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DEPARTMENT OF THE INTERIOR 6. Interaction With EPA and State Section 3178.10 Facility and Equipment Regulations Ownership Bureau of Land Management 7. Other Provisions Subpart 3179— Prevention and 8. Summary of Costs and Benefits Resource Conservation 43 CFR Parts 3100, 3160 and 3170 III. Background Section 3179.1 Purpose A. Impacts of Waste and Loss of Gas Section 3179.2 Scope [17X.LLWO310000.L13100000.PP0000] B. Purpose of the Rule Section 3179.3 Definitions and Acronyms 1. Overview Section 3179.4 Determining When the RIN 1004–AE14 2. Issues Addressed by Rule Loss of Oil or Gas is Avoidable or 3. Relationship to Other Federal, State, and Waste Prevention, Production Subject Unavoidable Industry Activities Section 3179.5 When Lost Production is to Royalties, and Resource C. Legal Authority Subject to Royalty Conservation D. Stakeholder Outreach Section 3179.6 Venting and Flaring From IV. Summary of Final Rule Gas Wells and Venting Prohibition AGENCY: Bureau of Land Management, V. Major Changes From Proposed Rule Section 3179.7 Gas Capture Requirement Interior. A. Venting Prohibition and Capture Targets Section 3179.8 Alternative Capture 1. Venting Prohibition ACTION: Final rule. Requirement 2. Capture Targets Section 3179.9 Measuring and Reporting SUMMARY: The Bureau of Land B. Leak Detection and Repair 1. Requirements of Final Rule Volumes of Gas Vented and Flared Management (BLM) is promulgating Section 3179.10 Determinations new regulations to reduce waste of 2. Changes From Proposed Rule 3. Significant Comments Regarding Royalty-Free Flaring from venting, flaring, and C. Liquids Unloading at New Wells Section 3179.11 Other Waste Prevention leaks during oil and natural gas 1. Requirements of Final Rule and Changes Measures production activities on onshore Federal From Proposed Rule Section 3179.12 Coordination With State and Indian (other than Osage Tribe) 2. Significant Comments Regulatory Authority leases. The regulations also clarify when D. Variances Related to State and Tribal Section 3179.101 Well Drilling produced gas lost through venting, Regulations Section 3179.102 Well Completion and flaring, or leaks is subject to royalties, 1. Requirements of Final Rule Related Operations Section 3179.103 Initial Production and when oil and gas production may 2. Changes From Proposed Rule 3. Significant Comments Testing be used royalty-free on-site. These VI. Additional Significant Comments and Section 3179.104 Subsequent Well Tests regulations replace the existing Responses Section 3179.105 Emergencies provisions related to venting, flaring, A. Interaction With EPA Regulations Section 3179.201 Equipment and royalty-free use of gas contained in B. Authority to Require Flaring of Gas Requirements for Pneumatic Controllers the 1979 Notice to Lessees and C. ‘‘Avoidably Lost’’ Oil or Gas Section 3179.202 Requirements for Operators of Onshore Federal and D. Application to Units and Communitized Pneumatic Diaphragm Pumps Indian Oil and Gas Leases, Royalty or Areas Section 3179.203 Storage Vessels E. ROW Permitting Section 3179.204 Downhole Well Compensation for Oil and Gas Lost F. Planning (NTL–4A), which are over 3 decades Maintenance and Liquids Unloading VII. Section by Section Section 3179.301 Operator Responsibility old. Part 3100 Section 3179.302 Approved Instruments DATES: The final rule is effective on Section 3103.3–1 Royalty on production and Methods January 17, 2017. Section 3160.0–5 Definitions Section 3179.303 Leak Detection Section 3162.3–1 Drilling applications Inspection Requirements for Natural Gas FOR FURTHER INFORMATION CONTACT: and plans Timothy Spisak at the BLM Washington Wellhead Equipment and Other Subpart 3178—Royalty-Free Use of Lease Equipment Office, 20 M Street SE., Room 2134LM, Production Section 3179.304 Repairing Leaks Washington, DC 20003, or by telephone Section 3178.1 Purpose Section 3179.305 Leak Detection at 202–912–7311. For questions relating Section 3178.2 Scope of This Subpart Inspection, Recordkeeping and Reporting to regulatory process issues, contact Section 3178.3 Production on Which Section 3179.401 State or Tribal Requests Royalty is not due Faith Bremner at 202–912–7441. for Variances From the Requirements of Section 3178.4 Uses of Oil or Gas on a Persons who use a This Subpart Lease, Unit, or Communitized Area That VIII. Analysis of Impacts telecommunications device for the deaf do not Require Prior Written BLM A. Description of the Regulated Entities (TDD) may call the Federal Relay Approval for Royalty-Free Treatment of Service (FRS) at 1–800–877–8339 to Volumes Used 1. Potentially Affected Entities contact these individuals during normal Section 3178.5 Uses of Oil or Gas on a 2. Affected Small Entities business hours. FRS is available 24 Lease, Unit, or Communitized Area That B. Impacts of the Requirements 1. Overall Costs of the Rule hours a day, 7 days a week to leave a Require Prior Written BLM Approval for Royalty-Free Treatment of Volumes Used 2. Overall Benefits of the Rule message or question with these 3. Net Benefits of the Rule individuals. You will receive a reply Section 3178.6 Uses of Oil or Gas Moved off the Lease, Unit, or Communitized 4. Distributional Impacts during normal business hours. Area That do not Require Prior Written IX. Procedural Matters SUPPLEMENTARY INFORMATION: Approval for Royalty-Free Treatment of A. Executive Order 12866, Regulatory I. Table of Contents Volumes Used Planning and Review II. Executive Summary Section 3178.7 Uses of Oil or Gas Moved B. Regulatory Flexibility Act and Small A. Background off the Lease, Unit, or Communitized Business Regulatory Enforcement B. Summary of Rule Area That Require Prior Written Fairness Act of 1996 1. Venting and Flaring Approval for Royalty-Free Treatment of C. Unfunded Mandates Reform Act of 1995 2. Leaks Volumes Used D. Executive Order 12630, Governmental 3. Reducing Venting from Equipment and Section 3178.8 Measurement or Actions and Interference with Practices Estimation of Volumes of Oil or Gas That Constitutionally Protected Property 4. Royalty Provisions Governing New are Used Royalty-Free Rights (Takings) Competitive Leases Section 3178.9 Requesting Approval of E. Executive Order 13132, Federalism 5. Unavoidable Versus Avoidable Losses of Royalty-Free Treatment When Approval F. Executive Order 12988, Civil Justice Gas is Required Reform

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G. Executive Order 13175, Consultation allottee owners, and States.1 Over the Royalty Management Act (FOGRMA), and Coordination with Indian Tribal past decade, the United States has the Federal Land Policy and Governments experienced a dramatic increase in oil Management Act of 1976 (FLPMA), the H. Paperwork Reduction Act and natural gas production due to Indian Mineral Leasing Act of 1938 I. National Environmental Policy Act technological advances, such as (IMLA), the Indian Mineral J. Executive Order 13211, Actions combined with Development Act of 1982 (IMDA), and Concerning Regulations That directional drilling. Yet the American the Act of March 3, 1909.4 In particular, Significantly Affect Energy Supply, public has not benefited from the full the MLA requires the BLM to ensure Distribution, or Use potential of this increased production, that lessees ‘‘use all reasonable K. Executive Order 13563, Improving due to venting, flaring, and leaks of precautions to prevent waste of oil or Regulation and Regulatory Review significant quantities of gas during the gas developed in the land.’’ 5 Leases X. Authors production process. Federal and Indian issued by BLM must ensure that II. Executive Summary onshore lessees and operators reported operations are conducted with to the Office of Natural Resources ‘‘reasonable diligence, skill, and care’’ A. Background Revenue (ONRR) that they vented or and that lessees comply with rules ‘‘for flared 462 billion cubic feet (Bcf) of the prevention of undue waste.’’ 6 This final regulation aims to reduce natural gas between 2009 and 2015— Advancing those mandates, this rule the waste of natural gas from mineral enough gas to serve about 6.2 million replaces the BLM’s decades-old NTL– leases administered by the BLM. This households for a year, assuming 2009 4A requirements related to venting and gas is lost during oil and gas production usage levels.2 activities through venting or flaring of Venting, flaring, and leaks waste a flaring, and to royalty-free use of oil and the gas, and through equipment leaks. valuable resource that could be put to gas production; amends the BLM’s oil While oil and gas production productive use, and deprive American and gas regulations at 43 CFR part 3160 technology has advanced dramatically taxpayers, tribes, and States of royalty to include requirements for a waste in recent years, the BLM’s rules to revenues. In addition, the wasted gas minimization plan; and adds new minimize waste of gas have not been may harm local communities and subparts 3178 and 3179 to 43 CFR part updated in over 30 years. The Mineral surrounding areas through visual and 3170 that address royalty-free use of Leasing Act of 1920 (MLA) requires the noise impacts from flaring, and lease production (subpart 3178) and BLM to ensure that lessees ‘‘use all contribute to regional and global air waste prevention through reduction of reasonable precautions to prevent waste pollution problems of smog, particulate venting, flaring and leaks (subpart of oil or gas developed in the land,’’ 30 matter, and toxics (such as benzene, a 3179). This rule will apply to all Federal U.S.C. 225, and that leases include ‘‘a carcinogen). Finally, vented or leaked and Indian (other than Osage Tribe) provision that such rules . . . for the gas contributes to , onshore oil and gas leases as well as prevention of undue waste as may be because the primary constituent of leases and business agreements entered prescribed by [the] Secretary shall be natural gas is , an especially into by tribes (including IMDA observed,’’ id. at § 187. The BLM powerful (GHG), with agreements), as consistent with those believes there are economical, cost- climate impacts roughly 25 times those agreements and with principles of Federal Indian law.7 effective, and reasonable measures that of (CO2), if measured operators can take to minimize gas over a 100-year period, or 86 times those This rule implements waste. These measures will enhance our of CO2, if measured over a 20-year recommendations from several oversight nation’s natural gas supplies, boost period.3 Thus, measures to conserve gas reviews, including reviews by the Office royalty receipts for American taxpayers, and avoid waste may significantly of the Inspector General of the tribes, and States, reduce environmental benefit local communities, public Department of the Interior (OIG) and the damage from venting, flaring, and leaks health, and the environment. Government Accountability Office of gas, and ensure the safe and Congress has directed the BLM to (GAO). These reviews raised concerns responsible development of oil and gas oversee Federal and Indian oil and gas about waste of gas from Federal and resources. activities under multiple laws, Indian production, found that the BLM’s including the MLA, the Mineral Leasing The BLM’s onshore oil and gas existing requirements regarding venting Act for Acquired Lands of 1947 and flaring are insufficient and management program is a major (MLAAL), the Federal Oil and Gas contributor to our nation’s oil and gas outdated, and expressed concerns about the ‘‘lack of price flexibility in royalty production. The BLM manages more 1 Office of Natural Resources Revenue, Statistical than 245 million acres of land and 700 Information, http://statistics.onrr.gov/ million acres of subsurface estate, ReportTool.aspx using Sales Year—FY 2015— 4 Mineral Leasing Act, 30 U.S.C. 188–287; Mineral Leasing Act for Acquired Lands, 30 U.S.C. making up nearly a third of the nation’s Federal Onshore—All States Sales Value and Revenue for Oil, Natural Gas Liquids (NGL), and 351–360; Federal Oil and Gas Royalty Management mineral estate. Domestic production Gas products as of September 7, 2016. Act, 30 U.S.C. 1701–1758; Federal Land Policy and from 96,000 Federal onshore oil and gas 2 BLM analysis of ONRR Oil and Gas Operations Management Act of 1976, 43 U.S.C. 1701–1785; wells accounts for 11 percent of the Report Part B (OGOR–B) data provided for 2009– Indian Mineral Leasing Act of 1938, 25 U.S.C. 396a–g; Indian Mineral Development Act of 1982, Nation’s natural gas supply and 5 2015; see Energy Information Administration (EIA), Trends in U.S. Residential Natural Gas 25 U.S.C. 2101–2108; Act of March 3, 1909, 25 percent of its oil. In Fiscal Year (FY) Consumption, http://www.eia.gov/pub/oil_gas/ U.S.C. 396. 2015, operators produced 183.4 million natural_gas/feature_articles/2010/ 5 30 U.S.C. 225. barrels (bbl) of oil, 2.2 trillion cubic feet ngtrendsresidcon/ngtrendsresidcon.pdf (reporting 6 30 U.S.C. 187. (Tcf) of natural gas, and 3.3 billion that in 2009, U.S. residential consumption was 7 Key statutes underpinning this proposed approximately 74 Mcf per household with natural regulation contain exceptions for the Osage Tribe. gallons of natural gas liquids (NGLs) gas service). Specifically, the Osage Tribe is excepted from the from onshore Federal and Indian oil and 3 See Intergovernmental Panel on Climate Change, application of both the Indian Mineral Leasing Act gas leases. The production value of this Climate Change 2013: The Physical Science Basis, and the Federal Oil and Gas Royalty Management oil and gas exceeded $20.9 billion and Chapter 8, Anthropogenic and Natural Radiative Act, 25 U.S.C. 396f; 43 U.S.C. 1702(3), 1702(4). The Forcing, at 714 (Table 8.7), available at https:// leasing of Osage Reservation lands for oil and gas generated over $2.3 billion in royalties, www.ipcc.ch/pdf/assessment-report/ar5/wg1/ mining is subject to special Bureau of Indian Affairs which were shared with tribes, Indian WG1AR5_Chapter08_FINAL.pdf. regulations contained in 25 CFR part 226.

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rates’’ 8 and about royalty-free use of rulemaking the BLM has focused on and are developed in a manner that gas. The GAO also noted that ‘‘around potential interactions of this rule with provides for long-term productivity and 40 percent of natural gas estimated to be other Federal, State, or tribal regulatory sustainability. vented and flared on onshore Federal requirements. For example, the U.S. Second, as a practical matter, neither leases could be economically captured Environmental Protection Agency (EPA) EPA nor State and tribal regulations with currently available control issued rules in 2012 and early 2016 to fully address the issue of waste of gas technologies.’’ 9 The OIG and GAO control emissions of methane and from BLM-administered leases. The EPA reports recommended that the BLM volatile organic compounds (VOCs) regulations are directed at update its regulations to require from new, modified and reconstructed reduction, not waste prevention; they operators to augment their waste oil and gas wells and production cover only new, modified and prevention efforts, afford the BLM equipment, and many States and tribes reconstructed sources; and they do not greater flexibility in rate setting, and regulate aspects of the oil and gas address wasteful of clarify BLM policies regarding royalty- production process to address safety, associated gas from oil wells, among free, on-site use of oil and gas. waste, production accountability, and/ other things. Similarly, no State or tribe The BLM has engaged in substantial or air quality concerns. Regulatory has established a comprehensive set of stakeholder outreach in the course of agencies often have overlapping requirements addressing all three developing this proposal. In 2014, the authority and may adopt very similar avenues for waste—venting, flaring, and BLM conducted a series of forums to measures to realize those leaks—and only a few States have consult with tribal governments and to complementary goals, such as significant requirements in even one of solicit stakeholder views to inform the improving air quality and reducing these areas. The BLM therefore believes development of this proposed rule, with waste. For example, measures in this this rule is a necessary step in fulfilling public meetings (some of which were rule that aim to avoid the waste of its statutory mandate to minimize waste livestreamed) in Colorado, New Mexico, methane gas through venting or leaks of the public’s and tribes’ natural gas North Dakota, and Washington, DC.10 will also reduce methane pollution. resources. The BLM continued to consult with The BLM recognizes that overlapping B. Summary of Rule stakeholders throughout the rule regulatory regimes can create difficulties development process, including holding for operators, and has therefore very This rule requires operators to take numerous meetings and calls with State carefully considered and minimized various actions to reduce waste of gas, and tribal representatives, individual potential overlaps with other Federal, establishes clear criteria for when flared companies, trade associations, and non- State, or tribal regulations. The BLM gas will qualify as waste and therefore governmental organizations (NGOs). aligned the requirements of this new be subject to royalties, and clarifies The BLM conducted additional outreach rule with similar requirements adopted which on-site uses of gas are exempt with States and tribes where there is by the EPA and States, where from royalties. The rule focuses on extensive oil and gas production from practicable, and exempted equipment several key points or processes in the oil BLM-administered leases. We issued a complying with relevant EPA and gas production process where proposed rule on January 21, 2016, requirements from overlapping waste-prevention actions are most which was published on February 8, requirements of this rule. In addition, effective and least costly: Venting and 2016, and accepted public comments this rule includes a provision that flaring of associated gas from through April 22, 2016, after extending authorizes the BLM to grant variances development oil wells (routine flaring the comment period. In addition, we from particular BLM requirements if a occurs at oil wells that dispose of gas as held public meetings during the State or tribe demonstrates that a State, a waste product), gas leaks from comment period in Farmington, New local, or tribal regulation imposes equipment at the well site or elsewhere Mexico; Oklahoma City, Oklahoma; equally effective requirements. on the lease, operation of high-bleed Denver, Colorado; and Dickinson, North It is critical to note, however, that pneumatic controllers and certain Dakota. We also held separate meetings neither EPA nor State and tribal pneumatic pumps, gas emissions from with tribes at each of these locations, requirements obviate the need for this storage vessels, downhole well and held further government-to- rule. First, the BLM has an independent maintenance and liquids unloading, and government consultation meetings at the legal responsibility and a proprietary well drilling and completions. The request of several tribes. The BLM interest as a land and resource manager following discussion summarizes the received approximately 330,000 public to oversee and minimize waste from oil rule’s requirements applicable to each of comments on the proposed rule, and gas production activities conducted these aspects of the production process, including approximately 1,000 unique pursuant to Federal and Indian (other and also outlines the rule’s provisions comments. than Osage Tribe) leases, as well as to with respect to royalties, and the The BLM is not the only regulator ensure that development activities on interaction between the rule and related with the responsibility to oversee Federal and Indian leases are performed EPA and State or tribal regulations. in a safe, responsible, and aspects of onshore oil and gas 1. Venting and Flaring production, and throughout this environmentally protective matter. The BLM’s existing venting and flaring In 2014, operators vented about 30 Bcf 8 GAO, Oil and Gas Royalties: The Federal System requirements are over 30 years old and and flared at least 81 Bcf of natural gas for Collecting Oil and Gas Revenues Needs predate significant technological from BLM-administered leases, totaling Comprehensive Reassessment, GAO–08–691, developments. Updating and clarifying 4.1 percent of the total production from September 2008, 6. those requirements will make them those leases in that year, and sufficient 9 GAO, Federal Oil and Gas Leases: Opportunities Exist to Capture Vented and Flared Natural Gas, more effective, more transparent, and gas to supply nearly 1.5 million 11 Which Would Increase Royalty Payments and easier to understand and administer; households with gas for a year. In Reduce Greenhouse Gases, GAO–11–34, (Oct. and will reduce operators’ compliance 2010), 2. burdens in some respects. The BLM 11 RIA at 16; see Energy Information 10 Further information can be found at the BLM Administration (EIA), Trends in U.S. Residential oil and gas program’s outreach-events page: http:// must carry out its responsibility, Natural Gas Consumption, http://www.eia.gov/pub/ www.blm.gov/wo/st/en/prog/energy/public_events_ delegated by Congress, to ensure that oil_gas/natural_gas/feature_articles/2010/ on_oil.html. the public’s resources are not wasted ngtrendsresidcon/ngtrendsresidcon.pdf (reporting

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2015 operators flared at least 85 Bcf, a geographic areas beyond individual the operator carefully considers and 114 percent increase from 2009 levels.12 leases enhances flexibility and makes plans for how it will capture the gas that Roughly 83 Bcf of this flaring came from the targets less costly to meet. Similarly, will be produced, before the operator oil wells.13 Analysis of data supplied by the more extended phasing in of the drills a well. While the provisions of a the ONRR suggests that most of the capture targets eases costs and plan will not be enforceable against the flaring was routine flaring of associated compliance burdens, while allowing operator, plan submission is mandatory, gas from development oil wells (as appropriate planning and investment by and the plan must include specific opposed to flaring during exploration, industry to meet more stringent targets elements listed in the regulations. As in well testing, and emergencies). Over 88 in out years. At the same time, the BLM the proposed rule, failure to submit a percent of this flaring occurred in North recognizes that it has a statutory complete and adequate plan could be Dakota, South Dakota, and New Mexico. responsibility to ensure that operators grounds for denial of an application for This rule prohibits venting of natural minimize waste of public resources. permit to drill (APD). gas, except under certain specified Accordingly, the BLM has structured 2. Leaks conditions, such as in an emergency or the capture targets to ensure that when flaring is technically infeasible.14 operators will achieve overall Based on our estimates, leaks are the With respect to flaring, the rule requires reductions in wasteful flaring that are second largest source of vented gas from operators to reduce wasteful flaring of comparable to, and eventually slightly Federal and Indian leases, accounting gas by capturing for sale or using on the greater than, what the BLM estimated for about 4 Bcf of the natural gas lost in lease a percentage of their gas would have been achieved under the 2014.15 Our analysis indicates that Leak production. The required capture proposed rule. Detection and Repair (LDAR) programs percentage increases over time, and is The BLM estimates that, once fully are a cost-effective means of reducing also adjusted to provide for a base level implemented, the capture targets will waste in oil and gas production, and of ‘‘allowable’’ flaring that ramps down reduce flaring by up to 49 percent multiple studies have found that once over time. This capture requirement relative to 2015 levels. Like the leaks are detected, the vast majority can builds on the proposed rule’s flaring proposed rule, the final rule also retains be repaired with a positive return to the limits, and modifies that approach in the BLM’s discretion to craft alternative operator.16 response to comments, to make requirements for certain operators that Like the proposed rule, the final rule compliance more feasible and less cannot meet the baseline flaring requires operators to use an instrument- costly, while working towards phasing reduction obligations. Specifically, the based approach to leak detection. The out routine flaring of associated gas final rule allows the BLM to adjust the final rule allows operators to use optical from oil wells by increasing capture. capture target for an operator on an gas imaging equipment, portable Specifically, beginning one year from existing lease that demonstrates to the analyzers deployed according to the the effective date of the final rule, BLM that meeting the target would protocol prescribed in EPA’s Method operators must capture 85 percent of impose such costs as to cause the 21,17 or an alternative leak detection their adjusted total volume of gas operator to cease production and device approved by the BLM. In produced each month. This percentage abandon significant recoverable oil response to comments on the proposed increases to 90 percent in 2020, 95 reserves under the lease. In assessing rule, the final rule was revised to be percent in 2023, and 98 percent in 2026. the operator’s showing, the BLM will consistent with the EPA’s final An operator’s adjusted total volume of consider the costs of gas capture, and requirements under 40 CFR part 60 gas produced is calculated based on the the costs and revenues of all oil and gas subpart OOOOa, requiring operators to quantity of high pressure gas produced production on the lease. conduct semi-annual inspections at well from the operator’s development oil As explained in the proposed rule, the sites and quarterly inspections at wells that are in production, adjusted to initial flaring limitations were intended compressor stations. Operators may also exempt a specified volume of gas per to motivate operators to increase their request BLM approval of an alternative well, which declines over time. capture of gas associated with oil instrument-based leak detection Beginning one year from the effective development, since a reduction in program; the BLM may approve such a date of the final rule, operators are flaring is achieved most effectively by program if it finds that the program allowed to exempt 5,400 Mcf gas per an increase in capture. Consequently, would reduce leaked volumes by at least well per month, and this quantity flaring limitations and capture as much as the BLM program. Operators declines to 3,600 beginning in 2019, requirements are two sides of the same must repair a leak within 30 days of 1,800 in 2020, 1,500 in 2021, 1,200 in coin. Increasing capture is the BLM’s discovery, absent good cause, and verify 2022, 900 in 2024, and 750 from 2025 primary goal in imposing these waste that the leak is fixed. Operators must on. prevention requirements, and we also keep records documenting the dates The final rule gives operators the concluded that it would be a more and results of leak inspections, repairs, option to meet their capture targets on direct means of achieving that goal to and follow-up inspections. a lease-by-lease basis, or an average require capture rather than merely basis over all of their Federal or Indian encourage it through the imposition of 3. Reducing Venting From Equipment production from development oil wells flaring limits. In modifying the rule in and Practices county-by-county or State-by-State. this way, we have determined that both Like the proposed rule, the final rule Giving operators the ability to average approaches are expected to achieve includes requirements to update old, their rates of gas capture over comparable results, in terms of both inefficient equipment and to follow best increasing capture and reducing practices to minimize waste through that in 2009, U.S. residential consumption was wasteful flaring. venting. These provisions address gas approximately 74 Mcf per household with natural In addition, this rule finalizes the losses from pneumatic controllers and gas service). proposal to require operators to submit 12 BLM analysis of ONRR OGOR–B data provided pumps, storage vessels, liquids for 2009–2015 and EPA GHG Inventory data for a Waste Minimization Plan when they 2014. apply for a permit to drill a new 15 RIA at 3. 13 RIA at 49. development . Preparation of a 16 RIA at 27. 14 See 43 CFR 3179.6. Waste Minimization Plan ensures that 17 See 40 CFR part 60, appendix A–7.

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unloading, and well drilling and not apply to pneumatic pumps that are the operator demonstrates, and the BLM completions. subject to EPA regulations. concurs, that complying with the The final rule provides that an requirements would impose such costs a. Pneumatic Controllers and Pumps operator can receive an exemption from as to cause the operator to cease We estimate that on BLM- the requirements for pneumatic production and abandon significant administered leases in 2014, operators controllers or pumps if the operator recoverable oil reserves under the lease. lost about 14.9 Bcf of natural gas from demonstrates and the BLM concurs that In making this determination, the BLM pneumatic controllers and about 2.3 Bcf replacing the pneumatic pump(s) would will consider the costs of compliance, from pneumatic pumps.18 A recent impose such costs as to cause the and the costs and revenues of all oil and study by the consulting firm ICF operator to cease production and gas production on the lease. International (ICF) identified abandon significant recoverable oil reserves under the lease. In making this c. Well Maintenance and Liquids replacement of high-bleed pneumatic Unloading controllers (those with bleed rates determination, the BLM will consider higher than 6 standard cubic feet (scf)/ the costs of capture, and the costs and We estimate that 3.26 Bcf of natural gas was lost in 2014 during liquids hour) with low-bleed pneumatic revenues of all oil and gas production unloading operations on Federal and controllers (those with bleed rates of 6 on the lease. Indian lands.23 There are a wide variety scf/hour or less) as one of the most b. Storage Vessels of methods for liquids unloading, and inexpensive options for reducing We estimate that 2.94 Bcf of natural technological developments, such as methane losses, estimating that gas was lost in 2014 from storage tank automated well controls and plunger lift replacing these devices would actually venting on Federal and Indian lands.20 systems, now allow liquids to be save industry $2.65 per Mcf of avoided Of that volume, we estimate that 1.54 unloaded with minimal loss of gas. The .19 Like the proposed Bcf was lost from storage vessels used BLM expects prudent operators to use rule, the final rule requires operators to in natural gas production and 1.4 Bcf of available technologies and practices to replace high-bleed pneumatic gas was lost from storage vessels used in minimize gas losses, and we believe that controllers with low-bleed or no-bleed oil production.21 Tank vapors can be the failure to use such technologies and pneumatic controllers within one year controlled by installing a vapor recovery practices during liquids unloading of the effective date of the final rule. unit (VRU) or by routing them to a flare constitutes waste. This requirement tracks existing or combustor. New, modified and The final rule does not adopt the requirements in Colorado and Wyoming reconstructed vessels used in oil and gas provision from the proposed rule that (in part of the State), and it applies only production are already subject to EPA would have prohibited manual well to pneumatic controllers that are not emissions limits, which require that purging from new wells, due to covered by EPA regulations. individual storage vessels with VOC concerns about the technical feasibility For pneumatic pumps, the final rule emissions equal to or greater than 6 tons of such a ban. Instead, the final rule requires the operator to replace per year (tpy) achieve at least a 95 requires an operator to: (1) Minimize gas pneumatic diaphragm pumps that percent reduction in VOC emissions vented to unload liquids, consistent operate 90 or more days per year with from baseline levels. Colorado and part with safe operations; (2) optimize the zero-emissions pumps, or route the of Wyoming have similar, somewhat operation of the plunger lift or pump exhaust gas to processing more stringent requirements for storage automated well control system, at wells equipment. If use of a pneumatic pump vessels.22 equipped with such a system, to is required based on the function the Like the proposed rule, this final rule minimize gas losses from the system to pump must serve, and the operator includes requirements to reduce gas the extent possible; (3) consider other determines that routing the exhaust gas losses from existing storage vessels, methods for liquids unloading and to processing equipment would be which are not covered by the EPA determine that they are technically technically infeasible or unduly costly, standards. Using the same applicability infeasible or unduly costly, prior to the operator must route the pneumatic threshold as EPA and Colorado (6 tpy of manually purging a well for the first diaphragm pump to a combustor or VOCs, which the BLM is using as a time; and (4) comply with specified flare, if one is located on the site. proxy for natural gas losses since the procedures and document venting The BLM modified the requirements VOCs in this context are coming from events when unloading liquids by in the proposed rule for pneumatic the natural gas from storage vessels), the manual well purging. pumps in response to comments and to rule requires operators to route storage vessel vapor gas to a sales line, if the d. Reduction of Waste From Drilling, better align with the EPA’s final subpart Completion, and Related Operations OOOOa requirements. For example, the storage vessel has the potential to emit BLM eliminated the proposed at least 6 tpy of VOCs. If an operator We estimate that in 2014, 1.12 Bcf of requirements for chemical injection determines that compliance with this natural gas was lost during drilling, pumps and diaphragm injection pumps requirement is technically infeasible or completion, and refracturing (sometimes that operate relatively infrequently, as unduly costly, the operator may instead referred to by the broader term we believe that these pumps vent route the tank vapor gas to a combustor ‘‘workover’’) operations on BLM- relatively small quantities of gas. Like or flare. Like the proposed rule, this administered leases.24 The EPA requires the proposed rule, the final rule does final rule allows operators to request an new hydraulically fractured and exemption from these requirements if refractured oil or gas wells to capture or 18 RIA at 4. flare gas that otherwise would be 19 ICF International, Economic Analysis of 20 RIA at 17. released during drilling and completion Methane Emission Reduction Opportunities in the 21 RIA at 17. operations. The BLM final rule also U.S. in the Onshore Oil and Natural Gas Industries, 22 Colorado Air Quality Control Commission includes provisions to minimize the 4–4 (Mar. 2014), available at https://www.edf.org/ Regulations, Regulation 7, 5 CCR 1001–9, Sections waste of gas during these operations by sites/default/files/methane_cost_curve_report.pdf XII.D–F; XVII.C; Wyoming, Nonattainment Area (ICF 2014 Study) (base case assumed $4/Mcf price Regulations Ch. 8, Section 6(c) (June 2015), for recovered gas and a 10 percent discount rate/ available at http://soswy.state.wy.us/Rules/RULES/ 23 RIA at 3. cost of capital). 9868.pdf. 24 RIA at 3.

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requiring operators to capture, use, flare, drilling, completions, and tests; normal gas from a lease for production activities or inject the gas. While we do not expect operations of pneumatic devices and without owing royalties on the oil or gas that these provisions will obligate storage vessels; liquids unloading; leaks; used. In addition, like the proposed operators to take any additional actions equipment or pipeline maintenance rule, the final rule includes provisions beyond what they must do to comply requiring depressurization; and residual specifying when operators must with the EPA requirements, we believe gas after stripping of natural gas liquids. measure the volumes of gas vented or it is appropriate for the BLM to adopt its A loss of gas is also deemed flared, and requiring operators to report own provisions governing operator unavoidable when gas is flared from a to ONRR volumes of gas vented or conduct, to fulfill its independent well that is not connected to a gas flared. statutory obligation to minimize waste pipeline, provided the BLM has not of oil and gas resources on BLM- otherwise determined that the loss of 8. Summary of Costs and Benefits administered leases. gas is avoidable. All other losses of gas, Overall, the BLM estimates that the as well as any gas flared in violation of 4. Royalty Provisions Governing New benefits of this rule would outweigh its the capture requirement (regardless of Competitive Leases costs by a significant margin. Under whether the well is connected to a certain assumptions, for example, the The final rule revises 43 CFR 3103.3– pipeline), are deemed avoidable and rule is expected to produce net benefits 1, which governs royalty rates subject to royalties. By establishing ranging from $46 million to $199 applicable to onshore oil and gas leases, clear-cut categories for unavoidable and million per year (annualizing capital to make the rule text parallel to the avoidable losses, the final rule will costs using a 7 percent discount rate) or BLM’s statutory authority, which dramatically reduce the large number of from $50 million to $204 million per specifies that competitively-issued requests for approval to flare royalty- BLM-administered leases ‘‘shall be year (annualizing capital costs using a 3 free that operators have had to file and percent discount rate).26 conditioned upon the payment of a the BLM has had to process each year. royalty at a rate of not less than 12.5 a. Costs percent in amount or value of the 6. Interaction With EPA and State production removed or sold from the Regulations The BLM estimates that this rule will lease.’’ 30 U.S.C. 226(b)(1)(A). The final Like the proposed rule, this final rule pose costs ranging from $114–$279 version of 43 CFR 3103.3–1 thus makes seeks to minimize regulatory overlap. million per year (using a 7 percent clear that for competitive leases issued Thus, if EPA and/or States or tribes have discount rate to annualize capital costs) after the effective date of this rule, the adopted requirements that are at least as or $110–$275 million per year (using a BLM has the flexibility to set rates at or effective as and would potentially 3 percent discount rate to annualize above 12.5 percent. This change overlap with the provisions of this rule, capital costs) over the next 10 years.27 finalizes this provision as it was the final rule provides a means for These costs include engineering proposed, and responds to findings and operators to comply with the EPA, State, compliance costs and the social cost of recommendations in audits from the local or tribal requirements in lieu of the minor additions of carbon dioxide to the GAO. The final rule does not, however, BLM requirements. Specifically, in atmosphere, resulting from the on-site set a new rate for competitively-issued cases in which EPA rules limit venting or downstream use of gas that is newly leases. from equipment or require leak captured as a result of this rule.28 The Like the proposed rule, the final rule inspections and repairs, those operators engineering compliance costs presented specifies the fixed, statutory rate of 12.5 that are in compliance with those EPA do not include potential cost savings percent for all noncompetitive leases requirements are deemed, under this from the recovery and sale of natural gas issued after the effective date of the rule, rule, to be in compliance with the (those savings are shown in the as required by statute.25 In addition, the comparable BLM requirements. With summary of benefits). final rule makes clear that the royalty respect to State, local, or tribal rules, the In some areas, operators have already rate on all existing leases remains the final rule allows a State or tribe to undertaken, or plan to undertake, rate prescribed in the lease or in request a variance from a particular voluntary actions to address gas losses. regulations applicable at the time of BLM regulation. If the variance is To the extent that operators are already lease issuance. granted, the BLM has the authority to in compliance with the requirements of enforce the specific provisions of the 5. Unavoidable Versus Avoidable Losses this final rule, the above estimates State, local, or tribal rule for which the of Gas overstate the likely impacts of the rule. variance was granted, in lieu of the We expect that cost impacts on Like the proposed rule, the final rule comparable provisions of the BLM rule. individual operators would be small, also updates the pre-existing royalty As clarified in the final rule, the BLM even for businesses with less than 500 provisions in NTL–4A to more clearly may grant a State or tribal variance employees. In the Regulatory Impact and specifically define when a loss of request only if the BLM determines that Analysis (RIA), we estimate that average gas is considered ‘‘unavoidable’’ and the State, local, or tribal rule would costs for a representative small operator royalty-free, and when it is considered perform at least as well as the BLM would increase by about $55,200, which ‘‘avoidable’’ and subject to royalties. A provision to which the variance would would result in an average reduction in loss of gas is deemed unavoidable when apply, in terms of reducing waste of oil an operator has complied with all and gas, reducing environmental applicable requirements and taken 26 BLM, Economic Impact and Regulatory impacts from venting and/or flaring of Threshold Analysis for 43 CFR 3178 (Royalty Free prudent and reasonable steps to avoid gas, and ensuring the safe and Use of Production) and 43 CFR 3179 (Venting and waste, and the gas is lost from one of the responsible production of oil and gas. Flaring Requirements) (2015) (hereinafter RIA) at 6. operations or sources specified in this 27 RIA at 4. final regulation, subject to certain 7. Other Provisions 28 Some gas that would have otherwise been limitations. The specified operations Like the proposed rule, the final rule vented would now be combusted on-site or presumably downstream to generate electricity. As and sources include emergencies; well includes provisions that update and described in the RIA, the estimated value of these clarify pre-existing BLM requirements carbon additions would not exceed $30,000 in any 25 30 U.S.C. 226(c)(1). regarding when operators may use oil or given year.

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profit margin of 0.15percentage d. Influence on Production advances, such as hydraulic fracturing 29 points. The final rule has a number of combined with directional drilling. This boost in production has brought many b. Benefits requirements that are expected to influence the production of natural gas, benefits in the form of expanded and We measure the benefits of the rule as NGLs, and crude oil from onshore more secure domestic supplies, lower the cost savings that the industry would Federal and Indian oil and gas leases. prices, increased economic activity in receive from the recovery and sale of We estimate the following incremental certain regions of the country, and natural gas and the environmental changes in production, noting the greater royalty revenues for Federal, benefits of reducing the amount of representative share of the total U.S. State, and tribal governments. methane (a potent GHG) and other air production in 2015 for context. We At the same time, the American released into the atmosphere. estimate additional natural gas public has not benefited from the full As with the estimated costs, we expect production, ranging from 9–41 Bcf per benefits on an annual basis. The BLM potential of this increased production, year (representing 0.03–0.15 percent of as the increase in oil production has estimates that this rule would result in the total U.S. production), and a monetized benefits of $209–$403 been accompanied by significant and reduction in crude oil production growing quantities of wasted natural million per year (using model averages ranging from 0.0–3.2 million bbl per of the social cost of methane with a 3 gas. Between 2009 and 2015, operators year (representing 0–0.07 percent of the on BLM-administered leases wasted percent discount rate).30 We estimate total U.S. production). We also expect enough natural gas to serve over 6.2 that the final rule would reduce 0.8 Bcf of gas to be combusted on-site million homes for 1 year, according to methane emissions by 175,000–180,000 that would have otherwise been vented. data reported to ONRR.36 tpy, roughly a 35% reduction in Combined, the rule will reduce venting methane emissions from the 2014 by about 35 and reduce flaring by 49%, A. Impacts of Waste and Loss of Gas estimates, and which we estimate to be depending on the year.33 worth $189–$247 million per year (this Since the relative changes in As explained in the proposed rule social benefit is included in the production are expected to be small, we preamble section IV.B, natural gas is a monetized benefit above).31 do not expect that the final rule will limited and valuable public resource, Adoption of the final rule will also significantly impact the price, supply, which is critical to U.S. energy security have numerous ancillary benefits. These or distribution of energy. and national security. Natural gas also include improved quality of life for provides significant economic benefits e. Royalties nearby residents, who note that flares as an energy source for electricity are noisy and unsightly at night; We estimate that this final rule will generation and industrial and reduced release of VOCs, including produce additional royalties of $3–$10 residential use, and as a feedstock for benzene and other hazardous air million per year (discounted at 7 manufacturing. Royalty payments on pollutants; and reduced production of percent) or $3–$14 million per year natural gas sales provide Federal, State, 34 nitrogen oxides (NOx) and particulate (discounted at 3 percent). and tribal governments with over $3 matter, which can cause respiratory and III. Background billion in revenues each year. heart problems. The BLM’s onshore oil and , flaring, and leaks of natural c. Net Benefits management program is a major gas from production on BLM- administered sites waste this limited Overall, the BLM estimates that the contributor to the nation’s oil and gas and deprive the benefits of this rule outweigh its costs production. The BLM manages more American public and tribes of the by a significant margin. The BLM than 245 million acres of land and 700 security and economic benefits that this expects net benefits ranging from $46– million acres of subsurface estate, resource, which belongs to the public $199 million per year (using a 7 percent comprising nearly a third of the nation’s and tribes, would otherwise provide. In discount rate to annualize capital costs) mineral estate. Domestic production addition to the economic and security or $50–$204 million per year (using a 3 from over 96,000 Federal onshore oil losses, the waste of natural gas also percent discount rate to annualize and gas wells accounts for 11 percent of capital costs). Specifically, assuming a 7 the Nation’s natural gas supply and 5 imposes public health and percent discount rate to annualize percent of its oil supply. In FY 2015, the environmental costs, in the form of air capital costs, we estimate the following ONRR reported that operators produced pollution, such as smog and regional annual net benefits in selected years: 183.4 million bbl of oil, 2.6 Tcf of haze; emissions of hazardous air • $99–$115 million in 2018; natural gas, and 3.3 billion gallons of pollutants, some of which are NGLs from onshore Federal and Indian carcinogenic; and emissions of methane, • $51–$93 million in 2022; and oil and gas leases. The production value a powerful contributor to global • $120–$189 million in 2026. of this oil and gas exceeded $20.9 warming and a primary target for Assuming a 3 percent discount rate to billion and generated over $2.3 billion reduction under the President’s Climate annualize capital costs, we estimate the in royalties.35 Action Plan.37 Absent stronger annual net benefits would be: • Over the past decade, the United provisions to reduce natural gas waste $103–$119 million in 2018; States has experienced a dramatic • on Federal lands, the avoidable loss of $55–$97 million in 2022; and increase in oil and natural gas gas will continue to threaten climate • 32 $125–$193 million in 2026. production due to technological 36 Office of Natural Resources Revenue, Statistical 29 RIA at 129. These estimates rely on 2014 33 RIA at 5. Information, http://statistics.onrr.gov/ company data, and use a 7 percent discount rate. 34 RIA at 143. ReportTool.aspx using Sales Year–FY 2015–Federal 30 RIA at 5. 35 Office of Natural Resources Revenue, Statistical Onshore—All States Sales Value and Revenue for 31 RIA at 110. We also estimate that the final rule Information, http://statistics.onrr.gov/ Oil, NGL, and Gas products as of September 7, would have an incidental benefit of reducing VOC ReportTool.aspx using Sales Year–FY 2015–Federal 2016. emissions by 250,000–267,000 tpy (this benefit is Onshore–All States Sales Value and Revenue for 37 The President’s Climate Action Plan (June not monetized in our calculations). Oil, NGL, and Gas products as of September 21, 2013) (https://www.whitehouse.gov/sites/default/ 32 RIA at 111. 2016. files/image/president27sclimateactionplan.pdf).

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stability and undermine respiratory and types of losses, such as most leaks, are decreased by 86 percent.45 The cardiovascular health. not reported at all). The EPA data are reduction in flaring at gas wells based on emissions factors that are coincides with the adoption of EPA 40 B. Purpose of the Rule representative rather than actual.40 Even CFR part 60 subpart OOOO (‘‘subpart 1. Overview though data in these programs have OOOO’’) air pollution requirements, The purpose of this rule is to reduce recently been updated, they are still which limit emissions from gas wells waste of natural gas owned by the incomplete, and recent studies suggest hydraulically fractured after August 23, American public and tribes, which actual emissions may be somewhat, or 2011.46 occurs during the oil and gas production even substantially, higher than the Another indicator of the increase of 41 process. While the BLM already emissions factors suggest. Thus, we flaring on Federal and Indian lands is regulates venting and flaring of natural believe that the estimates of losses used the increased number of applications to gas during oil and gas production on to support today’s rule, while vent or flare royalty-free that the BLM Federal and Indian (other than Osage substantial, are conservative. For has received from operators. In 2005, Tribe) leases, the current requirements purposes of this final rule, ONRR the BLM received just 50 applications to are over 30 years old and do not reflect provided the BLM with data evidencing vent or flare gas. In 2011, the BLM modern technologies, practices, and 7 years of vented and flared volumes received 622 applications, and this understanding of the harms caused by reported on the OGOR-Bs. The data doubled again within 3 years to 1,248 venting, flaring, and leaks of gas. analyzed included gas flared and vented applications in 2014. BLM field offices Oversight reviews have also suggested from both oil and gas wells from 2009 indicate that most of the additional that the current requirements are through 2015. During this period, applications were for flaring of insufficiently clear in their directives, operators reported that they vented or associated gas from oil wells in New which complicates implementation for flared a total of 462 Bcf of natural gas, Mexico, Montana, the Dakotas, and, to BLM staff and creates uncertainty for oil or about 2.7 percent of the 16.8 Tcf of a lesser extent, Wyoming. natural gas that was produced from and gas operators. Today’s rule updates b. Recent Studies of Venting and Leaks the existing provisions to direct BLM-administered leases from 2009 42 operators to take reasonable and through 2015. This is enough natural The proposed rule preamble section common-sense measures to prohibit gas to supply over 6.2 million IV.H.2 discussed recent efforts to routine venting, minimize the quantities households—or every household in the improve our understanding of the of natural gas routinely flared, reduce States of Colorado, Montana, New quantities of natural gas lost through natural gas losses through leaks, and Mexico, North Dakota, South Dakota, venting and leaks during the production 43 deploy up-to-date technology to reduce Utah, and Wyoming—for 1 year. process, and it highlighted a number of routine losses from production These data are reported by operators recent studies. These include both equipment. on BLM-administered leases, but the ‘‘bottom up’’ studies, which attempt to production is actually derived from improve the accuracy and 2. Issues Addressed by Rule lands with various ownership patterns. understanding of current estimates by a. Large Quantities of Natural Gas Are Of the vented and flared gas reported to conducting site-specific intensive Wasted on Federal and Indian Leases ONRR, 15 percent came from wells measurements of losses during the extracting only Federal minerals; 8.8 production process, and ‘‘top down’’ As explained in the proposed rule percent came from wells extracting only preamble section IV.H.1, while there is studies, which use aircraft and tracers to Indian minerals, and 76.2 percent from quantify levels some uncertainty regarding the total wells extracting minerals with mixed volume of natural gas lost during and attribute them to oil and gas ownership (some combination of production activities. Several of these production on public and tribal lands, Federal, Indian, fee (private) and State the volume is unacceptably high. recent studies by government, industry, minerals). and environmental organizations There is no single definitive source Finally, the BLM notes that available suggest that emission levels are higher for the total volume of natural gas losses data suggest the problem of natural gas than those estimated using the DOI and from oil and gas production on Federal loss on BLM-administered leases is EPA data, and in particular, some Lands. BLM efforts to estimate the total growing. The total amounts of annual studies highlighted emissions levels two volume are informed by the Oil and Gas reported flaring from Federal and Indian to three times higher than those based Operations Report Part B (OGOR–B) leases increased by over 1000 percent on EPA data. They also provided filed with the ONRR, the EPA from 2009 through 2015.44 During this 38 information on the distribution of gas Greenhouse Gas Inventory, data from period, reported volumes of flared oil- the EPA Greenhouse Gas Reporting well gas increased by 318 percent, while leaks, which are heavily concentrated at 39 Program, and numerous studies reported volumes of flared gas-well gas ‘‘super-emitter’’ facilities, and discussed in the preamble to the highlighted the challenges in predicting proposed rule and provided by 40 EPA, 2016 GHG Inventory Report: 1990–2014. which sites will experience super- commenters. Each data set, however, Available at https://www3.epa.gov/climatechange/ emitter conditions. Commenters on the has limitations. The ONRR data rely on Downloads/ghgemissions/US-GHG-Inventory-2016- proposed rule pointed to additional self-reporting, and there is substantial Main-Text.pdf. studies, some issued after the proposal, 41 Envt’l Def. Fund, New EPA Stats Confirm: Oil variation in the types of losses that & Gas Methane Emissions Far Exceed Prior that further demonstrate significant gas different operators report (and certain Estimates (Apr. 15, 2016), https://www.edf.org/ loss, the potential to reduce such waste media/new-epa-stats-confirm-oilgas-methane- through various technologies and 38 U.S. EPA, (U.S. Greenhouse Gas Inventory emissions-far-exceed-prior-estimates. practices, and the need for widespread 42 Report: 1990–2014), available at https:// BLM analysis of ONRR OGOR–B data provided leak detection and repair. www.epa.gov/sites/production/files/2016-04/ for 2009–2015. documents/us-ghg-inventory-2016-main-text.pdf 43 Using U.S. Energy Information Administration (‘‘2016 GHG Inventory’’). Natural Gas Consumption by End Use for 2015 45 BLM query of AFMSS database for the number 39 U.S. EPA, Greenhouse Gas Reporting Program; found at http://www.eia.gov/dnav/ng/ng_cons_ of Flaring Sundry Notices filed on Federal and and Natural Gas Systems. Available at sum_a_EPG0_vrs_mmcf_a.htm. Indian lands between 2009 and 2015 on November https://www.epa.gov/ghgreporting/ghgrp- 44 BLM analysis of ONRR OGOR–B data provided 4, 2011. petroleum-and-natural-gas-systems. for 2009–2015. 46 79 FR 49490 (Aug.16, 2012).

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Commenters pointed to both bottom conducted by scientists from NOAA and In 2015, a team of scientists at up and top down studies that suggest the Cooperative Institute for Research in Colorado State University published BLM’s estimate of natural gas waste is Environmental Sciences at the studies based on direct measurements of conservative. For example, EPA’s 2016 University of Colorado, Boulder. The emissions from 114 gathering facilities GHG Inventory was released in April study relied on the largest isotopic at sixteen different processing plants. 2016 (after BLM issued its proposed methane source signature database ever The study found that 30 percent of rule), and provides estimates of methane assembled to estimate total global facilities were responsible for loss from the oil and gas sector that are methane emissions and identify the approximately 80 percent of the venting. significantly greater than previous sources of emissions. It finds that Substantial venting occurred at liquid estimates.47 EPA updated its method for methane emissions from storage tanks at approximately 20 estimating emissions using the latest production are 20% to 60% greater than percent of the facilities where emission peer-reviewed science published over previous estimates, and that they rates were four times the average rate. the last several years. The data also represent 20% to 25% of global methane Moreover, the high emitting facilities revealed that emissions had grown by emissions. The study also highlights were generally capable of immediate more than 10 percent between 2010 and that methane emissions by microbial emission reductions through operating 2014. sources (e.g., cows, agriculture, adjustments, such as adjusting the Commenters also referenced a 2013 landfills, and wetlands) are responsible operating pressure of the separation top-down study led by the National for 58% to 67% of total methane equipment.51 Oceanic and Atmospheric emissions each year, and that these In 2012, the City of Fort Worth, Texas, Administration (NOAA) that estimated sources drove most of the global sponsored a study of 375 oil and gas emissions from an oil and natural gas increase in methane emissions observed production facilities. It found that thief production field in Uintah County, between 2007 and 2013. Thus, the study hatches were the largest source, and Utah, using atmospheric measurements affirms the potential for methane pneumatic controllers were the most in a mass balance approach. The mitigation from fossil fuel production, frequent source, of fugitive emissions at measurements, published in while indicating that significant further well pads and compressor stations. Geophysical Research Letters, suggested reductions may be available from These leaks were often due to operator an emission rate between 6.2 and 11.7 expanding mitigation efforts to other error or inadequate maintenance.52 percent of production, allowing for sectors as well. Commenters also pointed to the uncertainties in gas composition and gas There have also been recent and largely random nature of significant production.48 This is significantly ongoing studies of so-called ‘‘super- leaks. A recent study, authored by Lyon higher than estimates from bottom up emitters,’’ which account for a et al., used optical gas imaging to survey inventories, such as the 1.4 percent of disproportionate quantity of the losses. 8,220 oil and gas well pads through production assumed in the 2012 EPA One of these is a study by Zavala et al., aerial surveys. The study found only a Greenhouse Gas Inventory, and further published on July 7, 2015, in small correlation between the suggests that natural gas waste is likely Environmental Science and Technology. probability of detection of a leak and underestimated in commonly cited The study used data collected from gas site characteristics, such as well count, inventories. wells in the Barnett Shale region in well age, gas production, oil production, In meetings pursuant to E.O. 12866, Texas to identify unusually high and water production. The stochastic stakeholders referenced a new study emitters—that is, emissions outliers—by and diverse nature of the sites with published in Nature on October 5, 2016, focusing on a site’s absolute methane leaks, along with the level of waste entitled ‘‘Upward revision of global emissions divided by production rate. observed, provides further support for fossil fuel methane emissions based on The study referred to this metric as the broadly applicable leak detection and isotope database.’’ 49 The research was proportional loss rate, and demonstrated repair programs.53 that sites with ‘‘high proportional loss Both the Zavala and Lyon studies 47 EPA, U.S. Greenhouse Gas Inventory Report: rates have excess emissions resulting observed that leak rates are not strongly 1990–2014 at 3–69, Table 3–46 (2016), available at from abnormal or otherwise avoidable correlated with well production rates— https://www.epa.gov/sites/production/files/2016- 04/documents/us-ghg-inventory-2016-main-text.pdf operating conditions such as improperly that is, higher and lower producing (‘‘2016 GHG Inventory’’); EPA,U.S. Greenhouse Gas functioning equipment.’’ The study then wells can both have significant levels of Inventory Report: 1990–2013 at 3–70, Table 3-44 concluded that these sources’ natural gas waste. Specifically, the (2016), available at https://www.epa.gov/sites/ Zavala study found small producing production/files/2016-03/documents/us-ghg- ‘‘reduction potential’’—that is, their inventory-2015-main-text.pdf (‘‘2015 GHG ability to reduce their losses—is likely sites (10–100 Mcf/day) were twice as Inventory’’). See also Envt’l Def. Fund, New EPA greater than that suggested by emission- likely as those sites an order of Stats Confirm: Oil & Gas Methane Emissions Far factor based estimates. The study also magnitude larger (100–1,000 Mcf/day) Exceed Prior Estimates (Apr. 15, 2016), https:// to be among the 5% of sites with the www.edf.org/media/new-epa-stats-confirm-oilgas- found that the losses and abnormal methane-emissions-far-exceed-prior-estimates; A.R. operating conditions that characterize Brandt et al., Methane Leaks from North American these super-emitters are not specific to Application to Natural Gas Production Sites,’’ Natural Gas Systems, 343 Science 733 (2014), a given set or type of sources, but can Environ. Sci. Technol., 49, at 8167–8174 (‘‘Zavala- available at http://www.novim.org/images/pdf/ Araiza (2015)’’), available at http://pubs.acs.org/ ScienceMethane.02.14.14.pdf; Gina McCarthy, and do occur at different sources over doi/abs/10.1021/acs.est.5b00133. 50 Remarks on Climate Action at CERA in Houston, time. 51 Mitchell, A.L., et al, (2015) ‘‘Measurements of Texas (Feb. 24, 2016), available at https://yosemite. Methane Emissions from Natural Gas Gathering epa.gov/opa/admpress.nsf/8d49f7ad4bbcf4ef85257 Isotope Database.’’ Nature, 88 Vol. 538. (Oct. 5, Facilities and Processing Plants,’’ Environ. Sci. 3590040b7f6/5c432a7068e191e985257f630054fea8 2016) (http://www.nature.com/nature/journal/v538/ Technol, 2015, 49 (5), pp 3219–3227, available at !OpenDocument. n7623/full/nature19797.html); U.S. Department of http://pubs.acs.org/doi/abs/10.1021/es5052809. 48 Anna Karion et al., Methane Emissions Commerce, National Oceanic and Atmospheric 52 Eastern Research Group and Sage Estimate from Airborne Measurements Over a Administration. Study Finds Fossil Fuel Methane Environmental Consulting, City of Fort Worth Western United States Natural Gas Field, 40, Emissions Greater Than Previously Expected (2016) Natural Gas Air Quality Study (Final Report) 3–99 Geophysical Research Letters 4393, 4393 (2013) (http://www.noaa.gov/media-release/study-finds- (2011), available at http://fortworthtexas.gov/up (http://onlinelibrary.wiley.com/doi/10.1002/ fossil-fuel-methane-emissions-greater-than- loadedFiles/Gas_Wells/AirQualityStudy_final.pdf. grl.50811/full). previously-estimated). 53 David R. Lyon et. al, Aerial Surveys of Elevated 49 Schwietzke, Stefan et al. ‘‘Upward Revision of 50 Zavala-Araiza, et al., (2015) ‘‘Toward a Emissions from Oil and Gas Global Fossil Fuel Methane Emissions Based on Function Definition of Methane Super-Emitters: Production Sites, 1 Envtl. Sci. Tech. (2016)

