Oil and gas methane regulations upheld in federal court after New Mexico challenges repeal

A federal court ruled against plans to rescind regulations on methane emissions proposed by the U.S. Department of the Interior (DOI) in a lawsuit filed by New Mexico Attorney General Hector Balderas and California Attorney General Xavier Becerra.

The federal administration had called for the repeal of the 2016 Waste Prevention Rule which required oil and gas producers across the country to cut methane leaks and emissions at facilities.

About 35 percent of New Mexico’s land is federally administrated – the second-highest in the nation at 4 million acres – and produce up to 900 billion cubic feet of natural gas in 2018. 

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Balderas said stricter federal regulations were needed to prevent widespread pollution in New Mexico amid growth in the production of crude oil and natural gas, while also preserving revenue that could be lost when natural gas such as methane is released.

“Methane waste not only damages our environment but deprives New Mexico schools of millions of dollars in lost royalties they are owed from oil and gas production,” Balderas said. “My office will continue to protect these interests and hold this administration accountable for breaking the law.”

The decision issued on Wednesday by the U.S. District Court for the Northern District of California vacated the Rule’s repeal, meaning it would go into effect in 90 days.

More:New Mexico joins court filing to call for stricter federal methane regulations

The court deemed rescinding the rule violated the National Environmental Policy Act (NEPA) and contradicted the role of the Bureau of Land Management – an arm of the DOI – in protecting the environment from pollution caused by oil and gas development.

Under the Rule, new standards were applied to oil and gas operations to increase inspections and require additional technology to capture more gas, prevent venting of natural gas and phase out the use of flaring, a process where excess natural gas is burned off at oil and gas facilities.

It also established royalties that operators would pay on released gas, with half of the revenue going to the states that host the production.

More:Southeast New Mexico leaders: Delay oil and gas methane regulations amid COVID-19 downturn

Balderas estimated the Rule would cut methane emissions by 175,000 tons annually, which he argued was the equivalent of more than 3 million cars driving for one year.

It would also save 41 billion cubic feet of natural gas, he said, enough to serve 554,000 homes for a year, while also generating $14 million in additional royalties.

The recent ruling was the latest in a conflict between the two states and the federal administration, after the same federal court ruled in favor of Balderas and Becerra against the administration’s attempt to delay key provisions of the rule in 2017 and ordered the federal government to immediately implement the regulations.

More:Oil and gas methane study could provide data for New Mexico's regulatory efforts

In its call for the Rule’s repeal, the DOI referred to President Donald Trump’s executive order, Promoting Energy Independence and Economic Growth, which directed the BLM to review the rule and amend it if necessary.

“The BLM reviewed the 2016 rule and determined that it would have imposed costs exceeding its benefits,” read the 2018 publication of the BLM’s revision in the Federal Register. “Many of the provisions of the 2016 rule would have imposed compliance costs well in excess of the value of the resource (natural gas) that would have been conserved.”

Robert McEntyre, spokesman for the New Mexico Oil and Gas Association said the rule would enact undue burdens on the industry as it already worked to address emissions through “market-driven” strategies rather than relying on strict government regulations.

More:Oil and gas industry, activists debate methane emissions amid NM's rule-making process

“We’ve recommended common-sense strategies that would help us address emissions and allow the industry to grow,” McEntyre said. “The regulations in question do not do that. They are burdensome and they don’t allow flexibility.”

McEntyre said the industry itself, through collaboration among operators and oil and gas companies, should lead the development of policies and strategies to reduce emissions.

“It’s putting producers rather than regulators in the driver’s seat to determine how to achieve emission reductions,” he said. “One of the reasons New Mexico has grown since the last downturn is we’ve moved toward a more streamlined regulatory environment.

“There’s definitely a balance to be achieved. That rule doesn’t achieve that balance.”

More:New Mexico fines oil and gas company DCP Midstream $5.3M for air pollution violations

But environmentalist groups championed the decision to uphold the Waste Prevention Rule as a move to stop the federal government’s attempts to put industry profits ahead of protecting the environment.

“It’s despicable that the Trump administration has repeatedly tried to gut modest protections for our lungs and our climate to benefit a dirty, climate-destroying industry,” said Michael Saul, a senior attorney at the Center for Biological Diversity.

“We’re grateful that the courts continue to reject these unscientific, indefensible attempts to give fossil-fuel companies a license to pollute.”

More:Oil and gas pollution could get worse as regulations cut in response to COVID-19

In the ruling, the Court pointed to a lack of analysis from the BLM in both statutory and environmental impacts to justify the repeal.

“While deference exists as a concept, where the slate is not blank, as here, BLM could not act in a vacuum,” read the court’s decision.

“Rather, it was required to provide its reasoned explanation for its abrupt reversal as to the findings in the Waste Prevention Rule and to comply with its obligations under NEPA by considering the impacts of its rulemaking on the environment both thoroughly and thoughtfully.

“Where a court has found such widespread violations, the  court must fulfill its duties in striking the defectively promulgated rule.”

More oil and gas news:

• BLM: Federal oil and gas land sales continue despite COVID-19 health crisis
• New Mexico oil and gas market could take 3 more years to recover
• New Mexico congresspeople continue hunt for funding to plug abandoned oil and gas wells
• Busted: COVID-19 a second blow to Carlsbad as oil prices remain low
• Carlsbad locals take oversight of Permian Basin oil and gas pollution into their own hands

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.