[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
THE FUTURE OF HYDRAULIC FRACTURING ON FEDERALLY MANAGED LANDS
=======================================================================
OVERSIGHT HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
OF THE
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
Wednesday, July 15, 2015
__________
Serial No. 114-15
__________
Printed for the use of the Committee on Natural Resources
Available via the World Wide Web: http://www.fdsys.gov
or
Committee address: http://naturalresources.house.gov
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
___________
U.S. GOVERNMENT PUBLISHING OFFICE
95-556PDF WASHINGTON : 2015
________________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
COMMITTEE ON NATURAL RESOURCES
ROB BISHOP, UT, Chairman
RAUL M. GRIJALVA, AZ, Ranking Democratic Member
Don Young, AK Grace F. Napolitano, CA
Louie Gohmert, TX Madeleine Z. Bordallo, GU
Doug Lamborn, CO Jim Costa, CA
Robert J. Wittman, VA Gregorio Kilili Camacho Sablan,
John Fleming, LA CNMI
Tom McClintock, CA Niki Tsongas, MA
Glenn Thompson, PA Pedro R. Pierluisi, PR
Cynthia M. Lummis, WY Jared Huffman, CA
Dan Benishek, MI Raul Ruiz, CA
Jeff Duncan, SC Alan S. Lowenthal, CA
Paul A. Gosar, AZ Matt Cartwright, PA
Raul R. Labrador, ID Donald S. Beyer, Jr., VA
Doug LaMalfa, CA Norma J. Torres, CA
Jeff Denham, CA Debbie Dingell, MI
Paul Cook, CA Ruben Gallego, AZ
Bruce Westerman, AR Lois Capps, CA
Garret Graves, LA Jared Polis, CO
Dan Newhouse, WA Vacancy
Ryan K. Zinke, MT
Jody B. Hice, GA
Aumua Amata Coleman Radewagen, AS
Thomas MacArthur, NJ
Alexander X. Mooney, WV
Cresent Hardy, NV
Vacancy
Jason Knox, Chief of Staff
Lisa Pittman, Chief Counsel
David Watkins, Democratic Staff Director
Sarah Parker, Democratic Deputy Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
DOUG LAMBORN, CO, Chairman
ALAN S. LOWENTHAL, CA, Ranking Democratic Member
Louie Gohmert, TX Jim Costa, CA
Robert J. Wittman, VA Niki Tsongas, MA
John Fleming, LA Matt Cartwright, PA
Glenn Thompson, PA Donald S. Beyer, Jr., VA
Cynthia M. Lummis, WY Ruben Gallego, AZ
Dan Benishek, MI Lois Capps, CA
Jeff Duncan, SC Jared Polis, CO
Paul A. Gosar, AZ Vacancy
Raul R. Labrador, ID Vacancy
Paul Cook, CA Vacancy
Garret Graves, LA Vacancy
Ryan K. Zinke, MT Vacancy
Jody B. Hice, GA Vacancy
Alexander X. Mooney, WV Raul M. Grijalva, AZ, ex officio
Cresent Hardy, NV
Rob Bishop, UT, ex officio
------
CONTENTS
----------
Page
Hearing held on Wednesday, July 15, 2015......................... 1
Statement of Members:
Fleming, Hon. John, a Representative in Congress from the
State of Louisiana......................................... 1
Grijalva, Hon. Raul M., a Representative in Congress from the
State of Arizona........................................... 6
Lamborn, Hon. Doug, a Representative in Congress from the
State of Colorado, Prepared statement of................... 3
Lowenthal, Hon. Alan S., a Representative in Congress from
the State of California.................................... 4
Prepared statement of.................................... 5
Statement of Witnesses:
Fitzsimmons, Tom, Commissioner, Wyoming Oil and Gas
Conservation Commission, Cody, Wyoming, Prepared statement
of......................................................... 7
Hetrick, Lloyd, Operations Engineering Advisor, Newfield
Exploration Company, The Woodlands, Texas.................. 20
Prepared statement of.................................... 21
Kornze, Neil, Director, Bureau of Land Management, U.S.
Department of the Interior, Washington, DC................. 9
Prepared statement of.................................... 11
Olguin, James M. ``Mike'', Council Member, Southern Ute
Indian Tribe, Ignacio, Colorado............................ 15
Prepared statement of.................................... 16
Wiseman, Hannah, Attorneys' Title Professor, Florida State
University College of Law, Tallahassee, Florida............ 24
Prepared statement of.................................... 26
Additional Materials Submitted for the Record:
Cartwright, Hon. Matt, a Representative in Congress from the
State of Pennsylvania, Prepared statement of............... 57
List of documents submitted for the record retained in the
Committee's official files................................. 58
OVERSIGHT HEARING ON THE FUTURE OF HYDRAULIC FRACTURING ON FEDERALLY
MANAGED LANDS
----------
Wednesday, July 15, 2015
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Natural Resources
Washington, DC
----------
The subcommittee met, pursuant to notice, at 10:43 a.m., in
room 1324, Longworth House Office Building, Hon. Doug Lamborn
[Chairman of the Subcommittee] presiding.
Present: Representatives Lamborn, Gohmert, Fleming, Lummis,
Benishek, Gosar, Labrador, Cook, Zinke, Mooney, Hardy, Bishop;
Lowenthal, Costa, Tsongas, Cartwright, Beyer, Gallego, Capps,
Polis, and Grijalva.
Dr. Fleming [presiding]. The Subcommittee on Energy and
Mineral Resources will come to order. I am not Chairman
Lamborn.
[Laughter.]
Dr. Fleming. I am Fleming, but I am standing in for--or
sitting in for Lamborn, for the moment. He is held up in
another Committee activity.
The subcommittee is meeting today to hear testimony on the
future of hydraulic fracturing on federally managed lands.
Under Committee Rule 4(f), any oral opening statements at
hearings are limited to the Chairman and the Ranking Member,
and the Vice Chairman and a designee of the Ranking Member.
This will allow us to hear from our witnesses sooner, and help
Members keep to their schedules. Therefore, I ask unanimous
consent that all other Members' opening statements be made part
of the hearing record, if they are submitted to the
Subcommittee clerk by 5:00 p.m. today.
[No response.]
Dr. Fleming. Hearing no objection, so ordered.
I now recognize myself for an opening statement.
STATEMENT OF THE HON. JOHN FLEMING, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF LOUISIANA
Dr. Fleming. For decades the states have been regulating
hydraulic fracturing on Federal lands managed by the BLM
without incident. And now, the BLM arrogantly seeks to second
guess state regulations with a one-size-fits-all final rule on
hydraulic fracturing.
This subcommittee has warned about the adverse effects the
BLM's poorly planned hydraulic fracturing regulations would
have on tribes and states with Federal lands, and now we have
the words of a Federal judge echoing our warnings. He stated,
and I quote, ``There is a showing of a credible threat of
irreparable harm: in cost of compliance, as well as the loss of
revenue,'' to the states and industry.
Now, why do states need to suffer this irreparable harm?
The BLM tells us it is necessary because there are ``concerns
about whether fracturing can lead to or cause the contamination
of underground water sources,'' and that only half of the
states with oil and gas leases on the Federal lands have modern
hydraulic fracturing regulations.
Well, let's look at the facts. When the final rule was
released, the BLM acknowledged that 99.3 percent of all well
completions on Federal or tribal land occurred in states with
hydraulic fracturing regulations. What is more telling is how
the BLM has never identified a single jurisdiction that lacks
sufficient regulatory protections in which hydraulic fracturing
occurs on Federal lands.
Furthermore, the EPA's recent study finding that there had
been no ``widespread, systemic impacts on drinking water
resources in the United States,'' clearly demonstrates that
states have been successful in regulating hydraulic fracturing
and ensuring the protection of drinking water resources.
These facts highlight that states were proactive in
regulating the process of hydraulic fracturing, and that they
have been successful in doing so. I would say that the BLM's
final rule on hydraulic fracturing is nothing more than a
frivolous regulatory exercise, if not for the severe and
unfortunate consequences the rule carries.
In an attempt to address concerns from states and tribes
about possible duplicative efforts, the BLM established a
variance provision. This subsection permits states or tribes to
seek the application of their rules on Federal land if those
rules ``are demonstrated to be equal to or more protective''
than the BLM's.
Let me be clear about what this variance provision is. It
is merely a means by which the BLM may interpret state or
tribal regulations on Federal lands. So when the final rule
states, ``variances may be granted to states and tribes,''
there is actually no grant. Neither the states nor the tribes
receive any cognizable right or exercisable claim to continue
implementing their hydraulic fracturing regulations on Federal
lands, as has been the practice for decades.
As such, the variance provision only permits the BLM the
opportunity to avoid its own regulations. How this redundant
exercise will avoid duplicative efforts is beyond me.
Inherently, it appears to encourage duplicative efforts, and
will only lead to further confusion within the BLM state
offices.
What is further troubling is the approach of the BLM toward
those states who, in good faith, have attempted to obtain a
variance. Like the rest of the rule, the BLM failed to provide
any nationwide or baseline guidance that would have informed
the state offices on how to proceed in the variance
discussions. As such, not a single variance agreement has been
entered into.
After examining the BLM's attempted roll out of this rule
over the past few months, I must say, that if any group should
be thrilled the judge postponed the effective date of the rule,
it should be the BLM. Without this stay, the implementation of
the rule would have been a national embarrassment, and would
have effectively paused hydraulic fracturing on Federal and
tribal lands for the foreseeable future.
Maybe if this had been an emergency rulemaking in which the
BLM had a limited time frame to address a severe issue, these
major oversights and lack of preparedness would be excusable.
However, that is not the case. It is simply inexcusable that
after 3 years, numerous stakeholder meetings, and over a
million comments, that BLM can't even provide standardized
guidance to its state offices.
Unfortunately, it is too late for the BLM to withdraw this
rule. And so, the Nation is left with an uncertain future for
hydraulic fracturing on Federal lands.
These are Mr. Lamborn's words, but I agree with every
single one of them.
[The prepared statement of Mr. Lamborn follows:]
Prepared Statement of the Hon. Doug Lamborn, Chairman, Subcommittee on
Energy and Mineral Resources
For decades, the states have been regulating hydraulic fracturing
on Federal lands managed by the BLM without incident. And now, the BLM
arrogantly seeks to second guess state regulations with a one-size-
fits-all final rule on hydraulic fracturing.
This subcommittee has warned about the adverse effects the BLM's
poorly planned hydraulic fracturing regulations would have on tribes
and states with Federal lands. And now, we have the words of a Federal
judge echoing our warnings. He stated, and I quote, ``there is a
showing of a credible threat of irreparable harm: [in] cost of
compliance, as well as the loss of revenue,'' to the states and
industry.
Now, why do the states need to suffer this irreparable harm? The
BLM tells us it is necessary because there are ``concerns about whether
[hydraulic] fracturing can lead to or cause the contamination of
underground water sources,'' and that only half of the states with oil
and gas leases on Federal lands have modern hydraulic fracturing
regulations.
Well, let's look at the facts. When the final rule was released,
the BLM acknowledged that 99.3 percent of all well completions on
Federal or tribal land occurred in states with hydraulic fracturing
regulations. What is more telling, is how the BLM has never identified
a single jurisdiction that lacks sufficient regulatory protections in
which hydraulic fracturing occurs on Federal lands.
Furthermore, the EPA's recent study finding that there had been no
``widespread, systemic impacts on drinking water resources in the
United States,'' clearly demonstrates that states have been successful
in regulating hydraulic fracturing and ensuring the protection of
drinking water resources.
These facts highlight that states were proactive in regulating the
process of hydraulic fracturing, and that they have been successful in
doing so. I would say that the BLM's final rule on hydraulic fracturing
is nothing more than a frivolous regulatory exercise, if not for the
severe and unfortunate consequences the rule carries.
In an attempt to ``address concerns from states and tribes about
possible duplicative efforts,'' the BLM established a variance
provision. This subsection permits states or tribes to seek the
application of their rules on Federal land if those rules ``are
demonstrated to be equal to or more protective'' than the BLM's.
Let me be clear about what this variance provision is: it is merely
a means by which the BLM may interpret state or tribal regulations on
Federal lands. So when the final rule states, ``variances may be
granted to states and tribes''--there is actually no grant. Neither the
states, nor the tribes receive any cognizable right or exercisable
claim to continue implementing their hydraulic fracturing regulations
on Federal lands, as has been the practice for decades.
As such, the ``variance provision'' only permits the BLM the
opportunity to avoid its own regulations. How this redundant exercise
will avoid duplicative efforts is beyond me. Inherently, it appears to
encourage duplicative efforts, and will only lead to further confusion
within the BLM state offices.
What is further troubling is the approach of the BLM toward those
states who in good faith have attempted to obtain a variance. Like the
rest of the rule, the BLM failed to provide any nationwide, or baseline
guidance that would have informed the state offices on how to proceed
in the variance discussions. As such, not a single variance agreement
has been entered into.
After examining the BLM's attempted roll out of this rule over the
past few months, I must say, that if any group should be thrilled the
judge postponed the effective date of the rule, it should be the BLM.
Without this stay, the implementation of the rule would have been a
national embarrassment, and would have effectively paused hydraulic
fracturing on Federal and tribal lands for the foreseeable future.
Maybe if this had been an emergency rulemaking in which the BLM had
a limited time frame to address a severe issue, these major oversights
and lack of preparedness would be excusable. However, that is not the
case. It is simply inexcusable that after 3 years, numerous stakeholder
meetings, and over a million comments, the BLM can't even provide
standardized guidance to its state offices.
Unfortunately, it is too late for the BLM to withdraw this rule--
and so, the Nation is left with an uncertain future for hydraulic
fracturing on Federal lands.
______
Dr. Fleming. With that, I will yield to the Ranking Member
for his opening remarks.
STATEMENT OF THE HON. ALAN S. LOWENTHAL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Lowenthal. Thank you, Chairman Fleming, and thank you
to the witnesses for being here, particularly Director Kornze,
who has faced a considerable amount of grilling from both sides
of the aisle over this rule in the past few months. And each
time you have defended it and your agency in a forthright and
highly commendable manner. Mr. Director, it is good to see you
again.
I have heard a lot of complaints from the oil and gas
industry and my colleagues on the other side of the aisle about
what they see as overblown concerns about fracking. To them,
fracking is perfectly safe, and anyone who questions that is
needlessly scaring people. But when it comes to overblown
hysteria, nothing matches the industry's reaction to the Bureau
of Land Management's fracking rule.
If you listen to them, you would think that this rule was a
royal edict, completely changing the rules of the game on
Federal lands, and that the BLM has never regulated oil and gas
before. But you would be wrong. Because this rule is nothing
but a modest modernization of long-standing BLM regulations to
take into account how the industry currently operates.
One point there appears to be a lot of confusion over is
how this rule would affect the states. Let me make this clear.
And this is not my opinion. On Federal lands, the BLM sets the
floor. Let me say that again: On Federal lands, the BLM sets
the floor. The states are free to put the ceiling wherever they
want. And, yes, even on Federal lands, companies must meet
those state standards. That is how things worked yesterday,
that is how they work today, and that is how they will work the
day after the fracking rule takes effect.
Forget about the state's variance provision. I am not
talking about that, because it is really unnecessary. States
will be able to set their rules, and companies on Federal lands
will have to follow them, variance or no variance.
I am sorry that Mr. Fitzsimmons is not here from Wyoming,
because it is great that Wyoming has strong fracking
regulations. I am pleased to hear that. Wyoming would be free
to enforce these regulations when this rule goes into effect,
just as they are right now, because of their stronger drilling
regulations. But let's also be clear that not all states have
regulations as good as Wyoming's. And when it comes to
protecting public lands and public resources in all 50 states,
we have given the BLM a statutory mandate, and it would be
irresponsible, if not illegal, for them to simply ignore that.
And that authority goes way back. It may surprise people to
know that regulations covering all forms of well stimulation,
including fracking, were first issued in 1942, even though
fracking barely existed at the time. Those were issued by the
U.S. Geological Survey, who was in charge of this issue before
the BLM.
Those regulations were in place when the Safe Drinking
Water Act was passed in 1974, and the House report on the Safe
Drinking Water Act says very clearly, and I quote, ``The
committee does not intend any of the provisions of this bill to
repeal or to limit any authority that the USGS may have under
other legislation.'' That is about as clear-cut and dry as you
can get.
