BLM Publishes Final Public Lands Fracking Rule, Industry Responds with Lawsuit

by Stoel Rives LLP
Contact

[co-author: Shannon Morrissey - Law Clerk]

The federal Bureau of Land Management (“BLM”), within the Department of the Interior (“DOI”), published their final rule on hydraulic fracturing last Thursday, March 26.  (Hydraulic Fracturing on Federal and Indian Lands, 80 Fed. Reg. 16,128 (Mar. 26, 2015).)  The finalized rule comes almost four years after the initial proposed rule was published in the Federal Register on May 11, 2012 and follows the supplemental notice of proposed rulemaking and request for comment which was published on May 24, 2013.  The final rule becomes effective on June 24, 2015 and only governs wells hydraulically fracked on Federal and Indian Lands.  It does not apply to fracking activity on private and state-owned land, where most of the fracking in the United States occurs. 

In 2013, 90% of the 2,800 new wells on Federal and Indian lands were stimulated using hydraulic fracturing techniques, and the BLM approximates that the final rule will impact about 2,800-3,800 wells each year.  Regarding monetary impacts on operators, the “BLM estimates that the compliance cost will be about $11,400 per well . . . On average this equates to approximately 0.13 to 0.21% of the cost of drilling a well.”  (Id. at 16130.) 

The overarching purpose of the final rule is to protect human health and the environment from potential risks associated with hydraulic fracturing.  Further, the BLM’s rule states the following themes: “To ensure that wells are properly constructed to protect water supplies, to make certain that the fluids that flow back to the surface as a result of hydraulic fracturing operations are managed in an environmentally responsible way, and to provide public disclosure of the chemicals used in hydraulic fracturing fluids.”  (Id. at 16128.) 

Requirements under the Final Rule

The principal requirement under existing oil and gas regulations is the requirement of a permit for hydraulic fracturing activities.  Before beginning operations, an operator must submit an Application for a Permit to Drill (“APD”) to the BLM and wait for approval.  As the new regulations supplement the existing regulations, and do not replace them, this permit requirement will continue under the new regulations.

Additionally, the final rule requires the operator to do the following:

  • Submit additional information with its APD including wellbore geology, location of faults and fractures, and the depths of all usable water;
  • Design and implement a cementing program to protect usable water;
  • Monitor cementing operations during well construction;
  • Perform a mechanical integrity test;
  •  Monitor annulus pressure during the fracking activity;
  • Store waste fluids in “rigid enclosed, covered or netted and screened above-ground storage tanks;” and
  • Disclose chemicals used in the fracking activity.  (Id. at 16129-30.)

One of the most controversial aspects of the rule is the new definition of “usable water.”  Usable water is “defined generally as those waters containing less than 10,000 parts per million of total dissolved solids (TDS).”  (Id.)  The BLM altered this definition from previous versions of the rule in response to public comments, including removing from the definition aquifers used for agricultural or industrial purposes.  However, the BLM ultimately claims that there has been no substantial change in the definition and there will be “no significant changes in costs of running casing and cement.”  (Id. at 16142.)

In addition, the final rule provides that variances may be granted to states and tribes, only if the state or tribal requirements meet or exceed the objectives of the BLM rule.  A variance may be granted for specific requirements of the rule but not from the entire rule.  (Id. at 16167.)  Unlike several environmental statues, nothing in the BLM’s statutory authorities authorize delegation of BLM’s duties to state or tribal agencies.  (Id.)  However, in areas where BLM lacks regulatory authority, state and tribal laws will apply.  The final rule “recognizes that some tribes have been proactive in regulating hydraulic fracturing on their lands.”  (Id. at 16185.)  “It is not the BLM’s intent to preempt tribal regulations.”  (Id.)  Thus, in the absence of any preemption, the final rule will not change any tribal laws and regulations that would apply to leases of tribal and individually owned tribal lands.

Similarities to California’s Fracking Regulations

The final rule is similar to California’s Permanent Well Stimulation Treatment Regulations under Senate Bill 4, and the BLM notes that the regulations are consistent.  (Id. at 16129.)  The federal regulations and California’s regulations share the following requirements: a permitting scheme, chemical disclosure requirements, and well integrity testing.  California’s regulations, however, are more stringent and have the following, additional requirements: neighboring landowner notification and a water testing request option for such landowner, preparation of a groundwater monitoring plan, and an independent scientific study of the impacts of fracking commissioned by the California Natural Resources Agency.  The federal final rule differs from California’s regulations because the rule gives specific requirements for storage of waste fluids (in a “rigid, enclosed, covered or netter and screened above-ground storage tank”), whereas regulations under SB 4 merely instruct that “[f]luids shall be stored in containers and shall not be stored in sumps or pits.”  (§ 1786(a)(4).)

Opposition to the Final Rule

BLM’s final rule has failed to satisfy environmentalists or industry groups.  Environmental organizations argue that the regulations do not fully address and prevent potential risks of fracking, primarily climate change impacts.  Some environmental groups continue to advocate for a complete ban on hydraulic fracturing.

Industry groups have shown their dissatisfaction by filing a lawsuit.  On March 20, the Independent Petroleum Association of American and the Western Energy Alliance filed suit against the Department of the Interior and the BLM.  They argue that the “BLM’s rulemaking represents a reaction to unsubstantiated concerns and the administrative record lacks the factual, scientific, or engineering evidence necessary to sustain the agency’s final rule.”

On March 26, the state of Wyoming filed a lawsuit challenging the BLM’s final rule, making Wyoming the first state to challenge the regulations.  (Wyoming v. U.S. Dept. of Interior, Case No. 15-CV-43-5 (Mar. 26, 2015).)  Among other claims, Wyoming argues that the BLM’s final rule “exceeds the agency’s statutory jurisdiction, conflicts with the Safe Drinking Water Act, and unlawfully interferes with the State of Wyoming’s hydraulic fracturing regulations.”  Additionally, on March 31, the state of North Dakota announced that it is joining Wyoming’s suit.

Written by:

Stoel Rives LLP
Contact
more
less

Stoel Rives LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.