[Federal Register Volume 83, Number 36 (Thursday, February 22, 2018)]
[Proposed Rules]
[Pages 7924-7948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-03144]



[[Page 7923]]

Vol. 83

Thursday,

No. 36

February 22, 2018

Part III





Department of the Interior





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Bureau of Land Management





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43 CFR Parts 3160 and 3170





Waste Prevention, Production Subject to Royalties, and Resource 
Conservation; Rescission or Revision of Certain Requirements; Proposed 
Rule

  Federal Register / Vol. 83 , No. 36 / Thursday, February 22, 2018 / 
Proposed Rules  

[[Page 7924]]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 3160 and 3170

[18X.LLWO310000.L13100000.PP0000]
RIN 1004-AE53


Waste Prevention, Production Subject to Royalties, and Resource 
Conservation; Rescission or Revision of Certain Requirements

AGENCY: Bureau of Land Management, Interior.

ACTION: Proposed rule.

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SUMMARY: On November 18, 2016, the Bureau of Land Management (BLM) 
published in the Federal Register a final rule entitled, ``Waste 
Prevention, Production Subject to Royalties, and Resource 
Conservation'' (``2016 final rule''). After reconsidering the cost, 
complexity, and other implications of the 2016 final rule, the BLM is 
now proposing to revise the 2016 final rule in a manner that reduces 
unnecessary compliance burdens, is consistent with the BLM's existing 
statutory authorities, and re-establishes long-standing requirements 
that the 2016 final rule replaced. In addition to requesting public 
comment on the proposed rule generally, the BLM is also requesting 
comment on ways that the BLM can reduce the waste of gas by 
incentivizing the capture, reinjection, or beneficial use of the gas.

DATES: Send your comments on this proposed rule to the BLM on or before 
April 23, 2018. A comment to the OMB on the proposed information 
collection revisions is best assured of being given full consideration 
if the OMB receives it by March 26, 2018.

ADDRESSES: 
    Mail: U.S. Department of the Interior, Director (630), Bureau of 
Land Management, Mail Stop 2134LM, 1849 C St. NW, Washington, DC 20240, 
Attention: 1004-AE53.
    Personal or messenger delivery: U.S. Department of the Interior, 
Bureau of Land Management, 20 M Street SE, Room 2134 LM, Washington, DC 
20003, Attention: Regulatory Affairs.
    Federal eRulemaking Portal: https://www.regulations.gov. In the 
Searchbox, enter ``RIN 1004-AE53'' and click the ``Search'' button. 
Follow the instructions at this website.

FOR COMMENTS ON INFORMATION-COLLECTION ACTIVITIES 
    Fax: Office of Management and Budget (OMB), Office of Information 
and Regulatory Affairs, Desk Officer for the Department of the 
Interior, fax 202-395-5806.
    Electronic mail: [email protected].
    Please indicate ``Attention: OMB Control Number 1004-0211,'' 
regardless of the method used to submit comments on the information 
collection burdens. If you submit comments on the information-
collection burdens, you should provide the BLM with a copy, at one of 
the street addresses shown earlier in this section, so that we can 
summarize all written comments and address them in the final 
rulemaking. Comments not pertaining to the proposed rule's information-
collection burdens should not be submitted to OMB. The BLM is not 
obligated to consider or include in the Administrative Record for the 
final rule any comments that are improperly directed to OMB.

FOR FURTHER INFORMATION CONTACT: Catherine Cook, Acting Division Chief, 
Fluid Minerals Division, 202-912-7145 or [email protected], for information 
regarding the substance of this proposed rule or information about the 
BLM's Fluid Minerals program. For questions relating to regulatory 
process issues, contact Faith Bremner at 202-912-7441 or 
[email protected]. Persons who use a telecommunications device for the 
deaf (TDD) may call the Federal Relay Service (FRS) at 1-800-877-8339, 
24 hours a day, 7 days a week, to leave a message or question with the 
above individuals. You will receive a reply during normal business 
hours.

SUPPLEMENTARY INFORMATION: 
I. Executive Summary
II. Public Comment Procedures
III. Background
IV. Discussion of the Proposed Rule
V. Procedural Matters

I. Executive Summary

    On November 18, 2016, the BLM published in the Federal Register a 
final rule entitled, ``Waste Prevention, Production Subject to 
Royalties, and Resource Conservation'' (82 FR 83008) (``2016 final 
rule''). The 2016 final rule was intended to: Reduce waste of natural 
gas from venting, flaring, and leaks during oil and natural gas 
production activities on onshore Federal and Indian leases; clarify 
when produced gas lost through venting, flaring, or leaks is subject to 
royalties; and clarify when oil and gas production may be used royalty-
free. The 2016 final rule became effective on January 17, 2017, with 
some requirements taking effect immediately, but the majority of 
requirements phased-in on January 17, 2018 or later.
    On March 28, 2017, President Trump issued Executive Order (E.O.) 
13783, ``Promoting Energy Independence and Economic Growth,'' directing 
the BLM to review the 2016 final rule and to publish proposed rules 
suspending, revising, or rescinding it, if appropriate.
    The BLM reviewed the 2016 final rule and found that some impacts 
were under-estimated and many provisions of the rule would add 
regulatory burdens that unnecessarily encumber energy production, 
constrain economic growth, and prevent job creation. This proposed rule 
would revise the 2016 final rule so that the remaining requirements 
would be consistent with the policies set forth in section 1 of E.O. 
13783, which states that ``[i]t is in the national interest to promote 
clean and safe development of our Nation's vast energy resources, while 
at the same time avoiding regulatory burdens that unnecessarily 
encumber energy production, constrain economic growth, and prevent job 
creation.''
    More specifically, the BLM acknowledges that the 2016 final rule 
contains requirements that overlap with other Federal and State 
requirements and regulations. However, unlike the Environmental 
Protection Agency (EPA) regulations with which the rule overlaps, the 
2016 final rule would affect existing wells, including a substantial 
number that are likely to be marginal or low-producing and therefore 
less likely to remain economical to operate if subjected to additional 
compliance costs. The 2016 final rule also contains numerous 
administrative and reporting burdens that are unnecessary and likely to 
constrain development. Finally, as explained in the Regulatory Impact 
Analysis (RIA) prepared for this rule, the BLM reviewed the 2016 final 
rule and determined that the costs the rule is expected to impose would 
exceed the benefits it is expected to generate. For these reasons, the 
BLM is now proposing to revise the 2016 final rule in a manner that 
reduces unnecessary compliance burdens and, in large part, re-
establishes the long-standing requirements that the 2016 final rule 
replaced.

II. Public Comment Procedures

    If you wish to comment on this proposed rule, you may submit your 
comments to the BLM by mail, personal or messenger delivery, or through 
https://www.regulations.gov (see the ADDRESSES section).
    Please make your comments on the proposed rule as specific as 
possible, confine them to issues pertinent to the proposed rule, and 
explain the reason

[[Page 7925]]

for any changes you recommend. Where possible, your comments should 
reference the specific section or paragraph of the proposal that you 
are addressing. The BLM is not obligated to consider or include in the 
Administrative Record for the final rule comments that we receive after 
the close of the comment period (see DATES) or comments delivered to an 
address other than those listed above (see ADDRESSES).
    Comments, including names and street addresses of respondents, will 
be available for public review at the address listed under ``ADDRESSES: 
Personal or messenger delivery'' during regular hours (7:45 a.m. to 
4:15 p.m.), Monday through Friday, except holidays. Before including 
your address, telephone number, email address, or other personal 
identifying information in your comment, be advised that your entire 
comment--including your personal identifying information--may be made 
publicly available at any time. While you can ask us in your comment to 
withhold from public review your personal identifying information, we 
cannot guarantee that we will be able to do so.
    As explained later, this proposed rule would include revisions to 
information collection requirements that must be approved by the Office 
of Management and Budget (OMB). If you wish to comment on the revised 
information collection requirements in this proposed rule, please note 
that such comments must be sent directly to the OMB in the manner 
described in the ADDRESSES section. The OMB is required to make a 
decision concerning the collection of information contained in this 
proposed rule between 30 and 60 days after publication of this document 
in the Federal Register. Therefore, a comment to the OMB on the 
proposed information collection revisions is best assured of being 
given full consideration if the OMB receives it by March 26, 2018.

III. Background

    The BLM manages more than 245 million acres of public land, known 
as the National System of Public Lands, primarily located in 12 Western 
States, including Alaska. The BLM also manages 700 million acres of 
subsurface mineral estate throughout the nation.
    The BLM's onshore oil and gas management program is a major 
contributor to the nation's oil and gas production. In fiscal year (FY) 
2016, sales volumes from Federal onshore production lands accounted for 
9 percent of domestic natural gas production, and 5 percent of total 
U.S. oil production.\1\ Over $1.9 billion in royalties were collected 
from all oil, natural gas, and natural gas liquids transactions in FY 
2016 on Federal and Indian Lands.\2\ Royalties from Federal lands are 
shared with States. Royalties from Indian lands are collected for the 
benefit of the Indian owners.
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    \1\ United States Department of the Interior, ``Budget 
Justifications and Performance Integration Fiscal Year 2018: Bureau 
of Land Management'' at VII-77, available at https://www.doi.gov/sites/doi.gov/files/uploads/fy2018_blm_budget_justification.pdf.
    \2\ Derived from data available on the Office of Natural 
Resources Revenue website's ``Statistical Information'' page, 
accessible at https://statistics.onrr.gov/.
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    The venting or flaring of some natural gas is a practically 
unavoidable consequence of oil and gas development. Whether during well 
drilling, production testing, well purging, or emergencies, it is not 
uncommon for gas to reach the surface that cannot be feasibly used or 
sold. When this occurs, the gas must either be combusted (``flared'') 
or released to the atmosphere (``vented''). Depending on the 
circumstances, operators may also flare natural gas on a longer-term 
basis from production operations, predominantly in situations where an 
oil well co-produces natural gas (or ``associated gas'') in an 
exploratory area or a field that lacks adequate gas-capture 
infrastructure to bring the gas to market. Still other venting or 
flaring of gas from production equipment may occur by design and as a 
substitute for other power generated facilities at the wellsite.
    In response to oversight reviews and a recognition of increased 
flaring from Federal and Indian leases, the BLM developed a final rule 
entitled, ``Waste Prevention, Production Subject to Royalties, and 
Resource Conservation,'' which was published in the Federal Register on 
November 18, 2016 (81 FR 83008) (``2016 final rule''). The 2016 final 
rule replaced the BLM's existing policy at that time, Notice to Lessees 
and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty 
or Compensation for Oil and Gas Lost (NTL-4A).
    The 2016 final rule was intended to: Reduce waste of natural gas 
from venting, flaring, and leaks during oil and natural gas production 
activities on onshore Federal and Indian leases; clarify when produced 
gas lost through venting, flaring, or leaks is subject to royalties; 
and clarify when oil and gas production may be used royalty free on-
site. The 2016 final rule became effective on January 17, 2017, with 
some requirements taking effect immediately, but the majority of 
requirements phased-in over time.
    On March 28, 2017, President Trump issued E.O. 13783, entitled, 
``Promoting Energy Independence and Economic Growth,'' requiring the 
BLM to review the 2016 final rule. Section 7(b) of E.O. 13783 directs 
the Secretary of the Interior to review four specific rules, including 
the 2016 final rule, for consistency with the policy articulated in 
section 1 of the Order and to publish proposed rules suspending, 
revising, or rescinding those rules, if appropriate. Among other 
things, section 1 of E.O. 13783 states that ``[i]t is in the national 
interest to promote clean and safe development of our Nation's vast 
energy resources, while at the same time avoiding regulatory burdens 
that unnecessarily encumber energy production, constrain economic 
growth, and prevent job creation.''
    To implement E.O. 13783, Secretary of the Interior Ryan Zinke 
issued Secretarial Order No. 3349, entitled, ``American Energy 
Independence'' on March 29, 2017, which, among other things, directs 
the BLM to review the 2016 final rule to determine whether it is fully 
consistent with the policy set forth in section 1 of E.O. 13783.
    The BLM reviewed the 2016 final rule and believes that it is 
inconsistent with the policy in section 1 of E.O. 13783. The BLM found 
that the impacts resulting from some provisions of the rule were 
underestimated and would add regulatory burdens that unnecessarily 
encumber energy production, constrain economic growth, and prevent job 
creation. This proposed rule would revise the 2016 final rule so that 
the remaining requirements would be consistent with the policies set 
forth in section 1 of E.O. 13783.
    On October 5, 2017, the BLM published a proposed rule that would 
suspend the implementation of certain requirements in the 2016 final 
rule until January 17, 2019 (82 FR 46458). After a public comment 
period, the BLM finalized this temporary suspension on December 8, 2017 
(82 FR 58050) (``Suspension Rule''). The purpose of the Suspension Rule 
is to avoid imposing temporary or permanent compliance costs on 
operators for requirements that may be rescinded or significantly 
revised in the near future. The BLM plans to conclude its revision of 
the 2016 final rule during the period of the suspension effected by the 
Suspension Rule.
    The BLM has several reasons for modifying the requirements in the 
2016 final rule. First, the 2016 final rule is more expensive to 
implement and generates fewer benefits than initially

[[Page 7926]]

estimated. The BLM reviewed the 2016 final rule's requirements and 
determined that the rule's compliance costs for industry and 
implementation costs for the BLM would exceed the rule's benefits. For 
a more detailed explanation, see the analysis of the 2016 final rule's 
requirements (baseline scenario) in the Regulatory Impact Analysis 
(RIA) prepared for this rule (RIA at 38). Over the 10-year evaluation 
period (2019-2028), the total net benefits posed by the 2016 final rule 
are estimated to be -$627 to -$902 million (net present value (NPV) and 
interim domestic social cost of methane (SC-CH4) using a 7 
percent discount rate) or -$581 to -$945 million (NPV and interim 
domestic SC-CH4 using a 3 percent discount rate).
    In addition, many of the 2016 final rule's requirements would pose 
a particular compliance burden to operators of marginal or low-
producing wells, and there is concern that those wells would not be 
economical to operate with the additional compliance costs. Although 
the characteristics of what is considered to be a marginal well can 
vary, the percentage of the nation's oil and gas wells classified as 
marginal is high. The Interstate Oil and Gas Compact Commission (IOGCC) 
published a report in 2015 detailing the contributions of marginal 
wells to the nation's oil and gas production and economic activity.\3\ 
According to the IOGCC, about 69.1 and 75.9 percent of the nation's 
operating oil and gas wells, respectively, are marginal (IOGCC 2015 at 
22). The IOGCC defines a marginal well as ``a well that produces 10 
barrels of oil or 60 Mcf of natural gas per day or less'' (IOGCC 2015 
at 2).\4\ The U.S. Energy Information Administration (EIA) reported 
that, in 2016, roughly 76.4 percent of oil wells produced less than or 
equal to 10 barrels of oil equivalent (BOE) per day and 81.3 percent of 
oil wells produced less than or equal to 15 BOE/day. For gas wells, EIA 
reported that roughly 71.6 percent produced less than or equal to 10 
BOE/day and 78.2 percent less than or equal to 15 BOE/day. For both oil 
and gas wells, EIA estimates that 73.3 percent of all wells produce 
less than 10 BOE/day.\5\ On Federal lands, this would equate to 68,972 
wells designated as marginal.\6\
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    \3\ IOGCC, ``Marginal Wells: Fuel for Economic Growth. 2015 
Report.'' Available on the web at http://iogcc.ok.gov/websites/iogcc/images/MarginalWell/MarginalWell-2015.pdf.
    \4\ By other definitions, marginal or stripper wells might 
include those with production of up to 15 barrels of oil or 90 Mcf 
of natural gas per day or less. The U.S. Energy Information 
Administration (EIA) reported that, in 2009, roughly 78.7 percent of 
oil wells produced less than or equal to 10 barrels of oil 
equivalent (BOE) per day and 85.4 percent of oil wells produced less 
than or equal to 15 BOE/day. For gas wells, EIA reported that 
roughly 64.5 percent produced less than or equal to 10 BOE/day and 
73.3 percent less than or equal to 15 BOE/day. EIA, ``United States 
Total 2009: Distribution of Wells by Production Rate Bracket.'' 
December 2010. Available on the web at https://www.eia.gov/naturalgas/archive/petrosystem/us_table.html.
    \5\ EIA, ``The Distribution of U.S. Oil and Natural Gas Wells by 
Production Rate.'' December 2017. Available on the web at https://www.eia.gov/petroleum/wells/.
    \6\ Estimated percent of marginal wells applied to the number of 
Federal and Indian wells, provided in the BLM Oil and Gas 
Statistics, available at https://www.blm.gov/programs/energy-and-minerals/oil-and-gas/oil-and-gas-statistics.
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    The 2016 final rule's requirements that would impose a particular 
burden on marginal or low-producing wells include leak detection and 
repair (LDAR), pneumatic equipment, and liquids unloading requirements. 
The 2016 final rule allows for exemptions from many of the requirements 
when compliance would impose such costs that the operator would cease 
production and abandon significant recoverable reserves. Although the 
2016 final rule allowed operators to request an alternative LDAR 
program, there is no full exemption from the requirement. Due to the 
prevalence of marginal and low-producing wells, we would expect that 
many exemptions would be warranted, making the burden imposed by the 
exemption process excessive. It is also possible that some proportion 
of marginal wells would be prematurely shut-in by their operators due 
to the costs and uncertainties involved in obtaining an exemption from 
the BLM or the costs associated with an alternate LDAR program.
    There are many other reporting requirements in the 2016 final rule 
and the cumulative effect of the burden is substantial. Specifically, 
the BLM estimates that the 2016 final rule would impose administrative 
costs of about $14 million per year ($10.7 million to be borne by the 
industry and $3.27 million to be borne by the BLM). The BLM estimates 
that the proposed revision of the 2016 final rule would alleviate the 
vast majority of these burdens and would pose administrative burdens of 
only $349,000 per year. (See RIA section 3.2.2).
    In addition, the 2016 final rule has many requirements that overlap 
with the EPA's authority under the Clean Air Act, and in particular 
EPA's New Source Performance Standards at 40 CFR part 60, subparts OOOO 
(NSPS OOOO) and OOOOa (NSPS OOOOa). For example, the EPA's NSPS OOOO 
regulates new, reconstructed, and modified pneumatic controllers, 
storage tanks, and gas wells completed using hydraulic fracturing, 
while NSPS OOOOa regulates new, reconstructed, and modified pneumatic 
pumps, fugitive emissions from well sites and compressor stations, and 
oil wells completed using hydraulic fracturing, in addition to the 
requirements in NSPS OOOO.
    The BLM's 2016 final rule also regulates these source categories. 
While the EPA regulates new, modified, and reconstructed sources, the 
BLM crafted the 2016 final rule to address the remaining existing 
facilities within these same source categories. However, by forcing 
operators to upgrade equipment to meet the BLM's standard, operators 
could need to replace old equipment with new equipment. Thus, the 2016 
final rule could compel facilities not intended to fall under the 
purviews of NSPS OOOO and NSPS OOOOa to become regulated facilities.
    In addition, as the BLM acknowledged during the development of the 
2016 final rule,\7\ some States with significant Federal oil and gas 
production have similar regulations addressing the loss of gas from 
these sources. For example, the State of Colorado has regulations that 
restrict methane emissions during most oil and gas well completions and 
recompletions, impose requirements for pneumatic controllers and 
storage vessels, require a comprehensive LDAR program, and set 
standards for liquids unloading.\8\ The Utah Department of 
Environmental Quality issued a General Approval Order on June 5, 2014, 
that applies to new and modified oil and gas well sites and tank 
batteries and requires: Pneumatic controllers to be low bleed or have 
their emissions routed to capture or flare, pneumatic pumps to route 
emissions to capture or flare, and operators to inspect for leaks at 
least annually.\9\ Since the promulgation of the 2016 final rule, the 
State of California has issued new regulations that require quarterly 
monitoring of methane emissions from oil and gas wells, compressor 
stations and other equipment involved in the production of oil and gas, 
impose limitations on venting from natural gas powered pneumatic 
devices and pumps,

