Oil, Gas Producers: BLM Fracing Rule Unnecessary; Undermines State Authority

August 22, 2013

Today, the Independent Petroleum Association of America (IPAA) and Western Energy Alliance submitted comments on the Department of the Interior’s (DOI) second draft of the proposed rule to regulate hydraulic fracturing and well construction on federal lands.

“This rule undercuts states’ authority to regulate energy production, a realm in which they have been successful for decades. The cost to the industry will be a colossal $345 million a year. This bureaucratic burden will discourage independent producers from exploring for natural gas and oil on federal lands,” said IPAA President and CEO Barry Russell.

“Our federal system has vested the states with the authority to ensure that development of energy sources is safe and responsible. Together with state regulators and local environmental groups, the U.S. oil and natural gas industry has secured the great benefits of the shale revolution, while protecting the environment and strengthening local communities. DOI should not be in the business of undermining this progress,” Russell concluded.

“The Interior Department cannot point to a single instance of an environmental problem from hydraulic fracturing. DOI cannot demonstrate that states are not adequately regulating or that federal regulation is more effective,” said Kathleen Sgamma VP of Government and Public Affairs for Western Energy Alliance.

“DOI already struggles to meet its current obligations, and has neither the resources nor the expertise to implement this very prescriptive, complex rule. The rule will further disadvantage the West, as development, jobs, and economic activity will continue to migrate to areas without federal lands.”

Here are three major areas of concern explained in IPAA and Western Energy Alliance’s comments:

  •  Usable Water Definition Creates Confusion and Increased Costs Without Any Benefit. Currently, state oil and gas agencies and BLM field offices identify the usable water zones and formations that must be protected. The proposed rule upsets this locally-sensitive practice and imposes a costly burden for operators to identify all usable water zones, irrespective of localized geographic and geologic considerations. This increased stringency could cost as much as $310 million per year without any appreciable benefit to the public or protection of water resources.
  • State/Tribal or Basin Variance Language is Flawed. The proposed rule claims to provide a procedure for BLM to recognize a state’s or tribe’s regulations as satisfying BLM’s requirements, but it does not actually provide a means for state regulations to take precedence.
  • Economic Analysis is Inadequate and the Rule is Arbitrary and Capricious.  BLM’s economic analysis estimates costs of $3,138-5,011 per well for a cumulative cost to industry of $12-20 million. However, a Western Energy Alliance / IPAA study released in July found BLM’s analysis to omit several significant categories of cost to the industry. In reality, the rule would cost $96,913 per well for a cumulative annual cost of $345 million. 

Click here to read Western Energy Alliance's position paper on state variance. 

Click here see the full technical comments.