U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

21–975 2017

S. HRG. 114–467 

THE BUREAU OF LAND MANAGEMENT’S PROPOSED RULE ENTITLED ‘‘WASTE PREVENTION, 

PRODUCTION SUBJECT TO ROYALTIES, AND 

RESOURCE CONSERVATION’’ 

HEARING 

BEFORE THE 

SUBCOMMITTEE ON PUBLIC LANDS, 

FORESTS, AND MINING 

OF THE 

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

APRIL 14, 2016 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 

Available via the World Wide Web: http://fdsys.gov 

(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

BILL CASSIDY, Louisiana 

CORY GARDNER, Colorado 

ROB PORTMAN, Ohio 

JOHN HOEVEN, North Dakota 

LAMAR ALEXANDER, Tennessee 

SHELLEY MOORE CAPITO, West Virginia 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, JR., Maine 

ELIZABETH WARREN, Massachusetts 

SUBCOMMITTEE ON PUBLIC LANDS, FORESTS, AND MINING

JOHN BARRASSO, Chairman 

SHELLEY MOORE CAPITO 

JAMES E. RISCH 

MIKE LEE 

STEVE DAINES 

BILL CASSIDY 

CORY GARDNER 

JOHN HOEVEN 

JEFF FLAKE 

LAMAR ALEXANDER 

RON WYDEN 

DEBBIE STABENOW 

AL FRANKEN 

JOE MANCHIN III 

MARTIN HEINRICH 

MAZIE K. HIRONO 

ELIZABETH WARREN 

COLIN HAYES, Staff Director 

PATRICK J. MCCORMICK III, Chief Counsel 

TRISTAN ABBEY, Senior Professional Staff Member 

KIP KNUDSON, Professional Staff Member 

ANGELA BECKER-DIPPMANN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SPENCER GRAY, Democratic Professional Staff Member 

STEPHANIE TEICH-MCGOLDRICK, Democratic Congressional Fellow 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Barrasso, Hon. John, Subcommittee Chairman and a U.S. Senator from Wyoming ...................................................................................................................... 1 

Wyden, Hon. Ron, Subcommittee Ranking Member and a U.S. Senator from 

Oregon ................................................................................................................... 8 

Garnder, Hon. Cory, a U.S. Senator from Colorado ............................................. 10 

WITNESSES 

Leiter, Amanda, Deputy Assistant Secretary, Lands and Minerals Management, U.S. Department of the Interior ............................................................... 10 

Parfitt, Todd, Director, Wyoming Department of Environmental Quality ......... 18 

Olguin, Hon. James ‘‘Mike’’, Councilman, Southern Ute Indian Tribe ............... 24 

Boccella, Mark, Americas Business Development Manager, Optical Gas Imaging, FLIR Systems, Inc ........................................................................................ 33 

Sgamma, Kathleen, Vice President of Government & Public Affairs, Western 

Energy Alliance .................................................................................................... 37 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED 

Alert Plus: 

Letter for the Record ........................................................................................ 87 

Barrasso, Hon. John: 

Opening Statement ........................................................................................... 1 

Article in the New York Times by Jack Healy dated April 12, 2016 

entitled ‘‘In Wyoming, Hard Times Return as Energy Prices Slump’’ ..... 3 

Boccella, Mark: 

Opening Statement ........................................................................................... 33 

Written Testimony ............................................................................................ 35 

Responses to Questions for the Record ........................................................... 84 

Gardner, Hon. Cory: 

Opening Statement ........................................................................................... 10 

Leiter, Amanda: 

Opening Statement ........................................................................................... 10 

Written Testimony ............................................................................................ 13 

Responses to Questions for the Record ........................................................... 73 

Mandan, Hidatsa & Arikara Nation: 

Statement for the Record ................................................................................. 92 

Olguin, Hon. James ‘‘Mike’’: 

Opening Statement ........................................................................................... 24 

Letter dated April 16, 2016 from the Southern Ute Indian Tribe ............... 26 

Parfitt, Todd: 

Opening Statement ........................................................................................... 18 

Written Testimony ............................................................................................ 20 

Response to Question for the Record .............................................................. 83 

Sgamma, Kathleen: 

Opening Statement ........................................................................................... 37 

Photo .................................................................................................................. 38 

Written Testimony ............................................................................................ 41 

State of Utah, Department of Natural Resources: 

Letter for the Record ........................................................................................ 50 

Utah State Senate: 

Letter for the Record ........................................................................................ 48 

Page

IV 

(The) Wilderness Society: 

Letter for the Record ........................................................................................ 99 

Ute Indian Tribe: 

Statement for the Record ................................................................................. 101 

Wyden, Hon. Ron: 

Opening Statement ........................................................................................... 8 

(1) 

THE BUREAU OF LAND MANAGEMENT’S PROPOSED RULE ENTITLED ‘‘WASTE PREVENTION, PRODUCTION SUBJECT TO ROYALTIES, AND RESOURCE CONSERVATION’’ 

THURSDAY, APRIL 14, 2016 

U.S. SENATE, 

SUBCOMMITTEE ON PUBLIC LANDS, FORESTS, AND MINING, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:36 p.m. in Room 

SD–366, Dirksen Senate Office Building, Hon. John Barrasso, 

Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF HON. JOHN BARRASSO, 

U.S. SENATOR FROM WYOMING 

Senator BARRASSO. The committee will come to order. 

This afternoon the Public Lands Subcommittee will hold an oversight hearing on the Bureau of Land Management’s (BLM) socalled waste prevention rule. The stated purpose of the rule is to 

reduce venting and flaring of natural gas that is produced from oil 

wells on Federal land and Indian land. 

I think it is fair to say that we all want to reduce unnecessary 

venting and flaring of natural gas. Even the proposed rule recognizes that operators do not want to waste gas. That is written in 

the rule. Unnecessary venting and flaring reduces revenue to taxpayers, as well as States, tribes, and the Federal Government. 

Venting and flaring is also bad for the environment. 

So the question is not whether we should take steps to reduce 

unnecessary venting and flaring. The question is, what is the most 

cost-effective way of doing so, and who is best positioned to lead 

this effort, producers, states, tribes, or Washington? 

I question whether Washington should play any role in this 

arena, but even those who believe Washington has a role to play, 

they question whether the BLM has legal authority to regulate air 

quality. Air quality is the responsibility of the EPA, the states, and 

some tribes like the Southern Ute, not the BLM. 

I suspect that is why Secretary Jewell sent Ms. Leiter, an accomplished law professor on leave at the department, to testify here 

today. The Administration knows it will need to employ legal gymnastics to defend the rule. 

I also have practical questions related to the BLM’s proposed 

rule. For example, if BLM truly wants to reduce flaring, then why 

isn’t it taking steps to put its own house in order? In other words, 

2 

why isn’t BLM taking steps to account for and address delays in 

permitting of natural gas pipelines? 

As the proposed rule explains, the primary means to avoid flaring gas from oil wells is to capture, transport, and process that gas 

for sale, using the same technologies that are used for natural gas 

wells, specifically gas-gathering infrastructure. Now this consists of 

small pipelines that ship natural gas from oil wells to processing 

plants. 

According to the BLM, flaring takes place in areas ‘‘with existing 

capture infrastructure, but where the rate of well construction is 

outpacing the infrastructure capacity.’’ Flaring also occurs in areas 

‘‘where capture and processing infrastructure has not yet been 

built.’’ 

One reason for the lack of sufficient infrastructure is BLM’s permitting process. For years, oil and gas producers have reported 

long delays in obtaining permits for gas-gathering lines on Federal 

land. 

To date, BLM is still unable to produce a complete list of the 

pending permits—just a list of the permits—for natural gas-gathering lines on Federal land. 

The data that is available is not promising. As of April 8, 2016, 

over half of the 832 applications for rights-of-way for oil and gas 

pipelines have been pending with BLM for more than two years— 

more than two years. To me, this is inexcusable. It is why any final 

rule must include a means by which BLM can readily account for 

and promptly address delays in permitting gas-gathering lines on 

Federal land. 

Now I understand the Administration wants to finalize this rule 

in June, but now is not the time to set an artificial schedule. 

Over the last 18 months, the West has seen devastating job loss. 

Wyoming alone has lost over 4,800 oil and gas jobs. The New York 

Times highlighted this yesterday, Wednesday, April 13, 2016, with 

the story, ‘‘In Wyoming, Hard Times Return as Energy Prices 

Slump.’’ 

[The information referred to follows:] 

3 


Insert offset folio 1 here 21975.001
4 


Insert offset folio 2 here 21975.002
5 


Insert offset folio 3 here 21975.003
6 


Insert offset folio 4 here 21975.004
7 


Insert offset folio 5 here 21975.005
8 

A rule that is rushed out the door will only make this situation 

worse and more difficult for these folks to get back to work. 

Ms. Leiter, I think it is important that BLM understand that. 

I will now turn to Senator Wyden to offer his opening remarks. 

STATEMENT OF HON. RON WYDEN, U.S. SENATOR FROM 

OREGON 

Senator WYDEN. Thank you very much, Mr. Chairman. 

Today we have an opportunity to look at the issues surrounding 

oil and gas production on public lands and how to bring our policies 

in this area into the 21st century. 

When I was Chair of this full committee, I held a series of 

roundtables on natural gas. One area that came through loud and 

clear is that America needs to find ways to reduce venting and flaring of natural gas. Not only is it wasteful, it is detrimental to the 

environment, and when it takes place on Federal land, it cheats 

taxpayers out of their fair return. 

The Mineral Leasing Act of 1920 requires that BLM ensure that 

lessees, and I quote here, ‘‘use all reasonable precautions to prevent waste of oil or gas.’’ Yet the Bureau of Land Management has 

not updated its rules to minimize waste in over 30 years. This is 

despite the fact that the oil and gas industry has changed dramatically and that massive strides have been made in the technologies 

and practices to reduce waste in cost-effective ways. 

So let’s be clear, the rules are from yesteryear. They have not 

been updated in three decades, yet it is very clear that there has 

been enormous progress made with respect to more productive 

technologies and ways to reduce waste. 

In 2010, the General Accounting Office (GAO) came out with report that showed that millions of dollars were being wasted by the 

venting and flaring of natural gas from oil and gas production on 

Federal lands. 

In a letter to Interior Secretary Sally Jewell, I, along with a bicameral group of lawmakers, called on the Interior Department to 

act. The Department has taken a concrete step toward addressing 

this problem by establishing limits on venting and flaring, improving leak detection, clarifying and revising royalty rates, and by 

doing a better job of planning our oil and gas infrastructure so as 

to be able to minimize waste. According to the Inspector General 

and the GAO, these updates from the Administration are long overdue. So again, this is the reason we have independent auditors, colleagues. They are not Democrats. They are not Republicans. They 

are independent auditors, and they say the updates are long overdue. 

For example, the General Accounting Office found back in 2010 

that around 40 percent of natural gas estimated to be vented and 

flared on onshore Federal leases could be economically captured 

with currently available control technologies. 

The Bureau of Land Management’s proposed methane rules 

would cut the waste of valuable natural gas from oil and gas production on public lands. This waste results in lost royalty revenues 

to the American people. The Federal Government has an obligation 

to ensure that American taxpayers get a fair return on resources 

9 

mined from public lands. My view is this rule is a much-needed 

step in fulfilling this obligation. 