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highest emissions. The Lyon study directional drilling. Technologies for bearing, but have not focused enough on found that well pad characteristics, such capturing and using gas on-site, providing operators clear guidance on as oil production levels, could only detecting leaks, powering equipment, how to determine, account for, and collectively explain about 14% of the controlling vapors from storage vessels, report the volumes of natural gas that variation in observed emissions. While removing liquids from gas wells, and are not royalty bearing. The GAO a statistically significant correlation many other aspects of the production suggested that lack of specific guidance between size and leaks is observed, both process have also advanced. Not in these areas has resulted in substantial studies note that it is a weak linear surprisingly, NTL–4A neither reflects variation in how operators obtain and correlation and that leak occurrence is today’s best practices and advanced report the data, and may result in largely stochastic. The Lyon study technologies, nor is particularly inaccuracy in the DOI’s data on natural found that over 15 percent of the high- effective in minimizing waste of public gas emissions. The GAO recommended emitting sites detected in its survey minerals, as the previously described that the BLM provide operators with were low production sites, producing 15 data and studies show. In addition, as specific instructions regarding how to barrel of oil equivalent (BOE) per day or discussed in the preamble to the estimate natural gas emissions, which less.54 proposed rule, ambiguities have arisen the GAO suggests would improve Another recent study by the Colorado regarding how NTL–4A is interpreted emissions data and better ensure that, Air Pollution Control Division surveyed and implemented by various BLM when appropriate, royalties are oil and gas wells over two years using offices and industry entities. There is a collected on these lost quantities of optical gas imaging. The research compelling need to update these natural gas. The GAO also addressed revealed a significant number of leaks, requirements to make them clearer, recommendations to the ONRR that are but also highlighted that it is possible to more effective, and reflective of modern closely related to provisions of this rule. achieve immediate reduction or technologies and practices. For example, the GAO recommended that the ONRR provide additional minimization of waste from production d. Concerns Identified Through guidance on how to report royalty-free facilities with timely identification and Oversight repair of leaks. The survey spanned and royalty-bearing flaring, and how to from July 2013 through June of 2015 and External oversight reviews strongly report unreported or underreported covered over 4,400 facilities. The optical support the BLM’s conclusion that the emissions from sources such as tanks. gas imaging technology identified gas current NTL–4A requirements need to Some of the changes made in today’s lost through leaks or vents at more than be updated, and many of the changes rule will help clarify the regulatory 25 percent of the facilities, with the made in this rule implement requirements that relate to some of these majority of these leaks or vents recommendations from relevant reporting concerns. occurring at storage tanks.55 oversight reviews. As discussed in the proposed rule, key oversight reviews 3. Relationship to Other Federal, State, c. Existing BLM Regulations Need To Be that influenced the development of this and Industry Activities Updated rule include: (1) A December 2007 Understanding that other Federal, As discussed in detail in the proposed Royalty Policy Committee (RPC) report, State and tribal rules also apply to rule preamble at section IV.E, venting, Mineral Revenue Collection from aspects of onshore oil and gas flaring, and royalty-free uses of oil and Federal and Indian Lands and the Outer production, the BLM has aimed to natural gas on BLM-administered leases Continental Shelf, which recommended ensure that this rule will complement are currently governed by NTL–4A. This that the BLM update its rules and other regulatory requirements. As noted ‘‘Notice to Lessees’’ was issued by the identified many specific actions to earlier, for example, the EPA issued U.S. Geological Survey on December 27, improve production accountability; (2) a rules in 2012 and May of 2016 to control 1979, before the BLM assumed oversight March 2010 report by the OIG, BLM and emissions of methane and VOCs from responsibility for onshore oil and gas MMS Beneficial Use Deductions, which new, modified and reconstructed oil development and production. NTL–4A recommended that the BLM clarify its and gas wells and production places limitations on venting or flaring requirements for royalty-free use of equipment, and many States and tribes of gas-well or oil-well gas, unless natural gas; and (3) an October 2010 also regulate aspects of the production approved in writing by BLM. NTL–4A GAO report, Federal Oil and Gas process to address safety, waste, also specifies the circumstances under Leases—Opportunities Exist to Capture production accountability, and/or air which an operator owes royalties on oil Vented and Flared Gas, Which Would quality concerns. or gas that is lost from a lease. Increase Royalty Payments and Reduce In updating the BLM regulations, the In the past 37 years since NTL–4A Greenhouse Gases, which recommended BLM carefully considered and was issued, oil and gas production that the BLM update its regulations to accounted for these potentially technologies and practices have take advantage of opportunities to overlapping regimes. Thus, to the advanced considerably, particularly capture economically recoverable maximum extent possible, today’s rule with the development of modern natural gas using available technologies. aligns its requirements with similar hydraulic fracturing techniques and In July 2016, the GAO issued another requirements adopted by the EPA or the report relevant to this rule. The 2016 States, exempts equipment and 54 David R. Lyon et. al, Aerial Surveys of Elevated report entitled, ‘‘OIL AND GAS— processes covered by EPA requirements, Hydrocarbon Emissions from Oil and Gas Interior Could Do More to Account for and authorizes the BLM to grant Production Sites, 1 Envtl. Sci. Tech. (2016) and Manage Natural Gas Emissions,’’ variances from particular rule available at http://pubs.acs.org/doi/abs/10.1021/ reviewed the DOI’s provisions to provisions if a petitioner State or tribe acs.est.6b00705. See supporting information ‘‘Site- level parameter data for well pads in the surveyed account for and manage natural gas can show that a State, local, or tribal areas and basins’’ file columns M and N in the emissions. The GAO found that DOI requirement is at least as effective as the ‘‘Surveyed Well Pads’’ worksheet. agencies, including the BLM and ONRR, corresponding provision of this rule. 55 Colorado Department of Public Health and have historically focused on The BLM is also committed to working Environment Air Pollution Control Division Colorado Optical Gas Imaging Infrared Camera Pilot determining the volume of natural gas with the EPA to ensure that any future Project: Final Assessment July 11, 2016 Author: production and accounting for the EPA regulations align to the extent Tim Taylor percent of that volume that is royalty- possible with the BLM requirements. To

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the extent that additional State or tribal that are particularly relevant to this reconstructed equipment and activity in regulations are adopted in the future, rulemaking. the oil and gas production sector not the State and tribal variance provisions addressed in the subpart OOOO a. EPA Regulations in section 3179.401 provide a standards, such as hydraulically mechanism for the BLM to approve The EPA regulates air pollution from fractured oil well completions, compliance with those regulations in oil and gas production, and since pneumatic pumps, and fugitive lieu of the BLM regulations, where the measures to reduce emissions tend to emissions from well sites and State or tribal regulations meet the limit releases of natural gas, the EPA’s compressor stations. The final 40 CFR criteria for a variance. air pollution regulations to reduce subpart OOOOa rule includes several As noted earlier, even though EPA, emissions from the oil and gas sector changes from the EPA’s proposed rule State, and tribal requirements address have the co-benefit of reducing waste of that are particularly noteworthy with some gas waste, there is still a clear natural gas and increasing gas capture. respect to the BLM’s rulemaking, need for this rule. For one thing, the BLM very carefully coordinated the including: (1) It establishes a fixed semi- BLM has independent legal and waste prevention requirements under annual schedule for monitoring leaks proprietary responsibilities to prevent today’s rule with EPA requirements from well sites; (2) it does not adopt a waste in the production of Federal and applicable to some of the same sources, proposed exemption from the LDAR tribal minerals, as well as to ensure the to minimize compliance burdens for requirements for low-production wells; safe, responsible, and environmentally operators and to avoid unnecessary and (3) it does not adopt proposed protective use of BLM-managed lands duplication. requirements to limit emissions from and resources. This rule will update the As explained in section IV.I.3 of the pneumatic piston pumps. BLM’s decades-old venting and flaring proposed rule preamble, the EPA On May 12, 2016, EPA also requirements, and represents an adopted new source performance announced the availability of Control important element of BLM’s larger effort standards (NSPS) in 2012 (subpart Technique Guidelines (CTGs) to help to ensure that its oil and gas regulations OOOO) that require new, modified, or States reduce VOC emissions from are effective, transparent, and easy to reconstructed sources to limit the existing sources in certain understand and administer, and that the release of VOCs by requiring that nonattainment areas. Although reducing provisions of those regulations operators use ‘‘green completions’’ at methane emissions is not the purpose of adequately account for significant recent hydraulically fractured natural gas CTGs, control of VOC emissions also technological advances in the industry. wells.56 The EPA’s NSPS also imposed results in co-control of methane The BLM also notes that this requirements at gas processing plants emissions. These CTGs identify many of regulation covers a range of sources and and boosting stations.57 the same types of measures required by activities that are not adequately On September 18, 2015, EPA the OOOOa standards, but the addressed by existing BLM, State, or proposed NSPS standards that would guidelines are not legally binding. tribal regulations. Further, EPA update the 2012 standards to limit Rather, the CTGs are a set of regulations cover only new, modified, methane in addition to VOCs, as recommendations that State and local and reconstructed sources, not the many described in the BLM proposed rule, to air pollution control agencies must existing and unmodified sources on be codified in proposed 40 CFR part 60 consider when evaluating what they BLM-administered leases. EPA subpart OOOOa.58 This rule also will identify as Reasonably Available regulations also do not address flaring proposed to limit methane and VOC Control Technology (RACT) for existing or activities such as liquids unloading. emissions from additional sources not sources covered under State ozone Finally, State and tribal regulations are covered under the 2012 subpart OOOO nonattainment plans to implement effective only within the jurisdiction of rule. EPA finalized 40 CFR part 60 Clean Air Act requirements, known as the relevant State or tribe, and State and subpart OOOOa on May 12, 2016, after State Implementation Plans (SIPs). tribal regulations do not consistently receiving over 900,000 public comments States are only required to include address all the sources of waste BLM and holding three public hearings, and RACT measures in their SIPs for ozone seeks to prevent via this rule. Indeed, no the rule went into effect in August 2016. nonattainment areas whose air quality State or tribe has requirements covering As with the subpart OOOO standards, levels violate the Clean Air Act air all the sources of waste addressed by subpart OOOOa applies only to new, quality standard for ozone and are this rule. modified, or reconstructed sources, and classified as moderate nonattainment or In the proposed rule preamble section not to existing equipment and higher.60 In October of 2015, EPA IV.I.2., the BLM also discussed the operations. The final OOOOa rule revised the health-based ambient air commendable efforts that some oil and regulates greenhouse gases through quality standard for ozone pollution to gas operators have made to reduce waste limits on methane emissions that 70 parts per billion. The changes to SIPs of gas through venting, flaring, and owners and operators can meet using required to address that pollution would leaks. While steps in the right direction, readily available and cost-effective be due to EPA within two years after the these voluntary efforts are insufficient technologies.59 It also requires leak ozone classifications are published in by themselves, given the large and detection and repair at new, modified, the Federal Register, which is projected growing volumes of waste. Moreover, and reconstructed sources, and it covers to be no later than Jan. 21, 2021.61 It for the one specific activity area for additional new, modified, and appears that few, if any, areas with which industry has identified a significant Federal or Indian oil and gas reduction in gas losses over the past few 56 79 FR 49490, August 16, 2012. production are likely to be classified as years—well completions at 57 Subpart OOOO imposed emission standards for moderate nonattainment or above for hydraulically fractured gas wells—the pneumatic controllers, centrifugal compressors and the most recent ozone standard. decreases appear to be largely driven by storage vessels, and required work practices for Moreover, even if some areas with the adoption of the EPA subpart OOOO reciprocating compressors and equipment leaks at requirements for green completions at gas processing plants. Subpart OOOO also imposed a emission standard for sweetening 60 I.e., nonattainment areas designated those wells. units at gas processing plants. ‘‘moderate’’ or above. The following sections provide a brief 58 80 FR 56593, Sept. 18, 2015. 61 These are the attainment dates for areas overview of EPA and State regulations 59 81 FR 35823, June 3, 2016. designated as moderate nonattainment or above.

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significant Federal or Indian oil and gas determined that it is necessary and The rules would limit the use of production are identified as having prudent to update and finalize this ; however, if a combustion ozone pollution problems, the changes regulation at this time. control device must be used, the rules to SIPs required to address that b. State Regulations would require the use of a low- pollution would not likely be due to emissions incinerator. In January 2016, EPA for a number of years. In developing this rule, the BLM the Pennsylvania Department of The EPA has also taken the first steps consulted with State regulators and Environmental Protection also to gather information to promulgate reviewed analogous State requirements announced that it would pursue an regulations that would require related to waste of oil and gas resources. enhanced strategy for reducing methane subsequent State regulation of existing Specifically, the BLM reviewed emissions.68 Importantly, though, sources under Clean Air Act (CAA) requirements from Alaska, California, neither of these proposed regimes nor section 111(d). When the EPA Colorado, Montana, North Dakota, Ohio, any existing State regimes cover the full establishes NSPS for new sources in a Pennsylvania, Utah, and Wyoming. suite of oil and gas activities addressed particular source category, as it did for Most of these State requirements were by this rule. the oil and gas sector in its OOOOa discussed in the preamble to the regulations promulgated in May 2016, proposed rule, which also explained C. Legal Authority the EPA is also required, under CAA that these State requirements, and the section 111(d)(1), to prescribe outcomes they produce, vary widely.65 Pursuant to a delegation of Secretarial regulations for States to submit plans As noted in the preamble to the authority, the BLM is authorized to establishing emissions performance proposed rule, of the States with regulate oil and gas activities on Federal standards for existing sources in that extensive oil and gas operations on and Indian lands under a variety of source category. Acting under this CAA BLM-administered leases, only one has statutes, including the MLA, the mandate, in March of 2016 the EPA comprehensive requirements to reduce MLAAL, FOGRMA, FLPMA, the IMLA, announced its intention to regulate flaring, and only one has comprehensive the IMDA, and the Act of March 3, existing oil and gas sources for methane statewide requirements to control losses 1909.69 These statutes authorize the and VOC emissions.62 To begin this from venting and leaks.66 Furthermore, Secretary of the Interior to promulgate process, the EPA issued a draft State regulations do not apply to BLM- such rules and regulations as may be information collection request (ICR) on administered leases on Indian lands, necessary to carry out the statutes’ May 12, 2016, and a second draft ICR on and States do not have a statutory various purposes.70 September 23, 2016.63 Once the ICR is mandate or trust responsibility to The MLA rests on the fundamental approved by the Office of Management reduce the waste of Federal and Indian principle that the public should benefit and Budget, the ICR is expected to oil and gas. Finally, because State laws from mineral production on public gather a broad range of information on and regulations are subject to change, lands.71 A primary instrument for the oil and gas industry regarding BLM reliance on State standards risks public benefit is the requirement that a emission control efficacy, costs, and additional waste of public resources and lessee return a portion of the proceeds timing requirements.64 The EPA then adverse environmental impacts to from production to the public through expects to use this information in Federal and Indian lands should the the payment of royalties to Federal, developing regulations to guide State State standards change to allow for State, and/or tribal governments. For plans to reduce emissions from existing additional waste and environmental competitively issued leases, the MLA sources. This rulemaking would then be impacts. There is therefore a need for requires the payment of a royalty ‘‘at a followed by State development and uniform, modern waste reduction rate not less than 12.5 percent in adoption of State plans containing standards for oil and gas operations on amount or value of the production enforceable performance standards for public and Indian lands across the removed or sold from the lease’’; for sources, State plan approvals by EPA, country. Nonetheless, the BLM did look non-competitive leases, the MLA sets and subsequent implementation by to some of the most effective State the royalty ‘‘at a rate of 12.5 percent in industry to meet compliance deadlines approaches as models. In particular, we amount or value of the production established in the State plans. Given the have drawn on approaches that length of this process and the Colorado, Wyoming and North Dakota 68 Pennsylvania Department of Environmental uncertainty regarding the final adopted to address rising rates of Protection, A Pennsylvania Framework of Actions outcomes, and in light of the BLM’s flaring, waste of minerals, and pollution for Methane Reductions from the Oil and Gas independent statutory mandate to impacts in those states. Sector, available at: http://files.dep.state.pa.us/Air/ prevent waste from Federal and Indian The BLM also notes that at least two AirQuality/AQPortalFiles/Methane/ States have recently expressed an intent DEP%20Methane%20Strategy%201-19- oil and gas leases based on information 2016%20PDF.pdf. currently available, the BLM has to further reduce methane emissions 69 Mineral Leasing Act, 30 U.S.C. 188–287; through regulatory action. On February Mineral Leasing Act for Acquired Lands, 30 U.S.C. 62 McCarthy, Gina. ‘‘EPA Taking Steps to Cut 1, 2016, California’s Air Resources 351–360; Federal Oil and Gas Royalty Management Methane Emissions from Existing Oil and Gas Board proposed new rules to reduce Act, 30 U.S.C. 1701–1758; Federal Land Policy and Sources’’. March 10, 2016. Available at https:// emissions of methane through venting Management Act of 1976, 43 U.S.C. 1701–1785; blog.epa.gov/blog/2016/03/epa-taking-steps-to-cut- Indian Mineral Leasing Act of 1938, 25 U.S.C. methane-emissions-from-existing-oil-and-gas- and leaks during oil and gas production, 396a–g; Indian Mineral Development Act of 1982, sources. processing, and storage.67 These 25 U.S.C. 2101–2108; Act of March 3, 1909, 25 63 81 FR 35763 and 81 FR 66692. proposed rules would require the use of U.S.C. 396. 64 On September 23, 2016, EPA issued a second vapor collection systems and the control 70 30 U.S.C. 189 (MLA); 30 U.S.C. 359 (MLAAL); draft ICR, and public comments are due October 31, of vapors with 95 percent efficiency. 30 U.S.C. 1751(a) (FOGRMA); 43 U.S.C. 1740 2016. Once all of the public comments are reviewed (FLPMA); 25 U.S.C. 396d (IMLA); 25 U.S.C. 2107 and incorporated, and the ICR is approved by the (IMDA); 25 U.S.C. 396. Office of Management and Budget, the EPA will 65 81 FR at 6633–34. 71 See, e.g., California Co. v. Udall, 296 F.2d 384, issue a final ICR, using its authority under CAA 66 81 FR at 6636. 388 (D.C. Cir. 1961) (noting that the MLA was Section 114. Industry will have at least 30 days to 67 State of California Air Resources Board Staff ‘‘intended to promote wise development of . . . complete the operator survey and 120 days to Report: Statement of Reasons, available at: http:// natural resources and to obtain for the public a respond to the facility survey. https://www.gpo.gov/ www.arb.ca.gov/cc/oil-gas/ reasonable financial return on assets that ‘belong’ to fdsys/pkg/FR-2016-09-29/pdf/2016-23463.pdf. Oil%20and%20Gas%20ISOR.pdf. the public’’).

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removed or sold from the lease.’’ 72 The phrase that encompasses not just nonrenewable resources . . . .’’ 87 BLM is responsible for specifying conservation of mineral deposits, but Multiple use also requires resources to royalty rates and determining the also preventing environmental harm.78 be managed in a ‘‘harmonious and quantity of produced oil and gas that is The Secretary also may refuse to lease coordinated’’ manner ‘‘without subject to royalties under the terms and lands in order to protect the public’s permanent impairment to the conditions of a Federal lease. interest in other natural resources and productivity of the land and the quality Another important means of ensuring the environment.79 BLM’s regulations of the environment.’’ 88 Significantly, that the public benefits from mineral governing oil and gas operations on the FLPMA admonishes the Secretary to production on public lands is public lands have always required consider ‘‘the relative values of the minimizing and deterring the waste of operators to avoid damaging other resources and not necessarily . . . the oil and gas produced from the Federal natural resources or environmental combination of uses that will give the 80 mineral estate. To this end, the MLA quality. greatest economic return or the greatest requires oil and gas lessees to ‘‘use all The MLA additionally requires oil unit output.’’ 89 reasonable precautions to prevent waste and gas leases to contain ‘‘a provision of oil or gas developed in the land, that such rules for the safety and welfare Finally, the promulgation of this rule . . .’’ 73 The MLA requires lessees to of the miners . . . as may be prescribed helps to meet the Secretary’s statutory exercise ‘‘reasonable diligence, skill, by the Secretary shall be observed . trust responsibilities with respect to the and care’’ in their operations and also . . .’’ 81 This rule helps to ensure safety development of Indian oil and gas requires oil and gas lessees to observe of workers engaged in the production of interests. The Secretary’s management ‘‘such rules . . . for the prevention of oil and gas on Federal and Indian lands and regulation of Indian mineral undue waste as may be prescribed by by requiring, except in special interests carries with it the duty to act [the] Secretary.’’ 74 Lessees are not only circumstances, the combustion of as a trustee for benefit of the Indian responsible for taking measures to natural gas loosed from wells and mineral owners.90 The Congress has prevent waste, but also responsible for equipment during production. directed the Secretary to ‘‘aggressively making royalty payments on wasted oil FLPMA further authorizes BLM to carry out [her] trust responsibility in the and gas when waste does occur. In ‘‘regulate’’ the ‘‘use, occupancy, and administration of Indian oil and gas.’’ 91 FOGRMA, Congress expressly made development’’ of the public lands via In furtherance of her trust obligations, lessees ‘‘liable for royalty payments on ‘‘published rules.’’ 82 FLPMA also the Secretary has delegated regulatory oil or gas lost or wasted from a lease site mandates that the Secretary, ‘‘[i]n authority for administering operations when such loss or waste is due to managing the public lands . . . shall, by on Indian oil and gas leases to the negligence on the part of the operator of regulation or otherwise, take any action BLM,92 which has developed the lease, or due to the failure to comply necessary to prevent unnecessary or specialized expertise through regulating with any rule or regulation, order or undue degradation of the lands.’’ 83 And the production of oil and gas from citation issued under [FOGRMA] or any FLPMA authorizes BLM to ‘‘promulgate public lands administered by the mineral leasing law.’’ 75 rules and regulations to carry out the Department. In choosing from among In addition to ensuring that the public purposes of this Act and of other laws reasonable regulatory alternatives for 84 benefits from oil and gas production applicable to the public lands.’’ Indian mineral development, the BLM is from public lands, the BLM is also FLPMA expressly declares that the BLM obligated to adopt the alternative that is tasked with regulating the physical should balance the need for domestic in the best interest of the tribe and impacts of oil and gas development on sources of minerals against the need to individual Indian mineral owners.93 public lands. The MLA directs the ‘‘protect the quality of scientific, scenic, What is in the best interest of the tribe Secretary to ‘‘regulate all surface- historical, ecological, environmental, air and individual Indian mineral owners is disturbing activities conducted pursuant and atmospheric, water resources, and determined by a consideration of all to any lease’’ and to ‘‘determine archeological values; . . . [and] provide relevant factors, including economic reclamation and other actions as for outdoor recreation and human considerations as well as potential required in the interest of conservation occupancy and use.’’ 85 environmental and social effects.94 The of surface resources.’’ 76 The MLA FLPMA requires the BLM to manage BLM believes that this rule is in the best requires oil and gas leases to include public lands under principles of interest of Indian mineral owners provisions ‘‘for the protection of the multiple use and sustained yield.86 The interests of the United States . . . and statutory definition of ‘‘multiple use’’ because it will prevent unnecessary and for the safeguarding of the public explicitly includes the consideration of excessive losses (‘‘waste’’) of natural gas welfare,’’ which includes lease terms for environmental resources. Multiple use from Indian lands. In so doing, this rule the prevention of environmental is a ‘‘combination of balanced and will help ensure that the extraction of harm.77 The Secretary may suspend diverse resource uses that takes into natural gas from Indian lands results in lease operations ‘‘in the interest of account the long-term needs of future the payment of royalties to Indian conservation of natural resources,’’ a generations for renewable and mineral owners, rather than the waste of

72 30 U.S.C. 226(b)(1)(A) (emphasis added); 30 78 30 U.S.C. 209; Copper Valley Machine Works 87 43 U.S.C. 1702(c). U.S.C. 226(c)(1); see also 30 U.S.C. 352 (applying v. Andrus, 653 F.2d 595, 601 & nn.7–8 (D.C. Cir. 88 43 U.S.C. 1702(c). that requirement to leases on acquired land). The 1981); Hoyl v. Babbitt, 129 F.3d 1377, 1380 (10th 89 43 U.S.C. 1702(c). same royalty provision is included in the lease Cir. 1997); Getty Oil Co. v. Clark, 614 F. Supp. 904, 90 See Woods Petroleum Corp. v. Department of instruments for leases of Indian tribal and allotted 916 (D. Wyo. 1985). Interior, 47 F.3d 1032, 1038 (10th Cir. 1995) (en lands under applicable regulations, although that 79 Udall v. Tallman, 380 U.S. 1, 4 (1965); Duesing banc). rate is set at no less than 162⁄3%, absent approval v. Udall, 350 F.2d 748, 751–52 (1965). 91 30 U.S.C. 1701(a)(4). 80 of the Secretary. 25 CFR 211.41, 212.41. See 43 CFR 3162.5–1 to .5–2 (1983–2014). 92 235 DM 1.1.K. 73 81 30 U.S.C. 187. 30 U.S.C. 225. 93 See Jicarilla Apache Tribe v. Supron Energy 82 74 30 U.S.C. 187. 43 U.S.C. 1732(b). Corp., 728 F.2d 1555, 1567 (10th Cir. 1984) 75 30 U.S.C. 1756. 83 43 U.S.C. 1732(b). (Seymour, J., concurring in part and dissenting in 76 30 U.S.C. 226(g). 84 43 U.S.C. 1740. part), adopted as majority opinion as modified en 77 See Natural Resources Defense Council, Inc. v. 85 43 U.S.C. 1701(a)(8). banc, 782 F.2d 855 (10th Cir. 1986). Berklund, 458 F. Supp. 925, 936 n.17 (D. DC 1978). 86 43 U.S.C. 1702(c), 1732(a). 94 See 25 CFR 211.3.

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the owners’ mineral resources.95 contact persons for further information, In response to the proposed rule and Additionally, the BLM believes tribal and provided an email address for these outreach meetings, the BLM members and individual Indian mineral submitting comments. At the 2014 received approximately 330,000 total owners who live near Indian oil and gas Denver, Colorado, and Washington, DC comment submissions from Federal, development will realize environmental sessions, the tribal and public meetings State, and local governments and benefits as a result of this rule’s were live streamed to allow for the agencies, tribal organizations, industry reductions in flaring and air pollution greatest possible participation by representatives, non-governmental from Indian oil and gas development. interested parties. The tribal outreach organizations, individuals, and other During public comment hearings, the sessions also served as initial stakeholders. Of the approximately BLM heard from a number of tribal consultation with Indian tribes to 330,000 comment submissions, members who raised concerns about the comply with Executive Order 13175, approximately 1,000 were unique impacts of vented and leaked gas on Consultation and Coordination with comments, with the remaining their health, highlighting in particular Indian Tribal Governments. comments coming from mass-mailing increases in ozone pollution and air As part of our pre-proposal outreach campaigns from several organizations. toxics. Tribal members also detailed the efforts, the BLM accepted informal The BLM closely reviewed and analyzed impacts of living near numerous large comments generated as a result of the the comments we received, and made flares, noting the resulting noise and public/tribal outreach sessions through revisions to the proposed rule based on light pollution. The BLM believes that May 30, 2014. A total of 29 unique the information, data, analysis, insights, this rule will help to reduce some of comments were received: 12 from the and viewpoints provided in the these impacts on tribal members. oil and gas industry and trade comments. The final rule reflects the In short, the BLM has the authority to associations, 6 from NGOs representing very extensive input that the BLM manage public and tribal oil and gas 37 organizations, 2 from government gathered from these public meetings, resources to reduce waste and ensure officials or elected representatives, and discussions with States and tribes, and environmentally responsible 9 from private citizens. Two hundred the public comment process. development. In response to the notice and sixty comments from private IV. Summary of Final Rule of proposed rulemaking, the BLM citizens were part of an email campaign. received many comments asserting a Like the proposed rule, the final rule After the proposed rule was published range of different arguments regarding focuses on key areas in the oil and gas on February 8, 2016, we conducted a the BLM’s exercise of its legal authority production process where waste- second series of paired outreach in promulgating this rule. The most prevention actions are most effective meetings, with a tribal meeting each salient of these arguments are addressed and least costly. Specifically, we are morning and a public meeting each later in this preamble, but the BLM did adopting requirements to reduce waste afternoon. We held these meetings at not make any changes to this rule based from the following: Venting or flaring of four locations: Farmington, New Mexico on comments about the BLM’s associated gas from producing oil wells; (February 16, 2016), Oklahoma City, authority. gas leaks from equipment and facilities Oklahoma (February 18, 2016), Denver, located at the well site, as well as from D. Stakeholder Outreach Colorado (March 1, 2016), and compressors located on the lease; In 2014 and again in in 2016, the BLM Dickinson, North Dakota (March 3, operation of high-bleed pneumatic conducted a series of forums to consult 2016). Again, in advance of the tribal controllers and certain pneumatic with tribal governments 96 and solicit outreach sessions, the BLM sent letters pumps; gas emissions from storage stakeholder views to inform the BLM’s to over 200 tribal leaders that have vessels; well maintenance and liquids development of the proposed and final previously expressed interest in oil and unloading; and well drilling and rules. In 2014, the BLM held public gas related matters. These letters completions. Based on the available meetings in Denver, Colorado (March explained generally the proposed rule, data regarding methane emissions and 19, 2014), Albuquerque, New Mexico invited the tribal leaders to attend the the numbers and types of sources of gas (May 7, 2014), Dickinson, North Dakota outreach sessions, provided contact losses from Federal and Indian leases, (May 9, 2014), and Washington, DC persons for further information, and we believe that these aspects of the (May 14, 2014).97 On each of those days, provided an email address for production process offer the best the BLM held a tribal outreach session submitting comments. The public opportunities for reducing waste. in the morning and a public outreach outreach sessions included a telephone Like the proposed rule, the final rule session in the afternoon. In advance of conference call-in number to allow requires operators to flare gas rather the tribal outreach sessions, the BLM members of the public who could not than vent it, except in specified sent letters to over 200 tribal leaders attend in person to listen live to the circumstances, such as emergencies, the that have previously expressed interest proceedings. routine operation of certain equipment, in oil and gas related matters. These In addition, the BLM conducted and when flaring is technically letters explained generally the proposed outreach to States with extensive oil and infeasible. The final rule then requires rulemaking, invited the tribal leaders to gas production on BLM-administered operators to avoid wasteful flaring of gas attend the outreach sessions, provided leases. Prior to the proposal, the BLM by capturing for sale or using on-site reviewed State regulations and specified percentages of their adjusted 95 The remainder of this preamble refers to this guidance, and contacted State regulatory total gas production. Beginning one year analysis as the BLM’s determination that, as a result bodies that oversee aspects of oil and from the effective date of the final rule, of its trust obligations, it has an obligation or mandate to reduce waste from Indian lands, just as gas production to discuss their operators must capture 85 percent of it does to reduce waste from BLM-administered requirements and practices. After their adjusted total gas production each Federal Lands. issuing the proposal, the BLM month, and this gradually increases to 96 In developing this rule, the BLM consulted conducted seven online meeting 98 percent by 2026. An operator’s with tribal stakeholders in compliance with 25 sessions with State regulators from adjusted total gas production is based U.S.C. 2107, 512 DM 4, and 512 DM 5. 97 See the BLM oil and gas program’s outreach- Alaska, Colorado, New Mexico, North on the quantity of high pressure gas events page: http://www.blm.gov/wo/st/en/prog/ Dakota, Utah (two meetings), and produced from the operator’s energy/public_events_on_oil. Wyoming. development wells that are in

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production, adjusted to exempt a percentage requirements, any quantities BLM Web site and is part of the rule- specified volume of gas per well. The of flared gas that cause the operator to making record. exempted or ‘‘flaring allowable’’ volume violate the applicable capture A. Venting Prohibition and Capture declines over time. Beginning one year requirements are deemed avoidable Targets from the effective date of the final rule, losses and subject to royalties. operators are allowed to exempt 5,400 In addition, the BLM is finalizing the As discussed in section III.B.2.a of Mcf gas per well per month, and this proposed change to the royalty this preamble, routine venting and quantity gradually declines to 750 Mcf provisions, to align the provisions with flaring of gas from oil or gas wells waste by 2025. the BLM’s statutory authority and allow significant volumes of natural gas. In With respect to leaks, the final rule the BLM to set royalties for competitive 2014, for example, operators vented largely follows the proposed rule, leases at or above 12.5 percent. At this about 30 Bcf and flared at least 81 Bcf except that the required frequency of time, however, the BLM is not setting from BLM-administered leases—4.1 inspection is set at two times a year, and the royalty rate above 12.5 percent in percent of the total production from does not vary according to the number this regulation. those leases in that year, and sufficient of leaks found. Operators must use Like the proposed rule, the final rule gas to supply nearly 1.5 million optical gas imaging equipment or aligns the requirements of this rule to households with gas for a year.98 The portable analyzers deployed according the extent practicable with EPA and final rule aims to reduce this waste to Method 21, and leaks must be State requirements. It also avoids using a two-pronged approach: A repaired and retested within specified potential regulatory overlap by prohibition on venting, and capture time frames. The final rule clarifies the exempting certain equipment covered targets to reduce flaring. approval process for alternative leak by relevant EPA rules, and deeming the 1. Venting Prohibition detection devices and for operators’ operator’s compliance with relevant individual alternative leak inspection EPA requirements to satisfy the BLM a. Requirements of Final Rule programs. requirements as well. Like the proposed rule, the final rule First, final rule § 3179.6 prohibits includes requirements to update old and The final rule also allows a State or venting from oil and gas wells, except inefficient equipment, and to follow tribe to request a variance from under certain enumerated conditions. best practices to minimize waste particular BLM requirements. If the The circumstances in which venting is through venting. Thus, operators must variance is granted, the BLM has permissible include: When flaring is replace high-bleed pneumatic authority to enforce the specific technically infeasible, such as when the controllers and certain pneumatic provision(s) of the State, local, or tribal gas is not readily combustible or the pumps with less wasteful controllers rule for which the variance was granted, volumes are small; when the gas is and pumps, and capture or flare any instead of the comparable provision(s) vented during normal operation of an high volumes of gas that would of the BLM rule. As clarified in the final on-site, gas-activated pneumatic pump otherwise be vented from tanks. In rule, the BLM may grant a State or tribal or controller; when the gas is vented addition, the final rule requires variance request if the BLM determines from a storage vessel, provided that operators to capture, flare, use, or that the State, local, or tribal rule would § 3179.203 does not require flaring of reinject gas produced during well perform at least as well as the affected the gas; when the gas is vented during drilling and well completions, and it BLM regulatory provision in reducing downhole well maintenance or liquids limits the quantities of gas that may be waste of oil and gas, reducing unloading, provided those operations vented royalty-free during well testing. environmental impacts from venting are conducted in accordance with The final rule continues to address and or flaring of gas, and ensuring the § 3179.204 of the final rule; and when whether and when lost oil or gas is safe and responsible production of oil gas is vented through a leak, provided royalty-bearing, based on whether the and gas. that the operator is complying with the loss is deemed unavoidable (royalty- V. Major Changes From Proposed Rule rule’s LDAR provisions in §§ 3179.301– free) or avoidable (royalty-bearing). 3179.305. Venting is also permissible Relative to the proposed rule, and after Based on information that has become during ‘‘emergencies,’’ which final rule our evaluation of public comments, the available since the proposed rule, and § 3179.105 defines as situations in final rule somewhat expands the list of the extensive material BLM received which the loss of gas is circumstances in which a loss of oil or through public comments, the BLM has ‘‘uncontrollable,’’ and venting or flaring gas is deemed unavoidable (thereby made changes and adjustments to the is ‘‘necessary to avoid risk of an expanding the circumstances under proposed regulatory text. This section of immediate and substantial adverse which the loss of gas is considered the preamble summarizes the most impact on safety, public health, or the royalty-free), and retains the proposed significant of those changes and environment.’’ In addition, venting is approach that all oil or gas that is not addresses some of the key public allowed if necessary to allow facility or specifically defined as unavoidably lost comments. pipeline non-routine maintenance to be is deemed to be avoidably lost and This section only addresses a few performed. Any venting of gas from oil subject to royalties. Unavoidable losses substantive areas in which the BLM or gas wells that does not fit within one include oil or gas lost in emergencies, made significant changes from the of the circumstances listed in § 3179.6 is losses from normal equipment operation proposed rule. Section VI discusses a violation of this rule and could result when the operator is in compliance with significant comments received on other in enforcement actions. In addition, gas all requirements to update equipment, aspects of the rule. The final text of all vented in violation of this rule will be and gas that is flared from wells not of the rule provisions, and changes deemed ‘‘avoidable’’ under final rule connected to a gas pipeline (unless the made in light of all public comments, § 3179.4, and thus subject to royalties operator has not met applicable gas are discussed in Section VII, Section by under final rule § 3179.5. capture requirements). Because the BLM Section. Finally, additional public believes that it is reasonable to expect comments are addressed in the separate 98 BLM analysis of ONRR OGOR–B data provided operators to reduce waste in order to Response to Comments document, for 2009–2015 and EPA GHG Inventory data for comply with the final rule’s capture which is available to the public on the 2014.

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b. Changes From Proposed Rule and pigging routinely, such as monthly, final rule’s approach to flaring has three Significant Comments weekly, or even several times a day. parts: Capture targets, which increase The final venting prohibition largely Under those circumstances, the BLM over time; averaging provisions that tracks proposed section § 3179.6, expects that a prudent operator would allow operators to choose whether to although the BLM modified a few configure its operations or deploy comply with the capture targets one provisions and added additional express capture or flaring equipment so as to lease/unit/communitized area at a time, exemptions in response to comments avoid routine venting, and the final rule or instead on an area-wide average received. First, proposed § 3179.6(a)(3), requires operators to avoid such routine basis; and finally, a flaring allowable which exempted gas vented from venting. Finally, the BLM added volume that declines over time, which storage vessels subject to conditions § 3179.6(b)(8) to the final rule in operators can subtract from their total specified in § 3179.203, has been response to commenters’ observations flaring prior to assessing their renumbered § 3179.6(b)(4) and that it may be necessary to vent gas compliance with the capture targets. reworded for clarity. Second, proposed when applicable laws, regulations, or The mechanics of implementing this § 3179.6(a)(4), which exempted gas permit terms prohibit flaring in approach are as follows. First, final rule vented during normal operations of particular areas or at particular times, § 3179.7 establishes required capture natural gas-activated pneumatic such as flaring prohibitions that may be targets that incrementally increase over controllers and pumps, has been imposed in permafrost areas or during the first nine years of rule renumbered § 3179.6(b)(3). Third, the an extreme fire hazard. implementation. The schedule for the capture targets is provided in BLM added a provision, final rule 2. Capture Targets § 3179.6(b)(5), to clarify that gas may be § 3179.7(b)(1)–(4) and reproduced in a. Requirements of Final Rule vented during downhole well Table 1: maintenance or liquids unloading The second prong of the final rule’s TABLE 1 activities, provided those activities are approach to routine venting and flaring is laid out in final rule §§ 3179.7 and performed in compliance with Required § 3179.204. This change responds to 3179.8, which together target routine monthly comments noting that while this rule flaring of associated gas from capture requires operators to use best practices ‘‘development’’ oil wells.99 These final target rule provisions are based on proposed Date range (percent of to minimize venting from liquids associated unloading operations, these operations rule §§ 3179.6(b) and 3179.7, gas will still release some quantity of gas, respectively, but the provisions have captured and it is not practical to capture and been renumbered and revised in the per month) flare that gas regardless of whether the final rule in response to numerous comments received during the public 1/17/2018 through 12/31/2019 85 operator uses plunger lifts, manual 1/1/2020 through 12/31/2022 ... 90 purging, or another method to unload comment period. This discussion first describes the approach taken in the final 1/1/2023 through 12/31/2025 ... 95 liquids. Fourth, in response to Beginning 1/1/2026 ...... 98 comments noting that there are rule, and then, in part b., details how additional losses through venting not this modified approach responds to Section 3179.7(c)(3) of the final rule listed in the proposed provision, the comments received. then provides that, in order to First, in response to comments, the BLM added § 3179.6(b)(6) to the final demonstrate compliance with the final rule shifts from numerical limits rule, to clarify that an operator is not relevant monthly capture target, on per-well flaring volumes (the required to flare gas that is lost due to operators must choose the ‘‘relevant approach taken in proposed rule leaks, provided the operator is in full area’’ over which they intend to assess § 3179.6(b)) to a more flexible approach compliance with the leak detection and their capture percentage(s). An operator modeled in part on existing North repair requirements in final rule may choose whether to comply with the Dakota rules. The new approach sets §§ 3179.301–305. Fifth, the BLM added capture targets on each of the operator’s targets for the percent of associated gas § 3179.6(b)(7) to the final rule, to leases, units, or communitized areas from development oil wells that must be respond to commenters’ concern that captured in a given month, either on a (the ‘‘lease-by-lease approach,’’ see final some gas is released when pressurized per lease/unit/communitized area basis rule § 3179.7(c)(3)(i)), or instead to equipment must be depressurized for or averaged over a county or state. The comply on a county-wide or state-wide maintenance, and their assertion that it capture targets do not, however, apply basis (the ‘‘averaging approach,’’ see is difficult and costly to route such to the full volume of gas that an operator final rule § 3179.7(c)(3)(ii)). An operator infrequent, low-volume emissions to flares. Instead, like the proposed rule, that chooses the lease-by-lease approach capture or a flare. This exemption from the final rule allows operators to flare a must demonstrate that each lease, unit, the venting prohibition is limited to specified volume of gas that declines or communitized area is individually in venting associated with non-routine over time. In the final rule, however, compliance with the relevant capture maintenance activities. In justifying this allowed flaring has been recast as target each month. An operator that their request for an exemption for a ‘‘flaring allowable’’ volume that chooses the averaging approach must venting associated with maintenance operators can subtract from their total notify the BLM by Sundry Notice of its activities, commenters emphasized that flaring volume prior to calculating their choice by January 1 of the relevant year, these activities release only small capture percentage. Overall, then, the and may then demonstrate monthly quantities of gas in total because they compliance with the relevant capture occur infrequently and each incidence 99 As defined in final rule § 3179.3, a target on an area-wide average basis. involves a relatively small volume of ‘‘development’’ oil or gas well is a well ‘‘drilled to The second step to demonstrating gas. The BLM is aware, however, that produce oil or gas, respectively, from an established compliance with the capture targets, activities such as pigging a gathering field in which commercial quantities of detailed in final rule § 3179.7(c), is for have been discovered and are being an operator to determine its total line may release a not insignificant produced.’’ The BLM retains the authority to volume of gas, and, under some determine whether the well in question is a volume of gas produced from circumstances, operators conduct development oil or gas well. Id. development oil wells in the relevant

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area, subtract the flaring allowable If the operator’s actual capture long-term limit on routine flaring of volume, and then divide the result of percentage for a given lease, unit, or associated gas from development oil that calculation into the total volume of communitized area (lease-by-lease wells; whether the specific long-term gas that the operator sold or used, to approach), or for the county or State flaring limit should be lower or higher determine the operator’s actual capture (averaging approach), falls short of the than 1,800 Mcf/month/well, to further percentage. The operator must then required capture target for the given reduce flaring or reduce compliance compare its actual capture percentage to month, then the operator may face costs, respectively; operators’ likely the required gas capture percentage for enforcement action, and must pay operational response(s) to the the applicable period, to determine royalties on the excess flared gas, which imposition of a flaring limit; the whether the operator meets or exceeds is considered avoidably lost. The excess feasibility and costs of the proposed the required capture target for the given flared gas is the volume of gas by which three-year timeline for decreasing the month. the operator missed its required capture flaring limit from 7,200 to 1,800 Mcf/ More specifically, the volume of gas target, and it is calculated as follows: month/well; and the effectiveness of the that the operator sold or used is the Excess flared gas = (Required capture proposed method and conditions in volume of gas that the operator sold target * (total volume of produced § 3179.7 for allowing operators to obtain over the month from all of the operator’s gas¥flaring allowable))¥(volume an alternative flaring limit. The BLM developed the capture target development oil wells in the relevant of gas sold or used). approach in final rule § 3179.7, and the area plus the volume of gas that the Royalties on the excess flared gas would alternative capture target provisions in operator used on lease, unit, or be prorated across an operator’s leases, final rule § 3179.8, after careful communitized area across the relevant units or communized areas that reported consideration of the many comments area. The volume of gas flared is the high-pressure flaring during the month. received on the flaring limit approach volume that the operator flared from Alternatively, an operator may request set forth in proposed rule §§ 3179.6(b) high pressure flares over the month in that the BLM establish an alternative and 3179.7. In particular, the BLM gave the relevant area. The flaring allowable capture target under final rule § 3179.8, careful consideration to operators’ concept derives from the flaring limits if three conditions are met: (1) The assertions that the numerical values of introduced in proposed rule § 3179.6(b), operator has chosen to comply with the the proposed flaring limits, the and it represents the volume of flared capture target using the lease-by-lease proposed schedule for meeting those gas that is exempt from the capture basis rather than the averaging limits, and the prescriptive nature of the target. Flaring allowable equals the total approach; (2) the potentially limits would make it prohibitively number of development oil wells ‘‘in noncompliant lease was issued before expensive—and, in some areas of the 100 production’’ in the relevant area the effective date of this final rule; and country, technically impossible—for multiplied by the relevant flaring (3) the operator demonstrates via operators to comply with the terms of allowable quantity, which is specified Sundry Notice, and the BLM agrees, that the proposed rule. After reviewing the in final rule § 3179.7(c)(2)(i) through (iv) the applicable capture percentage under flaring data provided by these and reproduced in Table 2. The final final rule § 3179.7 ‘‘would impose such commenters, obtaining additional rule allows an operator to choose costs as to cause the operator to cease updated and more detailed data from whether to calculate each of these production and abandon significant ONRR, and reanalyzing these volumes—the volumes of gas sold, used, recoverable oil reserves under the provisions, the BLM determined that the or flared, and the flaring allowable lease.’’ final rule should phase in its approach volume—for each BLM-administered to routine flaring over a longer period of lease, unit, or communitized area (under b. Changes From Proposed Rule and Significant Comments time, and provide operators with more the lease-by-lease approach), or instead flexibility to take better account of to calculate them on an area-wide Proposed rule § 3179.6(b) would have variable conditions on different leases, average basis for all BLM-administered imposed a monthly limit on flaring, units, and communitized areas in leases, units, and communitized areas in beginning on the effective date of the different parts of the country. the county or State (under the averaging final rule, with the specific limit The BLM remains committed to approach). decreasing over the first three years of requiring operators to significantly the final rule. Specifically, the proposed reduce routine flaring of associated gas TABLE 2 rule would have established a flaring from development oil wells on BLM- limit of 7,200 Mcf/month per administered leases, thereby increasing Monthly development oil well in production on gas capture. We have structured final flaring the lease, unit, or communitized area, Date range allowable rule §§ 3179.7 and 3179.8 to achieve a per well for the first year the rule was in effect comparable volume of flaring reductions (Mcf) (proposed rule § 3179.6(b)(1)); 3,600 as proposed rule §§ 3179.6(b) and Mcf/month per development oil well in 3179.7, although over a somewhat 1/17/2018 through 12/31/2018 5,400 production on the lease, unit, or longer timeframe, and then to achieve 1/1/2019 through 12/31/2019 ... 3,600 communitized area for the second year additional reductions in later years. 1/1/2020 through 12/31/2020 ... 1,800 the rule was in effect (proposed rule The final rule’s capture targets and 1/1/2021 through 12/31/2021 ... 1,500 § 3179.6(b)(2)); and 1,800 Mcf/month the proposed rules flaring limits operate 1/1/2022 through 12/31/2023 ... 1,200 1/1/2024 through 12/31/2024 ... 900 per development oil well in production in a similar manner, with the latter Beginning 1/1/2025 ...... 750 on the lease, unit, or communitized area approach a refinement of the former to for every month beginning in year three enhance opportunities for compliance. and thereafter (proposed rule For example, the long-term flaring limit 100 As defined in § 3179.7(c)(4), a well is § 3179.6(b)(3)). of 1,800 Mcf/month/well in proposed considered ‘‘in production’’ after ‘‘a completion, a The proposed rule included a broad rule § 3179.6(b)(3) is exactly equivalent completion report, or a notice of first production, whichever occurs first, and only during a month in request for comments on a range of to a capture target of 100 percent, with which it produces gas (that is sold or flared) for 10 issues relating to this section, including: a flaring allowable volume of 1,800 Mcf/ or more days.’’ The feasibility and costs of imposing a month/well, applied on a lease-by-lease

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basis. The final rule phases in a 98 target incrementally increases from 85 goal was the shift from a fixed long-term percent (rather than 100 percent) percent in year two (e.g., one year after flaring limit of 1,800 Mcf/month/well capture target over nine years, and the effective date of the final rule) to 98 (proposed rule § 3179.6(b)(3)) over three converts the proposed volumetric percent in year nine. As noted, this years to a flaring allowable volume that flaring limits from the proposed rule flexible capture target approach is decreases over time to 750 Mcf/month/ into declining allowances against the modeled in large part on North Dakota’s well in year 2025 (final rule capture target. The differences between regulations, which also impose an § 3179.7(c)(2)(iv)). proposed rule § 3179.6(b) and final rule escalating capture target, as described in Fourth, the final rule allows greater § 3179.7(b) are therefore more a matter the preamble to the proposed rule.101 flexibility in how operators may comply of form than function, with the final Second, the BLM extended the with the capture targets. Commenters rule designed to achieve flaring compliance dates in response to indicated that leases, units, and reductions comparable to the reductions commenters’ concern that coming into communitized areas vary greatly in both that the BLM expected from the compliance with a long-term flaring the volumes of associated gas produced proposed rule, but to allow operators limit of 1,800 Mcf/month/well would from oil wells and the availability of gas more compliance flexibility. take longer than the three years that the capture infrastructure, and asserted that That said, the proposed and final BLM had proposed. The final rule complying with a single flaring limit approaches to reducing routine flaring postpones the effective date of any that applies uniformly to every lease, do differ in certain key respects, as a capture requirements for one full year unit, and communitized area would be result of public comments. The five after the effective date of the rule. prohibitively expensive or even, in most significant differences are as Thereafter, the final rule incrementally some areas of the country, technically follows. increases the required capture targets impossible. Commenters contended that First, the final rule uses specified over a nine year period and as a result, they would be forced to capture targets, rather than requiring incrementally decreases the flaring submit numerous Sundry Notices under that operators capture 100 percent of allowable volumes over an eight year proposed rule § 3179.7 to request their associated gas above fixed period. Final rule § 3179.7(b) extends alternative flaring limits. Commenters volumetric limits as initially proposed, the time an operator has to meet the asserted that North Dakota’s approach, in response to comments indicating flaring allowable volume of 1,800 Mcf/ which allows operators to comply with that, in some states (notably North month/well until calendar year 2021, capture targets on a statewide average Dakota and New Mexico), gas volumes about four years after the effective date basis, would reduce the need to request are so high and the availability of of the final rule (and about two alternative limits and thus achieve capture infrastructure so variable that it additional years after the 1,800 Mcf/ comparable overall flaring reductions at is extremely difficult to identify a fixed month/well fixed flaring limit would significantly lower cost. The BLM volumetric limit on flaring that would have taken effect under § 3179.6(b)(3) of agrees, and has in response to these both be achievable and also provide the proposed rule). comments structured the final rule to meaningful reductions in all States. Third, and conversely, the BLM has provide operators with greater Commenters asserted that given the high reduced the long-term flaring allowable discretion in how they choose to gas-to-oil ratios (GOR) in the Bakken volumes that apply once the final rule comply. Specifically, final rule basin, there are certain areas where an is fully phased in, in response to other § 3179.7(c)(3) allows an operator to operator could exceed the proposed commenters’ concerns that the proposed choose whether to comply with the flaring limit of 1,800 Mcf/month/well in approach allowed significant quantities capture targets on a county- or state- a period of hours. Commenters argued of wasteful flaring to continue unabated wide average basis, or instead to comply that even after averaging over a month from 2020 on and did not provide on each lease, unit, or communitized and across a lease, as the proposed rule sufficient incentives for industry to area. This flexibility, too, is modeled on would have allowed, the 1,800 Mcf/ continue to decrease flaring over time. North Dakota’s regulations, which allow month/well limit would significantly Natural gas is a valuable resource that for compliance on a well-, field-, impact future development in the should be put to productive use, and the county- or state-wide basis, as described Bakken and Permian basins. Operators MLA requires that we minimize the in the preamble to the proposed rule.102 in these areas suggested that allowing waste of public resources, consistent Fifth and finally, the final rule makes averaging of flaring volumes across with existing lease obligations. In certain changes to the alternative flaring multiple leases, units, or communitized addition, if the only changes the BLM provisions (proposed rule § 3179.7, areas—or even across counties or across made to the final rule were to allow renumbered as final rule § 3179.8) in a State—would enable operators to use averaging over a broad geographic area part to address some commenters’ high capture rates in areas with low and to impose capture targets that never concerns that the proposed renewable 2- GOR and/or significant gas capture ramp up to 100%, the final rule would year exemption (proposed rule capability to offset lower capture rates achieve far less of a reduction in § 3179.7(d)) would allow too many in other areas, and thereby avoid having wasteful flaring than the proposed rule. operators to evade the flaring limits and to curtail production. While providing operators more should therefore be eliminated. The Based on these concerns, the BLM flexibility to reduce flaring at lower changes also account for the change in restructured the fixed flaring limits as costs by shifting from the proposed the final rule from flaring limits to capture targets both to better take rule’s fixed flaring limits to the final capture targets, and for the BLM’s account of geographically varying rule’s capture targets and allowable decision to allow operators to choose to volumes of associated gas and to allow flaring volumes, the BLM strived to demonstrate compliance with the operators some greater flexibility to ensure that the final rule still achieves capture targets on an area-wide average absorb the impacts of intermittent meaningful flaring reductions, basis. Specifically, the BLM deleted the interruptions or reductions in capture comparable to the reductions that the proposed 2-year exemption provision capacity. Final rule § 3179.7, therefore, BLM expected from the proposed rule. and restyled proposed rule § 3179.7 as requires capture of a specified The key change necessary to meet that an alternative capture target rather than percentage of gas above the flaring allowable volume; this specified capture 101 81 FR at 6634. 102 81 FR at 6634.

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an alternative flaring limit. The change 2025, 8 years after the rule comes into meeting specified standards for leak to a capture target approach and the effect. detection methodology and frequency, decision to allow operators to choose to Thus, the BLM expects that the final and for the timing of repairs. Within one comply by averaging their flaring over rule’s schedule and targets for reducing year of the effective date of the rule (or an entire county or State significantly flaring will achieve a total volume of within 60 days of beginning production, reduce the risk that a single remote flaring reductions somewhat greater for new sites), operators must use an lease, unit, or communitized area with than the proposed rule, and at lower instrument-based approach to conduct high levels of flaring and little or no cost, though over a longer timeframe. semi-annual inspections at well sites access to capture infrastructure will Moreover, the final rule establishes a and quarterly inspections at compressor make it impossible for an operator to structure in § 3179.7 for reducing stations. Operators may also request comply. Under the averaging approach, routine flaring that could be adapted to BLM approval of an alternative such leases, units, or communitized achieve more ambitious flaring instrument-based leak detection areas need not receive a blanket reductions, if and when the BLM deems program, which the BLM may approve exemption from the capture target. those reductions to be technologically if it finds that the program would Rather, an operator concerned about the feasible and cost effective. The BLM has reduce leaked volumes by at least as ability of a lease, unit, or communitized only specified capture targets and much as the BLM program. Operators area to comply with the capture target flaring allowable volumes out to 2026. must repair a leak within 30 days of can either (a) reduce its flaring at other As additional data on flaring become discovery, absent good cause, and verify sites in the relevant area to compensate available, and capture technologies that the leak is fixed. Operators must for the high levels of flaring at that improve, the BLM could choose to also keep records documenting the dates remote lease, or (b) apply for an increase the capture targets further over and results of leak inspections, repairs, alternative capture target for that lease time, and/or decrease the flaring and follow-up inspections, and submit under final rule § 3179.8 (if the allowable volumes, through future annual reports with this information. predicate conditions are met). Because rulemakings in order to continue to Section 3179.301 provides that the fewer leases are likely to raise such reduce routine flaring of associated detection requirements in the final concerns under the final rule’s capture from BLM-administered leases, units, rule apply to sites 106 and associated target approach than under the and communitized areas, consistent equipment that is used to produce, proposed rule, the BLM anticipates with the United States’ March 2016 process, compress, treat, store, or receiving fewer requests for alternative endorsement of the World Bank’s Zero measure natural gas from or allocated to capture targets and having an increased Routine Flaring by 2030 Initiative.103 a Federal or Indian lease (or from a unit or communitized area that includes capacity to process such requests on a B. Leak Detection and Repair case-by-case basis. such a lease), where such sites are To set the capture targets and flaring 1. Requirements of Final Rule upstream of or contain the approved allowable volumes in the final rule, the As discussed in detail in the RIA, we royalty point of measurements. These BLM conducted a detailed analysis of estimate using data from the EPA GHG requirements also apply to each site 2015 data submitted to ONRR of sales, Inventory that about 4.01 Bcf of natural located on a Federal or Indian lease, and on lease use and flaring volumes month- gas was lost in 2014 as a result of leaks all associated equipment operated by by-month for operators within a state. or other fugitive emissions from various the operator, which is used to store, These data go substantially beyond what components, including valves, fittings, measure, or dispose of produced water. was available to BLM in preparing the pumps, storage vessels and compressors An operator is not required to inspect proposed rule, and while the results on well site operations on BLM- sites that contain only a wellhead or show that the proposed rule would have administered leases.104 This quantity of wellheads and no other equipment, nor reduced flaring less than we initially gas would supply nearly 55,000 homes is the operator required to inspect the 107 estimated, we have higher confidence in each year.105 ‘‘leak components’’ that are not the updated estimates. Using the new LDAR programs are a cost-effective accessible data to reanalyze the likely flaring means of reducing waste of gas in the oil In response to multiple requests from reductions from the proposed rule, the and gas production process, as indicated industry and NGO commenters, the BLM estimates that the proposed rule by the studies and State programs final rule provides greater specificity on would have reduced the quantity of discussed in the proposed rule, as well what constitutes a ‘‘leak’’, which flared gas in 2020 by 42 percent relative as additional information provided includes releases not associated with to 2015 levels. since the proposal, which is discussed the normal operation of the component Using the same data and assumptions, in the background section III. Provisions (e.g., releases from equipment designed the BLM estimates that the final rule’s in §§ 3179.301 through 3179.305 of the to vent that exceed the quantities and approach, which allows operators to final rule require operators to carry out frequencies expected during normal average over their statewide production leak inspections and repairs at their operation of the equipment). Similarly, and establishes a capture target of 98% well sites and associated equipment, over time, will reduce the quantity of 106 A ‘‘site’’ is defined as a discrete area containing a wellhead, wellhead equipment, or flared gas in 2020 by roughly 26 percent 103 ‘‘Zero Routine Flaring by 2030’’ is a voluntary other equipment used to produce, process, relative to 2015 levels. With the initiative introduced by the World Bank in 2015 compress, treat, store, or measure natural gas or additional time and flexibility provided and endorsed by multiple governments, oil store, measure, or dispose of produced water, which in the final rule, operators will be able companies, and development institutions. The is suitable for inspection in a single visit. initiative focuses on the phase-out of routine, high- 107 Under the definitions in the final rule, ‘‘leak to plan for and build out the additional pressure flaring of the type addressed by the BLM’s infrastructure necessary to capture and component’’ means any component that has the capture targets in § 3179.7 of the final rule, not potential to leak gas and can be tested in the transport greater volumes of gas in later flaring for safety and other non-routine reasons. For manner described in sections 3179.301 through years. Thus, the final rule further steps more information and a list of endorsers, see http:// 3179.305 of this subpart, including, but not limited down the allowable flaring volumes www.worldbank.org/en/programs/zero-routine- to, valves, connectors, pressure relief devices, open- flaring-by-2030. ended lines, flanges, covers and closed vent after 2020, and likewise steps up the 104 RIA at 17. systems, thief hatches or other openings on a required capture percentages, to achieve 105 Based on an estimate of 74 Mcf of gas used storage vessel, compressors, instruments, and almost a 50% reduction in flaring by per household per year. See footnote 2. meters.

