The release of the Bureau of Land Management’s waste prevention rule, also known as the BLM venting and flaring rule, is welcome news for the future of energy development and environmental protection. Oil-producing states’ economies are also set to benefit.
Despite this, some members of Congress were quick to bash the new rule. Sen. Tom Udall, D-N.M., a vocal critic of the revision, said it would mean that “states like New Mexico and responsible natural gas producers must step up and act to stop methane emissions on their own.”
Actually, that’s a good thing. The administration’s methane rule is more flexible, letting individual states' regulators, not federal bureaucrats in Washington, determine the best methods for regulating emissions.
Because the Department of the Interior has limited authority to regulate air quality, and because oil and natural gas venting and flaring is already regulated at the state level and through the EPA, the Trump administration's revision represents common sense. In contrast, the Obama-era version of the rule was rushed, duplicative, and created using flawed economic data.
This new ruling will honor the efforts of oil and natural gas companies to protect public lands and the environment. It will also provide a path forward that supports energy development, environmental protection, and economic growth.
Unfortunately, these realities are still lost on politicians like Udall. He claimed that the Obama rule would have had “no negative effect on job creation or on the booming U.S. oil and gas production on federal lands.” Considering Sen. Udall represents a state whose economy and public school system rely heavily on a thriving oil and gas industry, his claims require correction.
For starters, the latest data from the EPA show that methane emissions from venting and flaring have not only declined significantly in recent years, but are lower than previously thought. That's an indicator of industry’s existing and ongoing commitment to air quality.
The regulation of air quality is also the jurisdiction of the EPA, not the BLM. The BLM does not have any legal authority to regulate air quality. Yet the Obama administration sold its previous version of this BLM rule as an effort to improve air quality.
The BLM does have the authority to regulate waste under the Mineral Leasing Act. However, as Udall is surely aware, New Mexico and the seven other states that are responsible for 99 percent of the oil produced on federal lands already have their own rules regulating venting and flaring on the books. In fact, the Trump administration’s more flexible revised rule gives states, including New Mexico, the power to implement something like the Obama version if they so choose.
Udall’s comments also fail to recognize the damaging economics of this previous rule for an industry that provides $11.3 billion to the New Mexico economy.
Udall claims that “BLM’s own analysis found that scrapping the methane rule would lead to more than $1 billion in wasted natural gas and pollution. This wasteful decision will hit New Mexico the hardest, where royalty resources are sorely needed.” But he fails to mention that only by including its deeply flawed and inappropriate “social cost of methane” estimate was the Obama administration able to claim that the benefits of its version of the venting and flaring rule outweighed its projected costs.
Excluding the “social cost of methane,” the Obama rule’s net costs came to $259 million. Based on the Obama administration’s own math, its rule would have no doubt been devastating for the smaller operators who are prevalent on federal lands. Considering that 73 percent of federal onshore wells are marginal producers, it is no surprise that a recent analysis by consulting firm Environmental Resources Management found that 40 percent of wells on federal lands could be shut in permanently because they would become uneconomical under the Obama version of the rule. In a state such as New Mexico, which relies heavily on revenues generated by oil production, such an impact would be devastating.
Above all else, the Trump administration’s actions were driven by the law. A regulatory impact analysis is required to determine if costs of proposed federal regulations are excessive, including loss of employment. If costs are found to be excessive, alternatives are to be sought. The Obama administration refused to abide by this law in its haste to rush its BLM rule out the door shortly before the Trump administration took over. But after estimating the Obama version of the BLM rule would have cost $1.3 to 1.6 billion over 10 years, the Trump administration appropriately sought an alternative.
Sen. Udall is right about one thing: “royalty resources are sorely needed” in New Mexico, and they’ve resulted in a $1.2 billion budget surplus in the coming biennium. The Obama administration’s version of the BLM venting and flaring rule would have driven down those revenues and hurt New Mexico’s economy and the variety of services provided to residents of the state.