Now times have changed, and these regulations were last
updated in the 1980s to exempt routine fracturing jobs. But
times changed again, and now fracking is significantly
different than it was 30 years ago. It is long past time for
the BLM to modernize these out-of-date regulations and to
provide to the industry and to the states proper baseline
protections for public lands from coast to coast.
Now, I would like to say that despite my bewilderment at
the complaints from the industry and the states, I am also very
sympathetic to the concerns of our tribes. As we saw from a
Government Accountability Office report last month, there are
serious problems with the way that energy development on tribal
lands is managed, problems that go back for decades.
While we have to consider carefully this rule's impact on
the tribes, their overall concern with energy development is
real--they are real, they are serious, and they deserve a more
thorough investigation by this committee.
But for companies operating on public lands, this rule is
nothing more than a small step to bring BLM's outdated
regulations, which they have operated under for decades, into
the 21st century.
Thank you, Mr. Chair, and I yield back.
[The prepared statement of Mr. Lowenthal follows:]
Prepared Statement of the Hon. Alan S. Lowenthal, Ranking Member,
Subcommittee on Energy and Mineral Resources
Thank you Mr. Chairman, and thank you to the witnesses for being
here, particularly Director Kornze, who has faced a considerable amount
of grilling from both sides of the aisle over this rule in the past few
months, and each time he has defended it and his agency in a forthright
and highly commendable manner. Mr. Director, it is good to see you
again.
I have heard a lot of complaints from the oil and gas industry and
my colleagues on the other side about what they see as overblown
concerns about fracking. To them, fracking is perfectly safe, and
anyone who questions that is needlessly scaring people.
But when it comes to real overblown hysteria, nothing matches the
industry's reaction to the Bureau of Land Management's fracking rule.
If you listened to them, you would think this rule was a royal edict
completely changing the rules of the game on Federal lands, and that
the BLM has never regulated oil and gas before.
But you would be wrong. Because this rule is nothing but a modest
modernization of long-standing BLM regulations to take into account how
the industry currently operates.
One point that there appears to be a lot of confusion over is how
this rule would affect states. Let me make this clear. And this is not
my opinion, this is fact: this rule does not affect a state's ability
to set its own regulations. On Federal lands, BLM sets the floor. The
states are free to put the ceiling wherever they want. And, yes, even
on Federal lands companies must meet those state standards.
That's how things worked yesterday, that's how they work today, and
that's how they will work on the day the fracking rule takes effect.
Forget about the state variance provision. I'm not talking about
that. Because it's unnecessary. States will be able to set their rules,
and companies on Federal lands will have to follow them, variance or no
variance.
I think it's great that Wyoming has strong fracking regulations.
I'm pleased to hear that. You would be free to enforce those
regulations just as you are right now for your stronger drilling
regulations.
But not all states have regulations as good as Wyoming's. And when
it comes to protecting public land and public resources in all 50
states, we have given the BLM a statutory mandate, and it would be
irresponsible, if not illegal, for them simply to ignore that.
And that authority goes back quite a way. It may surprise people to
know that regulations covering all forms of well stimulation, including
fracking, were issued in 1942, even though fracking barely existed at
the time. Those were issued by the U.S. Geological Survey, who was in
charge of this issue before the BLM.
Those regulations were in place when the Safe Drinking Water Act
was passed in 1974. And the House report on the Safe Drinking Water Act
says very clearly, ``The committee does not intend any of the
provisions of this bill to repeal or limit any authority the USGS may
have under any other legislation.''
That is about as cut and dry as you can get.
Now, times changed, and those regulations were updated in the 1980s
to exempt routine fracturing jobs. But times changed again, and now
fracking is significantly different than it was 30 years ago. It is
long past time for BLM to modernize these out-of-date regulations and
provide proper baseline protections for public lands from coast to
coast.
Now, I would like to say that despite my bewilderment at the
complaints from the industry and the states, I am very sympathetic to
the concerns of our tribes. As we saw from a Government Accountability
Office report last month, there are serious problems with the way that
energy development on tribal lands is managed, problems that go back
decades.
While we have to consider carefully this rule's impacts on the
tribes, their overall concerns with energy development are real, they
are serious, and they deserve a more thorough investigation by this
committee.
But for companies operating on public lands, this rule is nothing
more than a small step to bring BLM's outdated regulations, which they
have operated under for decades, toward the 21st century.
Thank you, Mr. Chairman, and I yield back.
______
Dr. Fleming. The gentleman yields. The Chair now recognizes
Mr. Grijalva for an opening statement.
STATEMENT OF THE HON. RAUL M. GRIJALVA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ARIZONA
Mr. Grijalva. Thank you very much, Mr. Chairman, for your
courtesy, and also the Ranking Member, as well. Of course,
thanking the witnesses for being here, and the Director, for
his professionalism and on occasion his endurance, as well. As
the Ranking Member indicated, criticism has come from all sides
of the committee regarding the rule, and through that all, your
professionalism is very much appreciated. Thank you.
As I said before, I believe that the Bureau of Land
Management's rule for fracking is much too weak. I am pleased
to discover that several western states completely agree with
me. Throughout their court arguments, the states point out that
they have much stronger regulations than BLM, which means that
companies in those states can keep going on with their business
as usual, regardless of risks they might be posing to our air,
to our water, to our health, and to the economic equity of
homeowners throughout many of those lands.
That is a problem. The Federal Government should be raising
the bar, not settling for the lowest common denominator. The
rule is necessary, and will have some benefits, particularly in
states that don't have robust rules. But we should be doing
more. Yet for some reason, the states and industry are not
thanking BLM for issuing a rule that will have very little
impact in the field, and cost almost nothing. They aren't
thanking Congress for leaving in place the loopholes that
exempt them from a number of our fundamental environmental
laws. No. Instead, they are complaining that the rule is too
confusing, too redundant, too expensive.
This has to be a reflex. If a regulation comes out, it must
be bad, so they have to challenge it. Never mind that the rule
allows states to continue to regulate as they wish. Never mind
that it actually simplifies requirements for companies in some
cases. Never mind that the BLM has been very accommodating and
bending over backwards to try to meet the concerns of the
states and industry.
The industry creates confusion. It invents unrealistic
costs. Then their allies on the Hill rush to their defense.
This rule does not do as much as it should, but it also doesn't
do half of what the Republicans claim. The rule does not do as
much as I would like it to, but it is much better than nothing.
And that is what the Majority would precisely have us do:
nothing. Nothing keeps our land, our water, our air, and our
health at risk, and that would be irresponsible.
I appreciate the time, and I yield back.
Dr. Fleming. The gentleman yields back, so I think we are
ready for our testimony to begin.
Before I begin with the witness introductions, I would like
to mention that one of today's witnesses, Mr. Tom Fitzsimmons
of the Wyoming Oil and Gas Conservation Commission, was not
able to join us here today, due to weather-related travel
issues. Though he is not able to testify, he will still be able
to answer any questions submitted for the record.
I also would like to enter his testimony into the hearing
record.
[No response.]
Dr. Fleming. And, hearing no objection, so ordered.
[The prepared statement of Mr. Fitzsimmons follows:]
Prepared Statement of Tom Fitzsimmons, PE, Commissioner, Wyoming Oil
and Gas Conservation Commission, Cody, Wyoming
Chairman Lamborn, Ranking Member Lowenthal and members of the
committee, thank you for the opportunity to appear before you today.
I serve as a commissioner on the Wyoming Oil and Gas Conservation
Commission as well as chairman of the Wyoming Enhanced Oil Recovery
Commission. When not serving in these roles, I provide expert witness
testimony in business and technical matters concerning the oil and gas
industry. Prior to my involvement in the state commissions, I was
actively involved in fracturing several hundreds of oil and gas wells
as a producer and service provider. I have over 32 years in the oil and
gas industry in Wyoming, Montana, and across the West.
The state of Wyoming, through the Wyoming Oil and Gas Conservation
Commission (hereinafter WOGCC), has in place a comprehensive and time-
tested hydraulic fracturing regulatory program. Implemented in 2010,
Wyoming's Hydraulic Fracturing rule has been modeled by other state
regulatory agencies and has been referred to by the Secretary of the
Interior as a ``standard'' for other states to follow. The Bureau of
Land Management (BLM) hydraulic fracturing rule that was set to become
effective last month is unnecessary and is a threat to our state's
economy.
state agencies are best suited to manage hydraulic fracturing
Successful regulatory oversight hinges upon a focused approach. As
mentioned, Wyoming's rule on hydraulic fracturing is comprehensive.
From the rule's inception, it was designed to be robust. It requires
disclosure and covers many aspects of well stimulation including, but
not limited to, groundwater protection through downhole design and
testing and baseline groundwater testing for chemical additives. In
addition, the WOGCC governs the recovery of resources so that oil and
gas is optimally developed with the guiding principle and legislative
mandate to avoid waste.
Wyoming's cohesive team of industry experts reside in a single
office overseen by the Commissioners, located in the center of Wyoming.
The team, led by Oil and Gas Supervisor Mark Watson, is experienced and
efficient. The Wyoming team understands the regional oil and gas
potential made possible through technologies such as enhanced oil
recovery while balancing the needs of the environment and responsible
development. In contrast, the BLM has 10 field offices located across
many miles in Wyoming--each staffed to serve a wide variety of needs--
but not focused to regulate hydraulic fracturing. This is not a
condemnation of BLM staff, but rather an insight of the value in
allowing the states to apply a focused, local approach to regulation as
opposed to a disjointed Federal agency lead by Washington, DC that
promotes a ``one-size-fits-all approach.''
BLM's draft resource management plan for the Big Horn Basin
contained, in my opinion, two critical flaws when it was released. The
flaws were: (1) the pipeline corridor infrastructure was not tied to
adjoining basin pipeline corridors; and (2) the BLM failed to recognize
almost 2.0 billion barrels of reserve potential through enhanced oil
recovery. These flaws were errors of omission due to lack of focus,
time and industry expertise in the agency at every level.
The lack of focus and expertise within the BLM results in long
delays in the permitting process. Although the cost of permitting for a
Federal APD is 190 times higher than the cost of a state permit, it
still takes two to five times longer to approve a Federal APD. With the
addition of the BLM's Hydraulic Fracturing rule, we can only expect
permitting delays to increase even more. Further, the lack of
regulatory focus has many operators shifting their investment to fee
and state managed minerals. As mentioned above the legislative mandate
of the WOGCC is to minimize waste. Sparse development on Federal
minerals will result in waste. Promoting waste through developing more
unnecessary bureaucratic ``red tape'' through unnecessary rules is not
the way to best develop America's abundance of oil and natural gas or
maximize revenue for the Federal Government for the benefit of all
American citizens.
confusion in regulatory authority results in avoidance of mineral
development
Michael Madrid (BLM Deputy State Director for Minerals) testified
before the Legislature's Select Committee on Federal Natural Resource
Management on July 9, 2015 in Cheyenne, Wyoming. Mr. Madrid conceded
that it would be very difficult to manage Hydraulic Fracturing rules by
two agencies on the same well. We should listen to the people who are
on the front line of this issue. Overlapping rules complicates
development when the permitting and the reporting process are doubled.
Other challenges that create confusion include:
The possibility exists for the BLM to disapprove a hydraulic
fracture stimulation already approved by the WOGCC simply because
portions of the Wyoming approved procedure may differ from the BLM rule
even though certain portions of the Wyoming rule exceeded BLM
requirements.
When it comes to chemical disclosure and trademark protection,
Wyoming has a well thought-out approach that allows service companies
to prequalify their trade secret products before being used on a
fracture treatment. Wyoming's single application process is efficient
for both the state and the industry. In contrast, the BLM process
presents a risk to service companies that their proprietary information
may be compromised if the trade secret status is rejected after the
fact, leaving no recourse other than litigation to protect proprietary
information.
Further, the BLM rules will require that the operator submit a new
and complete trade secret request for each hydraulic-fracture-
treatment, in which a trade secret protected product is used, even if
they have previously submitted numerous trade secret requests for that
same product. This requirement places an unnecessary data management
burden on all involved with no additional benefit. The objective of
this requirement could be managed more efficiently. All of this
uncertainty results in fewer companies willing to risk their investment
on development of Federal minerals. The economic impacts to the state
of Wyoming and its cities, towns, and counties will be profoundly
negative and can be avoided.
prevention of waste is vital
The Wyoming Oil and Gas Conservation Commission is well known for
its transparency of lease, production and well data presented on an
easy to use Web platform. This platform allows oil and gas operators to
evaluate other offset wells and thus improve their practices. For
example, this transparency enables an engineer to learn from
competitors and improve well performance which results in higher
ultimate recovery from future wells. The BLM's hydraulic fracturing
rule fails to consider the need for combining fracture treatment data
with production performance. This oversight will make it nearly
impossible to analyze the large volumes of data associated with
production and well construction.
hf regulation should be at state level
For all these reasons, the members of the Wyoming Oil and Gas
Conservation Commission believe it has effective hydraulic fracturing
regulations in place that are carried out by highly skilled
professionals who solely focus on these important matters as public
servants. Wyoming's state regulations aim to protect our environment,
maximize recovery of resources and promote responsible development. In
addition, our baseline water testing requirements and chemical additive
disclosure regulations help ensure public safety. The BLM rule is
unnecessary, lacks focus, and fails to adequately promote responsible
development. Wyoming has been a leader in the regulation of Hydraulic
Fracturing. Wyoming's state rules were developed by industry,
government, conservationists as well as other stakeholders working side
by side to find the right balance. It is critical that the Federal
Government defers jurisdiction to states with rules similar to
Wyoming's to ensure timely development with reduced waste and
confusion.
Thank you for the opportunity to appear before you today and I look
forward to your questions.
______
Dr. Fleming. Testifying today we have Mr. Neil Kornze,
Director, Bureau of Land Management, U.S. Department of the
Interior; Mr. Mike Olguin, Council Member, Southern Ute Indian
Tribe; Mr. Lloyd Hetrick, Operations Engineering Advisor,
Newfield Exploration Company; and Ms. Hannah Wiseman,
Attorneys' Title Professor of Florida State University College
of Law.
Let me remind the witnesses that, under our Committee
Rules, they must limit their oral statements to 5 minutes. But
the entire statement will appear in the record.
We work on a light system here. You have 5 minutes. You
will be under a green light for the first 4 minutes, then
yellow. When it turns red, if you haven't finished, go ahead
and finish. Trust me, your entire testimony, as written, will
appear in the record.
The Chair now recognizes Director Kornze to testify for 5
minutes.
STATEMENT OF NEIL KORNZE, DIRECTOR, BUREAU OF LAND MANAGEMENT,
U.S. DEPARTMENT OF THE INTERIOR, WASHINGTON, DC
Mr. Kornze. Thank you, Mr. Chairman, Ranking Member,
members of the committee. It is great to be here with you
today.
The BLM manages roughly 10 percent of the Nation's surface,
and nearly a third of its minerals and soils. We manage these
lands on behalf of the American people, under the framework of
multiple use and sustained yield. Today the Bureau's work is
more complex than ever, but we work very hard to make sure that
the public's voice is heard in the actions that we take.
The BLM works diligently to fulfill its role in America's
energy economy, by supporting the responsible development of
oil and gas resources on public and Indian lands. During this
Administration, oil production from those lands has increased
81 percent, tracking or exceeding comparable statewide trends.
Some may contend that production on BLM-managed lands has not
kept pace with national trends; the numbers, however, tell a
very different story.
And, even though we oversee more than 100,000 wells across
the country, we continue to make lands available for leasing
far in excess of industry demand. Right now, industry holds 34
million acres of land for oil and gas development, but is only
producing on a third of that. It is worth noting that last year
the BLM made nearly 6 million acres of land available, but
industry bid on only about 20 percent of that acreage.
It is also important to highlight that the BLM has issued
roughly 6,000 drilling permits that are available, approved,
and ready to go today, that are not being used by industry.
This represents about 2 years' worth of work by the oil and gas
industry on public and Indian lands, and we would like to see
these permits put to work creating American energy and American
jobs.
In supporting this development, our oil and gas program's
highest priority is ensuring that the operations that it
authorizes are safe and environmentally responsible. The
hydraulic fracturing rule is critical to meeting that
responsibility, because it establishes standards that are
essential to protecting our shared environment, while also
facilitating robust development.
