United States: Federal Onshore

Updated December 2021

Policy and Targets

Background and the Role of Reductions in Meeting Environmental and Economic Objectives

US flaring data and international agreements are described in section 1 of the preceding case study, on US federal offshore production. According to the Energy Information Administration, in 2021, the United States vented and flared about 287 billion cubic feet, of which 36 percent were in Texas, 27 percent in North Dakota, 23 percent in Wyoming, and 6 percent in New Mexico.

The share of onshore oil production on public lands has been increasing slowly for years. It picked up pace after 2015, thanks to increased drilling and development in tight oil plays, reaching 10 percent of total onshore oil production in 2020. The share of onshore gas production on public lands has been declining for years. It fell below 9 percent of total onshore gas production in 2020.

Flaring and venting from oil and gas operations on public lands has been regulated by the Department of the Interior’s Bureau of Land Management (BLM) since 1980. In a 2010 report, the Government Accountability Office (GAO) identified opportunities to reduce flared and vented gas in federal onshore and offshore fields to increase royalties and reduce greenhouse gas (GHG) emissions. In a 2016 report, the GAO identified gaps in the regulation of flaring and venting in federal onshore fields by the BLM and the Department of Interior’s Office of Natural Resources Revenue (ONRR).

In 2014, the President’s Climate Action Plan set a goal of cutting methane emissions from oil and gas operations by 40–45 percent below the 2012 level by 2025. In response, the BLM issued the 2016 Waste Prevention Rule, which targeted the reduction of flaring and venting via a series of new measures, including some of the recommendations from the 2016 GAO report. The BLM’s 2016 Waste Prevention Rule was never fully implemented, because of legal challenges from states and industry groups. In 2018, the BLM revised the rule. In 2020, federal courts vacated both versions in response to legal challenges and the BLM regulation reverted to rules set in 1980. Other states and environmental groups litigated to reinstate the 2016 Waste Prevention Rule. On November 30, 2022, the BLM proposed a new rule, the Waste Prevention, Production Subject to Royalties, and Resource Conservation. The rule codifies the general guidelines of Section 50263 of the Inflation Reduction Act of 2022. It is narrower than the 2016 Waste Prevention Rule to avoid similar legal challenges. Relevant specifics of the proposed rule are discussed in later sections of this case study.

In late 2021, the Environmental Protection Agency (EPA) issued the latest version of the New Source Performance Standards (NSPS). After a second round of comments, the rule is expected to be published by the end of 2023 (see section 1 of the preceding case study, on federal offshore production). The Inflation Reduction Act introduced a methane penalty.

Targets and Limits

The updated waste prevention rule proposed in November 2022 sets new limits . The proposed rule allows only 48 hours of royalty-free flaring under emergency situations, which are defined more narrowly than before; and limits royalty-free flaring due to pipeline constraints, processing failures, or similar events to 1,050 cubic feet (mcf) per month, per lease, unit, or communitized area (see section 9 of this case study). The BLM can mandate operators to curtail or shut in production if reported flaring exceeds 4,000 mcf per month for three consecutive months and the BLM confirms that flaring is ongoing (Section 3179.8).

The EPA’s proposed NSPS rule requires 95 to 100 percent reductions in methane and VOC emissions from various equipment such as pneumatic devices and storage vessels.

Legal, Regulatory Framework, and Contractual rights

Primary and Secondary Legislation and Regulation

The BLM has the authority to manage and regulate public lands under the Federal Land Policy and Management Act, 1976. Title 30 US Code (Mineral Lands and Mining), as amended over the years, outlines various regulators’ roles in, and general principles for, oil and gas leasing. The BLM also has authority to develop regulations “for the prevention of undue waste” under Section 187 and to ensure that lessees “use all reasonable precautions to prevent waste of oil or gas” under Section 225 of Title 30.

BLM Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost, 1980 (NTL-4A), is the key document governing the regulation of flaring and venting on public lands. Title 43 Code of Federal Regulations (CFR) Subpart 3178 superseded sections in NTL-4A requiring operators to obtain prior written BLM approval for beneficial use of oil and gas at the lease, unit, or communitized area. The rule proposed in November 2022 does not change this requirement. In addition, with the changes proposed to Subpart 3179, NTL-4A, would be replaced in its entirety. Overall, the proposed rule would regulate flaring and venting of natural gas as well as methane leaks during oil and gas operations on federal and Indian lands. Comments have been collected and a final rule is expected by the end of 2023. Various sections of this case study discuss the relevant clauses.

