Waste Prevention, Production Subject to Royalties, and Resource Conservation; Delay and Suspension of Certain Requirements, 46458-46475 [2017-21294]

Agencies

• DEPARTMENT OF THE INTERIOR
• Bureau of Land Management

[Federal Register Volume 82, Number 192 (Thursday, October 5, 2017)]
[Proposed Rules]
[Pages 46458-46475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21294]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 3160 and 3170

[17X.LLWO310000.L13100000.PP0000]
RIN 1004-AE54


Waste Prevention, Production Subject to Royalties, and Resource 
Conservation; Delay and Suspension of Certain Requirements

AGENCY: Bureau of Land Management, Interior.

ACTION: Proposed rule.

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SUMMARY: On November 18, 2016, the Bureau of Land Management (BLM) 
published in the Federal Register a final rule entitled, ``Waste 
Prevention, Production Subject to Royalties, and Resource 
Conservation'' (2016 final rule). The BLM is now proposing to 
temporarily suspend or delay certain requirements contained in the 2016 
final rule until January 17, 2019. The BLM is currently reviewing the 
2016 final rule and wants to avoid imposing temporary or permanent 
compliance costs on operators for requirements that may be rescinded or 
significantly revised in the near future.

DATES: Send your comments on this proposed rule to the BLM on or before 
November 6, 2017. As explained later, the BLM is also requesting that 
the Office of Management and Budget (OMB) extend the control number 
(1004-0211) for the 24 information collection activities that would 
continue in this proposed rule. If you wish to comment on this request, 
please note that such comments should be sent directly to the OMB, and 
that the OMB is required to make a decision concerning the collection 
of information contained in this proposed rule between 30 and 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to the OMB on the proposed information collection revisions 
is best assured of being given full consideration if the OMB receives 
it by November 6, 2017.

ADDRESSES: 
    Mail: U.S. Department of the Interior, Director (630), Bureau of 
Land Management, Mail Stop 2134LM, 1849 C St. NW., Washington, DC 
20240, Attention: 1004-AE52.
    Personal or messenger delivery: U.S. Department of the Interior, 
Bureau of Land Management, 20 M Street SE., Room 2134 LM, Washington, 
DC 20003, Attention: Regulatory Affairs.
    Federal eRulemaking Portal: https://www.regulations.gov. In the 
Searchbox, enter ``RIN 1004-AE54'' and click the ``Search'' button. 
Follow the instructions at this Web site. Comments on the information 
collection burdens: Fax: Office of Management and Budget (OMB), Office 
of Information and Regulatory Affairs, Desk Officer for the Department 
of the Interior, fax 202-395-5806.
    Electronic mail: OIRA_Submission@omb.eop.gov. Please indicate 
``Attention: OMB Control Number 1004-0211,'' regardless of the method 
used to submit comments on the information collection burdens. If you 
submit comments on the information collection burdens, you should 
provide the BLM with a copy, at one of the addresses shown earlier in 
this section, so that we can summarize all written comments and address 
them in the final rule preamble.

FOR FURTHER INFORMATION CONTACT: Catherine Cook, Acting Division Chief, 
Fluid Minerals Division, 202-912-7145, or ccook@blm.gov, for 
information regarding the substance of this proposed rule or 
information about the BLM's Fluid Minerals program. For questions 
relating to regulatory process issues, contact Faith Bremner, 
Regulatory Analyst, at 202-912-7441, or fbremner@blm.gov. Persons who 
use a telecommunications device for the deaf (TDD) may call the Federal 
Relay Service (FRS) at 1-800-877-8339, 24 hours a day, 7 days a week, 
to leave a message or question with the above individuals. You will 
receive a reply during normal business hours.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures
II. Background
III. Discussion of the Proposed Rule
IV. Procedural Matters

I. Public Comment Procedures

    If you wish to comment on this proposed rule, you may submit your 
comments by any of the methods described in the ADDRESSES section.
    Please make your comments on the proposed rule as specific as 
possible, confine them to issues pertinent to the proposed rule, and 
explain the reason for any changes you recommend. Where possible, your 
comments should reference the specific section or paragraph of the 
proposal that you are addressing. The BLM is not obligated to consider 
or include in the Administrative Record for the final rule comments 
that we receive after the close of the comment period (see DATES) or 
comments delivered to an address other than those listed above (see 
ADDRESSES).
    Comments, including names and street addresses of respondents, will 
be available for public review at the address listed under ``ADDRESSES: 
Personal or messenger delivery'' during regular hours (7:45 a.m. to 
4:15 p.m.), Monday through Friday, except holidays. Before including 
your address, telephone number, email address, or other personal 
identifying information in your comment, be advised that your entire 
comment--including your personal identifying information--may be made 
publicly available at any time. While you can ask us in your comment to 
withhold from public review your personal identifying information, we

[[Page 46459]]

cannot guarantee that we will be able to do so.