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releases due to operator error or closed vent systems, and openings on the alternative monitoring device could equipment malfunctions, or from controlled storage vessels would not be be used anywhere in the country. control equipment that does not meet subject to the BLM’s LDAR Section 3179.303 specifies the the level of control required by this or requirements or the EPA’s subpart required frequency for inspections, other regulations, are also considered OOOOa inspection which is fully aligned with the leaks. These types of leaks include requirements if the operator chose to requirements of Subpart OOOOa. releases from: A thief hatch left open; a comply with the EPA requirements in Operators must inspect each well site at vapor recovery unit that is not operating lieu of the BLM requirements. least semi-annually, with consecutive properly; a tank or combustor that is The final rule requires operators to inspections spaced at least four months inadequately sized to handle the use an instrument-based approach to apart. Operators must inspect each throughput of gas; or an intermittent leak detection. This is consistent with at least quarterly, controller that actuates continuously. the proposed rule, and with EPA, with consecutive inspections spaced at Section 3179.301(j) and (k) integrate Colorado, and Wyoming leak detection least 60 days apart. the final rule with EPA NSPS requirements. Under final rule In addition to alternative monitoring requirements for operators to conduct a § 3179.302, operators must use an devices, the final rule allows for BLM fugitive emissions inspection and repair optical gas imaging device (also approval of alternative monitoring program. Section 3179.301(j) provides commonly referred to as an infrared programs. Specifically, like the that for new, modified or reconstructed camera), or a portable analyzer device proposed rule, the final rule allows an equipment, an operator will be deemed capable of detecting leaks and used operator to request the BLM to approve to be in compliance with the BLM according to the specifications of an alternative instrument-based leak LDAR requirements if the operator is in Method 21, a protocol prescribed by detection program in place of the compliance with the EPA subpart EPA for effectively using these program specified in the regulations. OOOOa requirements applicable to the devices.109 Use of a portable analyzer The BLM may approve the alternative equipment. Paragraph (k) further allows device must also be assisted by audio, program if it finds that the alternative an operator to choose to comply with visual, and olfactory (AVO) inspection, program would achieve equal or greater the EPA fugitive emissions monitoring as these devices have much more reduction of gas lost through leaks compared with the approach specified requirements in subpart OOOOa and narrowly-focused leak detection in the regulations. Because approval of apply those requirements to all sites and capabilities compared to optical gas inadequate alternative programs could equipment on a lease not already imaging, which can be used to scan unintentionally but significantly deemed in compliance with the BLM across broad arrays of equipment. The undermine the effectiveness of the LDAR provisions, in lieu of complying final rule includes specifications for LDAR requirements, the BLM intends with the BLM LDAR provisions. This acceptable optical gas imaging that the decision to approve an provision allows an operator with new, equipment, requires all instruments to alternative program would be made only modified or reconstructed facilities be used according to the manufacturer’s by the relevant BLM State Director, or, (which must comply with subpart specifications, and requires the operator with respect to requests that cover OOOOa) as well as existing facilities of any leak detection instrument to be operations in more than one State, at the (which are not subject to subpart adequately trained in its proper use. national level by the BLM Director, OOOOa) to apply a single leak detection Final section 3179.302 also allows Deputy Director, or an Assistant regime to all of their facilities, rather any person to request and the BLM to Director. In addition, the BLM will post than complying with subpart OOOOa approve the use of an alternative approved alternative programs online for some facilities and the BLM monitoring device, accompanied by a both to provide public transparency and requirements for others. monitoring protocol, and, in response to to allow other operators to see examples The final BLM LDAR provisions also comments, this section also details the of alternative programs that the BLM apply to a few specific types of information that must be included in a believes will be effective. equipment that EPA addresses under request. The BLM may approve an requirements that are separate from Section 3179.304 requires operators to alternative leak detection device and repair the leaks that they find. Operators EPA’s subpart OOOOa fugitive inspection protocol, if the BLM finds emissions program—specifically, certain must repair a leak as soon as that the alternative would achieve equal practicable, and within 30 days of covers and closed vent systems, and or greater reduction of gas lost through thief hatches or other openings on discovery, unless there is good cause to leaks, compared with optical gas delay the repair. When an operator controlled storage vessels, which are imaging used as required. The BLM may covered under 40 CFR 60.5411a or repairs a leak, the operator must verify approve the device for use for all or that the repair was effective within 30 60.5395a, rather than under the fugitive most applications, or may approve use emissions requirements in subpart days of the date of the repair using on a pilot project or demonstration optical gas imaging, a portable analyzer OOOOa. The final rule provides that if basis. Finally, the BLM will provide an operator chooses to comply with the using Method 21, or a soap-bubble test. public notice of a request for approval Section 3179.305 requires operators to EPA subpart OOOOa fugitive emissions of an alternative monitoring device and keep records related to leak detection requirements in lieu of the BLM LDAR will post on the BLM Web site a list of inspections and repairs, make them requirements for all equipment on a each approved monitoring device and available to the BLM upon request, and lease, the operator must apply the EPA protocol, along with any limitations on submit an annual summary report on fugitive emissions requirements to its use. The BLM intends that the the previous year’s inspection activities. sources covered under 40 CFR 60.5411a decision to approve the use of an or 60.5395a as well.108 Absent this alternative monitoring device would be 2. Changes From Proposed Rule requirement, these equipment covers, made only at the national level, by the The final rule provisions on leak Director, Deputy Director, or an detection and repair largely track the 108 See Section VII, Section by Section, for Assistant Director, as, once approved, discussion of treatment of sources exempt from the proposal, however, we adjusted the EPA fugitive emissions program specified in section frequency of inspections, based upon 43 CFR 60.5397a. 109 See 40 CFR part 60, appendix A–7. public comments along with a desire to

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align these requirements with EPA’s associated with the storage, BLM through a Sundry Notice that it is final rule, and made other minor measurement, or disposal of produced complying with the EPA rule in lieu of adjustments. The BLM had proposed an water, the leak detection requirements the BLM requirements for equipment on approach in which the initial required apply only to such equipment operated a lease. While the BLM needs to know frequency of inspection was semi- by the operator and located on the for oversight purposes if an operator has annual, but then the frequency varied Federal or Indian lease. elected not to comply with the BLM for each site according to the number of The final rule retains and refines the requirements, we agree with leaks found. An operator that found proposed rule’s provision allowing an commenters that requiring a more than three leaks in each of two operator to satisfy the leak detection ‘‘demonstration’’ of compliance with the inspections would have been required requirements by complying with the EPA requirements is unnecessary. to increase its inspection frequency to EPA leak detection requirements under As noted earlier, the final rule also quarterly, while an operator that found 40 CFR part 60, subpart OOOOa. First, contains a more detailed definition of a fewer than three leaks in each of two the final rule provides that for new, ‘‘leak’’ than the proposed rule, as well inspections would have been allowed to modified and reconstructed equipment, as more detailed specifications of drop its inspection frequency to an operator that is in compliance with approved leak detection instruments annually. A broad swathe of the EPA fugitive emissions requirements and methods. In addition, the final rule commenters opposed this approach in will be deemed to be in compliance separates approval of an alternative the proposed rule (as well as in the with the BLM LDAR requirements, monitoring device and protocol from EPA’s proposed OOOOa). The final rule without any requirement to file a approval of an operator’s alternative replaces this approach with a fixed Sundry Notice and demonstrate leak detection program, and it adds semi-annual rate of inspections for all compliance, as the BLM had proposed. specificity on what is required for each sites other than compressor stations, Second, it clarifies that that an operator of these. The final rule also adds a and a quarterly inspection rate for who chooses to comply with the EPA required minimum interval between compressor stations, consistent with the fugitive emissions monitoring inspections, which was not specified in final OOOOa as well. requirements in subpart OOOOa in lieu the proposal, but is consistent with final Another change from proposed to of the BLM LDAR requirements must subpart OOOOa. Other minor changes final rule concerns the effective date of apply the EPA requirements to all sites that align the rule with final subpart the leak detection requirements. The and equipment on a lease not already OOOOa include: A 30- rather than 15- proposed rule would have imposed the deemed in compliance with the BLM day period for repair and follow-up leak detection requirements as of the LDAR provisions. inspections; additional detail on what effective date of the rule, with the first The final rule includes this change constitutes good cause for delay of inspection required within six months because leaks from some types of new, repair; and a new, two-year outer limit of that date. In response to comments, modified and reconstructed equipment, on the timeline for completing repairs the final rule extends the time for initial such as covers and closed vent systems, delayed for good cause. In addition, compliance to give operators one year and thief hatches on controlled storage while the proposal had required from the effective date of the rule to vessels, are not covered by the fugitive operators to verify the effectiveness of make their first inspection. emissions requirements under subpart repair using the same method used to The BLM made several other changes OOOOa, but instead are addressed identify the leak, in response to that adopt commenters’ suggestions. We through specific provisions for storage comments, the final rule allows added a provision allowing approval of vessel affected facilities and any operators to use any approved an alternative, potentially less effective, associated covers and closed vent monitoring instrument or the soap leak detection program for an operator systems in subpart OOOOa—namely 40 bubble test to verify the effectiveness of that demonstrates that compliance with CFR 60.5395a and 60.5411a. These repair. the LDAR requirements would impose provisions establish comprehensive such costs as to cause the operator to control programs for storage vessel 3. Significant Comments cease production and abandon affected facilities, including separate Commenters provided many detailed significant recoverable oil or gas and distinct inspection regimes. This comments on numerous aspects of the reserves. We also added a requirement final rule ensures that if an operator leak detection program. This section that operators provide an annual elects to comply with the EPA fugitive highlights the most significant summary report on the results of their emissions requirements in lieu of the comments; additional comments are leak inspections. Consistent with the BLM leak detection requirements for addressed in Section V. and the final subpart OOOOa, the final rule also equipment on a given lease, the operator Response to Comments document. includes a new exemption from LDAR must apply the EPA fugitive emissions Comments addressed here include: requirements for sites that contain only requirements to all equipment covered Coverage of the program (i.e., which a wellhead(s), and no other equipment. by the BLM leak detection requirements, types of operations and equipment In addition, the BLM made various including equipment such as covers, should be included in the program); smaller changes to enhance the clarity closed vent systems, and thief hatches. program structure (how inspection of the final rule. The final rule has Absent this provision, operators could frequency is to be determined, and the refined and clarified the specific sites potentially avoid any leak detection required frequency of inspection); the and equipment subject to the leak program with respect to existing sources instruments and methods to be used for inspection requirements. The final rule in these categories. leak detection; opportunities for use of applies to all equipment handling The final rule also modifies the new instruments and methods; Federal or Indian gas, upstream of and requirement in the proposed rule that requirements for repairs; and potential including the site where the royalty operators who choose to comply with exemptions from the requirements. measurement point is located—whether the EPA requirements in lieu of the the equipment is on or off the lease and BLM requirements must file a Sundry a. Coverage regardless of the ownership of the Notice demonstrating compliance with Comments: Many commenters equipment. The final rule also specifies the EPA rule. The final rule provides addressed the coverage of the program. that with respect to equipment that the operator need only notify the Some commenters supported applying

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the program broadly to catch as many compressors, and/or vapor recovery applicable LDAR requirement to reduce leaks as possible, while others urged the units. Commenters also asserted that the leaks as much as reasonably possible. BLM to use risk-based or other 2013 Carbon Limits Study and the 2014 The BLM carefully considered approaches to target the program more CAPP study show that compressor numerous and varied approaches that narrowly to exclude certain types of stations leak more than well sites, and might improve the program’s cost- sites and equipment and/or to focus on that components tend to have greater effectiveness by narrowing the coverage the most likely sources of significant average emissions when subjected to of the LDAR program while maintaining leaks and improve the program’s cost- frequent thermal cycling, vibrations or its benefits. In evaluating suggestions to effectiveness. cryogenic service. exclude certain types of sites from the Some commenters urged the BLM to In addition, commenters urged the LDAR requirements, the BLM looked for exclude sites where the commenters BLM to exclude from the LDAR evidence indicating that the frequency asserted that there is less likelihood of requirements storage vessels that would of leaks, size of leaks, and overall leaks and/or smaller leaks. For example, not be required to have emission amounts of gas lost through leaks relate they suggested excluding oil or gas low controls under the proposed BLM and to the type of site being inspected. In production wells (also commonly called final EPA rules (i.e., tanks with the requesting comments on this topic, the ‘‘marginal’’ or ‘‘stripper’’ wells) that potential to emit less than 6 tpy of BLM had urged commenters to present produce less than 15 barrels of oil VOCs), and equipment designed to vent, data or other information to support equivalent per day; oil well sites that such as pneumatic pumps and their assertions, and specifically produce crude oil with either an API pneumatic controllers, as well as other requested ‘‘information regarding the ° gravity less than 18 or a GOR less than types of equipment and sites discussed relationship between well production 300 scf/bbl; and sites that have just in Section V. and levels of leaked methane from a wellheads without co-located On the other hand, other commenters site.’’ 110 production equipment. strongly opposed narrowing the With respect to suggestions that the Some commenters alleged that wells applicability of the LDAR program, and BLM exclude low production wells from in particular, excluding low production producing less than 15 BOE per day do the LDAR requirements, we note that not have the potential to emit at the wells from that program. These roughly 85 percent of wells on Federal same rate as larger producing facilities commenters cited recent peer-reviewed and Indian leases are classified as low or enough production to have studies concluding that the occurrence production wells (i.e., produce 15 significant waste from leaks. Hence, of leaks is fairly random; the probability barrels of oil equivalent per day or less). they argued, the costs of LDAR for a of a production site being among the Thus, unless these wells are, in fact, marginal well far outweigh any benefits highest emitting sites does not increase unlikely to leak significant volumes of in terms of recovery of lost gas. One uniformly with production volumes; gas, a decision to exclude these wells commenter stated that sites with and relatedly, both high- and low- from the LDAR program would have a marginal wells have less equipment on- producing sites can be associated with significant negative effect on the waste site, fewer components that could leak, high-emitting events. These commenters and thus a smaller likelihood of leaks. provided estimates of calculated reduction benefits of this rule. Commenters also noted that the EPA methane emissions from low production The information submitted by proposed to exclude low production and non-low production wells commenters on low production wells wells from its fugitive emissions nationwide based on data reported to does not support their exclusion from program, and argued that the BLM EPA and the EPA GHG Inventory, the LDAR requirements. As discussed should do the same. Some asserted that finding that 83 percent of the total above, some commenters suggested, these wells are only marginally methane emissions from oil and gas without providing supporting data, that profitable to begin with, and the costs of wells was attributable to low production sites with low production would be LDAR could make these wells wells, while only 17 percent was expected to lose smaller quantities of uneconomical, leading to premature attributable to other wells. The gas overall from leaks. However, others shut-in and a loss of mineral resources. commenters also provided calculations disagreed, pointing to the Zavala-Araiza Commenters also recommended that, at based on an EPA estimate of the cost of study. As discussed in section III, this minimum, these low production wells semi-annual inspections. These study showed that the probability of a should be subject to more relaxed LDAR calculations showed, the commenters production site being among the highest requirements, such as one-time or argued, that even for low production emitting sites does not increase annual instrument-based inspections, wells, the cost of LDAR compliance uniformly with production volume, and possibly in combination with AVO would on average be only a small it found significant opportunities to inspections, rather than semi-annual fraction of the annual revenue per well. reduce losses by finding and fixing leaks instrument-based inspections. These commenters further argued that at lower production wells. These Commenters also asserted that the the majority of all existing wells, commenters noted that the Lyon et al. requirement to inspect for leaks should including those on public lands, meet study also demonstrates that both high- be limited to certain specified facilities the definition of ‘‘marginal,’’ and that and low-production sites can be or components because those facilities excluding such wells from the LDAR associated with high-emitting events or components are more likely to leak, requirements would allow large with roughly 15 percent of the and to have higher leak rates. Various amounts of gas waste to continue identified high-emissions sites in that commenters recommended that the rule unabated. study being associated with low focus on valves, open-ended lines, Response: The final rule covers production wells. Commenters urging pumps, or components with potential to largely the same types of sites and an exclusion for low production wells operate at or above sales line pressure. equipment as the proposed rule, with a did not provide data refuting these Other commenters suggested limiting few small exceptions. As discussed findings. Without additional data on the LDAR requirements to facilities with above, natural gas leaks during the oil this issue, the BLM simply cannot components that tend to vibrate or are and gas production process are wasteful conclude that low-production sites pose in thermal operation, and specifically and can cause significant environmental those with controlled storage vessels, harm. The BLM is adopting a broadly 110 Proposed Rule at __.

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low leak risks and therefore merit requirements or subject to less stringent likelihood of errors that would allow exclusion from semi-annual LDAR. requirements. leaks to escape detection. It is simpler As commenters noted, the EPA had The BLM does, however, agree with and more effective for operators simply proposed to exclude wells with less commenters that the risk of leaks is to inspect all of the equipment located than 15 barrels a day oil-equivalent substantially lower at sites with only a at a site. If, however, an operator has production from the OOOOa fugitive wellhead, compared to sites with one or data that show it is possible to conduct emissions requirements. In the final more pieces of production equipment, an equally effective LDAR monitoring OOOOa rule, however, the EPA reached such as a tank, compressor, dehydrator, program while excluding certain types the same conclusion as the BLM and or vapor recovery unit. Industry of equipment, or sites that only have dropped the proposed exemption. EPA commenters asserted that there is a that type of equipment, the operator found that the record for the final rule greater likelihood of leaks from moving may submit a proposed alternative did not support excluding these wells or vibrating equipment, or from monitoring protocol to BLM for review from the fugitive emissions equipment in thermal operation, and potential approval. requirements. In the preamble to the because a valve may stick open, Some commenters pointed out that final rule, EPA stated: ‘‘We did not vibrations may cause a connection to pneumatic controllers are designed to receive data showing that low loosen, or heat may cause a seal to vent and argued that these releases production well sites have lower GHG degrade. While the BLM does not have should not be considered leaks. The (principally as methane) or VOC data about the likelihood and/or size of BLM agrees, and has excluded normal emissions other [sic] than non-low leaks in these circumstances, the BLM’s operation of this equipment from the production well sites. In fact, the data experience in the field supports the final rule’s leak definition. The BLM that were provided indicated that the general point. In addition, studies have notes, however, that pneumatic potential emissions from these well sites identified many leaks from the controllers can and do malfunction, could be as significant as the emissions identified equipment, including tanks, such as getting stuck in an open from non-low production well sites compressors, and dehydrators.112 At a position, which can lead to unnecessary because the type of equipment and the wellhead without co-located production losses of gas. Additionally, as other well pressures are more than likely the equipment, there are significantly fewer commenters stated, these malfunctions same.’’ 111 Thus, including low components capable of leaking. can be identified through leak production wells under the BLM Exempting these sites from the LDAR inspections. The BLM, therefore, requirements also maintains consistency requirements will provide some cost believes it would be inappropriate to between the BLM and EPA rules. savings for operators, and based on the exclude this equipment from the rule’s In addition, the BLM does not information available, the BLM believes LDAR requirements. anticipate a significant number of that realizing those savings will have Commenters make similar arguments individual well shut-ins or any lease- only a minimal impact on the overall with respect to uncontrolled storage wide shut-ins as a result of the LDAR benefits of the LDAR program. vessels (i.e., tanks that are not required requirements, even with respect to low Moreover, excluding wellhead-only to capture or flare their releases), which production wells. As discussed in the sites is directionally consistent with are allowed to release up to 6 tons per RIA, third-party providers offer LDAR some of the other suggestions for year of VOCs. Commenters argued that services at a relatively modest cost, and narrowing program applicability, such venting from an uncontrolled tank is operators may recoup some of the costs as focusing on sites with tanks or necessary for proper relief of of the program through the saved gas. compressors. In the final OOOOa rule, overpressure. Again, the BLM believes Also, operators have the option to the EPA reached the same conclusion that the commenters’ concerns should design and request approval of an and exempted wellhead-only sites from be addressed through the definition of a alternative LDAR program that is less its fugitive emissions requirements. ‘‘leak,’’ which now excludes releases costly for their particular circumstances, Other than the exclusion for sites with due to normal operation of a storage provided they can demonstrate that only a wellhead, the BLM is not limiting vessel or pressure relief valve, rather their alternative program is equally the LDAR requirement to covering only than by removing uncontrolled storage effective. Finally, an operator may certain specified types of equipment or vessels from coverage under the LDAR request approval of an alternative leak equipment components. BLM does not program. detection program that is not as effective believe that it has sufficient information As an initial point, uncontrolled tanks as the BLM’s requirements, if the to appropriately distinguish between are not open to the atmosphere—rather, operator demonstrates that compliance types of production equipment or they are typically vapor tight, slightly with the BLM’s LDAR requirements or equipment components on the basis of pressurized, and equipped with a thief an equally effective alternative would be the likely quantity of gas lost through hatch to allow measurement of so costly as to cause the operator to leaks. In addition, once an operator is at production and a pressure relief valve to cease production and abandon a site conducting a leak detection allow gas release of overpressure. This significant recoverable oil or gas inspection, inspecting all of the on-site standard industry practice, which reserves under a lease. equipment should add little time and preserves the product and prevents With respect to oil well sites that cost, particularly when the operator is unlimited release of vapors, was produce crude oil with either an API using optical gas imaging. The BLM recently reinforced in the BLM’s oil gravity less than 18° or a gas-to-oil ratio believes that trying to identify and measurement rule, 43 CFR subpart 3174. (GOR) less than 300 scf/bbl, as with low exclude specific types of equipment The oil measurement rule requires oil production wells, the BLM does not from inspection adds complexity to the storage tanks, hatches, connections, and have data to be able to conclude that inspection system and introduces the other access points to be vapor tight, these oil well sites are likely to be and it sets specifications for pressure responsible for a sufficiently small 112 See, e.g., Warneke, C., Geiger, et al.: Volatile relief valves. Using leak inspections to quantity of gas lost through leaks that organic compound emissions from the oil and ensure that thief hatches are closed, natural gas industry in the Uintah Basin, Utah: oil they should be excluded from the LDAR and gas well pad emissions compared to ambient seals are sound, and pressure relief air composition, Atmos. Chem. Phys., 14, 10977– valves are operating properly will 111 81 FR at 35856. 10988, doi:10.5194/acp-14-10977-2014, 2014. reduce waste of gas.

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Moreover, as discussed in section III., training, and preventative maintenance burdensome for operators because once recent studies indicate that tanks are a to minimize the occurrence and a leak is identified, repairs are generally very significant source of lost gas. As duration of such losses. We are adopting cost-effective. On average, many repairs noted earlier, the Lyon et al. study, a a definition of ‘‘leak’’ sufficiently broad pay for themselves in terms of gas helicopter survey of over 8,000 oil and in coverage to give operators the savings, and even if some smaller leaks gas wells, reported that over 90 percent incentive to avoid wasteful losses, may cost more to repair than they return of the detected emission incidences whether they occur due to aging in gas savings, we generally expect that were from tanks. Similarly, the Colorado equipment or due to operator error, the benefits to the public exceed the State University studies found including errors in appropriately sizing costs of repair.113 substantial venting at tanks, and the equipment to handle the quantities of c. Inspection Frequency City of Fort Worth study found that thief production. As found in multiple recent hatches are the largest source of fugitive surveys, all of these types of Comments: Numerous commenters emissions. The BLM believes that unnecessary losses occur and they are opposed the BLM’s proposed approach including both controlled and frequently identified using leak to the frequency of inspections, under uncontrolled storage tanks in the LDAR detection methods. which the frequency would initially be program will allow operators to identify The BLM has also slightly modified semi-annual, but then could increase or leaks and malfunctions that allow the definition of ‘‘leak component,’’ and decrease depending on the number of significant quantities of gas to be lost. clarified that the inspection requirement leaks found. Commenters stated that applies to leak components at a covered this approach: Is not consistent with b. Definition of a Leak site. Industry commenters had requested Colorado and Wyoming leak detection Comments: Many commenters noted that the BLM limit the inspection programs; is confusing, overly that the proposed rule did not define a requirement to specific components on complicated, and burdensome; ‘‘leak,’’ and they asserted that this a site. For the reasons previously inappropriately relies on past would cause confusion, variations in discussed, the BLM believes it is performance, which is not indicative of interpretations, and inequitable reasonable to require operators to future performance due to the random implementation of these provisions, as inspect all pieces of equipment that nature of leaks; creates an incentive for well as potentially requiring repairs for have the potential to leak gas and that operators not to find leaks; and very small releases. Some commenters can be tested for leaks. Moreover, as incorrectly assumes that loss through also urged the BLM to define a leak to discussed in the proposed rule, leaks is homogenously distributed, distinguish it from normal, intended repairing leaks generally pays for itself rather than heterogeneously distributed, operation (e.g., pneumatic device over a reasonably short time-frame which means that just one leak can be actuation, crank case ventilation, etc.). through gas savings. To provide responsible for the majority of the Many commenters suggested that additional clarity, the BLM has added to waste. BLM identify the quality or quantity of the definition of ‘‘leak component’’ While commenters generally a release that would trigger repair examples of specific types of supported fixed frequency inspections, requirements under the leak detection components that are covered, including different commenters supported program. Commenters generally but not limited to: Valves, connectors, different frequencies. Some called for supported defining a leak as any visible pressure relief devices, open-ended quarterly inspections, while others hydrocarbon emission detected by use lines, flanges, covers and closed vent preferred annual. Still others suggested of an optical gas imaging instrument, or systems, thief hatches or other openings an approach like Colorado’s, which the formation of visible bubbles when on a storage vessel, compressors, requires different frequencies, from equipment is tested with soap solution. instruments, and meters. monthly to once, depending on the With respect to portable analyzers, With respect to leak thresholds, and estimated uncontrolled VOC emissions commenters generally supported setting consistent with the proposed rule, EPA from the highest emitting storage tank at a numeric threshold, but differed on the and State provisions, and commenters’ a site. number. Some commenters urged the suggestions, the BLM is defining ‘‘leak’’ Commenters supporting a BLM to use 10,000 ppm of hydrocarbon as including ‘‘a visible hydrocarbon requirement for quarterly inspections as the threshold for a ‘‘leak,’’ while emission’’ detected using optical gas asserted that: The costs are reasonable others recommended using 500 ppm, imaging, or a release of gas forming (and lower than calculated by the BLM); stating that this is protective and visible bubbles with soap solution. Colorado, Wyoming, and other states consistent with the Colorado Including soap solution allows already require quarterly inspections for requirements. operators to deploy an additional many sites; and optical gas imaging is Response: The BLM agrees that the detection methodology that is most effective when performed rule should define what constitutes a inexpensive and effective in confirming frequently, which can make up for its ‘‘leak’’ and has included a definition in that leak repairs have worked. The BLM tendency to miss smaller leaks the final rule. As noted earlier, the agrees with commenters that portable compared to other leak detection definition excludes losses due to normal analyzers can detect extremely small methods. Commenters who operation of equipment intended to releases, so the rule needs to specify a recommended annual inspections vent, provided the releases do not threshold for the size of leak that asserted that: The costs of LDAR exceed the quantities and frequencies requires repair. The final rule identifies programs outweigh the benefits (and are expected during normal operations. The 500 ppm as the appropriate threshold. higher than calculated by the BLM); definition further clarifies that ‘‘leaks’’ This threshold is consistent with both operators find far fewer leaks after the include releases due to operator errors the Colorado and EPA fugitive initial inspection, so repeated or equipment malfunctions. emissions programs, and aligning the inspections produce diminishing The purpose of a leak detection BLM and other Federal, State and tribal program is to find and fix losses of gas programs is important to enhance clarity 113 Carbon Limits AS report entitled, Improving utilization of associated gas in US fields that are not part of normal operations. and consistency and reduce confusion by Anders Pederstad, April 2015 found on the A prudent operator should conduct and costs. Additionally, the BLM does internet at: http://www.catf.us/resources/ reasonable levels of monitoring, staff not believe that this threshold is too publications/files/Flaring_Report.pdf.

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returns; and even requiring annual operators, while others argued that the Methane Detectors Challenge,115 and inspections will likely cause operators BLM should only allow the use of they stated that several new to prematurely shut-in some wells. optical gas imaging, stating that portable technologies for continuous or periodic Commenters also objected to inspection analyzers are less effective. Some monitoring may become commercially frequencies that differ from EPA and commenters urged the BLM also to available within the next 2 years. State requirements. allow use of AVO inspections as the Many commenters urged the BLM to Response: Upon review of the method of leak detection. detail the information that must be comments, the BLM agrees that included in an application for approval Response: Upon reviewing the requiring leak inspections at a fixed of alternative technologies, as well as comments, the BLM has concluded that frequency will make the program easier the process and criteria that the BLM to implement, less burdensome for portable analyzers, if used appropriately would use to respond to an application. operators, and more effective. The BLM and supplemented by AVO inspection, Various commenters emphasized that has concluded that requiring semi- can be as effective as optical gas imaging the process should be rapid, efficient, annual inspections is a reasonable for leak detection. Thus, the BLM has transparent, predictable, consistent, and approach that balances the leak- revised the proposed approach to allow rigorous. In addition, commenters detection advantages of more frequent operators to use optical gas imaging, or suggested that any person should be inspections against the associated costs. to use portable analyzers according to able to submit an application, and that Further discussion of the cost- Method 21 and supplemented by AVO any operator should be able to use an effectiveness of this approach is inspection. The BLM believes that approved technology. provided in the RIA. concerns about the accuracy of portable Response: The BLM agrees on the Requiring semi-annual inspections analyzers are ameliorated by requiring need for a clear, consistent, and rigorous also aligns the BLM and EPA the use of Method 21, Determination of process and criteria for approval of requirements. The BLM notes that it is Volatile Organic Compounds Leaks, alternative leak instruments and not possible to align the BLM program’s which is a procedure established by the methods, and we have modified the inspection frequency with both EPA EPA for detecting VOC leaks from regulations accordingly. The final rule requirements and all State requirements process equipment using a portable provides that any person may request because the EPA and States have detecting instrument.114 Method 21 approval of an alternative monitoring different inspection frequencies, and contains requirements for equipment device and protocol for using that frequencies differ even among the States specifications, performance, calibration, device by submitting a Sundry Notice to and among different EPA leak detection and use to ensure that the analyzers are the BLM that contains information that programs for different sources. The BLM used properly and will identify leaks the BLM would need to evaluate the expects that States with comprehensive that are occurring. The BLM agrees with effectiveness of the alternative device and effective LDAR requirements that commenters that allowing the use of compared to the base program. differ from the requirements of this rule portable analyzers according to Method Once a device is approved for general are likely to obtain variances under 21 will reduce costs by aligning with use, any operator may use it without the section 3179.401, which would existing EPA, State, and local need for additional notification or eliminate conflict concerns. Also, as a requirements. The BLM did not receive approval. Because an approved device legal matter, operators on a Federal or information supporting some could potentially be used by an operator Indian lease, unit, or communitized area commenters’ contention that AVO on any Federal or Indian lease, unit, or will be subject to EPA fugitive inspections can be as effective as a communitized area, the BLM intends emissions requirements for their new, technology-based program, and thus the that the request will be evaluated by the modified and reconstructed facilities final rule does not allow operators to BLM Director, Deputy Director, or and BLM LDAR requirements for their inspect for leaks only using AVO. Associate Director. The BLM may existing facilities. By aligning the timing approve the device if the BLM finds that of the BLM and EPA requirements, and e. Approval of Alternative Leak the device would achieve equal or separately allowing operators to comply Detection Instruments/Methods and greater reduction of gas lost through with EPA requirements in lieu of BLM Alternative Leak Detection Programs leaks compared to optical gas imaging requirements, the rule provides Comments: Many commenters used in a leak detection program that operators with options for implementing strongly supported the provisions meets the rule requirements. The BLM a single leak inspection program across allowing the BLM to approve additional believes that this is an appropriate all of their facilities on a lease, unit, or technologies and methods for leak criterion for approval because it ensures communitized area. detection when they are found to be that the program will achieve its leak effective, and they urged the BLM to reduction goals regardless of the type of d. Instruments/Methods for Leak leak detection device used. The BLM Detection establish clear criteria for rapid approval of alternative monitoring understands that different types of Comments: Commenters generally devices and new technology. Some devices may achieve equivalent results. supported allowing the use of optical commenters included alternative For example, a device that monitors gas imaging for leak detection, but monitoring programs in their comments continuously, but is less sensitive than differed on whether also to allow on this topic. Commenters noted optical gas imaging, might achieve portable analyzers, or portable analyzers ongoing research and development results equivalent to optical gas imaging deployed according to Method 21, as an investment in new monitoring due to the gas savings from early alternative instrument for leak technologies and methods, such as the detection. The information submitted detection. In addition, most commenters DOE’s ARPA–E MONITOR program and must be sufficient to support such a opposed the BLM’s proposal to allow the Environmental Defense Fund’s operators with less than 500 wells 115 American Petroleum Institute (API). within the jurisdiction of a BLM field Comments on the ‘‘Waste Prevention, Production 114 U.S. EPA, Leak Detection and Repair, A Best Subject to Royalties, and Resource Conservation’’ office to use portable analyzers in lieu Practices Guide (Oct. 2007) (https://www.epa.gov/ Proposed Rule. Submitted April 22, 2016. Docket ID of optical gas imaging. Some argued that sites/production/files/2014-02/documents/ BLM–2016–0001–9073: Available at Method 21 should be an option for all ldarguide.pdf). 40 CFR part 60, Appendix A–7. regulations.gov.

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finding, however. Finally, the rule states must be completed by January 17, 2018. flexibility to select a verification method that the BLM will post online each The BLM notes that equipment should minimize costs. approved alternative monitoring device manufacturers, service providers, and The BLM also has modified the final and protocol, along with any limitations operators are already taking action to rule to provide operators up to 30 days on its use. produce and procure leak detection to make a repair, although the rule still The BLM also clarified the distinction equipment and establish programs in requires operators to repair leaks as between alternative leak detection response to EPA’s OOOOa requirements soon as practicable. We recognize that devices or methods and alternative leak published on June 3, 2016. Under those some State LDAR programs require detection programs, which are both requirements, all operators with new, repairs to be made sooner—within 5 to included in the proposed and final modified or reconstructed facilities will 15 days of finding a leak. The rules. Separate from the provisions for already be conducting leak detection requirement to repair leaks as soon as approval of an alternative device, the inspections as of June 3, 2017. practicable means that many leaks will final rule allows an operator to request Expanding such programs to cover be repaired upon discovery or within a BLM approval of an alternative leak additional well sites should take less shorter timeframe than 30 days, as many detection program that uses optical gas time than the initial development and leaks can be repaired on the spot or as imaging, a portable analyzer or another deployment. The BLM also believes that soon as a maintenance technician can approved device according to approved one year from the effective date of the get out to the site. However, according specifications. As with an alternative rule will provide ample time to to industry commenters, allowing up to device, the final rule spells out the manufacture the needed equipment, 30 days will meaningfully reduce the information that an operator would given the number of additional sources time and costs involved in filing Sundry need to submit to request approval of an that will be covered by this rule. Notices for leaks that could not be fixed alternative program. The BLM intends in 15 days but could be fixed in 30. that the request would be reviewed and g. Repair Requirements The final rule also provides additional potentially approved by the BLM State Comments: Commenters raised detail regarding what constitutes ‘‘good Director (or Director, if the request several primary concerns. First, many cause’’ for delay of repair beyond 30 covers operations in more than one commenters opposed the BLM’s days. Good cause for delay exists if State). The BLM could approve an proposal to require that an operator repair within 30 days is technically alternative leak detection program if the verify a repair using the same method infeasible; would require a pipeline BLM finds that the alternative program used to detect the leak. They noted that blowdown, a compressor station would achieve equal or greater it may be more efficient to allow the shutdown, or a well shut-in; or would reduction of gas lost through leaks operator to test a repair using, for be unsafe to conduct during operation of compared to the leak detection program example, a soap bubble test than to the unit. In addition, the operator must required under the rule. The rule does bring the leak surveyor back to the site complete the repair at the earliest opportunity, and in no case may the not allow other operators to use an to check the repair. alternative leak detection program repair be delayed beyond two years. Second, some commenters urged the requested by and approved for a specific Technical infeasibility includes a need BLM to allow 30 rather than 15 days for operator, as the results may not be to order parts, in which case the leak repair. Commenters stated that transferable. The BLM expects each operator must complete the repair as some leaks require more time to repair operator to make a detailed showing, soon as the parts are available. Where due to safety issues, availability of specific to their particular the cause for delay is the need to personnel or replacement parts, hostile circumstances, that an alternative blowdown or shut-down equipment, the weather conditions, or other logistical program would be equally or more operator must complete the repair issues related to sites being remote, effective. For example, an operator during the next equipment blowdown or might propose a program that included dispersed, unmanned, and un- shutdown that occurs after the leak is more frequent inspections for some sites electrified. One commenter argued that found. and less frequent for others, compared if an operator contracts with a h. Interaction With EPA Fugitive to the final rule requirements, or an consultant to perform the monitoring, Emission Requirements and State LDAR operator may be able to deploy an the consultant will not be able to make Requirements alternative leak detection device or the repair at the time the leak is system, approved by the BLM, on a detected, thus requiring more time to Comments: Many commenters argued continuous basis and achieve results complete the repairs. that the proposed BLM LDAR program that would allow for less frequent Third, commenters requested more overlaps and in some ways conflicts inspections using optical gas imaging. clarification on what would constitute with the EPA fugitive emissions ‘‘good cause’’ for delay of repair, noting requirements under OOOOa and various f. Timing that where the operator must blowdown State LDAR requirements. These Comments: Several commenters (depressurize) the equipment before commenters urged the BLM to drop the recommended that the BLM extend the making the repair, this could release LDAR program altogether or, at phase-in period for the proposed LDAR more gas than would be released by the minimum, align the BLM requirements program. They stated that operators or leak prior to the next scheduled with the EPA and State requirements contractors will need time to ramp up equipment blowdown. and/or allow operators to comply with LDAR efforts, including acquiring the Response: The BLM modified the EPA or State requirements in lieu of the necessary equipment and hiring and final rule to address each of these BLM requirements. training inspectors. Commenters concerns, as well as align the rule with Response: While the BLM cannot variously recommended phase-in the final subpart OOOOa. The BLM abdicate its statutory responsibility to periods of one year or three years. agrees that optical gas imaging, portable ensure safe, responsible, and Response: The BLM agrees and has analyzers using Method 21, and the nonwasteful production of public oil modified the final rule to allow for a one soap bubble test are all effective means and gas resources, the BLM has worked year phase-in period. Thus, the first to identify whether a leak has been closely with the EPA and consulted round of leak detection inspections repaired, and providing operators the with States to align the regulations as

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much as possible, consistent with the the BLM does not believe that these section highlights one significant agencies’ separate statutory authorities. differences would impose any change to those provisions from the In final form, the EPA and BLM additional burdens on operators. The proposed rule. In the final rule, liquids programs use the same criteria to BLM regulations do not require unloading activities at new wells are identify what constitutes a leak that operators to develop a monitoring plan subject to the same best practices and must be repaired, and they require or specify their walking path for reporting requirements as those at operators to use the same types of leak inspections, nor do they include existing wells. The BLM had proposed detection equipment, inspect the same requirements for scheduling inspection to prohibit liquids unloading through types of sources at the same frequencies, of components that are difficult-to- manual well purging at new wells and repair leaks within the same monitor or unsafe-to-monitor. The BLM drilled after the effective date of the timeframes. In addition, the final rule record-keeping requirements are also rule, but we are not carrying this provides that operators complying with less specific than the EPA requirements. proposal forward into the final rule. EPA requirements for new, modified The BLM regulations do not provide 2. Significant Comments and reconstructed equipment are specific direction to operators on the deemed in compliance with the BLM proper calibration and use of leak Comments: Many commenters requirements for such equipment, detection instruments, instead simply opposed the proposed well purging eliminating the possibility of overlap requiring operators to operate the prohibition for wells drilled after the where both regulations apply. Also, the instruments according to the effective date of the rule. These final rule gives operators the option to manufacturer’s specifications. Also, the commenters stated that even with comply only with the EPA requirements BLM requirements define ‘‘leak optimized liquids unloading at existing facilities as well. component’’ slightly more broadly than management and a highly sophisticated The BLM notes that there are a few the EPA definition of ‘‘fugitive automated system, some purging would small differences between the BLM and emissions component.’’ For existing still be necessary. One commenter EPA programs, but these should not equipment that is not also subject to the asserted that there are a large number of increase compliance burdens for EPA requirements, the final rule different technologies, tools, and operators. First, while the programs provides operators the choice of practices for liquids unloading that are both cover largely the same sources, the complying with the EPA or the BLM matched to an individual well’s programs differ somewhat in their requirements, allowing operators to characteristics at each stage of its lifecycle (e.g., wellbore design, tubular coverage. The BLM LDAR provisions comply with a single set of requirements design and condition, use of packers, apply to all covers, closed vent systems, for all of their sources if they so choose, and the frequency of unloading needed and storage vessels, while the EPA or to comply with the somewhat less to maintain or increase production), and fugitive emissions requirements only prescriptive BLM requirements with that no single technique will be apply to covers and closed vent systems respect to their existing sources. not subject to § 60.5411a, and thief With respect to State leak detection adequate or appropriate across the full hatches or other openings on a requirements, the BLM notes that lifecycle of a well. Others argued that it controlled storage vessel not subject to because requirements differ both among is inappropriate to have different standards apply to similar wells § 60.5395a. Subpart OOOOa has a the individual States and between the depending on the date on which they separate, detailed set of requirements in EPA and the individual State rules, it is § 60.5411a for sources covered by that are drilled. not possible to align the BLM Several commenters apparently section, and another set of requirements requirements with all of the other in § 60.5395a for storage vessel affected assumed that the prohibition on well potentially applicable requirements. In purging would effectively require facilities, and section 60.5416a addition, the BLM does not believe it is prescribes a separate and different leak operators to install a plunger lift system appropriate to exempt operators from during initial well construction, and inspection regime for these sources. the BLM requirements if they are subject For waste reduction purposes, the these commenters provided multiple to any State requirement relating to leak BLM did not believe it was necessary to reasons that would not be appropriate. detection, as some commenters adopt separate requirements for storage First, they asserted that new wells are suggested. That approach would not vessels, covers and closed vent systems. not likely to require liquids unloading ensure achievement of an equivalent Instead, the BLM elected to require until later in the life of the well. Second, reduction in gas losses. Instead, the final controls for storage vessels with high they argued that the characteristics of levels of gas loss and to include storage rule has a variance provision that allows the well at the time that deliquification vessels, covers, and closed vent systems State or local requirements to substitute is needed impact the technical under the LDAR program. Thus, the for any of the BLM requirements under feasibility and cost of using methods final rule provides that operators that these rules, upon a showing that the other than purging for liquids choose to comply with the EPA fugitive State or local requirement at issue unloading, and that operators are not emissions program in lieu of the BLM would perform at least equally well in likely to know during initial leak detection program for both new and terms of reducing the waste of oil and construction which option is optimal. existing equipment on a lease must gas, reducing environmental impacts Third, commenters contended that apply the EPA fugitive emissions from venting and or flaring of gas, and installing plunger lift systems at initial requirements to all equipment covered ensuring the safe and responsible construction would also ‘‘lock in’’ by the BLM requirements, including production of oil and gas. technology choices that may preclude storage vessels, covers and closed vent C. Liquids Unloading at New Wells the use of more appropriate or improved systems, to ensure that these types of technology when deliquification is equipment are covered by at least one of 1. Requirements of Final Rule and needed. Lastly, commenters asserted the agencies’ leak detection Changes From Proposed Rule that even if equipment was installed on requirements. The requirements to reduce venting new wells to accommodate plunger lifts, Second, a few elements of the BLM from liquids unloading activities at by the time liquids unloading is LDAR requirements are less prescriptive natural gas wells are generally discussed required, the equipment may need to be than the EPA requirements, but again, in Section VII. Section by Section. This fixed or replaced.

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Other comments supported BLM’s tribe is requesting a variance, and must criteria for BLM approval of a variance proposal to prohibit purging during identify the State, local, or tribal request. Many commenters stated that a liquids unloading activities at new provisions that would substitute for the patchwork of State, Federal, and tribal wells. They stated that operators could BLM provision or provisions. The regulations could cause compliance effectively design wells and deploy variance request must also explain why difficulties and confusion for both the mitigation technologies in a way that the variance is needed, and demonstrate regulators and the regulated entities. would eliminate emissions, and that how the State, local or tribal rules These commenters requested that the these technologies are cost effective. would perform at least as well as the variance approval criterion be less Citing datasets showing that a small BLM provisions they would replace. restrictive, and opposed the proposed minority of wells are responsible for a language stating that the State or tribal 2. Changes From Proposed Rule large amount of venting during liquids regulation must ‘‘meet or exceed’’ the unloading events, these commenters The variance provisions in the final requirements of this rule. Stating that also argued that the BLM should rule largely track the proposed rule, many of the State and tribal regulations address this issue by applying the with a few additions and clarifications. that limit venting and flaring are purging prohibition to these high- The criterion for approval of a variance qualitative, not quantitative, emitting existing wells as well.116 request in the proposed rule was a commenters asserted that determining Response: Upon reviewing the determination that the State or tribal what ‘‘meets or exceeds’’ the BLM’s information provided by the regulation ‘‘meets or exceeds the requirements would be arbitrary. commenters, the BLM has determined requirements of the provision(s) from Instead, some commenters suggested that it is not appropriate to prohibit which the State or tribe is requesting the that the BLM change the language to ‘‘is manual well purging at new wells. It is variance.’’ The final rule requires consistent with the intent of,’’ stating often less expensive to design in instead a finding that the State or tribal that this would allow State regulations performance specifications (such as no rule ‘‘would perform at least equally that meet the intent of the proposed purging) than to retrofit an existing well in terms of reducing waste of oil rule, and are adequate and complete in source. However, in this case, the BLM and gas, reducing environmental achieving similar goals, to meet the agrees with commenters that there is no impacts from venting and/or flaring of variance criterion. single technology or set of technologies gas, and ensuring the safe and Other commenters suggested changes that could appropriately be deployed at responsible production of oil and gas, to make the variance application and all new gas wells to avoid manual compared to the particular provision(s) approval process more restrictive, or purging later in the well’s life. The BLM from which the State or tribe is opposed allowing variances altogether. did not intend the proposed purging requesting the variance.’’ The final rule One commenter supported the proposed prohibition to force all new wells to changes the phrase ‘‘any individual criteria for approval but suggested install plunger lift systems, and we do provision of this subpart’’ to ‘‘any strengthening this requirement by not believe that would be a cost- provision(s) of this subpart,’’ to make specifying how the BLM would evaluate effective way to minimize venting from clear that a variance request can apply the relative effectiveness of the State liquids unloading activities. to a specific provision or a group of program, for example by requiring provisions. additional data or modeling to support D. Variances Related to State and Tribal The final rule also: Allows local a variance request. Commenters also Regulations government requirements, in addition to requested that variance requests be 1. Requirements of Final Rule State and tribal requirements, to support made publicly available, and that there be an opportunity for the public to Like the proposed rule, the final rule a variance request and substitute for BLM requirements; adds a requirement comment on the requests. provides a variance procedure to allow Several commenters suggested that that the State or tribe must notify the an equally or more effective State, local variances should be allowed for all BLM of any substantive changes to the government, or tribal requirement to provisions and for entire State State, local government, or tribal rules substitute for the comparable BLM programs, stating that this approach to be applied under the variance; and requirement under this subpart. The would eliminate an involved process clarifies that a variance allows State, BLM may grant a variance request requiring variance requests for specific local government, or tribal rules to submitted by a State or tribe if the BLM provisions. Others raised concerns apply in place of the BLM requirements, State Director finds that the State, local about allowing a programmatic but does not eliminate Federal government, or tribal rule or regulation variance, and urged the BLM to limit would perform at least as well as the enforcement of waste prevention variances to specific provisions of the relevant provision of the BLM rule in requirements on Federal or Indian rule or allow for a variance only when terms of reducing waste of oil and gas, leases, units, or communitized areas. the State and BLM requirements are reducing environmental impacts from Rather, under a variance, the BLM has duplicative. They noted that in many venting and/or flaring of gas, and the authority to enforce the rules cases State regulations do not address ensuring the safe and responsible identified by the State, locality, or tribe all of the areas covered by the BLM production of oil and gas. as if the requirements were BLM rule—i.e., venting, flaring, and leaks— The rule identifies what a State or regulations. The final rule further and State and tribal regulations may tribe would need to include in a request clarifies that State, local, and tribal also not cover the same specific sources for a variance. The request must identify enforcement of their own regulations of these losses as the BLM rule. the provision or provisions of the BLM would not be affected by the BLM’s Response: The BLM agrees that it requirements from which the State or approval of a variance. could be helpful to add further detail to 3. Significant Comments the proposed criteria for approving a 116 See EDF, Comments on Proposed Regulation variance. In addition, the BLM agrees Order Article 3: Greenhouse Gas Emission a. Criteria for Variance Approval and that it could be helpful to clarify Standards for Crude Oil and Natural Gas Facilities: Scope of Variance Part II of Comments 8 (May 22, 2015), available at whether several provisions could be http://www.arb.ca.gov/cc/oil-gas/meetings/EDF_5– Comments: Several commenters considered together and be found, in 22–15.pdf. expressed concerns with the proposed combination, to meet the criteria for

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approving a variance. The BLM has for the public to comment on the for the public that would have been revised the variance provisions to requests. In the past, the BLM has not provided under the BLM regulations. address both of these issues. made individual variance requests VI. Additional Significant Comments First, the goal of the variance publicly available or provided an and Responses provision is to allow State, local, or opportunity for public comment. tribal regulations to substitute for the This section summarizes and BLM requirements where they will b. Enforcement Under an Approved responds to some additional comments produce benefits at least equivalent to Variance on the proposed rule, that, while the expected benefits of the BLM Comments: Commenters requested significant, did not lead to major regulations. The final rule spells out this clarification on who would be changes in the final rule, and that are criterion by identifying three key responsible for enforcement if a more cross-cutting in nature than the benefits of the BLM rules: (1) Reducing variance were approved. Commenters provision-specific comments addressed waste of oil and gas; (2) reducing stated variously that: The State or tribe in the Section VI. Section-by-Section. environmental impacts from venting should enforce the applicable State, These include comments on: The and/or flaring of gas; and (3) ensuring local or tribal requirements; States and interaction between the BLM rule and the safe and responsible production of the BLM should establish memoranda of EPA regulations; the BLM’s authority to oil and gas. To replace provisions of the understanding for enforcement; or the require flaring of vented gas; when gas BLM rule with a State or tribal BLM should retain authority to enforce should be considered ‘‘avoidably lost’’; requirement, the State or tribe must any State, local, or tribal provision for application of these requirements to demonstrate that their rules would which a variance is granted (noting that units and communitized areas; delays in perform at least as well in achieving States or tribes might lack resources to permitting for natural gas pipeline rights these benefits. operate effective enforcement of way; and the interplay between this The final rule would allow States and programs). rule and the BLM’s land use planning tribes to request variances for specific activities. Response: The final rule clarifies that sets of provisions, as well as individual the variance provisions allow operators A. Interaction With EPA Regulations provisions. For example, a State that to comply with State, local, or tribal had a leak detection program similar to Comment: Many commenters raised requirements in lieu of BLM provisions the BLM program, but with a different concerns about how the proposed BLM where a variance has been approved, required inspection frequency, might regulations would interact with EPA but the BLM is still responsible for request a variance for the frequency regulations on oil and gas production. enforcing those requirements insofar as provisions or for the whole leak Some commenters urged the BLM not to they would replace the BLM detection program. The State would finalize some or all of the provisions of need to demonstrate that even if the requirements. As a practical matter, the this rule, arguing that its provisions State or local program would identify a BLM and States, localities, or tribes will regulate air pollution, and that task different set of leaks compared to the likely enter into memoranda of should be left to EPA. Some of these BLM program, overall the State or local understanding to coordinate commenters further suggested that if the program would be at least as effective as enforcement activities and efficiently BLM does regulate waste from oil and the BLM program in reducing an deploy enforcement resources, avoiding gas production, the BLM should exempt equivalent quantity of gas losses— overlap or redundancy. Ultimately, sources covered by the EPA regulations, which would, in turn, reduce waste, however, the BLM remains responsible and align its requirements with the EPA reduce the environmental impacts of for ensuring that operators comply with requirements where they overlap, to venting, and enhance safe and Federal requirements, or in this case, avoid duplication and inconsistencies. responsible production. State, local, or tribal requirements that Some commenters highlighted specific The final rule provisions are not, the BLM deems to be an acceptable provisions that could potentially however, structured to support a broad substitute for the Federal requirements. overlap with EPA’s requirements, and approval of a variance for an entire This is in contrast to situations in expressed concern about differences or State, local, or tribal oil and gas which a Federal agency is authorized by conflicts between the two agencies’ production oversight program, and the law to formally delegate administration regulatory regimes. BLM agrees with the commenters who and enforcement of a regulatory Response: We discuss the necessity raised concerns about such an approach. program to a State agency. Here, the for BLM regulations to reduce waste The BLM recognizes that all States and BLM is not delegating its regulatory or from oil and gas production in section many tribes regulate various aspects of enforcement authority to the State, III.B.3.a of this preamble, and the BLM’s oil and gas production, but different locality, or tribe. Rather, the BLM is legal authority for the rule in section States and tribes focus on different recognizing that, in the absence of a III.C. The BLM agrees with commenters, aspects of the production process and variance, an operator would be required however, that in those areas covered by aim for different goals. For example, one to comply with overlapping both this rule and EPA requirements, State may primarily regulate flaring, requirements. Where States, localities, the two sets of regulations should align while another aims primarily to reduce or tribes have regulations in place that to the maximum extent possible. We methane emissions from tanks. The are different from, but at least as have addressed comments raising focus on at least equivalent performance effective as, the BLM requirements, potential inconsistencies between the requires a specific look at the results applying two sets of requirements is proposed BLM text in specific achieved from a particular provision or burdensome for operators and would provisions and corresponding EPA text set of provisions, and it would not allow not generate additional benefits. The in sections VI.A of this preamble, and in approval of, for example, a stringent variance process avoids the potential the Section by Section discussion in flaring regime to substitute for leak duplication and inefficiencies that section VII, where those specific prevention requirements. could otherwise occur in this situation, provisions are discussed. The remainder The final rule does not require that while still holding the BLM responsible of this section addresses comments on variance requests be made publicly for ensuring that operators meet the the generalized potential for duplication available or that there be an opportunity requirements and produce the benefits and overlap.