The Bureau of Land Management estimates that between 2009 

and 2014, oil and gas producers on public and tribal lands vented, 

flared, and leaked enough gas to supply roughly five million homes 

for a year. Using conservative assumptions, the Bureau of Land 

Management also estimated that the net benefits of the rule would 

range from $115 to nearly $200 million per year. 

While the Bureau of Land Management’s charge is primarily to 

reduce the waste of publicly-owned resources, I think you cannot 

ignore the fact that there are significant environmental benefits of 

this rule. Methane is a potent greenhouse gas that America cannot 

afford economically or environmentally to just keep sending up into 

the atmosphere. 

In addition, discharges from oil and gas production, including a 

host of gases, are directly harmful to human health. This includes 

toxins like benzene and toluene, which cause cancer, neurological 

disorders, and birth defects. Volatile organic compounds are also 

commonly emitted, which leads to ozone and local air quality problems. 

When a new rule comes out, often the affected industry says it 

is unreasonable, it is unworkable, it is going to cause grievous 

harm. I would like to note, and this is particularly important, that 

a number of states have already implemented much of what the 

Bureau of Land Management is proposing, including my friend’s 

home State of Wyoming, and we are going to hear from them 

today. 

While some states have their own rules, many do not. In my 

view, it is the responsibility now of the Federal Government, since 

these rules have not been updated in decades, to establish a foundation from which state agencies can build their own regulatory 

framework. The Bureau of Land Management’s proposed rule will 

do that. It will create a level playing field, ensuring that public resources are not wasted in all states, while giving flexibility to 

states to implement their own rules that meet or exceed Bureau of 

Land Management standards. 

Finally, I want to thank our witnesses, particularly Mark 

Boccella from FLIR, a leading company in methane-leak detection, 

specifically optical gas imaging, which is headquartered in my 

home State of Oregon. It is my understanding FLIR is not here to 

take a public position. They are going to tell us what kind of technology is out there and what that technology can do. 

I very much appreciate the time and interest of all of you. There 

are not very many flights to Oregon left in the day, so I hope you 

will excuse my bad manners if, before long, I chase off. But it is 

my intention to work very closely with Chairman Barrasso on these 

issues. These are important issues. They were important a few 

years ago. They are even more important today, and I think we 

ought to work together. 

Thank you, Mr. Chairman. 

Senator BARRASSO. If you do have additional questions, we will 

certainly be able to put them into the record and submit them in 

writing, so I would request that you respond quickly to Senator 

Wyden. 

10 

Additionally, Senator Gardner, I know that you have some 

friends from home. 

STATEMENT OF HON. CORY GARDNER, U.S. SENATOR FROM 

COLORADO 

Senator GARDNER. Thank you, Senator Barrasso. 

Welcome to the United States Senate, Councilmember Michael 

Olguin of the Southern Ute Tribe in Western Colorado. Thank you 

very much for your time and testimony today, and thank you for 

your leadership. 

I also want to thank you for the flag. I hope you had a chance 

to see it flying very proudly outside of our office today and always. 

So thank you very much, Councilmember Olguin, for your time. 

I see Tyson in the background as well, so he is here. I have a 

number of representatives. Thank you very much. 

And to Kathleen Sgamma with Western Energy Alliance, thank 

you very much, both of you proud Coloradans, for your representation today. 

This is an important issue in terms of our economy, in terms of 

our sovereignty, and in terms of the work that both of you are 

doing to grow economic opportunity for all who you represent. So 

thank you very much for being here today before the United States 

Senate. 

Thank you, Chairman Barrasso. 

Senator BARRASSO. Thank you, Senator Gardner. 

At this point, I want to welcome the witnesses. Joining us this 

afternoon, Ms. Amanda Leiter, who is the Deputy Assistant Secretary for Land and Mineral Management at the Department of the 

Interior; Mr. Todd Parfitt, who is the Director of the Wyoming Department of Environmental Quality, thank you very much for returning today; the Honorable James Mike Olguin, who is a Councilman with the Southern Ute Indian Tribe; Mr. Mark Boccella, who 

is the American Business Development Manager of Optical Gas Imaging at FLIR Systems; and Ms. Kathleen Sgamma, Vice President 

of Government and Public Affairs at the Western Energy Alliance. 

Welcome to all of you. I look forward to your testimony. 

Ms. Leiter, please begin. 

STATEMENT OF AMANDA LEITER, DEPUTY ASSISTANT SECRETARY, LANDS AND MINERALS MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR 

Ms. LEITER. Thank you very much. Mr. Chairman, Ranking 

Member, members of the Subcommittee, thank you for the opportunity to be here. 

The BLM manages roughly ten percent of the nation’s surface 

and nearly a third of its minerals. We manage these lands on behalf of the American public under a framework of multiple use and 

sustained yield. 

The BLM works diligently to fulfill its role in America’s energy 

future by supporting the responsible development of oil and gas resources on public and Indian lands. Domestic oil production is at 

its highest level in nearly 30 years, and the nation is now the largest natural gas producer in the world. In fact, during this Administration, oil production from public and Indian lands onshore has inVerDate Nov 24 2008 14:39 Feb 28, 2017 Jkt 021975 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\21975\C21975.TXT C21975
11 

creased by 108 percent, exceeding the increase on state and private 

lands. 

This production contributes to the nation’s energy supplies and 

provides important economic benefits. In Fiscal Year 2015, for example, onshore Federal oil and gas royalties exceeded $2 billion, 

about half of which was paid to the states in which the development occurred. 

In supporting oil and gas development on public and Indian 

lands, the BLM’s highest priorities are ensuring that operations 

are safe and environmentally responsible and provide a fair return 

on public resources. 

The common-sense measures in the proposed methane and waste 

reduction rule would advance those priorities by curbing waste of 

our nation’s natural gas supply. Domestic natural gas provides an 

abundant source of clean-burning fuel to power and heat American 

homes and businesses. At the same time, however, venting, flaring, 

and leaks during oil and gas operations waste natural gas and generate harmful methane emissions. 

The primary component of natural gas is methane, a greenhouse 

gas far more potent than carbon dioxide. Methane accounts for 

about nine percent of U.S. greenhouse gas emissions, and almost 

a third of U.S. methane emissions are estimated to come from oil 

and gas operations. 

Currently, oil and gas operations on public and Indian lands lose 

vast amounts of natural gas. As you just heard, between 2009 and 

2014, 375 billion cubic feet of natural gas was lost through venting 

and flaring, enough gas to supply more than five million households for a year. 

These resources belong to the American public. They should be 

used and not wasted. Venting, flaring, and leaks of natural gas not 

only waste public resources and cause environmental impacts, they 

also deprive states, tribes, and Federal taxpayers of up to $23 million annually in potential royalty revenue. And in the absence of 

sensible controls, natural gas losses from U.S. oil and gas operations are projected to increase. 

The BLM’s proposed rule would advance the Administration’s 

goals of reducing the waste of public resources and cutting methane emissions from the oil and gas sector. By requiring reasonable 

and cost-effective measures to reduce venting, flaring, and leaks, 

the BLM expects to reduce the waste of natural gas by at least 40 

percent. 

The proposal establishes baseline standards and practices. In 

brief, the rule would limit flaring and would largely prohibit venting as a means of gas disposal. Operators would also be required 

to use currently available methods to conduct periodic inspections 

of their operations, and they would be required to promptly repair 

any leaks they find during those inspections. Further, operators 

would be required to replace certain devices that run on natural 

gas with newer devices that are readily available and that waste 

less gas. 

Taking into account the broader impacts of the wasted gas, we 

believe that the overall benefits of the proposal would substantially 

outweigh its costs. 

12 

Several states and the U.S. Environmental Protection Agency 

have also taken steps to limit losses of natural gas from oil and gas 

operations. In developing the proposed rule, the BLM regularly 

consulted and continues to consult with EPA. And we conducted a 

series of meetings and public forums over the past two years to 

consult with tribal and state governments and solicit stakeholder 

views. 

The BLM has worked to ensure that its proposed regulations 

would not impose conflicting or redundant requirements on operators, and we remain committed to coordinating with our Federal, 

State, and tribal partners to align and target the final regulations. 

Once finalized, this rule will reduce waste; increase returns to 

Federal taxpayers, States, and tribes; and, help protect our environment, while also ensuring continued development of the public’s 

oil and gas resources. 

Thank you for the opportunity to present this testimony, and I 

would be glad to answer any questions you may have. 

[The prepared statement of Ms. Leiter follows:] 

13 


Insert offset folio 6 here 21975.006
14 


Insert offset folio 7 here 21975.007
15 


Insert offset folio 8 here 21975.008
16 


Insert offset folio 9 here 21975.009
17 


Insert offset folio 10 here 21975.010
18 

Senator BARRASSO. Thank you very much for your testimony. 

Mr. Todd Parfitt? 

STATEMENT OF TODD PARFITT, DIRECTOR, WYOMING 

DEPARTMENT OF ENVIRONMENTAL QUALITY 

Mr. PARFITT. Thank you, and good afternoon, Chairman Barrasso, Ranking Member Wyden, and honorable members of this 

subcommittee. 

My name is Todd Parfitt. I am the Director of the Wyoming Department of Environmental Quality. I thank the subcommittee for 

inviting the State of Wyoming to share its perspective on the Bureau of Land Management’s proposed rule entitled ‘‘Waste Prevention, Production Subject to Royalties, and Resource Conservation.’’ 

My comments today will focus on environmental aspects of the 

BLM’s proposal. 

Wyoming is blessed with amazing and abundant natural resources. Wyoming is also blessed with abundant mineral resources 

that have provided the nation, the state, and its citizens with revenue and jobs. 

In Wyoming, we manage our natural and mineral resources exceptionally well, providing for both environmental stewardship and 

energy production by fostering a regulatory framework that encourages responsible production of oil and gas resources. 

Throughout the past 20 years, Wyoming has been recognized as 

a national leader in regulating air emissions from oil and gas production. In 1997, absent an EPA permitting program, Wyoming 

DEQ’s Air Quality Division established its oil and gas minor source 

permitting and guidance program. This air emissions program is 

consistent with Wyoming’s legislative directive aimed at preventing, reducing, and eliminating pollution, and retaining primacy 

over Wyoming’s air-quality resources. 

In 2011, EPA looked to Wyoming and Colorado as it developed 

its oil and gas new source performance standards for production 

equipment. EPA’s rule recognized that some state permitting programs already regulate those wells, and the rule took advantage of 

existing state compliance mechanisms. 

In 2015, under the President’s climate change agenda, EPA proposed additional rulemaking to address methane and volatile organic compounds, extend coverage to additional downstream natural gas transmission equipment, and add leak detection requirements. Wyoming has provided comments on these proposed rules. 

In March of this year, EPA announced its initiative to regulate 

emissions from existing sources. EPA noted that this effort was 

broad and would start with an information collection request that 

would look at a large universe of representative sources and data. 

