Royalty for Oil and Gas Lost From Onshore Federal and Indian Leases

DEPARTMENT OF THE INTERIOR Bureau of Land Management 43 CFR Parts 3160 and 3170 [A2407-014-004-065516, #O2509-014-004-125222] RIN 1004-AF33 Royalty for Oil and Gas Lost From Onshore Federal and Indian Leases AGENCY: Bureau of Land Management, Interior. ACTION: Proposed rule. SUMMARY: In response to the One Big Beautiful Bill Act, enacted on July 4, 2025, and Executive Order (E.O.) 14154, entitled, “Unleashing American Energy,” dated January 20, 2025, the Bureau of Land Management (BLM) is proposing to modify its existing regulations pertaining to royalties due on oil and natural gas lost on Federal and Indian leases. These modifications would reduce unnecessary compliance burdens for operators and streamline the BLM's royalty determinations on lost oil or natural gas. DATES: Send your comments on this proposed rule to the BLM on or before August 24, 2026. The BLM is not obligated to consider any comments received after this date in making its decision on the final rule. If you wish to comment on the information collection requirements in this proposed rule, please note that the Office of Management and Budget (OMB) is required to make a decision concerning the collection of information contained in this proposed rule between 30 and 60 days after publication of this proposed rule in the Federal Register . Therefore, comments should be submitted to OMB by July 24, 2026. ADDRESSES: Submit your comments using one of the following methods: • Mail, Personal, or Messenger Delivery: U.S. Department of the Interior, Director (630), Bureau of Land Management, 1849 C St. NW, Room 5646, Washington, DC 20240, Attention: RIN #1004-AF33. • Federal eRulemaking Portal: https://www.regulations.gov. In the Search box, enter the docket number “BLM-2025-0235” and click the “Search” button. Follow the instructions at this website. As required by 5 U.S.C. 553(b)(4), the Portal also contains a plain language summary of the proposed rule. For Comments on Information-Collection Requirements: Written comments and recommendations for the information collection requirements should be sent to www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting “Currently under Review—Open for Public Comments” or by using the search function. If you submit comments on these information-collection burdens, you should provide the BLM with a copy at one of the addresses shown earlier in this section so that we can summarize all written comments and address them in the final rulemaking. Please indicate “Attention: Paperwork Reduction Act Comments (RIN 1004-AF33).” Comments not pertaining to the proposed rule's information-collection burdens should not be submitted to OMB. The BLM is not obligated to consider or include in the administrative record for the final rule any comments that are improperly directed to OMB. FOR FURTHER INFORMATION CONTACT: John Ajak, Acting Division Chief, Fluid Minerals Division, telephone: (505) 549-9654, email: jajak@blm.gov, or by mail to Bureau of Land Management, 1849 C St. NW, Room 5633, Washington, DC 20240, for information regarding the substance of this final rule. Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States. SUPPLEMENTARY INFORMATION: I. List of Acronyms II. Background III. Summary of the Proposed Rule IV. Section-by-Section Discussion of Proposed Rule V. Procedural Matters I. List of Acronyms AO = Authorized Officer APD = Application for Permit to Drill API = American Petroleum Institute BLM = Bureau of Land Management CA = Communitization Agreement CAA = Clean Air Act CFR = Code of Federal Regulations FMP = Facility measurement point FOGRMA = Federal Oil and Gas Royalty Management Act GAO = Government Accountability Office GOR = Gas-to-oil ratio IMDA = Indian Mineral Development Act of 1982 IMLA = Indian Mineral Leasing Act of 1938 LDAR = Leak detection and repair Mcf = thousand cubic feet at standard conditions MLA = Mineral Leasing Act of 1920, as amended NTL = Notice to Lessees NTL-4A = Notice to Lessees: Royalty or Compensation for Oil and Gas Lost OGOR = Oil and Gas Operations Report ONRR = Office of Natural Resources Revenue RIA = Regulatory Impact Analysis Unit PA = Unit participating area VFMP = Venting and flaring measurement point WMP = Waste Minimization Plan II. Background For many decades, the BLM's Notice to Lessees and Operators 4A: Royalty or Compensation for Oil and Gas Lost (NTL-4A) governed royalty and compensation for oil and gas lost on Federal or Indian leases and it still governs in five states due to ongoing litigation. NTL-4A was issued on January 1, 1980, as an update to earlier provisions. It clarified when oil and gas losses were considered “avoidably lost,” such as losses due to negligence or improper authorization, versus “unavoidably lost,” such as emergencies, equipment failures, circumstances where capture is not economic, and authorized flaring and venting. It also outlined strict conditions for venting or flaring, including time limits during emergencies, well purging, and testing, and it required operators to obtain approval from the authorized officer in many situations. NTL-4A remained the primary regulatory standard for decades until the BLM issued the 2016 Waste Prevention Rule, which imposed stricter requirements on venting, flaring, measurement, and gas capture, while replacing NTL-4A's subjective considerations with objective standards that could be consistently applied nationwide. In September 2018, the BLM rescinded the 2016 Waste Prevention Rule and returned to a regulatory framework modeled after NTL-4A, without restoring NTL-4A's subjective standards for emergencies and economics. In April 2024, NTL-4A was ultimately superseded by another Waste Prevention rule. On April 10, 2024, the BLM published a final rule concerning royalties due on lost oil and gas entitled, “Waste Prevention, Production Subject to Royalties, and Resource Conservation” (89 FR 25378) (the 2024 Rule). In response to section 50103 of the One Big Beautiful Bill Act (Pub. L. 119-21), enacted on July 4, 2025; E.O. 14154, “Unleashing