New federal mandates target hydraulic fracturing

WASHINGTON — The Obama administration imposed the first major federal mandates on hydraulic fracturing Friday, unveiling a plan forcing companies to disclose the chemicals they pump underground and seal off waste water in storage tanks instead of open pits.

The measure from the Interior Department’s Bureau of Land Management updates decades-old rules governing wells drilled on federally managed lands, with new standards for constructing them and conducting the hydraulic fracturing process critical to unlocking oil and gas from dense rock formations nationwide.

Although the rule only applies to development on public and tribal lands — where there are more than 100,000 oil and gas wells today — environmentalists have argued that tough federal protections could provide inspiration for state regulators.

And while the final rule falls well short of some environmentalists’ call for a total ban on fracking, Interior Secretary Jewell insisted that it still provides an essential update to outdated federal regulations and could go a long way to ensuring public confidence in the oil and gas drilling that has helped make the United States an energy super power.

Keeping pace

“Current federal well drilling regulations are more than 30 years old and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” Jewell said Friday.

Jewell suggested that the oil industry should buy in to the new mandates, which come amid “a lot of public fear” about fracking. “Thoughtful regulation can help them because it reassures the public that rules are in place that protect them.”

But the oil industry wasted no time in challenging the new rule, with the Independent Petroleum Association of America and the Western Energy Alliance filing a lawsuit against the measure in a Wyoming-based federal district court. They argue that it unnecessarily imposes one-size-fits-all federal mandates on top of existing well-tailored state regulations.

Read more: Industry swiftly challenges feds’ new fracturing rule

The rule also drew a swift rebuke from environmentalists, who said it did not do enough to safeguard communities, wildlife and the ground water on which they depend.

The measure, now set to take effect in 90 days, will require oil companies to disclose the chemicals they use in hydraulic fracturing. But, in a concession to the oil industry, those disclosures will be allowed through the not-for-profit FracFocus registry and will only be required within 30 days of completing fracturing operations — not before, as some environmentalists had wanted.

Read more: Feds to impose hydraulic fracturing and chemical disclosure mandates

Assistant Secretary for Land and Minerals Management Janice Schneider said the post-fracking disclosure allows for a realistic accounting of the chemicals that actually are pumped into a well, not a company’s best guesses about what might be used beforehand.

The Bureau of Land Management will require oil and gas companies that want to shield chemical information as trade secrets to submit affidavits justifying the exemptions.

The decision to use FracFocus comes as the industry-backed registry promises to make improvements to the system, including the way data can be retrieved. FracFocus has said it is working to allow users to download company-submitted data in a machine-readable format — not just PDFs — allowing better analysis and aggregation. A spokesman for the Ground Water Protection Council said machine-readable data are already available to regulatory agencies, though not the public.

“We expect to have the changes requested by BLM in place prior to the effective date of their rule,” said Dan Yates, associate executive director of the group.

Well integrity

The rule also imposes new requirements for validating the integrity of all wells and verifying there are strong cement barriers keeping the well bore isolated from underground water supplies.

The Bureau of Land Management is also setting new standards for storing the waste water that flows out of hydraulically fractured wells. In most cases, that means companies will be barred from using open-air pits to temporarily store the frack fluids and produced water that emerges from the underground formation.

Instead, companies would be required to keep those recovered fluids “in rigid enclosed, covered or netted and screened above-ground storage tanks, with very limited exceptions that must be approved on a case-by-case basis.”

Bureau of Land Management Director Neil Kornze said the requirement would “limit the opportunity for spills.”

The change is meant “to have greater confidence that we are, in fact, protecting groundwater — that if there’s a leak, if there’s a spill, we have greater ability to make the correction and stop it,” Kornze said.

That is a major win for environmentalists who said open-air pits allow toxic chemicals to leach into the area and present spill risks. Pits could still be used for permanent storage off site.

Balancing act

The measure has been hotly contested — and has proved challenging for regulators, who struggled to write a mandate that would apply to wells across the United States and assuage environmentalists concerned about hydraulic fracturing without putting up major roadblocks to the domestic drilling boom.

A first draft, unveiled in May 2012, was scrapped a year later, after it unleashed a torrent of public comments in opposition. The final rule unveiled Friday builds on a proposal released in May 2013.

Amy Mall, senior fracking policy analyst at the Natural Resources Defense Council, said the final regulation gave too much ground to the oil industry.

“These rules put the interests of big oil and gas above people’s health and America’s natural heritage.” she said. “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.”

Mark Ruffalo, an actor and advisory board member for Americans Against Fracking, called the regulations “nothing more then a giveaway to the oil and gas industry.”

Under the final rule, states and tribes may request variations from some of the Bureau of Land Management’s provisions if they have equal or more protective regulations in place. According to the Interior Department, “variances may be granted on a case-by-case basis from a specific provision of the rule…but not from the entire rule.”

Jewell and Kornze cited the variance as a protection against duplicative regulations, oil industry officials and allies said Friday it was unworkable.

“There’s no real mechanism for the state variance,” said Kathleen Sgamma, vice president of government and public affairs for the Western Energy Alliance. “Sitting down with states to develop a memorandum of understanding — that’s not a process in the rule, that’s a promise.”

Red tape

House Natural Resources Committee Chairman Rob Bishop, R-Utah, said the variance provision “will create an entanglement of bureaucracy previously unseen in our nation’s energy history.”

“We have been careful to make sure there is a system for integrating with the states that have stepped forward and put together good regulation,” Kornze said. “Once people have a chance to actually see and look at and analyze the rule (they will see) where we have landed is a very commonsense, basic level of protection the public is going to be very comfortable with.”

But oil industry representatives have a deep, fundamental objection to a BLM rule they say is not needed and insist would only deliver scant environmental benefits at a high economic cost.

Frank Macchiarolo, executive vice president of government affairs for America’s Natural Gas Alliance, called it an “overly burdensome approach.”

“State regulators have shown that they best understand the unique geological conditions that exist within their borders, and they have the expertise needed to oversee natural gas development,” Macchiarolo said.

The Interior Department estimated the extra per-well cost would be about $11,400 per operation — as much as 0.21 percent of the cost of drilling a well. As many as 3,800 operations per year could be affected Interior said.

But a previous Western Energy Alliance analysis had a much higher price tag per well: $97,000 on average.

Republicans in charge of the House and Senate blasted the rule on Friday — setting the stage for a potential legislative fight over the mandates.

Legislation already pending on Capitol Hill would block the Interior Department from trumping state rules on hydraulic fracturing.

“States have effectively regulated this technology for years and understand the local conditions and geology far better than any lawyer in Washington ever could,” said Rep. Lamar Smith, R-Texas.

Sen. James Inhofe, R-Okla., head of the Environment and Public Works Committee, said he would keep pushing his bill to ensure states have the sole authority in regulating hydraulic fracturing within their borders. “There is no logical reason to add a new layer of top-down bureaucratic regulation that duplicates what is already being done effectively by the states,” Inhofe said.

Sen. Ed Markey, D-Mass., was already bracing for a legislative attack on the rule Friday. Although the regulation does not go far enough, Markey said, “I don’t think that scrapping these rules and returning to the status quo is the right way to go.”