On November 30, 2022, the Department of the Interior’s Bureau of Land Management (“BLM”) published a proposed rule aimed at reducing “the waste of natural gas from venting, flaring, and leaks during oil and gas production activities on Federal and Indian leases.” The proposed rule states: “Section 50263 of the IRA provides that, for leases issued after the date of enactment of the Act, royalties are owed on all gas produced from Federal land, including gas that is consumed or lost by venting, flaring, or negligent releases through any equipment during upstream operations. Section 50263 further provides three exceptions to the general obligation to pay royalties on produced gas, namely: (1) gas that is vented or flared for not longer than 48 hours in an emergency situation that poses a danger to human health, safety, or the environment; (2) gas used or consumed within a lease, unit, or communitized area for the benefit of the lease, unit, or communitized area; and (3) gas that is unavoidably lost.”
The proposed rule outlines amendments to BLM regulations designed to implement section 50263 of the IRA. Among other things, the proposed rule outlines how BLM will determine if an “emergency situation exists” and if a loss of gas is “unavoidable.
Comments on the proposed rule were accepted through January 30, 2023.