American Energy;” and additional direction from the Secretary, the BLM has reconsidered the rule and proposes to modify it by reducing unnecessary compliance burdens for operators and streamlining BLM royalty determinations on lost oil or natural gas. The proposed rule includes and, in some instances, revises provisions from earlier rules, adds new provisions, and codifies certain provisions of NTL-4A. NTL-4A was implemented in the vertical drilling era but to a great degree has proven ill-suited to address royalty determinations in an era of horizontal drilling and hydraulic fracturing and increased gas volumes associated with those techniques. The proposed regulations would be codified in the Code of Federal Regulations (CFR) and would replace current requirements governing royalty determinations. The Department is now proposing to revise the 2024 Rule and eliminate the significant and overburdensome regulatory requirements that it imposes on operators. While the Department would prefer to rescind the 2024 Rule in its entirety, which would better meet the goals and direction of E.O. 14154 to “promote sound regulatory decision making and prioritize the interests of the American people” and ensure that “an abundant supply of reliable energy is readily accessible in every State and territory of the Nation,” a revision of the 2024 Rule avoids the question of which rule would apply if the 2024 Rule were to be fully rescinded given the lack of a proposed rule to fully replace it. Prior to the promulgation of the 2024 Rule, the Department twice attempted to replace NTL-4A with a more modern regulatory framework to account for royalties on lost oil and gas. First, in 2016, the Department promulgated the rule entitled, “Waste Prevention, Production Subject to Royalties, and Resource Conservation,” (81 FR 83008 (Nov. 18, 2016)) (2016 Rule). As detailed below, the U.S. District Court for the District of Wyoming subsequently vacated the 2016 Rule, though that decision was subsequently vacated by the Tenth Circuit. 1 Then, in 2018 during the first Trump administration, the Department promulgated the rule entitled, “Waste Prevention, Production Subject to Royalties, and Resource Conservation; Rescission or Revision of Certain Requirements,” (83 FR 49184 (Sept. 28, 2018)) (2018 Rule), which rescinded the 2016 Rule, except for certain royalty provisions. The 2018 Rule, too, was subsequently vacated. 2 In light of this rulemaking and litigation history, rescinding the 2024 Rule would revert the Department regulations to the 2016 Rule rather than the older NTL-4A. 1  The 2016 Rule was challenged in the U.S. District Court for the District of Wyoming based on an allegation that it was regulating air emissions in excess of the BLM's authority under the Mineral Leasing Act of 1920 (MLA), 30 U.S.C. 181 et seq. Western Energy Alliance v. Jewell, No. 2:16-cv-00280-SWS (D. Wyo., Nov. 16, 2016); Wyoming v. United States Dep't of the Interior, No. 2:16-cv-00285-SWS (D. Wyo., Nov. 18, 2016) (consolidated). In 2020, the U.S. District Court for the District of Wyoming vacated most of the 2016 rule based on the Department confessing error. Wyoming, 493 F. Supp. 3d 1046, 1087 (D. Wyo. 2020). However, after the 2024 Rule was promulgated, the appeal that the environmental plaintiffs took to the Tenth Circuit from the Wyoming district court's decision vacating the 2016 Rule was dismissed as moot and the Tenth Circuit vacated the underlying Wyoming district court decision on August 13, 2024. Wyoming v. United States Dep't of the Interior, 2024 U.S. App. LEXIS 20310, 2024 WL 3791170 (10th Cir. Aug. 13, 2024). Consequently, the 2016 Rule would become effective if the 2024 Rule were rescinded. 2  The 2018 Rule was challenged in the U.S. District Court for the Northern District of California based on allegations that the rule failed to comply with the National Environmental Policy Act (NEPA), among other things. California v. Bernhardt, No. 4:18-cv-05712-YGR (N.D. Cal., Sept. 18, 2018), Sierra Club v. Bernhardt, 4:18-cv-05984-YGR ((N.D. Cal., Sept. 28, 2018) (consolidated). In July 2020, the U.S. District Court for the Northern District of California vacated the 2018 Rule. California, 472 F. Supp. 3d 573, 632 (N.D. Cal. 2020). Although the Department filed a protective notice of appeal with the U.S. Court of Appeals for the Ninth Circuit in 2020 pending resolution of the Wyoming case, the appeal has been in administrative closure since the Wyoming district court vacated the 2016 Rule. California Air Resources Board v. Bernhardt, No. 20-16793 (9th Cir.). As such, the Department is interested in hearing from the public about our rationale for this approach to the proposed rule, rather than rescinding the 2024 Rule in its entirety. Please send any comments you may have about our analysis of the rulemaking and litigation history and regarding whether the Department should instead rescind the 2024 Rule in its entirety, notwithstanding concerns about reverting to the 2016 Rule. The following discussion describes the BLM's management of its oil and gas program, including the challenges that the BLM faces in making oil and gas royalty determinations. It also describes the legal framework within which the BLM administers the Mineral Leasing Act of 1920 (MLA), 30 U.S.C. 181 et seq., and related statutory authorities and regulations. Following this background section is a summary of the proposed rule and a section-by-section analysis of the regulatory text, which, if adopted in a final rule, would revise one section in part 3160 of title 43 of the CFR and replace subpart 3179 in part 3170. A. The Oil and Gas Program The BLM is responsible for managing over 245 million surface acres of land, primarily located in 12 Western States, and 700 million acres of subsurface mineral estate, located throughout the United States. The BLM maintains a program for leasing these lands for oil and gas development and regulates oil and gas production on Federal leases. While the BLM does not manage the leasing of Indian lands for oil and gas production, it does regulate oil and gas operations on many Indian leases under the Secretary's statutory and Tribal trust responsibilities. The BLM's onshore oil and gas program is a significant contributor to oil and gas production in the United States. Based on data for fiscal year 2024, production from 96,946 Federal onshore oil and gas wells  3 accounted for approximately 8 percent of the nation's natural gas supply and 9 percent of its oil. 4 In that year, operators produced 686 million barrels of oil and 4.48 trillion cubic feet of natural gas from onshore Federal and Indian oil and gas leases. The production of this oil and gas in 2024 generated more than $7.7 billion in royalties. Approximately $5.9 billion of these royalties were shared between the United States and the States in which production occurred. Approximately $1.8 billion of these royalties went directly to Tribes or Indian allottees for production from Indian lands. 