Methane and Waste Prevention Rule
Update: 2016 Waste Prevention Final Rule Vacated by U.S. District Court
As a result of recent litigation:
- The vast majority of the 2016 Waste Prevention Rule—including all of 43 C.F.R. subpart 3179 and the waste minimization plan requirement of 43 C.F.R. §3162.3-1(j)—has been vacated by a U.S. District Court.
- Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost (commonly referred to as NTL-4A, 44 Fed. Reg. 76600 (Dec. 27, 1979)) has been reinstated, insofar as it concerns venting, flaring, and avoidably/unavoidably lost production from BLM-managed leases.
- 43 C.F.R. subpart 3178 will continue to govern the royalty-free use of production. The portions of NTL-4A pertaining to the use of oil or gas for “beneficial purposes” have not been reinstated since these portions were not challenged in the litigation. The amendment of 43 CFR § 3103.3-1, pertaining to lease royalty rates, remains unchanged and was also not challenged.
On November 18, 2016, the BLM issued a final rule concerning, among other things, the waste of Federal and Indian gas through venting, flaring, and leaks (“2016 Waste Prevention Rule”). 81 Fed. Reg. 83,008 (Nov. 18, 2016). The 2016 Waste Prevention Rule replaced NTL-4A (44 Fed. Reg. 76600 (Dec. 27, 1979)), which was the BLM’s prior regulation governing the royalty-free use of production and the surface waste of oil and gas. The 2016 Waste Prevention Rule became effective on January 17, 2017. However, due to a series of administrative and judicial interventions, the rule was never fully implemented.
Shortly after the 2016 Waste Prevention Rule was published, industry groups and certain states with significant BLM-administered oil and gas development filed petitions for judicial review of the 2016 Waste Prevention Rule in the U.S. District Court for the District of Wyoming. Wyoming v. DOI, Case No. 2:16-cv-00285-SWS (D. Wyo.) On April 4, 2018, the court stayed implementation of much of the rule pending finalization of the BLM’s voluntary revision of the rule.
On September 28, 2018, the BLM issued a final rule substantially revising the 2016 Rule (“2018 Revision Rule”). 83 Fed. Reg. 49,184 (Sept. 28, 2018). In September 2018, a coalition of environmental groups and states filed lawsuits challenging the 2018 Revision Rule in the U.S. District Court for the Northern District of California. California v. Bernhardt, Case No. 4:18-cv-05712-YGR (N.D. Cal.). On July 15, 2020, the court ruled in favor of plaintiffs and ordered that the 2018 Revision Rule be vacated. California v. Bernhardt, No. 4:18-cv-05712-YGR, 2020 WL 4001480 (N.D. Cal. July 15, 2020).
On July 21, 2020, the U.S. District Court for the District of Wyoming lifted the stay in the case challenging the 2016 Waste Prevention rule. On October 8, 2020, the court found that the BLM exceeded its statutory authority and acted arbitrarily in promulgating the 2016 Waste Prevention Rule. The court ordered that the rule be vacated, except for certain severable provisions. The severable provisions not vacated by the court’s order are: (1) 43 C.F.R. subpart 3178, pertaining to royalty-free use of production, and (2) the amendment of 43 C.F.R. §3103.3-1, pertaining to royalty rates on competitive leases. The effect of the court’s order is to vacate all provisions of the Waste Prevention Rule pertaining to the loss of gas through venting, flaring, and leaks, and to reinstate NTL-4A with respect to venting, flaring, and avoidably/unavoidably lost determinations.