## Facts

- The Bureau of Land Management (BLM), within the U.S. Department of the Interior, issued the 2016 “Waste Prevention, Production Subject to Royalties, and Resource Conservation Rule” regulating venting, flaring, and leaks of associated natural gas from oil and gas operations on federal and Indian lands.
- The rule generally prohibited venting except in limited circumstances, limited flaring volumes, required operators to capture specified percentages of produced gas, imposed leak detection and repair obligations, and addressed when lost gas would be royalty-bearing.
- BLM justified the rule as preventing waste and protecting royalty revenues, while also citing the value of recovered gas and benefits from reduced methane emissions.
- Wyoming and Montana (with other states and industry groups) challenged the rule, arguing it was primarily an air-emissions regulation better left to the Environmental Protection Agency under the Clean Air Act rather than BLM under the Mineral Leasing Act (MLA).
- The litigation was stayed during related proceedings concerning a later repeal/replacement effort; after that effort was set aside in separate litigation, the challenge to the 2016 rule proceeded to a merits decision in the District of Wyoming.

## Issues

1. Whether the 2016 Waste Prevention Rule was authorized by the MLA as a waste-prevention and royalty-protection measure, or instead impermissibly regulated air emissions in an area primarily governed by the Clean Air Act.
2. Whether BLM’s adoption of the rule was arbitrary and capricious under the Administrative Procedure Act, including with respect to marginal wells, capture-percentage standards, and economic analysis.
3. If unlawful in part, whether the rule’s provisions were severable or should be vacated largely or entirely.

## Decision

- The court held that BLM exceeded its statutory authority under the MLA because a principal purpose and intent of the rule was to curb air emissions, not to address lease-level waste and royalty collection within BLM’s delegated role.
- The court also held the rule was arbitrary and capricious under the APA, including for inadequately addressing impacts on marginal wells, insufficiently supporting the capture-percentage requirements, and failing to separately consider domestic costs and benefits while relying heavily on global climate benefit assumptions.
- The court vacated nearly the entire rule, leaving only two severable provisions in place.

## Legal Principles

- Agency rulemaking must fall within the authority delegated by Congress; an agency may not justify regulation primarily on goals assigned to a different statutory scheme and lead regulator.
- Under the APA, an agency acts arbitrarily and capriciously when it fails to consider important aspects of the problem, does not adequately explain key standards, or relies on reasoning not supported by the administrative record.
- When parts of a rule are invalid, a court may sever and preserve discrete provisions only if they can function independently and are not intertwined with the rule’s unlawful rationale.

## Conclusion

The district court concluded that BLM’s 2016 waste-prevention regulation largely functioned as an air-emissions control program beyond the MLA’s grant of authority and, independently, reflected unexplained and unsupported policy choices under the APA; it therefore vacated all but two provisions.


Wyoming v. U.S. Dep’t of the Interior, 493 F. Supp. 3d 1046 (D. Wyo. 2020)