Judge Considers Restoring Rolled-Back Emissions Rule

SAN FRANCISCO (CN) – A federal judge suggested Monday that the Trump administration’s Interior Department unlawfully rolled back an emissions rule to benefit oil and gas companies, but she questioned whether restoring the rule might unduly burden the industry.

During a summary judgment hearing Monday, U.S. Magistrate Judge Elizabeth Laporte said the department failed to offer sound reasoning for delaying a rule previously found to provide a net benefit by reducing leaks and emissions from oil and gas wells on federal land.

When the new rule was delayed on June 15 without notice or an opportunity for public comment, the Interior Department cited pending litigation and the “significant costs” of implementation as justification. But a previous impact study found the benefits outweighed the costs. Laporte said the agency “didn’t engage in any new analysis” and focused solely on the rule’s costs without considering the benefits.

“You can’t ignore one side of the story,” Laporte said. “You can’t close your eyes and just look at one side of the scale.”

The judge also wrestled with whether to reinstate the rule, given that the Interior Department plans to pass more rules aimed at revising or rescinding the Obama-era regulation in the coming weeks.

Laporte said she doesn’t want oil and gas companies to feel trapped in a game of “ping pong” with regulations being instated, suspended, restored and revoked.

But opponents argue failing to restore the rule could “embolden” federal agencies to adopt the same unlawful strategy for rolling back regulations in the future.

“After an agency goes through a full rulemaking process, that rule is effective and companies must comply with it until it is duly rescinded,” said attorney Susannah Weaver, representing the Sierra Club and 16 other groups. “Here, we have the Bureau of Land Management trying to shortcut that process and cause disruptive consequences and use that as justification to deny a vacatur.”

California, New Mexico, and a coalition of conservation and tribal groups filed separate lawsuits against the Bureau of Land Management, an Interior Department division, in July. The plaintiffs argue the bureau can’t postpone a rule that already took effect on Jan. 17, before the Trump administration took control of the White House.

The waste prevention rule would require oil and gas well operators on federal land to upgrade equipment, start leak detection and repair programs, and submit to semiannual inspections. The rule also prohibits the release of methane gas, except under special conditions, and changes the definition of “unavoidable losses” so states can get an estimated $14 million more in annual royalties for avoidable losses of natural gas.

The rule was expected to stop 41 billion cubic feet of natural gas from escaping into the air and eliminate up to 180,000 tons of methane emissions and up to 267,000 tons of other air pollutants each year, according to the Interior Department.

The bureau says it delayed the rule pending the outcome of a lawsuit in federal court in Wyoming, where the rule was challenged by four states – Montana, North Dakota, Texas and Wyoming – and two industry groups. The Administrative Procedure Act authorizes agencies to postpone the effective date of an action “pending judicial review” when it finds “that justice so requires” it.

But California, New Mexico and the conservation groups say to meet the “justice so requires” standard,  agencies must consider the same factors required for a preliminary injunction – denied in the Wyoming case last January – or, at a bare minimum, look at both sides of the issue.

Justice Department attorney Clare Boronow countered the “justice so requires” standard merely mandates an agency provide a rational and reasonable basis for issuing a delay. She said the compliance date for the new rule wouldn’t start until January 2018, and an agency’s authority to postpone a rule’s effective date pending judicial review includes the authority to postpone compliance dates.

Boronow said reinstating the challenged rule would be “extremely disruptive” for oil and gas well operators, requiring them to spend upwards of $114 million to comply with a regulation that may soon be revised or rescinded.

Appearing by telephone representing the intervening Western Energy Alliance and Independent Petroleum Association, attorney Eric Waeckerlin said most oil and gas well operators would have had to start working on their leak detection and repair programs months ago to be in compliance by January 2018.

When Laporte asked why those operators didn’t start coming into compliance during the five months before the rule was delayed in June, Waeckerlin replied many were preparing for it but that “it will take time to get up and running again.”

Boronow told the judge the agency is in the process of issuing two new rules – one to officially postpone the waste prevention rule and another to suspend and revise the rule. She said the proposed postponement rule would be published in the coming weeks, with a 30-day public comment period to follow.

“Isn’t that the procedure that should have been done in the first place?” Laporte asked. “That flies in the face of all law.”

After nearly two hours of debate, Laporte took the arguments under submission.

Last month, Laporte ruled in a similar case that the Interior Department wrongly postponed a rule that would have increased state royalties for the extraction of oil, gas and coal on federal lands. But she refused to restore the rule, finding it would be “unduly disruptive” for the industry because the regulation was set to be rescinded within one week.

 

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