Obama’s hydraulic fracturing regulations in court hours after launch

Critics of new hydraulic fracturing rules say States already properly regulate the industry

Only hours after the Obama Administration introduced new rules for hydraulic fracturing on federal lands, the energy industry sued in federal court to stop what it says is unnecessary regulation.

Two groups, the Independent Petroleum Association of America and the Western Energy Alliance, filed suit in Wyoming Friday seeking to block the rule. The suit claims the rule would impose unfair burdens that will “complicate and frustrate oil and gas production on federal lands.”

“Hydraulic fracturing has been conducted safely and responsibly in the United States for over sixty years. These new federal mandates will add burdensome new costs on our independent producers, taking investments away from developing new American-made energy, much-needed job creation, and economic growth,”  said Barry Russell, CEO of the IPAA.

“The agency needs to further engage stakeholders, adequately assess the costs, and compare the proposal to existing safeguards under state law.”

Tim Wigley, president of WEA, says the Bureau of Land Management struggles to meet its current workload of leasing, environmental analysis, permitting, monitoring, inspecting, and otherwise administering the federal onshore oil and natural gas program.

“Yet it is undertaking an entirely new regulatory regime that it has neither the resources nor the expertise to implement,” Wigley said in a press release. “States have been successfully regulating fracking for decades, including on federal lands, with no incident that necessitates redundant federal regulation.”

The League of Conservation Voters called the bill an important step forward to regulate fracturing. Even so, the group was disappointed with the continued reliance on FracFocus, a private website that has taken on increasing prominence in recent years as it collects data on drilling sites.

The final rule improves on previous versions, said Madeleine Foote, legislative representative for the conservation league, but “it represents a missed opportunity to set a high bar for protections that would truly increase transparency and reduce the impacts (of fracturing) to our air, water and public lands.”

While the new rule only applies to federal land – which makes up just one-tenth of natural gas drilling in the United States – the Obama administration is hoping the rule will serve as a model and set a new standard for hydraulic fracturing that states and other regulators will follow.

Brian Deese, a senior adviser to President Barack Obama, said the rules for public lands could serve as a template that the oil and gas industry could adopt to help address the public’s concern about the health and safety of fracking.

“Ultimately, this is an issue that is going to be decided in state capitals and localities as well as with the industry,” he said.

The rule will make the Interior Department’s Bureau of Land Management the largest customer of FracFocus. Nearly 95,000 wells nationwide are registered with the site, which is managed by the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission. Both groups are based in Oklahoma. The groundwater council is a non-profit organization while the oil and gas commission is a collection of state officials from energy-producing states.

Interior Secretary Sally Jewell said BLM will have representation on FracFocus’ board, adding that the group has taken steps to improve its platform, including adopting a new format that allows data to be automatically read by computers.

While Inhofe and other congressional Republicans are likely to mount an effort to block the rule, Jewell predicted the rule would survive because the industry recognizes that sensible regulation of fracking is appropriate.

“We expect that these rules will stick,” she said.

Background

According to the Independent Petroleum Association of America and the Western Energy Alliance, in May 2012, the U.S. Bureau of Land Management released its proposed well stimulation and hydraulic fracturing regulation for federal and Indian lands. The original intent of the rule was to ensure that the hydraulic fracturing process does not contaminate groundwater.

IPAA, Western Energy Alliance, and a number of cooperating associations opposed this proposed rule because it imposed costs that are not commensurate with any benefits the rule might provide and because the proposed rule is duplicative of States’ efforts to regulate oil and natural gas. In response to the proposed rule, IPAA and Western Energy Alliance urged BLM to produce a gap analysis identifying inadequacies in existing requirements that BLM’s proposed rule would remediate, which BLM has failed to produce.

BLM received 177,000 comments from interested stakeholders in response to its original proposal. To address the shortcomings documented in those comments, in May 2013 the BLM issued a supplemental proposal.

Unfortunately, the revised proposal reflected in BLM’s current rulemaking still fails to account for the facts related to hydraulic fracturing. BLM’s proposal is technically unsound and does not provide any benefits that already-existing state regulations do not currently provide. Because the revised proposal arbitrarily imposes costs without providing any corresponding benefit, IPAA, Western Energy Alliance, and numerous cooperating associations still opposed the proposed rule and respectfully requested the Obama Administration to withdraw the regulation.

In its February 2015 report, the White House Council of Economic Advisers lauded the economic and energy security benefits of the recent growth in U.S. oil and natural gas production and stated environmental regulation of hydraulic fracturing is best addressed at the State and local level, not the federal level.

According to an IHS Global Insight study, onshore independent oil and natural gas producers supported over 2.1 million American jobs in 2010 while contributing $320.6 billion in economic activity, accounting for 2.2 percent of U.S. gross domestic product (GDP). A recent report from the non-partisan Congressional Budget Office also found that shale development has increased our GDP, reduced energy prices for consumers and businesses, and increased revenues to the U.S. Treasury.

The Small Business & Entrepreneurship Council (SBEC) also recently reported on the benefits of increased American oil and natural gas production, made possible by hydraulic fracturing, noting that job growth in the U.S. oil and gas industry has grown in stark contrast to the rest of the U.S. economy.