Shortly before EPA announced its existing source data collection 

effort, BLM came out with its proposed rule, which includes requirements for venting and flaring. Several parts of BLM’s proposed rule are designed to regulate air pollution, which is a matter 

that Congress delegated to the states and EPA, not to the BLM. 

Wyoming and EPA already regulate what BLM is attempting to 

regulate. This is evident by the fact that much of BLM’s proposal 

is based on Wyoming’s air-quality environmental regulations. In 

19 

fact, BLM references Wyoming’s air-quality regulations over 40 

times in the proposed rules. 

This duplication of environmental control measures raises many 

concerns. For example, the BLM’s proposal usurps authority currently vested with the states. By attempting to exert control over 

state and private lands that are intermingled within Federal lease 

is an example of Federal Government overreach. 

It is also unnecessary. Wyoming’s air-quality rules and Oil and 

Gas Conservation Commission regulations apply across the entire 

state, to private, State, and Federal mineral development. 

Some key definitions posed by BLM are inconsistent with EPA’s 

definitions, further creating regulatory confusion. 

BLM’s proposed variance process is not a legitimate variance 

process in the context of cooperative federalism. It is dissimilar to 

EPA’s primacy recognition and is subject to BLM interpretation, 

which creates an inconsistency within and among states. 

It is worth repeating that BLM’s proposal sites Wyoming’s airquality existing source regulations over 40 times. While Wyoming 

appreciates the recognition, BLM has misapplied Wyoming’s environmental regulations, which are applicable to a specific ozone nonattainment area and did not consider how Wyoming addresses oil 

and gas development on a statewide basis. The unique nature of 

this nonattainment area is not applicable to other areas of the 

state. Air-quality agencies understand the impacts and interactions 

of multiple pollutants and that certain actions may actually worsen 

or create additional air pollution issues. 

In the NEPA process, the BLM has historically recognized the 

state’s air-quality primacy and deferred to the state on air-quality 

issues. But BLM’s proposed rule would be an unwarranted deviation from this practice. BLM’s proposed rule will lead to inconsistency and uncertainty, resulting in administrative inefficiencies and 

delays. 

In closing, Wyoming respectfully requests that BLM continue to 

recognize the state’s air-quality primacy and defer to the state on 

air-quality issues. Thank you. 

[The prepared statement of Mr. Parfitt follows:] 

20 


Insert offset folio 11 here 21975.011
21 


Insert offset folio 12 here 21975.012
22 


Insert offset folio 13 here 21975.013
23 


Insert offset folio 14 here 21975.014
24 

Senator BARRASSO. Thank you very much, Mr. Parfitt. 

Now if I could please ask Councilman Olguin to testify? Thank 

you. 

STATEMENT OF HON. JAMES ‘‘MIKE’’ OLGUIN, COUNCILMAN, 

SOUTHERN UTE INDIAN TRIBE 

Mr. OLGUIN. Good afternoon, Chairman Barrasso and committee 

members. It is a pleasure to be here this afternoon. 

My name is Michael Olguin. I am an elected official for the 

Southern Ute Indian Tribe, and I want to thank you for this opportunity to provide a statement on the tribe’s behalf on what is commonly known as the BLM’s proposed venting and flaring rule and 

its potential impacts on the tribe and economic development on our 

reservation. 

On April 5, 2016, the tribe submitted formal comments to the 

BLM on a proposed venting and flaring rule, a copy of which we 

provided to this committee. At this time, I would like to highlight 

our main concerns about the proposed rule. 

First, we question BLM’s authority to impose air pollution control aspects of the proposed rule. Under the guise of preventing 

waste and protecting trust assets, the BLM is, in fact, reaching beyond the authority given it by Congress and encroaching into the 

EPA’s jurisdiction. 

Under the Clean Air Act, Congress established a regulatory 

structure based on the principle of cooperative federalism, under 

which air pollution is regulated by EPA and by states and tribes 

who are delegated primacy by EPA. From our perspective, the 

BLM’s proposed rule appears to sidestep that settled structure. 

Second, BLM’s proposed command and control approach is redundant with EPA regulations and fails to afford appropriate deference to EPA as well as to the tribe and State of Colorado Environmental Commission. 

In 2004, Congress enacted the Southern Ute and Colorado Intergovernmental Agreement Implementation Act. Under that Act, 

Congress endorsed and implemented a unique cooperative arrangement between the tribe and the State of Colorado for regulating air 

quality on the Southern Ute Indian Reservation. 

One of the key elements of that Act was to ensure there was one 

set of air-quality regulations applicable to all lands within our 

checkerboard reservation. In other words, we wanted and Congress 

wanted to avoid checkerboard regulations of air quality. 

The state and the tribe have appointed three persons to a Joint 

Environmental Commission. This commission has established rules 

for regulating air pollution on our reservation. BLM’s proposed rule 

fails to acknowledge the commission’s congressionally-sanctioned 

role on our reservation and would potentially create duplicative 

and conflicting regulations, causing reservation operators confusion. 

Third, BLM’s proposed rule is out of step with recent more progressive and enlightened rulemaking by its sister agencies. Both 

the BIA and EPA have adopted rules that provide greater deference to tribes on decisions affecting tribal lands. Unlike the recent BIA and EPA rules, BLM’s proposed rule reflects a ‘‘my way 

or the highway’’ paternalism toward tribes. 

25 

Under the BLM’s proposed rule, tribes could obtain a variance to 

the rule’s requirements, but only if the tribal rule meets or exceeds 

BLM’s requirements. The approval of a variance is subject to the 

absolute discretion of the state BLM director, and that director’s 

denial of a tribal variance request is not subject to administrative 

appeal. The BLM should follow its sister agency leads by giving 

due deference to tribal decision-making and thereby promoting 

tribal self-determination and self-governance. 

Fourth, BLM’s one-size-fits-all approach elevates national uniformity over reasonableness and fails to recognize that emissions 

associated with extraction activities can vary widely. For instance, 

a rule that may be appropriate for high-pressure and volume wells 

that produce both oil and gas in the Bakken reservoir may not be 

appropriate for lower pressure, low-volume coalbed methane in the 

San Juan basin. 

Fifth, the tribe supports the goals of capturing greater quantities 

of gas and reducing waste, but the cost of compliance with BLM’s 

proposed rule on the Southern Ute Reservation will outweigh the 

production value of some low-producing wells, causing operators to 

plug those wells. This will cause a loss of royalties to the tribe, 

which is inconsistent with the BLM’s stated intended purpose of 

the rule. 

We expect that the cost of compliance with BLM’s proposed rule 

and the added regulations will drive away additional development 

on the reservation. It will make our reservation a much less business friendly place. 

Instead, like you, Chairman Barrasso, we believe one of the ways 

to obviate the need for the BLM rule is to expedite Federal permitting and construction of gas-gathering infrastructure, so the gas 

currently being vented and flared could be captured and made to 

serve the tribe and its members. 

To this end, as you know, the tribe is supportive of the Natural 

Gas Gathering Act as well as the Indian Tribal Energy Development and Self-Determination Act. 

In conclusion, creating and maintaining a favorable business environment on the reservation is important to the tribe; however, we 

also recognize the importance and value of maintaining and improving the reservation’s air quality. 

BLM is overreaching, ignoring, and underestimating the cost and 

economic impacts of its proposed rule, and unless the agency itself 

steps back or Congress steps in, tribal economies will be crushed 

under the burden of every-expanding government regulations. 

Thank you for this opportunity. 

[The letter dated April 6, 2016 from the Southern Ute Indian 

Tribe follows:] 

26 


Insert offset folio 15 here 21975.015
27 


Insert offset folio 16 here 21975.016
28 


Insert offset folio 17 here 21975.017
29 


Insert offset folio 18 here 21975.018
30 


Insert offset folio 19 here 21975.019
31 


Insert offset folio 20 here 21975.020
32 


Insert offset folio 21 here 21975.021
33 

Senator BARRASSO. Thank you so much for your testimony. 

Mr. Boccella. 

STATEMENT OF MARK BOCCELLA, AMERICAS BUSINESS DEVELOPMENT MANAGER, OPTICAL GAS IMAGING, FLIR SYSTEMS, INC. 

Mr. BOCCELLA. Good afternoon, Chairman Barrasso and members of the subcommittee. 

My name is Mark Boccella, and I am a Business Development 

Manager for FLIR Systems and am responsible for the optical gas 

imaging business in the Americas. I am delighted to be here by invitation of Senator Wyden, as FLIR is a constituent company within the great State of Oregon. 

We are not here in any type of advocacy role, but instead have 

been asked to talk specifically about FLIR gas detection technology. 

Therefore, I do not intend to offer comment pursuant to any current or proposed regulations. 

FLIR is a company that has a long history of partnering with industry and government on critical initiatives. FLIR develops both 

airborne and ground-based thermal sensing platforms that provide 

U.S. troops with the critical night vision and situational awareness. 

FLIR has been a market leader in this realm for over 50 years 

now. 

In this 50 years, we have witnessed thermal imaging, or infrared 

technology, begin to follow a similar development and cost trajectory as GPS technology. What was once a technology that was large 

in size, costing hundreds of thousands of dollars and only available 

to military personnel, GPS has become a commercial technology 

with low price points, making it available to everyone. 

Like GPS, low-cost IR, or infrared sensors, are being implemented today in smart phones and other types of handheld devices. 

In 2005, FLIR developed a new technology called optical gas imaging, or OGI. OGI allows for easy visualization of otherwise invisible gases, such as methane or natural gas, in general. 

FLIR manufactures a portable camera that oil and gas operators 

can use to ensure their equipment is not leaking valuable product 

into the air. With an OGI camera, the operator can simply stand 

in a central location at a natural gas well site or production facility 

and scan for what the industry calls super-emitters or fat tails. 

These are essentially large-scale gas leaks. 

Optical gas imaging is a technology that companies currently use 

to ensure compliance in states that have rules for leak detection of 

hydrocarbons or methane emissions. But more importantly, this 

technology has been widely adopted by companies worldwide as a 

way for them to affordably meet sustainability objectives. 

Over the past decade, FLIR has performed considerable research, 

gathering information from customers and service providers regarding the effectiveness and affordability of implementing internal 

OGI programs. 

From the research, we received common feedback that the implementation of consistent leak detection and repair programs using 

OGI technology is a profitable endeavor to pursue, as it maximizes 

return on investment by keeping more product in the pipe. This 

concept has created a strong service provider network, which is 

34 

part of a larger methane mitigation industry that is growing in the 

United States. Through this development, we have our own experience adding jobs to the sector. 

It is important to note that optical gas imaging is continually 

evolving. Recently, fix-mounted OGI cameras have been developed, 

offering continuous emissions monitoring and automated leak detection in remote areas. Additionally, there is software technology 

available today that enhances optical gas imaging by offering realtime leak rate and volume quantification. 

In conclusion, FLIR’s optical gas imaging technology provides a 

simple method for operators to quickly visualize gas leaks. By integrating this into LDAR programs, many companies are discovering 

a return on investment by recouping potential lost product from 

their operations. 

Moving forward, FLIR is continually investing to develop and 

produce new, innovative, and more cost-effective gas detection solutions so greater emission reductions can be realized at a lower cost 

for our customers. 

Thank you for the opportunity to speak today, and I am happy 

to address any questions regarding our technology. 

