HYDRAULIC FRACTURING:

Revised Interior rule loops in industry-favored FracFocus

Companies that drill for oil or gas on federal land would be able to report the chemicals used in hydraulic fracturing through an industry-backed database under a new draft of the Interior Department's fracking rule.

According to an unpublished draft of the rule obtained by EnergyWire, operators would be allowed to report the chemicals through Fracfocus.org, a privately run site used by industry to satisfy disclosure requirements in several states.

That would mark a win for the oil and gas industry over environmental groups in the ongoing battle over how to manage the shale drilling boom taking place across the country.

"It's progress," said Kathleen Sgamma, vice president of government and public affairs for the Western Energy Alliance, which represents oil and gas developers.

It is also a shift in policy by the Interior Department. Before the rule was released, Interior Deputy Secretary David Hayes said that the department wanted to gather more data than Fracfocus is designed for (Greenwire, Oct. 31, 2011).

But it is an idea that has support at the White House. Obama's top climate and energy adviser, Heather Zichal, last summer publicly endorsed FracFocus as the most effective and efficient way to satisfy calls for disclosure (E&ENews PM, June 21, 2012).

Interior announced three weeks ago that it would revise the rule, which has been criticized by industry as duplicative of state regulations.

At the time, officials said Interior's Bureau of Land Management would send changes to the White House for review and would release a new proposal for public comment in the first quarter of this year (E&ENews PM, Jan. 18).

Often referred to as the "BLM fracking rule," the proposal is intended to update rules for oil and gas drilling on federal land by requiring disclosure of the chemicals that companies inject underground, bolstering standards for ensuring wells do not leak and requiring that wastewater is properly managed.

BLM estimated the initial rule would cost operators $11,833 per well, a small portion of the overall cost to drill. But an industry-commissioned report argued the rule would cost drillers about 25 times as much.

Sgamma said yesterday that the revised rule still adds to industry's expenses. Though she acknowledged that the FracFocus disclosure option creates more flexibility for drillers, she questioned the necessity of federal oversight of wells already regulated by states.

"Fundamentally, this rule does not need to take place. Fundamentally, it's an expensive rule even with the changes," she said. "It hasn't been properly evaluated from an economic standpoint, and states are already regulating fracking."

Digging into FracFocus

FracFocus's operational costs are paid for by two Washington-based industry lobbying groups, the American Petroleum Institute and America's Natural Gas Alliance (EnergyWire, Oct. 18, 2012). It is run by the Ground Water Protection Council, a private nonprofit in Oklahoma City governed by state oil and gas officials from across the country.

But environmental groups are suspicious that the oil and gas industry played too much of a role in designing FracFocus. They have also complained that state officials are allowing companies to withhold too much information as "trade secrets."

Those complaints will likely intensify with Interior's revised rule. Because FracFocus would be approved for disclosure, companies would no longer be required to give BLM an explanation of why they were claiming trade secret protection. Instead, operators could simply withhold the information and promise it was proprietary. BLM would reserve the right to request it.

Open-government groups worry about public disclosure data being kept in private hands and say the site shouldn't replace traditional public disclosure to government agencies.

A Department of Energy panel set up by the Obama administration to study the safety of fracturing and shale gas drilling in 2011 reported that the FracFocus effort was "off to a good start" but criticized it for the restrictions it places on the data it collects (Greenwire, Aug. 11, 2011).

The Ground Water Protection Council has resisted making the FracFocus database available for downloading by researchers and the public. Industry trade groups oppose making the data public in that manner.

GWPC Executive Director Mike Paque has said the registry is being updated to make it more searchable and easier to use but will not facilitate aggregation of the data.

"It's built for the individual landowner," Paque said at a meeting of state oil and gas regulators. "It's not built to be an analytical tool for wide-ranging studies."

GWPC has also declined a request to publicly release the database, as has the Interstate Oil and Gas Compact Commission, which is also involved in administering FracFocus.

Tribal lands

Stirring on the sidelines of the fracking rule debate is ongoing criticism from American Indian advocates who say BLM is overstepping its authority by trying to regulate oil and gas wells on tribal lands in addition to the broader swath of public lands the rule targets.

The revised draft makes no major changes to the rule's bearing on tribal lands, a disappointment to advocates who spent the better part of 2012 pressuring BLM to add an opt-out provision for tribes that have their own regulations for oil and gas development.

Advocates crossed their fingers three weeks ago when BLM announced that it was revising the draft rules. Representatives from oil and gas-producing tribes met with Interior acting Deputy Director Neil Kornze and Assistant Secretary for Indian Affairs Kevin Washburn the following week with some hope that the agency would inform the tribes of the requested changes.

But the meeting turned out to be mostly procedural, along with brainstorming for other tribal energy issues, according to an attorney who attended the meeting. The Indian representatives were told nothing about how the rule would be changed.

That's the second time tribes saw an opening for the revisions they wanted. In summer 2012, BLM extended the draft rule's comment period and held additional stakeholder meetings with tribes. Both times, industry voices in the negotiations proved more successful at coercing change.

Tex Hall, chairman of the Mandan Hidatsa and Arikara Nation in North Dakota, said yesterday that the intent of Congress in the Federal Land Policy and Management Act of 1976 was not to lump Indian lands with public lands designated for multiple uses.

"BLM's public lands and our Indian lands are managed under very different standards," Hall said in a statement. "Indian lands are for our benefit and are managed according to trust standards. In order for tribes to better manage their own lands and to avoid the mismanagement of Indian lands under this rule, BLM must include a tribal opt-out in its final hydraulic fracturing rule."

Officials addressed the concern in the new draft, writing that the Interior secretary has delegated authority for regulating oil and gas wells to BLM. The rule "will help prevent unnecessary or undue degradation of public lands and to provide protection of Indian trust resources," the revised document says.

Click here to read Interior's revised draft hydraulic fracturing rule.

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