[[Page 7927]]

and require vapor recovery from tanks under certain circumstances.\10\
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    \7\ 81 FR 6616, 6633-34 (Feb. 8, 2016).
    \8\ Colorado Air Quality Control Commission, Regulation 7, 5 CCR 
1001-9, Sections XII, XVII, and XVIII.
    \9\ State of Utah, Department of Environmental Quality, Division 
of Air Quality, Approval Order: General Approval Order for a Crude 
Oil and Natural Gas Well Site and/or Tank Battery, DAQE-
AN1492500001-14 (June 5, 2014).
    \10\ Cal. Code Regs. Tit. 17, Sec. Sec.  95665-95677.
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    Furthermore, the BLM is not confident that all provisions of the 
2016 final rule would survive judicial review. During the development 
of the 2016 final rule, the BLM received comments from the regulated 
industry and some States arguing that the BLM's proposed rule exceeded 
the BLM's statutory authority. Specifically, these commenters objected 
that the proposed rule, rather than preventing ``waste,'' was actually 
intended to regulate air quality, a matter within the regulatory 
jurisdiction of the EPA and the States under the Clean Air Act. 
Commenters also asserted that the proposed rule exceeded the BLM's 
waste prevention authority by requiring conservation without regard to 
economic feasibility, a key factor in determining whether a loss of oil 
or gas is prohibited ``waste'' under the Mineral Leasing Act. 
Immediately after the 2016 final rule was issued, petitions for 
judicial review of the rule were filed by industry groups and States 
with significant BLM-managed Federal and Indian minerals. Wyoming v. 
U.S. Dep't of the Interior, Case No. 2:16-cv-00285-SWS (D. Wyo.). 
Petitioners in this litigation maintain that the BLM's promulgation of 
the 2016 final rule was arbitrary and capricious (in violation of the 
Administrative Procedure Act), and that the 2016 final rule exceeded 
the BLM's statutory authority by regulating air quality and failing to 
give due consideration to economic feasibility. Although the court 
denied petitioners' motions for a preliminary injunction, the court did 
express concerns that the BLM may have usurped the authority of the EPA 
and the States under the Clean Air Act, and questioned whether it was 
appropriate for the 2016 final rule to be justified based on its 
environmental and societal benefits, rather than on its resource 
conservation benefits alone. The BLM requests comment on whether the 
2016 final rule was consistent with its statutory authority.
    The 2016 final rule also has requirements that limit the flaring of 
associated gas produced from oil wells. The 2016 final rule sought to 
constrain this flaring through the imposition of a ``capture 
percentage'' requirement, requiring operators to capture a certain 
percentage of the gas they produce, after allowing for a certain volume 
of flaring per well. The requirement would become more stringent over a 
period of years. The BLM reviewed State regulations, rules, and orders 
designed to limit the waste of oil and gas resources and the flaring of 
natural gas, and determined that states with the most significant BLM-
managed oil and gas production place restrictions or limitations on gas 
flaring from oil wells. For example, the State of North Dakota has 
requirements that are similar (but not identical) to the 2016 final 
rule. Other States generally have flaring limits that trigger a review 
by a governing board to determine whether the gas should be conserved. 
A memorandum containing a summary of the statutory and regulatory 
restrictions on venting and flaring in the 10 States responsible for 
approximately 99 percent of Federal oil and gas production is available 
on the Federal eRulemaking Portal: https://www.regulations.gov. In the 
Searchbox, enter ``RIN 1004-AE53'', click the ``Search'' button, open 
the Docket Folder, and look under Supporting Documents.
    The BLM regulates the development of Federal and Indian onshore oil 
and gas resources pursuant to its authority under the following 
statutes: The Mineral Leasing Act of 1920 (30 U.S.C. 188-287), the 
Mineral Leasing Act for Acquired Lands (30 U.S.C. 351-360), the Federal 
Oil and Gas Royalty Management Act (30 U.S.C. 1701-1758), the Federal 
Land Policy and Management Act of 1976 (43 U.S.C. 1701-1785), the 
Indian Mineral Leasing Act of 1938 (25 U.S.C. 396a-g), the Indian 
Mineral Development Act of 1982 (25 U.S.C. 2101-2108), and the Act of 
March 3, 1909 (25 U.S.C. 396). These statutes authorize the Secretary 
of the Interior to promulgate such rules and regulations as may be 
necessary to carry out the statutes' various purposes.\11\ The Federal 
and Indian mineral leasing statutes share a common purpose of promoting 
the development of Federal and Indian oil and gas resources for the 
financial benefit of the public and Indian mineral owners.\12\ The 
Mineral Leasing Act requires lessees to ``use all reasonable 
precautions'' \13\ to prevent the waste of oil or gas and authorizes 
the Secretary of the Interior to prescribe rules ``for the prevention 
of undue waste.'' \14\ The Federal Oil and Gas Royalty Management Act 
establishes royalty liability for ``oil or gas lost or wasted . . . 
when such loss or waste is due to negligence on the part of the 
operator of the lease, or due to the failure to comply with any rule or 
regulation, order or citation issued under [the mineral leasing 
laws].'' \15\ In the Federal Land Policy and Management Act of 1976, 
Congress declared ``that it is the policy of the United States that . . 
. the public lands be managed in a manner which recognizes the Nation's 
need for domestic sources of minerals . . . .'' \16\ In order to make 
certain that the development of Federal and Indian oil and gas 
resources will not be unnecessarily hindered by regulatory burdens, the 
BLM is exercising its inherent authority \17\ to reconsider the 2016 
final rule. The BLM's reconsideration of the 2016 final rule is 
intended to ensure that the BLM's waste prevention regulations require 
``reasonable precautions'' on the part of operators, that the BLM's 
regulations prevent ``undue waste,'' and that the BLM's regulations do 
not unnecessarily constrain domestic mineral production.
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    \11\ 30 U.S.C. 189 (MLA); 30 U.S.C. 359 (MLAAL); 30 U.S.C. 
1751(a) (FOGRMA); 43 U.S.C. 1740 (FLPMA); 25 U.S.C. 396d (IMLA); 25 
U.S.C. 2107 (IMDA); 25 U.S.C. 396.
    \12\ See, e.g., California Co. v. Udall, 296 F.2d 384, 388 (DC 
Cir. 1961) (noting that the MLA ``was intended to promote wise 
development of . . . natural resources and to obtain for the public 
a reasonable financial return on assets that `belong' to the 
public.'').
    \13\ 30 U.S.C. 225.
    \14\ 30 U.S.C. 187.
    \15\ 30 U.S.C. 1756.
    \16\ 43 U.S.C. 1701.
    \17\ See Ivy Sports Med., LLC v. Burwell, 767 F.3d 81, 86 (DC 
Cir. 2014) (noting the ``oft-repeated'' principle that the ``power 
to reconsider is inherent in the power to decide'').
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IV. Discussion of the Proposed Rule

A. Summary and Request for Comment

    The 2016 final rule replaced the BLM's existing policy, NTL-4A, 
which governed venting and flaring from BLM-administered leases for 
more than 35 years. Because the BLM has found the 2016 final rule to 
impose excessive costs, and believes that a regulatory framework 
similar to NTL-4A can be applied in a manner that limits waste without 
unnecessarily burdening production, the BLM is proposing to replace the 
requirements contained in the 2016 final rule with requirements similar 
to, but with notable improvements on, those contained in NTL-4A.
    The preamble to the 2016 final rule suggested that NTL-4A was 
outdated and needed to be overhauled to account for technological 
advancements and to incorporate ``economical, cost-effective, and 
reasonable measures that operators can take to minimize gas waste.'' 
\18\ But, as evidenced by the Regulatory Impact Analysis for the 2016 
final rule and the RIA prepared for this proposed rule, many of the 
requirements imposed by the 2016 final rule were not, in fact, cost-
effective and actually imposed

[[Page 7928]]

compliance costs well in excess of the value of the resource to be 
conserved.
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    \18\ 81 FR 83008, 83009, 83017 (Nov. 18, 2016).
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    The BLM believes that a return to the NTL-4A framework, as 
explained in more detail in the section-by-section discussion below, is 
appropriate and will ensure that operators take ``reasonable 
precautions'' to prevent ``undue waste.'' Where the 2016 final rule 
introduced sensible improvements on NTL-4A--for example, the 
requirement that a person remain onsite during liquids unloading in 
order to minimize the loss of gas--the BLM has endeavored to retain 
them in this proposed rule.
    The BLM requests comments on each of the provisions proposed for 
rescission, modification, or replacement as outlined below and 
described more fully in the following section-by-section discussions.
    The BLM is proposing to rescind the following requirements of the 
2016 final rule:
     Waste Minimization Plans;
     Well drilling requirements;
     Well completion and related operations requirements;
     Pneumatic controllers equipment requirements;
     Pneumatic diaphragm pumps equipment requirements;
     Storage vessels equipment requirements; and
     LDAR requirements.
    In addition, under this proposal, the following requirements in the 
2016 final rule would be modified and/or replaced with requirements 
that are similar to those that were in NTL-4A:
     Gas capture requirements would be revised to conform with 
policy similar to that found in NTL-4A;
     Downhole well maintenance and liquids unloading 
requirements; and
     Measuring and reporting volumes of gas vented and flared.

The remaining requirements in the 2016 final rule would either be 
retained, modified only slightly, or removed, but the impact of the 
removal would be small relative to the items listed previously.
    The BLM is not proposing to revise the royalty provisions (Sec.  
3103.3-1) or the royalty-free use provisions (subpart 3178) that were 
part of the 2016 final rule. However, as explained below, the BLM is 
taking comment on subpart 3178.
    Many of the provisions of the 2016 final rule that are proposed for 
complete rescission are focused on emissions from sources and 
operations, which are more appropriately regulated by EPA under its 
Clean Air Act authority, and for which there are analogous EPA 
regulations at 40 CFR part 60, subparts OOOO and OOOOa. Specifically, 
these emissions-targeting provisions of the 2016 final rule are 
Sec. Sec.  3179.102, 3179.201, 3179.202, and 3179.203, and Sec. Sec.  
3179.301 through 3179.305. The BLM has chosen to rescind these 
provisions based on a number of considerations.
    First, the BLM believes that these provisions create unnecessary 
regulatory overlap in light of EPA's Clean Air Act authority and its 
analogous EPA regulations that similarly reduce losses of gas.\19\ In 
general, the emissions-targeting provisions of the 2016 final rule were 
crafted so that compliance with similar provisions within EPA's 
regulations would constitute compliance with the BLM's regulations. 
Although EPA's regulations apply to new, reconstructed, and modified 
sources, while the 2016 final rule's requirements would also apply to 
existing sources, the BLM notes that the EPA's regulations at 40 CFR 
part 60 subpart OOOO have been in place since 2011 and that over time, 
as existing well sites are decommissioned and new well sites come 
online, the EPA's regulations at 40 CFR part 60 subpart OOOOa will 
displace the BLM's regulations, eventually rendering the emissions-
targeting provisions of the 2016 final rule entirely duplicative. By 
removing these duplicative provisions, the proposed rule would fall 
squarely within the scope of the BLM's authority to prevent waste and 
would leave the regulation of air emissions to the EPA, the agency with 
the experience, expertise, and clear statutory authority to do so.
---------------------------------------------------------------------------

    \19\ The BLM is aware that the EPA has proposed a temporary stay 
of some of the requirements contained in NSPS OOOOa and that the EPA 
is undertaking a reconsideration of these requirements. See 82 FR 
27645 (June 16, 2017). The BLM has coordinated with the EPA during 
the development of this proposed rule and is committed to continued 
coordination with the EPA throughout the process of revising the 
2016 final rule.
---------------------------------------------------------------------------

    Second, the BLM has reviewed and revised the impact analysis and 
reconsidered whether the substantial compliance costs associated with 
the emissions-targeting provisions are justified by the value of the 
gas that is expected to be conserved as a result of compliance. The BLM 
has made the policy determination that it is not appropriate for 
``waste prevention'' regulations to impose compliance costs greater 
than the value of the resources they are expected to conserve. Although 
the RIA for the 2016 final rule found that, in total, the benefits of 
these provisions outweighed their costs, this finding depended on 
benefits that were likely overestimated and compliance costs that were 
likely underestimated. The BLM seeks comment on the uncertainties and 
assumptions in the RIA.
    E.O. 13783, at Section 5, disbanded the earlier Interagency Working 
Group on Social Cost of Greenhouse Gases (IWG) and withdrew the 
Technical Support Documents \20\ upon which the RIA for the 2016 final 
rule relied for the valuation of changes in methane emissions. The SC-
CH4 estimates presented by the BLM for this rule are interim 
values for use in regulatory analyses until an improved estimate of the 
impacts of climate change to the U.S. can be developed. In accordance 
with E.O. 13783, they are adjusted to reflect discount rates of 3 
percent and 7 percent, and to present domestic rather than global 
impacts of climate change, consistent with OMB Circular A-4. The 7 
percent rate is intended to represent the average before-tax rate of 
return to private capital in the U.S. economy. The 3 percent rate is 
intended to reflect the rate at which society discounts future 
consumption, which is particularly relevant if a regulation is expected 
to affect private consumption directly. When relying on the assumed 
domestic impacts of climate change, the benefits of many of the 
emissions-targeting provisions do not outweigh their costs. And, 
because the value of the conserved gas would not outweigh the costs, 
the BLM is not confident that its legal authority to prescribe rules 
``for the prevention of undue waste'' \21\ would cover many of the 
emissions-targeting provisions in the 2016 final rule.
---------------------------------------------------------------------------

    \20\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under E.O. 12866 (published August 26, 
2016) and its Addendum.
    \21\ 30 U.S.C. 187.
---------------------------------------------------------------------------

    Finally, the BLM recognizes that the oil and gas exploration and 
production industry continues to pursue reductions in methane emissions 
on a voluntary basis. For example, XTO Energy, Inc., which operates 
2,435 BLM-administered leases, has publicly stated that it is 
undertaking a 3-year plan to phase out high-bleed pneumatic devices 
from its operations and will be implementing an enhanced LDAR program. 
In December 2017, the American Petroleum Institute (API) announced a 
voluntary program to reduce methane emissions. The API announced that 
26 companies, including ExxonMobil, Chevron, Shell, Anadarko and EOG 
Resources, would take action to implement LDAR programs and replace, 
remove, or retrofit high-bleed pneumatic controllers with low- or zero-
emitting devices.\22\
---------------------------------------------------------------------------

    \22\ Osborne, J., ``Oil companies clamping down on methane 
leaks,'' Houston Chronicle (Dec. 6, 2017); American Petroleum 
Institute, ``Natural Gas, Oil Industry Launch Environmental 
Partnership to Accelerate Reductions in Methane, VOCs,'' available 
at http://www.api.org/news-policy-and-issues/news/2017/12/04/natural-gas-oil-environmental-partnership-accelerate-reductions-methane-vocs.

---------------------------------------------------------------------------

[[Page 7929]]

    The BLM seeks comment on this proposed rule. The BLM has allowed a 
60-day comment period for this proposed rule, which the BLM believes 
will afford the public a meaningful opportunity to comment.
    The BLM intends that each of the provisions of the proposed rule 
are severable. It is reasonable to consider the provisions severable as 
they do not depend on each other. To the extent that two or more 
provisions inextricably depend on each other, they would not be 
severable. The BLM requests comment on the severability of the proposed 
provisions.
    The BLM is also seeking comment on the royalty-free use 
regulations, which were codified at 43 CFR subpart 3178 as part of the 
2016 final rule. The royalty-free use provisions in subpart 3178 are 
viewed as being consistent with applicable Federal law, executive 
orders, and policies. However, the BLM is still interested in whether 
the requirements of subpart 3178 can be improved. An issue of 
particular interest to the BLM is whether the requirement for prior BLM 
approval for royalty-free treatment in the situations covered under 
Sec.  3178.5 is appropriate. The BLM would like to know whether the 
incremental royalty accountability offered by prior BLM approval 
justifies the requirement in Sec.  3178.5.
    Finally, the BLM requests comment on ways that the BLM can reduce 
the waste of gas by incentivizing the capture, reinjection, or 
beneficial use of the gas. The BLM is interested to learn of best 
practices that could be incorporated into the final rule that would 
encourage operators to capture, use, or reinject gas without imposing 
excessive compliance burdens that could unnecessarily encumber energy 
production, constrain economic growth, and prevent job creation.

B. Section-by-Section Discussion

1. 2016 Final Rule Requirements Proposed for Rescission
    With this proposed rule, the BLM would rescind the following 
provisions of the 2016 final rule:
43 CFR 3162.3-1(j)--Drilling Applications and Plans
    In the 2016 final rule, the BLM added a paragraph (j) to 43 CFR 
3162.3-1, which requires that when submitting an Application for Permit 
to Drill (APD) for an oil well, an operator must also submit a waste-
minimization plan. Submission of the plan is required for approval of 
the APD, but the plan is not itself part of the APD, and the terms of 
the plan are not enforceable against the operator. The purpose of the 
waste-minimization plan is for the operator to set forth a strategy for 
how the operator will comply with the requirements of 43 CFR subpart 
3179 regarding the control of waste from venting and flaring from oil 
wells.
    The waste-minimization plan must include information regarding: The 
anticipated completion date(s) of the proposed oil well(s); a 
description of anticipated production from the well(s); certification 
that the operator has provided one or more midstream processing 
companies with information about the operator's production plans, 
including the anticipated completion dates and gas production rates of 
the proposed well or wells; and identification of a gas pipeline to 
which the operator plans to connect.
    Additional information is required when an operator cannot identify 
a gas pipeline with sufficient capacity to accommodate the anticipated 
production from the proposed well, including: A gas pipeline system 
location map showing the proposed well(s); the name and location of the 
gas processing plant(s) closest to the proposed well(s); all existing 
gas trunklines within 20 miles of the well, and proposed routes for 
connection to a trunkline; the total volume of produced gas, and 
percentage of total produced gas, that the operator is currently 
venting or flaring from wells in the same field and any wells within a 
20-mile radius of that field; and a detailed evaluation, including 
estimates of costs and returns, of potential on-site capture 
approaches.
    The BLM estimates that the administrative burden of the waste-
minimization plan requirements would be roughly $1 million per year for 
the industry and $180,000 per year for the BLM (2016 RIA at 96 and 
100).
    This proposed rule would completely rescind the waste minimization 
plan requirement of Sec.  3162.3-1(j). The BLM believes that the waste 
minimization plan requirement imposes an unnecessary administrative 
burden on both operators and the BLM. The BLM believes that there will 
be sufficient information-based safeguards against undue waste even in 
the absence of the waste minimization plan requirement for the 
following reasons. First, the BLM has found that comparable gas capture 
plan requirements in North Dakota and New Mexico will ensure that 
operators in those States take account of the availability of capture 
infrastructure when seeking permission to drill a well. Second, State 
regulations in Utah, Wyoming, and Montana require operators to submit 
production information similar to that required under Sec.  3162.3-
1(j)(2) when operators seek approval for routine flaring. Finally, 
where flaring is not otherwise authorized, an operator would be 
required to submit one of the following before it could receive 
approval for royalty-free flaring of associated gas under proposed 
Sec.  3179.201(c): (1) A report supported by engineering, geologic, and 
economic data which demonstrates to the BLM's satisfaction that the 
expenditures necessary to market or use the gas are not economically 
justified; or (2) An action plan that will eliminate the flaring within 
a time period approved by the BLM. These requirements would help to 
meet the purpose of Sec.  3162.3-1(j), which is to ensure that 
operators do not waste gas without giving due consideration to the 
possibility of marketing or using the gas.
    In addition, the extensive amount of information that an operator 
must include in the waste minimization plan makes compliance with the 
requirement cumbersome for operators. Operators have also expressed 
concern that the waste minimization plan requirement will slow down APD 
processing as BLM personnel take time to determine whether the waste 
minimization plan submitted by an operator is ``complete and 
adequate,'' and whether the operator has provided all required pipeline 
information to the full extent that the operator can obtain it.
    In light of the foregoing, the BLM believes that there is limited 
(if any) benefit to the waste minimization plan requirement of Sec.  
3162.3-1(j) and is therefore proposing to rescind it in its entirety.
43 CFR 3179.7--Gas Capture Requirement
    In the 2016 final rule, the BLM sought to constrain routine flaring 
through the imposition of a ``capture percentage'' requirement, 
requiring operators to capture a certain percentage of the gas they 
produce, after allowing for a certain volume of flaring per well. The 
capture percentage requirement (as amended by the 2017 Suspension Rule) 
would become more stringent over a period of years, beginning with an 
85 percent capture requirement (5,400 Mcf per well flaring allowable) 
in January 2019, and eventually reaching a 98 percent capture 
requirement (750 Mcf per well flaring allowable) in January

