Methane rule survives Congress but its future is dim
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The Senate’s recent failure to reject a regulation targeting emissions from natural gas drilling sites under the Congressional Review Act signals the likely end of the CRA to overturn Obama-era rules. But for the venting and flaring rule, as it is known, the future is certainly fleeting.

The Bureau of Land Management (BLM) rule focused on reducing waste of natural gas from flaring, venting and leaks from oil and gas production on federal lands. Though part of the Obama administration’s plan to reduce levels of the potent greenhouse gas methane, the rule also focused on curbing waste of a valuable resource and ensuring a fair return to the public. An initial compliance phase began in 2017, with stricter phases scheduled in 2018 and 2019.

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The oil and gas industry alleged that compliance costs went far beyond BLM’s annual upper estimate of $279 million and that the agency went far beyond its authority to regulate air emissions, a province for the states and the Environmental Protection Agency. Not surprisingly, these groups, joined by several states, filed a challenge to the rule that is now pending in Wyoming federal court.

 

Because the rule was finalized within the required 60-legislative-day “look-back” window, it was subject to the CRA’s expedited procedure for congressional disapproval. The House passed its resolution in February 2017, but the Senate failed to pass its resolution at the very end of its statutory review period. Had it passed, President Trump would have signed quickly, immediately killing the rule. 

The Senate resolution failed by a handful of votes, likely because using the CRA procedure would have prevented BLM, under Trump or future presidents, from promulgating a  “substantially similar” rule. The rule replaced 30-year-old regulatory and royalty provisions, and freezing those in place could have had significant financial impacts.  While the rule contained a major climate component — making it a target — it also allowed BLM to raise royalties and ensure more gas was put to productive use to ensure taxpayer return.

In general, this could be a victory for common sense. The CRA is a blunt instrument to undo a prior administration’s regulations. The law disregards the administrative process that led to the rule, providing no legislative direction to replace it and blocking any further agency action to do so.

Historically, the CRA has been used once successfully. Since January 2017, it has been used 14 times, and only the end of the expedited disapproval period has saved other Obama rules from a similar fate. Congress can still legislatively block these rules, but now must follow the regular legislative process that is subject to a potential filibuster.

But this good news for rule proponents is likely short-lived. First, the president specified in a March 28 executive order that this rule be reviewed by Interior for potential suspension, revision or rescission. Interior immediately ordered a review within 21 days, a deadline now passed. Given its climate-related pedigree, it is substantially likely the rule will be changed. However BLM decides to act, it will need to follow the full administrative process, which will take time. 

The Wyoming court challenge also looms, with a judge who appears somewhat favorable to opponents’ arguments. The judge recently blocked efforts to expedite briefing and ordered briefing through the summer, promising a decision by the January 2018 compliance date.  

However, given Interior’s pending review and likely revision, it is unlikely this court will ultimately review the current rule. Rather, once it decides the rule’s fate, BLM will likely seek an abeyance, as has been done with other regulations. Were BLM to take this route, it would begin the administrative process, which would certainly entail further litigation down the road.

While we have likely seen the end of the CRA to reverse Obama-era policies, the administrative process is just starting for the venting and flaring rule. The rule will change, at least to remove its climate-focus, but it is unclear whether BLM will keep the parts that reduce resource waste and maximize public revenues.

 

Jim Rubin is a partner at Dorsey & Whitney with more than 25 years' experience in environmental regulation.


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