Implement NTL-4A and 43 C.F.R. 3178 Regulations; The 43 C.F.R 3179 and 3162.3 -1(j) requirements of the 2016 Waste Prevention Regulations are Invalidated

United States Department of the Interior
BUREAU OF LAND MANAGEMENT
Grand Junction, Colorado 81506
https://www.blm.gov

October 22, 2020

In Reply Refer To:
3170 (310) P

EMS TRANSMISSION 10/23/2021
Information Bulletin No. 2021-003

To:                  All Field Office Officials

From:              Assistant Director, Energy, Minerals, and Realty Management

Subject:           Implement NTL-4A and 43 C.F.R. 3178 Regulations; The 43 C.F.R 3179 and 3162.3 -1(j) requirements of the 2016 Waste Prevention Regulations are Invalidated   

The purpose of this Information Bulletin is to update State and Field Offices on the status of the Bureau of Land Management’s (BLM) oil and gas regulations pertaining to the venting and flaring of gas.

As a result of recent litigation:

• The vast majority of the 2016 Waste Prevention Rule—including all of 43 C.F.R. subpart 3179 and the waste minimization plan requirement of 43 C.F.R. §3162.3-1(j)—has been vacated by a U.S. District Court.
• Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost (commonly referred to as NTL-4A, 44 Fed. Reg. 76600 (Dec. 27, 1979)) has been reinstated, insofar as it concerns venting, flaring, and avoidably/unavoidably lost production from BLM-managed leases.

• 43 C.F.R. subpart 3178 will continue to govern the royalty-free use of production.  The portions of NTL-4A pertaining to the use of oil or gas for “beneficial purposes” have not been reinstated since these portions were not challenged in the litigation. The amendment of 43 CFR § 3103.3-1, pertaining to lease royalty rates, remains unchanged and was also not challenged.

Background

On November 18, 2016, the BLM issued a final rule concerning, among other things, the waste of Federal and Indian gas through venting, flaring, and leaks (“2016 Waste Prevention Rule”).  81 Fed. Reg. 83,008 (Nov. 18, 2016).  The 2016 Waste Prevention Rule replaced NTL-4A (44 Fed. Reg. 76600 (Dec. 27, 1979)), which was the BLM’s prior regulation governing the royalty-free use of production and the surface waste of oil and gas.  The 2016 Waste Prevention Rule became effective on January 17, 2017.  However, due to a series of administrative and judicial interventions, the rule was never fully implemented.

Shortly after the 2016 Waste Prevention Rule was published, industry groups and certain states with significant BLM-administered oil and gas development filed petitions for judicial review of the 2016 Waste Prevention Rule in the U.S. District Court for the District of Wyoming.  Wyoming v. DOI, Case No. 2:16-cv-00285-SWS (D. Wyo.)  On April 4, 2018, the court stayed implementation of much of the rule pending finalization of the BLM’s voluntary revision of the rule.

On September 28, 2018, the BLM issued a final rule substantially revising the 2016 Rule (“2018 Revision Rule”).  83 Fed. Reg. 49,184 (Sept. 28, 2018).  In September 2018, a coalition of environmental groups and states filed lawsuits challenging the 2018 Revision Rule in the U.S. District Court for the Northern District of California.  California v. Bernhardt, Case No. 4:18-cv-05712-YGR (N.D. Cal.).  On July 15, 2020, the court ruled in favor of plaintiffs and ordered that the 2018 Revision Rule be vacated.  California v. Bernhardt, No. 4:18-cv-05712-YGR, 2020 WL 4001480 (N.D. Cal. July 15, 2020).

On July 21, 2020, the U.S. District Court for the District of Wyoming lifted the stay in the case challenging the 2016 Waste Prevention rule.  On October 8, 2020, the court found that the BLM exceeded its statutory authority and acted arbitrarily in promulgating the 2016 Waste Prevention Rule. The court ordered that the rule be vacated, except for certain severable provisions.  The severable provisions not vacated by the court’s order are: (1) 43 C.F.R. subpart 3178, pertaining to royalty-free use of production, and (2) the amendment of 43 C.F.R. §3103.3-1, pertaining to royalty rates on competitive leases.  The effect of the court’s order is to vacate all provisions of the Waste Prevention Rule pertaining to the loss of gas through venting, flaring, and leaks, and to reinstate NTL-4A with respect to venting, flaring, and avoidably/unavoidably lost determinations.

If you have any questions, please contact Rebecca Good, Fluid Minerals Division, at rgood@blm.gov or (307) 261-7633.

Signed by:                                                                   Authenticated by:
Nicholas E. Douglas                                                   Robert M. Williams
Assistant Director                                                       Division of Regulatory Affairs,(HQ-630)
Energy, Minerals, and Realty Management