[[Page 7930]]

2027. An operator could choose to comply with the capture targets on 
each of the operator's leases, units or communitized areas, or on a 
county-wide or state-wide basis.
    The BLM estimates that this requirement, over 10 years from 2019-
2028, would impose costs of $516 million to $1.04 billion and generate 
cost savings from product recovery of $424 to $564 million (RIA at 41). 
The annual costs and cost savings would be expected to increase as the 
requirements increase in stringency.
    This proposed rule would completely rescind the 2016 final rule's 
capture percentage requirements for a number of reasons. The BLM 
believes these requirements to be overly complex and ultimately 
ineffective at reducing flaring. In the early years, when capture 
percentages are not as high and allowable flaring is high, the 2016 
final rule allows for large amounts of royalty-free flaring. In the 
later years, the BLM believes that the 2016 final rule would introduce 
complexities that would undermine its effectiveness. Because of the 
common use of horizontal drilling through multiple leaseholds of 
different ownership, the 2016 final rule's coordination requirements in 
Sec.  3179.12 (providing for coordination with States and tribes when 
any requirement would adversely impact production from non-Federal and 
non-Indian interests) create a high degree of uncertainty over how the 
capture requirements would be implemented and what their impact would 
be. Even if the capture percentage requirements were implemented and 
effective, the BLM is concerned that the prescriptive nature of the 
approach would allow for unnecessary flaring in some cases while 
prohibiting necessary flaring in others. For example, even if an 
operator could feasibly capture all of the gas it produces from a 
Federal well, the operator could still flare a certain amount of gas 
without violating Sec.  3179.7's capture percentage requirements. Thus, 
in situations where the operator faces transmission or processing plant 
capacity limitations (i.e., where a pipeline or processing plant does 
not have the capacity to take all of the gas that is being supplied to 
it), Sec.  3179.7 would allow the operator to flare gas from a Federal 
well in order to produce more gas from a nearby non-Federal well for 
which there are tighter regulatory or contractual constraints on 
flaring.
    In addition, the capture percentage requirement affords less 
flexibility for smaller operators with fewer operating wells than it 
does for larger operators with a greater number of operating wells. A 
small operator with only a few wells in an area with inadequate gas-
capture infrastructure would likely be faced with curtailing production 
or violating Sec.  3179.7's prescriptive limits. On the other hand, a 
larger operator with many wells would have greater flexibility to 
average the flaring allowable over its portfolio and avoid curtailing 
production or other production constraints.
    In place of the 2016 final rule's capture percentage requirements, 
the proposed rule would address the routine flaring of associated gas 
by deferring to State or tribal regulations where possible and 
codifying the familiar NTL-4A standard for royalty-free flaring as a 
backstop where no applicable State or tribal regulation exists. The 
proposed rule's approach to the routine flaring of associated gas is 
explained more fully below (see the discussion of revised Sec.  
[thinsp]3179.201).
43 CFR 3179.8--Alternative Capture Requirement
    Section 3179.8 allows operators of leases issued before January 17, 
2017, to request a lower capture percentage requirement than would 
otherwise be imposed under Sec.  3179.7. In order to obtain this lower 
capture requirement, an operator must demonstrate that the applicable 
capture percentage under Sec.  3179.7 would ``impose such costs as to 
cause the operator to cease production and abandon significant 
recoverable oil reserves under the lease.'' Because the BLM is 
proposing to rescind the capture requirements of Sec.  3179.7, the BLM 
is also proposing to rescind the mechanism for obtaining a lower 
capture requirement. If Sec.  3179.7 is rescinded, there is no need for 
Sec.  3179.8.
43 CFR 3179.11--Other Waste Prevention Measures
    Section 3179.11(a) states that the BLM may exercise its existing 
authority under applicable laws and regulations, as well as under the 
terms of applicable permits, orders, leases, and unitization or 
communitization agreements, to limit production from a new well that is 
expected to force other wells off of a common pipeline. Section 
3179.11(b) states that the BLM may similarly exercise existing 
authority to delay action on an APD or impose conditions of approval on 
an APD. Section 3179.11 is not an independent source of authority or 
obligation on the part of the BLM. Rather, Sec.  3179.11 was intended 
to clarify how the BLM may exercise existing authorities in addressing 
the waste of gas. However, the BLM understands that Sec.  3179.11 could 
easily be misread to indicate that the BLM has plenary authority to 
curtail production or delay or condition APDs regardless of the 
circumstances. Because Sec.  3179.11 is unnecessary and is susceptible 
to misinterpretation, the BLM is proposing to rescind Sec.  3179.11.
43 CFR 3179.12--Coordination With State Regulatory Authority
    Section 3179.12 states that, to the extent an action to enforce 43 
CFR subpart 3179 may adversely affect production of oil or gas from 
non-Federal and non-Indian mineral interests, the BLM will coordinate 
with the appropriate State regulatory authority. The purpose of this 
provision is to ensure that due regard is given to the States' 
interests in regulating the production of non-Federal and non-Indian 
oil and gas. The BLM is proposing to rescind Sec.  3179.12 because, as 
explained more fully below, the BLM is proposing to revise subpart 3179 
in a manner that defers to State and tribal requirements with respect 
to the routine flaring of associated gas. In light of this new 
approach, the BLM believes that there is much less concern that subpart 
3179 could be applied in ways that State regulatory agencies find to be 
inappropriate. The BLM continues to recognize the value of coordinating 
with State regulatory agencies, but no longer considers it necessary to 
include a coordination requirement in subpart 3179.
43 CFR 3179.101--Well Drilling
    Current Sec.  3179.101(a) requires that gas reaching the surface as 
a normal part of drilling operations be used or disposed of in one of 
four ways: (1) Captured and sold; (2) Directed to a flare pit or flare 
stack; (3) Used in the operations on the lease, unit, or communitized 
area; or (4) Injected. Section 3179.101(a) also specifies that gas may 
not be vented, except under the circumstances specified in Sec.  
3179.6(b) or when it is technically infeasible to use or dispose of the 
gas in one of the ways specified above. Section 3179.101(b) states that 
gas lost as a result of a loss of well control will be classified as 
avoidably lost if the BLM determines that the loss of well control was 
due to operator negligence.
    The BLM is proposing to rescind Sec.  3179.101 because it would be 
duplicative under revised subpart 3179. In essence, Sec.  3179.101(a) 
requires an operator to flare gas lost during well drilling rather than 
vent it (unless technically infeasible). This same requirement would be 
contained in proposed Sec.  3179.6(b). Current Sec.  3179.101(b) states 
that where gas is lost during a loss of well control, the

[[Page 7931]]

lost gas will be considered ``avoidably lost'' if the BLM determines 
that the loss of well control was due to operator negligence. This 
principle would be contained in proposed Sec.  3179.4(b), which 
requires an absence of operator negligence in order for lost gas to be 
considered ``unavoidably lost.''
43 CFR 3179.102--Well Completion and Related Operations
    Current Sec.  3179.102 addresses gas that reaches the surface 
during well-completion, post-completion, and fluid-recovery operations 
after a well has been hydraulically fractured or refractured. It 
requires the gas to be disposed of in one of four ways: (1) Captured 
and sold; (2) Directed to a flare pit or stack, subject to a volumetric 
limitation in Sec.  3179.103; (3) Used in the lease operations; or (4) 
Injected. Section 3179.102 specifies that gas may not be vented, except 
under the narrow circumstances specified in Sec.  3179.6(b) or when it 
is technically infeasible to use or dispose of the gas in one of the 
four ways specified above. Section 3179.102(b) provides that an 
operator will be deemed to be in compliance with its gas capture and 
disposition requirements if the operator is in compliance with the 
requirements for control of gas from well completions established under 
40 CFR part 60, subparts OOOO or OOOOa, or if the well is not a ``well 
affected facility'' under those regulations. Section 3179.102(c) and 
(d) would allow the BLM to exempt an operator from the requirements of 
Sec.  3179.102 where the operator demonstrates that compliance would 
cause the operator to cease production and abandon significant 
recoverable oil reserves under the lease.
    This proposed rule would rescind current Sec.  3179.102 in its 
entirety. The EPA finalized regulations in 40 CFR part 60, subpart 
OOOOa, that are applicable to all of the well completions covered by 
Sec.  3179.102. See 81 FR 35824 (June 3, 2016); 81 FR 83055-56. In 
light of the complete overlap with EPA regulations, and the fact that 
compliance with these regulations satisfies an operator's obligations 
under Sec.  3179.102, the BLM has concluded that Sec.  3179.102 is 
duplicative and unnecessary. In the 2016 final rule, the BLM recognized 
the duplicative nature of Sec.  3179.102, but sought to establish a 
``backstop'' in the ``unlikely event'' that the analogous EPA 
regulations ceased to be in effect. See 81 FR 83056. The BLM no longer 
believes that it is appropriate to insert duplicative regulations into 
the CFR as insurance against unlikely events. In addition, the BLM 
questions the appropriateness of issuing regulations that serve as a 
backstop to the regulations of other Federal agencies, especially when 
those regulations are promulgated under different authorities. The BLM 
continues to believe that applicable EPA regulations adequately address 
the loss of gas associated with unconventional well completions, and 
therefore proposes to rescind Sec.  3179.102.
43 CFR 3179.201--Equipment Requirements for Pneumatic Controllers
    Section 3179.201 addresses pneumatic controllers that use natural 
gas produced from a Federal or Indian lease, or from a unit or 
communitized area that includes a Federal or Indian lease. Section 
3179.201 applies to such controllers if the controllers: (1) Have a 
continuous bleed rate greater than 6 standard cubic feet per hour (scf/
hour) (``high-bleed'' controllers); and (2) Are not covered by EPA 
regulations that prohibit the new use of high-bleed pneumatic 
controllers (40 CFR part 60, subparts OOOO or OOOOa), but would be 
subject to those regulations if the controllers were new, modified, or 
reconstructed. Section 3179.201(b) requires the applicable pneumatic 
controllers to be replaced with controllers (including, but not limited 
to, continuous or intermittent pneumatic controllers) having a bleed 
rate of no more than 6 scf/hour, subject to certain exceptions. Section 
3179.201(d) (as amended by the 2017 Suspension Rule) requires that this 
replacement occur no later than January 17, 2019, or within 3 years 
from the effective date of the 2016 final rule if the well or facility 
served by the controller has an estimated remaining productive life of 
3 years or less. Section 3179.201(b)(4) and (c) would allow the BLM to 
exempt an operator from the requirements of Sec.  3179.201 where the 
operator demonstrates that compliance would cause the operator to cease 
production and abandon significant recoverable oil reserves under the 
lease.
    The BLM estimates that this requirement, over 10 years from 2019-
2028, would impose costs of about $12 million to $13 million and 
generate cost savings from product recovery of $24 million to $30 
million (RIA at 41).
    This proposed rule would rescind Sec.  3179.201 in its entirety. 
Low-bleed continuous pneumatic controllers are already very common, 
representing about 89 percent of the continuous bleed pneumatic 
controllers in the petroleum and natural gas production sectors.\23\ 
The EPA has regulations in 40 CFR part 60, subparts OOOO and OOOOa that 
require new, modified, or reconstructed continuous bleed controllers to 
be low-bleed.
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    \23\ EPA. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 
1990-2015 (published April 2017). Annex 3. Data are available in 
Table 3.5-5 and Table 3.6-7.
---------------------------------------------------------------------------

    The BLM believes that these analogous EPA regulations will 
adequately address the loss of gas from pneumatic controllers on 
Federal and Indian leases over time, as new facilities come online and 
more of the existing high-bleed continuous controllers are replaced by 
low-bleed continuous controllers, pursuant to the EPA regulations. The 
BLM understands the typical lifespan of a pneumatic controller to be 10 
to 15 years.
    Furthermore, low-bleed continuous pneumatic controllers are 
expected to generate revenue for operators when employed at sites from 
which gas is captured and sold and when the sale price of gas is 
generally higher than it is now. Thus, we expect many operators to 
adopt low-bleed pneumatic controllers even in the absence of Sec.  
3179.201's requirements.
    Finally, as discussed above, the BLM recognizes that the oil and 
gas exploration and production industry continues to pursue reductions 
in methane emissions on a voluntary basis, and the BLM expects these 
efforts to result in a reduction in the number of high-bleed pneumatic 
devices employed by the industry. For the foregoing reasons, the BLM 
finds Sec.  3179.201 to be unnecessary and is therefore proposing to 
rescind it.
43 CFR 3179.202--Requirements for Pneumatic Diaphragm Pumps
    Section 3179.202 establishes requirements for operators with 
pneumatic diaphragm pumps that use natural gas produced from a Federal 
or Indian lease, or from a unit or communitized area that includes a 
Federal or Indian lease. It applies to such pumps if they are not 
covered under EPA regulations at 40 CFR part 60, subpart OOOOa, but 
would be subject to that subpart if they were a new, modified, or 
reconstructed source. For covered pneumatic pumps, Sec.  3179.202 
requires that the operator either replace the pump with a zero-
emissions pump or route the pump exhaust to processing equipment for 
capture and sale. Alternatively, an operator may route the exhaust to a 
flare or low-pressure combustion device if the operator makes a 
determination (and notifies the BLM through a Sundry Notices and 
Reports on Wells, Form 3160-5) that replacing the pneumatic diaphragm 
pump with a zero-emissions

[[Page 7932]]

pump or capturing the pump exhaust is not viable because: (1) A 
pneumatic pump is necessary to perform the function required; and (2) 
Capturing the exhaust is technically infeasible or unduly costly. If an 
operator makes this determination and has no flare or low-pressure 
combustor on-site, or routing to such a device would be technically 
infeasible, the operator is not required to route the exhaust to a 
flare or low-pressure combustion device. Under Sec.  3179.202(h) (as 
amended by the 2017 Suspension Rule), an operator must replace its 
covered pneumatic diaphragm pump or route the exhaust gas to capture or 
flare beginning no later than January 17, 2019. Section 3179.202(f) and 
(g) would allow the BLM to exempt an operator from the requirements of 
Sec.  3179.202 where the operator demonstrates that compliance would 
cause the operator to cease production and abandon significant 
recoverable oil reserves under the lease.
    This proposed rule would rescind Sec.  3179.202 in its entirety. 
The BLM is concerned that the costs of compliance with Sec.  3179.202 
outweigh the value of its conservation effects. The BLM estimates that 
Sec.  3179.202, over 10 years from 2019-2028, would impose costs of 
about $29 million to $30 million, but only generate cost savings from 
product recovery of $18 million to $22 million (RIA at 41). The BLM 
also believes that the analogous EPA regulations in 40 CFR part 60, 
subpart OOOOa, will adequately address the loss of gas from pneumatic 
diaphragm pumps on Federal and Indian leases as more and more of them 
are covered by the EPA regulations over time.
    Finally, as discussed above, industry is reportedly making ongoing 
efforts to retire old leak-prone equipment, including pneumatic pumps, 
on a voluntary basis.
    For these reasons, the BLM is proposing to rescind Sec.  3179.202 
in its entirety.
43 CFR 3179.203--Storage Vessels
    Section 3179.203 applies to crude oil, condensate, intermediate 
hydrocarbon liquid, or produced-water storage vessels that contain 
production from a Federal or Indian lease, or from a unit or 
communitized area that includes a Federal or Indian lease, and that are 
not subject to 40 CFR part 60, subparts OOOO or OOOOa, but would be if 
they were new, modified, or reconstructed sources. If such storage 
vessels have the potential for volatile organic compound (VOC) 
emissions equal to or greater than 6 tons per year (tpy), Sec.  
3179.203 requires operators to route all gas vapor from the vessels to 
a sales line. Alternatively, the operator may route the vapor to a 
combustion device if it determines that routing the vapor to a sales 
line is technically infeasible or unduly costly. The operator may also 
submit a Sundry Notice to the BLM that demonstrates that compliance 
with the above options would cause the operator to cease production and 
abandon significant recoverable oil reserves under the lease due to the 
cost of compliance.
    The BLM is proposing to rescind Sec.  3179.203 in its entirety. The 
BLM is concerned that the costs of compliance with Sec.  3179.203 
outweigh the value of its conservation effects. The BLM estimates that 
Sec.  3179.203, over 10 years from 2019-2028, would impose costs of 
about $51 million to $56 million while only generating cost savings 
from product recovery of about $1 million (RIA at 41). The BLM also 
believes that the analogous EPA regulations in 40 CFR part 60, subparts 
OOOO and OOOOa, will adequately address the loss of gas from storage 
vessels on Federal and Indian leases as more and more of them are 
covered by the EPA regulations over time.
    Furthermore, the BLM has always believed that Sec.  3179.203 would 
have a limited reach, due to the 6 tpy emissions threshold and the 
carve-out for storage vessels covered by EPA regulations. The BLM 
estimated in the RIA for the 2016 final rule that Sec.  3179.203 would 
impact fewer than 300 facilities on Federal and Indian lands.\24\ In 
light of the EPA's requirements for storage vessels, and the limited 
reach and modest conservation impacts of Sec.  3179.203, the BLM is 
proposing to rescind Sec.  3179.203 in its entirety. Finally, we note 
that, even if Sec.  3179.203 is rescinded as proposed, the BLM would 
retain the authority to impose royalties on vapor losses from storage 
vessels under proposed Sec.  3179.4(b)(2)(vii) when the BLM determines 
that recovery of the vapors is warranted.
---------------------------------------------------------------------------

    \24\ U.S. Bureau of Land Management, ``Regulatory Impact 
Analysis for: Revisions to 43 CFR 3100 (Onshore Oil and Gas Leasing) 
and 43 CFR [3160] (Onshore Oil and Gas Operations), Additions of 43 
CFR 3178 (Royalty-Free Use of Lease Production) and 43 CFR 3179 
(Waste Prevention and Resource Conservation),'' pg. 69 (Nov. 10, 
2016).
---------------------------------------------------------------------------

