[Federal Register Volume 89, Number 70 (Wednesday, April 10, 2024)]
[Rules and Regulations]
[Pages 25378-25432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06827]
[[Page 25377]]
Vol. 89
Wednesday,
No. 70
April 10, 2024
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; Final Rule
Federal Register / Vol. 89 , No. 70 / Wednesday, April 10, 2024 /
Rules and Regulations
[[Page 25378]]
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DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Parts 3160 and 3170
[BLM_HQ_FRN_MO4500174370]
RIN 1004-AE79
Waste Prevention, Production Subject to Royalties, and Resource
Conservation
AGENCY: Bureau of Land Management, Interior.
ACTION: Final rule.
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SUMMARY: On November 30, 2022, the Department of the Interior, through
the Bureau of Land Management (BLM), published in the Federal Register
a proposed rule entitled ``Waste Prevention, Production Subject to
Royalties, and Resource Conservation.'' This final rule aims to reduce
the waste of natural gas from venting, flaring, and leaks during oil
and gas production activities on Federal and Indian leases. The final
rule also ensures that, when Federal or Indian gas is wasted, the
public and Indian mineral owners are compensated for that wasted gas
through royalty payments. This final rule will be codified in the Code
of Federal Regulations and will replace the BLM's current requirements
governing venting and flaring, which are more than four decades old.
DATES: The final rule is effective on June 10, 2024. The incorporation
by reference of certain material listed in this rule is approved by the
Director of the Federal Register as of June 10, 2024.
FOR FURTHER INFORMATION CONTACT: Yvette M. Fields, Division Chief,
Fluid Minerals Division, telephone: 240-712-8358, email:
[email protected], or by mail to Bureau of Land Management, 1849 C St.
NW, Room 5633, Washington, DC 20240, for information regarding the
substance of this final rule.
Individuals in the United States who are deaf, deafblind, hard of
hearing, or have a speech disability may dial 711 (TTY, TDD, or
TeleBraille) to access telecommunications relay services. Individuals
outside the United States should use the relay services offered within
their country to make international calls to the point-of-contact in
the United States. For a summary of the final rule, please see the
final rule summary document in docket BLM-2022-0003 on
www.regulations.gov.
SUPPLEMENTARY INFORMATION:
I. List of Acronyms
II. Executive Summary
III. Background
IV. Discussion of Public Comments on the Proposed Rule
V. Section-by-Section Discussion
VI. Procedural Matters
I. List of Acronyms
AO = Authorized Officer
APD = Application for Permit to Drill
API = American Petroleum Institute
AVO = Audio, visual, and olfactory
BLM = Bureau of Land Management
CA = Communitization Agreement
CAA = Clean Air Act
CFR = Code of Federal Regulations
EA = Environmental Assessment
EPA = Environment Protection Agency
FLPMA = Federal Land Policy and Management Act
FMP = Facility measurement point
FOGRMA = Federal Oil and Gas Royalty Management Act
GAO = Government Accountability Office
GOR = Gas-to-oil ratio
IMDA = Indian Mineral Development Act of 1982
IRA = Inflation Reduction Act of 2022
LDAR = Leak detection and repair
Mcf = thousand cubic feet at standard conditions
MLA = Mineral Leasing Act of 1920, as amended
NTL = Notice to Lessees
NTL-4A = Notice to Lessees and Operators of Onshore Federal and
Indian Oil and Gas Leases: Royalty or Compensation for Oil and Gas
Lost
OGI = Optical gas imaging
OGOR = Oil and Gas Operations Report
ONRR = Office of Natural Resources Revenue
RIA = Regulatory Impact Analysis
Unit PA = Unit participating area
WMP = Waste Minimization Plan
II. Executive Summary
On November 30, 2022, the Department of the Interior (DOI or
``Department''), through the Bureau of Land Management (BLM), published
in the Federal Register a proposed rule entitled, Waste Prevention,
Production Subject to Royalties, and Resource Conservation. 87 FR 73588
(Nov. 30, 2022). The BLM has considered the public comments received on
the proposed rule to develop this final rule.
This final rule aims to reduce the waste of natural gas from oil
and gas leases administered by the BLM. This gas is lost during oil and
gas exploration and production activities through venting, flaring, and
leaks. Venting is the intentional release of gas into the atmosphere
during operations, such as liquids unloading. Gas that is combusted in
a controlled manner is flared gas. Leaks are the unintentional release
of gas into the atmosphere from production equipment. Although some
losses of gas may be unavoidable, Federal law requires that operators
take reasonable steps to prevent the waste of gas through venting,
flaring and leaks. The final rule describes the reasonable steps that
operators of Federal and Indian oil and gas leases must take to avoid
the waste of natural gas. The final rule also ensures that, when
Federal or Indian gas is avoidably wasted, the public and Indian
mineral owners are compensated for the wasted gas through royalty
payments.
The BLM administers a Federal onshore oil and gas leasing program
pursuant to the requirements of various statutes, including the Mineral
Leasing Act (MLA), the Federal Oil and Gas Royalty Management Act
(FOGRMA), the Inflation Reduction Act of 2022 (IRA) Public Law 117-169,
and the Federal Land Policy and Management Act (FLPMA). The MLA
requires lessees to ``use all reasonable precautions to prevent waste
of oil or gas developed in the land,'' \1\ and further requires oil and
gas lessees to observe ``such rules . . . for the prevention of undue
waste as may be prescribed by [the] Secretary . . . .'' \2\ Under
FOGRMA, oil and gas lessees are liable for royalty payments on gas
wasted from the lease site.\3\ In addition, as discussed further below,
the IRA provides that, for leases issued after August 16, 2022,
royalties are owed on all gas produced from Federal land, subject to
certain exceptions for gas that is lost during emergency situations,
used for the benefit of lease operations, or ``unavoidably lost.''
FLPMA authorizes the BLM to ``regulate'' the ``use, occupancy, and
development'' of the public lands via ``published rules,'' while
mandating that the Secretary, ``[i]n managing the public lands . . .
shall, by regulation or otherwise, take any action necessary to prevent
unnecessary or undue degradation of the lands.'' \4\ The BLM also
regulates oil and gas operations on trust and restricted fee lands
pursuant to the Indian Mineral Leasing Act, 25 U.S.C. 396a et seq.; the
Act of March 3, 1909, 25 U.S.C. 396; and the Indian Mineral Development
Act (IMDA), 25 U.S.C. 2101 et seq.
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\1\ 30 U.S.C. 225.
\2\ 30 U.S.C. 187.
\3\ 30 U.S.C. 1756.
\4\ 43 U.S.C. 1732(b).
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In addition to managing the leasing and production of oil and gas
from Federal lands, the BLM also oversees operations on many Indian and
Tribal oil and gas leases pursuant to a delegation of authority from
the Secretary of the Interior.\5\ The Secretary's management and
regulation of Indian mineral interests carries with
[[Page 25379]]
it the duty to act as a trustee for the benefit of the Indian mineral
owners.
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\5\ Department of the Interior, Departmental Manual, 235 DM
1.1K.
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This final rule replaces the BLM's current requirements governing
natural gas venting and flaring, which are contained in Notice to
Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases:
Royalty or Compensation for Oil and Gas Lost (NTL-4A).\6\ NTL-4A was
issued more than 40 years ago, and its policies and requirements are
outdated. To begin, NTL-4A is ill-suited to address the large volume of
flaring associated with the rapid development of unconventional
``tight'' oil and gas resources that has occurred in recent years. In
addition, NTL-4A does not account for technological and operational
advancements that can reduce losses of gas from oil storage tanks and
equipment leaks.
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\6\ 44 FR 76600 (Dec. 27, 1979).
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In 2016, the BLM issued a final rule replacing NTL-4A with new
regulations intended to reduce the waste of gas from venting, flaring,
and leaks.\7\ That rule was challenged in Federal court, and the BLM
never fully implemented the rule due to the resulting litigation.\8\ In
September 2018, the BLM issued a final rule effectively rescinding the
2016 Rule, and that rule was itself challenged in court.\9\ Eventually,
the United States District Court for the Northern District of
California vacated the 2018 rescission of the 2016 Rule on various
grounds, including what the Court determined was the rule's failure to
meet the BLM's statutory mandate to prevent waste.\10\ The U.S.
District Court for the District of Wyoming then vacated the 2016 Rule
on the grounds that, among other things: (1) the MLA's ``delegation of
authority does not allow and was not intended to authorize the
enactment of rules justified primarily upon the ancillary benefit of a
reduction in air pollution''; and (2) ``BLM acted arbitrarily and
capriciously in failing to fully assess the impacts of the [2016 Rule]
on marginal wells, failing to adequately explain and support the [2016
Rule's] capture requirements, and failing to separately consider the
domestic costs and benefits of the [2016 Rule].'' \11\ The result of
these rulemakings and court decisions is that NTL-4A continues to
govern venting and flaring from BLM-managed oil and gas leases.
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\7\ 81 FR 83008 (Nov. 18, 2016).
\8\ See Wyoming v. U.S. Dep't of the Interior, 493 F. Supp. 3d
1046, 1052-1057 (D. Wyo. 2020) (hereinafter, Wyoming court).
\9\ 83 FR 49184 (Sept. 28, 2018).
\10\ California v. Bernhardt, 472 F. Supp. 3d 573 (N.D. Cal.
2020).
\11\ See Wyoming court at 1086-87.
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Based on the lessons of prior rulemakings and court decisions, the
BLM concludes that this final rule will reduce the waste of natural gas
through improved regulatory requirements pertaining to venting,
flaring, and leaks, as well as improve upon NTL-4A in a variety of
significant ways while eschewing elements of the 2016 Rule criticized
by the District Court.
In brief, the primary components of this final rule are as follows:
The final rule better implements the statutory requirement
that the ``lessee will . . . use all reasonable precautions to prevent
the waste of oil or gas developed in the land,'' \12\ consistent with
the BLM's authority to issue rules implementing that statutory
requirement.\13\ The final rule requires operators to take reasonable
measures to prevent waste as conditions of approval of an Application
for Permit to Drill (APD). Then, after an APD is approved, the BLM may
order an operator to implement, within a reasonable amount of time,
additional reasonable measures to prevent waste at ongoing exploration
and production operations. Reasonable measures to prevent waste may
reflect factors including, but not limited to, advances in technology
and changes in industry practice.
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\12\ 30 U.S.C. 225.
\13\ See 30 U.S.C. 187.
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The final rule requires operators to submit either a Waste
Minimization Plan (WMP) or a self-certification statement as one of
five required attachments to their oil well applications for permit to
drill.\14\ The WMP will provide the BLM with the following information:
anticipated oil and associated-gas production and anticipated 3-year
decline curves; certification that the operator has an executed, valid
gas sales contract; and any other steps the operator commits to take to
reduce or eliminate gas losses.
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\14\ See Sec. 3162.3-1(d).
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In lieu of a waste-minimization plan, the operator may choose to
provide a self-certification statement. That statement would commit the
operator to capturing 100 percent of the associated gas produced from
an oil well and would obligate the operator to pay royalties on all
lost gas except for gas lost through emergencies. With the addition of
this new requirement to file a WMP or the described self-certification
statement for oil-well APDs, operators must now provide five
attachments with their completed Form 3160-3, including existing
requirements for a drilling plan, a surface use plan of operations, and
evidence of bond coverage. All five attachments must be
administratively and technically complete before the BLM approves the
APD. If the application is not complete, the BLM will defer action on
the APD, and the operator will have an opportunity to address BLM-
identified deficiencies. In the case of a WMP or self-certification
statement, the operator must address the identified deficiencies within
2 years of receiving notification from the BLM of the deficiencies or
the BLM may disapprove the application.
The final rule recognizes the IRA's provision that
royalties are not owed on gas that is ``unavoidably lost''. The final
rule clarifies which lost oil or gas will qualify as ``unavoidably
lost'': lost oil or gas will qualify as ``unavoidably lost'' if, as
stated in the final rule at Sec. 3179.41, the operator has taken
reasonable steps to avoid waste; the operator has complied fully with
applicable laws, lease terms, regulations, provisions of a previously
approved operating plan, and other written orders of the BLM; and the
loss is within the applicable time or volume limits. The final rule
provides for several circumstances in which lost oil or gas will be
considered ``unavoidably lost,'' including during well completions,
production testing, and emergencies. The final rule also establishes a
volumetric threshold based on oil production on royalty-free flaring
due to pipeline capacity constraints, midstream processing failures, or
other similar events that may prevent produced gas from being
transported to market. The volumetric threshold is based on the total
volume of gas flared in a month divided by the total net volume of oil
produced in a month for each lease, unit PA, or CA. If an operator were
to exceed the avoidable loss threshold, then royalties are due on the
amount flared beyond the threshold.
The final rule includes specific affirmative obligations
that operators must take to avoid wasting oil or gas. In particular:
The final rule requires operators on Federal or Indian leases to
maintain a leak detection and repair (LDAR) program designed to prevent
the waste of Federal or Indian gas. An operator's LDAR program must
provide for regular inspections of all oil and gas production,
processing, treatment, storage, and measurement equipment on the lease
site.
The requirements of this final rule are explained in detail in
sections III and IV that follow.
As detailed in the Regulatory Impact Analysis (RIA) prepared for
this final rule, the BLM estimates that this rule will have the
following economic impacts:
[[Page 25380]]
Costs to industry of around $19.3 million per year
(annualized at 7 percent);
Benefits to industry in recovered gas of $1.8 million per
year (annualized at 7 percent);
Increases in royalty revenues from recovered and flared
gas of $51 million per year; and
Ancillary effects society of $17.9 million per year from
reduced greenhouse gas emissions (using a 3 percent discount rate).
III. Background
A. Waste of Natural Gas During the Development of Federal and Indian
Oil and Gas Resources
The BLM is responsible for managing more than 245 million surface
acres of land and 700 million acres of subsurface mineral estate. The
BLM maintains a program for leasing these lands for oil and gas
development and regulates oil and gas production operations on Federal
leases. While the BLM does not manage the leasing of Indian and Tribal
lands for oil and gas production, the BLM does regulate oil and gas
operations on many Indian and Tribal leases as part of its Tribal trust
responsibilities.
The BLM's onshore oil and gas management program is a significant
contributor to the Nation's oil and gas production. Domestic production
from 88,887 Federal onshore oil and gas wells \15\ accounts for
approximately 8 percent of the Nation's natural gas supply and 9
percent of its oil.\16\ In Fiscal Year (FY) 2021, operators produced
473 million barrels of oil and 3.65 trillion cubic feet of natural gas
from onshore Federal and Indian oil and gas leases. The production of
this oil and gas generated more than $4.2 billion in royalties.
Approximately $3.2 billion of these royalties were shared between the
United States and the States in which the production occurred.
Approximately $1 billion of these royalties went directly to Tribes and
Indian allottees for production from Indian lands.\17\
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\15\ BLM Public Lands Statistics, Table 9 (FY 2021 data),
available at https://www.blm.gov/programs-energy-and-minerals-oil-and-gas-oil-and-gas-statistics.
\16\ Bureau of Land Management Budget Justifications and
Performance Information Fiscal Year 2023, p. V-79, available at
https://www.doi.gov/sites/doi.gov/files/fy2023-blm-greenbook.pdf.
\17\ Production and revenue number derived from data maintained
by the Office of Natural Resources Revenue at https://revenuedata.doi.gov/.
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In recent years, the United States has experienced a significant
increase in oil and natural gas production due to technological
advances, such as hydraulic fracturing combined with directional
drilling. This increase in production has been accompanied by a
significant waste of natural gas through venting and flaring. During
oil and gas operations it is sometimes necessary to vent gas (the
intentional release of natural gas into the atmosphere) or to flare gas
(the combustion of unsold gas). As the following graph illustrates, the
amount of venting and flaring from Federal and Indian leases has
increased dramatically from the 1990s to the 2010s, and the upward
trend in flaring suggests that it will continue to be a problem.
Between 1990 and 2000, the total venting and flaring reported by
Federal and Indian onshore lessees averaged approximately 11 billion
cubic feet (Bcf) per year. Between 2010 and 2020, in contrast, the
total venting and flaring reported by Federal and Indian onshore
lessees averaged approximately 44.2 Bcf per year.\18\
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\18\ The BLM analysis of ONRR Oil and Gas Operations Report part
B (OGOR-B) data provided for 1990-2000 and 2010-2020. All venting
and flaring data is nationwide and does not separate Federal and
Indian data. For certain data points, separating Federal and Indian
data would require a manual review of thousands of venting and
flaring sundry notices since the BLM does not have a database that
tracks this distinction.
[GRAPHIC] [TIFF OMITTED] TR10AP24.000
Assuming a $3 per thousand cubic feet (Mcf) price of gas,\19\ the
Federal and Indian gas that was vented and flared from 2010 to 2020
would be valued at $1.46 billion. The BLM notes that vented and flared
volumes have not
[[Page 25381]]
increased linearly with production: according to data maintained by the
Office of Natural Resources Revenue (ONRR), the average volume of
vented and flared gas as a percentage of total gas production was 0.42
percent from 1990 to 2000; from 2010 to 2020, however, vented and
flared gas averaged 1.07 percent of total gas production. This metric
reflects a 157 percent increase in the waste of gas during oil and gas
production from Federal and Indian lands. Furthermore, the average
amount of vented and flared gas (in Mcf) per barrel (bbl) of oil
production was 0.0815 Mcf/bbl from 1990 to 2000, while it rose to
0.1642 Mcf/bbl from 2010 to 2020 \20\--a 102 percent increase in the
waste of gas per barrel of oil produced. Together, these trends
demonstrate that the requirements established by NTL-4A are ineffective
at limiting the amount of gas that is vented or flared from Federal and
Indian lands.
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\19\ The average annual Henry Hub spot price for natural gas
from 2010 through 2020 was $3.19. U.S. Energy Information
Administration (EIA), Henry Hub Natural Gas Spot Price, available at
https://www.eia.gov/dnav/ng/hist/rngwhhda.htm.
\20\ In the proposed rule, the BLM erroneously stated that the
average amount of vented and flared gas in thousands of cubic feet
(Mcf) per barrel (bbl) of oil production was 0.8148 Mcf/bbl from
1990 to 2000, which rose to 1.6418 Mcf/bbl from 2010 to 2020. The
correct average amounts are 0.08148 Mcf/bbl of vented and flared gas
from 1990 to 2000, which rose to 0.16418 Mcf/bbl from 2010 to 2020.
The accompanying graph, which appeared in the proposed and final
rules, is accurate and remains unchanged. Accordingly, the BLM is
revising the cited average amounts to reflect the information
provided in the accompanying graph.
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BILLING CODE 4331-29-P
[GRAPHIC] [TIFF OMITTED] TR10AP24.001
[GRAPHIC] [TIFF OMITTED] TR10AP24.002
[[Page 25382]]
BILLING CODE 4331-29-C
Recent studies have identified three other major sources of gas
losses during the oil and gas production process: emissions from
natural-gas-activated pneumatic equipment, venting from oil storage
tanks, and equipment leaks.\21\ The EPA estimates that, nationwide,
36.2 Bcf of methane was emitted from pneumatic controllers and 4.9 Bcf
of methane was emitted from equipment leaks at upstream oil and gas
production sites in the United States in 2019.\22\ The BLM estimates
that 13 Bcf of natural gas was lost from pneumatic devices on Federal
and Indian lands in 2019. The BLM estimates that an additional 0.86 Bcf
of gas was lost due to equipment leaks from Federal natural gas
production operations not subject at the time to State or EPA (LDAR)
requirements. Notably, leakage appears to be exacerbated in areas where
there is insufficient infrastructure for natural gas gathering,
processing, and transportation \23\--a known issue in basins such as
the Permian and Bakken, where substantial BLM-managed oil and gas
production occurs. Finally, the BLM estimates that 17.9 Bcf of natural
gas was emitted from storage tanks on Federal and Indian lands in 2019.
Losses from pneumatic equipment, leaks, and storage tanks would be
valued at $53.7 million dollars (at $3/Mcf) in 2019.
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\21\ Alvarez, et al., ``Assessment of methane emissions from the
U.S. oil and gas supply chain,'' Science 361 (2018); see also 81 FR
83008, 83015-17 (Nov. 18, 2016).
\22\ EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990-2019 at 3-73 (2019).
\23\ Zhang, et al., ``Quantifying methane emissions from the
largest oil-producing basin in the United States from space,''
Science Advances 6 (2020).
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Apart from undue waste, excessive venting, flaring, and leaks by
Federal oil and gas lessees also impose three additional harms. First,
vented or leaked gas wastes valuable publicly or Indian owned resources
that could be put to productive use, and deprives American taxpayers,
Tribes, and States of substantial royalty revenues. Second, the wasted
gas may harm local communities and surrounding areas through visual and
noise impacts from flaring. And third, vented or leaked gas also
contributes to climate change, because the primary constituent of
natural gas is methane, an especially powerful greenhouse gas, with
climate impacts roughly 28 to 36 times those of carbon dioxide
(CO2), if measured over a 100-year period, or 84 times those
of CO2 if measured over a 20-year period.\24\ Thus,
regulatory measures that encourage operators to conserve gas and avoid
waste could, as a purely incidental matter, have ancillary effects on
public health and the environment.\25\
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\24\ See Intergovernmental Panel on Climate Change, Climate
Change 2013: The Physical Science Basis, Chapter 8, Anthropogenic
and Natural Radiative Forcing, at 714 (Table 8.7), available at
https://www.ipcc.ch/pdf/assessment-report/ar5/wg1/WG1AR5_Chapter08_FINAL.pdf.
\25\ The BLM notes that the BLM did not rely on such ancillary
effects in developing this final rule. Rather, with the exception of
the safety provisions in Sec. 3179.50 (which also promotes worker
health), the requirements of this final rule are independently
justified as reasonable measures to prevent waste that would be
expected, regardless of ancillary effects on public health or the
environment.
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Both the MLA and IRA distinguish an avoidable loss from an
unavoidable loss. Indeed, some amount of venting and flaring is
unavoidable and expected to occur during oil and gas exploration and
production operations. For example, an operator may need to flare gas
on a short-term basis as part of drilling operations, well completion,
or production testing, among other situations. Longer-term flaring may
occur in exceptional circumstances, which might include the drilling of
and production from an exploratory well in a new field, where gas
pipelines have not yet been built due to a lack of information
regarding expected gas production.\26\ In some fields, the overall
quantity of gas produced may be so small that the development of gas-
pipeline infrastructure may not be economically justified.
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\26\ The BLM notes that, even in such exceptional circumstances,
operators should be expected to take measures to avoid excessive
flaring and this proposed rule would place limitations on royalty-
free flaring from exploratory wells.
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Although some venting or flaring may be unavoidable (and thus not
waste) under some circumstances, operators have an affirmative
obligation under Federal law to use reasonable precautions to prevent
the waste of oil or gas developed from a lease. As other technologies
and practices on oil and gas operations have evolved (as evidenced by
changes in State and Federal regulations, and in industry best
practices), so too measures that are considered reasonable to prevent
waste should progress over time with advances in technology and changes
in industry practice.
Further, operators' immediate economic interests may not always be
served by minimizing the loss of natural gas, and BLM regulation is
necessary to discourage operators from venting or flaring more gas than
is operationally necessary. A prime example is the flaring of oil-well
gas due to pipeline capacity constraints. Oil wells in certain fields
are known to produce relatively large volumes of associated natural
gas. Accordingly, natural-gas-capture infrastructure--including
pipelines--has been built out in those fields, and the BLM expects
operators to sell the associated gas they produce. However, it is not
uncommon for the rate of oil-well development to outpace the capacity
of the related gas-capture infrastructure. When the existing gas-
capture infrastructure is overwhelmed, an operator is faced with a
choice: flare the associated gas in order to continue oil production
unabated or curtail oil production in order to conserve the associated
gas. Absent clear requirements in NTL-4A as to whether a specific
operational circumstance is an avoidable or unavoidable loss, an
operator might conclude that the BLM would not make any avoidable loss
determination if the operator were to flare, and thus waste associated
gas to continue oil production--maximizing the operators' short-term
profits by providing immediate revenue from oil production, even
accounting for the loss of gas revenue. But the latter course of action
may often best serve the public's interest by maximizing overall energy
production (considering both production streams rather than producing
oil and flaring gas) and royalty revenues.
Likewise, maximizing the recovery of gas by regularly inspecting
for leaks may not always maximize the operator's profits. It is in
these circumstances--where an operator's interest in maximizing short-
term profits diverges from the public's interest in maximizing resource
recovery--that BLM regulation is necessary and appropriate to ensure
that operators take reasonable measures to prevent waste, as required
by statute.
B. Legal Authority
Pursuant to a delegation of Secretarial authority, the BLM is
authorized to regulate oil and gas exploration and production
activities on Federal and Indian lands under a variety of statutes,
including the MLA, the Mineral Leasing Act for Acquired Lands, the IRA,
FOGRMA, the FLPMA, the Indian Mineral Leasing Act of 1938, the IMDA,
and the Act of March 3, 1909.\27\ 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.\28\
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\27\ Mineral Leasing Act, 30 U.S.C. 188-287; Mineral Leasing Act
for Acquired Lands, 30 U.S.C. 351-360; Federal Oil and Gas Royalty
Management Act, 30 U.S.C. 1701-1758; Federal Land Policy and
Management Act of 1976, 43 U.S.C. 1701-1785; Indian Mineral Leasing
Act of 1938, 25 U.S.C. 396a-g; Indian Mineral Development Act of
1982, 25 U.S.C. 2101-2108; Act of March 3, 1909, 25 U.S.C. 396.
\28\ 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.
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[[Page 25383]]
7. Authority Regarding the Waste of Natural Gas
The MLA rests on the fundamental principle that the public should
benefit from mineral production on public lands.\29\ An important means
of ensuring that the public benefits from mineral production on public
lands is minimizing and deterring the waste of oil and gas produced
from the Federal mineral estate. To this end, the MLA requires that all
oil and gas lessees be subject to the condition that lessees ``use all
reasonable precautions to prevent waste of oil or gas developed in the
land . . . .'' \30\ The MLA requires oil and gas lessees to exercise
``reasonable diligence, skill, and care'' in their operations and to
observe ``such rules . . . for the prevention of undue waste as may be
prescribed by [the] Secretary.'' \31\ Lessees are not only responsible
for taking measures to prevent waste, but also for making royalty
payments on wasted oil and gas when waste occurs, in accordance with
the MLA's assessment of royalties on all ``production removed or sold
from the lease.'' \32\ Furthermore, FOGRMA expressly makes lessees
``liable for royalty payments on oil or gas lost or wasted from a lease
site 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 [FOGRMA] or any mineral
leasing law.'' \33\
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\29\ See, e.g., California Co. v. Udall, 296 F.2d 384, 388 (D.C.
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'').
\30\ 30 U.S.C. 225.
\31\ 30 U.S.C. 187.
\32\ 30 U.S.C. 226(b)(1)(A).
\33\ 30 U.S.C. 1756.
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In addition, on August 16, 2022, President Biden signed the IRA
into law. Section 50263 of the IRA, which is entitled ``Royalties on
All Extracted Methane,'' provides that, for leases issued after August
16, 2022, royalties are owed on all gas produced from Federal land,
including gas that is consumed or lost by venting, flaring, or
negligent releases through any equipment during upstream operations.
This section further provides three exceptions to the general
obligation to pay royalties on produced gas, namely on: ``(1) gas
vented or flared for not longer than 48 hours in an emergency situation
that poses a danger to human health, safety, or the environment; (2)
gas used or consumed within the area of the lease, unit, or
communitized area for the benefit of the lease, unit, or communitized
area; or, (3) gas that is unavoidably lost.'' \34\
---------------------------------------------------------------------------
\34\ 30 U.S.C. 1727.
---------------------------------------------------------------------------
The BLM's authority to regulate the waste of Federal oil and gas is
not limited to operations that occur on Federal lands, but also extends
to operations on non-Federal lands where Federal oil and gas is
produced under a unit or communitization agreement (CA). ``For the
purpose of more properly conserving the natural resources of any oil or
gas pool, field, or like area,'' the MLA authorizes lessees to operate
their leases under a cooperative or unit plan of development and
operation if the Secretary of the Interior determines such an
arrangement to be necessary or advisable in the public interest.\35\
The Secretary is authorized, with the consent of the lessees involved,
to establish or alter drilling, producing, and royalty requirements and
to make such regulations with respect to the leases under a cooperative
or unit plan.\36\ The MLA states that a cooperative or unit plan of
development may contain a provision authorizing the Secretary to
regulate the rate of development and the rate of production.\37\
Accordingly, the BLM's standard form unit agreement provides that the
BLM may regulate the quantity and rate of production in the interest of
conservation.\38\ The BLM's standard form CA provides that the BLM
``shall have the right of supervision over all fee and state mineral
operations within the communitized area to the extent necessary to
monitor production and measurement, and to assure that no avoidable
loss of hydrocarbons occurs . . . .'' \39\ As noted earlier, FOGRMA
authorizes the BLM to assess royalties on gas lost or wasted from a
``lease site.'' The term ``lease site'' is broadly defined in FOGRMA as
any lands or submerged lands, including the surface of a severed
mineral estate, on which exploration for, or extraction or removal of,
oil or gas is authorized pursuant to a lease.\40\ The BLM maintains the
authority to regulate the waste of Federal minerals from operations on
those lands by requiring royalty payments and setting appropriate rates
of development and production.\41\
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\35\ 30 U.S.C. 226(m).
\36\ Id.
\37\ Id.
\38\ 43 CFR 3186.1, ] 21.
\39\ See ``BLM Manual 3160-9-Communitization,'' Appendix 1, ]
12.
\40\ See 30 U.S.C. 1702(6); Maralex Resources, Inc. v.
Bernhardt, 913 F.3d 1189, 1200 (10th Cir. 2019) (``the statutory
definition of `lease site' necessarily includes any lands, including
privately-owned lands, on which [production] of oil or gas is
occurring pursuant to a communitization agreement''). Additionally,
FOGRMA defines ``oil and gas'' broadly to mean ``any oil or gas
originating from, or allocated to, the Outer Continental Shelf,
Federal, or Indian lands.'' 30 U.S.C. 1702(9) (emphasis added).
\41\ This conclusion is consistent with the assessment of the
BLM's authority expressed by the court that vacated the 2016 Waste
Prevention Rule. See Wyoming 493 F. Supp. 3d at 1081-85.
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2. Authority Regarding Environmental Impacts to the Public Lands
In addition to ensuring that the public receives a pecuniary
benefit from oil and gas production from public lands, the BLM is also
tasked with regulating the physical impacts of oil and gas development
on public lands. The MLA directs the Secretary to ``regulate all
surface-disturbing activities conducted pursuant to any lease'' and to
``determine reclamation and other actions as required in the interest
of conservation of surface resources.'' \42\
---------------------------------------------------------------------------
\42\ 30 U.S.C. 226(g).
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The MLA requires oil and gas leases to include provisions ``for the
protection of the interests of the United States . . . and for the
safeguarding of the public welfare,'' including lease terms for
purposes other than safeguarding the public resource of oil and
gas.\43\ The Secretary may suspend lease operations ``in the interest
of conservation of natural resources,'' a phrase that encompasses not
just conservation of mineral deposits, but also preventing
environmental harm.\44\ The MLA additionally requires oil and gas
leases to contain ``a provision that such rules for the safety and
welfare of the miners
[[Page 25384]]
. . . as may be prescribed by the Secretary shall be observed.'' \45\
Accordingly, the Department's regulations governing oil and gas
operations on the public lands have long required operators to conduct
operations in a manner that is protective of natural resources,
environmental quality, and the health and safety of workers.\46\
---------------------------------------------------------------------------
\43\ See Natural Resources Defense Council, Inc. v. Berklund,
458 F. Supp. 925, 936 n.17 (D.D.C. 1978). The BLM acknowledges that
the court that vacated the 2016 Waste Prevention Rule stated that
``it is not a reasonable interpretation of BLM's general authority
under the MLA to `safeguard[ ] the public welfare' as empowering the
agency to regulate air emissions, particularly when Congress
expressly delegated such authority to the EPA under the [Clean Air
Act].'' Wyoming 493 F. Supp. 3d at 1067. The BLM further notes that
the court that vacated the BLM's rescission of the 2016 Waste
Prevention Rule found that the rescission failed to satisfy the
BLM's ``statutory obligation'' to ``safeguard[ ] the public
welfare,'' and stated that the MLA's ``public welfare'' provision
supports the BLM's consideration of air emissions in promulgating
its waste prevention regulations. See California v. Bernhardt, 472
F. Supp. 3d 573, 616 (N.D. Cal. 2020). The BLM need not elaborate on
the meaning of the MLA's ``public welfare'' provision in this
rulemaking, as the BLM is proposing requirements that are
independently justified as waste prevention measures and are not for
environmental purposes. The one exception is Sec. 3179.50, which
does serve an environmental purpose, but is an exercise of the
Secretary's authority to prescribe ``rules for the safety and
welfare of the miners'' under 30 U.S.C. 187.
\44\ 30 U.S.C. 209; see also, e.g., Copper Valley Machine Works
v. Andrus, 653 F.2d 595, 601 & nn.7-8 (D.C. Cir. 1981); Hoyl v.
Babbitt, 129 F.3d 1377, 1380 (10th Cir. 1997); Getty Oil Co. v.
Clark, 614 F. Supp. 904, 916 (D. Wyo. 1985).
\45\ 30 U.S.C. 187.
\46\ See 43 CFR 3162.5-1, 3162.5-3. The BLM promulgated those
regulations in 1982. 47 FR 47765 (1982).
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FLPMA authorizes the BLM to ``regulate'' the ``use, occupancy, and
development'' of the public lands via ``published rules.'' \47\ FLPMA
also mandates that the Secretary, ``[i]n managing the public lands . .
. shall, by regulation or otherwise, take any action necessary to
prevent unnecessary or undue degradation of the lands.'' \48\ In
addition, section 102 of FLPMA declares a policy that the BLM should
both protect the environment, as stated in paragraph 102(a)(8), and
manage the land in such a manner as to provide for ``domestic sources
of minerals'' and other resources, as stated in paragraph
102(a)(12).\49\ With respect to protecting the environment, paragraph
102(a)(8) states the policy of the United States that lands be managed
to ``protect the quality of scientific, scenic, historical, ecological,
environmental, air and atmospheric, water resources, and archeological
values . . . .'' \50\
---------------------------------------------------------------------------
\47\ 43 U.S.C. 1732(b).
\48\ Id.
\49\ 43 U.S.C. 1701; Theodore Roosevelt Conservation P'ship v.
Salazar, 605 F. Supp. 2d 263, 281-82 (D.D.C. 2009).
\50\ 43 U.S.C. 1701(a)(8); but see 43 U.S.C. 1701(b).
---------------------------------------------------------------------------
FLPMA also requires the BLM to manage public lands under principles
of multiple use and sustained yield.\51\ The statutory definition of
``multiple use'' explicitly includes the consideration of environmental
resources. ``Multiple use'' is a ``combination of balanced and diverse
resource uses that takes into account the long-term needs of future
generations for renewable and nonrenewable resources . . . .'' \52\
``Multiple use'' also requires resources to be managed in a
``harmonious and coordinated'' manner ``without permanent impairment to
the productivity of the land and the quality of the environment . . .
.'' \53\ Significantly, FLPMA directs the Secretary to consider ``the
relative values of the resources and not necessarily . . . the
combination of uses that will give the greatest economic return or the
greatest unit output.'' \54\
---------------------------------------------------------------------------
\51\ Id. at 1702(c), 1732(a).
\52\ 43 U.S.C. 1702(c).
\53\ Id.
\54\ Id.
---------------------------------------------------------------------------
The Secretary's management and regulation of Indian mineral
interests carries with it the duty to act as a trustee for the benefit
of the Indian mineral owners.\55\ Congress has directed the Secretary
to ``aggressively carry out [her] trust responsibility in the
administration of Indian oil and gas.'' \56\ In furtherance of her
trust obligations, the Secretary has delegated regulatory authority for
administering operations on Indian oil and gas leases to the BLM,\57\
which has developed specialized expertise through regulating the
production of oil and gas from public lands administered by the
Department. In choosing from among reasonable regulatory alternatives
for Indian mineral development, the BLM is obligated to adopt the
alternative that is in the best interest of the Tribe and individual
Indian mineral owners.\58\ What is in the best interest of the Tribe
and individual Indian mineral owners is determined by a consideration
of all relevant factors, including economic considerations as well as
potential environmental and social effects.\59\
---------------------------------------------------------------------------
\55\ See Woods Petroleum Corp. v. Department of Interior, 47
F.3d 1032, 1038 (10th Cir. 1995) (en banc).
\56\ 30 U.S.C. 1701(a)(4).
\57\ 235 DM 1.1.K.
\58\ See Jicarilla Apache Tribe v. Supron Energy Corp., 728 F.2d
1555, 1567 (10th Cir. 1984) (Seymour, J., concurring in part and
dissenting in part), adopted as majority opinion as modified en
banc, 782 F.2d 855 (10th Cir. 1986).
\59\ See 25 CFR 211.3.
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C. Regulatory History
The BLM has a long history of regulating venting and flaring from
onshore oil and gas operations. This section summarizes the BLM's
historic practices, as well as the BLM's experience in two recent
rulemakings related to venting and flaring.
8. Early Regulation of Surface Waste of Gas
The Department of the Interior has maintained regulations
addressing the waste of gas through venting and flaring from onshore
oil and gas leases since 1938. At that time, the Department's
regulations required the United States to be compensated ``at full
value'' for ``all gas wasted by blowing, release, escape into the air,
or otherwise,'' except where such disposal was authorized under the
laws of the United States and the State in which it occurred.\60\ The
regulations further provided that the production of oil or gas from the
lease was to be restricted to such amounts as could be put to
beneficial use and that, in order to avoid the excessive production of
oil or gas, the Secretary could limit the rate of production based on
the market demand for oil or the market demand for gas.\61\
---------------------------------------------------------------------------
\60\ 30 CFR 221.5(h) (1938).
\61\ Id. 221.27.
---------------------------------------------------------------------------
By 1942, the Department's regulations contained a definition of
``waste of oil or gas.'' This definition included the ``physical waste
of oil or gas,'' which was defined as ``the loss or destruction of oil
or gas after recovery thereof such as to prevent proper utilization and
beneficial use thereof, and the loss of oil or gas prior to recovery
thereof by isolation or entrapment, by migration, by premature release
of natural gas from solution in oil, or in any other manner such as to
render impracticable the recovery of such oil or gas.'' \62\ The
regulations stated that a lessee was ``obligated to prevent the waste
of oil or gas'' and, in order to avoid the physical waste of gas, the
lessee was required to ``consume it beneficially or market it or return
it to the productive formation.'' \63\ The regulations stated that
``unavoidably lost'' gas was not subject to royalty, though the
regulations did not define ``unavoidably lost.'' \64\
---------------------------------------------------------------------------
\62\ 30 CFR 221.6(n) (1942).
\63\ Id. 221.35.
\64\ Id. 221.44.
---------------------------------------------------------------------------
In 1974, the Secretary issued NTL-4, which established the
following policy for royalties on gas production: Gas production
subject to royalty shall include: (1) that gas (both dry and casing-
head) which is produced and sold either on a lease basis or that which
is allocated to a lease under the terms of an approved communitization
or unitization agreement; (2) that gas which is vented or flared in
well tests (drill-stem, completion, or production) on a lease,
communitized tract, or unitized area; and, (3) that gas which is
otherwise vented or flared on a lease, communitized tract, or unitized
area with the prior written authorization of the Area Oil and Gas
Supervisor (Supervisor).\65\
---------------------------------------------------------------------------
\65\ See 44 FR 76600 (Dec. 27, 1979).