[The prepared statement of Mr. Boccella follows:] 

35 


Insert offset folio 22 here 21975.022
36 


Insert offset folio 23 here 21975.023
37 

Senator BARRASSO. Thank you very much for the update. 

Ms. Sgamma. 

STATEMENT OF KATHLEEN SGAMMA, VICE PRESIDENT OF 

GOVERNMENT & PUBLIC AFFAIRS, WESTERN ENERGY ALLIANCE 

Ms. SGAMMA. Thank you, Mr. Chairman, members of the committee. 

Western Energy Alliance represents about 450 companies engaged in all aspects of environmentally responsible oil and natural 

gas in the West. Our members include environmental consultants 

and those who capture methane as well as the operators. 

The Administration has focused an overwhelming number of new 

regulations on the oil and natural gas industry that cumulatively 

extend far beyond reasonable regulatory oversight and into mechanisms for controlling and slowing production in America. 

Over the last year, Western Energy Alliance has responded to 48 

regulatory processes involving 49,226 pages of regulatory documents. This is me standing by 49,226 pages. 

[The information referred to follows:] 

38 


Insert offset folio 24 here 21975.024
39 

I can assure you that it is hard to keep up with that regulatory 

stack and still continue to provide affordable energy for America. 

The good news is that industry is already reducing methane 

emissions. We have reduced methane emissions 21 percent since 

1990 even as we have increased natural gas production 47 percent. 

Studies have found leakage rates around 0.42 percent. 

Other than coal, the Administration is not going after other industries with the same or greater environmental impact, but we 

are the only ones that capture natural gas and put it to beneficial 

use. When we increase natural gas production and then use it in 

electricity generation, we deliver 59 percent more climate change 

benefit than wind and solar combined since 2006. 

Federal regulations, like this rule before us, invariably result in 

more redtape, more expense, less efficiency, and less natural gas 

than would be otherwise produced and less overall climate change 

impact. I am no philosopher, but that just does not make sense. 

Our biggest issue with the rule is that BLM simply doesn’t have 

the authority to regulate air quality. BLM has limited authority 

under the Mineral Leasing Act, NTL–4A, to determine if gas lost 

is unavoidably or avoidably lost. That definition includes economic 

consideration, operational considerations, economic infrastructure 

considerations. 

The Clean Air Act is an extremely comprehensive law that gives 

EPA and states broad powers to regulate air emissions; however, 

there are very specific procedures that EPA must follow when it 

regulates air quality. BLM’s assumption of expansive Clean Air Act 

authority conveniently comes without those Clean Air Act constraints. 

BLM’s regulation, the Federal Land Policy and Management Act, 

FLPMA, gives BLM the ability to ensure compliance with environmental regulations for oil and gas operations but does not give 

them authority to create those regulations or those laws themselves. 

In essence, BLM is asserting regulatory omnipotence on Federal 

lands. And even if BLM had the authority to regulate air quality, 

why is it doing what EPA is already doing? I think when you look 

at what they are trying to do with existing sources, it is clearly an 

attempt to circumvent very specific Clean Air Act procedures and 

go after existing sources, something that even EPA does not dare 

to do. 

Another major problem with the rule is that it is one-size-fits-all. 

The flaring standard was based on vertical wells in the 1980’s. We 

are now developing horizontal wells that, in effect, equate to about 

ten vertical wells, and we are trying to apply the same flaring limit 

on those highly productive wells. 

This rule would cause production to be shut in. It would cause 

new wells to be scaled back so they would not be as highly productive, and simply seems antithetical, the waste of oil and natural 

gas you get, seems antithetical in a rule that is meant to control 

waste. 

Finally, when we are looking at the magnitude of this rule, we 

are looking at the industry on the well side, which is what I represent and what this rule is aimed at. It covers about 1.07 percent 

of U.S. greenhouse gas emissions at a carbon dioxide equivalent, 

40 

and this rule would return a scant 11 million. It would affect 

0.0092 percent of greenhouse gas emissions, so that is chasing a 

small return for a very large sum. 

BLM could simply approve rights-of-way in a timely manner that 

would enable us to go in and lay the pipelines and gas-gathering 

infrastructure so we can stop flaring and collect more natural gas. 

Thank you very much. 

[The prepared statement of Ms. Sgamma follows:] 

41 


Insert offset folio 25 here 21975.025
42 


Insert offset folio 26 here 21975.026
43 


Insert offset folio 27 here 21975.027
44 


Insert offset folio 28 here 21975.028
45 


Insert offset folio 29 here 21975.029
46 


Insert offset folio 30 here 21975.030
47 

Senator BARRASSO. Thank you very much for your testimony. We 

will start our rounds of questions with Senator Lee. 

Senator LEE. Thank you very much, Mr. Chairman. Thanks for 

your kindness and your willingness to accommodate my schedule, 

and thanks to all of you for being willing to come here today. 

Before I get started with my questions, Mr. Chairman, I would 

like to submit to the record a letter from the Utah Senate urging 

the Secretary of the Interior to withdraw the rule that is the subject here. 

Senator BARRASSO. Without objection. 

[The information referred to follows:] 

48 


Insert offset folio 31 here 21975.031
49 

Senator LEE. I also would like to submit to the record a letter 

from the Utah Department of Natural Resources recommending 

that BLM reconsider moving forward with this regulation. 

Senator BARRASSO. Without objection. 

[The information referred to follows:] 

50 


Insert offset folio 32 here 21975.032
51 


Insert offset folio 33 here 21975.033
52 


Insert offset folio 34 here 21975.034
53 

Senator LEE. Ms. Leiter, is the EPA currently in the process of 

promulgating a rule or promulgating a set of regulations to regulate methane emissions from new oil and natural gas sources? 

Ms. LEITER. That is my understanding. There is a proposed rule 

that they recently took comment on, and my understanding is that 

they are in the process of finalizing a rule that would cover methane emissions from new and modified oil and gas sources. 

Senator LEE. Okay. So they are in the process of drafting regulations that would deal with methane emissions from new sources, 

new wells. 

Is the EPA also then in the process of developing regulations 

that would deal with methane emissions from existing sources of 

oil and natural gas? 

Ms. LEITER. I believe, from some recent announcements, that 

they are beginning a data-gathering phase to ascertain the scope 

of the air problem from existing sources. That, from my understanding of past similar efforts, would be the beginning of a 

multiyear effort to address those pollutants. 

Senator LEE. The Administration has made the claim, a claim 

that I consider absurd, that its ability to implement policies to reduce waste somehow enables the BLM to regulate air emissions. 

Is the Department of the Interior aware of Utah’s stringent regulations governing venting and flaring of waste? 

Ms. LEITER. Certainly, and, in fact, we have learned from the 

good examples of Utah, Colorado, and Wyoming in several aspects 

of the rule and other states. I don’t want to leave anybody off the 

list, but, certainly, at least those three. 

Senator LEE. I think this is significant, the existing regulatory 

structure and those being developed by the EPA. In light of these 

state regulations, in particular, this rule appears to me to be utterly unnecessary. Not only is the BLM superseding Utah’s venting 

and flaring regulations, but it is doing so by usurping, or maybe 

better said as encroaching upon, the regulatory powers reserved for 

the EPA. 

So separate and apart from this, you have the state overlap, and 

then separate and apart from the state overlap, you have overlap 

within the Federal Government between BLM and EPA. 

And it is not as though the state is doing a bad job of this, in 

my state. In 2015, Utah decreased the volumes of gas vented and 

flared from all wells, whether we are talking about new wells or 

existing wells, by 61 percent. I mean, this is pretty significant. 

Earlier today, I met with elected officials from Uintah County, 

Utah, where a whole lot of Utah’s oil and natural gas production 

occurs. Utah’s oil and natural gas industry today is, you might say, 

kind of on life support. As a result, unemployment in Uintah County has risen to nearly ten percent. 

With regulations like this one, regulations that I consider unnecessary and extraordinarily onerous, regulations like this one, I can 

only wonder whether the Administration wants to snuff it out completely. 

Is it the opinion that regulations in place in Utah, regulations 

imposed by the State of Utah, are insufficiently regulating methane 

venting and flaring within Utah? 

54 

Ms. LEITER. So there are some very good examples from states, 

including Utah. We have tried to learn from those. But the landscape of state regulation is uneven, and the aim of the Administration, and really its obligation, is to reduce the waste of these resources from production on Federal lands and to do that in a consistent way across the country for all oil and gas production across 

Federal lands. 

Senator LEE. I guess I struggle a little bit with the fact that, to 

the extent that the regulation in Utah by the State of Utah is sufficient, I wonder why then you are willing to throw out the Utah regulations. 

Ms. LEITER. The aim is not to throw out Utah’s or any state’s 

regulations. There is a capacious variance provision in the act for 

any state that seeks to demonstrate that its regulations are comparable and doing what our regulations would do. Any state that 

establishes that, operators within the state would then be able to 

follow the state’s regulations rather than these. 

Senator LEE. I would hope that you would simply exempt Utah 

from the rule in light of the fact that we have had great success 

with it. 

Thank you, Mr. Chairman. That is all my time allows for. 

Senator BARRASSO. Thank you, Senator Lee. 

Senator Heinrich. 

Senator HEINRICH. Thank you, Mr. Chair. 

As some of you know, last spring, NASA announced the discovery 

of a large methane hotspot over the four corners area in northwestern New Mexico. Since that time, I have heard from many of 

my constituents who are worried about what that hotspot means 

for our climate and for our public health in the area. I have also 

heard from a number of local elected officials who want to make 

sure that the State of New Mexico is getting the full benefit from 

the royalties it is entitled to and not losing out because of poorly 

maintained wells. 

I do not think any of us up here support waste. Natural gas is 

an important energy source and too valuable of a commodity not 

to take all practical steps to capture it and to put it to beneficial 

use. 

To be clear, I support Federal efforts to reduce waste, but I also 

believe there needs to be a balanced approach that encourages producers to reduce emissions without inadvertently causing producing wells to be capped. My focus is on making sure that efforts 

to reduce leaks from wells on Federal lands are done in a way that 

is technologically feasible and prioritizes the biggest sources first. 

Focusing enforcement on the biggest emitters and on the well 

components that are most likely to leak can reduce waste and pollution without imposing unnecessary costs on producers. I also 

think it is highly worthwhile to look at Colorado’s example, and 

other state regulatory models, to see where there are areas that 

can be applied to production on Federal lands broadly. 

Ms. Leiter, I want to start with you and ask a question regarding 

the Colorado model. I believe that you are familiar with the consensus approach that was developed by Governor Hickenlooper in 

Colorado to reduce waste from venting and flaring. 

55 

Is BLM open to considering modifications in the final rule along 

the lines agreed to in Colorado, and do you look to Colorado’s approach as a model for this rule? 

Ms. LEITER. We certainly look to Colorado’s approach, and we are 

open to considering any approaches that we see out there, or that 

are submitted to us in public comment. 

If you are referring specifically to focusing the leak detection, 

that specific aspect of it, we are looking hard at the data that are 

submitted to us in terms of whether there is a way to focus leak 

detection on those sources that are leaking at the highest rate or 

the largest volume. A lot of the data that have been submitted suggests that there may not be a way to focus, but we are looking to 

see whether there is a way to find those sources. 

