BLM Issues Proposed New Rule for Fracking Federal Lands

On Friday, the Department of Interior’s Bureau of Land Management (BLM) released the long anticipated new rule for hydraulic fracturing on federally-owned and Indian-owned land (see a copy of the proposed new rule embedded below). The question for MDN readers is, does this have any impact on drilling in the Marcellus and Utica Shale? The answer to that question is…

…both yes and no. If you consult a map of BML owned land, federally-owned land is located almost exclusively in the western U.S. Same for Indian-owned lands. So in that regard, there is no direct impact on drilling operations in the Marcellus and Utica—at least in the short-term. However, with respect to the larger issue, which is the attempt by the federal government to take over of regulation of oil and gas drilling, the answer would have to be a resounding “yes” that this will eventually impact all shale gas drilling.

The new rule from the BLM contains three parts:

1. All chemicals used in hydraulic fracturing must be publicly disclosed following the completion of fracking of a given well.
2. New guidelines for how drillers case (enclose) drilled wells, which must be approved prior to drilling the well.
3. Drillers must submit and have approved water management plans prior to drilling—plans that include how wastewater will be disposed.

The first two parts are already in place in most shale drilling states, under state law. The third is in place in some states and not others, and depending on how it’s implemented, can either be a minor nuisance, or potentially a major roadblock.

But wait! Doesn’t this only affect federal lands? Again, yes and no. The new rule only applies to federal lands, but federal lands are also subject to state laws with respect to oil and gas drilling, and the BLM has stated in their new rule that if a state regulation is more “protective” than the BLM rule, the state rule will remain in effect. If it’s the other way around, the BLM rule will apply. See how federal control creeps in?

Example: In Wyoming they have a law that says drillers must disclose fracking chemicals before drilling begins. But the new BLM rule says disclosure happens after drilling is completed. Presumably BLM would stick with the Wyoming regulation in this case, but it causes confusion and can potentially hinder oil and gas exploration.

Reaction in the mainstream press is interesting. The left-leaning media thinks it gives to much ground to the drilling industry. Conservative media thinks the new rules are unnecessary and intrusive, but in the end may be OK.

The new rule is now open for public comment for 60 days and the official rule will be adopted by the end of the year.

For more information, see:

• U.S. Department of Interior (May 4, 2012) – Interior Releases Draft Rule Requiring Public Disclosure of Chemicals Used in Hydraulic Fracturing on Public and Indian Lands
• Casper (WY) Star-Tribune (May 5, 2012) – Mixed Wyoming reaction to proposed federal fracking rules
• Forbes (May 4, 2012) – New Federal Fracking Rules Look Reasonable; Enviros Not Satisfied
• New York Times (May 4, 2012) – New Proposal on Fracking Gives Ground to Industry