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We do not believe that the final BLM existing sources under the CAA would undue waste or for safety purposes.117 and EPA rules impose conflicting entail the following steps: As explained further in the Section by requirements on operators, and we • EPA issues a final ICR; Section analysis in Preamble Section further believe that we have addressed • Industry submits the required VII, each provision of this rule that issues of regulatory overlap. First, much information; requires flaring rather than venting is a • of this rule regulates activities or areas EPA develops and proposes a rule waste prevention and/or a safety that are not regulated by EPA. This under CAA section 111(d); • measure. For instance, the requirement includes the rule’s provisions on routine EPA reviews public comment on to flare and not vent high-pressure flaring during the oil and gas production that proposal and finalizes the CAA associated gas constitutes waste section 111(d) rule; process, well maintenance and liquids prevention because any flaring at a • Because rules under section 111(d) unloading, well drilling, well testing, given well will likely cause the operator emergencies, royalties due on lost gas, do not have independent effect but are implemented by States, States then to capture more gas at its other wells in royalty rates, measurement and order to stay within the capture reporting of lost gas, and operators’ develop and submit to EPA State plans to implement the 111(d) rule (a process percentage under § 3179.7. These royalty-free use of gas. Second, where provisions therefore fall comfortably both EPA and the BLM regulate an that generally requires State rulemaking and may require State legislation); within the BLM’s waste prevention and activity, the rules largely apply to • safety authority under the MLA, different sources. In particular, the BLM EPA approves the State Plan (or prescribes a Federal implementation irrespective of the BLM’s environmental requirements on venting from mandate. pneumatic controllers, pneumatic plan where the State fails to submit a satisfactory plan); and Second, as discussed above, the MLA pumps, and storage vessels all explicitly • apply to existing sources that are not Industry implements the and FLPMA grant BLM the authority to subject to EPA’s subpart OOOOa, but requirements in time to meet regulate oil and gas development on the would be subject to that rule if they compliance deadlines established in the public lands, including to protect the were new, modified, or reconstructed State plans. public’s interest in other natural sources. In addition, even where the Clearly, it will be many years before resources and the quality of the BLM and EPA requirements address the existing sources in this sector are environment.118 In its traditional role as same type of activity, but apply to subject to binding requirements under manager of the public lands and steward different sources (existing (BLM) versus CAA section 111(d), and it is not yet of publically owned resources, BLM new, modified, or reconstructed (EPA)), evident what shape those requirements must regulate the development of the agencies have worked together to will take. Given the substantial federally owned oil and gas deposits align the text and substance of the uncertainty surrounding the timing and pursuant to principles of multiple use requirements as closely as practicable. content of any EPA regulation of and sustained yield.119 Under those Third, in those few instances in existing oil and gas sources, the BLM principles, BLM may consider air which both agencies regulate an activity has both the authority and the quality and GHG emissions when and could potentially cover the same obligation to act now to rein in the deciding how to regulate mineral- source—specifically well completions ongoing waste of large quantities of development operations. FLPMA and leak detection—the BLM final rule public and Indian natural gas. expressly declares that BLM should balance the need for domestic sources of provides that an operator can comply B. Authority To Require Flaring of Gas with just one set of requirements. minerals against the need to protect the Specifically, the rule aligns the BLM’s Citing several specific provisions of quality of ‘‘air and atmospheric’’ requirements with the corresponding the proposed rule that would require resources.120 Furthermore, as part of its EPA requirements to a substantial operators to flare rather than vent gas resource management plans, the BLM degree, and also provides that an that is not captured for sale or use, has recently exercised its authority operator will be deemed to be in including the venting prohibition and under FLPMA to include emission compliance with the BLM rules if the provisions on storage tanks, several mitigation standards for oil and gas operator complies with the applicable industry commenters asserted that the operations.121 requirements of subpart OOOOa. BLM lacks the authority to require Comment: Commenters noted that in flaring instead of venting of Federal and 117 The BLM has acted on the latter authority addition to the existing EPA regulations tribal gas. These commenters argued since DATE: longstanding rules promulgated under of new, modified, and reconstructed air that the BLM’s sole authority is to the MLA require the operator to ‘‘perform pollution sources at oil and gas prevent waste, and a provision that operations and maintain equipment in a safe and workmanlike manner’’ and ‘‘take all precautions facilities, EPA announced in March requires flaring rather than venting does necessary to provide adequate protection for the 2016 its intention to regulate existing oil not aim at waste prevention because health and safety of life and the protection of and gas sources under CAA section shifting from venting to flaring does not property.’’ 43 CFR 3162.5–3. 111(d), and EPA is currently developing conserve the gas. The sole purpose of 118 See 30 U.S.C. 187, 189; 43 U.S.C. 1732(b), an information collection request (ICR) such provisions, these commenters 1740. 119 43 U.S.C. 1732(a). as the first step in that process. asserted, is to regulate air pollution and 120 43 U.S.C. 1701(a)(8), (a)(12). Commenters argued that this EPA action GHG emissions. Commenters further 121 See, e.g., BLM Tres Rios Field Office, Resource negates any argument that the BLM rule asserted that regulation of air pollution Management Plan and Record of Decision at II–63 is necessary to address emissions from and GHG emissions is the exclusive (Feb. 27, 2015), available at http://www.blm.gov/ the existing sources that subpart OOOO province of the EPA, and by extension, style/medialib/blm/co/field_offices/san_juan_ public_lands/land_use_planning/approved_ and subpart OOOOa do not cover. the BLM may not regulate in this arena. lrmp.Par.66402.File.dat/Part%20II%20- Response: The ICR and EPA’s For several reasons, the provisions of %20RMP%20Chapter%202.pdf (setting forth intention to conduct a rulemaking under the rule that require flaring instead of specific standards to mitigate oil and gas emissions CAA section 111(d) are discussed in venting are within the BLM’s statutory that will apply to all approved site-specific projects, including NOx limits for engines, use of ‘‘green detail in section III.B.3.a of this authority. First, as noted above, the completions technology,’’ storage tank controls preamble. In summary, establishing MLA grants the BLM the authority to designed to achieve 95% emission reduction, and emission reduction requirements for promulgate rules for the prevention of use of low or no-bleed pneumatics).

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Third, the rule’s provisions requiring OOOOa regulations harmonize to the Furthermore, in the absence of clear flaring rather than venting further the maximum extent practicable. statutory language or legislative history BLM’s trust responsibilities with respect delineating what should be considered C. ‘‘Avoidably Lost’’ Oil or Gas to Indian oil and gas development ‘‘avoidably lost’’ oil or gas under the because they will prevent the waste of As noted above, the MLA requires MLA, the BLM’s past practice does not gas and will reduce the environmental royalties on oil and gas to be paid as a prohibit it from revising its impacts to Indian lands from oil and gas ‘‘percent in amount or value of the interpretation of that term. Finally, development. The BLM believes that production removed or sold from the FOGRMA provides BLM with an these provisions, like all the provisions lease.’’ 124 As interpreted in a judicial independent statutory authorization to in this rule, are in the best interest of decision addressing waste prevention impose royalties on oil or gas lost as a Indian mineral owners and that the regulations issued by the Department in result of an operator’s negligence or extension of these provisions to oil and the 1970’s,125 production ‘‘removed or failure to comply with any rule or gas production from Indian lands is sold from the lease’’ does not include oil regulation issued under the mineral therefore justified. or gas that is ‘‘unavoidably lost’’ during leasing laws, without further economic Finally, while the CAA indeed production. ‘‘Avoidably lost’’ oil or gas, analysis. Specifically, section 308 of delegates responsibility for on the other hand, constitutes waste and FOGRMA, provides that ‘‘[a]ny lessee is implementing its air pollution and GHG is subject to royalties. As explained in liable for royalty payments on oil or gas emissions control program to EPA, the preamble to the proposed rule, lost or wasted from a lease site when nothing in the Act bars the BLM from NTL–4A distinguished between such loss or waste is due to negligence considering air pollution and GHG ‘‘avoidably lost’’ and ‘‘unavoidably lost’’ on the part of the operator of the lease, emissions when deciding how to oil and gas, though it defined those or due to the failure to comply with any regulate the development of federally terms in a general way that was subject rule or regulation, order or citation 126 owned oil and gas deposits. The EPA to inconsistent application. In issued under this Act or any mineral and the Department of the Interior have § 3179.4, this rule clarifies the leasing law.128 distinct statutory authorities and distinction between ‘‘avoidable’’ and Some commenters argued that the missions that may, in some cases, result ‘‘unavoidable’’ losses by limiting BLM’s existing interpretation of what in overlapping policy goals. This rule ‘‘unavoidable’’ losses to specific constitutes an ‘‘avoidable loss’’ has does not infringe on EPA’s prerogative circumstances in which the operator has become a ‘‘fundamental term’’ of the to regulate air quality through source- not been negligent and has complied BLM’s existing oil and gas lease fully with applicable laws, lease terms, specific performance standards and contracts upon which lessees relied in and regulations. Industry commenters cooperation with State partners. Nor entering into the contracts and making objected to this approach on the ground does EPA’s authority infringe on or subsequent business decisions. Citing that whether a loss of oil or gas is otherwise restrict the BLM’s mandate to Mobil Oil Exploration & Producing ‘‘avoidable,’’ and therefore royalty- prevent waste from and manage the Southeast, Inc. v. United States, 530 bearing under the MLA, requires a case- environmental impacts of activities on U.S. 604 (2000), commenters argued that by-case evaluation of a lessee’s public lands and using public resources. the proposed rule would substantially reasonableness in light of the economic The CAA does not displace other impair the value of their lease contracts circumstances. That is, they argued that Federal agencies’ Congressionally- and therefore subject the BLM to a loss of oil or gas should be deemed granted authority to address contract damages or takings claims. ‘‘unavoidable’’ if taking measures to On the contrary, in promulgating this environmental and climate change avoid the loss would have been concerns.122 Congress may grant final rule the BLM is acting within its ‘‘uneconomic’’ from the operator’s authority under the MLA and thus agencies overlapping spheres of perspective. authority, and such agencies merely within the terms of existing leases. First, For several reasons, the BLM did not the MLA requires lessees to ‘‘use all have a responsibility to coordinate with change the final rule based on these each other.123 The BLM has worked reasonable precautions to prevent waste comments. As an initial matter, there is of oil or gas,’’ 129 and provides the closely with EPA to ensure that this rule no statutory or jurisprudential basis for and EPA’s subpart OOOO and subpart Secretary with the continuing authority the commenters’ position that the BLM to ‘‘prescribe necessary and proper rules must conduct an inquiry into a lessee’s 122 and regulations’’ in order to carry out See, e.g., 42 U.S.C. 7610 (‘‘Except as provided economic circumstances before in subsection (b) of this section, this chapter shall the purposes of the MLA.130 The MLA not be construed as superseding or limiting the determining a loss of oil or gas to be further requires that each lease contain authorities and responsibilities, under any other ‘‘avoidable.’’ Although the BLM’s a provision ‘‘that such rules . . . for the provision of law, of the Administrator or any other practice under NTL–4A has generally prevention of undue waste as prescribed Federal officer, department, or agency.’’). been to engage in case-by-case economic 123 by [the] Secretary shall be observed.’’ 131 See, e.g., Massachusetts v. EPA, 549 U.S. 497, assessments before making avoidable/ 531–32 (2007) (finding overlap but no conflict The BLM’s standard form lease makes between EPA’s authority to regulate greenhouse unavoidable loss determinations, the 127 clear that the rights granted to the lessee gases from new motor vehicles under the CAA BLM has not always done so and is are ‘‘subject to . . . the Secretary of the section 202(a) and the authority of the National not legally required to do so. Highway Transportation Safety Administration Interior’s regulations and formal orders (NHTSA) under the Energy Policy and Conservation in effect as of lease issuance, and to 124 30 U.S.C. 226(b)(1)(A), 226(c)(1) (emphasis Act (EPCA) to promote energy efficiency by setting regulations and formal orders hereafter mileage standards); see also Green Mt. Chrysler added). Plymouth Dodge Jeep v. Crombie, 508 F. Supp. 2d 125 See Marathon Oil Co. v. Andrus, 452 F. Supp. promulgated when not inconsistent 295, 350 (D. Vt. 2007) (concluding that ‘‘the 548, 552–53 (D. Wyo. 1978). with the lease rights granted or specific preemption doctrines do not apply to the interplay 126 81 FR at 6665. provisions of [the] lease.’’ 132 Both the between’’ EPA’s responsibilities under the Clean 127 Compare Ladd Petroleum Corp., 107 IBLA 5, Air Act and NHTSA’s duties under the EPCA, and 7 (1989) (requiring opportunity for operator to show 128 30 U.S.C. 1756. noting that ‘‘[s]hould a conflict between [the two that gas capture would be ‘‘uneconomic’’ before 129 agencies’ processes] become apparent, the federal flaring is deemed avoidable), with Lomax 30 U.S.C. 225. agencies involved—EPA and NHTSA— are capable Exploration Co., 105 IBLA 1, 7 (1988) (flaring 130 30 U.S.C. 189. of and even encouraged to cooperate in a joint without prior approval constitutes per se avoidable 131 30 U.S.C. 187. accommodation or resolution’’). loss under NTL–4A). 132 BLM Form 3100–11 (emphasis added).

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plain meaning of this language and the prevention authority under the MLA facilities on public lands. Specifically, BLM’s longstanding interpretation of it does not extend to the waste of Federal the BLM has ROW approval authority extend to ‘‘incorporat[ing] future oil and gas that occurs on non-Federal for ROWs that cross lands administered regulations, even though inconsistent tracts in a Federally-approved unit or by the BLM, or lands administered by with those in effect at the time of lease communitized area. Commenters cited two or more Federal agencies,136 except execution, and even though to do so the BLM’s decision not to apply lands in the National Park System or creates additional obligations or Onshore Oil and Gas Order No. 1 lands held in trust for Indians or Indian burdens for the lessee.’’ 133 The BLM’s (‘‘Order 1’’) to operations on non- tribes.137 legal and contractual authority to Federal lands in units and Several commenters expressed update its regulations governing oil and communitized areas 135 as evidence that concern that they have experienced gas leases should thus foreclose the BLM lacks authority to apply this significant delays in obtaining ROW successful breach of contract claims rule to such lands. However, the cited approvals for gathering lines, and that based on this rule. passage from the preamble to Order 1 these delays impede producers’ ability The Mobil Oil decision cited by did not address the scope of the BLM’s to capture and sell gas. These commenters is not pertinent. In that regulatory authority with respect to non- commenters stated that the BLM should case, a permitting delay mandated by a Federal tracts in Federally-approved streamline the ROW approval process. subsequently enacted statute constituted units and communitized areas; rather, They asserted that accelerating the a breach of the lease because the terms the passage addressed what was permitting process for pipeline ROWs of the lease did not subject it to the ‘‘appropriate’’ in light of the would allow energy producers to more burdens of such later-enacted jurisdictional limitations contained in easily capture and market gas that might statutes.134 Today’s rule constitutes a 43 CFR. § 3161.1. otherwise be flared due to a lack of ‘‘hereafter promulgated’’ regulation to Commenters also asserted that infrastructure. Some commenters which Federal oil and gas leases are because the regulation of State and further asserted that the BLM could expressly subject. The application of private minerals is under the quickly and easily reduce flaring by this rule to existing lessees, therefore, jurisdiction of the States, the BLM lacks processing ROWs in a timely manner, does not breach their contract rights the authority to apply its waste and that streamlining ROW permitting because their existing leases incorporate prevention regulations to units and would provide a more cost-effective the rule by reference. communitized areas in a manner that solution to the problem of gas waste That said, the BLM is cognizant that would affect the production of State and than imposing the requirements in the private minerals unitized or some of the requirements of this rule proposed rule. may pose more substantial burdens for communitized with Federal minerals. While the BLM agrees that the Commenters suggested several ways existing lessees than for future lessees, in which the BLM could increase because future lessees can take account regulation of State and private minerals is under the jurisdiction of the States, permitting speed for gas gathering lines of the requirements of the rule in on Federal land. One commenter stated, making their leasing decisions. the BLM does not agree that States’ jurisdiction over State and private for example, that the BLM should Accordingly, certain sections of the rule, expand the use of categorical exclusions including sections 3179.8 and 3179.201, minerals precludes the BLM from promulgating a waste prevention under the National Environmental are structured to reduce the burden on Policy Act (NEPA) when permitting gas existing lessees. For further discussion regulation that has incidental impacts on State and private minerals unitized gathering lines, and another suggested of these provisions, see Section VII, using a ROW ‘‘corridor’’ approval Section by Section. or communitized with Federal or Indian minerals. The purpose of this rule is to approach, so that small adjustments in D. Application to Units and ensure that operators take reasonable a project footprint would not delay the Communitized Areas precautions to prevent the waste of full approval process. The BLM’s experience is that while Some commenters objected to the Federal and Indian oil and gas, a matter processing time for ROW applications application of this rule to operations on that BLM has the authority to regulate can sometimes be an issue, particularly State and private tracts that are pursuant to its statutory and trust in a handful of offices where staff committed to a Federally-approved unit responsibilities described in Section retention has been difficult over the past or communitized area. These III.C. few years, processing time is not the commenters admit that the BLM has the The fact that States and private parties primary cause of the large volume of authority under FOGRMA to regulate oil have chosen to enter into unitization or current flaring. For example, BLM data and gas activities on such tracts for the communitization agreements whereby indicate that many applications to flare purposes of royalty accountability, but State or private oil or gas is commingled gas come from wells that are already fail to recognize the various royalty- with Federal or Indian oil or gas, and connected to pipeline infrastructure, or accountability purposes of this rule, produced concurrently with Federal or for which operators are not seeking including identifying and imposing Indian oil or gas, does not deprive the ROWs to build new pipelines. For royalties on wasteful losses of oil and BLM of its authority to impose instance, in Dickinson, North Dakota, gas, clarifying the circumstances under reasonable waste prevention large volumes of gas are being flared which production may be used royalty requirements on operators producing from over 1,700 Federal and Indian oil free, and setting measurement standards Federal or Indian oil or gas. wells,138 yet the local BLM field office for venting and flaring (some of which E. ROW Permitting is royalty bearing). More to the point, Under section 28 of the MLA, the 136 though, these commenters did not 43 CFR 2881.11. BLM is responsible for granting most of 137 Mineral Leasing Act section 28(b)(1) explain why the BLM’s waste the ROWs for oil and natural gas (definition of ‘‘Federal lands’’ excluding lands in gathering, distribution, and the National Park system or lands held in trust for 133 Coastal Oil & Gas Corp., et al., 108 IBLA 62, Indians or Indian tribes). 66 (1989). transportation pipelines and related 138 Based on internal BLM analysis of North 134 Mobil Oil Exploration & Producing Southeast Dakota activity from AFMSS queried on April 16, v. United States, 530 U.S. 604, 613–20 (2000). 135 72 FR 10308, 10313 (March 7, 2007). 2015.

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currently has just four ROW gathered and transmitted without preamble to the proposed rule, the BLM applications pending. crossing Federal or Indian land); and (6) agrees that the land use planning and While the BLM data indicate that the working closely with proponents to NEPA processes are critical to achieving current speed of the BLM’s ROW determine which projects are priorities. our simultaneous goals of responsible processing is not a significant factor in oil and gas development, land F. Planning the rate of flaring at most wells, the stewardship and resource conservation, BLM recognizes the importance of Finally, many stakeholders requested and protection of air quality on (and timely ROW approvals and continues to that the BLM address waste reduction reduction of air emissions from) Federal make improvements aimed at increasing through requirements under the MLA lands. the efficiency of the ROW permitting relating to the BLM’s land use planning The BLM already has land use process. A variety of factors, some in the and environmental review processes. planning and NEPA tools and processes BLM’s control but some beyond the Commenters stated that the BLM should in place that can be used to help achieve BLM’s control, can impact the timely use its authority to reduce waste by the specific goals of this rulemaking—to approval of ROWs and other actions that proactively using all available planning, reduce the wasteful and may be needed to construct a pipeline analysis and permitting tools including environmentally harmful loss of gas or gas processing facility. For example, Applications for a Permit to Drill through venting, flaring, and leaks. The fee land owners may delay or block a (APDs); lease stipulation decisions in BLM conducts NEPA analyses for both pipeline project that crosses both public resource management plans (RMP); regional planning decisions and project and private lands, even when the master leasing plans (MLPs); waste level decisions. These analyses take a Federal portion of the ROW is minimization plans (WMPs); and hard look at the direct effects, indirect permitted. The time period for unitization agreements. Commenters effects, and cumulative effects of the permitting ROWs may also be extended also stated that the proposed rule fails proposed federal action on various if, for example: The ROW grant is to exercise the BLM’s full authority at resources during the land use planning pending consultation or concurrence the planning and leasing stages, and or project approval process, such as the from another agency, e.g., pursuant to further, that land-use planning should effects on wildlife, air quality, or the Endangered Species Act or Section be used to support well-planned fossil recreation opportunities. The BLM’s 106 of the National Historic fuel development that would, for NEPA analyses also quantify GHG Preservation Act; the ROW application example, limit the leasing of lands emissions associated with the proposed is incomplete; the corresponding APD where infrastructure constraints are planning decision alternatives under has not yet been processed; or a high expected to be significant, so as to consideration. In particular, the land volume of applications is submitted in minimize the need for venting or flaring use planning and NEPA processes for a short period of time. of associated gas. new RMPs and MLPs provide important Last year, the BLM instituted key Commenters asserted that if the BLM opportunities to consider the effects of program changes to more quickly conducted more robust NEPA reviews oil and gas development over a larger process pending oil- and gas-related prior to oil and gas development, the area and to optimize planned ROW applications, and we have seen reviews would identify additional waste development to minimize impacts from progress as a result of these efforts. reduction opportunities. Commenters venting and flaring, among other These steps included using strike teams further requested that the rules activities. The planning process gives to add additional permit-processing governing development of RMPs be the BLM the opportunity to consider resources at high-volume offices, modified to support the intended how a specific land management plan working with the Office of Personnel purpose of the rule to capture gas and could address the timing and location of Management to identify pay strategies to prevent venting or flaring. These development of oil and gas and related address staff shortages in key offices, commenters also asserted that detailed, infrastructure, such as pipelines, and and increasing formal training for site-specific MLPs can support methane the projected consequences of such critical staff. Additionally, particular capture and waste minimization once an decisions in terms of the quantities of field offices are actively pursuing other RMP is in place. vented and flared gas and the impacts actions to decrease permitting times, Commenters disagreed with the associated with those emissions. including: (1) Coordinating aspects of BLM’s decision not to propose changes Thus, the BLM already has the NEPA the pipeline ROW and corresponding to the BLM land use planning processes and tools in place to evaluate APD reviews, so that they occur regulations as part of this rulemaking. the effects of the gas that would be concurrently rather than consecutively; They suggested that the BLM’s failure to flared, vented, and leaked from (2) working with project proponents to link the proposed rule to the BLM’s proposed oil and gas production, minimize surface disturbance to help foundational planning and management including impacts to wildlife and air expedite environmental reviews; (3) framework misses opportunities to quality, as well as GHG emissions, fully and consistently utilizing foster orderly and efficient development which contribute to climate change. The applicable Categorical Exclusions to of oil and gas that would prevent NEPA analyses can also identify ways to NEPA to streamline reviews; (4) methane pollution and waste. Some minimize such effects, such as encouraging project proponents to commenters suggested that although evaluating alternative options for siting develop oil and gas Master Development changes to the BLM’s land use planning and timing of development that would Plans and Master Leasing Plans as well rules are not required to enhance the maximize the opportunities for gas as right-of-way Master Agreements, use of planning mechanisms available to capture in lieu of flaring. which are negotiated with a single the BLM when developing RMPs and In addition, the BLM is in the process applicant for processing and monitoring MLPs, referencing these tools in the of completing a comprehensive update multiple applications covering facilities final rule would emphasize their to its land use planning regulations, within a specific geographic area; (5) importance. which should further enhance the encouraging unitization to help While the BLM is not making changes opportunities to address gas waste in streamline permitting by avoiding the to the BLM land use planning new oil and gas production approvals. need for multiple ROWs (or potentially regulations or NEPA review processes as The BLM proposed its new planning for any ROW at all, if the gas can be part of this rulemaking, as stated in the regulations in February 2016. The

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proposed changes would boost public of the baseline costs any requirements of To improve the clarity of this provision, participation and facilitate earlier the rule for which an exemption is not final § 3103–1(d) adds the language stakeholder engagement in the planning being requested. In addition, to the ‘‘from the gas stream’’ in two places that process. For example, the new planning extent that there is common data address any helium component that is regulations would provide for a supporting multiple exemption not conveyed with the mineral estate in planning assessment at the initiation of requests, such as the data on production a Federal oil and gas lease. an RMP, which would involve and revenues from a given lease, the Several commenters stated that a new stakeholders and other agencies in BLM intends that an operator would be royalty rate above the current rate of identifying key issues and obtaining able to provide that data once on a 12.5 percent would create uncertainty in better data early in the process. These single submission containing a separate the leasing process, and would new regulations would also enhance the showing for each of the specific disadvantage Federal leases compared existing opportunities for stakeholders requests, rather than providing multiple with State and private leases and to highlight options to reduce waste separate submissions. disincentivize investments on Federal from proposed oil and gas production in lands. One commenter objected to the VII. Section by Section BLM land use planning. proposed rule’s use of the term ‘‘base This section discusses the final rule rate,’’ because the BLM did not provide G. Exemptions Through Sundry Notices provisions, substantial changes from the a definition of that term. The Some commenters expressed concerns proposed rule, and some of the most commenter also noted that the proposed that because the rule provides for significant comments received. Public rule does not describe the process by operators to request various exemptions comments not addressed in this section which the rate will be determined, to through submission of Sundry Notices or elsewhere in this preamble are whom it will apply, or how and when to the BLM, these provisions could addressed in the separate Response to it will be reevaluated and reset. One impose a paperwork burden on Comments document, which is available commenter noted that under the BLM’s operators and the requests could be on the BLM Web site and is part of the recent regulatory revision of Onshore difficult for the BLM staff to process in rule-making record. Oil and Gas Order Number 3, the BLM a timely manner. The BLM believes that Part 3100 proposes to authorize commingling the number of requests for exemptions allocations and approvals (CAAs) for will be fairly limited, as the BLM’s Section 3103.3–1 Royalty on properties with identical fixed royalty analysis does not indicate that the costs Production rates. The commenter suggested that a of these provisions will be substantial The final rule’s amendments to variable royalty rate would have the for the vast majority of operators. existing 43 CFR 3103.3–1 focus on unintended consequence that most Nevertheless, the BLM recognizes that existing § 3103.3–1(a)(1), and do five CAAs would not be approved. these are valid concerns, and is things: (1) Remove two provisions of the Other commenters supported the committed to minimizing unnecessary existing regulations that are no longer BLM’s proposal to ensure that the paperwork burdens on operators and necessary (§ 3103.3–1(a)(1)(i) and (ii)); royalty rate of 12.5 percent represents a continuing to streamline its own (2) add a new § 3103–1(a)(2); (3) specify floor and not a ceiling. The commenters operations. that the royalty rate on all leases contended that this would allow the Thus, the BLM is providing here some existing at the time the rule becomes American public to receive a fair market additional information regarding how effective will remain at the rate return on their resources. Some we expect operators to submit requests ‘‘prescribed in the lease or in applicable commenters suggested that the royalty and how we may process them, and we regulations at the time of lease rate be raised to 18.75 percent to be in will provide additional guidance as we issuance’’; (4) specify the statutory rate line with the royalty rate assessed on move forward to implement the final of 12.5 percent for all noncompetitive Federal offshore leases. Commenters rule. Concerns have been raised in this leases issued after the effective date of also noted that the current rate is far regard with respect to requests for the final rule; and (5) conform the below several state rates. One exemption from multiple requirements regulatory regime for competitive leases commenter suggested that the increase of the rule for a lease. Specifically, issued after the effective date of the rule in royalty rate should be informed by operators have asked whether they to the regime envisioned by the MLA, the social and environmental costs of oil could submit a single request for an which specifies that the royalty rate for and gas production, including the social exemption from multiple provisions of all new competitively issued leases be cost of methane emissions. Another the rule, and how the BLM would set ‘‘at a rate of not less than 12.5 commenter stated that if the BLM were evaluate it. The final rule requires an percent.’’ 139 All of these changes were to increase the royalty rate, it should be operator to make a demonstration that in the proposed rule. a constant rate, rather than a sliding each requirement for which the operator The final rule also renumbers existing scale, as this would reduce is requesting an exemption would itself § 3103–1(a)(2) and (a)(3) as § 3103– administrative and reporting burdens. cause the operator to cease production 1(a)(3) and (a)(4) and makes minor Some commenters requested that the and abandon significant recoverable changes to existing § 3103–1(a)(3)) (final BLM set the royalty rate at least 60–90 reserves on the lease. An operator could § 3103–1(a)(4)) for clarity. days prior to any lease sale and publish not simply add up the costs of Additionally, the final rule reprints notice in the Federal Register and the compliance with multiple requirements existing §§ 3103–1(b) and (c), for clarity. BLM Web site for public comment. of the rule to show that the cumulative Finally, the BLM made a minor revision The BLM did not revise the rule in costs of the requirements would cause to § 3103.3–1(d) from the proposed rule. response to these comments. As stated the operator to cease production and in the proposed rule preamble, the BLM abandon significant recoverable reserves 139 Note that the rule renumbers current 43 CFR is not currently proposing to raise the under the lease, and thereby obtain an 3103.3–1(a)(2) and (3) but does not otherwise base royalty rate for new competitively exemption from all of those change the content of those provisions. Further, the issued leases above 12.5 percent; rather, rule does not alter 43 CFR 3103.3–1(b), (c), or (d). requirements. In making the showing for Those provisions are reprinted in this rule solely to we are conforming the regulatory a specific requirement, however, the clarify the numbering of the revised § 3103.3–1, and provisions governing royalty rates for operator could take into account as part for ease of reference. new competitive leases to the

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corresponding rate provisions in the closest to the proposed well(s); all Commenters also expressed concern MLA. The BLM would engage in existing gas trunklines within 20 miles that the waste minimization plan additional process before raising the of the well, and proposed routes for requirement could trigger the need for rate. connection to a trunkline; the total additional analysis under NEPA for volume of produced gas, and percentage non-federal/non-Indian wells within a Section 3160.0–5 Definitions of total produced gas, that the operator unit or communitized area. Under This amendment to § 3160.0–5 deletes is currently venting or flaring from wells existing regulations, wells that are not the definition of ‘‘avoidably lost’’ that in the same field and any wells within located on federal or Indian surface and by its terms applies to part 3160. A a 20-mile radius of that field; and a do not pierce federal or Indian minerals definition of ‘‘avoidably lost’’ is no detailed evaluation, including estimates are not required to obtain BLM’s longer needed for part 3160, and this of costs and returns, of potential on-site approval of an APD, even if those wells definition is superseded by the capture approaches. are within a unit or communitized area provisions in new subpart 3179, Some commenters requested that from which federal or Indian minerals particularly § 3179.4, governing when waste minimization plans required by are produced. Commenters were the loss of oil or gas is deemed other states, such as North Dakota and concerned that the requirement for a avoidable or unavoidable. The BLM did New Mexico, should be allowed to waste minimization plan would not receive comments on removing this satisfy the requirements set forth in this somehow require those wells to file definition and is finalizing this deletion section. The BLM recognizes that some APDs or subject them to NEPA. as proposed. States have similar waste minimization The BLM believes these concerns are Section 3162.3–1 Drilling Applications plan requirements under State law. To unfounded. Operators would be and Plans the extent that an operator is already required to submit waste minimization This section describes the preparing, under State requirements, a plans only for wells that already require requirements for drilling applications waste minimization plan that meets all an APD under part 3160—i.e., for wells and plans, including the information or most of the requirements for a waste that are located on federal or Indian that an operator must provide with an minimization plan under section surface or pierce federal or Indian APD. The BLM is amending this section 3162.3–1, the BLM requirements should minerals. Operators may need to to add paragraph 3162.3–1(j), which impose little additional burden on the incorporate information in their waste requires that when submitting an APD operator. The operator would be able to minimization plans regarding wells on a for an oil well, an operator must also submit the same plan to the BLM, unit or communitized area that do not submit a waste minimization plan. supplemented as necessary to meet each require APDs (see, e.g., § 3162.3– Submission of the plan is required for of the requirements of section 3162.3–1. 1(j)(2)(ii), requiring anticipated approval of the APD, but the plan will Other commenters stated that the production information for all wells on not itself become part of the APD, and preparation and review of the waste a multi-well pad). Also, to the extent the terms of the plan will not be minimization plans would be a burden that gas from a nonfederal mineral estate enforceable against the operator. both on applicants and the BLM, is mixed with federal or Indian gas, the The purpose of the waste because in the commenters’ view, the waste minimization plan may minimization plan is for the operator to proposed rule significantly effectively minimize waste of both set forth a strategy for how the operator underestimated the number of plans federal or Indian and non-federal or will comply with the requirements of that would be required and the time non-Indian gas. However, nothing under subpart 3179 regarding the control of required to prepare them. The this provision requires operators to file waste from venting and flaring. The commenters asserted that the BLM can an APD for any well, much less extends waste minimization plan must include be slow in approving APDs, and argued the APD requirements under part 3160 information regarding: The anticipated that the review of the additional waste to wells that are not located on federal completion date(s) of the proposed minimization plans could slow the or Indian surface and do not pierce well(s); a description of anticipated process further. Other commenters federal or Indian minerals. Moreover, production from the well(s); suggested that the requirement to waste minimization plans are not certification that the operator has prepare a waste minimization plan be enforceable, and BLM will only review provided one or more midstream limited only to wells that anticipate and approve them in the course of processing companies with information flaring a high volume of associated gas acting on an APD. While the BLM will about the operator’s production plans, after completion. The BLM disagrees analyze potential indirect impacts of including the anticipated completion with these comments and believes that execution of the waste minimization dates and gas production rates of the requiring operators to prepare a waste plan as part of its NEPA analyses for proposed well or wells; and minimization plan for all wells is a APDs submitted after the rule takes identification of a gas pipeline to which reasonable, low cost, and effective way effect, there is no independent federal the operator plans to connect. to encourage operators to consider and action here that would trigger NEPA for Based on comments received plan for capturing gas before the a waste minimization plan separate requesting that the information required development of every new well. As from an APD. Other commenters stated in the plans be streamlined, the final stated previously, however, the final that the BLM should strengthen the rule provides that certain kinds of rule streamlines some of the elements requirements of the waste minimization information are only required if an required in the plan. Further, the BLM plans and make them enforceable. The operator cannot identify a gas pipeline presently plans to review the BLM declined to do so. The BLM with sufficient capacity to accommodate effectiveness of the plan requirement believes that waste minimization plans, the anticipated production of the within 3 years after the final rule’s like the environmental analyses proposed well(s). This conditionally- effective date, to assess the costs to performed under the National required information includes: A gas operators of preparing the plans, the Environmental Policy Act, can drive pipeline system location map showing costs to the BLM of reviewing the plans, significantly better outcomes by the proposed well(s); the name and and the effectiveness of the plans in ensuring that the operator and location of the gas processing plant(s) driving flaring reductions at new wells. midstream companies have more

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information at an earlier stage, to allow covered by this subpart. The section PA. The reason for this limitation is to for better planning and coordination. To also states that the term ‘‘lease’’ in this prevent excessive use of royalty-free gas achieve that result, however, the plans subpart includes IMDA agreements, by prohibiting a unit operator from must be quite detailed and contain all unless specifically excluded in the using royalty-free production from one relevant information. The BLM believes agreement or unless the relevant PA to power operations on, or treat that the plan’s unenforceability helps provisions of this subpart are production from, another PA on the achieve that outcome: Because the terms inconsistent with the agreement. In the same unit, to the benefit of different of the plans cannot be enforced against final rule, in response to comments, the owners and to the detriment of the the operator, the BLM avoids creating an BLM edited proposed paragraph (a)(5) to public interest. incentive for operators to develop very clarify the list of items to which this As discussed below, § 3178.5 qualifies general plans with few specific details. subpart applies. Paragraph (a)(5) in the the general provisions of § 3178.3 by Additionally, the BLM is concerned that final rule provides that this subpart listing specific operations for which circumstances could change between applies to wells and production prior written BLM approval will be when the plan is developed and when equipment, and also, under specified required for royalty-free use. well production begins, making strict circumstances, compressors. The BLM received a few relatively adherence to the plan difficult. In such Additionally, the final rule omits technical comments on § 3178.3, which a circumstance, the existence of the plan proposed paragraph (a)(6) relating to are addressed in the Response to would still be useful, because operators coverage of gas lines, as the BLM has Comments document. The BLM did not would have information at their determined that gas lines do not ‘‘use’’ make any changes to this section from fingertips that would enable them production for purposes of this subpart. the proposed rule. respond nimbly to the changed One commenter suggested replacing Section 3178.4 Uses of Oil or Gas on circumstance, but operators would not ‘‘other facilities’’ with ‘‘production a Lease, Unit, or Communitized Area be held to the specific terms of the now equipment,’’ and suggested That Do Not Require Prior Written BLM outdated plan. distinguishing compressors that Approval for Royalty-Free Treatment of Commenters also requested that the promote production at the wellhead Volumes Used from those that promote pipeline flow. BLM make the waste minimization This section identifies uses of plans publicly available. The BLM The BLM agrees that these suggested changes improve the clarity of the rule, produced oil or gas that will not require already publicly posts APDs for a period prior written BLM approval for royalty- prior to approval, and we plan to post and we have revised the text accordingly. The text now refers to free treatment. The uses listed in this the waste minimization plans section involve routine production and accompanying the APDs in the same ‘‘production equipment’’ and limits coverage to compressors that both are related operations. In addition, manner, subject to any protections for paragraph (b) clarifies that even when a confidential business information. located on a lease, unit or communitized area and compress use is authorized, the royalty-free Subpart 3178—Royalty-Free Use of production from the same lease, unit or volume is limited to the amount of fuel Lease Production communitized area. reasonably necessary to perform the operation on the lease using Section 3178.1 Purpose Commenters also suggested distinguishing among flow lines, appropriately sized equipment. This This section states that the purpose of gathering lines and transmission lines, ensures that royalty-free on-site use the subpart is to address circumstances and requested revisions to highlight the remains subject to the requirement to in which oil and gas produced from limits of the BLM’s authority over gas avoid waste of the resource. Federal and Indian leases may be used lines. We believe that these comments While the royalty-free uses described royalty-free. This subpart supersedes are no longer applicable with the here are generally similar to the uses those parts of NTL–4A pertaining to oil elimination of proposed paragraph identified as ‘‘beneficial purposes’’ in or gas used for ‘‘beneficial purposes.’’ (a)(6). NTL–4A, this rulemaking further The BLM received a comment on this clarifies which uses warrant royalty-free Section 3178.3 Production on Which section requesting that the BLM clarify treatment. whether the rule will replace all of Royalty Is Not Due In addition, this section clarifies that NTL–4A, or just those parts ‘‘pertaining This section sets forth the general rule hot oil treatment is an accepted on-lease to use of oil or gas for beneficial that royalty is not due on oil or gas that use of produced crude oil that does not purposes.’’ The BLM notes that Subpart is produced from a lease or require prior approval to be royalty-free. 3178 replaces the portion of NTL–4A communitized area and used for In this treatment, oil is not consumed as pertaining to the use of oil or gas for operations and production purposes fuel. Rather, after the oil is pumped beneficial purposes and Subpart 3179 (including placing oil or gas in back into the well to stimulate replaces the portion of NTL–4A marketable condition) on the same lease production, it is produced again. pertaining to venting and flaring of or communitized area without being Although the use of produced crude oil produced gas, unavoidably and removed from the lease or for hot oil treatments on the producing avoidably lost gas, and waste communitized area. This section also lease, unit, or communitized area has prevention. Together, the combined treats oil and gas produced from unit historically been understood by the revisions to Subparts 3178 and 3179 PAs—that is, the productive areas on a BLM and by operators as a royalty-free supersede NTL–4A in its entirety. The unit—and used for operating and use, it is not specifically addressed in BLM disagrees that the regulatory text production purposes on the unit, for the NTL–4A but is now included in this requires clarification beyond what is same PA, in the same way. Units often final rule. stated here, and did not revise this include different PAs composed of As mentioned above, the BLM section in response to this comment. multiple leases with varied ownership. received comments requesting that other This section therefore limits royalty-free uses of oil or gas be identified as Section 3178.2 Scope of This Subpart use of gas from a particular PA to uses royalty-free, including fuel for power This section specifies which leases, that are made on the same unit, to generation, pilot and assist gas, fuel for agreements, wells, and equipment are support production from the same unit heating, fuel for ancillary equipment,

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fuel to treat gas to remove impurities, • Added treatment of gas to • Any other types of use for fuel to run completion and work over paragraph (a)(6); and operations and production purposes equipment, and gas used for gas lift. The • Added two uses that will not which are not identified in § 3178.4. BLM agrees that these uses are routine, require prior written BLM approval for This provision clarifies that the BLM and therefore should not require prior royalty-free treatment, which were retains discretion to consider approving approval to be royalty-free. identified in § 3178.5 in the proposed royalty-free use under circumstances Regarding using oil as a circulating rule as requiring prior approval: (1) that are not now anticipated. medium in drilling operations, or Using oil as a circulating medium in In response to comments described injecting gas produced from a lease, unit drilling operations (paragraph (a)(8)), below, the BLM made the following PA, or communitized area into the same and (2) injecting gas produced from a three changes to the proposed rule lease, unit, PA, or communitized area to lease, unit PA, or communitized area requirements: (1) Removed proposed increase the recovery of oil or gas, the into the same lease, unit PA, or paragraphs (a)(1) and (a)(2) from this BLM had proposed to include these uses communitized area to for the purposes section and moved them to § 3178.4 in the list in § 3178.5 of uses requiring of conserving gas or increasing the (royalty-free without prior approval); (2) prior approval. As operators are already recovery of oil or gas (paragraph (a)(9). Added language to paragraph (2) • required to report the use of oil as a Added injection of gas that is (paragraph (4) in the proposed rule) to circulating medium in drilling cycled in a contained gas-lift system, as clarify that the provision applies to the operations under Onshore Order paragraph (a)(10). physical characteristics of the gas ‘‘that require the gas to be treated or Number 1, and the use of gas for Section 3178.5 Uses of Oil or Gas on processed prior to use’’; and (3) injection under applicable regulations a Lease, Unit, or Communitized Area Removed proposed paragraph (c) and in parts 3100, 3160 and 3180 of this That Require Prior Written BLM added language to paragraph (b)(1) that title, however, the BLM has decided not Approval for Royalty-Free Treatment of indicates that royalties must be paid on to require prior approval for these uses. Volumes Used In addition to the injection of gas for the volumes when the BLM disapproves a This section identifies uses of oil or purpose of increasing the recovery of oil request for royalty-free treatment under gas that will require prior written BLM or gas, the BLM has added the injection this section, and that any approvals for approval to be deemed royalty-free. The of gas ‘‘for the purpose of conserving royalty-free treatment will be effective aim of this section is three-fold: (1) To gas’’ as a royalty-free use that does not from the date the request was filed. Each ensure that the BLM retains discretion require prior written BLM approval change is discussed below along with a to grant royalty-free use where the BLM under the final rule. Often, gas injection summary of the comments that lead to deems the use to be consistent with the is used to enhance resource recovery by the change. MLA’s royalty requirement for oil or gas Several commenters indicated that maintaining or slowing the reservoir that is produced and then removed from some of the activities in proposed pressure decline which leads to higher the lease and sold; (2) to increase § 3178.5 should not require prior oil recovery. The BLM also understands uniformity in the administration of the approval. The BLM agrees and, in that, in some circumstances, excess gas royalty provisions by specifying response to this and other comments on that cannot be captured and sold or circumstances that warrant particular § 3178.4, moved some provisions to used on lease may be injected in order BLM attention; and (3) to ensure the § 3178.4, as described previously. to conserve the gas. This practice occurs BLM’s awareness of unusual uses that Additionally, some commenters in Canada’s Bakken field. While not all risk the loss or waste of oil and gas. stated that operators should not be reservoirs are conducive to gas For all of the identified uses, required to seek prior approval for the injection, the BLM believes it important operators will be required to submit a following two royalty-free uses: Gas to provide that as an option to conserve Sundry Notice requesting BLM approval removed from a pipeline at a location any gas that can’t be sold immediately. to conduct royalty-free activities. downstream of the FMP and gas initially Finally, this rule does not address The potentially royalty-free uses removed from a lease, unit participating some uses that are already defined as identified in this section are as follows: area, or communitized area for royalty-free under ONRR provisions, • Using oil or gas that was removed treatment or processing where the gas is such as the royalty-free use of residue from the pipeline at a location returned to the lease, unit, or gas to plant operations, as downstream of the approved facility communitized area for lease operation. provided in 30 CFR 1202.151(b). measurement point (FMP). The BLM The BLM disagrees with these Overall, in response to comments anticipates that these situations will be comments and retained these received, the BLM made the following quite rare because the tap that operators paragraphs in paragraphs (a)(1) and changes in the final rule: use to extract and measure gas is (a)(2) of this section. Gas that is • Modified paragraph (a)(1) to more generally upstream of the FMP. removed from a lease, unit participating broadly address the use of fuel to • Using produced gas for operations area, or communitized area would generate power, including the use of on the lease, unit PA, or communitized normally be royalty-bearing. Inclusion fuel to operate ‘‘combined heat and area, after it is returned from off-site of these uses in this section allows the power,’’ which is a particularly efficient treatment or processing to address a BLM the discretion to approve royalty- means of generating power from gas; particular physical characteristic of the free uses under the unique • Combined and modified proposed gas. Physical characteristics that might circumstances in which gas is removed paragraphs (a)(2) and (a)(3) to include preclude initial use of gas in lease and returned to the same lease, unit artificial lift equipment and completion operations and necessitate off-lease participating area, or communitized and workover equipment; treatment or processing include an area. • Renumbered the remaining unusually high concentration of Several commenters also stated that paragraphs accordingly; , or the presence of the BLM did not adequately explain • Added use of gas as a pilot fuel or inert gases or liquid fractions that limit why operators must ever receive agency as assist gas for a flare, combustor, the gas’s utility as a fuel. The operator approval for royalty-free use of thermal oxidizer, or other control will bear the burden of establishing the production. Commenters stated that the device, as paragraph (a)(5); necessity of off-lease treatment. BLM must specify the standard or

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criteria used to evaluate requests for Section 3178.6 Uses of Oil or Gas operations conducted off the lease, unit, approval. The BLM has determined that Moved Off the Lease, Unit, or or communitized area. When royalty-free uses requiring prior Communitized Area That Do Not production is removed from the lease, approval are uses that do not typically Require Prior Written Approval for unit, or communitized area, it becomes occur, that are not likely to apply to a Royalty-Free Treatment of Volumes royalty-bearing unless otherwise large number of operators, and that have Used provided. This principle is reflected in a higher risk of loss of gas depending on This section identifies two paragraph (a) of this section, which the individual circumstances circumstances in which royalty-free use provides that with only limited surrounding the use. These factors of oil or gas that has been moved off the exceptions, royalty is owed on all oil or warrant individual approval by the BLM lease, unit, or communitized area would gas used in operations conducted off the on a case-by-case basis, and are not be permitted without prior BLM lease, unit, or communitized area. situations in which development of approval. The first situation is where an Existing NTL–4A does not include a standard approval criteria is individual lease, unit, or communitized provision that specifically addresses appropriate. area includes non-contiguous areas, and approving off-lease royalty-free use. Some commenters argued that the oil or gas is piped directly from one area Such approval is required, however, BLM should remove the limitation, of the lease, unit, or communitized area under ONRR regulations, which included in the proposed rule, that gas to another area where it is used, and no provide, ‘‘All gas (except gas removed from the lease may only be oil or gas is added to or removed from unavoidably lost or used on, or for the used on the lease royalty-free if it was the pipeline, even though the oil or gas benefit of, the lease, including that gas removed for treatment or processing ‘‘to crosses lands that are not part of the used off-lease for the benefit of the lease address a particular characteristic of the lease, unit, or communitized area. when such off-lease use is permitted by gas.’’ The commenters stated that the Under this section, the BLM will the BOEMRE or BLM, as appropriate) operator should not have the burden of consider such production as not having produced from a Federal lease to which establishing the necessity of off-lease this subpart applies is subject to been ‘‘removed from the lease.’’ This 141 treatment. In response to this comment, will provide the lessee or operator the royalty.’’ New § 3178.6 will add the BLM revised paragraph (a)(2) same opportunity for royalty-free use as clarity and consistency in (paragraph (a)(4) in the proposed rule) if the lease, unit, or communitized area implementation of that ONRR to clarify that the provision applies to were one contiguous parcel. regulation. Paragraph (b) of this section identifies particular physical characteristics of the The second situation is where a well circumstances in which, despite the gas ‘‘that require the gas to be treated or is directionally drilled, and the general rule articulated in paragraph (a), processed prior to use.’’ wellhead is not located on the the BLM will consider approving off- Some commenters suggested that an producing lease, unit, or communitized area, but produced oil or gas is used on lease royalty-free use (referred to here as identified use should be royalty-free ‘‘off-lease royalty-free uses’’). These until the BLM denies it, rather than the same well pad for operations and production purposes for that well. In include situations in which the having to wait for the BLM to approve operation is conducted using equipment it. In addition, one commenter such situations, the rule allows for royalty-free use at the well pad, without or at a facility that is located off the suggested that if the BLM does not, lease, unit, or communitized area (under within 30 days, respond to a Sundry prior approval. Use at off-lease well heads is an established royalty-free an approved permit or plan of Notice requesting approval, the Notice operations, or at the agency’s request) should be deemed approved. Another use.140 Commenters asserted that the because of engineering, economic, commenter requested that approvals resource protection, or physical should go into effect when the request language in proposed paragraph (a) that described reasons why oil or gas would accessibility considerations. For is filed. In response to these comments, example, a compressor that otherwise the BLM revised § 3178.5(b)(1) to be moved off the lease, unit, or communitized area was ambiguous. In would have been located on a lease may indicate that approvals will be effective be sited off the lease because the from the date the request was filed. response to this comment, the BLM simplified the language in this topography of the lease is not conducive However, if the BLM disapproves a to equipment siting. To be approved for request, the operator must pay royalties paragraph to clarify the original intent discussed above. Paragraph (a) of the off-lease royalty-free use, the operation on all volumes used, including those would also have to be conducted used while the request was pending. final rule now states: ‘‘The oil or gas is transported from one area of the lease, upstream of the approved FMP. This Several commenters stated that unit, or communitized area to another paragraph reflects the BLM’s policy to exceptions for royalty-free use should area of the same lease, unit, or encourage operators to reduce the not be considered, that the rule allows communitized area where it is used, and amount of surface disturbance too much royalty-free venting and no oil or gas is added to or removed associated with oil and gas exploration flaring, or that the rule does not from the pipeline while crossing lands and development projects. In some sufficiently restrict royalty-free use that that are not part of the lease, unit, or cases, centralizing production facilities results in emissions to the environment. communitized area; . . . .’’ at a location off the lease may serve that As stated in the proposed rule preamble, objective. however, royalty-free on-site use is Section 3178.7 Uses of Oil or Gas Paragraph (c) requires the operator to limited to reasonable uses that are not Moved Off the Lease, Unit, or obtain BLM approval for off-lease wasteful. The BLM does not intend to Communitized Area That Require Prior royalty-free use via a Sundry Notice grant prior approval of royalty-free uses Written Approval for Royalty-Free containing the information required under § 3178.5 unless it determines, in Treatment of Volumes Used under proposed § 3178.9 of this subpart. light of available technology, that the This section addresses the royalty In response to a comment described requested use is reasonable and not treatment of oil or gas used in below, in the final rule the BLM added wasteful. As a result, the BLM did not the following provision to paragraph (c) revise this section in response to these 140 Plains Exploration & Production Co., 178 comments. IBLA 327, 341 n.16 (2010). 141 30 CFR 1202.150(b).

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of this section: ‘‘If the BLM disapproves off-lease production may be approved through § 3178.7 to clarify that royalty- a request for royalty-free treatment for by the BLM for off-lease royalty-free use. free use must adhere to the provisions volumes used under this section, the The BLM recognizes both the operating in those sections. The BLM received operator must pay royalties on the efficiency and resource conservation few, highly technical comments on this volumes. If the BLM approves a request advantages of locating production section, which are addressed in the for royalty-free treatment for volumes equipment from multiple wells on a Response to Comments document. used under this section, such approval common site. The BLM did not revise Section 3178.9 Requesting Approval of will be deemed effective from the date this paragraph in response to these Royalty-Free Treatment When Approval the request was filed.’’ comments. Paragraph (d) of this section clarifies Another commenter suggested that Is Required that approval of off-lease measurement the BLM should approve all requests This section describes how to request or commingling under other regulatory unless it can demonstrate that particular BLM approval of royalty-free use when provisions does not constitute approval circumstances related to lease prior-approval is required under of off-lease royalty-free use. An operator operations justify disallowing royalty- § 3178.5 or § 3178.7. The operator must or lessee must expressly request, and free use. The BLM disagrees with this submit a Sundry Notice containing submit its justification for, approval of comment and did not modify the rule in specified information, which is off-lease royalty-free use. The BLM response to this comment. The MLA necessary for the BLM to determine if anticipates that generally such approval exempts from royalties production that approval is appropriate. The would be appropriate only in some of is used on the lease for lease operations. information includes a description of the situations in which the BLM has This rule allows for royalty-free off-lease the operation to be conducted, the approved measurement at a location off uses in some cases, including those measurement or estimation method, the the lease, unit, or communitized area, or specified in § 3178.6 as not requiring volume expected to be used, the basis has approved commingling production prior approval. The circumstances for an estimate (if applicable), and the off the lease, unit, or communitized area described in § 3178.7 give the BLM the proposed use of the oil or gas. This and allocating production back to the flexibility to approve additional off- section was finalized as proposed, with producing properties. lease royalty-free uses where the BLM minor wording changes to improve Paragraph (e) of this section addresses believes those uses are reasonable and clarity. The BLM received few, highly circumstances in which equipment not wasteful. technical comments on this section, located on a lease, unit, or which are addressed in the Response to communitized area also treats Section 3178.8 Measurement or Comments document. production from other properties that Estimation of Volumes of Oil or Gas Section 3178.10 Facility and are not unitized or communitized with That Are Used Royalty-Free Equipment Ownership the property on which the equipment is This section specifies that an operator located. An operator is allowed to report must measure or estimate the volume of This section clarifies that although the as royalty-free only that portion of the royalty-free gas used in operations operator is not required to own or lease oil or gas used that is properly allocable upstream of the FMP. In general, the the equipment that uses oil or gas to the share of production contributed operator is free to choose whether to royalty-free, the operator is responsible by the lease, unit or communitized area measure or estimate, with the exception for all authorizations, production on which the equipment is located, that the operator must in all cases measurements, production reporting, unless otherwise authorized by the measure the following volumes: (1) and other applicable requirements. The BLM. Royalty-free gas removed downstream of BLM did not receive significant A commenter proposed that an the FMP and used pursuant to sections comments on this section and did not identified use should be royalty-free 3178.4 through 3178.7; and (2) royalty- revise this section from the proposed until the BLM denies an application for free oil used pursuant to sections 3178.4 rule. prior approval, rather than requiring an through 3178.7. When royalty-free oil or Subpart 3179—Waste Prevention and operator to wait for the BLM to approve gas is removed downstream of the FMP Resource Conservation the use. As stated above, in response to and used pursuant to sections 3178.4 these comments, the BLM revised through 3178.7, the operator must apply Section 3179.1 Purpose § 3178.7(c) to indicate that approvals for a new FMP under section 3173.12 to As in the proposed rule, this section will be effective from the date the measure the gas that is removed for use. states that the purpose of subpart 3179 request was filed. However, if the BLM If oil is used on the lease, unit or is to implement statutes relating to disapproves a request, the operator must communitized area, it is most likely to prevention of waste from Federal and pay royalties on all volumes used, be removed from a storage tank on the Indian (other than Osage Tribe) leases, including those volumes used during lease, unit or communitized area. Thus, conservation of surface resources, and pendency of the request. paragraph (c) also requires the operator management of the public lands for Commenters also suggested that the to document the removal of the oil from multiple use and sustained yield. The proposed language in paragraph (e) was the tank or pipeline. section also provides that subpart 3179 inconsistent with the BLM’s goal of Paragraph (e) requires that operators supersedes those parts of NTL–4A that encouraging operators to reduce the use best available information to pertain to venting and flaring of amount of surface disturbance because estimate gas volumes, where estimation produced gas, unavoidably and this provision would discourage is allowed. For both oil and gas, the avoidably lost gas, and waste production from multiple leases. The operator must report the volumes prevention. BLM disagrees. This section indicates measured or estimated, as applicable, One commenter stated that BLM that only the portion of the oil or gas under ONRR reporting requirements. As should clarify whether subpart 3179 used as fuel that is properly allocable to revisions to Onshore Oil and Gas Orders replaces NTL–4A and that NTL–4A is the lease, unit, or communitized area on No. 4 and 5 have now been finalized as no longer applicable, or if subpart 3179 which the equipment is located (on- 43 CFR subparts 3174 and 3175, only supersedes part of NTL–4A. As lease) is royalty-free; however, the respectively, the final rule text now stated previously, subpart 3178 replaces proportion of the oil or gas used from references § 3173.12, as well as § 3178.4 the portion of NTL–4A pertaining to the

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use of oil or gas for beneficial purposes, defined terms have a meaning particular effectively lower the tank size threshold and subpart 3179 replaces the portion of to this rule. Other defined terms may be for coverage and would be considerably NTL–4A pertaining to flaring and familiar to many readers, but are less cost-effective, as the same type of venting of produced gas, unavoidably defined in the regulatory text to enhance equipment would have to be installed and avoidably lost gas, and waste the clarity of the rule. on multiple tanks with smaller releases. prevention. Together, the combined In response to comments, the final The BLM has also excluded from the revisions to subparts 3178 and 3179 rule adds several definitions that were definition of storage vessel tanks storing supersede NTL–4A in its entirety. not included in the proposed rule, hydraulic fracturing fluid prior to including ‘‘automatic ignition system’’; implementation of an approved Section 3179.2 Scope ‘‘continuous bleed’’; ‘‘high pressure permanent disposal plan under Onshore This section specifies which leases, flare’’; ‘‘leak’’ and ‘‘leak component’’ Oil and Gas Order No. 7. This revision agreements, tracts, facilities, and gas (which replaced the term ‘‘component’’ ensures that the final rule will not lines are covered by this subpart. The from the proposed rule); and overlap with BLM rules governing section also states that the term ‘‘lease’’ ‘‘pneumatic controller.’’ The final rule hydraulic fracturing activities. in this subpart includes IMDA also adds a definition of ‘‘compressor Commenters also suggested that the agreements, unless specifically station’’ that is consistent with the BLM adopt definitions for ‘‘pneumatic excluded in the agreement or unless the definition in subpart OOOOa, as the controllers’’ and ‘‘continuous bleed’’ relevant provisions of this subpart are final rule leak detection provisions and that are consistent with the definitions inconsistent with the agreement. The the subpart OOOOa leak detection in subpart OOOOa. The BLM agrees that BLM did not revise this section from the provisions both refer to compressor aligning the definitions in the BLM and proposed rule. stations. In addition, the definition of EPA rules to the extent possible will Some commenters stated that the ‘‘storage vessel’’ has been expanded to reduce the potential for confusion. scope of the rule is too broad. Some clarify the types of vessels covered by Accordingly, § 3179.3 includes commenters suggested limiting its scope section 3179.203. The definitions of definitions for ‘‘pneumatic controllers’’ to leases with more than 51 percent ‘‘development oil well’’ and and ‘‘continuous bleed’’ that are Federal interest, while others suggested ‘‘development gas well’’ include minor consistent with the definitions of these that the BLM clarify that this subpart wording changes for clarity. terms in subpart OOOOa. does not apply to exploration, wildcat, Some commenters expressed concerns In order to provide clarity, BLM has or delineation wells. The BLM disagrees that the proposed definition of a storage included definitions of ‘‘automatic that the scope of the rule is too broad, vessel in § 3179.3 does not match the ignitor system’’ and ‘‘high pressure and did not revise this section based on definition provided in subparts OOOO flare’’ in the final rule. The final rule these comments. As discussed earlier in and OOOOa. Commenters asserted that defines an ‘‘automatic ignition system’’ this Preamble, the BLM has both the the definition proposed by the BLM as an automatic ignitor and, where authority to ensure that operators take applies the 6 tpy VOC threshold for needed to ensure continuous reasonable precautions to prevent the applicability to a whole tank battery, as combustion, a continuous pilot flame. A waste of Federal and Indian oil and gas. well as to a single tank, making the ‘‘high pressure flare’’ is defined as an The fact that this final rule may impact proposed rule significantly more open-air flare stack or flare pit designed some leases with minority Federal or stringent than the EPA OOOOa rule, for the combustion of natural gas Indian interest does not deprive the which only applies if an individual leaving a pressurized production vessel BLM of its authority to impose storage vessel exceeds the threshold. (such as a separator or heater-treater) reasonable waste prevention Commenters also noted that the EPA that is not a storage vessel. requirements on operators producing definition of storage vessel excludes Federal or Indian oil or gas. portable tanks temporarily located at the Section 3179.4 Determining When the Finally, the BLM notes that the rule well site, and they recommended that Loss of Oil or Gas Is Avoidable or generally applies to all oil and gas wells, the BLM take the same approach as the Unavoidable including exploratory, wildcat, and EPA by aligning the BLM’s definition This section describes the delineation wells. Provisions of the rule with the EPA definition. Other circumstances under which lost oil or that apply more narrowly explicitly commenters supported the BLM’s gas is classified as ‘‘unavoidably lost.’’ indicate the narrower scope; for proposed definition of storage vessel, as ‘‘Avoidably lost’’ oil or gas is then example, the gas capture requirements it could apply the requirements for defined as oil or gas that is not in section 3179.7 apply only to storage vessels to a collection of low- unavoidably lost. The descriptions in ‘‘development oil wells.’’ emitting single tanks that would not the rule enhance clarity and consistency otherwise meet the threshold. by listing specific circumstances under Section 3179.3 Definitions and Based on input from commenters, the which oil and gas may be ‘‘unavoidably Acronyms BLM has revised its definition of storage lost’’ when the operator has not been This section contains definitions for vessel to be largely consistent with the negligent, has not violated laws, terms that are used in subpart 3179: EPA subpart OOOO and subpart regulations, lease terms or orders, and ‘‘accessible component’’; ‘‘automatic OOOOa definitions. The BLM removed has taken prudent and reasonable steps ignition system’’; ‘‘capture’’ and the reference to a ‘‘battery of tanks’’ and to avoid waste. ‘‘capture infrastructure’’; ‘‘compressor added provisions excluding temporary The rule also defines as ‘‘unavoidably station’’; ‘‘continuous bleed’’; tanks from the definition of a storage lost’’ any produced gas that is vented or ‘‘development oil well’’ or vessel. The BLM believes that this is a flared from a well that is not connected ‘‘development gas well’’; ‘‘gas-to-oil reasonable approach. The 6 tpy to gas capture infrastructure, if the BLM ratio’’; ‘‘gas well’’; ‘‘high pressure flare’’; threshold identifies a quantity of lost has not determined that the loss of gas ‘‘leak’’; ‘‘leak component’’; ‘‘liquid gas that is reasonably cost-effective to through such venting or flaring is hydrocarbon’’; ‘‘liquids unloading’’; address at an individual tank, without otherwise avoidable. ‘‘lost oil’’ or ‘‘lost gas’’; ‘‘pneumatic regard to the type of vessel or fluid Finally, this section defines controller’’; ‘‘storage vessel’’; and stored. Avoiding the same quantity of ‘‘avoidably lost’’ oil or gas as lost oil or ‘‘volatile organic compounds.’’ Some lost gas from a battery of tanks would gas that does not meet this section’s

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definition of ‘‘unavoidably lost.’’ Also of natural gas from a development oil month, somewhere in the averaging included in the ‘‘avoidably lost’’ well. In this rulemaking, the BLM is area, to provide itself a sufficient buffer category is any ‘‘excess flared gas,’’ modernizing and clarifying the criteria in meeting the gas capture targets to which § 3179.7 defines as the quantity for determining when incidental and accommodate force majeure events that of flared gas by which the operator fell necessary disposal of gas accompanying may not be within its control, but are short of the applicable capture oil production crosses the line into common and predictable. requirement specified in that section. unreasonable waste of public gas In response to comments received, the resources, and the final rule expresses Relatedly, some commenters final rule added two new items to the these criteria in the form of a gas requested that gas lost because of ROW list of operations and sources that are capture target. When an operator is not delays should be considered considered unavoidably lost: (1) Gas lost meeting the applicable gas capture unavoidably lost. This preamble during facility and pipeline target, specified in § 3179.7 the BLM addresses the issue of ROW delays in maintenance, such as when an operator deems the excess flared gas volume— Section VI.E. For the reasons discussed must blow-down and depressurize that is, the volume that caused the there, the BLM declines to make this equipment to perform maintenance and operator to fall short of the capture change, which goes to the central repairs, which includes ‘‘pigging’’ of target—to be waste, avoidable, and premise of the gas capture requirement. lines to remove liquids, and (2) flaring subject to royalties. The BLM has determined that it is not of gas from which at least 50 percent of Several commenters disagreed with reasonable for operators to develop oil natural gas liquids have been removed BLM’s proposed definitions of ‘‘waste’’ wells and plan to use flaring as the and captured for market, if the operator and ‘‘avoidably lost.’’ Many commenters primary and routine disposal method has notified the BLM through a Sundry felt that the BLM should maintain the for the associated gas. Rather, these Notice that the operator is conducting definitions used in NTL–4A, including rules require oil well operators, over such capture. applying an economic test to determine time, to plan to capture an increasing The final rule also makes the what degree of capture is economical for percentage of their associated gas. In the following four clarifications to items the operator. These comments are near-term, the BLM believes that the gas that were included on the proposed list addressed in section V.C of this of operations and sources that are preamble. capture targets, combined with the considered unavoidably lost, and that Some commenters stated that the quantities of allowable flaring and the remain on that list in the final rule: (1) BLM should consider gas lost during ability to average, are sufficiently Normal operating losses from a natural force majeure events as unavoidably generous to allow operators to manage gas-activated pneumatic controller or lost. The BLM does not agree that all short-term delays in planned gas pump are considered unavoidable, losses during force majeure events pipeline infrastructure with little provided the controller or pump should be considered unavoidable. Such difficulty, using production deferment complies with §§ 3179.201 and events may be out of the control of and on-site capture at some wells where 3179.202; (2) normal operating losses operators, but they are often expected necessary. Over the longer term, a from storage vessels and other low and operators can therefore plan for reasonable operator can continue to use pressure production vessels are them. The final rule does include as those tools as well as working with the considered unavoidable provided the justifications for unavoidable loss some midstream companies to ensure that vessels are in compliance with specific events that are generally there is adequate pipeline capacity §§ 3179.203 and 3174.5; (3) losses from considered force majeure events, such available to support transport of well venting in the course of downhole as emergencies. However, the gas associated gas prior to building out large well maintenance and/or liquids capture requirements in the final rule well developments. unloading are considered unavoidable are structured to provide operators provided those operations are substantial flexibility to meet the Many commenters requested that the conducted in compliance with capture targets without providing a BLM grandfather all existing § 3179.204; and (4) leaks are considered blanket exemption for all events that the determinations of royalty-free flaring. unavoidable, provided the operator has operator does not directly control. For Again, this change would undercut a complied with the leak detection and example, scheduled maintenance of key goal of this rulemaking: Gradually, repair requirements of §§ 3179.301 downstream pipeline or processing over time, to require operators to reduce through 3179.305. plants is neither unexpected nor routine flaring of associated gas from The BLM also modified the proposed unusual, and the BLM believes an development oil wells. With the treatment of gas that is lost from a well operator should be able to plan ahead to generous phase-in schedule for the gas that is not connected to a pipeline to address those events—for example, by capture targets and the quantities of align this provision with the revised identifying alternative capture allowable flaring, this rule requires only approach in the final rule that addresses approaches or planning to temporarily modest near-term reductions in flaring flaring through capture targets instead of reduce production or shut in the well to from existing wells. The BLM believes flaring limits. The BLM had proposed address these circumstances. that it is entirely reasonable to expect Moreover, as described in Preamble that gas flared in excess of the operators to work, over time, to reduce applicable flaring limit would be Section V.A, Venting Prohibition and flaring from their existing wells, as well considered avoidable. The final rule Capture Targets, the final rule allows as from new developments. Moreover, deems avoidable any gas that is operators to meet the capture target on for this rule to have any meaningful ‘‘excess’’ relative to the capture target. average over a month at all of the wells The term ‘‘excess flared gas’’ is defined on a lease, unit, or communitized area, effect on flaring, it must cover both in § 3179.7. or alternatively, on average over a existing and new development. The principle underlying both the month at all of the operator’s wells in Allowing all current determinations of proposed and final regulatory text with a county or state. A prudent and royalty-free flaring to persist in respect to excess flared gas is that a reasonable operator will be able to take perpetuity is unnecessary and would prudent and reasonable operator will advantage of this flexibility to ensure substantially undercut the effectiveness not routinely flare an unlimited quantity that it has captured enough gas over the of this rule.