The EPA issues and updates the NSPS under section 111 of the Clean Air Act, 1990. Title 40 CFR Subpart OOOO, issued in 2012, commonly known as Quad-O, focuses on the emissions of volatile organic compounds from onshore oil and gas facilities for which construction, modification, or reconstruction commenced after August 23, 2011, and on or before September 18, 2015. In 2016, Quad-O was amended with Subpart OOOOa for onshore facilities for which construction, modification, or reconstruction commenced after September 18, 2015. These amendments added GHGs, including methane leaks from hydraulically fractured oil well completions and most midstream sources. In 2020, the EPA rescinded most of the new restrictions following an Executive Order from President Trump in 2017. In response to an Executive Order from President Biden, the EPA issued new regulations in November 2021 and revised them based on feedback from stakeholders in November 2022. The new rule proposes Subparts OOOOb and OOOOc to strengthen the coverage of methane and volatile organic compound emissions. Subpart OOOOb proposes standards for emission sources previously not regulated and for facilities that commenced construction, modification, or reconstruction after November 15, 2021. Subpart OOOOc offers guidelines to states to limit methane emissions from oil and gas facilities existing on or before November 15, 2021. The new rule is to be finalized by the end of 2023.

Legislative Jurisdictions

Federal laws and regulators govern flaring and venting on public lands. Regional BLM offices have the authority to interpret national BLM guidance if local conditions warrant it, sometimes in coordination with state energy, environmental regulators, or tribal authorities.

Associated Gas Ownership

Natural resource ownership is tied to land ownership. The federal government owns oil, gas, and other minerals found below the surface of public lands except for certain tribal lands. Firms access oil and gas in federal lands through a concession (lease) from the BLM state offices. The concession grants the right to explore for and, if a commercial discovery is made, own, develop, and produce oil and gas. Royalties are not paid on unavoidably lost gas, which includes flared and vented volumes under certain conditions (see section 21 of this case study).

Regulatory Governance and Organization

Regulatory Authority

The Department of Interior’s BLM regulates flaring and venting from oil and gas leases on onshore federal and Indian lands. State regulators or tribal authorities may have rules, regulations, or orders governing flaring or venting of oil-well gas or emissions from flaring and venting. The BLM’s regional supervisors ratify such rules and any flare or vent authorizations issued by appropriate state regulators. The EPA has regulatory jurisdiction over air emissions from flaring and venting.

Regulatory Mandates and Responsibilities

The BLM has independent statutory responsibilities to prevent the waste of mineral resources, including oil and gas, in the course of their extraction from public lands. The BLM and state authorities may disagree, as demonstrated by the 2016 Waste Prevention Rule  and the legal challenges that followed its issuance (see section 1 of this case study).

The BLM and the EPA have no overlapping or conflicting mandates. However, in 2020, the court found that the 2016 Waste Prevention Rule of the BLM was essentially a regulation of air emissions, which is in the purview of the EPA; and was not justified as a waste prevention regulation as allowed under Title 30. The EPA’s new NSPS proposal and the new BLM proposal on waste prevention should be complementary. The BLM purposefully focused on updating NTL-4A  in a way to avoid similar legal challenges. Energy and environment regulators in states have historically adapted national regulations such as the EPA NSPS to their own conditions. These regulations often overlap and can create uncertainty.

Monitoring and Enforcement

The BLM Oil and Gas Program conducts inspections—averaging 30,000 annually since 2010—to ensure compliance with federal and Indian laws, regulations, policies, and permit conditions of approval. Title 43 CFR Subpart 3163 defines enforcement actions in case of noncompliance. The BLM has the authority to impose financial and nonfinancial penalties. Under the proposed waste prevention rule, the BLM can require operators to curtail or stop production if the agency determines that flaring surpassed the limits proposed in the rule (see section 2 of this case study).

Licensing/Process Approval

Flaring or Venting without Prior Approval

Title 43 CFR Section 3179.4 of BLM’s new rule proposed in November 2022 defines “unavoidably lost” gas when flaring is allowed royalty free—the operator must not have been negligent, must have taken prudent and reasonable steps to avoid waste, and must have complied fully with applicable laws, lease terms, regulations, provisions of a previously approved operating plan, and other written orders of the BLM. Section 3179.4(b) provides a list of 14 operations or sources from which lost gas may be considered as “unavoidably lost.” Many of these operations or sources have limitations or requirements detailed in other subsections to qualify. For example, 10,000 mcf during new hydraulic fracturing completions; 5,000 mcf during recompletions (wells connected to a pipeline); and 20,000 mcf total during initial production tests up to 30 days (with possible extensions to 60 days or 30,000 mcf).

