The U.S. Environmental Protection Agency (EPA) issued its final methane rule on May 12. The 600-page rule is agenda-driven and backed by pseudoscience, emotions, and unicorn dust, and it’s important to note one specific change in the final rule amounts to a regulatory taking. The final rule imposes costly regulations on wells producing fewer than 15 barrels per day, effectively shutting down those businesses.
In North Dakota, there are over 3,000 low-volume wells, often referred to as “stripper wells.” Stripper wells are defined as those wells that produce fewer than 40 barrels of oil per day; the majority produce 15 barrels or less. The drop in oil prices is already impacting the viability of stripper wells, and the state’s oil regulators have recently loosened rules to allow these wells to be idle for up to two years as the operators wait for higher oil prices.
Stripper wells ensure every last drop of oil can be produced in a region, but the low volume means the owners of these wells are very vulnerable to changes in costs related to maintaining and operating each well. When EPA expanded its methane rule to include these low-volume wells, it effectively added significant costs to each well — a decision that will likely lead operators to abandon their projects.
A press release issued by the National Stripper Well Association (NSWA) puts it bluntly. “These new rules will cripple stripper and marginal well owners and operators, and on top of historically low oil prices, we are looking at total disaster,” said NSWA Chairwoman Darlene Wallace. “By requiring the addition of new costly equipment requirements and expensive leak detection the economics within the oil and gas industry as a whole will be fundamentally changed, severely and forever.”
Forcing owners of these low-volume wells to shut them down amounts to a regulatory taking. Under the Fifth Amendment to the U.S. Constitution, private property cannot be taken for public use without just compensation. Courts have ruled this right, commonly referred to as the Takings Clause, applies to the loss of many kinds of property taken as a result of government regulation.
http://spectator.org/the-epas-taking-on-strippers/
