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Industry Groups File Suit Against BLM’s New Federal Hydraulic Fracturing Rule

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IPAA-LogoAfter more than three years of work, the U.S. Department of Interior’s Bureau of Land Management unveiled its updated rules for hydraulic fracturing on federal and tribal lands and several oil and gas industry groups are rallying against the new rules.

“From California to Pennsylvania, the oil and natural gas industry has played a critical role in reviving America’s economy and hydraulic fracturing has been the key to this revival,” said Barry Russell, president and CEO of the Independent Petroleum Association of America (IPAA). “These new mandates on hydraulic fracturing by the federal government, however, are the complete opposite of common-sense.”

The IPAA and the Western Energy Alliance filed a complaint in the United States District Court for the District of Wyoming, asserting that BLM’s final rule is both substantively meritless and the product of a procedurally deficient rulemaking process. The Complaint requests that the federal court set aside the final rule. BakerHostetler filed the complaint March 20, immediately after the Bureau of Land Management (BLM) released its new rules. The rules, which only apply to wells drilled on federal or tribal lands, take effect in 90 days.

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The complaint characterizes BLM’s rulemaking as “a reaction to unsubstantiated concerns” and requests the regulations be set aside because the administrative record lacks the factual, scientific, or engineering evidence necessary to sustain the agency’s action. The complaint also characterizes the new rule as simply another regulatory overreach by the Obama Administration that will hurt America’s oil and natural gas producers.

“States have been successfully regulating fracking for decades, including on federal lands, with no incident that necessitates redundant federal regulation,” said Tim Wigley, president of Western Energy Alliance. “BLM struggles to meet its current workload of leasing, environmental analysis, permitting, monitoring, inspecting, and otherwise administering the federal onshore oil and natural gas program. Yet it is undertaking an entirely new regulatory regime that it has neither the resources nor the expertise to implement. If anything, BLM should be delegating more to the states in recognition of their exemplary environmental and safety records, not implementing new federal red tape that is not properly justified.”

In addition to the IPPA and Western Energy Alliance suit, the American Petroleum Institute came out against the new rules, saying the duplicative rules could slow the energy renaissance in the U.S. by adding costs and delays without improving on existing state and federal regulations.

“Despite the renaissance on state and private lands, energy production on federal lands has fallen, and this rule is just one more barrier to growth,” said Erik Milito, API’s director of upstream and industry operations. “Under the strong environmental stewardship of state regulators, hydraulic fracturing and horizontal drilling have opened up a new era of energy security, job growth, and economic strength. Increased production and use of natural gas has helped cut U.S. carbon emissions to a nearly 20-year low, and this decision only stands in the way of further progress, hampering natural gas development on federal lands onshore, where it has already declined an amazing 21.6 percent since 2009. A duplicative layer of new federal regulation is unnecessary, and we urge the 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.”

Key components of the rule, which will take 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 the Bureau of Land Management through the website FracFocus, within 30 days of completing fracturing operations;
• Higher standards for interim storage of recovered waste fluids from hydraulic fracturing to mitigate risks to air, water and wildlife;
• Measures to lower the risk of cross-well contamination with chemicals and fluids used in the fracturing operation, by requiring companies to submit more detailed information on the geology, depth, and location of pre-existing wells to afford the BLM an opportunity to better evaluate and manage unique site characteristics.

Milito credited the BLM for following the lead of states that have already adopted FracFocus.org as their preferred tool for improving the availability of information on fracturing fluids.

In a release about the filing of the complaint, BakerHostetler noted:

Independent oil and gas producers note several factors that undermine the legitimacy of BLM’s approach. Most important, even were another layer of administrative rules necessary to ensure that hydraulic fracturing can be conducted safely, a position that contravenes decades of technical evidence, BLM’s new regulations do not represent those rules. Despite being titled as a rule for “Hydraulic Fracturing on Federal and Indian Lands,” BLM’s proposal does not attempt to govern any aspect of the hydraulic fracturing process. This omission suggests little more than a politically-motivated attempt to appeal to those that misrepresent “hydraulic fracturing,” using the term as a proxy for all oil and gas development rather than focusing on the more accurate, and narrower, definition of the term as a well stimulation technique.

What is included in the final rule are new regulations imposing administrative impediments that will complicate and frustrate oil and gas production on federal lands. BLM has included cementing and construction standards that it contends will ensure well bore integrity, but which simply duplicate existing state regulations and industry best practices. The agency will now require public disclosure of chemical additives injected during production operations, mirroring requirements that already exist under state law. But unlike the states, BLM will now also require operators to disclose highly confidential operational and engineering design information in a manner that disregards the prohibitions against such disclosures under federal public records laws. And BLM’s proposal will impose rigid requirements for the methods that may be used to manage and store water produced during oil and gas operations, regardless of whether that storage method represents the most environmentally sensitive method of managing produced water.

“These new federal mandates will add burdensome new costs on our independent producers, taking investments away from developing new American-made energy, much-needed job creation, and economic growth,” Russell said. “The agency needs to further engage stakeholders, adequately assess the costs, and compare the proposal to existing safeguards under state law.”

To view the final rule, click here.

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