REVISED BLM WASTE PREVENTION/METHANE REGULATIONS FINALIZED

Effective November 27, 2018, the revised Bureau of Land Management (BLM) regulations pertaining to waste prevention will take effect. 83 Fed. Reg. 49,184 (Sept. 28, 2018). This final rulemaking eliminates several of the more onerous burdens imposed by the regulations adopted at the end of the previous Administration. 82 Fed. Reg. 83,008 (Nov. 18, 2016) (the “2016 Rule”). The 2016 Rule (sometimes called the methane rule) was officially effective as of January 17, 2017, although many of its provisions called for delayed implementation. The 2016 Rule has been the subject of conflicting rulings from the federal courts in the District of Wyoming (now in the Tenth Circuit Court of Appeals) and the Northern District of California (and briefly in the Ninth Circuit Court of Appeals). Although the adoption of the new final rule would appear to moot that litigation, the States of California and New Mexico, followed by Sierra Club and a number of other non-governmental organizations, filed new lawsuits challenging the 2018 final rule in the U.S. District Court for the Northern District of California. State of California, et al. v. Zinke, et al., Case No. 4:18-cv-05712-YGR (filed Sept. 18, 2018); Sierra Club, et al. v. Zinke, et al., Case No. 4:18-cv-05984-SBA (filed Sept. 28, 2018). Western Energy Alliance and Independent Petroleum Association of America have moved to intervene in the State of California case. This post describes the terms of the 2018 rule that will take effect November 27, 2018, barring an injunction or order vacating the 2018 rule from the federal court in California.

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EPA Proposes Methane Emissions Cuts for Oil and Gas to Meet Climate Change Goals

On January 14, 2015, the Obama Administration announced a plan to reduce methane emissions from oil and gas operations by 40 to 45 percent by 2025. http://www.whitehouse.gov/the-press-office/2015/01/14/fact-sheet-administration-takes-steps-forward-climate-action-plan-anno-1

This announcement is part of the implementation of the President’s 2013 Climate Action Plan, and, in particular, the 2014 “Strategy to Reduce Methane.” President Obama stated then that reducing methane emissions is “critical.” Widely viewed as part of the U.S. “quid” for the “quo” of China’s agreement to peak its greenhouse gas (GHG) emissions by 2030, methane reduction will be a focus of administration policy-making for the next two years.

This 2015 announcement is built on the foundation of several earlier actions. In 2009, pursuant to the Clean Air Act (CAA), the EPA issued the “Endangerment Finding” determining that GHG emissions endanger public health. At that time, the EPA identified methane as one of “the two most important, directly emitted, long-lived greenhouse gases.” 74 Fed. Reg. 66,496, 66,517 (Dec. 15, 2009). Methane is considered to be a more potent GHG than CO2. Also in 2009, the EPA issued a mandatory GHG reporting rule under CAA §114. The oil and gas industry began reporting under subpart W of this rule in 2011. As of 2014, subpart W now covers multiple oil and gas facilities and activities including upstream, gathering and boosting, completions and workovers of fracked oil wells, natural gas distributors, pipeline transportation, and blowdowns of natural gas transmission pipelines between compressors. Finally, in April 2014 the EPA issued five technical “white papers” on oil and gas methane and volatile organic compounds (VOCs) emissions covering compressors, completions/productions, leaks, liquids unloading and pneumatic devices.

The EPA’s 2015 proposal is based on the data collected from the 2009 mandatory reporting rule and the analyses in the 2014 white papers. According to the EPA, methane makes up 10% of GHG and of that total, 30% is contributed by oil and gas. The EPA recognizes that the industry has decreased its methane emissions by 16% since 1990, but is focused on a predicted 25% increase over the next decade. As proposed, these EPA measures apply only to new or modified facilities. Environmental groups will push for application to existing facilities while the industry will argue that voluntary actions have a proven record of achievement.

In order to meet the new goal, the White House proposes several initiatives that will be implemented by several federal agencies:

EPA - New Standards for Methane and VOC Emissions - In the summer of 2015, the EPA will be proposing new standards in a rule for methane and VOCs from “new and modified oil and gas production sources, and natural gas processing and transmission sources” for the oil and gas industry. On January 28, 2015, the EPA called for input from oil and gas small businesses, NGOs and states on the development of a rule to reduce methane and VOCs under the CAA New Source Performance Standards. After considering comments from the states, the oil and gas industry and the public, the EPA will issue a final rule in 2016.
EPA - New Guidelines for Reducing VOCs - The EPA will be developing new guidelines and proposing control measures to reduce VOC emissions from oil and gas operations that states could adopt to help meet air quality standards for ozone. The EPA will publish Control Technique Guidelines (CTG) to address options for VOC emissions in ozone nonattainment areas and states in the Ozone Transport Region.

EPA - Enhanced Leak Detection and Reporting - The EPA will be considering remote sensing technologies to improve the accuracy of reported methane emissions.

BLM - Updated Standards on Public Lands - In April 2015 the BLM will be proposing an update to standards (Onshore Order No. 9) for new and existing oil and gas wells on public lands to reduce venting, flaring and leaks of methane. The final Order is expected in April 2016.

DOT - New Pipeline Safety Standards - Later this year, the Pipeline and Hazardous Materials Safety Administration (PHMSA) will be proposing new natural gas pipeline safety standards to reduce emissions.

DOE - Technology and Emissions Quantification - The federal budget for Fiscal Year 2016 includes approximately $25 million in funding for the development of technology to detect and repair natural gas transmission leaks, development of next generation compressors and quantification of natural gas emissions.

Over the next few years, methane emissions may be reduced automatically if low prices for oil and gas persist and production drops. In the meantime, the emissions reducing strategies outlined above will begin to take effect.

EPA Fact Sheet on the Proposal may be found at: http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/ba7961bf631c87bf85257dcd00526ff7!OpenDocument

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