Industry Groups Reiterate Call to Suspend Hydraulic Fracturing Rulemaking

The Independent Petroleum Association of America (IPAA) and the Western Energy Alliance (WEA) submitted a letter Monday to Secretary of the Interior Ken Salazar, seeking a meeting to discuss the Bureau of Land Management's (BLM) proposed rule for hydraulic fracturing on federal and Indian lands.

"The Bureau of Land Management's proposed rule on hydraulic fracturing of wells on federal and Indian lands is unnecessary, excessive and requires actions that no state currently regulating oil and gas production deems necessary, based on their decades of regulatory experience," said IPAA and WEA in the letter.

"Placing additional regulatory costs on small producers looking to operate on federal lands hardly seems to be a wise choice for a nation hungry for new energy supplies," the industry associations said in the letter.

The two organizations recently submitted detailed comments outlining their concerns and concerns of 47 industry trade associations about the proposed rule. IPAA and WEA described the proposed rule as "a poorly-conceived solution to a non-existent problem."

The U.S. Environmental Protection Agency (EPA), in its study of the health and environmental impacts of well stimulation, "has yet to find one verifiable instance where stimulation activities caused aquifer contamination, human health impacts, environmental degradation, or any other health or environmental impact that would warrant such a dramatic expansion of BLM authority," the organizations said in their comments.

EPA's study is not due to be released for peer-review until 2014, the organizations said.

"Given EPA's negative track record as to the release of information related to hydraulic fracturing's effect on public health to date, no action should be taken relative to EPA's study until the study is peer reviewed."

While the organizations said they appreciate BLM's request for specific comment on how it can avoid duplication with existing state regulatory schemes, "it appears that the drafters of this proposed rule have entirely ignored the scope and effectiveness of existing state regulations governing stimulation activities," IPAA and WEA said.

The best way to avoid duplication is to suspend the rulemaking and defer to state regulations. In the case of a perceived deficiency in any one state's regulatory mechanism, BLM should work with the state instead of imposing a 'one-size-fits-all' federal rule applicable in every state, IPAA and WEA said.

The proposed rule also continues a worrying trend relative to water rights. As proposed, the rule appears to allow BLM staff to direct operators to use, or not use, water from various sources without explaining from where the federal government's authority comes to impose water access limitations or requirements, the organizations said in the comments.

"In fact, the federal government seems to be moving aggressively forward with regulations and permit terms that will allow it to take over control of water rights," the organizations said in their filed comments. "This is an unacceptable usurpation of states' rights guaranteed by the 10th Amendment, and it cannot be allowed to move forward unchecked."

WEA and IPAA also noted that hundreds of companies in the United States are already using to disclose components of stimulation fluids.

"Establishing an entirely new and separate reporting scheme is unnecessary and would be a waste of time and resources," the groups said.

The groups also are concerned and confused by BLM's decision to expand the proposed rule's cope to include acidizing jobs, which they said were small and routine and for which no evidence of environmental impact from this technique.

"Further, we believe the rule could be interpreted to regulate cyclic steaming thermally enhanced oil recovery, which is widely used in the state of California," said IPAA and WEA. "We believe cyclic steaming should not be included in the breadth of this rule."

The proposed rule grossly underestimates the economic impact the regulation will cause, the groups said in the comments.

WEA reported in June that the proposed rule to regulate hydraulic fracturing on public lands could cost as much as $1.6 billion annually, and would divert resources away from energy development, job creation, and economic growth into efforts to comply with federal rules redundant with state regulations.

The U.S. Interior Department in May proposed new rules regulating oil and gas drilling on public lands, Dow Jones Newswires reported.

The Interior Department has said it wanted to finalize the rule by the end of this year. Given the complexity of the rule and the time needed to make adjustments to take comments into consideration, this timeline seems aggressive, but "that seems to be what they're sticking to," Kathleen Sgamma, vice president of government and public affairs for WEA, told Rigzone.

While some of the issues have been addressed by the Interior Department, many of the main issues have fallen on deaf ears, Sgamma said, which has prompted IPAA and WEA to call for additional meetings.


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