Arbitrary and Burdensome? BLM Issues New Fracking Rules
Arbitrary and Burdensome? BLM Issues New Fracking Rules
On March 20, 2015, the U.S. Department of the Interior issued a final rule regulating hydraulic fracturing (‘fracking”) in connection with all oil and gas extraction on public lands managed by the Bureau of Land Management (“BLM”). The BLM rule marks the first widespread federal regulation of fracking. The new rule will take effect 90 days after publication on the federal register, and will apply to approximately 3,800 oil and gas wells annually. BLM estimated the per-well cost of compliance as and additional $11,400. However, industry estimates vary, and indicate that per-well cost of compliance with the new requirements could be as high as $100,000.
Some of the main requirements of the BLM rule include directing oil and gas operators to:
- Validate well integrity prior to fracking;
- Design and implement a casing and cementing program that follows best practices;
- Monitor cementing operations during well construction and take remedial action if cementing is inadequate;
- Disclose chemicals used in fracking to BLM via the FracFocus website; and
- Provide more detailed information on existing wells for assessment by BLM.
In the event of noncompliance, BLM’s remedies will be governed by existing regulations under 43 C.F.R. § 3163, which include: written notice of violation, shutdown of operations, civil penalties, or criminal penalties under certain circumstances.
Members of the oil and gas industry have denounced the new requirements as arbitrary and burdensome since individual states have been regulating fracking on federal land for years. After the new rule takes effect, operators with leases on federal lands will be required to comply with the BLM requirements in addition to state operating requirements, to the extent that the state regulation does not conflict with the federal rule. States that currently regulate fracking operations include: California, Colorado, New Mexico, Montana, North Dakota, and Wyoming.
In response to the new rule, the Independent Petroleum Association of America and the Western Energy Alliance filed a lawsuit challenging the rulemaking in Wyoming federal court. The lawsuit asserts that the BLM rule is duplicative with existing state regulations and is based on scientifically unsupported concerns related to fracking. Similar opposition has occurred in Congress. Senator Inhofe (R-OK) introduced S.B. 828, “The Fracturing Regulations are Effective in State Hands Act” (FRESH Act), which would revoke BLM’s new rule and prohibit the executive branch from regulating fracking on federal lands. The bill is not expected to pass, but it is anticipated that Congress will propose similar legislation in the future to preclude further federal regulation of fracking.
Update provided by Mitchell Chadwick attorney Aman Sidhu.