WorldWide Drilling Resource

26 OCTOBER 2016 WorldWide Drilling Resource ® Federal Judge Strikes Down Hydraulic Fracturing Regulation Efforts Compiled by Editorial Staff of WorldWide Drilling Resource ® On Tuesday, June 21, 2016, a federal judge halted implementation of regulations managing hydraulic fracturing by the oil and gas industry on public and tribal lands. The ruling was handed down by Wyoming-based District Court Judge Scott W. Skavdahl, blocking the Interior Department’s Bureau of Land Management (BLM) from enforcing a 2015 rule which laid out detailed standards for the construction of oil and gas wells drilled into approximately 700 million acres of federal lands. The regulation has never been enforced, due to legal objection from oil industry groups such as the Western Energy Alliance (WEA) and the Independent Petroleum Association of America (IPAA), four states (Colorado, North Dakota, Utah, and Wyoming), and the Ute Indian tribe of the Uintah and Ouray Reservation in northeast Utah. They argued the measures only duplicated local drilling requirements, and boosted the cost of extracting oil and gas from federal lands by several thousand dollars in compliance costs per well with little environmental benefit. The rule would have compelled companies to disclose the chemicals they pump underground, and seal off wastewater in storage tanks. While only applying to acreage under the BLM’s control, it would have supplied a model for states to follow as they regulate drilling on private land. Skavdahl said the hydraulic fracturing rule exceeded the BLM’s powers. The legal question, according to Skavdahl, is “not whether hydraulic fracturing is good or bad for the environment,” but whether Congress gave the BLM the authority to regulate it. “Congress has not delegated to the Department of Interior the authority to regulate hydraulic fracturing,” Skavdahl wrote in his judgement. “The BLM’s effort to do so through the [hydraulic fracturing] rule is in excess of its statutory authority and contrary to law.” Kathleen Sgamma, WEA’s vice president of government and public affairs, was satisfied with the order. “We’re overjoyed with the ruling,” she said. “The judge determined that the federal government lacks the authority to reg- ulate [hydraulic fracturing], period. He decided exclusively on statutory authority, so there’s nothing to remand, no do-over. He didn’t even rule on BLM appeals to the circuit court. States have shown they’ve successfully regulated [hydraulic fracturing] with no incidence of contamination in...70 [years]. The BLM failed to show any gap in state regulation. In fact, the agency couldn’t point to a single incident on public lands to justify the new rule.” IPAA also celebrated the ruling. “We are pleased to see Judge Skavdahl agrees with the merits of our case: BLM did not have the authority to issue its rule in the first place,” Neal Kirby, the group’s spokesman stated. “Today’s decision demonstrates BLM’s efforts are not needed and that states are - and have for over 60 years been - in the best position to safely regulate hydraulic fracturing.” Barry Russell, IPAA president and CEO, said the organization has long opposed the federal government’s moves to man- date hydraulic fracturing, saying it is “unnecessary, duplicative, and would further drive independent producers from federal lands.” “We recognize that every energy-producing area has different needs and requirements, which is why the states are far more effective at properly regulating hydraulic fracturing than the federal government. And many of these states have mod- ernized their regulations within the last ten years,” he stated. According to John Roe of Dugan Production Co., a Farmington independent oil and gas company, the advances in hor- izontal drilling and multistage hydraulic fracturing have actually made oil and gas operations safer. With the latest drilling and well-stimulation techniques, the land is disturbed less and as many as 16 or more wells can be hydraulically fractured from the same well pad. That used to mean 16 wells drilled through the water table, but not any longer, Roe said. He believes the environmental community has wrongfully twisted their stance against the industry, using lies and distortions about what hap- pens when an oil or gas well is drilled. “When we hear from these radical people that we’re destroying the environment, it just burns me up,” Roe continued. “I chose to live in Farmington. I enjoy clean water and the outdoors. We live and work in the same environment. As a prudent operator, we do what we can to do what’s right, no matter if there are rules or not.” Even Congressional Republications have disagreed with the hydraulic fracturing rule, labeling it as costly, unnecessary, and unattainable. Speaker Paul Ryan said, “Hydraulic fracturing is one of the keys that has unlocked our nation’s energy resurgence in oil and natural gas. Yet the Obama administration has sought to regulate it out of existence. This is not only harmful for the economy and consumers, it’s unlawful - as the court has just ruled.” Congressman Kevin Cramer of North Dakota also spoke of the judge’s ruling. “The judge rightly recognized Congress writes laws, not the bureaucracy. His opinion made very clear when, in 2005, Congress specifically removed the authority of the Environmental Protection Agency to regulate hydraulic fracturing it did not intend for the BLM to instead have this authority,” he said. “From the beginning, the hydraulic fracturing rule has been a solution in search of a problem,” claimed attorney Mark Barron, who represented IPAA and WEA during the lawsuit. “Despite the independent producers’ extraordinary record of safety and environmental stewardship, BLM attempted to promulgate a rule that imposed needless costs on America’s small businesses and public treasuries, without any commensurate environmental benefit.” The House has repeatedly moved to overturn the rule legislatively, and a funding bill passed recently by the House Appropriations Committee would cut off funding to enforce the hydraulic fracturing regulation. The Interior Department declined to comment on the litigation, but did say it is disappointed it cannot enforce the hydraulic fracturing mandate. It is important to note the department’s right to appeal, which could very well happen.