43 CFR 3179.301 Through 3179.305--Leak Detection and Repair
    Sections 3179.301 through 3179.305 establish leak detection, 
repair, and reporting requirements for: (1) Sites and equipment used to 
produce, process, treat, store, or measure natural gas from or 
allocable to a Federal or Indian lease, unit, or communitization 
agreement; and (2) Sites and equipment used to store, measure, or 
dispose of produced water on a Federal or Indian lease. Section 
3179.302 prescribes the instruments and methods that may be used for 
leak detection. Section 3179.303 prescribes the frequency for 
inspections and Sec.  3179.304 prescribes the time frames for repairing 
leaks found during inspections. Finally, Sec.  3179.305 requires 
operators to maintain records of their LDAR activities and submit an 
annual report to the BLM. Pursuant to Sec.  3179.301(f) (as amended by 
the 2017 Suspension Rule), operators must begin to comply with the LDAR 
requirements of Sec. Sec.  3179.301 through 3179.305 before: (1) 
January 17, 2019, for all existing sites; (2) 60 days after beginning 
production for sites that begin production after January 17, 2019; and 
(3) 60 days after a site that was out of service is brought back into 
service and re-pressurized.
    The BLM is proposing to rescind Sec. Sec.  3179.301 to 3179.305 in 
their entirety. The BLM is concerned that the costs of compliance with 
Sec. Sec.  3179.301 to 3179.305 outweigh the value of their 
conservation effects. The BLM estimates that these requirements, over 
10 years from 2019-2028, would impose costs of about $550 million to 
$688 million and generate cost savings from product recovery of about 
$116 million to $148 million (RIA at 41). In addition, the BLM 
estimates that the administrative burdens associated with the LDAR 
requirements, at roughly $5 million, represent the bulk of the 
administrative burdens of the 2016 final rule.
    The BLM believes that the analogous EPA regulations in 40 CFR part 
60, subpart OOOOa, will adequately address the loss of fugitive gas on 
Federal and Indian leases over time, as new facilities come online and 
more and more existing facilities are reconstructed or modified and 
become covered by the EPA regulations.
    Finally, the BLM is concerned that Sec. Sec.  3179.301 to 3179.305 
apply to all wellsites equally. Wellsites that are not connected to 
deliver gas to market would not achieve any waste reduction because 
sales from the recovered gas would not be realized. More importantly, 
the BLM believes that the LDAR requirements are unnecessarily 
burdensome to operators of marginal wells, particularly marginal oil 
wells. The BLM does not believe that the potential fugitive gas losses 
from marginal oil wells (with production rates fewer than 10 bbl per 
day or 15 bbl per day) would be substantial enough to warrant the costs 
of maintaining a LDAR program with semi-annual inspection frequencies. 
As noted previously, the

[[Page 7933]]

BLM believes that over 69 percent of oil wells on the public lands are 
marginal.
43 CFR 3179.401--State or Tribal Requests for Variances From the 
Requirements of This Subpart
    Section 3179.401 would allow a State or tribe to request a variance 
from any provisions of subpart 3179 by identifying a State, local, or 
tribal regulation to be applied in place of those provisions and 
demonstrating that such State, local, or tribal regulation would 
perform at least equally well as those provisions in terms of reducing 
waste of oil and gas, reducing environmental impacts from venting and/
or flaring of gas, and ensuring the safe and responsible production of 
oil and gas.
    The BLM is proposing to rescind Sec.  3179.401 because it believes 
that the variance process established by this section will no longer be 
necessary in light of the BLM's proposal to codify NTL-4A standards and 
to defer to State and tribal regulations for the routine flaring of 
associated gas, as explained in the discussion of proposed Sec.  
3179.201.
2. Revised Subpart 3179
    With this proposed rule, the BLM would revise subpart 3179, as 
follows:
43 CFR 3179.1 Purpose
    Section 3179.1 states that the purpose of 43 CFR subpart 3179 is to 
implement and carry out the purposes of statutes relating to prevention 
of waste from Federal and Indian leases, the conservation of surface 
resources, and management of the public lands for multiple use and 
sustained yield. The BLM is not proposing any revision to existing 
Sec.  3179.1 as a part of this rulemaking. Section 3179.1 is presented 
here for context.
43 CFR 3179.2 Scope
    This section specifies which leases, agreements, tracts, and 
facilities are covered by this subpart. The section also states that 
subpart 3179 applies to Indian Mineral Development Act (IMDA) 
agreements, unless specifically excluded in the agreement or unless the 
relevant provisions of this subpart are inconsistent with the 
agreement, and to agreements for the development of tribal energy 
resources under a Tribal Energy Resource Agreement entered into with 
the Secretary of the Interior, unless specifically excluded in the 
agreement. Existing Sec.  3179.2 remains largely unchanged. However, 
the BLM is proposing to revise paragraph (a)(5) by using the more-
inclusive words ``well facilities'' instead of the words ``wells, 
tanks, compressors, and other equipment'' to describe the onshore 
equipment that would be subject to this proposed rule. The purpose of 
the phrase ``wells, tanks, compressors, and other equipment'' has been 
to specify components subject to LDAR requirements which, as described 
above, the BLM is proposing to rescind.
43 CFR 3179.3 Definitions and Acronyms
    This proposed section would keep, in their entirety, four of the 18 
definitions that appear in existing Sec.  3179.3: ``Automatic ignition 
system,'' ``gas-to-oil ratio,'' ``liquids unloading,'' and ``lost oil 
or lost gas.'' The definition for ``capture'' is retained in this 
proposed rule, except the word ``reinjection'' has been changed to 
``injection'' in order to be consistent with references to conservation 
by injection (as opposed to reinjection) elsewhere in subpart 3179.
    A definition for ``gas well'' is also maintained in this proposed 
rule, however the second and third sentences in the existing definition 
would be removed. The second-to-last sentence in the existing 
definition of ``gas well'' would be removed because, though a well's 
designation as a ``gas'' well or ``oil'' well is appropriately 
determined by the relative energy values of the well's products, the 
6,000 scf/bbl standard in existing Sec.  3179.3 is not a commonly used 
standard. The last sentence in the existing definition of ``gas well,'' 
which states generally that an oil well will not be reclassified as a 
gas well when its gas-to-oil ratio (GOR) exceeds the 6,000 scf/bbl 
threshold, would be removed and replaced with a simpler qualifier 
making clear that a well's status as a ``gas well'' is ``determined at 
the time of completion.''
    A new definition for ``oil well'' is proposed to be added that 
would define an ``oil well'' as a ``well for which the energy 
equivalent of the oil produced exceeds the energy equivalent of the gas 
produced, as determined at the time of completion.'' The addition of a 
definition of ``oil well'' should help to make clear when proposed 
Sec.  3179.201's requirements for ``oil-well gas'' apply.
    A definition of ``waste of oil or gas'' is proposed to be added 
that would define waste, for the purposes of subpart 3179, to mean any 
act or failure to act by the operator that is not sanctioned by the 
authorized officer as necessary for proper development and production, 
where compliance costs are not greater than the monetary value of the 
resources they are expected to conserve, and which results in: (1) A 
reduction in the quantity or quality of oil and gas ultimately 
producible from a reservoir under prudent and proper operations; or (2) 
avoidable surface loss of oil or gas. This definition incorporates the 
familiar definition of ``waste of oil or gas'' from BLM's operating 
regulations at 43 CFR 3160.0-5, but adds an important limitation: Waste 
does not occur where the cost of conserving the oil or gas exceeds the 
monetary value of that oil or gas. This definition is intended to 
codify the BLM's policy determination that it is not appropriate for 
``waste prevention'' regulations to impose compliance costs greater 
than the value of the resources they are expected to conserve. The BLM 
requests comment and data pertinent to this proposed definition of 
``waste of oil or gas.''
    This proposed section would remove 12 definitions from the existing 
regulations because they are no longer needed: ``Accessible 
component,'' ``capture infrastructure,'' ``compressor station,'' 
``continuous bleed,'' ``development oil well,'' ``high pressure 
flare,'' ``leak,'' ``leak component,'' ``liquid hydrocarbon,'' 
``pneumatic controller,'' ``storage vessel,'' and ``volatile organic 
compounds (VOC).'' These definitions pertain to requirements in 
existing subpart 3179 that the BLM is proposing to rescind.
43 CFR 3179.4 Determining When the Loss of Oil or Gas Is Avoidable or 
Unavoidable
    Proposed Sec.  3179.4 describes the circumstances under which lost 
oil or gas would be classified as ``avoidably lost'' or ``unavoidably 
lost.'' Under proposed Sec.  3179.5, royalty would be due on all 
avoidably lost oil or gas, while royalty is not due on unavoidably lost 
oil or gas. The proposed revision of Sec.  3179.4 includes concepts 
from both existing Sec.  3179.4 and NTL-4A, Sections II. and III.
    Proposed paragraph (a) defines ``avoidably lost'' production and 
mirrors the ``avoidably lost'' definition in NTL-4A Section II.A. 
Proposed paragraph (a) would define avoidably lost gas as gas that is 
vented or flared without BLM approval, and produced oil or gas that is 
lost due to operator negligence, the operator's failure to take all 
reasonable measures to prevent or control the loss, or the operator's 
failure to comply fully with applicable lease terms and regulations, 
appropriate provisions of the approved operating plan, or prior written 
BLM orders. This paragraph would replace the ``avoidably lost'' 
definition that appears in the last paragraph of existing Sec.  3179.4, 
which primarily defines ``avoidably lost'' oil or gas as lost oil gas 
that is not ``unavoidably lost'' and also expressly includes ``excess 
flared gas'' as defined

[[Page 7934]]

in existing Sec.  3179.7, which the BLM is proposing to rescind.
    Proposed paragraph (b) defines ``unavoidably lost'' production. 
Proposed paragraph (b)(1) follows language from Section II.C(2) of NTL-
4A. It states that oil or gas that is lost due to line failures, 
equipment malfunctions, blowouts, fires, or other similar circumstances 
is considered to be unavoidably lost production, unless the BLM 
determines that the loss resulted from operator negligence, the failure 
to take all reasonable measures to prevent or control the loss, or the 
failure of the operator to comply fully with applicable lease terms and 
regulations, appropriate provisions of the approved operating plan, or 
prior written orders of the BLM.
    Proposed paragraph (b)(2) is substantially similar to the 
definition of ``unavoidably lost'' oil or gas that appears in existing 
Sec.  3179.4(a). This paragraph improves upon NTL-4A by providing 
clarity to operators and the BLM about which losses of oil or gas 
should be considered ``unavoidably lost.'' Paragraph (b)(2) introduces 
a list of operations or sources from which lost oil or gas would be 
considered ``unavoidably lost,'' so long as the operator has not been 
negligent, has taken all reasonable measures to prevent or control the 
loss, and has complied fully with applicable laws, lease terms, 
regulations, provisions of a previously approved operating plan, or 
other written orders of the BLM.
    Except for cross references, proposed Sec.  3179.4(b)(2)(i) through 
(vi) are the same as paragraphs (a)(1)(i) through (vi) in existing 
Sec.  3179.4. These paragraphs list the following operations or sources 
from which lost oil or gas would be considered ``unavoidably lost'': 
Well drilling; well completion and related operations; initial 
production tests; subsequent well tests; exploratory coalbed methane 
well dewatering; and emergencies.
    This proposed rule would remove normal operating losses from 
pneumatic controllers and pumps (existing Sec.  3179.4(a)(1)(vii)) from 
the list of unavoidable losses because the use of gas in pneumatic 
controllers and pumps is already royalty free under existing Sec.  
3178.4(a)(3).
    Proposed paragraph (b)(2)(vii) is similar to existing Sec.  
3179.4(a)(1)(viii), but has been rephrased to reflect the NTL-4A 
provisions pertaining to storage tank losses (NTL-4A Section II.C(1)). 
Under proposed 3179.4(b)(2)(vii), normal gas vapor losses from a 
storage tank or other low-pressure production vessel would be 
unavoidably lost, unless the BLM determines that recovery of the vapors 
is warranted. Changing the phrase ``operating losses'' (as used in 
existing Sec.  3179.4(a)(1)(viii)) to ``gas vapor losses'' makes clear 
that this provision applies to low pressure gas losses and that the 
operator should have separated gas from the oil before placing it in 
the tank.
    Proposed Sec.  3179.4(b)(2)(viii) is the same as existing Sec.  
3179.4(a)(1)(ix). It states that well venting in the course of downhole 
well maintenance and/or liquids unloading performed in compliance with 
Sec.  3179.104 is an operation from which lost gas is considered 
``unavoidably lost.''
    The proposed revision does not retain existing Sec.  
3179.4(a)(1)(x), which classifies leaks as unavoidable losses when the 
operator has complied with the LDAR requirements in existing Sec. Sec.  
3179.301 through 3179.305. The BLM is proposing to rescind these LDAR 
requirements and so there is no need to reference these requirements as 
a limitation on losses through leaks. The BLM requests comment on 
whether regulatory text should be added to Sec.  3179.4(b) to provide 
clarity to the BLM's position that leaks are considered unavoidably 
lost.
    Proposed Sec.  3179.4(b)(2)(ix) is the same as existing Sec.  
3179.4(a)(1)(xi), identifying facility and pipeline maintenance, such 
as when an operator must blow-down and depressurize equipment to 
perform maintenance or repairs, as an operation from which lost oil or 
gas would be considered ``unavoidably lost,'' so long as the operator 
has not been negligent and has complied with all appropriate 
requirements.
    The proposed rule does not include existing Sec.  
3179.4(a)(1)(xii). This paragraph lists the flaring of gas from which 
at least 50 percent of natural gas liquids have been removed and 
captured for market as an unavoidable loss. This provision was included 
in the 2016 final rule as part of the BLM's effort to adopt a gas 
capture percentage scheme similar to that of North Dakota. The BLM is 
proposing to remove this provision because it is proposing to rescind 
the gas capture percentage requirements contained in the 2016 final 
rule.
    The proposed rule does not include existing Sec.  3179.4(a)(2). 
Section 3179.4(a)(2) provides that gas that is flared or vented from a 
well that is not connected to a gas pipeline is unavoidably lost, 
unless the BLM has determined otherwise. Existing Sec.  3179.4(a)(2) 
was essentially a blanket approval for royalty-free flaring from wells 
not connected to a gas pipeline. Flaring from these wells, however, 
would no longer be royalty free if the operator failed to meet the gas 
capture requirements imposed by existing Sec.  3179.7 and the flared 
gas thus became royalty-bearing ``excess flared gas.'' Because the BLM 
is proposing to rescind Sec.  3179.7, maintaining existing 3179.4(a)(2) 
would amount to sanctioning unrestricted flaring from wells not 
connected to gas pipelines. The routine flaring of oil-well gas from 
wells not connected to a gas pipeline is addressed by proposed Sec.  
3179.201, which is discussed in more detail below.
    Proposed Sec.  3179.4(b)(3) states that produced gas that is flared 
or vented with BLM authorization or approval is unavoidably lost. This 
provision mirrors proposed Sec.  3179.4(a), which states that gas that 
is flared or vented without BLM authorization or approval is avoidably 
lost, and provides clarity to operators about royalty obligations with 
respect to authorized venting and flaring.
43 CFR 3179.5 When Lost Production Is Subject to Royalty
    The proposed rule would not change Sec.  3179.5. This section would 
continue to state that royalty is due on all avoidably lost oil or gas 
and that royalty is not due on any unavoidably lost oil or gas.
43 CFR 3179.6 Venting Limitations
    The title of this section in the proposed rule has been changed 
from ``venting prohibitions'' to ``venting limitations.'' The proposed 
rule would retain most of the provisions in existing Sec.  3179.6. The 
purpose of both sections is to prohibit flaring and venting from gas 
wells, with certain exceptions, and to require operators to flare, 
rather than vent, any uncaptured gas, whether from oil wells or gas 
wells, with certain exceptions.
    Proposed Sec.  3179.6(a) is the same as the existing Sec.  
3179.6(a), except the cross reference has been updated. It states that 
gas-well gas may not be flared or vented, except where it is 
unavoidably lost, pursuant to Sec.  3179.4(b). This same restriction on 
the flaring of gas-well gas was included in NTL-4A.
    Both proposed and existing Sec.  3179.6(b) state that operators 
must flare, rather than vent, any gas that is not captured, with the 
exceptions listed in subsequent paragraphs. Although the text of NTL-4A 
did not contain a similar requirement that, in general, lost gas should 
be flared rather than vented, the implementing guidance for NTL-4A in 
the United States Geological Survey's (USGS) Conservation Division 
Manual did contain a similar preference for flaring over venting. The 
flaring of gas is generally preferable to the venting of

[[Page 7935]]

gas due to safety concerns. Proposed Sec.  3179.6(b) therefore 
represents an improvement on NTL-4A by making clear in the regulation, 
rather than in implementation guidance, that lost gas should be flared 
when possible.
    The first three flaring exceptions in both the proposed and 
existing Sec.  3179.6 are identical: Paragraph (b)(1) allows for 
venting when flaring is technically infeasible; paragraph (b)(2) allows 
for venting in the case of an emergency, when the loss of gas is 
uncontrollable, or when venting is necessary for safety; and, paragraph 
(b)(3) allows for venting when the gas is vented through normal 
operation of a natural-gas-activated pump or pneumatic controller.
    The fourth flaring exception, listed in proposed Sec.  
3179.6(b)(4), would allow gas vapors to be vented from a storage tank 
or other low-pressure production vessel, except when the BLM determines 
that gas-vapor recovery is warranted. Although this language is 
somewhat different than what appears in existing Sec.  3179.6(b)(4), it 
has the same practical effect. It has been changed in this proposed 
rule in order to align the language with proposed Sec.  3179.4(b)(vii) 
and to remove the cross-reference to the storage tank requirements in 
existing Sec.  3179.203, which the BLM is proposing to rescind.
    The fifth flaring exception, listed in proposed Sec.  3179.6(b)(5), 
would apply to gas that is vented during downhole well maintenance or 
liquids unloading activities. This is similar to existing Sec.  
3179.6(b)(5), except that the proposed rule would remove the cross 
reference to existing Sec.  3179.204. Although the proposed revision of 
subpart 3179 would retain limitations on royalty-free losses of gas 
during well maintenance and liquids unloading in proposed Sec.  
3179.104, no cross-reference to those restrictions is necessary in this 
section, which simply addresses whether the gas may be vented or 
flared, not whether it is royalty-bearing.
    The proposed rule would remove the flaring exception listed in 
existing Sec.  3179.6(b)(6), which applies when gas is vented through a 
leak, provided that the operator has complied with the LDAR 
requirements in Sec. Sec.  3179.301 through 3179.305. The BLM is 
proposing to rescind these LDAR requirements so there is no need to 
reference these requirements as a limitation on venting through leaks.
    The sixth flaring exception, listed in proposed Sec.  3179.6(b)(6), 
is identical to the exception listed in existing Sec.  3179.6(b)(7). 
This exception would allow gas venting that is necessary to allow non-
routine facility and pipeline maintenance to be performed.
    The seventh flaring exception, listed in proposed Sec.  
3179.6(b)(7), is identical to the exception listed in existing Sec.  
3179.6(b)(8). This exception would allow venting when a release of gas 
is unavoidable under Sec.  3179.4, and Federal, State, local, or tribal 
law, regulation, or enforceable permit terms prohibit flaring.
    Proposed Sec.  3179.6(c) is identical to existing Sec.  3179.6(c). 
Both sections require all flares or combustion devices to be equipped 
with automatic ignition systems.
Authorized Flaring and Venting of Gas
43 CFR[thinsp]3179.101 Initial Production Testing
    Proposed Sec.  3179.101 would establish volume and duration 
standards which limit the amount of gas that may be flared royalty free 
during initial production testing. The gas is no longer royalty free 
after reaching either limit. Proposed Sec.  3179.101 would establish a 
volume limit of 50 million cubic feet (MMcf) of gas that may be flared 
royalty free during the initial production test of each completed 
interval in a well. Additionally, proposed Sec.  3179.101 would limit 
royalty-free initial production testing to a 30 day period, unless the 
BLM approves a longer period.
    The 2016 final rule also uses volume and duration thresholds to 
limit royalty-free initial production testing. Existing Sec.  3179.103 
provides for up to 20 MMcf of gas to be flared royalty free during well 
drilling, well completion, and initial production testing operations 
combined. Under existing Sec.  3179.103, upon receiving a Sundry Notice 
request from the operator, the BLM may increase the volume of royalty-
free flared gas up to an additional 30 MMcf. Under existing Sec.  
3179.103, similar to proposed Sec.  3179.101, the BLM allows royalty-
free testing for a period of up to 30 days after the start of initial 
production testing. The BLM may extend, upon request, the initial 
production testing period by up to an additional 60 days. Further, 
existing Sec.  3179.103 provides additional time for dewatering and 
testing exploratory coalbed methane wells. Under existing Sec.  
3179.103, such wells have an initial royalty-free period of 90 days 
(rather than 30 days for all other well types), and the possibility of 
the BLM approving, upon request, up to two additional 90-day periods.
    Under NTL-4A, gas lost during initial production testing was 
royalty free for a period not to exceed 30 days or the production of 50 
MMcf of gas, whichever occurred first, unless a longer test period was 
authorized by the State and accepted by the BLM.
    The volume and duration limits in proposed Sec.  3179.101 are 
similar to those in existing Sec.  3179.103. Both sections allow 30 
days from the start of the test, and both allow for extensions of time. 
However, existing Sec.  3179.103 limits an extension to no more than 60 
days, whereas proposed Sec.  3179.101 does not specify an extension 
limit. Proposed Sec.  3179.101 would allow for up to 50 MMcf of gas to 
be flared royalty free, with no express opportunity for an extension. 
By comparison, existing Sec.  3179.103 allows for 20 MMcf to be flared 
royalty free, with the possibility of an additional 30 MMcf of gas 
flared with BLM approval, and no opportunity for an extension beyond 
the cumulative 50 MMcf of gas. The BLM requests comment on whether 
royalty-free flaring during initial production testing should be 
limited to 50 MMcf or 30 days (with the possibility of an extension).
    The provision for exploratory coalbed methane wells in existing 
Sec.  3179.103 is the most notable difference between it and this 
proposed rule with regard to the initial production testing. Existing 
Sec.  3179.103 provides for up to 270 cumulative royalty-free 
production testing days for exploratory coalbed methane wells, whereas 
the proposed rule contains no special provision for such wells. 
Exploratory coalbed methane wells are expected to be an exceedingly low 
percentage of future wells drilled, and so the BLM does not believe 
that a special provision addressing these wells is necessary. In the 
future, if an exploratory coalbed methane well requires additional time 
for initial production testing, this can be handled under proposed 
Sec.  3179.101(b), which allows an operator to request a longer test 
period without imposing an outside limit on the length of the 
additional test period the BLM might approve.
43 CFR[thinsp]3179.102 Subsequent Well Tests
    Proposed Sec.  3179.102(a) provides that gas flared during well 
tests subsequent to the initial production test is royalty free for a 
period not to exceed 24 hours, unless the BLM approves or requires a 
longer test period. Proposed Sec.  3179.102(b) provides that the 
operator may request a longer test period and must submit its request 
using a Sundry Notice. Proposed Sec.  3179.102 is functionally 
identical to existing Sec.  3179.104.
    NTL-4A included royalty-free provisions for ``evaluation tests'' 
and for ``routine or special well tests.'' Because NTL-4A also 
contained specific

