Industry challenges new fracking rules for federal lands

Industry groups and environmentalists alike chafed on Friday at new federal mandates on the use of hydraulic fracturing on federal lands, although a Colorado official said the new rules didn’t differ significantly from regulations already in place in the state.

Rules unveiled Friday morning by the Bureau of Land Management would force oil companies drilling on federal tracts – including the Pawnee National Grassland in Weld County – to disclose the chemicals they pump underground along with water and sand as part of the oil and gas extraction process known as “fracking” and require them to store the used water in tanks instead of open pits.

Additionally, under the new regulations, government inspectors would check the safety and integrity of the cement barriers that line fracking wells on federal lands.

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Within an hour after the BLM had released the new regulations, the Denver-based Western Energy Alliance and the Washington, D.C.-based Independent Petroleum Association of America sued the federal Department of the Interior in U.S. District Court in Cheyenne, Wyo., challenging the new mandates as “a reaction to unsubstantiated concerns.” The industry groups were represented by Denver law firm Baker and Hostetler LLP.

The industry groups say the mandates, although targeting fracking on federal and Indian lands, are much broader in scope and impose one-size-fits-all rules that conflict with state regulations tailored to specific areas.

However, Todd Hartman, communications director at the state Department of Natural Resources, said many of the new federal regulations aren’t that different from state rules, which also apply to fracking on federal lands within Colorado.

“The biggest similarity between the new BLM rules and Colorado’s rules is the public disclosure of chemicals using FracFocus as a repository,” Hartman said. “Like Colorado, the BLM will require disclosure after fracturing operations are complete.”

FracFocus is an industry-backed not-for-profit registry. Environmentalist groups had wanted the disclosures to be made before fracking began on a site instead of 30 days after its conclusion.

“BLM rules will require a successful Mechanical Integrity Test prior to fracturing. Colorado also requires MITs, but not prior to fracturing,” Hartman said. “However, this is common practice in Colorado and is also widely practiced as an industry standard.

“The BLM will require storage tanks for fluids associated with hydraulic fracturing, with very limited exceptions. Colorado allows the use of pits, but with specific requirements and not in certain circumstances. Over the past several years, many operators have transitioned into closed-loop systems and no longer rely on pits.”

One federal rule that does significantly supersede state rules, Hartman said, is that “BLM will require certain additional information before and after fracturing takes place. That includes the anticipated source and volume of water to be used, and the estimated volume of fluids to be recovered, as well as the proposed method for disposal of the fluids.”

Interior Secretary Sally Jewell defended the new rules, which are to take effect in 90 days. “Current federal well drilling regulations are more than 30 years old,” she said Friday, “and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing.”

She urged the oil and gas industry to embrace the new mandates because they would help alleviate “a lot of public fear” about fracking.

But Tim Wigley, president of the Western Energy Alliance, said that “states have been successfully regulating fracking for decades, including on federal lands, with no incident that necessitates redundant federal regulation. …

“If anything, BLM should be delegating more to the states in recognition of their exemplary environmental and safety records, not implementing new federal red tape that is not properly justified,” Wigley said. “This is a classic case of federal overreach, with the government taking on even more control that will stifle economic growth and job creation while limiting the return to American taxpayers on the energy they all own.”

Kathleen Sgamma, the alliance’s vice president for government and public affairs, described the Pawnee National Grassland as a unique case – a checkerboard of federal and private lands. No surface drilling is permitted on the federal tracts, but their underground oil and gas deposits can be reached from drill sites on adjacent private lands via horizontal fracking. Because the deposits themselves are beneath the federal surfaces, however, the new BLM rules would apply, she said.

“These rules would further disadvantage public lands and continue to drive more responsible development onto private lands – or to other states,” Sgamma said. “They actually have more of an effect on bigger BLM tracts on the Western Slope.”

The alliance had claimed that a May 2013 preliminary draft of the rules would put the price of compliance for an average well at $97,000, nearly 10 times the BLM estimate of about $10,000. On Friday, BLM Director Neil Kornze called the cost of the new mandates “modest” – less than a quarter of 1 percent of what it costs a company to drill a well.

Some environmentalists, meanwhile, said the rules didn’t go far enough.

“These rules put the interests of big oil and gas above people’s health and America’s natural heritage,” said Amy Mall, senior fracking policy analyst at the Natural Resources Defense Council. “These rules fail to protect the nation’s public lands – home to our last wild places and sources of drinking water for millions of people – from the risks of fracking.”