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Section 3179.5 When Lost Production (a)(4) as paragraph (b)(3) and qualified from all of the operator’s development Is Subject to Royalty that venting from a natural gas-activated oil or gas wells in the relevant area, This section provides that royalties pneumatic controller or pump is minus’’ a declining ‘‘flaring allowable’’ are due on all avoidably lost oil or gas, permitted during normal operation and volume.. By requiring that operators but not on unavoidably lost oil or gas. when the pump is in compliance with shift from venting to flaring, the BLM is We received no significant comments on § 3179.201 and § 3179.202; (6) Added effectively increasing operators’ flared this section, and the final rule is very paragraphs (b)(5) through (b)(8) that volume in a given month, which in turn similar to the proposed rule with minor describe additional cases when venting increases the total volume of gas that the wording changes to improve clarity. of gas is permitted (situations 4–8 in the operators must capture in that month. previous paragraph); (7) Removed all of Second, directing associated gas to a Section 3179.6 Venting and Flaring proposed paragraph (b) describing flare rather than allowing operators to From Gas Wells and Venting Prohibition venting or flaring volume limits, vent it improves waste accounting This section expressly prohibits all because flaring limits are now addressed because under final rule § 3179.9, venting and flaring from gas wells, in a new § 3179.7; and (8) Added a new operators must measure volumes above except where the gas is unavoidably lost paragraph (c), which requires that all 50 Mcf per day that are flared from a pursuant to section 3179.4(a). In flares or combustion devices be high pressure flare stack or manifold. By addition, this section requires operators equipped with an automatic ignition shifting operators from venting to to flare rather than vent all gas that is system. flaring, § 3179.6 will likely increase the Section 3179.6(a) carries forward not captured, except under certain number of operators that must measure NTL–4A’s express prohibition on limited circumstances. Operators will be their flared gas volumes under § 3179.9. venting and flaring from gas wells. allowed to vent gas in the following This will, in turn, improve operators’ Section IV.A of NTL–4A prohibits the situations: (1) When flaring is (and the BLM’s) waste accounting. venting or flaring of gas well gas, except technically infeasible—for example if Better waste accounting is itself a waste for unavoidable losses and short-term the volumes of gas are too small to prevention measure, because it gives the venting and flaring during emergencies, operate a flare (such as so-called BLM and operators a better sense of how well purging and evaluation tests, initial much gas is being wasted—and thus bradenhead gas), or if the gas is not production tests, and wells tests readily combustible; (2) under how much could be made available for (circumstances now defined as productive use and/or sold to offset the emergency conditions, when the loss of unavoidable in section 3179.4(a)). gas is uncontrollable or venting is costs of waste prevention equipment. Similar restrictions on venting and Third, this requirement constitutes necessary for safety; (3) when the gas is flaring from gas wells were implied in vented through normal operation of a waste prevention when applied to the proposed rule; the BLM has chosen operator flaring during activities natural gas-activated pneumatic to state this explicitly in the final rule controller or pump; (4) when the gas is regulated under §§ 3179.102, 3179.103, in order to avoid confusion. and 3179.104. Under §§ 3179.102 and vented from a storage vessel, provided Key comments received on this that § 3179.203 does not require the .103, flaring during well completion and section are discussed in Section III.B.1.b initial production testing that exceeds combustion or flaring of the gas; (5) of this preamble. Additional substantial when the gas is vented during downhole 20 MMcf/well is treated as avoidably comments received on the venting lost gas subject to royalties under well maintenance or liquids unloading prohibition provisions are discussed activities performed in compliance with § 3179.4(a)(1)(C). The BLM believes that below. in many instances, the venting § 3179.204; (6) when the gas is vented The BLM received comments prohibition in § 3179.6 may result in through a leak where the operator is in asserting that the BLM lacked the operators reaching the 20 MMcf/well compliance with § 3179.301–305; (7) statutory authority to require operators royalty flaring threshold sooner, thereby when venting the gas is necessary to to flare rather than vent gas that is not providing an additional financial allow non-routine facility and pipeline captured. Commenters argued that such maintenance to be performed, such as a requirement does not fall within the incentive for operators to reduce waste. when an operator must, upon occasion, BLM’s waste-prevention authority under Under § 3179.104, all flaring during blow-down and depressurize equipment the MLA because shifting from venting subsequent well tests that exceeds 24 to perform maintenance or repairs; and to flaring does not prevent waste as the hours is treated as avoidably lost gas (8) when release of gas is unavoidable gas is lost in either case. These subject to royalties under and flaring is prohibited by Federal, commenters then argued that the only § 3179.4(a)(1)(D). State, local or Tribal law, regulation, or possible justification for the Fourth, as discussed above, the enforceable permit term. requirement to flare rather than vent is requirement to flare rather than vent The BLM made the following changes control of GHGs and other air associated gas is justified as a safety to the proposed rule requirements: (1) pollutants, which commenters assert is measure under the MLA. It is generally Changed the title of this section; (2) exclusively within the EPA’s domain. safer to combust methane gas than allow added a new section (a) that expressly The BLM disagrees with these it to vent uncombusted into the prohibits venting or flaring gas from gas comments for several reasons. First, the surrounding air due to concerns over wells, except where the gas is requirement in this section to flare methane’s explosiveness and the risks to unavoidably lost pursuant to section rather than vent does result in waste workers of hypoxia and exposure to 142 3179.4(a); (3) renumbered paragraphs prevention, because it is paired with various associated pollutants. Fifth, (a)(1) and (2) paragraphs (b)(1) and (2); provisions that limit total flaring— and as also discussed above, even if the (4) moved discussion of venting from a namely, the gas capture requirements in venting prohibition were purely an air storage vessel from proposed paragraph § 3179.7. Under § 3179.7(c), the quality control measure, the BLM does (a)(3) to paragraph (b)(4) and added denominator in the gas capture have the authority to regulate air quality language clarifying that such venting is percentage calculation is ‘‘the total 142 NIOSH–OSHA Hazard Alert entitled, ‘‘Health permitted when § 3179.203 does not volume of gas captured over the month and Safety Risks for Workers Involved in Manual require combustion or flaring of the gas; plus the total volume of gas flared over Tank Gauging and Sampling at Oil and Gas (5) renumbered proposed paragraph the month from high-pressure flares Extraction Sites,’’ February 2016, www.osha.gov.

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and GHG impacts on and from the occur on a lease that inform an comments received on the proposed public lands, pursuant to FLPMA and operator’s determination of technical flaring provisions are discussed below. the MLA, as discussed in Section III.C feasibility, the BLM does not believe Several commenters asserted that the of this Preamble. that it is appropriate to add further ability to avoid flaring depends on the Several commenters stated that specificity to this term. If there is a capacity of gathering lines, and that operators should be required to capture dispute about the term in a specific operators must prove production for a all natural gas from all wells, with no case, the BLM has the final say in new oil play and initiate larger scale exceptions, or that if flaring is allowed, determining whether flaring is, in fact, development before gathering and/or combustion devices should be required technically infeasible. processing companies are willing to to have a design destruction efficiency invest in infrastructure. These of at least 98%, that enclosed flares Section 3179.7 Gas Capture comments informed the revisions to the should be required, and that flares Requirement flaring revisions made in the final rule. should be required to be equipped with Final rule § 3179.7 houses a modified The BLM also recognizes that currently a continuous pilot light and an auto- version of the flaring requirements that the optimal mechanism to capture gas is ignition system. As discussed in Section were in proposed rule s 3179.6. As through connecting to a pipeline, which III.B.2 of this preamble, the BLM does discussed in Section III.B.2.a, the final may take time to achieve in some areas not believe that it is feasible to eliminate rule alters how the proposed rule due to lagging infrastructure and all venting and flaring, but we have constrained the quantities of gas lost capacity constraints. As a result, the revised both the flaring requirements through flaring, but achieves similar final rule provides additional time and and the circumstances when venting is flaring reductions by requiring operators flexibility for industry to plan and better permitted in response to comments. The to meet specified monthly capture coordinate development of production BLM also is not adding a requirement targets (subject to shrinking flaring wells with development of pipelines to for flares to have a design destruction allowances), rather than setting per well transport the production. As discussed efficiency of 98%. Many existing flares numeric flaring limits. in section III.B.2, the final rule provides have a design combustion efficiency of Final rule § 3179.7 establishes capture an option for operators to comply with 95%, rather than 98%. targets that increase over the first nine the capture targets on a lease-by-lease, The BLM has added a requirement in years of rule implementation. county-wide, or state-wide basis, and the final rule that flares must be Paragraphs (a) and (b) describe the also phases in the capture targets over equipped with an automatic ignition a longer period of time. These changes capture percentage requirements. The system, which will provide the flare will allow sufficient time and flexibility schedule for the capture targets is system with an effective method of to enable industry to better align oil provided in § 3179.7(b)(1)–(4) and is ignition in the case of interruption. The development with gas infrastructure reproduced in Section III.B.2.a of this term ‘‘automatic ignition system’’ over time. implies the concept of maintaining an preamble. Paragraph (c) defines On the other hand, given the BLM’s ignition source without specifying a ‘‘capture percentage,’’ ‘‘total volume of statutory obligation to reduce waste of particular type of device, and the BLM gas captured,’’ ‘‘adjusted total volume of gas, the clear technical capability of believes that operators will utilize gas produced,’’ and ‘‘relevant area.’’ operators to capture gas, the economic devices that are appropriate for the Under § 3179.7(c)(3), an operator may value of the gas, and the environmental circumstance. The BLM does not believe choose whether to comply with the impacts of not capturing it, the BLM has that requiring a specific device, such as capture targets on each of the operator’s determined that it is not reasonable to a continuous pilot, would necessarily leases, units or communitized areas, or allow operators to dispose of large result in reduced waste relative to a on a county-wide or state-wide basis. quantities of associated gas from more general requirement for an Section 3179.7(c)(4) defines when an oil development oil wells using routine automatic ignition system. or gas well is considered ‘‘in flaring. The final rule therefore Some commenters requested that the production’’ and therefore subject to the structures the capture targets in a way BLM allow venting when flaring is not capture targets in this section. Section that the BLM estimates will achieve economically feasible. The BLM 3179.7(d) establishes an equation for slightly greater flaring reductions than believes that this change is unnecessary, determining the quantity of ‘‘excess the proposed rule, albeit over a longer would add substantial ambiguity to the flared gas’’—that is, the volume of flared timeframe. rule, and could significantly weaken the gas that causes an operator to fall short Many commenters asserted that on- requirement to flare rather than vent. of the applicable capture target in a site capture technologies are not Flaring rather than venting gas that is given month, and that is therefore technically feasible and/or economically not being captured is widespread subject to royalties. Section 3179.7(e) viable. In the proposed rule, we industry practice, due in large part to requires operators to prorate the excess discussed research indicating that LNG safety concerns. While there are flared gas to each lease, unit, or stripping, CNG, and gas-to-power are situations where the quantities of gas communitized area that reported high- commercially mature technologies that are too small or difficult to allow for pressure flaring, for purposes of are portable, scalable, and have been flaring, the rule explicitly allows calculating royalties. utilized economically at well sites.143 venting in lieu of flaring in those As discussed in Section III.B.2 of this Moreover, MJ Bradley released a re- situations. It is not clear to the BLM preamble, the BLM developed the analysis of the economic analysis in the what other circumstances would render capture target approach in final rule proposal, which suggests that for over flaring ‘‘economically infeasible,’’ or § 3179.7 after careful consideration of 500 of the leases in the BLM data set, what specific concerns the commenter the many comments received on the the CNG trucking option would have is trying to address. flaring limit approach taken in proposed total net benefits that exceed total lessee A commenter seeking to minimize rule § 3179.6(b). The key comments exceptions to the venting prohibition received on § 3179.7 and BLM’s 143 81 FR 6641. See also Carbon Limits. asked the BLM to define the term response to these comments are also ‘‘Improving Utilization of Associated Gas in US Tight Oil Fields’’. 2015. Available athttp:// ‘‘technically infeasible.’’ Given the wide discussed in Section III.B of this www.catf.us/resources/publications/files/Flaring_ variety of situations that are likely to preamble. Additional substantive Report.pdf y.

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costs by approximately $56.5 million the BLM agrees, that the applicable whether a request met the criteria for over a 10 year period.144 The BLM capture percentage under final rule approval absent the required agrees with the commenter’s assertion § 3179.7 ‘‘would impose such costs as to information. Also, operators routinely that these remote-site capture cause the operator to cease production provide information to the BLM that technologies may not be viable at all and abandon significant recoverable oil they consider confidential; if they well sites. However, they are viable and reserves under the lease.’’ indicate on the Sundry Notice that the currently used at some sites. The final As discussed in Section V.B.2.b of information is considered confidential, rule’s option allowing operators to this preamble, § 3179.8 was revised in the BLM will handle the information in average compliance across all of their the final rule to reflect the shift to gas accordance with applicable regulations wells in a county or State capture targets in final rule § 3179.7. in 43 CFR part 2. In response to accommodates this heterogeneity in Section 3179.8(a) was also revised to statements that commenters may not site/technology compatibility: Operators reflect the three conditions discussed have access to information on pipe can deploy on-site capture technologies above. Section 3179.8 (b) describes the capacity, the BLM revised the final rule where it is most cost-effective, and use information an operator must submit in to state that data on pipeline capacity the increased capture rates at those sites the Sundry Notice. The final version of and the operator’s projections of the cost to offset continued flaring at other sites. this paragraph makes minor associated with installation and The BLM also notes that leasing on-site modifications relative to the proposed operation of gas capture infrastructure is capture equipment during the earlier version, including: Adding the phrase, required to the extent that the operator periods of well production, when ‘‘to the extent that the operator is able is able to obtain such information. associated gas levels and corresponding to obtain this information,’’ to the Some commenters requested that the potential revenues are highest, can requirements to include pipeline BLM clarify what ‘‘significant’’ means enhance the cost-effectiveness of the capacity and the operator’s projections with regard to recoverable oil reserves technologies. Leasing allows operators of the cost associated with installation in § 3179.8(c), while another to avoid upfront capital costs associated and operation of gas capture recommended that the criteria should be with purchasing equipment, making it infrastructure; adding cost projections based on an economic test that would easier to use such equipment only for for alternative methods of transportation grant an alternative limit if the return on periods in the well’s life when it is most that do not require pipelines; specifying investment would be too low for a economic to do so. This strategy also that the cost projections required in prudent operator to proceed with allows operators to match equipment final § 3179.8(b)(5)(i) must be based on compliance. Another commenter stated size to expected associated gas the next 15 years or the life of the lease, that new wells should also be allowed production volumes at different stages unit, or communitized area, whichever to apply for alternative limits. Other of well production. Finally, on-site is less; and dropping the requirement to commenters asserted that the BLM capture technology capital costs may provide the depths and names of should eliminate or substantially continue to decline as the market producing formations. Section 3179.8(c) narrow the approval of alternative further matures and achieves greater remains similar to the proposed rule limits, with one commenter stating that economies of scale. (§ 3179.7(c)), with flaring limits changed the BLM should determine approval of Several commenters expressed to capture percentages. The final rule alternative limits based on a cost-benefit concern about delays in approvals of also does not contain the renewable 2- analysis that includes the consideration year exemption in proposed § 3179.7(d). of environmental benefits. ROWs for gas pipelines, and asserted The key comments received on this The BLM did not revise the rule based that such delays will prevent operators section and BLM’s response to these on these comments, but we are from complying with the capture comments are discussed in Section providing here additional clarification targets. These comments are addressed III.B.2.b of this preamble. Additional on the BLM’s interpretation of this in Section VI.E of this preamble. substantive comments received on the standard. The BLM believes that Section 3179.8 Alternative Capture proposed flaring provisions are requiring the operator to demonstrate Requirement discussed below. that the applicable capture percentage Some commenters asserted that the under § 3179.7 would ‘‘impose such Section 3179.8 (§ 3179.7 in the proposed alternative capture and related costs as to cause the operator to cease proposed rule) describes an alternative Sundry Notice requirements were overly production and abandon significant process that is available to an operator burdensome and required submission of recoverable oil reserves’’ is an that cannot meet the capture targets confidential information. These appropriate threshold for granting described in final rule § 3179.7. Under commenters contended that oil and gas alternative capture requirements. The § 3179.8, an operator that cannot meet price and production volume forecasts BLM recognizes that the term the capture targets may request that the and pipeline and gas capture costs are ‘‘significant’’ is a qualitative rather than BLM establish an alternative capture considered confidential business quantitative metric. The BLM target if three conditions are met: (1) information. Commenters also claimed considered development of a The operator has chosen to comply with that operators do not have access to quantitative metric, but determined that the capture target using the lease-by- information on pipeline capacity. setting a quantitative threshold, such as lease, unit-by-unit, or communitized The BLM does not agree that the number of days of production lost, area-by-communitized areas basis rather Sundry Notice requirements for a might be arbitrary and ineffective. than the averaging approach; (2) the request for an alternative capture Moreover, the BLM has a history of potentially noncompliant lease was requirement are unduly burdensome, reviewing and effectively evaluating issued before the effective date of this although the BLM has streamlined the requests based on similar qualitative final rule; and (3) the operator proposed requirements in the final rule criteria. While we do not expect there to demonstrates via Sundry Notice, and where it was possible to do so without be a significant change in the review of losing information that would be these requests from prior practice, as 144 M.J. Bradley and Associates. ‘‘Re-analysis of Proposed BLM Flaring Reduction Rule; Projected necessary to evaluate a request. discussed in the preamble to the Costs and Benefits’’. September 9, 2016. Pages 13– Commenters did not explain how the proposed rule, we do expect that 14. BLM would be able to determine spelling out the requirements and

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qualitative criteria more clearly in percentage. One commenter suggested flared volumes exceed the 50 Mcf/day today’s rule will ensure a more that the BLM should align the phase-in threshold. consistent review and approval process. of the rule with the time it would take The BLM made the following changes The BLM notes that the phrase ‘‘cease to for the BLM to approve the requests from the proposed rule: The final rule production and abandon significant for alternate capture targets. Given that clarifies that (1) this section applies to recoverable oil reserves’’ is not intended the final rule phases in the capture gas vented and flared from wells, to require an operator to demonstrate targets over a longer period of time, the facilities, and equipment on a lease, unit that the lease could never be developed BLM expects that operators will have PA, or communitized area, rather than under any future circumstances. Yet nor sufficient time to prepare their Sundry just referencing gas vented and flared would it be sufficient for an operator to Notice requests for alternative capture from wells; (2) the 50 Mcf/day threshold show that compliance with the capture targets if needed. Additionally, the BLM triggering the requirement to measure is targets would cause the operator to shut does not anticipate receiving a large determined by averaging the estimated in the wells on a lease for a limited number of Sundry Notice requests for volumes from a high pressure flare stack period of time. Rather, the operator alternative capture targets, and therefore or manifold over the previous 12 must make a showing that the cost of anticipates that it will have adequate months, or the life of the flare, complying with the capture time to review them in a timely manner. whichever is shorter; (3) when the 50 requirements would cause the operator Mcf/day threshold is met, operators to shut in the wells on the lease under Section 3179.9 Measuring and have the choice of measuring or current market conditions and for the Reporting Volumes of Gas Vented and calculating the volume of the gas, rather reasonably foreseeable future, taking Flared than being required to measure only; (4) into account uncertainty regarding the This section (which was § 3179.8 in the requirement to measure or calculate long-term recoverable potential of the the proposed rule) requires operators to volumes applies beginning one year lease and reservoir. In other words, the estimate (using estimation protocols) or from the effective date of the rule; and showing should illuminate whether measure (using a metering device) all (5) under new paragraph § 3179.9(c), compliance would cause the operator to flared and vented gas, whether royalty- operators may measure or calculate be deprived of the value of the lease, not bearing or royalty-free. This section commingled gas at a single simply cause a reduction in profit. For further provides that specific measurement point at the flare, but they example, depending on the specific requirements apply when the operator is must use an allocation method economic circumstances of the lease, it flaring 50 Mcf or more of gas per day approved by the BLM to allocate the may be sufficient for an operator to from a high pressure flare stack or quantities of flared gas across the leases, show that it would have to shut in the manifold, based on estimated volumes unit PAs, or communitized areas that wells on a lease for a time period on the from the previous 12 months, or based can contribute production to a flare that order of a year or two. The BLM notes, on estimated volumes over the life of is above the 50 Mcf/day threshold. The BLM received a range of however, that it is not uncommon for the flare, whichever is shorter. operators to shut in and restart comments on § 3179.9 (§ 3179.8 in the Beginning one year from the effective production due to market conditions, proposed rule). Some commenters date of the rule, when this volume and a showing under this exemption recommended that the BLM disallow threshold is met, the operator must should demonstrate a more significant estimation of flared or vented gas and measure the volume of the flared gas, or impact that is clearly distinguishable requested that gas be measured in all must calculate the volume of the flared from such normal fluctuations. cases or that the threshold for With respect to the request to allow gas based on the results of a regularly measurement be lowered from 50 Mcf/ an alternative capture target to apply to performed GOR test, so as to allow the day. Commenters asserted that requiring new wells, the BLM notes that the BLM to independently verify the measurement and monitoring rather alternative is limited to existing leases, volume, rate, and heating value of the than allowing operators to estimate not existing wells. Thus, the alternative flared gas. This section also requires flared gas volumes will provide the co- capture target is potentially available operators to report all volumes vented benefits of assisting the BLM with with respect to an existing lease with or flared under applicable ONRR compliance assurance, allowing new wells. Moreover, the BLM believes reporting requirements. accurate determination of when that with the extended phase-in of the This section allows operators that are royalties are due, and further reducing capture targets and the state- and flaring gas across multiple leases, unit methane emissions. county-wide averaging option, operators PAs, communitized areas, or non- Other commenters argued that the have ample flexibility to take the Federal or non-Indian leases to measure threshold for measurement should be capture targets into account as they or calculate the flared volumes at a raised or that the measurement develop new production wells. Indeed, single point. To mitigate environmental requirement should be eliminated from this rule encourages such planning by impacts, commingling to a single flare the rule altogether. One commenter requiring operators to submit waste may be approved even though the contended that metering simply adds minimization plans with their APDs. relevant royalty interests may differ. costs and logistical difficulties without Further, the BLM does not believe that The BLM recognizes that the additional providing environmental benefit or the opportunity to request an alternative costs of requiring individual flaring reducing waste. Several commenters capture target should be extended to measurement and meter facilities for asserted that metering technology is not new leases. Operators have broad each lease, unit PA, or communitized available that can accurately or reliably flexibility to plan to meet the capture area are not necessarily justified by the estimate flare gas volumes over the targets at the time that they bid on new incremental royalty accountability extreme range of pressures and rates leases. afforded by the separate meters and typically encountered on producing Some commenters requested that the flares. However, to ensure proper wells, and that the measurement Sundry Notices be processed in a timely production accountability, the method equipment and methods in Onshore manner, and that the BLM provide a of allocating the flared volumes to each Order 5 and its successor regulations are schedule for applying for and being lease, unit PA, or communitized area not applicable to flares. Arguing that granted an alternative capture must be approved by the BLM where the there is no current technology that can

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reliably measure low pressure, low for either metering or a GOR-based of flared gas based on GOR can be quite volume, fluctuating gas flow, several calculation of flare volumes in accurate, if the GOR value used is commenters recommended that the circumstances where a GOR-based accurate and the well conditions are BLM remove the requirement to approach would allow the BLM to relatively stable. Since the GOR will measure gas at low-volume flow rates independently verify the volume, rate, vary as well conditions change, the and allow the operator to continue to and heating value of the flared gas. As accuracy of the GOR value for a well can use the estimation requirements and noted above, many commenters argued be enhanced by more frequent GOR GOR methodology in NTL–4A. Another that metering technology is not available testing, either on a set frequency and/or commenter asserted that operators to measure gas volumes at many flares, in response to changes in the well’s would need to install meters on any site and they asserted that using GOR-based production. The BLM expects that to where vented and flared gas could methods provides sufficient information meet the standards of § 3179.9, GOR potentially exceed the threshold. to accurately calculate flared gas tests would need to be performed at Several commenters requested volumes. Other commenters argued that least monthly for most wells. clarification on the period over which all flared gas volumes should be directly Commenters also contended that the the flaring must exceed the 50 Mcf/day metered. rule does not clearly specify the type of threshold, with one suggesting that the The BLM believes that technology gas that must be estimated or measured, threshold be based on an average value exists to measure flared volumes, and they recommended that the rule not over a production month. especially on higher-volume flares, and apply to ‘‘unavoidably lost’’ gas Like the proposed rule, the final rule that meters would not be prohibitively volumes. The BLM does not agree that maintains the 50 Mcf/day threshold for expensive to install. For example, the measurement should be required only triggering more specific standards for gas measurement requirements in when the volume of avoidably flared gas determining the volume of flared gas, recently adopted subpart 3175 contain exceeds the threshold. As a first step to however, the BLM has modified the standards applicable to metering gas at reducing waste through flaring, it is standards that apply when a flare stack very-low volume FMPs. These are the important for both the operator and the or manifold exceeds that threshold to BLM’s least stringent measurement BLM to have an accurate understanding allow either metering or a rigorous GOR- requirements for gas measurement, and of the total quantity of gas that is being based approach. The final rule also they allow operators to use alternative flared. While the BLM agrees that clarifies that exceedance of the 50 Mcf/ methods for measuring highly estimation techniques can provide a day threshold will be determined based fluctuating gas flows, provided only that ballpark volume estimate, the BLM on the average quantity of flaring per the measurements meet the performance believes that direct measurement day over the life of the flare or over the goals of section 3175.31. While the methods authorized under subpart 3175 previous 12 months of flaring activity, specific standards in subpart 3175 are more consistently and accurately whichever is shorter. The BLM agrees geared to orifice plate measurement, the identify the actual volume of the losses. that the rule should specify the performance goals for very-low volume Furthermore, the BLM notes that if an measurement period for exceeding the FMPs only require that the operator is flaring high pressure gas at threshold, and believes that limiting the measurement be verifiable and they do a rate of more than 50 Mcf/day, it averaging period of 12 months (or the not require the operator to achieve any becomes more likely that the operator is life of well) provides a good indication set level of uncertainty or maintain failing to meet capture requirements. If of ongoing, current levels of flaring that measurement free of statistically- an operator fails to meet capture are high enough to warrant significant bias. Therefore, the BLM may requirements, then at least a portion of measurement. approve alternate devices for purposes the flared gas is deemed avoidably lost, Although the BLM received of subpart 3175, such as thermal mass and therefore royalty bearing. comments arguing for both higher and meters, ultrasonic meters, or other Several commenters noted that the lower thresholds, the BLM ultimately technology that industry develops that rule does not provide methods for concluded that a change in the can provide verifiable measurement, estimating vented or flared volumes. threshold is not warranted. The 50 Mcf/ which could also be applicable to One commenter asserted that the BLM day threshold represents a level of measuring flared volumes under this must require operators to use estimation activity of high-pressure flares that can provision. In addition, provisions in techniques that provide accurate and be measured or calculated with a newly adopted subparts 3170 and 3175 reliable estimates of releases, while reasonable degree of accuracy. In establish a production measurement others recommended that methods addition, particularly when measured or team, which will approve technologies currently allowed under NTL–4A calculated on average over a period of for gas metering. Technologies approved should continue to be allowed for time at a single flare stack or manifold, by the production measurement team estimating associated gas and royalty- 50 Mcf/day is a sufficiently high level could also be used to comply with the free volumes. of flaring that it could reasonably be requirements of this section. The BLM does not believe that it is expected to lead to royalty obligations Nevertheless, the BLM is sensitive to necessary to specify estimation on flared volumes considered the performance limitations of many methods, as the BLM expects the ‘‘avoidably lost’’ under the final rule. commonly used meters, and the BLM industry to continue to use well- When an operator exceeds this believes that a properly designed GOR- understood and generally accepted threshold, the operator needs to be able based approach can also produce engineering practices for estimating to account accurately for the amount of adequately accurate results. A GOR- quantities of flared gas below the 50 flaring that occurs and validate its based method for calculating volumes of Mcf/day threshold. compliance with the capture target, flared gas would use a known GOR and Commenters also requested that the particularly as the ‘‘flaring allowable’’ measured volumes of oil production and BLM make public the data on volumes level decreases and the capture target sold gas. The GOR itself is determined of gas reported by operators as flared or increases in future years. based on a test that directly measures in vented. The BLM agrees that this is The BLM has modified the standards a controlled manner all of the oil and important information for the public, that apply to flares that exceed the 50 gas produced by the well over a given and the BLM plans to make this Mcf/day threshold, however, to allow period of time. Calculating the volumes information available, subject to any

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protections for confidential business an APD or approve it with conditions Section 3179.12 Coordination With information. related to gas capture and production State Regulatory Authority levels, and can suspend the lease under Section 3179.10 Determinations This section addresses certain ‘‘mixed Regarding Royalty-Free Flaring 43 CFR 3103.4–4 if the lease associated ownership’’ situations, in which a single with the APD is not yet producing. This section (which was § 3179.9 in well may produce oil and gas from both the proposed rule) provides for a In the final rule, the BLM revised both Federal and/or Indian mineral interests transition period for operators that are paragraphs § 3179.11(a) and (b) to add and non-Federal, non-Indian mineral operating under existing approvals for additional specificity regarding the interests. This section provides that to royalty-free flaring, as of the effective sources of the BLM’s existing authority. the extent any BLM action to enforce a date of the rule. Further, this section Specifically, the BLM added to both prohibition, limitation, or order under clarifies that nothing in this subpart paragraphs (a) and (b) language to the this subpart might adversely affect alters the royalty-bearing status of effect that the BLM may exercise its production of oil or gas from non- flaring that occurred prior to January 17, existing authority ‘‘under applicable Federal and non-Indian mineral 2017, nor the BLM’s authority to laws and regulations, as well as its interests, the BLM will coordinate on a determine that status and collect authority under the terms of applicable case-by-case basis with the State appropriate back-royalties. permits, orders, leases, and unitization regulatory authority with jurisdiction Commenters asserted that the rule or communitization agreements.’’ over that non-Federal and non-Indian represents a change in what is The BLM received a number of production. This is consistent with considered ‘‘avoidable loss’’ and comments on this section. While some current practice, in which the BLM and therefore cannot be applied to existing commenters expressed support for State regulators coordinate closely in leases. Commenters also requested that BLM’s authority on this matter, other regulating and enforcing requirements that apply to operators producing from the BLM permanently grandfather commenters expressed concern that the Federal or Indian interests and from existing approvals for royalty-free BLM could delay approval of APDs due non-Federal, non-Indian mineral flaring and only apply the rule to infrastructure limitations that are out interests. The BLM did not revise this requirements to wells drilled after the of the control of the operator (e.g., third- section from the proposed rule. effective date of the rule, arguing that 90 party pipeline capacity). One Some commenters asserted that that days is too little time to design and commenter suggested that the proposed the propose rule did not indicate what construct gas capture infrastructure. requirements would result in As discussed in Preamble Section constitutes coordination, and separately, curtailment of new production, III.C, the BLM’s legal and contractual that state-Federal coordination would potentially causing reservoir damage authority to update its regulations not reduce duplicative requirements for during initial production operations. governing existing oil and gas leases is operators. This provision is aimed at Another commenter asked the BLM to well established. The BLM has the coordinating enforcement of BLM (1) clarify that this portion of the rule authority to revise its interpretation of requirements, not intended to address applies to Federal minerals only and (2) what constitutes ‘‘avoidably lost’’ oil issues related to overlapping state and explain implementation of the rule for and gas and may impose this Federal requirements. The BLM special cases, such as long reach interpretation on existing leases. The anticipates that its level of coordination horizontal wells that produce from BLM revised the rule, however, to will vary by state, and may involve Federal and non-Federal leases within extend the grace period for preexisting entering into (or revising existing) the same wellbore. approvals to flare royalty free from the memoranda of understanding with the 90 days specified in the proposed rule The BLM did not revise this section relevant State parties. based on comments received. As stated to one year after the final rule becomes Section 3179.101 Well Drilling effective. After one year, those operators in the regulatory text, the BLM is with preexisting royalty-free flaring exercising existing authority and this This section requires that gas reaching approvals will become subject to all the section does not expand upon that the surface as a normal part of drilling provisions of the final rule. authority. The intent of this section is to operations be used or disposed of in one address operators’ concerns that gas of four specified ways: (1) Captured and Section 3179.11 Other Waste from their existing wells could be forced sold; (2) directed to a flare pit or flare Prevention Measures offline by new Federal gas production, stack; (3) used in the operations on the This section clarifies that nothing in and to clarify that the BLM already has lease, unit, or communitized area; or (4) this subpart alters the BLM’s existing the authority to remedy such injected. The final rule specifies that gas authority under applicable laws, circumstances when appropriate to may not be vented except under the regulations, permits, orders, leases, and minimize waste of oil and gas on BLM- circumstances specified in § 3179.6(b) unitization or communitization administered leases. If implementation or when it is technically infeasible to agreements to limit the volume of of this section could result in the use or dispose of the gas in one of the production from a lease, or to delay incidental curtailment of non-Federal ways specified above. action on an APD to minimize the loss production, the BLM will coordinate on This section also states that gas lost as of associated gas. Specifically, if a case-by-case basis with the relevant a result of a loss of well control will be production from a new well would force State regulatory authorities pursuant to classified as avoidably lost if the BLM an existing producing well already Section 3179.12. As noted in Preamble determines that the loss of well control connected to the pipeline to go offline, Section VI.D, the fact that a regulatory was due to operator negligence, in then notwithstanding the requirements provision aimed at Federal and Indian which case it will be subject to royalties. in 3179.7 and 3179.8, the BLM may production may have incidental impacts Several commenters asserted that the limit the volume of production from the on State or private production does not proposed requirement that all gas that new well while gas pressures from the impinge on the BLM’s authority to reaches the surface during drilling be well stabilize. In addition, this section ensure that operators take reasonable captured and sold, flared, used on-site, clarifies that, consistent with existing steps to minimize waste of Federal and or injected is not always technically authority, the BLM may delay action on Indian minerals. feasible because such gas can be low

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pressure, low volume, and intermittent. refractured. It requires the gas to be used operations following completion of new Commenters also stated that achieving a or disposed of in one of four specified gas and oil wells using hydraulic no-venting standard is not feasible ways: (1) Captured and sold; (2) directed fracturing treatment. Commenters particularly when gas reaches the to a flare pit or stack, subject to a asserted that the EPA rules effectively surface through unplanned gas kicks. volumetric limitation in section cover all wells, because most new wells Commenters asserted that in these 3179.103; (3) used in the lease utilize hydraulic fracturing, and existing situations, venting the gas can operations; or (4) injected. The final rule wells that undergo ‘‘recompletion’’ sometimes be the only safe solution. specifies that gas may not be vented hydraulic fracturing will be covered as In response to these comments, in except under the narrow circumstances well, as they are considered a addition to the exceptions described in specified in proposed § 3179.6(b) or ‘‘modified’’ source post-recompletion. § 3179.6(b), the final rule states that when it is technically infeasible to use Commenters further argued that the operators also do not have to use or or dispose of the gas in one of the four BLM should allow for exemptions for dispose of gas that reaches the surface ways specified above. It also provides wells that comply with either 40 CFR in one of the ways specified in that an operator will be deemed to be in part 60, subpart OOOO or subpart § 3179.101(a) if it is technically compliance with the gas capture and OOOOa, rather than limiting the infeasible to do so. The BLM believes disposition requirements of exemption to wells that comply with that a technical infeasibility option is § 3179.102(a) if the operator is in subpart OOOOa as the proposed rule necessary to address the situations compliance with the requirements for would have done. Commenters asserted described by commenters, which we control of gas from well completions that several issues related to controlling expect to occur rarely, where the established under subpart OOOO or emissions from well completion operator cannot use or dispose of the gas subpart OOOOa, or if the well is not a operations have already been worked as specified in § 3179.101(a). ‘‘well affected facility’’ under either of out in detail with the EPA, and these The BLM also received comments these subparts. issues would apply to the BLM’s rule as asserting that it lacks the authority to The final rule also allows an well. These issues include inadequate require that gas reaching the surface exemption from the requirements of well pressure or gas content during the during drilling operations be flared if § 3179.102(a) if the operator submits a well completion to operate surface not captured, used on the lease, or Sundry Notice to the BLM equipment, and the need for an injected. Commenters argued that such demonstrating that compliance with exemption for wells with less than 300 a requirement does not fall within the these requirements would impose such scf of gas per stock tank barrel of oil BLM’s MLA authority because it is not costs as to cause the operator to cease produced. Other commenters noted that waste prevention, as the gas is lost production and abandon significant oil the EPA’s well completion requirements whether it is vented or flared. These reserves under the lease. in subpart OOOOa do not cover commenters then argued that the only In response to comments described conventional wells because of their low possible justification for the below, we have made several changes to methane and VOC emissions, but that requirement was control of GHGs and the proposed rule requirements. the proposed BLM rule would apply to other air pollutants, which commenters Specifically, the final rule: (1) Clarifies conventional wells. Commenters also assert is exclusively within the EPA’s that sources subject to, and in argued that the Sundry Notice domain. compliance with, subpart OOOO and requirement to document EPA The BLM disagrees with these subpart OOOOa are deemed to be in compliance was an additional and comments. Flaring during drilling does compliance with this section, without unnecessary burden for sources already not count toward an operator’s capture filing a Sundry Notice (as the proposed regulated elsewhere. target, so the requirement to flare rather rule would have required); (2) limits than vent this gas does not achieve coverage of this section to hydraulically Although we believe that new wells waste reduction in that way. fractured or refractured well will generally be subject to subpart Nevertheless, the requirement falls completions; (3) adds text to clarify that OOOOa, after considering these squarely within the BLM’s authority a well that does not meet the definition comments, we have added language in because, as discussed in connection of a ‘‘well affected facility’’ under either the final rule stating that wells that are with § 3179.6, a requirement to flare subpart OOOO or subpart OOOOa, will in compliance with either subpart rather than vent associated gas is a nevertheless be deemed to be in OOOO or subpart OOOOa are deemed to safety measure under the MLA. It is compliance with this section, since the be in compliance with the requirements generally safer to combust methane gas NSPS provides that existing wells that of this section. We also agree with than to allow it to vent uncombusted are refractured and follow the well commenters that filing a Sundry Notice into the surrounding air due to concerns completion procedures in the NSPS are to this effect is unnecessary, and we over methane’s explosiveness and the not affected facilities; (4) adds an have not included that proposed risk of hypoxia and exposure to various exemption for technical infeasibility; requirement in the final rule. We also associated pollutants. In addition, also and (5) adds an exemption from the revised the text to limit the coverage of as discussed in connection with requirements of this section when the this section to fractured and refractured § 3179.6, the BLM has the authority to operator can demonstrate that wells. Upon consideration of the regulate air quality and GHG impacts on compliance would cause the operator to comments, the BLM agrees that the loss and from public lands pursuant to cease production and abandon of gas from conventional well FLPMA and the MLA. significant recoverable oil reserves completions is very small and that under the lease due to the cost of regulating conventional well Section 3179.102 Well Completion compliance. completions is not a particularly cost- and Related Operations Several commenters asserted that the effective way to reduce waste. We also This section addresses gas that requirements for well completions are revised the text to clarify that a well that reaches the surface during well duplicative with EPA requirements does not meet the definition of a ‘‘well completion, post-completion, and fluid contained in 40 CFR part 60 subpart affected facility’’ under either subpart recovery operations, after a well has OOOO and subpart OOOOa. These EPA OOOO or subpart OOOOa, and is been hydraulically fractured or rules address emissions from flowback exempt from those subparts on that

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ground, is deemed to be in compliance compliance options was technically determines that it has obtained adequate with this section. This change aligns the infeasible, the operator would have been reservoir information for the well; (2) 30 coverage of the BLM requirements with forced to abandon the well. While we do days have elapsed; (3) 20 MMcf of gas the coverage of the EPA requirements, not believe that the requirements for have been flared (as measured in and it ensures that a well that the EPA well completions are likely to impose combination with volumes flared during exempted from the subpart OOOO and such costs as to cause an operator to well completion under section subpart OOOOa requirements would not abandon the lease, the final rule also 3179.102); or (4) the beginning of well become subject to the BLM includes an exemption from production. Under any of these requirements by virtue of that § 3179.102(a) when the operator can scenarios, royalty-free flaring allowed exemption. demonstrate that compliance would by this section ends when production The BLM is including requirements cause the operator to cease production begins. for well completions in this rulemaking and abandon significant recoverable oil Paragraph (b) of this section allows to satisfy its statutory obligations to reserves under the lease due to the cost the BLM to approve royalty-free flaring prevent waste of oil and gas on Federal of compliance. for up to an additional 60 days, if there lands. The well completion The BLM also received comments are well or equipment problems or a requirements are a key part of a asserting that it lacks the authority to need for additional testing to develop comprehensive regulatory regime require that gas reaching the surface adequate reservoir information. reducing waste from development of the during well completions be flared if not Paragraph (d) allows a 90-day period for public’s oil and gas resources. The BLM captured, used on the lease, or injected. royalty-free flaring during dewatering requirements do not require any Commenters argued that such a and initial evaluation of an exploratory additional action from an operator that requirement does not fall within the well, and the BLM is in compliance with subparts OOOO BLM’s MLA authority because it is not may approve up to two extensions of 90 and OOOOa. Thus, without imposing waste prevention—i.e., the gas is lost days each. This approach recognizes any burden on an operator, the BLM whether it is vented or flared. These that it generally takes substantially more requirements provide a backstop in the commenters then argued that the only than 30 days to dewater a coalbed unlikely event that subparts OOOO or possible justification for the methane well, but the time required can OOOOa are no longer in effect. The requirement was control of GHGs and vary considerably between different BLM does not in any way question the other air pollutants, which commenters coalbed methane resources. The validity of the EPA regulations, but we assert is exclusively within the EPA’s operator is required to submit a Sundry note that some of the same commenters domain. Notice to BLM if it wishes to request a that claim the BLM regulations are The BLM disagrees with these longer test period under paragraph (b) or unnecessarily duplicative are separately comments for several reasons. First, the (d) of this section. challenging EPA’s subpart OOOOa in requirement in this section to flare In response to comments described court. rather than vent constitutes waste below, the final rule includes a new Commenters also questioned the prevention because (a) all flaring provision in paragraph (c) of this section technical feasibility of the proposed covered by this section and § 3179.103 that allows the BLM to increase the 20 requirement that all gas that reaches the is subject to a volumetric royalty-free MMcf royalty-free flaring limit by up to surface during well completion and post flaring limit of 20 MMcf/well; and (b) an additional 30 MMcf of gas for completion, drilling fluid recovery, or flared gas from well completions that exploratory wells in remote locations fracturing or refracturing must be exceeds this volumetric limit is treated where additional testing is needed in captured and sold, flared, used on-site, as avoidably lost gas subject to royalties advance of development of pipeline or injected. These commenters under § 3179.4(a)(1)(B). This royalty infrastructure. The operator is required contended that gas releases during these trigger provides an incentive for submit a Sundry Notice to BLM if it stages of development, especially operators to stay under the 20 MMcf/ wishes to request this higher limit. immediately following drilling, may well flaring limit—and thus to limit Under any of these circumstances, involve small quantities, or gas with low their waste. Second, as discussed in notwithstanding an extension of the test BTU or high contaminant connection with § 3179.6, a requirement period, the well will still be subject to concentrations. As a result, the to flare rather than vent associated gas the royalty-free flaring limit of 20 MMcf commenters stated, the compliance is a safety measure under the MLA. It is limit or, upon approval through a options in the proposed rule are cost generally safer to combust methane gas Sundry Notice, the higher limit prohibitive and not technically feasible. than to allow it to vent uncombusted specified in paragraph (c) of this They further argued that capturing low into the surrounding air due to concerns section. Volumes vented or flared under quantities of gas requires significant over methane’s explosiveness and the this section must be reported to ONRR compression capacity to enter a sales risk of hypoxia and exposure to various as directed in § 3179.9 of this subpart. line, that gas that does not meet pipeline associated pollutants. In addition, also Several commenters argued that the specifications for sales is unlikely to as discussed in connection with proposed royalty-free flaring limit of 20 burn (without makeup gas) or be § 3179.6, the BLM has the authority to MMcf was too low, and that higher appropriate for beneficial use, and that regulate air quality and GHG impacts on limits are needed due to higher reinjection of small volumes produced and from public lands pursuant to production rates being achieved through for a limited time is cost prohibitive. FLPMA and the MLA. advancements in hydraulic fracturing. In response to these comments, the They further requested that the rule final rule includes an exemption from Section 3179.103 Initial Production state that the duration and maximum the requirements for handling gas from Testing gas volumes for initial production a well completion when it is technically This section clarifies when gas may be testing do not include the duration of infeasible to use or dispose of the gas flared royalty-free during a well’s initial flowback operations and gas volumes using any of the four identified options. production test. It provides that gas may produced during those operations. In Commenters also asserted that under the be flared royalty-free during initial response to these comments, the BLM proposed rule, absent an exemption, if production testing until the first of the added new paragraph (c) of this section using any of the four identified following events: (1) The operator (discussed above), which allows the

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BLM to increase the 20 MMcf royalty- exceeds the capacity of related hour (‘‘high-bleed’’ controllers); and (2) free flaring limit by up to an additional equipment or other infrastructure; are not covered by EPA regulations that 30 MMcf of gas for exploratory wells in scheduled maintenance; a situation prohibit the new use of high-bleed remote locations where additional caused by operator negligence; and pneumatic controllers (40 CFR 60, testing is needed in advance of the when a lease, unit, or communitized subpart OOOO or subpart OOOOa), but development of pipeline infrastructure. area has already experienced three or would be subject to those regulations if While the BLM believes that for more emergencies within the past 30 the controllers were new, modified, or established fields, adequate testing to days, except when the BLM determines reconstructed sources. determine a well’s production capacity such emergencies were unanticipated Paragraph (b) of this section requires can be conducted with no more than 20 and beyond the operator’s control. pneumatic controllers subject to the MMcf of flared gas (including flaring Volumes vented or flared under this requirement to be replaced with from flowback operations), we recognize proposed section must be reported to controllers (including, but not limited that a higher amount of flaring may be ONRR as directed in § 3179.9 of this to, continuous or intermittent necessary for exploratory wells that are subpart. pneumatic controllers) having a bleed located in remote areas where no Based on a number of comments rate of no more than 6 scf/hour, subject existing infrastructure exists. To the requesting additional clarification, the to the exceptions described below. extent that an operator chooses to BLM has added a definition of Paragraph (c) is discussed below, in conduct additional testing beyond the ‘‘emergency’’ to the final text. connection with the exceptions. Under royalty-free limits established in this Additionally, in response to comments paragraph (d), operators are required to section, the operator is free to do so, but stating that certain emergency situations replace such controllers within 1 year the operator is responsible for paying may necessitate flaring beyond 24 from the effective date of the final rule, royalties on the flared gas, rather than hours, the final rule allows operators to or within 3 years from the effective date being able to shift the associated royalty flare or vent royalty-free beyond the 24- of the rule if the well or facility served losses to the public. hour limit, but only when necessary and by the controller has an estimated with BLM approval. While the BLM remaining productive life of 3 years or Section 3179.104 Subsequent Well asserts that in most cases, 24 hours is a less. Under paragraph (e), operators are Tests sufficient timeframe to address an also required to ensure that pneumatic The requirement in this section is emergency and/or make an appropriate controllers are functioning within the essentially the same as NTL–4A’s business decision, we acknowledge that manufacturers’ specifications. requirement regarding subsequent well venting or flaring beyond 24 hours This section provides several tests. This section limits to 24 hours any might be necessary in a limited number exceptions to the replacement royalty-free flaring during production of cases, such as a natural disaster that requirement in paragraph (b). First, an tests conducted after the initial prevents access to the site. operator is not required to replace a production test, unless the BLM Some commenters asserted that the controller if a high-bleed controller is approves or requires a longer test BLM was being too strict in limiting necessary to perform the needed period. The operator must submit via royalty-free flaring in emergencies to 3 function. For example, replacement Sundry Notice its request for a longer emergencies in a 30-day period. BLM might not be required if a low-bleed test period. Volumes vented or flared believes that after multiple incidents in controller would not provide a timely under this section must be reported to a short timeframe, operators should response, which would lead to greater ONRR as directed in proposed § 3179.9 identify and correct any maintenance or waste or create a safety hazard. To avail of this subpart. The BLM received few operational issues, and that repetitive, themselves of this exception, operators comments on this provision and made systemic events do not constitute an must submit a Sundry Notice to the no substantive changes to this provision emergency situation. Commenters also BLM that describes the functional needs from the proposed to final rule. recommended that the BLM remove the requiring the use of higher-bleed controllers. Second, replacement is not Section 3179.105 Emergencies provisions listing improper installation and scheduled maintenance as events required if the controller was routed to This section allows operators to flare that do not constitute emergencies. The a flare device or low-pressure combustor (or in some cases vent) royalty-free BLM did not revise the rule based on as of the effective date of this rule, and during an emergency, which is a these comments, as scheduled continues to be so-routed. Third, an temporary, infrequent, and unavoidable maintenance is not an unanticipated operator is not required to replace its situation in which the loss of gas is disruption and improper installation pneumatic controller if it chooses to uncontrollable or necessary to avoid can be avoided through good work route the pneumatic controller exhaust immediate and substantial adverse practices. to processing equipment for capture and impacts to safety, public health, or the The BLM notes that the provisions on sale. Fourth, an operator may be environment. Paragraph (a) further downhole well maintenance in exempted from the replacement limits royalty-free emergency venting or § 3179.204 cover well maintenance requirement if it demonstrates through a flaring to a maximum of 24 hours per activities. Sundry Notice (described in paragraph incident, unless the BLM agrees that the (c)), and the BLM concurs, that emergency conditions necessitate Section 3179.201 Equipment replacing the pneumatic controllers on flaring—and possibly venting—for a Requirements for Pneumatic Controllers the lease would impose such costs as to longer period. In addition, paragraph (b) This section addresses gas losses from cause the operator to cease production clarifies situations that do not constitute pneumatic controllers. Paragraph (a) and abandon significant recoverable oil an emergency for purposes of royalty establishes that this section applies to reserves under the lease. assessment, including: More than three pneumatic controllers that use natural In response to comments and to failures of the same equipment within gas produced from a Federal or Indian further clarify the section, the BLM any 365-day period; failures from lease, or from a unit or communitized made the following four changes to the improperly sized, installed, or area that includes a Federal or Indian proposed rule requirements: (1) maintained equipment; failure to limit lease, if the controllers (1) have a Clarified that a pneumatic controller is production when the production rate continuous bleed rate greater than 6 scf/ subject to this section if it is not subject