[[Page 7936]]

provisions for ``initial production tests,'' all of the other mentioned 
tests were presumed to be subsequent to the initial production tests. 
Under NTL-4A, royalty-free evaluation tests were limited to 24 hours, 
with no mention of a possibility for extension. Routine or special well 
tests, which are well tests other than initial production tests and 
evaluation tests, were royalty free under NTL-4A, but only after 
approval by the BLM.
    The provisions for subsequent well tests in proposed Sec.  3179.102 
are essentially the same as those in both the 2016 final rule and in 
NTL-4A. All three provide for a base test period of 24 hours, and all 
three have a provision for the BLM to approve a longer test period. 
Proposed Sec.  3179.102 improves upon NTL-4A by making the requirements 
for subsequent well tests more clear.
43 CFR[thinsp]3179.103 Emergencies
    Under proposed Sec.  3179.4(b)(2)(vi), royalty is not due on gas 
that is lost during an emergency. Proposed Sec.  3179.103 describes the 
conditions that constitute an emergency, and lists circumstances that 
do not constitute an emergency. As provided in proposed Sec.  
3179.103(d), an operator would be required to estimate and report to 
the BLM on a Sundry Notice the volumes of gas that were flared or 
vented beyond the timeframe for royalty-free flaring under proposed 
Sec.  3179.103(a) (i.e., venting or flaring beyond 24 hours, or a 
longer necessary period as determined by the BLM).
    The provisions in proposed Sec.  3179.103 are nearly identical to 
those in existing Sec.  3179.105. The most notable change from the 2016 
final rule is in describing those things that do not constitute an 
emergency. Where existing Sec.  3179.105(b)(1) specifies that ``more 
than 3 failures of the same component within a single piece of 
equipment within any 365-day period'' is not an emergency, proposed 
Sec.  3179.103(c)(4) simplifies that concept by including ``recurring 
equipment failures'' among the situations caused by operator negligence 
that do not constitute an emergency. This simplification addresses the 
practical difficulties involved in tracking the number of times the 
failure of a specific component of a particular piece of equipment 
causes emergency venting or flaring, and recognizes that recurring 
failures of the same equipment, even if involving different 
``components,'' may not constitute a true unavoidable emergency. The 
BLM requests comment on how to best determine when recurring equipment 
failures constitute emergencies and whether a certain number of 
failures of the same equipment should provide a standard for when 
losses of gas due to equipment failures are royalty-bearing.
    The description of ``emergencies'' in NTL-4A was brief and was 
subject to varied interpretations. The purpose behind both existing 
Sec.  3179.105 and proposed Sec.  3179.103 is to improve upon NTL-4A by 
narrowing the meaning of ``emergency,'' such that it is uniformly 
understood and consistently applied.
43 CFR 3179.104 Downhole Well Maintenance and Liquids Unloading
    Under proposed Sec.  3179.4(b)(2)(viii), gas lost in the course of 
downhole well maintenance and/or liquids unloading performed in 
compliance with proposed Sec.  3179.104 is royalty free. Proposed Sec.  
3179.104(a) states that gas vented or flared during downhole well 
maintenance and well purging is royalty free for a period not to exceed 
24 hours. Proposed Sec.  3179.104(a) also states that gas vented from a 
plunger lift system and/or an automated well control system is royalty 
free. Proposed Sec.  3179.104(b) states that the operator must minimize 
the loss of gas associated with downhole well maintenance and liquids 
unloading, consistent with safe operations. Proposed Sec.  3179.104(c) 
states, for wells equipped with a plunger lift system or automated 
control system, minimizing gas loss under paragraph (b) includes 
optimizing the operation of the system to minimize gas losses to the 
extent possible consistent with removing liquids that would inhibit 
proper function of the well. Proposed Sec.  3179.104(d) provides that 
the operator must ensure that the person conducting the purging remains 
present on-site throughout the event in order to end the event as soon 
as practical, thereby minimizing any venting to the atmosphere. 
Proposed Sec.  3179.104(e) defines ``well purging'' as blowing 
accumulated liquids out of a wellbore by reservoir gas pressure, 
whether manually or by an automatic control system that relies on real-
time pressure or flow, timers, or other well data, where the gas is 
vented to the atmosphere, and it does not apply to wells equipped with 
a plunger lift system. Proposed Sec.  3179.104(e) is identical to 
existing Sec.  3179.204(g).
    Existing Sec.  3179.204 requires the operator to ``minimize vented 
gas'' in liquids unloading operations, but does not impose volume or 
duration limits. As with proposed Sec.  3179.104, existing Sec.  
3179.204 allows for gas vented or flared during well purging to be 
royalty free provided that the operator ensures that the person 
conducting the operation remains on-site throughout the event. Existing 
Sec.  3179.204 also requires plunger lift and automated control systems 
to be optimized to minimize gas loss associated with their effective 
operation. The main difference between existing Sec.  3179.204 and 
proposed Sec.  3179.104 is that existing Sec.  3179.204(c) requires the 
operator to file a Sundry Notice with the BLM the first time that each 
well is manually purged or purged with an automated control system. 
That Sundry Notice would need to include documentation showing that the 
operator evaluated the feasibility of using methods of liquids 
unloading other than well purging and that the operator determined that 
such methods were either unduly costly or technically infeasible. 
Although the administrative burden is apparent, filing this Sundry 
Notice would require the operator to evaluate and analyze other methods 
of liquids unloading, which is expected to impose costs on the 
operator. And, the evaluation may lead the operator to identify a more 
costly alternative that could not be ignored as ``unduly costly.'' 
Additionally, under existing Sec.  3179.204, the operator would file a 
Sundry Notice with the BLM each time a well purging event exceeded 
either a duration of 24 hours in a month or an estimated gas loss of 75 
Mcf in a month. For each manual purging event, the operator would also 
need to keep a record of the cause, date, time, duration, and estimate 
of the volume of gas vented. The operator would maintain these records 
and make them available to the BLM upon request.
    With respect to royalty, gas vented during well purging was 
addressed in NTL-4A as follows: ``. . . operators are authorized to 
vent or flare gas on a short-term basis without incurring a royalty 
obligation . . . during the unloading or cleaning up of a well during . 
. . routine purging . . . not exceeding a period of 24 hours.'' As used 
in NTL-4A, it is unclear whether the ``24 hours'' limit was intended to 
be 24 hours per month or 24 hours per purging event. Under the latter 
interpretation, there would be no practical or enforceable limit to the 
volume of gas vented, or to the time during which purging could occur, 
because purging could occur in successive events of 24 hours duration.
    In terms of minimizing the loss of gas during well purging events, 
proposed Sec.  3179.104 and existing Sec.  3179.204 are essentially the 
same. Differences between the two are found in the reporting and 
recordkeeping requirements imposed by the 2016 final rule. The intent 
of these recordkeeping requirements, as explained in the 2016 final 
rule preamble, was to build a

[[Page 7937]]

record of the amount of gas lost through these operations so that 
information might lead to better future management of liquids unloading 
operations. The BLM now believes that the reporting and recordkeeping 
requirements in existing Sec.  3179.204 are unnecessary and unduly 
burdensome. In particular, the reporting requirement of existing Sec.  
3179.204(c) appears to be unnecessary because wells undergoing manual 
well purging are in decline and any alternative method of liquids 
unloading is unlikely to be economical for those wells. At this time, 
the BLM does not believe that it is in a position to develop better 
waste management techniques based on information collected pursuant to 
existing Sec.  3179.204.
    As mentioned above, proposed Sec.  [thinsp]3179.104(d) would 
require the person conducting manual well purging to remain present on-
site throughout the event to end the event as soon as practical. This 
provision was not a requirement in NTL-4A, and was first established in 
the 2016 final rule. The BLM is seeking comment on the operational 
feasibility of this provision or if another measure would be less 
burdensome, but achieve the same result.
Other Venting or Flaring
43 CFR 3179.201 Oil Well Gas
    Proposed Sec.  3179.201 would govern the routine flaring of 
associated gas from oil wells. The requirements of proposed Sec.  
3179.201 would replace the ``capture percentage'' requirements of the 
2016 final rule. Short term flaring, such as that experienced during 
initial production testing, subsequent well testing, emergencies, and 
downhole well maintenance and liquids unloading, would be governed by 
proposed Sec. Sec.  3179.101 through 3179.104.
    Proposed Sec.  3179.201(a) would allow operators to vent or flare 
oil-well gas royalty free when the venting or flaring is done in 
compliance with applicable rules, regulations, or orders of the State 
regulatory agency (for Federal gas) or tribe (for Indian gas). This 
section establishes State or tribal rules, regulations, and orders as 
the prevailing regulations for the venting and flaring of oil-well gas 
on BLM-administered leases, unit participating areas (PAs), or 
communitization agreements (CAs).
    Under the 2016 rule, an operator's royalty obligations for venting 
or flaring are determined by the avoidable/unavoidable loss definitions 
and the gas capture requirement thresholds. Operator royalty 
obligations for vented or flared gas from oil wells in NTL-4A was, for 
the most part, dependent on an ``avoidable loss'' determination by the 
BLM. NTL-4A allowed for the BLM to ratify or accept the venting or 
flaring rules, regulations, or orders of the appropriate State 
regulatory agency. The proposed rule implements this concept from NTL-
4A by deferring to the rules, regulations, or orders of State 
regulatory agencies or a tribe. This change both simplifies an 
operator's obligations by aligning Federal and State venting and 
flaring requirements for oil-well gas and allows for region-specific 
regulation of oil-well gas that accounts for regional differences in 
production, markets, and infrastructure. An operator would owe royalty 
on any oil-well gas flared in violation of applicable State or tribal 
requirements.
    The BLM has analyzed the statutory and regulatory restrictions on 
venting and flaring in the 10 States constituting the top eight 
producers of Federal oil and the top eight producers of Federal gas, 
which collectively produce more than 99 percent of Federal oil and more 
than 98 percent of Federal gas. The BLM found that each of these States 
have statutory or regulatory restrictions on venting and flaring that 
are expected to constrain the waste of associated gas from oil wells. 
Most of these States require an operator to obtain approval from the 
State regulatory authority (by justifying the need to flare) in order 
to engage in the flaring of associated gas.\25\ North Dakota has a 
similar requirement, but, in the Bakken, Bakken/Three Forks, and Three 
Forks pools, restricts flaring through the application of gas-capture 
goals that function similarly to the capture percentage requirements of 
the 2016 final rule. Summaries of the State statutory and regulatory 
restrictions on venting and flaring analyzed by the BLM are contained 
in a Memorandum that has been published for public review on https://www.regulations.gov. In the Searchbox, enter ``RIN 1004-AE53'', click 
the ``Search'' button, open the Docket Folder, and look under 
Supporting Documents.
---------------------------------------------------------------------------

    \25\ These States are: New Mexico, Wyoming, Colorado, Utah, 
Montana, Texas, and Oklahoma.
---------------------------------------------------------------------------

    It is the intent of proposed Sec.  3179.201(a) to defer to State 
and tribal statutes and regulations, like those described in the 
Memorandum, that provide a reasonable assurance to the BLM that 
operators will not be permitted to engage in the flaring of associated 
gas without limitation and that the waste of associated gas will be 
controlled. The BLM requests comment on whether the language of 
proposed Sec.  3179.201(a) achieves that intent.
    Proposed Sec.  3179.201(b) exclusively addresses oil-well gas 
production from an Indian lease. Vented or flared oil-well gas from an 
Indian lease will be treated as royalty free pursuant to proposed Sec.  
3179.201(a) only to the extent it is consistent with the BLM's trust 
responsibility.
    In the event a State regulatory agency or tribe does not currently 
have rules, regulations or orders governing venting or flaring of oil-
well gas, the BLM is proposing to codify the NTL-4A approach as a 
backstop, providing a way for operators to obtain BLM approval to vent 
or flare oil-well gas royalty free by submitting an application with 
sufficient justification as described in proposed Sec.  3179.201(c). 
Applications for royalty-free venting or flaring of oil-well gas must 
include either: (1) An evaluation report supported by engineering, 
geologic, and economic data demonstrating that capturing or using the 
gas is not economical; or (2) An action plan showing how the operator 
will minimize the venting or flaring of the gas within 1 year of the 
application. If an operator vents or flares oil-well gas in excess of 
10 MMcf per well during any month, the BLM may determine the gas to be 
avoidably lost and subject to royalty assessment. The BLM notes that 
there was no similar provision in NTL-4A allowing for the BLM to impose 
royalties where flaring under an action plan exceeds 10 MMcf per well 
per month. However, this provision is based on guidance in the 
Conservation Division Manual \26\ (at 644.5.3F), which was developed by 
the USGS and has long been used by the BLM as implementation guidance 
for NTL-4A. The BLM requests comment on this provision, including 
whether 10 MMcf per well per month is an appropriate threshold and 
whether specific criteria for when royalty will be imposed should be 
included in the regulatory text. The BLM also requests comment on 
whether a longer or shorter period for minimizing flaring under an 
action plan is appropriate.
---------------------------------------------------------------------------

    \26\ Available at https://www.ntc.blm.gov/krc/uploads/172/NTL-4A%20Royalty%20or%20Compensation%20for%20Oil%20and%20Gas%20Lost.pdf.
---------------------------------------------------------------------------

    As under NTL-4A, the evaluation report required under proposed 
Sec.  3179.201(c)(1) would be required to demonstrate to the BLM's 
satisfaction that the expenditures necessary to market or beneficially 
use the gas are not economically justified. Under proposed Sec.  
3179.201(d)(1), the evaluation report would be required to include 
estimates of the volumes of oil and gas that would be produced to the 
economic limit if the application to vent or flare were approved, and 
estimates of

[[Page 7938]]

the volumes of oil and gas that would be produced if the applicant was 
required to market or use the gas.
    From the information contained in the evaluation report, the BLM 
will determine whether the operator can economically operate the lease 
if it is required to market or use the gas, taking into consideration 
both oil and gas production, as well as the economics of a field-wide 
plan. Under proposed Sec.  3179.201(d)(2), the BLM would be able to 
require operators to provide updated evaluation reports as additional 
development occurs or economic conditions improve, but no more than 
once a year. NTL-4A did not contain a similar provision allowing the 
BLM to require an operator to update its evaluation report based on 
changing circumstances. Proposed Sec.  3179.201(d)(2) thus represents a 
change from NTL-4A. The BLM requests comment on methods for determining 
whether the operator can economically operate the lease. The BLM also 
requests comment on the once-a-year limitation on the BLM's authority 
to require an updated report.
    An action plan submitted under proposed Sec.  3179.201(c)(2) would 
be required to show how the operator will minimize the venting or 
flaring of the oil-well gas within 1 year. An operator may apply for an 
approval of an extension of the 1-year time limit. In the event the 
operator fails to implement the action plan, the entire volume of gas 
vented or flared during the time covered by the action plan would be 
subject to royalty.
    Proposed Sec.  3179.201(e) provides for grandfathering of prior 
approvals to flare royalty free. These approvals would continue in 
effect until no longer necessary because the venting or flaring is 
authorized by the rules, regulations, or orders of an appropriate State 
regulatory agency or tribe under proposed Sec.  3179.201(a), or the BLM 
requires an updated evaluation report and determines to amend or revoke 
its approval. Existing Sec.  3179.10 of the 2016 rule (as amended by 
the 2017 Suspension Rule) allows approvals to flare royalty free to 
continue in effect until January 17, 2019. The BLM specifically 
requests comment on whether the grandfathering scheme outlined in 
proposed Sec.  3179.201(e) is appropriate and whether any possible 
improvements can be made in order to ensure a smooth transition for 
operators, including whether it is appropriate to phase-out or require 
the BLM to provide affirmative determinations (i.e., allow for negative 
consent).
Measurement and Reporting Responsibilities
43 CFR 3179.301 Measuring and Reporting Volumes of Gas Vented and 
Flared
    Proposed Sec.  3179.301(a) would require operators to estimate or 
measure all volumes of lost oil and gas, whether avoidably or 
unavoidably lost, from wells, facilities, and equipment on a lease, 
unit PA, or CA and report those volumes under applicable Office of 
Natural Resources Revenue (ONRR) reporting requirements. Under proposed 
Sec.  3179.301(b), the operator could: (1) Estimate or measure the 
vented or flared gas in accordance with applicable rules, regulations, 
or orders of the appropriate State or tribal regulatory agency; (2) 
Estimate the volume of the vented or flared gas based on the results of 
a regularly performed GOR test and measured values for the volume of 
oil production and gas sales, to allow BLM to independently verify the 
volume, rate, and heating value of the flared gas; or (3) Measure the 
volume of the flared gas. The BLM requests comment on any other 
potential means of estimating these volumes that would reduce burden 
and maintain accuracy.
    Under proposed Sec.  3179.301(c), the BLM would be able to require 
the installation of additional measurement equipment whenever it 
determines that the existing methods are inadequate to meet the 
purposes of subpart 3179. NTL-4A contained essentially the same 
provision. Based on past experience in implementing NTL-4A, the BLM 
believes that proposed Sec.  3179.301(c) would help to ensure accuracy 
and accountability in situations in which high volumes of royalty-
bearing gas are being flared.
    Proposed Sec.  3179.301(d) would allow the operator to combine gas 
from multiple leases, unit PAs, or CAs for the purpose of flaring or 
venting at a common point, but the operator would be required to use a 
BLM-approved method to allocate the quantities of the vented or flared 
gas to each lease, unit PA, or CA. Commingling to a single flare is 
allowed because the BLM recognizes that the additional costs of 
requiring individual flaring measurement and meter facilities for each 
lease, unit PA, or communitized area are not necessarily justified by 
the incremental royalty accountability afforded by the separate meters 
and flares.
    Proposed Sec.  3179.301 is essentially the same as existing Sec.  
3179.9. The main difference between the two is that existing Sec.  
3179.9 requires measurement or calculation under a particular protocol 
when the volume of flared gas exceeds 50 Mcf per day.

