DOI issues final rule for fracing on public, tribal lands

The US Department of the Interior issued a long-anticipated final rule to govern hydraulic fracturing of onshore oil and gas wells on public and tribal lands. Officials said the regulations will improve safety and help protect groundwater by updating requirements for wellbore integrity, wastewater disposal, and public disclosure of chemicals.

“We really are upholding the public trust,” Sec. of the Interior Sally Jewell told reporters in a Mar. 20 teleconference. “It’s been pretty clear that there’s a lot of public fear and concern, particularly about groundwater. I don’t think anyone would say it makes sense to keep regulations in place from 30 years ago.”

US Bureau of Land Management Director Neil Kornze, whose agency has charge of implementing and enforcing the rule, said, “I think that once people have an opportunity to look at and analyze this final rule, they’ll be very comfortable with its provisions. They’ll also like the system to integrate with states which already have put forward their own regulations.”

DOI officials said that the key components of the rule, which takes effect in 90 days, include:

• Provisions for ensuring the protection of groundwater supplies by requiring a validation of well integrity and strong cement barriers between the wellbore and water zones through which the wellbore passes.

• Increased transparency by requiring companies to publicly disclose chemicals used in hydraulic fracturing to BLM through the web site FracFocus.org, within 30 days of completing fracturing operations. Exceptions for proprietary information would be allowed as long as BLM had access to the information in an emergency.

• Higher standards for interim storage of recovered waste fluids from fracing—specifically, use of rigid, above-ground containers instead of open, lined pits—to mitigate risks to air, water, and wildlife.

• Requirements for companies to submit more detailed information on the geology, depth, and location of preexisting wells to give BLM an opportunity to better evaluate and manage unique site characteristics.

“This rule will protect public health and the environment during and after [fracing] operations at a modest cost while both respecting the work previously done by the industry, the states, and the tribes, and promoting the adoption of more protective standards across the country,” said Janice Schneider, DOI’s assistant secretary for Land and Minerals Management.

“It will be implemented in the most efficient way possible to avoid duplication or unnecessary activities by industry, other regulators, or BLM staff,” Schneider said, adding, “We know how important it is to get this right.”

Jewell said, “I think the industry also recognizes that sensible regulation can help them because it helps address public concerns.” When a reporter mentioned that some members of Congress had expressed disapproval of the rule, Jewell added, “Political reaction is not surprising, but we’re confident from the process we went through that we did the right thing for the American people.”

But the rule also quickly drew criticism from an American Petroleum Institute official. “A duplicative layer of new federal regulation is unnecessary, and we urge BLM to work carefully with the states to minimize costs and delays created by the new rule to ensure that public lands can still be a source of job creation and economic growth,” said Erik Milito, API upstream and operations director.

He expressed approval for BLM’s following the lead of states that have already adopted FracFocus.org as their preferred tool for making more information available public on frac fluids which are used.

Associations sue

Attorneys representing the Independent Petroleum Association of America and Western Energy Alliance immediately sued in Federal District Court for Wyoming to have the new regulations set aside. “Independent producers operate in a responsible manner that protects the nation’s public lands, but the rule BLM has promulgated provides no public benefit,” said Mark S. Barron, an associate in Baker & Hostetler LLP’s Denver office who worked on the action.

“Requiring oil and gas operators to file repetitive paperwork with multiple government agencies will not prevent or remediate environmental harm,” Barron said. “To the contrary, if implemented the rule will rob oil and gas operators of the operational flexibility needed to ensure that the environmental footprint of development is reduced to the greatest extent possible.”

IPAA Pres. Barry Russell challenged DOI officials’ characterization of the rule as commonsense. “At a time when the oil and gas industry faces incredible cost uncertainties, these so-called baseline standards will threaten America’s economic upturn and further deter oil and gas development on federal lands,” he said.

Meanwhile, WEA Pres. Tim Wigley observed, “States have been successfully regulating fracing for decades, including on federal lands, with no incident that necessitates redundant federal regulation. BLM struggles to meet its current workload of leasing, environmental analysis, permitting, monitoring, inspecting, and otherwise administering the federal onshore oil and gas program. Yet it is undertaking an entirely new regulatory regime that it has neither the resources nor the expertise to implement.”

Kornze said, “On average, these commonsense measures represent less than 0.25% of the cost of drilling a well. These are smart investments that allow the industry to move forward, and assure the public that hydraulic fracturing occurs safely on public and tribal lands.”

Working with states

Officials emphasized that the final rule applies only to federally administered lands, but added that state regulations and oil and gas industry standards and practices also will matter. “There are a number of states where there’s oil and gas activity that have no fracing regulations,” Jewell said. “These standards may be all they have. There also are several states which already have sophisticated requirements. In those cases, the most stringent standards would apply.”

Kornze said, “We work very closely with oil and gas regulators in every state. We plan to sit down them and discuss which rules will apply, and work with them on other efficiencies, particularly concerning inspections where there’s a complicated land pattern.”

He said that requiring rigid, aboveground containers to be used for handling fluid blowbacks gives BLM more confidence that fracing operators can manage problems. “It also echoes what already exists in many states,” Kornze noted.

Schneider said, “Use of these tanks as a temporary measure for 90 days to manage blowback fluids already is very, very common. Information we’ve received is that it costs about $5,500/operation.”

Asked why DOI is using FracFocus.org, the voluntary system established several years ago by the Interstate Oil & Gas Compact Commission and the Groundwater Protection Council, Kornze said it would have cost BLM an estimated $25 million to build and operate its own frac fluid ingredient disclosure system. “We have confidence that FracFocus is heading in the right direction, but getting even better,” he said.

Jewell added, “When this rule goes into effect, BLM will be the largest customer of FracFocus. It will be represented on the board. FracFocus also has pledged to make improvements which will result in a new version.”

Contact Nick Snow at [email protected].