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to 40 CFR part 60, subparts OOOO or manner as of the effective date of the document why a high bleed pneumatic OOOOa, but would be subject to either rule, and continues to do so. The BLM controller is needed. of those subparts if it were a new, believes that given the low cost and As provided in the proposed rule, modified, or reconstructed source; (2) high return on pneumatic controller operators seeking exemptions based on clarified that the operator may replace a replacement, spending capital to route a functional need for the equipment high-bleed pneumatic controller with a controller exhaust to a flare or low- need only notify the BLM of that need continuous pneumatic controller, an pressure combustor is unlikely to make and do not have to get the BLM’s intermittent pneumatic controller, or a sense from an economic, practical and approval. Further, if the exhaust from non-pneumatic device, as long as the waste prevention perspective. the pneumatic controller was already replacement has a bleed rate no greater Some commenters stated that the being routed to a flare or other control than 6 scf per hour; (3) clarified that an BLM should require the use of zero- device on the effective date of the rule, operator may be exempted from bleed devices on leases where on-site or if the operator chooses to route the replacement if it was routing the electrical grid power is used, or that the exhaust to processing equipment, no controller exhaust to a flare or a low- BLM should require bleed gas to be notice is required. The BLM only pressure combustor device at the time routed to a flare or other control device. requires a Sundry Notice and approval the rule was effective, so long as the The final rule does not require the use for exemptions based on the cost of operator continues to do so; (4) allowed of zero-bleed pneumatic controllers. replacing the equipment. an operator to be exempted from Many sites using pneumatic controllers The BLM also received comments replacement if it routes the controller are not connected to the electric grid, asserting that it lacks the authority to exhaust to processing equipment; and and the BLM believes that requiring require operators who opt not to install (5) included in paragraph (c) the operators to route gas from pneumatic low-bleed pneumatic controllers to information that must be included in controllers would impose considerable route their existing pneumatic the Sundry Notice to demonstrate that costs on them and involve technical controllers to a flare device (rather than the costs of replacing a pneumatic complications which could impact the venting). Commenters argued that such controller would cause the operator to cost effectiveness of the replacement a requirement does not fall within the cease production and abandon requirement. The BLM did clarify in the BLM’s MLA authority because it is not significant recoverable oil reserves. final rule that operators using waste prevention—i.e., the gas is lost Several commenters requested that pneumatic controllers that have a bleed whether it is vented or flared. These the final rule clarify perceived rate greater than 6 scf per hour have the commenters then argued that the only conflicting regulatory coverage between option to route the exhaust to possible justification for the the proposed rule and the EPA’s processing equipment rather than requirement was control of GHGs and subparts OOOO and OOOOa. Based on replace the controller. other air pollutants, which commenters these comments, we revised Many commenters stated that one assert is exclusively within the EPA’s § 3179.201(a)(2) to further qualify that a year is insufficient to replace high-bleed domain. pneumatic controller is subject to this pneumatic controllers and requested The BLM disagrees with these section if it ‘‘[i]s not subject to any of that requirements be extended to two or comments. The final rule does not the requirements of 40 CFR part 60, three years. The BLM believes that one require flaring in lieu of venting as a subpart OOOO or subpart OOOOa, but year is a sufficient time period for means of compliance with this section. would be subject to one of those operators to replace high-bleed The primary means of compliance is subparts if it were a new, modified, or pneumatic controllers, given the replacement with a low-bleed reconstructed source.’’ This change relatively low cost and rapid pay-back pneumatic controller, which prevents ensures that the BLM requirements do period of these replacements, as waste by reducing the amount of gas not inadvertently apply to existing discussed in section V. Discussion of diverted to the pneumatic controllers— equipment that would not be covered by the Proposed Rule of the preamble to which, in turn, makes more gas the EPA requirements. We believe this the proposed rule. In addition, as available for capture. An operator is change properly conveys our original included in the proposed rule, if the exempted from this requirement if a intent to cover the same types of well or facility that the pneumatic high-bleed pneumatic controller is pneumatic controllers that EPA rules controller serves has an estimated required based on functional needs, if cover. remaining productive life of three years the operator directs its controller Some commenters stated that or less from the effective date of the exhaust to processing equipment for pneumatic controller exhaust should be rule, the operator has three years from capture, or if the operator is already allowed to be routed to processing the effective date of the rule to replace directing the exhaust from the controller equipment, such as a vapor recovery the pneumatic controller, provided that to a flare (or low-pressure combustor). unit, on-site fuel line, or a control the operator notifies the BLM through a The rule therefore imposes no new or device (in addition to a flare), noting Sundry Notice. additional flaring requirements. that Wyoming’s recent regulation for Several commenters argued that existing pneumatic controllers in the operators should not have to submit a Section 3179.202 Requirements for Upper Green River Basin allow Sundry Notice and wait for BLM Pneumatic Diaphragm Pumps operators this flexibility. The BLM approval, if they meet one of the This section establishes requirements agrees with these comments and as exemptions to the requirements. These for operators with pneumatic diaphragm stated previously, revised the rule to commenters also asserted that the pumps that use natural gas produced state that operators may route the pump requirement for submission of a Sundry from a Federal or Indian lease, or from to processing equipment. However, the Notice (and hence, they assumed, BLM a unit or communitized area that final rule clarifies that with respect to approval) set a higher standard for includes a Federal or Indian lease. It routing pneumatic controller exhaust to retaining a high-bleed controller based applies to such pumps if they are not a flare or low-pressure combustor, an on functional need than the covered under EPA regulations at 40 operator may only be exempted from requirements in 40 CFR part 60, subpart CFR part 60, subpart OOOOa, but would replacement of the controller if it is OOOOa, under which they claimed EPA be subject to that subpart if they were already routing such exhaust in this only requires recordkeeping to a new, modified, or reconstructed

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source. It does not apply to pneumatic necessary to perform the function substantially lower quantities of gas diaphragm pumps that vent exhaust gas required, and (b) capturing the than diaphragm pumps. The BLM also to the atmosphere or that operated fewer pneumatic pump exhaust is technically recognizes that some diaphragm pumps than 90 days in the prior calendar year infeasible or unduly costly. If an are used very intermittently or only for (as documented in a Sundry Notice). operator makes this determination and a short portions of the year, and that low For covered pneumatic pumps, this has no flare or low pressure combustor usages result in low quantities of lost section requires that the operator either on-site (or flaring to such a device gas. In the final rule, the BLM has replace the pump with a zero-emissions would be technically infeasible), the specified that the rule does not apply to pump or route the pump exhaust to operator is not required to route the chemical injection pumps or to processing equipment for capture and exhaust to a flare or low pressure diaphragm pumps that operated fewer sale. Alternatively, an operator may combustion device. Second, in response than 90 individual days in the prior route the exhaust to a flare or low to comments and as discussed below, calendar year. This change also aligns pressure combustion device if the the final rule removes chemical the requirements of this section with the operator makes a determination (and injection pumps from inclusion in this requirements for pneumatic pumps notifies the BLM through a Sundry section. Third, it adds paragraph (b) under 40 CFR part 60 subpart OOOOa. Notice) that replacing the pneumatic stating that an operator is not required Several commenters requested that diaphragm pump with a zero-emissions to replace a pump if the pump does not the final rule clarify perceived pump or capturing the pump exhaust is vent exhaust gas to the atmosphere (e.g., conflicting regulatory coverage between not viable because (1) a pneumatic already is routed to a flare or to capture the proposed rule and 40 CFR part 60 pump is necessary to perform the equipment) or if the operator submits a subpart OOOOa. In addition to the function required, and (2) capturing the Sundry Notice to the BLM documenting change to chemical injection pumps, we exhaust is technically infeasible or that the pump(s) operated fewer than 90 revised § 3179.202(a)(2) to further unduly costly. If an operator makes this individual days in the prior calendar qualify that a pneumatic diaphragm determination and has no flare or low- year. Fourth, the final rule clarifies that pump is subject to this section if it ‘‘[i]s pressure combustor on-site, or routing to a pneumatic diaphragm pump is subject not subject to any of the requirements of such a device would be technically to this section if it is not subject to any 40 CFR part 60, subpart OOOOa, but infeasible, the operator is not required of the requirements of 40 CFR part 60, would be subject to that subpart if it to route the exhaust to a flare or low- subpart OOOOa, but would be subject to were a new or modified source.’’ This pressure combustion device. Further, an that subpart if it were a new, modified, change ensures that the BLM operator that is required to replace a or reconstructed source. Fifth, it adds requirements do not inadvertently apply pump or route the exhaust gas from a paragraph (d), which includes to existing equipment that would have pump either for capture or to a flare or information that must be included in been exempted under the EPA combustion device may be exempt from the Sundry Notice specified in requirements. We believe this change the requirement if the operator § 3179.202(f). properly conveys our original intent to demonstrates through a Sundry Notice, Some commenters suggested that the cover the same types of pneumatic and the BLM concurs, that the cost BLM require the use of zero-bleed pumps that EPA rules cover. would impose such costs as to cause the pumps in all cases except where Similar to comments received on operator to cease production and technically infeasible, while other pneumatic controllers, some abandon significant recoverable oil commenters stated that routing pump commenters stated that pneumatic reserves under the lease. exhaust to a flare offers no product pumps should be allowed to be routed Operators must comply with these recovery potential and does not to processing equipment, such as a requirements no later than one year after minimize loss or waste. The BLM agrees vapor recovery unit, on-site fuel line, or the effective date of the rule. In that the installation of zero-bleed pumps a control device (in addition to a flare). addition, similar to the requirements for is technically feasible in many cases. In The BLM agrees with these comments pneumatic controllers and based on the response to these comments, and to and revised the rule to state that same rationale, this section provides require operators to employ waste operators may route the pneumatic that if the estimated remaining minimization practices when feasible, pump exhaust to processing equipment productive life of the well or facility is the final rule is restructured to require for capture and sale, or, under certain three years or less, the operator is operators, when feasible, to install zero- conditions described above, to either a allowed to notify BLM through a Sundry bleed pumps or route the pump exhaust low-pressure combustor device or a Notice and replace the pneumatic pump to process equipment for capture and flare. no later than three years from the sale. However, in making this revision, Several commenters stated that 1 year effective date of this section, rather than the BLM does not intend to require is insufficient to replace covered within one year. The section also operators to replace pumps that are pneumatic pumps and requested that requires that pneumatic pumps function already routed to flare or capture the replacement requirements be within manufacturers’ specifications. equipment (i.e., pumps that do not extended to 3 years. The BLM believes The final rule makes five changes to currently vent exhaust gas to the that one year is a sufficient time period the proposed rule requirements. First, it atmosphere), and we have added for operators to replace pneumatic restructures the requirements as clarifying language to avoid this result. diaphragm pumps, or route them to a discussed above to require that As discussed below, the compliance flare that is already installed on-site, operators either replace pneumatic mechanisms in this section are given the relatively low cost and rapid diaphragm pumps with zero emission structured to encourage the prevention pay-back period of these replacements, pumps or capture the exhaust for sale. of waste. as discussed in the preamble to the As explained above, the operator may Some commenters stated that proposed rule, and the relatively low route the exhaust to a flare or low chemical injection and temporary use cost of connecting a pump to a pre- pressure combustor device if it makes a pumps should be exempt because they existing on-site flare. Moreover, because determination that replacing the pump have low aggregate emissions and the BLM is not including chemical with a zero-emissions pump is not operate intermittently. The BLM agrees injection pumps in this final rule, viable because (a) a pneumatic pump is that chemical injection pumps release operators will need to address far fewer

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pneumatic pumps than the proposed pneumatic pumps, asserting that the gas processing plants because the rule would have required. In addition, BLM proposed rules are different and availability of consistent, reliable as included in the proposed rule, if a more stringent. First, they asserted that electrical power at all affected facilities well or facility that the pneumatic pump the EPA rule limits ‘‘affected facilities’’ could not be reasonably assumed.147 serves has an estimated remaining to sites with a control device already on- The BLM, however, has flexibility to productive life of three years or less site, while the proposed BLM require waste reduction measures at any from the effective date of the rule, the requirements would apply to pneumatic site where such measures would work, operator has three years from the pumps regardless of whether a control without specifically defining such sites, effective date of the rule to complete the device is present. Second, commenters even if the measures may not be replacement, provided that notification asserted that the EPA rule only requires available at all sites. Zero emission is filed through a Sundry Notice. operators to route pump emissions to a pumps are feasible where solar power is The BLM also received comments control device if one already exists on adequate to power the pump for its asserting that it lacks the authority to site, while the BLM proposed rule may intended function and at sites where require operators who opt not to install require replacement with a zero other sources of electric power are zero-emission pneumatic pumps to emission pump in such a circumstance. available. Where they are feasible, our route their existing pneumatic pumps to Some of these concerns were analysis indicates that the cost of a flare device (rather than venting). addressed by the EPA’s final subpart replacing a gas-driven pneumatic pump Commenters argued that such a OOOOa regulations, while other with a zero emission pump is modest requirement does not fall within the differences are appropriate given the and would be at least partially offset by BLM’s MLA authority because it is not different authorizing statutes and the value of the saved gas. waste prevention—i.e., the gas is lost primary foci of the two sets of Additionally, the BLM final rule whether it is vented or flared. These regulations. As an initial matter, the establishes a preference for operators commenters then argued that the only BLM requirements apply only to pumps who do not replace their pumps with a possible justification for the that are not subject to subparts OOOO zero-emissions pump to route exhaust requirement was control of GHGs and or OOOOa (but would be if the pump gas to capture in lieu of routing to a other air pollutants, which commenters was new, modified, or reconstructed), so flare. This emphasis on either assert is exclusively within the EPA’s no pump will be subject to both replacement or capture is a function of domain. regulations. the BLM’s waste prevention focus. The BLM disagrees with these With regard to the first issue Thus, unlike subpart OOOOa, the final comments for several reasons. First, the described above, the final BLM and EPA BLM rule requires operators with a gas- requirement in this section to flare rules apply to the same types of driven pneumatic pump that is rather than vent associated gas pneumatic pumps. In its final rule, EPA currently venting to the atmosphere to constitutes waste prevention. Requiring noted that there was some confusion replace it with a zero emission pump, if operators to (at minimum) direct regarding the proposed definition of a zero-emission pump would work at associated gas that bleeds from their affected facility, and stated that it had that site to perform the function pneumatic pumps to a flare device modified the regulatory text to clarify required, or route the exhaust gas to eliminates the lowest cost method of that ‘‘all natural gas-driven diaphragm capture. If a zero-emission pump is not handling such gas (that is, venting). pumps at natural gas processing plants viable at that site and routing the This, in turn, provides a greater or well sites are affected facilities, exhaust gas to capture is technically incentive for operators to upgrade to a except for pumps at well sites that infeasible or unduly costly, however, zero-emission pneumatic pump or operate less than 90 days per calendar then the operator must comply with a capture pump exhaust gas. Upgrading to year.’’ 145 The final subpart OOOOa text requirement that tracks the requirement a zero-emission pneumatic pump requires operators to maintain records under subpart OOOOa—the operator prevents waste by reducing the amount on the control status of all pneumatic must route the exhaust gas from the of gas diverted to the pneumatic pump affected facilities and to include pneumatic pump to a flare, if there is pumps—which, in turn, directs more them all in the operators’ annual already a flare on-site. While the BLM gas to either a capture line or the high- reports. The final BLM rule aligns with rule establishes an additional pressure flare. If an operator chooses to the scope and requirements of the final requirement on operators, it does not capture, upgrading the pneumatic pump EPA rule in these respects. conflict in any way with the EPA rule will directly prevent waste by causing With regard to the second issue, the or increase an operator’s burden to more gas to be sold. BLM final rule does apply somewhat comply with both rules. Any pump that Second, as discussed in connection different requirements to pumps is already routed to a flare in with § 3179.6, a requirement to flare covered by the BLM rule as compared compliance with the EPA rule will also rather than vent associated gas is a to pumps covered by the EPA rule, due be in compliance with the BLM rule. safety measure under the MLA. It is to differences between the two agencies’ For pumps without a flare on-site, the generally safer to combust methane gas legal authorities. The legal authority for EPA rule requires no further action, than to allow it to vent uncombusted subpart OOOOa is section 111 of the while the BLM rule requires into the surrounding air due to concerns Clean Air Act, which requires the EPA replacement or routing to capture, over methane’s explosiveness and the to set standards of performance for new absent the listed conditions. risk of hypoxia and exposure to various sources and requires a ‘‘standard of The third potential difference that associated pollutants. In addition, also performance’’ to be based on the best commenters highlighted between the as discussed in connection with system of emission reduction (BSER) BLM and EPA requirements for § 3179.6, the BLM has the authority to ‘‘adequately demonstrated.’’ 146 As pneumatic pumps is the level of regulate air quality and GHG impacts on noted in the proposed subpart OOOOa documentation required to show that and from public lands pursuant to preamble, the EPA did not require zero routing to a flare is technically FLPMA and the MLA. emissions pumps at facilities other than infeasible. To clarify a possible Some commenters raised concerns misunderstanding by the commenters, a about differences between the proposed 145 81 FR 35851. BLM and EPA requirements for 146 81 FR 35884. 147 80 FR 56625.

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requirement to notify the BLM through compliance. Operators must meet this OOOO or OOOOa’’ could encompass a Sundry Notice, as specified in this requirement no later than one year after storage vessels that neither the EPA nor section, is not a requirement to obtain the rule becomes effective, or three the BLM intended to cover. In the final approval from the BLM. Sundry Notices years after the rule becomes effective if rule, § 3179.203(a)(2) covers a storage may be used simply for notification the operator needs to replace the storage vessel if it ‘‘[i]s not subject to any of the purposes, or to obtain approval from the vessel in order to comply. requirements of 40 CFR part 60, BLM for an action. The final rule Operators must determine the rate of subparts OOOO or OOOOa, but would specifies the purpose of each VOC emissions from the storage vessel be subject to that subpart if it were a requirement to file a Sundry Notice. within 60 days after this rule is new, modified, or reconstructed Here, the BLM final rule requires an effective, and within 30 days after source.’’ operator to notify the BLM through a adding a new source of production to a Several commenters argued that the Sundry Notice if the operator is not storage vessel. This determination is proposed initial period of 6 months to replacing the pump for one of the based on the maximum average daily comply with the emission reduction reasons specified. The operator must throughput for a 30-day period of provisions was too short. Commenters also notify the BLM if the operator is not production, and may take into account stated that it would take longer than 6 routing the pump to a flare because any legally and practically enforceable months to complete engineering studies there is no flare on site or routing to a limits in an operating permit or other of existing storage vessels; design, order flare would be technically infeasible. requirements applicable to the storage and construct the control device; and Subpart OOOOa establishes vessel. This section no longer applies to then install the control device. requirements for an engineering a storage vessel whose total Commenters recommended various time evaluation of whether routing to a flare uncontrolled VOC emissions rate periods ranging from 1 to 3 years. We would be technically infeasible, requires declines to 4 tpy in the absence of believe a 1-year initial compliance the evaluation and determination of controls for 12 consecutive months. period is adequate to perform the tasks technical infeasibility to be certified by In response to comments, the BLM necessary to install a control device, and a qualified professional engineer, and has made the following changes to the we have modified § 3179.203(c) requires this information to be included requirements in the proposed rule: (1) accordingly. in the operator’s annual report. Thus, Clarified the exemption for sources Commenters also stated that in some while the specific documentation subject to 40 CFR part 60, subparts cases they would likely have to replace requirements for pumps covered by the OOOO or OOOOa; (2) extended the an existing tank in order to meet the BLM requirements differ from those initial compliance period from 6 months emission limitations. In such cases, established by the EPA, both rules to 1 year; (3) added a 3-year initial commenters stated that even more time require the operator, under specified compliance period for operators that would be needed to obtain capital circumstances, to either route the pump must replace storage vessels to comply funding approval and purchase the new exhaust to a flare or notify the with the requirements; (4) required gas storage vessel. In response, we further respective agency that the pump meets to be routed to a sales line when that amended § 3179.203(c) to provide a 3- the criteria for an exemption. The BLM option is neither technically infeasible year initial compliance period when the notification requirements are less nor unduly costly, as determined by the operator must replace a storage vessel in specific than the EPA requirements, operator; (5) added a requirement that order to comply with the rule which the BLM believes will make operators must determine whether the requirements. compliance less burdensome for an storage vessel has the potential for VOC In the proposed rule, § 3179.203(c) operator. emissions equal to or greater than 6 tpy allowed the operator to choose between based on the maximum average daily routing emissions from storage vessels Section 3179.203 Storage Vessels throughput for a 30-day period of subject to the rule to a combustion This section addresses gas vented production, which may take into control device, a continuous flare, or a from crude oil, condensate, intermediate account legally and practically sales line. Some commenters opposed hydrocarbon liquid, or produced water enforceable limits applicable to the these provisions because they believe storage vessels that contain production storage vessel; (6) added a requirement BLM should focus on preventing loss of from a Federal or Indian lease, or from that storage vessels subject to the final natural resources. The BLM agrees that a unit or communitized area that rule must be adequately sized to this rule should focus on gas capture includes a Federal or Indian lease, and accommodate the operator’s production and use whenever possible, and in the are not subject to 40 CFR part 60, levels and equipped to meet any final rule, § 3179.203(c) first requires the subparts OOOO or OOOOa, but would applicable regulatory requirements for operator to route tank vapor gas from a be if they were new, modified, or tank vapors; and (7) added a storage vessel to a sales line. If the reconstructed sources. If such storage requirement that storage vessels subject operator determines that routing the vessels have the potential for VOC to the final rule may only vent through emissions to the sales line is technically emissions equal to or greater than 6 tpy, properly functioning pressure relief infeasible or unduly costly, the operator the final rule requires operators to route devices. Each change is discussed below may route the gas to a combustion all gas vapor from the vessels to a sales along with a summary of the relevant device. line. Alternatively, the operator may comments and responses. We also received numerous comments route the vapor to a combustion device Several commenters expressed requesting that we align the final rule as if it determines that routing the vapor to concerns about differences between the much as possible with the requirements a sales line is technically infeasible or types of new storage vessels that are finalized by the EPA in subparts OOOO unduly costly. The operator also may subject to subparts OOOO or OOOOa and OOOOa. As stated in the preamble submit a Sundry Notice to the BLM that and the types of existing storage vessels to the proposed rule, the BLM and the demonstrates that compliance with the that would have been subject to the EPA understand that aligning our above options would cause the operator proposed rule. The BLM agrees that requirements to the extent possible, to cease production and abandon applying the requirements of this provides common standards that ease significant recoverable oil reserves section, as proposed, to storage vessels implementation and reduce confusion under the lease due to the cost of ‘‘not subject to 40 CFR part 60, subparts for both the regulated industry and

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regulatory agencies.148 Several small requirement was control of GHGs and plunger lift system or an automated well changes in the final rule help clarify the other air pollutants, which commenters control system, the operator must rule and better align it with the final assert is exclusively within the EPA’s optimize the operation of the system to requirements in subparts OOOO and domain. minimize gas losses. OOOOa. In § 3179.203(b), the rule The BLM disagrees with these For all wells, before the operator provides additional guidance to comments for several reasons. First, the manually purges a well for the first time operators on how to make the threshold requirement in this section to flare after the effective date of this section, determination that a storage vessel has rather than vent tank vapor gas the operator must document in a Sundry the potential for VOC emissions equal to constitutes waste prevention. Requiring Notice that other methods for liquids or greater than 6 tpy. Changes to the operators to (at minimum) direct tank unloading are technically infeasible or definition of ‘‘storage vessel’’ in § 3179.3 vapor gas to a flare device eliminates the unduly costly. In addition, during any also synchronize the coverage between lowest cost method of handling such gas liquids unloading by manual well the two sets of rules, such that these (i.e., venting), and thereby provides a purging, the person conducting the well provisions cover the same types of higher baseline for operators to calculate purging is required to be present on-site storage vessels that would be covered by whether it would be economical to to minimize to the maximum extent subparts OOOO or OOOOa if they were install a VRU to capture the tank vapor practicable any venting to the new, modified, or reconstructed. gas for sale. The BLM anticipates that atmosphere. This section also requires One commenter suggested that the this higher baseline may encourage the operator to maintain records of the BLM make it clear that venting from more operators to install VRUs. cause, date, time, duration and access points or pressure relief devices Second, as discussed in connection estimated volume of each venting event during normal operation is prohibited. with § 3179.6, a requirement to flare associated with manual well purging, The commenter stated that to account rather than vent associated gas is a and to make those records available to for those instances where venting may safety measure under the MLA. It is the BLM upon request. be necessary, the BLM could adopt the generally safer to combust methane gas The operator must notify the BLM by approach taken by Colorado by than to allow it to vent uncombusted Sundry Notice within 30 days after the specifying those instances where into the surrounding air due to concerns first liquids unloading by manual or venting is reasonably required, such as over methane’s explosiveness and the automated well purging after the for ‘‘maintenance, gauging or safety of risk of exposure to various associated effective date of the rule. Additionally, personnel and equipment.’’ The pollutants. In addition, also as operators must notify the BLM by commenter also recommended that the discussed in connection with § 3179.6, Sundry Notice within 30 days after the BLM add a requirement that operators the BLM has the authority to regulate air following conditions are met: (1) The certify that their storage tank facilities quality and GHG impacts on and from cumulative duration of manual well are adequately sized in order to capture, public lands pursuant to FLPMA and purging events for a well exceeds 24 convey, and control emissions. They the MLA. hours during any production month; or stated that this is required in Colorado Some commenters requested that the (2) the estimated volume of gas vented and is a direct response to the Air BLM require storage vessel vapors to be in the process of conducting liquids Pollution Control Division and EPA combusted at an efficiency of 98%. unloading by manual well purging for a investigations that revealed significant Storage vessel vapors can be combusted well exceeds 75 Mcf during any leaks and venting from controlled at an efficiency of 98% using an production month. The final rule also facilities. enclosed combustor. However, the BLM defines ‘‘well purging’’ for purposes of In response to this comment, final has determined that requiring the this section and requires operators to rule § 3179.203(f) provides that storage operator to install an enclosed report to ONRR gas volumes vented vessels subject to this section must be combustor on a location with an during manual and automated adequately sized to accommodate existing flaring system would be downhole maintenance and liquids production levels and equipped to meet relatively costly compared to the benefit unloading, including through the any applicable regulatory requirements of modestly higher combustion operation of plunger lifts. for emissions. Also, § 3179.203(g) efficiency applied to a comparatively In response to comments on the requires that storage vessels subject to small volume of vapor coming from proposed rule, we removed the this section may only vent through storage vessels flares. The BLM believes proposed prohibition on well purging properly functioning pressure relief that in those instances where storage for wells drilled after the effective date devices. We believe both of these vessel vapors must be controlled on a of this section, as discussed in above in provisions embody good engineering site that does not have an existing flare section III.D.3., and made several practices and should be common system, the operator will likely elect to smaller changes in the final rule: (1) practice when operating a storage install an enclosed combustor rather Removing the proposed requirement to vessel. than a flare, because it will more flare unrecovered gas during downhole The BLM also received comments effectively combust the lower volumes well maintenance and liquids unloading asserting that it lacks the authority to of vapor associated with storage vessels. operations; (2) clarifying recordkeeping require operators who opt not to capture and reporting requirements and tank vapor gas to route such gas to a Section 3179.204 Downhole Well increased the length of time operators flare device (rather than venting). Maintenance and Liquids Unloading have to submit reports; and (3) revising Commenters argued that such a This section establishes requirements the definition of ‘‘well purging.’’ requirement does not fall within the for venting and flaring during downhole The BLM is aware, and many BLM’s MLA authority because it is not well maintenance and liquids commenters observed, that flares are not waste prevention—i.e., the gas is lost unloading. It requires the operator to always feasible control options for whether it is vented or flared. These use practices for such operations that downhole well maintenance and liquids commenters then argued that the only minimize vented gas and the need for unloading activities, and we recognize possible justification for the well venting, unless the practices are that there may be difficulties separating necessary for safety. The rule also liquids from the purged gases. For these 148 See, e.g., 81 FR 6647. requires that for wells equipped with a reasons, we proposed the use of flares

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where other recovery or gas loss Several commenters objected to the § 3179.202, the legal authority for 40 reduction technologies cannot be used, extent and content of the proposed CFR part 60 subpart OOOOa is section and only then when flaring is not recordkeeping requirements, but did not 111of the Clean Air Act, which requires technically infeasible or unduly costly identify changes that could be made the EPA to set a standard of (see proposed § 3179.204(a)). Although without compromising the information performance for new sources and we attempted in the proposed rule to needed for effective implementation of defines a ‘‘standard of performance’’ as narrow the use of flares to situations in the rule. The BLM believes the to be based on the best system of which they are more likely to be recordkeeping and reporting emission reduction (BSER) ‘‘adequately feasible, and provided an option for requirements are essential to verify demonstrated.’’ 151 operators to document those situations compliance and to more accurately In explaining its decision not to where flaring is infeasible, commenters assess the amount of gas lost through regulate liquids unloading at this time, raised several concerns related to safety, liquids unloading events, including for the EPA stated that although it had cost and feasibility. Upon further review the purposes of royalty calculations. In received valuable information from the of the information provided by the response to commenters’ concerns, public on technologies to reduce commenters, we believe there is however, the final rule extends the time emissions, ‘‘the information was not uncertainty in the ability of operators to to submit a Sundry Notice of large sufficient to finalize a national standard be able to consistently and safely quantity liquids unloading events from representing BSER for liquids operate a flare during these operations. 14 days to 30 days, to allow operators unloading.’’ 152 The BLM, however, has For these reasons, we did not finalize more time to gather information. the flexibility to require a suite of best the proposed flaring requirement. Similarly, we have extended the time to management practices to achieve waste Instead, the final rule requires operators submit a Sundry Notice after the first reduction, as we have done here, rather to minimize vented gas during liquids unloading event from 10 days to than being required to identify the best downhole well maintenance and liquids 30 days. system of emission reduction under the unloading operations, and it specifies Some commenters contended that specific criteria in section 111 of the best management practices that recordkeeping and reporting Clean Air Act. requirements related to each well operators must follow. For wells Section 3179.301 Operator purging event are unnecessary, but the equipped with a plunger lift system or Responsibility BLM does not agree. Large quantities of an automated well control system, these This section establishes that the practices include optimizing the gas are lost through well purging that cannot be used to supply the country’s LDAR requirements in §§ 3179.301 operation of the system to minimize gas through 3179.305 of this subpart apply losses. energy needs and provide no royalty revenues to taxpayers. Building a to oil or natural gas wells and all Proposed § 3179.204(a) would have historical record of the amount of gas equipment associated with the well sites required the operator to use best lost is key to determining proper that produce, process, compress, treat, practices to maximize the recovery of management of these events in the store, or measure natural gas from a gas from downhole well maintenance future. For example, more accurate Federal or Indian lease, or from a unit and liquids unloading operations. knowledge of the amount of gas lost to or communitized area, where the site is Commenters expressed concern that the well purging events will allow operators upstream of or contains the approved word ‘‘maximize’’ could be construed to to make better-informed decisions on point of royalty measurement. These imply that the operator must use the the financial viability of each liquids sections also apply to a site and all technology that provides the absolute unloading technology. Also, the BLM equipment operated by the operator and highest amount of gas recovery, will be able to better estimate the cost associated with a site that is used to regardless of other concerns. This is not of lost royalties associated with vented store, measure, or dispose of produced our intent, as evidenced by our gas from well purging activities. We water that is located on a Federal or discussion of the proposed requirements believe these important benefits justify Indian lease. The sections obligate in the preamble to the proposed rule. the expenditures related to obtaining operators to inspect all equipment that For example, we discuss that some and reporting the required records. is used to produce, compress, treat, technologies are less costly than others, A number of commenters asserted store, or measure natural gas or to store, and that some technologies make more that BLM should withdraw the measure or dispose of produced water sense to install early in the life of a well proposed downhole well maintenance for gas leaks from leak components, rather than later. We also state that we and liquids unloading provisions of the with the exception of wells and well expect most new wells to use plunger rule because of the complexity of the equipment that have been lifts, and that the proposed rule would issue. They argued that the BLM does depressurized, and sites that contain not require (though it would encourage) not understand the impacts of the only a well head and no other the use of automated systems.149 We proposed requirements. In particular, equipment. The first inspection must expect the operator to make an informed they noted EPA’s decision not to occur within one year of the effective and reasoned decision on which regulate liquids unloading. date of the rule for sites that have begun technology makes the most sense for The BLM has engaged numerous production prior to the effective date. each well based on the conditions and stakeholders throughout the rulemaking For production sites that begin economics of the well. To further clarify process to better inform its final rule production after the effective date, the this, rather than requiring operators to decisions, and has coordinated closely first inspection must occur within 60 maximize recovery of gas, the final rule with the EPA in sharing technical days of beginning production. For sites requires operators to minimize vented information and expertise.150 This is an that were out of service and brought gas and the need for well venting area where differences between the two back into service, the first inspection associated with downhole well agencies’ approaches stem in large part must occur within 60 days of the date maintenance and liquids unloading from their different statutory authorities. the site is brought back into service and operations. As noted above in connection with 151 42 U.S.C. 7411(a)(1). 149 81 FR 6655–6656. 150 81 FR 6617–6618. 152 81 FR 35846.

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re-pressurized. These sections do not § 3179.303(a) to § 3179.301(e) and equipment adds little cost and burden, apply to a site that contains a wellhead revised the definition for clarity. particularly if the operator is using or wellheads and no other equipment, Additionally, the BLM moved the optical gas imaging technology, and nor to a well or well equipment that has requirement in proposed § 3179.303(c) inspecting such equipment offers the been depressurized. that exempts leak components that are same potential additional benefits as Operators are required to conduct the not accessible from the inspection and any other inspection. Thus, the BLM inspections during production monitoring requirements to paragraph believes that requiring inspection of all operations, and to fix any leaks found. (d) of this section; added paragraph (f) of the equipment at a given site will Subsequent inspections must be to specify when the first inspection make the rule more cost-effective in conducted according to the schedule in must take place; and replaced proposed avoiding waste, as compared to § 3179.303. Operators may satisfy the paragraph (e) with new paragraph (j) to exempting inspection of some requirements of §§ 3179.301 through provide an exemption for sites and equipment at a site that is already being 3179.305 for all of their equipment on equipment that are in compliance with inspected. Moreover, the BLM believes a given lease by complying with the the fugitive emission requirements that applying the LDAR requirements to fugitive emissions requirements under 40 CFR part 60, subpart OOOOa. most but not all of the equipment at a established under 40 CFR part 60, This section of the preamble discusses single site would heighten the potential subpart OOOOa with respect to all additional comments on the LDAR for inspection errors and confusion, and equipment covered by the BLM leak provisions in § 3179.301, beyond the make administration and tracking of the detection requirements. This includes comments discussed in Section IV.A.d. results more difficult. equipment such as covers and closed The BLM made changes to clarify the Commenters also urged the BLM to vent systems, and thief hatches and scope of LDAR coverage in the final rule exclude from the LDAR requirements other openings on controlled storage in response to commenters who asserted the following additional types of sites or vessels, which if new, modified or that the proposed rule was not entirely equipment, beyond those discussed in reconstructed, are subject to 40 CFR clear on the scope of coverage. The final Section IV.A.d,: Wells that are shut-in at 60.5411a or 60.5395a under OOOOa and rule now explicitly describes the ‘‘sites’’ the time of an LDAR inspection; sites not the fugitive emissions requirements to which the LDAR provisions apply where there is only a small amount of under OOOOa. Specifically, the and no longer makes use of the term mineral interest from or allocated to a operator must treat each of its sites and ‘‘facilities.’’ The proposed rule covered Federal or Indian lease, unit, or equipment as if it were a collection of ‘‘facilities,’’ as well as compressors that communitization agreement; equipment fugitive emissions components as were on lease and operated by the operated by an entity other than the defined in 40 CFR part 60 subpart operator, regardless of whether they operator; sites with a legally and OOOOa; comply with the requirements handled Federal or Indian product. practically enforceable leak detection of 40 CFR part 60 subpart, OOOOa that ‘‘Facility’’ is defined in section 3170.3 and repair requirement in an operating apply to affected facility fugitive to include a site and associated permit, or other enforceable requirement emissions components at a well site or equipment used to process, treat, store, established under a Federal, State, local compressor station, as applicable, under or measure production from a Federal or or tribal authority; and sites located on 40 CFR part 60, subpart OOOOa; and Indian lease, unit or communitized area, the North Slope of Alaska. notify the BLM through a Sundry Notice as well a site and associated equipment With respect to wells that are shut-in of such compliance. used to store, measure, or dispose of at the time an inspection occurs, Several changes were made to this produced water. With respect to coverage under LDAR depends on section in response to comments and to produced water, the definition of whether the shut-in is temporary, or the provide additional clarity. As discussed ‘‘facility’’ only includes sites on a well or well equipment has been in Section V.B.2., § 3179.301(a) clarifies Federal or Indian lease, unit or depressurized. Leaks will only be the specific sites and equipment subject communitized area, but the definition is detectable when a well is operating, so to the leak inspection requirements, not similarly limited with respect to the rule provides that leak inspections which apply to all equipment handling sites associated with Federal or Indian must occur during production Federal or Indian gas, upstream of and production. Using the term ‘‘facilities’’ operations. The BLM agrees that a well including the site where the royalty to define the coverage of the LDAR that has been depressurized is no longer measurement point is located—whether program would create a distinction in operation and should not leak, and the equipment is on or off the lease and between equipment upstream and the BLM has excluded such wells from regardless of the ownership of the downstream of the approved point of the LDAR requirements. Depressurized equipment. This section also specifies royalties measurement on an otherwise wells that are brought back into service that the leak detection requirements covered site. In addition, the BLM has do not need to be inspected until 60 apply to equipment handling produced not retained in the final rule the days after the date that the well is re- water only if the equipment is operated proposed coverage for compressors that pressurized. A well that is temporarily by the operator and located on the do not handle Federal or Indian shut-in but not depressurized, however, Federal or Indian lease. The BLM added product. Given the potential for may have significant leaks when it is a provision to § 3179.301(b) stating that confusion here, we believe that it is brought back into production. the LDAR requirements do not apply to clearer to simply specify the sites and Exempting such a well from any a well or well equipment that has been equipment subject to the LDAR inspection obligations might provide an depressurized, nor to a site that contains requirements in the final rule, rather incentive for operators to schedule a wellhead or wellheads and no other than use the term ‘‘facilities.’’ inspections during shut-ins to reduce equipment. In § 3179.301(c), the BLM With respect to the LDAR the number of sites that would need to clarified that the operator must inspect requirements in this rule, the BLM be inspected. for gas leaks from leak components. In believes it is reasonable and appropriate With respect to leases where the conjunction with this change, we added to apply the requirements to all Federal or Indian mineral interest is a definitions for ‘‘leak’’ and ‘‘leak equipment at a site that is subject to minority interest, the BLM has the component’’ in § 3179.3. We also moved these requirements. Once an operator is authority and an obligation to minimize the definition of ‘‘site’’ from already on-site, inspecting additional the waste of Federal and Indian mineral

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resources. The waste of Federal and although a facility measurement point requirements, an operator might prefer Indian resources is of no less concern to may be located on lands not covered by to comply with the OOOOa the BLM when the Federal or Indian a Federal or Indian lease, unit, or requirements for all of its facilities on a interest is a minority interest. Even a communitization agreement (as might lease, including existing facilities that small percentage interest could still be the case when off-lease measurement are not covered by subpart OOOOa, represent a significant volume of occurs pursuant to applicable rather than complying with subpart Federal or Indian resources, depending regulations in 43 CFR subpart 3173), the OOOOa for new, modified and on the reservoir. Also, as a policy LDAR requirements of this rule do not reconstructed facilities and the BLM matter, the BLM believes that the LDAR apply to sites that are not located on a LDAR requirements for existing requirements of this rule are cost- Federal or Indian lease, unit or facilities. Thus, the final rule provides effective and provide net public communitized area. that an operator may satisfy the BLM benefits. Thus, the BLM does not In addition, the BLM disagrees with LDAR requirements by complying with believe that it is appropriate to the suggestion to create a blanket the subpart OOOOa fugitive emission arbitrarily limit the benefits of this rule exemption from the LDAR requirements requirements for all sites and equipment based on the proportion of the Federal for sites with another legally and on a given lease. or Indian mineral interest at issue in the practically enforceable leak detection However, by providing that lease, unit, or communitized area. In the and repair requirement in an operating compliance with subpart OOOOa is final rule, the BLM has clarified that permit or other enforceable Federal, deemed compliance with the BLM where a site is upstream of or contains State, local or tribal requirement. The requirements, rather than simply the royalty measurement point, the final rule already contains provisions to exempting all facilities subject to LDAR provisions cover the site and all address overlapping EPA or State subpart OOOOa, the BLM maintains equipment associated with it that requirements, as discussed in sections enforcement authority if an operator is handles Federal or Indian gas. III.B.3 VI.A. of this preamble. An subject to both subpart OOOOa and the Similarly, neither legal nor policy operator with a specific program BLM requirements, but complies with considerations support exempting contained in its operating permit could, neither. Under this approach, a BLM equipment operated by an entity other under section 3179.303(b) request inspector in the field could review than the site operator. The operator is approval of that program as an information to confirm that the operator responsible for ensuring that operations alternative to the BLM requirements, is in fact in compliance with one set of conducted pursuant to a Federal or provided the permit program is at least leak detection requirements. Indian lease are in compliance with the equally effective at detecting and Section 3179.302 Approved lease terms and applicable reducing losses from leaks as the BLM Instruments and Methods regulations.153 Exempting equipment requirements. By contrast, exempting that is operated by an entity other than any site with existing enforceable LDAR This section prescribes the types of the operator could create an incentive requirements provides no assurance that instruments that an operator must use to for operators to establish contractual those requirements will produce results inspect for leaks. Specifically, operators arrangements that avoid the LDAR equivalent to the BLM requirement. must use: (1) An optical gas imaging requirements. The BLM believes that The BLM also declines to exclude device such as an infrared camera; (2) a through cooperation with contractors automatically from the LDAR portable analyzer capable of detecting that own or operate equipment on the requirements sites that are located on leaks in compliance with Method 21 of lease, the operator has the practical the North Slope of Alaska. The BLM 40 CR part 60, appendix A–7; or (3) a means of ensuring compliance with the notes that one operator has argued that leak detection device not listed in this LDAR requirements on lease, regardless conditions on the North Slope make it section that has been approved by BLM. of who owns the equipment. impossible to meet all of the LDAR The persons using the above devices The BLM recognizes that some requirements, and that the operator has must be adequately trained in their use. equipment at the site containing the in place alternative practices, Anyone may request approval of an facility measurement point, such as equipment, and techniques that reduce alternative monitoring device and storage vessels or compressors, may be the likelihood of leaks and facilitate protocol by submitting a Sundry Notice downstream of the measurement point prompt detection of any that might with the information specified in and may be in control of the purchaser occur. The final provision allowing the paragraph (c) of this section, subject to rather than the operator.154 BLM to approve an operator’s the approval of the BLM as specified in Nevertheless, as discussed previously, alternative instrument-based leak paragraph (d). the BLM believes that it is appropriate detection program is designed to In the final rule, the BLM amended to require the operator to conduct LDAR address just this sort of situation. paragraph (a) of this section by on all equipment located at the site. Certain operators requested that removing reference to monitoring Once the operator is inspecting a given facilities subject to the EPA subpart methods since this paragraph specifies site, particularly when using optical gas OOOOa fugitive emissions requirement monitoring equipment, not methods. In imaging, it will add minimal time and be exempt from the BLM LDAR paragraph (a)(2), we added a provision cost to inspect additional co-located requirements. After review of these that portable analyzers must be operated equipment. It should be noted that, comments, the BLM agrees that those in compliance with Method 21 rather facilities should not have to comply than manufacturers specifications. We 153 See Luff Exploration Co., 115 IBLA 134 (1990) with both the EPA subpart OOOOa removed from paragraph (a) the (upholding enforcement action against operator program and a separate BLM LDAR proposed option of using a based on noncompliant equipment owned and operated by purchaser). program, and the final rule provides that comprehensive program approved by 154 The BLM’s jurisdiction over Federal and an operator in compliance with the the BLM under § 3179.303(b). Indian oil and gas production does not cease at the requirements of subpart OOOOa will be The BLM also added a provision at point of royalty measurement. See Wexpro deemed in compliance with the BLM paragraph (b) that the person operating Company, 174 IBLA 57 (2008) (requiring BLM to LDAR requirements as well. In addition, the leak detection device must be consider whether use of gas in operations downstream of the royalty measurement point even though the BLM and the EPA have adequately trained in the proper use of constituted royalty-free ‘‘beneficial use’’). largely aligned their leak detection the device. We added an option at

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paragraph (c) where any person may In the final rule, the BLM clarified in rule requires the operator to notify the request approval of an alternative paragraph (a) of this section that the BLM by Sundry Notice if there is good monitoring device and protocol by operator must inspect leak components cause to delay the repairs beyond 30 submitting a Sundry Notice with the at the site, and that the inspection must days, and to complete the repair at the information specified in paragraph (c). be conducted using a leak detection earliest opportunity, but in no case The request will be subject to the device listed under § 3179.302. The longer than 2 years after discovery. The approval of the BLM as specified in BLM is maintaining a semiannual rule also requires the operator to newly added paragraph (d), which inspection frequency for each site, and conduct a follow-up inspection, using includes the requirement that it must be added provisions for quarterly an authorized method, to verify the demonstrated that the alternative leak inspections of compressor stations. In effectiveness of the repair within 30 the final rule, these inspection detection device and associated protocol calendar days after the repair, and to frequencies are fixed, and the BLM did will achieve equal or greater reduction make additional repairs within 15 of gas lost through leaks compared to not finalize the proposed table of calendar days if the previous repair was the approach specified in variable, performance-based inspection not effective. This repair and follow-up § 3179.302(a)(1). Paragraph (d) also frequencies. establishes that the BLM will provide Paragraph (b) of this section allows for process must be followed until the public notice of the submission of an BLM approval of an alternative program, repair is effective. The BLM does not alternative device or monitoring if an operator submits an approval consider an inspection to verify the protocol for approval, and will post on request via a Sundry Notice. It is the effectiveness of a repair to be a periodic the BLM Web site a list of each BLM’s intent that those approvals be inspection under § 3179.303. approved alternative monitoring device made at the State office level for In the final rule, the BLM increased and protocol and limitations on its use. intrastate programs, and at the national the time period for completing repairs The final rule also notes that the BLM or Washington office level for interstate from the proposed 15 days to 30 days. programs. Final § 3179.303(b) differs may approve an alternative device and Operators also have 30 days, as opposed slightly from the proposed version of monitoring protocol for use in all or to the proposed 15 days, to verify the most applications, or instead just for use this provision. First, the final rule specifies that the approval applies to an effectiveness of the repair through a on a pilot or demonstration basis. follow-up inspection. While the Please see Section III.A.d for a ‘‘alternative instrument-based leak detection program’’ instead of the proposed rule would have required that discussion of major comments received proposed ‘‘alternative leak detection the follow-up inspection be carried out on this section of the proposed rule. device, program, or method.’’ Next, the using the method originally used to Section 3179.303 Leak Detection rule specifies that the approval is in lieu detect the leak, the final rule specifies Inspection Requirements for Natural Gas of complying with paragraph (a) of this that any of the instruments specified or Wellhead Equipment and Other section, and that the alternative must approved under § 3179.302(a) or the Equipment achieve equal or greater reduction of gas soap bubble test under EPA’s Method lost through leaks compared with the 21, section 8.3.3, may be used. This section requires operators to approach specified in §§ 3179.302(a)(1) conduct initial site inspections within In paragraph (a) of this section in the and 3179.303(a). The BLM also added specified timeframes after the effective proposed rule, the BLM specified that details of what the Sundry Notice must date of the rule. The section requires the the operator must repair any leak ‘‘not include at § 3179.303(b)(1)–(5), and operator initially to conduct site associated with normal equipment added paragraph (e) stating that inspections twice a year, with operations.’’ In the final rule, we specify approved alternative LDAR programs consecutive semiannual inspections will be posted online. that ‘‘any leak’’ must be repaired as soon conducted at least four months apart; Additionally, the BLM added a as practicable, but within 30 days after and to conduct compressor station provision at paragraph (c) of this section discovery. In conjunction with this inspections quarterly, with consecutive to provide the operator with the option change, we have added to § 3179.3 a quarterly inspections conducted at least to request approval of a leak detection definition of ‘‘leak’’ that excludes 60 days apart. The inspection program that does not meet the criterion releases due to normal operation of frequencies are fixed. specified in § 3179.303(b) when it can equipment that is intended to vent. Paragraph (b) of this section be demonstrated that compliance with The proposed rule, as well as the final authorizes the BLM to approve an the requirements of §§ 3179.301 through rule, allows the owner to delay repair if alternative instrument-based leak 3179.305 would cause the operator to detection program if the BLM finds that a good cause exists. Although ‘‘good cease production and abandon cause’’ was not defined in the proposed the alternative would achieve equal or significant recoverable oil or gas greater reduction of gas lost through rule, we have added a definition in reserves under the lease. The BLM also paragraph (a) of the final rule. Also, the leaks compared with the approach added paragraph (d) setting forth the final rule allows the operator up to two specified in §§ 3179.302(a)(1) and requirements for the Sundry Notice to years to repair a leak if good cause for 3179.303(a). The operator must submit support a demonstration under delay exists, although the operator must the request through a Sundry Notice. paragraph (c). The operator also has the option to Please see Section III.A.d for a submit a Sundry Notice and repair the request approval of a leak detection discussion of major comments received leak sooner than 2 years if the program that does not meet the criterion on this section of the proposed rule. opportunity arises. Previously, we had specified in § 3179.303(b) when it can proposed that the operator repair the be demonstrated that compliance with Section 3179.304 Repairing Leaks leak within 15 days after the cause for the requirements of §§ 3179.301 through This section requires operators to the delay ceases to exist. 3179.305 would cause the operator to repair any leak as soon as practicable Please see Section III.A.d for a cease production and abandon and no later than 30 calendar days after discussion of major comments received significant recoverable oil or gas discovery of the leak, unless there is on this section of the proposed rule. reserves under the lease. good cause for repair to take longer. The

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Section 3179.305 Leak Detection the affected Federal or Indian leases and for variances, such as local air Inspection, Recordkeeping and applicable statutes. authorities, multiple State agencies, or Reporting This section also clarifies that a operators. Commenters asserted that variance granted under this proposed This section requires operators to allowing only States or tribes to request section does not constitute a variance maintain records of LDAR inspections variances causes uncertainty for from provisions of regulations, laws, or and repairs, including dates, locations, operators, and that if a State declined to orders other than subpart 3179, and it methods, where leaks were found, dates put forth a variance request, companies reserves the BLM’s authority to rescind of repairs, and dates of follow-up would bear the cost and burden of a variance or modify any condition of complying with multiple regulatory inspections. These records must be approval in a variance. Additionally, regimes. As stated above, the BLM has made available to the BLM upon this section requires States or tribes modified the rule to allow local request. AVO inspections only have to with approved variances to notify the requirements, in addition to State and be documented if they find a leak BLM in writing of any substantive tribal requirements, to substitute for requiring repair. Paragraph (b) of the amendments, revisions, or other BLM requirements. Regarding the section also requires operators to submit changes to the applicable State, local or comment that multiple State agencies to the BLM, by March 31 of each tribal regulation(s) or rule(s). This may need to request a variance, the final calendar year, an annual summary section further specifies that if the BLM rule does not preclude different State or report on the previous year’s LDAR approves a variance for State, local or tribal agencies from requesting inspection activities. The BLM plans to tribal regulation(s) or rule(s), the variances from different provisions of make these reports available to the variance can be enforced by the BLM as the rule. The BLM has not modified the public, subject to any protections for if the regulation(s) or rule(s) were final rule to allow localities or confidential business information. provided for in this Subpart. operators, in addition to States and The final rule amends the records that In response to comments received, the tribes, to request a variance to be able must be maintained. The BLM did not BLM made the following changes to the to comply with State, local or tribal finalize the proposed recordkeeping proposed rule requirements: (1) Revised requirements in lieu of the BLM requirements regarding the equipment paragraph (a)(1) to change a reference to requirements. Specifically with respect or facility inspected, descriptions of granting a variance from ‘‘any to local requirements, the BLM believes each leak, and the date of each leak individual provision of this subpart’’ to that it is important to ensure that the repair attempt. We clarified, however, ‘‘any provisions of this subpart’’; (2) State supports a variance request, and that AVO checks need only be revised paragraphs (a)(2)(iv) and (b) to thus that the State prefers the BLM to documented if they find a leak requiring state that the State, local or tribal enforce the State’s or locality’s repair. regulations or rules would ‘‘perform at requirements rather than federal Please see Section III.A.d for a least equally well in terms of reducing requirements. Additionally, we believe discussion of major comments received waste of oil and gas, reducing that a State has the best understanding on this section of the proposed rule. environmental impacts from venting of its own regulatory requirements and Section 3179.401 State or Tribal and/or flaring of gas, and ensuring the how those compare to the requirements Requests for Variances From the safe and responsible production of oil of this rule. Requirements of This Subpart and gas, compared to the particular Several commenters asserted that the provision(s) from which the State or variance application and approval This section creates a variance tribe is requesting the variance’’; (3) processes were unclear and/or overly procedure under which the BLM State added text to allow variances for burdensome. These commenters Director may grant a State or tribe’s requirements and regulations of local expressed various concerns, including: request to have a State, local or tribal governments, in addition to State and (1) Lack of a clear and comprehensive regulation apply in place of a provision tribal requirements (though the variance description of the information needed to or provisions of this subpart. The request must still come from the State request a variance; (2) lack of timelines variance request must: (1) Identify the or tribe, not from a locality); (4) added for review and approval; (3) lack of specific provisions of the BLM new paragraph (e) that requires the State criteria by which the BLM would requirements for which the variance is or tribe that requested the variance to evaluate variance requests; and (4) lack requested; (2) identify the specific State, notify the BLM of substantive of provisions stating how the BLM will local or tribal regulation that would amendments, revisions, or other address future modifications to either substitute for the BLM requirements; (3) changes to the applicable State, local or this rule or State regulations once explain why the variance is needed; and tribal regulation(s) or rule(s); and (5) variances are approved. Commenters (4) demonstrate how the State, local or added new paragraph (f) that clarifies were also concerned about the BLM’s tribal regulation will satisfy the that if the BLM approves a variance for ability to review variance requests in a purposes of the relevant BLM State, local or tribal regulation(s) or timely manner. To address these provisions. The BLM State Director will rule(s), the variance can be enforced by concerns, comments suggested review a State or tribal variance request. the BLM as if the regulation(s) or rule(s) clarifying the regulatory text as well as To approve a request, the BLM State were provided for in this Subpart. developing formal implementation Director will determine that the State, Paragraph (f) also clarifies that a State’s guidance in consultation with the States local or tribal regulation: (1) Would or tribe’s enforcement of its own prior to the effective date of the rule. perform at least equally well in terms of regulations would not be affected by the In response to these comments, as avoiding waste of oil and gas, reducing BLM’s approval of a variance. discussed in Section III.E.2 of this environmental impacts from venting Major comments received on preamble, the final rule provides three and/or flaring of gas, and ensuring the variances are discussed in Section specific criteria for evaluating whether safe and responsible production of oil III.E.3 of this preamble; additional it is appropriate to apply the State, local and gas, compared to the particular comments on variances are discussed or tribal requirements in lieu of this provision(s) from which the State or below. rule. In addition, the final rule added tribe is requesting the variance, and (2) Some commenters requested that new paragraph (e) that requires the State would be consistent with the terms of additional entities be allowed to apply or tribe that requested the variance to

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notify the BLM of substantive which a variance leads to unintended or functions.156 Therefore, the amendments, revisions, or other unforeseen consequences that run approximately 17,000 entities associated changes to the applicable State, local or counter to the BLM’s determination that with developing, and producing of tribal regulation(s) or rule(s). This the State, local, or tribal regulation domestic oil and gas 157 represent an requirement will ensure that the BLM is performs at least as well as the BLM upper bound estimate of the operators aware of changes to State, local or tribal rule. The BLM expects that such that could potentially be affected by this regulations that may impact whether the situations will arise infrequently, but rulemaking. State, local or tribal regulation or the BLM nevertheless believes it is 2. Affected Small Entities requirement continues to meet the important to include a mechanism for variance criteria established in the final addressing such situations as they The Small Business Administration rule. Regarding the comments arguing occur. After considering the comments, (SBA) has developed size standards to for a timeline for submittal and the BLM determined that consideration carry out the purposes of the Small processing of the variances, the BLM is of waste reduction, environmental, and Business Act.158 For mining, including confident that it will be able to process safety interests outweighs commenters’ the extraction of crude oil and natural these requests in a timely manner that concerns. As a result, the final rule gas, the SBA defines a small entity as an will allow sufficient time for operators maintains the BLM’s discretion to individual, limited partnership, or small to have a clear understanding of their rescind a variance or modify any company, at ‘‘arm’s length’’ from the compliance requirements. condition of approval. Regarding the control of any parent companies, with Some commenters also expressed comments requesting that the BLM fewer than 1,250 employees. For entities concern with the proposed BLM State include an appeals process for revoked drilling oil and gas wells, the threshold Director review of the variance requests. or denied variances, the BLM did not is 1,000 employees. For entities These commenters asserted that provide for administrative appeals on involved in support activities, the delegating the approval process to the similar variance decisions under the standard is annual receipts of less than BLM State Director could result in hydraulic fracturing rule, and the BLM $38.5 million Table 9–3a in the RIA uneven treatment among States. The is maintaining this practice in this final displays the number of establishments BLM agrees that achieving consistent rule. Applying this approach also helps in the oil and gas sector using a 1,000 implementation of the regulations is an to avoid a protracted appeals process employee cutoff. This table shows that important goal, and this is one reason with respect to State and tribal over 99% of the establishments why the BLM does not believe that variances. involved in oil and gas extraction and decisions on variance requests should the drilling of oil and gas wells are VIII. Analysis of Impacts be made below the BLM State Director classified as small. level. Further, the BLM believes that A. Description of the Regulated Entities BLM State Directors are in a good To estimate a percentage of small position to evaluate how State, local or 1. Potentially Affected Entities firms involved in oil and gas support tribal rules or requirements compare to activities, we reference Table 9–3d of Entities that will be directly affected the RIA, which provides the NAICS the requirements of this rule, given their by the rule include most, if not all, familiarity with the regulatory regimes information for firms involved in oil entities involved in the exploration and and gas support activities based on the that apply in the relevant State or States. development of oil and natural gas on In addition, once the rule is in effect, size of receipts. The most recent data Federal and Indian lands. According to available from the U.S. Census Bureau the BLM would have the opportunity to AFMSS data (as of March 27, 2015), issue guidance to enhance coordination for establishment/firm size based on there are up to 1,828 entities that receipts is for 2007. Of the firms among State Directors in evaluating currently operate Federal and Indian variances, as well as with the BLM providing oil and gas support activities leases.155 We believe that these 1,828 in 2007, about 97 percent had annual Washington office, to help ensure entities will be most affected by the consistency across the BLM State receipts of less than $35 million and are rule, in addition to entities currently classified as small.159 Offices. Finally, the more specific involved with drilling and support criteria in the final rule for evaluating a activities, and any entities that become B. Impacts of the Requirements variance request will enhance involved in the future. 1. Overall Costs of the Rule consistency across States. The potentially affected entities are Some commenters also opposed the likely to fall within one of the following Overall, the BLM estimates that this proposed provision in § 3179.401(d) industries, identified by the North rule will pose costs of about $114–279 stating that the ‘‘BLM reserves the right million per year (with capital costs to rescind a variance or modify any American Industry Classification System (NAICS) codes: annualized using a 7% discount rate) or condition of approval.’’ These $110–275 million per year (with capital commenters asserted that such a • NAICS Code 21111 ‘‘Oil and Gas Extraction’’ costs annualized using a 3% discount proposal undermines certainty for rate).160 These costs include engineering operators and discourages States and • NAICS Code 213111 ‘‘Drilling Oil and Gas Wells’’ compliance costs and the social cost of tribes from seeking a variance. Other minor additions of carbon dioxide to the commenters requested that the BLM • NAICS Code 213112 ‘‘Support Activities’’ include an appeals process for revoked 156 or denied variances, stating that if a RIA at 122. According to 2014 data from the U.S. 157 U.S. Census Bureau data does not readily variance were requested and denied, Census Bureau, there were 6,532 entities differentiate between the number of firms involved States would have no administrative directly involved in extraction of oil and in oil development and production activities versus means by which to address the BLM gas in the United States, 2,121 entities gas development and production. decision without going to court. involved in the drilling of wells, and 158 13 CFR 121.201. The BLM believes that maintaining 159 U.S. Census Bureau does not provide receipt 8,577 entities providing other support data that allow a break at the $38.5 million BLM authority to rescind a variance or threshold as defined by SBA. As such, the 97 modify any condition of approval is 155 The actual number is expected to be slightly percent figure is a slight underestimate. necessary to guard against situations in lower due to duplicate entries. 160 RIA at 4.