---------------------------------------------------------------------------
NTL-4 thus effectively required onshore oil and gas lessees to pay
royalties on all gas produced, including gas that was unavoidably lost
or used for production purposes. Various oil and gas companies sought
judicial review of NTL-4. In 1978, the U.S. District Court for the
District of Wyoming overturned NTL-4, holding that the MLA does not
authorize the collection of royalties on gas production
[[Page 25385]]
that is unavoidably lost or used in lease operations.\66\
---------------------------------------------------------------------------
\66\ Marathon Oil Co. v. Andrus, 452 F. Supp. 548, 553 (D. Wyo.
1978).
---------------------------------------------------------------------------
2. NTL-4A
From January 1980 to January 2017, the Department of the Interior's
instructions governing the venting and flaring of gas from onshore oil
and gas leases were contained in ``Notice to Lessees and Operators of
Onshore Federal and Indian Oil and Gas Leases: Royalty or Compensation
for Oil and Gas Lost'' (``NTL-4A'').\67\ NTL-4A was issued by the U.S.
Geological Survey (USGS), which was the Interior bureau tasked with
oversight of Federal onshore oil and gas production at the time.
---------------------------------------------------------------------------
\67\ 44 FR 76600 (Dec. 27, 1979).
---------------------------------------------------------------------------
Under NTL-4A, operators were required to pay royalties on
``avoidably lost'' gas--i.e., gas lost due to the operator's
negligence, failure to take reasonable precautions to prevent or
control the loss, or failure to comply with lease terms, regulations,
or BLM orders. NTL-4A expressly authorized royalty-free venting and
flaring ``on a short-term basis'' during emergencies, well purging and
evaluation tests, initial production tests, and routine and special
well tests. NTL-4A prohibited the flaring of gas from gas wells under
any other circumstances. For gas produced from oil wells, however, NTL-
4A authorized (but did not mandate) the BLM to approve flaring where
conservation of the gas was not ``economically justified'' because it
would ``lead to the premature abandonment of recoverable oil reserves
and ultimately to a greater loss of equivalent energy than would be
recovered if the venting or flaring were permitted to continue . . .
.'' \68\ NTL-4A stated that, ``when evaluating the feasibility of
requiring conservation of the gas, the total leasehold production,
including oil and gas, as well as the economics of a field-wide plan,''
must be considered. Finally, under NTL-4A, the loss of gas vapors from
storage tanks was considered ``unavoidably lost,'' unless the BLM
``determine[d] that the recovery of such vapors would be warranted . .
. .'' \69\
---------------------------------------------------------------------------
\68\ Id. at 76601 (Dec. 27, 1979).
\69\ Id.
---------------------------------------------------------------------------
Soon after issuing NTL-4A, the USGS issued guidelines and
procedures for implementing NTL-4A, which were published in the
Conservation Division Manual (CDM) Part 644, Chapter 5.\70\ Among other
things, the CDM provided guidance regarding applications to flare oil-
well gas. Specifically, the CDM provided guidance for responding to a
lessee's contention ``that reserves of casinghead gas are inadequate to
support the installation of facilities for gas collection and sale . .
. .'' \71\ The CDM explained that, ``[f]rom an economic basis, all
leasehold production must be considered; the major concern is
profitable operation of the lease, not just profitable disposition of
the gas.'' \72\ The CDM further explained that the ``economics of
conserving gas must be on a field-wide basis, and the Supervisor must
consider the feasibility of a joint operation between all other
lessees/operators in the field or area.'' \73\ Thus, the economic
standard for obtaining approval to flare oil-well gas under NTL-4A was
on its face a demanding one. The fact that the capture and sale of oil-
well gas from an individual lease would not pay for itself was not
sufficient to justify royalty-free flaring of the gas.
---------------------------------------------------------------------------
\70\ Geological Survey Conservation Division Manual, Part 644
Producing Operations Chapter 5 Waste Prevention/Beneficial Use, 6-
23-80 (Release No. 68).
\71\ Id. at 644.53F.
\72\ Id.
\73\ Id.
---------------------------------------------------------------------------
The CDM also provided guidance for venting and flaring situations
involving both Federal and non-Federal lands. In such cases, the BLM
was directed to contact the appropriate State agency to work jointly
for optimum gas conservation. However, where such a cooperative effort
was not possible, the BLM was directed to ``proceed unilaterally to
take action to prevent unnecessary venting or flaring from Federal
lands.''
Under the plain terms of NTL-4A, flaring without prior approval
(outside of the short-term circumstances specified in Sections II and
III of NTL-4A) constituted a royalty-bearing loss of gas, regardless of
the economic circumstances. The BLM originally applied NTL-4A to that
effect, and this practice was upheld by the Interior Board of Land
Appeals. See Lomax Exploration Co., 105 IBLA 1 (1988). However, the BLM
changed this policy in Instruction Memorandum No. 87-652 (Aug. 17,
1987), which required the BLM to provide an operator with
an207pportuneity to demonstrate, after the fact, that capturing the gas
was not economically justified. See Ladd Petroleum Corp., 107 IBLA 5
(1989).
Even so, the number of applications for royalty-free flaring
received by the BLM increased dramatically between 2005 and 2016: in
2005, the BLM received just 75 applications to vent or flare gas, while
in 2015 it received 2,901 applications.\74\ The following table shows
the number of applications to vent or flare gas received by the BLM
through 2021, but it does not reflect when the venting or flaring
occurred.\75\
---------------------------------------------------------------------------
\74\ Following publication of the proposed rule, the BLM re-
queried the Automated Fluid Minerals Support System (AFMSS) to
obtain the number of venting and flaring sundry notices in the
database. The number of sundry notices has been updated in the final
rule to reflect the updated query.
\75\ The BLM applies the venting and flaring rule that was in
effect at the time the flaring occurred, not when the application
was received, which may be later in time than the flaring, even
years later. See, e.g., Ladd Petroleum Corp., 107 IBLA 5 (1989). The
application, therefore, does not provide for straightforward
comparison of the effects of regulatory changes, particularly given
recent court orders setting aside the BLM's rules in this sphere.
------------------------------------------------------------------------
Number of
applications
Year received to vent
or flare gas
------------------------------------------------------------------------
2015................................................. 2,900
2016................................................. 2,637
2017................................................. 2,162
2018................................................. 2,095
2019................................................. 2,901
2020................................................. 2,386
2021................................................. 922
------------------------------------------------------------------------
Both the 2016 Waste Prevention Rule and the 2018 Revision Rule
would have dispensed with case-by-case flaring approvals, but because
those rules were both struck down, post-2016 flaring application data
does not provide a useful comparison between the 2016 Waste Prevention
Rule and NTL-4A. In addition, there is no useful comparison because the
2016 Waste Prevention Rule was never in effect and the 2018 revision
rule was in effect for less than 2 years. Most of the applications to
flare royalty-free were submitted to the field offices in New Mexico,
Montana, and the Dakotas, which oversee Federal and Indian mineral
interests in unconventional plays where oil production is accompanied
by large volumes of associated gas. Notably, the vast majority of these
applications involved wells that were connected to a gas pipeline but
flared due to pipeline capacity constraints.
3. 2016 Waste Prevention Rule
On November 18, 2016, the BLM issued a final rule intended to
reduce the waste of Federal and Indian gas through venting, flaring,
and leaks (``2016 Waste Prevention Rule'').\76\ The 2016 Waste
Prevention Rule replaced NTL-4A and became effective on January 17,
2017. The BLM's development of the 2016 Waste Prevention Rule was
prompted by a
[[Page 25386]]
combination of factors, including the substantial increase in flaring
over the previous decade, the growing number of applications to vent or
flare royalty-free, new information regarding the quantities of gas
lost through venting and leaks, and concerns expressed by oversight
entities such as the U.S. Government Accountability Office (GAO).\77\
---------------------------------------------------------------------------
\76\ 81 FR 83008 (Nov. 18, 2016).
\77\ Id. at 83014-83017; GAO, ``Federal Oil and Gas Leases--
Opportunities Exist to Capture Vented and Flared Gas, Which Would
Increase Royalty Payments and Reduce Greenhouse Gases'' (Oct. 2010);
GAO, ``OIL AND GAS--Interior Could Do More to Account for and Manage
Natural Gas Emissions'' (July 2016).
---------------------------------------------------------------------------
The 2016 Waste Prevention Rule applied to all onshore Federal and
Indian oil and gas leases, units, and communitized areas. The key
components of the 2016 Waste Prevention Rule were:
A requirement that APDs be accompanied by a WMP that would
detail anticipated gas production and opportunities to conserve the
gas;
A provision specifying the various circumstances under
which a loss of oil or gas would be ``avoidably lost'' and therefore
royalty-bearing;
A requirement that operators capture (rather than flare) a
certain percentage of the gas they produce;
Equipment requirements for pneumatic controllers,
pneumatic diaphragm pumps, and storage vessels (tanks); and
LDAR provisions requiring semiannual lease site
inspections, the use of specified instruments and methods, and
recordkeeping and reporting.
The rule's ``capture percentage'' requirements were intended to
address the routine flaring of gas from oil wells. The rule required an
operator to capture, rather than flare, a certain percentage of the gas
produced from the operator's ``development oil wells.'' The required
capture percentage would increase over a 10-year period, starting at 85
percent in 2018 and ultimately reaching 98 percent in 2026. Gas flared
in excess of the capture requirements would be royalty bearing.
In the 2016 Waste Prevention Rule, the BLM recognized that the EPA
had promulgated emissions limitations for pneumatic equipment and
storage tanks as well as LDAR requirements for new and modified sources
in the oil and gas production sector pursuant to its authority under
the Clean Air Act (CAA). The BLM further recognized that those EPA
requirements would have the effect of reducing the waste of gas from
leases subject to those requirements. In order to avoid unnecessary
duplication or conflict between the BLM and EPA regulations, the 2016
Waste Prevention Rule allowed for operators to comply with the
analogous EPA regulations as an alternative means of compliance with
BLM's requirements.\78\
---------------------------------------------------------------------------
\78\ See 81 FR 83008, 83018-19, 83085-89 (Nov. 18, 2016).
---------------------------------------------------------------------------
The capture percentage, pneumatic equipment, storage tanks, and
LDAR requirements of the 2016 Rule were each subject to phase-in
periods, and the rule allowed operators to obtain exemptions or reduced
requirements where compliance would ``cause the operator to cease
production and abandon significant recoverable oil reserves under the
lease.'' \79\ The BLM's RIA for the 2016 Waste Prevention rule
estimated that the rule would impose costs of between $110 million and
$275 million per year, while generating benefits of between $20 million
and $157 million per year worth of additional gas captured and between
$189 million and $247 million per year in quantified social benefits
(in the form of forgone methane emissions).\80\
---------------------------------------------------------------------------
\79\ See 81 FR 83082-88 (Nov. 18, 2016).
\80\ BLM (2016). Regulatory Impact Analysis for: Revisions to 43
CFR 3100 (Onshore Oil and Gas Leasing) and 43 CFR 3600 (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). p. 4-5. Available at https://www.regulations.gov/document/BLM-2016-0001-9127.
---------------------------------------------------------------------------
Certain States and operators filed petitions for judicial review of
the Waste Prevention Rule in the U.S. District Court for the District
of Wyoming.\81\ Following the change in Administration in January 2017,
the litigation was effectively paused in response to the BLM's
administrative actions to suspend the rule. After those actions were
invalidated by a different court,\82\ the Wyoming court stayed
implementation of the capture percentage, pneumatic equipment, storage
tank, and LDAR requirements, and stayed the litigation pending
finalization of the BLM's voluntary revision of the 2016 Waste
Prevention Rule.
---------------------------------------------------------------------------
\81\ Wyoming v. DOI, Case No. 2:16-cv-00285-SWS (D. Wyo.).
\82\ See California v. BLM, No. 3:17-CV-03804-EDL (N.D. Cal.);
Sierra Club v. Zinke, No. 3:17-CV-03885-EDL (N.D. Cal.). On June 15,
2017, the BLM announced that it would postpone the January 17, 2018,
compliance dates to phase-in certain parts of the 2016 Waste
Prevention Rule. Wyoming at 1053. Several Intervenors-Respondents
from the Wyoming litigation, as well as the Attorney Generals from
the States of California and New Mexico challenged the BLM's 2017
postponement decision in the aforementioned cases in the Northern
District of California. Id. at 1053-54. This California district
court held that the BLM's 2017 postponement notice was invalid,
thereby resulting in the reinstatement of the phase-in dates for
certain parts of the 2016 Waste Prevention Rule. Id. at 1054.
---------------------------------------------------------------------------
4. 2018 Revision of Waste Prevention Rule
On September 28, 2018, the BLM issued a final rule substantially
revising the 2016 Waste Prevention Rule (``2018 Revision Rule'').\83\
In the 2018 Revision Rule, the BLM rescinded the WMP, gas capture
percentage, pneumatic equipment, storage tank, and LDAR requirements of
the 2016 Waste Prevention Rule. The BLM also revised the remaining
provisions of the rule to largely reflect the language of NTL-4A.
Finally, the BLM established a new policy of deferring to State
regulations for determining when the routine flaring of oil-well gas is
royalty-free.
---------------------------------------------------------------------------
\83\ 83 FR 49184 (Sept. 28, 2018).
---------------------------------------------------------------------------
In the 2018 Revision Rule, the BLM concluded that the 2016 Waste
Prevention Rule exceeded the BLM's statutory authority by imposing
requirements with compliance costs that exceed the value of the gas
that would be conserved, thus violating the non-statutory ``prudent
operator'' standard that some believed to have been implicitly
incorporated into the MLA when it was adopted in 1920. The BLM also
stated that the 2016 Waste Prevention Rule created a risk of premature
shut-ins of marginal wells, reasoning that the compliance costs
associated with the 2016 Waste Prevention Rule would represent a
significant proportion of a marginal well's revenue. Contrary to what
the BLM had found in 2016, the BLM stated in the 2018 Revision Rule
that existing State flaring regulations provided sufficient assurance
against excessive flaring.
The RIA for the 2018 Revision Rule found that the economic benefits
of the 2018 Revision Rule (i.e., reduced compliance costs) would
significantly outweigh its economic costs (i.e., forgone gas production
and additional methane emissions).\84\ This result was based in large
part on the use of a narrowly defined ``domestic'' social cost of
methane metric. That metric purported to capture domestic methane
costs. However, because it focused on impacts within U.S. borders, it
underestimated the full benefits of GHG mitigation accruing to U.S.
citizens and residents and thus drastically reduced the monetized
climate benefits of the 2016 Waste Prevention Rule relative to
[[Page 25387]]
what had been estimated in the RIA for the 2016 Waste Prevention
Rule.\85\
---------------------------------------------------------------------------
\84\ BLM (2018). Regulatory Impact Analysis for the Final Rule
to Rescind or Revise Certain Requirements of the 2016 Waste
Prevention Rule. p. 2-4. Available at https://www.regulations.gov/document/BLM-2018-0001-223607.
\85\ See California v. Bernhardt, 472 F. Supp. 3d 573, 611 (N.D.
Cal. 2020).
---------------------------------------------------------------------------
5. Judicial Review of the Revision Rule
In September 2018, a coalition of organizations and the States of
California and New Mexico filed lawsuits challenging the 2018 Revision
Rule in the U.S. District Court for the Northern District of
California. On July 15, 2020, the district court ruled in favor of the
plaintiffs. California v. Bernhardt, 472 F. Supp. 3d 573 (N.D. Cal.
2020). The court found that:
The BLM's interpretation of its statutory authority in the
2018 Revision Rule was unjustifiably limited, failed to require lessees
to use all reasonable precautions to prevent waste, and failed to meet
the BLM's statutory mandate to protect the public welfare;
The BLM's decision to defer to State flaring regulations
was not supported by sufficient analysis or record evidence;
The record did not support the BLM's claims that the 2016
Waste Prevention Rule posed excessive regulatory burdens and that its
costs outweighed its benefits; and
The BLM's cost-benefit analysis underlying the rule was
flawed for a variety of reasons, including that the use of a
``domestic'' social cost of methane was unreasonable and not based on
the best available science.
The court ordered that the 2018 Revision Rule be vacated in its
entirety.\86\
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\86\ However, the court stayed vacatur until October 13, 2020.
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6. Judicial Review of the 2016 Waste Prevention Rule
Following the decision in California v. Bernhardt, the Wyoming
court lifted the stay on the litigation over the 2016 Waste Prevention
Rule. In the briefing, the Department of the Interior confessed error
on the grounds that the BLM exceeded its statutory authority and was
``arbitrary and capricious'' in promulgating the rule. In October 2020,
the district court ruled in favor of the plaintiffs, finding that the
BLM had exceeded its statutory authority and had been arbitrary and
capricious in promulgating the 2016 Waste Prevention Rule. Wyoming v.
U.S. Dep't of the Interior, 493 F. Supp. 3d 1046 (D. Wyo. 2020).
Specifically, the court found that the 2016 Waste Prevention Rule was
essentially an air quality regulation and that the BLM had usurped the
authority to regulate air emissions that Congress had granted to EPA
and the States in the CAA. The court found that the rule was not
independently justified as a waste-prevention measure under the MLA.
Rather, in the court's view, the record reflected that the BLM's
primary concern was regulating methane emissions from existing oil and
gas sources. The court faulted the BLM's rulemaking for imposing
requirements beyond what could be expected of a ``prudent operator''
that develops the lease for the mutual profit of lessee and lessor.
Finally, the court faulted the BLM for applying air quality
regulations--as opposed to waste-prevention regulations--to unit and CA
operations on non-Federal lands. The court ordered that the 2016 Waste
Prevention Rule be vacated, thereby reinstating NTL-4A as the BLM's
standard for managing venting and flaring from Federal oil and gas
leases.
7. The Inflation Reduction Act
On August 16, 2022, President Biden signed the IRA into law.\87\
The IRA contains a suite of provisions addressing onshore and offshore
oil and gas development under Federal leases. For example, section
50265, inter alia, requires the Department to maintain a certain level
of onshore oil and gas leasing activity as a prerequisite to approving
renewable energy rights-of-way on Federal lands. Importantly, that
provision of the IRA is accompanied by other provisions that serve to
ensure that lessees pay fair and appropriate compensation to the
Federal Government in exchange for the opportunity to conduct their
industrial activities under Federal leases.
---------------------------------------------------------------------------
\87\ Public Law 117-169.
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One such provision of the Act is section 50263, which is entitled,
``Royalties on All Extracted Methane.'' \88\ Consistent with the MLA's
assessment of royalties on all gas ``removed or sold from the lease''
\89\ and FOGRMA's requirement that lessees pay royalties on lost or
wasted gas,\90\ section 50263 of the IRA provides that, for leases
issued after the date of enactment of the Act, royalties are owed on
all gas produced from Federal land, including gas that is consumed or
lost by venting, flaring, or negligent releases through any equipment
during upstream operations. Section 50263 further provides three
exceptions to the general obligation to pay royalties on produced gas,
namely: (1) gas that is vented or flared for not longer than 48 hours
in an emergency situation that poses a danger to human health, safety,
or the environment; (2) gas used or consumed within a lease, unit, or
communitized area for the benefit of the lease, unit, or communitized
area; and, (3) gas that is unavoidably lost.\91\
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\88\ 30 U.S.C. 1727.
\89\ 30 U.S.C. 226(b).
\90\ 30 U.S.C. 1756.
\91\ 30 U.S.C. 1727.
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The BLM has for decades assessed royalties on upstream production
and has exempted from royalties gas lost in emergency situations,
``beneficial use'' gas, and ``unavoidably lost'' gas. IRA section 50263
is consistent with the BLM's prior agency practice regarding emergency
situations, beneficial use, and the unavoidable loss of gas, and it
provides additional support for the approach set forth in this proposed
rule. Importantly, IRA section 50263 confirms that the concepts of
``avoidable'' and ``unavoidable'' loss are appropriate for assessing
royalties. Section 50263 also confirms that the United States'
pecuniary interest in regulating losses extends to those from upstream
equipment. But the IRA leaves certain questions open, such as what
losses qualify as ``unavoidably lost'' and what qualifies as an
``emergency situation.'' Congress thus has left it to the BLM, as an
exercise of the agency's expertise and judgment, to determine answers
to the specific questions the IRA leaves open. As set forth below, this
final rule addresses these questions in a manner that is consistent
with the IRA's focus on (and the MLA's and FOGRMA's pre-existing
emphasis on) ensuring that Federal lessees pay fair and appropriate
compensation to the Federal Government in exchange for the opportunity
to conduct their industrial activities under Federal leases.
D. The Final Rule
The BLM has authority under the MLA to promulgate such rules and
regulations as may be necessary ``for the prevention of undue waste''
\92\ and to ensure that lessees ``use all reasonable precautions to
prevent waste of oil or gas.'' \93\ For many years, the BLM has
implemented this authority through restrictions on the venting and
flaring of gas from onshore Federal oil and gas leases. However, as
illustrated by the judicial decisions noted previously, before the
IRA's enactment, courts disagreed about the full scope of the BLM's
authority to regulate venting and flaring. Requirements that one court
might consider necessary for the BLM to meet its statutory mandates
might have been seen as regulatory overreach by another court.
Consistent with the approach outlined in the proposed rule, and in
light of all the statutory
[[Page 25388]]
authorities including the IRA, the BLM has chosen to focus on improving
upon NTL-4A in a variety of ways without advancing elements of the 2016
Waste Prevention Rule that were the subject of certain judicial
criticism.
---------------------------------------------------------------------------
\92\ 30 U.S.C. 187.
\93\ 30 U.S.C. 225.
---------------------------------------------------------------------------
As explained in more detail below and in Section IV, the Section-
by-Section Discussion, this final rule makes substantial improvements
in addressing the waste of Federal and Indian gas, while also
addressing the Wyoming court's criticisms of the 2016 Waste Prevention
Rule. First, the requirements unambiguously constitute reasonable waste
prevention measures that should be expected of an operator. The
requirements impose fewer overall costs than those of the 2016 Waste
Prevention Rule and ensure either actual conservation of gas that would
otherwise be wasted or compensation to the public and Indian mineral
owners through royalty payments when gas is wasted. This contrasts with
certain provisions in the 2016 Rule that would have reduced pollution--
but not necessarily reduced waste--by allowing operators to comply with
analogous EPA standards in place of the BLM requirements.
Second, to address the Wyoming court's ruling that the BLM's
authority regarding unit and CA operations on non-Federal and non-
Indian surface is limited, certain requirements in this final rule are
narrower in scope than similar requirements in the 2016 Waste
Prevention Rule. Specifically, the final rule's requirements pertaining
to safety, storage tanks, and LDAR apply only to operations on Federal
or Indian surface estates.
Third, the requirements are consistent with the ``prudent
operator'' standard as that term has been applied in the oil and gas
jurisprudence.
Fourth, the final rule has been developed with an eye towards
avoiding excessive compliance burdens on marginal wells.
Finally, the BLM is expressly excluding the social cost of
greenhouse gases from its decisions on any of the proposed waste
prevention requirements, thereby addressing the Wyoming court's concern
that the 2016 Rule was inappropriately supported by ``climate change
benefits.''
The provisions of this final rule serve straightforward waste
prevention objectives by promoting gas conservation. To avoid
situations where oil-well development outpaces the capacity of the
available gas capture infrastructure, the BLM is requiring operators to
submit either a WMP, including certification of a valid, executed
contract to sell the associated gas, or a self-certification of 100
percent capture of associated gas with oil-well APDs. The BLM
recognizes that not all venting and flaring can be prevented. In the
circumstances in which some venting or flaring cannot be prevented
(e.g., initial production tests or emergencies), the BLM is
establishing appropriate time or volume limits on royalty-free venting
or flaring. The BLM is addressing the problem of intermittent flaring
due to pipeline capacity constraints by establishing a volume limit
based on oil production for royalty-free flaring caused by inadequate
capture infrastructure. Requiring royalty payments on venting and
flaring that exceeds the established limits will both discourage waste
and ensure that Federal and Indian royalty revenues are not reduced by
an operator's wasteful practices. The BLM estimates that the royalty-
free flaring limits of the final rule would generate $51 million per
year in additional royalties. See section 7.6 of the RIA for more
information.
This final rule also contains LDAR provisions intended to reduce
losses of natural gas. Unlike the 2016 Waste Prevention Rule--which
extended these requirements to State and private surface estates in
certain situations--the requirements in this final rule apply only to
operations on the Federal or Indian surface estate, where the BLM has
express authority and responsibility to regulate for safety, the
prevention of waste, and the payment of Federal or Indian royalties.
These requirements would not apply to operations that occur on State or
private surface tracts committed to a Federal unit or CA. The BLM
estimates that the requirements of this final rule regarding LDAR would
result in the conservation of up to 0.5 Bcf of gas each year.
The BLM acknowledges that the contents of this final rule differ in
some regards from the 2018 Revision Rule's narrower interpretation of
the BLM's statutory authority.\94\ Consistent with the BLM's
understanding of its authority for decades prior to 2018, the BLM has
reconsidered the relevant conclusions of the 2018 Revision Rule and now
rejects those conclusions for the following reasons. To begin, nothing
in the MLA's plain text--which requires lessees to take ``all
reasonable precautions to prevent waste'' and to abide by rules and
regulations issued ``for the prevention of undue waste''--suggests that
the BLM's authority is limited to the promulgation of rules that
effectively pay for themselves (as measured by balancing compliance
costs against the value of the recovered gas).\95\ Consistent with this
text, the BLM's longstanding policy governing venting and flaring has
assessed the economic feasibility of gas conservation in the context of
``the total leasehold production, including oil and gas, as well as the
economics of a field-wide plan.'' See supra, Part III.C.2. As the CDM
made clear, the BLM's concern under the MLA for nearly four decades
prior to the 2018 Revision Rule was ``profitable operation of the
lease, not just profitable disposition of the gas.''
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\94\ See 83 FR 49184, 49185-86 (Sept. 28, 2018).
\95\ 30 U.S.C. 187, 225. Indeed, such a requirement would
imperil nearly all operational regulations.
---------------------------------------------------------------------------
Despite suggestions to the contrary in the 2018 Revision Rule, the
focus of the final rule on overall ultimate resource recovery, not
lessee profits vis-[agrave]-vis wasted gas, is consistent with the non-
statutory ``prudent operator'' standard. While the prudent operator
standard rests on an expectation of ``mutually profitable development
of the lease's mineral resources,'' \96\ it does not follow that
lessees can maximize their profit by wasting recoverable hydrocarbon
resources without regard for the lessor's lost royalty revenues or the
lessor's interest in conserving the gas for future disposition. To the
contrary, lessees have an obligation of reasonable diligence in the
development of the leased resources, rooted in due regard for the
interests of both the lessee and the lessor.\97\ And in the MLA,
FOGRMA, and the IRA, Congress enshrined the United States' interest, as
a mineral lessor, in avoiding waste and maximizing royalty
revenues.\98\ The BLM, in managing oil and gas resources on behalf of
the United States, may value more production--considering both oil and
gas production--over a
[[Page 25389]]
longer time period more highly than does an operator, who might be more
focused on generating near-term profits. None of the authorities
previously relied upon by the BLM to interpret the ``prudent operator''
standard forecloses any Secretarial action that might marginally affect
lessee profits.\99\
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\96\ Wyoming at 1072.
\97\ See Id.; see also Sinclair Oil & Gas Co. v. Bishop, 441
P.2d 436, 447 (Okla. 1967) (``Necessarily, we determine the lessee
was acting prudently when he ascertained that it was illegal and
improper to flare gas in the quantities shown by the evidence, in
order to produce the unallocated allowable of oil.''); Tr. Co. of
Chicago v. Samedan Oil Corp., 192 F.2d 282, 284 (10th Cir. 1951)
(``A first consideration is the precept that a prudent operator may
not act only for his self-interest. He must not forget that the
primary consideration to the lessor for the lease is royalty from
the production of the lease free of cost of development and
operation.'').
\98\ See 30 U.S.C. 187, 225, 226(m), 1756; see also California
Co. v. Udall, 296 F.2d 384, 388 (D.C. Cir. 1961) (``[The Secretary]
has a responsibility to insure that these resources are not
physically wasted and that their extraction accords with prudent
principles of conservation. To protect the public's royalty interest
he may determine that minerals are being sold at less than
reasonable value. Under existing regulations he can restrict a
lessee's production to an amount commensurate with market demand,
and thus protect the public's royalty interest by preventing
depression of the market.'').
\99\ Cf. California v. Bernhardt, 472 F. Supp. 3d 573, 596 (N.D.
Cal. 2020) (``The statutory language demonstrates on its face that
any consideration of waste management limited to the economics of
individual well-operators would ignore express statutory mandates
concerning BLM's public welfare obligations.'').
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In contrast to NTL-4A, this final rule does not allow operators to
request that flared oil-well gas be deemed royalty-free based on case-
by-case economic assessments. There are a number of reasons for this
approach. In the first instance, Federal law does not require the
American taxpayers to forgo royalties on wasted gas due to an
individual operator's economic circumstances. Although it was the BLM's
practice to engage in case-by-case economic assessments under NTL-4A,
that approach is no longer appropriate, as the practical realities of
oilfield development have changed dramatically since 1980. As the U.S.
Department of Energy explained in a recent report, ``flaring has become
more of an issue with the rapid development of unconventional tight oil
and gas resources over the past two decades'' that has ``brought online
hydrocarbon resources that vary in their characteristics and
proportions of natural gas, natural gas liquids and crude oil.'' \100\
Consistent with these developments, and as discussed in Section III.A,
the BLM has witnessed a massive increase in the amount of venting and
flaring from the 1990's to the 2010's. The average amount of annual
venting and flaring from Federal and Indian leases between 1990 and
2000 was 11 Bcf. Between 2010 and 2020, it quadrupled to an average of
44.2 Bcf per year, with a 157 percent increase in the amount of vented
and flared gas as a percentage of gas production, and a 102 percent
increase in the amount of vented and flared gas per barrel of oil
produced. The upward trend in venting and flaring suggests is likely to
continue.
---------------------------------------------------------------------------
\100\ U.S. Department of Energy, Office of Fossil Energy, Office
of Oil and Natural Gas, ``Natural Gas Flaring and Venting: State and
Federal Regulatory Overview, Trends, and Impacts'' (June 2019).
https://www.energy.gov/fecm/articles/natural-gas-flaring-and-venting-regulations-report.
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Based on EIA data from 1990 through 2022, U.S. vented and flared
volumes continue an upward trend that tends to mirror U.S. oil
production,\101\ which raises a concern that new exploration and
development is outpacing infrastructure construction. Oil production in
2019 reached a record high level of 4.5 billion barrels of oil despite
a relatively low average annual spot price of $57 per barrel. Operators
may have increased oil production in 2019 to maintain revenues given
the lower pricing. An increase in oil production to maintain revenues
may have led to the very high flare volume in that year. While the
vented and flared volume has decreased since 2019--likely due to
unrepresentative production during the COVID 19 pandemic that resulted
in reduced drilling and completions during this time--the data
demonstrates that, generally, venting and flaring has continued to
increase since 1990, particularly as compared to the production of oil.
This rule will work toward reducing the waste from Federal and Indian
mineral estates.\102\
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\101\ https://www.eia.gov/dnav/ng/ng_prod_sum_a_EPG0_VGV_mmcf_m.htm.
\102\ For the following tables, see https://rigcount.bakerhughes.com/na-rig-count/, https://www.eia.gov/dnav/pet/hist/rwtcA.htm.
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BILLING CODE 4331-29-P
[GRAPHIC] [TIFF OMITTED] TR10AP24.003
[[Page 25390]]
[GRAPHIC] [TIFF OMITTED] TR10AP24.004
[GRAPHIC] [TIFF OMITTED] TR10AP24.005
BILLING CODE 4331-29-C
The related increase in the number of flaring applications--from 75
in 2005, to 922 in 2021 has created a significant administrative burden
for the BLM.\103\ It has also created an estimated information
collection burden of approximately 23,228 total annual burden hours
potentially incurred by operators and has led to significant
uncertainty for operators as hundreds of applications wait to be
processed.
---------------------------------------------------------------------------
\103\ See table in the Executive Summary.
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Finally, the BLM notes that the bulk of the recent royalty-free
flaring applications has concerned flaring from wells that are
connected to pipeline infrastructure. The purpose of the economic
inquiry under NTL-4A, by contrast, was to determine whether the volumes
of associated gas production would make the installation of gas-capture
infrastructure economically viable. CDM 644.5.3E and F. Where the gas-
capture infrastructure has already been built out, there is no need to
consider the cost and value of its installation against the volume of
associated gas production. The BLM understands that, as posited by a
commenter, there may be instances where a gas pipeline connected to an
oil well is not able to accept that well's gas for a time. In those
circumstances, an operator may temporarily curtail production or shut
in the well instead of wasting the gas. Oil and gas production should
resume when the pipeline can accept the gas.
One of the primary concerns underlying the BLM's promulgation of
the 2018 Revision Rule was the compliance burden on ``marginal wells,''
i.e., wells that produce approximately 10 barrels of oil or 60 Mcf of
natural gas per day or less.\104\ The court that vacated the 2016 Waste
Prevention Rule faulted the BLM for failing to adequately assess the
impact of that rule on marginal wells.\105\ The court that vacated the
2018 Revision Rule, however, rejected that concern as unfounded.\106\
The BLM does not wish to impose requirements that
[[Page 25391]]
inadvertently cause recoverable oil or gas resources to be stranded due
to premature lease abandonment, but, as the MLA makes clear, any such
considerations go to whether particular conservation measures are
reasonable under the MLA, not whether marginal operations must take
reasonable measures in the first instance. 30 U.S.C. 225. For example,
there is no real risk of premature abandonment by requiring the
operator of a marginal gas well to minimize the loss of gas during
liquids unloading operations, as required in this rule. Under the final
rule, an operator of a marginal gas well may vent gas during liquids
unloading operations royalty-free for 24 hours. If the gas well is not
put into production within 24 hours and maintenance operations must
continue, the volume of gas vented is likely very small and the flowing
pressure very low--otherwise, the operator would be returning the well
to production. Thus, the marginal time that it takes an operator to
continue liquids unloading beyond the initial 24 hours will not result
in significant vented gas and corresponding royalty obligation.
Furthermore, the BLM has provisions for royalty rate reductions in 43
CFR 3103.4-1 to encourage the greatest ultimate recovery of oil or gas.
Therefore, in the unlikely event that compliance with the final rule
would lead to an operator's premature abandonment of a well, an
operator may seek royalty relief to continue operations.
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\104\ 83 FR 49184, 49187 (Sept 28, 2018).
\105\ Wyoming 493 F. Supp. 3d at 1075-78.
\106\ California v. Bernhardt, 472 F. Supp. 3d 573, 606 (N.D.
Cal. 2020).
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The BLM has developed this final rule to avoid excessive and
unreasonable compliance burdens on marginal wells when balanced against
the need to reduce waste. In the 2018 Revision Rule, the BLM noted that
the provisions of the 2016 Waste Prevention Rule that placed a
particular burden on marginal wells were those pertaining to pneumatic
controllers, pneumatic diaphragm pumps, and LDAR. In this final rule,
the requirements for LDAR only apply to Federal or Indian minerals
produced from facilities located on a Federal or Indian surface estate,
thereby limiting the number of operators to which the LDAR program
applies. In addition, the BLM has not included in this final rule the
provisions in the proposed rule regarding pneumatic controllers and
diaphragm pumps.
The BLM acknowledges that, in the 2018 Revision Rule, it asserted
that additional restrictions on flaring were unnecessary because the
States with the most significant BLM-managed oil and gas production
impose regulatory restrictions on flaring from oil wells and that these
State regulations ``provide[d] a reasonable assurance . . . that the
waste of associated gas will be controlled.'' \107\ This assertion
directly contradicted the BLM's prior findings during the promulgation
of the 2016 Waste Prevention Rule, and a district court held that the
BLM's decision to rely on State flaring regulations was unjustified
based on the record evidence.\108\
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\107\ 83 FR 49184, 49202 (Sept. 28, 2018).
\108\ California v. Bernhardt, 472 F. Supp. 3d 573, 601-04 (N.D.
Cal. 2020).
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For this rulemaking, the BLM analyzed the State regulations
governing flaring, venting, and leaks in the 10 States responsible for
99 percent of Federal oil and gas production: Alaska, California,
Colorado, Montana, New Mexico, North Dakota, Oklahoma, Texas, Utah, and
Wyoming. Summaries of these regulations were collected in a table that
is available in the docket for this rulemaking at www.regulations.gov.
While there have been notable advancements in some States since the
promulgation of the 2016 Waste Prevention Rule--for example, new
comprehensive flaring regulations have since been adopted in New Mexico
and Colorado, and new requirements for storage tanks, pneumatic
equipment, and LDAR have been adopted in Colorado and Utah--State
regulations vary widely in their scope and stringency.\109\ And,
importantly, many of the State flaring regulations reserve substantial
discretion to the State agencies to authorize additional flaring.\110\
That discretion creates significant uncertainty about the extent to
which the BLM can rely on those regulations to protect the interests of
the United States and Indian mineral owners in minimizing waste and
maximizing royalty revenues.
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\109\ Examples of variations among State regulations include the
following. Unlike other States, (1) the States of New Mexico, North
Dakota, Montana, Texas, Alaska, and Oklahoma do not have regulations
to control losses of gas from pneumatic equipment; (2) Texas'
requirements to inspect for and repair leaks are focused on storage
tanks; (3) Alaska does not maintain LDAR requirements; and (4)
Wyoming's requirements for tanks, pneumatic equipment, and LDAR are
limited to the Upper Green River Basin ozone nonattainment area.
\110\ These States are Wyoming, Utah, Montana, Texas, and
Oklahoma.
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In its comments on the proposed rule, the Wyoming Oil and Gas
Conservation Commission asserts that the BLM incorrectly characterizes
Wyoming's regulations regarding flaring and gas capture plan
requirements. Specifically, Wyoming challenges language in the proposed
rule that ``Wyoming's gas capture plan requirements are not triggered
until after flaring becomes a problem at the well.'' \111\
Specifically, the State objects to the proposed rule's description of
Wyoming regulations as triggering a plan only after a flaring
``issue,'' explaining that, in the Commission's view, ``[t]he operator
must submit a gas capture plan, among other information . . . before
flaring or it would need to limit flaring to 60 mcf/d or be in
violation of the [applicable] rule.'' But whether or not these
contingencies are properly characterized as an ``issue,'' the BLM's
point--that it was deemed a plan to be useful when the APD is
submitted--stands. State gas capture plan requirements, by themselves,
do not provide the BLM, in its capacity as regulator and steward of the
Federal mineral estate, with an opportunity to render its own
determinations regarding potential waste when processing an APD.
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\111\ 87 FR 73588, 73598 (Nov. 30, 2022).