II. Background

    The BLM's onshore oil and gas management program is a major 
contributor to our nation's oil and gas production. The BLM manages 
more than 245 million acres of Federal land and 700 million acres of 
subsurface estate, making up nearly a third of the nation's mineral 
estate. In fiscal year (FY) 2016, sales volumes from Federal onshore 
production lands accounted for 9 percent of domestic natural gas 
production, and 5 percent of total U.S. oil production. Over $1.9 
billion in royalties were collected from all oil, natural gas, and 
natural gas liquids transactions in FY 2016 on Federal and Indian 
Lands. Royalties from Federal lands are shared with States. Royalties 
from Indian lands are collected for the benefit of the Indian owners.
    In response to oversight reviews and a recognition of increased 
flaring from Federal and Indian leases, the BLM developed a final rule 
entitled, ``Waste Prevention, Production Subject to Royalties, and 
Resource Conservation,'' which was published in the Federal Register on 
November 18, 2016. See 81 FR 83008 (Nov. 18, 2016). The rule replaced 
the BLM's existing policy at that time, Notice to Lessees and Operators 
of Onshore Federal and Indian Oil and Gas Leases, Royalty or 
Compensation for Oil and Gas Lost (NTL-4A). The 2016 final rule was 
intended to: Reduce waste of natural gas from venting, flaring, and 
leaks during oil and natural gas production activities on onshore 
Federal and Indian leases; clarify when produced gas lost through 
venting, flaring, or leaks is subject to royalties; and clarify when 
oil and gas production may be used royalty-free on-site. The 2016 final 
rule became effective on January 17, 2017. Many of the final rule's 
provisions are to be phased in over time, and are to become operative 
on January 17, 2018.
    Immediately after the 2016 final rule was issued, industry groups 
and States with significant BLM-managed Federal and Indian minerals 
filed petitions for judicial review. The petitioners in this litigation 
are the Western Energy Alliance (WEA), the Independent Petroleum 
Association of America, the State of Wyoming, the State of Montana, the 
State of North Dakota, and the State of Texas. This litigation has been 
consolidated and is now pending in the U.S. District Court for the 
District of Wyoming. Wyoming v. U.S. Dep't of the Interior, Case No. 
2:16-cv-00285-SWS (D. Wyo.); W. Energy All. v. Zinke, Case No. 16-cv-
280-SWS (D. Wyo.). Petitioners assert that the BLM was arbitrary and 
capricious in promulgating the 2016 final rule and that the rule 
exceeds the BLM's statutory authority. Shortly after filing petitions 
for judicial review, petitioners filed motions for a preliminary 
injunction, seeking a stay of the rule pending the outcome of the 
litigation. These motions were denied by the court on January 16, 2017, 
and the rule went into effect the following day. Although the court 
denied the motions for a preliminary injunction, it did express 
concerns that the BLM may have ``usurp[ed]'' the authority of the 
Environmental Protection Agency (EPA) and the States under the Clean 
Air Act, and questioned whether it was appropriate for the 2016 final 
rule to be justified based on its environmental and societal benefits, 
rather than on its resource conservation benefits alone. The next stage 
in the litigation will be the court's consideration of the merits of 
the petitioner's claims. It is possible that the court's decision on 
these claims could result in the 2016 final rule being overturned. On 
June 15, 2017, the Department of the Interior (Department) issued a 
Federal Register notice, pursuant to 5 U.S.C. 705, postponing the 
January 2018 compliance dates of the 2016 final rule pending judicial 
review. 82 FR 27430 (June 15, 2017).
    In the Regulatory Impact Analysis (RIA) for the 2016 final rule, 
the BLM estimated that the requirements of the 2016 final rule would 
impose compliance costs, not including potential cost savings for 
product recovery, of approximately $114 million to $279 million per 
year (2016 RIA at 4). The BLM had concluded that, while many of the 
requirements were consistent with EPA regulations for new sources, 
current industry practice, or similar to the requirements found in some 
existing State regulations, the 2016 final rule would be an 
economically significant rule with estimated costs and benefits 
exceeding $100 million per year (2016 RIA at 138). Comments received by 
many oil and gas companies and trade associations representing members 
of the oil and gas industry suggested that the BLM's proposed and final 
rules were unnecessary and would cause substantial harm to the 
industry. During the litigation following the issuance of the 2016 
final rule, the petitioners argued that the BLM underestimated the 
compliance costs of the final rule and that the costs would drive the 
industry away from Federal and Indian lands, thereby reducing royalties 
and harming State and tribal economies. The petitioners also argued 
that the final rule would cause marginal wells to be shut-in, thereby 
ceasing production and reducing economic benefits to local, State, 
tribal, and Federal governments. The BLM is concerned that the RIA for 
the 2016 final rule may have underestimated costs and overestimated 
benefits, and is therefore presently reviewing that analysis for 
potential inaccuracies. In any event, the RIA for the 2016 rule 
indicates that the rule poses a substantial burden on industry, 
particularly those requirements that are set to become effective on 
January 17, 2018.
    Since late January 2017, the President has issued several Executive 
Orders that necessitate a review of the 2016 final rule by the 
Department. On January 30, 2017, the President issued Executive Order 
13771, entitled, ``Reducing Regulation and Controlling Regulatory 
Costs,'' which requires Federal agencies to take proactive measures to 
reduce the costs associated with complying with Federal regulations. In 
addition, on March 28, 2017, the President issued Executive Order 
13783, entitled, ``Promoting Energy Independence and Economic Growth.'' 
Section 7(b) of Executive Order 13783 directs the Secretary of the 
Interior to review four specific rules, including the 2016 final rule, 
for consistency with the policy articulated in section 1 of the Order 
and, ``if appropriate,'' to publish proposed rules suspending, 
revising, or rescinding those rules. Among other things, section 1 of 
Executive Order 13783 states that ``[i]t is in the national interest to 
promote clean and safe development of our Nation's vast energy 
resources, while at the same time avoiding regulatory burdens that 
unnecessarily encumber energy production, constrain economic growth, 
and prevent job creation.''
    To implement Executive Order 13783, Secretary of the Interior Ryan 
Zinke issued Secretarial Order No. 3349, entitled, ``American Energy 
Independence'' on March 29, 2017, which, among other things, directs 
the BLM to review the 2016 final rule to determine whether it is fully 
consistent with the policy set forth in section 1 of Executive Order 
13783. The BLM conducted an initial review of the 2016 final rule and 
found that it appears to be inconsistent with the policy in section 1 
of Executive Order 13783. The BLM found that some provisions of the 
rule appear to add regulatory burdens that unnecessarily encumber 
energy production, constrain economic growth, and prevent job creation. 
Following up on its initial review, the BLM is currently reviewing the 
2016 final rule to develop an appropriate proposed

[[Page 46460]]

revision--to be promulgated through notice-and-comment rulemaking--that 
would propose to align the 2016 final rule with the policies set forth 
in section 1 of Executive Order 13783.

III. Discussion of the Proposed Rule

A. Summary and Request for Comment

    Today, the BLM is proposing to temporarily suspend or delay certain 
requirements contained in the 2016 final rule until January 17, 2019. 
The BLM is currently reviewing the 2016 final rule, as directed by the 
aforementioned Executive Orders and by Secretarial Order No. 3349. The 
BLM wants to avoid imposing temporary or permanent compliance costs on 
operators for requirements that might be rescinded or significantly 
revised in the near future. The BLM also wishes to avoid expending 
scarce agency resources on implementation activities (internal 
training, operator outreach/education, developing clarifying guidance, 
etc.) for such potentially transitory requirements.
    For certain requirements in the 2016 final rule that have yet to be 
implemented, this proposed rule would temporarily postpone the 
implementation dates until January 17, 2019, or for one year. For 
certain requirements in the 2016 final rule that are currently in 
effect, this proposed rule would temporarily suspend their 
effectiveness until January 17, 2019. A detailed discussion of the 
proposed suspensions and delays is provided below. The BLM has 
attempted to tailor the proposed rule so as to target the requirements 
of the 2016 final rule for which immediate regulatory relief appears to 
be particularly justified. Although the requirements of the 2016 final 
rule that would not be suspended under the proposed rule may ultimately 
be revised in the near future, the BLM is not proposing to suspend them 
because it does not, at this time, believe that suspension is 
necessary.
    The BLM promulgated the 2016 final rule, and now proposes to 
suspend and delay certain provisions of that rule, pursuant to its 
authority under the following statutes: The Mineral Leasing Act of 1920 
(30 U.S.C. 188-287), the Mineral Leasing Act for Acquired Lands (30 
U.S.C. 351-360), the Federal Oil and Gas Royalty Management Act (30 
U.S.C. 1701-1758), the Federal Land Policy and Management Act of 1976 
(43 U.S.C. 1701-1785), the Indian Mineral Leasing Act of 1938 (25 
U.S.C. 396a-g), the Indian Mineral Development Act of 1982 (25 U.S.C. 
2101-2108), and the Act of March 3, 1909 (25 U.S.C. 396). See 81 FR 
83008 and 83019-83021 (Nov. 18, 2016). These statutes authorize the 
Secretary of the Interior to promulgate such rules and regulations as 
may be necessary to carry out the statutes' various purposes.\1\ The 
Federal and Indian mineral leasing statutes share a common purpose of 
promoting the development of Federal and Indian oil and gas resources 
for the financial benefit of the public and Indian mineral owners.\2\ 
In order to ensure that the development of Federal and Indian oil and 
gas resources will not be unnecessarily hindered by regulatory burdens, 
the BLM is exercising its inherent authority \3\ to reconsider the 2016 
final rule. The suspension of requirements proposed today is a part of 
the BLM's reconsideration process.
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    \1\ 30 U.S.C. 189 (MLA); 30 U.S.C. 359 (MLAAL); 30 U.S.C. 
1751(a) (FOGRMA); 43 U.S.C. 1740 (FLPMA); 25 U.S.C. 396d (IMLA); 25 
U.S.C. 2107 (IMDA); 25 U.S.C. 396.
    \2\ See, e.g., California Co. v. Udall, 296 F.2d 384, 388 (D.C. 
Cir. 1961) (noting that the MLA was intended to promote wise 
development of . . . natural resources and to obtain for the public 
a reasonable financial return on assets that `belong' to the 
public.'').
    \3\ See Ivy Sports Med., LLC v. Burwell, 767 F.3d 81, 86 (D.C. 
Cir. 2014) (noting ``oft-repeated'' principle that the ``power to 
reconsider is inherent in the power to decide'').
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    The BLM seeks comment on this proposed rule. Issues of particular 
interest to the BLM include the necessity of the proposed suspensions 
and delays, the costs and benefits associated with the proposed 
suspensions and delays, and whether suspension of other requirements of 
the 2016 rule is warranted. The BLM is also interested in the 
appropriate length of the proposed suspension and delays and would like 
to know whether the period should be longer or shorter (e.g., six 
months, 18 months, or 2 years). The BLM has allowed a 30-day comment 
period for this proposed rule, which the BLM believes will afford the 
public a meaningful opportunity to comment. This proposed rule is a 
straightforward suspension and delay of regulatory provisions that were 
(in a proposed form) themselves recently the object of public comment 
procedures. Because this proposal is a narrow one, involving a simple 
and temporary suspension and delay of regulatory provisions with which 
interested parties are likely already familiar, the BLM believes that 
the 30-day comment period is appropriate.

