The U.S. Department of the Interior unveiled new mandates on March 20 to regulate hydraulic fracturing on public and American Indian lands.

The mandates highlight new measures to protect groundwater, including updated requirements for wellbore integrity, wastewater disposal and public disclosure of chemicals. The new rule will go into effect in 90 days.

Secretary of the Interior Sally Jewell said the new standards were much needed in order to bring onshore oil and gas drilling regulations into the 21st century.

There are more than 100,000 oil and gas wells on federally managed lands. Of wells currently being drilled, more than 90% use hydraulic fracturing, the Interior Department said in a release.

“Current federal well-drilling regulations are more than 30 years old and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” Jewell said.

The Bureau of Land Management (BLM) estimates the new mandates will cost less than one-fourth of 1% of the cost of drilling a well, based on the Energy Information Administration’s average per well cost of $5.4 million.

Key components of the new rule:

  • Provisions for ensuring the protection of groundwater supplies by requiring a validation of well integrity and strong cement barriers between the wellbore and water zones through which the wellbore passes;
  • Increased transparency by requiring companies to publicly disclose chemicals used in hydraulic fracturing to the BLM through the website FracFocus, within 30 days of completing fracking operations;
  • Higher standards for interim storage of recovered waste fluids from hydraulic fracturing to mitigate risks to air, water and wildlife; and
  • Measures to lower the risk of cross-well contamination with chemicals and fluids used in the fracking operation, by requiring companies to submit more detailed information on the geology, depth, and location of preexisting wells to afford the BLM an opportunity to better evaluate and manage unique site characteristics.

Backlash

Since the release of the new mandates, several oil and gas industry organizations have voiced their opposition.

The American Petroleum Institute (API) said the rule imposes new costs and delays on energy development without improving on existing state and federal regulations.

"Despite the renaissance on state and private lands, energy production on federal lands has fallen, and this rule is just one more barrier to growth,” said Erik Milito, API director of upstream and industry operations.

Milito said that the decision hampers progress in energy security, job growth and economic strength made by state-regulated hydraulic fracturing and horizontal drilling.

“A duplicative layer of new federal regulation is unnecessary, and we urge the BLM to work carefully with the states to minimize costs and delays created by the new rule to ensure that public lands can still be a source of job creation and economic growth,” he said.

The America’s Natural Gas Alliance (ANGA) said the rule is a step in the wrong direction.

“We are disappointed that the rule did not appropriately recognize the extensive regulatory structures already in place in states across this country," said Frank J. Macchiarola, executive vice president of government affairs for ANGA. "This overly burdensome approach adds an unneeded regulatory layer that could affect our members’ ability to produce this clean, abundant and affordable natural gas resource.”

Macchiarola said state regulators “have shown that they best understand the unique geological conditions that exist within their borders, and they have the expertise needed to oversee natural gas development.”

The Independent Petroleum Association of America (IPAA) and Western Energy Alliance (WEA) filed suit in U.S. District Court for the District of Wyoming on March 20 requesting that the court set aside the final rule.

The suit claims that “BLM’s final rule is both substantively meritless and the product of a procedurally deficient rulemaking process.”

Attorneys with BakerHostetler’s Energy and Shale practice team, including Mark Barron, Poe Leggette, and Alex Obrecht, are representing IPAA and WEA.

New Measures

The mandates are the culmination of four years of extensive public involvement. The BLM published both a draft rule and a supplemental draft rule, held regional forums and numerous stakeholder meetings on the proposal and reviewed more than 1.5 million public comments, according to the Interior Department release.

The updated and strengthened regulations provide a framework of safeguards and disclosure protocols that will allow for the continued responsible development of federal oil and gas resources, Jewell said.

“As we continue to offer millions of acres of public lands for conventional and renewable energy production, it is absolutely critical the public have confidence that transparent and effective safety and environmental protections are in place,” she said.

Other reforms will also include important measures to target where oil and gas leasing occurs and protect sensitive areas that are too special to drill.

The mandates applies only to development on public and tribal lands and includes a process so that states and tribes may request variances from provisions for which they have an equal or more protective regulation in place. This will avoid duplication while enabling the development of more protective standards by state and tribal governments, the release said.

The BLM oversees about 700 million subsurface acres of federal mineral estate and carries out regulatory duties of the Secretary of the Interior for an additional 56 million acres of Indian mineral estate across the U.S. The Indian Mineral Leasing Act and other laws require that Indian lands and communities have the same protections as U.S. public lands.