Of the wells currently being drilled that BLM oversees,
over 90 percent employ modern hydraulic fracturing techniques
that are significantly more complex than those used in the near
past. They are often much deeper, and also often coupled with
horizontal drilling techniques. While these technological
advances and the tremendous increase in their use has
facilitated greater access to oil and gas, it has also
necessitated that the BLM revisit its rules on hydraulic
fracturing, which were last updated roughly 30 years ago.
The BLM's rule builds upon the existing regulatory
framework and establishes reasonable common-sense baseline
standards, as has been discussed here. It requires operators to
construct sound wells, to disclose the chemicals they use, and
to safely recover and handle waste fluids. Our rule was
informed by our engineers, technical expertise, as well as that
of state and tribal regulators, industry, and many other
experts.
The BLM has a long history of regulating oil and gas
activities on public lands, as you know. It also has an
established track record of working closely with operators,
tribes, and states to avoid duplication and delay. The ultimate
implementation of the hydraulic fracturing rule will be no
different.
We have been actively working with states and tribes that
have hydraulic fracturing standards to evaluate the potential
for variances. Unfortunately, those discussions had to be
temporarily put on hold in response to the Wyoming District
Court's order. We intend to continue this important work, once
the litigation has been addressed.
Now, before closing, I would like to briefly mention the
two pending legal challenges against the BLM's hydraulic
fracturing rule. While I am very confident that the rule is
consistent with the BLM statutory authorities, because of where
we are in the process of defending our rule, the ongoing
litigation could impact much of our discussion here today.
I am happy to discuss the requirements of the rule.
However, in light of the litigation, there will likely be areas
of inquiry that I won't be at liberty to explore in today's
hearing. For example, I will be quite limited in what I can say
regarding potential positive or negative impacts of the rule,
or regarding arguments related to the BLM's authority to issue
and enforce the rule. I appreciate your understanding on this
point. I have been here twice in front of the House Natural
Resources Committee to discuss this rule, and know that I share
your desire to have a robust conversation on these issues.
Thank you for the opportunity to be with you today; I look
forward to your questions.
[The prepared statement of Mr. Kornze follows:]
Prepared Statement of Neil Kornze, Director, Bureau of Land Management,
U.S. Department of the Interior
Chairman Lamborn, Ranking Member Lowenthal, and members of the
subcommittee, thank you for the opportunity to discuss the Bureau of
Land Management's (BLM) final hydraulic fracturing regulations and
their application to Federal, tribal, and Indian trust mineral
resources. The BLM oil and gas program's highest priority is ensuring
that the operations it authorizes on public and tribal lands are safe
and environmentally responsible. This rule is critical to meeting that
responsibility as we continue to offer millions of acres of public land
for minerals development each year.
The BLM's rule establishes a consistent set of requirements
designed to prevent problems in these complex hydraulic fracturing
operations before they occur. It also will provide as much information
as possible to the public about these operations that affect their
public lands. The goals of the rule--safe and environmentally
responsible operation and resource protection--are goals that we know
the BLM shares with industry, states, tribes, and the American public.
The expertise brought to these issues by those who participated in the
rulemaking process was essential to producing a rule that will achieve
these goals, and we are very appreciative of the time and skill
invested by all concerned.
background
The BLM is responsible for protecting the resources and managing
the uses of our Nation's public lands, which are located primarily in
12 western states, including Alaska. The BLM administers more land--
over 245 million surface acres--than any other Federal agency. The BLM
also manages approximately 700 million acres of onshore Federal mineral
estate throughout the Nation, including the subsurface estate overlain
by properties managed by other Federal agencies such as the Department
of Defense and the U.S. Forest Service. In addition, the BLM, together
with the Bureau of Indian Affairs (BIA), provides permitting and
oversight services under the Indian Mineral Leasing Act of 1938 to
approximately 56 million acres of land held in trust by the Federal
Government on behalf of tribes and individual Indian owners. The BLM
works closely with surface management agencies, including the BIA and
tribal governments, in the management of these subsurface resources. We
are also mindful of our agency's responsibility for stewardship of
public land resources and Indian trust assets that generate substantial
revenue for the U.S. Treasury, the states, tribal governments, and
individual Indian owners.
In support of President Obama's balanced approach to energy, the
BLM is committed to promoting safe, responsible, and environmentally
sustainable domestic oil and gas production in a manner that will
protect consumers, human health, and the environment, and reduce our
dependence on foreign oil.
In Fiscal Year (FY) 2014, onshore Federal oil and gas royalties
exceeded $3 billion, approximately half of which were paid directly to
the states in which the development occurred. In Fiscal Year 2014,
tribal oil and gas royalties exceeded $1 billion with all of those
revenues paid to the tribes or individual Indian owners of the land on
which the development occurred.
The BLM works diligently to fulfill its role in securing America's
energy future, coordinating closely with partners across the country to
ensure that development of oil and gas resources occurs in the right
places and that those projects are managed safely and responsibly. In
recent years, the BLM has overseen a significant increase in oil
production from public lands, while also supporting continued natural
gas production. Oil production from Federal and Indian lands in 2014
rose 12 percent from the previous year and is now up 81 percent since
2008--113 million barrels per year in 2008 to 205 million barrels per
year in 2014. For comparison, nationwide oil production over the same
period increased 73 percent. The BLM continues to make public lands
available for oil and gas development in excess of industry demand.
Additionally, today the BLM has responsibility for more than 100,000
existing oil and gas wells.
hydraulic fracturing technology
Hydraulic fracturing involves the injection of fluid under high
pressure to create or enlarge fractures in the rocks containing oil and
gas so that the fluids can flow more freely into the wellbore and thus
increase production. The number of wells on BLM-managed public lands
and on Indian lands that are stimulated by hydraulic fracturing
techniques has increased steadily in recent years. Of wells currently
being drilled, over 90 percent use modern hydraulic fracturing
techniques for well completion.
These new well completions are typically significantly more complex
than the wells drilled in the past. Modern hydraulic fracturing
operations are often considerably deeper and coupled with relatively
new horizontal drilling techniques to create greater wellbore volume in
the reservoir, unlike those that occurred in the past which were used
on a relatively small scale, to complete or to re-complete wells. The
increasingly common combination of long lateral wellbores with the
types of hydraulic fracturing used today has facilitated larger-scale
operations that allow greater access to oil and gas resources in shale,
tight gas, coalbed methane and conventional reservoirs across the
country, sometimes in areas that have not previously or only recently
experienced significant oil and gas development.
hydraulic fracturing rulemaking considerations
The Mineral Leasing Act of 1920 (MLA), as amended, directs the
Secretary of the Interior to lease Federal oil and gas resources, and
authorizes her to regulate the resulting oil and gas operations on
those leases. The BLM has used this authority to develop regulations
governing all aspects of oil and gas operations, including requirements
related to surface-disturbing activities, production measurement, and
well construction. The Indian Mineral Leasing Act extends this
regulatory authority and the resultant rules to Indian oil and gas
leases on trust lands (except those lands specifically excluded by
statute). Finally, the Federal Land Policy and Management Act of 1976
(FLPMA) directs the BLM to manage the public lands using the principles
of multiple use and sustained yield and to take any action necessary to
prevent unnecessary or undue degradation. In fulfilling these
objectives, FLPMA requires the BLM to manage public lands in a manner
that protects the quality of their resources, including ecological,
environmental, and water resources. On net, this statutory regime
requires the BLM to balance responsible development with protection of
the environment and public safety. The BLM works hard to ensure the
appropriate balance is struck and that the applicable regulations and
requirements are applied and enforced fairly and consistently across
all the lands where the BLM has oversight responsibilities.
Prior to the issuance of the hydraulic fracturing rule, the BLM
rules applicable to hydraulic fracturing were last updated over 30
years ago, and had not kept pace with the significant technological
advances in hydraulic fracturing techniques and the tremendous increase
in its use. The new rule is the culmination of 4 years of work by the
BLM that began in November 2010 when it held its first public forum on
this topic. Since that time, the BLM has published two proposed rules
and held numerous meetings with the public and state officials, as well
as many tribal consultations and meetings. The public comment period
was open for a cumulative period of more than 210 days, during which
time the BLM received and analyzed comments from more than 1.5 million
individuals and groups. During this period, the BLM also studied state
and tribal regulations, and consulted with state and tribal agencies,
industry, and the public, including communities affected by oil and gas
operations.
hydraulic fracturing rule requirements
Informed by the experience of its experts and the technical
expertise and concerns of state regulators, tribes, industry, and the
public, the BLM's hydraulic fracturing rule strengthens its existing
oversight procedures and provides all stakeholders with additional
assurance that operations are being carried out safely and responsibly.
Key components of the rule include provisions for ensuring the
protection of groundwater supplies through requirements related to
wellbore integrity. These include the placement of competent cement
barriers between the wellbore and any potentially usable water zones
through which the wellbore passes, which protects groundwater both from
hydraulic fracturing fluids during drilling and from hydrocarbon
contamination during production. The rule requires the interim storage
of recovered waste fluids from the hydraulic fracturing operation in
tanks, unless, under certain restrictive circumstances, specific
approval for the use of pits has been granted to the operator, in order
to minimize the potential for produced water spills that puts soil,
water, and wildlife at risk. Additional measures requiring companies to
submit more detailed information on the geology, depth, and location of
pre-existing wells prior to drilling will lower the risk of cross-well
contamination, which has become more prevalent as the use of horizontal
drilling has significantly increased. To increase transparency, as much
of this information as possible will be made available to the public.
Finally, the rule requires companies to publicly disclose information
about the chemicals used in their hydraulic fracturing processes on
public lands within 30 days of completing the operations, subject to
exceptions for information demonstrated to be a trade secret. Any
information claimed to be a trade secret can be obtained by BLM for
review of that claim.
These requirements were developed based on BLM's experience and
technical expertise and work done by states, tribal authorities, and
industry. During the 4 years the BLM spent preparing the rule, it
benefited from the expertise of state and tribal regulators, and many
provisions of the final rule reflect existing state standards. None of
these requirements impose undue delays, costs, or procedures on
operators.
work with states and tribes
The BLM has established and maintained regulations governing oil
and gas operations on public lands for decades, and has worked
successfully with operators, tribes and state governments to avoid
duplication and delay in the enforcement and monitoring of these
regulations. The ultimate implementation of the hydraulic fracturing
rule will continue this long-standing practice while also ensuring the
BLM satisfies its obligations to ensure Federal standards are met. As
explained above, the rule builds upon and updates the BLM's existing
regulations to address an evolving technology, in order to provide
consistent parameters for the conduct of hydraulic fracturing
operations on BLM-managed public lands nationwide and Indian trust
lands.
Of the 32 states with the potential for oil and gas development on
federally managed mineral resources, slightly more than half have rules
in place that address hydraulic fracturing, and those rules vary widely
from state to state. Recognizing the expertise and experience that
state and tribal authorities possess and consistent with its standard
practice of ensuring the efficient implementation of its rules, the BLM
had been working with states and tribes that have standards in place
for hydraulic fracturing that meet or exceed those set by the BLM's
rule to establish variances from those aspects of the BLM rule. That
work has temporarily paused as a result of the litigation explained
below. Following BLM approval of a variance, the BLM will enforce the
specific state or tribal standard as part of its hydraulic fracturing
regulatory program. In addition, the BLM will continue its coordination
with states and tribes to establish or review and strengthen existing
agreements related to oil and gas regulation and operations.
The BLM's overall intent for these coordination efforts is to
minimize duplication and maximize efficiency, while also ensuring the
applicable Federal standards are met. As this rule is implemented, the
BLM will continuously work with states, tribes, and operators to
maximize coordination and efficiency.
implementing the rule
The rule is expected to cost industry about $11,400 per hydraulic
fracturing operation on average, which equates to no more than one-
quarter of 1 percent of the cost of drilling a well. This is a modest
cost considering the typical hydraulically fractured well costs between
$5-$10 million to develop, the public interest in ensuring that these
operations are conducted in an environmentally sound and safe manner,
and in light of the high cost of remediating contaminated aquifers. The
BLM is aware that industry, states, tribes, and the public share the
same goal of safeguarding local communities, water quality, wildlife,
and other resources from potential harm. For this reason, the BLM rule
not only incorporates requirements from existing state and tribal
rules, but industry best practices as well. In many cases, operators
have voluntarily undertaken the best practices reflected in the BLM's
rule. The rule ensures that those practices are maintained and adopted
by all. As a result, the rule achieves a cost-effective path toward
consistent permitting requirements and disclosure protocols for
hydraulic fracturing operations.
The BLM has been taking a number of steps both internally and
externally to prepare for the implementation of the rule in advance of
its scheduled effective date. Internally, recognizing the central role
wellbore integrity plays in maintaining safe operations, the BLM
partnered with the Society of Petroleum Engineers to add more technical
training for the BLM's engineers that emphasizes cementing and other
critical aspects of hydraulic fracturing operations. The BLM will
continue to offer, develop, and refine these technical training
modules.
Externally, the BLM has undertaken outreach efforts to states,
operators, trade associations, and other interested stakeholders. The
BLM state offices have been meeting with their state counterparts,
undertaking state-by-state comparisons of regulatory requirements in
order to identify opportunities for variances, and to establish
Memorandums of Understanding (MOUs) that will realize efficiencies and
allow for successful implementation of the rule. To date, the BLM has
had discussions with: the North Dakota Industrial Commission; the
Wyoming Oil and Gas Commission; and the states of Alaska, California,
Colorado, New Mexico, Nevada, and Utah. The BLM also gave a
presentation on the rule this past May at the Interstate Oil and Gas
Compact Commission's meeting. As discussed above, some activities that
would actually implement the rule have been temporarily paused as a
result of litigation, but BLM intends to resume them at the appropriate
time.
Similarly, communication with industry has also been ongoing, but
has been paused to the extent consistent with the Court's order. Our
offices have reached out to local or regional industry organizations
and local operators to address their questions related to the
implementation process. On April 7, 2015, BLM Washington hosted a
nationwide industry outreach session that over 200 people participated
in to explain the rule and answer questions about its implementation.
Since that time, similar sessions have been held or set up at the local
level. BLM state and field offices have coordinated and held training
opportunities with associations representing producers in Wyoming,
Utah, Colorado, Montana, and North Dakota. Finally, we are also working
closely with the Ground Water Protection Council (GWPC) to finalize a
MOU that will ensure that the chemical disclosures provided by industry
can be easily searched and downloaded from the GWPC's publicly
available hydraulic fracturing database, FracFocus.
legal challenges to the rule
As you know, two industry associations (Independent Petroleum
Association of America and the Western Energy Alliance) and a number of
the states (Wyoming, Colorado, North Dakota, and Utah), and the Ute
Tribe of the Uintah and Ouray Reservation have challenged the rule in
the U.S. District Court in Wyoming. The Sierra Club and five other
environmental organizations have intervened in that litigation to
defend the rule. A separate suit was filed by the Southern Ute Indian
Tribe in the U.S. District Court in Colorado. These suits are still in
the early phases, and we are vigorously defending the rule and strongly
believe it is clearly and fully consistent with the applicable legal
authorities and consistent with the BLM's statutory obligations.
In the Wyoming litigation, the court held a hearing on June 23,
2015, on the motions of several of petitioners for a preliminary
injunction. At the end of 6\1/2\ hours of testimony and argument, the
court did not issue a preliminary injunction against the rule. The
court did, however, postpone the effective date of the rule until the
administrative record is filed by the BLM, the parties annotate their
briefs with citations to the record, and the court has time to render a
decision on the preliminary injunction motions. In the Colorado
litigation, the court has denied the Southern Ute tribe's motion for a
temporary restraining order, and has set a schedule for litigation
going forward.
The BLM has been working diligently with other offices of the
Department and with a contractor to prepare and file the administrative
record with the Wyoming and Colorado courts, which is currently due to
be filed on July 22, 2015, and August 24, 2015, respectively. In the
meantime, the rule remains on hold consistent with the Wyoming Court's
order until record is filed.
conclusion
The BLM's hydraulic fracturing rule provides a much-needed update
to the BLM's existing regulations. It establishes common-sense
standards governing modern hydraulic fracturing operations that reflect
the technological advancement of the process over time. It also
provides opportunities for the BLM to coordinate standards and
processes with states and tribes to reduce administrative costs and
improve efficiency. These new regulations are essential to our efforts
to protect the environment and local communities, while also ensuring
the continued conscientious development of our Federal oil and gas
resources. Thank you for the opportunity to present this testimony. I
will be pleased to answer any questions you may have.