B. Section-by-Section Discussion

43 CFR 3162.3-1(j)--Drilling Applications and Plans
    In the 2016 final rule, the BLM added a paragraph (j) to 43 CFR 
3162.3-1, which presently requires that when submitting an Application 
for Permit to Drill (APD) for an oil well, an operator must also submit 
a waste-minimization plan. Submission of the plan is required for 
approval of the APD, but the plan is not itself part of the APD, and 
the terms of the plan are not enforceable against the operator. The 
purpose of the waste-minimization plan is for the operator to set forth 
a strategy for how the operator will comply with the requirements of 43 
CFR subpart 3179 regarding the control of waste from venting and 
flaring from oil wells.
    The waste-minimization plan must include information regarding: The 
anticipated completion date(s) of the proposed oil well(s); a 
description of anticipated production from the well(s); certification 
that the operator has provided one or more midstream processing 
companies with information about the operator's production plans, 
including the anticipated completion dates and gas production rates of 
the proposed well or wells; and identification of a gas pipeline to 
which the operator plans to connect. Additional information is required 
when an operator cannot identify a gas pipeline with sufficient 
capacity to accommodate the anticipated production from the proposed 
well, including: A gas pipeline system location map showing the 
proposed well(s); the name and location of the gas processing plant(s) 
closest to the proposed well(s); all existing gas trunklines within 20 
miles of the well, and proposed routes for connection to a trunkline; 
the total volume of produced gas, and percentage of total produced gas, 
that the operator is currently venting or flaring from wells in the 
same field and any wells within a 20-mile radius of that field; and a 
detailed evaluation, including estimates of costs and returns, of 
potential on-site capture approaches.
    In the RIA for the 2016 final rule, the BLM estimated that the 
administrative burden of the waste-minimization plan requirements would 
be roughly $1 million per year for the industry and $180,000 per year 
for the BLM (2016 RIA at 96 and 100). The BLM is currently reviewing 
the requirements of Sec.  3162.3-1(j) in order to determine whether the 
burden it imposes on operators is necessary and whether this burden can 
be reduced. The BLM is also evaluating whether there are circumstances 
in which compliance with Sec.  3162.3-1(j) is infeasible because some 
of the required information is in the possession of a midstream company 
that is not in a position to share it with the operator. The BLM is 
considering narrowing the required information and

[[Page 46461]]