5 3  BLM Public Lands Statistics, Table 9 (FY 2024 data), available at https://www.blm.gov/programs-energy-and-minerals-oil-and-gas-oil-and-gas-statistics. 4  Bureau of Land Management Budget Justifications and Performance Information, Fiscal Year 2023, p. V-79, available at https://www.doi.gov/sites/doi.gov/files/fy2023-blmgreenbook.pdf. 5  Production and revenue numbers are derived from data maintained by the Office of Natural Resources Revenue and are available at https://revenuedata.doi.gov/. While most natural gas extracted during drilling and production is captured, it is not uncommon for gas to reach the surface that cannot be feasibly sold or used on-lease. This typically happens during drilling, production testing, well purging, and emergencies. It also occurs during production, when capacity of distribution pipelines is limited and for other reasons. When this occurs, the uncaptured gas must either be combusted ( i.e., flared) or vented ( i.e., released directly into the atmosphere). B. Royalties on Lost Oil or Gas While determining royalties due on gas sold is relatively straightforward, determining royalties due on gas that is lost during production is a more complicated task given the associated metering requirements. Regulation of these determinations has a long and complex history and has been the subject of many administrative appeals and lawsuits. Beginning in 1980 (when vertical drilling was the predominant industry practice) and for almost four decades thereafter, BLM royalty determinations were governed by NTL-4A. 6 To obtain a royalty determination for vented or flared gas, operators were required, under either section III(A) or section IV(B) of NTL-4A, to submit to the BLM their requests for royalty-free flaring using a BLM form designated as “Sundry Notices and Reports on Wells” (Form 3160-5, commonly referred to as a Sundry Notice). 6   Royalty or Compensation for Oil and Gas Lost, 44 FR 76600 (Dec. 27, 1979) (effective Jan. 1, 1980), available at https://www.blm.gov/sites/blm.gov/files/energy_noticetolessee4a.pdf. The Sundry Notice must include documentation substantiating that an emergency precluded routing of gas to the sales line (Sec. III(A)), or that capture would not be economic. (Sec. IV(B)). Sometimes the operator has to submit sundries to flare royalty-free because there is a backlog of rights-of-way applications for infrastructure, other times the pipelines are at capacity. Operators frequently challenged BLM decisions on these sundries, advancing arguments that capitalized on the subjective nature of the determinations required by NTL-4A, such as whether capture and sale of gas was “economic” or infeasible due to an “emergency.”  7 Hundreds of sundries seeking unavoidable loss determinations are now pending before the BLM, a testament to NTL-4A's unsuitability, and based on an unpublished analysis performed by the North Dakota Field Office, the BLM estimates that thousands more such sundries could potentially be filed. 7   See NTL4-A sec. IV(B((1), IV(C) (economic justification requirements); NTL4-A sec. III(A) (criteria for emergencies). 44 FR 76600, 76601 (Dec, 27, 1979). In 2016, the BLM made the first of three attempts to replace NTL-4A with a modern, workable rule, one suited to the increased production levels observed in the preceding decade and tailored to use of horizontal drilling and hydraulic fracturing techniques. By 2016, use of these techniques had become the predominant practice. 8 In 2018, the BLM promulgated a second rule to reduce unnecessary compliance burdens, realign regulations with the BLM's existing statutory authorities, and re-establish longstanding requirements that had been replaced, such as continuing to allow royalty-free flaring if the operator found the gas capture to be economically not feasible. 9 Both rules were challenged in district court: the 2016 rule for regulating air emissions in excess of the BLM's authority under the Mineral Leasing Act of 1920 (MLA), 30 U.S.C. 181 et seq., 10 and the 2018 rule for failure to comply with the National Environmental Policy Act (NEPA), among other things. 11 In July 2020, the U.S. District Court for the Northern District of California vacated the 2018 rule, briefly restoring the 2016 rule to governing status. 12 Four months later, the U.S. District Court for the District of Wyoming vacated most of the 2016 rule, including all provisions relevant to royalty determination. 13 Together, these judicial decisions operated to reinstate NTL-4A. 8   Waste Prevention, Production Subject to Royalties, and Resource Conservation, 81 FR 83008 (Nov. 18, 2016). 9   Waste Prevention, Production Subject to Royalties, and Resource Conservation; Rescission or Revision of Certain Requirements, 83 FR 49184 (Sept. 28, 2018). 10   Western Energy Alliance v. Jewell, No. 2:16-cv-00280-SWS (D. Wyo., Nov. 16, 2016); State of Wyoming v. United States Dep't of the Interior, No. 2:16-cv-00285-SWS (D. Wyo., Nov. 18, 2016) (consolidated). 11   State of California v. Bernhardt, No. 4:18-cv-05712-YGR (N.D. Cal., Sept. 18, 2018), Sierra Club v. Bernhardt, 4:18-cv-05984-YGR ((N.D. Cal., Sept. 28, 2018) (consolidated). 12   California, 472 F. Supp. 3d 573, 632 (N.D. Cal. 2020). 