Oil and gas groups, states outline problems with BLM’s fracing rule

The US Bureau of Land Management issued a hydraulic fracturing regulation rule that lacks justification, cannot be administered technically, exceeds the agency’s regulatory authority, and violates federal law, the Independent Petroleum Association of America and Western Energy Alliance jointly said.

“BLM’s misunderstanding of numerous technical aspects of oil and gas production, as well as the agency’s failure to properly account for the final rule’s economic consequences, undermines the procedural legitimacy of the rulemaking,” IPAA and WEA said in comments filed Mar. 4 on their behalf in US District Court for Wyoming.

“Requiring oil and gas operators to comply with these unsustainable regulations would impose costs that cannot be recovered and discourage development that would benefit the public, without any demonstrable environmental or administrative benefits,” IPAA and WEA said.

“Because both the substance and procedural history of the final hydraulic fracturing rule violate the [federal Administrative Practices Act], the court should set aside the rule,” the trade associations urged.

Attorneys representing Wyoming, Utah, and Colorado, and the Ute Indian Tribe also asked the court to vacate the regulations in two filings. BLM issued the long-awaited final fracing rule for public lands nearly a year ago, but Wyoming’s government sued within a week, charging the US Department of the Interior agency exceeded its authority. Utah and Colorado subsequently joined the challenge (OGJ Online, Mar. 20, 2015; Mar. 27, 2015).

US District Judge Scott W. Skavdahl in Cheyenne first issued a stay preventing BLM from implementing the regulations and subsequently granted a preliminary injunction preventing BLM from enforcing the rule until legal challenges against it were resolved (OGJ Online, June 24, 2015; Oct. 1, 2015).

Comments were due on Mar. 7, with briefings expected to be completed by Apr. 18, OGJ has learned.

Did not identify gaps

In their comments, attorneys for IPAA and WEA argued that BLM relied on unsubstantiated public concerns about fracing and did not identify any gap in existing state and other regulations.

“BLM has not identified a single jurisdiction in which it contends [fracing] occurs on federal lands without sufficient regulatory protections,” they said. “[It] has no evidence that its costly proposed rule will be any more effective in practice than existing state regulations protecting water and other environmental values.”

The agency also offered “frack hits”—the transmission of fluids from one well bore to another in a producing formation—as a justification for the final rule after not raising the issue when the rule was proposed, the attorneys said.

They also said that a requirement to test the lateral well bore’s integrity serves no purpose, BLM’s redefinition of “usable water” disregards existing law and practice, the final rule’s failure to protect confidentiality and trade secrets violates federal law, recovered fluids storage requirements are not structured rationally, operators do not have information on how to comply with certification requirements, and the rule’s cement evaluation log requirement is based on unsupported assumptions.

BLM’s estimate of anticipated costs is also inadequate, the attorneys charged. “Although the final rule will add an additional authorization request and decision-making process to BLM’s administrative responsibilities—i.e., yet another permit—BLM has assumed only de minimis values to the expense and time necessary to prepare and review applications for permission to conduct [fracing],” they said.

“Given that there are often many months, if not years, between the time an [application for a permit to drill] is submitted and the time BLM approves [it], it is rare that an operator will have all the information related to [fracing] that the final rule requires at the time an APD is submitted,” they noted.

Lacks regulatory authority

In their brief, attorneys for the three states indicated that Congress has not given BLM authority to regulate fracing. “The Safe Drinking Water Act is the only source of federal authority to regulate underground sources of drinking water,” they said. The law’s underground injection contaminates program, which the US Environmental Protection Agency and states jointly administer, is meant to comprehensively address all underground injection activity, they added.

They also said that the 2005 Energy Policy Act conclusively removed fracing from federal oversight, leaving the matter to the states to regulate. “Despite the removal of almost all federal authority to regulate hydraulic fracturing, [BLM] persists in its rulemaking efforts,” the attorneys said. “Indeed, comments made by EPA itself during the rulemaking process demonstrate that the [fracing] rule is an attempt to resurrect EPA’s pre-Energy Policy Act authority.”

Unlike federal agencies, states do not need express grants of authority from Congress to carry out their own independent environmental regulation, they said. “Absent preemption by Congress, the states are free to regulate, under their inherent police power, for the protection of the public welfare including environmental regulation,” they said.

“Indeed, many states have regulated the practice of hydraulic fracturing; 99.3% of hydraulically fractured wells on federal land are covered by state regulation,” the attorneys noted.

Similarly, BLM’s attempts to justify its fracing rule under the 1976 Federal Land and Policy Management Act is not justified because FLPMA is a land management, and not an environmental protection, statute, they contended. Federal mineral leasing statutes govern leasing, and not protection of underground water, they said. “[BLM’s] claim that the Right-of-Way Leasing Act authorizes the fracing rule is similarly spurious,” they said.

Tribal concerns

The third filing—on behalf of the Ute Indian Tribe of the Uintah and Ouray Reservation—said BLM’s fracing rule is contrary to federal obligations for Indian tribes because the federal government is attempting to impose a rule designed for its own lands on tribal acreage.

“The only thing which has changed is that even after this court preliminarily enjoined the rule, even after the record showed the United States’ wrongful failure to consult and its other violations of law related to the Ute Tribe, the US and its co-respondents continue to offensively and paternalistically assert that they know what is best for the Ute Tribe and the Ute people,” it said.

“The tribe again reiterates that it is one thing for the US to adopt the [fracing] rule for its own lands, where it has the powers of both a government and the landowner; but it is something far different to paternalistically impose that exact same rule against tribal lands, where the US does not have the beneficial ownership,” the filing said.

The tribe also expressed concern that the US has been joined by interest groups in this case with even less basis who have adopted a similarly paternalistic position toward the tribe.

“While [we] can have reasoned discussions with others regarding what is best for the tribe, its lands, and its people, in the end it is for [us] to then make the decision,” it said. “It is not for outsiders or the US to attempt to impose their will on a tribe which has been existing and living on these lands since before the United States was born.”

Contact Nick Snow at nicks@pennwell.com.

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