[co-author: Shannon Morrissey - Law Clerk]

Today, Friday, March 20, the Bureau of Land Management (“BLM”), an agency within the Department of the Interior, published regulations for hydraulic fracturing on Federal and Indian lands.  The Final Rule becomes effective in 90 days and will impact about 2,800-3,800 wells each year.  In 2013, 90% of the 2,800 new wells on Federal and Indian lands were stimulated using hydraulic fracturing techniques, according to the BLM.  (Hydraulic Fracturing on Federal and Indian Lands, Final Rule, at p. 14.)  The regulations do not apply to fracking activity on private and state-owned land, where most of the fracking in the United States occurs.

Requirements under the Final Rule

The overarching purpose of the Final Rule is to provide a “baseline for environmental protection.”  (Id. at p. 12.)  Principally, a permit is required under existing oil and gas regulations.  Before beginning operations, an operator must submit an Application for a Permit to Drill (“APD”) to the BLM and wait for approval.  As the new regulations supplement the existing regulations, and do not replace them, this permit requirement will continue under the new regulations.

Additionally, the Final Rule requires the operator to do the following: submit additional information with its APD including wellbore geology, location of faults and fractures, and the depths of all usable water; implement and monitor a cementing program during well construction; perform a mechanical integrity test; store waste fluids in “rigid enclosed, covered or netted and screened above-ground storage tanks;” and disclose chemicals used in the fracking activity.  (Id. at p. 9.)

“The BLM estimates that the compliance cost will be about $11,400 per well . . . On average this equates to approximately 0.13 to 0.21% of the cost of drilling a well.”  (Id. at pp. 12-13.)  The regulations are similar to California’s Permanent Well Stimulation Treatment Regulations under Senate Bill 4, and the BLM notes that the regulations are consistent.

The Final Rule is the first in a series of fracking regulations that are expected from the Obama administration.  The next regulations to be released will likely govern methane emissions as described in our previous post here.