13   Wyoming, 493 F. Supp. 3d 1046, 1087 (D. Wyo. 2020). In 2021, the BLM commenced a third effort to modernize its royalty regulations, publishing a proposed rule in 2022, 87 FR 73588 (Nov. 30, 2022), and later a final rule. 89 FR 25378 (Apr. 10, 2024). 14 Like the 2016 and 2018 rules, the 2024 Rule was designed to streamline royalty determinations, principally by replacing NTL-4A's subjective considerations with objective standards that could be efficiently and consistently applied nationwide. The 2024 Rule was also designed to improve well-site safety and to reduce waste of gas in a manner that avoids implicating concerns over regulation of air quality identified by the Wyoming district court. 15 Like the 2016 rule, the preamble to the 2024 Rule touted the additional royalties that would be paid based on predicted increases in gas capture, but the increased royalties benefit only the lessors, tribes, and states. Meanwhile, lessees or operators bear the compliance cost. 14  In November 2024, the BLM published a direct final rule to correct certain technical errors in the 2024 Rule. See Waste Prevention, Production Subject to Royalties, and Resource Conservation, 89 FR 92602 (Nov. 22, 2024). The direct final rule became effective December 23, 2024. 15   See Wyoming, 493 F. Supp. 3d 1046, 1065 (holding that the 2016 rule upended the Clean Air Act's “cooperative federalism framework and usurp[ed] the authority to regulate air emissions”). Shortly after the rule was promulgated, five States (North Dakota, Wyoming, Montana, Texas, and Utah) filed a lawsuit, which is still pending. They advance several grounds for a court order setting aside ( i.e., vacating) the 2024 Rule, including an argument similar to one that prevailed in the Wyoming district court cases. 16 Specifically, the States argue that the BLM exceeded its MLA authority in regulating air emissions and thus intruded on the delegated regulatory province of the States under the Clean Air Act (CAA). 17 While the North Dakota court has stayed proceedings and has not ruled on the merits, it did preliminarily enjoin implementation and enforcement of the rule within the five plaintiff States, concluding plaintiffs were likely to prevail on their claim that the 2024 Rule preempts “an area that is already regulated” by the States under their delegated CAA authority. 18 16   Western Energy Alliance, No. 2:16-cv-00280, State of Wyoming, No. 2:16-cv-00285. 17   North Dakota v. Interior, No. 1:24-cv-00066 (D.N.D., Apr. 24, 2024). 18   North Dakota, 2024 U.S. Dist. LEXIS 164665, *16 (D.N.D. Sept. 12, 2024). The BLM appealed the injunctive order to the Eighth Circuit Court of Appeals. However, in February 2025, before briefing concluded, the BLM requested and obtained an order holding the appellate proceedings in abeyance indefinitely. 19 In support of its request, the BLM explained it needed time to consider, among other things, E.O. 14154, “Unleashing American Energy,” which directs Federal agencies to identify any rules or other actions that “impose an undue burden on the identification, development, or use of domestic energy resources,” and to consider whether to “suspend, revise, or rescind” them. 20 19   North Dakota v. Interior, No. 24-3299 (8th Cir., Jan. 27, 2025). 20  90 FR 8353 (Jan. 29, 2025). As a result of the district court's 2024 injunction, NTL-4A now governs BLM royalty determinations in North Dakota, Wyoming, Montana, Texas, and Utah. In all other States where Federal or Indian oil or gas is produced (other than on leases issued by The Osage Tribe), the 2024 Rule governs royalty determinations. C. Legal Authority Pursuant to a delegation of Secretarial authority, the BLM is authorized to regulate oil and gas exploration and production activities on Federal and Indian leases under a variety of statutes, including the MLA, the Mineral Leasing Act for Acquired Lands of 1947 (MLAAL), the Federal Oil and Gas Royalty Management Act of 1982 (FOGRMA), the Indian Mineral Leasing Act of 1938 (IMLA), the Indian Mineral Development Act of 1982 (IMDA), and the Act of March 3, 1909. 21 These statutes authorize the Secretary to promulgate such rules and regulations as may be necessary to carry out the various statutory purposes. 22 21  30 U.S.C. 188-287 (MLA); 30 U.S.C. 351-360 (MLAAL); 30 U.S.C. 1701-1757 (FOGRMA); 25 U.S.C. 396a-g (IMLA); 25 U.S.C. 2101-2108 (IMDA); and 25 U.S.C. 396 (Act of March 3, 1909). The latter three statutes govern the BLM's regulation of operations on Indian trust and restricted fee lands. 22  30 U.S.C. 189 (MLA); 30 U.S.C. 359 (MLAAL); 30 U.S.C. 1751(a) (FOGRMA); 25 U.S.C. 396d (IMLA); 25 U.S.C. 2107 (IMDA); 25 U.S.C. 396 (Act of March 3, 1909). The latter three statutes govern the BLM's regulation of operations on Indian trust and restricted fee lands. In 2022, Congress amended the MLA to expressly require lessees to pay royalties “on all gas produced,” 30 U.S.C. 1727(a), 23 subject to: a limited exception for emergencies (up to 48 hours); an exception for on-lease use of produced gas; and an exception for produced gas that is “unavoidably lost.” Id. 1727(b). Certain provisions in the 2024 Rule implemented the 2022 MLA amendments, 24 including § 3179.83 (2024) (Emergencies), which codified the noted 48-hour cap on royalty-free flaring. However, the 2022 amendments were repealed on signing of the One Big Beautiful Bill Act (OBBB). See sec. 50103, Public Law 119-21 (July 4, 2025). As further discussed below, the BLM proposes amending the regulations to address the OBBB. 23  This provision altered the long-standing requirement that royalties be paid on gas “removed or sold” from the lease. 30 U.S.C. 226(b)(1)(A). 24   See 89 FR at 25387 (discussing the 2022 MLA amendments). Finally, in FOGRMA, Congress established a system for collecting and accounting for Federal mineral royalties and made lessees liable for royalties on “oil or gas lost or wasted from a lease site when such loss or waste is due to negligence [or] the failure to comply with any rule or regulation, order or citation issued under [FOGRMA] or any mineral leasing law.”  25 The proposed regulations restate the FOGRMA negligence provision. See 43 CFR 3179.41(e) (proposed). 