Western states wary of enforcement role in BLM fracking rules

By Mike Lee | 05/20/2015 09:00 AM EDT

SALT LAKE CITY — A second legal and bureaucratic struggle is underway over the Bureau of Land Management’s plan to regulate hydraulic fracturing on public land, as states decide whether they’ll help enforce the plan.

BLM has asked at least three oil-producing states to sign memoranda of understanding (MOUs) that would allow the states to enforce the federal rules on federal land.

Wyoming and Utah have balked and North Dakota is wavering, in part because BLM would require state regulations to match or exceed the federal regulations as part of an MOU. The state officials, meeting here for a conference of the Interstate Oil and Gas Compact Commission say their existing regulations are adequate, and many of them are frustrated with BLM over other issues.

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"I don’t understand what the benefit to a state is to signing an MOU," said Mark Watson, supervisor of the Wyoming Oil and Gas Conservation Commission.

If the states don’t agree to the MOUs, it could hamper enforcement of the rules, since BLM doesn’t have the staff to do frequent inspections at its sprawling landholdings. And it also could undermine a secondary purpose of the BLM proposal — the idea that having a strong federal rule in place would encourage states to tighten their own rules.

Wyoming has already sued BLM over the hydraulic fracturing rule. North Dakota and Colorado have said they’ll join the suit (EnergyWire, May 19).

Hydraulic fracturing, or fracking, involves breaking up rocks with a high-pressure mix of water, sand and chemicals. Most oil-producing states already have changed parts of their regulations since the start of the fracking-driven oil and gas boom.

The BLM rule will apply only to wells drilled on federal land; it imposes tougher requirements for well construction, chemical disclosure and waste disposal, among other requirements.

However, BLM controls the mineral rights on about 700 million acres, mostly in the Great Plains and Rocky Mountain states. About two-thirds of the gas in Wyoming is produced on federal land, for instance. And in North Dakota, BLM has an interest in about a third of the drilling units because it inherited the mineral rights when farmers defaulted on federal mortgages in the Great Depression, state Mineral Resources Director Lynn Helms said.

Currently, a company that wants to drill on federal land applies for a state permit and a BLM permit. The BLM permit can take months because the agency is required to post permits for public comment and conduct environmental reviews, Steven Wells, division chief of fluid minerals for BLM, said in an interview.

Once the fracking regulations are finalized, companies will typically have to submit documentation showing they’ve met the requirements at the same time they apply for the BLM drilling permit, Wells said. The new regulations won’t necessarily add to the time it takes to get a BLM permit, he said.

States bemoan BLM’s struggles

State regulators said yesterday they were frustrated with BLM in general because the agency frequently is understaffed and has trouble sharing information with the states and with producers. BLM has been perennially strapped for cash, and an audit in 2014 found that it failed to inspect 40 percent of its highest-priority oil and gas wells between 2009 and 2012 (EnergyWire, July 17, 2014).

The states — prodded by oil producers and trade groups — argue that it would make more sense for BLM to delegate control of the fracking regulations to them. The states would benefit because they’d be able to issue permits faster, providing a boost to their economies.

Oil and gas agencies in the big producing states already administer federal regulations on underground injection wells, and state environmental regulators are typically in charge of carrying out federal air and water quality regulations.

"Let’s have BLM do what it’s charged to do, which is manage multiple roles on its land," said John Baza, director of the Utah Division of Oil, Gas and Mining, during a panel discussion.

"If they decide to lease — turn it over to us," he said.

Wells said BLM can’t do that, because of federal laws and because of its dual role. The agency regulates oil and gas on federal land and acts as the landowner, negotiating leases and collecting payment.

It’s unclear how big the effect will be if states decide not to sign MOUs.

In Utah, state inspectors spend about half their time on federal land because of the overlapping ownership. The state and federal inspectors informally notify each other if they spot violations of each other’s rules, Baza said.

"Where the fields are located, it’s hard not to pass by a federal well," he said. Even without an MOU, "We’ll keep doing what we’re doing."

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