______
Dr. Fleming. Thank you, Mr. Kornze.
The Chair now recognizes Mr. Olguin for 5 minutes, sir.
STATEMENT OF JAMES M. ``MIKE'' OLGUIN, COUNCIL MEMBER, SOUTHERN
UTE INDIAN TRIBE, IGNACIO, COLORADO
Mr. Olguin. Good morning, Chairman Fleming, Ranking Member
Lowenthal, and members of the subcommittee. My name is Mike
Olguin. I am a member of the Southern Ute Indian Tribal
Council, and on behalf of the Southern Ute Indian Tribe, I am
honored to be here. With me today are my fellow tribal council
member Tyson Thompson; our tribe's legal counsel, Tom Shipps;
and the operating director of the Tribe's growth fund, Bob
Zahradnik, who is also an experienced petroleum engineer. I may
need to call upon them later for help in answering some of your
questions.
At this time, Mr. Chairman, I would like to mention a few
key items from my written statement, and then, with the
possible assistance of my colleagues, I would like to answer
questions that you and members of the subcommittee may have.
First, I believe it is important for you to know something
about our reservation. The Southern Ute Indian Reservation is
located in southwestern Colorado. It is a checkerboard
reservation. That is, there are multiple types of landownership
within the reservation, including tribal land and non-Indian
land. Our reservation is blessed with substantial natural gas
resources, and we have relied upon natural gas revenues for
more than 50 years to fund our government, care for our
members, and preserve our cultural identity.
In 1974, our chairman, Leonard C. Burch, imposed a
moratorium on the tribe's oil and gas leasing, because he did
not trust the Department of the Interior's oversight. For
almost 10 years, that moratorium remained in place. During that
time, the tribe established its own energy department, and
assembled detailed information about its resources. Only after
the tribe felt confident that it could prudently monitor the
development of its resources, did leasing recommence.
While Federal laws and regulations continue to require BIA
and BLM approval of many oil and gas activities on the Tribe's
lands, our own departments have far outstripped the capacity of
those Federal agencies to oversee those activities. Over the
course of the last 50 years, oil and gas on our reservation has
involved the drilling and hydraulic fracturing of thousands of
wells. Throughout that period, there has never been an instance
in which hydraulic fracturing has resulted in contamination of
usable water resources.
Second, my testimony summarizes our efforts to consult with
the BLM with respect to the proposed hydraulic fracturing
regulation. Frankly, when the rule was initially considered,
the BLM did not take its effect on tribes as a serious issue.
By the time the BLM proposed a revised rule in 2013, the BLM
recognized that energy-producing tribes had serious concerns
with what was being proposed, and it went through the motions
of tribal consultation.
Our comments throughout the 4-year process reflected our
concern that every extra regulatory step, every extra required
report, and every extra approval imposed by the BLM and
operators in Indian Country increases the cost of operating on
Indian lands, and decreases the ability to attract energy
development dollars to our lands.
Simply put, tribal lands are different from public lands.
Congress has recognized tribal rights of self-governance over
tribal lands. We repeatedly called upon the BLM to separate its
regulation of public lands from tribal lands to address those
important distinctions. However, the BLM ignored our repeated
requests and, in doing so, has embarked on a policy that sets
back concepts of tribal sovereignty and self-governance for
years.
Third, notwithstanding BLM's refusal to grant tribes an
opt-out mechanism, the Southern Ute Tribal Council has adopted
its own hydraulic fracturing rule. Under existing Bureau of
Indian Affairs regulations, we maintain that the Southern Ute
rule supersedes the BLM final rule as to lands within the
tribe's jurisdiction. Frankly, our rule is a better rule. It
eliminate BLM's pre-approval delays and interpretive exercises,
but imposes more demanding cementing requirements on operators.
It provides certainty.
Fourth, my testimony informs the subcommittee that our
tribe has commenced a lawsuit in Federal court in Denver,
challenging the lawfulness of the BLM final rule as it applies
to our lands. We believe the BLM's failure to recognize tribal
sovereignty in its regulation violates the letter and the
spirit of the Indian Reorganization Act of 1934, and Congress'
tribal mineral leasing statutes.
In conclusion, Mr. Chairman, the Southern Ute Indian Tribe
has consistently been a leader in energy development and
environmental protection. The BLM's effort to lump tribal lands
and public lands into a one-size-fits-all basket is poor
policy. Our sovereign rights to manage and protect our own
lands are simply too important to turn over to the BLM, and we
do not intend to do so. Thank you.
[The prepared statement of Mr. Olguin follows:]
Prepared Statement of Hon. James M. ``Mike'' Olguin, Southern Ute
Indian Tribal Council Member, Southern Ute Indian Tribe
i. introduction
Chairman Lamborn, Ranking Member Lowenthal and members of the
subcommittee, I am Mike Olguin, an elected member of the Southern Ute
Indian Tribal Council, which is the governing body of the Southern Ute
Indian Tribe. I am honored to appear before you to provide testimony
regarding the future of hydraulic fracturing regulation on federally
managed lands, including Indian lands. For approximately 4 years, our
tribe has actively opposed the Bureau of Land Management's attempt to
lump Indian lands and public lands into a ``one-size-fits-all'' basket
for purposes of approving and regulating hydraulic fracturing. To the
unnecessary detriment of our tribal government, which relies upon
energy related revenue, we believe the BLM's approval requirements are
poorly conceived. In order to nullify the BLM's regulatory efforts on
our tribe's lands, we have exercised our sovereign rights by enacting
our own hydraulic fracturing regulation. The Southern Ute regulation
ensures prudent, environmentally sound practices in a much more
reasonable and efficient manner than the BLM's rule. Our tribal leaders
hope that your intervention in the hydraulic fracturing debate will
lead to respectful recognition of Indian tribal sovereignty in
regulating activities on their own lands, regardless of executive or
legislative policy decisions applicable to Federal public lands.
ii. background
The Southern Ute Indian Reservation consists of approximately
700,000 acres of land located in southwestern Colorado in the Four
Corners Region of the United States. Our Reservation is part of the
northern San Juan Basin, an area that has seen widespread oil and gas
development over a period of almost 70 years. The revenues we receive
from natural gas development of tribal lands on our Reservation are the
tribe's economic lifeblood. For decades, we have worked with industry
and with Federal agencies to ensure that oil and gas development occurs
in an environmentally responsible manner on our lands.
The landownership pattern within our Reservation is complex and
includes parcels of tribal trust lands, parcels of allotted lands owned
by individual Indians, parcels owned by non-Indians, Federal lands and
state lands. In many situations, non-Indian mineral estates are
adjacent to tribal mineral estates. This landownership pattern is
significant and magnifies the impact of differences between Federal
regulation of Indian lands and state regulation of neighboring non-
Indian lands. The burden of unnecessary Federal regulation provides a
direct incentive for operators to lease and drill on offsetting non-
Indian lands and to avoid development of tribal energy resources. The
disincentive to develop tribal resources includes ever-increasing fees
for processing Applications for Permits to Drill (``APDs'') and permit
delays. The burden of Federal regulation results in lost revenue to our
tribe, as well as potential drainage of tribal minerals.
Hydraulic fracturing involves the underground injection of fluid
and proppants under high pressure in order to propagate and maintain
fractures and enhance the movement and recovery of oil and gas.
Hydraulic fracturing is necessary for the continued development of
energy resources from sandstones, shales and coal formations on our
lands. Thousands of wells on our Reservation have been stimulated
through hydraulic fracturing of sandstones and coalbeds. Preliminary
studies also indicate that there are significant recoverable reserves
associated with shale formations underlying our Reservation that will
require hydraulic fracturing in order to be produced.
Over the course of the extensive history of hydraulic fracturing on
our Reservation, there have been no documented cases of adverse
environmental impacts resulting from such well stimulation. It should
be noted that the hydrocarbon bearing zones on our Reservation are
generally located at depths much greater (2,500 to 8,000 feet below
surface) than usable water aquifers (typically 100 to 300 feet below
surface). Further, the hydrocarbon bearing zones are separated from
usable aquifers by thick strata with low permeability. Even with those
natural safeguards in place, our tribe has led the effort to ensure
that oil and gas development activities do not adversely affect surface
or groundwater resources. Significantly, in the course of reviewing
APDs on our lands, we have insisted upon regular Bradenhead testing of
well integrity and have required cementing of well casings to surface.
In recent years, oil and gas companies have been able to recover
oil and gas resources throughout the country from shales and tight
formations previously considered unproductive. Technological advances
in horizontal drilling and hydraulic fracturing stimulation spurred
these resource recovery opportunities. The significant expansion of
this activity into geographic areas not previously subject to oil and
gas development has fostered debate regarding the environmental effects
of hydraulic fracturing. These concerns have, in turn, led the
Department of the Interior and the BLM to develop a response intended
to ensure the public that, through government oversight and regulation,
hydraulic fracturing occurring on Federal and Indian leased lands will
be undertaken in an environmentally safe and prudent manner. While this
goal may appear reasonable, the process employed by the BLM in
developing the regulations applicable to Indian lands was flawed and
the ultimate set of regulations is objectionable.
iii. the process of consultation with affected indian tribes was
inadequate
A. The Initial Proposed Rule
In mid-December of 2011, BLM's Assistant Director for Minerals and
Realty Management Michael D. Nedd, sent a letter inviting our tribe and
other tribes to engage in government-to-government consultation
regarding BLM's intent to develop regulations governing hydraulic
fracturing on Federal and Indian lands. We welcomed this initial
invitation for early consultation. On January 19, 2012, a substantial
contingent of our tribe's staff, including representatives from our
Energy Department, Natural Resources Department, and Environmental
Programs Division, attended a BLM information session in Farmington,
New Mexico, where representatives from the BLM provided basic
information about hydraulic fracturing and asked for tribal input
regarding the shape that any such regulations might take. We
congratulated BLM on this seemingly fresh approach to visiting with
tribes at the formative stages of regulation development. We also
delivered at that time written comments from our now deceased Chairman,
the late Jimmy R. Newton, Jr., that addressed three principal matters:
(1) suggestions for process; (2) a summary of the importance of
hydraulic fracturing to the tribe; and (3) a summary of potential
environmental concerns and protection measures associated with
hydraulic fracturing.
In commenting on process, Chairman Newton's letter specifically
urged that ``the consultation process include not only an opportunity
to comment on proposed BLM regulations but consultation on the
formulation of proposed regulations.'' Chairman Newton further
suggested that ``BLM circulate discussion drafts of possible
regulations for review and comment before any proposed regulations are
issued.'' Only later did we learn that our concept of meaningful tribal
consultation had been shortchanged from the outset by the BLM.
Notwithstanding our requests and suggestions, BLM proceeded to develop
draft proposed regulations in isolation and, without disclosing its
activities to tribes, submitted those draft regulations to the Office
of Management and Budget for publication approval in the Federal
Register. This process truly was an example of the Federal trustee's
train having left the station before Indian Country had a chance to
know that the train was even moving. Within a month following BLM's
publication of the proposed regulation, we submitted written comments
to the BLM on June 11, 2012, and expressed our deep concerns with many
of the substantive proposals contained in those draft regulations. Our
comments at that time reflected our ongoing concern that every extra
regulatory step, every extra required report, and every extra approval
imposed by the Federal Government on operators in Indian Country
increases the costs of operating in Indian Country and decreases the
ability of tribes to attract energy development dollars to our lands.
B. The Revised Proposed Rule
In response to over 177,000 comments, the BLM issued a revised
proposed rule on May 24, 2013. Again, our tribe weighed into the
discussion, not just by submitting written comments, but by meeting
with key officials within the Department of the Interior, the BLM, the
Bureau of Indian Affairs (``BIA''), and the White House. Among our
substantive comments to the revised proposed rule, we questioned the
cost effectiveness of the BLM's approval requirements; its capacity to
interpret cement evaluation logs and cement bond logs; its approach to
isolation of geologic zones containing unusable groundwater; and the
vague--but broad--discretion retained by the BLM to impose potentially
unlimited conditions on hydraulic fracturing activities without any
established time frames for issuing approval. Most significantly, we
urged the BLM to separate its rulemaking on public lands from Indian
lands. In calling for that separation, we emphasized the dramatic
differences in Federal law and policy underpinning Federal public lands
and Indian lands, which had spawned separate regulatory regimes for
Indian mineral leasing, royalty valuation and collection, and pooling
and unitization of subsurface resources, as well as empowerment of
tribes in implementing key environmental laws. Further, we specifically
reminded the BLM that, under long-established regulations governing
Indian mineral leasing, tribes organized under the Indian
Reorganization Act of 1934 (``IRA''), like the Southern Ute Indian
Tribe, retained the authority to supersede the BIA's mineral leasing
regulations, including incorporated BLM regulations made applicable to
tribal lands. See 25 C.F.R. Sec. 211.29. In its explanation of the
revised proposed rule, however, the BLM stated that Congress had tied
its hands and that it lacked the authority to separate tribal lands and
public lands in developing the proposed rule. In response, we stated as
follows:
For the BLM to suggest that it lacks the power to consider
tribal lands and public land distinctly defies decades of
statutory and regulatory treatment and is, frankly, insulting.
Rather, the proper question is whether there is any reason to
treat such lands differently, and, if reasonable grounds are
provided for such different treatment, then the BLM should
strive to do so.
See Comment Letter from Chairman Jimmy R. Newton, Jr. to BLM at 4 (Aug.
20, 2013).
As the subcommittee is fully aware, on March 26, 2015, the
Assistant Secretary for Land and Minerals Management, Janice M.
Schneider, approved the BLM's final rule regulating hydraulic
fracturing on Federal and Indian lands. 80 Fed. Reg. 16128.
iv. the tribe's hydraulic fracturing regulation
On June 16, 2015, the Southern Ute Indian Tribal Council adopted
Resolution No. 2015-98, which approved the tribe's regulation of
hydraulic fracturing and chemical disclosure on lands within the
jurisdiction of the tribe. As authorized by 25 C.F.R. Sec. 211.29, the
tribe's regulation expressly states that it supersedes the BLM's
regulation. I will briefly summarize the key differences between the
Southern Ute rule and the BLM rule. Under the Southern Ute rule, an
operator must provide the Southern Ute Department of Energy 48 hours
advance written notice of its intent to conduct hydraulic fracturing
operations. The Tribe's Department of Energy may review operator
information related to the proposed activity and may monitor that
activity. Following the completion of hydraulic fracturing, the
operator must provide the tribe with a detailed report describing the
activities. In order to ensure that hydraulic fracturing occurs in an
environmentally sound manner, an operator is required to cement all
surface and intermediate casing with a continuous column from the
bottom of that casing to the surface, and all production casing must be
cemented from the bottom of the vertical portion of the production
casing to at least 50 feet above the bottom of the intermediate casing.
In that regard, the Southern Ute rule is more restrictive than the BLM
rule or the state of Colorado's cementing requirements. The Southern
Ute rule provides a better safeguard to water quality and greater
certainty to operators, while also eliminating the delays inherent in
pre-approval. Like the BLM rule, however, the tribe's rule also
requires storage of wastewater in tanks and the public disclosure of
the chemical composition hydraulic fracturing fluids.
In contrast, under the BLM rule an operator must obtain BLM pre-
approval before the operator may proceed with hydraulic fracturing
activities. There is no time period following submission of such an
application within which BLM must issue its approval or disapproval. In
granting approval, the BLM has the discretion to impose a wide variety
of conditions, including the imposition of discretionary conditions
that exceed those explicitly required in the rule. Critically, unlike
the tribe's straight forward cementing requirement, the BLM rule's
cementing requirement is based upon on the isolation of zones that
contain usable water, which requires an interpretive water quality
analysis. In addition to the inherent delay associated with securing
discretionary agency approval, the act of approval for each well
arguably triggers the need for a separate analysis under the National
Environmental Policy Act (``NEPA''), which invites additional delays
through third-party challenges and potential litigation by those
opposed to oil and gas development.