25  30 U.S.C. 1756. III. Summary of the Proposed Rule E.O. 14154, Unleashing American Energy, directs agencies to identify rules that “impose an undue burden on the identification, development, or use of domestic energy resources,” and to consider whether to “suspend, revise, or rescind” them. It emphasizes the importance of job creation and the availability of reliable and affordable electricity, as well as the need for low energy prices to avoid “driving up the cost of transportation, heating, utilities, farming, and manufacturing, while weakening our national security.”  26 These are sound and legitimate objectives for Interior to consider when making decisions within its broad MLA authority to regulate oil and gas development on Federal and Indian lands. 26  E.O. 14154 at 1. Responding to E.O. 14154, the Secretary issued Order No. 3418 (Feb. 3, 2025), 27 which directed removal of impediments to the development and use of energy and natural resources subject to Interior's jurisdiction. The order identified a goal of advancing innovation to improve energy and critical minerals identification, permitting, leasing, development, production, transportation, refining, distribution, exporting, and generation capacity of the United States to provide a reliable, diversified, growing, and affordable supply of energy for our Nation. 28 27  Secretarial Order (S.O.) 3418, Unleashing American Energy (February 3, 2025). 28  S.O. 3418 at 1. Section 50103 of the OBBB repealed Section 50263 of the Inflation Reduction Act, Public Law 117-169 (2022) (Royalties on all Extracted Methane). Section 50263 specified that, for all new leases, royalties shall be assessed for all gas produced, including all gas that is consumed or lost by venting, flaring, or negligent releases through any equipment during upstream operations. Exceptions included: gas vented or flared for not longer than 48 hours in an emergency situation that poses a danger to human health, safety, or the environment; gas used or consumed within the area of the lease, unit, or communitized area for the benefit of the lease, unit, or communitized area; or gas that is unavoidably lost. Given these directives, and changes in law, the BLM carefully reconsidered the 2024 Rule to identify undue burdens on operators and impediments to energy development that could be either eliminated or refined for greater efficiency. The effort resulted in this proposed rule, which is best understood by how it changes the current rule. The 2024 Rule was designed to eliminate the inefficiencies of NTL-4A, an objective the BLM still favors, as well as to improve royalty collection and safety and to reduce waste of oil and gas. However, it attempted these things by requiring unnecessarily expensive equipment and imposing reporting and administrative obligations that are not required by statute. For example, the 2024 Rule revised 43 CFR 3162.3-1 (Drilling applications and plans), to add a requirement that an operator either submit a waste minimization plan with any application for a permit to drill (APD), or “self-certify” that it will “capture 100 percent of oil-well gas produced by an oil well.”  29 In 2024, the BLM estimated the recurring cost to operators of this requirement at $400,000 annually. The BLM is proposing to eliminate these provisions because they are overly expensive, they are not required by law, operators are already financially incentivized to capture and sell as much gas as possible, and the pipeline capacity constraints of the 2010s have been alleviated to a degree. Additionally, given the objectives of E.O. 14154 and S.O. 3418, the BLM concludes that removing these provisions appropriately advances one of the MLA's central purposes, to “promote the orderly development” of Federal oil and gas “through private enterprise.”  30 29   See 89 FR at 25399; see also §§ 3162.3-1(j)(1)-(2), 3162.3-1(j)(3), 3162.3-1(j)(4), and 3162.3-1(k) (required elements of plan and self-certification). 30   Geosearch, Inc. v. Andrus, 508 F. Supp. 839, 842 (D. Wyo. 1981) (citing Harvey v. Udall, 384 F.2d 883 (10th Cir. 1967), quoting Senate Subcommittee of the Committee on Interior and Insular Affairs, The Investigation of Oil and Gas Lease Practices, 84th Cong., 2nd Sess. 2 (1957)); see also Public Law 66-146, 41 Stat. 437 (Feb. 25, 1920) (Mineral Leasing Act) (“An Act to promote the mining of coal, phosphate, oil, gas and sodium on the public domain.”) (emphasis added). The 2024 Rule also requires operators to develop, submit, and implement “leak detection and repair” (LDAR) programs, to be approved by the BLM. See 43 CFR 3179.100, 3179.101, 3179.102 (2024). In the RIA for this proposed rule, the BLM examined the recurring cost to operators of developing and maintaining the LDAR programs. This cost is estimated to be $16.8 million annually. The proposed rule eliminates this overly burdensome and expensive requirement, which, according to BLM estimates, would be only minimally effective in reducing waste. The BLM estimates that the 2024 Rule's LDAR requirement would allow for the annual capture of about 555,000 Mcf of gas, with an annual royalty value of $210,000. Under the 2024 Rule, this small increase in royalty revenue would be achieved at an expense of $16.8 million, a costly circumstance that is not warranted. Further, the volume of gas that the LDAR requirements are estimated to capture (555,000 Mcf) represents a very small fraction of the “lost gas” problem. Total annual gas losses (from venting, flaring, and leaks) are estimated at 55.5 Bcf. 31 31  The total volume of gas lost (55.5 billion) is based on actual venting and flaring data from ONRR and on the BLM's estimate of annual volumes of leaked gas. The 2024 LDAR requirements were forecast to eliminate a mere 1 percent of these estimated losses. It is unfair to expect operators to bear this inequitably high cost for generating such a small amount of additional royalty revenue. The BLM therefore proposes to eliminate the three noted LDAR provisions and the references