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atmosphere.161 The engineering 3. Net Benefits of the Rule economic analysis of the benefits and compliance costs presented do not Overall, the BLM estimates that the costs of a regulation, they may be include potential cost savings from the benefits of this rule outweigh its costs important for describing distributional recovery and sale of natural gas (those by a significant margin. The BLM effects. savings are shown in the summary of expects net benefits ranging from $46– c. Small Businesses benefits). In some areas, operators have 199 million per year (capital costs already undertaken, or plan to annualized using a 7% discount rate) or The BLM identified up to 1,828 undertake, voluntary actions to address $50–204 million per year (capital costs entities that currently operate Federal gas losses. To the extent that operators annualized using a 3% discount rate).165 and Indian leases. The vast majority of are already in compliance with the these entities are small businesses, as requirements of this rule, the above 4. Distributional Impacts defined by the SBA. We estimated a estimates overstate the likely impacts of a. Energy Systems range of potential per-entity costs, based the rule. on different discount rates and The rule has a number of scenarios. Those per-entity compliance 2. Overall Benefits of the Rule requirements that are expected to costs are presented in the RIA. 168 The benefits of the rule include the influence the production of natural gas Recognizing that the SBA defines a additional production of resources from and crude oil from onshore Federal and small business for oil and gas producers Federal and Indian leases; reductions in Indian oil and gas leases. We estimate as one with fewer than 1,250 employees, venting, flaring, and leaks of gas, the following incremental changes in a definition that encompasses many oil including GHG emissions; and production, noting the representative and gas producers, the BLM looked at increased opportunities for royalties. share of the total U.S. production in company data for 26 different small- We measure the benefits of the rule as 2015 for context. We estimate additional the cost savings that the industry will natural gas production ranging from 9– sized entities that currently hold BLM- receive from the recovery and sale of 41 Bcf per year (representing 0.03–0.15 managed oil and gas leases. The BLM natural gas and the projected percent of the total U.S. production) and ascertained the following information environmental benefits of reducing the a reduction in crude oil production from the companies’ annual reports to amount of GHG pollution released into ranging from 0.0–3.2 million bbl per the U.S. Securities and Exchange the atmosphere. As with the estimated year (representing 0–0.07 percent of the Commission (SEC) for 2012 to 2014. costs, we expect benefits on an annual total U.S. production).166 Separate from From data in the companies’ 10–K basis. the volumes listed above, we also expect filings to the SEC, the BLM was able to The BLM estimates that this rule 0.8 Bcf of gas to be combusted on-site calculate the companies’ profit 169 would result in monetized benefits of that would have otherwise been vented. margins for the years 2012, 2013 and $209–403 million per year (calculating Since the relative changes in production 2014. We then calculated a profit the monetized emissions reductions are expected to be small, we do not margin figure for each company when using model averages of the social cost expect that the rule would significantly subject to the average annual cost of methane with a 3 percent discount impact the price, supply, or distribution increase associated with this rule. For rate).162 We estimate that the rule would of energy. simplicity, we used the midpoint of the reduce methane emissions by 175,000– low and high average per-entity cost 180,000 tpy, which we estimate to be b. Royalties increase figures, or $55,200, recognizing worth $189–247 million per year (this The rule is expected to increase that this figure includes compliance social benefit is included in the natural gas production from Federal and costs (annualized using a 7% discount monetized benefit above). We estimate Indian leases, and likewise, is expected rate) and cost savings. For these 26 that the rule would reduce VOC to increase annual royalties to the small companies, a per-entity emissions by 250,000–267,000 (this Federal Government, tribal compliance cost increase of $55,200 benefit is not monetized in our governments, States, and private would result in an average reduction in calculations).163 Overall, we predict the landowners. For requirements that profit margin of 0.15 percentage points rule will reduce methane emissions by would result in incremental gas (based on the 2014 company data). The 35% from the 2014 estimates and production, we calculate the additional full detail of this calculation is available reduce the flaring of associated gas by royalties based on that production. We in the RIA.170 49%, when the capture requirements are estimate that the rule will result in d. Employment fully phased in.164 additional royalties of $3–13 million per The rule will also have numerous year.167 Executive Order 13563 states, ‘‘Our ancillary benefits. These include Royalty payments are recurring regulatory system must protect public improved quality of life for nearby income to Federal or tribal governments health, welfare, safety, and our residents, who note that flares are noisy and costs to the operator or lessee. As environment while promoting economic and unsightly at night; reduced release such, they are private transfer payments growth, innovation, competitiveness, of VOCs, including benzene and other that do not affect the total resources and job creation.’’ 171 An analysis of hazardous air pollutants; and reduced available to society. An important but employment impacts is a standalone production of NOX and particulate sometimes difficult problem in cost analysis and the impacts should not be matter, which can cause respiratory and estimation is to distinguish between real included in the estimation of benefits heart problems. costs and transfer payments. While and costs. transfers should not be included in the 161 Some gas that would have otherwise been 168 The BLM conducted a Final Regulatory vented would now be combusted on-site or 165 RIA at 6. The highs and lows of the benefits Flexibility Analysis, RIA at 123–136. downstream to generate electricity. The estimated and costs do not occur during the same years; 169 The profit margin was calculated by dividing value of the carbon additions do not exceed $30,000 therefore, the net benefit ranges presented here do the net income by the total revenue as reported in in any given year. not calculate simply as the range of benefits minus the companies’ 10–K filings. 162 RIA at 5. the range of costs presented above. 170 RIA at 129. 163 RIA at 106. 166 RIA at 7. 171 Executive Order 13563, Improving Regulation 164 Id. 167 RIA at 8. and Regulatory Review (Jan. 18, 2011).

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The rule is not expected to materially by 30,000–32,000 tpy.178 We estimate governmental jurisdictions, and small impact employment within the oil and additional royalties from leases on not-for-profit enterprises. gas extraction, drilling, and support Indian lands of $0.3–1.9 million per The BLM reviewed the Small industries.172 As noted previously, the year.179 Business Administration (SBA) size anticipated additional gas production standards for small businesses and the IX. Procedural Matters volumes represent only a small fraction number of entities fitting those size of the U.S. natural gas production A. Executive Order 12866, Regulatory standards as reported by the U.S. volumes. Additionally, the annualized Planning and Review 180 Census Bureau in the Economic Census. The BLM concludes that the vast compliance costs represent only a small Executive Order 12866 requires majority of entities operating in the fraction of the annual net incomes of agencies to assess the benefits and costs relevant sectors are small businesses as companies likely to be impacted. of regulatory actions, and, for significant defined by the SBA. As such, the rule Therefore, we believe that the rule regulatory actions, submit a detailed will likely affect a substantial number of would not alter the investment or report of their assessment to the OMB small entities. The BLM believes, employment decisions of firms or for review. A rule is deemed significant significantly adversely impact however, that the final rule will not under Executive Order 12866 if it may: have a significant economic impact on employment. (a) Have an annual effect on the a substantial number of small entities. The requirements would require the economy of $100 million or more or Although the rule will affect a one-time installation or replacement of adversely affect in a material way the substantial number of small entities, the equipment and the ongoing economy, a sector of the economy, BLM does not believe that these effects implementation of an LDAR program, productivity, , jobs, the would be economically significant. The and labor would be necessary to comply environment, public health or safety, or screening analysis conducted by BLM with each of these. The Supporting State, local, or tribal governments or estimates the average reduction in profit Statement for the Paperwork Reduction communities; margin for small companies will be just Act describes the labor requirements (b) Create a serious inconsistency or a fraction of one percentage point, posed by the rule. otherwise interfere with an action taken which is not a large enough impact to or planned by another agency; e. Impacts on Tribal Lands be considered significant. (c) Materially alter the budgetary Although it is not required, the BLM impact of entitlements, grants, user fees, This section presents the costs, nevertheless chose to prepare an Initial benefits, net benefits, and incremental or loan programs or the rights and Regulatory Flexibility Analysis and production associated with operations obligations of recipients thereof; or Final Regulatory Flexibility Analysis for (d) Raise novel legal or policy issues on Indian leases, as well as royalty this rule. Due to the fact that the rule is 173 arising out of legal mandates, the implications for tribal governments. economically significant and impacts a President’s priorities, or the principles We estimate that the rule’s operation on substantial number of small entities, the set forth in the Executive Order. Indian lands would pose costs ranging BLM believes it is prudent, and from $15–$39 million per year (using a After reviewing the requirements, the BLM has determined that the rule is an potentially helpful to small entities, to 7% discount rate to annualize capital provide an IRFA and FRFA for the costs) or $14–$39 million per year economically significant regulatory action according to the criteria of rulemaking. We do not believe this (using a 3% discount rate to annualize decision should be viewed as a 174 Executive Order 12866, and we have capital costs). Projected benefits from precedent for other rulemakings. the rule’s operation on Indian lands prepared a regulatory impact analysis range from $3–$23 million per year for the rule. C. Unfunded Mandates Reform Act of 1995 (using model averages of the social cost B. Regulatory Flexibility Act and Small of methane with a 3 percent discount Business Regulatory Enforcement Under the Unfunded Mandates rate).175 Net benefits from operation of Fairness Act of 1996 181 Reform Act (UMRA), agencies must the rule on leases on Indian lands range prepare a written statement about The Regulatory Flexibility Act as from $3–$25 million per year (with benefits and costs prior to issuing a amended by the Small Business capital costs annualized using 7% and proposed rule that includes any Federal Regulatory Enforcement Fairness Act 3% discount rates).176 mandate that is likely to result in (SBREFA) generally requires an agency aggregate expenditure by State, local, For impacts on production from to prepare a regulatory flexibility and tribal governments, or by the leases on Indian lands, the rule is analysis of any rule subject to notice private sector, of $100 million or more projected to result in additional natural and comment rulemaking requirements in any 1 year, and prior to issuing any gas production ranging from 1.1–5.8 Bcf under the Administrative Procedure final rule for which a proposed rule was per year and a reduction in crude oil Act, unless the head of the agency published. production ranging from 0–320,000 bbl certifies that the rule would not have a 177 This final rule does not contain a per year. We further estimate that the significant economic impact on a rule would reduce methane emissions Federal mandate that may result in substantial number of small entities.182 from leases on Indian lands by 22,000 expenditures of $100 million or more by Congress enacted the RFA to ensure that tpy, and would reduce VOC emissions State, local, and tribal governments, in government regulations do not the aggregate, or by the private sector in unnecessarily or disproportionately 172 any 1 year. Thus, the final rule is also RIA at 118. burden small entities. Small entities 173 not subject to the requirements of RIA at 118–120. include small businesses, small 174 RIA at 118. Section 205 of UMRA. 175 RIA at 119. This final rule is also not subject to 178 176 RIA at 119. The highs and lows of the benefits Id. the requirements of Section 203 of 179 RIA at 120. and costs do not occur during the same years; UMRA because it contains no regulatory therefore, the net benefit ranges presented here do 180 RIA at 138. not calculate simply as the range of benefits minus 181 RIA at 167–168. requirements that might significantly or the range of costs presented above. 182 5 U.S.C. 601–612. The exception is found in uniquely affect small governments. It 177 Id. 5 U.S.C. 605(b). contains no requirements that apply to

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such governments, nor does it impose G. Executive Order 13175, Consultation approval by the OMB under the PRA. obligations upon them. and Coordination With Indian Tribal The BLM included an information Governments collection request in the proposed rule. D. Executive Order 12630, OMB has approved the information Governmental Actions and Interference In accordance with Executive Order 13175, the BLM has evaluated this collection for the final rule under With Constitutionally Protected Property control number 1004–0211. Rights (Takings) rulemaking and determined that it will not have substantial direct effects on 2. Summary of Information Collection Under Executive Order 12630, the federally recognized Indian tribes. Requirements Nevertheless, on a government-to- final rule would not have significant • Title: Waste Prevention, Production government basis we initiated takings implications. A takings Subject to Royalties, and Resource consultation with tribal governments implication assessment is not required. Conservation (43 CFR parts 3160 and that the final rule may affect. The final rule would establish a limited 3170). set of standards under which gas can be In 2014, the BLM conducted a series • Forms: Form 3160–3, Application flared or vented, and under which an of forums to consult with tribal for Permit to Drill or Reenter; and Form operator can use oil and gas on a lease, governments to inform the development 3160–5, Sundry Notices and Reports on unit, or communitized area for of this proposal. We held tribal outreach Wells. operations and production purposes, sessions in Denver, Colorado (March 19, • OMB Control Number: 1004–0211. 2014), Albuquerque, New Mexico (May without paying royalty. • Description of Respondents: 7, 2014), Dickinson, North Dakota (May Oil and gas operators on BLM- Holders of Federal and Indian (except 9, 2014), and Washington, DC (May 14, Osage Tribe) oil and gas leases, those administered leases are subject to lease 183 2014). At the Denver and who belong to federally approved units terms that expressly require that Washington, DC sessions, the tribal and CAs, and those who are parties to subsequent lease activities be conducted meetings were live-streamed to allow for IMDA oil and gas agreements. in compliance with applicable Federal the greatest possible participation by • Respondents’ Obligation: Required laws and regulations. The final rule is tribes and others. The tribal outreach to obtain or retain a benefit. consistent with the terms of those sessions served as initial consultation • Frequency of Collection: On Federal leases and is authorized by with Indian tribes to comply with occasion and monthly. applicable statutes. Thus, the final rule Executive Order 13175. As part of our • Abstract: This rule updates is not a governmental action capable of outreach efforts, the BLM accepted standards to reduce wasteful venting, interfering with constitutionally informal comments generated as a result flaring, and leaks of natural gas from protected property rights, it would not of the public/tribal outreach sessions onshore wells located on Federal and cause a taking of private property, and through May 30, 2014. Indian oil and gas leases, units and CAs. it does not require further discussion of After the proposed rule published on • Estimated Number of Responses: takings implications under this February 8, 2016, the BLM conducted 63,200. • Executive Order. another round of outreach meetings, Estimated Total Annual Burden with the tribal sessions taking place in Hours: 82,170 hours. E. Executive Order 13132, Federalism the morning, and the general-public • Estimated Total Non-Hour Cost: sessions taking place in the afternoon, None. The final rule would not have a with a conference call-in number for the substantial direct effect on the States, public to listen in remotely. These 3. Discussion of Regulations the relationship between the national meetings were held at four locations: Except for the recordkeeping required government and the States, or the Farmington, New Mexico (February 16, by 43 CFR 3179.305, the information- distribution of power and 2016), Oklahoma City, Oklahoma collection activities in the final rule responsibilities among the levels of (February 18, 2016), Denver, Colorado involve new uses and burdens for BLM government. It would not apply to (March 1, 2016), and Dickinson, North Forms 3160–3 and 3160–5, the use of States or local governments or State or Dakota (March 3, 2016). which has been cleared by OMB under local government entities. Therefore, in control number 1004–0137, Onshore Oil H. Paperwork Reduction Act accordance with Executive Order 13132, and Gas Operations (43 CFR part 3160) the BLM has determined that this final 1. Overview (expiration date January 31, 2018). After rule does not have sufficient Federalism The Paperwork Reduction Act this rule goes into effect, the BLM plans implications to warrant preparation of a (PRA) 184 provides that an agency may to request that OMB merge the new uses Federalism Assessment. not conduct or sponsor, and a person is and burdens of Forms 3160–3 and not required to respond to, a collection 3160–5 with control number 1004–0137. F. Executive Order 12988, Civil Justice The information collection activities of information, unless it displays a Reform in this rule are described below along currently valid OMB control number. with estimates of the annual burdens. Collections of information include This final rule would comply with the Included in the burden estimates are the requests and requirements that an requirements of Executive Order 12988. time for reviewing instructions, individual, partnership, or corporation Specifically, this rulemaking: (a) Meets searching existing data sources, obtain information, and report it to a the criteria of section 3(a) requiring that gathering and maintaining the data Federal agency. See 44 U.S.C. 3502(3); all regulations be reviewed to eliminate needed, and completing and reviewing 5 CFR 1320.3(c) and (k). errors and ambiguity and be written to each component of the information This rule contains information minimize litigation; and (b) Meets the collection. criteria of section 3(b)(2) requiring that collection activities that require all regulations be written in clear Plan to Minimize Waste of Natural Gas 183 More info can be found at: http:// (43 CFR 3162.3–1) language and contain clear legal www.blm.gov/wo/st/en/prog/energy/public_events_ standards. on_oil.html. This rule adds a new provision to 43 184 44 U.S.C. 3501–3521. CFR 3162.3–1 that requires a plan to

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minimize waste of natural gas when through use of a gas-activated • Identification of all of the operator’s submitting an APD for a development pneumatic controller, returned to the wells within the lease from which gas oil well. This information is in addition reservoir, or some other disposition). is captured; to the APD information that the BLM The following information is also Notification of Choice To Comply on already collects under OMB Control required: County- or State-Wide Basis (43 CFR Number 1004–0137. The required • Data that show pipeline capacity 3179.7(c)(3)(ii)) elements of the waste minimization and the operator’s projections of the cost plan are listed at paragraphs (j)(1) Section 3179.7 requires operators associated with installation and through (j)(7). flaring gas from development oil wells operation of gas capture infrastructure, to capture a specified percentage of the to the extent that the operator is able to Request for Approval for Royalty-Free operator’s adjusted volume of gas obtain this information, as well as cost Uses On-Lease or Off-Lease (43 CFR produced over the relevant area. The projections for alternative methods of 3178.5, 3178.7, 3178.8, and 3178.9) ‘‘relevant area’’ is each of the operator’s transportation that do not require Section 3178.5 requires submission of leases, units, or communitized areas, pipelines; and a Sundry Notice (Form 3160–5) to unless the operator chooses to comply • Projected costs of and the combined request prior written BLM approval for on a county- or State-wide basis and the stream of revenues from both gas and oil use of gas royalty-free for the following operator notifies the BLM of its choice production, including: operations and production purposes on by Sundry Notice by January 1 of the Æ The operator’s projections of gas the lease, unit or communitized area: relevant year. prices, gas production volumes, gas • Using oil or gas that an operator quality (i.e., heating value and H2S Request for Approval of Alternative removes from the pipeline at a location content), revenues derived from gas Capture Requirement (43 CFR 3179.8(b)) downstream of the facility measurement production, and royalty payments on point (FMP); Section 3179.8 applies only to leases gas production over the next 15 years or • Removal of gas initially from a issued before the effective date of the the life of the operator’s lease, unit, or lease, unit PA, or communitized area for final rule and to operators choosing to communitized area, whichever is less; treatment or processing because of comply with the capture requirement in and particular physical characteristics of the section 3179.7 on a lease-by-lease, unit- Æ The operator’s projections of oil gas, prior to use on the lease, unit PA by-unit, or communitized area-by- prices, oil production volumes, costs, or communitized area; and communitized area basis. The regulation revenues, and royalty payments from • Any other type of use of produced provides that operators who meet those the operator’s oil and gas operations oil or gas for operations and production parameters may seek BLM approval of a within the lease over the next 15 years purposes pursuant to § 3178.3 that is not capture percentage other than that or the life of the operator’s lease, unit, identified in § 3178.4. which is applicable under 43 CFR or communitized area, whichever is Section 3178.7 requires submission of 3179.7. The operator must submit a less. a Sundry Notice (Form 3160–5) to Sundry Notice that includes the Request for Exemption From Well request prior written BLM approval for following information: off-lease royalty-free uses in the • The name, number, and location of Completion Requirements (43 CFR following circumstances: each of the operator’s wells, and the 3179.102(c) and (d)) • The equipment or facility in which number of the lease, unit, or Section 3179.102 lists several the operation is conducted is located off communitized area with which it is requirements pertaining to gas that the lease, unit, or communitized area for associated; reaches the surface during well engineering, economic, resource- • The oil and gas production levels of completion and related operations. An protection, or physical-accessibility each of the operator’s wells on the lease, operator may seek an exemption from reasons; and unit, or communitized area for the most these requirements by submitting a • The operations are conducted recent production month for which Sundry Notice that includes the upstream of the FMP. information is available and the following information: Section 3178.9 requires the following volumes being vented and flared from (1) The name, number, and location of additional information in a request for each well; each of the operator’s wells, and the prior approval of royalty-free use under In addition, the request must include number of the lease, unit, or section 3178.5, or for prior approval of map(s) showing: communitized area with which it is off-lease royalty-free use under section • The entire lease, unit, or associated; 3178.7: communitized area, and the (2) The oil and gas production levels • A complete description of the surrounding lands to a distance and on of each of the operator’s wells on the operation to be conducted, including a scale that shows the field in which the lease, unit or communitized area for the the location of all facilities and well is or will be located (if applicable), most recent production month for equipment involved in the operation and all pipelines that could transport which information is available; and the location of the FMP; the gas from the well; (3) Data that show the costs of • The volume of oil or gas that the • All of the operator’s producing oil compliance; and operator expects will be used in the and gas wells, which are producing (4) Projected costs of and the operation and the method of measuring from Federal or Indian leases, (both on combined stream of revenues from both or estimating that volume; Federal or Indian leases and on other gas and oil production, including: the • If the volume expected to be used properties) within the map area; operator’s projections of oil and gas will be estimated, the basis for the • Identification of all of the operator’s prices, production volumes, quality (i.e., estimate (e.g., equipment manufacturer’s wells within the lease from which gas heating value and H2S content), published consumption or usage rates); is flared or vented, and the location and revenues derived from production, and and distance of the nearest gas pipeline(s) to royalty payments on production over • The proposed disposition of the oil each such well, with an identification of the next 15 years or the life of the or gas used (e.g., whether gas used those pipelines that are or could be operator’s lease, unit, or communitized would be consumed as fuel, vented available for connection and use; and area, whichever is less.

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The rule also provides that an (4) Scheduled maintenance; lease, unit or communitized area for the operator that is in compliance with the (5) A situation caused by operator most recent production month for EPA regulations for well completions negligence; or which information is available; under 40 CFR part 60, subpart OOOO or (6) A situation on a lease, unit, or (3) Data that show the costs of subpart OOOOa is deemed in communitized area that has already compliance; compliance with the requirements of experienced 3 or more emergencies (4) Projected costs of and the this section. As a practical matter, all within the past 30 days, unless the BLM combined stream of revenues from both hydraulically fractured or refractured determines that the occurrence of more gas and oil production, including: The wells are now subject to the EPA than 3 emergencies within the 30 day operator’s projections of gas prices, gas requirements, so the BLM does not period could not have been anticipated production volumes, gas quality (i.e., believe that the requirements of this and was beyond the operator’s control. heating value and H2S content), revenues derived from gas production, section would have any independent Pneumatic Controllers—Introduction effect, or that any operator would and royalty payments on gas production request an exemption from the Section 3179.201 pertains to any over the next 15 years or the life of the requirements of this section, as long as pneumatic controller that: (1) Is not operator’s lease, unit, or communitized the EPA requirements remain in effect. subject to EPA regulations at 40 CFR area, whichever is less; and the 60.5360 through 60.5390, but would be operator’s projections of oil prices, oil Request for Extension of Royalty-Free subject to those regulations if it were a production volumes, costs, revenues, Flaring During Initial Production new or modified source; and (2) has a and royalty payments from the Testing (43 CFR 3179.103) continuous bleed rate greater than 6 operator’s oil and gas operations within Section 3179.103 allows gas to be standard cubic feet (scf) per hour. the lease over the next 15 years or the flared royalty-free during initial Section 3179.201(b) requires operators life of the operator’s lease, unit, or production testing. The regulation lists to replace each high-bleed pneumatic communitized area, whichever is less. specific volume and time limits for such controller with a controller with a bleed Showing in Support of Replacement of testing. An operator may seek an rate lower than 6 scf per hour within 1 Pneumatic Controller Within 3 Years extension of those limits by submitting year of the effective date of the rule, (43 CFR 3179.201(d)) a Sundry Notice to the BLM. unless (1) the pneumatic controller exhaust is routed to processing The operator may replace a high-bleed Request for Extension of Royalty-Free equipment; (2) the pneumatic controller pneumatic controller within 3 years of Flaring During Subsequent Well Testing exhaust was, as of the effective date of the effective date of the rule (instead of (43 CFR 3179.104) the rule, and continues to be routed to within 1 year of the effective date) if the Section 3179.104 allows gas to be a flare device or low pressure operator notifies the BLM through a flared royalty-free for no more than 24 combustor; or (3) one of the following Sundry Notice that the well or facility hours during well tests subsequent to applies: that the pneumatic controller serves has the initial production test. The operator an estimated remaining productive life Notification of Functional Needs for a may seek authorization to flare for a of 3 years or less from the effective date Pneumatic Controller (43 CFR longer period by submitting a Sundry of the rule. Notice to the BLM. 3179.201(b)(1)) The operator notifies the BLM Pneumatic Diaphragm Pumps— Reporting of Venting or Flaring (43 CFR through a Sundry Notice that use of a Introduction 3179.105) pneumatic controller with a bleed rate With some exceptions, section Section 3179.105 allows an operator greater than 6 scf per hour is required 3179.202 pertains to any pneumatic to flare gas royalty-free during a based on functional needs that may diaphragm pump that: (1) Uses natural temporary, short-term, infrequent, and include, but are not limited to, response gas produced from a Federal or Indian unavoidable emergency. Venting gas is time, safety, and positive actuation, and lease, or from a unit or communitized permissible if flaring is not feasible the Sundry Notice describes those area that includes a Federal or Indian during an emergency. The regulation functional needs. lease; and (2) Is not subject to EPA defines limited circumstances that regulations at 40 CFR 60.5360 through Showing That Cost of Compliance constitute an emergency, and other 60.5390, but would be subject to those Would Cause Cessation of Production circumstances that do not constitute an regulations if it were a new or modified and Abandonment of Oil Reserves emergency. The operator must estimate source. This regulation generally (Pneumatic Controllers) (43 CFR and report to the BLM on a Sundry requires replacement of such a pump 3179.201(b)(4) and 3175.201(c)) Notice the volumes flared or vented in with a zero-emissions pump or routing the following circumstances that, as The operator demonstrates to the BLM of the pump’s exhaust gas to processing provided by 43 CFR 3179.105, do not through a Sundry Notice, and the BLM equipment for capture and sale within constitute emergencies for the purposes agrees, that replacement of a pneumatic 1 year of the effective date of the final of royalty assessment: controller would impose such costs as rule. (1) More than 3 failures of the same to cause the operator to cease This requirement does not apply to component within a single piece of production and abandon significant pneumatic diaphragm pumps that do equipment within any 365-day period; recoverable oil reserves under the lease. not vent exhaust gas to the atmosphere. (2) The operator’s failure to install The Sundry Notice must include the In addition, this requirement does not appropriate equipment of a sufficient following information: apply if one of the following applies: capacity to accommodate the (1) The name, number, and location of production conditions; each of the operator’s wells, and the Showing That a Pneumatic Diaphragm (3) Failure to limit production when number of the lease, unit, or Pump Was Operated on Fewer Than 90 the production rate exceeds the capacity communitized area with which it is Individual Days in the Prior Calendar of the related equipment, pipeline, or associated; Year (43 CFR 3179.202(b)(2)) gas plant, or exceeds sales contract (2) The oil and gas production levels A pneumatic diaphragm pump is not volumes of oil or gas; of each of the operator’s wells on the subject to section 3179.202 if the

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operator documents in a Sundry Notice Showing in Support of Replacement of To support the demonstration that the pump was operated fewer than Pneumatic Diaphragm Pump Within 3 described above, the operator must 90 days in the prior calendar year. Years (43 CFR 3179.202(h)) submit a Sundry Notice that includes the following information: Notification of Functional Needs for a The operator may replace a pneumatic Pneumatic Diaphragm Pump (43 CFR diaphragm pump within 3 years of the (1) The name, number, and location of 3179.202(d)) effective date of the rule (instead of each well, and the number of the lease, within 1 year of the effective date) if the unit, or communitized area with which In lieu of replacing a pneumatic operator notifies the BLM through a it is associated; diaphragm pump or routing the pump Sundry Notice that the well or facility exhaust gas to processing equipment, an (2) The oil and gas production levels that the pneumatic controller serves has operator may submit a Sundry Notice to of each of the operator’s wells on the an estimated remaining productive life the BLM showing that replacing the lease, unit or communitized area for the of 3 years or less from the effective date pump with a zero emissions pump is most recent production month for of the rule. not viable because a pneumatic pump is which information is available; necessary to perform the function Storage Vessels (43 CFR 3179.203(c)) (3) Data that show the costs of required, and that routing the pump A storage vessel is subject to 43 CFR compliance with paragraph (c)(1) or exhaust gas to processing equipment for 3179.203(c) if the vessel: (1) Contains (c)(2) of this section on the lease; and capture and sale is technically infeasible production from a Federal or Indian (4) The operator must consider the or unduly costly. lease, or from a unit or communitized costs and revenues of the combined Showing That Cost of Compliance area that includes a Federal or Indian stream of revenues from both the gas Would Cause Cessation of Production lease; and (2) Is not subject to any of the and oil components, including: The and Abandonment of Oil Reserves requirements of EPA regulations at 40 operator’s projections of oil and gas (Pneumatic Diaphragm Pumps) (43 CFR CFR part 60, subpart OOOO, but would prices, production volumes, quality (i.e., 3179.202(f) and (g)) be subject to that subpart if it were a heating value and H2S content), new or modified source. revenues derived from production, and An operator may be exempted from Within 60 days after the effective date the replacement requirement if the royalty payments on production over of this section, and within 30 days after the next 15 years or the life of the operator submits a Sundry Notice to the any new source of production is added BLM that provides an economic analysis operator’s lease, unit, or communitized to the tank, the operator must area, whichever is less. that demonstrates, and the BLM agrees, determine, record, and make available that compliance with these to the BLM upon request, whether the Downhole Well Maintenance and requirements would impose such costs storage vessel has the potential for VOC Liquids Unloading—Documentation and as to cause the operator to cease emissions equal to or greater than 6 tpy Reporting (43 CFR 3179.204(c) and (e)) production and abandon significant based on the maximum average daily The operator must minimize vented recoverable oil reserves under the lease. throughput for a 30-day period of gas and the need for well venting The Sundry Notice must include the production. The determination may take associated with downhole well following information: into account requirements under a maintenance and liquids unloading, (1) Well information that must legally and practically enforceable limit consistent with safe operations. Before include: (i) The name, number, and in an operating permit or other the operator manually purges a well for location of each well, and the number requirement established under a federal, liquids unloading for the first time after of the lease, unit, or communitized area state, local or tribal authority that limit the effective date of this section, the with which it is associated; and (ii) The the VOC emissions to less than 6 tpy. oil and gas production levels of each of If a storage vessel has the potential for operator must consider other methods the operator’s wells on the lease, unit or VOC emissions equal to or greater than for liquids unloading and determine communitized area for the most recent 6 tpy, no later than 1 year after the that they are technically infeasible or production month for which effective date of this section, or 3 years unduly costly. The operator must information is available; if the operator must and will replace the provide information supporting that (2) Data that show the costs of storage vessel at issue in order to determination as part of a Sundry compliance with paragraphs (c) through comply with the requirements of this Notice within 30 calendar days after the (e) of § 3179.202; and section, the operator must: first liquids unloading event by manual (3) The operator’s estimate of the costs (1) Route all tank vapor gas from the or automated well purging conducted and revenues of the combined stream of storage vessel to a sales line; after the effective date of this section. revenues from both the gas and oil (2) If the operator determines that This requirement applies to each well components, including: (i) The compliance with paragraph (c)(1) of this the operator operates. operator’s projections of gas prices, gas section is technically infeasible or For any liquids unloading by manual production volumes, gas quality (i.e., unduly costly, route all tank vapor gas well purging, the operator must: heating value and H S content), 2 from the storage vessel to a device or (1) Ensure that the person conducting revenues derived from gas production, method that ensures continuous the well purging remains present on-site and royalty payments on gas production combustion of the tank vapor gas; or throughout the event to minimize to the over the next 15 years or the life of the (3) Submit an economic analysis to maximum extent practicable any operator’s lease, unit, or communitized the BLM through a Sundry Notice that venting to the atmosphere; area, whichever is less; and (ii) the demonstrates, and the BLM agrees, operator’s projections of oil prices, oil based on the information identified in (2) Record the cause, date, time, production volumes, costs, revenues, paragraph (d) of this section, that duration, and estimated volume of each and royalty payments from the compliance with paragraph (c)(2) of this venting event; and operator’s oil and gas operations within section would impose such costs as to (3) Maintain the records for the period the lease over the next 15 years or the cause the operator to cease production required under § 3162.4–1 and make life of the operator’s lease, unit, or and abandon significant recoverable oil them available to the BLM, upon communitized area, whichever is less. reserves under the lease. request.

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Downhole Well Maintenance and approach specified in the regulations; as to cause the operator to cease Liquids Unloading—Notification of (5) Tracking and documentation production and abandon significant Excessive Duration or Volume (43 CFR procedures; and (6) Proposed recoverable oil or gas reserves under the 3179.204(f)) limitations on the types of sites or other lease. The BLM may approve an The operator must notify the BLM by conditions on deploying the device and alternative leak detection program that Sundry Notice, within 30 calendar days, the protocol to achieve the does not achieve equal or greater if: demonstrated results. reduction of gas lost through leaks, but (1) The cumulative duration of Leak Detection—Operator Request To is as effective as possible consistent manual well purging events for a well Use an Alternative Leak Detection with not causing the operator to cease exceeds 24 hours during any production Program (43 CFR 3179.303(b)) production and abandon significant month; or Section 3179.303(b) allows an recoverable oil or gas reserves under the (2) The estimated volume of gas operator to submit a Sundry Notice lease. vented in liquids unloading by manual requesting authorization to detect gas To obtain approval for an alternative well purging operations for a well leaks using an alternative instrument- program under this provision, the exceeds 75 Mcf during any production based leak detection program, different operator must submit a Sundry Notice month. from the specified requirement to that includes the following information: Leak Detection—Compliance With EPA inspect each site semi-annually using an (1) The name, number, and location of Regulations (43 CFR 3179.301(j)) approved monitoring device. each well, and the number of the lease, To obtain approval for an alternative Sections 3179.301 through 3179.305 unit, or communitized area with which leak detection program, the operator include information collection activities must submit a Sundry Notice that it is associated; pertaining to the detection and repair of includes the following information: (2) The oil and gas production levels gas leaks during production operations. (1) A detailed description of the of each of the operator’s wells on the These regulations require operators to alternative leak detection program, lease, unit or communitized area for the inspect all equipment covered under including how it will use one or more most recent production month for § 3179.301(a) for gas leaks. Section of the instruments specified in or which information is available; 3179.301(k) allows an operator to satisfy approved under § 3179.302(a) and an (3) Data that show the costs of the requirements of §§ 3179.301 through identification of the specific compliance on the lease with the 3179.305 for all of the equipment on a instruments, methods and/or practices requirements of §§ 3179.301–305 and given lease by notifying the BLM in a that would substitute for specific Sundry Notice that the operator is elements of the approach specified in with an alternative leak detection applying the EPA subpart OOOOa §§ 3179.302(a) and 3179.303(a); program that meets the requirements of fugitive emissions requirements to such (2) The proposed monitoring protocol; § 3179.303(b); equipment. (3) Records and data from laboratory (4) The operator must consider the Leak Detection—Request To Use an and field testing, including, but not costs and revenues of the combined Alternative Monitoring Device and limited to, performance testing, to the stream of revenues from both the gas Protocol (43 CFR 3179.302(c)) extent relevant; and oil components and provide the (4) A demonstration that the proposed Section 3175.302 specifies the operator’s projections of oil and gas alternative leak detection program will prices, production volumes, quality (i.e., instruments and methods that an achieve equal or greater reduction of gas operator may use to detect leaks. heating value and H2S content), lost through leaks compared to revenues derived from production, and Section 3175.302(d) allows the BLM to compliance with the requirements royalty payments on production over approve an alternative monitoring specified in §§ 3179.302(a) and the next 15 years or the life of the device and associated inspection 3179.303(a); protocol if the BLM finds that the (5) A detailed description of how the operator’s lease, unit, or communitized alternative would achieve equal or operator will track and document its area, whichever is less; greater reduction of gas lost through procedures, leaks found, and leaks (5) The information required to obtain leaks compared with the approach repaired; and approval of an alternative program specified in § 3179.302(a)(1) when used (6) Proposed limitations on types of under § 3179.303(b), except that the according to § 3179.303(a). sites or other conditions on deployment estimated volume of gas that will be lost Any person may request approval of of the alternative leak detection through leaks under the alternative an alternative monitoring device and program. program must be compared to the protocol by submitting a Sundry Notice volume of gas lost under the required to BLM that includes the following Leak Detection—Operator Request for Exemption Allowing Use of an program, but does not have to be shown information: (1) Specifications of the to be at least equivalent. proposed monitoring device, including Alternative Leak-Detection Program a detection limit capable of supporting That Does Not Meet Specified Criteria Leak Detection—Notification of Delay in the desired function; (2) The proposed (43 CFR 3179.303(d)) Repairing Leaks (43 CFR 3179.304(a)) monitoring protocol using the proposed An operator may seek authorization monitoring device, including how for an alternative leak detection program Section 3179.304(a) requires an results will be recorded; (3) Records and that does not achieve equal or greater operator to repair any leak no later than data from laboratory and field testing, reduction of gas lost through leaks 30 calendar days after discovery of the including but not limited to compared to the required approach, if leak, unless there is good cause for performance testing; (4) A the operator demonstrates that delay in repair. If there is good cause for demonstration that the proposed compliance with the leak-detection a delay beyond 30 calendar days, monitoring device and protocol will regulations (including the option for an section 3179.304(b) requires the achieve equal or greater reduction of gas alternative program under 43 CFR operator to submit a Sundry Notice lost through leaks compared with the 3179.303(b)) would impose such costs notifying the BLM of the cause.

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Leak Detection—Inspection includes: (1) The number of sites (2) The total number of leaks Recordkeeping and Reporting (43 CFR inspected; (2) The total number of leaks identified, categorized by the type of 3179.305) identified, categorized by the type of component; component; (3) The total number of (3) The total number of leaks repaired; Section 3179.305 requires operators to leaks repaired; (4) The total number of (4) The total number leaks that were maintain the following records and leaks that were not repaired as of not repaired as of December 31 of the make them available to the BLM upon December 31 of the previous calendar previous calendar year due to good request: (1) For each inspection required year due to good cause and an estimated cause and an estimated date of repair for under § 3179.303, documentation of the date of repair for each leak; and (5) A each leak. date of the inspection and the site where certification by a responsible officer that (5) A certification by a responsible the inspection was conducted; (2) The the information in the report is true and officer that the information in the report monitoring method(s) used to determine accurate. is true and accurate to the best of the the presence of leaks; (3) A list of leak officer’s knowledge. components on which leaks were found; Leak Detection—Annual Reporting of (4) The date each leak was repaired; and Inspections (43 CFR 3179.305(b)) 4. Burden Estimates (5) The date and result of the follow-up By March 31 each calendar year, the The following table details the inspection(s) required under § 3179.304. operator must provide to the BLM an estimated annual burdens of activities By March 31 each calendar year, the annual summary report on the previous that would involve APDs and Sundry operator must provide to the BLM an year’s inspection activities that Notices, the use of which has been annual summary report on the previous includes: authorized under Control Number year’s inspection activities that (1) The number of sites inspected; 1004–0137.

ESTIMATED HOUR BURDENS

Total hours Type of response Number of Hours per (column B × responses response column C)

A. B. C. D.

Plan to Minimize Waste of Natural Gas, 43 CFR 3162.3–1, Form 3160–3 ...... 2,000 8 16,000 Request for Approval for Royalty-Free Uses On-Lease or Off-Lease, 43 CFR 3178.5, 3178.7, 3178.8, and 3178.9, Form 3160–5 ...... 50 4 200 Notification of Choice to Comply on County- or State-wide Basis, 43 CFR 3179.7(c)(3)(iii) ..... 200 1 200 Request for Approval of Alternative Capture Requirement, 43 CFR 3179.8(b), Form 3160–5 .. 50 16 800 Request for Exemption from Well Completion Requirements, 43 CFR 3179.102(c) and (d), Form 3160–5 ...... 0 0 0 Request for Extension of Royalty-Free Flaring During Initial Production Testing, 43 CFR 3179.103, Form 3160–5 ...... 500 2 1,000 Request for Extension of Royalty-Free Flaring During Subsequent Well Testing, 43 CFR 3179.104, Form 3160–5 ...... 5 2 10 Reporting of Venting or Flaring, 43 CFR 3179.105, Form 3160–5 ...... 250 2 500 Notification of Functional Needs for a Pneumatic Controller, 43 CFR 3179.201(b)(1), Form 3160–5 ...... 10 2 20 Showing that Cost of Compliance Would Cause Cessation of Production and Abandonment of Oil Reserves, 43 CFR 3179.201(b)(4) and 3179.201(c), Form 3160–5 ...... 50 4 200 Showing in Support of Replacement of Pneumatic Controller within 3 Years, 43 CFR 3179.201(d), Form 3160–5 ...... 100 1 100 Showing that a Pneumatic Diaphragm Pump was Operated on Fewer than 90 Individual Days in the Prior Calendar Year, 43 CFR 3179.202(b)(2), Form 3160–5 ...... 100 1 100 Notification of Functional Needs for a Pneumatic Diaphragm Pump, 43 CFR 3179.202(d), Form 3160–5 ...... 150 1 150 Showing that Cost of Compliance Would Cause Cessation of Production and Abandonment of Oil Reserves, 43 CFR 3179.202(f) and (g), Form 3160–5 ...... 10 4 40 Showing in Support of Replacement of Pneumatic Diaphragm Pump within 3 Years, 43 CFR 3179.202(h), Form 3160–5 ...... 100 1 100 Storage Vessels, 43 CFR 3179.203(c), Form 3160–5 ...... 50 4 200 Downhole Well Maintenance and Liquids Unloading—Documentation and Reporting, 43 CFR 3179.204(c) and (e), Form 3160–5 ...... 5,000 1 5,000 Downhole Well Maintenance and Liquids Unloading—Notification of Excessive Duration or Volume, 43 CFR 3179.204(f), Form 3160–5 ...... 250 1 250 Leak Detection—Compliance with EPA Regulations, 43 CFR 3179.301(j), Form 3160–5 ...... 50 4 200 Leak Detection—Request to Use an Alternative Monitoring Device and Protocol, 43 CFR 3179.302(c), Form 3160–5 ...... 5 40 200 Leak Detection—Operator Request to Use an Alternative Leak Detection Program, 43 CFR 3179.303(b), Form 3160–5 ...... 20 40 800 Leak Detection—Operator Request for Exemption Allowing Use of an Alternative Leak-Detec- tion Program that Does Not Meet Specified Criteria, 43 CFR 3179.303(d), Form 3160–5 .... 150 20 3,000 Leak Detection—Notification of Delay in Repairing Leaks, 43 CFR 3179.304(a), Form 3160–5 100 1 100 Leak Detection—Inspection Recordkeeping and Reporting, 43 CFR 3179.305 ...... 52,000 .25 13,000 Leak Detection—Annual Reporting of Inspections, 43 CFR 3179.305(b), Form 3160–5 ...... 2,000 20 40,000 Totals ...... 63,200 ...... 82,170

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I. National Environmental Policy Act ‘‘any action by an agency (normally List of Subjects published in the Federal Register) that The BLM prepared a draft 43 CFR Part 3100 environmental assessment (EA) to promulgates or is expected to lead to the Government contracts; Mineral determine whether issuance of this promulgation of a final rule or royalties; Oil and gas reserves; Public proposed regulation pertaining to oil regulation, including notices of inquiry, lands-mineral resources; Reporting and and gas waste prevention and royalty advance notices of proposed recordkeeping requirements; Surety clarification would constitute a ‘‘major rulemaking, and notices of proposed bonds. Federal action significantly affecting the rulemaking: (1)(i) That is a significant quality of the human environment’’ regulatory action under Executive Order 43 CFR Part 3160 under Section 102(2)(C) of the National 12866 or any successor order, and (ii) is likely to have a significant adverse effect Administrative practice and Environmental Policy Act (NEPA). This procedure; Government contracts; EA was posted for public comment for on the supply, distribution, or use of energy; or (2) that is designated by the Indians—lands; Mineral royalties; Oil a period of 75 days, from February 8 and gas exploration; Penalties; Public through April 22, 2016. During the Administrator of (OIRA) as a significant energy action.’’ lands—mineral resources; Reporting public comment period for the proposed and recordkeeping requirements. rule and draft EA, BLM received Since the compliance costs for this comments that further informed the rule would represent such a small 43 CFR Part 3170 analysis of the potential environmental fraction of company net incomes, we Administrative practice and impacts of the rule. In response to these believe that the rule is unlikely to procedure; Flaring; Government comments, BLM incorporated changes impact the investment decisions of contracts; Incorporation by reference; in the final EA, which will be released firms. Also, the incremental production Indians—lands; Mineral royalties; concomitantly with the rule. of gas estimated to result from the rule’s Immediate assessments; Oil and gas The BLM believes that the rule would enactment constitutes a small fraction of exploration; Oil and gas measurement; benefit the environment by reducing total U.S. production, and any potential Public lands—mineral resources; emissions of methane (a potent GHG), and temporary deferred production of Reporting and record keeping VOCs (which contribute to smog), and oil would likewise constitute a small requirements; Royalty-free use; Venting. hazardous air pollutants such as fraction of total U.S. production. For Dated: November 14, 2016. benzene (a known carcinogen). In these reasons, we do not expect that the addition, the rule would reduce light final rule will significantly impact the Amanda Leiter, pollution and other impacts from supply, distribution, or use of energy. Acting Assistant Secretary, Land and flaring. These reductions would As such, the rulemaking is not a Minerals Management. contribute to a more robust ‘‘significant energy action’’ as defined in 43 CFR Chapter II Executive Order 13211. environmental quality overall. BLM has For the reasons set out in the determined that the rule may also have K. Executive Order 13563, Improving preamble, the Bureau of Land a certain degree of adverse Regulation and Regulatory Review Management amends 43 CFR parts 3100, environmental impacts, primarily due to 3160 and 3170 as follows: land disturbance from increased or Executive Order 13563 reaffirms the accelerated construction of gas gathering principles of E.O. 12866 while calling PART 3100—ONSHORE OIL AND GAS lines or pipelines and compressors and/ for improvements in the nation’s LEASING or increased truck traffic on existing regulatory system to promote disturbed surfaces from the increased predictability, to reduce uncertainty, ■ 1. Amend the authority citation for use of mobile capture technology. After and to use the best, most innovative, part 3100 to read as follows: and least burdensome tools for careful consideration of the impacts and Authority: 25 U.S.C. 396d and 2107; 30 alternatives discussed in the final EA, achieving regulatory ends. The U.S.C. 189, 306, 359 and 1751; 43 U.S.C. BLM has determined that this action executive order directs agencies to 1732(b), 1733, and 1740; and the Energy does not meet the criteria of significance consider regulatory approaches that Policy Act of 2005 (Pub. L. 109–58). reduce burdens and maintain flexibility under 40 CFR 1508.27 either in terms of ■ 2. Revise § 3103.3–1 to read as and freedom of choice for the public context or intensity; therefore, BLM follows: finds that the promulgation of the rule where these approaches are relevant, has no significant impact. feasible, and consistent with regulatory § 3103.3–1 Royalty on production. objectives. E.O. 13563 emphasizes (a) Royalty on production will be J. Executive Order 13211, Actions further that regulations must be based Concerning Regulations That payable only on the mineral interest on the best available science and that owned by the United States. Royalty Significantly Affect Energy Supply, the rulemaking process must allow for Distribution, or Use must be paid in amount or value of the public participation and an open production removed or sold as follows: Under Executive Order 13211, exchange of ideas. We have developed (1) For leases issued on or before agencies are required to prepare and this final rule in a manner consistent January 17, 2017, the rate prescribed in submit to OMB a Statement of Energy with these requirements. the lease or in applicable regulations at Effects for significant energy actions. X. Authors the time of lease issuance; This statement is to include a detailed (2) For leases issued January 17, 2017: statement of ‘‘any adverse effects on The principal authors of this rule are: (i) 121⁄2 percent on all noncompetitive energy supply, distribution, or use Timothy Spisak and James Tichenor of leases; (including a shortfall in supply, price the BLM Washington Office; Eric Jones (ii) A rate of not less than 121⁄2 increases, and increase use of foreign of the BLM Moab, Utah Field Office; percent on all competitive leases, supplies)’’ for the action and reasonable and David Mankiewicz of the BLM exchange and renewal leases, and leases alternatives and their effects. Farmington, New Mexico Field Office; issued in lieu of unpatented oil placer Section 4(b) of Executive Order 13211 assisted by Faith Bremner of the staff of mining claims under § 3108.2–4 of this defines a ‘‘significant energy action’’ as the BLM’s Regulatory Affairs Division. title;

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(3) 162⁄3 percent on noncompetitive waste minimization plan must include (C) The proposed route and tie-in leases reinstated under § 3108.2–3 of the following information: point that connects or could connect the this title plus an additional 2 (1) The anticipated completion date of subject well to an existing gas trunkline; percentage-point increase added for the proposed well(s); (ii) The total volume of produced gas, each succeeding reinstatement; (2) A description of anticipated and percentage of total produced gas, (4) The rate used for royalty production, including: that the operator is currently flaring or determination that appears in a lease (i) The anticipated date of first venting from wells in the same field and that is reinstated or that is in force for production; any wells within a 20-mile radius of that competitive leases at the time of (ii) The expected oil and gas field; and issuance of the lease that is reinstated, production rates and duration from the (iii) A detailed evaluation, including plus 4 percentage points, plus an proposed well. If the proposed well is estimates of costs and returns, of additional 2 percentage points for each on a multi-well pad, the plan should opportunities for on-site capture succeeding reinstatement. include the total expected production approaches, such as compression or (b) Leases that qualify under specific for all wells being completed; liquefaction of natural gas, removal of provisions of the Act of August 8, 1946 (iii) The expected production decline natural gas liquids, or generation of (30 U.S.C. 226c) may apply for a curve of both oil and gas from the electricity from gas. limitation of a 121⁄2 percent royalty rate. proposed well; and (c) The average production per well (iv) The expected Btu value for gas PART 3170—ONSHORE OIL AND GAS per day for oil and gas will be production from the proposed well. PRODUCTION determined pursuant to 43 CFR 3162.7– (3) Certification that the operator has ■ 6. The authority citation for part 3170 4. provided one or more midstream continues to read as follows: (d) Payment of a royalty on the processing companies with information helium component of gas will not about the operator’s production plans, Authority: 25 U.S.C. 396d and 2107; 30 convey the right to extract the helium including the anticipated completion U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740. from the gas stream. Applications for dates and gas production rates of the the right to extract helium from the gas proposed well or wells; ■ 7. Add subparts 3178 and 3179 to part stream will be made under part 16 of (4) Identification of a gas pipeline to 3170, to read as follows: this title. which the operator plans to connect, Subpart 3178—Royalty-Free Use of Lease with sufficient capacity to accommodate Production PART 3160—ONSHORE OIL AND GAS the anticipated production of the Sec. OPERATIONS proposed well(s), and information on 3178.1 Purpose. the pipeline, including, to the extent 3178.2 Scope. ■ 3. The authority citation for part 3160 that the operator can obtain it, the 3178.3 Production on which a royalty is not continues to read as follows: following information: due. Authority: 25 U.S.C. 396d and 2107; 30 (i) Maximum current daily capacity of 3178.4 Uses of oil or gas on lease, unit, or U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. the pipeline; communitized area that do not require 1732(b), 1733, and 1740. (ii) Current throughput of the prior written BLM approval for royalty- pipeline; free treatment of volumes used. § 3160.0–5 [Amended] 3178.5 Uses of oil or gas on a lease, unit, (iii) Anticipated daily capacity of the or communitized area that require prior ■ 4. Amend § 3160.0–5 by removing the pipeline at the anticipated date of first written BLM approval for royalty-free definition of ‘‘Avoidably lost.’’ gas sales from the proposed well; treatment of volumes used. ■ 5. Amend § 3162.3–1 by adding (iv) Anticipated throughput of the 3178.6 Uses of oil or gas moved off the paragraph (j) to read as follows: pipeline at the anticipated date of first lease, unit, or communitized area that do gas sales from the proposed well; and not require prior written approval for § 3162.3–1 Drilling applications and plans. (v) Any plans known to the operator royalty-free treatment of volumes used. * * * * * for expansion of pipeline capacity for 3178.7 Uses of oil or gas moved off the the area that includes the proposed lease, unit, or communitized area that (j) When submitting an Application require prior written approval for for Permit to Drill an oil well, the well; and royalty-free treatment of volumes used. operator must also submit a plan to (5) If an operator cannot identify a gas 3178.8 Measurement or estimation of minimize waste of natural gas from that pipeline with sufficient capacity to volumes of oil or gas that are used well. The waste minimization plan must accommodate the anticipated royalty-free. accompany, but would not be part of, production of the proposed well(s), the 3178.9 Requesting approval of royalty-free the Application for Permit to Drill. The waste minimization plan must also treatment when approval is required. waste minimization plan must set forth include: 3178.10 Facility and equipment ownership. a strategy for how the operator will (i) A gas pipeline system location map Subpart 3179—Waste Prevention and comply with the requirements of 43 CFR of sufficient detail, size, and scale as to Resource Conservation subpart 3179 regarding control of waste show the field in which the proposed 3179.1 Purpose. from venting and flaring, and must well will be located, and all existing gas 3179.2 Scope. explain how the operator plans to trunklines within 20 miles of the well. 3179.3 Definitions and acronyms. capture associated gas upon the start of The map should also contain: 3179.4 Determining when the loss of oil or oil production, or as soon thereafter as (A) The name and location of the gas gas is avoidable or unavoidable. reasonably possible, including an processing plant(s) closest to the 3179.5 When lost production is subject to explanation of why any delay in capture proposed well(s), and of the intended royalty. 3179.6 Venting prohibition. of the associated gas would be required. destination processing plant, if 3179.7 Gas capture requirement. Failure to submit a complete and different; 3179.8 Alternative limits on venting and adequate waste minimization plan is (B) The location and name of the flaring. grounds for denying or disapproving an operator of each gas trunkline within 20 3179.9 Measuring and reporting volumes of Application for Permit to Drill. The miles of the proposed well; gas vented and flared from wells.