Venting is not allowed unless flaring or capturing are not technically feasible or in the case of emergencies. The proposed rule provides more detailed description of conditions under which venting may be allowed under Title 43 CFR Section 3179.6 (Safety).

According to NTL-4A , which is in effect until the proposed rule is enacted, flaring or venting is allowed without royalty obligation or prior authorization from the BLM if volumes are considered “unavoidably lost,” defined as follows:

  • Volumes are lost during temporary emergencies, such as the failure of a compressor or other piece of equipment, relief of abnormal system pressures, or other conditions that result in flaring or venting of gas. Such venting or flaring cannot exceed 24 hours per incident or a cumulative total of 144 hours for the lease during any calendar month.
  • Volumes are lost during the unloading or cleaning up of a well during routine evaluation tests. Such flaring or venting cannot exceed 24 hours.
  • Volumes are lost during initial production tests, not exceeding 30 days or 50 million cubic feet (mmcf) of gas, whichever occurs first.
  • Gas vapors are released from storage tanks or other low-pressure production vessels. A BLM regional supervisor may determine that operators must recover such vapors.
  • Oil and gas are lost as a result of line failures, equipment malfunctions, blowouts, fires, or similar events. If a BLM regional supervisor determines that the loss resulted from the negligence or failure of the operator to take all reasonable measures to prevent the loss, losses cannot be classified as “unavoidably lost.”
Authorized Flaring or Venting

Flaring and venting are authorized under Subparts 3179.101 through 3179.104 of Title 43, which cover initial production testing, subsequent well tests, emergencies, and downhole well maintenance and liquids unloading. The proposed rule expands on these definitions.

According to NTL-4A , prior authorization from a BLM regional supervisor is required if emergency flaring is expected to last longer than 24 hours. If a longer period of production testing is necessary, state regulators, if applicable, must authorize it, and the BLM regional supervisor must ratify this authorization. These requirements are essentially the same in the proposed rule.

Gas from a gas well cannot be flared or vented except in narrow circumstances such as downhole well maintenance and liquids unloading that may cause gas flow to stop (limited to 24 hours according to the conditions outlined in Section 3179.204). Except when it falls under the “unavoidably lost” category (see the previous section), associated gas from oil wells cannot be flared or vented without written approval from a BLM regional supervisor.

Development Plans

The BLM’s 2016 Waste Prevention Rule  required that a waste-minimization plan be submitted along with the application for an oil well drilling permit. The BLM rescinded this requirement in 2018. According to the BLM’s justification, at least some states have comparable gas capture requirements. In the rule proposed in November 2022, the BLM demonstrates that state programs are insufficient for the BLM, as the federal regulator, to assess potential waste during the permitting stage. Accordingly, the proposed rule requires operators to submit a plan to minimize waste of associated gas from an oil well along with the application for a permit to drill (APD). The plan must demonstrate how the operator plans to capture associated gas as soon as production starts, or justify any delays (adding Paragraphs [j] and [k] to Title 43 CFR Subpart 3162.3-1). The waste prevention plans are assessed using the concept of “unreasonable and undue waste of gas” defined in the rule as “frequent or ongoing loss of gas that could be avoided without causing an ultimately greater loss of equivalent total energy than would occur if the loss of gas were to continue unabated.” The BLM sought comments on this definition as it proposed to use it to approve, deny, or delay APDs. 

Economic Evaluation

According to NTL-4A , BLM regional supervisors consider the economics of a field-wide plan for oil and gas production for the leasehold. The BLM may approve an application for flaring or venting associated gas from oil wells if either of the documents below could justify the proposed action:

  1. A technical and economic report by the operator demonstrating that
    • the expenditures necessary to market or beneficially use gas are not economically justified and
    • conservation of the gas, if required, would lead to the premature abandonment of recoverable oil reserves and ultimately to a greater loss of equivalent energy than would be recovered with flaring or venting of the gas.
  2. An action plan from the operator that will eliminate flaring or venting within a year from the date of application.

