Last week, the Bureau of Land Management (BLM) released an updated draft rule governing hydraulic fracturing activities on public and Indian lands.  BLM estimates that fracking occurs at approximately 90 percent of wells drilled on these lands.  The updated rule follows an initial draft rule proposed in 2012, an extended comment period and several forums.  

BLM indicates that the updated rule would maintain safety standards, decrease duplicity with existing state standards and provide new alternative methods of compliance to increase flexibility for well operators.  As examples of increased flexibility, BLM identifies key issues in the updated draft as an expanded set of evaluation tools and more detailed guidance on trade secret protections.  This includes the use of the broader term of cement evaluation logs in place of cement bond logs, allowing a larger variety of methods for demonstrating compliance with well integrity standards.  To improve consistency with state regulations, the updated rule would require well operators to disclose the chemicals used in fracking operations by submitting information to FracFocus.org, an existing website already used by several states for mandatory fracking fluid disclosures.  The updated rule would also provide for a variance where existing state or tribal rules adequately correspond to the BLM rules.  To invoke trade secret protection, the updated rule specifies that an operator would need to submit an affidavit claiming trade secret protection of certain chemicals; however, BLM could demand certain details regarding these chemicals for its own records.  Like the prior rule, the updated rule requires pre-approval of a proposed fracking plan, monitoring and evaluation of well integrity before commencing fracking operations, monitoring during fracking operations, and reporting of information about the well and the fluids used and recovered during fracking operations (see May 8, 2012, post for more information about the prior rule).  BLM estimates the costs of the updated rule would range from $12 to $20 million per year.

Also, although the updated rule does not materially change the flowback fluid storage requirements, allowing storage in either tanks or lined pits, BLM does invite comment regarding the potential costs and benefits associated with mandatory closed tank storage.  BLM will take comments on the rule for a period of 30 days after publication in the Federal Register.

The updated rule has been met with objections from environmental groups and industry alike.  Environmental groups say that BLM weakened the rule from the earlier draft by allowing well operators to disclose chemicals used after fracking, rather than before, and to withhold chemicals under trade secret protection.  Environmentalists also argue that the rule should include baseline monitoring to evaluate potential impacts.  Industry representatives oppose the rule as unnecessary and duplicative of state efforts to regulate fracking.