Analyzing the Costs and Benefits of Repealing BLM’s “Methane Rule”

WASHINGTON—Shortly after taking office, President Trump signed an executive order requiring agencies to review existing regulations and other policies that could burden the development of energy. Among the rules identified for review was an Obama administration Bureau of Land Management (BLM) regulation from 2016 aimed at reducing the waste of methane, a potent greenhouse gas, from oil and gas production on federal lands. In 2018, BLM released a proposed rule that, if passed, would effectively repeal the 2016 methane rule. In a new report by Resources for the Future (RFF), researchers carefully analyze the costs and benefits of repealing or modifying the methane waste prevention rule.

The report posted today is the first in a series of six RFF analyses of selected rules targeted by the Trump administration for possible repeal or modification. The report, The 2016 BLM Methane Waste Prevention Rule: Should It Stay or Should It Go?, was authored by RFF Senior Fellow Alan Krupnick and Research Assistant Isabel Echarte.

BLM’s new regulatory impact analysis (RIA) argues that repealing the rule would result in large net benefits, while the original 2016 RIA argued that implementing the rule would result in large net benefits. According to the authors, the large discrepancy results almost entirely from the Trump administration’s decision to use a domestic social cost of methane, which measures climate damages to the United States alone, as opposed to the global estimate previously used in federal analyses. The authors find that, when using the global social cost of methane, repealing the rule would result in net costs of $814 million to $1.2 billion over 10 years (in 2012$ and a 3 percent discount rate). When using the Trump administration’s domestic social cost, however, repealing the rule results in net benefits to society of $495 million to $860 million (in 2012$ at a 3 percent discount rate).

The authors note that “the Trump administration should take into account that its goal of reducing regulatory burdens has the potential to result in large net costs to society. Even if the administration believes that large net costs are unlikely, it should explicitly consider whether its goal—reducing compliance burdens for industry—warrants even the possibility of these large net costs.”

Read the full report: The 2016 BLM Methane Waste Prevention Rule: Should It Stay or Should It Go?

Other reports coming up in this series include:

• The Environmental Protection Agency’s (EPA’s) “Oil and Natural Gas Sector: Emissions Standards for New, Reconstructed, and Modified Sources New Source Performance Standards” rule,
• The Bureau of Safety and Environmental Enforcement’s (BSEE’s) “Oil and Gas and Sulfur Operations in the Outer Continental Shelf-Blowout Preventer Systems and Well Control Rule” rule,
• The Pipeline and Hazardous Materials Safety Administration’s (PHMSA’s) “Hazardous Materials: Enhanced Tank Car Standards and Operational Controls for High-Hazard Flammable Trains” rule,
• BSEE and the Bureau of Ocean Energy Management’s “Oil and Gas and Sulphur Operations on the Outer Continental Shelf—Requirements for Exploratory Drilling on the Arctic Outer Continental Shelf” rule, and
• PHMSA’s “Pipeline Safety: Integrity Management Program for Gas Distribution Pipelines” rule.