However, a 2016 GAO report  found that the BLM’s field offices approved a large percentage of flaring and venting requests without the documentation required in the BLM’s guidance. About half of the approved operations were allowed to flare royalty-free. The GAO also observed that the BLM’s field offices had applied BLM guidance inconsistently and sometimes with significant differences. The rapid increase in drilling activity in tight oil and other unconventional plays since the early 2010s led to a significant increase in the number of applications for various permits to the BLM’s regional offices, overwhelming staff. The proposed rule does not allow case-by-case economic assessment of whether flared oil well gas can be considered royalty free.

Measurement and Reporting

Measurement and Reporting Requirements

According to NTL-4A , “the volume of oil or gas produced, whether sold, avoidably or unavoidably lost, vented or flared, or used for beneficial purposes must be reported.” The definition of beneficial purposes in NTL-4A is superseded by Title 43 Subpart 3178 , which primarily defines conditions for qualification as lease-use gas. Operators must also report to the regional supervisor “the volume and value of all oil and gas which is sold, vented or flared without the authorization” [of the supervisor], or those volumes deemed by the supervisor to be avoidably lost.

All hydrocarbons produced from a well completion, including all gas flared, vented, and liquid hydrocarbons burned, must be reported on Form ONRR-4054, per Title 30 CFR § 1210.102. As with federal offshore, since September 15, 2010, leaseholders must specify flaring and venting volumes separately in the Oil and Gas Operations Report (OGOR) Part B. They must use different disposition codes for flared oil-well gas, flared gas-well gas, vented oil-well gas, and vented gas-well gas.

According to NTL-4A, if the amounts of oil or gas involved have been measured, the measured volumes must be reported. Estimation criteria are provided. Metering is not required, but the BLM’s regional supervisors may require the installation of additional measuring equipment if the goals of NTL-4A are not met with existing equipment or estimation methods. Separately, operators must follow the guidance of Title 43 Subpart 3175 on gas measurement. This subpart has clauses on gas metering technology, hardware, and software requirements for metering, performance standards, and record-keeping requirements to ensure accurate royalty calculations.

Measurement Frequency and Methods

For reporting required by NTL-4A  two forms must be filed: Form 9-329, the Monthly Report of Operation, and Form 9-361, the Monthly Report of Sales and Royalties. According to Title 30 CFR § 1210.102 , all operators must file Form ONRR-4054 for each well for each calendar month, beginning the month in which drilling is completed unless it is only test production or ONRR grants an exemption in writing.

Engineering Estimates

According to NTL-4A, when there is no measurement, the volume of oil or gas must be determined utilizing the following criteria, as applicable:

  • last measured throughput of the production facility
  • duration of the period in which no measurement was made
  • daily lease production rates
  • historic production data
  • well production rates and gas-to-oil ratio tests
  • productive capability of other wells in the area completed in the same formation
  • subsequent measurement or testing, as required by the supervisor
  • other methods approved by the supervisor.

The 2016 GAO report  considers these methods insufficiently specific, leading to varied methodologies across regions subject to the approval of the BLM regional supervisor. According to the report, some operators adopted estimation techniques used in the EPA’s GHG reporting. The 2016 Waste Prevention Rule  had more prescriptive requirements on measurement and estimation of flare and vent volumes (Title 43 § 3179.301), but the courts vacated Subpart 3179 in 2020. The proposed rule Subpart 3179.9 provides details on measurement and reporting requirements, including mandatory metering for large flares.

Record Keeping

According to Title 43 § 3170.7, “lessees, operators, purchasers, transporters, and any other person directly involved in producing, transporting, purchasing, selling, or measuring oil or gas through the point of royalty measurement or the point of first sale... must retain all records, including source records, that are relevant to determining the quality, quantity, disposition, and verification of production attributable to Federal or Indian leases” for 6–7 years subject to conditions described in the statute. The BLM reviews operational records every one to four years, depending on the lease conditions and performance.

Data Compilation and Publishing

The ONRR is responsible for compiling the OGOR databases, which include flare and vent volumes as well as emissions. Given the concerns expressed in the 2016 GAO report regarding the lack of specificity of the guidance for the OGOR reporting process, these data may not be consistent or complete.

Data on flared and vented volumes, aggregated by region, are available online from the Energy Information Administration. They are based on voluntary summary reports from states, which, in turn, depend on self-reporting by producers. Not all states collect or report flaring and venting data to the Energy Information Administration. Those that do report do not necessarily follow the same reporting standards. Hence this data set is incomplete, and there are inconsistencies between state data and data published online by the Energy Information Administration. Section 17 of the preceding case study, on US federal offshore production, cites other national data sources.

