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Micah Chambers Special Assistant / Acting Director Office of Congressional & Legislative Affairs Office of the Secretary of the Interior

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Micah Chambers Special Assistant / Acting Director Office of Congressional & Legislative Affairs Office of the Secretary of the Interior From: Chambers, Micah To: Ryan Ullman Subject: BLM V/F Memo Date: Wednesday, April 12, 2017 12:02:34 PM Attachments: 4-6-17 VF CRA Briefing.pdf -- Micah Chambers Special Assistant / Acting Director Office of Congressional & Legislative Affairs Office of the Secretary of the Interior BLM Venting & Flaring Rule Summary of the Final Rule: The “Venting & Flaring Rule” (the Rule) is formally the Waste Prevention, Production Subject to Royalties, and Resource Conservation rulemaking that replaced the requirements related to venting, flaring, and royalty-free use of gas contained in the 1979 Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost (NTL-4A). Currently, only 12 percent of operators have reported flared gas from oil well production. The Rule is codified in 43 CFR subparts 3178 and 3179 and became effective on January 17, 2017. Statutory Authority and Regulatory History: The Mineral Leasing Act of 1920 (MLA) (30 U.S.C. §§ 188–287) subjects federal oil and gas leases to the condition that lessees will “use all reasonable precautions to prevent waste of oil and gas developed in the land . .” 30 U.S.C. § 225. Further, the MLA requires lessees to exercise “reasonable diligence, skill, and care” in their operations and requires lessees to observe “such rules for the health and safety of the miners and for the prevention of undue waste as may be prescribed by [the] Secretary [of the Interior].” 30 U.S.C. § 187. The Federal Oil and Gas Royalty Management Act (FOGRMA) makes lessees liable for royalty payments on oil or gas lost or wasted from a lease site when such loss or waste is due to negligence or the failure to comply with applicable rules or regulations. 30 U.S.C. § 1756. Both the MLA and FOGRMA authorize the Secretary of the Interior to prescribe rules and regulations necessary to carry out the purposes of those statutes. 30 U.S.C. § 189; 30 U.S.C. § 1751. Before promulgation of the Venting and Flaring Rule, the Bureau of Land Management (BLM) regulated the venting, flaring, and beneficial use of gas pursuant to NTL-4A, which placed limits on the venting and flaring of gas and defined when gas was “unavoidably lost” and therefore not subject to royalties. The BLM’s Venting & Flaring Rule included many regulatory changes, including emissions-focused requirements that did not appear in NTL-4A. Multiple states and industry groups believe that these new requirements are actually within the jurisdiction of the Clean Air Act (CAA) and therefore outside the Department’s authority to regulate. If the Rule is Not Repealed under the Congressional Review Act (CRA): Although the Venting & Flaring Rule went into effect in January 2017, many of the Rule’s more onerous requirements are not yet operative. Although operators are not yet obligated to comply with these requirements, they will need to expend time and resources to prepare for compliance dates. Presently, the Rule requires operators to submit a waste minimization plan with their applications for permits to drill (APDs), imposes restrictions on venting, and clarifies that when gas is “avoidably lost” and it is therefore subject to royalties. Operators must comply with the Rule’s flaring (or “gas capture”) requirements, equipment upgrade/replacement requirements, and leak detection and repair (LDAR) requirements beginning on January 17, 2018. The BLM expects industry’s annual compliance costs from 2017 to 2026 to be between $114 and $279 million, with first year compliance costs estimated to be $113 million ($84 million for LDAR alone). 1 The Rule will continue in effect unless the BLM rescinds or replaces the Rule through the rulemaking process outlined below, or the Rule is overturned in pending litigation. Any new rule that the BLM promulgates would likely be challenged in court with a minimum litigation cost of $500,000. If the new rulemaking is overturned in litigation, the Venting and Flaring Rule would come back into effect. If the Rule is Repealed under the CRA: If the Rule is repealed under the CRA, NTL-4A would come back into effect immediately. The BLM retains its existing authority under the MLA and FOGRMA to make effective updates to NTL-4A while ceding some of the more duplicative regulatory provisions to states/EPA under the CAA. The BLM could consider policy actions to curb waste and focus on revisions to NTL-4A to address the following: Encouraging beneficial use of oil or gas on lease Regulating flaring of unmarketable gas from oil wells Conserving unsold gas by reinjection Improving ROW timelines and removing obstacles to timely approval for pipeline infrastructure Recognizing existing State/tribal policy/rules, such as those in North Dakota, Wyoming, Utah, New Mexico, Colorado, and Montana If a court overturns any replacement or revision of NTL-4A, NTL-4A would come back into effect. Table: Rulemaking Schedule Activity Description Timing Advanced Notice of OPTIONAL. The BLM would solicit