is also considering whether submission of a State waste-minimization 
plan, such as those required by New Mexico and North Dakota, would 
serve the purpose of Sec.  3162.3-1(j). While the BLM conducts this 
review and considers revising Sec.  3162.3-1, the BLM does not believe 
that generating and reviewing lengthy, unenforceable waste-minimization 
plans is a prudent use of operator or BLM resources. The BLM is 
therefore proposing to suspend the waste minimization plan requirement 
of Sec.  3162.3-1(j) until January 17, 2019.
    This proposed rule would revise Sec.  3162.3-1 by adding 
``Beginning January 17, 2019'' to the beginning of paragraph (j). The 
rest of this paragraph would remain the same as in the 2016 final rule 
and the introductory paragraph is repeated in the proposed rule text 
only for context.
43 CFR 3179.7--Gas Capture Requirement
    In the 2016 final rule, the BLM sought to constrain routine flaring 
through the imposition of a ``capture percentage'' requirement, 
requiring operators to capture a certain percentage of the gas they 
produce, after allowing for a certain volume of flaring per well. The 
capture-percentage requirement would become more stringent over a 
period of years, beginning with an 85 percent capture requirement 
(5,400 Mcf per well flaring allowable) in January 2018, and eventually 
reaching a 98 percent capture requirement (750 Mcf per well flaring 
allowable) in January 2026. An operator would choose whether to comply 
with the capture targets on each of the operator's leases, units or 
communitized areas, or on a county-wide or state-wide basis.
    In the RIA for the 2016 final rule, the BLM estimated that this 
requirement would impose costs of up to $162 million per year and 
generate cost savings from product recovery of up to $124 million per 
year, with both costs and cost savings increasing as the requirements 
increased in stringency (2016 RIA at 49).
    The BLM is currently considering whether the capture-percentage 
requirement of Sec.  3179.7 is unnecessarily complex and whether it 
will, in fact, be a significant improvement on the requirements of NTL-
4A. The BLM is considering whether the NTL-4A framework can be applied 
in a manner that addresses any inappropriate levels of flaring, and 
whether market-based incentives (i.e., royalty obligations) could 
improve capture in a more straightforward and efficient manner. 
Finally, the BLM is considering whether the need for a complex capture-
percentage requirement could be obviated through other BLM efforts to 
facilitate pipeline development. Rather than require operators to 
institute new processes and adjust their plans for development to meet 
a capture-percentage requirement that may be rescinded or revised as a 
result of the BLM's review, the BLM is proposing to delay for one year 
the compliance dates for Sec.  3179.7's capture requirements. This 
delay would allow the BLM sufficient time to conduct notice-and-comment 
rulemaking to determine whether the capture percentage requirements 
should be rescinded or revised and would prevent operators from being 
unnecessarily burdened by regulatory requirements that are subject to 
change.
    This proposed rule would revise the compliance dates in paragraphs 
(b), (b)(1) through (b)(4), and (c)(2)(i) through (vii) of Sec.  3179.7 
to begin January 17, 2019. Paragraphs (c), (c)(1), and the introductory 
text of (c)(2) would remain the same as in the 2016 final rule and are 
repeated in the proposed rule text only for context.
43 CFR 3179.9--Measuring and Reporting Volumes of Gas Vented and Flared 
From Wells
    Section 3179.9 requires operators to estimate (using estimation 
protocols) or measure (using a metering device) all flared and vented 
gas, whether royalty-bearing or royalty-free. This section further 
provides that specific requirements apply when the operator is flaring 
50 Mcf or more of gas per day from a high-pressure flare stack or 
manifold, based on estimated volumes from the previous 12 months, or 
based on estimated volumes over the life of the flare, whichever is 
shorter. Beginning on January 17, 2018, if this volume threshold is 
met, Sec.  3179.9(b) would require the operator to measure the volume 
of the flared gas, or calculate the volume of the flared gas based on 
the results of a regularly performed gas-to-oil ratio test, so as to 
allow the BLM to independently verify the volume, rate, and heating 
value of the flared gas.
    In the RIA for the 2016 final rule, the BLM estimated that this 
requirement would impose costs of about $4 million to $7 million per 
year (2016 RIA at 52).
    The BLM is presently reviewing Sec.  3179.9 to determine whether 
the additional accuracy associated with the measurement and estimation 
required by Sec.  3179.9(b) justifies the burden it would place on 
operators. The BLM is considering whether it would make more sense to 
allow the BLM to require measurement or estimation on a case-by-case 
basis, rather than imposing a blanket requirement on all operators. In 
order to avoid unnecessary compliance costs on the part of operators, 
the BLM is proposing to delay the compliance date in Sec.  3179.9 until 
January 17, 2019.
    This proposed rule would revise the compliance date in Sec.  
3179.9(b)(1). The rest of paragraph (b)(1) would remain the same as in 
the 2016 final rule and is repeated in the proposed rule text only for 
context.
43 CFR 3179.10--Determinations Regarding Royalty-Free Flaring
    Section 3179.10(a) provides that approvals to flare royalty free 
that were in effect as of January 17, 2017, will continue in effect 
until January 17, 2018. The purpose of this provision was to provide a 
transition period for operators who were operating under existing 
approvals for royalty-free flaring. Because the BLM's review of the 
2016 final rule could result in rescission or substantial revision of 
the rule, the BLM believes that terminating pre-existing flaring 
approvals in January 2018 would be premature and disruptive and would 
introduce needless regulatory uncertainty for operators with existing 
flaring approvals. The BLM is therefore proposing to extend the end of 
the transition period provided for in Sec.  3179.10(a) to January 17, 
2019.
    This proposed rule would revise the date in paragraph (a) and 
replace ``as of the effective date of this rule'' with ``as of January 
17, 2017,'' which is the effective date of the 2016 final rule, for 
clarity. This proposed rule would not otherwise revise paragraph (a), 
but the rest of the paragraph would remain the same as in the 2016 
final rule and is repeated in the proposed rule text only for context.
43 CFR 3179.101--Well Drilling
    Section 3179.101(a) requires that gas reaching the surface as a 
normal part of drilling operations be used or disposed of in one of 
four ways: (1) Captured and sold; (2) Directed to a flare pit or flare 
stack; (3) Used in the operations on the lease, unit, or communitized 
area; or (4) Injected. Section 3179.101(a) also specifies that gas may 
not be vented, except under the circumstances specified in Sec.  
3179.6(b) or when it is technically infeasible to use or dispose of the 
gas in one of the ways specified above. Section 3179.101(b) states that 
gas lost as a result of a loss of well control will be classified as 
avoidably lost if the BLM determines that the loss of well control was 
due to operator negligence.
    The BLM is currently reviewing Sec.  3179.101 to determine whether 
it is

[[Page 46462]]