to LDAR in current § 3179.41(b)(9) because they are not required by law, they are uneconomic, and operators are already financially incentivized to capture and sell gas. Eliminating this requirement will also advance the objectives of E.O. 14154 and S.O. 3418 by removing an undue burden on energy development. The BLM further proposes to revise a provision in § 3179.41, which establishes that some portion of flaring caused by pipeline capacity constraints constitutes an avoidable loss and is thus subject to a royalty obligation. Section 3179.41 in the 2024 Rule defines unavoidable loss by specifying 13 “operations or sources” where loss of gas is deemed unavoidable. See 43 CFR 3179.41(b) (2024). One of these circumstances—very common in recent years—is the need to flare gas due to pipeline capacity constraints, including midstream processing failures and similar transportation-to-market challenges. Under § 3179.41(b)(11) (2024), such flaring is deemed unavoidable, to a point. That point is specified in current § 3179.70. Once an operator exceeds certain arbitrary monthly limits—stated in thousand cubic feet of gas (Mcf) per barrel of oil produced per month—royalties are due. The limits on royalty-free flaring in the 2024 Rule are: (1) 0.08 Mcf per month in year 1 (from July 1, 2024, to July 1, 2025). (2) 0.07 Mcf per month in year 2. (3) 0.06 Mcf per month in year 3. (4) 0.05 Mcf per month will begin in year 4 and thereafter. Id. 3179.70. The proposed rule would eliminate these limits on royalty-free flaring by removing § 3179.70 and the reference to it in § 3179.41(b)(11) (2024) ( see proposed § 3179.41(b)(10)). The current limits benefit lessors through modestly increased royalties, while burdening lessees and operators with significant added expense and operational difficulties. The limits on unavoidable loss in current § 3179.70 are not required by statute and, in the BLM's view, impose significant and undue financial burden on operators who are already incentivized to capture and sell gas. Further, the limits impose additional accounting and record-keeping requirements on operators. The BLM concludes that removing these limits and the corresponding administrative burdens, which increase operator costs, appropriately removes undue burdens on development of domestic energy. For these same reasons, the BLM proposes to eliminate or reduce additional limitations on unavoidable loss in § 3179.41(b). Under the proposed rule, the following sources of lost gas would be retained as unavoidable losses ( i.e., royalty-free), but the time or volume limits on that royalty-free flaring would either be removed or relaxed: new well completion or recompletion; emergencies; use of an oil storage tank that is in compliance with § 3174.5(b); leaks; well tests for existing completions, downhole well maintenance and liquids unloading; and, as discussed in preceding paragraph, pipeline capacity constraints. The BLM proposes to retain leaks as unavoidable losses, but without requiring an LDAR program. Instead, the BLM will continue to hold operators responsible under § 3162.5-3 to operate in a workmanlike manner, which includes avoiding leaks. There are several additional sources of lost gas deemed unavoidable under the 2024 Rule which are retained in the proposed rule unchanged, except for minor edits for clarity or consistency with other rule revisions. These are: well drilling; normal operating losses from a natural-gas-activated pneumatic controller or pump; facility and pipeline maintenance ( e.g. depressurization of equipment); and flaring of gas from which at least 50 percent of the natural gas liquids have been removed on-lease and captured for market. The first source is derived from NTL-4A and its inclusion in the proposed rule reflects long-standing operational practice. The remaining sources have been in place since 2016 and two are standard industry practice ( i.e., the pneumatic controller provision and the facility and pipeline maintenance provision) that have proven safe and practical from both operator and BLM perspective. The final source ( i.e., the 50 percent provision for natural gas liquids) is intended to ensure greater capture of gas with high Btu content and reduced Btu content at the flare. The BLM is also proposing to remove two sources of lost gas because they are unnecessary: specifically, flaring during dewatering of exploratory coalbed methane wells, and flaring from a well that is not connected to a gas pipeline, to the extent that such flaring was authorized by an APD. Lastly, the proposed rule would expand the current definition of unavoidable loss in 3179.41(b) by designating as unavoidable the flaring of gas that is of such a low quality as to be unmerchantable, where the operator demonstrates the poor gas quality ( see proposed sec. 3179.41(b)(12)). Operators should not be required to pay royalties on gas that cannot be sold or beneficially used. IV. Section-by-Section Discussion of Proposed Rule A. 43 CFR Part 3160—Onshore Oil and Gas Operations Section 3162.3-1 Drilling Applications and Plans Current § 3162.3-1 requires an operator to submit an APD before conducting any drilling operations on a Federal or Indian oil or gas lease. No drilling operations may commence before APD approval. This proposed rule would reduce the requirements for an oil-well APD by removing the requirement to submit either a waste minimization plan (WMP) or a self-certification, which was intended to allow operators to verify that they have planned for the capture of the associated gas from an oil well. The current rule requires an operator to submit either a WMP or a self-certification stating that the operator will capture 100 percent of the gas that the oil-well produces. Under the current rule, the WMP must include the following information: (1) The anticipated initial oil production rate from the oil well and the anticipated production decline over the first 3 years of production; (2) The anticipated initial oil-well gas production rate from the oil-well and the anticipated production decline over the first 3 years of