Interior methane rule: Climate solution or lawsuit magnet?

By Heather Richards | 03/28/2024 06:48 AM EDT

The regulation is one of several the Biden administration has billed as a reform of the nation’s massive oil and gas program.

Gas flaring on public lands.

Gas flaring on public lands in North Dakota is shown. Matthew Brown/AP

The Interior Department’s long-awaited final methane rule is teeing up a potential legal fight even as environmentalists say it is critical to addressing climate change.

The plan, which sets limits on emissions of the greenhouse gas on public lands, is being closely examined by oil and gas groups, which successfully axed a previous Bureau of Land Management methane rule in federal court for veering into air quality regulations overseen by EPA.

BLM says the rule will bring in $50 million per year in added natural gas revenue. It makes oil companies pay royalties on “wasted” methane and caps the amount of gas they can release or burn off due to lack of pipelines. It could also hamper drilling approvals for companies that don’t prove they can minimize releases of the gas, which has about 80 times the heat-trapping capability of carbon dioxide over a period of 20 years.


“This rule represents a common sense, fair, and equitable solution to preventing waste that provides a level playing field for all of our energy-producing communities,” BLM Director Tracy Stone-Manning said in a statement Wednesday.

As the first substantial overhaul of the waste regulations by the BLM in 40 years, the plan is one of several the Biden administration has billed as a reform of the nation’s massive oil and gas program. Others include BLM’s proposed rule to increase royalties and curb the footprint of new drilling in potentially productive oil plays, as well as Interior’s reduction of oil leasing on federal lands and offshore.

Coupled with proposed methane regulations released recently by EPA that introduce the Inflation Reduction Act’s fee on excess methane emissions, the BLM’s plan could be politically relevant as President Joe Biden seeks to secure support from climate and clean energy voters ahead of the November election against the presumptive Republican presidential nominee, former President Donald Trump.

The BLM rule goes into effect 60 days after it is published in the Federal Register, with some provisions phased in over time to give operators time to adjust, the agency said. Oil companies will have 18 months to submit leak detection and repair plans to BLM state offices.

Some environmental groups called the rule a climate and environmental success Wednesday.

“President Biden promised an all-of-government approach to the climate crisis, and this rule is an important part of it,” said Jennifer Rokala, executive director of the Center for Western Priorities, a conservation and advocacy group, in a statement.

House Natural Resources ranking member Raúl Grijalva (D-Ariz.) said the rule ensures oil companies pay for the natural resources they extract.

“With nearly a quarter of the country’s carbon pollution coming from our public lands, this rule is a much-needed step towards fighting the climate crisis and protecting the health of frontline communities,” he said in a statement.

But oil and gas supporters were cautious Wednesday in their initial responses to the final regulation.

The Western Energy Alliance, an oil and gas organization based in Denver that sued over a 2016 methane rule from the BLM, said it was looking closely at how the BLM defines “unavoidably lost” gas, which affects whether gas bears royalties.

“The Alliance is reviewing the final rule to ensure it has corrected the problems with the 2016 Obama Administration rule,” Kathleen Sgamma, the alliance’s president, said in a statement.

The American Petroleum Institute, a major oil and gas industry group, said it was reviewing the language to examine whether the BLM had stayed within the limits of the law.

“API supports a smart regulatory framework for reducing methane emissions, but overlapping regulations and lack of coordination between policymakers could hinder progress, create unnecessary barriers to development on federal lands and result in regulatory incoherence,” Holly Hopkins, API’s vice president of upstream policy, said in a statement.

She said API “will consider all options to prevent regulatory overreach.”

‘Very careful’

This is the second time the BLM has tried to rein in oil companies from directly releasing natural gas or burning it off during drilling — a practice largely used when there are no existing pipelines to carry the gas to market.

The Obama-era methane rule was shot down by the U.S. District Court for the District of Wyoming in 2020. Chief Judge Scott Skavdahl, an Obama appointee, said the BLM has the authority to regulate waste but not air quality.

The Biden administration’s BLM rule aims to thread that needle, experts said.

“They are very careful,” said Tina Van Bockern, a partner at the law firm Holland & Hart who follows federal energy law. “In a few places they explicitly state, and respond to comments to say, ‘We’re staying in the bounds of the court decision. We are not regulating air quality. We don’t have that authority.’”

But Van Bockern said the Biden administration may still face a legal battle over whether it has overstepped its regulatory authority in its new approach, which includes a limit per barrel of oil on the amount of gas that can be vented or burned from an oil well due to lack of pipelines or similar constraints.

The Biden administration’s draft proposal released in 2022 had set a limit of roughly 1,000 million cubic feet per lease per month. The BLM argues in its final proposal that the new metric is more refined and would “target only those locations generating the majority of the flaring.”

Critics have long argued that vented and flared — or burned — natural gas is an environmental harm and a waste of federally owned minerals, while industry groups have argued that venting or flaring is necessary during emergencies or when the amount of gas is too small to justify building pipelines.

Ben Tettlebaum, director and senior staff attorney at the Wilderness Society, said the BLM rule does double duty, addressing waste of natural resources while benefiting the climate.

“Methane from oil and gas development on public lands harms communities, invaluable natural resources, and the climate,” he said in a statement. “This rule takes steps to reduce methane waste from venting and flaring, which not only makes good economic sense, but also has conservation and climate benefits.”

This story also appears in Climatewire.