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Proposed US Hydraulic Fracturing Regulations May Have Limited Impact on Federal Lands In PA

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While our newest contributor, Derald Hay, awaits his new-media login, he’s asked me to post this piece on his behalf:

On May 24, 2013, the Bureau of Land Management published a revised set of proposed regulations pertaining to hydraulic fracturing on Federal and Indian lands. The primary focus of the revised regulations included additional standards for well casings and a procedure for management of trade secrets with respect to the contents of the drilling fluid. 

Interestingly, the proposed regulations will likely have little impact in Pennsylvania. The proposed regulations only apply to operations within a mineral estate owned by the Federal government or Indian tribe. The prime federally owned area in Pennsylvania within the Marcellus vein is in the Allegheny National Forest in north central Pennsylvania. At the time the federal government acquired the surface rights to the Allegheny National Forest in the early 1900’s, most of the subsurface mineral rights had been severed from the surface estate – creating a tension between federal management for protection of the surface natural resources (and non-mineral/oil/gas subsurface resources) and the implied rights of subsurface owners to utilize the surface to access the subsurface estate for extracting oil and gas. See U.S. v. Minard Run Oil Co., 1980 U.S. Dist. LEXIS 9570 (Civ. Act. No. 80-129 W.D. Pa).

In general, the proposed regulations are designed to reduce environmental and health risks associated with hydraulic fracturing (particularly with regard to the management of flowback fluids and establishing standards for the design/construction of wells). The proposed regulations also will allow oil and gas operators to claim trade secret protection over the chemical composition of the frac-fluid. However, if requested by the BLM, an ingredients list of the frac fluid must still be disclosed.

BLM estimates the industry-wide cost of compliance with the proposed regulations to be between $12 Million to $20 Million per year.

BLM is seeking public comments on the revised proposed regulations. In particular, BLM is seeking information on the costs of various methods of managing the flowback fluids (e.g., reinjection, lined pits, and off-site treatment). Comments can be submitted via the Federal eRulemaking Portal until June 24, 2013.