production; (3) Certification that the operator has a valid, executed gas sales contract to sell 100 percent of the oil-well gas, less gas anticipated for use on lease pursuant to 43 CFR subpart 3178, to a purchaser; and (4) Any information demonstrating the operator's plans to avoid the waste of gas production from any source, including, as appropriate, from pneumatic equipment, storage tanks, and leaks. The self-certification is a written statement that the operator will capture 100 percent of the gas produced except for any gas used on-lease under 43 CFR subpart 3178 or gas lost from an emergency under § 3179.83. For wells drilled with an approved WMP, flaring is subject to the monthly limitations on royalty-free flaring in current § 3179.70. Any flaring under an APD subject to a self-certification has a royalty obligation. Under the current rule, the BLM would approve an administratively and technically complete oil-well APD with a WMP or self-certification statement or defer action on an APD that was not administratively and technically complete until such time as the operator is able to amend the application to comply with the requirements of a WMP or self-certification statement. The current rule requires the applicant to address the BLM-identified deficiencies in the WMP or the self-certification statement within 2 years of the submission of the application or the BLM will disapprove the APD. The proposed rule would remove the requirement to submit either a WMP or self-certification with an oil-well APD. The BLM proposes to do this because the requirements are very expensive, they are not required by law, operators are already financially incentivized to capture as much gas as possible because it benefits them financially to do so, and much of the pipeline capacity constraints of the 2010s have been alleviated. B. 43 CFR Part 3170—Onshore Oil and Gas Production Subpart 3179—Royalty for Oil and Gas Lost From Onshore Federal and Indian Leases § 3179.1 Purpose The purpose of the 2024 Rule is fourfold: (1) To implement and carry out the purpose of the statutes related to the prevention of waste from Federal and Indian (other than The Osage Nation) oil and gas leases; (2) Protection of worker safety; (3) Conservation of surface resources; and (4) Management of the public lands for multiple use and sustained yield. See 89 FR 25426. The current rule's requirements are primarily focused on the prevention of waste from Federal and Indian oil and gas leases. This proposed rule would change the purpose to: (1) Ensuring proper compensation of mineral rights owners for produced oil or gas that is lost from Federal or Indian (except Osage Tribe) oil and gas leases; (2) Promotion of orderly and efficient development and administration of fluid mineral resources; (3) Reduction of regulatory burdens for operators of Federal oil and gas leases; and (4) Streamlining the BLM's administration of oil and gas losses. Although it is not stated in the purpose section in the rule text, this proposed rule also addresses concerns raised by the GAO in accounting for natural gas emissions with new requirements for the assignment of a venting or flaring measurement point (VFMP). 32 32  GAO, “OIL AND GAS—Interior Could Do More to Account for and Manage Natural Gas Emissions” (July 2016). § 3179.2 Scope The scope identifies the operations to which the various provisions of proposed subpart 3179 would apply. Paragraph (a) in the proposed rule remains substantively the same as the current rule, stating that the provisions of proposed subpart 3179 would apply to: (1) All onshore Federal and Indian (other than Osage Tribe) oil and gas leases, unit participating agreements (PAs), and communitization agreements (CAs); (2) Indian Mineral Development Act oil and gas agreements; (3) Leases and other business agreements and contracts for the development of Tribal energy resources under a Tribal Energy Resource Agreement entered into with the Secretary; and (4) Wells, equipment, and operations on State or private tracts that are committed to a federally approved unit or CA. The proposed scope would remove paragraph (b) of the current rule that, along with the opening phrase in paragraph (a) of the current provision, provided that five sections of this subpart (see §§ 3179.50, 3179.90, and 3179.100 through 3179.102) apply only to operations and production equipment located on Federal or Indian surface estates and not to State or private tracts. Under the proposed rule, the requirements in the five listed sections would be removed, so there is no further need for paragraph (b). Current paragraph (c) would be redesignated as paragraph (b). § 3179.10 Definitions and Acronyms The current rule contains definitions for 11 terms (“automatic ignition system,” “capture,” “compressor station,” “gas-to-oil ratio (GOR),” “gas well,” “high-pressure flare,” “leak,” “liquids unloading,” “lost oil or lost gas,” “low-pressure flare,” and “pneumatic controller”) to assist with understanding the rule's requirements. Proposed § 3179.10 would also contain definitions for 11 terms (“capture,” “gas-to-oil ratio (GOR),” “gas well,” “liquids unloading,” “lost gas,” “lost oil,” “pneumatic controller,” “Sundry Notice,” “Type 1 equipment,” “Type 2 equipment,” and “venting and flaring measurement point (VFMP)”). Some defined terms have a particular meaning in this proposed rule. Other defined terms may be familiar to many readers, but the BLM is including their definitions in the proposed rule to improve the clarity of the regulatory text. The proposed definition section would remove the terms “automatic ignition system,” “compressor station,” “high-pressure flare,” “leak,” and “low-pressure flare,” which appear in the current rule, since the terms are not used in the proposed regulatory text. The definitions of “capture,” “gas-to-oil ratio,” and “pneumatic controller” would remain unchanged from the current rule. The BLM also proposes rearranging and simplifying the current definition for “gas well” without changing its meaning. The BLM proposes to make minor changes to two definitions: “liquids