Small businesses will bear the high costs associated with Obama-era rules restricting natural gas production on federal lands, a Washington, D.C.-based public policy group warned legislators Monday.
Philip Rossetti of American Action Forum said rules on venting and flaring methane from oil and natural gas on federal lands will cost private companies hundreds of millions of dollars annually. He added that the highly contentious rule does little to mitigate greenhouse gasses from methane, because only a fraction of natural gas production comes from federal lands.
“The estimated annual burdens are $110 – 279 million,” Rossetti wrote in a research note on the American Action Forum website. “Small businesses (defined as fewer than 1,250 employees) are expected to bear most the burdens, with an estimated 1,828 entities to be impacted and have an average per-entity cost of $42,300 – 63,600.”
Congress is currently working on approving a Congressional Revenue Act (CRA) repealing the rules. The GOP-led House approved the CRA in February, and Republicans in the Senate are mulling whether to support the act.
Republicans believe the rule, signed by former President Barack Obama shortly before he left office, is another duplicative rule from the Bureau of Land Management (BLM), while Democrats argue it’s needed to reduce greenhouse gasses causing global warming.
“The contortions BLM went through to say they had the legal authority is almost embarrassing,” Utah Republican Rep. Rob Bishop said in a statement on the CRA’s passing.
He added: “This is an illegal rule and it’s a costly one. This rule’s repeal is a vote for people and making sure their lives are better, not worse.”
Analysts are already skeptical about the rule’s ability to tackle climate change.
Global natural gas production emits only 219 million metric tons of greenhouse gasses, or about 3 percent of the current total, according to U.S. inventory of greenhouse gases. Rossetti noted that the relatively small amount of natural gas production on federal land makes the rules hurt more people than they help.
“Only 15.1 percent of U.S. natural gas production comes from federal land,” he wrote, “so the BLM’s rule would only target a very small portion of national emissions, and primarily small businesses at that.”
The BLM openly admitted in a regulatory impact analysis that the rules will negatively affect natural gas production, a development Rossetti called “disturbing since natural gas has been the biggest driver of declining emissions in the U.S.”
Recent research by the Environmental Protection Agency (EPA) appears to support Rossetti’s claim. The agency stated last year that carbon dioxide contributes more to global warming than methane, which is responsible for 10 percent of all U.S. greenhouse gas emissions.
The EPA’s data also show methane emissions have fallen as hydraulic fracturing, or fracking, increased natural gas production. The agency still wants to regulate methane to reduce global warming.
Rosetti concluded that the more pressing matter is whether a CRA, which would effectively prevent introducing future fracking regulations on federal lands, is the most appropriate way to nix the methane rule.
He did add a caveat to his concern. Natural gas systems contribute only 3 percent of current total greenhouse gas emissions, Rosetti wrote, meaning the potential for significant climate benefit either through this regulation or future similar regulations is small.
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