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BLM Proposes Venting & Flaring Rules for Energy Production on Federal Lands

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The Interior Department’s Bureau of Land Management (BLM) has proposed new regulations to address venting and flaring activities on federal and tribal lands. See 87 Fed. Reg. 73,588 (Nov. 30, 2022). The proposal, which comes after years of back-and-forth rulemakings and court rulings, would require operators to use “all reasonable precautions to prevent waste of oil or gas developed from [leases],” submit “waste minimization plans” with all drilling permit applications, restrict the amount and duration of methane venting and flaring activities, and require further upgrades to production sites, among other things. The proposal also states that, in some circumstances, BLM could block drilling permits if “available gas capture infrastructure” is not adequate to service production capacity. In terms of specific equipment changes, the proposal would restrict the use of natural-gas-activated pneumatic controllers or pneumatic diaphragm pumps with high bleed rates; require oil storage tanks with vapor recovery systems where “technically and economically feasible”; and require use of leak detection and repair programs. The proposal would also place monthly volume limits on the amount of royalty-free flaring activities that can occur due to pipeline capacity.
The proposal, if finalized, would replace the existing BLM venting and flaring requirements found in the Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases: Royalty or Compensation for Oil and Gas Lost (“NTL-4A”), and is almost certainly headed for a new round of legal challenges. 

BLM’s attempts to address venting and flaring requirements have been embroiled in litigation for years. In October of 2020, a federal district court in Wyoming vacated the Obama Administration’s venting and flaring rule (which was adopted in 2016), finding that “BLM exceeded its waste prevention authority in promulgating regulations primarily intended to benefit the environment and improve air quality without regard to its longstanding interpretation of ‘waste’ and in a manner that is inconsistent with the administrative structure Congress enacted into law.”  The court also found that BLM failed to: “(1) fully assess the impact of the rule on marginal wells: (2) explain and identify support for the rule’s capture requirements; and (3) separately consider the domestic costs and benefits of the rule.”  On the other hand, a federal district court in California also vacated the Trump Administration’s 2018 attempt to rescind BLM’s 2016 rule.  BLM asserts that this new proposal is supported by various existing statutes (such as FLPMA, MLA, and FOGRMA), as well as the recently enacted Inflation Reduction Act (IRA), noting that the IRA provided new authorities to address “gas lost during emergency situations, gas used for the benefit of lease operations, and gas that is ‘unavoidably lost.’” 87 Fed. Reg. at 73,588.  
Comments on the substance of the proposal must be filed by January 30, 2023; however, comments directed toward the information collection requirements in the proposal should be submitted by December 30, 2022. 

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