In sum, we strongly believe that the Southern Ute rule provides a
simpler and more effective way to regulate hydraulic fracturing
activity on the tribe's lands than the BLM rule.
v. southern ute indian tribe v. department of the interior
On June 18, 2015, several days before the BLM rule was to become
effective, the Southern Ute Indian Tribe filed a lawsuit in the U.S.
District Court for the District of Colorado. Southern Ute Indian Tribe
v. United States Department of the Interior, et al., Civil Action No.
1:15-cv-01303-MSK (D. Colo). In that case, the tribe has challenged the
lawfulness of the rule, including its failure to recognize an IRA
tribe's unconditional right to supersede the BLM final rule. We have
also asserted that the rule should be vacated as arbitrary and
unreasonable in its treatment of Indian tribes, whose powers of self-
governance under statutes and policies have been repeatedly emphasized
over the last 40 years. The tribe's opening brief on the lawfulness
challenge is due on July 23, 2015, and oral argument is scheduled for
October 14, 2015.
conclusion
In conclusion, I am honored to appear before you today on behalf of
the Southern Ute Indian Tribe. We recognize that your work involves
broad oversight of BLM's role in energy development on public lands,
and that energy development on Indian lands is not a matter on which
you typically focus. To the extent you can do so, however, we hope that
you will assist us in preserving our sovereign rights to regulate
activities on our lands. We also hope that the common-sense approach
that we have taken with respect to our lands will assist you and the
BLM in fashioning a reasonable approach to hydraulic fracturing
regulation on Federal public lands. We look forward to continuing our
work with the subcommittee on this and other important matters.
At this point, I would be happy to answer any questions you may
have.
______
Dr. Fleming. Thank you, Mr. Olguin.
The Chair now recognizes Mr. Hetrick to testify for 5
minutes.
STATEMENT OF LLOYD HETRICK, OPERATIONS ENGINEERING ADVISOR,
NEWFIELD EXPLORATION COMPANY, THE WOODLANDS, TEXAS
Mr. Hetrick. Congressman Fleming, Ranking Member Lowenthal,
and distinguished members of this subcommittee, my name is
Lloyd Hetrick. I am a professional engineer, and an operations
engineering advisor for Newfield Exploration Company. Thank you
for inviting me to testify today.
The future of hydraulic fracturing and, therefore, oil and
gas development on federally managed lands is uncertain. Every
day, independent oil and gas companies like Newfield make key
decisions on where to invest our drilling capital. We evaluate
not only the potential quantity and quality of natural
resources available, but also the regulatory uncertainties that
may impede our ability to bring them to market economically.
From new hydraulic fracturing regulations to additional
air, water, and endangered species initiatives, Federal lands
carry extra burdens when competing for our investment dollars.
This should concern policymakers of every stripe, because the
public's oil and gas resources are among the Nation's largest
sources of non-tax revenue for the Federal Government.
For every dollar the government spends administering the
Federal onshore program, companies return over $83 in
royalties, rents, bonuses, and other revenue to the taxpayer.
Every barrel of crude and Mcf of natural gas produced here in
America, and each dollar that flows to the U.S. Treasury from
activity on federally managed lands, provides lawmakers with
additional foreign policy and budget options.
We live in an era of energy abundance, where the combined
technologies of horizontal drilling and hydraulic fracturing
have been unlocked, and oil and gas resources thought to be
uneconomic for development less than a decade ago are now
commercially developed. But such promise can be stifled by
regulation run amuck. My testimony today details a few of these
amucks created by the BLM's new hydraulic fracturing rule,
including: it impacts non-Federal lands, most significantly in
the western United States, the checkerboard pattern referenced
earlier, and other parts of the United States also.
It additionally creates inefficiencies not properly
addressed in the BLM's economic analysis. It duplicates, in
some cases contradicts, and increases confusion with respect to
existing state regulations. And, finally, it uses the public as
a secondary regulator. This will create new challenges for both
the BLM and the operator, and add confusion to the public.
If the committee intends to create more certainty with
regard to the future of hydraulic fracturing and, therefore,
oil and gas development on federally managed lands and those
state and private lands that are also impacted by this rule
should the courts allow the rule to move forward, then I
respectfully request the committee help the BLM to improve it.
Finally, I do want to recognize my peers in the BLM for
reaching out to all stakeholders during this process since
early 2012. They have listened to concerns from all sides, and
attempted to find reasonable middle ground. My arguments
presented today are not intended as an indictment of the
agency, rather a reflection of the complexity of this
rulemaking process.
Thank you for this opportunity, and I look forward to your
questions.
[The prepared statement of Mr. Hetrick follows:]
Prepared Statement of Lloyd H. Hetrick, Newfield Exploration Company
Chairman Lamborn, Ranking Member Lowenthal and distinguished
members of the committee, my name is Lloyd Hetrick. I am a registered
professional engineer and the Operations Engineering Advisor for
Newfield Exploration Company based in The Woodlands, Texas.
I have more than 36 years of diverse experience spanning all phases
of the exploration and production industry, including: drilling,
completions, production, Health, Safety and Environmental (HSE), and
mechanical integrity. I have served a leadership role in the standard
setting process for hydraulic fracturing via multiple Federal agency
advisory panels and industry trade association committees working to
develop and implement appropriate governmental regulations and
standards.
Thank you for having me here today.
Newfield is a Fortune 500 independent energy company engaged
primarily in crude oil and natural gas exploration and production
onshore here in the United States. We are focused on developing
unconventional oil and gas reservoirs in the Anadarko and Arkoma Basins
of Oklahoma, the Bakken formations of North Dakota and the Uinta Basin
of Utah. Roughly 55 percent of our wells drilled domestically during
2014 were administered by the Bureau of Land Management (BLM).
Newfield is the largest oil producer in Utah with more than 225,000
mineral acres in the Uinta Basin including Federal, state, tribal and
private leases. Our Uinta Basin operations include one of the largest
Federal secondary recovery units in the continental United States. We
maintain a field office near Roosevelt, Utah, with more than 400
employees. Approximately 85 percent of our wells drilled in Utah during
2014 were administered by BLM.
All of our Utah development activities--regardless if conducted on
Federal, state, tribal or private leases--will ultimately be affected
by BLM's new hydraulic fracturing rule. As I'll discuss further, there
is no practical scenario in which Newfield can hold its state or
private leases to a different standard than its Federal or tribal
leases and coherently manage a compliance program in its Utah
operations.
Therefore, this rule impacts everything we do in Utah and adds
significant uncertainty and cost to an already low-margin resource play
to further complicate the future of hydraulic fracturing on federally
managed lands.
The recent downturn in global crude oil prices has resulted in a
reduction of Newfield's investment and workforce in the Uinta Basin and
has impacted peer companies similarly--significantly impacting the
employment of local contractors and related commerce. At this same time
last year, there were 28 rigs running in Utah; today, there are 7. The
economic realities of production in Utah are further undermined by the
BLM rule.
This reduction in drilling and production has and will continue to
adversely affect employment, wages, Federal royalties, taxes and all of
the related socioeconomic benefits enjoyed during times of robust
development.
It is important to remember that every $1 million of upstream
capital expenditure by independent oil and gas producers results in
$1.1 million in total taxes, $5.1 million in overall contribution to
U.S. GDP and 6 direct and 33 total upstream jobs. When midstream and
downstream factors are considered, America's oil and gas industry
supports 9.2 million U.S. jobs and 7.7 percent of the Nation's GDP
according to the American Petroleum Institute. The industry pays almost
$86 million in Federal rents, royalties, bonus payments and income tax
payments daily.
Revenue in the form of royalties, rents, bonuses and other payments
to American Indian tribes nationwide for the production of oil and gas
in FY2014 was reported by the Office of Natural Resource Revenue (ONRR)
to be more than $1.1 billion.
America's oil and gas resources are among the Nation's largest
sources of non-tax revenue to the Federal Government. For every dollar
the government spends administering the Federal onshore program,
companies return $83.69 in royalties and leasing revenue to the
American taxpayer.
From Utah's Federal onshore lands for Fiscal Year 2014, the ONRR
reported oil and natural gas revenue in the form of royalties, rents,
bonuses, and other payments to the U.S. Treasury in excess of $302
million.
Unfortunately, the decline Utah activity has already occurred and
may continue to negatively impact Utah and especially the Uinta Basin
for the foreseeable future.
In addition to the negative economic effects caused by the downturn
in crude oil prices, significant regulatory uncertainty already existed
for Newfield and other Uinta Basin operators due to the lack of
predictability associated with agency reviews mandated by the National
Environmental Policy Act (NEPA). While outside the scope of this
hearing, it is worth mentioning as an example that Newfield is now in
its seventh year of agency review for an infill development
Environmental Impact Statement (EIS).
BLM's hydraulic fracturing regulation creates an additional layer
of regulatory uncertainty that will materially undermine the ability of
the Uinta Basin to compete on an economic basis with other plays in the
Nation. When any operator is faced with such uncertainty, capital and
resources will be redirected to areas where the regulatory process is
more certain. This was not anticipated in the rulemaking process and is
discussed further below.
I will not dwell on often-recited and legitimate arguments by
industry that this new rule is unnecessary because of sufficient and
continually improving state regulations and lacks appropriate data to
justify these new rules. I would however, like to remind the committee
of the EPA's finding of ``no widespread, systematic impacts'' from
hydraulic fracturing in their recently released ``Assessment of the
Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking
Water Resources.''
I respectfully offer the committee three categories of concerns and
include Newfield-specific examples to support my assertion that if this
new BLM regulation is to be implemented, it still needs more work.
I want to recognize my peers at BLM for reaching out to all
stakeholders during the rulemaking process. Since 2012, BLM has
listened to concerns from all sides and--to a large extent--attempted
to find reasonable middle ground. The following arguments are not an
indictment of the agency nor of those who have worked to craft the rule
in response to direction from more senior political leadership, rather
they reflect the complexity of this process.
The BLM rule, in many cases, impacts non-Federal minerals, causes
delays and creates inefficiencies that were not properly addressed in
the BLM's economic analysis:
For operations located in certain BLM regions like North
Dakota and Montana operators with state or private leases
that are combined within a drilling and spacing unit also
including Federal minerals, the entire unit becomes subject
to the new rule. Other BLM regions such as Utah and
Oklahoma limit the extent of the new rule to apply only
when the Federal tract is penetrated by the wellbore within
the drilling and spacing unit.
With most unconventional oil and gas plays in which
horizontal extended reach wells are utilized to properly
develop the lands, drilling and spacing units tend to be
larger than the conventional vertical units and encompass
more lands within the development drilling and spacing
unit. Therefore, previously non-applicable minerals are
more likely to fall under this new BLM rule. This
particular scenario is most clearly demonstrated with the
``checkerboard'' Federal mineral ownership pattern common
across the western United States. Although only 50 percent
of the checkerboard has Federal minerals, 100 percent of
the checkerboard becomes subject to the new rule. A
similar, but more dramatic scenario exists in Newfield's
Oklahoma operations where a small amount of Federal
minerals causes a much larger area to become Federal
jurisdiction. Roughly 1 percent of our Anadarko position is
Federal minerals, yet even with this small subset of
Federal minerals, the new rule will apply to more than 10
times that amount. Neither the Federal checkerboard nor the
Oklahoma example was contemplated in BLM's new rule.
In some instances, inadequate cementing records or some
potential technical disagreement on Cement Evaluation Log
(CEL) interpretation--not a shortfall in well integrity--
may result in a new well that cannot be hydraulically
fractured or an existing well than cannot be refractured.
The cost of such a problem ranges from a few hours of lost
operational downtime up to the cost of a $10 million well.
Specific to the downtime referenced above, every hydraulic
fracturing job requires at least a 48-hour notice to obtain
BLM approval of cement-related assurances. However, BLM is
barely staffed to provide support during a normal 40-hour
work week, certainly not 24/7/365 support.
Finally, the Office of the Inspector General has
recognized that inefficiencies in the Department of
Interior's permit review process impede productivity and
that neither BLM nor the operator can predict when permits
will be approved. Since site-specific operational plans
cannot often be finalized months in advance, operators may
be forced to submit applications that include multiple
scenarios to ensure operational flexibility. Although some
of the proposed operational scenarios may never be
implemented, an already overburdened BLM staff will be
required to review all components of the new applications.
This rule has portions that duplicate, contradict or increase
confusion with respect to existing state regulations, or in some cases,
presents perplexing requirements:
Duplication--Surface casing cementing rules are
essentially the same in the new BLM rule as are required in
all oil and gas producing states.
Contradiction--The new BLM rule requires pressure
measurement on all casing strings during hydraulic
fracturing, but the North Dakota Industrial Commission
requires the surface annulus to be kept open to protect the
surface casing and provide pressure relief, in case a leak
occurs.
Deferral with Uncertainty--The BLM rule says all usable
water must be protected and further defers the
identification of what ``usable water'' must be protected
to states and tribes. This deferral is unambiguous as long
as states and tribes use a threshold of 10,000 mg/l TDS,
but not all states use this threshold, nor do all states
protect all usable water. Please remember that ``usable''
does not necessarily mean ``useful'' to plants, wildlife or
humans.
Deferral with Uncertainty--BLM recognizes the use of
FracFocus for chemical disclosure, but adds additional
onerous steps which limit a company's ability to protect
trade secrets and inhibits innovation in this technology-
driven part of our business.
Perplexing--The BLM rule requires that operators make
seven illogical affirmations in order to claim trade secret
protection when providing public disclosure for proprietary
chemicals used during hydraulic fracturing.
Perplexing--The BLM rule requires a certification that
attests to a company's compliance with all Federal, state
and local laws, rules and regulations. However, with
increased local challenges and initiatives, this
certification might be impossible to achieve without a time
and date stamp.
The BLM's strategy to use public review as a secondary regulator
will create foreseeable challenges for BLM and the operator and
confusion for the public:
BLM's stated incremental processing time for each new well
application is only 4 hours, so there cannot be much
technical analysis planned for the significant amount of
new information submitted.
Considering BLM statements that public access to this
information will be facilitated, it appears BLM is
promoting several predictable outcomes:
-- The public will be reviewing substantial technical and
specialized industry information, of which many will not be
familiar. Confusion about the technologies or the processes
required to effectively achieve desired environmental and
safety outcomes will result in further questions of, and
petitions to, BLM and operators.
-- The predictable outcome will be a further-inundated
regulator while the operator is faced with the ongoing task of
educating the public that hydraulic fracturing has been, and
will continue to be a safe well completion technique for almost
seven decades.
-- In short, the rule will have failed to provide the public
with assurances about the safety of hydraulic fracturing
technology while adding delays, costs, and uncertainty for
industry and consumers.
In conclusion, if this final BLM rule is to be applied, additional
actions need to be taken to provide an economic analysis, operational
clarifications and a fundamental clarification on the role of the BLM
as the primary regulator for Federal and tribal minerals.
Finally, Newfield wishes to associate itself with any written
testimony submitted to the committee on this topic by the Independent
Petroleum Association of America, the Western Energy Alliance, or the
American Exploration & Production Council.
______
Dr. Fleming. Thank you, Mr. Hetrick.
The Chair now recognizes Ms. Wiseman to testify for 5
minutes.
STATEMENT OF HANNAH WISEMAN, ATTORNEYS' TITLE PROFESSOR,
FLORIDA STATE UNIVERSITY COLLEGE OF LAW, TALLAHASSEE, FLORIDA
Ms. Wiseman. Acting Chairman Fleming, Ranking Member
Lowenthal, and members of the committee, I thank you for the
opportunity to appear before you today. I speak for myself
alone. But solely by way of background, I have taught several
environmental law and oil and gas law classes at the University
of Texas School of Law, University of Tulsa School of Law, and
I am currently at the Florida State University College of Law.
I will speak today about the authority of the Bureau of
Land Management to issue the final rule, entitled, ``Oil and
Gas: Hydraulic Fracturing on Federal and Indian Lands.'' I will
also describe how this rule is not precluded by other Federal
statutes, how it addresses known risks, and how it beneficially
complements existing state and tribal programs.
In 1920, the Secretary of the Interior regulated the casing
of oil and gas wells on Federal lands under the Mineral Leasing
Act. In 1942, the U.S. Geological Survey, the BLM's predecessor
in regulating wells on Federal lands, promulgated regulations
allowing requirements for well casing programs and well
stimulation plans to be submitted prior to the injection of
water, acid, or other substances. The BLM has since issued a
variety of regulations for oil and gas development.