---------------------------------------------------------------------------
North Dakota in its comments on the proposed rule takes issue with
the way the BLM characterized the allowance for variances in North
Dakota's gas capture regulations. Specifically, the State asserted:
``In its proposed rule publication, the BLM disingenuously criticizes
North Dakota's gas capture regulations for allowing variances, and then
inconsistently proposes a rule that considers associated natural gas as
unavoidably lost under the same circumstances as 9 out of 10 [North
Dakota Industrial Commission] variance allowances. . . .'' The BLM
acknowledges North Dakota's disagreement with the BLM's
characterization of North Dakota's gas capture regulations.
Nonetheless, as discussed in the proposed rule, the BLM found
significant variance in the scope and stringency of State regulations.
Flaring statistics show that State regulations, by themselves, have not
been adequate to reduce waste from Federal oil wells, underscoring the
need for uniformity with respect to Federal mineral interests. As
discussed further in the section-by-section analysis below, according
to EIA data from 2017 through 2022, North Dakota accounted for
approximately 33 percent of the volume of gas flared nationwide but
only 11 percent of the volume of oil produced nationwide. Wyoming
accounted for approximately 11 percent of the average total flared gas
onshore nationwide and 2 percent of the oil produced nationwide. State
efforts to reduce venting and flaring, though important, do not
displace the Secretary's duty to prevent undue waste from Federal and
Indian wells nationwide.\112\ Consequently, the BLM's
[[Page 25392]]
application of a uniform national standard ensures improved royalty
collection and avoidance of waste. In addition, the Secretary, and not
the States, is responsible for collecting Federal and Indian royalties.
The Secretary can best do this by not requiring shifting Federal
standards in response to any changes to State requirements.
---------------------------------------------------------------------------
\112\ https://www.eia.gov/dnav/ng/ng_prod_sum_a_EPG0_VGV_mmcf_a.htm, https://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbbl_a.htm.
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The BLM also recognizes that the EPA has recently finalized
regulations governing certain aspects of oil and gas production
operations at 40 CFR part 60, subparts OOOOb and OOOOc, and that these
regulations can have the incidental effect of reducing the waste of gas
during production activities. Specifically, EPA's regulations \113\
require: (1) capture or flaring of gas that reaches the surface during
well completion operations with hydraulic fracturing; \114\ (2) storage
tanks with potential methane emissions of 20 tons or more per year to
control those emissions (including through combustion); \115\ (3)
process controllers to be zero emissions; \116\ (4) pumps to be zero
emissions; \117\ and (5) operators of well sites to develop and
implement a fugitive emissions monitoring plan.\118\
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\113\ 40 CFR part 60 subpart OOOOb regulates greenhouse gases
(in the form of limitations on methane) and VOCs from various new,
modified, and reconstructed emission sources across the Crude Oil
and Natural Gas source category for which construction,
reconstruction, or modification commenced after December 6, 2022. 40
CFR part 60 subpart OOOOc includes presumptive standards for
greenhouse gases (in the form of limitations on methane, a
designated pollutant), for certain existing emission sources prior
to December 6, 2022, across the Crude Oil and Natural Gas source
category.
\114\ See 40 CFR part 60 subpart OOOOb at Sec. 60.5375b.
\115\ See 40 CFR part 60 subpart OOOOb at Sec. 60.5395b and 40
CFR part 60 subpart OOOOc at Sec. 60.5396c.
\116\ See 40 CFR part 60 subpart OOOOb at Sec. 60.5370b and 40
CFR part 60 subpart OOOOc at Sec. 60.5362c(c), Sec. 60.5370c and
Table 1.
\117\ See 40 CFR part 60 subpart OOOOb at Sec. 60.5370b and 40
CFR part 60 subpart OOOOc at Sec. 60.5362c(c), Sec. 60.5370c and
Table 1.
\118\ See 40 CFR part 60 subpart OOOOb at Sec. 60.5370b, and
Sec. 60.5397b and 40 CFR part 60 subpart OOOOc at Sec.
60.5362c(c), Sec. 60.5370c, Table 1, and Sec. 60.5397c.
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Although operator compliance with those EPA requirements can reduce
the waste of natural gas from Federal and Indian leases, they do not
supplant the need for BLM standards that are adopted pursuant to the
BLM's independent statutory authority and duties. The BLM further notes
that, under the CAA, States with one or more existing sources must
develop and submit State plans to the EPA for approval. Under this
statutory structure, State plans would implement the emissions
guidelines for existing sources. Also, EPA's requirements are not a
substitute for BLM standards because EPA's requirements are focused on
controlling GHG (in the form of methane) and VOC emissions, rather than
conserving natural gas, and compliance with the EPA's standards will
not always reduce the waste of natural gas or assure payment of
royalties to the United States or to Indian mineral owners. For
example, an operator can comply with EPA's requirements for storage
tanks by routing the emissions to combustion (i.e., flaring) and
therefore eliminating venting from the tanks altogether. That process
results in the same loss of gas as venting the gas from the tank.
Therefore, while that process reduces air pollution by prioritizing
flaring over venting, it does not reduce waste or assure payment of
royalties because in either scenario, the same amount of gas is lost.
Based on its review and analysis of State and EPA regulations, the
BLM finds that it is necessary to establish a uniform standard
governing the wasteful losses of Federal and Indian gas through
venting, flaring, and leaks.\119\ The BLM cannot rely on a patchwork of
State and EPA regulations to ensure that operators of Federal oil and
gas leases consistently meet the waste prevention mandates of the MLA,
that the American public receive a fair return for the development of
the Federal mineral estate, and that the Department's trust
responsibility to Indian mineral owners is satisfied. The BLM
acknowledges that this is a change in position from what the BLM stated
in the Revision Rule regarding analogous State and EPA regulations, a
change shown to be necessary by the vast increase in flaring in recent
decades, which demonstrates the ineffectiveness of NTL-4A in
controlling the waste of gas through venting and flaring. In addition,
establishing a uniform standard in lieu of case-by-case avoidable and
unavoidable loss determinations reduces the administrative burden on
the BLM's limited resources; avoids inconsistent application across the
States; and simplifies Federal and Indian enforcement.
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\119\ The BLM acknowledges that the Wyoming court questioned
what it described as the BLM's authority to ``hijack'' the
cooperative federalism framework of the CAA ``under the guise of
waste management.'' Wyoming 493 F. Supp. 3d at 1066. However, as
noted elsewhere, this final rule is justified not by any ancillary
effects on air quality or climate change, but solely on the basis of
waste prevention--an arena where the BLM has independent statutory
authority to regulate. See Id. at 1063 (``The terms of the MLA and
FOGRMA make clear that Congress intended the Secretary, through the
BLM, to exercise rulemaking authority to prevent the waste of
Federal and Indian mineral resources and to ensure the proper
payment of royalties to Federal, State, and Tribal governments.'').
On its own terms, therefore, the Wyoming court's reference to
cooperative federalism under the Clean Air Act is inapplicable to
this final rule, which does not seek to improve air quality and does
not rely on EPA's CAA regulations.
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The RIA for this final rule calculates that this rule would cost
operators $19.3 million per year, using a 7 percent discount rate, for
the next 10 years ($19.2 million per year using a 3 percent discount
rate), while generating benefits to operators of approximately $1.8
million per year, using a 7 percent discount rate, in the form of 0.45
Bcf of additional captured gas.\120\ The RIA estimates that this final
rule would generate $51 million per year in additional royalties. The
BLM acknowledges that the estimated costs of this rule to operators
will outweigh the benefits in terms of the estimated monetized market
value of the gas conserved. However, these benefits do not take into
account the increase in royalties that will be received by the American
taxpayer or Indian mineral owners, or include any increase in
production that could possibly be received from changes in behavior due
to the avoidable loss threshold, which would also lead to an increase
in benefits. The BLM notes that the statutory provisions authorizing
the BLM to regulate oil and gas operations for the prevention of waste
do not impose a net-benefit requirement.
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\120\ The cost-benefit analysis contained in the RIA was
generated to comply with Executive Order 12866 and is not required
by the statutes authorizing the BLM to regulate for the prevention
of waste from oil and gas leases.
---------------------------------------------------------------------------
Separately, the reduced methane emissions associated with the final
rule provide a monetized benefit to society (in the form of avoided
climate damages) of $17.9 million per year over the same time frame,
leading to an overall net monetized benefit from the rule of $360,000
to $441,000 a year, as well as additional unquantified benefits. (See
Appendix A of the RIA regarding unquantified benefits.) The basis for
the BLM's estimates of social benefits from reduced methane emissions--
namely, the social cost of greenhouse gases (SC-GHG)--is explained in
detail in Appendix A of the RIA. To be clear, although the BLM is
reporting its estimates of the social benefits of reduced methane
emissions here and in the RIA, the purpose of that reporting is solely
to provide the most complete and transparent accounting of the costs
and benefits of the rule for the public's awareness. The BLM considered
but did not rely on climate-related costs and
[[Page 25393]]
benefits when reaching the policy decisions in this rule. The
requirements of this final rule reflect reasonable measures to avoid
waste, regardless of any impacts with respect to climate change.
IV. Discussion of Public Comments on the Proposed Rule
This section of the preamble summarizes the major categories of the
public comments that the BLM received in response to the proposed rule,
as well as the BLM's responses. Detailed discussion regarding the
substantive comments on the proposed rule that the BLM received, the
BLM's responses to those comments, and changes that the BLM made in the
final rule are provided in Section V (Section-by-Section Discussion) of
this preamble.
The public comment period for the proposed rule ended on January
30, 2023. During the 60-day public comment period, the BLM received
3,323 total comments submitted from Federal, State, local governments,
local agencies, Tribal organizations, industry representatives,
individuals, and other external stakeholders. Of the 3,323 comment
letter submissions, 2,892 were template form letters from seven
different organizations, leaving 134 additional unique commenters. From
these 141 unique commenters, the BLM identified 1,123 unique comments
on the proposed rule.
Several commenters requested that the BLM hold meetings to take
public input on the proposed rule before the comment period ended. The
BLM held additional meetings with the Santa Rosa Rancheria Tachi-Yokut
Tribe on December 1, 2022; the Mandan, Hidatsa and Arikara Nation (MHA
Nation) on December 6, 2022, and February 13, 2023; and the Southern
Ute Indian Tribe on April 10, 2023, May 25, 2023, and June 8, 2023.
All relevant comments are posted at the Federal eRulemaking portal:
http://www.regulations.gov. To access the comments at that website,
enter 1004-AE79 in the Searchbox.
Comments on Federalism Implications
Summary of Comments: Several commenters suggested that the BLM
withdraw the proposed rule on the grounds that it exceeds Federal
statutory authority or, in the alternative, revise the proposed rule to
reflect a federalism framework to affirm the States' authority over
State and local mineral resources within the State's boundaries. To
that end, the commenters stated that the final rule has sufficient
federalism implications to warrant the preparation of a federalism
summary impact statement. In support of this position, the commenters
claimed that this rule unlawfully focuses on air quality emissions
rather than waste, and that this focus violates the cooperative
federalism framework under the CAA. The commenters referenced the BLM's
purported preference for flaring over venting and claimed that this
preference for flaring is unsupported because the BLM's regulatory
authority is limited to waste prevention and does not include safety as
a guise to regulate air quality.
Response: The BLM disagrees with the commenters. The BLM developed
this rule based on its statutory authority to prevent and reduce the
waste of natural gas produced from Federal and Indian (not State) land
through improved regulatory requirements pertaining to venting,
flaring, and leaks, while ensuring a fair return to the American
public.\121\ It does not override the States' or Tribes' more stringent
requirements for flaring and gas capture or waste prevention measures
on State or Indian lands. Operators with leases on Federal lands must
comply with the Department's regulations and with State requirements to
the extent that they do not conflict with the Department's regulations.
As stated in the Federalism section of this rule, below, although the
final rule will affect the relationship between operators, lessees, and
the BLM, it will not directly impact States. Accordingly, a federalism
summary impact statement is not warranted.
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\121\ 30 U.S.C. 187.
---------------------------------------------------------------------------
Any claim that this rule violates the cooperative federalism
framework under the CAA is likewise unfounded. As discussed below, the
waste prevention rule is intended to prevent the waste of gas from
Federal oil and gas leases and is, therefore, not an air quality
emissions rule. As noted in the preamble to the proposed rule, the
Wyoming court questioned the BLM's authority to--in the court's view--
preempt cooperative federalism under the CAA, using a pretext of waste
prevention. But as consistently explained throughout this preamble,
this final rule is authorized by the BLM's independent statutory
authority to prevent waste of natural gas and is not focused on
achieving any ancillary effects on air quality or climate change. As
such, cooperative federalism requirements under the CAA do not apply to
this final rule.\122\ Moreover, the Department's regulations governing
oil and gas operations on the public lands have long required operators
to conduct operations in a manner that is protective of natural
resources, environmental quality, and public health and safety. See 43
CFR 3162.5-1 and 3162.5-3. As the BLM stated in the proposed rule and
reiterated in the Sec. 3179.50 Safety discussion in this final
preamble, combusting gas rather than venting it into the surrounding
air is safer for operations due to the gas' explosiveness and the risk
to workers from hypoxia and exposure to various associated pollutants.
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\122\ We have found no statutory support for the argument that
any regulation that has ancillary effects on air quality is per se
preempted by the CAA.
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Comments on State or Tribal Variances
Summary of Comments: At least one commenter said that, as a
sovereign regulatory authority over the State and private minerals
located within the State's boundaries, it objected to the requirement
that the State and private mineral holders must seek variances from the
waste prevention requirements. This commenter also concluded that the
variance provision was improper because, according to the commenter,
the rule is an air quality emissions rule.
Response: The BLM decided not to include the provisions for State
or Tribal requests for variances that were found in the proposed rule
at 43 CFR 3179.401 in part because it concluded that the proposed
variance provision could lead to regulatory uncertainty. As stated
above in response to comments regarding federalism implications, the
final rule does not preempt more stringent requirements for flaring,
gas capture, or waste prevention under State or Tribal law, as
appropriate. Operators with oil and gas leases on Federal lands must
comply with the Department's regulations and with State requirements,
to the extent that they do not conflict with the Department's
regulations, and similarly operators of Tribal leases must comply with
both Tribal and Departmental regulations. Moreover, the waste
prevention rule is intended to prevent the waste of gas from Federal
and Indian oil and gas leases and is, therefore, not an air quality
emissions rule, as further discussed below.
Comments on Air Quality
Summary of Comments: Some commenters claimed that this rule seeks
to address air quality rather than waste prevention and that the BLM
should defer to the Environmental Protection Agency (EPA) or State
agencies to regulate air quality under the CAA and other authorities.
Response: The BLM disagrees. As discussed above, the rule responds
to the BLM's statutory obligation to prevent waste. The MLA requires
the BLM to subject all oil and gas leases to the condition that the
lessee ``use all
[[Page 25394]]
reasonable precautions to prevent the waste of oil or gas developed in
the land'' and underscores that ``[v]iolations of the provisions of
this section shall constitute grounds for the forfeiture of the
lease.'' \123\ The Act also provides the Secretary with authority to
subject leases to ``such rules . . . for the prevention of undue waste
as may be prescribed by [the] Secretary.'' \124\ Even the Wyoming
court--which vacated portions of the 2016 Rule after the court found it
was primarily justified by air quality benefits--recognized that the
BLM does in fact have authority to promulgate and impose rules designed
to reduce waste, provided such rules are ``independently justified as
waste prevention measures pursuant to [the BLM's] MLA authority.'' 493
F. Supp. 3d at 1067. As explained below, the waste prevention
provisions of the final rule are independently justified, and the air
quality comments from oil-and-gas industry representatives do not
demonstrate otherwise.
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\123\ 30 U.S.C. 225.
\124\ 30 U.S.C. 187.
---------------------------------------------------------------------------
Notwithstanding this authority, a commenter opposed to much of the
proposed rule stated that the BLM should avoid conflict or duplication
with EPA's and the States' exercise of their ``exclusive authority''
over air quality. The commenter added that CAA regulation and
enforcement fall within other Federal and State agencies' ``exclusive
jurisdiction.'' The commenter also referred to what it described as the
``exclusive air quality purview'' of EPA and the States, while arguing
that the BLM should not ``assume'' such authority.
The BLM is not regulating air quality in this rule. The BLM is
regulating to prevent waste and to assure payment of royalties pursuant
to independent and express statutory authority. The ability of EPA and
the States to regulate air pollution does not bar the BLM from
fulfilling its statutory obligation to regulate waste. Addressing waste
may have some effects on air pollution and its connection to human
health and welfare, which is the primary responsibility of the EPA,
States, and local governments.\125\ But the possibility that a BLM rule
might have incidental effects on air quality does not strip the BLM
from exercising its clear, express statutory authority under the MLA to
prevent or reduce waste of gas. Cf. Wyoming, 493 F. Supp. 3d at 1063
(acknowledging that ``a regulation that prevents wasteful losses of
natural gas from venting and flaring necessarily reduces emissions of
that gas''). The MLA is designed to encourage diligent development of
Federal oil and gas resources, avoid waste, and generate revenue, see
Public Law 66-145, sections 15, 16, 26, 27, while the CAA seeks to
reduce air pollution to protect the public health and welfare. 42
U.S.C. 7401(a)(2), (b)(1). The EPA's regulation of methane emissions
does not excuse the BLM from its obligation to prevent waste of and
generate revenue from Federal oil and gas resources. In the proposed
and final rules, the BLM has explained why it is implementing certain
measures for waste prevention or other matters attendant to BLM
authority (e.g., safety and royalty measurement).
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\125\ Bell v. Cheswick Generating Station, 734 F.3d 188, 190 (3d
Cir. 2013) (emphasis added).
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Another comment expressed concern about conflicts between the MLA
and various air quality regulations and statutes. The commenter
specified that the rule should not ``create potential conflicts or
duplication with EPA and State requirements promulgated pursuant to the
CAA and State authorities.'' Another comment expressed concern about a
``potentially conflicting and duplicative BLM regulatory overlay'' on
existing and forthcoming regulations on methane and VOC emissions. As
noted, the CAA and the MLA pursue different statutory goals, which may,
as a general matter, reduce the possibility of conflict among specific
regulations promulgated by the BLM and EPA. The successful prevention
of the waste of gas may also lead to air quality effects. Nonetheless,
we have examined the EPA's methane-related regulations and the EPA's
OOOO series rules \126\ and have avoided conflict by focusing on the
BLM's waste prevention and royalty measurement mandates, while
acknowledging ancillary effects to air quality from this final rule. We
have found no provision of the final rule that prevents compliance with
EPA's regulations.
---------------------------------------------------------------------------
\126\ 77 FR 49490, 49542 (Aug. 16, 2012); 81 FR 35824, 35898
(June 3, 2016); 86 FR 63110 (Nov. 15, 2021).
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Enactment of the CAA did not repeal any section of the MLA or any
of the BLM's other statutory authorities. Thus, neither the CAA, nor
the programs of the EPA, States, or Tribes relieve the BLM of its
statutory obligations to prevent waste and to assure royalty
accountability. Similarly, nothing in this final rule interferes with
any air quality regulation of EPA, the States, or Tribes.
In sum, we conclude that the final rule is a proper exercise of the
agency's authority under the MLA and other statutes (discussed above)
to promulgate regulations for the prevention of waste. Its ancillary
effects on air quality are not disqualifying and, despite commenters'
suggestions to the contrary, do not defeat the provisions of the MLA
discussed above, as reinforced by the IRA.
Commenters also suggested that the BLM's proposed rule implicates a
``major question'' as that term is used in West Virginia v. EPA, 142 S.
Ct. 2587 (2022). In that case, the Supreme Court vacated an EPA
rulemaking because, according to the Court, EPA ``claimed to discover
in a long-extant statute an unheralded power representing a
transformative expansion in its regulatory authority,'' ``located that
newfound power in the vague language of an ancillary provision of the
Act,'' and ``adopted a regulatory program that Congress had
conspicuously and repeatedly declined to enact itself.'' Id. At 2610.
The Supreme Court went on to hold that, in such circumstances,
colorable congressional authorization was insufficient; the agency must
instead point to ``clear congressional authorization'' for its actions.
Id. At 2614.
The final rule is not the type of ``extraordinary'' Rule that
implicates a major question. See Id. At 2609. The BLM has not claimed
to discover any novel authority in the MLA. Rather, a lessor's legal
capacity to prevent waste extends back at least to the common law
prudent operator standard. Congress codified the Secretary's authority
and obligation to prevent waste in 1920, when it drafted the MLA to
provide that ``[e]ach lease shall contain . . . a provision that such
rules . . . for the prevention of undue waste as may be prescribed by
said Secretary shall be observed.'' \127\ Congress affirmed the BLM's
authority and obligations in 2022, when, in the IRA, it required the
BLM to charge royalties on gas that was not ``unavoidably lost'' but
did not otherwise define that term.\128\ By the same token, the MLA
provisions at issue here are not ``ancillary:'' they have been squarely
and explicitly relied upon for decades in efforts to reduce waste. In
short, the Department's authority to regulate waste is--and always has
been--a component of its authority to lease.
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\127\ See 30 U.S.C. 187).
\128\ As previously stated in the preamble, the IRA provides
that, for leases issued after August 16, 2022, royalties are owed on
all gas produced from Federal land, subject to certain exceptions
for gas that is lost during emergency situations, used for the
benefit of lease operations, or ``unavoidably lost.''
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Beyond this longstanding authority, the BLM's rule is narrower than
the
[[Page 25395]]
Supreme Court's characterization of the rule in West Virginia. That
rule, according to the Court, ``balance[ed] the many vital
considerations of national policy implicated in deciding how Americans
will get their energy.'' 142 S. Ct. at 2612. Accord Biden v. Nebraska,
143 S. Ct. 2355, 2372 (2023) (striking down student loan forgiveness
program on the grounds that ``no regulation premised on [the ostensibly
authorizing statute] has even begun to approach the size or scope of
the Secretary's program''). Here, the BLM is changing its regulations
to marginally adjust waste prevention--merely one component of oil and
gas production--under the MLA and the Indian minerals statutes. Those
statutes, in turn, reflect merely one component of the nation's total
oil and gas production, which itself is merely one component of the
nation's total energy mix.
Nor has Congress considered and rejected the measures in this final
rule. Commenters did not provide evidence showing that the most
significant portions of this rule--new requirements for APDs,
clarification of the term ``avoidably lost'', and leak detection--have
been the subject of congressional debate. Ultimately, ``common sense''
indicates that the MLA and the IRA reflect precisely ``the manner in
which Congress [would have been] likely to delegate'' the technical and
discrete issue of waste prevention vis-[agrave]-vis public minerals.
West Virginia at 2609. The BLM therefore did not make changes based on
these comments.
Comments on Ways To Minimize Waste of Natural Gas During the Leasing
Stage
Summary of Comments: The BLM requested public comment on how it can
improve its processes pertaining to the leasing stage of development to
minimize the waste of natural gas during later stages of development.
Some commenters recommended that the BLM require WMPs at the land use
planning stage or when an operator nominates parcels of land for
leasing under an Expression of Interest. Although at least one
commenter recommended that the BLM require a WMP during the leasing
stage, at least one other commenter objected to that proposal. At least
one commenter objected to the BLM's proposed requirement that an APD
include a WMP and specifically protested what it claimed to be vague
standards for approval or denial of the plan. The commenter further
stated that this proposed provision potentially duplicates a State's
gas capture plans and may delay or cause the State permit to expire if
the rule required the operator to submit information that conflicts
with the State's requirements. Another commenter requested that the BLM
remove any requirement for the operator to provide confidential
business information or otherwise unavailable information in the WMP
because the operator does not possess this information and it is not
helpful for the specific purpose it is intended.
Response: As discussed further in the Section-by-Section
discussion, the BLM in this final rule has retained the requirement to
submit a WMP with a Federal or Indian oil and gas APD, or, in the
alternative, submit a self-certification statement that would commit
the operator to capturing 100 percent of the associated gas produced
from an oil well and would obligate the operator to pay royalties on
all lost gas except for gas lost through emergencies. The BLM has
reviewed the comments and changed the provisions for a WMP. Under the
final rule, the operator may submit either: (1) a self-certification
statement committing the operator to capture 100 percent of the
associated gas less any on-lease use of associated gas pursuant to
subpart 3178; or (2) a WMP that includes, among other requirements, a
certification that the operator has a valid, executed gas sales
contract for the associated gas. A WMP is subject to the avoidable loss
flaring limit established in final Sec. 3179.70, while self-
certification is a statement that the operator will be able to capture,
as defined in final Sec. 3179.10, 100 percent of the associated gas.
In the case of self-certification, 100 percent of the oil-well flared
gas has a royalty obligation from the date of first production until
the well is plugged and abandoned, less any on-lease use of associated
gas pursuant to subpart 3178.
The BLM has added the self-certification option to the final rule
in response to comments that the waste prevention plan requirement is
overly burdensome for industry and provides little benefit to the BLM.
The self-certification option serves the dual purposes of providing
operators with a less burdensome alternative, while simultaneously
reducing waste through the encouragement of capture, a term defined in
the proposed rule and unchanged in the final rule. The updated
requirement provides the operator with the flexibility to secure a
valid, executed gas sales contract or elect to expedite approval of the
APD with a self-certification statement. In making this decision,
operators may consider, e.g., the time to secure a gas sales contract,
the desired date of the oil well completion, or the flaring royalty
obligation associated with either a WMP or self-certification.
The BLM disagrees with a commenter's belief that the WMP
potentially duplicates a State's gas capture plans or would delay or
cause a State permit to expire if the rule requires the operator to
provide confidential or otherwise unavailable information. In any State
or on any Tribal lands with essentially the same requirements as this
final rule, this rule has no additional substantive burden on
operators. As previously stated, the final rule does not preempt any
State's or Tribe's requirements that are more stringent with respect to
flaring and gas capture requirements or for waste prevention. There is
nothing unique about this rule's interaction with State or Tribal law;
those laws have always applied to operations regulated by the BLM,
except on the rare occasion in which they prevent compliance with BLM
regulations. More stringent State or Tribal regulations apply of their
own force. Operators with leases on Federal lands must comply with both
the Department's regulations and with State or Tribal requirements, to
the extent that the non-Federal requirements do not conflict with the
Department's regulations. None of the commenters have shown that any
portion of the rule would interfere with the States' or Tribes' ability
to regulate oil and gas operations on Federal lands or that the
operator cannot comply with both the final rule and State or Tribal
regulations.
After carefully considering the comments received concerning
confidential information that may be included in the WMP, as well as
information that is not within the operator's purview, the BLM has
revised the required information in the WMP to align with the BLM's
waste prevention objectives more closely. For example, the BLM is not
finalizing the proposal for operators to identify in the WMP the
anticipated daily capacity of the pipeline at the anticipated date of
first gas sales from the proposed well, or the proposal to include any
plans known to the operator for expansion of pipeline capacity for the
area that includes the proposed well. Commenters indicated that this
information could be confidential and proprietary information that
belongs to midstream companies and that oil and gas operator are
obligated to keep confidential. We agree.
[[Page 25396]]
Comments on Definition of ``Unreasonable and Undue Waste of Gas'' in
the Loss of Oil or Gas, Avoidable or Unavoidable Determination, and the
Prudent Operator Standard
``Unreasonable and undue waste of gas,'' avoidable or unavoidable
determination, and the prudent operator standard are interrelated and
warrant a combined discussion. Accordingly, the following summary of
comments and the BLM's response will cover these three concepts.
Summary of Comments: In the proposed rule, the BLM requested public
comment on the definition of ``unreasonable and undue waste of gas,''
which the BLM considers when determining whether the loss of oil or gas
is avoidable or unavoidable. Commenters suggested that the definition
include an express reference to economic feasibility because, according
to the commenters, the rule will become unwieldy and difficult for the
BLM to administer without this economic consideration. Commenters
expressed concern that the proposed avoidable loss threshold ignores
whether the lessee is acting reasonably and prudently without any
evaluation of the operator's actual economic circumstances, and that
flaring is not automatically ``waste.''
Response: We disagree with the commenters' suggestion that the rule
should accommodate economic feasibility for individual flaring cases.
In the proposed rule, the BLM explained that ``lessees have an
obligation of reasonable diligence in the development of the leased
resources, rooted in due regard for the interests of both the lessee
and the lessor.'' 87 FR 73597. The lessor has an interest in collecting
royalties on production and in conserving gas for future disposition.
The proposed rule also explained that the prudent operator standard
looks to the operation of a lease as a whole and considers the
interests of both the lessees and the lessors in conserving and
developing the Federal mineral resource. However, with the final rule,
the BLM has decided to not carry forward the proposed definition of
``unreasonable and undue waste of gas'' and removed the term from Sec.
3179.10 and references to the definition in Sec. Sec. 3179.100 and
3179.70(b). The BLM has determined that the definition might create
unnecessary confusion and is not relevant for purpose of carrying out
Sec. Sec. 3179.100 and 3179.70(b).
Several commenters objected to the BLM's discussion of the prudent
operator standard, which focuses on the lease as a whole, and argued
that the prudent operator standard forecloses the BLM from imposing
measures for waste prevention that may, in some situations, require an
operator to spend more than the value of potentially wasted gas. That
is, the commenters did not contend that the BLM's rule would render
leases unprofitable on the whole, but merely that the prevention of
marginal waste might not, from the individual operator's perspective
(and particularly for low volume producers) pay for itself.
In support of this reading, the commenters cited the BLM's
regulatory definition of waste as:
any act or failure to act by the operator that is not sanctioned by
the authorized officer as necessary for proper development and
production 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.
43 CFR 3160.0-5 (emphasis added). The definitions in 43 CFR 3160.0-5
explicitly apply to part 3160 only, and the BLM notes that most of the
regulations in this final rule appear in part 3170. In any event, there
is no conceptual inconsistency between the regulations in that part and
the definitions in part 3160. The definition of ``waste'' in part 3160
indicates that gas is wasted where, inter alia, loss is avoidable, and
the final definitions in part 3170 explain when loss is avoidable and,
separately, what subset of ``waste'' is ``undue.'' To avoid confusion,
the final rule has deleted the word ``prudent'' where it had occurred
in the proposed rule. See Sec. 3179.41(a) and (b).
It is unclear precisely why commenters believe this provision is
inconsistent with a fair reading of the non-statutory prudent operator
standard and why they believe that standard requires a narrower
reading. It is true, as commenters note (and as discussed elsewhere in
this rule), that NTL-4A and IBLA caselaw have previously recognized
``unavoidably lost'' gas--the waste implicitly contemplated by 43 CFR
3160.0-5(1)--as excluding those cases where, in a case-by-case
determination, ``the Supervisor determines that said loss resulted from
. . . the failure of the lessee or operator to take all reasonable
measures to prevent and/or control the loss.'' NTL-4A. II.A. For the
reasons explained elsewhere in this preamble, such case-by-case
determinations are no longer sufficient for the BLM's fulfillment of
its obligations to prevent waste. Here, we explain why the authorities
cited by some commentors do not require individualized determinations.
Thus, for example, commenters' frequent citations to court
decisions and to the IBLA decisions in Ladd Petroleum Corporation and
Rife Oil Properties are misplaced. Ladd did not address the meaning of
the prudent operator standard or avoidably lost gas at all, and instead
held that, where the BLM had chosen to issue certain guidance detailing
case-by-case feasibility determinations, the substance of that guidance
should govern in pending administrative appeals. 107 IBLA 5 (1989).
Rife Oil, meanwhile, stands for the proposition that NTL-4A provided
for case-by-case waste determinations, not that the MLA and FOGRMA
require such determinations. 131 IBLA 357, 373-75 (1994).\129\ The same
is true for the cases cited by Ladd and Rife Oil. See Lomax Exploration
Co., 105 IBLA 1 (1988) (concluding that NTL-4A applied to certain
venting or flaring without passing on the BLM's discretion to modify or
depart from NTLA-4A); Mallon Oil Co., 107 IBLA 150, 156 (1989) (same);
Maxus Exploration Co., 122 IBLA 190, 198 n.1 (1992) (``As the word
`economic' is used in NTL-4A, it relates to a lessee's argument that
conservation of the gas is not viable from an economic standpoint . . .
.'') (emphasis added).
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\129\ In dicta, the Rife Oil decision considered a possible
``read[ing] [of] NTL-4A as barring the venting of gas . . . without
regard to whether it was avoidably lost'' within the meaning if NTL-
4A, 131 IBLA at 374, hypothesizing that such a reading ``would lead
to potential waste of oil where production of oil was marginally
economic but production of gas was not economic and the requirement
to market the gas caused a premature abandonment of the well.'' Id.
at 374 n.6 (emphasis added). This abstract hypothetical says nothing
regarding the United States' general authority as lessor to balance
by regulation the waste from potential loss of gas against the waste
from potential loss of oil, much less does it evaluate the specific
balancing the BLM has performed throughout in this rule.
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Some commenters also concluded that the IRA essentially codified
NTL-4A's definitions of ``avoidable'' and ``unavoidable,'' reasoning
that Congress must have been aware of the BLM's pre-2016 definitions of
those terms. The IRA, however, did not provide a statutory definition
of ``avoidable'' or ``unavoidable,'' and did not prohibit the Secretary
of the Interior from promulgating a rule to define and implement those
terms under her existing statutory authorities. See, e.g., 30 U.S.C.
189.\130\ The IRA did not amend the MLA to require the type of case-by-
case evaluations the commenters seek, and commenters have
[[Page 25397]]
not provided ``the sort of overwhelming evidence of [congressional]
acquiescence'' to NTL-4A's definitions ``necessary to support [their]
argument in the face of Congress's failure to amend.'' Sackett v. EPA,
143 S. Ct. 1322, 1343 (2023).\131\
---------------------------------------------------------------------------
\130\ ``The Secretary of the Interior is authorized to prescribe
necessary and proper rules and regulations and to do any and all
things necessary to carry out and accomplish the purposes of [the
MLA].''
\131\ In the context of drainage (the original problem addressed
by the prudent operator standard) the BLM has promulgated
regulations detailing a lessee's obligations to avoid uncompensated
drainage or to pay compensatory royalties. 43 CFR 3162.2-2 to
3162.2-15. Thus, as in this final rule, the BLM by regulation
specifies the duties of lessees without reliance upon common law
standards, including the prudent operator standard.
---------------------------------------------------------------------------
Commenters also cited FOGRMA's provision that lessees are liable
for royalties when ``waste is due to negligence . . . or . . . failure
to comply with any rule or regulation . . . under any mineral leasing
law.'' 30 U.S.C. 1756 (emphasis added). This provision says nothing of
the prudent operator standard and imposes royalty for failure to comply
with any applicable regulations, including the regulations at issue in
this rule. Some commenters attempted to downplay this language by
characterizing FOGRMA as requiring compliance only with ``specific
regulatory requirement[s],'' but the relevant statute does not include
the word ``specific,'' and the commenters provided no explanation as to
how that concept, even if somehow embodied in FOGRMA, would operate to
exclude from royalty obligations those regulations--like this final
rule--designed to conserve the Federal and Indian mineral estates.
Commenters also cited to the District of Wyoming's decision
addressing the merits of the 2016 Rule, but that decision likewise does
not compel the commenters' preferred reading of the prudent operator
standard or elevate it to a statutory limit on the Secretary's
rulemaking authority. The relevant portion of the decision began by
reciting the history of the BLM's case-by-case evaluation of
feasibility, citing Rife Oil and the IBLA's Ladd Petroleum decision.
See Wyoming, 493 F. Supp. 3d at 1073-74.\132\ The Wyoming court then
concluded that although the ``MLA's waste provisions leave room for
interpretation,'' the BLM's 2016 construction of those provisions was
unlawful because the BLM had ``primarily'' sought to ``benefit the
environment and improve air quality,'' as reflected in the BLM's
reliance on the 2016 Rule's ancillary effects. Id.
---------------------------------------------------------------------------
\132\ In the Wyoming decision, the court characterized the
IBLA's Ladd holding as ``remanding BLM decision that flared gas was
avoidably lost for determination of `whether in fact it was
economically feasible to market the gas' and explaining that
interpretation of NTL-4A giving operator opportunity to show gas was
not marketable `is consistent with the intent of the underlying
statutory and regulatory authority.' '' This statement is a quote
from a headnote in IBLA's decision, not the decision itself. Ladd
Petroleum Corp., 107 IBLA 5 (1989).
---------------------------------------------------------------------------
In both its proposed and final rules, however, the BLM is
exclusively focused on addressing waste and royalty payments, along
with certain safety provisions, and has disavowed in form and substance
any effort to regulate air quality in a manner entrusted to EPA and
that agency's State and Tribal partners, including by eschewing any
reliance on ancillary effects on the atmosphere. Instead, the BLM has
promulgated this rule purely to curb the excessive, accelerating, and
nationwide waste of Federal and Indian gas and to curb localized
hazards to human health and safety from operations. As it did in the
2016 Rule, the BLM has acknowledged its ``decades-long practice of
factoring in operator economics on a case-by-case basis when
determining whether a loss was avoidable,'' explaining in this
rulemaking why the MLA's waste provisions--which ``leave room for
interpretation''--now justify a suite of nationwide standards and
important flexibilities for specific operators and leases. Id.
Therefore, the final rule does not conflict with the Wyoming court's
decision.
In dicta, the Wyoming court also discussed the prudent operator
standard without reference to considerations like the social cost of
methane. Id. The District Court cited caselaw and the MLA for the
general proposition that ``[o]il and gas leases--including those
between the Federal Government and its lessees--are intended to ensure
mutually profitable development of the lease's mineral resources.'' Id.
(emphasis added). Indeed, the cases cited by the Wyoming court stand
for the proposition that a mineral lease is fundamentally different
from ``a business into which [the lessee] puts property, money, and
labor exclusively his own, the profits and losses in which are of
concern only to him, and the conduct of which may be according to his
own judgment . . . .'' Brewster v. Lanyon Zinc Co., 140 F. 801, 814
(8th Cir. 1905). Instead, the ``interest in the subject of the lease .
. . make the extent to which . . . the operations are prosecuted of
immediate concern to the lessor.'' Id. As the BLM noted in the proposed
rule and reaffirms here, these general propositions do not specify
precisely how the United States, as manager of the Federal mineral
estate, must perform its statutory duty of preventing waste, and,
specifically, whether it must do so on a case-by-case basis or elevate
an operator's profit maximization over the United States' duties to the
taxpayers and to Indian mineral owners.
As discussed in Brewster, one way the lessor may elect to enforce
this interest is by seeking expedited production, so that the lessee's
failure to develop the lease does not ``exhaust'' the oil and gas
``through the operation of wells on adjoining lands.'' Id. See also
Gerson v. Anderson-Prichard Prod. Corp., 149 F.2d 444, 446 10th Cir.
1945 (``A lease of this kind contains an implied covenant that the
lessee will exercise reasonable diligence in the development of the
leasehold and in the protection of it from undue drainage through wells
on adjacent lands.'') (emphasis added). The prudent operator standard
chiefly applies to these drainage cases, in which it protects the
operator from overbroad allegations of a ``breach of the covenant for
the exercise of reasonable diligence.'' Brewster, 140 F. at 814-15
(emphasis added). Given the significant cost of drilling a new well
\133\ ``and the fact that the lessee must bear the loss if the
operations are not successful,'' the standard shields the lessee from
demands to drill unprofitable wells ``even if some benefit to the
lessor will result'' from less drainage. Brewster, 140 F. at 814
(emphasis added). See also Olsen v. Sinclair Oil & Gas Co., 212 F.
Supp. 332, 333 (D. Wyo. 1963) (``the `prudent operator' rule . . . is
to the effect that the lessee has no implied duty to drill an offset
well if reasonably prudent operators would not drill it'').
