North Dakota oil regulator calls for suspension of federal methane regulation • Daily Montanan

A new methane rule from the Bureau of Land Management threatens to violate thousands of existing agreements between the federal agency and landowners, Lynn Helms, director of the Department of Mineral Resources, testified in federal court Tuesday.

Helms testified on his last day before retirement that the new rule would cost North Dakota $2.1 million a year in lost tax revenue and would result in approximately 85 wells in the state being closed and abandoned.

The regulation is “in complete contradiction” to state regulations on gas flaring, Helms said.

In April, North Dakota, Wyoming, Texas and Montana filed suit against the Department of the Interior in the U.S. District Court for North Dakota, arguing that the new rule was a costly and unlawful regulatory burden. Utah later joined as a plaintiff.

In a hearing Tuesday before U.S. District Judge Dan Traynor, attorneys for the states argued that enforcement of the rule should be stayed pending further litigation.

The states claim that the BLM is trying to usurp regulatory authority over greenhouse gas flaring and air pollution, which is currently the responsibility of the Environmental Protection Agency and state governments.

The BLM’s new rule will require oil operators to take more steps to prevent natural gas waste, such as limiting venting and flaring and taking additional steps to detect and fix gas leaks.

During Tuesday’s hearing, federal government lawyers explained that the purpose of the new rule, among other things, is to standardize gas flaring practices across the country.

The regulations also expand operators’ obligations to pay royalties to the federal government and tribal mineral owners when they flare gas. The BLM estimates the new rule will generate more than $50 million per year in royalties.

The plaintiffs say the rule is a reincarnation of a 2016 waste management policy that was overturned four years ago by a U.S. district judge in Wyoming.

The judge concluded that the BLM had deviated from its established practices and exceeded its regulatory authority. In this case, the judge denied the plaintiffs’ request for a preliminary injunction.

The federal government argued Tuesday that the new rule is much more moderate than the 2016 rule. However, the text of the 2024 rule acknowledges that it was drafted to avoid some of the Wyoming court’s criticisms of the previous rule.

Both sides apparently agreed that the 2024 rule is expected to be significantly less costly for the states.

The Wyoming judge’s 2020 order said the BLM estimated the cost of the previous rule nationally at about $114 million to $279 million per year.

However, Traynor did not seem convinced that the rule for 2024 will be significantly different.

“How can this not be the same thing, just with a different paint job?” he said during the hearing.

Lawyers for the federal government disagreed, arguing that the rules were inconsistent with state regulations.

They also rejected allegations that the agency was retroactively changing contracts with mineral owners. They said existing agreements included provisions recognizing the BLM’s authority to prevent the loss of gas through flaring.

“The road traffic rules have not changed, only the signage has become more uniform,” said Erik Van de Stouwe, a lawyer for the federal government.

Van de Stouwe accused the states of wrongly portraying the regulation as a climate protection policy “based on secret motives”, when in reality it is about royalties and preventing unnecessary losses of natural gas.

He also noted that no operator had challenged the methane regulation.

Traynor asked Van de Stouwe if the BLM had consulted with the Mandan, Hidatsa and Arikara on policy, given the significant oil and gas production on the Fort Berthold Reservation. According to the state’s oil and gas division, there are more than 2,600 active oil and gas wells on the reservation, and another 2,000 could be drilled in the future.

“When something goes wrong, it hits the indigenous people the hardest,” Traynor said.

Van de Stouwe said he believes the BLM has reached out to the MHA Nation for feedback on the rule.

MHA Nation Chairman Mark Fox did not respond to a request for comment by the time of publication.

North Dakota produced an average of nearly 3.5 billion cubic feet of natural gas per day in April, according to preliminary state figures.

Ninety-five percent of this gas was captured, above the North Dakota Industrial Commission’s target of 91 percent.

This story was originally published by the North Dakota Monitor, part of States Newsroom, a nonprofit news network that includes the Daily Montanan and is a 501c(3) nonprofit organization supported by grants and a coalition of donors.