Methane ruling leaves industry in limbo while feds try to revise rule

A court action has left oil and gas companies having to decide whether to prepare to meet a deadline to comply with a federal rule to limit methane emissions, even as the industry expects to see the rule revised or revoked and the government continues seeking to delay the deadline.

The ruling last week by U.S. Magistrate Judge Elizabeth Laporte, of the U.S. District Court of Northern California, rejected an earlier Trump administration move to push back the compliance deadline as the Bureau of Land Management looks to revise or rescind the rule. On the same day as Laporte’s ruling, the BLM filed notice of another effort to delay the deadline, but this time through a formal rulemaking proposal including a public-comment period.

“I think the ruling is significant just in the sense that the court confirmed that the Trump administration can’t cut the public out of the process,” said Robin Cooley, an attorney with Earthjustice, which represented several conservation groups on the matter.

The other significant part is that Laporte’s ruling reinstates the rule immediately, she said.

The Obama administration adopted the rule aimed at reducing waste of natural gas from venting, flaring and leaks during oil and natural gas production involving onshore federal and Indian leases.

It took effect in January, with certain requirements scheduled to kick in later.

The rule, modeled to a degree after one in Colorado, seeks to reduce emissions of a potent greenhouse gas, along with associated pollutants, while boosting federal royalty revenues.

Industry groups and some states have sued to challenge the rule.

A congressional effort to repeal it was killed in the Senate in May.

Laporte’s ruling means that currently, some requirements of the rule take effect Jan. 18 of next year, including the leak detection and repair measure.  The BLM is now trying to delay those requirements for a year, hoping to avoid imposing compliance costs on companies for a rule it wants to eventually change or eliminate.  The agency believes aspects of the rule are unnecessarily burdensome to industry.

Kathleen Sgamma, president of the Western Energy Alliance, which is legally challenging the methane rule, voiced confidence that companies won’t end up having to comply and it will be deemed illegal and overturned.

“That doesn’t mean there’s not confusion in the short term as there is maneuvering from the environmental groups, but ultimately we’re on a path of the administration rewriting the rule considerably,” she said.

But she acknowledged that companies are in a tough spot for now. It could take the BLM a few months to complete the rulemaking to postpone the January compliance deadline. For the time being, with the rule remaining in place, companies face the risk that if they don’t start preparing now, they won’t be able to comply in January if it turns out they’re still required to do so.

Sgamma said she’s not sure to what degree the compliance issue is a concern for companies in Colorado, where state-level methane-capture requirements already are in place for the industry.

Cooley said the ruling means companies should be taking the steps they need to in order to meet January’s deadline.  She doesn’t think the industry should assume that what she says are common-sense regulations will be repealed in a legal manner.

The government has a legal duty to prevent waste, she said.

“Taking actions that are going to allow that waste to continue, in our view, is not consistent with the Mineral Leasing Act,” she said.

Sgamma said the BLM’s earlier effort to postpone the January requirements was legally tenuous.

“We think they wasted some valuable time there,” pursuing that approach, she said.

Cooley said Interior Secretary Ryan Zinke tried to use a section of the Administrative Procedure Act letting agencies under certain circumstances suspend a rule before it goes into effect. But in this case the rule already was in effect, even if aspects of it have delayed implementation deadlines.

BLM spokesperson Megan Crandall said by email, “This (court) result was not unexpected and, at this time, has practically no effect on operators’ obligations since all of the requirements BLM purported to postpone were not effective until January 2018 anyway.”

Sgamma is hoping the BLM will expeditiously complete the rulemaking allowing for the year delay, and said her group also is exploring other legal options to address the compliance deadline.

In a similar case in late August, Laporte ruled that the Interior Department improperly delayed implementation of an Obama administration rule governing valuation of oil, gas and coal for royalty purposes. But in that case she refused to reinstate the rule because the Interior Department already had acted to revoke it effective Sept. 6, and she didn’t want industry to have to work to comply with a measure that would have been in effect for just a few days.


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