---------------------------------------------------------------------------
\133\ According to a 2016 report by the Energy Information
Agency: ``Total capital costs per well in the onshore regions
considered in the study [ranged] from $4.9 million to $8.3 million,
including average completion costs that generally fell in the range
of $ 2.9 million to $ 5.6 million per well. However, there is
considerable cost variability between individual wells.'' Trends in
U.S. Oil and Natural Gas Upstream Costs, p.2 (U.S. E.I.A. March
2016).
---------------------------------------------------------------------------
In other words, the prudent operator standard originally arose in
and chiefly applies to drainage, but the principles underlying the
standard equally enable the lessor to exercise its ``immediate
concern'' in the lease by requiring conservation of the mineral estate.
Brewster at 814. The policy concerns ordinarily animating application
of the prudent operator standard are not as salient in the latter case,
where there is materially less risk that the lessor will seek to reap a
profit by asking the lessee to shoulder a significant net loss. A
lessor requiring the lessee to conserve marginally more resources
generally does not, for example, seek royalties from significant
capital expenses, borne by the lessee, ``incident to the work of
exploration,'' Id., or to ``drill[ing] an
[[Page 25398]]
offset well.'' Gerson, 149 F.2d at 446.\134\ Congress essentially
codified that understanding in the MLA, commanding the Secretary of the
Interior to ``obtain for the public a reasonable financial return on
assets that `belong' to the public,'' while requiring only ``some
incentive'' for development. Cal. Co. v. Udall, F.2d 384, 388 (D.C.
Cir. 1961).
---------------------------------------------------------------------------
\134\ Accord Parker A. Lee, Ming Lei, Dominique J. Torsiello,
``Reasonably Prudent Operator or Good and Workmanlike Manner: Does
Your Contract Have the Right Standard of Care?'' McDermott Will &
Emery, The National Law Review, XIII, Number 27 (``Under the
reasonably prudent operator standard, the lessee or operator is
obligated to make reasonable efforts to develop the interest for the
common advantage of both the lessor and lessee.'') (emphasis added).
---------------------------------------------------------------------------
In all events--and contrary to the commenters' arguments in support
of individualized economic analyses--any application of the prudent
operator standard considers the profitability of the entire lease, not
whether individual volumes of potentially wasted gas are themselves
profitable for the lessee. See Gerson, 149 F.2d at 446 (``the lessee
does not bear an implied obligation . . . unless, taking into
consideration all existing facts and circumstances, it would probably
produce oil in sufficient quantity to repay the whole sum required to
be expended, including the cost of drilling, equipping, and operating
the well, and also pay a reasonable profit on the entire outlay''). For
the reasons discussed in this preamble, the BLM has reached reasonable
determinations, with respect to each of its waste prevention measures,
that the marginal restrictions in the final rule will not render a
lease unprofitable.
On this score, some commenters argued that the draft RIA shows that
the costs of the proposed rule exceed the benefits, and therefore the
rule is arbitrary and capricious and/or is in tension with the prudent
operator standard. The BLM disagrees. The RIA for the final rule
provides estimates of the monetized costs and benefits under the
accounting rules in OMB Circular A-4, p.38 (2003), and acknowledges
that not all costs and benefits can be monetized. Comparison of
monetized benefits to monetized costs provides useful but not complete
analysis, and thus is not determinative with respect to the non-
statutory prudent operator standard. The final rule requires operators
to incur some expenses from which they may derive revenue (selling the
gas), or may not gain revenue (paying royalties on flared gas or
curtailing oil production to limit flaring). For example, the RIA
treats royalties as ``transfer payments.'' Transfer payments do not
increase or decrease the wealth of society as a whole, and thus are not
counted as benefits of the final rule under the OMB Circular. For the
Federal taxpayers and Indian mineral owners, though, royalty payments
are income, and as such are benefits to which they are entitled under
statute, regulations, and the terms of leases. We also note that some
industry commenters point out that some of the costs of the proposed
rule projected in the draft RIA are for tasks that are already required
by the EPA in New Source Performance Standards subpart OOOOa. The BLM
acknowledges that some projected costs are for tasks now required in
the final EPA New Source Performance Standards subparts OOOOa, OOOOb,
and OOOOc rules, as addressed in the RIA.
Comments on Banning Routine Flaring and Requiring Gas Capture
Summary of Comments: Some commenters requested that the BLM's final
rule include a prohibition on ``routine flaring'' and that the final
rule should ``require capture of flared gas where it is both
technologically and economically feasible.'' The commenters also assert
that the BLM is ``legally required to reduce waste, not just charge
royalties on it.'' They note that reducing the waste of avoidably lost
gas through capture requirements will also benefit ``individual
taxpayers and Tribes and will have the added co-benefits of protecting
frontline communities and the climate from the effects of wasted gas.''
Some commenters specifically noted the impacts of oil and gas
operations and venting and flaring on environmental justice communities
and asserted that charging royalties on flaring of associated gas and
requiring WMPs will not significantly reduce venting and flaring
without a prohibition on routine flaring.
Response: The BLM disagrees with those commenters in part. The MLA
does not mandate capture of all gas as such or place a ban on venting
or flaring as such, but instead requires operators to ``use all
reasonable diligence to prevent the waste of oil or gas developed in
the land.'' \135\ As commenters note, the MLA also requires that all
leases include ``a provision that such rules for . . . the prevention
of undue waste as may be prescribed by said Secretary shall be
observed.'' \136\ Those statutory provisions accommodate instances
where waste is not preventable, even when operators employ all
reasonable diligence. Likewise, section 50263 of the IRA does not
mandate capture of gas or place a ban on venting or flaring as such,
but instead requires, subject to exceptions, the payment of royalties
on gas that is consumed or lost by venting, flaring, or negligent
releases through any equipment during upstream operations.\137\ In
short, Congress could have banned venting and flaring as such in the
MLA or IRA, but did not.
---------------------------------------------------------------------------
\135\ 30 U.S.C. 225 (emphasis added).
\136\ 30 U.S.C. 187 (emphasis added).
\137\ (a) IN GENERAL.--For all leases issued after the date of
enactment of this Act, except as provided in subsection (b),
royalties paid for gas produced from Federal land and on the outer
Continental Shelf shall be assessed on all gas produced, including
all gas that is consumed or lost by venting, flaring, or negligent
releases through any equipment during upstream operations.
(b) EXCEPTION.--Subsection (a) shall not apply with respect to--
(1) gas vented or flared for not longer than 48 hours in an
emergency situation that poses a danger to human health, safety, or
the environment; (2) gas used or consumed within the area of the
lease, unit, or communitized area for the benefit of the lease,
unit, or communitized area; or (3) gas that is unavoidably lost. 30
U.S.C. 1727.
---------------------------------------------------------------------------
The final rule implements the requirement in section 50263 of the
IRA to assess royalties on gas that is lost by venting and flaring.
Although the BLM believes that the royalty obligation for flared gas
provides some marginal incentive for operators to make investments to
sell the gas rather than to pay royalties on flared gas, we agree with
the commenters that the statutory requirement for operators to use all
reasonable diligence to prevent waste is a separate though related
mandate--one that the final rule achieves through such requirements as
a WMP.
Some commenters assert that to meet the MLA's requirements, the BLM
must: (1) adopt a definition of ``unreasonable and undue waste'' that
clarifies that routine flaring constitutes avoidable loss; (2) ban
routine flaring, as some States have done; and (3) include only narrow
exceptions where there is no alternative to venting or flaring. The BLM
agrees that much of the historical flaring was avoidable, and as
discussed below, the final rule includes provisions that impose limits
on what would otherwise be ``routine flaring,'' including the
definition of ``unavoidably lost'' in Sec. 3179.41(b). We disagree,
though, that the MLA requires that all routine flaring be defined as
``avoidable'' loss. The MLA requires operators to use ``reasonable
diligence'' to avoid waste, and thus ``reasonable diligence'' to
prevent undue waste; the statute does not prohibit all venting and
flaring. Contrary at least one commenter's views, therefore, the final
rule is not based on maximizing operators' internal profit--that is not
the
[[Page 25399]]
test for ``reasonable diligence,'' and the final rule may require some
operators to incur some costs of compliance. Other operators may design
and operate their facilities to capture and sell virtually all oil-well
gas at a profit, but that is merely sufficient--not necessary--for
compliance with the relevant portions of the rule. Although the MLA
does not authorize the BLM to prohibit all flaring, State laws or
regulations prohibiting routine flaring apply to operations on Federal
lands.
Some commenters argue that FLPMA requires the BLM to protect the
quality of the air and atmospheric resources, citing 43 U.S.C.
1701(a)(8). Section 1701(a)(8) states it is the ``policy of the United
States'' that ``the public lands be managed in a manner that will
protect the quality of [various ecologic values, including] air and
atmospheric'' values. That statement, however, is ``effective only as
specific statutory authority for [its] implementation is enacted by
[FLPMA] or by subsequent legislation and shall then be construed as
supplemental to and not in derogation of the purposes for which public
lands are administered under other provisions of law.'' \138\ Here, the
BLM's authority for its waste prevention and safety measures is
established in the MLA, FOGRMA, and the IRA. The purposes of the final
rule are waste prevention and royalty accountability, not air quality
control. The BLM also addresses impacts on air quality in the EA for
the final rule, as required by statute.
---------------------------------------------------------------------------
\138\ 43 U.S.C. 1701(b).
---------------------------------------------------------------------------
Commenters cited evidence that continued fossil fuel production is
inconsistent with meeting goals of limiting climate change and that
communities living near oil and gas operations suffer
disproportionately high rates of adverse health effects. Those include
several environmental justice communities near oil and gas operations
on the public lands. Those issues are discussed in the NEPA compliance
document and the RIA. However, ending fossil fuel production is outside
the scope of this rulemaking, the purpose of which is to update the
waste prevention requirements for oil and gas development on public
lands. Like several other oil and gas regulations, the final rule may
have some incidental public health and climate effects, but the BLM
does not have authority to regulate air emissions for the benefit of
public health or the climate, and the final rule is designed to address
waste prevention and royalty accountability.
A commenter advocated greater enforcement by the BLM. The BLM
regularly reviews its enforcement programs for effective deployment of
its resources. Enforcement plans, however, are outside the scope of
this rulemaking.
A commenter asserted that the BLM underestimated historical venting
and flaring. The BLM has used the best available data. That data show
that the current regulation at NTL-4A has failed to control venting and
flaring, particularly over the last two decades. Thus, we agree with
the commenter that a more effective regulation is needed to assure that
operators exercise reasonable diligence to prevent waste.
The BLM also recognizes the benefits of gas capture, and the final
rule encourages greater capture and sale of gas from oil wells. In part
in response to these comments, the BLM included in Sec. 3162.3-1 of
the final rule an option for operators to self-certify that they will
capture 100 percent of oil-well gas produced by an oil well as an
alternative to submitting a waste management plan. If a self-certifying
operator flares gas other than in response to a defined emergency, the
loss is ``avoidable'' and fully royalty bearing. Although the BLM has
no firm estimates for the number of operators who will self-certify,
the option should both prevent waste and prove attractive for the
reasons set forth elsewhere in this preamble.
Comments on Impact of the Rule on Indian Leases
Summary of Comments: Noting that the proposed rule was generally
intended to apply in equal measure to Federal leases and Indian leases,
one commenter criticized the rule for not addressing how flaring
limitations and other features of the rule--given their potential to
cause premature shut[hyphen]in or curtailment of oil and gas
production--may disproportionately impact Indian lessors who rely on
production revenues and may not be as willing as the Federal Government
to curtail or shut[hyphen]in production in order to avoid what the
commenter characterized as ``relatively minor'' losses of revenue
resulting from venting or flaring. The commenter also contended that,
under the various Indian leasing statutes--including the IMDA (25
U.S.C. 2101 et seq.)--the BLM must assure that the lands are developed
in a manner that maximizes the ``best economic interests'' of Indian
lessors.
Response: The BLM's regulations apply to oil and gas operations on
Indian trust and restricted fee lands as provided by 25 CFR 221.1(c),
212.1(d), 225.1(c), and the BLM is the bureau tasked with regulating
oil and gas operations on those lands by delegations to the BLM from
the Secretary of the Interior. The purposes of the regulations of
mineral development on Indian lands are to maximize the best economic
interest of the Indian mineral owner and to minimize any adverse
environmental or cultural impact. 25 CFR 221.1(a) (Tribal leases),
212.1(a) (allotted leases), 225.1(a) (IMDA). ``In considering whether
it is `in the best interest of the Indian mineral owner' to take a
certain action . . . , the Secretary shall consider any relevant
factor, including, but not limited to: economic considerations, such as
date of lease expiration; probable financial effect on the Indian
mineral owner; leasability of land concerned; need for change in the
terms of the existing lease; marketability; and potential
environmental, social, and cultural effects.'' 25 CFR 211.3, 212.3,
225.3. Accord, e.g., 25 U.S.C. 2103(b) (IMDA). Thus, economic
considerations, such as immediate production of oil, are relevant
factors, but they are not the sole factors; the regulations promulgated
in accordance with the BLM's statutory authority give the Secretary
broad discretion. The Secretary thus has discretion to require
operators producing Indian oil to take reasonable measures to reduce
waste of Indian resources, to define avoidably lost gas, and to require
payment of royalties to the Indian lessors on avoidably wasted gas.
Since the final rule will apply equally on Indian lands as it does
on Federal lands, there will be no disproportionate impact on Indian
leasing or development. It might be that on some leases at some times,
Indian royalty payments would temporarily decrease as oil production is
curtailed while the operator complies with the final rule. We have no
reason to believe that total long-term revenues from such leases would
suffer, rather we believe they will increase as the operators pay
royalties on the gas as well as on the oil. Indeed, for many leases
there is likely to be no decrease in royalty payments, and most likely
there will be increases in royalty payments because operators will pay
royalties on captured or flared gas with little or no interruption of
oil sales.
We do not believe that the final rule will cause premature plugging
and abandonment of otherwise profitable wells. Every day, oil wells on
Indian lands, as on Federal lands and elsewhere, are produced at
capacity, curtailed, shut in, or plugged and abandoned based on a
variety of factors, including production quantity and quality, costs of
production, availability of transportation, and commodity prices.
Although it is possible that
[[Page 25400]]
compliance with the final rule may increase net costs for some
operators, it would be only one of many business costs for operators
and is likely not as determinative for continuing operations as are the
changes in prices for the oil or gas, either positive or negative.
There is nothing improper in the final rule's requirements to reduce
waste of Indian gas and to pay royalties to the Indian mineral owners
on gas that would otherwise be wasted. The final rule has not been
changed in response to the comment.
Comments on the RIA
In preparing the final rule, the BLM updated the numbers in the
proposed RIA. The updated RIA indicates that the final rule would cost
$19.3 million per year (using a 7 percent discount rate to annualize
capital costs), while generating private costs savings benefits of
around $1.8 million per year and ancillary effects on society from
reduced methane emissions of around $17.9 million per year, with total
benefits averaging around $19.7 million per year. The updated RIA
estimates that the final rule would generate $51 million per year in
royalties. The projected costs changed from the RIA for the proposed
rule to the RIA for the final rule because the final rule does not
include certain requirements from the proposed rule, such as pneumatic
control devices, thereby reducing the rule's costs.
The BLM received a comment stating that the BLM's estimated burden
hours for operators to prepare a WMP was too low. In response, the BLM
notes that there are significantly fewer requirements for a WMP in the
final rule as compared with the proposed rule. Therefore, we believe
that our estimate of 1 hour is appropriate.
One commenter disagreed with the BLM's estimate regarding the
projected number of orifice meters that would be installed the first
year. The intent of the comment is not entirely clear because it only
indicates the commenter's view that an estimated installation of 968
meters appears to be inaccurate but does not specify the nature of the
inaccuracy or how the inaccuracy is a burden to operators. In the final
RIA, the BLM estimates that there would be a total of 902 meters
installed and explains that it uses the 1,050 Mcf threshold to
determine the number of meters installed because the final rule
requires all high-pressure flares with more than 1,050 Mcf of flaring
per month to measure flaring.
The BLM received a comment expressing concern with the
administrative burden resulting from the proposed rule. The BLM
addresses administrative burdens in the RIA and the accompanying
supporting statement under the Paperwork Reduction Act. In the RIA for
the final rule, the BLM estimates that the total annual administrative
burden of the final rule will be about $8.9 million. The BLM notes that
the requirements for a WMP have been significantly reduced in the final
rule. In the final rule, the WMP only requires information operators
would have readily available when submitting an APD. The information
collection activity associated with the WMP required for this rule is 1
hour of additional time to complete an APD. Further, operators have the
option of self-certifying that they will commit to capture 100 percent
of the gas and thus avoid the administrative cost of preparing a WMP.
The information collection activity associated with either preparing
and submitting the WMP or the self-certification is 1 hour of
administrative time. The BLM believes operators submitting APDs for
multiple wells on a single well pad will be able to simply copy and
paste the WMP from one well's APD into the next well's APD. This
copying and pasting for a multi-well pad also has an information
collection burden of 1 hour, which most likely overestimates the time
it will take operators to copy and paste the information from one
document into another. And the final rule does not require ``complete
and adequate'' information in a WMP as proposed, but does require the
WMP to be technically and administratively complete. The phrase
``technically and administratively complete'' is further explained in
the preamble discussion for Sec. 3162.3-1.
V. Section-by-Section Discussion
The following table is provided to aid the reader in understanding
the changes from the proposed rule section numbers and names to the
final rule sections.
Table 1 to IV--Section-by-Section Changes Made From the Proposed to the
Final Rule
------------------------------------------------------------------------
Proposed rule section Final rule section
------------------------------------------------------------------------
3162.3-1 Drilling applications and 3162.3-1 Drilling applications
plans. and plans.
3179.1 Purpose......................... 3179.1 Purpose.
3179.2 Scope........................... 3179.2 Scope.
3179.3 Definitions and acronyms........ 3179.10 Definitions and
acronyms.
3179.11 Severability.
3179.30 Incorporation by
reference (IBR).
3179.40 Reasonable precautions
to prevent waste.
3179.4 Determining when the loss of oil 3179.41 Determining when a loss
or gas is avoidable or unavoidable. of oil or gas is avoidable or
unavoidable.
3179.5 When lost production is subject 3179.42 When lost production is
to royalty. subject to royalty.
3179.43 Data submission and
notification requirements.
3179.6 Safety.......................... 3179.50 Safety.
3179.7 Gas-well gas.................... 3179.60 Gas-well gas.
3179.8 Oil-well gas.................... 3179.70 Oil-well gas.
3179.9 Measuring and reporting volumes 3179.71 Measurement of flared
of gas vented and flared. oil-well gas volume.
3179.72 Reporting and
recordkeeping of vented and
flared gas volumes.
3179.10 Determinations regarding 3179.73 Prior determinations
royalty-free flaring. regarding royalty-free
flaring.
3179.11 Incorporation by reference Renumbered to 3179.30.
(IBR).
3179.12 Reasonable precautions to Renumbered to 3179.41.
prevent waste.
------------------------------------------------------------------------
Flaring and Venting Gas During Drilling and Production Operations
------------------------------------------------------------------------
3179.101 Well drilling................. 3179.80 Loss of well control
while drilling.
3179.102 Well completion and related 3179.81 Well completion and
operations. recompletion flaring
allowance.
3179.103 Initial production testing.... Removed.
3179.104 Subsequent well tests......... 3179.82 Subsequent well test
for an existing completion.
[[Page 25401]]
3179.105 Emergencies................... 3179.83 Emergencies.
Gas Flared or Vented from Equipment and
During Well Maintenance Operations.
3179.201 Pneumatic controllers and Removed.
pneumatic diaphragm pumps.
3179.203 Oil storage vessels........... 3179.90 Oil storage tank
vapors.
3179.204 Downhole well maintenance and 3179.91 Downhole well
liquids unloading. maintenance and liquids
unloading.
3179.205 Size of production equipment.. 3179.92 Size of production
equipment.
------------------------------------------------------------------------
Leak Detection and Repair (LDAR)
------------------------------------------------------------------------
3179.301 Leak detection and repair 3179.100 Leak detection and
program. repair program.
3179.302 Repairing leaks............... 3179.101 Repairing leaks.
3179.303 Leak detection inspection 3179.102 Leak detection
recordkeeping and reporting. inspection recordkeeping and
reporting.
------------------------------------------------------------------------
State or Tribal Variance
------------------------------------------------------------------------
3179.401 State or Tribal requests for Removed.
variances from the requirements of
this subpart.
------------------------------------------------------------------------
Immediate Assessments
------------------------------------------------------------------------
A. 43 CFR Part 3160--Onshore Oil and Gas Operations
Section 3162.3-1 Drilling Applications and Plans
Existing Sec. 3162.3-1 contains the BLM's longstanding requirement
for the operator to submit an APD prior to conducting any drilling
operations on a Federal or Indian oil and gas lease. Drilling may only
commence following the BLM's approval of the APD. The proposed rule
would have added two new paragraphs to Sec. 3162.3-1, intended to help
operators and the BLM avoid situations where substantial volumes of
associated gas are flared from oil wells due to inadequate gas capture
infrastructure.
Proposed Sec. 3162.3-1(j) would have required an operator to
provide a WMP with its APD for an oil well, demonstrating how the
operator intended to address the capture of associated gas from an oil
well when production begins. The purpose of the proposed WMP was to
help the BLM understand how much associated gas could be wasted as a
result of the approval of an APD. The proposed WMP required the
inclusion of the following information with an oil-well APD: the
anticipated completion date of the oil well; a description of the
anticipated production of both oil and associated gas; a certification
that the operator has informed at least one midstream processing
company of the operator's production plans; and information regarding
the gas pipeline to which the operator plans to connect. If an operator
was not able to identify a gas pipeline with sufficient capacity to
accommodate the anticipated associated gas production, the WMP would
have been required to also include the following information: a gas
pipeline system map showing the existing pipelines within 20 miles of
the well and the location of the closest gas processing plant;
information about the operator's flaring from other wells in the
vicinity; and a detailed evaluation of opportunities for alternative
on-site capture methods, such as compression of the gas, removal of
Natural Gas Liquids (NGL), or other capture means. Finally, the
operator would have been required to include any other information
demonstrating the operator's plans to avoid the waste of gas production
from any source, including pneumatic equipment, storage tanks, and
leaks.
The purpose of the proposed WMP was for the operator to provide the
BLM with information necessary to understand how much associated gas
would be lost to flaring if the BLM were to approve the oil-well APD
and whether the loss of that gas would be reasonable under the
circumstances. If the WMP were to demonstrate that approving an
otherwise administratively and technically complete APD could result in
undue waste of Federal or Indian gas, the proposed Sec. 3162.3-1(k)
would have authorized the BLM to take one of the following actions: the
BLM could have approved the APD subject to conditions for gas capture
and/or royalty payments on vented and flared gas; or the BLM could have
deferred action on the APD in the interest of preventing waste. If the
potential for undue waste had not been addressed within 2 years of the
applicant's receipt of the notice of the deferred action, under the
proposed rule the BLM would have denied the APD.
The BLM received numerous comments on the proposed WMP. Based on
those comments, we believe there was some confusion about when a WMP
would be required. For both the proposed and final rules, a WMP is
required when a Federal or Indian APD is required. In both the proposed
and final rules, only wells that are being drilled to target oil
production--in other words Federal or Indian oil-well APDs--will
require a WMP. The BLM assumes that if an operator is drilling a gas
well, there is a predetermined market for the gas or a plan to shut in
wells until gas infrastructure is built. For this reason, if a well is
being drilled to a known gas formation and will be producing primarily
gas, the Federal or Indian APD does not require a WMP.
Based on public comment, the BLM has revised the content of the
proposed WMP in this final rule. Many commenters said the waste
minimization requirements were overly burdensome for both the BLM and
operators. In addition, commenters read the requirements as calling for
operators to provide proprietary, confidential information belonging to
midstream companies that operators are unable to provide. Commenters
were also concerned about how the BLM would evaluate an operator's WMP,
pointing to subjective language in proposed Sec. 3162.3-1(j)
indicating that the BLM could deny an APD if the operator failed to
submit a complete and ``adequate'' WMP. Many commenters said the
proposed required information for the WMP failed to meet the BLM's
stated objectives of understanding associated
[[Page 25402]]
gas capture and reducing waste through flaring prior to approval of a
Federal or Indian APD.
After evaluating the primary objective of the WMP, which is to
ensure operators have adequately planned to reduce associated gas waste
prior to drilling an oil well, the BLM agrees with commenters that the
rule can be effective without requiring all the information in the
proposed rule. The proposed rule required 19 pieces of information for
the WMP for the operator to demonstrate to the BLM that it had
sufficiently planned for the capture or sale of associated gas from an
oil well. After careful consideration of the comments and the purpose
of a WMP, the BLM in the final rule is reducing the information
required to 4 pieces in a WMP: (1) initial oil production estimates and
decline, (2) initial gas production estimates and decline, (3)
certification that the operator has an executed gas sales contract to
sell 100 percent of the produced oil-well gas, and (4) any other
information demonstrating the operator's plans to avoid the waste of
gas.
The BLM agrees with the commenters that BLM's objective--
determining if an operator has a plan to capture the produced gas--can
be accomplished with less information. And as mentioned above, the BLM
intends to eschew collection of information that could be proprietary
or confidential. The final rule also provides operators with an
alternative to the submission of a WMP with their APDs by allowing
operators to instead submit a self-certification statement that the
operator will be able to capture, as defined in final Sec. 3179.10,
100 percent of the oil-well gas that the oil well produces.
The BLM has required the anticipated initial production rate and 3
years of production decline because the BLM has concluded that 3 years
of data will sufficiently cover the ordinarily steep decline for
production for unconventional reservoirs and the associated
establishment of the reservoir's production decline curve. This
information provides the BLM with an estimate of how much associated
gas could be flared, the size of production equipment required at
initial production, and the size of production equipment required when
production has leveled off. The WMP information is relevant to
understand not only the volume at risk for flaring, but also how the
sizing of the production equipment affects tank vapors. (If the
production equipment is undersized or there is insufficient separation
upstream of the production tanks, there will be more gas wasted as tank
vapors.) Approved APDs with a WMP will be subject to the flaring
limitations identified in final Sec. 3179.70 once the well begins
producing. The BLM believes the revised waste minimization requirements
reduce the burden on operators, reduce the review time for the BLM,
eliminate any concern of providing proprietary or confidential
information, and increase the BLM's understanding of the disposition of
the associated gas from an oil well to ensure the public receives a
fair return for its oil and gas.
As an alternative to the submission of a WMP with the APD, Sec.
3162.3-1(d)(4) of the final rule allows operators to submit a self-
certification. Section 3162.3-1(k) provides that a self-certification
is a statement by the operator that it will be able to capture, as
defined in final Sec. 3179.10, 100 percent of the oil-well gas that
the oil well produces. If the operator elects to self-certify, all
flared oil-well gas, except for gas flared under emergencies as
identified in Sec. 3179.83, is an avoidable loss with a royalty
obligation and is not subject to the unavoidable loss threshold in
Sec. 3179.70(a). In the case of self-certification, 100 percent of the
oil-well non-emergency flared gas has a royalty obligation from the
date of first production until the well is plugged and abandoned. The
BLM offers the self-certification alternative to accommodate operators
who may consider this option an advantageous business alternative while
ensuring the public receives a fair return for its oil and gas. An
operator might choose to avoid having to submit a WMP because it can be
relatively easy to design, build, and operate its facilities to capture
all of the gas and sell it. In addition, an operator may want to
accelerate drilling and development in lieu of waiting for a gas
contract and accept the additional royalty obligation as a business
expense should the operator need to flare following drilling and
completion.
The BLM's approval process for the WMP or the self-certification
statement appears in the new final Sec. 3162.3-1(l). With this
addition, the BLM has clarified for operators how the Bureau will
evaluate a WMP or self-certification statement. Upon review of the WMP
or the self-certification, the BLM may take one of the following
actions: (1) approve an administratively and technically complete oil-
well APD with a WMP, subject to the conditions for flared gas described
in Sec. 3162.3-1(j); (2) approve an administratively and technically
complete oil-well APD with a self-certification statement for
associated gas capture subject to the conditions for flared gas
described in Sec. 3162.3-1(k); or (3) defer action on an APD that is
not administratively or technically complete in the interest of
preventing waste until such time as the operator is able to amend its
APD to comply with the requirements in either Sec. 3162.3-1 paragraph
(j) or (k).
The final rule replaces the subjective term ``adequate'' in this
section with the term ``administratively and technically complete.''
The concept ``administratively and technically complete'' appears in
the original Sec. 3162.3-1(d), which states that ``[p]rior to
approval, the application shall be administratively and technically
complete.'' To be administratively complete, an APD must contain all
the required components: a drilling plan, a surface use plan of
operations, evidence of bond coverage, other information as may be
required by applicable orders and notices, and, with the finalization
of this rule, for an oil well, a WMP or self-certification. For an APD
to be technically complete, the APD must fulfill all the requirements
of each of the components and be technically correct pursuant to any
applicable orders and notices. For example, an APD is not
administratively complete if it does not include a drilling plan. If
the APD does include a drilling plan, but the drilling plan fails to
include the appropriate blowout prevention equipment, as required in 43
CFR subpart 3172, then the drilling plan is not technically complete.
A WMP or self-certification will now be a required component of an
APD for it to be administratively complete. If an operator does not
submit a WMP or a self-certification statement with the APD, then the
APD will not be administratively complete. For the WMP or self-
certification to be technically complete, it must contain the required
information in final Sec. 3162.3-1 paragraph (j) or (k). If the
operator submits a WMP that includes only the anticipated oil
production decline curve for 1 year, then the APD is not technically
complete. If an operator fails to include a WMP or self-certification
as required or if the WMP or self-certification fails to meet the
requirements in Sec. 3162.3-1 paragraph (j) or (k), then the BLM will
defer action on the APD until the operator amends the APD to comply
with the requirements of administrative and technical completeness.
Final Sec. 3162.3-1(l)(3) limits the time in which the operator
must address deficiencies in the WMP or the self-certification to
within 2 years of submission of the APD. If the operator does not meet
this deadline, then the
[[Page 25403]]
BLM may disapprove the APD. This change conforms the WMP or self-
certification process with the rest of the current Sec. 3162.3-1 and
review process. Furthermore, a 2-year limit provides operators with
sufficient time to either secure a gas sales contract or proceed with
self-certification in the absence of a sales contract. The 2-year time
limit also ensures that an APD will not remain in a pending status with
the BLM for an extended period because of an operator's lack of
diligence or inability to complete its application. A 2-year limit is
reasonable for an operator who intends to drill on a lease and is
capable of submitting a complete WMP or self-certification.
B. 43 CFR Part 3170--Onshore Oil and Gas Production
Section 3179.1 Purpose
Final Sec. 3179.1 has only one change from the proposed rule. The
BLM changed the name of the Osage Tribe to the Tribe's official name,
The Osage Nation, which the Tribe adopted in 2008. The purpose of
subpart 3179 remains unchanged in the final rule and continues to
implement and carry out the purposes of statutes relating to the
prevention of waste from Federal and Indian oil and gas leases,
conservation of surface resources, and management of the public lands
for multiple use and sustained yield, including section 50263 of the
IRA.
This final rule section continues to clarify that upon publication,
final subpart 3179 supersedes those portions of NTL-4A that pertain to,
among other things, flaring and venting of produced gas, unavoidably
and avoidably lot gas, and waste prevention. Subpart 3178, published on
November 18, 2016 (81 FR 83078), superseded the portions of NTL-4A that
pertain to oil or gas used on lease for beneficial purposes (see 43 CFR
subpart 3178). With the final publication of subpart 3179, NTL-4A has
been superseded in its entirety.
Section 3179.2 Scope
Section 3179.2 of the final rule continues to identify the
operations to which the various provisions of subpart 3179 will apply.
Paragraph (a) states that, in general, the provisions of the final rule
apply to: (1) all onshore Federal and Indian (other than The Osage
Nation) oil and gas leases, units, and communitized areas; (2) IMDA
agreements, except in certain circumstances described in the rule text;
(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, except under certain
circumstances; and (4) wells, equipment, and operations on State or
private tracts that are committed to a federally approved unit or CA.
Final Sec. 3179.2(a) removes the duplication of the words ``provided
in'' that appeared in the proposed rule.
Final paragraph (b) is substantially the same as proposed paragraph
(b). The only change in the final rule is that the crossed-referenced
sections have been revised to reflect the new section numbers. As in
the proposed rule, it provides that certain provisions in subpart 3179,
namely redesignated Sec. Sec. 3179.50, 3179.90, and 3179.100 through
102, apply only to operations and production equipment located on a
Federal or Indian oil and gas surface estate and do not apply to
operations on State or private tracts, even where such tracts are
committed to a federally approved unit or CA, sometimes referred to as
``mixed ownership'' agreements.
As in the proposed rule, final Sec. 3179.2(b) implicates a
question regarding the BLM's authority raised by the court that vacated
the 2016 Waste Prevention Rule. That court stated that the MLA ``does
not provide broad authorization for the BLM to impose comprehensive
Federal regulations similar to those applicable to operations on
Federal lands on State or privately-owned tracts or interests.'' \139\
In that court's view, the BLM's authority to regulate unit or CA
operations on State and private tracts under the MLA and FOGRMA may be
limited to rates of development and matters directly relevant to the
BLM's proprietary interest in the Federal minerals.\140\ This rule does
not reach a position on the full extent of the BLM's authority to
regulate non-Federal lands. For purposes of this rule, however, we note
that many provisions in the final rule--including final Sec. Sec.
3179.41, 3179.70, 3179.81, 3179.82, and 3179.83 and the final
measurement and reporting requirements in final Sec. Sec. 3179.71 and
3179.72--have a direct impact on royalty revenue and apply to all
operations producing Federal or Indian gas, whether on a Federal or
Indian lease or as part of a mixed-ownership agreement. Other
requirements--such as those related to storage tank hatches and the
leak detection-and repair program--apply when the facilities are
located on Federal or Indian surface estate because those requirements
have a slightly less direct connection to royalties. While the BLM does
not view that connection as dispositive of its authority in this
sphere, it has in this rule chosen to limit application of these
programs in light of the BLM's recent history of regulation and the
possibility that further extending these requirements would generate
relatively small marginal gains in revenue relative to other
requirements.
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\139\ Wyoming court at 1082.
\140\ Id. at 1082-83.
---------------------------------------------------------------------------
The final rule redesignates sections throughout the subpart to
standardize the organization of sections in part 3170 (e.g., section
numbers ending in ``30'' will be the sections that contain
incorporation-by-reference material, as required, throughout part
3170). Further, the reorganization of the sections in part 3170 groups
similar topics together under similar section designations for ease of
use and readability.
Section 3179.10 Definitions and Acronyms
This final rule section contains definitions for 12 terms that are
used in subpart 3179 as opposed to the 13 terms that appeared in the
proposed rule. The BLM removed the proposed definition for ``storage
vessel.'' Proposed Sec. 3179.203, which pertained to oil storage
vessels, was significantly revised based on public comment as discussed
further below. Thus, the BLM removed the definition for ``storage
vessel'' and substituted the more commonly understood term ``oil
storage tank'' for ``storage vessel'' in the remainder of subpart 3179.
The use of the common term ``oil storage tank'' brings the final
subpart 3179 into alignment with the use of ``oil storage tank'' in
current subpart 3174.
One commenter recommended that, ``for the purposes of this section,
where there is a State definition that applies for the same BLM term,
the BLM will apply the definition used in the State in which the
applicable gas or oil well is located.'' The BLM is charged with
ensuring that the public and Indian mineral interests receive a fair
return for their oil and gas leases. That obligation necessarily
entails the determination of a lessee's royalty obligation, which, in
the case of waste prevention, relies directly on the BLM's consistent
use of terms. The BLM would be unable to implement the requirements of
this rule consistently--and to ensure a uniformly fair return--if the
Bureau were to rely on multiple, varying, and changeable State
definitions for the terms used in this regulation. Further, if the BLM
were to adopt this approach, and there was a conflict between the BLM
requirements and the State definition, there would be no clear path to
resolution of the conflict. The BLM did not make changes
[[Page 25404]]
to allow for the use of definitions from State code to apply to Federal
and Indian oil and gas regulations for the State in which the
production occurs.
The BLM received comments on the definition for ``automatic
ignition system'' that agree with the BLM's approach to not require a
specific type of device. The BLM agrees that the term ``automatic
ignition system'' connotes the concept of an ignition source without
specifying a particular type of device. To be clear, any applicable
rule of the EPA, a State, or a Tribe regarding such equipment and its
destruction efficiency apply to operations regulated by the BLM.
One commenter stated that requiring a continuous flame is wasteful
and unnecessary. The BLM disagrees with this comment because the
proposed definition of ``automatic ignition system'' only requires a
continuous pilot flare where needed to ensure continuous combustion.
The BLM believes the proposed definition allows for a great deal of
operator flexibility and did not change the ``automatic ignition
system'' definition based on the comments.
The BLM did not receive any comments on the proposed definitions
for ``capture,'' ``compressor station,'' ``gas-to-oil ratio (GOR),'' or
``pneumatic controller.'' Therefore, these four definitions remain the
same in final rule as in the proposed rule.
One commenter requested the BLM to add a definition for ``economic
feasibility.'' The commenter's recommended definition mirrors part of
the definition for ``economically marginal property'' found in subpart
3173. For the proposed rule, the BLM used the term ``economically
infeasible'' in proposed Sec. 3179.203(b), which addressed vapor
recovery systems. Since the BLM has removed the requirement for a vapor
recovery system on oil storage tanks in the final rule, the final rule
no longer references the terms ``economically feasible'' or
``economically infeasible.'' Therefore, the BLM has not included a
definition for ``economic feasibility'' in the final rule.
Commenters recommended that the BLM include a definition for the
term ``exploratory well.'' The BLM has a definition for ``exploratory
well'' in existing subpart 3172, but that definition applies within
that subpart. Leaving the term undefined in this rule could cause
confusion. Accordingly, we are adding the same definition of
``exploratory well'' to this rule as appears in 43 CFR 3172.5:
``[e]xploratory well means any well drilled beyond the known producing
limits of a pool.'' Subpart 3179 resides in part 3170 Onshore Oil and
Gas Production. The definitions that are used within multiple subparts
of part 3170 reside in subpart 3170. Originally published in 1988 as
Onshore Oil and Gas Order No. 2, subpart 3172 was codified in the CFR
on June 16, 2023 (88 FR 39514). When the BLM revises subpart 3170, it
will remove the definition for exploratory well from subpart 3172 and
include it in subpart 3170 since the definition now applies to more
than one subpart.
The BLM received numerous comments on the definition for ``gas
well.'' The definition that the BLM included in the proposed rule was
taken from the Conservation Division Manual 644.5. One commenter
recommended including a definition that relied on a GOR standard
throughout the rule and did not recommend incorporating any deference
to the States' definitions in the rule. The commenter did not provide
any recommendation for the appropriate GOR standard for a gas well. The
BLM is aware that many States define a gas well in terms of GOR, and
the GOR varies among State definitions. The BLM has decided not to
change the proposed definition, which relies on whether the well
produces more energy from gas or oil. The BLM has implemented that
definition in the CDM for decades. Commenters did not explain how a GOR
based definition would improve implementation of this final rule.