Senator HEINRICH. Mr. Boccella, would you agree with that position, and can you talk a little bit about whether or not your OGI 

technology that you talked about in your testimony has been used 

widely in the natural gas basins in Wyoming and Colorado that are 

under current existing waste prevention rules? 

Mr. BOCCELLA. Yes. This technology has been around for over a 

decade now, so really, as a technology company, we have to be able 

to provide some kind of technology that traditionally can provide 

a return on investment for it to be adopted. 

So well before any regulatory entity really, I think, even knew 

what this technology was or started to evaluate this technology, we 

have seen considerable growth out of states like Wyoming, Colorado, Utah, and New Mexico, just based on production, again because the goal is to keep as much product in the pipe. 

So with that said, we have seen any company that employs more 

consistently detection and repair programs using our technology, 

that it has moved them in a direction toward being more profitable, 

for sure. I would have to assume that also reduces waste. 

Senator HEINRICH. Because your technology is both visual and 

sort of intuitively volumetric, you are able to utilize it to focus on 

the biggest issues first and then move on to smaller issues over 

time? 

Mr. BOCCELLA. That’s correct, yes. We do considerable tests to 

ensure that we can see the small leaks as well, but obviously anybody who is trying to do this in an efficient manner is probably 

going to start with the biggest first. 

So we feel that the core benefit of our technology is the ability 

to very, very quickly, immediately assess the situation, so that you 

can understand where the big stuff is coming from, and you can try 

to reduce that. 

Senator HEINRICH. Great. Thank you all. 

Thank you, Mr. Chairman. 

Senator BARRASSO. Thank you. 

Senator Daines. 

Senator DAINES. Thank you, Mr. Chairman. 

In Montana, oil and gas activity is at its lowest level in decades. 

It is clear our Federal Government needs to be better at 

incentivizing production, recognizing we are facing some real 

headwinds now in pricing. I have heard from concerned Montanans 

this proposed rule does exactly the opposite. 

56 

Montana has immense oil and natural gas potential. In fact, in 

coal potential, we have more recoverable coal than any state in the 

union, yet we are ranked 19th in total oil and gas production. 

What is even more disheartening is our applications for permits 

to drill in Montana have dropped 80 percent from 2008, and that 

is significantly more than the overall national drop of 47 percent. 

America has great opportunity to responsibly grow our production 

and meet domestic and global demand. This not only benefits us, 

it benefits our allies overseas, as well as ultimately securing our 

own energy future. 

I am also very proud of the fact, as Americans, we can now claim 

we are the world’s leading producer of oil and liquids, surpassing 

both Saudi Arabia and Russia, and that puts us in a much more 

secure place economically and from a national security viewpoint. 

Unfortunately, rules like this one coming out of the Administration, like the ones we are discussing today, seem to have the unintended consequences of stifling innovation that states and the private sector, I believe, are capable of accomplishing. 

By the way, I think our record levels of oil and oil liquids production in the world, now that we are number one, is not because of 

the Administration, but in spite of it, we got there. Thanks to 

American innovation, we are now the world’s leader. 

For Ms. Sgamma, a question. The BLM contends the rule would 

result in a net benefit of up to $188 million to the public. Do you 

think the taxpayer would ultimately lose out on royalty revenue 

under the proposed rule? 

Ms. SGAMMA. BLM’s numbers are that the rule would cost $161 

million annually, and it would return $11 million in royalties. So 

only by the government accounting would that be considered costeffective. 

Now we did a full assessment of the rule. If you look at the full 

cost of the rule, plus a realistic natural gas price—which BLM used 

$4. We haven’t seen $4 for NCF for quite some time. If you do that, 

you find that the rule is actually delivering $90 million in benefit, 

but delivering $1.26 billion in cost. 

So it is extremely not cost-effective, and that $11 million in royalties that BLM is claiming will be captured by this rule is actually 

$3 million at today’s natural gas price, a drop in the bucket compared to the $2.1 billion in royalties—— 

Senator DAINES. So net-net, in terms of we sit up here on this 

dais as U.S. Senators, ensuring we are responsible stewards of the 

American tax dollars, you are saying that we will lose money because of this, not make money. 

Ms. SGAMMA. Yes. In fact, getting $3 million in royalties will actually lose $65 million in Federal corporate income taxes. So that 

is not a cost-effective rule. 

Senator DAINES. It sounds like D.C. math to me. 

Ms. SGAMMA. Government accounting, yes. 

Senator DAINES. Ms. Leiter, included in this venting and flaring 

rule is a proposal to amend BLM regs to remove the fixed 12.5 percent royalty rate and instead establish what the BLM terms a base 

rate of not less than 12.5 percent. 

57 

What does BLM mean by the term ‘‘base rate’’ and what are the 

criteria and process set forth in the proposed rule to determine 

what the rate would be for different wells? 

Ms. LEITER. So all of the proposed rule aims to do right now is 

to ensure that our regulatory authority has a similar scope to our 

statutory authority. The statute under which we are operating sets 

the royalty rate at not less than 12.5 percent. The BLM had a regulation in place that set the rate at 12.5 percent. 

All we seek to deal to do, with the recommendation of the GAO, 

is ensure that we have the same regulatory authority as the statutory authority we have always had. 

Senator DAINES. But what that does is it creates a lot of uncertainty in understanding and trying to put a pro forma together of 

understanding what used to be a fixed rate is now something that 

becomes variable and it can go up. 

Ms. LEITER. There is no intention now to raise the rate. 

Senator DAINES. If there’s no intention, why not keep it fixed? 

Ms. LEITER. Because the BLM needs, and the GAO strongly recommended that the BLM have, the authority to respond in a more 

nimble way as market conditions change. 

Senator DAINES. Ms. Sgamma says the taxpayer loses out on 

this. What does your math say? 

Ms. LEITER. On this rule? 

Senator DAINES. Correct. 

Ms. LEITER. Our math suggests, and I stand by our math, I do 

not think it is government math, our rule rests on an assessment 

of the costs of the rule to companies as well as the benefits of the 

rule in terms of benefits to companies of gas that is captured and 

can be sold; benefits to the American public in terms of gas that 

is captured instead of vented or flared and can be sold, and royalties can be realized; and then, finally, significant benefits to the 

American public by avoided methane emissions. 

Senator DAINES. If I am sitting here thinking about investment, 

what is the net benefit in dollars to the American taxpayer based 

on your math? 

Ms. LEITER. Our estimate is a range of $115 million to $188 million per year. That is with certain assumptions. 

Senator DAINES. Okay, so both of you cannot be right. There is 

a huge disparity here. 

Ms. Sgamma, your number was with a ‘‘B.’’ I would be curious, 

I would like to have this reconciled in terms of looking at the assumptions here, because obviously there is a different set of assumptions and a different kind of math here with a very, very different outcome here in terms of the mathematics. 

Ms. LEITER. Well, I would just say we have a multi-hundred-page 

regulatory impact analysis that is out for public comment right 

now, and we would welcome Ms. Sgamma and her organization to 

submit their numbers, and we will take a look. 

Ms. SGAMMA. We will be commenting, but most of that is based 

on very tenuous, very fuzzy math, and the social cost of methane. 

We will go into detail on why that math is very faulty. 

Senator DAINES. It sounds like there might be sensitivity in 

terms of pricing as well. You had questioned the $4 number as 

58 

well. There are some pretty important assumptions here that might 

lead to very disparate outcomes here in terms of the mathematics. 

Mr. Chairman, I see that I am out of time here, but I will take 

a second round. 

Senator BARRASSO. Thank you. 

Senator Franken. 

Senator FRANKEN. Okay, I am trying to come to grips with some 

of the arguments here. 

Ms. Sgamma seems to say that BLM is doing this under the 

Clean Air Act. That is not my understanding. My understanding is 

that you are doing it under wise public use. Is that right, Ms. 

Leiter? 

Ms. LEITER. Well, specifically, under the Mineral Leasing Act, 

which requires that we use ‘‘all reasonable precautions to prevent 

waste of oil or gas developed on the public lands.’’ 

Senator FRANKEN. Right, that is your authority here. 

Ms. LEITER. Yes. 

Senator FRANKEN. So I do not think there’s any question. I think 

there are benefits to our air. I think there are benefits in terms of 

the amount of carbon and in terms of greenhouse gases, but my understanding was that you have the authority to do this. This is on 

Federal lands. 

A couple other things that confused me. The reason that there 

is less drilling now, or oil and gas coming out of Montana I think 

is because of the price. The price is low because production is so 

high, and that is because fracking and horizontal drilling and all 

that came out of work that the Federal Government did with industry. 

You said no, Ms. Sgamma, but you are wrong, when I started 

saying—— 

Ms. SGAMMA. I would take more credit from industry than the 

Federal Government on that one. 

Senator FRANKEN. No, but I was about to say—you cannot deny 

that the Federal Government had a role in this, can you? 

Ms. SGAMMA. I’m not denying that. 

Senator FRANKEN. Okay, then why shake your head? In other 

words, I am feeling a little bit of a heavy bias coming from you. 

The BLM has the authority to do this. 

I would also think that states that are doing this well, like Utah, 

Colorado, and Wyoming, would actually have an interest in having 

this be a uniform rule, because I know that when Minnesota companies are doing things by more stringent standards than other 

states, if the other states are capturing—in this case it would be 

about capturing methane, which, when it is vented, is, in the long 

term, about 30-some times worse as a greenhouse gas. Those Minnesota companies would be happy that the Federal Government 

was putting out a uniform regulation. It would make me more competitive. 

So I do not understand. I guess we are going to do a second 

round. 

We saw in Paris almost 200 nations come together. Part of this 

revolved around transparency and the proper measure of emissions. If we demand that other countries properly measure emissions, I think we have to do that ourselves. 

59 

I am concerned about undetected methane leaks. We cannot reduce our greenhouse gas emissions if we do not even know they are 

happening in the first place. 

Ms. Leiter, in your experience, how common is it for oil and gas 

operators to have significant methane leaks and how long does it 

typically take for them to be detected? 

Ms. LEITER. Well, to be honest, under the notice to lessees 4A, 

that this replaces, we did not have great recordkeeping requirements in place. One aim of this rule is to improve the information 

that we have about how much venting and flaring is going on and 

also the extent of the leak problem. 

So sources that are venting or flaring above a certain threshold 

amount would have to be reporting that venting and flaring, and 

all sources would have to be keeping clear records of their leak detection programs and the results of those programs and would have 

to make those leak detection reports available to the BLM upon request. 

Senator FRANKEN. Okay, well, I am going to be running out of 

time now, and I want to respect other Senators’ time. I hope I can 

stick around for a second round, but if not, thank you all for your 

testimony. 

Senator BARRASSO. Thank you, Senator Franken. 

Before turning to Senator Hoeven, Ms. Sgamma—I will take this 

against my time—is there anything else you would like to add 

about the issue of government versus private activity related to the 

significant increase in oil and gas production? 

Ms. SGAMMA. Well, industry is the one who has made billions of 

dollars in investment. There was some initial technology developed 

with DOE in the 1990’s, but industry has taken it far beyond that. 