The HF rule provides a needed update to BLM rules, in light
of the relatively new combination technique of slick water
fracturing and horizontal drilling. The BLM has ample authority
under either the Federal Land Policy and Management Act or the
Mineral Leasing Act, in addition to the Indian Mineral Leasing
Act and other acts, to issue this rule.
It is the policy of the Federal Land Policy and Management
Act to protect environmental, ecological, and ``water
resource'' values, and to promote multiple-use development of
lands. Beyond this baseline requirement, the MLA, the Mineral
Leasing Act, prohibits the waste of oil and gas, and directs
the BLM to conserve surface resources. It authorizes the BLM to
do any and all things necessary to carry out the Act's
purposes.
The BLM rule also addresses known risks. Some
unconventional wells have had deficient casing, as indicated by
state inspectors' reports. Methane has leaked to the surface in
some cases. Fracturing fluid and flowback stored on well sites
has leaked and run off sites, as described on pages 6-7 of my
testimony. Other Federal environmental statutes do not preclude
or displace BLM regulation of fracturing and associated well
activities.
When several Federal statutes potentially apply to an
activity, the question is whether Congress indicated an intent
for one statute to preclude the others. The Safe Drinking Water
Act, which exempts hydraulic fracturing with the exception of
diesel fuel, indicates no intent to preclude regulation of
fracturing, casing, or cementing on Federal lands. The
exemption is only for purposes of this part. The legislative
history of the Act also states that Congress did not intend to
limit the authority of BLM's predecessor to protect
groundwater.
Further, Federal environmental acts like the Safe Drinking
Water Act, do not comprehensively address the unique
responsibilities of Federal agencies to protect public natural
resources. Those responsibilities are addressed under acts like
the Federal Land Policy and Management Act and the Mineral
Leasing Act.
Finally, with respect to the interaction of state, tribal,
and Federal regulations on BLM lands, the BLM's rule is more
stringent than some state regulations and less stringent than
others. Where the BLM rule is less stringent than state
regulations, the rule will simply act as a floor above which
states are free to regulate more stringently, without any BLM
review, as has always been the case. A variance will be
unnecessary, although it is an option. Where the rule is more
stringent, it will provide a consistent standard for wells
drilled on Federal lands.
Wells of the BLM must administer in the public interest.
Many of the standards in the HF rule are not one-size-fits-all,
and anticipate well-specific determinations. Adding BLM
enforcement resources to existing state resources will also be
beneficial, providing more feet on the ground for inspections
and enforcement. States have done an admirable job of
inspecting more sites as development has boomed, as have the
tribes. But budget constraints and outdated fee structures at
the state level have hindered certain state enforcement
efforts.
In summary, the HF rule has strong statutory authorization,
is not precluded by other Federal statutes, addresses known
risks, and usually complements but in no way displaces state
regulation. Thank you.
[The prepared statement of Ms. Wiseman follows:]
Prepared Statement of Hannah J. Wiseman,\1\ Attorneys' Title Professor,
Florida State University College of Law
---------------------------------------------------------------------------
\1\ The author thanks Elizabeth Farrell, Mary McCormick, and other
Florida State University College of Law Research Center Directors and
Librarians, Shi-Ling Hsu, David Markell, Bruce Pendery, and Erin Ryan
for suggested edits and sources.
---------------------------------------------------------------------------
introduction
This testimony addresses the Bureau of Land Management Final Rule
entitled ``Oil and Gas; Hydraulic Fracturing on Federal and Indian
Lands'' (described here as the ``HF Rule'') issued on March 26,
2015.\2\ After summarizing key provisions of the HF Rule, this
testimony will describe the authority of the BLM to promulgate the
rule, the lack of conflict between the HF Rule and other Federal
statutes, the environmental risks that the rule helps to address, and
the ways in which the HF Rule and Federal enforcement resources
complement and improve upon state regulation of oil and gas
development.
---------------------------------------------------------------------------
\2\ Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands,
80 Fed. Reg. 16,128 (Mar. 26, 2015) (to be codified at 43 C.F.R. pt.
3160).
---------------------------------------------------------------------------
i. rule summary: the hf rule addresses certain aspects of the casing
and cementing of hydraulically fractured wells, the storage of
fracturing wastes, and the disclosure of fracturing chemicals
The HF Rule primarily contains requirements for information
collection and disclosure, mandating that well operators proposing to
hydraulically fracture a well on Federal or Indian lands submit data on
the geology in the proposed area of the well; \3\ existing conditions
such as old wells, natural faults and fractures, and usable water in
the area; \4\ and proposed hydraulic fracturing design, water
acquisition, waste management, and disposal practices.\5\ After
fracturing, operators--entities that drill and hydraulically fracture
wells--must disclose data on well depth and fractures; actual water
acquisition, waste management, and disposal practices; and the
chemicals used in fracturing.\6\ Operators can avoid public disclosure
of certain chemicals used in the fracturing process by submitting an
affidavit to the BLM with information indicating, inter alia, the
importance of keeping the information confidential.\7\ Operators also
must collect data on the quality of cementing operations to show that
the protective casing and cementing of wells is adequate, and they must
monitor the pressure in wells during hydraulic fracturing to ensure
that pressures do not compromise the structure (``integrity'') of the
well and its casing and cement.\8\ Substantive requirements include,
inter alia, that operators take remedial action if it appears that well
cementing was inadequate or that fracturing compromised well integrity
\9\ and that operators use tanks to store flowback water from
fracturing, with certain exceptions.\10\ Where state or tribal
requirements achieve or exceed the goals of the HF Rule, the BLM may
grant a regulation-specific variance from the BLM rule for all wells in
the relevant jurisdiction or for individual wells; \11\ as discussed
below, however, these variances may be unnecessary because BLM rules
are a floor, not a ceiling.
---------------------------------------------------------------------------
\3\ Id. at 16,218.
\4\ Id.
\5\ Id. at 16,218-16,219.
\6\ Id. at 16,220-16,221.
\7\ Id.
\8\ Id. at 16,219-16,220.
\9\ Id.
\10\ Id. at 16,220.
\11\ Id. at 16,221.
---------------------------------------------------------------------------
ii. the blm has clear statutory authority to regulate hydraulically
fractured oil and gas wells on federal lands
The BLM permits and oversees the use of Federal lands for a variety
of purposes, including grazing, recreation, and oil and gas
development, among other purposes. In leasing federally-owned oil and
gas, the BLM--just like private owners of land and minerals--must
protect the public's interest in the minerals and land and ensure that
fluid mineral development will not unduly interfere with other uses of
land. Indeed, many private landowners include conditions in mineral
leases in order to protect their property and natural resources.\12\
However, in leasing Federal oil and gas resources, the BLM represents
broader public interests that diverge from those of most private
mineral owners. Resources administered by the BLM are, by law, not
managed solely, or even primarily, for pecuniary gain. The BLM's core
statutory mandate, contained within the Federal Land Policy and
Management Act (FLPMA), is to manage public lands and resources in a
manner that allows for multi-use development of lands, including ``a
combination of balanced and diverse resource uses,'' \13\ by current
and future generations of people.\14\ Congress has made clear that in
managing public resources the BLM must give consideration to ``the
relative values of the resources and not necessarily to the combination
of uses that will give the greatest economic return or the greatest
unit output.'' \15\ The BLM therefore must regulate oil and gas
development at the surface and belowground to protect its mineral
interests and the many other interests that the agency represents on
Federal lands, such as grazing and recreational interests. Notably, it
is also the express policy of Congress to protect ``water resource . .
. values'' on Federal lands.\16\
---------------------------------------------------------------------------
\12\ See, e.g., Oil and Gas Lease Between James J. Franko & Nancy
L. Franko and Rex Energy I, LLC, Apr. 22, 2008, available at http://
www.nytimes.com/interactive/2011/12/02/us/oil-and-gas-
leases.html?_r=0#document/221308-rex20080422fra (requiring testing of
water supplies prior to drilling and replacement of water supplies if
supplies are impacted and requiring the payment of damages for impacts
to crops and timber). Many other leases in the New York Times database
contain identical language.
\13\ 43 U.S.C. Sec. 1702(c) (2012).
\14\ See 43 U.S.C. Sec. 1732(a) (2012) (requiring BLM management of
public lands ``under principles of multiple use and sustained yield'');
43 U.S.C. Sec. 1702(c) (2012) (defining ``multiple use'' as ``the
management of the public lands and their various resource values so
that they are utilized in the combination that will best meet the
present and future needs of the American people'').
\15\ 43 U.S.C. Sec. 1702(c) (2012).
\16\ 43 U.S.C. Sec. 1701(a)(8) (2012).
---------------------------------------------------------------------------
FLPMA responsibilities for managing public lands are baseline
responsibilities that apply when the BLM leases minerals on public
lands. Beyond this baseline law, the BLM must follow the specific
directives of the Mineral Leasing Act (MLA), as amended, when it allows
mineral development on public lands. This Act provides, inter alia,
that the Secretary of Interior (whose responsibilities the BLM carries
out) must regulate surface-disturbing activities from oil and gas
development and ensure ``restoration of any lands or surface waters
adversely affected by lease operations'' by the operator.\17\ It also
provides that the Secretary of the Interior shall regulate surface
disturbing activities and determine reclamation and other actions
required ``in the interest of conservation of surface resources.'' \18\
Under this Act, the BLM may suspend leases where oil and gas operators
have failed to protect the environment.\19\ In addition to the BLM's
authority under FLPMA, the HF Rule falls clearly within the discretion
granted to the BLM by the MLA.\20\ Casing and cementing rules prevent
oil and gas waste and protect surface (as well as underground)
resources, as do rules for the use of flowback tanks.
---------------------------------------------------------------------------
\17\ 30 U.S.C. Sec. 226(g) (2012).
\18\ Id.
\19\ See Getty Oil v. Clark, 614 F.Supp. 904, 916 (D. Wyo. 1985)
(noting that the Secretary of the DOI may suspend a lease or condition
a suspension as is ``necessary to protect the environmental values of
the leased property'').
\20\ See 30 U.S.C. Sec. 189 (2012) (authorizing the BLM ``to do any
and all things necessary to carry out and accomplish the purposes of
this chapter'').
---------------------------------------------------------------------------
Federal agencies have long regulated the casing and cementing of
wells and other well development activities on public lands. On June 4,
1920, the Secretary of the Interior acting under MLA authority issued
operating regulations for oil and gas wells requiring, inter alia,
notification prior to well drilling, plugging, and abandonment; keeping
of records relating to ``kinds, length, and sizes of casings used in
drilling the wells''; and operator correction of conditions causing
damage to water-bearing or other formations or ``dangerous to life or
property.'' \21\ The U.S. Geological Survey (USGS)--one of the BLM's
predecessors in managing wells on public lands--provided in a 1942
regulation that the Supervisor could require the submittal of a well
casing program and that drilling, well stimulation, and other well
development activities could not occur ``without first notifying the
supervisor'' of a plan.\22\
---------------------------------------------------------------------------
\21\ See Forbes v. United States, 125 F.2d 404, 409 (9th Cir. 1942)
(describing and quoting the regulations).
\22\ 30 C.F.R. Sec. 221.21 (1942); Regulations Applicable to Lands
of the United States and All Restricted Tribal and Allotted Indian
Lands (Except Osage Indian Reservation), 7 Fed. Reg. 4132, 4134-4135
(June 2, 1942).
---------------------------------------------------------------------------
Many of the BLM's rules for managing mineral resources on Federal
lands are more than two decades old, \23\ and these rules, like the
older USGS rules, have long regulated the casing and cementing of oil
and gas wells.\24\ Yet oil and gas development has changed dramatically
in the past decade. U.S. companies have used hydraulic fracturing for
more than 60 years, \25\ but the type of fracturing used on many wells
changed in the late 1990s and early 2000s.\26\ During this time George
Mitchell perfected a technique called ``slickwater'' (also called slick
water or slick-water) fracturing in Texas' ``tight'' gas formations,
which are densely packed formations, and combined this technique with
the horizontal drilling of wells.\27\ Several years later, slickwater
fracturing and similar unconventional fracturing combined with
horizontal drilling rapidly spread around the country to other tight
sandstone and shale formations, \28\ enabling the development of
thousands of new wells drilled into these formations--wells that,
without unconventional fracturing and horizontal drilling, would not
have been productive and would not have been drilled.\29\ Although some
oil and gas operators also continue to use conventional fracturing
techniques, unconventional fracturing combined with horizontal drilling
is very common and has triggered much of the recent boom in U.S. oil
and gas development.\30\
---------------------------------------------------------------------------
\23\ See Molly Feiden, Madeline Gottlieb, Alan Krupnick & Nathan
Richardson, Hydraulic Fracturing on Federal and Indian Lands: An
Analysis of the Bureau of Land Management's Revised Proposed Rule, 29
J. Land Use & Envtl. L. 337, 339 (2013-2014) (noting that most of the
BLM's onshore oil and gas operations regulations ``were last revised in
the 1980s or early 1990s'').
\24\ Prior to 2007, the BLM administered an eight-point rule for
the casing and cementing of wells on BLM lands. It replaced this with a
nine-point rule in 2007. Onshore Oil and Gas Operations; Federal and
Indian Oil and Gas Leases; Onshore Oil and Gas Order No. 1, Approval of
Operations, 72 Fed. Reg. 10,308, 10,310 (Mar. 7, 2007) (codified at 43
C.F.R. pt. 3160).
\25\ See John M. Golden & Hannah J. Wiseman, The Fracking
Revolution: Shale Gas as a Case Study in Innovation Policy, 64 Emory
L.J. 955, 968 (2015) (comparing sources that describe the first
fracturing of wells as occurring in the late 1940s).
\26\ See Hong Sun et al., A Nondamaging Friction Reducer for
Slickwater Frac Applications, Soc'y of Petroleum Engineers, Conference
Paper no. 139480 at 1 (2011).
\27\ See id. at 975 (describing Mitchell's involvement in helping
to perfect horizontal drilling and slickwater fracturing). Techniques
similar to the slickwater technique, characterized by large quantities
of water and fewer gels and other chemicals, had been used in earlier
decades but had not been applied to shales and typically had not been
combined with horizontal drilling. Experts typically describe
slickwater fracturing as a new, recent technology. See, e.g., Terrence
Palisch, Michael Vincent & Patrick Handren, Slickwater Fracturing: Food
for Thought, 25 SPE Production and Operations 327, 327 (2010).
\28\ See Golden & Wiseman, supra note 25, at 966 (``In the past
decade and a half, growth in shale gas production has been more than
exponential.'').
\29\ See, e.g., Halliburton, U.S. Shale Gas: An Unconventional
Resource. Unconventional Challenges at 1 (2008), available at http://
www.shaleenergyinsider.com/wp-content/uploads/sites/11/2014/01/
H063771.pdf (noting that the Barnett Shale, investigated ``as early as
1981,'' produced ``gas at commercial rates'' only when certain
fracturing technologies became available).
\30\ See U.S. Dept. of Energy, Why Is Shale Gas Important?, http://
energy.gov/sites/prod/files/2013/04/f0/why_is_shale_gas_important.pdf
(noting that ``U.S. shale gas production has increased 12-fold over the
last decade'' and is projected to make up 49% of U.S. dry natural gas
production by 2035). Experts estimated in 2004 that 30% of hydraulic
fracturing jobs used slickwater fracturing. Palisch et al., supra note
27, at 327.
---------------------------------------------------------------------------
The HF Rule, issued after the BLM proposed a draft rule and a
revised draft rule \31\ and received extensive public comments,
addresses certain aspects of modern (unconventional) fracturing on land
managed by the BLM, lands under which the BLM controls the minerals,
and certain Indian lands.\32\ This HF Rule does not exceed the BLM's
statutory authority; it has strong statutory support and helps the BLM
to fulfill its statutory duties.\33\
---------------------------------------------------------------------------
\31\ Oil and Gas; Well Stimulation Including Hydraulic Fracturing,
77 Fed. Reg. 27,691 (proposed May 11, 2012); Supplemental Notice of
Proposed Rulemaking and Request for Comment, 78 Fed. Reg. 31,636 (May
24, 2013).
\32\ Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands,
supra note 2.
\33\ See infra notes 35-36, 37, and accompanying text.