necessary in light of current operator practices. The experience of BLM 
field office personnel indicates that operators would typically dispose 
of gas during well drilling consistent with Sec.  3179.101(a). The 
primary effect of Sec.  3179.101, therefore, may be to impose a 
regulatory constraint on operators in exceptional circumstances where 
the operator must make a case-specific judgment about how to safely and 
effectively dispose of the gas. The BLM is therefore proposing to 
suspend the effectiveness of Sec.  3179.101 until January 17, 2019, 
while the BLM completes its review of Sec.  3179.101 and decides 
whether to propose permanently revising or rescinding it through 
notice-and-comment rulemaking.
    This proposed rule would add a new paragraph (c) making it clear 
that the operator must comply with Sec.  3179.101 beginning January 17, 
2019.
43 CFR 3179.102--Well Completion and Related Operations
    Section 3179.102 addresses gas that reaches the surface during 
well-completion, post-completion, and fluid-recovery operations after a 
well has been hydraulically fractured or refractured. It requires the 
gas to be used or disposed of in one of four ways: (1) Captured and 
sold; (2) Directed to a flare pit or stack, subject to a volumetric 
limitation in Sec.  3179.103; (3) Used in the lease operations; or (4) 
Injected. Section 3179.102 specifies that gas may not be vented, except 
under the narrow circumstances specified in Sec.  3179.6(b) or when it 
is technically infeasible to use or dispose of the gas in one of the 
four ways specified above. Section 3179.102(b) provides that an 
operator will be deemed to be in compliance with its gas capture and 
disposition requirements if the operator is in compliance with the 
requirements for control of gas from well completions established under 
Environmental Protection Agency (EPA) regulations 40 CFR part 60, 
subparts OOOO or OOOOa regulations, or if the well is not a ``well 
affected facility'' under those regulations.
    The BLM is currently reviewing Sec.  3179.102 to determine whether 
it is necessary in light of current operator practices and the 
analogous EPA regulations in 40 CFR part 60, subparts OOOO and OOOOa. 
The experience of BLM field office personnel indicates that operators 
would typically dispose of gas during well completions and related 
operations consistent with Sec.  3179.102(a). The BLM also suspects 
that most of the well completions and related operations that would 
otherwise be covered by Sec.  3179.102 are actually exempted under 
Sec.  3179.102(b). Considering current industry practice and the 
overlap with EPA regulations, the primary effect of Sec.  3179.102 may 
be to generate confusion about regulatory compliance during well-
drilling and related operations. The BLM is therefore proposing to 
suspend the effectiveness of Sec.  3179.102 until January 17, 2019, 
while the BLM completes its review of Sec.  3179.102 and decides 
whether to permanently revise or rescind it through notice-and-comment 
rulemaking.
    This proposed rule would add a new paragraph (e) making it clear 
that operators must comply with Sec.  3179.102 beginning January 17, 
2019.
43 CFR 3179.201--Equipment Requirements for Pneumatic Controllers
    Section 3179.201 addresses pneumatic controllers that use natural 
gas produced from a Federal or Indian lease, or from a unit or 
communitized area that includes a Federal or Indian lease. Section 
3179.201 applies to such controllers if the controllers: (1) Have a 
continuous bleed rate greater than 6 standard cubic feet per hour (scf/
hour) (``high-bleed'' controllers); and (2) Are not covered by EPA 
regulations that prohibit the new use of high-bleed pneumatic 
controllers (40 CFR part 60, subparts OOOO or OOOOa), but would be 
subject to those regulations if the controllers were new, modified, or 
reconstructed sources. Section 3179.201(b) requires the applicable 
pneumatic controllers to be replaced with controllers (including, but 
not limited to, continuous or intermittent pneumatic controllers) 
having a bleed rate of no more than 6 scf/hour, subject to certain 
exceptions. Section 3179.201(d) requires that this replacement occur no 
later than January 17, 2018, or within 3 years from the effective date 
of the rule if the well or facility served by the controller has an 
estimated remaining productive life of 3 years or less.
    In the RIA for the 2016 final rule, the BLM estimated that this 
requirement would impose costs of about $2 million per year and 
generate cost savings from product recovery of $3 million to $4 million 
per year (2016 RIA at 56).
    The BLM is currently reviewing Sec.  3179.201 to determine whether 
it should be revised or rescinded. The BLM is considering whether Sec.  
3179.201 is necessary in light of the analogous EPA regulations and the 
fact that operators are likely to adopt more efficient equipment in 
cases where it makes economic sense for them to do so. The BLM does not 
believe that operators should be required to make equipment upgrades to 
comply with Sec.  3179.201 until the BLM has had an opportunity to 
review its requirements and revise them through notice-and-comment 
rulemaking. The BLM is therefore proposing to delay the compliance date 
stated in Sec.  3179.201 until January 17, 2019.
    This proposed rule would revise the first sentence of paragraph (d) 
by replacing ``no later than 1 year after the effective date of this 
section'' with ``by January 17, 2019.'' This proposed rule would also 
replace ``the effective date of this section'' with ``January 17, 
2017'' the two times that it appears in the second sentence of 
paragraph (d). This proposed rule would not otherwise revise paragraph 
(d), but the rest of the paragraph would remain the same as in the 2016 
final rule and is repeated in the proposed rule text only for context.
43 CFR 3179.202--Requirements for Pneumatic Diaphragm Pumps
    Section 3179.202 establishes requirements for operators with 
pneumatic diaphragm pumps that use natural gas produced from a Federal 
or Indian lease, or from a unit or communitized area that includes a 
Federal or Indian lease. It applies to such pumps if they are not 
covered under EPA regulations at 40 CFR part 60, subpart OOOOa, but 
would be subject to that subpart if they were a new, modified, or 
reconstructed source. For covered pneumatic pumps, Sec.  3179.202 
requires that the operator either replace the pump with a zero-
emissions pump or route the pump exhaust to processing equipment for 
capture and sale. Alternatively, an operator may route the exhaust to a 
flare or low-pressure combustion device if the operator makes a 
determination (and notifies the BLM through a Sundry Notice) that 
replacing the pneumatic diaphragm pump with a zero-emissions pump or 
capturing the pump exhaust is not viable because: (1) A pneumatic pump 
is necessary to perform the function required; and (2) Capturing the 
exhaust is technically infeasible or unduly costly. If an operator 
makes this determination and has no flare or low-pressure combustor on-
site, or routing to such a device would be technically infeasible, the 
operator is not required to route the exhaust to a flare or low-
pressure combustion device. Under Sec.  3179.202(h), an operator must 
replace its covered pneumatic diaphragm pump or route the exhaust gas 
to capture or flare beginning no later than January 17, 2018.
    In the RIA for the 2016 final rule, the BLM estimated that this 
requirement would impose costs of about $4 million per year and 
generate cost savings from

[[Page 46463]]