I would really like to address the reason that we regulate at the 

state level. It is because, as you know, the resources in Wyoming 

are quite different than the field in the Bakken or the Permian in 

New Mexico, different fields, different topography, different geology, different gas composition. You have associated gas at high volumes in the Bakken, not so much in your Wyoming fields. So the 

reason we regulate at the state level is for those differences. 

Senator BARRASSO. Thank you. 

Senator Hoeven. 

Senator HOEVEN. My initial questions are for Deputy Assistant 

Secretary Leiter. 

Welcome to all the witnesses. Thank you for being here. 

In September 2015, the EPA proposed methane emission standards for new production sources. That was September 2015. In February 2016, the BLM proposed its own methane regulations, resulting from production on Federal lands. So that is February 2016. 

Then in March 2016, the EPA announced the agency will be proposing methane emission regulations on existing sources. These are 

all on top of state-led efforts to decrease fugitive emissions, and I 

believe that states should have primacy to regulate oil and gas operations. 

So my first question is, is it redundant to have BLM-proposed 

rules in states that already have been addressing prevention of gas 

waste, so where states are already acting? 

60 

Second, is there is a scenario where projects will need to comply 

with the state methane program, a different BLM methane program, and a different EPA methane program? And is that necessary and reasonable? 

Ms. LEITER. Thank you for your question, Senator. 

So we are well-aware of the very proactive efforts that North Dakota is making to control this problem in North Dakota. And the 

aim of the rule is to first learn from what states are doing well and 

to try to align requirements with state requirements where possible. But states are regulating different aspects of the problem and 

not always regulating consistently. So the other aim of the BLM 

rule is to ensure that consistent and sensible rules apply uniformly 

across Federal lands. 

With respect to EPA’s rules, we are working closely with EPA on 

the things that we both regulate to try to ensure that our regulations are consistent with theirs or, where they differ, to ensure that 

compliance with EPA’s regulations would be deemed compliance 

with ours as well. 

But we have a different aim. Our aim, as I have said, is waste 

reduction. It is not just our aim but our obligation under our statutory authority. So our rules would extend to certain aspects of the 

problem that EPA’s rules don’t cover, such as flaring. 

Senator HOEVEN. So you have the state regulating methane 

emissions, you have BLM doing it and you have EPA doing it. You 

can see how our producers are in a difficult situation trying to comply with all three, and there may be differing requirements. 

Is there some way you can bring this together and make it simpler? That is the whole idea with state primacy, that if the state 

is taking the necessary steps and they are giving primacy, as we 

do in many regulatory programs with the state implementation 

plan for energy regulation and good environmental stewardship, 

why not do that here? And does BLM have a process to allow that, 

so if the state is stepping up and doing the job that you can then 

grant the state primacy or give them an exemption? If so, how do 

we accomplish that? How do you do that? 

Ms. LEITER. So that cooperative federalism regime certainly applies under the Clean Air Act. It isn’t as relevant to the BLM’s obligation under the Mineral Leasing Act to control waste of the 

public’s oil and gas resources from Federal lands where the BLM 

has jurisdiction. 

But that said, we are working hard to make sure that the rules 

are as consistent as possible. We are talking to the EPA on a regular basis, we have consulted with North Dakota and other states, 

and we have included a variance provision such that any state that 

can establish that its regulations are as effective as ours in controlling this problem could establish essentially primacy, that it would 

be the state rules that would apply in those cases rather than the 

BLM rule. 

Senator HOEVEN. Is there a process where we can work with the 

BLM to get an exemption, so the state, if they are undertaking the 

action, which, as you acknowledged, we are working very aggressively to do in North Dakota, as one example, where we can get 

an exemption to go ahead and do it and know that we are meeting 

61 

the standard so they do not have to also go through the same regulatory approval for both BLM and EPA as well? 

Ms. LEITER. That is the intent of our variance provisions. 

Senator HOEVEN. Are those in place? 

Ms. LEITER. The rule at the moment is out for public comment, 

so we are going to have to look at the comment that we get on the 

variance provisions and make sure that we hone them for the final 

rule. But we would be interested in, certainly, your state’s and 

other states’ comments on whether those are adequate and would 

be effective. 

Senator HOEVEN. I have some follow-up, so I can wait for another 

round. 

Senator BARRASSO. There will be a second round. I will finish my 

first-round questions. 

Mr. Parfitt, in your testimony, you state Wyoming and EPA already regulate what the BLM is attempting to regulate under the 

guise of waste prevention and royalty accountability. You explain 

that portions of the BLM’s proposed rule are designed to regulate 

air pollution, which is a matter that Congress delegated to the 

states and the EPA, not to the BLM. You go on in your written testimony to say the BLM has historically recognized the state’s air 

quality primacy and deferred to the state on air quality issues. So 

finally, you conclude the BLM’s newfound interpretation of authority to regulate air quality above and beyond state and EPA requirements is, at best, I think you said arbitrary and unreasonable. 

Ms. Leiter, my question for you is, what has changed? Why is the 

BLM now in the business of regulating air quality? 

Ms. LEITER. Well, I do not think I can say it as well as Senator 

Franken did. I will try. 

Senator BARRASSO. Nobody can. It is okay. 

Ms. LEITER. I will try. 

Our obligation under the Mineral Leasing Act is to regulate the 

waste of natural resources. It happens that in this case, in wasting 

natural gas, it goes up into the air. So by regulating that waste, 

we will have incidental very positive effects on air quality. But it 

is not our aim to regulate air quality. It is our aim to reduce waste. 

Senator BARRASSO. Mr. Parfitt, would you like to respond? 

Mr. PARFITT. Thank you, Senator. 

Our position is that this is regulation of air quality. It is a matter that has been delegated to the states, and it will refer back to 

the December 2005 letter from the BLM where they state and acknowledge the authority for air quality is with the state. 

If I could just read this, this is a quote from the letter we received in 2005, ‘‘It has been administratively determined that BLM 

does not have the authority to regulate air quality. That authority 

rests with the Wyoming Department of Environmental Quality.’’ 

You have a situation where EPA has recently come out with 

their rules for new and modified sources. That is still under final 

review by EPA. They are proposing to look at existing sources for 

methane through an information collection request process. 

So what you end up with is a duplication of rules from the BLM, 

from the EPA, and the state, which causes confusion and inefficiencies, in our view. 

62 

Senator BARRASSO. Mr. Olguin, would you like to add anything 

on that? 

Mr. OLGUIN. Yes, thank you. 

From our perspective, of course, being a checkerboard reservation, having this level of overregulating components here is going 

to create that problem of who regulates who. I think even as simple 

as, from my perspective, if BLM is regulating the air quality, who 

is regulating the minerals aspect, which is BLM’s component? 

I think from our stance here, we have enough regulations governing Indian country as it is, and more regulations just create 

problems for Indian tribes and their economies. And we struggle 

very hard to maintain income for our people, our lands, and this 

is across Indian country. I think it is just another step to provide 

that paternalism from the Federal Government. 

Senator BARRASSO. Ms. Leiter, where do you believe BLM’s jurisdiction ends and the EPA’s jurisdiction begins, with respect to 

methane emissions? 

Ms. LEITER. Well, I can certainly tell you that our jurisdiction 

ends where the resources, the land where the resources are nonfederal. 

With respect to the lands and the minerals that we do regulate, 

I believe we have not just the authority but the obligation under 

the governing statute to try to reduce waste of the resources and 

to do that in as reasonable a way as possible. 

We do recognize the jurisdictional complications, certainly in the 

checkerboard areas, and our practice in the past has been to work 

with states or with the tribes where those issues arise. 

Senator BARRASSO. Isn’t BLM just trying to regulate existing 

sources of methane in a way that even the EPA is not allowed to 

under the Clean Air Act? 

Ms. LEITER. Well, EPA is not doing so under the provision that 

it is currently acting under, but EPA under the Clean Air Act is 

beginning to investigate the possibility of regulating existing 

sources. And it is our aim to set up our regulations such that compliance with EPA’s regulations, where applicable, would be deemed 

to be compliance with ours as well. 

Senator BARRASSO. Mr. Parfitt, I see a smile. Do you have anything you would like to add on to this? Then, Ms. Sgamma, I am 

going to ask you the same question. 

Mr. PARFITT. Thank you, Senator. 

Under the Clean Air Act, EPA would have to go through what 

is called the 111(b) process to regulate new and modified sources 

before it can establish regulation under 111(b) for existing sources. 

Senator BARRASSO. Ms. Sgamma, anything additional? 

Ms. SGAMMA. When we got this venting and flaring rule, we noticed it looked a lot like EPA’s new source performance standards. 

In fact, there were some cut-and-paste that was a little bit interesting, if not funny at times, because it just did not apply well. 

So we will be cutting and pasting our comments from EPA’s 

Quad-O regulation and putting that in our BLM regulation as well. 

It is talking about tons per year. It is talking about controlling 

emissions. That is clearly within the realm of EPA, not within the 

realm of BLM. 

Senator BARRASSO. Thank you. 

63 

We will now start a second round of questioning. 

Senator Daines, we will start with you. 

Senator DAINES. Thank you, Mr. Chairman. 

Ms. Sgamma, I want to follow up. We got in the discussion a little bit about the impact on climate change, and I assume that 

BLM’s proposed rules intend to regulate the capture of methane, 

which is a pollutant in the atmosphere, in an attempt to address 

climate change. 

How effective is the proposed rule in impacting global emissions 

in a meaningful way? 

Ms. SGAMMA. By BLM’s number, it would reduce emissions by 

0.0092 percent. So that is a very de minimis amount for a large 

cost. 

And it is putting at risk the much larger benefit we provide on 

the electricity generation end. Electricity generates ten times the 

emissions that producing sector does, the oil and natural gas producing sector. And we deliver those benefits by providing those climate benefits in a sector that has ten times the emissions. 

If we constrain natural gas production, we put that much greater 

climate change benefit at risk. 

Senator DAINES. We saw a similar kind of analysis when we 

looked at the impact of the EPA Power Plan. They ran it through 

the EPA’s own algorithm, Magic, it’s called. The impact on global 

temperature between now and 2100 was 0.02 degrees centigrade, 

back to using the term de minimis. 

Ms. Leiter, are these numbers coming out of BLM in terms of 

this 0.0092 percent reduction in emissions? 

Ms. LEITER. So I am not sure exactly what number Ms. Sgamma 

is pointing at, but the Supreme Court has been very clear that 

agencies have the regulatory authority to take the steps that are 

needed toward what is a more comprehensive solution. The BLM 

is not under any illusion that it is solving climate change with this 

rule, but it is taking a step—— 

Senator DAINES. I understand, but we have to weigh tradeoffs in 

terms of a cost-benefit analysis, and there is some disagreement in 

terms of what the cost will be here. 

Ms. LEITER. Certainly. 

Senator DAINES. The benefit, arguably, is perhaps de minimis. 

We have seen this with the EPA Power Plan, literally 0.02 degree 

impact centigrade on climate temperature between now and 2100 

for what will be a devastating effect on our economy in Montana. 

This is just looking at these tradeoffs, which, as always, what we 

have to do here is balancing pros and cons. 

