Wednesday, February 14, 2018

Shale Law in the Spotlight: UPDATE – Current Legal Developments Relating to Bureau of Land Management (BLM) Rules on Methane Waste Prevention and Hydraulic Fracturing

Written by Chloe Marie – Research Fellow

·         Update on BLM Methane Waste Prevention rule

On December 8, 2017, the Bureau of Land Management (BLM) issued a final rule, the purpose of which is to “temporarily suspend or delay certain requirements” provided for in the Waste Prevention, Production Subject to Royalties, and Resource Conservation rule – also known as the Methane Waste Prevention rule. More precisely, the Methane Waste Prevention rule now will not become effective until January 17, 2019. This most recent final rule follows the publication by BLM of a proposed rule in the Federal Register on October 5, 2017.

The Methane Waste Prevention final rule was published on November 18, 2016, as part of President Obama’s Climate Action to further tackle U.S. methane emissions. This rule provided for a new set of regulations designed to help curb methane emissions released through venting or flaring during oil and gas operations carried out on Federal and Indian lands.  In a Presidential Executive Order No. 13783 dated March 28, 2017, the White House directed Secretary of Interior Ryan Zinke to review the Methane Waste Prevention rule as part of a plan to reduce regulation that would limit energy development and production. BLM was then commissioned to conduct an initial review of the rule.

From this initial review, BLM raised “concerns regarding the statutory authority, cost, complexity, feasibility, and other implications of the 2016 final rule, and therefore wants to avoid imposing temporary or permanent compliance costs on operators for requirements that might be rescinded or significantly revised in the near future.” BLM also declared that it would work on a proposed revision of the 2016 rule in order to comply with the priorities expressed in the Executive Order mentioned above.

On December 19, 2017, a number of environmental groups brought legal action against the Secretary of Interior before the U.S. District Court for the Northern District of California challenging BLM’s decision to suspend or delay certain requirements provided for in the Methane Waste Prevention rule (Sierra Club et al. v Ryan Zinke et al., No. 3:17-cv-07186). The environmental groups argue that such decision “creates a regulatory and policy vacuum that BLM concedes will decrease the amount of natural gas brought to market by [9 bcf]” before adding that “this will result in a reduction in royalties and will have harmful impacts on public health and the environment by increasing emissions of methane … and other air pollutants.” As a result, they are seeking an order vacating such decision and reinstating all provisions of the 2016 Methane Waste Prevention rule.  

·         Update on BLM Hydraulic Fracturing rule

On December 29, 2017, BLM issued a final rule repealing the Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands rule that initially was published in the Federal Register on March 26, 2015. The purpose of the Hydraulic Fracturing rule was to amend existing requirements for oil and gas operations on Federal and Indian lands and set stringent regulations relating to wellbore integrity, water quality protection, and public disclosure of chemicals used during hydraulic fracturing operations. The Hydraulic Fracturing rule was scheduled to become effective on June 24, 2015; however, implementation of the rule was delayed amid judicial and regulatory challenges.

As with the Methane Waste Prevention rule, Secretary of Interior Ryan Zinke was instructed to examine whether the Hydraulic Fracturing rule was consistent with the policies established in section 1 of Executive Order No. 13783. Subsequently, Secretary Zinke ordered the repeal of the 2015 rule following its review.

In the 2017 final rule, BLM explains that this rescission is needed because the original Hydraulic Fracturing rule would have “impose[d] administrative burdens and compliance costs that are not justified.” BLM also declared that it “believes that the appropriate framework for mitigating these impacts exists through state regulations, through tribal exercise of sovereignty, and through BLM’s own pre-existing regulations and authorities.”

Following the release of this rescission rule, the state of California initiated legal proceedings against BLM on January 24, 2018. The state of California is asking the U.S. District Court for the Northern District of California to vacate the rescission rule and reinstate all provisions of the 2015 Hydraulic Fracturing rule. California also alleges that “by repealing the Fracking Rule in its entirety, Defendants have tossed aside the public interest in ensuring that fossil fuel development is conducted in an environmentally sound and safe manner in service of what their own data shows is a negligible increase in oil and gas operators’ profits.” Stay tuned for further legal developments.

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