C. Summary of Estimated Impacts

    The BLM reviewed the proposed rule and conducted an RIA and 
Environmental Assessment (EA) that examine the impacts of the proposed 
requirements. The draft RIA and draft EA that the BLM prepared have 
been posted in the docket for the proposed rule on the Federal 
eRulemaking Portal: https://www.regulations.gov. In the Searchbox, 
enter ``RIN 1004-AE53'', click the ``Search'' button, open the Docket 
Folder, and look under Supporting Documents. The following discussion 
is a summary of the proposed rule's economic impacts. For a more 
complete discussion of the expected economic impacts of the proposed 
rule, please review the draft RIA.
    The BLM's proposed rule would remove almost all of the requirements 
in the 2016 final rule that we previously estimated would pose a 
compliance burden to operators and generate benefits of gas savings or 
reductions in methane emissions. The proposed rule would replace the 
2016 final rule's requirements with requirements largely similar to 
those that were in NTL-4A. Also, for the most part, the proposed rule 
would remove the administrative burdens associated with the 2016 final 
rule's subpart 3179.
    The baseline for the analysis of this proposed rule accounts for 
the BLM's 2017 Suspension Rule that has suspended or delayed certain 
requirements of the 2016 final rule until January 17, 2019. 82 FR 58050 
(Dec. 8, 2017). The effect of the 2017 Suspension Rule is to shift the 
impacts of the affected requirements into the near future. The BLM also 
revisited the underlying assumptions used in the RIA for the 2016 final 
rule. Specifically, the BLM revisited the underlying assumptions 
pertaining to LDAR, administrative burdens, and climate benefits (see 
sections 3.2, 3.3, and 7 of the RIA).
    For this proposed rule, we track the impacts over the first 10 
years of implementation against the baseline. The period of analysis in 
the RIA prepared for the 2016 final rule was 10 years and the period of 
analysis in the RIA prepared for the 2017 Suspension Rule was 10 years 
after the suspension or delay. Results are provided using the net 
present value (NPV) of costs and benefits estimated over the evaluation 
period, calculated using 7 percent and 3 percent discount rates.

[[Page 7939]]

Estimated Reductions in Compliance Costs (Excluding Cost Savings)
    First, we examined the reductions in compliance costs, excluding 
the savings that would have been realized from product recovery. The 
proposed rule would reduce compliance costs from the baseline. Over the 
10-year evaluation period (2019-2028), we estimate a total reduction in 
compliance costs of $1.32 billion to 1.60 billion (NPV using a 7 
percent discount rate) or $1.66 billion to 2.03 billion (NPV using a 3 
percent discount rate). We expect very few compliance costs associated 
with the proposed rule, including the remaining administrative burdens.
Estimated Reduction in Benefits
    The proposed rule would reduce benefits from the baseline, since 
estimated cost savings that would have come from product recovery would 
be forgone and the emissions reductions would also be forgone. The 
proposed rule would result in forgone cost savings from natural gas 
recovery. Over the 10-year evaluation period (2019-2028), we estimate 
total forgone cost savings from natural gas recovery (from the 
baseline) of $629 million (NPV using a 7 percent discount rate) or $824 
million (NPV using a 3 percent discount rate). The proposed rule also 
expected to result in forgone methane emissions reductions. Over the 
10-year evaluation period (2019-2028), we estimate total forgone 
methane emissions reductions from the baseline valued at $66 million 
(NPV and interim domestic SC-CH4 using a 7 percent discount rate) or 
$259 million (NPV and interim domestic SC-CH4 using a 3 percent 
discount rate).
Estimated Net Benefits
    The proposed rule is estimated to result in positive net benefits 
relative to the baseline. More specifically, we estimate that the 
reduction of compliance costs would exceed the forgone cost savings 
from recovered natural gas and the value of the forgone methane 
emissions reductions. Over the 10-year evaluation period (2019-2028), 
we estimate total net benefits from the baseline of $625-900 million 
(NPV and interim domestic SC-CH4 using a 7 percent discount 
rate) or $578-942 million (NPV and interim domestic SC-CH4 
using a 3 percent discount rate).
Energy Systems
    The proposed rule is expected to influence the production of 
natural gas, natural gas liquids, and crude oil from onshore Federal 
and Indian oil and gas leases. However, since the relative changes in 
production are expected to be small, we do not expect that the proposed 
rule would significantly impact the price, supply, or distribution of 
energy.
    The proposed rule would reverse the estimated incremental changes 
in crude oil and natural gas production associated with the 2016 final 
rule. Over the 10-year evaluation period (2019-2028), we estimate that 
18.4 million barrels of crude oil production and 22.7 Bcf of natural 
gas production would no longer be deferred (as it would have been under 
the 2016 final rule). However, we also estimate that there would be 299 
Bcf of forgone natural gas production (that would have been produced 
and sold under the 2016 final rule).
    For context, we note the share of the total U.S. production in 2015 
that the incremental changes in production would represent. The per-
year average of the estimated crude oil volume that would no longer be 
deferred represents 0.058 percent of the total U.S. crude oil 
production in 2015. The per-year average of the estimated natural gas 
volume that would no longer be deferred represents 0.008 percent of the 
total U.S. natural gas production in 2015. The per-year average of the 
estimated forgone natural gas production represents 0.109 percent of 
the total U.S. natural gas production in 2015.
Royalty Impacts
    The 2016 final rule, when implemented, would be expected to impact 
the production of crude oil and natural gas from Federal and Indian oil 
and gas leases. In the RIA for the 2016 final rule, the BLM estimated 
that the rule's requirements would generate additional natural gas 
production, but that substantial volumes of crude oil production would 
be deferred or shifted to the future. The BLM concluded that the 2016 
final rule would generate overall additional royalty, with the royalty 
gains from the additional natural gas produced outweighing the value of 
the royalty losses from crude oil production (and some associated gas) 
being deferred into the future.
    The proposed rule, which reverses most of the 2016 final rule's 
provisions, is expected to reverse the estimated royalty impacts of the 
2016 final rule. This formulation does not account for the potential 
countervailing impacts of the reduction in compliance burdens, which 
might spur additional production on Federal and Indian lands and 
therefore have a positive impact on royalties.
    We note that royalty impacts are presented separately from the 
costs, benefits, and net benefits. Royalty payments are recurring 
income to Federal or tribal governments and costs to the operator or 
lessee. As such, they are transfer payments that do not affect the 
total resources available to society. An important but sometimes 
difficult problem in cost estimation is to distinguish between real 
costs and transfer payments. While transfers should not be included in 
the economic analysis estimates of the benefits and costs of a 
regulation, they may be important for describing the distributional 
effects of a regulation.
    The proposed rule is expected to result in forgone royalty payments 
to the Federal Government, tribal governments, States, and private 
landowners. Over the 10-year evaluation period (2019-2028), we estimate 
total forgone royalty payments (from the baseline) of $26.4 million 
(NPV using a 7 percent discount rate) or $32.7 million (NPV using a 3 
percent discount rate).
Consideration of Alternative Approaches
    E.O. 13563 reaffirms the principles of E.O. 12866 and requires that 
agencies, among other things, ``identify and assess available 
alternatives to direct regulation, including providing economic 
incentives to encourage the desired behavior, such as user fees or 
marketable permits, or providing information upon which choices can be 
made by the public.''
    The 2016 final rule established requirements and direct regulation 
on operators. If the proposed rule were finalized, then the BLM would 
remove the requirements of the 2016 final rule that impose the most 
substantial direct regulatory burdens on operators. Also, with the 
proposed rule, the BLM would remove the duplicative operational and 
equipment requirements and paperwork and administrative burdens.
    In developing this proposed rule, the BLM considered scenarios for 
retaining certain requirements currently in subpart 3179. For example, 
we examined the impacts of retaining subpart 3179 in its entirety 
(essentially taking no action). We also examined the impacts of 
retaining the gas capture requirements of the 2016 final rule 
(Sec. Sec.  3179.7-3179.8) and the measurement/metering requirements 
(Sec.  3179.9) while rescinding the operational and equipment 
requirements addressing venting from leaks, pneumatic equipment, and 
storage tanks. The results of these alternative scenarios are presented 
in Section 4 of the RIA.

[[Page 7940]]

Employment Impacts
    E.O. 13563 reaffirms the principles established in E.O. 12866, but 
calls for additional consideration of the regulatory impact on 
employment. E.O. 13563 states, ``Our regulatory system must protect 
public health, welfare, safety, and our environment while promoting 
economic growth, innovation, competitiveness, and job creation.'' An 
analysis of employment impacts is a standalone analysis and the impacts 
should not be included in the estimation of benefits and costs.
    This proposed rule would remove or replace requirements of the 
BLM's 2016 final rule on waste prevention and is a deregulatory action. 
As such, we estimate that it would result in a reduction of compliance 
costs for operators of oil and gas leases on Federal and Indian lands. 
Therefore, it is likely that the impact, if any, on employment would be 
positive.
    In the RIA for the 2016 final rule, the BLM concluded that the 
requirements were not expected to impact the employment within the oil 
and gas extraction, drilling oil and gas wells, and support activities 
industries, in any material way. This determination was based on 
several reasons. First, the estimated incremental gas production 
represented only a small fraction of the U.S. natural gas production 
volumes. Second, the estimated compliance costs represented only a 
small fraction of the annual net incomes of companies likely to be 
impacted. Third, for those operations that would have been impacted, 
the 2016 final rule had provisions that would exempt these operations 
from compliance to the extent that the compliance costs would force the 
operator to shut in production. Based on these factors, the BLM 
determined that the 2016 final rule would not alter the investment or 
employment decisions of firms or significantly adversely impact 
employment. The RIA also noted that the requirements would necessitate 
the one-time installation or replacement of equipment and the ongoing 
implementation of an LDAR program, both of which would require labor.
    We do not believe that the proposed rule would substantially alter 
the investment or employment decisions of firms. By removing or 
revising the requirements of the 2016 final rule, the BLM would 
alleviate the associated compliance burdens on operators. The 
investment and labor necessary to comply with the 2016 rule would not 
be needed. We do not believe that the cost savings in themselves would 
be substantial enough to substantially alter the investment or 
employment decisions of firms. We also recognize that there may be a 
small positive impact on investment and employment due to the reduction 
in compliance burdens if the output effects dominate. The magnitude of 
the reductions would be relatively small but could carry 
competitiveness impacts, specifically on marginal wells on Federal 
lands, deterring investment. In sum, the effect on investment and 
employment of this rule remains unknown.
Small Business Impacts
    The BLM reviewed the Small Business Administration (SBA) size 
standards for small businesses and the number of entities fitting those 
size standards as reported by the U.S. Census Bureau. We conclude that 
small entities represent the majority of entities operating in the 
onshore crude oil and natural gas extraction industry and, therefore, 
the proposed rule would impact a substantial number of small entities. 
To examine the economic impact of the rule on small entities, the BLM 
performed a screening analysis on a sample of potentially affected 
small entities, comparing the reduction of compliance costs to entity 
profit margins. This screening analysis showed that the estimated per-
entity reduction in compliance costs would result in an average 
increase in profit margin of 0.19 percentage points (based on the 2014 
company data).\27\
---------------------------------------------------------------------------

    \27\ Average commodity price in 2014 was higher than subsequent 
years; therefore, the result in profit margin may not be 
representative of the increase in profit margin as a result of the 
updated rulemaking.
---------------------------------------------------------------------------

    The BLM also notes that most of the emissions-based requirements in 
the 2016 final rule (including LDAR, pneumatic controllers, pneumatic 
pumps, and liquids unloading requirements) would impose a particular 
burden on marginal or low-producing wells.\28\ There is concern that 
those wells would not be able to be operated profitably with the 
additional compliance costs imposed by the 2016 final rule. While the 
2016 final rule allows for exemptions when compliance would impose such 
costs that the operator would cease production and abandon significant 
recoverable reserves, due to the prevalence of marginal and low-
producing wells, the BLM expects that many exemptions would be 
warranted, making the burdens imposed by the exemption process, in 
itself, excessive. The prospect of either shutting-in a marginal well 
or assuming unwarranted administrative burdens to avoid compliance 
costs potentially represents a substantial loss of income for companies 
operating marginal wells. The BLM's proposal would rescind or revise 
these requirements in the 2016 final rule, thus reducing compliance 
costs for all wells, including marginal wells, and reducing the 
potential economic harm to small businesses.
---------------------------------------------------------------------------

    \28\ As explained previously, the IOGCC defines a marginal well 
as one that produces 10 barrels of oil or 60 Mcf of natural gas per 
day or less and reports that about 69.1 and 75.9 percent of the 
nation's operating oil and gas wells, respectively, are marginal.
---------------------------------------------------------------------------

Impacts Associated With Oil and Gas Operations on Tribal Lands
    The proposed rule would apply to oil and gas operations on both 
Federal and Indian leases. In the RIA, the BLM estimates the impacts 
associated with operations on Indian leases, as well as royalty 
implications for tribal governments. We estimate these impacts by 
scaling down the total impacts by the share of oil wells on Indian 
lands and the share of gas wells on Indian Lands. Please reference the 
RIA at section 4.4.5 for a full explanation of the estimated impacts.

V. Procedural Matters

Regulatory Planning and Review (E.O. 12866, E.O. 13563)

    Executive Order 12866 provides that the Office of Information and 
Regulatory Affairs within the Office of Management and Budget (OMB) 
will review all significant rules. The Office of Information and 
Regulatory Affairs has determined that this proposed rule is 
economically significant. Executive Order 13563 reaffirms the 
principles of Executive Order 12866 while calling for improvements in 
the Nation's regulatory system to promote predictability, to reduce 
uncertainty, and to use the best, most innovative, and least burdensome 
tools for achieving regulatory ends. The Executive Order directs 
agencies to consider regulatory approaches that reduce burdens and 
maintain flexibility and freedom of choice for the public where these 
approaches are relevant, feasible, and consistent with regulatory 
objectives. Executive Order 13563 emphasizes further that regulations 
must be based on the best available science and that the rulemaking 
process must allow for public participation and an open exchange of 
ideas. We have developed this rule in a manner consistent with these 
requirements.
    This proposed rule would rescind or revise portions of the BLM's 
2016 final rule. We have developed this proposed rule in a manner 
consistent with the requirements in Executive Order 12866 and Executive 
Order 13563. The BLM reviewed the requirements of the

[[Page 7941]]

proposed rule and determined that it will not adversely affect in a 
material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities. For more detailed 
information, see the RIA prepared for this proposed rule. The RIA has 
been posted in the docket for the proposed rule on the Federal 
eRulemaking Portal: https://www.regulations.gov. In the Searchbox, 
enter ``RIN 1004-AE53'', click the ``Search'' button, open the Docket 
Folder, and look under Supporting Documents.

Reducing Regulation and Controlling Regulatory Costs (E.O. 13771)

    This proposed rule is expected to be an E.O. 13771 deregulatory 
action. Details on the estimated cost savings of this proposed rule can 
be found in the rule's RIA.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) 
generally requires that Federal agencies prepare a regulatory 
flexibility analysis for rules subject to the notice-and-comment 
rulemaking requirements under the Administrative Procedure Act (5 
U.S.C. 500 et seq.), if the rule would have a significant economic 
impact, whether detrimental or beneficial, on a substantial number of 
small entities. See 5 U.S.C. 601-612. Congress enacted the RFA to 
ensure that government regulations do not unnecessarily or 
disproportionately burden small entities. Small entities include small 
businesses, small governmental jurisdictions, and small not-for-profit 
enterprises.
    The BLM reviewed the SBA size standards for small businesses and 
the number of entities fitting those size standards as reported by the 
U.S. Census Bureau in the Economic Census. The BLM concludes that the 
vast majority of entities operating in the relevant sectors are small 
businesses as defined by the SBA. As such, the proposed rule would 
likely affect a substantial number of small entities.
    The BLM reviewed the proposed rule and estimates that it would 
generate cost savings of about $69,000 per entity per year. These 
estimated cost savings would provide relief to small operators which, 
the BLM notes, represent the overwhelming majority of operators of 
Federal and Indian leases.
    For the purpose of carrying out its review pursuant to the RFA, the 
BLM believes that the proposed rule would not have a ``significant 
economic impact on a substantial number of small entities,'' as that 
phrase is used in 5 U.S.C. 605. An initial regulatory flexibility 
analysis is therefore not required. In making a ``significant'' 
determination under the RFA, BLM used an estimated per-entity cost 
savings to conduct a screening analysis. The analysis shows that the 
average reduction in compliance costs associated with this proposed 
rule are a small enough percentage of the profit margin for small 
entities, so as not be considered ``significant'' under the RFA.
    Details on this determination can be found in the RIA for the 
proposed rule.

Small Business Regulatory Enforcement Fairness Act

    This proposed rule is a major rule under 5 U.S.C. 804(2), the Small 
Business Regulatory Enforcement Fairness Act. This proposed rule:
    (a) Would have an annual effect on the economy of $100 million or 
more.
    (b) Would not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    (c) Would not have a significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises.

Unfunded Mandates Reform Act (UMRA)

    This proposed rule would not impose an unfunded mandate on State, 
local, or tribal governments, or the private sector of $100 million or 
more per year. The proposed rule would not have a significant or unique 
effect on State, local, or tribal governments or the private sector. 
The proposed rule contains no requirements that would apply to State, 
local, or tribal governments. It would rescind or revise requirements 
that would otherwise apply to the private sector. A statement 
containing the information required by the Unfunded Mandates Reform Act 
(UMRA) (2 U.S.C. 1531 et seq.) is not required for the proposed rule. 
This proposed rule is also not subject to the requirements of section 
203 of UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments, because it contains 
no requirements that apply to such governments, nor does it impose 
obligations upon them.

Governmental Actions and Interference With Constitutionally Protected 
Property Right--Takings (Executive Order 12630)

    This proposed rule would not affect a taking of private property or 
otherwise have taking implications under Executive Order 12630. A 
takings implication assessment is not required. The proposed rule would 
rescind or revise many of the requirements placed on operators by the 
2016 final rule. Operators would not have to undertake the associated 
compliance activities, either operational or administrative. Therefore, 
the proposed rule would impact some operational and administrative 
requirements on Federal and Indian lands. All such operations are 
subject to lease terms which expressly require that subsequent lease 
activities be conducted in compliance with subsequently adopted Federal 
laws and regulations. This proposed rule conforms to the terms of those 
leases and applicable statutes and, as such, the rule is not a 
government action capable of interfering with constitutionally 
protected property rights. Therefore, the BLM has determined that the 
rule would not cause a taking of private property or require further 
discussion of takings implications under Executive Order 12630.