Conversely, adopting a new definition--one relying on GOR--could create
implementation conflicts insofar as the BLM chooses a GOR that differs
from certain State definitions. Historically, the proposed and final
rule definition has provided the BLM with regulatory flexibility when
interacting with operators and State regulatory authorities by allowing
BLM to adapt to reservoir changes throughout the life cycle of a well
that may result in a well qualifying as an oil well initially and as a
gas well later.
Another commenter recommended removing the BLM definition for ``gas
well'' and reminded the BLM that in its January 11, 2023, virtual
information forum, the BLM stated it uses the gas- or oil- well
designation assigned by a State jurisdiction when resolving
controversial issues. The BLM's statement at the virtual information
forum was based on IBLA's interpretation of NTL-4A.\141\ The BLM has
determined that consistent implementation of this rule would be better
served by a uniform definition of ``gas well'', which it is now
promulgating in this final rule for the first time. The commenter
expressed concerns regarding how any inconsistencies between State well
designations and the BLM's ``gas well'' definition would be reconciled.
The final rule does not affect States' implementation of their
regulatory programs. Accordingly, the final rule does not need a
mechanism for reconciling State well designations. The BLM did not
change the definition for ``gas well'' in the final rule based on the
comments received.
---------------------------------------------------------------------------
\141\ See Rife, 131 IBLA 357 (1994).
---------------------------------------------------------------------------
One commenter requested that the BLM change its definition of
``high-pressure flare'' to mean ``an open-air flare stack or flare pit
that combusts natural gas at high-pressure volumes leaving a
pressurized vessel greater than 100 psig or more and that in normal
operations would go to a sales line.'' Based on the BLM's experience,
we conclude that, by defining ``high-pressure flare'' as ``leaving a
pressurized vessel greater than 100 psig,'' the rule would apply to
less than 5 percent of flares at Federal or Indian oil-well facilities.
Excluding 95 percent of flares would not accomplish the waste
prevention goals of this rule. Conversely, in this final rule the BLM
intends for any flare carrying gas from a pressurized vessel to be
considered a high-pressure flare and to include most, if not all,
flares that operate due to pipeline capacity constraints. The BLM did
not change the definition to one that includes a pressure threshold to
ensure that most of the associated gas flaring is regulated with this
subpart.
Another commenter suggested the BLM revise the ``high-pressure
flare'' definition to include any flare that would normally go to sales
and provide a definition for ``low-pressure flare'' as associated gas
from separation equipment that would not normally go to sales without
compression. The BLM considered the recommended changes to the
definition for ``high-pressure flare'' and ``low-pressure flare'' and
changed the definition of ``high-pressure flare'' in response to
comments. The final definition is: ``High-pressure flare means an open-
air flare stack or flare pit designed for the combustion of natural gas
that would normally go to sales.'' Under normal operating conditions,
the gas from a pressurized vessel flows through a gas facility
measurement point (FMP) and into a sales line, but, due to pipeline
capacity constraints, the gas from the pressurized vessel sometimes
goes to a flare instead. The BLM disagrees with the commenters that
compression needs to be added to the ``high-pressure flare''
definition, and the BLM believes that defining a low-
[[Page 25405]]
pressure flare as a flare that does not meet the definition of a high-
pressure flare is sufficient for the requirements of this rule. A
commenter suggested adding ``with sufficient pressure to otherwise be
injected into the pipeline without the aid of a compressor.'' There are
operations producing from Federal or Indian leases that use compression
on-lease to have enough pressure to enter the sales line. Locations
with compression also flare due to pipeline capacity issues. Therefore,
the BLM did not add compression to the final definition of ``high-
pressure flare.'' The BLM recognizes and agrees with the comments that
the BLM's proposed definition for ``high-pressure flare'' would include
gas from a second- or third-stage pressurized separation vessel at a
lower pressure than would be required for sales. That is not the BLM's
intent, and the definition was changed based on comments to better
reflect that the requirements for high-pressure flares are meant for
the flared production that would have gone to sales if there were
adequate pipeline capacity.
A third commenter suggested that the BLM should define ``high-
pressure flare'' as combustion of gas that does not require compression
and that could be transported through the connected sales line. The BLM
agrees with the commenter that a high-pressure flare combusts gas that
normally flows to sales and changed the definition in response to the
comment. However, the BLM did not include the phrase ``does not require
compression'' in the final definition because that would
inappropriately limit the definition of high-pressure flare. Some oil
wells produce gas that would not need compression to enter a sales
line, but if the gas is not routed to a sales line, it should be routed
to a flare and therefore subject to the final requirements in Sec.
3179.70. Accordingly, tethering the definition of ``high-pressure
flare'' to the absence of compression might imply that a low-pressure
flare requires compression, which is inaccurate as a matter of practice
and does not reflect the BLM's intent.
For the proposed definition of ``leak,'' the BLM received comments
suggesting removal of the three methods and standards by which a leak
or release may be detected. Other commenters, though, stated that the
definition should remain as proposed. For the final rule definition of
``leak,'' the BLM added the use of audio, visual, and olfactory (AVO)
means for leak detection and removed the reference to ``a leaking vapor
recovery unit'' as an example of a leak, since the requirements for
installation of a vapor recovery unit have been removed from the final
rule. The final rule LDAR program uses AVO detection methods and does
not require operators to evaluate and possibly install vapor recovery
equipment. See final Sec. Sec. 3179.10 and 3179.100.
The BLM amended the final definition of ``leak'' to be consistent
with the final rule's leak LDAR requirements. Commenters recommended
that the removal of the detection methods from the definition. The BLM
retained the detection methods in the definition to provide clarity for
the regulated community and BLM inspectors. Leaks are not considered
leaks unless they can be detected by one of the three methods provided
in the definition. Further, the three identified methods for leak
detection provide operators with facility inspection flexibility.
The BLM received several comments suggesting a rewording of the
proposed definition for ``liquids unloading.'' For additional clarity,
commenters recommended the following rewording to the definition,
``removal of liquid hydrocarbons or water in the wellbore that
accumulated during production of a completed gas well.'' The rewording
did not offer any substantive change from the proposed definition,
which states ``removal of an accumulation of liquid hydrocarbons or
water from the wellbore of a completed gas well.'' The BLM did not
change the definition based on the comments received.
The BLM did not change the final rule definition for ``lost oil or
lost gas'' based on comments received. The BLM received comments
suggesting that the BLM expressly exclude royalty-free use of produced
oil or gas on-lease from the definition.
The BLM does not consider royalty-free use of oil or gas on the
lease to be ``lost oil or lost gas,'' but adding an express exclusion
of royalty-free use in the proposed definition for ``lost oil or lost
gas'' could have created confusion or conflict with the implementation
of proposed Sec. 3179.201, regulating pneumatic equipment. Pneumatic
controllers and pneumatic diaphragm pumps use gas designated as on-
lease and royalty-free use pursuant to subpart 3178. Subpart 3178, in
turn, requires that any production used on-lease and royalty-free must
be a reasonable volume, based on the type of equipment used. In the
case of pneumatic equipment, proposed Sec. 3179.201 would have limited
the bleed rate to 6 scf per hour. Thus, if a pneumatic controller had a
higher bleed rate than allowed in proposed subpart 3179 and an operator
were reporting this use as on-lease use, then the controller would have
been in compliance with subpart 3178 and out of compliance with
proposed subpart 3179. For this reason, the BLM removed the pneumatic
equipment requirements in proposed Sec. 3179.201 and did not change
the definition for ``lost oil or lost gas'' in this final subpart.
The BLM received comments recommending a change to the definition
of ``low-pressure flare.'' The proposed rule defined a ``low-pressure
flare'' as any flare that does not meet the definition of a ``high-
pressure flare.'' Based on comments received, the BLM changed the
definition for a ``high-pressure flare'' to state that it combusts gas
that would normally go to sales. Multiple commenters suggested defining
the ``low-pressure flare'' as one that would not normally go to sales
without compression. Since the definition for a ``high-pressure flare''
now requires that the gas stream would normally go to sales, the
proposed definition for ``low-pressure flare'' as one that is not a
``high-pressure flare'' accomplishes what the commenters recommended.
The BLM did not change the proposed definition of ``low-pressure
flare'' in the final rule based on the comments.
One commenter suggested including a definition for ``oil well.''
NTL-4A does not contain a definition for either ``oil well'' or ``gas
well.'' However, the 2016 and 2018 rules that have been vacated by the
court did contain a definition for an ``oil well.'' The BLM believes
that defining a ``gas well'' is sufficient for the purposes of this
rule. The BLM acknowledges that the 2016 and 2018 versions of this rule
provide a definition for ``oil well'' that mirrors the definition for a
``gas well.'' However, this final rule definition of a ``gas well''
necessarily implies that an ``oil well'' is one that is not a ``gas
well.'' The final rule definition for gas well reads, ``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. Unless more specific British thermal unit (Btu)
values are available, a well with a GOR greater than 6,000 standard
cubic feet (scf) of gas per barrel of oil is a gas well.'' Based on the
final definition of ``gas well,'' the BLM believes it functionally
supplies a definition for an oil well as one that produces more energy
in oil than in gas. The BLM did not add a definition for an oil well to
the final rule based on this one comment.
The proposed rule defined ``unreasonable and undue waste of gas''
to mean a frequent or ongoing loss of gas that could be avoided without
causing
[[Page 25406]]
an ultimately greater loss of equivalent total energy than would occur
if the loss of gas were to continue unabated. The BLM requested comment
on the definition of ``unreasonable and undue waste of gas'' in the
proposed rule as well as comment on a proposed alternative definition:
``Unreasonable and undue waste of gas means a frequent or ongoing loss
of substantial quantities of gas that could reasonably be avoided if
the operator were to take prudent steps to plan for and manage
anticipated production of both oil and associated gas from its
operation, including, where appropriate, coordination with other nearby
operations.'' One commenter specifically suggested the inclusion of the
qualifier ``that is economically feasible to avoid'' after ``or the
ongoing loss of gas'' in the proposed definition, stating that the BLM
has always considered economics in making the determination as to
whether the loss of gas is avoidable or unavoidable. The commenter
continued that the removal of economic considerations makes the rule
``unwieldy,'' and ``significantly reduces the BLM's ability to
efficiently administer this regulatory program.'' A number of
commenters recommended the removal of the term ``unreasonable and undue
waste'' that was tied to the proposed WMP, LDAR, and oil-well flaring
requirements. Commenters stated the proposed definition is inconsistent
and arbitrary and does not provide clear guidance. Another commenter
recommended modifications to the proposed alternative definition, which
included the addition of a sentence stating, ``This includes all
venting and flaring of gas unless it arises due to circumstances beyond
the control of the operator or due to temporary operational necessities
that render abatement options infeasible or unsafe.'' The BLM
considered all the comments received on the proposed and alternative
definitions of unreasonable and undue waste, as discussed in the next
paragraph.
Oil and gas deposits are nonrenewable resources and therefore waste
prevention and resource conservation are reasonable requirements for
producing operations, as provided for and required by statute. In the
more than 40 years since the publication of NTL-4A, oil and gas
industry technology has advanced significantly, the market has shifted
from viewing associated gas as a waste product to a commodity, yet loss
of gas from Federal and Indian oil wells has increased in total and on
a per barrel produced basis. An economic feasibility analysis is highly
dependent on multiple variables that one may choose to include in the
analysis, while the more simplified, sensible approach that the BLM is
using here does not require such a multivariate analysis. With the
final rule, the BLM has decided to not carry forward the proposed
definition of ``unreasonable and undue waste of gas'' and removed the
term from the final rule definitions and references to the definition
in that appeared in the proposed rule at Sec. 3162.3-1(k), Sec.
3179.8(b), and Sec. 3179.301. The BLM has determined that the proposed
definition and its alternative proposed definition might create
unnecessary confusion and, moreover, is not relevant for purpose of
carrying out final Sec. 3179.70(b) and Sec. 3179.100. The proposed
definitions would made it unnecessarily difficult for the BLM to take
enforcement actions given the multivariate nature of the definition.
Indeed, the final rule does not use the term ``unreasonable and undue
waste of gas'' anywhere in the regulatory text. Therefore, the BLM
removed the definition.
For the final rule, one commenter suggested that the BLM add a
definition for the term ``vapor recovery tower.'' Since the BLM removed
the provisions for vapor recovery equipment in the proposed Sec.
3179.203 in response to comments, the BLM does not believe the addition
of a definition for a ``vapor recovery tower'' serves any purpose in
the final rule. The BLM did not add a definition to the final rule
based on this comment and the changes made in the final rule.
Section 3179.11 Severability
This new section describes the legal principle of ``severability''
and applies it to the regulations in subpart 3179. If any portion of
these regulations were found invalid or unenforceable as to a
particular set of circumstances or particular people, the remaining
portions of the regulations would remain in effect and the BLM could
continue to enforce them.
The BLM has included this severability section in the final rule to
make its intent clear that the various provisions in the regulation are
independent and that any of the sections of this final rule may either
stand alone or work together and are therefore severable. If a court
were to find certain sections invalid, the remaining sections of the
rule would remain in effect.
Section 3179.30 Incorporation by Reference (IBR)
This final rule incorporates one industry standard without
republishing the standard in its entirety in the CFR, a practice known
as incorporation by reference. This standard was developed through a
consensus process, facilitated by the American Petroleum Institute
(API), with input from the oil and gas industry. The BLM has reviewed
this standard and determined that it will further the purposes of Sec.
3179.71 of this final rule. This standard reflects the industry-
accepted standard for the testing and reporting protocols for a flare
gas meter within a Flare Flow Meter System. Under Sec. 3179.71(c),
ultrasonic meters used in high-pressure flare systems must be tested
for flare use. The legal effect of IBR is that the incorporated
standard becomes a regulatory requirement. This final rule incorporates
the specific version of the standard listed. The standard referenced in
this section would be incorporated in its entirety.
The incorporation of the industry standard follows the requirements
found in 1 CFR part 51. The industry standard can be incorporated by
reference pursuant to 1 CFR 51.7 because, among other things, it would
substantially reduce the volume of material published in the Federal
Register; the standard is published, bound, numbered, and organized;
and the standard proposed for incorporation is readily available to the
general public through purchase from the standard organization or
through inspection at any BLM office with oil and gas administrative
responsibilities. 1 CFR 51.7(a)(3) and (4). The language of
incorporation in final 43 CFR 3179.30 meets the requirements of 1 CFR
51.9.
The API material that the BLM is incorporating by reference is
available for inspection at the Bureau of Land Management, Division of
Fluid Minerals, U.S. Department of the Interior, 1849 C Street NW,
Washington, DC 20240, telephone 202-208-3801; and at all BLM offices
with jurisdiction over oil and gas activities.
The API material is also available for inspection and purchase from
API, 200 Massachusetts Avenue NW, Suite 100, Washington, DC 20001-5571;
telephone 202-682-8000; online purchase https://www.apiwebstore.org/Standards. In addition, the API provides free read-only access to the
API standard that the BLM has incorporated by reference via an online
reading room https://publications.api.org/.
[[Page 25407]]
The following describes the API standard that the BLM incorporates
by reference in this final rule:
API Manual of Petroleum Measurement Standards (MPMS) Chapter 22.3,
Testing Protocol for Flare Gas Metering; First Edition, August 2015
(``API 22.3''). This standard covers the testing and reporting
protocols for natural gas flare meters. This standard discusses the
testing to be performed, how the test data should be analyzed, and how
measurement uncertainty is determined based on the test data.
In the proposed rule, the BLM included two GPA Midstream
Association standards that would have addressed requirements in
proposed Sec. 3179.203(c) for sampling and analysis in the evaluation
of the installation of vapor recovery equipment. Since the BLM has
removed the vapor recovery equipment requirements from the final rule,
there is no longer a need to incorporate those two industry standards
and they have been removed.
In response to comments, the BLM in the final rule has expanded the
acceptable methods for measuring flared oil-well gas volumes from
orifice meters to also include ultrasonic meters. Since ultrasonic
meters are not an approved method of measurement at FMPs pursuant to 43
CFR subpart 3175, the BLM is including the testing protocol from API
22.3 to ensure ultrasonic metering accuracy for high-pressure flares.
Operators who use ultrasonic meters for flare measurement are required
to ensure that these meters are tested for flare use pursuant to API
22.3. The test result report based on API 22.3 must be made available
to the AO upon request.
The BLM received a number of comments requesting the inclusion of
API MPMS Chapter 14.10 Natural Gas Fluids Measurement--Measurement of
Flow to Flares, December 2021, in the industry standards that are
incorporated by reference. The BLM elected not to include this standard
for reasons outlined in the discussion for Sec. 3179.71 of this
preamble.
Section 3179.40 Reasonable Precautions To Prevent Waste
The BLM redesignated this section from Sec. 3179.12 in the
proposed rule to Sec. 3179.40 in the final rule. The BLM received
comments on this section stating that the section: (1) is vague and
would be difficult for the BLM to enforce consistently among field
offices; (2) uses the MLA's ``reasonable precautions to prevent waste''
language absent actionable requirements; and (3) would allow the BLM to
exercise open-ended discretion divorced from regulatory requirements
because it allows the BLM, under proposed paragraphs (b) and (c), to
prescribe ``reasonable measures'' as conditions of approval of an APD.
One commenter supported the BLM's inclusion of the ``reasonable
precautions to prevent waste'' language in this section and concurred
with the BLM's conclusion that what may constitute reasonable
precautions to prevent waste may change over time.
In response to these comments, the BLM notes that the proposed
section simply reflects the BLM's existing statutory authority--already
enshrined by Congress in the MLA--to require reasonable precautions for
preventing waste. The BLM cannot ignore that statutory authority and
duty. And insofar as commenters suggest that the BLM's regulation is in
tension with other regulations--such as the application of royalties to
enumerated categories of ``avoidably lost'' gas--the BLM notes that it
cannot act contrary to statute or regulation and, where regulations
provide the BLM with discretion, it must exercise reasoned decision
making in accordance with the APA. Against these background principles,
commenters did not provide specific examples of any conflicts between
Sec. 3179.40 and other regulations or requirements. Nor did commenters
provide specific examples of how any conceptual tension between the
MLA's ``reasonable precautions'' language and the final regulations
would manifest as an irreconcilable and unworkable conflict with these
or any other Department regulations.
Indeed, the BLM routinely attaches conditions to APDs, chiefly to
apply general statutory and regulatory commands to site-specific
conditions, and to apply lease stipulations to particular wells. If an
operator requests a variance under Sec. 3170.6, for instance, which
requires the alternative to meet or exceed the current requirement, the
BLM may grant the variance with reasonable measures for the
implementation of the variance. To date, operators have not objected to
the BLM's reasonable measures included with Conditions of Approval for
APDs or approvals of measurement variance requests. Further, any
decision the BLM makes to prescribe ``reasonable measures'' that an
operator believes causes harm may be appealed pursuant to Sec. Sec.
3165.3 and 3165.4. The BLM did not change this section in response to
comments and the final rule section remains the same as the proposed
section, except for redesignating the section.
Section 3179.41 Determining When the Loss of Oil or Gas Is Avoidable or
Unavoidable
The BLM redesignated this section from Sec. 3179.4 in the proposed
rule to Sec. 3179.41 in the final rule. In paragraph (a) of this
section, the BLM considers lost oil as an unavoidable loss when the
operator has taken reasonable steps to avoid waste and has complied
fully with applicable laws, lease terms, regulations, provisions of a
previously approved operating plan, and other written orders of the
BLM. Likewise in paragraph (b) of this section, the BLM considers lost
gas as an unavoidable loss based on the grounds described in paragraph
(a) for lost oil, but with a list of operations or sources from which
the gas is lost to qualify as unavoidably lost. Proposed paragraph (b)
in this section contained 14 operations for which gas lost would be
considered an unavoidable loss. The final rule section contains 13
operations for which gas lost would be considered an unavoidable loss.
The BLM removed one operation: initial production testing. The BLM also
removed the term ``prudent'' from the determinations of unavoidably
lost oil and unavoidably lost gas because it could cause confusion with
the prudent operator standard discussed above, and it is not required
for those determinations.
One commenter pointed out that the proposed rule did not address
force majeure, or act-of-God events, such as extreme weather
conditions, and requested that this type of event should be included in
the list of unavoidable losses. The commenter explained that, in its
view, force majeure events may not qualify as ``emergencies,'' as that
term is defined in the proposed rule and the IRA. In the BLM's
experience in considering NTL-4A Sundry Notices, it has encountered
operators who have claimed that pipeline capacity issues should be
considered force majeure events since, in the operators' view, any gas
flared because of a capacity issue is out of its control. The BLM has
concluded that pipeline capacity issues are neither force majeure
events, nor outside an operator's control. As discussed above,
operators have various options to reduce associated gas flaring when
there are pipeline capacity issues, such as curtailing oil production
until pipelines become available, and an operator's choice to continue
oil production unabated when there is no available pipeline capacity
should not mean that the public must lose the value of the royalties
for that flared gas. The BLM disagrees with the comment and will not
include ``force majeure'' in the
[[Page 25408]]
list of unavoidable losses in final Sec. 3179.41(b). The emergency
provision in the final rule will cover most events that are
traditionally thought of as ``force majeure'' events, but provides
clearer standards focused on situations that are true emergencies
rather than simply all those arguably beyond the operator's control. As
discussed below, final Sec. 3179.83 defines an emergency situation as
a temporary, infrequent, and unavoidable situation in which the loss of
gas is necessary to avoid a danger to human health, safety, or the
environment. For the first 48 hours of an emergency, the lost gas is
royalty free.\142\ It is worth noting that if a ``force majeure'' event
prevented production and sale of oil, there would be little or no
venting or flaring.
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\142\ 30 U.S.C. 1727.
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Commenters on this proposed section disagreed with the time or
volume limits set within sections cited in the unavoidable loss list of
operations in proposed Sec. 3179.4(b). In most instances, the
commenters believed the set limits to be too low and found them to be
arbitrary. The BLM has addressed the time or volume limits in final
Sec. Sec. 3179.70, 3179.81, 3179.82, and 3179.83. Each of these
sections discusses the comments received and the BLM's response to the
comments separately.
Numerous commenters objected to the list of unavoidable loss
operations for lost gas and recommended keeping the NTL-4A rule
established 40 years ago, under which the BLM evaluates each event on a
case-by-case basis. Under the commenters' reading of these documents,
gas may be wasted, royalty-free, so long as the economics of production
do not justify the funding and construction, by a single lessee, unit
PA, or CA, of infrastructure, such as a redundant pipeline system or a
gas plant. As set forth above, nothing in the MLA requires adoption of
commenters' reading of the prudent operator standard, and, properly
considered, even if applicable that standard does not foreclose the BLM
from regulating the massive and increasing volume of waste generated
from the development of public minerals: as noted in the proposed rule
preamble, the average amount of flared associated gas per barrel of oil
produced has increased 102 percent between the decade beginning in 1990
and the decade beginning in 2010.
Even on their own terms, NTL-4A and the CDM 644.5 were designed to
allow these outcomes. For example, CDM 644.5 explains that ``economics
of conserving gas must be on a field-wide basis, and the Supervisor
must consider the feasibility of a joint operation between all other
lessees/operators in the field or area.'' Because most gas pipelines or
gas plants do not require a single well to supply them to capacity, but
rather service multiple wells, it is inappropriate to weight the costs
of infrastructure against the value of the gas produced by a single
well or lease.
The BLM also received comments suggesting that the proposed rule's
definition of ``avoidable loss'' is inconsistent with 43 CFR 3162.7-
1(d). That section first provides that ``[t]he operator shall conduct
operations in such a manner as to prevent avoidable loss of oil and
gas.'' In a separate sentence, the regulation states that ``[an]
operator shall be liable for royalty payments on oil or gas lost or
wasted from a lease site . . . when such loss or waste is due to
negligence on the part of the operator of such lease, or due to the
failure of the operator to comply with any regulation, order or
citation issued pursuant to'' 43 CFR part 3160 (emphasis added).
Commenters appear to have read this regulation as equating
``avoidable loss'' with negligence or noncompliance with BLM orders or
regulations, such that the BLM's proposed rule--which deems gas
``avoidably lost'' in certain scenarios where an operator is otherwise
complying with the regulations and is not negligent--is overbroad and
in tension with the existing regulations.
There is no conflict between the BLM's existing regulations and the
proposed rule or this final rule. The regulation at 43 CFR 3162.7-1(d)
provides two distinct conditions for when royalties are owed, namely
that operators must pay royalties on losses or waste resulting from
negligence or from noncompliance with BLM regulations. This final rule
defines avoidable waste and specifies when wasted gas is royalty
bearing. Thus, it is not in conflict with Sec. 3162.-1(d), rather it
is the type of regulation contemplated and referenced by Sec. 3162.7-
1(d).
Paragraph 3162.7-1(d) does not define such royalty-bearing loss or
waste as ``avoidable.'' Rather, it includes a separate requirement that
operators must conduct operations in such a manner as to prevent
avoidable loss.
In comparison, NTL-4A includes a broad definition of ``avoidable
loss'' that has been in place for four decades and that the relevant
commenters did not question, contradicting any suggestion that Sec.
3162.7-1(d) conclusively defines what qualifies as avoidable loss of
gas.
Unlike 43 CFR 3162.7-1(d), but like NTL-4A, the BLM's proposed rule
and this final rule in Sec. 3179.41 define when lost gas is
``avoidably lost'' or ``unavoidably lost'' and apply royalties to
``avoidably lost'' gas in Sec. 3179.42. This final 3179 subpart
provides that lost gas is royalty bearing if it is avoidably lost--that
is, if the operator has not taken reasonable steps to avoid waste, has
not complied with BLM directives, and the gas is coming from sources
other than those listed in Sec. 3179.42(b), it is royalty bearing.
These final regulations better define the conditions for when gas is
royalty free and when it is royalty bearing. The BLM has, however,
eliminated the ``negligence'' component of the definitions for
``avoidably lost'' and ``unavoidably lost,'' since the definitions
already require reasonable measures to prevent waste, i.e., a higher
bar than negligence. Particularly in light of this change, there is no
tension between the BLM's existing regulations and those finalized in
this rule.
Section 3179.42 When Lost Production Is Subject to Royalty
Proposed Sec. 3179.5 is redesignated Sec. 3179.42 in the final
rule. The BLM received several comments on this section, none of which
directly objected to the two statements made in this section. The
section states that royalty is due on all avoidably lost oil or gas and
royalty is not due on any unavoidably lost oil or gas. For example,
commenters objected to the use of the terms ``avoidable'' and
``unavoidable'' elsewhere in the subpart. As a further example, one
commenter stated the BLM should acknowledge that raw associated gas
cannot be marketed, explaining that, in the commenter's view, ``[i]t is
improper to assess royalties on flared gas because that gas cannot make
it to market and has no value.'' The commenter appears to argue that
when an operator chooses to flare gas, that gas has no value to the
public. The BLM disagrees. When an operator makes the business decision
to prioritize oil production over gas capture and sale, that operator
has necessarily chosen to deprive the public or the Indian lessor of
return for that gas. In all events, this comment addresses concepts
addressed elsewhere in the regulatory language and preamble. No
commenter disagreed that an avoidable loss has a royalty obligation and
an unavoidable loss has no royalty obligation. For this reason, the BLM
did not change this section.
Section 3179.43 Data Submission and Notification Requirements
This is a new section that did not appear in the proposed rule, but
merely contains three tables that reference
[[Page 25409]]
requirements that appear elsewhere in the regulations for the benefit
of readers. All the requirements included in these tables were
available for public comment, even though the tables themselves did not
appear in the proposed rule. The BLM includes this section for both BLM
inspectors and oil and gas operators as a quick reference to Sundry
Notice requirements, information that is required at the request of the
AO, and information requirements for the LDAR program. The section
creates no new obligations on operators that are not already required
in other regulations; it is provided for convenience. The summaries of
the requirements, as provided in the table, impose no obligation on
operators or on the BLM: all rights and obligations appear in the
corresponding section of code.
For example, Table 1 to paragraph (a) informs an operator or a BLM
inspector that subpart 3179 contains seven Sundry-Notice requirements.
Each Sundry-Notice requirement is briefly summarized in the left-hand
column with the section number of the specific Sundry-Notice
requirement appearing in the right-hand column. If a reader wants
further information on the Sundry-Notice requirements, then the reader
may go to the referenced sections to understand the requirement more
fully within the context of the section. Table 1 has a Sundry-Notice
requirement of ``Delay of leak repair beyond 30 calendar days with good
cause'' with a corresponding cross reference to Sec. 3179.101. The
reader may go to Sec. 3179.101(a) to learn the full requirement and
conclude that Sec. 3179.101(a) requires operators to repair leaks as
soon as practicable, and in no event longer than 30 calendar days after
discovery unless the operator has good cause for the delay. Further
reading shows that Sec. 3179.101(b) requires an operator to submit a
Sundry Notice informing the BLM of the good cause creating the delay in
repair beyond 30 calendar days. The table provides a quick guide to a
requirement and provides the corresponding regulatory reference.
The tables are intended to list all the requirements in the subpart
or a section, but they are not intended to provide a comprehensive
understanding of the full requirements. The tables are meant to serve
as a summarized, quick reference to aid the reader. While this is a new
section in the final rule, everything contained within the tables was
subject to public comment in the proposed rule. The tables simply
summarize final rule requirements. In the event of any conflict, the
language of the final rule requirements prevails over the summaries in
the table.
Section 3179.50 Safety
Proposed Sec. 3179.6 is redesignated Sec. 3179.50 in the final
rule. The section remains largely the same as in the proposed rule. The
BLM received a number of comments on the use of the term ``automatic
ignition system'' and on the proposed immediate assessment of $1,000
per violation imposed on operators upon the discovery of a flare that
is not lit. Industry commenters expressed the view that the definition
for an ``automatic ignition system'' did not allow for various types of
equipment to ensure that flares are properly lit when natural gas is
present. The BLM intends for the term ``automatic ignition system'' to
require operators to maintain an ignition source without specifying a
particular type of device, with the goal that operators will use
devices that are appropriate under the circumstances. The purpose of
flaring is to combust the gas immediately with no venting from the
flare apparatus, and that is the function and requirement of the
automatic ignition system.
One commenter interpreted this section to mean that the BLM would
prohibit venting of associated gas. The commenter further stated that,
in certain circumstances, a ``no venting'' standard is impossible to
meet. The BLM agrees with the commenter, and, for this reason, the BLM
continues to include a list of exceptions for which flaring is not
possible and venting is anticipated at final Sec. 3179.50(a)(1)
through (8). The commenter requested the addition of a de minimis
exception in the final rule on the grounds that flaring is occasionally
technically or economically infeasible. The proposed and final sections
already include an exception for technical infeasibility, in addition
to several other exceptions for small amounts of gas, and the commenter
did not explain why a general ``de minimis'' exception would cover
scenarios not already embraced by the final text. The BLM did not make
any changes to this section in the final rule based on that commenter's
suggestions. Royalty-free flaring under this provision is limited, as
indicated in final Sec. 3179.83, discussed below.
Some commenters contended that the BLM would exceed its statutory
authority if it imposed an immediate assessment of $1,000 per violation
for unlit flares. Commenters cited the Wyoming court's decision \143\
that concluded, for waste minimization and resource conservation
purposes, that there is no difference between eliminating excess
methane by venting or by flaring. But that is not true for royalties;
routing the gas through metered flaring equipment is essential for
royalty measurement.
---------------------------------------------------------------------------
\143\ Wyoming v. U.S. Dep't of the Interior, 493 F. Supp. 3d at
1068.
---------------------------------------------------------------------------
Furthermore, as the BLM stated in the proposed rule, consistent
with the MLA's requirement that leases contain provisions for the
``safeguarding of the public welfare'' and for the ``safety and welfare
of the miners,'' combusting gas rather than venting it into the
surrounding air is safer for operations due to the gas's explosiveness
and the risk to workers from hypoxia and exposure to various associated
pollutants.\144\ Furthermore, the BLM has an obligation to protect
local public health and safety in connection with its oil and gas
leases.\145\ Based on the 2019 ONRR production data, 3 percent of the
flaring locations are flaring more than 30,000 Mcf per month over the
averaging period. Allowing volumes of this magnitude to be vented
because of failures of flaring equipment would be a public health and
safety threat.\146\
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\144\ ``Health and Safety Risks for Workers Involved in Manual
Tank Gauging and Sampling at Oil and Gas Extraction Sites,''
February 2016, available at https://www.osha.gov/sites/default/files/publications/OSHA3843.pdf.
\145\ 43 CFR 3162.5-3, 3163.1(a)(3).
\146\ See ``Flammability of methane, propane, and hydrogen
gases,'' May 2000, available at https://www.cdc.gov/niosh/mining/UserFiles/works/pdfs/fompa.pdf and ``Toward an Understanding of the
Environmental and Public Health Impacts of Unconventional Natural
Gas Development: A Categorical Assessment of the Peer-Reviewed
Scientific Literature, 2009-2015,'' April 2016, available at https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0154164.
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The BLM also notes, again, that the preference for flaring over
venting is well established in oilfield operations. USGS's implementing
guidance for NTL-4A states that, ``[b]ecause of safety requirements,
gas which cannot be beneficially used or sold must normally be flared,
not vented.'' \147\
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\147\ CDM, 644.5.3G (June 1980) (emphasis added).
---------------------------------------------------------------------------
Furthermore, the BLM in the final rule has limited the scope of
this section to apply only to operations and production equipment
located on a Federal or Indian surface estate. The requirements in the
final Sec. 3179.50 do not apply to operations and production equipment
on State or private tracts, even where those tracts are committed to a
federally approved unit or CA.
In response to comments, the BLM changed the text of final Sec.
3179.50(a)(4) by replacing the term ``storage vessel'' with ``oil
storage tank'' and removing the reference to the requirement for vapor
recovery equipment in proposed Sec. 3179.203, which has been removed
[[Page 25410]]
from the final rule. Also, the BLM amended regulatory text in final
Sec. 3179.50(b) to state that flares or combustion devices must be
equipped with either an automatic ignition system or an on-demand
ignition system. Paragraph (b) has changed slightly from an immediate
assessment for ``discovery of a flare that is not lit'' to state that,
upon discovery of a flare that is venting instead of combusting gas,
the BLM may issue the operator an immediate assessment of $1,000 per
violation. The BLM changed the language to underscore that the type of
automatic ignition system is irrelevant, and the expectation is that
gas of sufficient volume and quality must be flared. The immediate
assessment for a flare that is venting gas instead of combusting gas
remains fundamentally the same as the proposed rule and no changes were
made based on comments received.
Section 3179.60 Gas-Well Gas
The BLM redesignated this section from Sec. 3179.7 in the proposed
rule to Sec. 3179.60 in the final rule. The BLM did not receive any
substantive comments related to this section. The comments received for
this section more directly relate to the BLM's definition of a gas
well. These comments are addressed in the discussion of Sec. 3179.10
of this preamble. The BLM did not make any changes to the regulatory
text other than updating a referenced citation to the final section
number.
Section 3179.70 Oil-Well Gas
Proposed Sec. 3179.8 is redesignated Sec. 3179.70 in the final
rule. This section covers the limit beyond which oil-well gas will be
considered an avoidable loss with a royalty obligation when gas is
flared due to pipeline capacity constraints, midstream processing
failures, or similar events. The proposed rule included a volumetric
limit of 1,050 Mcf per month per lease, unit PA, or CA. The BLM
received numerous comments explaining why a volumetric limit of this
kind is inappropriate. The BLM administers many leases that contain a
single producing well and many units that contain hundreds of producing
wells. Under the proposed rule, a single-well lease and a multi-well
unit would have been subject to the same 1,050 Mcf per month volumetric
limit.
The BLM agrees that the volumetric limit of 1,050 Mcf per lease,
unit PA, or CA per month is unfair due to the varying number of wells
in a lease, unit PA, or CA, and has discarded that particular limit,
replacing it with a per-barrel volumetric limit. The BLM's objective in
this rulemaking is to create a practical, royalty-based approach to
waste prevention from oil wells that removes the need for an
inefficient case-by-case determination of an avoidable/unavoidable loss
for gas flaring and allows for some unavoidable flaring, capped by a
practical limit.
Achieving this goal is not straightforward, and the BLM considered
and ultimately declined to adopt certain alternate thresholds proposed
by commenters, such as a time-based limit to flaring.\148\ In North
Dakota, the BLM encountered significant obstacles when implementing the
emergency provision from NTL-4A Section III.A. allowing operators to
flare royalty-free for ``24 hours per incident and to 144 hours
cumulative for the lease during any calendar month.'' From that
experience, the BLM learned that the time-limit approach is difficult
to enforce, and operators learned that they are ill-prepared to provide
flaring volumes based on time: operators do not maintain hourly
production data that could be used for NTL-4A emergency determinations,
nor will the measurement regulations provided for in this final rule
obligate such hourly measurements for all operators. From experience,
therefore, the BLM decided against adopting a time-based approach in
the final rule.
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\148\ See Marathon Oil Co. v. Andrus, 452 F. Supp. 548, 553 (D.
Wyo. 1978).
---------------------------------------------------------------------------
The BLM also considered and rejected commenters' suggestion that
the BLM require operators to capture certain percentages of their oil-
well gas. Instead, this final rule requires operators to submit either
a waste-minimization plan or a self-certification committing the
operator to capture 100 percent of the gas. In addition, insofar as
this rule flows from lessees' obligation to compensate the United
States or Indian mineral owners for their resources, the BLM's
application of royalties to avoidably lost gas ensures that the Federal
taxpayer or Indian lessor is compensated in the same manner as if the
gas were captured and sold. The royalty approach aligns with Congress'
instruction in the IRA. It also aligns with the BLM's historical
practice of curbing waste through royalties, not capture percentages,
and (in the context of the production rate limits for oil well gas)
with the demonstrated capacity of industry to conserve Federal gas. And
consistent with this rule's efforts to streamline BLM enforcement and
supervision (by, e.g., limiting the need for Sundry Notices), it
forgoes a not insignificant burden on both operators and the BLM. For
example, forgoing capture percentages obviates the need for the BLM to
make case-by-case determinations to avoid premature shut-ins, as in the
2016 Rule's provision for applications for exceptions to the capture
requirements. Although the BLM does not here disclaim the authority to
impose capture limits on Federal gas, the BLM's objective in this rule
does not necessitate such percentages.
The flaring thresholds in the final rule begin at 0.08 Mcf of gas
per barrel of oil produced in the first year of the rule, 0.07 Mcf per
barrel produced in the second year of the rule, 0.06 Mcf per barrel
produced in the third year, and 0.05 Mcf per barrel produced
afterwards. The BLM selected the initial limit--0.08 Mcf per barrel of
oil produced--because it is the average amount of gas flared per barrel
of oil produced in 1990 to 2000. Since the 1990s, the industry has
witnessed considerable technological advances in directional drilling,
hydraulic fracturing, and well completions, but has failed to adhere to
the level of conservation the industry has already demonstrated it can
achieve. Advances have been made in the use of skid-mounted equipment
for the extraction of natural gas liquids on-lease, equipment for
compressed natural gas on-lease, and on-lease power generation and
these advances may not be fully used in the field. Operators also have
available to them older methods for using the gas, such as reinjection
for enhanced oil recovery, reservoir pressure maintenance, or simply
safe disposal. The failure to fully implement new and old techniques to
manage gas that is currently wasted is particularly glaring given the
inclusion of standardized natural gas contracts with delivery at Henry
Hub in the New York Mercantile Exchange (NYMEX) in 1990. Including
natural gas on the New York exchange provided important pricing
information for the industry and facilitated broader marketing for
natural gas as a commodity even though the price of gas fluctuates with
the market. Notwithstanding a national market for pricing since 1990,
Federal lessees have wasted more of the public's gas as a function of
oil production. Cf., Cal. Co. v. Udall, 296 F.2d 384, 388 (D.C. Cir.