unloading” and “lost oil or gas.” The proposed definition of the term “liquids unloading” would change the language that states “the wellbore of a completed gas well” to read “the wellbore of a gas well.” The inclusion of the word “completed” in the current phrasing in the 2024 Rule to describe a gas well does not improve the meaning of the term “liquids unloading.” The BLM proposes to split the term “lost oil or gas” and include separate definitions for “lost gas” and “lost oil.” The current rule's definition for “lost oil or gas” is too narrow for the proposed rule's objective of providing requirements for circumstances where lost gas production may be vented, flared, or combusted and the combined definition with its modifiers is unclear. The proposed definition for “lost gas” accommodates the idea that lost gas may be vented, flared, or combusted prior to removal from the lease, unit PA, or CA and cannot be recovered. The proposed definition for “lost oil” recognizes that oil can escape containment prior to removal from the lease, unit PA, or CA and may, in some instances, be recovered as waste oil, reconditioned, and placed into marketable condition for sale. In other instances, recovered oil would be disposed of as slop oil. The BLM also proposes to add definitions for the terms “Sundry Notice,” “Type 1 equipment,” “Type 2 equipment,” and “Venting and flaring measurement point.” The term “Sundry Notice,” which is not currently defined, would have the same meaning throughout part 3170. The BLM would include the new term, “type 1 equipment,” to describe the vent lines, flares or combustors that manage gas that would normally go to a sales line. This new term would replace and update the concept of “high-pressure flare” to eliminate any association with pressure for this type of equipment and to avoid confusion with the need for a pressure rating, as well as the unintended implication that the BLM requires flaring. Further, during the implementation of the current rule, the BLM observed that some operators were interpreting the term “high-pressure flare” to exclude gas that is “combusted” at combustors. The chemical reaction at flares and combustors is the same; but to avoid an overly exacting interpretation of the singular use of either flaring or combusting, the BLM proposes to use both terms throughout the proposed rule, as well as in the definition for “type 1 equipment.” The same is true of the new proposed term “type 2 equipment.” The addition of the proposed term “type 2 equipment” would replace and update the concept of the term “low-pressure flare” without an association to pressure or an unintended requirement to flare. The proposed rule would include a new requirement for operators to apply for a “venting and flaring measurement point (VFMP)” number to use for production accountability on monthly operator-completed “Oil and Gas Operations Reports” (OGORs). The VFMP, which is the point where produced gas that would normally go to a sales line is estimated or measured before being vented, flared, or combusted. The proposed rule includes a list of acronyms in the definitions section of the regulatory text to correct an oversight in the current rule regarding the acronyms that are used in this subpart. Acronyms for the current rule only appear in the preamble. The preamble is not published in the Code of Federal Regulations and therefore the current rule's acronyms are less readily available to the public. By including the acronyms in this proposed rule's regulatory text, the BLM intends to provide clarity and improve readability. § 3179.11 Severability This proposed section describes the legal principle of “severability” and applies it to the regulations in subpart 3179. If a court finds any portion of these regulations is to be invalid or unenforceable as to a particular set of circumstances or individuals, the BLM's intention is that the remaining portions of the regulations would remain in effect and the BLM would continue to enforce them. The BLM proposes to retain this severability section within the regulation text, with one non-substantive edit (substituting “persons” for “people”). If this proposed rule is adopted as a final rule and a court were to find certain sections invalid, the BLM's goal is for the remaining sections of the rule to remain in effect. § 3179.30 Incorporation by Reference (IBR) This proposed rule would incorporate an industry standard in its entirety in the CFR, a practice known as incorporation by reference. This standard was developed through a consensus process, facilitated by the American Petroleum Institute (API), with input from the oil and gas industry. The BLM has reviewed this standard and determined that it would further the purposes of proposed § 3179.50. The standard is currently approved for use in existing § 3179.71(c), which the BLM is proposing to remove in this rule (see discussion regarding existing § 3179.71 later in this preamble). In addition to relocating the standard within subpart 3179, this proposed rule would also make minor edits to existing § 3179.30 by updating the BLM point of contact and adding the acronym “IBR.” The proposed standard referenced in this section would be incorporated in its entirety. The proposed incorporation of the industry standard follows the requirements found in 1 CFR part 51. The industry standard can be incorporated by reference pursuant to 1 CFR 51.7 because, among other things, it would substantially reduce the volume of material published in the Federal Register ; the standard is published, bound, numbered, and organized; and the standard proposed for incorporation is readily available to the general public through purchase from the standard organization or through inspection at any BLM office with oil and gas administrative responsibilities. 1 CFR 51.7(a)(3) and (4). The language of incorporation in final 43 CFR 3179.30 meets the requirements of 1 CFR 51.9. The API material that the BLM is proposing to incorporate by reference is available for inspection at the Bureau of Land Management, Division of Fluid Minerals, U.S. Department of the