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3179.10 Determinations regarding royalty- Secretary, unless specifically excluded (5) Use of gas as a pilot fuel or as free venting or flaring. in the lease, other business agreement, assist gas for a flare, combustor, thermal 3179.11 Other waste-prevention measures. or Tribal Energy Resource Agreement; oxidizer, or other control device; 3179.12 Coordination with State regulatory (4) Committed State or private tracts (6) Use of fuel to compress or treat gas authority. in a federally approved unit or to place it in marketable condition; Flaring and Venting Gas During Drilling and communitization agreement defined by (7) Use of oil to clean the well and Production Operations or established under 43 CFR subpart improve production, e.g., hot oil 3179.101 Well drilling. 3105 or 43 CFR part 3180; and treatments. The operator must 3179.102 Well completion and related (5) All onshore wells, and production document the removal of the oil from operations. equipment located on a Federal or the tank or pipeline under Onshore Oil 3179.103 Initial production testing. Indian lease or a federally approved unit and Gas Order No. 3 (Site Security), or 3179.104 Subsequent well tests. or communitized area, and compressors 3179.105 Emergencies. any successor regulation; located on a Federal or Indian lease or (8) Use of oil as a circulating medium Gas Flared or Vented From Equipment a federally approved unit or in drilling operations, if the use is part During Well Maintenance Operations communitized area and which compress of an approved Drilling Plan under 3179.201 Equipment requirements for production from the same Federal or Onshore Oil and Gas Order No. 1; pneumatic controllers. Indian lease or federally approved unit (9) Injection of gas for the purpose of 3179.202 Requirements for pneumatic or communitized area. conserving gas or increasing the chemical injection pumps or pneumatic (b) For purposes of this subpart, the diaphragm pumps. recovery of oil or gas, if the BLM has 3179.203 Storage vessels. term ‘‘lease’’ also includes IMDA approved the injection under applicable 3179.204 Downhole well maintenance and agreements. regulations in parts 3100, 3160, or 3180 of this title; and liquids unloading. § 3178.3 Production on which royalty is (10) Injection of gas that is cycled in Leak Detection and Repair (LDAR) not due. a contained gas-lift system. (a) To the extent specified in 3179.301 Operator responsibility. (b) The volume to be treated as royalty §§ 3178.4 and 3178.5, royalty is not due 3179.302 Approved instruments and free must not exceed the amount of fuel methods. on: reasonably necessary to perform the 3179.303 Leak detection and inspection (1) Oil or gas that is produced from a operational function, using equipment requirements for natural gas wellhead lease or communitized area and used for of appropriate capacity. equipment, facilities, and compressors. operations and production purposes 3179.304 Repairing leaks. (including placing oil or gas in 3179.305 Leak detection inspection § 3178.5 Uses of oil or gas on a lease, unit, recordkeeping. marketable condition) on the same lease or communitized area that require prior or communitized area without being written BLM approval for royalty-free State or Tribal Variances removed from the lease or treatment of volumes used. 3179.401 State or tribal requests for communitized area; or (a) Oil or gas produced from a lease, variances from the requirements of this (2) Oil or gas that is produced from a unit, or communitized area may also be subpart. unit PA and used for operations and used royalty-free for the following § 3178.1 Purpose. production purposes (including placing operations and production purposes on oil or gas in marketable condition) on The purpose of this subpart is to the lease, unit, or communitized area, the unit, for the same unit PA, without address the circumstances under which but prior written BLM approval is being removed from the unit. required to ensure that production oil or gas produced from Federal and (b) For the uses described in § 3178.5, Indian leases may be used royalty-free accountability is maintained: the operator must obtain prior written (1) Use of oil or gas that the operator in operations on the lease, unit, or BLM approval for the volumes used for removes from the pipeline at a location communitized area. This subpart operational and production purposes to downstream of the Facility supersedes those portions of Notice to be royalty free. Measurement Point (FMP); Lessees and Operators of Onshore (2) Use of gas that has been removed Federal and Indian Oil and Gas Leases, § 3178.4 Uses of oil or gas on a lease, unit, from the lease, unit PA, or Royalty or Compensation for Oil or Gas or communitized area that do not require communitized area for treatment or Lost (NTL–4A), pertaining to oil or gas prior written BLM approval for royalty-free processing because of particular used for beneficial purposes. treatment of volumes used. (a) Oil or gas produced from a lease, physical characteristics of the gas that § 3178.2 Scope. unit, or communitized area may be used require the gas to be treated or (a) This subpart applies to: royalty-free for operations and processed prior to use, where the gas is (1) All onshore Federal and Indian production purposes on the lease, unit, returned to, and used on, the lease, unit (other than Osage Tribe) oil and gas or communitized area without prior PA, or communitized area from which leases, units, and communitized areas, written BLM approval in the following it was produced; and except as otherwise provided in this circumstances: (3) Any other types of use of produced subpart; (1) Use of fuel to generate power or oil or gas for operations and production (2) Indian Mineral Development Act operate combined heat and power; purposes, which are not identified in (IMDA) oil and gas agreements, unless (2) Use of fuel to power equipment, § 3178.4. specifically excluded in the agreement including artificial lift equipment, (b)(1) The operator must obtain BLM or unless the relevant provisions of this equipment used for enhanced recovery, approval to conduct activities under subpart are inconsistent with the drilling rigs, and completion and paragraph (a) of this section by agreement; workover equipment; submitting a Form 3160–5, Sundry (3) Leases and other business (3) Use of gas to actuate pneumatic Notices and Reports on Wells (Sundry agreements and contracts for the controllers or operate pneumatic pumps Notice) containing the information development of tribal energy resources at production facilities; required under § 3178.9. If the BLM under a Tribal Energy Resource (4) Use of fuel to heat, separate, or disapproves a request for royalty-free Agreement entered into with the dehydrate production; treatment for volumes used under this

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section, the operator must pay royalties (2) The operations are conducted information to make a reasonable on such volumes. If the BLM approves upstream of the FMP. estimate. a request for royalty-free treatment for (c) The operator must obtain BLM (f) Each of the volumes required to be volumes used under this section, such approval under paragraph (b) of this measured or estimated, as applicable, approval will be deemed effective from section by submitting a Sundry Notice under this subpart, must be reported by the date the request was filed. containing the information required the operator following applicable ONRR (2) With respect to uses under under § 3178.9. If the BLM disapproves reporting requirements. paragraph (a)(1) of this section, the a request for royalty-free treatment for operator must measure the volume of oil volumes used under this section, the § 3178.9 Requesting approval of royalty- free treatment when approval is required. or gas used in accordance with Onshore operator must pay royalties on such Oil and Gas Orders No. 4 (oil) and 5 volumes. If the BLM approves a request To request written approval of (gas) as applicable, or other successor for royalty-free treatment for volumes royalty-free use when required under regulations. used under this section, such approval § 3178.5 or § 3178.7, the operator must (3) With respect to removals under will be deemed effective from the date submit a Sundry Notice that includes paragraph (a)(2) of this section, the the request was filed. the following information: operator must measure any gas returned (d) Approval of measurement or (a) A complete description of the to the lease, unit, or communitized area commingling off the lease, unit, or operation to be conducted, including under such an approval in accordance communitized area under other the location of all facilities and with Onshore Oil and Gas Order No. 5 regulations does not constitute approval equipment involved in the operation or other successor regulations. of off-lease royalty-free use. The and the location of the FMP; operator or lessee must expressly (b) The volume of oil or gas that the § 3178.6 Uses of oil or gas moved off the request, and submit its justification for, operator expects will be used in the lease, unit, or communitized area that do operation, and the method of measuring not require prior written approval for approval of off-lease royalty-free use. royalty-free treatment of volumes used. (e) If equipment or a facility located or estimating that volume; (c) If the volume of gas expected to be Oil or gas used after being moved off on a particular lease, unit, or communitized area treats oil or gas used will be estimated, the basis for the the lease, unit, or communitized area estimate (e.g., equipment manufacturer’s may be treated as royalty free without produced from properties that are not unitized or communitized with the published consumption or usage rates); prior written BLM approval only if the and use meets the criteria under § 3178.4 property on which the equipment or facility is located, in addition to treating (d) The proposed disposition of the and when: oil or gas used (e.g., whether gas used (a) The oil or gas is transported from oil or gas produced from the lease, unit, or communitized area on which the would be consumed as fuel, vented one area of the lease, unit, or through use of a gas-activated communitized area to another area of equipment or facility is located, the operator may report as royalty free only pneumatic controller, returned to the the same lease, unit, or communitized reservoir, or used in some other way). area where it is used, and no oil or gas that portion of the oil or gas used as fuel is added to or removed from the that is properly allocable to the share of § 3178.10 Facility and equipment pipeline while crossing lands that are production contributed by the lease, ownership. unit, or communitized area on which not part of the lease, unit, or The operator is not required to own or the equipment is located, unless communitized area; or lease the equipment or facility that uses otherwise authorized by the BLM under (b) A well is directionally drilled, the oil or gas royalty free. The operator is this section. wellhead is not located on the responsible for obtaining all producing lease, unit, or communitized § 3178.8 Measurement or estimation of authorizations, measuring production, area, and oil or gas is used on the same volumes of oil or gas that are used royalty- reporting production, and all other well pad for operations and production free. applicable requirements. purposes for that well. (a) The operator must measure or estimate the volumes of royalty-free gas Subpart 3179—Waste Prevention and § 3178.7 Uses of oil or gas moved off the Resource Conservation lease, unit, or communitized area that used in operations upstream of the FMP. require prior written approval for royalty- (b) The operator must measure the § 3179.1 Purpose. free treatment of volumes used. volume of gas that is removed from the The purpose of this subpart is to (a) Except as provided in § 3178.6(b) product stream downstream of the FMP implement and carry out the purposes and paragraph (b) of this section, royalty and used royalty-free pursuant to of statutes relating to prevention of is owed on all oil or gas used in sections 3178.4 through 3178.7. waste from Federal and Indian (other operations conducted off the lease, unit, (c) The operator must measure the than Osage Tribe) leases, conservation or communitized area. volume of oil that is used royalty-free of surface resources, and management of (b) The BLM may grant prior written pursuant to sections 3178.4 through the public lands for multiple use and approval to treat oil or gas used in 3178.7. The operator must also sustained yield. This subpart supersedes operations conducted off the lease, unit, document removal of such oil from the those portions of Notice to Lessees and or communitized area as royalty free tank or pipeline. Operators of Onshore Federal and (referred to as off-lease royalty-free use) (d) If the operator removes oil or gas Indian Oil and Gas Leases, Royalty or if the use is among those listed in downstream of the FMP and that oil or Compensation for Oil and Gas Lost § 3178.4(a) and § 3178.5(a) and if: gas is used royalty-free pursuant to (NTL–4A),, pertaining to, among other (1) The equipment or facility in which sections 3178.4 through 3178.7, the things, flaring and venting of produced the operation is conducted is located off operator must apply for an FMP under gas, unavoidably and avoidably lost gas, the lease, unit, or communitized area for section 3173.12 to measure the oil or gas and waste prevention. engineering, economic, resource that is removed for use. protection, or physical accessibility (e) When estimating gas volumes, the § 3179.2 Scope. reasons; and operator must use the best available (a) This subpart applies to:

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(1) All onshore Federal and Indian combination of one or more requirements, such as releases from a (other than Osage Tribe) oil and gas compressors located at a well site, or thief hatch left open, a leaking vapor leases, units, and communitized areas, located at an onshore natural gas recovery unit, or an improperly sized except as otherwise provided in this processing plant, is not a compressor combustor, are considered leaks. subpart; station. Leak component means any (2) IMDA oil and gas agreements, Continuous bleed means a continuous component that has the potential to leak unless specifically excluded in the flow of pneumatic supply natural gas to gas and can be monitored in the manner agreement or unless the relevant a pneumatic controller. described in sections 3179.301 through provisions of this subpart are Development oil well or development 3179.305 of this subpart, including, but inconsistent with the agreement; gas well means a well drilled to produce not limited to, valves, connectors, (3) Leases and other business oil or gas, respectively, from an pressure relief devices, open-ended agreements and contracts for the established field in which commercial lines, flanges, covers and closed vent development of tribal energy resources quantities of hydrocarbons have been systems, thief hatches or other openings under a Tribal Energy Resource discovered and are being produced. For on a storage vessel, compressors, Agreement entered into with the purposes of this subpart, the BLM will instruments, and meters. Secretary, unless specifically excluded determine when a well is a development Liquid hydrocarbon means chemical in the lease, other business agreement, oil well or development gas well in the compounds of hydrogen and carbon or Tribal Energy Resource Agreement; event of a disagreement between the atoms that exist as a liquid under the (4) Committed State or private tracts BLM and the operator. temperature and pressure at which they in a federally approved unit or Gas-to-oil ratio (GOR) means the ratio are measured. The term is used to refer communitization agreement defined by of gas to oil in the production stream to oil, condensate, liquefied petroleum or established under 43 CFR subpart expressed in standard cubic feet of gas gas (LPG), (LNG), 3105 or 43 CFR part 3180; per barrel of oil. and natural gas liquids (NGL). (5) All onshore wells, tanks, Gas well means a well for which the Liquids unloading means the removal compressors, and other equipment energy equivalent of the gas produced, of an accumulation of liquid located on a Federal or Indian lease or including its entrained liquefiable hydrocarbons or water from the a federally approved unit or hydrocarbons, exceeds the energy wellbore of a completed gas well. communitized area; and equivalent of the oil produced. Unless Lost oil or lost gas means produced oil (b) For purposes of this subpart, the more specific British thermal unit (Btu) or gas that escapes containment, either term ‘‘lease’’ also includes IMDA values are available, a well with a gas- intentionally or unintentionally, or is agreements. to-oil ratio greater than 6,000 standard flared before being removed from the § 3179.3 Definitions and acronyms. cubic feet (scf) of gas per barrel of oil is lease, unit, or communitized area, and a gas well. Except where gas has been As used in this subpart, the term: cannot be recovered. re-injected into the reservoir, a mature Accessible component means a Pneumatic controller means an oil well would not be reclassified as a component that can be reached, if automated instrument used for gas well even after normal production necessary, by safe and proper use of maintaining a process condition such as decline has caused the GOR to increase portable ladders or by built-in ladders liquid level, pressure, delta-pressure, or beyond 6,000 scf of gas per barrel of oil. and walkways. Accessible components temperature. High pressure flare means an open-air also include components that can be Storage vessel means a tank or other flare stack or flare pit designed for the reached by the safe use of an extension vessel that contains an accumulation of combustion of natural gas leaving a on a monitoring probe. crude oil, condensate, intermediate pressurized production vessel (such as a Automatic ignition system means an hydrocarbon liquids, or produced water, separator or heater-treater) that is not a automatic ignitor and, where needed to and that is constructed primarily of non- storage vessel. ensure continuous combustion, a earthen materials (such as wood, Leak means a release of natural gas continuous pilot flame. concrete, steel, fiberglass, or plastic), Capture means the physical from a component that is not associated which provide structural support. A containment of natural gas for with normal operation of the well completion vessel that receives transportation to market or productive component, when such release is: recovered liquids from a well after use of natural gas, and includes (1) A visible hydrocarbon emission startup of production following reinjection and royalty-free on-site uses detected by use of an optical gas flowback, for a period that exceeds 60 pursuant to subpart 3178. imaging instrument; days, is considered a storage vessel Capture infrastructure means any (2) At least 500 ppm of hydrocarbon under this subpart unless the storage of pipelines, facilities, or other equipment detected using a portable analyzer or the recovered liquids in the vessel is (including temporary or mobile other instrument that can measure the governed by § 3162.3–3 of this title. For equipment) used to capture, transport, quantity of the release; or purposes of this subpart, the following or process gas. Capture infrastructure (3) Visible bubbles detected using are not considered storage vessels: includes, but is not limited to, soap solution. (1) Vessels that are skid-mounted or equipment that compresses or liquefies Releases due to normal operation of permanently attached to something that natural gas, removes natural gas liquids, equipment intended to vent as part of is mobile (such as trucks, railcars, or generates electricity from gas. normal operations, such as gas-driven barges or ships), and are intended to be Compressor station means any pneumatic controllers and safety release located at a site for less than 180 permanent combination of one or more devices, are not considered leaks unless consecutive days. This exclusion does compressors that move natural gas at the releases exceed the quantities and not apply to well completion vessels or increased pressure through gathering or frequencies expected during normal to storage vessels that are located at a transmission pipelines, or into or out of operations. Releases due to operator site for at least 180 consecutive days. storage. This includes, but is not limited errors or equipment malfunctions or (2) Process vessels such as surge to, gathering and boosting stations and from control equipment at levels that control vessels, bottoms receivers, or transmission compressor stations. The exceed applicable regulatory knockout vessels.

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(3) Pressure vessels designed to to a gas pipeline, provided the BLM has capture for sale or use on site a volume operate in excess of 204.9 kilopascals not determined loss of gas through such of gas sufficient to meet the ‘‘capture and without emissions to the venting or flaring is otherwise percentage’’ requirement specified in atmosphere. avoidable. paragraph (b) of this section. (4) Tanks holding hydraulic fracturing Avoidably lost oil or gas means: Lost (b) Beginning January 17, 2018, the fluid prior to implementation of an oil or gas that is not ‘‘unavoidably lost,’’ operator’s capture percentage must approved permanent disposal plan as defined in paragraph (a) of this equal: under Onshore Oil and Gas Order No. section; waste oil that became waste oil (1) For each month during the period 7. through operator negligence; and, any from January 17, 2018 until December Volatile organic compounds (VOC) ‘‘excess flared gas,’’ as defined in 31, 2019: 85 percent; has the same meaning as defined in 40 § 3179.7. (2) For each month during the period CFR 51.100(s). from January 1, 2020 until December 31, § 3179.5 When lost production is subject 2022: 90 percent; § 3179.4 Determining when the loss of oil to royalty. (3) For each month during the period or gas is avoidable or unavoidable. (a) Royalty is due on all avoidably lost from January 1, 2023 until December 31, For purposes of this subpart: oil or gas. 2025: 95 percent; and Unavoidably lost oil or gas means lost (b) Royalty is not due on any (4) For each month beginning January oil or gas provided that the operator has unavoidably lost oil or gas. 1, 2026: 98 percent. not been negligent; the operator has (c) The term ‘‘capture percentage’’ in complied fully with applicable laws, § 3179.6 Venting prohibition. this section means the ‘‘total volume of lease terms, regulations, provisions of a (a) Gas well gas may not be flared or gas captured’’ over the ‘‘relevant area’’ previously approved operating plan, or vented, except where it is unavoidably divided by the ‘‘adjusted total volume of other written orders of the BLM; and the lost pursuant to § 3179.4(a). gas produced’’ over the ‘‘relevant area.’’ oil or gas is: (b) The operator must flare rather than (1) The term ‘‘total volume of gas (1) Produced oil or gas that is lost vent any gas that is not captured, captured’’ in this section means: for from the following operations or except: each month, the volume of gas sold from sources, and that cannot be recovered in (1) When flaring the gas is technically all of the operator’s development oil the normal course of operations, where infeasible, such as when the gas is not wells in the relevant area plus the the operator has taken prudent and readily combustible or the volumes are volume of gas from such wells used on reasonable steps to avoid waste: too small to flare; lease, unit, or communitized area in the (i) Well drilling; (2) Under emergency conditions, as relevant area. (ii) Well completion and related defined in § 3179.105, when the loss of (2) The term ‘‘adjusted total volume of operations; gas is uncontrollable or venting is gas produced’’ in this section means: the (iii) Initial production tests, subject to necessary for safety; total volume of gas captured over the the limitations in § 3179.103; (3) When the gas is vented through month plus the total volume of gas (iv) Subsequent well tests, subject to normal operation of a natural gas- flared over the month from high the limitations in § 3179.104; activated pneumatic controller or pump; pressure flares from all of the operator’s (v) Exploratory coalbed methane well (4) When the gas is vented from a development oil wells that are in dewatering; storage vessel, provided that § 3179.203 production in the relevant area, minus: (vi) Emergencies, subject to the does not require the combustion or (i) For each month from January 17, limitations in § 3179.105; flaring of the gas; 2018 until December 31, 2018: 5,400 (vii) Normal operating losses from a (5) When the gas is vented during Mcf times the total number of development oil wells ‘‘in production’’ natural gas-activated pneumatic downhole well maintenance or liquids in the relevant area; controller or pump that is in compliance unloading activities performed in (ii) For each month in calendar year with § 3179.201 and § 3179.202; compliance with § 3179.204; 2019: 3,600 Mcf times the total number (viii) Normal operating losses from a (6) When the gas is vented through a of development oil wells in production storage vessel or other low pressure leak, provided that the operator is in full in the relevant area; production vessel that is in compliance compliance with §§ 3179.301 through (iii) For each month in calendar year with § 3179.203 and § 3174.5(b); 3179.305; 2020: 1,800 Mcf times the total number (ix) Well venting in the course of (7) When the gas venting is necessary of development oil wells in production downhole well maintenance and/or to allow non-routine facility and in the relevant area; and liquids unloading performed in pipeline maintenance to be performed, (iv) For each month in calendar year compliance with § 3179.204; such as when an operator must, upon 2021: 1,500 Mcf times the total number (x) Leaks, when the operator has occasion, blow-down and depressurize of development oil wells in production complied with the leak detection and equipment to perform maintenance or in the relevant area; repair requirements in §§ 3179.301–305; repairs; or (v) For each month in calendar years (xi) Facility and pipeline (8) When a release of gas is 2022–2023: 1,200 Mcf times the total maintenance, such as when an operator unavoidable under § 3179.4 and flaring number of development oil wells in must blow-down and depressurize is prohibited by Federal, State, local or production in the relevant area; equipment to perform maintenance or Tribal law, regulation, or enforceable (vi) For each month in calendar year repairs; or permit term. 2024: 900 Mcf times the total number of (xii) Flaring of gas from which at least (c) For purposes of this subpart, all development oil wells in production in 50 percent of natural gas liquids have flares or combustion devices must be the relevant area; and been removed and captured for market, equipped with an automatic ignition (vii) For each month in calendar year if the operator has notified the BLM system. 2025 and thereafter: 750 Mcf times the through a Sundry Notice that the total number of development oil wells operator is conducting such capture; or § 3179.7 Gas capture requirement. in production in the relevant area. (2) Produced gas that is flared or (a) Except as provided in § 3179.8, on (3) The term ‘‘relevant area’’ in this vented from a well that is not connected a monthly basis, each operator must section means:

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(i) Each of the operator’s leases, units, lands to a distance and on a scale that volumes under applicable ONRR or communitized areas; or shows the field in which the well or reporting requirements. (ii) All of the operator’s development wells are or will be located (if (b) The operator may estimate such oil wells on leases, units, and applicable), and all pipelines that could volumes, except: communitized areas within a county or transport the gas from the well or wells; (1) If the operator estimates that the within a State, if the operator notifies (ii) All of the operator’s producing oil volume of gas flared from a high the BLM by Sundry Notice by January and gas wells, which are producing pressure flare stack or manifold equals 1, of the relevant year that the operator from Federal or Indian leases (both on or exceeds an average of 50 Mcf per day has chosen to comply on a county- or Federal or Indian leases and on other for the life of the flare, or the previous State-wide basis. properties) within the map area; 12 months, whichever is shorter, then, (4) An oil well is considered ‘‘in (iii) Identification of all of the beginning January 17, 2018 the operator production’’ only after the well has operator’s wells within the lease, unit, must either: begun producing oil, and only during a or communitized area from which gas is (i) Measure the volume of the flared month in which it produces gas (that is flared or vented, and the location and gas; or sold or flared) for 10 or more days. distance of the nearest gas pipeline(s) to (ii) Calculate the volume of the flared (d) In any month in which the each such well, with an identification of gas based on the results of a regularly operator fails to meet the required those pipelines that are or could be performed GOR test and measured capture percentage, the ‘‘excess flared available for connection and use; and values for the volumes of oil production and gas sales, so as to allow BLM to gas’’ is royalty-bearing under § 3179.4. (iv) Identification of all of the independently verify the volume, rate, The term ‘‘excess flared gas’’ means: operator’s wells within the lease, unit, or communitized area from which gas is and heating value of the flared gas; or Excess flared gas = (required capture captured; (2) If the BLM determines and informs percentage * adjusted total volume of gas the operator that the additional accuracy ¥ (4) Data that show pipeline capacity produced over the relevant area) total offered by measurement is necessary for volume of gas captured. and the operator’s projections of the cost associated with installation and effective implementation of this (e) For purposes of calculating operation of gas capture infrastructure, Subpart, then the operator must royalties on an operator’s excess flared to the extent that the operator is able to measure the volume of the flared gas. gas in a given month, the operator must obtain this information, as well as cost (c) If measurement or calculation is required under paragraph (b) of this prorate the excess flared gas across the projections for alternative methods of section for a flare that is combusting gas relevant area to each lease, unit or transportation that do not require that is combined across multiple leases, communitized area that reported high- pipelines; pressure flaring during the month. (5) Projected costs of and the unit PAs, or communitized areas, the operator may measure or calculate the § 3179.8 Alternative capture requirement. combined stream of revenues from both gas and oil production, including: gas at a single point at the flare, but (a) With respect to leases issued (i) The operator’s projections of gas must use an allocation method before the effective date of this prices, gas production volumes, gas approved by the BLM to allocate the regulation, for operators choosing to quality (i.e., heating value and H S quantities of flared gas to each lease, comply with the capture requirement in 2 content), revenues derived from gas unit PA, or communitized area. § 3179.7 on a lease-by-lease, unit-by- production, and royalty payments on unit, or communitized area-by- § 3179.10 Determinations regarding gas production over the next 15 years or royalty-free flaring. communitized area basis, the BLM may the life of the operator’s lease, unit, or approve a capture percentage lower than (a) Approvals to flare royalty free, communitized area, whichever is less; the applicable capture percentage which are in effect as of the effective and date of this rule, will continue in effect specified under § 3179.7, if the operator (ii) The operator’s projections of oil demonstrates, and the BLM agrees, that until January 17, 2018. prices, oil production volumes, costs, (b) The provisions of this subpart do the applicable capture percentage under revenues, and royalty payments from not affect any determination made by § 3179.7 would impose such costs as to the operator’s oil and gas operations the BLM before or after January 17, cause the operator to cease production within the lease over the next 15 years 2017, with respect to the royalty-bearing and abandon significant recoverable oil or the life of the operator’s lease, unit, status of flaring that occurred prior to reserves under the lease. or communitized area, whichever is January 17, 2017. (b) To support a demonstration under less. paragraph (a) of this section, the (c) In establishing an alternative § 3179.11 Other waste prevention measures. operator must submit a Sundry Notice capture requirement under this section, that includes the following information: the BLM will set the capture percentage (a) If production from an oil well (1) The name, number, and location of at the highest level that the BLM newly connected to a gas pipeline each of the operator’s wells, and the determines, considering the information results or is expected to result in one or number of the lease, unit, or identified in paragraph (b) of this more producing wells already communitized area with which it is section, will not cause the operator to connected to the pipeline being forced associated; cease production and abandon off the pipeline, the BLM may exercise (2) The oil and gas production levels significant recoverable oil reserves its authority under applicable laws and of each of the operator’s wells on the under the lease. regulations, as well as its authority lease, unit or communitized area for the under the terms of applicable permits, most recent production month for § 3179.9 Measuring and reporting volumes orders, leases, and unitization or which information is available and the of gas vented and flared. communitization agreements, to limit volumes being vented and flared from (a) The operator must estimate or the production level from the new well each well; measure all volumes of gas vented or until the pressure of gas production (3) Map(s) showing: flared from wells, facilities and from the new well stabilizes at levels (i) The entire lease, unit, or equipment on a lease, unit PA, or that allow transportation of gas from all communitized area and the surrounding communitized area and report those wells connected to the pipeline.

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(b) If gas capture capacity is not yet (3) Used in operations on the lease, (4) Production begins. available on a given lease, the BLM may unit, or communitized area; or (b) The BLM may extend the period exercise its authority under applicable (4) Injected. specified in paragraph (a)(2) not to laws and regulations, as well as its (b) An operator will be deemed to be exceed an additional 60 days, based on authority under the terms of applicable in compliance with the requirements of testing delays caused by well or permits, orders, leases, and unitization paragraph (a) of this section, if the equipment problems or if there is a need or communitization agreements, to operator is in compliance with the for further testing to develop adequate delay action on an APD for that lease, requirements for control of gas from reservoir information. or approve the APD with conditions for well completions established under 40 (c) The BLM may increase the limit gas capture or limitations on CFR part 60, subpart OOOO or subpart specified in paragraph (a)(3) by up to an production. If the lease for which an OOOOa or if the well is not a ‘‘well additional 30 million cubic feet of gas APD is submitted is not yet producing, affected facility’’ under either of those for exploratory wells in remote locations the BLM may direct or grant a lease subparts. where additional testing is needed in suspension under 43 CFR 3103.4–4. (c) The requirements of paragraph (a) advance of development of pipeline of this section will not apply where the infrastructure. § 3179.12 Coordination with State operator demonstrates through a Sundry (d) During the dewatering and initial regulatory authority. Notice, and the BLM agrees, that To the extent that any BLM action to evaluation of an exploratory coalbed compliance with paragraph (a) of this methane well, the 30-day period enforce a prohibition, limitation, or section would impose such costs as to order under this subpart may adversely specified in paragraph (a)(2) of this cause the operator to cease production section is extended to 90 days. The BLM affect production of oil or gas that and abandon significant recoverable oil comes from non-Federal and non-Indian may approve up to two extensions of reserves under the lease. this evaluation period, of up to 90 days mineral interests, the BLM will (d) To support a demonstration under each. coordinate, on a case-by-case basis, with paragraph (d) of this section, the (e) The operator must submit its the State regulatory authority having operator must submit a Sundry Notice request for a longer test period or jurisdiction over the oil and gas that includes the following information: production from the non-Federal and (1) The name, number, and location of increased limit under paragraphs (b), non-Indian interests. each of the operator’s wells, and the (c), or (d) of this section using a Sundry number of the lease, unit, or Notice. Flaring and Venting Gas During communitized area with which it is Drilling and Production Operations § 3179.104 Subsequent well tests. associated; During well tests subsequent to the (2) The oil and gas production levels § 3179.101 Well drilling. initial production test, the operator may of each of the operator’s wells on the (a) Except as provided in § 3179.6 of flare gas for no more than 24 hours lease, unit or communitized area for the this subpart, and unless technically royalty free, unless the BLM approves or most recent production month for infeasible, gas that reaches the surface requires a longer period. The operator as a normal part of drilling operations which information is available; (3) Data that show the costs of must request a longer period under this must be: section using a Sundry Notice. (1) Captured and sold; compliance with paragraph (a) of this (2) Directed to a flare pit or flare stack section on the lease; (4) Projected costs § 3179.105 Emergencies. to combust any flammable gasses; of and the combined stream of revenues (a) An operator may flare or, if flaring (3) Used in operations on the lease, from both gas and oil production, is not feasible given the emergency, vent unit, or communitized area; or including: the operator’s projections of gas royalty-free under § 3179.4(a)(vi) of (4) Injected. oil and gas prices, production volumes, this subpart during an emergency. For (b) If gas is lost as a result of loss of quality (i.e., heating value and H2S purposes of this subpart, an well control, the BLM will make a content), revenues derived from ‘‘emergency’’ is a temporary, infrequent determination of whether the loss of production, and royalty payments on and unavoidable situation in which the well control is due to operator production over the next 15 years or the loss of gas or oil is uncontrollable or negligence. Such gas is avoidably lost if life of the operator’s lease, unit, or necessary to avoid risk of an immediate the BLM determines that the loss of well communitized area, whichever is less. and substantial adverse impact on control is due to operator negligence. § 3179.103 Initial production testing. safety, public health, or the The BLM will notify the operator in environment. For purposes of royalty writing when it makes a determination (a) Gas flared during a well’s initial production test is royalty-free under assessment, an ‘‘emergency’’ is limited that gas was lost due to operator to a short-term situation of 24 hours or negligence. §§ 3179.4(a)(1)(iii) and 3179.5(b) of this subpart until one of the following less (unless the BLM agrees that the § 3179.102 Well completion and related occurs: emergency conditions necessitating operations. (1) The operator determines that it has venting or flaring extend for a longer (a) Except as provided in § 3179.6, obtained adequate reservoir information period) caused by an unanticipated and unless technically infeasible, after a for the well; event or failure that is out of the well has been hydraulically fractured or (2) 30 days have passed since the operator’s control and was not due to refractured, gas that reaches the surface beginning of the production test, except operator negligence. during well completion, post- as provided in paragraph (b) and (b) The following do not constitute completion, and fluid recovery paragraph (d) of this section; emergencies for the purposes of royalty operations must be: (3) The operator has flared 20 million assessment: (1) Captured and sold; cubic feet (MMcf) of gas, when volumes (1) More than 3 failures of the same (2) Directed to a flare pit or flare stack flared under this section are combined component within a single piece of to combust any flammable gasses, with volumes flared under equipment within any 365-day period; subject to the volumetric limitations in § 3179.102(a)(2), except as provided in (2) The operator’s failure to install § 3179.103(a)(3); paragraph (c) of this section; or appropriate equipment of a sufficient

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capacity to accommodate the (3) The pneumatic controller exhaust § 3179.202 Requirements for pneumatic production conditions; is routed to processing equipment; or diaphragm pumps. (3) Failure to limit production when (4) The operator notifies the BLM (a) A pneumatic diaphragm pump is the production rate exceeds the capacity through a Sundry Notice and subject to this section if it: of the related equipment, pipeline, or demonstrates, and the BLM agrees, (1) Uses natural gas produced from a gas plant, or exceeds sales contract based on the information identified in Federal or Indian lease, or from a unit volumes of oil or gas; paragraph (c) of this section, that or communitized area that includes a (4) Scheduled maintenance; replacement of a pneumatic controller Federal or Indian lease; and (5) A situation caused by operator subject to paragraph (a)(1)(i) of this (2) Is not subject to any of the negligence; or section would impose such costs as to requirements of 40 CFR part 60, subpart (6) A situation on a lease, unit, or cause the operator to cease production OOOOa, but would be subject to that communitized area that has already and abandon significant recoverable oil subpart if it were a new, modified or experienced 3 or more emergencies reserves under the lease. reconstructed source. (b) An operator is not required to within the past 30 days, unless the BLM (c) To support a demonstration under comply with paragraphs (c) through (h), determines that the occurrence of more paragraph (b)(4) of this section, the with respect to a pneumatic diaphragm than 3 emergencies within the 30 day operator must submit a Sundry Notice pump or pumps if: period could not have been anticipated that includes the following information: (1) The pump does not vent exhaust and was beyond the operator’s control. (1) The name, number, and location of (c) Within 45 days of the start of the gas to the atmosphere; or each of the operator’s wells, and the (2) The operator submits a Sundry emergency, the operator must estimate number of the lease, unit, or and report to the BLM on a Sundry Notice to the BLM documenting that the communitized area with which it is pump(s) operated on less than 90 Notice the volumes flared or vented associated; beyond the timeframes specified in individual days in the prior calendar (2) The oil and gas production levels paragraph (b) of this section. year. of each of the operator’s wells on the (c) For each pneumatic diaphragm Gas Flared or Vented From Equipment lease, unit or communitized area for the pump subject to this section and within and During Well Maintenance most recent production month for the timeframes set forth in paragraph (h) Operations which information is available; of this section, the operator must: (3) Data that show the costs of (1) Replace the pump with a zero- § 3179.201 Equipment requirements for emissions pump, which may be an pneumatic controllers. compliance with paragraph (b) of this section on the lease; electric-powered pump; or (a) A pneumatic controller that uses (4) Projected costs of and the (2) Route the pump exhaust gas to natural gas produced from a Federal or combined stream of revenues from both processing equipment for capture and Indian lease, or from a unit or gas and oil production, including: sale. communitized area that includes a (d) As an alternative to compliance Federal or Indian lease, is subject to this (i) The operator’s projections of gas prices, gas production volumes, gas with paragraph (c), the operator may section if the pneumatic controller: route the pump exhaust gas to a flare or (1) Has a continuous bleed rate greater quality (i.e., heating value and H2S content), revenues derived from gas low pressure combustor device within than 6 standard cubic feet (scf) per hour; the timeframes set forth in paragraph (h) and production, and royalty payments on gas production over the next 15 years or of this section, if the operator (2) Is not subject to any of the determines and notifies the BLM requirements of 40 CFR part 60, subpart the life of the operator’s lease, unit, or communitized area, whichever is less; through a Sundry Notice that: OOOO or subpart OOOOa, but would be (1) Replacing the pump with a zero- and subject to one of those subparts if it emissions pump is not viable because a were a new, modified, or reconstructed (ii) The operator’s projections of oil pneumatic pump is necessary to source. prices, oil production volumes, costs, perform the function required; and (b) The operator must replace a revenues, and royalty payments from (2) Routing the pump exhaust gas to pneumatic controller subject to this the operator’s oil and gas operations processing equipment for capture and section with a controller (including but within the lease over the next 15 years sale is technically infeasible or unduly not limited to a continuous or or the life of the operator’s lease, unit, costly. intermittent pneumatic controller) or communitized area, whichever is (e) If the operator has met the criteria having a bleed rate of 6 scf per hour or less. in paragraph (d) allowing the operator to less within the timeframes set forth in (d) The operator must replace the use the compliance alternative provided paragraph (d) of this section, unless: pneumatic controller(s) no later than 1 in paragraph (d), but the operator has no (1) Use of a pneumatic controller with year after the effective date of this flare or low pressure combustor device a bleed rate greater than 6 scf per hour section as required under paragraph (b) on site, or routing the exhaust gas to is required based on functional needs of this section. If, however, the well or such a flare or low pressure combustor that may include, but are not limited to, facility that the pneumatic controller device would be technically infeasible, response time, safety, and positive serves has an estimated remaining the operator need take no further action actuation, provided that the operator productive life of 3 years or less from to comply with paragraphs (c) through notifies the BLM through a Sundry the effective date of this section, then (h). Notice that describes the functional the operator may notify the BLM (f) An operator that is required to needs necessitating the use of a through a Sundry Notice and replace the replace a pump or route the exhaust gas pneumatic controller with a bleed rate pneumatic controller no later than 3 from a pump to capture or a flare or greater than 6 scf per hour; years from the effective date of this combustion device under this section, (2) The pneumatic controller exhaust section. may nonetheless be exempt from such was, as of January 17, 2017 and (e) The operator must ensure requirement if the operator submits a continues to be, routed to a flare device pneumatic controllers are functioning Sundry Notice to the BLM that provides or low-pressure combustor; within manufacturers’ specifications. an economic analysis that demonstrates,

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and the BLM agrees, based on the § 3179.203 Storage vessels. lease, unit or communitized area for the information identified in paragraph (g) (a) A storage vessel is subject to this most recent production month for of this section, that compliance with the section if the vessel: which information is available; provisions of this section would impose (1) Contains production from a (3) Data that show the costs of such costs as to cause the operator to Federal or Indian lease, or from a unit compliance with paragraph (c)(1) or cease production and abandon or communitized area that includes a (c)(2) of this section on the lease; significant recoverable oil reserves Federal or Indian lease; and (4) The operator must consider the under the lease. (2) Is not subject to any of the costs and revenues of the combined (g) The Sundry Notice described in requirements of 40 CFR part 60, stream of revenues from both the gas paragraph (f) must include the following subparts OOOO or OOOOa, but would and oil components and provide: information: be subject to one of those subparts if it (i) The operator’s projections of oil (1) Well information must include: were a new, modified or reconstructed and gas prices, production volumes, source. (i) The name, number, and location of quality (i.e., heating value and H2S (b) Within 60 days after the effective content), revenues derived from each well, and the number of the lease, date of this section, and within 30 days unit, or communitized area with which production, and royalty payments on after any new source of production is production over the next 15 years or the it is associated; and added to the storage vessel, the operator (ii) The oil and gas production levels life of the operator’s lease, unit, or must determine, record, and make communitized area, whichever is less. of each of the operator’s wells on the available to the BLM upon request, lease, unit or communitized area for the (e) If the rate of total uncontrolled whether the storage vessel has the VOCs released from a storage vessel most recent production month for potential for VOC emissions equal to or which information is available; declines to 4 tpy or less for any greater than 6 tpy based on the continuous 12 month period, the (2) Data that show the costs of maximum average daily throughput for compliance with paragraphs (c) through requirements of paragraph (c) no longer a 30-day period of production. The apply. (e) of this section on the lease; determination may take into account (f) Storage vessels subject to this (3) The operator must consider the requirements under a legally and section must be adequately sized to costs and revenues of the combined practically enforceable limit in an accommodate the operator’s production stream of revenues from both the gas operating permit or other requirement levels and equipped to meet any and oil components and provide: established under a federal, state, local applicable regulatory requirements or tribal authority that limit the VOC (i) The operator’s projections of gas regarding tank vapors. prices, gas production volumes, gas emissions to less than 6 tpy. (g) Storage vessels subject to this quality (i.e., heating value and H S (c) If a storage vessel has the potential 2 section may only vent through properly content), revenues derived from gas for VOC emissions equal to or greater functioning pressure relief devices. production, and royalty payments on than 6 tpy under paragraph (b) of this gas production over the next 15 years or section, no later than one year after the § 3179.204 Downhole well maintenance the life of the operator’s lease, unit, or effective date of this section, or three and liquids unloading. communitized area, whichever is less; years if the operator must and will (a) The operator must minimize and replace the storage vessel at issue in vented gas and the need for well venting (ii) The operator’s projections of oil order to comply with the requirements associated with downhole well prices, oil production volumes, costs, of this section, the operator must: maintenance and liquids unloading, revenues, and royalty payments from (1) Route all tank vapor gas from the consistent with safe operations. the operator’s oil and gas operations storage vessel to a sales line; (2) If the operator determines that (b) For wells equipped with a plunger within the lease over the next 15 years lift system and/or an automated well or the life of the operator’s lease, unit, compliance with paragraph (c)(1) of this section is technically infeasible or control system, minimizing gas venting or communitized area, whichever is under paragraph (a) includes optimizing less. unduly costly, route all tank vapor gas from the storage vessel to a device or the operation of the system to minimize (h) The operator must replace the method that ensures continuous gas losses to the extent possible pneumatic diaphragm pump(s) or route combustion of the tank vapor gas; or consistent with removing liquids that the exhaust gas to capture or to a flare (3) Submit an economic analysis to would inhibit proper function of the or combustion device no later than 1 the BLM through a Sundry Notice that well. year after the effective date of this demonstrates, and the BLM agrees, (c) Before the operator manually section, except that if the operator will based on the information identified in purges a well for liquids unloading for comply with paragraph (c) of this paragraph (d) of this section, that the first time after the effective date of section by replacing the pneumatic compliance with paragraph (c)(2) of this this section, the operator must consider diaphragm pump with a zero-emission section would impose such costs as to other methods for liquids unloading and pump and the well or facility that the cause the operator to cease production determine that they are technically pneumatic diaphragm pump serves has and abandon significant recoverable oil infeasible or unduly costly. The an estimated remaining productive life reserves under the lease. operator must provide information of 3 years or less from the effective date (d) To support a demonstration under supporting that determination as part of of this section, the operator must notify paragraph (c) of this section, the the Sundry Notice required under the BLM through a Sundry Notice and operator must submit a Sundry Notice paragraph (e) of this section. replace the pneumatic diaphragm pump that includes the following information: (d) For any liquids unloading by no later than 3 years from the effective (1) The name, number, and location of manual well purging, the operator must: date of this section. each well, and the number of the lease, (1) Ensure that the person conducting (i) The operator must ensure its unit, or communitized area with which the well purging remains present on-site pneumatic diaphragm pumps are it is associated; throughout the event to minimize to the functioning within manufacturers’ (2) The oil and gas production levels maximum extent practicable any specifications. of each of the operator’s wells on the venting to the atmosphere;

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(2) Record the cause, date, time, (1) A site that contains a wellhead or affected facility fugitive emissions duration, and estimated volume of each wellheads and no other equipment; or components at a compressor station) venting event; and (2) A well or well equipment that has under 40 CFR part 60, subpart OOOOa; (3) Maintain the records for the period been depressurized. and required under § 3162.4–1 of this title (c) As prescribed in §§ 3179.302 and (3) Notifying the BLM through a and make them available to the BLM, 3179.303 of this subpart, the operator Sundry Notice regarding such upon request. must inspect all equipment covered compliance. (e) The operator must notify the BLM under this section, as provided in by Sundry Notice within 30 calendar paragraph (a) of this section, for gas § 3179.302 Approved instruments and methods. days after the first liquids unloading leaks from leak components. event by manual or automated well (d) The operator is not required to (a) The operator must use one or more purging conducted after the effective inspect or monitor a leak component of the following instruments, operated date of this section. This requirement that is not an accessible component. according to the manufacturer’s applies to each well the operator (e) For purposes of §§ 3179.301 specifications or as specified below, to operates. through 3179.305, the term ‘‘site’’ means detect leaks: (f) The operator must notify the BLM a discrete area located on a lease, unit, (1) An optical gas imaging device by Sundry Notice, within 30 calendar or communitized area, and containing a capable of imaging a gas that is half days, if: wellhead, wellhead equipment, or other methane, half at a (1) The cumulative duration of equipment used to produce, process, concentration of 10,000 ppm at a flow manual well purging events for a well compress, treat, store, or measure rate of less than or equal to 60 grams per exceeds 24 hours during any production natural gas or store, measure, or dispose hour from a quarter inch diameter month; or of produced water, which is suitable for orifice; (2) The estimated volume of gas inspection in a single visit. (2) A portable analyzer device capable vented in liquids unloading by manual (f) The operator must make the first of detecting leaks, such as catalytic well purging operations for a well inspection of each site: oxidation, flame ionization, infrared exceeds 75 Mcf during any production (1) Within one year of January 17, absorption or photoionization devices, month. 2017 for sites that have begun used for a leak detection survey (g) For purposes of this section, ‘‘well production prior to January 17, 2017; conducted in compliance with the purging’’ means blowing accumulated (2) Within 60 days of beginning relevant sections of Method 21 at 40 liquids out of a wellbore by reservoir gas production for sites that begin CFR part 60, appendix A–7, including pressure, whether manually or by an production after January 17, 2017; and section 8.3.1. and assisted by audio, automatic control system that relies on (3) Within 60 days of the date when visual, and olfactory inspection; or real-time pressure or flow, timers, or a site that was out of service is brought (3) A leak detection device not listed other well data, where the gas is vented back into service and re-pressurized. in this section that is approved by the to the atmosphere, and it does not apply (g) The operator must make BLM for use by any operator under to wells equipped with a plunger lift subsequent inspections as prescribed in § 3179.302(d) of this subpart. (b) The person operating any of the system. § 3179.303. (h) All leak inspections must occur leak detection devices listed in or (h) Total estimated volumes vented as during production operations. approved under this section must be a result of downhole well maintenance (i) The operator must fix identified adequately trained in the proper use of and liquids unloading, including leaks as prescribed in §§ 3179.304 and the device. through the operation of plunger lifts 3179.305 of this subpart. See 43 CFR (c) Any person may request approval and automated well controls, during the 3162.5–1 for responsibility to repair oil of an alternative monitoring device and production month must be included in leaks. protocol by submitting a Sundry Notice volumes reported to ONRR as vented. (j) With respect to new, modified or to BLM that includes the following Leak Detection and Repair (LDAR) reconstructed equipment, an operator information: will be deemed to be in compliance (1) Specifications of the proposed § 3179.301 Operator responsibility. with the requirements of this section for monitoring device, including a (a) The requirements of §§ 3179.301 such equipment, if the operator is in detection limit capable of supporting through 3179.305 of this subpart apply compliance with the requirements of the desired function; to: subpart OOOOa applicable to such (2) The proposed monitoring protocol (1) A site and all equipment equipment. using the proposed monitoring device, associated with it used to produce, (k) For each lease, unit, or including how results will be recorded; process, compress, treat, store, or communitized area, for all covered sites (3) Records and data from laboratory measure natural gas (including oil wells and equipment not already deemed in and field testing, including but not that also produce natural gas) from or compliance with the requirements of limited to performance testing; allocated to a Federal or Indian lease, this section pursuant to paragraph (j), an (4) A demonstration that the proposed unit, or communitized area, where the operator may choose to satisfy the monitoring device and protocol will site is upstream of or contains the requirements of §§ 3179.301 through achieve equal or greater reduction of gas approved point of royalty measurement; 3179.305 by: lost through leaks compared with the and (1) Treating each of those sources as approach specified in § 3179.302(a)(1) (2) A site and all equipment operated if it were a collection of fugitive when used according to § 3179.303(a) of by the operator and associated with a emissions components as defined in 40 this subpart; site used to store, measure, or dispose CFR part 60 subpart OOOOa; (5) Tracking and documentation of produced water, where the site is (2) Complying with the requirements procedures; and located on a Federal or Indian lease. of 40 CFR part 60 subpart OOOOa that (6) Proposed limitations on the types (b) The requirements of §§ 3179.301 apply to affected facility fugitive of sites or other conditions on deploying through 3179.305 of this subpart do not emissions components at a well site (or the device and the protocol to achieve apply to: for compressor stations, that apply to the demonstrated results.

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(d) The BLM may approve an that would substitute for specific the next 15 years or the life of the alternative monitoring device and elements of the approach specified in operator’s lease, unit, or communitized associated inspection protocol, if the §§ 3179.302(a) and 3179.303(a); area, whichever is less; BLM finds that the alternative would (2) The proposed monitoring protocol; (5) The information required under achieve equal or greater reduction of gas (3) Records and data from laboratory § 3179.303(b), except that in lieu of the lost through leaks compared with the and field testing, including, but not demonstration required under approach specified in § 3179.302(a)(1) limited to, performance testing, to the § 3179.303(b)(4), the operator must when used according to § 3179.303(a) of extent relevant; demonstrate that the alternative this subpart. (4) A demonstration that the proposed program is as effective as possible, (1) The BLM will provide public alternative leak detection program will consistent with not imposing such costs notice of a submission for approval achieve equal or greater reduction of gas as to cause the operator to cease under section 3179.302(c). lost through leaks compared to production and abandon significant (2) The BLM may approve an compliance with the requirements recoverable oil or gas reserves under the alternative device and monitoring specified in §§ 3179.302(a) and lease. protocol for use in all or most 3179.303(a); (e) For any BLM approval of an applications, or for use on a pilot or (5) A detailed description of how the operator’s use of an alternative leak demonstration basis under specified operator will track and document its detection program under subparagraph circumstances that limit where and for procedures, leaks found, and leaks (b) or (c) of this section, the BLM will how long the device may be used. repaired; and post online the alternative program (3) The BLM will post on the BLM (6) Proposed limitations on types of approved for that operator, including, at Web site a list of each approved sites or other conditions on deployment minimum, the information required in alternative monitoring device and of the alternative leak detection subparagraph (b)(1), (b)(2), (b)(5), and protocol, along with any limitations on program. (b)(6) of this section. its use. (c) If the operator demonstrates, and the BLM agrees, that compliance with § 3179.304 Repairing leaks. § 3179.303 Leak detection inspection the requirements of §§ 3179.301–305, (a) The operator must repair any leak requirements for natural gas wellhead including the option for compliance as soon as practicable, and in no event equipment and other equipment. with an alternative leak detection later than 30 calendar days after (a) Except as provided below or program under § 3179.303(b) would discovery, unless good cause exists for otherwise authorized in paragraph (b) of impose such costs as to cause the repair requiring a longer period. Good this section, the operator must inspect operator to cease production and cause for delay of repair exists if the leak components located on and around abandon significant recoverable oil or repair (including replacement) is the equipment identified in gas reserves under the lease, the BLM technically infeasible (including § 3179.301(a) of this subpart for leaks may approve an alternative leak unavailability of parts that have been using a leak detection device listed detection program for that operator that ordered), would require a pipeline under § 3179.302 according to the does not meet the criterion specified in blowdown, a compressor station following parameters: § 3179.303(b)(4), but is as effective as shutdown, a well shut-in, or would be (1) The operator must inspect each possible consistent with not causing the unsafe to conduct during operation of site at least semi-annually, and operator to cease production and the unit. consecutive semiannual inspections abandon significant recoverable oil or (b) If there is good cause for delaying must be conducted at least 4 months gas reserves under the lease. the repair beyond 30 calendar days, the apart; and (d) To support a demonstration under operator must notify the BLM of the (2) The operator must inspect each paragraph (c) of this section, the cause by Sundry Notice and must compressor station at least quarterly, operator must submit a Sundry Notice complete the repair at the earliest and consecutive quarterly inspections that includes the following information: opportunity, for example during the must be conducted at least 60 days (1) The name, number, and location of next compressor station shutdown, well apart. each well, and the number of the lease, shut-in, or pipeline blowdown. In no (b) The BLM may approve an unit, or communitized area with which case may the repair be delayed beyond operator’s request to use an alternative it is associated; 2 years. instrument-based leak detection (2) The oil and gas production levels (c) Not later than 30 calendar days program, in lieu of compliance with the of each of the operator’s wells on the after completion of a repair, the operator requirements of § 3179.303(a), if the lease, unit or communitized area for the must verify the effectiveness of the BLM finds that the alternative program most recent production month for repair through a follow-up inspection would achieve equal or greater which information is available; using one of the instruments specified reduction of gas lost through leaks (3) Data that show the costs of or approved under § 3179.302(a) or a compared with the approach specified compliance on the lease with the soap bubble test under Section 8.3.3 of in §§ 3179.302(a)(1) and 3179.303(a) of requirements of §§ 3179.301–305 and EPA Method 21—Determination of this subpart. The operator must submit with an alternative leak detection Volatile Organic Compound its request for an alternative leak program that meets the requirements of Leaks (40 CFR Appendix A–7 to part detection program through a Sundry § 3179.303(b); 60). Notice that includes the following (4) The operator must consider the (d) If the repair is not effective, the information: costs and revenues of the combined operator must complete additional (1) A detailed description of the stream of revenues from both the gas repairs within 15 calendar days, and alternative leak detection program, and oil components and provide the conduct follow-up inspections and including how it will use one or more operator’s projections of oil and gas repairs until the leak is repaired. of the instruments specified in or prices, production volumes, quality (i.e., (e) A follow-up inspection to verify approved under § 3179.302(a) and an heating value and H2S content), the effectiveness of repairs does not identification of the specific revenues derived from production, and constitute an inspection for purposes of instruments, methods and/or practices royalty payments on production over § 3179.303.

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§ 3179.305 Leak detection inspection State or Tribal Variances well in terms of reducing waste of oil recordkeeping and reporting. and gas, reducing environmental § 3179.401 State or tribal requests for impacts from venting and/or flaring of (a) The operator must maintain the variances from the requirements of this following records for the period subpart. gas, and ensuring the safe and required under § 3162.4–1 of this title responsible production of oil and gas, (a)(1) At the request of a State (for and make them available to the BLM compared to the particular provision(s) Federal land) or a tribe (for Indian upon request: from which the State or tribe is lands), the BLM State Director may (1) For each inspection required requesting the variance, and would be grant a variance from any provision(s) of under § 3179.303 of this subpart, consistent with the terms of the affected this Subpart that would apply to all documentation of: Federal or Indian leases and applicable Federal leases, units, or communitized (i) The date of the inspection; and statutes. The decision to grant or deny areas within a State or to all tribal the variance will be in writing and is (ii) The site where the inspection was leases, units, or communitized areas conducted; within the BLM’s discretion. The within that tribe’s lands, or to specific decision on a variance request is not (2) The monitoring method(s) used to fields or basins within the State or that determine the presence of leaks; subject to administrative appeals under tribe’s lands, if the BLM finds that the 43 CFR part 4. (3) A list of leak components on variance would meet the criteria in (c) A variance from any particular which leaks were found; paragraph (b) of this section. requirement of this rule does not (4) The date each leak was repaired; (2) A State or tribal variance request constitute a variance from provisions of and must: other regulations, laws, or orders. (5) The date and result of the follow- (i) Identify the provision(s) of this up inspection(s) required under subpart from which the State or tribe is (d) The BLM reserves the right to § 3179.304 paragraph (c) or (d) of this requesting the variance; rescind a variance or modify any subpart. (ii) Identify the State, local, or tribal condition of approval. (b) By March 31 each calendar year, regulation(s) or rule(s) that would be (e) If the BLM approves a variance the operator must provide to the BLM applied in place of the provision(s) of under this section, the State or tribe that an annual summary report on the this subpart; requested the variance must notify the previous year’s inspection activities that (iii) Explain why the variance is BLM in writing in a timely manner of includes: needed; and any substantive amendments, revisions, (1) The number of sites inspected; (iv) Demonstrate how the State, local, or other changes to the State, local or (2) The total number of leaks or tribal regulation(s) or rule(s) would tribal regulation(s) or rule(s) to be identified, categorized by the type of perform at least equally well in terms of applied under the variance. component; reducing waste of oil and gas, reducing (f) If the BLM approves a variance (3) The total number of leaks repaired; environmental impacts from venting under this section, the State, local or (4) The total number leaks that were and or flaring of gas, and ensuring the tribal regulation(s) or rule(s) to be not repaired as of December 31 of the safe and responsible production of oil applied under the variance can be previous calendar year due to good and gas, compared to the particular enforced by the BLM as if the cause and an estimated date of repair for provision(s) from which the State or regulation(s) or rule(s) were provided each leak. tribe is requesting the variance. for in this Subpart. The State, locality, (5) A certification by a responsible (b) The BLM State Director, after or tribes’ own authority to enforce its officer that the information in the report considering all relevant factors, may regulation(s) or rule(s) to be applied is true and accurate to the best of the approve the request for a variance, or under the variance would not be officer’s knowledge. approve it with one or more conditions, affected by the BLM’s approval of a (c) AVO checks are not required to be only if the BLM determines that the variance. documented unless they find a leak State, local or tribal regulation(s) or [FR Doc. 2016–27637 Filed 11–17–16; 8:45 am] requiring repair. rule(s) would perform at least equally BILLING CODE 4310–84–P

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