product recovery of $2 million to $3 million per year (2016 RIA at 61).
    The BLM is currently reviewing Sec.  3179.202 to determine whether 
it should be rescinded or revised. Analogous EPA regulations apply to 
new, modified, and reconstructed sources, therefore limiting the 
applicability of Sec.  3179.202. In addition, the BLM is concerned that 
requiring zero-emissions pumps may not conserve gas in some cases. The 
volume of royalty-free gas used to generate electricity to provide the 
power necessary to operate a zero-emission pump could exceed the volume 
of gas necessary to operate the pneumatic pump that the zero-emission 
pump would replace. The BLM does not believe that operators should be 
required to make equipment upgrades to comply with Sec.  3179.202 until 
the BLM has had an opportunity to review its requirements and revise 
them through notice-and-comment rulemaking. The BLM is therefore 
proposing to delay the compliance date stated in Sec.  3179.202 until 
January 17, 2019.
    This proposed rule would revise paragraph (h) by replacing ``no 
later than 1 year after the effective date of this section'' in the 
first sentence with ``by January 17, 2019'' and would also replace 
``the effective date of this section'' with ``January 17, 2017'' the 
two times that it appears later in the same sentence. This proposed 
rule would not otherwise revise paragraph (h); the rest of the 
paragraph would remain the same as in the 2016 final rule and is 
repeated in the proposed rule text only for context.
43 CFR 3179.203--Storage Vessels
    Section 3179.203 applies to crude oil, condensate, intermediate 
hydrocarbon liquid, or produced-water storage vessels that contain 
production from a Federal or Indian lease, or from a unit or 
communitized area that includes a Federal or Indian lease, and that are 
not subject to 40 CFR part 60, subparts OOOO or OOOOa, but would be if 
they were new, modified, or reconstructed sources. If such storage 
vessels have the potential for volatile organic compound (VOC) 
emissions equal to or greater than 6 tons per year (tpy), Sec.  
3179.203 requires operators to route all gas vapor from the vessels to 
a sales line. Alternatively, the operator may route the vapor to a 
combustion device if it determines that routing the vapor to a sales 
line is technically infeasible or unduly costly. The operator also may 
submit a Sundry Notice to the BLM that demonstrates that compliance 
with the above options would cause the operator to cease production and 
abandon significant recoverable oil reserves under the lease due to the 
cost of compliance. Pursuant to Sec.  3179.203(c), operators must meet 
these requirements for covered storage vessels by January 17, 2018 
(unless the operator will replace the storage vessel in order to 
comply, in which case it has a longer time to comply).
    In the RIA for the 2016 final rule, the BLM estimated that this 
requirement would impose costs of about $7 million to $8 million per 
year and generate cost savings from product recovery of up to $200,000 
per year (2016 RIA at 74).
    The BLM is currently reviewing Sec.  3179.203 to determine whether 
it should be rescinded or revised. The BLM is considering whether Sec.  
3179.203 is necessary in light of analogous EPA regulations and whether 
the costs associated with compliance are justified. The BLM does not 
believe that operators should be required to make upgrades to their 
storage vessels in order to comply with Sec.  3179.203 until the BLM 
has had an opportunity to review its requirements and revise them 
through notice-and-comment rulemaking. The BLM is therefore proposing 
to delay the January 17, 2018, compliance date in Sec.  3179.203 until 
January 17, 2019.
    This proposed rule would revise the first sentence of paragraph (b) 
by replacing ``Within 60 days after the effective date of this 
section'' with ``Beginning January 17, 2019'' and by adding ``after 
January 17, 201'' between the words ``vessel'' and ``the operator.'' 
This proposed rule would also revise the introductory text of paragraph 
(c) by replacing ``no later than one year after the effective date of 
this section'' with ``by January 17, 2019'' and by changing ``or three 
years if'' to ``or by January 17, 2020, if '' to account for removing 
the reference to ``the effective date of this section.'' This proposed 
rule would not otherwise revise paragraphs (b) and (c), and the rest of 
these paragraphs would remain the same as in the 2016 final rule and 
are repeated in the proposed rule text only for context.
43 CFR 3179.204--Downhole Well Maintenance and Liquids Unloading
    Section 3179.204 establishes requirements for venting and flaring 
during downhole well maintenance and liquids unloading. It requires the 
operator to use practices for such operations that minimize vented gas 
and the need for well venting, unless the practices are necessary for 
safety. Section 3179.204 also requires that for wells equipped with a 
plunger lift system or an automated well-control system, the operator 
must optimize the operation of the system to minimize gas losses. Under 
Sec.  3179.204, before an operator manually purges a well for the first 
time, the operator must document in a Sundry Notice that other methods 
for liquids unloading are technically infeasible or unduly costly. In 
addition, during any liquids unloading by manual well purging, the 
person conducting the well purging is required to be present on-site to 
minimize to the maximum extent practicable any venting to the 
atmosphere. This section also requires the operator to maintain records 
of the cause, date, time, duration and estimated volume of each venting 
event associated with manual well purging, and to make those records 
available to the BLM upon request. Additionally, operators are required 
to notify the BLM by Sundry Notice within 30 days after the following 
conditions are met: (1) The cumulative duration of manual well-purging 
events for a well exceeds 24 hours during any production month; or (2) 
The estimated volume of gas vented in the process of conducting liquids 
unloading by manual well purging for a well exceeds 75 Mcf during any 
production month. In the RIA for the 2016 final rule, the BLM estimated 
that these requirements would impose costs of about $6 million per year 
and generate cost savings from product recovery of about $5 million to 
$9 million per year (2016 RIA at 66). In addition, there would be 
estimated administrative burdens associated with these requirements of 
$323,000 per year for the industry and $37,000 per year for the BLM 
(2016 RIA at 98 and 101).
    The BLM is currently reviewing Sec.  3179.204 to determine whether 
it should be rescinded or revised. The BLM does not believe that 
operators should be burdened with the operational and reporting 
requirements imposed by Sec.  3179.204 until the BLM has had an 
opportunity to review them and, if appropriate, revise them through 
notice-and-comment rulemaking. In addition, as part of this review, the 
BLM would want to review how these data could be reported in a 
consistent manner among operators. The BLM is therefore proposing to 
suspend the effectiveness of Sec.  3179.204 until January 17, 2019.
    This proposed rule would add a new paragraph (i), making it clear 
that operators must comply with Sec.  3179.204 beginning January 17, 
2019.
43 CFR 3179.301--Operator Responsibility
    Sections 3179.301 through 3179.305 establish leak detection, 
repair, and reporting requirements for: (1) Sites and equipment used to 
produce, process, treat, store, or measure natural gas from

[[Page 46464]]

or allocable to a Federal or Indian lease, unit, or communitization 
agreement; and (2) Sites and equipment used to store, measure, or 
dispose of produced water on a Federal or Indian lease. Section 
3179.302 prescribes the instruments and methods that may be used for 
leak detection. Section 3179.303 prescribes the frequency for 
inspections and Sec.  3179.304 prescribes the time frames for repairing 
leaks found during inspections. Finally, Sec.  3179.305 requires 
operators to maintain records of their leak detection and repair 
activities and submit an annual report to the BLM. Pursuant to Sec.  
3179.301(f), operators must begin to comply with the leak detection and 
repair requirements of Sec. Sec.  3179.301 through 3179.305 before: (1) 
January 17, 2018, for sites in production prior to January 17, 2017; 
(2) 60 days after beginning production for sites that began production 
after January 17, 2017; and (3) 60 days after a site that was out of 
service is brought back into service and re-pressurized.
    In the RIA for the 2016 final rule, the BLM estimated that these 
requirements would impose costs of about $83 million to $84 million per 
year and generate cost savings from product recovery of about $12 
million to $21 million per year (2016 RIA at 91). In addition, there 
would be estimated administrative burdens associated with these 
requirements of $3.9 million per year for the industry and over $1 
million per year for the BLM (2016 RIA at 98 and 102).
    The BLM is currently reviewing Sec.  3179.301 through Sec.  
3179.305 to determine whether they should be revised or rescinded. The 
BLM is considering whether these requirements are necessary in light of 
comparable EPA and State leak detection and repair regulations. The BLM 
is considering whether the reporting burdens imposed by these sections 
are justified and whether the substantial compliance costs could be 
mitigated by allowing for less frequent and/or non-instrument-based 
inspections or by exempting wells that have low potential to leak 
natural gas. The BLM does not believe that operators should be burdened 
with the significant compliance costs imposed by these sections until 
the BLM has had an opportunity to review them and, if appropriate, 
revise them through notice-and-comment rulemaking. The BLM is therefore 
proposing to delay the effective dates for these sections until January 
17, 2019, by revising Sec.  3179.301(f).
    This proposed rule would revise paragraph (f)(1) by replacing 
``Within one year of January 17, 2017 for sites that have begun 
production prior to January 17, 2017;'' with ``By January 17, 2019, for 
all existing sites.'' This proposed rule would also revise paragraph 
(f)(2) by adding ``new'' between the words ``for'' and ``sites'' and by 
replacing the existing date with ``January 17, 2019.'' Finally, this 
proposed rule would revise paragraph (f)(3) by adding ``an existing'' 
between the words ``when'' and ``site'' and by adding ``after January 
17, 2019'' to the end of the sentence. This proposed rule would not 
otherwise revise paragraph (f), and the rest of the paragraph would 
remain the same as in the 2016 final rule and is repeated in the 
proposed rule text only for context.

