On May 16, 2013, the Bureau of Land Management (BLM) released a Supplemental Notice of Proposed Rulemaking and Request for Comment regarding hydraulic fracturing on BLM-administered public and Indian lands (Revised Proposed Rule). This Revised Proposed Rule was issued in response to comments on the initial draft Proposed Rule published on May 11, 2012 (Initial Proposed Rule). The BLM received over 177,000 comments on the Initial Proposed Rule. The impetus for this proposed rule is the increasing incursion of drilling and development activity in populated areas, which has raised public awareness and intensified regulatory scrutiny of hydraulic fracturing. This issue, coupled with the fact that BLM’s hydraulic fracturing regulations are outdated (established in 1982 and last updated in 1988), has caused the BLM to conclude that there is a need to revise its regulations to “modernize” BLM’s management of hydraulic fracturing operations and create a “uniform” national standard for operations on BLM-managed oil and gas resources.

The Initial Proposed Rule required operators to (1) disclose to the public the chemicals used in hydraulic fracturing, after the fracturing operation is completed; (2) confirm that wells used in fracturing operations meet appropriate construction standards to ensure well-bore integrity; and (3) require operators to employ appropriate plans for managing flowback waters from fracturing operations. In addition to these three main components — which remain in the Revised Proposed Rule — the Revised Proposed Rule also requires the use of an expanded set of cement evaluation tools (rather than cement bond logs) to ensure that water resources are being protected and provides more detailed guidance on disclosure requirements, modeling Colorado’s rule, which adopts FracFocus as the disclosure medium and entitles operators to trade secret protections. Furthermore, the Revised Proposed Rule would allow operators to seek a variance from the BLM rules allowing deference to states and tribes that already have standards in place that meet or exceed those proposed by this rule in order to reduce administrative costs, eliminate duplication, and improve efficiency.  Significantly, the variances would apply only to operational activities, including monitoring and testing technologies, and do not apply to the actual approval process for obtaining a permit to drill from the BLM.

Environmental advocates, who in response to the first call for comments had pushed for full disclosure of the chemicals used in the drilling process and tougher standards for groundwater protection and well-bore integrity, are disappointed that their proposals were not adopted in the Revised Proposed Rule. Industry trade associations have expressed the concern that perceived ambiguity and vagueness in the Revised Proposed Rule could lead to misinterpretation by operators and inconsistent application by BLM engineers and inspectors, and that the Department of the Interior still has not justified the rule from an economic or scientific point of view. This 171-page Revised Proposed Rule is the first significant regulation issued under the new Secretary of the Interior. Balancing the competing interests, Secretary of the Interior Sally Jewell commented on the Revised Proposed Rule: “As the President has made clear, this administration’s priority is to continue to expand safe and responsible domestic energy production. In line with that goal, we are proposing some commonsense updates that increase safety while also providing flexibility and facilitating coordination with states and tribes … As we continue to offer millions of acres of America’s public lands for oil and gas development, it is important that the public has full confidence that the right safety and environmental protections are in place.”

The BLM suggests that most of the new requirements can be satisfied by submitting additional information during the current application process for drilling operations on public or Indian lands and opines that the productivity in oil and gas gained in the last three years will not be impacted by the Revised Proposed Rule. BLM’s goal with these Initial and Revised Proposed Rules is to ensure that additional impositions on operators are the least burdensome, while still accomplishing the goal of protecting public lands and resources. The BLM also estimates the imposition of this rule would cost from US$12 million to US$20 million per year for operators. Upon publication in the Federal Register, interested persons have 30 days to comment. Note also that congressional leaders of the House Committee on Natural Resources have asked the BLM to extend the comment period to 120 days. The entire Revised Proposed Rule is available for public comment. Comments can be submitted through the Federal eRulemaking Portal