1961). For example, when the BLM evaluated the 2019 operator-reported
production for agreements reporting oil production and flaring data,
the average agreement produced 11,850 barrels of oil per month and
flared 4,500 Mcf of associated gas per month or an average flaring rate
of 0.38 Mcf per barrel of oil produced.
[[Page 25411]]
The BLM determined that the starting threshold of 0.08 Mcf per
barrel of oil produced would impact the approximately 62 percent of
flaring locations responsible for approximately 96 percent of the
reported flaring, based on 2019 production data. The 0.08 Mcf per
barrel of oil produced is comparable to the proposed 1,050 Mcf per
lease, unit PA, or CA in that the final threshold of 0.08 Mcf per
barrel addresses about 96 percent of the reported flaring. Thus, the
proposed and final rule limits target only those locations generating
the majority of the flaring, but, unlike in the proposed rule, would
not apply inequitably across unit agreements, PAs, and CAs. The BLM
estimates that the proposed limit of 0.08 Mcf per barrel of oil
produced would make 88 percent of the flared volumes royalty-bearing
and generate approximately $57.7 million in royalty revenue for the
first year. The 0.05 Mcf per barrel of oil produced threshold, in the
BLM's estimate, would make about 92 percent of the flared volumes
royalty-bearing, based on the 2019 production data.
The proposed rule included a flaring threshold of 1,050 Mcf per
lease, unit PA, or CA per month that would have gone into effect 60
days after publication of the final rule. For the final rule, the BLM
elected to use a phased-in timeline because of the changed metric, with
an initial threshold similar in magnitude to recently reported flaring.
A number of States have implemented a phased-in gas capture percentage
that allows operators to plan operations and budgets to meet the
capture requirements. The BLM provides a similar opportunity for
operators to plan for thresholds decreasing from 0.08 Mcf to 0.05 Mcf
over 4 years. Also, a 4-year phase-in for the threshold allows for
further advances in technology that may assist in lowering waste. When
BLM changed to the Mcf per barrel of oil produced flaring limit from
the 1,050 Mcf per lease, unit PA, or CA limit, the projected aggregate
flared volume beyond the limit increased and, therefore, projected
royalties increased.
Commenters also stated that regardless of the flaring threshold,
the BLM must include provisions permitting operators to submit a
request for approval to flare above the established threshold, and that
the threshold establishes an improper per se avoidable loss. The BLM
disagrees. The ability for operators to request approval to flare above
the established threshold defeats the purpose of a threshold and
returns the BLM and operator to an unworkable case-by-case analysis.
Commenters suggested a 24-hour time limit as an alternative to the
volumetric threshold that the BLM had in the proposed rule. The BLM
disagrees, and the commenters failed to explain how a time-based limit
would not also result in what the commenters alleged was an improperly
rigid, per se avoidable loss threshold associated with a volumetric
limit. The BLM has established the volumetric flaring threshold based
on oil production to allow for some avoidable oil-well loss flaring
while simultaneously eliminating the time-consuming and
administratively costly case-by-case determinations required under NTL-
4A.
The State of North Dakota has taken issue with the BLM's proposal
to use monthly volume limits. The North Dakota Industrial Commission
contends that the BLM should use the ``average percentage of gas
captured to ensure economic viability, better manage unconventional
resources, and minimize conflict with North Dakota's flaring
regulations.'' The BLM has elected not to use a monthly volume limit or
a gas capture percentage to determine waste due to the aforementioned
inequities associated with varying numbers of wells in a lease, unit
PA, or CA; the difficulties implementing a gas capture percentage
nationwide; and the concern for not fulfilling the BLM's Indian trust
obligation.
States such as North Dakota and New Mexico have implemented a
phased-in gas capture percentage. The final rule's limits based on
percentages of gas flared per barrel of oil, however, are a better
means to manage and understand waste by directly linking oil production
with flared gas.
Wyoming comments that in 2021, operators only flared or vented 0.18
percent of all gas that was produced in the State. And North Dakota
comments that ``its regulations resulted in gas capture rates
increasing from 64 percent in 2014 to total capture of 95 percent in
2022 even with all [of North Dakota's] approved variances includ''d.''
The BLM lauds both States for their advances in lowering flaring, and
their achievements will likely reduce any additional burdens on
operators in those States from the final rule. However, according to
EIA data from 2017 through 2022, North Dakota accounted for
approximately 33 percent of the volume of gas flared nationwide while
producing 11 percent of the volume of oil produced nationwide. Wyoming
accounted for approximately 11 percent of the average total flared gas
onshore nationwide and 2 percent of the oil produced nationwide. State
efforts to reduce venting and flaring, though important, do not
displace the Secretary's duty to prevent undue waste from Federal and
Indian wells nationwide.\149\ The BLM has written a rule that will
compensate the taxpayer or the Indian mineral owner for the waste of
flared gas when the operator chooses to maximize oil production
regardless of the associated gas disposition.
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\149\ https://www.eia.gov/dnav/ng/ng_prod_sum_a_EPG0_VGV_mmcf_a.htm, https://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbbl_a.htm.
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Some commenters stated that a fixed threshold for avoidable loss
wrongly fails to account for situations ``beyond the control of the
operator.'' The largest sources of flared gas associated with BLM
leases are unconventional oil reservoirs in North Dakota and New
Mexico, where pipeline capacity issues have been cited as reasons for
extreme flaring. The BLM has concluded that, particularly in these
cases, the rate of oil production and its associated gas production is
fully within the control of the operator: the BLM is well aware, for
example, that operators have shut in production (whether oil or gas)
when commodity pricing is low and have begun producing again when the
price rises. The BLM's threshold simply applies the operators' logic in
these circumstances to the BLM's interest, as lessor or trustee, in
conservation of a public or Indian resource. For this reason, the
threshold for an avoidable loss in the final rule is directly tied to
the oil production rate--i.e., a factor within the operators' control.
The BLM received comments stating that the flaring thresholds
throughout the rule are arbitrary and unfounded, particularly in
proposed Sec. 3179.8. One commenter claimed that the BLM had failed to
identify and make available for review the information used to
determine the flaring limits. On the contrary, the BLM clearly noted in
the proposed rule preamble that it relied on production data that
operators reported to ONRR from 2015 through 2019 to derive flaring
thresholds.\150\ These data are available to the public online at the
U.S. Department of the Interior Natural Resources Revenue Data website,
https://revenuedata.doi.gov/query-data.
---------------------------------------------------------------------------
\150\ 87 FR 73590, 73603 (Nov. 30, 2022).
---------------------------------------------------------------------------
The BLM elected to use 2019 production data, even though later
production data were available, in recognition of the lower (i.e.,
unrepresentative) production in 2020 and 2021 during COVID-19. When the
BLM prepared the proposed rule, 2022 production data were not
available. The 2022 production data is now available.
[[Page 25412]]
The BLM has now reviewed the 2022 data with a flaring rate of 0.11 Mcf
of gas flared per barrel of oil produced. Accordingly, the BLM has not
altered its approach to flaring limits based on the updated data.
Another commenter wrote, the ``BLM's proposed limits in this
Section are much too low, constituting in some instances mere minutes
of flaring.'' This comment is inconsistent with the publicly available
ONRR data, which indicates that the highest reported flared volumes for
any month in 2019 were 662 Mcf per hour or 11 Mcf per minute. If
operators are flaring 1,050 Mcf in minutes, they are failing to report
this level of flared volumes on their Oil and Gas Operations Reports
(OGOR) to ONRR. The BLM did not change the flaring limit based on this
comment.
One commenter objected to the proposed thresholds because,
according to the commenter, the most significant reason why new
production outpaces infrastructure capacity is the time-consuming
process of obtaining the necessary pipeline rights-of-way from the BLM.
The commenter outlined the required steps and associated time to obtain
approval to construct a pipeline across Federal and Indian land but did
not include the time necessary to obtain necessary approvals to cross
State and private land. According to the commenter, the process
ordinarily takes 47 weeks. The commenter asserted that operators have
no choice but to flare associated gas or shut in the wells given the
time necessary to obtain the rights-of way from the BLM. In effect, the
commenter asserted that the BLM is responsible for the flaring of
associated gas because obtaining rights-of-way from the BLM is a
lengthy process.
Since the rights-of-way process is well understood--as reflected in
the comment--operators necessarily make a business decision to
accelerate oil production while flaring associated gas due to capacity
constraints. Conversely, an operator could begin to plan for the
process for obtaining rights-of-way prior to drilling the wells--
particularly because many operators plan drilling 5 years into the
future--or, alternatively, leave wells shut in until the pipeline
rights-of-way is approved. As the BLM notes above, operators routinely
make business decisions that are advantageous to their self-interest by
electing to shut in wells when the price of oil is low, and, when the
price of oil is high, operators act on their self-interest as well by
increasing oil production. In this final rule, the BLM is merely
applying the same logic to the public's interest in the conservation of
resources and intends for the flaring limitations to encourage
operators to plan ahead for natural gas conservation before they drill
wells or postpone production until there is adequate pipeline capacity,
thereby reducing the waste of Federal natural gas resources. We note
that the BLM approves rights of way for pipelines only where BLM
manages the surface estate, which is important for some but not all oil
and gas operations.
In any event, as of January 2024, there are 4,237 approved APDs in
New Mexico, 1,948 in Wyoming, and 333 in North Dakota. Simultaneously,
the BLM currently has only 314 pending rights-of-way applications for
oil or gas pipelines in New Mexico, 29 in Wyoming, and none in North
Dakota. This disparity between APDs and rights-of-way applications
illustrates that operators appear uninterested in obtaining the
necessary rights-of-way to accommodate the need for greater pipeline
capacity. These pending rights-of-way applications may be factors
relating to some of the volume of flared associated gas that operators
have reported for the past year, but could have been addressed by
earlier planning for those rights-of-way before drilling begins. As
demonstrated by the comment, operators are aware of the process and
timeline for BLM approval of rights-of-way.
The BLM also received comments on the proposed provision in Sec.
3179.8(b) that would have allowed the BLM to exercise its discretion to
order the operator to curtail or shut in production as necessary to
avoid unreasonable and undue waste of Federal or Indian gas after
confirming that an operator's flaring is exceeding 4,000 Mcf of gas for
3 consecutive months. The BLM has revised the flaring threshold in the
final Sec. 3179.70(b) to allow 1 Mcf of gas per barrel of oil produced
per month for 3 consecutive months with confirmation that the flaring
is ongoing. The BLM arrived at this figure by targeting the 3 percent
of reporting units with roughly 16 percent of flaring--as it had in the
proposed rule--and simply adjusted the threshold to correspond to a
rate of production as in paragraph (a).
One commenter criticized the structure of proposed Sec. 3179.8 for
eliding any inquiry into whether the lessee is acting reasonably and
prudently in light of the operator's actual economic circumstances. The
commenter stated further that flaring is not automatically ``waste.''
The BLM agrees that flaring is not automatically waste, an
understanding reflected in the proposed and final rules' distinctions
between avoidable and unavoidable loss and associated flaring
thresholds. The BLM uses the unavoidable loss threshold to allow
operators to respond to operational considerations and manage both oil
production and associated gas flaring throughout the month to stay
below the unavoidable loss threshold: operators are capable of
curtailing oil production or shutting in oil wells to lessen or stop
the flaring of associated gas. And as set forth elsewhere in this rule,
nothing in the MLA requires that the BLM evaluate the feasibility of
flaring on a case-by-case basis or without regard to the United States'
interest in conserving the mineral estate.
One commenter went further and provided an example of the economic
value of shutting in a well for flaring in excess of 4,000 Mcf per
month, the threshold from proposed Sec. 3179.8(b), at a hypothetical
value of $3 per Mcf, which, at a minimum, would yield a gross income of
$12,000 for the gas and an associated Federal royalty income of $1,500.
This commenter continued that, in its view, the BLM failed to explain
``how it is negligent and imprudent for an operator to flare that
minimal value of gas in lieu of shutting in production from a CA that
in the same month would produce tens of thousands, if not hundreds of
thousands of dollars, worth of oil.''
The BLM does not find the commenters to be persuasive. The revenue
from oil in the proposed example is not lost unless the well is
abandoned--otherwise the operator can simply resume operations later.
The BLM has reasonably concluded that it would prefer to reap
royalties, for the benefit of the American taxpayers or Indian mineral
owners, from both oil production and otherwise wasted gas. The
commenter did not provide any specific data that, in such
circumstances, the well would be abandoned. Indeed, the example
ultimately buttresses the BLM's conclusion that the royalties the BLM
seeks to obtain are in many cases small relative to the overall value
of oil and the associated profit accruing to the operator, such that,
absent the final rule, an operator may decide to prioritize its short-
term profits over longer-term resource recovery.
This final rule section on oil-well gas applies to all onshore
Federal and Indian oil and gas leases, unit PAs, and CAs and this
section requires operators to flare (not vent) gas due to pipeline
capacity constraints, midstream procession failures, or other similar
events that prevent produced gas from being transported through the
connected pipeline. The BLM has received comments characterizing the
Wyoming
[[Page 25413]]
court decision as explaining that it does not matter if gas is vented
or flared. The BLM agrees with the relevant passage of the court's
opinion, which indicates that, as a matter of volumes of gas wasted, it
is immaterial whether the gas is vented or flared. But--independent of
the court's discussion regarding volumes of potentially wasted gas--
flaring provides benefits to the BLM's waste management mandate, namely
accuracy in the measurement of wasted gas. Oil-well gas with flared
volumes greater than 1,050 Mcf per month over the averaging period
requires accurate measurement for purposes of calculating the royalty
obligation. The measurement of vented gas through a flare line does not
meet the BLM's expectation for measurement accuracy when there is a
royalty obligation. There are no industry standards for measurement of
vented gas and no current industry understanding of measurement
accuracy of vented gas. Therefore, the operator is expected to flare
and measure the flare volume pursuant to final Sec. 3179.71, as set
forth below.
Section 3179.71 Measurement of Flared Oil-Well Gas Volume
The BLM has restructured proposed Sec. 3179.9, which was entitled,
``Measuring and reporting volumes of gas vented and flared,'' by
breaking it up into two sections in the final rule: Sec. 3179.71,
entitled, ``Measurement of flared oil-well gas volume,'' and Sec.
3179.72, entitled ``Reporting and recordkeeping of vented and flared
gas volumes.'' The BLM made this change for ease of use for both the
regulated community and BLM inspectors.
One commenter suggested a method for determining the flaring
threshold limit at commingled facilities. From this comment, the BLM
recognized that it had not included explicit regulatory text allowing
for the commingling of flared gas from multiple leases, unit PAs, and
CAs in the proposed rule. The BLM has rectified this omission by
including in the final rule the ability for operators to commingle
flared gas without BLM approval in final Sec. 3179.71(a). Proposed
paragraph (d) would have allowed operators to use an allocation method
approved by the BLM to allocate production from a commingled flare. The
BLM recognizes the benefit for operators and the BLM to allow flaring
from more than one lease, unit PA, or CA in a common high-pressure
flare. Final Sec. 3179.71(a) explicitly allows for the commingling of
flared gas from more than one lease, unit PA, or CA to a common flare
without BLM approval and provides the allocation method for commingled
flares in final paragraph (h). The BLM requires a standard allocation
methodology for commingled flared gas based on oil production. The BLM
also included a requirement in this section for operators to indicate
on the site facility diagram that the high-pressure flare is a common,
commingled flare, and to list the leases, unit PAs, or CAs contributing
gas to the common flare. Indicating that flares are commingled on the
site facility diagram ensures that BLM inspectors have accurate
information when conducting production inspections.
In the proposed rule, the BLM would have required operators to
measure using an orifice meter at all high-pressure flares flaring
1,050 Mcf per month or more within 6 months after the effective date of
the final rule. For flared gas measured with an orifice meter, the
proposed rule also would have required the following: (1) orifice plate
inspections once a year; (2) meter verification once a year; (3) gas
sampling with a C6+ analysis once a year; (4) flare gas sample taken
from: the flare meter location, the gas FMP when the flare and FMP gas
are the same quality, or another location approved by the BLM; (5)
measurement uncertainty within 5 percent; (6) radiant heat
considerations for flare placement; and (7) high-pressure flares that
met the measurement requirements for a low-volume FMP under subpart
3175. Many of these requirements that appeared in the proposed section
were taken directly from the industry standard, API MPMS Chapter 14,
Natural Gas Fluids Measurement, Section 10, Measurement of Flow to
Flares, Second edition, December 2021.
The BLM evaluated these requirements based on comments and decided
to instead require operators in the final rule to use an orifice
metering system with the low-volume measurement requirements found in
Sec. 3175.80, the low-volume electronic gas measurement system
requirements found in Sec. 3175.100, and the low-volume gas sampling
requirements found in Sec. 3175.110, with the gas sampling location
requirements provided in final Sec. 3179.71(d) or (e). These changes
make the accuracy of an orifice metering system used at a flare
consistent with that of a low-volume gas FMP. Based on measurement data
received from a commenter, the BLM agrees with the data analysis and
believes that flare measurement is unlikely to meet the 5
percent uncertainty requirement. The commenter provided analysis of
annual field data from an orifice measurement flare system and a linear
meter flare system showing that the overall uncertainty of the orifice
meter is 6.32 percent and the linear meter is 3.22 percent. Requiring a
flare meter to meet the FMP requirements for a low-volume gas FMP
removes the need to meet the 5 percent uncertainty level.
For this reason, the BLM removed the measurement uncertainty
requirement in the final rule. The requirement for the consideration
for radiant heat for flare installation has been moved to final Sec.
3179.71(c)(3).
One commenter requested that the BLM require flare measurement at
all locations flaring associated gas because the commenter believes
industry grossly underestimates flared volumes reported to ONRR. The
BLM considered this approach but abandoned it because requiring
measurement at all flares places an unnecessary economic burden on
small operators who rarely have routine flaring due to pipeline
capacity issues. While the BLM understands this threshold is based on
data that may underestimate the scope of the problem, the BLM has
concluded that requiring measurement on flared volumes less than 1,050
Mcf per month over the averaging period would encompass flaring
operations that would meet the BLM's emergency criteria and that are
outside the BLM's objective for this section, which is to measure more
frequent gas flaring. The BLM did not change the high-pressure flare
measurement requirement threshold based on this comment.
Other commenters requested the BLM to return to the NTL-4A standard
of estimation and eliminate the requirement to measure gas-flaring
volumes, relying instead on flared-volume estimation based on site-
specific information, such as GORs, sales gas volumes metered for
allocations, and gas sample analysis. One commenter provided a study
indicating that inefficient and unlit flares account for five times
more methane emissions than was previously estimated across the three
basins responsible for more than 80 percent of U.S. flaring.\151\ The
study's evidence that industry underestimates the amount of methane
lost from flares supports the final rule requirement to measure high-
pressure flares with volumes greater than or equal to 1,050 Mcf per
month over the averaging period.
---------------------------------------------------------------------------
\151\ Genevieve Plant et al., ``Inefficient and Unlit Natural
Gas Flares Both Emit Large Quantities of Methane,'' Science, vol.
377, pp. 1566 (2022), https://www.science.org/doi/10.1126/science.abq0385.
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The BLM received numerous comments requesting the BLM expand the
types of flare measurement systems that can be used from orifice
metering
[[Page 25414]]
only to other systems that are covered under API MPMS Chapter 14.10
Natural Gas Fluids Measurement--Measurement of Flow to Flares, December
2021. The BLM did not incorporate this API standard into the final rule
because it includes meters that the BLM does not regulate in its gas
measurement rules found in subpart 3175. Since royalties will be owed
at most flares that require measurement, the BLM is requiring almost
the same level of accountability for flaring measurement as would be
required for production royalty measurement. The BLM elected to expand
the list acceptable meters in subpart 3175 to include ultrasonic meters
because the BLM anticipates allowing for the use of ultrasonic meters
when it updates subpart 3175, but none of the other meters in API
14.10.
The BLM did not include the use of thermal flow or thermal mass
meters for several reasons. First, thermal mass meters are dependent on
gas properties, which are variable with natural gas in a flare line.
Second, open-loop calibration (as in a flare system), with a thermal
mass meter is only recommended using air. Any other application
environment will be inferred indirectly and introduce uncertainty or
less accurate measurement. Finally, no party submitted any measurement
data to demonstrate the acceptable performance of a thermal mass meter
for flare use. For these reasons, the BLM has expanded the final rule
to include orifice measurement systems and ultrasonic measurement
systems.
Comments highlighted safety concerns related to the use of orifice
meters on flares and the difficulty in obtaining accurate measurement,
given that flow to a flare is intermittent with rates varying
considerably at a single meter. The BLM agrees with both the safety and
measurement accuracy concerns and changed this section in the final
rule to allow both orifice metering and ultrasonic meters. In addition,
based on commenters' concerns for safety with the orifice metering
system, the BLM included a new provision in Sec. 3179.71(c)(3) that
requires operators to evaluate the production facility to determine
which type of flare measurement is safe for the facility.
In the final rule, orifice metering systems must comply with the
low-volume measurement requirements in Sec. 3175.80, low-volume
electronic gas measurement requirements in Sec. 3175.100, and the low-
volume gas sampling and analysis requirements in Sec. 3175.110, with
the exception for gas sampling requirements in the final rule at Sec.
3179.71(d) or (e). Under the new provisions in Sec. 3179.71(c)(2),
ultrasonic measurement systems must comply with three requirements.
First, each ultrasonic meter make and model must be tested for flare
use. Ultrasonic meter testing must be conducted and reported pursuant
to API MPMS Chapter 22.3, Testing Protocol for Flare Gas Metering,
First Edition, August 2015 (``API 22.3'') and the test report must be
available to the AO upon request. Second, ultrasonic meters must be
installed and operated for flare use according to the manufacturer's
specifications and those specifications must be provided to the AO upon
request. Third, ultrasonic metering systems must comply with the low-
volume electronic gas measurement requirements in Sec. 3175.100, and
low-volume gas sampling analysis requirements in Sec. 3175.110 with
the exception for the gas sampling requirements in Sec. 3179.71(d) or
(e).
Two commenters expressed concern that the measurement system as
required in the proposed rule could not meet the proposed uncertainty
requirement of 5 percent, even though the BLM used the
industry standard value. Section 4.1 of API MPMS Chapter 14.10 Natural
Gas Fluids Measurement--Measurement of Flow to Flares, December 2021
states, ``Targeted uncertainty for flare metering applications shall be
5 percent of actual volumetric or mass flow rate, measured
at 30 percent, 60 percent and 90 percent of the full scale for the
flare meter or as defined by regulations or specific end user
requirements.'' Based on a commenter's submission of an uncertainty
analysis of an orifice meter used in a flare application, the BLM
agrees that a 5 percent uncertainty for the flare meters,
particularly orifice meters, will be difficult to achieve. Therefore,
the BLM has removed the measurement uncertainty requirement that was in
proposed Sec. 3179.9(b)(5) based on the comment.
The BLM did not receive any comments on its gas sampling
requirements in the proposed rule. Since the BLM explicitly allows for
commingling of flared gas without prior approval in the final rule, it
became necessary to address gas sampling at a commingled and non-
commingled flare. The final rule at Sec. 3179.71(d) requires operators
to take gas samples from either the flare meter location, the gas FMP
location, or another location approved by the AO when measuring high-
pressure flare volumes from a single lease, unit PA, or CA. When the
gas sample is for a commingled high-pressure flare, the final rule at
Sec. 3179.71(e) requires that the gas sample be taken from either the
flare meter location or another location approved by the AO. High-
pressure flare heating value requirements are in the new Sec. 3179.72
in the final rule.
The BLM received comments regarding a provision in proposed Sec.
3179.9(b)(1) that provided a 6-month compliance timeline from the
effective date of the rule for the measurement requirements. Industry
commenters recommended a 1-year compliance deadline for all flare
measurement. For the final rule, the BLM extended the timeline for
compliance based on the flare flow category. The highest flare flow
category (>=30,000 Mcf per month) compliance deadline remains at 6-
months after the effective date of the rule. The mid-level flow
category (<30,000 Mcf per month and >=6,000 Mcf per month) for
compliance with measurement and gas sampling requirement has been
extended to 12 months after the effective date of the rule. The lowest
flare flow category (<6,000 Mcf per month and >=1,050 Mcf per month)
for compliance has been extended to 18 months after the effective date
of the rule. One reason for the tiered approach to the measurement
compliance timeline is the concern for the risk to royalties based on
the volumes flared. The shortest compliance timeline applies to flares
producing the highest volumes. The BLM has extended the compliance
timeline for lower flared volumes with a lower risk to royalty
measurement.
The BLM also understands current supply chain difficulties and has
taken those difficulties into consideration in extending the deadline
for compliance with measurement requirements and any modifications
required for gas sampling for flares based on the flare flow category.
The BLM retained a 6-month compliance deadline in the final rule at
Sec. 3179.71(f) for measurement and sampling equipment for high-
pressure flares measuring greater than or equal to 30,000 Mcf per month
over the averaging period. Based on the 2019 ONRR production data, the
BLM has concluded that this requirement will affect approximately 100
locations. Of those 100 locations, the BLM anticipates that many will
already have measurement systems in place: operators flaring above
30,000 Mcf per month are likely to be interested in accurate
measurements of the volume in order to make operational decisions.
Moreover, such wells are capable of generating substantial revenue,
allowing them to more easily overcome supply chain difficulties. In
short, the 6-month deadline should not be difficult for those operators
to meet.
[[Page 25415]]
The second flare flow category in the final rule has a deadline for
compliance 12 months after the effective date of the rule and measures
flare flow that is less than 30,000 Mcf per month over the averaging
period and greater than or equal to 6,000 Mcf per month over the
averaging period. Based on the 2019 ONRR production data used for this
rulemaking, the BLM estimates that the 12-month deadline will affect
approximately 228 locations. The BLM anticipates some, but not all, of
these locations will already have measurement equipment in place that
will require some updating based on the final rule flare measurement
requirements. In the final rule, the BLM has also extended the timeline
for flare measurement and gas sampling to be in compliance for flares
measuring less than 6,000 Mcf per month and greater than or equal to
1,050 Mcf per month over the averaging period within 18-months of the
effective date of the rule. The BLM estimates that approximately 575
locations will be required to comply with the measurement rules within
18 months of the effective date of the rule. Diligent operators should
be able to be in compliance by that effective date.
Final Sec. 3179.71(g) provides the method for estimating the
flared volumes when the flared volume is less than or equal to 1,050
Mcf per month over the averaging period. The estimation method is based
on the GORr calculated from the oil and gas volumes reported
to ONRR for the previous 6 months. The total gas produced is the sum of
the gas reported as sold or transferred to a gas plant, gas reported
for on-lease use, and gas reported as vented or flared for the 6 months
prior to the month in which the gas flared volume is estimated. The
GORr is then multiplied by the total volume of oil produced
from oil wells while flaring for the reporting month. The estimated gas
volume flared (Vf) equals the GORr times the
volume of oil produced while flaring (Vop) minus the total
gas volume sold or transferred to a gas plant (Vs). This
method for estimating the flared volume relies on volumes reported to
ONRR that can be verified by the BLM without having to rely on
production testing done by the operator. Final Sec. 3179.71(g)
replaces part of proposed Sec. 3179.9(a) with a verifiable method for
flare estimation.
The BLM did not receive any comments on the concepts of flare
estimation or measurement per se. On review of the proposed rule, the
BLM realized it did not include the ability for an operator to
commingle flared gas from multiple sources even though it has been
common practice for the BLM to allow this ability with approval. In the
final rule, the BLM allows operators to commingle flared gas without
prior BLM approval. Since commingling of flared gas does not require
BLM approval, the BLM included a required allocation methodology to be
used for the reporting of the flared gas to any lease, unit PA, or CA
included in the commingled flare. When a flare is combusting gas that
is combined from more than one lease, unit PA, or CA, final Sec.
3179.71(h) provides the allocation methodology for reporting the
allocated flared volume to ONRR. The allocation methodology is based on
the ratio of the net standard volume of oil from one of the FMPs that
is contributing flared gas to the commingled flare divided by the total
net standard volume of oil from all the FMPs that have gas contributing
to the flare times the total flared volume measured at the flare. The
allocation is done for each lease, unit PA, or CA contributing gas to
the flare. The flared volume for each lease, unit PA, or CA is reported
on its respective OGOR. Final Sec. 3179.71(h) replaces proposed Sec.
3179.9(d) with a verifiable method of allocation from a commingled
flare that follows typical industry practices for allocation.
Proposed Sec. 3179.9(e) became Sec. 3179.71(i) in the final rule.
The BLM did not receive any comments on this provision. The measurement
of flared volumes is not considered an FMP for the purpose of subpart
3175 even though some of the measurement requirements of subpart 3175
will apply to flare measurement. Flare measurement will require the use
of an FMP number on the OGOR when and if there is a royalty obligation.
Section 3179.72 Required Reporting and Recordkeeping of Vented and
Flared Gas Volumes
Final Sec. 3179.72 is a new section that contains all the ONRR
reporting requirements for avoidable and unavoidable losses and the
recordkeeping requirements for vented and flared gas volumes. Section
3179.72 begins with paragraph (a), which requires operators to report
all vented and flared volumes, both avoidable and unavoidable losses,
pursuant to ONRR's Minerals Production Reporter Handbook. This
paragraph remains unchanged from proposed Sec. 3179.9(a) to final
Sec. 3179.72(a). The BLM did not receive any comments on this
paragraph in the proposed rule.
In the final rule, the BLM allows operators to commingle flared gas
without prior BLM approval. Gas royalty determination is based on two
components: gas volumes and heating value. Final Sec. 3179.72(b)
requires operators to report the flared gas heating value based on the
gas analysis requirement in Sec. 3179.71(d) or (e). If flared gas is
commingled, the operator must report the same heating value from the
common flare on all the leases, unit PAs, or CAs contributing gas to
the flare based on the gas sample analysis. The proposed rule had
similar gas sampling analysis requirements but did not specifically
state the requirement to use this heating analysis for reporting. The
BLM has included this requirement to clarify the unstated expectation
in the proposed rule.
Based on comments received, the final rule includes provisions for
event and operational recordkeeping related to waste prevention. GAO
reports (e.g. GAO 04-809) have also admonished the BLM that it should
exercise better oversight in the documentation of waste.
In response to public and GAO comment, the BLM added paragraph (c)
for recordkeeping of oil- or gas-well flaring events, emergency events,
and manual downhole liquids unloading operations or well-purging
operations in this final section. The requirements of final paragraph
(c) apply 3 months after the effective date of the rule to give
operators time to develop a system of recordkeeping that complies with
the BLM's requirements. The BLM anticipates requesting the records
required in paragraph (c) when conducting production audits or
investigating excessive avoidable or unavoidable reported losses.
Section 3179.73 Prior Determinations Regarding Royalty-Free Flaring
In the final rule, the BLM redesignated proposed Sec. Sec. 3179.10
to 3179.73. The provision allows previous decisions authorizing
royalty-free flaring to continue for 6 months after this rule's
effective date, after which time the BLM will determine the royalty-
bearing status of all flaring based on the new subpart 3179
requirements. This change accords with lease terms, which expressly
subject all leases to ``regulations hereafter promulgated when not
inconsistent with lease rights granted or specific provisions of this
lease.'' See BLM standard lease form 3100-011. We think a 6-month
postponement of the effective date will foster a successful transition,
potentially reducing or eliminating difficulties for both operators and
the BLM. The BLM received two comments in support of including this
provision in the final rule. One commenter from a State regulatory
authority expressed concern
[[Page 25416]]
that some operators may not have budgeted for the necessary operational
changes and sought additional time for compliance. No industry
commenters, however, requested an extension of the 6-month provision.
Nor did anyone object to the approach that the BLM is adopting in the
final rule. The BLM did not make any changes to this section based on
the comments received. The proposed and final sections contain the same
requirements.
Flaring and Venting Gas During Drilling and Production Operations
Section 3179.80 Loss of Well Control While Drilling
Final Sec. 3179.80 was redesignated from proposed Sec. 3179.101
and retitled from ``Well drilling'' in the proposed rule to ``Loss of
well control while drilling'' in the final rule. The language in the
proposed and final sections remains largely the same, with one
exception. For consistency with the IRA section 50263, the BLM now
requires the operator to submit a Sundry Notice within 15 days
following the conclusion of a loss-of-well-control event describing the
loss of well control. From the details provided in the Sundry Notice
and any other information available to or obtained by the BLM, the BLM
will determine whether the loss of well control was due to operator
negligence. If the BLM determines the loss of well control was due to
operator negligence, then the oil or gas lost is determined to be an
avoidable loss with a royalty obligation. The BLM will notify the
operator in writing as to whether such loss will qualify as an
avoidable loss.
One commenter on this section suggested that the BLM assess
``royalties on all gas that is vented during well drilling unless
venting is required due to safety reasons or because flaring or capture
is infeasible.'' The BLM has concluded that the Sundry Notice
requirement in the final rule--and the respective royalty obligation--
meets the commenter's objective. In the BLM's experience, operators
work to avoid loss of well control while drilling and prepare in
advance should a loss of well control occur. Therefore, the BLM
considers the likelihood of negligence during the loss of well control
to be very low and adequately canvassed.
The BLM received another comment requesting that the BLM provide
clarification on the process it will use to make an avoidable-loss
determination, and whether and how an operator may appeal a BLM
decision of an avoidable loss. In response to part of this comment, the
final rule requires an operator to notify the BLM within 24 hours of
the start of a loss of well control event and to submit a Sundry Notice
containing relevant details of the loss of circulation to determine if
the loss is an avoidable or unavoidable loss. The BLM believes this
process is consistent with that in the Notice to Lessees and Operators
of Onshore Federal and Indian Oil and Gas Leases Reporting of
Undesirable Events (NTL-3A). The BLM already has an appeal process in
place that will cover any BLM decision in this section, see Sec. Sec.
3165.3 and 3165.4.
Section 3179.81 Well Completion and Recompletion Flaring Allowances
In response to comments, the BLM reorganized, redesignated, and
consolidated concepts from proposed Sec. Sec. 3179.102, 3179.103, and
3179.104 into only two final sections, Sec. Sec. 3179.81 and 3179.82.
Proposed Sec. 3179.103, which was entitled, ``Initial production
testing,'' has been redesignated as final Sec. 3179.81 and is now
entitled, ``Well completion or recompletion flaring allowances.''
Comments reflected some confusion about the BLM's intent in proposed
Sec. 3179.102, ``Well completion and related operations,'' and Sec.
3179.103, ``Initial production testing.'' The comments' core question
is whether the BLM views the period of flowback following fracturing or
refracturing as the same or different from initial production testing.
In response to those comments, the BLM eliminated the concept of
initial production testing and will regulate flaring following well
completion or recompletion as a separate period in the lifecycle of a
newly producing formation in a well.
Final Sec. 3179.81, ``Well completion or recompletion flaring
allowances,'' provides for flaring royalty-free under Sec. Sec.
3179.41(b)(2) and 3179.42(b) until one of the following events occurs:
(1) 30 days have passed since the beginning of the flowback following
completion or recompletion, except where an extension has been granted
under paragraph (b) for flowback delays caused by well or equipment
problems, or under paragraph (d) for dewatering and initial evaluation
of an exploratory coalbed methane well for up to two possible 90-day
extensions; (2) the operator has flared 20,000 Mcf of gas, as provided
in paragraph (a)(2); or (3) flowback has been routed to the production
separator, as provided in paragraph (a)(3). Paragraph (e) of this
section of the final rule requires operators to submit their requests
for extension using a Sundry Notice. One commenter contended that
royalty-free flaring thresholds for well completion in the proposed
rule were ``arbitrarily low.'' The BLM has increased these thresholds
in the final rule.
This final section includes the flowback period following a
completion or recompletion. As suggested by some commenters, the BLM
removed the provision in proposed Sec. 3179.103(a)(1) allowing the
operator to flare royalty-free until adequate reservoir information for
the well was obtained. Comments indicated that this provision was an
obsolete vestige of NTL-4A, and operators no longer initially test
wells for reservoir information. To avoid confusion about testing and
flowback following completion or recompletion, the BLM's final rule
includes time and volumetric flaring limits for well completion or
recompletion for flowback.
Section 3179.82 Subsequent Well Tests for an Existing Completion
For the final rule, the BLM redesignated and retitled this section
from Sec. 3179.104, ``Subsequent well tests,'' to Sec. 3179.82,
``Subsequent well tests for an existing completion.'' One commenter
argued that since the BLM's rule is focused on waste prevention from a
royalty perspective, the BLM should not allow operators to extend
subsequent well testing without a royalty obligation beyond 24 hours.
The BLM has always been responsible for ensuring that oil and gas
resources belonging to the public or to Indian mineral owners have been
produced in a reasonable manner, measured accurately, and reported
properly. The allowance for an extension to the 24-hour well testing
period was part of NTL-4A. Operators rarely need to submit well testing
extension requests and, when they do, the AO may deny the request if
the flaring during well testing would be excessive. Further, this
section also allows for a longer flare period for any well testing that
the BLM may require of an operator. Accordingly, the BLM disagrees with
the comment and did not make any changes to this section.
Another commenter indicated that the BLM does not provide an appeal
process within this section if an operator would like to appeal a BLM
decision not to extend the well-testing period. The BLM allows for
appeal of any BLM decision from an adversely affected party pursuant to
43 CFR 3165.3. The BLM did not change this section based on this
comment.
Section 3179.83 Emergencies
The BLM redesignated this section from Sec. 3179.105 in the
proposed rule to Sec. 3179.83 in the final rule. One
[[Page 25417]]
commenter stated that the proposed rule did not indicate who will make
the determination of whether a situation will be treated as an
emergency. The final rule indicates that the AO will receive the Sundry
Notice and make a determination of avoidable or unavoidable loss based
on the event circumstances. In Sec. 3179.83(a), the BLM defines an
emergency situation as a temporary, infrequent, and unavoidable
situation in which the loss of gas is necessary to avoid a danger to
human health, safety, or the environment. To further clarify the
definition of an emergency, the BLM provides in Sec. 3179.83(b) common
examples of situations that do not qualify as emergencies. Given the
definition and the illustrative situations that do not constitute an
emergency, the BLM believes operators will be able to report the lost
volumes with the appropriate disposition codes on the OGOR. From this
section, the BLM believes that operators can measure or estimate lost
volumes appropriately on the OGOR for the initial 48 hours of the
emergency situation that are royalty-free. Beyond the initial 48 hours
of an emergency, there may be a royalty obligation and, in final Sec.
3179.83(c), the BLM included a description of the type of information
that operators must include on a Sundry Notice to enable the BLM to
make an avoidable or unavoidable loss determination. The BLM added this
provision in the final rule for consistency with section 50263 of the
IRA.