Federalism (Executive Order 13132)

    Under the criteria in section 1 of Executive Order 13132, this 
proposed rule does not have sufficient federalism implications to 
warrant the preparation of a federalism summary impact statement. A 
federalism impact statement is not required.
    The proposed rule would not have a substantial direct effect on the 
States, on the relationship between the Federal Government and the 
States, or on the distribution of power and responsibilities among the 
levels of government. It would not apply to States or local governments 
or State or local governmental entities. The rule would affect the 
relationship between operators, lessees, and the BLM, but it does not 
directly impact the States. Therefore, in accordance with Executive 
Order 13132, the BLM has determined that this proposed rule does not 
have sufficient federalism implications to warrant preparation of a 
Federalism Assessment.

Civil Justice Reform (Executive Order 12988)

    This proposed rule complies with the requirements of Executive 
Order 12988. More specifically, this proposed rule meets the criteria 
of section 3(a), which requires agencies to review all

[[Page 7942]]

regulations to eliminate errors and ambiguity and to write all 
regulations to minimize litigation. This proposed rule also meets the 
criteria of section 3(b)(2), which requires agencies to write all 
regulations in clear language with clear legal standards.

Consultation and Coordination With Indian Tribal Governments (Executive 
Order 13175 and Departmental Policy)

    The Department strives to strengthen its government-to-government 
relationship with Indian tribes through a commitment to consultation 
with Indian tribes and recognition of their right to self-governance 
and tribal sovereignty. We have evaluated this proposed rule under the 
Department's consultation policy and under the criteria in Executive 
Order 13175 and have identified substantial direct effects on federally 
recognized Indian tribes that would result from this proposed rule. 
Under this proposed rule, oil and gas operations on tribal and allotted 
lands would no longer be subject to many of the requirements placed on 
operators by the 2016 final rule.
    The BLM believes that revising the requirements of subpart 3179 
would prevent Indian lands from being viewed as less attractive to oil 
and gas operators than non-Indian lands due to unnecessary and 
burdensome compliance costs, thereby preventing economic harm to tribes 
and allottees. The BLM is conducting tribal outreach which it believes 
is appropriate given that the proposed rule would remove many of the 
compliance burdens of the 2016 final rule, defer to tribal laws, 
regulations, rules, and orders, with respect to oil-well gas flaring 
from Indian leases, and otherwise revise subpart 3179 in a manner that 
aligns it with NTL-4A. The BLM notified tribes of the action and 
requested feedback and comment through the respective BLM State Office 
Directors. Future tribal consultation may occur on an ongoing basis.

Paperwork Reduction Act

1. Overview
    The Paperwork Reduction Act (PRA) (44 U.S.C. 3501-3521) provides 
that an agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information, unless it displays a 
currently valid control number. 44 U.S.C. 3512. Collections of 
information include requests and requirements that an individual, 
partnership, or corporation obtain information, and report it to a 
Federal agency. 44 U.S.C. 3502(3); 5 CFR 1320.3(c) and (k).
    OMB approved 24 information collection activities in a final rule 
pertaining to waste prevention and assigned control number 1004-0211 to 
those activities. See ``Waste Prevention, Production Subject to 
Royalties, and Resource Conservation,'' Final Rule, 81 FR 83008 (Nov. 
18, 2016). In the Notice of Action approving the 24 information 
collection activities in the 2016 final rule, OMB announced that the 
control number will expire on January 31, 2018. The Notice of Action 
also included terms of clearance.
    On October 5, 2017, the BLM proposed a rule that would suspend or 
delay several regulations in the 2016 final rule. In that proposed 
rule, the BLM requested the extension of control number 1004-0211 until 
January 31, 2019, including the 24 information collection activities in 
the 2016 final rule. The BLM invited public comment on the proposed 
extension of control no. 1004-0211. The BLM also submitted the 
information collection request for this proposed rule to OMB for review 
in accordance with the PRA.
    The BLM finalized that rule on December 8, 2017. See 82 FR 58050. 
OMB approved the information collection activities in the rule with an 
expiration date of December 31, 2020, and with a Term of Clearance that 
maintains the effectiveness of the Terms of Clearance associated with 
the 2016 final rule. That Term of Clearance requires the BLM to submit 
to the Office of Information and Regulatory Affairs draft guidance to 
implement the collection of information requirements of the 2016 final 
rule no later than 3 months after January 17, 2019.
    This proposed rule would not modify any regulations in 43 CFR 
subpart 3178. Accordingly, the BLM requests continuation of the 
information collection activity at 43 CFR 3178.5, 3178.7, 3178.8, and 
3178.9 (``Request for Approval for Royalty-Free Uses On-Lease or Off-
Lease'').
    The proposed rule would remove the information collection activity 
at 43 CFR 3162.3-1(j) (``Plan to Minimize Waste of Natural Gas''). The 
proposed rule also would remove or revise many regulations and 
information collection activities in 43 CFR subpart 3179. As a result, 
the BLM now requests revision of control number 1004-0211 to include:
     The information collection activities in this proposed 
rule; and
     The information collection activity entitled ``Request for 
Approval for Royalty-Free Uses On-Lease or Off-Lease.''
    The BLM requests comments on the following subjects:
     Whether the collection of information is necessary for the 
proper functioning of the BLM, including whether the information will 
have practical utility;
     The accuracy of the BLM's estimate of the burden of 
collecting the information, including the validity of the methodology 
and assumptions used;
     The quality, utility, and clarity of the information to be 
collected; and
     How to minimize the information collection burden on those 
who are to respond, including the use of appropriate automated, 
electronic, mechanical, or other forms of information technology.
    If you want to comment on the information collection requirements 
of this proposed rule, please send your comments directly to OMB, with 
a copy to the BLM, as directed in the ADDRESSES section of this 
preamble. Please identify your comments with ``OMB Control Number 1004-
0211.'' OMB is required to make a decision concerning the collection of 
information contained in this proposed rule between 30 to 60 days after 
publication of this document in the Federal Register. Therefore, a 
comment to OMB is best assured of having its full effect if OMB 
receives it by March 26, 2018.
2. Summary of Information Collection Activities
    Title: Waste Prevention, Production Subject to Royalties, and 
Resource Conservation (43 CFR parts 3160 and 3170).
    OMB Control Number: 1004-0211.
    Form: Form 3160-5, Sundry Notices and Reports on Wells.
    Description of Respondents: Holders of Federal and Indian (except 
Osage Tribe) oil and gas leases, those who belong to Federally approved 
units or communitized areas, and those who are parties to oil and gas 
agreements under the Indian Mineral Development Act, 25 U.S.C. 2101-
2108.
    Respondents' Obligation: Required to obtain or retain a benefit.
    Frequency of Collection: On occasion.
    Abstract: The BLM requests that control number 1004-0211 be revised 
to include the information collection activities in this proposed rule, 
as well as the information collection activity in 43 CFR subpart 3178 
that was in the 2016 final rule. The BLM also requests the removal of 
the information collection activity in 43 CFR 3162.3-1(j) that was in 
the 2016 final rule, and the removal or revision of the information 
collection activities that were in 43 CFR subpart 3179 of the 2016 
final rule.
    Estimated Number of Responses: 1,075.

[[Page 7943]]

    Estimated Total Annual Burden Hours: 4,010.
    Estimated Total Non-Hour Cost: None.
3. Information Collection Request
    A. The BLM requests that OMB control number 1004-0211 continue to 
include the following information collection activity that was included 
at 43 CFR subpart 3178 of the 2016 final rule:

Request for Approval for Royalty-Free Uses On-Lease or Off-Lease (43 
CFR 3178.5, 3178.7, 3178.8, and 3178.9)

    Section 3178.5 requires submission of a Sundry Notice (Form 3160-5) 
to request prior written BLM approval for use of gas royalty free for 
the following operations and production purposes on the lease, unit or 
communitized area:
     Using oil or gas that an operator removes from the 
pipeline at a location downstream of the facility measurement point 
(FMP);
     Removal of gas initially from a lease, unit PA, or 
communitized area for treatment or processing because of particular 
physical characteristics of the gas, prior to use on the lease, unit PA 
or communitized area; and
     Any other type of use of produced oil or gas for 
operations and production purposes pursuant to Sec.  3178.3 that is not 
identified in Sec.  3178.4.
    Section 3178.7 requires submission of a Sundry Notice (Form 3160-5) 
to request prior written BLM approval for off-lease royalty-free uses 
in the following circumstances:
     The equipment or facility in which the operation is 
conducted is located off the lease, unit, or communitized area for 
engineering, economic, resource-protection, or physical-accessibility 
reasons; and
     The operations are conducted upstream of the FMP.
    Section 3178.8 requires that an operator measure or estimate the 
volume of royalty-free gas used in operations upstream of the FMP. In 
general, the operator is free to choose whether to measure or estimate, 
with the exception that the operator must in all cases measure the 
following volumes:
     Royalty-free gas removed downstream of the FMP and used 
pursuant to Sec. Sec.  3178.4 through 3178.7; and
     Royalty-free oil used pursuant to Sec. Sec.  3178.4 
through 3178.7.
    If oil is used on the lease, unit or communitized area, it is most 
likely to be removed from a storage tank on the lease, unit or 
communitized area. Thus, this regulation also requires the operator to 
document the removal of the oil from the tank or pipeline.
    Section 3178.8(e) requires that operators use best available 
information to estimate gas volumes, where estimation is allowed. For 
both oil and gas, the operator must report the volumes measured or 
estimated, as applicable, under ONRR reporting requirements. As 
revisions to Onshore Oil and Gas Orders No. 4 and 5 have now been 
finalized as 43 CFR subparts 3174 and 3175, respectively, the final 
rule text now references Sec.  3173.12, as well as Sec.  3178.4 through 
Sec.  3178.7 to clarify that royalty-free use must adhere to the 
provisions in those sections.
    Section 3178.9 requires the following additional information in a 
request for prior approval of royalty-free use under Sec.  3178.5, or 
for prior approval of off-lease royalty-free use under Sec.  3178.7:
     A complete description of the operation to be conducted, 
including the location of all facilities and equipment involved in the 
operation and the location of the FMP;
     The volume of oil or gas that the operator expects will be 
used in the operation and the method of measuring or estimating that 
volume;
     If the volume expected to be used will be estimated, the 
basis for the estimate (e.g., equipment manufacturer's published 
consumption or usage rates); and
     The proposed disposition of the oil or gas used (e.g., 
whether gas used would be consumed as fuel, vented through use of a 
gas-activated pneumatic controller, returned to the reservoir, or 
disposed by some other method).
    B. The BLM requests the revision of the following information 
collection activities in accordance with this proposed rule:

Request for Extension of Royalty-Free Flaring During Initial Production 
Testing (43 CFR 3179.101)

    A regulation in the 2016 final rule, 43 CFR 3179.103, allows gas to 
be flared royalty free during initial production testing. The 
regulation lists specific volume and time limits for such testing. An 
operator may seek an extension of those limits on royalty-free flaring 
by submitting a Sundry Notice (Form 3160-5) to the BLM.
    A regulation in this proposed rule, 43 CFR 3179.101, would be 
similar to the 2016 final rule in addressing the royalty-free treatment 
of gas volumes flared during initial production testing. 43 CFR 
3179.101 in this proposed rule would provide that gas flared during the 
initial production test of each completed interval in a well is royalty 
free until one of the following occurs:
     The operator determines that it has obtained adequate 
reservoir information;
     30 days have passed since the beginning of the production 
test, unless the BLM approves a longer test period; or
     The operator has flared 50 MMcf of gas.
    Section 3179.101 of this proposed rule would also provide that an 
operator may request a longer test period by submitting a Sundry 
Notice.

Request for Extension of Royalty-Free Flaring During Subsequent Well 
Testing (43 CFR 3179.102)

    A regulation in the 2016 final rule, 43 CFR 3179.104, allows gas to 
be flared royalty free for no more than 24 hours during well tests 
subsequent to the initial production test. That regulation allows an 
operator to seek authorization to flare royalty free for a longer 
period by submitting a Sundry Notice (Form 3160-5) to the BLM.
    A regulation in this proposed rule, 43 CFR 3179.102, is 
substantively identical to 43 CFR 3179.104 in the 2016 final rule. 
Accordingly, the BLM requests that the information collection activity 
at 43 CFR 3179.102 of this proposed rule replace the activity at 43 CFR 
3179.104 of the 2016 final rule.

Emergencies (43 CFR 3179.103)

    A regulation in the 2016 final rule, 43 CFR 3179.105, allows an 
operator to flare gas royalty free during a temporary, short-term, 
infrequent, and unavoidable emergency. A regulation in this proposed 
rule, at 43 CFR 3179.103, is almost identical to 43 CFR 3179.105 of the 
2016 final rule. The BLM thus requests that the information collection 
activity entitled, ``Reporting of Venting or Flaring (43 CFR 
3179.105)'' be re-named ``Emergencies (43 CFR 3179.103).''
    As provided at 43 CFR 3179.103(a) of this proposed rule, gas flared 
or vented during an emergency would be royalty free for a period not to 
exceed 24 hours, unless the BLM determines that emergency conditions 
exist necessitating venting or flaring for a longer period. Section 
3179.103(d) of this proposed rule would require the operator to report 
to the BLM on a Sundry Notice, within 45 days of the start of an 
emergency, the estimated volumes flared or vented beyond the timeframe 
specified in paragraph (a).
    As defined at 43 CFR 3179.103(b) of this proposed rule, an 
``emergency'' for purposes of 43 CFR subpart 3179 would be a temporary, 
infrequent and unavoidable situation in which the loss of gas or oil is 
uncontrollable or necessary to avoid risk of an immediate

[[Page 7944]]

and substantial adverse impact on safety, public health, or the 
environment, and is not due to operator negligence.
    As provided at 43 CFR 3179.103(c) of this proposed rule, the 
following events would not constitute emergencies for the purposes of 
royalty assessment:
     The operator's failure to install appropriate equipment of 
a sufficient capacity to accommodate the production conditions;
     Failure to limit production when the production rate 
exceeds the capacity of the related equipment, pipeline, or gas plant, 
or exceeds sales contract volumes of oil or gas;
     Scheduled maintenance;
     A situation caused by operator negligence, including 
recurring equipment failures; or
     A situation on a lease, unit, or communitized area that 
has already experienced 3 or more emergencies within the past 30 days, 
unless the BLM determines that the occurrence of more than 3 
emergencies within the 30 day period could not have been anticipated 
and was beyond the operator's control.
    C. The BLM requests the removal of the following information 
collection activities in accordance with this proposed rule:
    1. ``Plan to Minimize Waste of Natural Gas'';
    2. ``Notification of Choice to Comply on County- or State-wide 
Basis'';
    3. ``Request for Approval of Alternative Capture Requirement'';
    4. ``Request for Exemption from Well Completion Requirements'';
    5. ``Notification of Functional Needs for a Pneumatic Controller'';
    6. ``Showing that Cost of Compliance Would Cause Cessation of 
Production and Abandonment of Oil Reserves (Pneumatic Controller)'';
    7. ``Showing in Support of Replacement of Pneumatic Controller 
within 3 Years'';
    8. ``Showing that a Pneumatic Diaphragm Pump was Operated on Fewer 
than 90 Individual Days in the Prior Calendar Year'';
    9. ``Notification of Functional Needs for a Pneumatic Diaphragm 
Pump'';
    10. ``Showing that Cost of Compliance Would Cause Cessation of 
Production and Abandonment of Oil Reserves (Pneumatic Diaphragm 
Pump)'';
    11. ``Showing in Support of Replacement of Pneumatic Diaphragm Pump 
within 3 Years'';
    12. ``Storage Vessels'';
    13. ``Downhole Well Maintenance and Liquids Unloading--
Documentation and Reporting'';
    14. ``Downhole Well Maintenance and Liquids Unloading--Notification 
of Excessive Duration or Volume'';
    15. ``Leak Detection--Compliance with EPA Regulations'';
    16. ``Leak Detection--Request to Use an Alternative Monitoring 
Device and Protocol'';
    17. ``Leak Detection--Operator Request to Use an Alternative Leak 
Detection Program'';
    18. ``Leak Detection--Operator Request for Exemption Allowing Use 
of an Alternative Leak-Detection Program that Does Not Meet Specified 
Criteria'';
    19. ``Leak Detection--Notification of Delay in Repairing Leaks'';
    20. ``Leak Detection--Inspection Recordkeeping and Reporting''; and
    21. ``Leak Detection--Annual Reporting of Inspections.''
    D. The BLM requests the addition of following information 
collection activity, in accordance with this proposed rule:

Oil-Well Gas (43 CFR 3179.201)

    A regulation in this proposed rule, 43 CFR 3179.201, would provide 
that, except as otherwise provided in 43 CFR subpart 3179, oil-well gas 
may not be vented or flared royalty free unless BLM approves such 
action in writing. The BLM would be authorized to approve an 
application for royalty-free venting or flaring of oil-well gas upon 
determining that royalty-free venting or flaring is justified by the 
operator's submission of either:
    (1) An evaluation report supported by engineering, geologic, and 
economic data that demonstrates to the BLM's satisfaction that the 
expenditures necessary to market or beneficially use such gas are not 
economically justified; or
    (2) An action plan showing how the operator will minimize the 
venting or flaring of the gas within 1 year or within a greater amount 
of time if the operator justifies an extended deadline. If the operator 
fails to implement the action plan, the gas vented or flared during the 
time covered by the action plan would be subject to royalty.
    The data in the evaluation report that is mentioned above would 
need to include:
     The applicant's estimates of the volumes of oil and gas 
that would be produced to the economic limit if the application to vent 
or flare were approved; and
     The volumes of the oil and gas that would be produced if 
the applicant were required to market or use the gas.
    The BLM would be authorized to require the operator to provide an 
updated evaluation report as additional development occurs or economic 
conditions improve. In addition, the BLM would be authorized to 
determine that gas is avoidably lost and therefore subject to royalty 
if flaring exceeds 10 MMcf per well during any month.
4. Burden Estimates
    This proposed rule would result in the following adjustments in 
hour or cost burden that result from the review of the proposed rule 
under Executive Order 12866:
    1. The hours per response for Request for Approval for Royalty-Free 
Uses On-Lease or Off-Lease would be increased from 4 to 8.
    2. The number of responses for ``Request for Extension of Royalty-
Free Flaring During Initial Well Testing'' would be increased from 500 
to 750.
    Program changes in this proposed rule would result in 62,125 fewer 
responses than in the 2016 final rule (1,075 responses minus 63,200 
responses) and 78,160 fewer burden hours than in the 2016 final rule 
(4,010 responses minus 82,170 responses. The program changes and their 
reasons are itemized in Tables 15-1 and 15-2 of the supporting 
statement.
    The following table details the annual estimated hour burdens for 
the information activities described above:

----------------------------------------------------------------------------------------------------------------
                                                                                                    Total hours
                        Type of response                             Number of       Hours per      (column B x
                                                                     responses       response        column C)
A                                                                              B               C               D
----------------------------------------------------------------------------------------------------------------
Request for Approval for Royalty-Free Uses On-Lease or Off-                   50               8             400
 Lease, 43 CFR 3178.5, 3178.7, 3178.8, and 3178.9, Form 3160-5..
Request for Extension of Royalty-Free Flaring During Initial                 750               2           1,500
 Production Testing, 43 CFR 3179.101, Form 3160-5...............
Request for Extension of Royalty-Free Flaring During Subsequent                5               2              10
 Well Testing, 43 CFR 3179.102, Form 3160-5.....................

