American Oil and Gas Reporter - June 2017 - 28

CRA On Methane Rule Dies In Senate
While disappointed with the U.S. Senate's failure to kill the rule entirely, oil
and gas industry officials are vowing to
work with the Department of Interior to
revise the Bureau of Land Management's
venting and flaring rule adopted during
the Obama administration.
The Independent Petroleum Association
of America reports that on May 10, the
Senate voted 51-49 to halt debate on HJR
36, a Congressional Review Act resolution
passed by the House of Representatives on
Feb. 3 that would have repealed the rule.
"We are disappointed the Senate wasn't
able to stop President Obama's unworkable
rule by a federal agency that doesn't have
the authority to regulate air quality," expresses IPAA President and Chief Executive
Officer Barry Russell. "This regulation
will impact marginal wells located on federal lands particularly. Shutting in these
smaller wells means less royalties will get
sent back to the federal treasury."
However, shortly after the Senate vote,
Acting Assistant Secretary of the Interior
for Land and Minerals Kate MacGregor
announced, "As part of President Trump's
America-first energy strategy and executive order, (DOI) has 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."
President Trump's Executive Order
on Promoting Energy Independence and
Economic Growth, which was issued
March 28, among other things, directs
DOI to review the venting and flaring
rule (AOGR, May 2017, pg. 29).
"The Senate vote doesn't impact the
administration's commitment to spurring
investment in responsible energy development and ensuring smart regulatory
protections," MacGregor says.
Russell responds, "IPAA looks forward
to working with DOI on a targeted, meaningful solution that will achieve the common goal of ensuring American taxpayers
receive a fair and equitable return in the
form of royalties while developing a safe,
workable solution instead of this onesize-fits-all approach."

Work To Overturn
BLM finalized the Waste Prevention,
Production Subject to Royalties, and Resource Conservation Rule in November.
It requires producers to reduce by half
methane flared from wells on public and
tribal lands, to periodically inspect their
facilities for leaks, and to replace equipment that vents large quantities of gas

28 THE AMERICAN OIL & GAS REPORTER

(AOGR, December 2016, pg. 32).
Other parts of the rule limit venting
from storage tanks and require the use of
best practices to limit gas lost when removing liquids. The rule also clarifies
when operators owe royalties on flared
gas, and restores DOI's ability under the
Mineral Leasing Act to set royalty rates
above 12.5 percent.
IPAA and the Western Energy Alliance
challenged the rule on Nov. 15 in the
U.S. District Court in Wyoming, and were
joined later by the states of Montana,
Wyoming, North Dakota and Texas. Alliance President Kathleen Sgamma says
the groups "will continue to make the
case in court that the rule is a vast overreach
of BLM authority. The district court judge
expressed grave doubts about BLM's authority to regulate air quality, and we and
the states will continue to press that point.
"We also will be working closely with
DOI on reviewing and rescinding the
rule," Sgamma promises. "BLM has neither
the authority nor expertise to regulate air
quality, and we know Secretary (Ryan)
Zinke understands that. While we were
hoping for a clean break through the CRA
process, we will roll up our sleeves and
continue to work to overturn this rule."

Politics Of Repeal
According to published reports, Republican Senators Susan Collins of Maine,
Lindsey Graham of South Carolina and
John McCain of Arizona joined all 48
Democrats to oppose HJR 36.
Those reports quote Senator McCain
as saying, "Improving the control of
methane emissions is an important public
health and air quality issue. While I am
concerned the BLM rule may be onerous,
passing the resolution would have prevented the federal government, under any
administration, from issuing a rule that is
'similar,' according to the plain reading
of the CRA. I believe the public interest
is best served if DOI issues a new rule."
IPAA indicates it had hoped producing
state Democrats Heidi Heitkamp of North
Dakota and Joe Manchin of West Virginia
would join Republicans in voting to repeal
the rule.
A story in the Dickinson (North Dakota) Press says Heitkamp claimed to have
heard "from North Dakotans on both
sides of the issue," and that "support for
the rule from the Mandan, Hidatsa and
Arikara Nation" on the Fort Berthold
Reservation, which accounts for onesixth of North Dakota's oil production,
"was a significant factor in her decision."
"I thought it was critically important

that we listen to the people of the tribe
and tribal government," the newspaper
quotes Heitkamp, whom it says believes
"the rule is not perfect and she is encouraging Secretary Zinke to work with the
industry, landowners and the tribes to
make the rule more effective."
The North Dakota Petroleum Council
rejects that excuse, calling Heitkamp's
vote "an affront to North Dakota and
state primacy."
"We are extremely disappointed in
Senator Heitkamp's decision," states
NDPC President Ron Ness. "She has
chosen to stand with the environmental
activists and the Democratic Party in
Washington rather than the oil and gas
workers and people of North Dakota."
Commenting that North Dakota already
has some of the most comprehensive regulations to address flaring in the nation,
and that as a result of a $13 billion investment by the natural gas industry since
2006, flaring has declined by 54 percent,
Ness contends BLM's rule provides no
environment benefits. Conversely, he
says it will "further burden already overtaxed federal employees and dilute their
ability . . . to make a larger, more immediate impact on reducing flaring and venting by focusing on fixing permitting, infrastructure and pipeline delays."
Other Developments
In other federal legislative developments in May, Congress passed and President Trump signed a $1.07 trillion omnibus spending bill (HR 244) that the
National Ocean Industries Association
says contains a significant change for
offshore oil and gas leases.
And the U.S. Chamber of Commerce
calls attention to approval by the Senate
Committee on Homeland Security and
Governmental Affairs of S 951, the Regulatory Accountability Act.
NOIA notes that under previous law,
if operations on an offshore lease stopped
during the last 180 days of its primary
term, the lease would expire unless the
operator was granted a suspension of operations (SOO) or a suspension of production (SOP).
"Now, operators have one year to resume operations or receive an SOO or
SOP before the lease is terminated,"
NOIA reports. "In addition, the SOOs
and SOPs issued by the Bureau of Safety
and Environmental Enforcement regional
supervisors are extended from 180 days
to a full year."
According to a summary provided by
the House Appropriations Committee,
American Oil and Gas Reporter - June 2017

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