Let me go back to Ms. Sgamma for a moment. You mentioned in 

your written testimony that the industry has an interest in capturing methane waste. I am wondering what the industry is doing 

to improve efficiencies, then, to manage methane waste, and what 

are some of the challenges to bringing that product to market? 

Ms. SGAMMA. Well, it’s not always in the control of the operator 

to capture that methane, because in the case of BLM, we have a 

backlog of rights-of-way, so we have wells where we cannot get the 

approval to put in the gas-gathering lines and the pipeline to collect that natural gas, so we have no choice but to flare it. 

64 

Even when lines are put in place, there are maintenance issues, 

there are downtimes on the pipe, or there could be situations where 

new wells come online, and then the pipeline reaches maximum. So 

there are times that there will be downtimes, even if you are connected to that pipeline. 

The way BLM has interpreted this in the past is, if it is reasonable—they are determining what is avoidable and what is unavoidable. Certainly, maintenance issues, operational issues, pipeline capacity issues, gas plant capacity issues, where there is nowhere to 

put your natural gas, that is, certainly, a situation which should 

be considered unavoidably lost. 

Senator DAINES. My understanding is when excess methane, in 

terms of you require some permitting for gathering lines as well. 

I mean, that is part of the solution here, and is it also a barrier 

as well? 

Ms. SGAMMA. Well, BLM could virtually overnight decrease flaring rates by simply approving the rights-of-way applications before 

it now for gas-gathering lines and pipelines so that we could connect to that pipeline, get that gas to market. 

Senator DAINES. How significant would that be in terms of reducing the amount of flaring? 

Ms. SGAMMA. I don’t have a number to quantify that, but I think 

Senator Barrasso had a number close to 900 rights-of-way that are 

awaiting approval and some of those are for over two years. So in 

the meantime, that operator has had to flare for two years. 

Senator DAINES. If that is a possible barrier here to trying to do 

the right thing to reduce the methane emissions, I mean, turning 

back to Ms. Leiter, does the BLM have a policy for prioritizing permitting of gathering-line systems to capture gas which would otherwise be vented or flared, and then we could have it transported to 

consumers? 

Ms. LEITER. So I have a couple pieces of the answer to that question. 

The first is, no, we don’t prioritize rights-of-way based on some 

estimate of the flaring that would otherwise occur, but we are 

working hard to reduce backlogs. 

My understanding is that in some states where there are significant numbers of rights-of-way pending, that can be due to market 

conditions. For example, in Farmington, New Mexico, something 

like 60 of the pending applications are actually awaiting additional 

information from the applicant, and the applicants have actually 

asked us to hold the applications until market conditions improve. 

But the other point to make is that at least 20 percent of this 

problem is due to leaks and things like that that can be repaired, 

where the presence or absence of a pipeline is unrelated. 

Another piece of the problem is that there needs to be more 

proactive planning by operators as they drill, more communication 

with midstream companies, et cetera. One purpose of this rule is 

to request, require, that operators submit a capture plan at the 

time of drilling, so that we can ensure that they have thought 

ahead about how to make sure that the capture infrastructure is 

in place in a timely way. 

Senator DAINES. Thank you. I am out of time. Thank you for 

your comments. 

65 

Senator BARRASSO. Senator Franken. 

Senator FRANKEN. Okay, again, I am just kind of listening to testimony and have questions. 

I hate to dwell on this, Ms. Sgamma, but you’re shaking your 

head on the Federal Government’s role in fracking and in getting 

natural gas and oil out of shale, which we have seen do tremendous 

things. In fact, when he was Governor, Governor Hoeven discovered all that. He personally did that. I wish he would do it in Minnesota. 

Senator HOEVEN. Thank you. I’d like to thank my colleague from 

the great state of Minnesota for that. 

Senator FRANKEN. Yes. 

Ms. Sgamma, you did this thing where it is like, well, yes, but 

the industry has put billions of dollars into it. Where did we get 

microseismic imaging that makes this possible? How much natural 

gas did we get out of shale in the 1990’s? 

Ms. SGAMMA. Not much. 

Senator FRANKEN. Why? 

Ms. SGAMMA. Because we hadn’t applied the technology and developed it to such an extent that we could go after these shale deposits. 

Senator FRANKEN. And who did that? 

Ms. SGAMMA. Primarily the industry. I know you want to emphasize the role of—— 

Senator FRANKEN. Who did microseismic imaging? Who did that? 

Could you answer my question? 

Ms. SGAMMA. Some of the original basic research was, indeed, 

done by DOE. 

Senator FRANKEN. Yes, that is my point. 

The point is, I have had this answer before, too, when I had a 

witness in the HELP Committee say the Federal Government does 

not create jobs. I said, well, we are on C-SPAN. C-SPAN is the 

Cable Satellite Public Affairs Network. Who put up the first satellites? You can stream us on the Internet. Who developed the 

Internet? He said, well, yes, the Federal Government developed the 

Internet, but private industry has put billions and billions and billions of dollars into it. That is the whole point, that research by the 

Federal Government has helped to create this industry. That is the 

point. My colleagues seem to forget the role of the Federal Government in research and development of these technologies. 

Now let’s go to this 0.0092 percent of emissions. Of what emissions? 

Ms. SGAMMA. Global greenhouse gas emissions. 

Senator FRANKEN. Global. Okay, global. 

We are trying to get the rest of the world to go along with us. 

My colleagues do not seem to recognize the seriousness of climate 

change, and that this is a global problem. 

So we are talking about this one rule doing 0.0092 of global emissions. If we are trying to get the rest of the world to go along with 

this, we have to demonstrate some leadership, too, and this is significant. 

If you just take that, your estimate from your written testimony, 

and a modest estimate of the social costs of carbon, a calculation 

of the cost of climate change to society, emission reductions from 

66 

this rule alone would prevent more than $170 million in economic, 

public health, and environmental damages per year. 

You know, I remember, we have had hearings here in this committee where Republicans would not show up, because they knew 

the hearing was about climate change. 

When you were the ranking member, you would show up, but 

that would be it. So if we were to have a hearing on the rising sea 

level, you would be the only Republican here. 

I remember we had one on wildfires, and because we had Jon 

Kyl talk about the terrible wildfires in Arizona that year, Republicans showed up to hear his testimony. 

Well, right after him was the director of the Forest Service. I 

said to him, do your scientists tell you that these more intense 

fires, the longer season of the fires, the size of these fires, is exacerbated by climate change? And he said, ‘‘yes.’’ 

This is serious. I am a grandfather. We are leaving this planet 

to our children, our grandchildren, and our posterity. This is serious. And I do not like it when I see this existential problem that 

we are facing so diminished by witnesses and, frankly, by my colleagues. This is a crisis that we are facing. 

Thank you. 

Senator BARRASSO. Senator Hoeven. 

Senator HOEVEN. So I want to turn to Ms. Leiter again. 

Last month the North Dakota Pipeline Authority reported that 

87 percent of the gas produced in North Dakota was captured and 

sold, so 13 percent was flared. As they say, in North Dakota, we 

have an aggressive program to capture this methane, not only from 

a standpoint of doing the best we can for good environmental stewardship but also so that we don’t waste the resource. 

But of the 13 percent that was flared, the agency estimates, and 

this is our Pipeline Authority, that ten percent of that flared gas 

was due to challenges or constraints on existing gathering systems. 

One of the challenges here is to get more infrastructure out 

there, and to get more infrastructure out there, we need more gasgathering systems. 

So how do we expedite that permitting process on Federal lands? 

Senator Barrasso and I have a bill to try to expedite that, but we 

have to be able to build the infrastructure in order to capture that 

gas. 

Ms. LEITER. So the BLM is doing a lot to speed the approval of 

rights-of-way. We had a strike team that was deployed over the 

last couple years that would go out to individual field offices to 

help speed the approval of pipeline rights-of-way. We have increased training. 

We have sought and received from the Office of Personnel Management authority to give a higher pay grade to professionals in 

certain areas, and we have a couple of key offices that are fully 

staffed with respect to pipeline approval for the first time in years. 

We did have trouble with staffing during the boom years, but we 

have worked to make ourselves more competitive and to increase 

staffing in those key offices. 

Senator HOEVEN. But can you see how these things have to fit 

together? In other words, if you are going to come out with regulations on methane emissions and, at the same time, you have to apVerDate Nov 24 2008 14:39 Feb 28, 2017 Jkt 021975 PO 00000 Frm 00070 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\21975\C21975.TXT C21975
67 

prove the infrastructure that our producers and operators are trying to build in order to capture, the two have to work together. 

So you have to make sure that, as you develop your rule—the 

two things I am trying to bring together here is you have BLM, 

EPA, and the states, and our producers are trying to meet the regulations of three different entities. At the same time, they have to 

get approvals from you to build the infrastructure needed to capture that gas. 

Again, we all want a clean environment. We want to make sure 

we are capturing that gas from an environmental standpoint. But 

those producers want to capture that gas so they can sell it and 

get revenue as well, so there is a financial aspect. 

But they cannot do it if, on the one hand, they cannot get approval for the gas-gathering systems, and on the other side they 

have to meet a regulation they cannot meet without you giving 

them a permit on the other side. So you have to do two things. You 

have to help them through the permitting process, and then you 

are going to have to come up with a way whereby, if the state is 

doing this, that the Federal agencies work with the state so the operators know that they are meeting the necessary requirement. 

You have to bring those two things together to make this work. 

Ms. LEITER. So I think that we are trying to do all of those 

things. We are trying to expedite right-of-way approvals. We are 

trying to work with the states to try to make sure that we are incorporating the best of the state rules, and that states could seek 

a variance for comparable state rules. 

But we do see in certain offices, including around Dickinson, for 

example, there is a significant amount of flaring that goes on and 

essentially no right-of-way applications pending. I think there are 

four pending in the Dickinson office at the moment. 

Senator HOEVEN. Four pending? 

Ms. LEITER. Right-of-way applications. 

Senator HOEVEN. Right-of-way requests? 

Ms. LEITER. Yes. 

Senator HOEVEN. Okay. But you are telling me there is going to 

be some way that you are going to bring this process together so 

that one oil and gas project does not have to get approval from the 

state methane program, from the BLM rule, and the EPA rule, all 

of which could be different? Somehow you are going to work with 

our industry and industries across the country, states across the 

country, to bring these together? 

I mean, again, they can only do this if you help them with a rational regulatory regime that also matches the approval process. In 

other words, you have to help them do it. 

Ms. LEITER. Our aim is certainly not to create duplicative regulation. The rules are out, as I said, for public comment. So in places 

where North Dakota sees inconsistency with North Dakota’s rules, 

we would love to hear about it in the comment process. 

Senator HOEVEN. What I am saying is, as you work on that rule, 

you have to provide an exemption process where somebody, and I 

believe it should be the state, can be the primary regulator, and 

as long as they are meeting or exceeding your requirements, that 

you let them take the lead and you then expedite the permitting 

process, if you want to accomplish this. 

68 

Ms. LEITER. Thank you. 

Senator HOEVEN. I am asking you if you agree with that or not, 

and if you are willing to try to accomplish that. 