---------------------------------------------------------------------------
FLPMA, the BLM's organic act, \34\ declares that it is ``the policy
of the United States'' that ``public lands be managed in a manner that
will protect the quality of scientific . . . ecological, environmental,
air and atmospheric, water resource, and archeological values.'' \35\
It also provides that in administering the Act, the BLM (acting for the
Secretary of the Interior, or ``Secretary'') must ``establish
comprehensive rules and regulations after considering the views of the
general public.'' \36\ Congress has set out a specific process for the
BLM's leasing and management of Federal oil and gas resources on behalf
of the public. Congress directs the Secretary to ``manage the public
lands under principles of multiple use and sustained yield . . .,''
\37\ meaning managing resources ``so that they are utilized in the
combination that will best meet the present and future needs of the
American people'' and in a manner ``that takes into account the long-
term needs of future generations for renewable and nonrenewable
resources, including, but not limited to, recreation, range, timber,
minerals, watershed, wildlife and fish, and . . . scientific and
historical value.'' \38\ The BLM must write comprehensive land use
plans, also described as ``resource management plans,'' \39\ and its
leasing of oil and gas resources must conform to these plans.\40\ If an
operator obtains a lease, the operator may apply to the BLM to develop
a specific well by submitting an application for a permit to drill
(APD).\41\
---------------------------------------------------------------------------
\34\ See New Mexico ex rel. Richardson v. Bureau of Land
Management, 565 F.3d 683, 688 n.1 (10th Cir. 2009).
\35\ 43 U.S.C. Sec. 1701(a)(12) (2012).
\36\ Id. at Sec. 1701(a)(5) (2012) (emphasis added).
\37\ Id. at Sec. 1732(a) (2012).
\38\ Id. at Sec. 1702(c) (2012).
\39\ See Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55,
59 (2004); Pennaco Energy, Inc. v. U.S. Dept. of the Interior, 377 F.3d
1147, 1151 (10th Cir. 2004).
\40\ 43 C.F.R. Sec. 1610.5-3(a) (2013).
\41\ Id. at Sec. 3162.3-1(c) (2013).
---------------------------------------------------------------------------
The BLM has specific regulations that guide its issuance or denial
of permits to drill for oil and gas. FLPMA provides: ``The Secretary
shall issue regulations necessary to implement the provisions of this
Act with respect to the management, use, and protection of the public
lands, including the property located thereon.'' \42\ Congress also
requires that the Secretary ``by regulation or otherwise, take any
action necessary to prevent unnecessary or undue degradation of the
lands'' \43\ in managing public lands. It is the responsibility of the
authorized BLM officer to regulate a host of issues associated with oil
and gas drilling quite apart from the HF rule specifically. As provided
by BLM regulations, these responsibilities and authorities include,
inter alia, approving and monitoring operator proposals for drilling,
development, or production and ensuring that operations are conducted
in a manner that is environmentally responsible, that protects life and
property, and that results in the maximum ultimate recovery of the
resource with minimum waste.\44\ Drilling plans must include ``a
description of the program, the surface and projected completion zone
location, pertinent geologic data, expected hazards, and proposed
mitigation measures to address such hazards.'' \45\
---------------------------------------------------------------------------
\42\ 43 U.S.C. Sec. 1733 (2012).
\43\ Id. at Sec. 1732(b) (2012)
\44\ 43 C.F.R. Sec. 3161.2 (2013).
\45\ Id. at Sec. 3162.3-1(e).
---------------------------------------------------------------------------
As discussed further below, the HF Rule's requirements, which
operate in addition to these other rules, will help to protect
groundwater, surface waters, and soils on public lands, thus supporting
other current and future uses of BLM lands such as grazing and
recreation. By preventing leakage from wells, the requirements will
also help to prevent the waste of oil and gas, for which the Federal
Government and states receive royalties.\46\ Causing waste of oil and
gas resources is prohibited by the MLA.\47\
---------------------------------------------------------------------------
\46\ 30 U.S.C. Sec. 223 (2012); 30 U.S.C. Sec. 191 (2012).
\47\ 30 U.S.C. Sec. 225 (2012).
---------------------------------------------------------------------------
iii. the hf rule addresses known risks, prevents the waste of valuable
federal oil and gas resources, and is not overly burdensome
The HF Rule follows Congressional mandates by taking modest steps
to address important environmental externalities of oil and gas
development and hydraulic fracturing and preventing the waste of
Federal mineral resources. Slickwater and other unconventional
fracturing techniques that have become common in the past decade, thus
necessitating updated BLM rules, use larger volumes of water \48\ and
in some cases different types of chemicals \49\ than other fracturing
techniques, and they introduce certain new environmental risks to the
oil and gas development process. Beyond causing more wells to be
drilled and fractured, sometimes in sensitive environments or more
populous areas, \50\ slickwater fracturing produces large volumes of
liquid ``flowback'' waste that must be stored on the well site surface
and disposed of \51\ and requires large volumes of water to be trucked
or piped to well sites.\52\
---------------------------------------------------------------------------
\48\ See, e.g., Governor's Marcellus Shale Advisory Commission
(Pennsylvania) Report at 73 (2011), http://www.marcellus.psu.edu/
resources/PDFs/MSACFinalReport.pdf (``While hydraulic fracturing is not
new to the Commonwealth--it has been standard practice for decades--the
size of the natural gas play and the quantity of water used to
stimulate a Marcellus Shale or other unconventional natural gas well is
new.'').
\49\ See Hannah J. Wiseman, Risk and Response in Fracturing Policy,
84 U. Colo. L. Rev. 729,744 n. 64 (2013).
\50\ See, e.g., City of Fort Worth, Gas Well Drilling,
Fortworthtexas.gov, http://fortworthtexas.gov/gaswells/ (last visited
July 12, 2015) (showing 1,976 producing gas wells in the City of Fort
Worth).
\51\ Envtl. Protection Agency, Assessment of the Potential Impacts,
supra note 55, at 6-3.
\52\ Natl. Park Service, U.S. Dep't of the Interior, Potential
Development of the Natural Gas Resources in the Marcellus Shale at 9
(2008), http://www.nps.gov/frhi/learn/management/upload/GRD-M-Shale_12-
11-2008_high_res.pdf. Unconventional fracturing techniques can also
reduce certain impacts compared to conventional oil and gas production
because horizontal drilling makes surface locations more flexible. U.S.
Dept. of Energy, Office of Fossil Energy, Environmental Benefits of
Advances Oil and Gas Exploration and Production Technology at 5 (1999),
http://www.netl.doe.gov/kmd/cds/disk25/oilandgas.pdf.
---------------------------------------------------------------------------
The techniques of hydraulic fracturing (including slickwater
fracturing) and horizontal drilling have produced very important
economic benefits but also substantial costs--costs that could be
reduced through careful management of the drilling and fracturing
process. Hydraulic fracturing chemicals, and chemicals mixed with
water, have spilled on well sites.\53\ Wells have blown out during
hydraulic fracturing, causing fracturing fluids to be discharged into
surface waters.\54\ In its draft assessment of the impacts of hydraulic
fracturing on water quality, the Environmental Protection Agency
observes that ``[s]pills of hydraulic fracturing fluids have occurred
across the country and have affected the quality of drinking water
resources,'' \55\ and it estimates that spill rates of chemicals and
hydraulic fracturing fluid range from 0.4 and 12.2 spills for every 100
wells.'' \56\ Flowback from wells has also leaked, polluting soil,
surface water, and other resources, \57\ and, in one incident
identified by the EPA, flowback and produced water have polluted
groundwater.\58\ Some fractured wells also have deficient or defective
underground casing and cement, \59\ and inspectors have detected
methane coming out of these wells at the surface.\60\
---------------------------------------------------------------------------
\53\ See, e.g., Dunn Cty., N.D., Well Name Fort Berthold 148-94-
22A-27-1H, Incident 20130430182213 (Apr. 30, 2013), http://
www.ndhealth.gov/EHS/FOIA/Spills/Summary_Reports/
20130430182213_Summary_Report.pdf (spill of 250 barrels of ``fracturing
solids and liquids''; report indicates 250 barrels were recovered but
``[a]dditional soil cleanup on and offsite to continue''); Billings
Cty., N.D., Well Name State Hecker 1-2-11H-142-98, Incident
20120614171333 (June 13, 2012), http://www.ndhealth.gov/EHS/FOIA/
Spills/Summary_Reports/20120614171333_Summary_Report.pdf (18 barrels of
``[f]resh water with fracing chemicals'' spilled; 17 barrels cleaned up
(recovered); potential environmental impacts to ``[s]urface soil
only''); Dunn Cty., N.D., Well Name Fuller 1-2H, Incident
20110810153048 (July 20, 2011), http: // www.ndhealth.gov / EHS / FOIA
/ Spills / Summary_Reports / 20110810153048_Summary_ Report.pdf
(release of 8 barrels of ``[f]rac water'' to a field; ``remedial
activities'' conducted); Lea Cty., N.M., API Permit 30-025-41627,
Incident nSAD1413436037 (Apr. 28, 2014), https: //
www.apps.emnrd.state.nm.us / ocd / ocdpermitting / Data / Incidents /
SpillSearchResultsExcel.aspx ?Api=30-025-41627 (describing a 7-gallon
spill of ``hydraulic frac fluid,'' 6.75 barrels of which were
recovered); Eddy Cty., N.M., API Permit 30-015-26415, Incident
nMLB1403537703 (Jan. 30, 2014), https://www.apps.emnrd.state.nm.us/ocd/
ocdpermitting/Data/Incidents/SpillSearch ResultsExcel.aspx?Api=30-015-
26415 (``Reported release of 230 bbls fresh water w/2% KCL and gel (for
slick water frac job) Released fluids ran down a draw (approx \1/4\
mile) and entered the Pecos River.''); Chaves Cty., N.M., API Permit
30-005-29061, Incident nGRL1010539051 (Feb. 5, 2010), https://
www.apps.emnrd.state.nm.us/ocd/ocdpermitting/Data/Incidents/SpillSearch
ResultsExcel.aspx?Api=30-005-29061 (noting 80 barrels of frac fluid
spilled, five of which were recovered).
\54\ See, e.g., Md. Att'y Gen., AG Gansler Secures Funding to
Safeguard Susquehanna Water Quality (June 14, 2012), http: //
www.oag.state.md.us / press / 2012 / 061412.html (last visited July 12,
2015) (noting the release of fracturing fluids into Towanda Creek due
to a well blowout); Governor's Marcellus Shale Advisory Commission,
supra note 48, at 75 (noting that ``over 10,000 gallons of fracturing
flowback fluid escaped the well pad and all containment'' in the
Towanda Creek incident and describing another blowout that released
fracturing fluids for 16 hours); McKenzie Cty., N.D., Well Name Cherry
State 31-16H, Incident 20140214142744, (Feb. 13, 2014), http: //
www.ndhealth.gov / EHS / FOIA / Spills / Summary_Reports/
20140214142744_ Summary_Report.pdf (describing a blowout at a North
Dakota well and noting ``[r]egaining well control still in progress);
Nicholas P. Cheremisinoff & Anton R. Davletshin, Hydraulic Fracturing
Operations: Handbook of Environmental Management Practices 460 (2015)
(indicating that the well in McKenzie County leaked fracturing fluid
and oil).
\55\ U.S. Envtl. Prot. Agency, External Review Draft, Assessment of
the Potential Impacts of Hydraulic Fracturing for Oil and Gas on
Drinking Water Resources at 5-42 (June 2015), available at http://
cfpub.epa.gov/ncea/hfstudy/recordisplay.cfm?deid=244651.
\56\ Id. at 5-48.
\57\ See, e.g., Williams Cty., N.D., Well Name Dave Arnson 8-5 1-H,
Incident 20110613213356 (May 31, 2011), http://www.ndhealth.gov/EHS/
FOIA/Spills/Summary_Reports/20110613213356_ Summary_Report.pdf (``2
bbls of flowback fluid ran off the edge of wellsite for approximately
100 ft.''; berm constructed, contaminants vacuumed; potential
environmental risk of soil contamination but no water body affected);
Mountrail Cty., N.D., Well Name Crowfoot 35-3031H, Incident
20110112143928 (Jan. 11, 2011), http://www.ndhealth.gov/EHS/FOIA/
Spills/Summary_Reports/20110112143928_Summary_Report.pdf (release of
120 barrels of flowback from a truck to a well site; 50 barrels
recovered); Greene Cty., Pa., API Permit 059-25160, Enforcement ID
250351 (Sept. 23, 2009), http: // www.depreportingservices.state.pa.us
/ ReportServer / Pages / Report Viewer.aspx?/Oil_Gas/OG_Compliance
(flowback released into field from pit; haul trucks responded); San
Juan Cty., N.M., API 30-045-29969, Incident nJK1217341013 (May 17,
2000), https: // www.apps.emnrd.state.nm.us / ocd / ocdpermitting /
Data / Incidents / SpillSearchResults Excel.aspx?Api=30-045-29969
(noting 100 barrels of flowback that spilled; no barrels recovered).
\58\ Envtl. Prot. Agency, Assessment of the Potential Impacts,
supra note 55, at 7-36 to 7-37.
\59\ See, e.g., Bradford Cty., Pa., API Permit 015-21704, Violation
ID 645597 (Aug. 2, 2012), http: // www.depreportingservices.state.pa.us
/ ReportServer / Pages / ReportViewer.aspx?/Oil_Gas/OG_Compliance
(noting that ``[w]ell has been fraced'' and indicating a ``[f]ailure to
report defective, insufficient, or improperly cemented casing'').
\60\ All of the following examples of incidents are from
Pennsylvania records of unconventional wells at which inspectors from
the Commonwealth took enforcement action. See Pa. Dept. of Envtl.
Prot., Oil and Gas Compliance Report, http: //
www.depreportingservices.state.pa.us / ReportServer / Pages /
ReportViewer.aspx?/Oil_Gas / OG_Compliance (select ``Inspections With
Violations Only'' and ``Unconventional Only''). Unconventional wells
are those that ``generally cannot be produced except by horizontal or
vertical wellbores stimulated by hydraulic fracturing.'' Pa. Dept. of
Envtl. Prot., Report Instructions for the Oil and Gas Compliance Report
at 5, http: // files.dep.state.pa.us / OilGas / BOGM / BOGMPortalFiles
/ OilGasReports / HelpDocs / OG_Compliance_Help.pdf. All violations are
from http: // www.depreportingservices.state.pa.us / ReportServer /
Pages / ReportViewer.aspx? / Oil_Gas / OG_Compliance. Lycoming Cty.,
Pa., API Permit 081-20238, Enforcement ID 268004, Feb. 18, 2011 (``02/
14/11 gas bubbling in the cellar found to be in the annular space of
the 9 \5/8\ 13 \3/8\ casing''); Bradford Cty., Pa., API Permit 015-
20932, Enforcement ID 288538, Sept. 11, 2012 (``initial complaint water
well shows methane levels increased from non-detect to 82.7 mg/L'';
``Chesapeake caused or allowed gas from lower formations to enter fresh
groundwater''); Clearfield Cty., Pa., API Permit 033-26855, Enforcement
ID 265809, Dec. 6, 2010 (``Methane migrated to surface through cement
in 9 \5/8\" annulus.''). Peer-reviewed sources have estimated rates of
well failure for all Marcellus wells to be 2.58%, 3.4%, or 6.2%. See
Richard J. Davies, Sam Almond, Robert S. Ward, Robert B. Jackson,
Charlotte Adams, Fred Worrall, Liam G. Herringshaw, Jon G. Gluyas &
Mark A. Whitehead, Oil and Gas Wells and Their Integrity: Implications
for Shale and Unconventional Resource Exploitation, 16 Marine and
Petroleum Geology 239, 243 (2014) (comparing the estimates from peer-
reviewed publications).