C. Summary of Estimated Impacts

    The BLM reviewed the proposed rule and conducted an RIA and 
Environmental Assessment (EA) that examine the impacts of the proposed 
requirements. The following discussion is a summary of the proposed 
rule's economic impacts. The RIA and draft EA that we prepared have 
been posted in the docket for the proposed rule on the Federal 
eRulemaking Portal: https://www.regulations.gov. In the Searchbox, 
enter ``RIN 1004-AE54'' and click the ``Search'' button. Follow the 
instructions at this Web site.
    The suspension or delay in the implementation of certain 
requirements in the 2016 final rule would postpone the impacts 
estimated previously to the near-term future. That is to say, impacts 
that we previously estimated would occur in 2017 are now estimated to 
occur in 2018, impacts that we previously estimated would occur in 2018 
are now estimated to occur in 2019, and so on. In the RIA for this 
proposed rule, we track this shift in impacts over the 10-year period 
following the delay. A 10-year period of analysis was also used in the 
RIA prepared for the 2016 final rule. Except for some notable changes, 
the 2017 RIA uses the impacts estimated and underlying assumptions used 
by the BLM for the RIA prepared for the 2016 final rule, published in 
November 2016. The BLM's proposed rule would temporarily suspend or 
delay almost all of the requirements in the 2016 final rule that we 
estimated would pose a compliance burden to operators and generate 
benefits of gas savings or reductions in methane emissions.
Estimated Reductions in Compliance Costs (Excluding Cost Savings)
    First, we examine the reductions in compliance costs excluding the 
savings that would have been realized from product recovery. The BLM's 
proposed rule would temporarily suspend or delay almost all of the 
requirements in the 2016 final rule that we estimated would pose a 
compliance burden to operators. We estimate that suspending or delaying 
the targeted requirements of the 2016 final rule until January 17, 
2019, would substantially reduce compliance costs during the period of 
the suspension or delay (2017 RIA at 29).
    Impacts in year 1:
     A reduction in compliance costs of $114 million (using a 7 
percent discount rate to annualize capital costs) or $110 million 
(using a 3 percent discount rate to annualize capital costs).
    Impacts from 2017-2027:
     Total reduction in compliance costs ranging from $73 
million to $91 million (net present value (NPV) using a 7 percent 
discount rate) or $40 million to $50 million (NPV using a 3 percent 
discount rate).
Estimated Reduction in Benefits
    The BLM's proposed rule would temporarily suspend or delay almost 
all of the requirements in the 2016 final rule that we estimated would 
generate benefits of gas savings or reductions in methane emissions. We 
estimate that the proposed rule would result in forgone benefits, since 
estimated cost savings that would have come from product recovery would 
be deferred and the emissions reductions would also be deferred (2017 
RIA at 32).
    Impacts in year 1:
     A reduction in cost savings of $19 million.
    Impacts from 2017-2027:
     Total reduction in cost savings of $36 million (NPV using 
a 7 percent discount rate) or $21 million (NPV using a 3 percent 
discount rate).
    We estimate that the proposed rule would also result in additional 
methane and VOC emissions of 175,000 and 250,000 tons, respectively, in 
year 1 (2017 RIA at 32).
    These estimated emissions are measured as the change from the 
baseline environment, which is the 2016 final rule's requirements being 
implemented per the 2016 final rule schedule. Since the proposed rule 
would delay the implementation of those requirements, the estimated 
benefits of the 2016 final rule would be forgone during the temporary 
suspension or delay.
    The BLM used interim domestic values of the carbon dioxide and 
methane to value the forgone emissions reductions resulting from the 
delay (see the discussion of social cost of greenhouse gases in the 
2017 RIA at Section 3.2 and Appendix).

[[Page 46465]]

    Impact in Year 1:
     Forgone methane emissions reductions valued at $8 million 
(using interim domestic SC-CH4 based on a 7 percent discount 
rate) or $26 million (using interim domestic SC-CH4 based on 
a 3 percent discount rate).
    Impacts from 2017-2027:
     Forgone methane emissions reductions valued at $1.9 
million (NPV and interim domestic SC-CH4 using a 7 percent 
discount rate); or
     Forgone methane emissions reductions valued at $300,000 
(NPV and interim domestic SC-CH4 using a 3 percent discount 
rate).
Estimated Net Benefits
    The proposed rule is estimated to result in positive net benefits, 
meaning that the reduction of compliance costs would exceed the 
reduction in cost savings and the cost of emissions additions (2017 RIA 
at 36).
    Impact in year 1:
     Net benefits of $83-86 million (using interim domestic SC-
CH4 based on a 7 percent discount rate) or $64-68 million 
(using interim domestic SC-CH4 based on a 3 percent discount 
rate).
    Impacts from 2017-2027:
     Total net benefits ranging from $35-52 million (NPV and 
interim domestic SC-CH4 using a 7 percent discount rate); or
     Total net benefits ranging from $19-29 million (NPV and 
interim domestic SC-CH4 using a 3 percent discount rate).
Energy Systems
    The proposed rule is expected to influence the production of 
natural gas, natural gas liquids, and crude oil from onshore Federal 
and Indian oil and gas leases, particularly in the short-term. However, 
since the relative changes in production are expected to be small, we 
do not expect that the proposed rule would significantly impact the 
price, supply, or distribution of energy.
    We estimate the following incremental changes in production, noting 
the representative share of the total U.S. production in 2015 for 
context (2017 RIA at 41).
    Annual Impacts:
     A decrease in natural gas production of 9.0 billion cubic 
feet (Bcf) in year 1 (0.03 percent of the total U.S. production).
     An increase in crude oil production of 91,000 barrels in 
year 2 (0.003 percent of the total U.S. production). There is no 
estimated change in crude oil production in year 1.
Royalty Impacts
    In the short-term, the rule is expected to decrease natural gas 
production from Federal and Indian leases, and likewise, is expected to 
reduce annual royalties to the Federal Government, tribal governments, 
States, and private landowners. From 2017-2027, however, we expect a 
small increase in total royalties, likely due to production slightly 
shifting into the future where commodity prices are expected to be 
higher.
    Royalty payments are recurring income to Federal or tribal 
governments and costs to the operator or lessee. As such, they are 
transfer payments that do not affect the total resources available to 
society. An important but sometimes difficult problem in cost 
estimation is to distinguish between real costs and transfer payments. 
While transfers should not be included in the economic analysis 
estimates of the benefits and costs of a regulation, they may be 
important for describing the distributional effects of a regulation.
    We estimate a reduction in royalties of $2.6 million in year 1 
(2017 RIA at 43). This amount represents about 0.2 percent of the total 
royalties received from oil and gas production on Federal lands in FY 
2016. However, from 2017-2027, we estimate an increase in total 
royalties of $1.26 million (NPV using a 7 percent discount rate) or 
$380,000 (NPV using a 3 percent discount rate).
Consideration of Alternative Approaches
    In developing this proposed rule, the BLM considered alternative 
timeframes for which it could suspend or delay the requirements (e.g., 
6 months and 2 years). Ultimately, the BLM decided to propose a 
suspension or delay for one year, which it believes to be the minimum 
length of time practicable within which to review the 2016 final rule 
and complete a notice-and-comment rulemaking to revise that regulation. 
We note that, based on the progress of the review during this 
rulemaking process, the BLM may revise the length of the suspension or 
delay for the final rule.
    A shorter suspension of delay of the same 2016 final rule 
requirements would result in a smaller reduction in compliance costs, 
smaller reduction in cost savings, and a smaller amount of forgone 
emissions reductions, relative to the proposal (2017 RIA at 49-50). 
Meanwhile, a longer suspension or delay of the same 2016 final rule 
requirements would result in a larger reduction in compliance costs, 
larger reduction in cost savings, and larger amount of forgone 
emissions reductions, relative to the proposal (2017 RIA at 50).
Employment Impacts
    The proposed rule would temporarily suspend or delay certain 
requirements of the BLM's 2016 final rule on waste prevention and is a 
temporary deregulatory action. As such, we estimate that it would 
result in a reduction of compliance costs for operators of oil and gas 
leases on Federal and Indian lands. Therefore, it is likely that the 
impact, if any, on the employment would be positive.
    In the RIA for the 2016 final rule, the BLM concluded that the 
requirements were not expected to impact the employment within the oil 
and gas extraction, drilling oil and gas wells, and support activities 
industries, in any material way. This determination was based on 
several reasons. First, the estimated incremental gas production 
represented only a small fraction of the U.S. natural gas production 
volumes. Second, the estimated compliance costs represented only a 
small fraction of the annual net incomes of companies likely to be 
impacted. Third, for those operations that would have been impacted to 
the extent that the compliance costs would force the operator to shut 
in production, the 2016 final rule had provisions that would exempt 
these operations from compliance. Based on these factors, the BLM 
determined that the 2016 final rule would not alter the investment or 
employment decisions of firms or significantly adversely impact 
employment. The RIA also noted that the requirements would require the 
one-time installation or replacement of equipment and the ongoing 
implementation of a leak detection and repair program, both of which 
would require labor to comply.
    We do not believe that the proposed rule would substantially alter 
the investment or employment decisions of firms for two reasons. First, 
the RIA for the 2016 final rule determined that that rule would not 
substantially alter the investment or employment decisions of firms, 
and so therefore delaying the 2016 final rule would likewise not be 
expected to impact those decisions. We also recognize that while there 
might be a small positive impact on investment and employment due to 
the reduction in compliance burdens, the magnitude of the reductions 
are relatively small.
Small Business Impacts
    The BLM reviewed the Small Business Administration (SBA) size 
standards for small businesses and the number of entities fitting those 
size standards as reported by the U.S. Census Bureau. We conclude that 
small

