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The Methane Boomerang

Methane gas has been the subject of yo-yoing regulation—and regulatory roll-backs—over the past few years. Presidential candidate Joe Biden has already vowed to take immediate action on climate change, including “requiring aggressive methane pollution limits for new and existing oil and gas operations.” But it takes time and agency resources to change existing regulations, and those changes can (and often are) challenged in court. Over the last few years, courts have blocked certain regulations from going into effect nationwide. What actions a new administration could take to regulate methane, as well as how fast those regulations could be put in place, will depend in large part on the status of court battles over prior regulations.

This post describes the current state of play for an Obama-era rule limiting methane emissions on federal land, the Trump-era rule to “roll back” that regulation, and what it might mean for methane regulation in either a second Trump term or new Biden administration. The history of this rule provides a particularly good example of how difficult it can be to change regulations and fulfill campaign promises.

Background on Methane Regulation

EPA has described the oil and gas industry as a “significant source of emissions of methane, a potent greenhouse gas with a global warming potential more than 25 times that of carbon dioxide.”1 As a result, methane has been the focus of federal regulations from multiple agencies. For example, EPA has issued regulations for methane from oil and gas operations and from landfills.

In addition to EPA, the Bureau of Land Management (“BLM”) within the Department of Interior has regulated methane emissions through its regulatory authority to prevent “waste” with respect to oil and gas activities on federal lands.  BLM oversees more than 245 million acres of land and 700 million subsurface acres of federal mineral estate, primarily located in the West. Onshore production from BLM managed lands accounts for about 9% of natural gas production, 5% of natural gas liquids production, and 5% of oil production.

In 2016, during the Obama administration, BLM issued a regulation known as the “Waste Prevention Rule.” BLM estimated that between 2009 to 2015, approximately 462 billion cubic feet (“Bcf”) of natural gas were released into the atmosphere through venting and flaring — a process where gas associated with production is either released into the atmosphere (venting), or burned off (flaring) because it can’t be feasibly captured or transported to market. The Waste Prevention Rule imposed additional requirements on upstream oil and gas operators designed to limit venting and flaring practices, including requiring them to capture a certain percentage of produced gas each month, with the required percentage increasing over a ten-year period. It also required operators to inspect for and repair equipment leaks and to replace certain types of equipment with equipment that vents or flares less gas.

The Waste Prevention Rule was completed in late 2016 and went into effect on January 17, 2017 — just days before the start of the Trump administration. Since then, the Waste Prevention Rule’s status has been in legal limbo and bounced back and forth between the agency and two federal courts.

Because the president (or a federal agency) cannot simply undo or change a regulation with the snap of his (or its) fingers, BLM took a number of steps to try to delay dates when certain requirements would go into effect while it undertook the legal process to review and revise the Waste Prevention Rule. Each time, it’s actions were challenged in court.

Back and Forth in the Courts

During the Obama administration, the Waste Prevention Rule was immediately challenged by Wyoming and Montana (later joined by North Dakota and Texas) in federal district court in Wyoming before the Rule could go into effect. BLM, California, New Mexico, and several environmental groups defended the Waste Prevention Rule. What followed was a particularly tortured web of federal executive and judicial actions.

On June 15, 2017, BLM (now in the Trump administration) published a notice to postpone certain compliance dates in the Waste Prevention Rule. The notice was challenged, and vacated (undone) by the federal court in the Northern District of California.

On December 8, 2017, BLM issued a “Suspension Rule,” suspending key requirements of the Waste Prevention Rule. It was challenged, and enjoined (stopped) by the federal court in the Northern District of California.

The parties who challenged the Waste Prevention Rule then went back to the federal district court in Wyoming, and that court agreed to stay (pause) certain deadlines in the Waste Prevention Rule while BLM worked to rescind (repeal) the Waste Prevention Rule. At the end of 2017, the Wyoming district court agreed to pause litigation as BLM continued to work on rescinding the Waste Prevention Rule.

BLM finally “rescinded” the Waste Prevention Rule on September 28, 2018, and in doing so eliminated some, but not all, requirements in the Waste Prevention Rule. Predictably, the rescission was challenged, again in the Northern District of California, before the rescission had time to become effective.

On July 15, 2020, the Federal District Court for the Northern District of California vacated BLM’s rescission reinstating the Waste Prevention Rule. The Northern District of California court gave the parties 90 days to reopen their lawsuit in Wyoming before the Waste Prevention Rule would become effective.

On July 21, 2020, the federal district court in Wyoming lifted the stay on the suit, and gave the parties until September 4, 2020, to complete briefing on the case, presumably so that it has time to issue a ruling before the Waste Prevention Rule goes into effect.

What does this mean for the election?

If there’s one take-away from the story of BLM’s Waste Prevention Rule, it’s that campaign promises aren’t always easy to fulfill. Agencies have to follow the same process to undo a regulation as they would if they were creating a new regulation. Agencies only have the resources to change so many regulations at a time, and it often takes several years to remove or revise a regulation. While a new administration could theoretically decide to stop defending a prior regulation being challenged in court, that decision is ultimately made by the Department of Justice (DOJ), rather than the agency that issued the regulation. DOJ rarely agrees simply to stop defending a rule unless the agency has taken some new regulatory action.

Even after the revision or rescission, a new regulation can be stopped nationwide by a single federal district court, and the party challenging the regulation can decide to sue in a court that they think is more likely to agree with their position. At least for the next 18 months, the regulatory regime for methane emissions from oil and gas activities on federal land will likely depend more on the status of the various court challenges than with who wins in November. If the Wyoming court upholds the Waste Prevention Rule, then it will stay in effect until BLM tries again to remove any of its requirements. Of course, a Biden administration is far less likely to try to lessen the requirements than a second term Trump administration. If the Wyoming court vacates (overturns) the Waste Prevention Rule, then the Trump administration would not need to take further action to remove the regulation from the books. A new Biden administration would have to complete the multi-month process of issuing a new regulation to take its place, and that new regulation would likely be challenged in court.

The methane requirements for oil and gas operations on federal land will also depend in part on which state the lands are located in. BLM requires operators to comply with both state and federal law. States such as Colorado and New Mexico have their regulations to control methane emissions from oil and gas operations. If additional western states where federal lands are located adopt similar programs, then operators on federal lands in those jurisdictions will also have to control their venting and flaring practices regardless of the final fate of the Waste Prevention Rule.

1 “The Global Warming Potential (GWP) was developed to allow comparisons of the global warming impacts of different gases. Specifically, it is a measure of how much energy the emissions of 1 ton of a gas will absorb over a given period of time, relative to the emissions of 1 ton of carbon dioxide (CO2).” According to EPA, methane has a GWP of 28–36, and lasts, on average, about a decade in the atmosphere, while carbon dioxide lasts in the atmosphere for about 100 years.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.