01/04/2023 - Inflation Reduction Act - Methane Regulation

BLM’s Proposed Methane Waste Prevention Rule Summary

by Abby Husselbee, Carrie Jenks, Sara Dewey

On November 30, 2022, the Department of the Interior’s Bureau of Land Management (BLM) published a proposal that would require operators of federal and tribal oil and gas leases to take steps to avoid the waste of methane: Waste Prevention, Production Subject to Royalties, and Resource Conservation. The proposed rule would establish new requirements designed to reduce methane waste and ensure that when natural gas is lost at oil and gas lease sites, the US public and tribal mineral owners are compensated through royalty payments. BLM projects that the benefits of the rule include reduced gas waste, increased royalty revenue, and environmental co-benefits.

BLM proposes to require operators to “use all reasonable precautions to prevent the waste of oil or gas” on federal and tribal leases. To do this, BLM would establish limits on wasted gas, require royalty payments for gas deemed “avoidably lost,” and set out new requirements for leak detection and equipment upgrades. For some operators, the BLM requirements for wasted gas would apply to sources in addition to EPA’s proposed methane emissions requirements and the Inflation Reduction Act (IRA) methane fee.

Our white paper offers an overview of the proposed rule, including the legal developments that have shaped the proposal and key changes from prior administrations’ waste prevention rules. Additionally we describe how BLM’s waste prevention rule compares to EPA’s supplemental methane proposal and the IRA methane fee. Stakeholder comments will help BLM finalize a legally durable rule and align regulatory requirements with technology advancements. BLM is accepting comments submitted through January 30, 2023.

Read or download our white paper here.