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Court Reverses Suspension of BLM Natural Gas Venting/Flaring Rule

A federal judge in San Francisco late Thursday blocked the Trump administration from delaying enforcement of an Obama-era rule governing associated natural gas flaring and venting on public and tribal lands, calling the delay "untethered to evidence" and putting the rule, for now, back into effect.

U.S. District Court Judge William Orrick of the Northern District of California rejected a proposed rule by the Department of Interior's (DOI) Bureau of Land Management (BLM) to suspend parts of the BLM's Waste Prevention, Production Subject to Royalties, and Resource Conservation Rule -- aka the venting and flaring rule -- until January 2019.

Orrick the attorneys general (AG) for California and New Mexico, as well as a coalition of 17 environmental groups, were likely to prevail in their separate lawsuits over the delay. He also rejected calls by North Dakota, Texas and three oil and gas industry groups to move the case to the District of Wyoming, where a separate case challenging the rule is pending.

"The BLM's reasoning behind the suspension rule is untethered to evidence contradicting the reasons for implementing the Waste Prevention Rule, and so plaintiffs are likely to prevail on the merits," Orrick wrote in a 29-page opinion. "They have shown irreparable injury caused by the waste of publicly owned natural gas, increased air pollution and associated health impacts, and exacerbated climate impacts."

Orrick sided with the plaintiffs' arguments that the BLM had provided a flawed analysis for justifying the suspension rule. "Instead, it appears that BLM is simply 'casually ignoring' all of its previous findings and arbitrarily changing course," he said. The judge also agreed that the BLM had "likely seriously inflated" its estimate, which is contained in a regulatory impact analysis, that the oil and gas industry would save $110-114 million by delaying the venting and flaring rule until 2019.

While Orrick disagreed with the plaintiffs' assertions that the BLM had failed in its statutory duties, he said a separate argument that DOI Secretary Ryan Zinke had limited the scope of public comments over the venting and flaring rule "has more merit."

"Secretary Zinke refused to consider comments regarding the substance or merits of the Waste Prevention Rule, determining that they were outside the scope of the Prevention Rule," Orrick said. "These comments, however, bear directly upon the secretary's stated rationales for the suspension rule...

"The secretary cannot, on the one hand, use concerns about cost and complexity to industry as a justification for the suspension rule, only to deny comments about the financial and economic burden to industry as outside the scope of the suspension rule, on the other."

California AG Xavier Becerra and New Mexico AG Hector Balderas filed a lawsuit against the BLM over the stay last December. A coalition of 17 environmental and tribal groups did likewise, and the two cases have since been consolidated. The cases are State of California et al v. U.S. Bureau of Land Management et al, No. 17-cv-7186; and Sierra Club et al v. Zinke et al, No. 17-cv-7187.

Swift Reaction

The oil and gas industry vowed to continue fighting in court.

"While the ruling is a temporary setback, the 2016 methane rule remains on life support," Western Energy Alliance (WEA) President Kathleen Sgamma told NGI's Shale Daily. "BLM has a new proposed rule out that corrects all the problems of BLM usurping air quality regulatory authority from EPA and the states, which have already regulated methane emissions.

"The WEA and the Independent Petroleum Association of America (IPAA) “will soon be taking action in our related case in Wyoming with a judge who's spent the last year and a half understanding the issues with this rule, unlike the judge who ruled yesterday and is new to the issues."

IPAA spokesman Neal Kirby said the organization is "reviewing the court's decision with our legal team now and we'll be determining the next steps for legal action shortly."

WEA, IPAA and the American Petroleum Institute (API) moved to intervene in the consolidated cases, while the BLM, North Dakota and Texas want to transfer the case to Wyoming, where IPAA and WEA filed a lawsuit against the rule in November 2016. Montana and Wyoming filed a separate lawsuit, and North Dakota and Texas subsequently joined as petitioners. The lawsuits have since been combined.

"America's natural gas and oil industry supports common sense regulation, but the BLM's technically flawed 2016 rule on methane emissions is an unnecessary and costly misstep," said API spokesman Michael Tadeo. "The rule could impede U.S. energy production while reducing local and federal government revenues. We remain hopeful that the new proposed 2018 rule can strengthen our nation's energy renaissance, our economy and environmental stewardship."

Environmental groups were elated with the latest ruling.

"The court's decision to block Secretary Zinke's unlawful suspension ensures the Waste Prevention Rule remains in place, protecting tribes, ranchers and families across the West," said Environmental Defense Fund lead attorney Peter Zalzal, whose group had sued over the delay. "The protections restored by this decision will help to prevent the waste of natural gas, reduce harmful methane, smog-forming and toxic pollution, and ensure communities and tribes have royalty money that can be used to construct roads and schools."

Last October, the same California district court ruled that the Trump administration had violated the Administrative Procedure Act (APA) when the BLM first proposed delaying the compliance dates for the rule because of the pending litigation in Wyoming. U.S. Magistrate Judge Elizabeth Laporte vacated the BLM's postponement notice and ordered the agency to immediately reinstate the rule.

In a twist, Laporte ruled last September that the Trump administration also ran afoul of the APA when the DOI's Office of Natural Resources Revenue issued a stay of the Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform Final Rule, also known as the 2017 Valuation Rule. But Laporte declined to put that rule back into effect.

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