[[Page 7945]]

 
Emergencies, 43 CFR 3179.103, Form 3160-5.......................             250               2             500
Oil-Well Gas, 43 CFR 3179.201...................................              20              80           1,600
                                                                 -----------------------------------------------
    Totals......................................................           1,075  ..............           4,010
----------------------------------------------------------------------------------------------------------------

National Environmental Policy Act

    The BLM has prepared a draft environmental assessment (EA) to 
determine whether this proposed rule would have a significant impact on 
the quality of the human environment under the National Environmental 
Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.). If the final EA 
supports the issuance of a Finding of No Significant Impact for the 
rule, the preparation of an environmental impact statement pursuant to 
the NEPA would not be required.
    The draft EA has been placed in the file for the BLM's 
Administrative Record for the rule at the address specified in the 
ADDRESSES section. The EA has also been posted in the docket for the 
rule on the Federal eRulemaking Portal: https://www.regulations.gov. In 
the Searchbox, enter ``RIN 1004-AE53'', click the ``Search'' button, 
open the Docket Folder, and look under Supporting Documents. The BLM 
invites the public to review the draft EA and suggests that anyone 
wishing to submit comments on the EA should do so in accordance with 
the instructions contained in the ``Public Comment Procedures'' section 
above.

Actions Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use (Executive Order 13211)

    This proposed rule is not a significant energy action under the 
definition in Executive Order 13211. A statement of Energy Effects is 
not required.
    Section 4(b) of Executive Order 13211 defines a ``significant 
energy action'' as ``any action by an agency (normally published in the 
Federal Register) that promulgates or is expected to lead to the 
promulgation of a final rule or regulation, including notices of 
inquiry, advance notices of rulemaking, and notices of rulemaking: 
(1)(i) That is a significant regulatory action under Executive Order 
12866 or any successor order, and (ii) Is likely to have a significant 
adverse effect on the supply, distribution, or use of energy; or (2) 
That is designated by the Administrator of the Office of Information 
and Regulatory Affairs as a significant energy action.''
    The rule would rescind or revise certain requirements in the 2016 
final rule and would reduce compliance burdens. The BLM determined that 
the 2016 final rule would not have impacted the supply, distribution, 
or use of energy. It stands to reason that a revision in a manner that 
conforms 43 CFR subpart 3179 with the policies governing venting and 
flaring prior to the 2016 final rule will likewise not have an impact 
on the supply, distribution, or use of energy. As such, we do not 
consider the proposed rule to be a ``significant energy action'' as 
defined in Executive Order 13211.

Clarity of This Regulation (Executive Orders 12866)

    We are required by Executive Orders 12866 (section 1(b)(12)), 12988 
(section 3(b)(1)(B)), and 13563 (section 1(a)), and by the Presidential 
Memorandum of June 1, 1988, to write all rules in plain language. This 
means that each rule must:
    (a) Be logically organized;
    (b) Use the active voice to address readers directly;
    (c) Use common, everyday words and clear language rather than 
jargon;
    (d) Be divided into short sections and sentences; and
    (e) Use lists and tables wherever possible.
    If you feel that we have not met these requirements, send us 
comments by one of the methods listed in the ADDRESSES section. To 
better help the BLM revise the rule, your comments should be as 
specific as possible. For example, you should tell us the numbers of 
the sections or paragraphs that you find unclear, which sections or 
sentences are too long, the sections where you feel lists or tables 
would be useful, etc.

Authors

    The principal authors of this proposed rule are: James Tichenor and 
Michael Riches of the BLM Washington Office; Rebecca Hunt of the BLM 
New Mexico State Office, Eric Jones of the BLM Moab, Utah Field Office; 
David Mankiewicz of the BLM Farmington, New Mexico Field Office; and 
Beth Poindexter of the BLM Dickinson, North Dakota Field Office; 
assisted by Faith Bremner of the BLM's Division of Regulatory Affairs 
and by the Department of the Interior's Office of the Solicitor.

List of Subjects

43 CFR Part 3160

    Administrative practice and procedure; Government contracts; 
Indians--lands; Mineral royalties; Oil and gas exploration; Penalties; 
Public lands--mineral resources; Reporting and recordkeeping 
requirements.

43 CFR Part 3170

    Administrative practice and procedure; Flaring; Government 
contracts; Incorporation by reference; Indians--lands; Mineral 
royalties; Immediate assessments; Oil and gas exploration; Oil and gas 
measurement; Public lands--mineral resources; Reporting and record 
keeping requirements; Royalty-free use; Venting.

    Dated: February 8, 2018.
Joseph R. Balash,
Assistant Secretary for Land and Minerals Management.

43 CFR Chapter II

    For the reasons set out in the preamble, the Bureau of Land 
Management proposes to amend 43 CFR parts 3160 and 3179 as follows:

PART 3160--ONSHORE OIL AND GAS OPERATIONS

0
1. The authority citation for part 3160 continues to read as follows:

    Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 
1751; and 43 U.S.C. 1732(b), 1733, and 1740; and Sec. 107, Pub. L. 
114-74, 129 Stat. 599, unless otherwise noted.


Sec.  3162.3-1  [Amended]

0
2. Amend Sec.  3162.3-1 by removing paragraph (j).

PART 3170--ONSHORE OIL AND GAS PRODUCTION

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3. The authority citation for part 3170 continues to read as follows:

    Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 
1751; and 43 U.S.C. 1732(b), 1733, and 1740.

[[Page 7946]]

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4. Revise subpart 3179 to read as follows:
Subpart 3179--Waste Prevention and Resource Conservation
Secs.
3179.1 Purpose.
3179.2 Scope.
3179.3 Definitions and acronyms.
3179.4 Determining when the loss of oil or gas is avoidable or 
unavoidable.
3179.5 When lost production is subject to royalty.
3179.6 Venting limitations.

Authorized Flaring and Venting of Gas

3179.101 Initial production testing.
3179.102 Subsequent well tests.
3179.103 Emergencies.
3179.104 Downhole well maintenance and liquids unloading.

Other Venting or Flaring

3179.201 Oil-well gas.

Measurement and Reporting Responsibilities

3179.301 Measuring and reporting volumes of gas vented and flared.

Subpart 3179--Waste Prevention and Resource Conservation


Sec.  3179.1  Purpose.

    The purpose of this subpart is to implement and carry out the 
purposes of statutes relating to prevention of waste from Federal and 
Indian (other than Osage Tribe) leases, conservation of surface 
resources, and management of the public lands for multiple use and 
sustained yield. This subpart supersedes those portions of Notice to 
Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, 
Royalty or Compensation for Oil and Gas Lost (NTL-4A), pertaining to, 
among other things, flaring and venting of produced gas, unavoidably 
and avoidably lost gas, and waste prevention.


Sec.  3179.2  Scope.

    (a) This subpart applies to:
    (1) All onshore Federal and Indian (other than Osage Tribe) oil and 
gas leases, units, and communitized areas, except as otherwise provided 
in this subpart;
    (2) IMDA oil and gas agreements, unless specifically excluded in 
the agreement or unless the relevant provisions of this subpart are 
inconsistent with the agreement;
    (3) Leases and other business agreements and contracts for the 
development of tribal energy resources under a Tribal Energy Resource 
Agreement entered into with the Secretary, unless specifically excluded 
in the lease, other business agreement, or Tribal Energy Resource 
Agreement;
    (4) Committed State or private tracts in a federally approved unit 
or communitization agreement defined by or established under 43 CFR 
subpart 3105 or 43 CFR part 3180; and
    (5) All onshore well facilities located on a Federal or Indian 
lease or a federally approved unit or communitized area.
    (b) For purposes of this subpart, the term ``lease'' also includes 
IMDA agreements.


Sec.  3179.3  Definitions and acronyms.

    As used in this subpart, the term:
    Automatic ignition system means an automatic ignitor and, where 
needed to ensure continuous combustion, a continuous pilot flame.
    Capture means the physical containment of natural gas for 
transportation to market or productive use of natural gas, and includes 
injection and royalty-free on-site uses pursuant to subpart 3178.
    Gas-to-oil ratio (GOR) means the ratio of gas to oil in the 
production stream expressed in standard cubic feet of gas per barrel of 
oil.
    Gas well means a well for which the energy equivalent of the gas 
produced, including its entrained liquefiable hydrocarbons, exceeds the 
energy equivalent of the oil produced, as determined at the time of 
well completion.
    Liquids unloading means the removal of an accumulation of liquid 
hydrocarbons or water from the wellbore of a completed gas well.
    Lost oil or lost gas means produced oil or gas that escapes 
containment, either intentionally or unintentionally, or is flared 
before being removed from the lease, unit, or communitized area, and 
cannot be recovered.
    Oil well means a well for which the energy equivalent of the oil 
produced exceeds the energy equivalent of the gas produced, as 
determined at the time of well completion.
    Waste of oil or gas means any act or failure to act by the operator 
that is not sanctioned by the authorized officer as necessary for 
proper development and production, where compliance costs are not 
greater than the monetary value of the resources they are expected to 
conserve, and which results in: (1) A reduction in the quantity or 
quality of oil and gas ultimately producible from a reservoir under 
prudent and proper operations; or (2) avoidable surface loss of oil or 
gas.


Sec.  3179.4  Determining when the loss of oil or gas is avoidable or 
unavoidable.

    For purposes of this subpart:
    (a) Avoidably lost production means:
    (1) Gas that is vented or flared without the authorization or 
approval of the BLM; or
    (2) Produced oil or gas that is lost when the BLM determines that 
such loss occurred as a result of:
    (i) Negligence on the part of the operator;
    (ii) The failure of the operator to take all reasonable measures to 
prevent or control the loss; or
    (iii) The failure of the operator to comply fully with the 
applicable lease terms and regulations, appropriate provisions of the 
approved operating plan, or prior written orders of the BLM.
    (b) Unavoidably lost production means:
    (1) Oil or gas that is lost because of line failures, equipment 
malfunctions, blowouts, fires, or other similar circumstances, except 
where the BLM determines that the loss was avoidable pursuant to Sec.  
3179.4(a)(2);
    (2) Oil or gas that is lost from the following operations or 
sources, except where the BLM determines that the loss was avoidable 
pursuant to Sec.  3179.4(a)(2):
    (i) Well drilling;
    (ii) Well completion and related operations;
    (iii) Initial production tests, subject to the limitations in Sec.  
3179.101;
    (iv) Subsequent well tests, subject to the limitations in Sec.  
3179.102;
    (v) Exploratory coalbed methane well dewatering;
    (vi) Emergencies, subject to the limitations in Sec.  3179.103;
    (vii) Normal gas vapor losses from a storage tank or other low 
pressure production vessel, unless the BLM determines that recovery of 
the gas vapors is warranted;
    (viii) Well venting in the course of downhole well maintenance and/
or liquids unloading performed in compliance with Sec.  
[thinsp]3179.104; or
    (ix) Facility and pipeline maintenance, such as when an operator 
must blow-down and depressurize equipment to perform maintenance or 
repairs; or
    (3) Produced gas that is flared or vented with BLM authorization or 
approval.


Sec.  [thinsp]3179.5   When lost production is subject to royalty.

    (a) Royalty is due on all avoidably lost oil or gas.
    (b) Royalty is not due on any unavoidably lost oil or gas.


Sec.  [thinsp]3179.6   Venting limitations.

    (a) Gas well gas may not be flared or vented, except where it is 
unavoidably lost pursuant to Sec.  [thinsp]3179.4(b).
    (b) The operator must flare, rather than vent, any gas that is not 
captured, except:

[[Page 7947]]

    (1) When flaring the gas is technically infeasible, such as when 
the gas is not readily combustible or the volumes are too small to 
flare;
    (2) Under emergency conditions, as defined in Sec.  
[thinsp]3179.105, when the loss of gas is uncontrollable or venting is 
necessary for safety;
    (3) When the gas is vented through normal operation of a natural 
gas-activated pneumatic controller or pump;
    (4) When gas vapor is vented from a storage tank or other low 
pressure production vessel, unless the BLM determines that recovery of 
the gas vapors is warranted;
    (5) When the gas is vented during downhole well maintenance or 
liquids unloading activities;
    (6) When the gas venting is necessary to allow non-routine facility 
and pipeline maintenance to be performed, such as when an operator 
must, upon occasion, blow-down and depressurize equipment to perform 
maintenance or repairs; or
    (7) When a release of gas is unavoidable under Sec.  [thinsp]3179.4 
and flaring is prohibited by Federal, State, local or tribal law, 
regulation, or enforceable permit term.
    (c) For purposes of this subpart, all flares or combustion devices 
must be equipped with an automatic ignition system.

Authorized Flaring and Venting of Gas


Sec.  [thinsp]3179.101   Initial production testing.

    (a) Gas flared during the initial production test of each completed 
interval in a well is royalty free until one of the following occurs:
    (1) The operator determines that it has obtained adequate reservoir 
information;
    (2) 30 days have passed since the beginning of the production test, 
unless the BLM approves a longer test period; or
    (3) The operator has flared 50 million cubic feet (MMcf) of gas.
    (b) The operator may request a longer test period and must submit 
its request using a Sundry Notice.


Sec.  [thinsp]3179.102   Subsequent well tests.

    (a) Gas flared during well tests subsequent to the initial 
production test is royalty free for a period not to exceed 24 hours, 
unless the BLM approves or requires a longer test period.
    (b) The operator may request a longer test period and must submit 
its request using a Sundry Notice.


Sec.  [thinsp]3179.103   Emergencies.

    (a) Gas flared or vented during an emergency is royalty free for a 
period not to exceed 24 hours, unless the BLM determines that emergency 
conditions exist necessitating venting or flaring for a longer period.
    (b) For purposes of this subpart, an ``emergency'' is a temporary, 
infrequent and unavoidable situation in which the loss of gas or oil is 
uncontrollable or necessary to avoid risk of an immediate and 
substantial adverse impact on safety, public health, or the 
environment, and is not due to operator negligence.
    (c) The following do not constitute emergencies for the purposes of 
royalty assessment:
    (1) The operator's failure to install appropriate equipment of a 
sufficient capacity to accommodate the production conditions;
    (2) Failure to limit production when the production rate exceeds 
the capacity of the related equipment, pipeline, or gas plant, or 
exceeds sales contract volumes of oil or gas;
    (3) Scheduled maintenance;
    (4) A situation caused by operator negligence, including recurring 
equipment failures; or
    (5) A situation on a lease, unit, or communitized area that has 
already experienced 3 or more emergencies within the past 30 days, 
unless the BLM determines that the occurrence of more than 3 
emergencies within the 30 day period could not have been anticipated 
and was beyond the operator's control.
    (d) Within 45 days of the start of the emergency, the operator must 
estimate and report to the BLM on a Sundry Notice the volumes flared or 
vented beyond the timeframe specified in paragraph (a) of this section.


Sec.  [thinsp]3179.104   Downhole well maintenance and liquids 
unloading.

    (a) Gas vented or flared during downhole well maintenance and well 
purging is royalty free for a period not to exceed 24 hours, provided 
that the requirements of paragraphs (b) through (d) of this section are 
met. Gas vented or flared from a plunger lift system and/or an 
automated well control system is royalty free, provided the 
requirements of paragraphs (b) and (c) of this section are met.
    (b) The operator must minimize the loss of gas associated with 
downhole well maintenance and liquids unloading, consistent with safe 
operations.
    (c) For wells equipped with a plunger lift system and/or an 
automated well control system, minimizing gas loss under paragraph (b) 
of this section includes optimizing the operation of the system to 
minimize gas losses to the extent possible consistent with removing 
liquids that would inhibit proper function of the well.
    (d) For any liquids unloading by manual well purging, the operator 
must ensure that the person conducting the well purging remains present 
on-site throughout the event to end the event as soon as practical, 
thereby minimizing to the maximum extent practicable any venting to the 
atmosphere;
    (e) For purposes of this section, ``well purging'' means blowing 
accumulated liquids out of a wellbore by reservoir gas pressure, 
whether manually or by an automatic control system that relies on real-
time pressure or flow, timers, or other well data, where the gas is 
vented to the atmosphere, and it does not apply to wells equipped with 
a plunger lift system.

Other Venting or Flaring


Sec.  [thinsp]3179.201   Oil-well gas.

    (a) Except as provided in Sec. Sec.  3179.101, 3179.102, 3179.103, 
and 3179.104 of this subpart, vented or flared oil-well gas is royalty 
free if it is vented or flared pursuant to applicable rules, 
regulations, or orders of the appropriate State regulatory agency or 
tribe.
    (b) With respect to production from Indian leases, vented or flared 
oil-well gas will be treated as royalty free pursuant to paragraph (a) 
of this section only to the extent it is consistent with the BLM's 
trust responsibility.
    (c) Except as otherwise provided in this subpart, oil-well gas may 
not be vented or flared royalty free unless BLM approves it in writing. 
The BLM may approve an application for royalty-free venting or flaring 
of oil-well gas if it determines that it is justified by the operator's 
submission of either:
    (1) An evaluation report supported by engineering, geologic, and 
economic data that demonstrates to the BLM's satisfaction that the 
expenditures necessary to market or beneficially use such gas are not 
economically justified. If flaring exceeds 10 MMcf per well during any 
month, the BLM may determine that the gas is avoidably lost and 
therefore subject to royalty; or
    (2) An action plan showing how the operator will minimize the 
venting or flaring of the oil-well gas within 1 year. An operator may 
apply for approval of an extension of the 1-year time limit, if 
justified. If the operator fails to implement the action plan, the gas 
vented or flared during the time covered by the action plan will be 
subject to royalty. If flaring exceeds 10 MMcf per well during any 
month, the BLM may determine that the gas is avoidably lost and 
therefore subject to royalty.
    (d) The evaluation report in paragraph (c)(1) of this section:

[[Page 7948]]

    (1) Must include all appropriate engineering, geologic, and 
economic data to support the applicant's determination that marketing 
or using the gas is not economically viable. The information provided 
must include the applicant's estimates of the volumes of oil and gas 
that would be produced to the economic limit if the application to vent 
or flare were approved and the volumes of the oil and gas that would be 
produced if the applicant was required to market or use the gas. When 
evaluating the feasibility of marketing or using of the gas, the BLM 
will determine whether the operator can economically operate the lease 
if it is required to market or use the gas, considering the total 
leasehold production, including both oil and gas, as well as the 
economics of a field-wide plan; and
    (2) The BLM may require the operator to provide an updated 
evaluation report as additional development occurs or economic 
conditions improve, but no more than once a year.
    (e) An approval to flare royalty free, which is in effect as of the 
effective date of this rule, will continue in effect unless:
    (1) The approval is no longer necessary because the venting or 
flaring is authorized by the applicable rules, regulations, or orders 
of an appropriate State regulatory agency or tribe, as provided in 
paragraph (a) of this section; or
    (2) The BLM requires an updated evaluation report under paragraph 
(d)(2) of this section and determines to amend or revoke its approval.

Measurement and Reporting Responsibilities


Sec.  [thinsp]3179.301   Measuring and reporting volumes of gas vented 
and flared.

    (a) The operator must estimate or measure all volumes of lost oil 
and gas, whether avoidably or unavoidably lost, from wells, facilities 
and equipment on a lease, unit PA, or communitized area and report 
those volumes under applicable ONRR reporting requirements.
    (b) The operator may:
    (1) Estimate or measure vented or flared gas in accordance with 
applicable rules, regulations, or orders of the appropriate State or 
tribal regulatory agency;
    (2) Estimate the volume of the vented or flared gas based on the 
results of a regularly performed GOR test and measured values for the 
volumes of oil production and gas sales, to allow BLM to independently 
verify the volume, rate, and heating value of the flared gas; or
    (3) Measure the volume of the flared gas.
    (c) The BLM may require the installation of additional measurement 
equipment whenever it is determined that the existing methods are 
inadequate to meet the purposes of this subpart.
    (d) The operator may combine gas from multiple leases, unit PAs, or 
communitized areas for the purpose of flaring or venting at a common 
point, but must use a method approved by the BLM to allocate the 
quantities of the vented or flared gas to each lease, unit PA, or 
communitized area.

[FR Doc. 2018-03144 Filed 2-21-18; 8:45 am]
 BILLING CODE 4310-84-P