The BLM also received a comment suggesting that the BLM should
expressly include severe weather events and natural disasters as
emergencies. Severe weather and natural disasters were not provisions
in NTL-4A. While the BLM believes that severe weather and natural
disasters may require other types of safety precautions, such as
temporarily shutting in a well, and if a well were shut in for severe
weather or natural disasters, then there is no need to be concerned
about associated gas flaring. If the well continues to produce oil,
then this does not constitute an emergency for flaring gas royalty-
free. The commenter did not provide adequate justification for this
type of change to the final rule.
Gas Flared or Vented From Equipment and During Well Maintenance
Operations
Section 3179.90 Oil Storage Tank Vapors
Based on comments on the proposed rule, the BLM changed the
requirements in proposed Sec. 3179.203, which has been redesignated as
Sec. 3179.90 in the final rule.
In response to comments, the BLM changed the term ``oil storage
vessels'' in the proposed section to ``oil storage tanks'' in the final
rule. This change in terminology brings this section of the final rule
into alignment with subpart 3174, Measurement of oil. The BLM received
several comments on the proposed requirements for vapor recovery
equipment and the immediate assessment of $1,000 per violation for an
oil storage tank hatch left open or unlatched, and unattended. After
careful consideration of the comments, the BLM removed the vapor
recovery requirements from Sec. 3179.90 for two reasons.
First, the BLM's focus is on waste prevention, including loss of
royalties, and the proposed vapor recovery requirement would not
increase royalties with any certainty. Many commenters stated that the
annual requirement to obtain a sample and compositional analysis of the
tank vapors was expensive, excessive, and in their view served no
purpose. The BLM agrees that those requirements would contribute little
to assuring proper royalty collection.
Second, even if the installation of vapor recovery equipment might
be economic, there is no guarantee that the tank vapors collected would
have adequate pressure for a sales line. Under these circumstances, the
BLM would be requiring operators to incur a capital expense with no
guarantee of sales or associated royalties for the public, or for
Indian mineral owners. For these main reasons, the BLM has decided to
remove the vapor-recovery-equipment requirements in this section.
A commenter pointed out that there are tank hatches designed to
open with excess pressure, and such openings might occur prior to or
during inspections, and that there should be no immediate assessment
for open, unlatched, and unattended tank hatches. API Standard 2000
Venting Atmospheric and Low-pressure Storage Tanks (Reaffirmed, April
2020) Section 3.4.2, Emergency Venting, indicates that a gauge hatch
that permits the cover to lift under abnormal internal pressure is an
acceptable emergency venting method, among other provisions. While
there are tanks designed and built with this type of emergency venting
gauge hatch, in the BLM's experience, this type of hatch is very
uncommon equipment located on a Federal or Indian oil and gas lease. If
an operator does have an emergency venting gauge hatch on the tank, the
operator may request a variance pursuant to Sec. 3170.6.
Other commenters asserted that the requirements for the oil storage
tank hatch presented a safety risk. Commenters specifically referenced
North Dakota Department of Environmental Quality (NDDEQ) guidance that,
according to the commenters, ``allows for tank vapor flares and control
devices to be bypassed when a well is shut in to minimize the risk. In
these cases, the hatches may need to be left open to relieve breathing
pressure due to temperature fluctuations throughout the day.'' The BLM
has been unable to locate that exact quote from NDDEQ's website, but
has found guidance for shut-in, upstream facilities.\152\ The BLM
confirmed by phone call with NDDEQ that this memo appears to be that
referenced by the commenter. The BLM agrees with the NDDEQ guidance
that, if a facility is completely shut-in and any production to tanks
has ceased, then emissions are expected to be minimal and operators may
be in compliance with VOC emissions standards with the hatch left open.
With this final rule, the BLM is regulating waste prevention from
producing oil and gas wells. The BLM is not regulating emissions from
shut-in facilities in this final rule.
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\152\ https://deq.nd.gov/publications/AQ/policy/PC/OilGas/20210823StorageTankMemo.pdf.
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As a general matter, the requirement to maintain all hatches and
connection and other access points vapor tight and capable of holding
pressure in excess of the pressure relieving device has been in place
since the BLM referenced API 12R1 Recommended Practice for Setting,
Connecting, Maintenance and Operations of Lease Tanks, Third Edition,
May 1986 in Onshore Oil and Gas Order No. 4, Measurement of Oil.\153\
The current API Standard 12R1, Installation, Operation, Maintenance,
Inspection, and Repair of Tanks in Production Service, Sixth Edition,
March 2020, Section 4.5.2 states, ``All hatches, connections, and other
access points shall be gasketed and kept closed during operation to
minimize vapor emissions.'' One commenter stated that the closure of a
tank hatch was a prudent operator standard and one that industry
follows diligently. The BLM thus concludes that, at a producing
facility, latching a tank hatch closed is the current industry
practice, and well
[[Page 25418]]
within the capabilities of competent operators.
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\153\ The BLM includes API 12R1, Third edition, from May 1986 as
historical reference that the requirement for vapor tight
connections was an industry standard included in the BLM's Onshore
Oil and Gas Order No. 4 later codified at 43 CFR subpart 3174
Measurement of oil.
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An immediate assessment is appropriate for violating such an
industry standard incorporated into the final rule. Immediate
assessments are not new. They have ``long been considered to be in the
nature of liquidated damages, allowing the BLM to recover the
administrative and other costs incurred as a consequence of the
operator's noncompliance, where actual damages are difficult or
impracticable to ascertain, and regardless of whether there has been
any actual threat to public health, safety, property, or the
environment.'' Brigham Oil & Gas, 181 IBLA 282, 287 (2011) (citing
authorities). On this understanding of the MLA, the volumes of gases
lost (or the safety or environmental risks caused by an improperly
opened or leaking hatch) are impossible to quantify, but the BLM would
nonetheless incur costs of, inter alia, enforcement actions to assure
the violation is abated. Thus, the BLM's statutory authority for such
an assessment in this context flows from 30 U.S.C. 188(a) (providing
that the lease may provide for resort to appropriate methods for the
settlement of disputes or for remedies for breach of specified
conditions thereof,'' which conditions necessarily encompass these
regulations), and the BLM's waste prevention authority.
Section 3179.91 Downhole Well Maintenance and Liquids Unloading
The BLM redesignated this section from Sec. 3179.204 in the
proposed rule to Sec. 3179.91 in the final rule. The BLM received two
comments in support of this proposed section with one commenter
explicitly agreeing with the BLM's inclusion of the requirement for a
person to be on site for well purging and that the person end the event
as soon as practical. Based on the comments, the BLM did not make any
substantive changes to this final section.
Section 3179.92 Size of Production Equipment
This section was designated as Sec. 3179.205 in the proposed rule.
One commenter on this section stated that the requirement to size
production and processing equipment properly based on the production
volume at the facility is consistent with current industry practice.
Another commenter pointed out that the States of New Mexico and
Colorado have State requirements similar to this section. The same
commenter recommended that, if operators fail to comply with the
requirement to properly size their production equipment, the BLM should
deem that failure to constitute unreasonable and undue waste. The BLM
did not adopt this suggestion, because it has elected to remove the
term ``unreasonable and undue waste'' from the final rule.
Under the final rule, an operator who fails to size the equipment
properly will receive an Incident of Noncompliance as a major violation
with an abatement period to fix the violation. If an operator fails to
comply within the abatement period, the BLM may escalate enforcement to
civil penalties. The BLM did not make any changes to the regulatory
text in this section in response to the comments received.
Leak Detection and Repair (LDAR)
Section 3179.100 Leak Detection and Repair Program
The BLM redesignated the LDAR program section from the proposed
rule at Sec. 3179.301 to the final rule at Sec. 3179.100. Section
3179.100 provides the requirements for operators to set up and maintain
programs for detecting and repairing natural-gas leaks from their
operations and production equipment. Section 3179.101 gives the
timetable and requirements for repairing leaks. Section 3179.102
provides the requirements for recordkeeping. The LDAR program applies
only to operations and production equipment located on a Federal or
Indian oil and gas lease. The LDAR program and requirements do not
apply to operations and production equipment on State or private
tracts, even where those tracts are committed to a federally approved
unit or CA (see Sec. 3179.2).
The BLM received numerous comments requesting that the BLM allow
operators to demonstrate their compliance with BLM requirements by
showing that they already comply with EPA's OOOO series rules or State
leak detection rules. The BLM considered and rejected this alternative
approach to compliance. First, the BLM's final Waste Prevention Rule
serves a different statutory purpose (conservation of resources) than
EPA's rule (protection of human health and welfare vis-a-vis air
quality). The BLM further declines to allow compliance with EPA's OOOOb
and OOOOc to demonstrate compliance with BLM's waste prevention rule
given the different statutory goals of each rule and the acute need to
reduce waste or receive compensation for waste of the public and Indian
mineral resource. Where the BLM has independently determined that
specific provisions from EPA are sufficient to accomplish the BLM's
waste prevention mandate, the BLM has made limited changes in the final
rule as set forth below at Sec. 3179.100(b)(2).
Second, the BLM's LDAR program is limited to operations and
production equipment located on Federal or Indian oil and gas leases.
Since the scope for this section is limited, it is appropriate for the
BLM to have its own requirements that would not interfere with
implementation of any EPA final rule. The BLM's LDAR program is focused
on monitoring and repairing leaks as quickly as possible to meet its
waste prevention objective of maximizing production by keeping it
contained within the system and flowing through the sales point.
Commenters also suggested that any final LDAR program cover a
larger area than simply a single lease, unit PA, or CA. The BLM
evaluated its ability to review individual LDAR programs for every
single lease, unit PA, or CA, and agrees with the commenters. The BLM
changed its final rule to require operators to submit LDAR programs
corresponding to the BLM-administrative State. The initial LDAR
programs and the annual reviews and updates of the originally submitted
LDAR program must be submitted to the appropriate BLM state office in
writing until such time as the BLM has the ability to receive the LDAR
programs and annual reviews and update reports electronically.
In the proposed rule, the BLM required the operator to submit the
LDAR program no later than 6 months after the effective date of the
final rule. Commenters believed this timeframe was too short for
submitting the initial program. The BLM agrees. The BLM extended the
time in which operators must submit an LDAR program to the BLM
administrative state office because the BLM adopted commenters'
suggestion to expand the geographic area for which an operator creates
the LDAR program. In the proposed rule, LDAR programs were to be
submitted to a BLM Field Office for review; in the final rule this was
changed to a larger geographic area and therefore BLM extended the time
to prepare the programs. In this final rule, the BLM extends this
timeframe for compliance to within 18 months of the effective date of
the final rule. This 18-month timeframe for compliance is likely to go
into effect prior to standards in state plans submitted in response to
EPA's OOOOc rule.
This final section requires operators to review and update
submitted LDAR programs on an annual basis. The annual update is due in
the same month in which the operator submitted the initial LDAR program
to the BLM. The
[[Page 25419]]
annual report ensures that information about the identified leases,
unit PAs, and CAs, leak detection methods, current operator, and
frequency of inspections is current. If the LDAR program requires no
changes, then the operator must notify the BLM state office that the
LDAR program submitted and reviewed remains in effect. The requirement
for an annual update and review is also cross-referenced in the section
about recordkeeping requirements for leak detection in final Sec.
3179.102.
The BLM received comments that the requirements for the LDAR
program were vague, with no guidance or requirements as to what the BLM
would determine as adequate or inadequate and what additional measures
the BLM might prescribe to address any identified deficiencies in the
program. The BLM acknowledges the commenters' concern, and in the final
rule modified some requirements for the LDAR program that should avoid
conflict with the EPA's OOOO series requirements. In final rule Sec.
3179.100(b), the LDAR program requires the operator to submit the
following information for the LDAR program: (1) identification of the
leases, unit PAs, and CAs by geographic State for all States within the
BLM's administrative State boundaries to which the LDAR program
applies; (2) identification of the method and frequency of leak
detection inspection used at the lease, unit PA, or CA. Under final
rule Sec. 3179.100(b)(2), acceptable inspection methods and frequency
include: (i) well pads with only wellheads and no production equipment
or storage must include quarterly AVO inspections for leak detection;
(ii) well pads with any production and processing equipment and oil
storage must include AVO inspections every other month and quarterly
OGI for leak detection; and (iii) other leak detection inspection
methods and frequency acceptable to the BLM (e.g., continuous
monitoring); (3) identification of the operator's recordkeeping process
for LDAR pursuant to final Sec. 3179.102.
Final Sec. 3179.100 requires operators to directly submit initial
LDAR programs and subsequent annual LDAR reports to BLM state offices
for review. At this time, the BLM's Automated Fluid Minerals Support
System is unable to receive LDAR programs or annual reports. In the
future, the BLM anticipates having a new electronic database that will
be able to accept LDAR program requirements. When a new electronic
database is available and capable of receiving the LDAR program
requirements, the BLM will notify operators and give them sufficient
time to prepare for electronic submission of LDAR program requirements.
Section 3179.101 Repairing Leaks
The final rule redesignated this section from Sec. 3179.302 in the
proposed rule to Sec. 3179.101 in the final. The BLM received comments
supporting this section as written in the proposed rule. One commenter
suggested changing the repair periods to align with their EPA
counterparts to eliminate confusion between the two agencies'
requirements. The BLM's proposed period remains unchanged because the
BLM has determined that its timeframes are sufficient to meet the BLM's
waste prevention needs. Even though EPA is providing the delay of
repair provisions for up to 2 years under specific conditions for the
enforcement of air quality, the BLM elects to maintain a shorter time
for repair for the prevention of waste.
A second commenter suggested that paragraph (d), which gives
operators 15 calendar days to address an ineffective repair, is an
insufficient amount of time. The BLM reminds the commenter that this is
15 days for an ineffective repair. Prior to this point, the operator
will have had 30 calendar days after discovery of the leak to
effectively repair the leak. The proposed and final rules provide an
additional 15 calendar days to repair an ineffectively repaired leak.
The repair of leaks in a timely manner is a maintenance obligation and
demonstrates operator performance in a good and workmanlike manner. The
15-day allowance for an ineffective repair--45 days in total--should
not be cause for concern for a diligent operator. The BLM did not make
any changes to the regulatory text of this section based on comments.
Section 3179.102 Required Recordkeeping for Leak Dtection Inspection
and Repair
The BLM redesignated this section in the final rule from Sec.
3179.303 in the proposed rule to Sec. 3179.102 in the final.
Commenters asked the BLM to remove the requirement for operators to
submit an annual report to the BLM on March 31 of each calendar year
summarizing the previous year's inspection activities, including: (1)
the number of sites inspected; (2) the total number of leaks
identified, categorized by the type of component that was leaking; (3)
the total number of leaks repaired and (4) the total number of leaks
that were not repaired as of December 31 of the previous year due to
good cause, along with an estimated date of repair for each leak. The
commenters requested this information be kept on site and be made
available to the AO upon request. Commenters also contended that the
March 31 and December 31 dates as arbitrary. The BLM disagrees in part
to the comments. The annual report is an integral part of informing the
BLM as to whether the LDAR program is beneficial in reducing leaks and
preventing waste, or, in other words, whether it is an effective
program that is worth continuing. The BLM agrees in part that removing
the two dates of March 31 and December 31 from the final rule would
allow an operator to report similar information to the BLM and EPA on
the same dates. Thus, the BLM removed the March 31 and December 31
dates that had been proposed to define the LDAR program year, and
instead the final rule allows operators to determine the LDAR program
year based on the submission of their initial LDAR program to the BLM
state office for review within 18 months of the effective date of the
rule pursuant to final Sec. 3179.100. The BLM also removed the
requirement for the annual report to contain the total number of leaks
repaired in the year. This information may be determined from the other
information required on the annual report.
As a reminder, final Sec. Sec. 3179.100 through 3179.103 apply
only to operations and production equipment located on a Federal or
Indian oil and gas lease. The aforementioned sections do not apply to
operations and production equipment on State or private tracts, even
when those tracts are committed to a federally approved unit or CA.
Immediate Assessments
Section 3179.200 Immediate Assessments
The BLM did not include a section on immediate assessments in the
proposed rule. However, the proposed rule contained two immediate
assessments: proposed Sec. 3179.6(b) for unlit flares and proposed
Sec. 3179.203(a) for thief hatch left open and unattended. There are
no new immediate assessments in the final rule. The immediate
assessment for the unlit flare is found in the redesignated Sec.
3179.50(b) and for the hatch left open and unattended is found in the
redesignated Sec. 3179.90(a).
The BLM included this new section summarizing the immediate
assessments found elsewhere in final subpart 3179 for consistency with
other subparts in part 3170 that contain immediate assessments, such as
Sec. Sec. 3173.29, 3174.15, and 3175.150. The BLM believes the tables
with immediate
[[Page 25420]]
assessments provided in these subparts provide the regulated community
and BLM inspectors with a quick reference for the immediate assessments
found within the respective subparts.
Sections That the BLM Removed
Section 3179.102 Well Completion and Related Operations
In the final rule, the BLM removed proposed Sec. 3179.102, ``Well
completion and related operations,'' and instead opted for a simpler
approach to flaring following well completion or recompletion that
appears in the final Sec. 3179.81. Based on numerous comments, the BLM
elected to eliminate the distinction made in proposed Sec. 3179.102
between a new completion that is hydraulically fractured and an
existing completion that is hydraulically refractured. In the proposed
rule, the BLM made this distinction because the BLM believed that it is
more likely for existing completions that are refractured to be
connected to a sales line to capture flowback gas to sales sooner and
limit flaring as a result. Comments revealed that the proposed sections
were confusing. The BLM eliminated proposed Sec. 3179.102 to simplify
and make the flaring limits more straightforward.
Based on comments received for the proposed rule, the BLM removed
proposed Sec. 3179.201 ``Pneumatic controllers and pneumatic diaphragm
pumps.'' The rationale for the removal and reduction of requirements
for this section are discussed below. The removal of proposed Sec.
3179.201 means that the subpart 3179 requirements that apply only to
operations on Federal and Indian surface estate have been reduced in
the final rule.
Section 3179.201 Pneumatic Controllers and Pneumatic Diaphragm Pumps
Proposed Sec. 3179.201 limited the bleed rate of natural-gas-
activated pneumatic controllers and pneumatic diaphragm pumps to 6 scf
per hour for leases, unit PAs, and CAs producing greater than 120 Mcf
of gas or 20 barrels of oil per month. The BLM's intention was to limit
the bleed rate of natural-gas-activated pneumatic diaphragm pumps to
decrease the volume of bleed gas and simultaneously increase the amount
of gas that would be sold. The BLM's proposed RIA indicated the
monetary benefits to industry for this requirement exceeded the costs.
The proposed rule RIA estimated that operators would replace up to
52,213 pneumatics devices, resulting in an estimated 5.93 Bcf of gas
conserved annually. The 5.93 Bcf of gas conserved described in the
proposed RIA was an initial estimate that assumed that all intermittent
bleed pneumatic controllers would bleed continuously throughout the
year. BLM recognizes that is not how intermittent bleed pneumatic
controllers are operated. Rather BLM understands that this equipment is
used in varying ways based on operating conditions. A more precise
estimate is difficult to ascertain because the BLM does not track
production equipment of this type. The proposed RIA also relied on
EPA's U.S. GHG Emissions data (https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks-1990-2021), from which
it is inherently difficult to attribute emissions volumes to operations
on Federal and Indian surface estate.
After reviewing public comments on this section and evaluating the
practical implications of enforcement of this section, the BLM decided
to remove this section in its entirety. The BLM authorizes royalty-free
use of lease production for operations and production purposes,
including placing oil or gas in marketable condition on the same lease,
unit PA, or CA prior to removal from the lease, unit PA, or CA. The
requirements for royalty-free use of lease production are found in
subpart 3178. Subpart 3178 does not limit the volume of royalty-free
use oil or gas so long as the volume is reasonable for the operation.
To limit the use of pneumatic controllers and pneumatic diaphragm pumps
to less than 6 scf per hour would have created a conflict with 43 CFR
subpart 3178. In addition, the BLM considered the practical difficulty
in inspecting for and enforcing the requirements of the proposed
section, which would obligate the BLM to maintain an extensive database
of pneumatic equipment with the manufacturer's advertised bleed rate
for enforcement. During a production inspection, a BLM inspector would
ascertain whether the device exceeded the required bleed rate and, if
it did, require the operator to replace the equipment. Proposed
3179.4(b)(7) would have allowed for normal operating losses from a
natural-gas-activated pneumatic controller or pump to qualify as an
unavoidable loss. Therefore, during any inspection there could have
been no determination of avoidably lost gas with a royalty obligation,
making this provision irrelevant for royalty collection purposes.
Section 3179.401 State and Tribal Requests for Variances From the
Requirements of This Subpart
Proposed Sec. 3179.401 would have reinstated the State or Tribal
variance provision from the 2016 Waste Prevention Rule. The provision
would have allowed States and Tribes to request a variance under which
analogous State or Tribal rules would have applied in place of some or
all of the requirements of subpart 3179. With a variance request, the
State or Tribe would have been required to: identify the subpart 3179
provision(s) for which the variance is requested; identify the State,
local, or Tribal rules that would be applied instead; explain why the
variance is needed; and, demonstrate how the State, local, or Tribal
rules would be as effective as the subpart 3179 provisions in terms of
reducing waste, reducing environmental impacts, assuring appropriate
royalty payments, and ensuring the safe and responsible production of
oil and gas.
The BLM State Director would have been authorized to approve the
variance request or approve it subject to conditions, after considering
all relevant factors. This decision would have been entirely at the
BLM's discretion and would not be subject to administrative appeals
under 43 CFR part 4. If the BLM were to have approved a variance, the
State or Tribe that requested the variance would be obligated to notify
the BLM of any substantive amendments, revisions, or other changes to
the State, local, or Tribal rules to be applied under the variance.
Finally, if the BLM were to have approved a variance under this
section, the BLM would have been authorized to enforce the State,
local, or Tribal rules applied under the variance as if they were
contained in the BLM's regulations.
In the proposed rule, the BLM requested public comment seeking
confirmation that such variances would be both useful and practical.
The BLM also requested that commenters provide specific examples of
situations where the variance provision in proposed Sec. 3179.401
would improve on existing practices and administrative tools, such as
Memoranda of Understanding (MOUs), in terms of providing better
environmental protection, better protection of taxpayer and lessor
interests, administrative efficiencies, and burden reductions for
operators.
Several commenters offered general support for the BLM's proposed
rule to allow for State or Tribal variance requests. Commenters
expressed concerns for the increased need for
[[Page 25421]]
limited State resources for the process and implementation, for
conflict with the MLA prohibition on the promulgation of rules ``in
conflict with the laws of the State in which the leased property is
situated,'' \154\ and the lack of clarity in the proposed requirement
that the State or Tribal regulation would perform ``at least equally
well'' as the BLM rule. The BLM agrees with some of these concerns.
However, the BLM did not receive comments confirming that the variances
would be both useful and practical or that variances would improve on
existing practices and administrative tools, such as MOUs. Commenters
expressed support for the use of MOUs,
---------------------------------------------------------------------------
\154\ 30 U.S.C. 187.
---------------------------------------------------------------------------
In the final rule, the BLM decided not to carry forward the
proposed provision to allow for State and Tribal variances. Upon
further review, the BLM believes that the provision would have created
a significant administrative burden for the agency while not improving
on existing practices and administrative tools.
Operators in States or on Tribal lands that have more stringent
standards than those contained in this rule are required to conform to
the more stringent State or Tribal standards, regardless of whether the
State or Tribe receives a variance under the provision of the proposed
rule. Such situations routinely arise in the context of other BLM oil
and gas operational regulations, indicating that a variance provision
in this rule is not useful. Commenters failed to show that the subpart
3179 provisions would conflict with any State's more stringent
requirements. The BLM has also not identified any such conflict. Thus,
with or without a formal variance, a State or Tribe may effectively
supplement the BLM's regulatory requirements by enacting stricter
requirements. That is consistent with the BLM's longstanding practice.
There are benefits associated with aligning data collection
processes or other potential areas of regulatory similarity that could
bring greater efficiencies for both operators and regulators, but MOUs
can more efficiently achieve many of those goals without the need for a
State or Tribal variance.
Commenters requested that the BLM pursue a Title V Operating Permit
Program similar to EPA's under the CAA and do further work to promote
Tribal self-determination and self-governance within this rule. The BLM
lacks EPA's CAA authority, but welcomes the opportunity to consult with
Tribes concerning cooperative agreements.
While the variance provisions are not in the final rule, the BLM
welcomes the opportunity to enter into MOUs or similar agreements with
States and Tribes to clarify applicable regulatory requirements, which
is also part of longstanding practice.
VI. Procedural Matters
A. Regulatory Planning and Review (E.O. 12866, E.O. 13563)
Executive Order 12866, as amended by Executive Order 14094,
provides that the Office of Information and Regulatory Affairs (OIRA)
within the Office of Management and Budget (OMB) will review all
significant rules. The OIRA has determined that this final rule is
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 final rule replaces the BLM's current rules governing venting
and flaring, which are contained in NTL-4A. We have developed this
final rule in a manner consistent with the requirements in Executive
Order 12866 and Executive Order 13563.
The monetized costs and benefits of this rule can be seen in the
following table along with the transfer payments this rule will provide
in the form of increased royalties from increased gas sales. The total
monetized Net Benefit on an annualized basis is $360,000 at a 7 percent
discount rate and $441,000 at a 3 percent discount rate. Additional
unquantified benefits from reduced emissions of VOCs and hazardous air
pollutants are discussed further in the RIA. The BLM reiterates that,
while it has included benefits associated with the social cost of
greenhouse gases in this particular presentation of costs and benefits
and in the RIA, this was done to respond to Executive Orders 12866 and
13563 and in order to present as complete a picture as possible of the
total costs and benefits of the final rule for the public. Climate
benefits derived from foregone emissions were not a factor in the
decision to include any of the individual waste prevention requirements
in this final rule.
Costs and Benefits Summary
[2024-2033]
----------------------------------------------------------------------------------------------------------------
7% Discount rate 3% Discount rate
---------------------------------------------------------------
Annualized Annualized
NPV ($MM) ($MM) NPV ($MM) ($MM)
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Measurements.................................... $8.46 $1.20 $9.60 $1.13
----------------------------------------------------------------------------------------------------------------
LDAR............................................ 64.55 9.19 78.40 9.19
Administrative Burdens.......................... 62.56 8.91 75.98 8.91
---------------------------------------------------------------
Total Cost.................................. 135.57 19.30 163.98 19.22
----------------------------------------------------------------------------------------------------------------
[[Page 25422]]
Benefits
----------------------------------------------------------------------------------------------------------------
LDAR............................................ $165.07 19.66 167.74 19.66
----------------------------------------------------------------------------------------------------------------
Total Benefits.............................. 165.07 19.66 167.74 19.66
Net Benefits................................ 29.50 0.36 3.76 0.44
Transfer Payments........................... 360.04 51.26 438.59 51.42
----------------------------------------------------------------------------------------------------------------
The BLM reviewed the requirements of the final rule and determined
that they 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 final rule. The RIA has been posted in the docket for
the final rule on the Federal eRulemaking Portal: https://www.regulations.gov. In the Searchbox, enter ``RIN 1004-AE79,'' click
the ``Search'' button, open the Docket Folder, and look under
Supporting Documents.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA)
requires that Federal agencies prepare a regulatory flexibility
analysis for rules subject to the notice-and-comment rulemaking
requirements under the APA (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 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 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 final rule will likely affect a substantial number of small
entities.
The BLM reviewed the final rule and has determined that, although
the final rule will likely affect a substantial number of small
entities, that effect will not be significant. The basis for this
determination is explained in more detail in the RIA. In brief, the
per-entity, annualized compliance costs associated with this final rule
are estimated to represent only a small fraction of the annual net
incomes of the companies likely to be impacted. Because the final rule
will not have a ``significant economic impact on a substantial number
of small entities,'' as that phrase is used in 5 U.S.C. 605, a final
regulatory flexibility analysis and regulatory compliance guide are not
required. The Secretary of the Interior certifies under 5 U.S.C. 605(b)
that this rule will not have a significant economic impact on a
substantial number of small entities.
C. Congressional Review Act
The statutory provision found at 5 U.S.C. 804(2), the Small
Business Regulatory Enforcement Fairness Act, does not apply to this
final rule because it is estimated that the rule will not have an
annual economic impact of $100 million or more. As noted in the Costs
and Benefits Summary earlier, the RIA that the BLM produced for this
rule calculates that this rule will cost operators $19.3 million per
year (using a 7 percent discount rate) for the next 10 years, while
generating benefits to operators of approximately $1.8 million a year
(using a 7 percent discount rate) in the form of 0.45 Bcf of additional
captured gas. The reduced methane emissions associated with the final
rule will provide a benefit to society of $17.9 million a year over the
same time frame, leading to a net benefit from the rule of $360,000 to
$441,000 a year.
D. Unfunded Mandates Reform Act (UMRA)
The final rule will not have a significant or unique effect on
State, local, or Tribal governments or the private sector. The final
rule contains no requirements that apply to State, local, or Tribal
governments. The final rule revises requirements that otherwise apply
to the private sector participating in a voluntary Federal program. The
costs that the final rule will impose on the private sector are below
the monetary threshold established at 2 U.S.C. 1532(a). A statement
containing the information required by the Unfunded Mandates Reform Act
(UMRA) (2 U.S.C. 1531 et seq.) is therefore not required for the final
rule. This final 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.
E. Governmental Actions and Interference With Constitutionally
Protected Property Right-Takings (Executive Order 12630)
This final rule will not effect a taking of private property or
otherwise have taking implications under Executive Order 12630. A
takings implication assessment is not required. The final rule will
replace the BLM's current rules governing venting and flaring, which
are contained in NTL-4A. Therefore, the final rule will 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 final 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 will not cause a taking
of private property or require further discussion of takings
implications under Executive Order 12630.
[[Page 25423]]
F. Federalism (Executive Order 13132)
Under the criteria in section 1 of Executive Order 13132, this
final 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 final rule will 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 will not apply to States or local governments
or State or local governmental entities. The rule will affect the
relationship between operators, lessees, and the BLM, but it will not
directly impact the States. Therefore, in accordance with Executive
Order 13132, the BLM has determined that this final rule will not have
sufficient federalism implications to warrant preparation of a
Federalism Assessment.
G. Civil Justice Reform (Executive Order 12988)
This final rule complies with the requirements of Executive Order
12988. More specifically, this final rule meets the criteria of section
3(a), which requires agencies to review all regulations to eliminate
errors and ambiguity and to write all regulations to minimize
litigation. This final rule also meets the criteria of section 3(b)(2),
which requires agencies to write all regulations in clear language with
clear legal standards.
H. 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.
The BLM evaluated this final rule under the Department's
consultation policy and under the criteria in Executive Order 13175 to
identify possible effects of the rule on federally recognized Indian
Tribes. Since the BLM approves proposed operations on all Indian
(except Osage Tribe) onshore oil and gas leases, the final rule has the
potential to affect Indian Tribes.
In August of 2021, the BLM sent a letter to each federally
recognized Tribe informing them of certain rulemaking efforts,
including the development of this final rule. The letter offered Tribes
the opportunity for individual government-to-government consultation
regarding the final rule. Three Tribes responded to the letter and
requested government-to-government consultation. The BLM conducted
Tribal consultations with those three Tribes during the rulemaking
process.
I. Paperwork Reduction Act
A. Overview
The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.)
generally provides that an agency may not conduct or sponsor a
collection of information, and, notwithstanding any other provision of
law, a person is not required to respond to collection of information
unless it has been approved by the Office of Management and Budget
(OMB) and displays a currently valid OMB control number. The
information collections requirements contained in the BLMs waste
prevention standard as contained in 43 CFR parts 3160, 3170, and
subpart 3178 have been approved by OMB under OMB control number 1004-
0211.
This Final rule contains revised and new information collection
(IC) requirements for BLM regulations and requires a submission to OMB
for review under the PRA, as outlined in the PRA implementing
regulations at 5 CFR 1320.11. The IC requirements are necessary to
assist the BLM in preventing venting, flaring, and leaks that waste the
public's resources and assets. Respondents are holders of Federal and
Indian oil and gas leases. The information collection requirements are
outlined in the BLM's waste prevention standards as well as on BLM
Forms 3160-3 (``Application for Permit to Drill or Reenter'') and 3160-
5 (``Sundry Notices and Reports on Wells''). Forms 3160-3 and 3160-5
are used broadly for onshore oil and gas operations and production
purposes under 43 CFR parts 3160 and 3170 and are approved under OMB
control number 1004-0137. This final rule does not introduce any
changes to Forms 3160-3 and 3160-5 and the forms will continue to be
approved under OMB control number 1004-0137; however, this information
collection request (ICR) seeks to include burdens specific to the use
of Forms 3160-3 and 3160-5 in regard to the proposed waste prevention
standard subject to this final rule. The final rule contains the below
new and revised IC requirements.
B. Effects on Existing Information Collections Requirements
The final rule revises certain existing information collection
requirements and introduces new information collection requirements.
These information collection requirements are discussed in detail in
the information collection request submitted to OMB and are available
at http://www.reginfo.gov/public/do/PRAMain under OMB control number
1004-0211 as outlined below.
Existing Sec. 3162.3-1 Drilling Applications and Plans (Application
for Permit To Drill Oil Well and WMP)
The final rule amends Sec. 3162.3-1 to include the requirement for
a WMP (using Form 3160-3) or self-certification. In addition, the final
rule adds Sec. 3162.3-1(j), which requires that when submitting an APD
for an oil well, the operator must also submit a plan to minimize waste
of natural gas from that well or alternatively, in Sec. 3162.3-1(k), a
self-certification for 100 percent capture of the associated gas.
Request for Approval for Royalty-Free Uses On-Lease or Off-Lease (43
CFR 3178.5, 3178.7, 3178.8, and 3178.9)
Sections 3178.5, 3178.7, and 3178.9 of the BLM's current rules
require 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. This final rule does not address nor would change this existing
requirement.
C. New Information Collection Requirements
The final rule introduces new information collection requirements
in the new subpart 43 CFR subpart 3179. These information collection
requirements are discussed in detail in the information collection
request to submitted to OMB and are available at http://www.reginfo.gov/public/do/PRAMain under OMB control number 1004-0211,
as outlined below.
The final subpart 3179 has information collection requirements, as
discussed below. The purpose of this subpart is to implement and carry
out the purposes of statutes to prevent waste from covered Federal and
Indian oil and gas leases with requirements for flaring and venting of
produced gas, requirements for the waste of gas from leaks, and clearly
defining unavoidably and avoidably lost gas.
Section 3179.41 Determining When the Loss of Oil or Gas Is Avoidable or
Unavoidable (Notifying the BLM Prior to Flaring)
Section 3179.41 requires that an operator notify the BLM through a
Sundry Notices and Report on Wells, Form 3160-5, prior to the flaring
of gas
[[Page 25424]]
from which at least 50 percent of natural gas liquids have been removed
on-lease and captured for market, that the operator is conducting such
capture and the inlet of the equipment used to remove the natural gas
liquids will be an FMP.
Section 3179.71 Measurement of Flared Oil-Well Gas Volume
Section 3179.71(a) of the rule requires operators to measure
volumes of gas using orifice meters or ultrasonic meters for flares
measuring greater than 1,050 Mcf per month over the averaging period
from wells, facilities and equipment on a lease, unit, or CA. The
operator is required to install measurement for flares, but there are
no information collection activities associated with the installation
of measurement equipment. Sections 3179.71(d) and (e) provide the
sampling requirements for non-commingled flares and commingled flares.
The gas sample analysis will determine the Btu value the operator is
required to report to the Office of Natural Resources Revenue Form
ONRR-4054.
Section 3179.72 Required Reporting and Recordkeeping of Vented and
Flared Gas Volumes
Section 3179.72 requires operators to maintain records of venting
and flaring events beginning 3 months following the effective date of
the rule. Operators are required to keep a record containing the
information specified in this section and make it available to the BLM
upon request.
Section 3179.80 Loss of Well Control While Drilling
Section 3179.80 provides that the operator must notify the BLM
within 24 hours of the start of the loss of well control event and
submit a Sundry Notice within 15 days following conclusion of the event
to the BLM describing the loss of well control.
Section 3179.81 Well Completion and Recompletion Flaring Allowances and
Sec. 3179.82 Subsequent Well Tests for an Existing Completion
The final rule allows for royalty-free flaring following a new
completion or recompletion until one of the following occurs: (1) 30
days have passed since beginning of the flowback following completion
or recompletion; (2) 20,000 Mcf of gas have been flared; (3) flowback
has been routed to the production separator. Section 3179.81 allows an
operator to flare gas for 30 days since the beginning of the flowback
under certain conditions and specified limits. Section 3179.82 permits
an operator to flare gas for no more than 24 hours during well tests
subsequent to the initial completion or recompletion flaring. An
operator is required to submit its request for longer test periods or
increased limits under paragraphs (b), (c), or (d) of this section
using a Sundry Notice.
Section 3179.83 Emergencies
Section 3179.83 requires that within 45 days of the start of the
emergency, the operator is required estimate and report to the BLM on a
Sundry Notice the volumes flared or vented beyond the timeframes
specified in paragraph (b) of this section.
Section 3179.90 Oil Storage Tank Vapors
The final rule for Sec. 3179.90 requires an operator to only open
the tank hatch to the extent necessary to conduct production and
measurement operations. This section also requires the operator to
maintain all oil storage tanks, hatches, connections and other tank
access points in a vapor tight condition. An immediate assessment is
imposed upon discovery of a hatch that is open or unlatched, and
unattended.
Section 3179.100 Leak Detection and Repair Program
The rule requires an operator to maintain an LDAR program designed
to prevent the undue waste of Federal or Indian gas. The LDAR program
must provide for regular inspections of all oil and gas production,
processing, treatment, storage, and measurement equipment on the lease
site. Operators must submit their LDAR programs for BLM review, and the
BLM would notify the operator if its program was determined to be
inadequate. Operators are required to submit an annual report on
inspections and repairs. Section 3179.100 requires that the operator of
a Federal or Indian lease must submit the LDAR program to the BLM state
office with jurisdiction over the production describing the operator's
LDAR program for all the production facilities within the BLM
administrative State boundaries, including the frequency of inspections
and any instruments to be used for leak detection.
Section 3179.101 Repairing Leaks
Section 3179.101 requires that an operator repair any leak as soon
as practicable, and in no event later than 30 calendar days after
discovery, unless good cause exists to delay the repair for a longer
period. Good cause for delay of repair exists if the repair (including
replacement) is technically infeasible (including unavailability of
parts that have been ordered), would require a pipeline blowdown, a
compressor station shutdown, a well shut-in, or would be unsafe to
conduct during operation of the unit. Paragraph (b) of this section
would require that if there is good cause for delaying the repair
beyond 30 calendar days, the operator must notify the BLM of the cause
by Sundry Notice.
Section 3179.102 Leak Detection Inspection Recordkeeping and Reporting
Operators are required to keep records in inspections and repairs
and submit those records to the BLM upon request. Section 3179.102
requires that an operator maintain certain records for the period
required under Sec. 3162.4-1(d) of this title and make them available
to the BLM upon request.
D. Changes From the Proposed to Final Rule
Below are changes to the information collections in the final rule
that are different from those in the proposed rule.
The final rule includes Sec. 3179.72 adds a new required
reporting and recordkeeping of vented and flared gas volumes.
The final rule includes Sec. 3179.80, Unavoidable/
Avoidable loss determination for drilling with loss of well control,
adds a new Sundry-Notice requirement in the final rule that was not in
the proposed rule.
