Wyoming’s oil and gas industry looks poised to fend off the Bureau of Land Management’s second bite at new methane rules that could cost the American oil and gas industry millions of dollars.
The new rule, called the Waste Prevention Subject to Royalties and Resource Conservation Rule, is actually a revision of a similar 2016 methane rule that was struck down by a Wyoming court.
Its aim is to curtail venting and flaring of methane from oil wells, but there are already rules about that with the EPA, and the additional layer of rules will add up to $19.3 million in additional costs for the industry.
North Dakota District Court Judge Daniel Traynor cited that history in issuing an injunction Thursday, saying that the plaintiffs, which include the state of Wyoming, are likely to succeed in getting the new rule tossed as well.
“The 2024 rule offers no rationale why flaring is more economically productive than venting,” Traynor wrote. “The Plaintiffs have shown they are likely to succeed on the merits of their claim that the 2024 Rule is arbitrary and capricious.”
Traynor noted the 2024 Rule claims that requiring flaring over venting will fulfill an “obligation to protect local public health and safety.”
“But the justification fails,” he added, “because the BLM has no congressional mandate to protect local health and safety, at least in terms of its gas waste management authorization.”
And even if venting is somehow more detrimental than flaring, defendants have failed to provide a rational explanation why, the judge wrote in his ruling.
“The 2024 Rule cites to a source from 1980 for the proposition that it’s safer for operators,” Traynor wrote. “But does not explain how this source is still valid, considering all the technological advances that have been made in the field.”
Traynor also agreed that the rule would likely cause irreparable harm to the sovereign authority of the plaintiff states, which include Wyoming, Utah, Montana, Texas and North Dakota, by “haphazardly” requiring more stringent flaring restrictions and bureaucratic hoops when those states have already crafted a plan “in the cooperative federalism system with the EPA.”
BLM Estimates Rule Would Generate $51 Million More In Royalties
BLM’s new methane rule was targeted to federal and tribal lands, a designation that would hit about 70% of Wyoming’s existing mineral acreage.
The agency said it was modernizing rules that are more than 40 years old, and that would hold oil and gas companies “accountable” by requiring them to avoid wasteful practices, find and fix leaks, and ensure taxpayers and tribal mineral owners are fairly compensated.
The rule would have generated an estimated $50 million in additional natural gas royalty payments, according to the BLM.
“This final rule, which updates 40-year-old regulations, furthers the Biden-Harris administration’s goals to prevent waste, protect our environment, and ensure a fair return to American taxpayers,” said U.S. Secretary of the Interior Deb Haaland said at the time the rule was released. “By leveraging modern technology and best practices to reduce natural gas waste, we are taking long-overdue steps that will increase accountability for oil and gas operators and benefit energy communities now and for generations to come.”
BLM Actually Highlighted Wyoming’s Leadership On Methane
BLM actually highlighted Wyoming’s role in helping to limit venting, flaring and leaks in its release — an irony not lost on the oil and gas industry in the Cowboy State.
Wyoming Petroleum Association Vice President Ryan McConnaughey told Cowboy State Daily that Wyoming should get more recognition for the leadership it has already taken in this area.
“This rule is the BLM’s latest attempt at an end run around its statutory authority and creating duplicative requirements to those under EPA jurisdiction,” McConnaughey said. “Previous attempts have been looked down upon by the courts. And it appears this one will be no different.
“Unending red tape has been a hallmark of the Biden administration’s efforts to halt federal oil and gas development.”
McConnaughey also said that the BLM’s estimate that the new rule will cost industry $19.3 million is “significantly underestimated, and could cost millions of dollars more than the government anticipates.”
U.S. Sen. John Barrasso, R-Wyoming, said a win on this case is vital to the future of the oil and gas industry.
“Wyoming and the Environmental Protection Agency already regulate methane emissions from oil and natural gas production,” he said. “Adding duplicative regulations would kill jobs and stifle growth.”
The EPA already has safeguards to govern and limit methane releases, Barrasso added.
“BLM’s rule is unsupported by the claimed environmental benefits, conflicts with other laws, and adds nothing more than another rule on top of existing federal regulations,” he said. “It’s long past time for the Biden-Harris administration to encourage American energy production instead of trying to strangle it.”
Renée Jean can be reached at renee@cowboystatedaily.com.
