary to expend judicial resources ruling on the merits of the case even as the government has proposed rescinding the rule.
“Our proceeding to address whether the District Court erred in invalidating the BLM’s fracking regulation when the BLM has now commenced rescinding that same regulation appears to be a very wasteful use of limited judicial resources,” the court ruled in September.
The Tenth Circuit, as a matter of regular procedure, also vacated the decision of the U.S. District Court for Wyoming, the lower court. Therefore, technically the Obama-era rule goes into effect on November 12 if no further action is taken by plaintiffs or the government. It is possible that BLM may finish rewriting the rule before then.
Likewise, in the case of the BLM methane rule, also known as the venting and flaring rule, which is set to go into effect January 1, 2018, the Trump administration, has moved forward with a rewrite. The 45-day public comment period to suspend the rule closes on November 6.
The question is, will BLM’s rewrites be completed in time?
“We think it is unlikely these rules will see the light of day because we have two paths,” Kathleen Sgamma, President of Western Energy Alliance, told Western Wire. “The environmentalists have a very steep, uphill battle to force these rules to go into effect.”
The looming deadlines do put operators in a bind, with a judge’s ruling on the merits of the BLM venting and flaring case not possible until very close to, or possibly even after, the January 1 compliance date. In order to comply with many of the provisions of the rule, Sgamma said, particularly the Leak Detection and Repair (LDAR) inspections, existing storage tank control requirements, and pneumatic equipment retrofits, companies would have to start now, especially those with hundreds of existing sites.
However, a quick ruling became less likely last week, as the Department of Justice asked the judge to further delay the case. While Western Energy Alliance and the Independent Petroleum Association of America [IPAA] would not indicate what their legal strategy will be in court over the next few months, multiple paths remain to roll back the onerous rules.
Besides court action, BLM may complete the rulemaking processes to rescind the hydraulic fracturing rule and suspend the venting and flaring rule. If that happens for either rule, the court cases become moot. Such a scenario happened with the royalty valuation rule, which the agency was able to complete on time before the rule was set to go into effect.
The parallel futures of both the rules in their current forms—whether overturned through ongoing rulemaking processes or via legal wrangling–indicate they’re on their last legs.
What is clear is that the legal battles won’t end with the new rules. While the new Trump-era rules will end the current court cases, they will likely face lawsuits from Democratic attorneys general and environmental groups, the same parties that have opposed all three rules.
The impact of the BLM rules has drawn considerable reaction from states that rely upon oil and gas development on BLM-controlled federal lands.
Shutterstock
Colin McKee, Policy Advisor to Wyoming Gov. Matt Mead, told Western Wire that while the governor’s office would not comment on ongoing litigation, the state opposes the BLM rule conceptually, and has since it was first proposed.
“Wyoming disapproves of the BLM’s rule for two primary reasons. First, it is duplicative and unnecessary because Wyoming already effectively regulates emissions from oil and gas production. Federal actions such as this act as a disincentive for states to lead,” McKee said.
“Second, the rule exceeds the BLM’s statutory jurisdiction by regulating air quality, an authority delegated to Wyoming,” McKee continued.
When Gov. Susana Martinez (R-N.M.) asked Congress to use the Congressional Review Act (CRA) to repeal the venting and flaring rule, she noted the state’s position as the “largest producer of federal onshore oil and gas in the United States.”
“New Mexico’s prolific production on federal lands combined with our dependence on the revenue generated from the oil and gas industry makes this issue critical to our state,” wrote Martinez. “We have the highest percentage of federal lease acres in production, and oil and gas revenue is the single largest source of funding for New Mexico’s budget.”
“Absent a repeal, funding for New Mexico’s schools, roads and healthcare will be dramatically reduced on account of the reduction in revenue generated by the oil and gas industry,” Martinez wrote.
Robert McIntyre, spokesman for the New Mexico Oil and Gas Association, estimated those costs at $100 million per year over the first three years, if the current rule were allowed to go forward.
Aubrey Dunn, Commissioner of Public Lands for New Mexico, argued in comments submitted earlier in the year that not only did the BLM lack authority to regulate venting and flaring, the rule was likely duplicative of Environmental Protection Agency regulations in the same space.
“While I have outlined some of the most significant detrimental effects of the rule . . . I am also very concerned about the blatant lack of authority that BLM has under the Minerals Leasing Act to regulate methane emissions, and the subsequent federal overreach that occurred as BLM recklessly and hurriedly pursued adoption of this rule,” Dunn wrote. “Congress clearly delegated the task of methane emissions regulation to the Environmental Protection Agency under the Clean Air Act in 1963.”
“This rule was unnecessary, rushed and possibly duplicative of efforts already underway at the EPA,” Dunn wrote.
New Mexico Attorney General Hector Balderas, however, entered on the side of the Obama-era rule, defending the venting and flaring regulation in court against objections from Gov. Martinez, the state lands commission, and the state’s oil and gas industry, and celebrated when the rule’s initial delay was overturned in July. He was allowed to participate in the litigation, despite the fact that he had not provided any comments during the original rulemaking process, as had the Governor and state agencies.
Balderas defended his intervention to support the 2016 rule “against challenges brought by industry and other states in federal court in Wyoming.”
Earlier this month, Western Wire reported that the added requirements of oil and gas operators regarding venting and flaring of methane on public lands would result in costs of compliance of approximately $110,000 per new well.
