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BLM Hydraulic Fracturing Rule Update

Out here in the west public lands, including those under the purview of the Bureau of Land Management (BLM), make up a significant area within most states. This is especially true for the Great Plains and Intermountain West regions. In March 2015, the BLM issued its final version of the rule that underwent several revisions. The rule involved oversight of exploration and production (E&P) operations on BLM land to include well-bore integrity requirements and assessments, water management plans, and chemical disclosure. Early estimates put the cost to comply with the rule at roughly $100k, per well. At issue, is the authority of the BLM to regulate these operations, and this strikes a nerve with many, not unlike the feelings during the Sagebrush Rebellion period.

In his June decision, Judge Scott W. Skavdahl of the U.S. District Court for Wyoming set aside the rule and stated, “Congress has not delegated to the Department of the Interior the authority to regulate hydraulic fracturing. BLM’s effort to do so through the Tracking Rule is in excess of its statutory authority and contrary to law.” His ruling was based exclusively on statutory authority, blocking remand, and the judge found the Rule invalid under the Administrative Procedures Act. Judge Skavdahl cited previous decisions by Congress that prevented the U.S. Environmental Protection Agency (US EPA) from regulating these same practices under the Clean Water Act. Several states and one Native American tribe had brought the suit, arguing that the rules were unauthorized and redundant as the state already had the authority for regulating hydraulic fracturing on Federal land within its boundaries. As an example, New Mexico passed the “New Pit Rule” in 2013 that covers how E&P Operators are to handle and control contamination from hydraulic fracturing wastewater while at a well. Colorado had also enacted rules covering well integrity for operations on both federally owned (public) and private land. These rules are under the jurisdiction of the Colorado Oil & Gas Conservation Commission and are considered some of the most extensive in the nation.

(Photo: Bureau of Land Management)
(Photo: Bureau of Land Management)

In July, the 10th U.S. Circuit Court vacated a preliminary injunction blocking the June measure. About this same time the House of Representatives approved a measure to block funding needed by the BLM to carry out the rule. E&P Operators, many western states, and several Native American groups are obviously celebrating the June ruling. “Today is a victory, not only for state management and responsible stewardship of our natural resources, but also for states’ rights,” stated Tom Mullins, CEO of Synergy Operating LLC, a Farmington independent oil and gas company, and Northwest Vice President of the New Mexico Independent Petroleum Association. With environmental regulations coming out of the US EPA at a seemingly record pace, redundant regulations by the BLM are not helping those in the oil and gas industry. We will continue to monitor the BLM rule through these court rulings.