Congressional efforts to repeal Obama-era regulations using the Congressional Review Act (CRA) have been steadily advancing, President Trump signed four more into law this week. However, one such CRA which would overturn a Bureau of Land Management (BLM) rule to regulate methane emissions from oil and gas developments on federal lands, which passed the House of Representatives weeks ago, still has not been considered in the U.S. Senate.
The “Waste Prevention, Production Subject to Royalties, and Resource Conservation” rule, commonly called the methane rule, was published in the Federal Register on November 18, 2016 and is subject to Congressional disapproval under the CRA. BLM’s methane rule sets limits on emissions, places prohibitions and new requirements on oil and gas operations on federal lands, and adjusts royalty rates. The rule is also duplicative and conflicts with state requirements. It is expensive, likely illegal, and will have little environmental benefit.
The rule is a solution in search of a problem. Gasses are vented and flared in oil and gas operations to safely reduce pressure in the wells, often because lack of infrastructure means gas cannot be transported to market immediately. Those gasses are themselves a valuable component and operators have every incentive to reduce flares and capture that asset. Market incentives and private innovations, not federal mandates, have indeed lead to reduced emissions.
In fact, since 2005, emissions have dropped by 38 percent. This has been true even as overall production has increased, 26 percent since 2005. The Environmental Protection Agency estimated that between 2012 and 2014, emissions from fracking natural gas wells dropped by 81 percent.
With an estimated cost of $1.8 billion, BLM’s methane rule is hugely expensive. In Ohio, more than 2,000 wells could be subject to the methane rule and retrofitting them could cost up to $50,000 per well. Such expensive retrofitting threatens to crush jobs and cost the state revenues as wells are shut-in.
Increased costs will make further development in some cases, simply uneconomical. An estimated 40 percent of wells on federal lands would fall into this later category. The result will be wells that are prematurely and permanently shut-in and thousands of jobs lost.
As energy becomes more expensive, there is a domino effect in the larger economy and everything else becomes more expensive. Conversely, reduced energy prices result in increased personal income.
In North Dakota, the second largest natural gas producing state in the country, the rule is estimated to reduce state revenues by more than $700 million over the Bakken’s expected 30-year lifespan. There are also has concerns over the federal rule conflicting with effective state regulations. North Dakota is one of 3 western states suing BLM to stop the rule.
The BLM methane rule is all pain and no gain. Global greenhouse gas emissions would be reduced by a very small fraction 0.0092. It is also legally questionable, since the Clean Air Act, vests the EPA and states with maintaining air quality, not the BLM. A better approach would be to streamline permitting requirements and expedite the approval process so that oil and gas operators on federal lands can efficiently operate, compete, and thrive.
The methane rule went into effect in January 2017 and the impacts are beginning to be felt The House passed a CRA disapproval of the regulation with bipartisan support more than a month ago. The Senate has a responsibility now to act to end this overreach and restore freedom in energy development on federal lands. The Senate should immediately take up the CRA and send it to President Trump for his signature.