[[Page 46466]]

entities represent the overwhelming majority of entities operating in 
the onshore crude oil and natural gas extraction industry and, 
therefore, the proposed rule would impact a significant number of small 
entities.
    To examine the economic impact of the rule on small entities, the 
BLM performed a screening analysis on a sample of potentially affected 
small entities, comparing the reduction of compliance costs to entity 
profit margins.
    The BLM identified up to 1,828 entities that operate on Federal and 
Indian leases and recognizes that the overwhelming majority of these 
entities are small business, as defined by the SBA. We estimated the 
potential reduction in compliance costs to be about $60,000 per entity 
during the initial year when the requirements would be suspended or 
delayed. This represents the average maximum amount by which the 
operators would be positively impacted by the proposed rule.
    We used existing BLM information and research concerning firms that 
have recently completed Federal and Indian wells and the financial and 
employment information on a sample of these firms, as available in 
company annual report filings with the Securities and Exchange 
Commission (SEC). From the original list of companies, we identified 55 
company filings. Of those companies, 33 were small businesses.
    From data in the companies' 10-K filings to the SEC, the BLM was 
able to calculate the companies' profit margins for the years 2012, 
2013, and 2014. We then calculated a profit margin figure for each 
company when subject to the average annual reduction in compliance 
costs associated with this proposed rule. For these 26 small companies, 
the estimated per-entity reduction in compliance costs would result in 
an average increase in profit margin of 0.17 percentage points (based 
on the 2014 company data) (2017 RIA at 46).
Impacts Associated With Oil and Gas Operations on Tribal Lands
    The proposed rule would apply to oil and gas operations on both 
Federal and Indian leases. In the RIA, the BLM estimates the impacts 
associated with operations on Indian leases, as well as royalty 
implications for tribal governments. We estimate these impacts by 
scaling down the total impacts by the share of oil wells on Indian 
lands and the share of gas wells on Indian Lands. Please reference the 
RIA at section 4.4.5 for a full explanation about the estimate impacts.

IV. Procedural Matters

Regulatory Planning and Review (Executive Orders 12866 and 13563)

    Executive Order 12866 provides that the Office of Information and 
Regulatory Affairs within the Office of Management and Budget (OMB) 
will review all significant rules.
    Executive Order 13563 reaffirms the principles of Executive Order 
12866 while calling for improvements in the Nation's regulatory system 
to promote predictability, to reduce uncertainty, and to use the best, 
most innovative, and least burdensome tools for achieving regulatory 
ends. The Executive Order directs agencies to consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public where these approaches are relevant, feasible, 
and consistent with regulatory objectives. Executive Order 13563 
emphasizes further that regulations must be based on the best available 
science and that the rulemaking process must allow for public 
participation and an open exchange of ideas.
    This proposed rule would temporarily suspend or delay portions of 
the BLM's 2016 final rule while the BLM reviews those requirements. We 
have developed this proposed rule in a manner consistent with the 
requirements in Executive Order 12866 and Executive Order 13563.
    After reviewing the requirements of the proposed rule, the OMB has 
determined that it is an economically significant action according to 
the criteria of Executive Order 12866. The BLM reviewed the 
requirements of the proposed rule and determined that it will not 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. For more detailed information, see the RIA prepared for 
this proposed rule. The RIA has been posted in the docket for the 
proposed rule on the Federal eRulemaking Portal: https://www.regulations.gov. In the Searchbox, enter ``RIN 1004-AE54'' and 
click the ``Search'' button. Follow the instructions at this Web site.

Regulatory Flexibility Act

    This proposed rule would not have a significant economic effect on 
a substantial number of small entities under the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.) The Regulatory Flexibility Act (RFA) 
generally requires that Federal agencies prepare a regulatory 
flexibility analysis for rules subject to the notice-and-comment 
rulemaking requirements under the Administrative Procedure Act (5 
U.S.C. 500 et seq.), if the rule would have a significant economic 
impact, either detrimental or beneficial, on a substantial number of 
small entities. See 5 U.S.C. 601--612. Congress enacted the RFA to 
ensure that government regulations do not unnecessarily or 
disproportionately burden small entities. Small entities include small 
businesses, small governmental jurisdictions, and small not-for-profit 
enterprises.
    The BLM reviewed the SBA size standards for small businesses and 
the number of entities fitting those size standards as reported by the 
U.S. Census Bureau in the Economic Census. The BLM concludes that the 
vast majority of entities operating in the relevant sectors are small 
businesses as defined by the SBA. As such, the proposed rule would 
likely affect a substantial number of small entities.
    However, the BLM believes that the proposed rule would not have a 
significant economic impact on a substantial number of small entities. 
Although the rule would affect a substantial number of small entities, 
the BLM does not believe that these effects would be economically 
significant. The proposed rule would temporarily suspend or delay 
certain requirements placed on operators by the 2016 final rule. 
Operators would not have to undertake the associated compliance 
activities, e