Ms. LEITER. I certainly agree that there are many pieces to this 

puzzle, and that we are working hard to try to make sure that our 

rules mesh well with the EPA’s rules and with the states rules, 

and also working hard to try to expedite right-of-way permitting. 

Senator HOEVEN. Are you willing to try to get to that one point 

of contact for the producers, so that if the state is meeting or exceeding your requirements, then they can be the primary regulator, 

that exemption process? 

Ms. LEITER. I am certainly willing to take that back to the department and consider it. Thank you. 

Senator HOEVEN. Okay. Thank you. 

Senator BARRASSO. Senator Hoeven, thank you. 

Senator HOEVEN. Thank you, Mr. Chairman. 

Senator BARRASSO. Ms. Sgamma, in your testimony, you say it 

is such a costly rule, many existing wells will be shut in and new 

wells not developed, denying the Federal Treasury much larger 

royalties than the rule would return. You explain that wells abandoned prematurely represent a huge waste of oil and natural gas 

resources. Yet BLM has not adequately quantified such waste in 

this so-called waste prevention rule. 

Mr. Olguin, you testified that the cost to comply will likely outweigh the production benefits, the production value of some of the 

low-producing wells, thereby causing operators to plug those wells. 

You also explain this will ultimately result in a net loss of royalty 

payments to the public and to the tribes. 

So I would also note that Governor Martinez of New Mexico has 

written to the BLM stating that preliminary estimates indicate 

that compliance with this rule will render as much as ten percent 

of New Mexico’s production uneconomic, along the lines of your testimony. 

So, Ms. Sgamma, would you please explain how BLM should 

quantify the amount of gas and oil that will be shut in and left undeveloped as a result of this rule? 

Ms. SGAMMA. This rule will, in effect, force operators to do things 

that don’t economically make sense. When that happens, the result 

will mostly be to shut in wells. So BLM should adequately look at 

those low-producing marginal wells and what kind of cost structure 

would cause them to go into being shut in. 

The New Mexico Oil and Gas Association suggests that a large 

percentage of their marginal wells would be shut in with just 

$5,000 of additional cost a day. These are very low-producing wells, 

so that would be one consideration. 

I think they should just look at and even consider what their 

rules will do for future production. They are not really looking at 

the full economic—all the costs that the rule will impose. 

Senator BARRASSO. Ms. Leiter, would BLM consider taking steps 

recommended like this, prior to issuing a final rule? 

Ms. LEITER. So the proposed rule incorporates exemptions in a 

bunch of different areas where an operator could demonstrate that 

compliance with a particular requirement would cause them to 

shut in and abandon significant resources on a lease. They would 

69 

then be exempt from that requirement. That is aimed specifically 

at the problem Ms. Sgamma identifies. 

Senator BARRASSO. It seems if BLM does not take steps, it is 

truly opening itself up to the charge that this rule is not a waste 

prevention rule, but a waste promotion rule. That is what it sounds 

like the impacts are going to be locally on the tribes and in the 

states. 

Mr. Olguin, in your written testimony, you tell us that the proposed rule further incentivizes mineral development on non-Indian 

lands within the exterior boundaries of the Southern Ute Indian 

Reservation. You explained that the BLM rule will apply to lands 

under BLM’s jurisdiction only, namely trust and allotted Indian 

lands. 

Non-Indian lands within the reservation will not be subject to 

the BLM’s proposed rule. You go on to talk about how the rule creates a regulatory-free zone within the reservation that will likely 

divert additional development and the resultant royalties away 

from Indian lands. 

So could you please discuss the importance of oil and gas revenues to the Southern Ute Indian Tribe and what lost revenue 

would mean to your community? 

Mr. OLGUIN. Yes, Mr. Chairman. 

As I stated numerous times, we are a checkerboard reservation. 

The Southern Ute Tribe being placed where it is in southern Colorado, that was not by choice. That was by design of the Federal 

Government. 

And I must say, listening to Mr. Franken, it kind of offended me 

in regards to the Federal Government, and I have to say this for 

the record. Hearing the great things the Federal Government has 

done, well, as far as Indian country, the Federal Government has 

not done a great job in the caretaking and trust responsibilities for 

Indian tribes. 

So when we look at every dollar, every penny, that tribes generate from their lands, we take that very seriously. As Southern 

Ute, we take that very seriously, when we can only control what 

we can control, which is our lands. 

With a checkerboard reservation, fee lands, lands that are not 

under our jurisdiction other than air quality, due to the environment commission, they can either drill a well, produce a well, generate revenue without any Federal oversight other than following 

the state’s rules and regs. So it becomes one of those issues that 

it is easier to drill across the fence line, produce across the fence 

line, versus follow all these regulations from the Federal Government standpoint, which hinders our ability to generate revenue. 

And we are not unique to this. Indian country is the one that 

suffers from this. Again, it goes back to that situation of the paternalism of the Federal Government knows best for Indian country. 

In our case, we will review, we will dispute, we will debate, we 

will file suits. I mean, we will actually argue the point to say we 

know what we are doing. We can do it better than the Federal Government. We can achieve a better result, and we hire the right people and provide that resource to the tribal membership, so that we 

can sustain our way of life. 

70 

Senator BARRASSO. Ms. Leiter, could you explain why the BLM 

did not analyze how its rule would divert economic investment 

away from the Indian lands like we hear about with the Southern 

Utes? 

Ms. LEITER. I cannot explain it, but certainly, if those comments 

are submitted, and I believe they are included in the letter that I 

had the opportunity to read this morning, it’s something that we 

can take a look at in the final rule. 

Senator BARRASSO. Thank you. 

Mr. Parfitt, I want to return to the BLM’s so-called variance 

process. As you state, the BLM’s proposed variance process is not 

a legitimate variance process in the context of, as you say, cooperative federalism. 

You explain it is dissimilar to the EPA’s primacy recognition and 

is subject to BLM interpretation, which creates this inconsistency 

among states and creates competitive advantages and competitive 

disadvantages. 

So would you expand upon your comments a little bit in terms 

of explaining this to the committee and for the record? 

Mr. PARFITT. Sure. When we work with our other Federal partners, like the Environmental Protection Agency, we obtain primacy. 

So we make a demonstration that we can implement a program, 

and then we take the lead. 

This situation is different in that it is subject to the BLM State 

Director, so there’s some subjectivity. There is a concern that you 

would have inconsistency across the states and, quite frankly, with 

the BLM whether or not they would delegate that authority to 

their regional offices, which would create further inconsistencies 

within the state. And it isn’t appealable, which is also problematic. 

Senator BARRASSO. Ms. Leiter, is there anything you can do, 

from BLM’s standpoint, to improve the variance process? 

Ms. LEITER. We would certainly be open to taking a look at suggestions that the states submit. We do not have the same statutory 

authority under the MLA that EPA has, and the same statutory regime that the EPA has under the Clean Air Act, which sort of expressly envisions this cooperative federalism regime. That is not 

true under the Mineral Leasing Act. We have statutory obligation 

to manage the lands that we administer. 

Senator BARRASSO. Mr. Parfitt, is there anything that you would 

like to add on that or respond? 

Mr. PARFITT. Yes, thank you. 

Again, our concern is with consistency. And we feel, without that 

consistency, it will have administrative impacts on our agency from 

an implementation standpoint. We do believe that that does fall 

within the cooperative federalism realm. 

Senator BARRASSO. Mr. Boccella, I know you are not here to talk 

about the policy standpoint, so I am not going to ask you questions 

regarding that component of this. But I understand that FLIR has 

a large share of the market for infrared cameras, which are used 

to detect methane leaks. I also understand that FLIR, through an 

organization called the Center for Methane Emissions Solutions, is 

lobbying states to adopt methane leak regulations. So my first 

question is, can you tell us the size of FLIR’s share of the U.S. 

71 

market for the infrared cameras, which are used to detect methane 

leaks? 

Mr. BOCCELLA. So first, I think I would like to say that FLIR’s 

involvement in the Center for Methane Emissions Solutions is not 

necessarily lobbying for any type of regulation. Our goal and 

CMES’s goal in that entity is to broaden awareness of methane 

mitigation technologies in general. If a regulation chooses specific 

methane mitigations and incorporates that, that may be due to the 

broadening of awareness in general. But I don’t think that it would 

be considered lobbying for a specific regulation. 

It is hard to say what the specific market share that FLIR has 

of infrared camera technology for methane mitigation would be in 

the United States. We were the inventor of this technology, so competition has come into play, I would say probably in the last five 

years for us. But I think it is safe to say upwards of maybe 70 percent to 80 percent. 

Senator BARRASSO. Is it fair to assume that BLM’s rule would be 

good for FLIR’s business? 

Mr. BOCCELLA. I cannot say that I am intimately familiar with 

all the details associated with BLM’s rule, but if there are requirements for things like optical gas imaging, there is no doubt that 

that could potentially require more use of our technology. 

Senator BARRASSO. I appreciate all of you being here today to answer these questions. Some of the other members of the committee 

may submit written questions to you. We ask that you respond. 

The hearing will remain open for two weeks for the record. Your 

full testimony will be made part of the record. 

Senator BARRASSO. I thank you all for being here. 

This committee meeting is adjourned. 

[Whereupon, at 4:17 p.m., the hearing was adjourned.] 

(72) 

APPENDIX MATERIAL SUBMITTED 

73 


Insert offset folio 35 here 21975.035
74 


Insert offset folio 36 here 21975.036
75 


Insert offset folio 37 here 21975.037
76 


Insert offset folio 38 here 21975.038
77 


Insert offset folio 39 here 21975.039
78 


Insert offset folio 40 here 21975.040
79 


Insert offset folio 41 here 21975.041
80 


Insert offset folio 42 here 21975.042
81 


Insert offset folio 43 here 21975.043
82 


Insert offset folio 44 here 21975.044
83 


Insert offset folio 45 here 21975.045
84 


Insert offset folio 46 here 21975.046
85 


Insert offset folio 47 here 21975.047
86 


Insert offset folio 48 here 21975.048
87 


Insert offset folio 49 here 21975.049
88 


Insert offset folio 50 here 21975.050
89 


Insert offset folio 51 here 21975.051
90 


Insert offset folio 52 here 21975.052
91 


Insert offset folio 53 here 21975.053
92 


Insert offset folio 54 here 21975.054
93 


Insert offset folio 55 here 21975.055
94 


Insert offset folio 56 here 21975.056
95 


Insert offset folio 57 here 21975.057
96 


Insert offset folio 58 here 21975.058
97 


Insert offset folio 59 here 21975.059
98 


Insert offset folio 60 here 21975.060
99 


Insert offset folio 61 here 21975.061
100 


Insert offset folio 62 here 21975.062
101 


Insert offset folio 63 here 21975.063
102 


Insert offset folio 64 here 21975.064
103 


Insert offset folio 65 here 21975.065
104 


Insert offset folio 66 here 21975.066
105 


Insert offset folio 67 here 21975.067
106 


Insert offset folio 68 here 21975.068
107 


Insert offset folio 69 here 21975.069
108 


Insert offset folio 70 here 21975.070
109 


Insert offset folio 71 here 21975.071
110 


Insert offset folio 72 here 21975.072
111 


Insert offset folio 73 here 21975.073
112 

Æ 


Insert offset folio 74 here 21975.074