Bloomberg BNA

BLM proposed rule on drilling technique criticized as going too far, not far enough


Source: Bloomberg BNA

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The Bureau of Land Management will create high and unnecessary financial burdens and will undercut state regulations with its proposed rule to regulate hydraulic fracturing on federal and Indian lands, according to industry groups filing comments just ahead of the Aug. 23 comment deadline.

Environmental activists took the opposite view, criticizing BLM's proposal as insufficient to protect human health and the environment from the consequences of hydraulic fracturing, a technique used in oil and natural gas extraction. Many groups and individuals said fracking should be banned altogether.

The proposed rule focused especially on testing for well integrity, disclosure of chemicals, and tracking of use and disposal of water and wastewater (2013 WLPM, 5/22/13).

States already regulate hydraulic fracturing, or fracking, on federal as well as other lands within their borders. The BLM proposal, as revised in May, would include a variance for state or Indian tribal regulations that meet or exceed federal standards. The variance plan did not mollify industry groups, which again described the plan as a duplicative layer of costly regulations.

Interior Secretary Sally Jewell has said BLM, an Interior Department agency, will complete the rulemaking this year.

Cost Estimates Disputed

The American Petroleum Institute, an industry group, said BLM was proposing regulations for the wrong reasons.

“BLM is attempting to justify new regulations based solely on perceived 'public concern,' not on actual data or agency experience administering oil and gas leases on federal and Indian lands. This is arbitrary and capricious agency action,” API said.

The regulations will cost industry anywhere from $30 million to $2.7 billion a year, API said, citing an analysis by the consulting company Advanced Resources International Inc. “Even on the low end, this estimate is substantially higher than the BLM's, which assumes annualized costs to industry, without empirical support, of only about '$12 [million] to $20 million,' ” the association said.

Another cost estimate was offered in comments filed by the Independent Petroleum Association of America and Western Energy Alliance, joined by several other industry associations. A study for IPAA and Western Energy Alliance put the annual cost to industry at $345 million. That study said the cost per well would be $96,913, not the $3,138 to $5,011 that BLM estimated.

“The economic analysis for the proposed hydraulic fracturing rule is woefully deficient,” IPAA and Western Energy Alliance said. “As previously discussed in our comments on the substantive provisions of the rulemaking, BLM has underestimated the costs of virtually every aspect of the proposed rule.”

More Environmental Protection Urged

Mass mailings of form letters written by environmental advocates constituted the great majority of the comments filed on the BLM proposal. Advocacy groups said the proposed rule should be strengthened to increase disclosure of chemicals, forbid open-air wastewater pits, tighten other technical requirements, and keep drilling farther from national parks.

Food and Water Watch and both advocated a complete ban on fracturing on federal lands, largely out of concern for greenhouse gas emissions. The groups submitted letters on behalf of thousands of individuals.

The Natural Resources Defense Council similarly submitted variations of a letter that urged “putting our most sensitive public lands off-limits to any oil and gas development. Secondly, do not let development proceed on other lands without smart, comprehensive regulations for all forms of well stimulation, including fracking, that will protect our air, water, wildlife and human health.”

Fourteen California state legislators, all Democrats, sent a letter asking BLM to expand the proposed rule to cover not only hydraulic fracturing but also all forms of well stimulation. The lawmakers especially expressed concern about acid stimulation, which injects acids into a geologic formation to improve oil or gas flow.

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