input from 1 month to publish Proposed Rulemaking the public on whether, and how, NTL-4A 2 months for public (ANPR) should be revised. comment Notice of Proposed The BLM would develop a NPR based on 3 months to draft NPR Rulemaking (NPR) previous rule experiences or comments 3 months for OMB review received from ANPR process. The Office of Management and Budget (OMB) needs to review and clear the proposal. NPR comment period The NPR is published in the Federal Register 2 months for notice-and-comment period. Comment review/ The BLM reviews the comments and revises 2 months review/drafting Drafting final rule the rule in light of those comments. The BLM 3 months OMB review sends the revised/final rule to OMB for review. Final rule is published The BLM publishes the final rule in the After publishing, 2 months Federal Register until effective Total time to publish 13 months (for NPR) 16 months (including ANPR) Total cost $1.2 – 2.1 million 2 From: ryanzinke <(b) (6) Sent: Friday, March 17, 2017 10:06 AM To: Heather Swift Subject: Brilliant Fred davis sends his compliments on the snow shovel piece. you are doing great work as always. we have get the boss included in the park piece somewhere. z Sent from my Verizon Wireless 4G LTE smartphone -------- Original message -------- From: Heather Swift <[email protected]> Date: 17/03/2017 05:15 (GMT-07:00) To: (b) (6) Subject: Fwd: U.S. Department of the Interior News Briefing for Friday, March 17, 2017 U.S. Department of the Interior News Briefing *Mobile version and searchable archives available here <http://interior.bulletinintelligence.com/?d=170317&auth=e71ils1bb2>.* *Please click here <http://interior.bulletinintelligence.com/subscribe> to subscribe.* [image: US Department of the Interior News Briefing] <http://interior.bulletinnews.com/?d=170317&auth=e71ils1bb2> DATE: FRIDAY, MARCH 17, 2017 7:00 AM EDT Today's Table of Contents DOI in the News <#SECTION_1> • Huffington Post: Secretary Zinke Confident Interior Can Maintain Mission In Face Of Budget Cuts. <#S1> • Raleigh (NC) News & Observer: BOEM Takes Bids On Development Rights Off North Carolina. <#S2> • E&E Daily: Secretaries Zinke, Perry Meet Wednesday To Discuss Range Of Issues. <#S3> • Public Radio International: Secretary Zinke Reiterates Commitment To Tribal Sovereignty In Meeting With Native American Leaders. <#S4> • Methow Valley (WA) News Online: Bill Reintroduced To Protect Methow Headwaters From Mining. <#S5> • Washington Times: Additional Coverage: Interior Approves Greens Hollow Coal Lease Sale. <#S6> • The Hill: Congress Criticized For Attacks On Public Lands. <#S7> America’s Great Outdoors <#SECTION_2> National Park Service <#SECTION_3> • Johnstown (PA) Tribune-Democrat: NPS Official To Present Plans For Pennsylvania’s National Sites. <#S8> 1 • Waynesville (NC) Smoky Mountain News: Legislation Filed To Recoup Money For Swain. <#S9> • Ellensburg (WA) Daily Record: North Cascades National Park Seeks Public Input On Plan To Relocate Grizzly Bears. <#S10> • Fox News: Additional Coverage: NPS Shuts Down Philly Historic Sites Amid Federal Hiring Freeze. <#S11> Fish and Wildlife Service <#SECTION_4> • The Guardian (UK): Scientists Decry Overturn Of Lead Ammo Ban. <#S12> • Lakeland (FL) Ledger: Environmental Groups File Lawsuit Over Effects Of Phosphate Mining In Central Florida. <#S13> • Ketchikan (AK) SitNews: Study Looks At Substance Harvest of Polar Bears Under Climate Change. <#S14> • CNN: Additional Coverage: Cheerios Offering Free Wildflower Seeds To Help Save Declining Bees. <#S15> • Daily Astorian (OR): Additional Coverage: Willapa Refuge Seeks Public Input On New Headquarter Plans. <#S16> Bureau of Land Management <#SECTION_5> • WDIO-TV Duluth (MN): Federal Agencies Hold Public Hearing On Mining Near Boundary Waters Canoe Area Wilderness. <#S17> • KSL-TV Salt Lake City: Bears Ears Designation Blocks Proposed ATV Trail In San Juan County. <#S18> • Santa Clarita Valley (CA) Signal: Bill To Stop Mining In Soledad Canyon Reintroduced. <#S19> Securing America’s Energy Future <#SECTION_6> Offshore Energy Development <#SECTION_7> • Bloomberg News: Eni Requests Extension Of Arctic Drilling Program. <#S20> • World Oil: BSEE’s Oil Spill Research Program Supports Testing Of New Oil Burning Technology. <#S21> Onshore Energy Development <#SECTION_8> • E&E Publishing: Environmentalists Seek To Move Litigation Forward On Fracking Rule. <#S22> • Bismarck (ND) Tribune: Oil Industry Welcomes Fracking Regulatory Rollbacks. <#S23> • Associated Press: North Dakota Considering Federal Government, ETP To Recoup Protest Costs. <#S24> • Harrisburg (PA) Patriot-News: Congress Urged Not To Repeal BLM’s Methane Waste Prevention Rule Under Congressional Review Act. <#S25> • The Hill: Support Urged To Keep Navajo Generating Station Open. <#S26> • Salt Lake (UT) Tribune: Editorial: Responsible Coal Mining Practices Necessary During Transition To Other Fuels. <#S27> Renewable Energy <#SECTION_9> • Associated Press: First US Offshore Wind Farm Performs “Superbly” During Blizzard. <#S28> Tackling America’s Water Challenges <#SECTION_10> • Washington Times: House Passes Fontenelle Expansion. <#S29> • Minneapolis Star Tribune: California Proposes $400 Million Plan To Slow Shrinkage Of Salton Sea.
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