Environmental groups sued the US Department of the Interior over a recently finalized rule limiting methane emissions on federal land, alleging it does not adequately curb waste and prevent air pollution.
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Register NowThe US Bureau of Land Management regulation, issued in September, is a revised version of an Obama-era rule limiting methane from oil and gas producers on federal and tribal lands. The environmental groups opposing the revision said in a September 28 complaint that Interior Secretary Ryan Zinke illegally rescinded the original rule and that the cost-benefit analysis in the regulation now fails to consider global climate costs, among other objections.
The September version of the rule contended that in "assessing domestic impacts of climate change, the benefits of many of the emissions-targeting provisions do not outweigh their costs." Based on that analysis, the BLM concluded that the value of the conserved gas was insufficient to give the agency the legal authority to instate a waste prevention rule on the scale of the 2016 rule.
Trying to limit the cost calculation to domestic-only impacts fails to consider climate change's international effects, which, because of the interconnected nature of the climate and the global economy, will have domestic effects, the lawsuit said.
Much of the BLM's revision was aimed at reducing compliance costs. The changes stemmed from an executive order issued by President Donald Trump in March 2017 that called for eliminating unnecessary regulations that could limit energy production and job creation.
The BLM said it estimated that under the 2016 rule, about 73% of the wells on agency-administered leases would be considered "marginal wells." For high-producing marginal natural gas wells, compliance costs for the Obama-era regulation would have been 86% of annual revenues. For the highest-producing marginal oil wells, compliance costs would have been about 24% of annual revenues, the BLM said. By contrast, the agency said it expects "few compliance costs" associated with the final rule.
CONGRESSIONAL MANDATE
The environmental groups' lawsuit, filed in the US District Court for the Northern District of California, alleged the BLM has a congressional mandate to require lessees to use "all reasonable precautions to prevent waste," and the revised rule fails to live up to that mandate. The groups also challenged the accuracy of the cost calculations and said the changes will have a significant effect on the environment.
The Sierra Club, the Center for Biological Diversity, the Environmental Defense Fund, the Natural Resources Defense Council and Western Environmental Law Center are among the 18 groups that filed the case. The groups asked the court to find that the BLM had violated the Mineral Leasing Act, Federal Land Policy Management Act, Administrative Procedure Act and "our country's environmental Magna Carta," the National Environmental Policy Act. They also requested that the court vacate the rescission rule and reinstate the 2016 rule in its entirety.
The rule has been in and out of court for years. Industry representatives sued immediately after the Obama-era rule was instated in 2016, and environmental groups challenged the BLM's 2017 decision to suspend the previous iteration of the rule. After that, a federal court ordered the BLM to reinstate the rule, but the agency used a different tactic in late 2017 to put the rule on hold until the bureau could revise the regulation.
-- Sarah Smith, S&P Global Market Intelligence, newsdesk@spglobal.com
-- Edited by Annie Siebert, newsdesk@spglobal.com