Methane Rule Under Fire at Interior After Surviving Senate

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By Alan Kovski and Rachel Leven

Regulations on the venting and flaring of natural gas survived a Senate attempt to nix them but may not be so lucky with an Interior Department eager to whittle them down or kill them altogether.

“The department has reviewed and flagged the waste-prevention rule as one we will suspend, revise or rescind given its significant regulatory burden that encumbers American energy production, economic growth and job creation,” said Kate MacGregor, acting assistant secretary of the Interior for land and minerals, in a statement issued after the Senate vote.

Oil and gas companies have already begun doing work to prepare for the rule’s first notable compliance deadline—Jan. 17, 2018. Many companies such as Continental Resources Inc., Anadarko Petroleum Corp. and Devon Energy Corp. operate on federal and tribal lands primarily in Western states.

The Senate May 10 rejected, on a 49-51 vote, a motion to consider a resolution that would have killed the Interior rule issued in November requiring cuts in methane and other emissions from oil and gas operations on federal and tribal lands. The vote—which represented the Senate’s only chance to overturn the regulation under the Congressional Review Act—put the ball back in Interior’s court on the waste prevention rule, written by the Bureau of Land Management.

“The rule is expected to have real and harmful impacts on onshore energy development and could impact state and local jobs and revenue,” MacGregor said. “Small independent oil and gas producers in states like North Dakota, Colorado and New Mexico, which account for a substantial portion of our nation’s energy wealth, could be hit the hardest.”

Defenders of the rule in the Senate said it will reduce waste and help protect human health and the environment. Methane, the primary constituent of natural gas, is a potent greenhouse gas.

‘Most Onerous New Regulation’

The companies did not immediately respond to requests for comment.

“From my perspective, this is the most onerous new regulation,” said Kari Cutting, vice president of the North Dakota Petroleum Council, when she spoke to Bloomberg BNA in advance of the Senate vote.

North Dakota has many wells in which gas is burned off, or flared, because not enough gas pipeline infrastructure exists to take the gas to markets when it comes to the surface along with oil.

“This regulation will particularly impact small-producing, marginal wells located on federal lands. Shutting in these smaller wells means less royalties will get sent back to the federal Treasury,” said Barry Russell, president of the Independent Petroleum Association of America, in a statement expressing disappointment at the Senate vote.

“IPAA looks forward to working with the Interior Department on a targeted, meaningful solution,” Russell said.

Senators for Rewrite, Not Nullification

The prospect of Interior action is one reason Sen. John McCain (R-Ariz.) voted against nullifying the regulations, though it meant going against most of his fellow Republicans. Two other Republicans voting against nullification were Maine’s Susan Collins and South Carolina’s Lindsey Graham.

“I believe that the public interest is best served if the Interior Department issues a new rule to revise and improve the BLM methane rule,” McCain said in a statement explaining his vote.

He said he was especially troubled by the Congressional Review Act provision that says no “substantially similar” rule can be issued after the Senate has rescinded a rule under the act.

Sen. Heidi Heitkamp (D-N.D.) expressed very similar reasons for opposing the rollback—anticipating Interior will revise the rule and not wanting to tie the hands of regulators with a vote that would bar any substantially similar rule. There had been much speculation that she would vote with most Republicans.

Barrasso to Talk to Zinke

Sen. John Barrasso (R-Wyo.), who introduced the Congressional Review Act resolution to kill the BLM rule, told reporters he was disappointed but would follow up with Interior Secretary Ryan Zinke to get the rule withdrawn immediately.

“I’m going to have that discussion with him shortly,” said Barrasso, chairman of the Senate Environment and Public Works Committee. “I’ve talked to him before. He knows how so many of us feel about this rule.”

Sen. Tom Carper (D-Del.), a defender of the BLM rule and the ranking member of the committee, said it was not a total surprise that McCain voted against the rollback.

“He’s a maverick. He’s a free spirit,” Carper said. “I think he looked at the facts, and—this is a way for us to conserve the resources that belong to all of the public, it’s the way to actually provide additional revenues to Treasury at a time we very much need those, and this is a way for us to actually improve the quality of our air.”

Lawsuits to Continue

Litigation against the rule is expected to continue. Lawsuits were filed in the U.S. District Court for the District of Wyoming by the state governments of Montana, North Dakota, Texas and Wyoming and by two industry groups, Western Energy Alliance and the Independent Petroleum Association of America.

The states and industry associations said the BLM exceeded its authority by trying to regulate air emissions, an Environmental Protection Agency responsibility ( Wyoming v. Interior, D. Wyo., No. 2:16-cv-285, 11/18/16 ).

The litigation would have gone away if the Senate had nullified the rule, Kathleen Sgamma, president of Western Energy Alliance, told Bloomberg BNA before the vote.

The most recent actions in the consolidated litigation were requests for a briefing schedule to argue the merits of the cases.

To contact the reporters on this story: Alan Kovski in Washington at akovski@bna.com; Rachel Leven in Washington at rleven@bna.com

To contact the editor responsible for this story: Paul Connolly at PConnolly@bna.com

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