The BLM removed the proposed Annual compositional analysis
for oil storage vessels that was contained in the proposed Sec.
3179.203.
The BLM removed the proposed State or Tribal requests for
variances or amendments that was contained in the proposed Sec. Sec.
3179.401 and 3179.401(e)).
E. Estimated Information Collection Burdens
Currently, there are 50 responses, 400 annual burden hours, and $0
non-hour cost burdens approved under this OMB control number. These
burdens pertain to a Request for Approval for Royalty-Free Uses On-
Lease or Off-Lease (43 CFR 3178.5, 3178.7, 3178.8, and 3178.9) which
are not addressed in this final rule. The BLM projects that the
information collections as contained in this final rule are to result
in 58,301 new annual responses (from 50 to 58,351), 125,351 new annual
burden hours (from 400 to 125,751); and $24,175,000 annual non-hour
cost burdens ($0 to $24,175,000). The increase in annual burdens
results from the Final rule results from the information collection
activities
[[Page 25425]]
contained in the 43 CFR subpart 3179, a new subpart introduced by this
final rule and a new requirement contained in 43 CFR 3162.3-1,
Application, to Drill Oil Well and WMP.
Title: Waste Prevention, Production Subject to Royalties, and
Resource Conservation (43 CFR parts 3160, 3170, 3178 and 3179).
OMB control number: 1004-0211.
Form Number: 3160-5 (OMB control number 1004-0137).
Type of Review: Revision of a currently approved collection.
Description of Respondents: Federal and Indian leases, as well as
State and private tracts committed to a federally approved lease, unit,
or communitized area.
Estimated Number of Respondents: 1,200.
Estimated Number of Annual Responses: 58,351.
Estimated Completion Time per Response: Varies from 1 hour to 8
hours depending on activity.
Estimated Total Annual Burden Hours: 125,751.
Respondents' Obligation: Required to obtain or retain a benefit.
Frequency of Collection: On occasion, Annually, Monthly, or one-
time depending on activity.
Estimated Total Non-Hour Cost: $24,175,000.
In accordance with the PRA and the PRA implementing regulations at
5 CFR 1320.11, the BLM has submitted an ICR to OMB for the new and
revised ICs in this final rule. As part of our continuing effort to
reduce paperwork and respondent burdens, we invite the public and other
Federal agencies to comment on any aspect of this information
collection, including:
(1) Whether the collection of information is necessary for the
proper performance of the functions of the agency, including whether
the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection
of information, including the validity of the methodology and
assumptions used;
(3) Ways to enhance the quality, utility, and clarity of the
information to be collected; and
(4) Ways to minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submission of response.
If you want to comment on the information-collection requirements
in this final rule, please send your comments and suggestions on this
information-collection request within 30 days of publication of this
final rule in the Federal Register to OMB at www.reginfo.gov/public/do/PRAmain. Find this particular information collection by selecting
``Currently under Review--Open for Public Comments'' or by using the
search function.
J. National Environmental Policy Act
The BLM has prepared a final EA to determine whether this proposed
rule will 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.). The final EA supports the issuance of a
Finding of No Significant Impact for the rule, therefore preparation of
an environmental impact statement pursuant to the NEPA is not required.
The final 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-AE79,'' click the ``Search'' button,
open the Docket Folder, and look under Supporting Documents.
K. Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use (Executive Order 13211)
Under Executive Order 13211, agencies are required to prepare and
submit to OMB a Statement of Energy Effects for significant energy
actions. This statement is to include a detailed statement of ``any
adverse effects on energy supply, distribution, or use (including a
shortfall in supply, price increases, and increase use of foreign
supplies)'' for the action and reasonable alternatives and their
effects.
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 proposed rulemaking, and notices of
proposed 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 (OIRA)
as a significant energy action.''
Since the compliance costs for this rule will represent a small
fraction of company net incomes, the BLM has concluded that the rule is
unlikely to impact the investment decisions of firms. See section 9 of
the BLM's RIA. Also, any incremental production of gas estimated to
result from the rule's enactment would constitute a small fraction of
total U.S. gas production, and any potential and temporary deferred
production of oil would likewise constitute a small fraction of total
U.S. oil production. For these reasons, we do not expect that the final
rule will significantly impact the supply, distribution, or use of
energy. As such, the rulemaking is not a ``significant energy action,''
as defined in Executive Order 13211.
Authors
The principal authors of this final rule are: Amanda Fox, Petroleum
Engineer, Santa Fe, NM; Beth Poindexter, Petroleum Engineer, San
Antonio, TX; and the Office of the Solicitor, Department of the
Interior. Technical support provided by: Tyson Sackett, Economist,
Cheyenne, WY; Scott Rickard, Economist, Billings, MT; and Terry Snyder,
Senior Natural Resources Specialist, Salt Lake City, UT. Assisted by:
Casey Hodges, Petroleum Engineer, Granby, CO; and Senior Regulatory
Analysts Faith Bremner and Darrin King of the BLM Washington Office.
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, Immediate
assessments, Incorporation by reference, Indians--lands, Mineral
royalties, Oil and gas exploration, Oil and gas measurement, Public
lands--mineral resources, Reporting and record keeping requirements,
Royalty-free use, Venting.
For the reasons set out in the preamble, the Bureau of Land
Management amends 43 CFR parts 3160 and 2170 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; 43 U.S.C. 1732(b), 1733, 1740; and Sec. 107, Pub. L. 114-
74, 129 Stat. 599, unless otherwise noted.
[[Page 25426]]
0
2. Amend Sec. 3162.3-1 by revising paragraph (d) and adding paragraphs
(j), (k), and (l) to read as follows:
Sec. 3162.3-1 Drilling applications and plans.
* * * * *
(d) The Application for Permit to Drill process must be initiated
at least 30 days before commencement of operations is desired. Prior to
approval, the application must be administratively and technically
complete. A complete application consists of Form 3160-3 and the
following attachments:
(1) A drilling plan, which may already be on file, containing
information required by paragraph (e) of this section and appropriate
orders and notices.
(2) A surface use plan of operations containing information
required by paragraph (f) of this section and appropriate orders and
notices.
(3) Evidence of bond coverage as required by the Department of the
Interior regulations.
(4) For an oil well, a Waste Minimization Plan (WMP), as required
by paragraph (j) or a self-certification statement, as required by
paragraph (k) (These requirements do not apply to gas wells); and
(5) Such other information as may be required by applicable orders
and notices.
* * * * *
(j) An Application for Permit to Drill for an oil well with a WMP
must include the following information in the WMP:
(1) The anticipated initial oil production rate from the oil well
and the anticipated production decline over the first 3 years of
production;
(2) The anticipated initial oil-well gas production rate from the
oil well and the anticipated production decline over the first 3 years
of production;
(3) Certification that the operator has a valid, executed gas sales
contract to sell to a purchaser 100 percent of the produced oil-well
gas, less gas anticipated for use on-lease pursuant to 43 CFR subpart
3178.
(4) Any other information demonstrating the operator's plans to
avoid the waste of gas production from any source, including, as
appropriate, from pneumatic equipment, storage tanks, and leaks.
(k) A self-certification is a written statement that the operator
will be able to capture, as defined in 43 CFR 3179.10, 100 percent of
the oil-well gas that the oil well produces. An approved Application
for Permit to Drill with a self-certification statement is not subject
to 43 CFR 3179.70(a), and all flared gas is an avoidable loss with a
royalty obligation, except for emergencies as identified in 43 CFR
3179.83. A self-certification statement applies and is enforceable from
the date of first production until the well is plugged and abandoned.
(l) The BLM may take one of the following actions based on the
operator's WMP or self-certification:
(1) Approve an administratively and technically complete oil-well
application with a WMP subject to conditions for flared gas, as
described in 43 CFR 3179.70(a);
(2) Approve an administratively and technically complete oil-well
application with a self-certification for oil-well gas capture subject
to conditions for flared gas, as described in this paragraph;
(3) Defer action on an oil-well application with a WMP or self-
certification statement that is not administratively and technically
complete in the interest of preventing waste until such time as the
operator is able to amend the application to comply with the
requirements in paragraph (j) of this section or this paragraph, as
applicable. If the applicant does not address deficiencies in the WMP
or the self-certification to comply with the applicable requirements
within 2 years of submission of the application, the BLM will
disapprove the application.
PART 3170--ONSHORE OIL AND GAS PRODUCTION
0
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.
0
4. Revise subpart 3179 to read as follows:
Subpart 3179--Waste Prevention and Resource Conservation
Secs.
3179.1 Purpose.
3179.2 Scope.
3179.10 Definitions and acronyms.
3179.11 Severability.
3179.30 Incorporation by Reference (IBR).
3179.40 Reasonable precautions to prevent waste.
3179.41 Determining when the loss of oil or gas is avoidable or
unavoidable.
3179.42 When lost production is subject to royalty.
3179.43 Data submission and notification requirements.
3179.50 Safety.
3179.60 Gas-well gas.
3179.70 Oil-well gas.
3179.71 Measurement of flared oil-well gas volume.
3179.72 Required reporting and recordkeeping of vented and flared
gas volumes.
3179.73 Prior determinations regarding royalty-free flaring.
Flaring and Venting Gas During Drilling and Production Operations
3179.80 Loss of well control while drilling.
3179.81 Well completion or recompletion flaring allowance.
3179.82 Subsequent well tests for an existing completion.
3179.83 Emergencies.
Gas Flared or Vented From Equipment and During Well Maintenance
Operations
3179.90 Oil storage tank vapors.
3179.91 Downhole well maintenance and liquids unloading.
3179.92 Size of production equipment.
Leak Detection and Repair (LDAR)
3179.100 Leak detection and repair program.
3179.101 Repairing leaks.
3179.102 Required recordkeeping for leak detection and repair.
Immediate Assessments
3179.200 Immediate Assessments.
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 The Osage Nation) oil and gas leases, protection of
worker safety, 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) Except as provided in provided paragraph (b), this subpart
applies to:
(1) All onshore Federal and Indian (other than The Osage Nation)
oil and gas leases, units, and communitized areas;
(2) 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;
(3) Leases and other business agreements and contracts for the
development of Tribal energy resources under a Tribal Energy Resource
Agreement (TERA) entered into with the Secretary, unless specifically
excluded in the lease, other business agreement, or TERA;
(4) Wells, equipment, and operations on State or private tracts
that are committed to a federally approved unit
[[Page 25427]]
or communitization agreement defined by or established under 43 CFR
subpart 3105 or 43 CFR part 3180.
(b) Sections 3179.50, 3179.90, and 3179.100 through 3179.102 apply
only to operations and production equipment located on a Federal or
Indian surface estate. They do not apply to operations and production
equipment on State or private tracts, even where those tracts are
committed to a federally approved unit or communitization agreement.
(c) For purposes of this subpart, the term ``lease'' also includes
IMDA agreements.
Sec. 3179.10 Definitions and acronyms.
As used in this subpart, the term:
Automatic ignition system means an automatic ignitor and, where
necessary 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
reinjection and royalty-free on-site uses pursuant to subpart 3178.
Compressor station means any permanent combination of one or more
compressors that move natural gas at increased pressure through
gathering or transmission pipelines, or into or out of storage. This
includes, but is not limited to, gathering and boosting stations and
transmission compressor stations. The combination of one or more
compressors located at a well site, or located at an onshore natural
gas processing plant, is not a compressor station.
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 at standard conditions.
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. Unless more specific British
thermal unit (Btu) values are available, a well with a gas-to-oil ratio
greater than 6,000 standard cubic feet (scf) of gas per barrel of oil
is a gas well.
High-pressure flare means an open-air flare stack or flare pit
designed for the combustion of natural gas that would normally go to
sales.
Leak means a release of natural gas from a component that is not
associated with normal operation of the component, when such release
is:
(1) A hydrocarbon emission detected by use of an optical-gas-
imaging instrument;
(2) At least 500 ppm of hydrocarbon detected using a portable
analyzer or other instrument that can measure the quantity of the
release; or
(3) A hydrocarbon emission detected via audio, visual, and
olfactory means or visible bubbles detected using soap solution.
Releases due to normal operation of equipment intended to vent as part
of normal operations, such as gas-driven pneumatic controllers and
safety-release devices, are not leaks unless the releases exceed the
quantities and frequencies expected during normal operations. Releases
due to operator errors or equipment malfunctions or from control
equipment at levels that exceed applicable regulatory requirements,
such as releases from an oil storage tank hatch left open, or an
improperly sized combustor, are leaks.
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.
Low-pressure flare means any flare that does not meet the
definition of high-pressure flare.
Pneumatic controller means an automated instrument used for
maintaining a process condition, such as liquid level, pressure, delta-
pressure, or temperature.
Sec. 3179.11 Severability.
If a court holds any provisions of the regulations in this subpart
or their applicability to any person or circumstances invalid, the
remainder of this subpart and its applicability to other people or
circumstances will not be affected.
Sec. 3179.30 Incorporation by Reference (IBR).
Certain material is incorporated by reference into this subpart
with the approval of the Director of the Federal Register under 5
U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other than that
specified in this section, the BLM must publish a rule in the Federal
Register, and the material must be reasonably available to the public.
All approved incorporation by reference (IBR) material is available for
inspection at the Bureau of Land Management (BLM) and at the National
Archives and Records Administration (NARA). Contact Yvette M. Fields
with the BLM at: Division of Fluid Minerals, 1849 C Street NW,
Washington, DC 20240, telephone 240-712-8358; email [email protected];
https://www.blm.gov/programs/energy-and-minerals/oil-and-gas. The
approved material is also available for inspection at all BLM offices
with jurisdiction over oil and gas activities. For information on
inspecting this material at NARA, visit www.archives.gov/federal-register/cfr/ibr-locations.html or email [email protected]. The
material may be obtained from the following source:
(a) American Petroleum Institute (API), 200 Massachusetts Ave. NW,
Suite 1100, Washington, DC 20001; telephone 202-682-8000. API offers
free, read-only access to some of the material at http://publications.api.org.
(1) API Manual of Petroleum Measurement Standards Chapter 22.3,
Testing Protocol for Flare Gas Metering; First Edition, August 2015
(``API 22.3''), IBR approved for Sec. 3179.71(c).
(2) [Reserved]
(b) [Reserved]
Sec. 3179.40 Reasonable precautions to prevent waste.
(a) Operators must use all reasonable precautions to prevent the
waste of oil or gas developed from the lease.
(b) The Authorized Officer may specify reasonable measures to
prevent waste as conditions of approval of an Application for Permit to
Drill (APD).
(c) After an APD is approved, the Authorized Officer may order an
operator to implement, within a reasonable time, additional reasonable
measures to prevent waste at ongoing exploration and production
operations.
(d) Reasonable measures to prevent waste may reflect factors
including, but not limited to, relevant advances in technology and
changes in industry practice.
Sec. 3179.41 Determining when the loss of oil or gas is avoidable or
unavoidable.
For purposes of this subpart:
(a) Lost oil is ``unavoidably lost'' if the operator has taken
reasonable steps to avoid waste, and the operator has complied fully
with applicable laws, lease terms, regulations, provisions of a
previously approved operating plan, and other written orders of the
BLM.
(b) Lost gas is ``unavoidably lost'' if the operator has taken
reasonable steps to avoid waste, the operator has complied fully with
applicable laws, lease terms, regulations, provisions of a previously
approved operating plan, and other written orders of the BLM; and the
gas is lost from the following operations or sources:
(1) Well drilling, subject to the limitations in Sec. 3179.80;
(2) Well completion and recompletion flaring allowances in Sec.
3179.81;
(3) Subsequent well tests, subject to the limitations in Sec.
3179.82;
[[Page 25428]]
(4) Exploratory coalbed methane well dewatering;
(5) Emergency situations, subject to the limitations in Sec.
3179.83;
(6) Normal operating losses from a natural-gas-activated pneumatic
controller or pump;
(7) Normal operating losses from an oil storage tank or other low-
pressure production vessel that is in compliance with Sec. Sec.
3179.90 and 3174.5(b);
(8) Well venting in the course of downhole well maintenance and/or
liquids unloading performed in compliance with Sec. 3179.91;
(9) Leaks, when the operator has complied with the LDAR
requirements in Sec. Sec. 3179.100 and 3179.101;
(10) Facility and pipeline maintenance, such as when an operator
must blow-down and depressurize equipment to perform maintenance or
repairs;
(11) Pipeline capacity constraints, midstream processing failures,
or other similar events that prevent oil-well gas from being
transported through the connected pipeline, subject to the limitations
in the WMP or self-certification for Applications for Permit to Drill
approved after June 10, 2024 or Sec. 3179.70, as applicable;
(12) Flaring of gas from which at least 50 percent of natural gas
liquids have been removed on-lease and captured for market, if the
operator has notified the BLM through a Sundry Notices and Report on
Wells, Form 3160-5 (Sundry Notice) that the operator is conducting such
capture and the inlet of the equipment used to remove the natural gas
liquids will be a Facility Measurement Point (FMP); or
(13) Flaring of gas from a well that is not connected to a gas
pipeline, to the extent that such flaring was authorized by the BLM in
the approval of the APD.
(c) Lost oil or gas that is not ``unavoidably lost'' as defined in
paragraphs (a) and (b) of this section is ``avoidably lost.''
Sec. 3179.42 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. 3179.43 Data submission and notification requirements.
(a) Table 1 is a summary of the Sundry Notice requirements in this
subpart.
Table 1 to Paragraph (a)--Notification Via Sundry Notice Requirements
----------------------------------------------------------------------------------------------------------------
Sundry notice requirements Reference
----------------------------------------------------------------------------------------------------------------
Flaring of gas following removal of >=50 percent of the Sec. 3179.41(b)(12).
natural gas liquids from the gas stream on-lease.
Other gas sample location for flare approved by the AO. Sec. 3179.71(d)(3) and (e)(2).
Unavoidable/avoidable determination of loss of oil and/ Sec. 3179.80.
or gas while drilling for loss of well control event.
Extension of time limit or volumetric limit for well Sec. 3179.81(e).
completion or recompletion flaring, or exploratory
coalbed methane dewatering flaring.
Extension of time limit for well testing subsequent to Sec. 3179.82.
initial completion.
Within 45 days of start of an emergency, estimate the Sec. 3179.83(c).
volume flared or vented beyond the first 48 hours of
the emergency.
Delay of leak repair beyond 30 calendar days with good Sec. 3179.101(b).
cause.
----------------------------------------------------------------------------------------------------------------
(b) Table 2 summarizes the locations in this subpart that require
an operator to provide information to the authorized officer upon
request.
Table 2 to Paragraph (b)--Information Required at the Request of the AO
----------------------------------------------------------------------------------------------------------------
Information required at the request of the AO Reference
----------------------------------------------------------------------------------------------------------------
Ultrasonic meter flare gas testing report.............. Sec. 3179.71(c)(2)(i).
Ultrasonic meter manufacturer's specifications Sec. 3179.71(c)(2)(ii).
including installation and operation specifications.
Recordkeeping for vented or flared gas events.......... Sec. 3179.72(c).
Recordkeeping for leak detection and repair............ Sec. 3179.102(a).
----------------------------------------------------------------------------------------------------------------
(c) Table 3 summarizes the initial LDAR program submission and
subsequent annual reporting.
Table 3 to Paragraph (c)--LDAR Program
----------------------------------------------------------------------------------------------------------------
Information required to be sent to the BLM State Office Reference
----------------------------------------------------------------------------------------------------------------
First submission of a leak detection and repair program Sec. 3179.100(b) and (d).
to the BLM for review.
Annual review and update of the leak detection and Sec. 3179.100(e).
repair program to the BLM.
----------------------------------------------------------------------------------------------------------------
Sec. 3179.50 Safety.
(a) The operator must flare, rather than vent, any gas that is not
captured, except when:
(1) Flaring the gas is technically infeasible, such as when volumes
are too small to flare;
(2) Under emergency conditions, the loss of gas is uncontrollable,
or venting is necessary for safety;
(3) The gas is vented through normal operation of a natural-gas-
activated pneumatic controller or pump;
(4) The gas is vented from an oil storage tank;
(5) The gas is vented during downhole well maintenance or liquids
unloading activities performed in compliance with Sec. 3179.91;
(6) The gas is vented through a leak;
[[Page 25429]]
(7) Venting is necessary to allow non-routine facility and pipeline
maintenance, such as when an operator must, upon occasion, blow-down
and depressurize equipment to perform maintenance or repairs; or
(8) A release of gas is necessary and flaring is prohibited by
Federal, State, local, or Tribal law or regulation, or enforceable
permit term.
(b) All flares or combustion devices must be equipped with an
automatic ignition system or an on-demand ignition system. Upon
discovery of a flare that is venting instead of combusting gas, the BLM
may subject the operator to an immediate assessment of $1,000 per
violation.
(c) The flare must be placed a sufficient distance from the tanks'
containment area and any other significant structures or objects so
that the flare does not create a safety hazard. The prevailing wind
direction must be taken into consideration when locating the flare.
Sec. 3179.60 Gas-well gas.
Gas-well gas may not be flared or vented, except where it is
unavoidably lost pursuant to Sec. 3179.41(b).
Sec. 3179.70 Oil-well gas.
(a) Where oil-well gas must be flared due to pipeline capacity
constraints, midstream processing failures, or other similar events
that prevent produced gas from being transported through the connected
pipeline, the oil-well gas is ``unavoidably lost'' for the purposes of
43 CFR 3162.3-1(j), 43 CFR 3179.41(b)(11), and 3179.42, subject to the
following limits:
(1) Flaring of 0.08 Mcf per barrel of oil produced per month
between July 1, 2024 and July 1, 2025.
(2) The flaring limit of 0.07 Mcf per barrel of oil produced per
month will begin on July 1, 2025.
(3) The flaring limit of 0.06 Mcf per barrel of oil produced per
month will begin on July 1, 2026.
(4) The flaring limit of 0.05 Mcf per barrel of oil produced per
month will begin on July 1, 2027, and remain at this level.
(b) Where substantial volumes of oil-well gas are flared the BLM
may order the operator to curtail or shut-in production as necessary to
avoid the undue waste of Federal or Indian gas. The BLM will not issue
a shut-in or curtailment order under this paragraph unless the operator
has reported flaring in excess of 1 Mcf per barrel of oil produced per
month for 3 consecutive months and the BLM confirms that flaring is
ongoing.
(c) If a BLM order under paragraph (b) of this section would
adversely affect production of oil or gas from non-Federal and non-
Indian mineral interests (e.g., production allocated to a mix of
Federal, State, Indian, and private leases under a unit agreement), the
BLM may issue such an order only to the extent that the BLM is
authorized to regulate the rate of production under the governing unit
or communitization agreement. In the absence of such authorization, the
BLM will contact the State regulatory authority having jurisdiction
over the oil and gas production from the non-Federal and non-Indian
interests and request that that entity take appropriate action to limit
the waste of gas.
Sec. 3179.71 Measurement of flared oil-well gas volume.
(a) The operator may commingle flared gas from more than one lease,
unit PA, or CA to a common high-pressure flare without BLM approval,
subject to the allocation requirement in paragraph (h). The site
facility diagram required under Sec. 3173.11 must indicate that the
high-pressure flare is a common, commingled flare and list the leases,
unit PAs, or CAs contributing gas to the common flare.
(b) The operator must measure flared gas for high-pressure flares
for volumes greater than 1,050 Mcf per month above the averaging
period. For high-pressure flares measuring less than or equal to 1,050
Mcf per month over the averaging period and for low-pressure flares,
operators may estimate the volume flared, as described in paragraph (h)
of this section.
(c) High-pressure flares requiring measurement must use either
orifice plates and orifice meter tubes, or ultrasonic meters. High-
pressure flare measurement systems must meet the following
requirements:
(1) Orifice metering systems must comply with the low-volume
measurement requirements in Sec. 3175.80, low-volume electronic gas
measurement requirements in Sec. 3175.100, and the low-volume gas
sampling and analysis requirements in Sec. 3175.110 with the gas
sampling location requirements provided in paragraphs (d) or (e) of
this section.
(2) Ultrasonic metering systems must comply with the following
requirements:
(i) Each ultrasonic meter make and model must be tested for flare
use. Flare gas meter testing must be conducted and reported pursuant to
API 22.3 (incorporated by reference, see Sec. 3179.30) and results
must be made available to the AO upon request.
(ii) Ultrasonic meters must be installed and operated for flare use
according to the manufacturer's specifications and those specifications
must be provided to the AO upon request.
(iii) Ultrasonic metering systems must comply with the low-volume
electronic gas measurement requirements in Sec. 3175.100, and the low-
volume gas sampling analysis requirements in Sec. 3175.110, except for
the gas sampling requirements in (d) or (e) of this section.
(3) Operators must evaluate the production facility to determine
which type of flare measurement is safe for the facility.
(d) The gas sample must be taken from one of the following
locations when the high-pressure flare is measuring a single lease,
unit PA, or CA:
(1) At the flare meter;
(2) At the gas FMP, if there is a gas FMP at the well site and the
gas composition is the same as that of the flare-meter gas; or
(3) At another location approved by the AO with a Sundry Notice
submission.
(e) The gas sample must be taken from one of the following
locations for a common high-pressure flare that measures more than one
lease, unit PA, or CA;
(1) At the flare meter; or
(2) At another location approved by the AO with a Sundry Notice
submission.
(f) Appropriate meters must be installed at all high-pressure
flares pursuant to paragraph (c), and gas sampling must be taken from
the appropriate location pursuant to paragraphs (d) or (e) according to
the following phase-in timeline:
[[Page 25430]]
Table 1 to Paragraph (f)--Deadline for Compliance With High-Pressure
Flare Measurement, and Gas Sampling Location
------------------------------------------------------------------------
Deadline for measurement
compliance for high-
Flare flow category pressure flares and gas
sampling location
------------------------------------------------------------------------
>=30,000 Mcf per month....................... December 10, 2024.
<30,000 Mcf per month and >=6,000 Mcf per June 10, 2025.
month.
<6,000 Mcf per month and >=1,050 Mcf per December 10, 2025.
month.
<1,050 Mcf per month......................... Not applicable.
------------------------------------------------------------------------
(g) When the flared volume for a high-pressure flare is less than
or equal to 1,050 Mcf per month and for low-pressure flares, the flared
volume may be estimated, or measured. Estimated flared gas volumes must
be based on production reported on the ONRR OGORs over the previous 6
months and calculated at follows:
Equation 1 to Paragraph (g)
[GRAPHIC] [TIFF OMITTED] TR10AP24.006
Equation 2 to Paragraph (g)
[GRAPHIC] [TIFF OMITTED] TR10AP24.007
Where:
m = The previous 6 months of flaring
Vg = The total volume of gas produced from oil wells in the previous
6 months as reported on the OGOR
Vo = The total volume of oil produced from oil wells in the previous
6 months as reported on the OGOR
GORr = The gas-to-oil ratio for the previous 6 months of production
as reported on the OGOR
Vop = The total oil produced from oil wells while flaring
Vs = The total gas volume produced and sent through a gas FMP from
oil wells while flaring
Vf = The estimated gas flared from oil wells to be reported on the
OGOR
(h) If a flare is combusting gas that is combined across multiple
leases, unit PAs, or CAs, the operator may measure the gas at a single
point at the flare and allocate flared volumes based on the oil
production while flaring from each lease, unit PA, or CA as follows:
Equation 3 to Paragraph (h)
[GRAPHIC] [TIFF OMITTED] TR10AP24.008
Where:
n = the total number of FMPs sending gas to a common flare
VFi = The volume flared from the ith lease,
unit PA, or CA sent to a common flare
VFt = The total volume flared from a common flare
NSVFMPi = The net standard volume of oil from the FMP for
the ith lease, unit PA, or CA
(i) Measurement points for flared volumes are not FMPs for the
purposes of subpart 3175.
Sec. 3179.72 Required reporting and recordkeeping of vented and
flared gas volumes.
(a) The operator must report all flared volumes, both avoidable and
unavoidable losses, using all applicable ONRR reporting requirements.
(b) The operator must report the flared gas quality in Btu on the
OGOR based on the gas analysis required in Sec. 3179.71(d) or (e). The
operator must report the same Btu content from a common flare on the
OGOR for all the leases, unit PAs, or CAs contributing gas to the flare
based on the gas sample analysis.
(c) Starting on September 10, 2024,operators must maintain the
following records and make them available to the AO upon request:
(1) Date and time when oil or gas-well flaring begins and ends, the
reason for flaring and whether the well, lease, unit PA, or CA was
shut-in or returned to sales when the flaring stopped;
(2) Date and time when an emergency begins and ends, the reason for
the emergency, whether the gas was vented or flared, and whether the
well, lease, unit PA, or CA was shut-in or returned to sales when the
emergency ended;
(3) Date and time when manual downhole liquids unloading operation
or well purging begins and ends, and whether the well was shut-in or
returned to sales at the end of the well maintenance.
Sec. 3179.73 Prior determinations regarding royalty-free flaring.
(a) Approvals to flare royalty free, which are in effect as of the
effective date of this rule, will continue in effect until November 1,
2024. After that date, the royalty-bearing status of all flaring will
be determined according to the provisions of this subpart.
(b) The provisions of this subpart do not affect any determination
made by the BLM before or after June 10, 2024 [INSERT EFFECTIVE DATE OF
THE FINAL RULE], with respect to the royalty-bearing status of flaring
that occurred prior to June 10, 2024.
Flaring and Venting Gas During Drilling and Production Operations
Sec. 3179.80 Loss of well control while drilling.
If, during drilling, gas is lost as a result of loss of well
control, the operator must notify the BLM within 24 hours of the start
of the loss of the well control event and submit to the BLM a Sundry
Notice within 15 days following the conclusion of the event describing
the loss of well control. The BLM will determine whether the loss of
well control was due to operator negligence. Oil or gas lost as a
result of loss of well control is avoidably lost if the BLM determines
that the loss of well control was due to operator negligence. The BLM
will notify the operator in writing when it determines whether oil or
gas was lost due to operator negligence, and whether such loss will
qualify as an avoidable loss.
[[Page 25431]]
Sec. 3179.81 Well completion or recompletion flaring allowance.
(a) Gas flared following well completion or recompletion is
royalty-free under Sec. Sec. 3179.41(b)(2) and 3179.42(b) until one of
the following occurs:
(1) Thirty days have passed since the beginning of the flowback
following completion or recompletion, except as provided in paragraphs
(b) and (d) of this section;
(2) The operator has flared 20,000 Mcf of gas; or
(3) Flowback has been routed to the production separator.
(b) The BLM may extend the period specified in paragraph (a)(1) of
this section, not to exceed an additional 60 days, based on flowback
delays caused by well or equipment problems.
(c) The BLM may increase the limit specified in paragraph (a)(2) of
this section by up to an additional 30,000 Mcf of gas for exploratory
oil wells in remote locations where additional flaring may be needed in
advance of construction of pipeline infrastructure.
(d) During the dewatering and initial evaluation of an exploratory
coalbed methane well, the 30-day period specified in paragraph (a)(1)
of this section is extended to 90 days. The BLM may approve up to two
extensions of this evaluation period, not to exceed 90 days per each
approval.
(e) The operator must submit its request for an extension under
paragraphs (b), (c), or (d) of this section using a Sundry Notice.
Sec. 3179.82 Subsequent well tests for an existing completion.
During well tests subsequent to the initial completion or
recompletion, the operator may flare gas royalty free under Sec.
3179.41(b)(3) for no more than 24 hours, unless the BLM approves or
requires a longer period. The operator must submit any such request
using a Sundry Notice.
Sec. 3179.83 Emergencies.
(a) An operator may flare or, if flaring is not feasible due to the
emergency situation, vent gas royalty-free under Sec. 3179.41(b)(5)
for no longer than 48 hours during an emergency situation. For purposes
of this subpart, an ``emergency situation'' is a temporary, infrequent,
and unavoidable situation in which the loss of gas is necessary to
avoid a danger to human health, safety, or the environment.
(b) The following examples do not constitute emergency situations
for the purposes of royalty assessment:
(1) Recurring failures of a single piece of equipment;
(2) The operator's failure to install appropriate equipment of a
sufficient capacity to accommodate the production conditions;
(3) 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;
(4) Scheduled maintenance; or
(5) A situation caused by operator negligence.
(c) Within 45 days of the start of the emergency, the operator must
estimate and report to the AO by a Sundry Notice the volumes flared or
vented beyond the timeframe specified in paragraph (a) of this section,
and details describing the emergency event, measures taken to prevent
the emergency event, and actions taken to control the emergency event
so that the BLM is able to determine if the loss of oil or gas is an
unavoidable loss pursuant to Sec. 3179.41.
Gas Flared or Vented From Equipment and During Well Maintenance
Operations
Sec. 3179.90 Oil storage tank vapors.
(a) The hatch on an oil storage tank may be open only to the extent
necessary to conduct production and measurement operations. All oil
storage tanks, hatches, connections, and other access points must be
vapor tight (i.e., capable of holding pressure differential at the
installed pressure-relieving or vapor-recovery device's settings). Upon
discovery of an oil storage tank hatch that has been left open or
unlatched, and unattended, the BLM will impose an immediate assessment
of $1,000 on the operator.
(b) Where practical and safe, gas released from an oil storage tank
must be flared rather than vented. An operator may commingle vapors
from multiple storage tanks to a single flare without prior approval
from the BLM.
Sec. 3179.91 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 per event,
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 unloading to end it as soon as practical,
thereby minimizing any venting to the atmosphere.
(e) For purposes of this section, ``well purging'' means blowing
accumulated liquids out of a wellbore by reservoir 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. Well purging does not apply to wells equipped with a
plunger lift system.
Sec. 3179.92 Size of production equipment.
Production and processing equipment must be of sufficient size to
accommodate the volumes of production expected to occur at the lease
site.
Leak Detection and Repair (LDAR)
Sec. 3179.100 Leak detection and repair program.
(a) Pursuant to paragraph (b) of this section, the operator must
maintain a BLM administrative statewide LDAR program designed to
prevent the waste of Federal or Indian gas.
(b) Operators must submit a statewide LDAR program to the BLM state
office with jurisdiction over the production for review. The LDAR
program must cover operations and production equipment located on a
Federal or Indian oil and gas lease and not operations and production
equipment located on State or private tracts, even though those tracts
are committed to a federally approved unit PA or CA. When there is a
change of operator, the new operator must update the LDAR program on
the annual update and revision timeline. Operators must submit the LDAR
program in writing for review until such time as the BLM's electronic
filing system is capable of receiving LDAR program submissions. At
minimum, the LDAR program must contain the following information, as
applicable:
(1) Identification of the leases, unit PAs, and CAs by geographic
State for all States within BLM's administrative State boundaries to
which the LDAR program applies;
[[Page 25432]]
(2) Identification of the method and frequency of leak detection
inspection used at the lease, unit PA, or CA. Acceptable methods, as
well as other methods approved by the BLM, and frequency include the
following:
(i) Well pads with only wellheads and no production equipment or
storage must include quarterly AVO inspections for leak detection;
(ii) Well pads with any production and processing equipment and oil
storage must include AVO inspections every other month and quarterly
optical gas imaging for leak detection; and
(iii) Other leak detection inspection methods and frequency
acceptable to the BLM (e.g., continuous monitoring).
(3) Identification of the operator's recordkeeping process for leak
detection and repair pursuant to Sec. 3179.102.
(c) The BLM will review the operator's LDAR program and notify the
operator if the BLM deems the program to be inadequate. The
notification will explain the basis for the BLM's determination,
identify the plan's inadequacies, describe any additional measures that
could address the inadequacies, and provide a reasonable time frame in
which the operator must submit a revised LDAR program to the BLM for
review.
(d) For leases in effect on June 10, 2024, the operator must submit
a statewide LDAR program to the state office no later than December 10,
2025.
(e) Operators must review and update submitted LDAR programs on an
annual basis in the month in which the operator submitted the first
LDAR program to ensure that the identified leases, unit PAs, and CAs,
leak detection methods, and frequency of inspections are current. If
the operator's LDAR program requires no changes, then the operator must
notify the BLM state office that the LDAR program submitted and
reviewed by the BLM remains in effect. Any updates to the LDAR program
must be submitted in writing to the BLM state office for review until
such time as the BLM's electronic system is capable of receiving the
annual LDAR updates.
Sec. 3179.101 Repairing leaks.
(a) The operator must repair any leak as soon as practicable, and
in no event later than 30 calendar days after discovery, unless good
cause exists to delay the repair for a longer period. Good cause for
delay of repair exists if the repair (including replacement) is
technically infeasible (including unavailability of parts that have
been ordered), would require a pipeline blowdown, a compressor station
shutdown, or a well shut-in, or would be unsafe to conduct during
operation of the unit.
(b) If there is good cause for delaying the repair beyond 30
calendar days, the operator must notify the BLM of the cause by Sundry
Notice and must complete the repair at the earliest opportunity, such
as during the next compressor station shutdown, well shut-in, or
pipeline blowdown. In no case will the BLM approve a delay of more than
2 years.
(c) Not later than 30 calendar days after completion of a repair,
the operator must verify the effectiveness of the repair by conducting
a follow-up inspection using an appropriate instrument or a soap bubble
test under Section 8.3.3 of EPA Method 21--Determination of Volatile
Organic Compound Leaks (40 CFR Appendix A-7 to part 60).
(d) If the repair is not effective, the operator must complete
additional repairs within 15 calendar days and conduct follow-up
inspections and repairs until the leak is repaired.
Sec. 3179.102 Required recordkeeping for leak detection and repair.
(a) The operator must maintain the following records for the period
required under 43 CFR 3162.4-1(d) and make them available to the AO
upon request:
(1) For each inspection required under Sec. 3179.100 of this
subpart, documentation of:
(i) The date of the inspection; and
(ii) The site where the inspection was conducted;
(2) The monitoring method(s) used to determine the presence of
leaks;
(3) A list of leak components on which leaks were found;
(4) The date each leak was repaired; and
(5) The date and result of the follow-up inspection(s) required
under Sec. 3179.101(c).
(b) With the annual review and update of the LDAR program under
Sec. 3179.100(e) the operator must provide to the BLM state office an
annual summary report on the previous year's inspection activities that
includes:
(1) The number of sites inspected;
(2) The total number of leaks identified, categorized by the type
of component;
(3) The total number of leaks that were not repaired from the
previous LDAR program year due to good cause and an estimated date of
repair for each leak.
(c) AVO checks are not required to be documented unless they find a
leak requiring repair.
Immediate Assessments
Sec. 3179.200 Immediate assessments
Certain instances of noncompliance warrant the imposition of
immediate assessments upon the violation, as prescribed in the
following table. Imposition of any of these assessments does not
preclude other appropriate enforcement actions under other applicable
regulations.
Table 1 to Sec. 3179.200--Violations Subject to Immediate Assessment
------------------------------------------------------------------------
Assessment amount
Violation: per violation:
------------------------------------------------------------------------
1. Flare is not combusting gas sent to flare. As $1,000
required in Sec. 3179.50(b)....................
2. Storage tank hatch is open or unlatched, and 1,000
unattended in violation of Sec. 3179.90........
------------------------------------------------------------------------
This action by the Principal Deputy Assistant Secretary is taken
pursuant to an existing delegation of authority.
Steven H. Feldgus,
Principal Deputy Assistant Secretary, Land and Minerals Management.
[FR Doc. 2024-06827 Filed 4-9-24; 8:45 am]
BILLING CODE 4331-29-P