Fines, Penalties, and Sanctions

Monetary Penalties

According to Title 43 CFR § 3163.1, in the event of failure or refusal to comply with BLM regulations, the terms of any lease or permit, any notice, or order requirements, the regulator notifies the party concerned in writing of the violation. A fine of US$1,000 per violation a day for major violations and a fine of US$250 per violation a day for minor violations may be imposed. According to Title 43 CFR § 3163.2, for failure or refusal to comply within 20 days (or another time period set by an authorized officer of the BLM) of the violation notice, the operator is liable for a civil penalty, which can be as high as US$5,000 per violation a day for up to 60 days.

According to the BLM’s proposed rule, all flares or combustion devices must be equipped with an automatic ignition system. Upon discovery of a flare that is not lit, the BLM may subject the operator to an immediate assessment of US$1,000 per violation (Section 3179.6).

The IRA of 2022 introduced a methane penalty. Starting in 2025, facilities emitting more than 25,000 tonnes of methane per year are subject to the penalty (see section 18 of the preceding case study, on US federal offshore production).

Nonmonetary Penalties

According to Title 43 CFR § 3163.1, “when necessary for compliance, or where operations have been commenced without approval, or where continued operations could result in immediate, substantial, and adverse impacts on public health and safety, the environment, production accountability, or royalty income,” the regulator may shut down operations after due written notice. Immediate shut in is possible if a BLM regional supervisor deems the offense severe enough. Continued noncompliance may lead to lease cancellation. According to Title 43 CFR § 3163.2, in addition to civil penalties, there can be criminal penalties of up to two years of imprisonment.

Enabling Framework

Performance Requirements

Section 20 of the preceding case study, on US federal offshore production, covers national environmental regulations with performance requirements applicable to flares. For onshore operations, Title 43 CFR § 3179 required operators to find and repair leaks at least twice a year. However, a court vacated Subpart 3179 in 2020. One of the litigants’ concerns was that the cost of adding equipment for leak detection would be too high for many small operators. The proposed rule reinstates Subpart 3179, which has performance requirements with respect to safe operation of flares, limits on flared and vented volumes under various circumstances such as well completions. Subpart 3179.301 of the proposed rule requires operators to maintain a leak detection and repair program, which will be subject to annual (or more frequent) inspections. Any leak must be repaired as soon as practicable but no later than 30 days after its discovery (Subpart 3179.302). Operators must provide a report on each inspection as well as an annual report (Subpart 3179.303).

Fiscal and Emission Reduction Incentives

According to NTL-4A , unavoidably lost production (see section 9 of this case study) is exempt from royalty calculations. BLM officers may determine that lost production was caused by failure to comply fully with the applicable lease terms and regulations, or appropriate provisions of the approved operating plan. Avoidable losses are subject to royalty. Set by law in 1920, the minimum royalty rate on federal onshore is 12.5 percent.

The BLM’s 2016 Waste Prevention Rule  introduced several conditions that create additional incentives. For example, it detailed the economic justification necessary for operators to demonstrate that capture is uneconomic and introduced a limit of 10 mmcf per well a month. Above this limit, the BLM may determine that gas is avoidably lost and hence subject to royalty. The 2016 rule also required that an action plan show how the operator will minimize the flaring or venting of the oil-well gas within one year. An operator may apply for approval of an extension of the one-year limit. If the operator fails to implement the action plan, the entire volume of gas vented or flared during the time covered by the action plan is subject to royalty. The BLM rescinded these requirements in 2018. Under the proposed rule, with the APD requirement (see section 11 of this case study), qualification as unavoidably lost production is expected to be more difficult.

Use of Market-Based Principles

No evidence regarding the use of market-based principles to reduce flaring, venting, or associated emissions could be found in the sources consulted. See section 22 of the case study on US federal offshore production.

Negotiated Agreements between the Public and the Private Sector

No evidence regarding negotiated agreements between the public and the private sector could be found in the sources consulted.

Interplay with Midstream and Downstream Regulatory Framework

For a description of the US natural gas market and infrastructure development, see section 24 of the case study on US federal offshore production. For onshore operations, the BLM’s proposed waste minimization plan (see section 11 of this case study) was intended to guide operators to work with midstream companies to identify sufficient pipeline and processing capacity near the planned drilling site so that associated gas can be captured from the first day of production. The previous US administration rescinded this requirement. The current one may reintroduce it or something similar.