---------------------------------------------------------------------------
The HF Rule addresses these and other externalities of oil and gas
drilling and fracturing. By requiring data such as the geology where
wells will be drilled and fractured, existing natural faults and
fractures, old wellbores near the proposed well, nearby sources of
usable water, and the proposed depth of the well and fractures, \61\
the BLM will better understand (and be able to manage) how the drilling
and fracturing of a well could potentially cause the leakage of methane
or other substances into nearby faults or old wells--leakage that could
potentially allow substances to migrate to the surface and impact
surface water and soil in addition to underground resources.\62\ By
requiring monitoring of cementing operations, the preparation of cement
evaluation logs where cement does not reach the surface of the well,
and remedial action where it appears that cement is inadequate, \63\
the HF Rule helps to ensure that wells--which will be subjected to high
pressures as a result of hydraulic fracturing--will not leak, again
helping to prevent the possible contamination of underground and
surface resources. The portions of the HF Rule addressing the casing
and cementing of wells also help to ensure that gas and oil will not
escape wells and that water will not mix with oil and gas, \64\ thus
preventing the waste of valuable Federal resources and money earned
from those resources. Further, by requiring the disclosure of chemicals
used in fracturing, \65\ the BLM helps to inform the public, including
other users of public lands, of the chemicals that are stored on site
and contained in the flowback. And the BLM achieves multiple
environmental goals, including operator compliance with the Migratory
Bird Treaty Act, \66\ Bald and Golden Eagle Protection Act, \67\ Clean
Water Act (CWA), \68\ and Resource Conservation and Recovery Act
(RCRA), \69\ by requiring tank storage of flowback.\70\
---------------------------------------------------------------------------
\61\ Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands,
supra note 2, at 16,218-16,219.
\62\ See Davies, supra note 60, at 240.
\63\ Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands,
supra note 2, at 16,219-16,220.
\64\ See Ground Water Protection Council, State Oil and Natural Gas
Regulations Designed to Protect Water Resources at 12, 19 (2009), http:
// www.gwpc.org / sites / default / files / state_oil_
and_gas_regulations_designed_to_protect_water_resources_0.pdf (prepared
for the U.S. Dept. of Energy) (noting early state well casing
regulations that prevented water incursion into the well).
\65\ Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands,
supra note 2, at 16,220-16,221.
\66\ 16 U.S.C. Sec. Sec. 703, 707 (2012).
\67\ Id. at Sec. 668.
\68\ 40 C.F.R. Sec. Sec. 435.50, 435.52 (2013).
\69\ 42 U.S.C. Sec. 6945 (2012).
\70\ Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands,
supra note 2, at 16,220.
---------------------------------------------------------------------------
Furthermore, in balancing the importance of oil and gas development
with other values on Federal lands, including environmental protection,
the rule is not overly onerous. As discussed in Part V, some states
already require cementing tests that are more stringent than BLM rules.
Further, many oil and gas operators already report a range of well data
including fracturing chemicals used through FracFocus, \71\ and some
oil and gas operators already use tanks. For example, Encana reports:
``In most of our operations, we use closed-loop fluid handling systems.
. . . Because drilling and fracturing fluids do not come into contact
with the ground surface, there is less likelihood of groundwater
contamination.'' \72\
---------------------------------------------------------------------------
\71\ FracFocus Chemical Disclosure Registry, http://fracfocus.org/
(showing 99,734 sites registered as of July 12, 2015); Keith B. Hall,
Hydraulic Fracturing: Trade Secrets and the Mandatory Disclosure of
Fracturing Water Composition, 49 Idaho L. Rev. 399 (2013) (describing
state disclosure requirements).
\72\ Encana', Fluid storage, disposal and reuse, https:
// www.encana.com / sustainability / environment / water / fracturing /
fluid-storage.html (last visited July 10, 2015).
---------------------------------------------------------------------------
iv. no federal environmental statutes preclude or displace the hf rule
In addition to having strong support in FLPMA and the MLA, the HF
Rule is not precluded or displaced by other Federal statutes that apply
to, or exempt, some oil and gas activities from certain Federal
environmental regulations. The BLM has long regulated the casing and
cementing of wells on Federal lands,\73\ among other regulations, and
other Federal statutes have not precluded these regulations--nor do
these statutes now preclude the updated regulations. The relevant
Federal environmental statutes that apply to certain aspects of oil and
gas development and fracturing are, inter alia, the Safe Drinking Water
Act (SDWA), RCRA, the CWA, and the Emergency Planning and Community
Right-to-Know Act (EPCRA). The SDWA applies to certain entities that
inject substances underground and requires those entities to obtain a
permit that ensures that injection will not endanger underground
sources of drinking water.\74\ The Act exempts from the definition of
``injection'' any hydraulic fracturing that is done without the use of
diesel.\75\ The EPA also exempts most oil and gas exploration and
production (E&P) wastes from Subtitle C of RCRA--a subtitle that
requires cradle-to-grave tracking of the generation, transport, and
disposal of hazardous wastes and sets standards for transport and
disposal.\76\ Under the CWA, the EPA prohibits certain discharges of
oil and gas wastes into surface waters \77\ and has proposed to
prohibit discharge of flowback from unconventional wells to certain
wastewater treatment plants.\78\ Finally, the EPCRA requires hydraulic
fracturing operators to keep records of hazardous substances that are
stored on site \79\ but does not require these operators to annually
report releases of these substances.\80\
---------------------------------------------------------------------------
\73\ See Onshore Oil and Gas Order No. 1, supra note 24, at
Sec. III.D.3 (requiring, inter alia, drilling plans including plans for
protecting usable water and minerals, blowout prevention plans, and
cementing plans); id. at Sec. III.F.3 (showing that in approving APDs
BLM must attach ``conditions of approval'' that reflect necessary
mitigation, allowing mitigation measures to minimize adverse impacts,
and allowing the BLM to require Best Management Practices).
\74\ 42 U.S.C. Sec. 300h(b)(1) (2012).
\75\ Id. at Sec. 300h(d)(1).
\76\ Regulatory Determination for Oil and Gas and Geothermal
Exploration, Development and Production Wastes, 53 Fed. Reg. 25,446-01
(July 6, 1988).
\77\ 40 C.F.R. Sec. Sec. 435.30. 435.32, 435.50, 435.52 (2013).
\78\ Effluent Limitations Guidelines and Standards for the Oil and
Gas Extraction Point Source Category, 80 Fed. Reg. 18557 (proposed Apr.
7, 2015).
\79\ 42 U.S.C. Sec. Sec. 11021-11022 (2012).
\80\ 42 U.S.C. Sec. 11023(b) (2012); 40 C.F.R. Sec. 372.23 (2013).
---------------------------------------------------------------------------
The HF Rule does not conflict with any of these Federal rules or
exemptions. The rule is not precluded by other Federal statutes and
exemptions for three reasons. First, Congress includes limited,
individual oil and gas exemptions in statutes that address different
types of pollution and that are administered by different agencies. In
providing these exemptions, Congress has not indicated an intent to
preclude regulation by different agencies under different statutes.
Second, environmental statutes are commonly structured to include
discrete exemptions: Congress often exempts an activity from a statute
knowing that the activity is or might be regulated under a different
statute. Third, the purpose of the environmental statutes in question
is primarily to limit the environmental externalities of certain
private entity and local government activities without unduly limiting
the productive use of private property; it is not to limit a Federal
agency's authority to manage federally-owned and federally-managed land
in a manner consistent with its statutory mandate.
A. Existing Federal environmental statutes indicate no Congressional
intent to exempt hydraulic fracturing, casing and cementing, or
waste storage from BLM rules. Exemptions under various
generally applicable environmental statutes do not exempt
hydraulic fracturing activities from all Federal regulation of
federally-managed land
The question of whether one Federal statute precludes the
application of another (such as whether the SDWA precludes BLM
regulation of oil and gas development and fracturing under FLPMA and
the MLA) is one of congressional intent, \81\ to be ascertained through
statutory interpretation.\82\ It is certainly within Congress's power
to exempt hydraulic fracturing from all Federal regulation; to date,
however, it has (wisely) not chosen to do so, \83\ and such a blanket
exemption cannot be manufactured from the limited exemptions already in
place. An exemption of an industrial activity from one Federal
environmental statute does not immunize that activity from other
Federal environmental statutes unless the statutory language clearly
shows Congressional intent for such immunity.\84\ Indeed, an exemption
or partial exemption from one statute may promote effective regulation
under another statute, thus making the laws complements.\85\ The
Federal laws that partially apply to the subject matter of the BLM
hydraulic fracturing rules, or that exempt hydraulic fracturing from
certain aspects of Federal law, do not show any intent to block Federal
agencies like BLM from regulating to accomplish their specific
statutory mission.
---------------------------------------------------------------------------
\81\ Felt v. Atchison, Topeka, and Santa Fe Railroad Co., 60 F.3d
1416, 1419 (9th Cir. 1995).
\82\ POM Wonderful LLC v. The Coca-Cola Company, 134 S.Ct. 2228,
2236 (2014).
\83\ In their briefs opposing the BLM rule, petitioners quote one
of my statements out of context. See Motion for Preliminary Injunction
(Wyoming and Colorado) at 10, Wyoming v. U.S. Dept. of the Interior,
No. 15-CV-00043-SWS (D. Wyo. May 29, 2015); Hannah Wiseman, Untested
Waters: The Rise of Hydraulic Fracturing in Oil and Gas Production and
the Need to Revisit Regulation, 20 Fordham Envtl. L. Rev. 115, 145
(2009)) (noting that ``the Act conclusively withdrew fracing from the
realm of Federal regulation'' to indicate that Congress exempted
hydraulic fracturing from the SDWA, but not to suggest that many other
well development stages associated with fracturing, such as flowback
disposal and discharge, are exempt from Federal laws). Notably, my
article also does not address the separate authority of the BLM to
regulate fracturing on Federal lands.
\84\ Cf. POM Wonderful, 134 S.Ct. at 2236-2237 (in a case
interpreting two Federal food labeling statutes, refusing to adopt
either a test that would require that full effect be given to each
statute and only bar the application of one statute if there is
irreconcilable conflict, or a test that would ``reconcile'' the laws by
finding that one law narrows the other, but finding that even under the
``reconciliation'' test, the best result in the case was not to bar the
application of a portion of one statute).
\85\ Cf. POM Wonderful, 134 S.Ct at 2238 (``When two statutes
complement each other, it would show disregard for the congressional
design to hold that Congress nonetheless intended one Federal statute
to preclude the operation of the other.'').
---------------------------------------------------------------------------
In exempting hydraulic fracturing from the definition of
``injection'' under the SDWA, the Energy Policy Act of 2005 amends the
SDWA to read as follows: ``For purposes of this part: (1) Underground
injection . . . (B) excludes-- . . . (ii) the underground injection of
fluids or propping agents (other than diesel fuels) pursuant to
hydraulic fracturing operations related to oil, gas, or geothermal
production activities.'' \86\ The Act simply makes clear that under the
SDWA hydraulic fracturing is not an injection activity that must be
permitted by the EPA or states. It does not address how fracturing may
or should be regulated under other acts or by other agencies.
Furthermore, the SDWA's legislative history shows that Congress did not
``intend any of the provisions of this bill to repeal or limit any
authority,'' of the U.S. Geological Survey (USGS), one of the BLM's
predecessors in regulating Federal oil and gas wells.\87\
---------------------------------------------------------------------------
\86\ 42 U.S.C. Sec. 300h(d)(1) (2012) (emphasis added).
\87\ H.R. Rep. No. 93-1185 at 32 (1974), as reprinted in 1974
U.S.C.C.A.N. 6454, 6494.
---------------------------------------------------------------------------
The SDWA is inapplicable to both drilling and fracturing of oil and
gas production wells; it does not apply to the injection of substances
like drilling muds and fluids and fracturing fluids underground, as
these activities do not count as injection pursuant to the provision in
the Energy Policy Act of 2005 and other provisions.\88\ But states and
Federal agencies regulating oil and gas drilling and fracturing have
other ways to ensure the safety of these practices. Therefore, many
other acts, which I introduce above, address drilling, casing, and
cementing of wells to ensure that substances do not leak underground
and pollute surface and underground water. Many states regulate the
casing and cementing of both fractured and conventional oil and gas
wells--not under delegated SDWA authority, but rather under their
independent regulatory authority to protect the public health, safety,
and welfare.\89\ Similarly, the BLM may regulate the casing of
fractured and conventional wells to fulfill its MLA and FLPMA
responsibilities, and, as indicated above, it has long regulated the
casing of conventional wells and well stimulation.\90\
---------------------------------------------------------------------------
\88\ States have argued that the SDWA is the only Act under which
the injection of substances may be regulated based on one line from a
Federal case. That case states, ``[I]t is clear that Congress dictated
that all underground injection be regulated under the [SDWA].'' Legal
Envtl. Assistance Found., Inc. v. U.S. Envtl. Protection Agency, 118
F.3d 1467, 1474 (11th Cir. 1997). This statement does not indicate that
only the SDWA may regulate underground injection. Rather, it indicates
that all underground injection activities are subject to the SDWA. The
case does not address whether underground injection activities might
also be subject to other Federal acts, particularly when injection
occurs on Federal lands.
\89\ See Ground Water Protection Council, supra note 64; Wiseman,
Risk and Response, supra note 49 (describing state casing and cementing
regulations).
\90\ See supra note 24.
---------------------------------------------------------------------------
Additionally, the SDWA applies to the protection of drinking water
and potentially usable water.\91\ The Act indicates no intent to
regulate fracturing and the cementing and casing of oil and gas wells
for the purpose of preventing oil and gas waste and protecting soil and
other surface resources, or wildlife. The BLM's rules for the casing
and cementing of wells help to achieve all of these results.
---------------------------------------------------------------------------
\91\ See, e.g., H.R. Rep. No. 93-1185, supra note 87, at 1 (``The
purpose of the legislation is to assure that water supply systems
serving the public meet minimum national standards for protection of
public health.'').
---------------------------------------------------------------------------
Similarly, in exempting certain oil and gas E&P wastes from RCRA in
1988, the EPA indicated no intent to preclude regulation of these
wastes under other acts, such as BLM's requirement under the HF Rule
that flowback be stored in tanks. Indeed, the EPA indicated that it
would rely on other acts like the SDWA (which applies to the disposal
of liquid wastes from oil and gas wells, including fractured wells),
the CWA, and subtitle D of RCRA, to help improve waste management.\92\
Nor did the EPA in the RCRA exemption indicate an intent to prevent
other entities from regulating these wastes under other Acts.\93\
---------------------------------------------------------------------------
\92\ Regulatory Determination, supra note 76, at 25,456.
\93\ The EPA indicated that it would help the states improve their
oil and gas waste regulations. Regulatory Determination, supra note 76,
at 25,456. As discussed in Part IV of this testimony, state oil and gas
regulations still vary and might leave gaps.
---------------------------------------------------------------------------
With respect to the CWA, the EPA regulates oil and gas waste rather
than exempting it, and the HF Rule and other BLM rules help operators
comply with CWA rules, such as limits on flowback and produced water
discharges.\94\ Finally, with respect to chemical disclosure, the EPCRA
already requires the maintenance of material safety data sheets for
fracturing chemicals at oil and gas sites (with certain trade secret
exemptions) \95\ and does not indicate an intent to preclude other
disclosure regulations implemented by other Federal agencies.
---------------------------------------------------------------------------
\94\ 40 C.F.R. Sec. Sec. 435.50, 435.52 (2013).
\95\ 2 U.S.C. Sec. Sec. 11021-11022 (2012); 29 C.F.R.
Sec. 1910.1200(i) (2013).
---------------------------------------------------------------------------
B. Federal environmental statutes are structured in a manner that
anticipates that activities will be regulated under certain
statutes and exempted from others
The argument that an exemption of an activity from one
environmental statute exempts it from similar protections under other
statutes administered by other agencies cuts against the very purpose
of having varied Federal statutes that address discrete issues, as
implemented by various agencies with various missions. For example,
some discharges of waste do not count as ``solid waste'' under RCRA,
which regulates the generation, transport, and disposal of waste,
because these discharges are instead regulated under the CWA.\96\
Indeed, certain environmental statutes contain an explicit ``anti-
duplication'' provision; in one case a Federal district court noted
that the ``the pollution discharges at issue in this case are exempted
from the coverage of the Recovery Act because they are instead
regulated by the Clean Water Act.'' \97\ In the oil and gas context,
despite the RCRA subtitle C exemption for oil and gas E&P wastes, \98\
an oil and gas operator that causes contamination of land with certain
oil and gas E&P wastes is liable for the costs of clean-up under the
Comprehensive Environmental Response, Compensation, and Liability
Act.\99\ And if the BLM is concerned that management of these wastes
would contaminate these public lands and prevent their future
productive use for grazing or other purposes (and generate CERCLA
liability), it may regulate the management of these wastes under its
FLPMA and MLA responsibilities.
---------------------------------------------------------------------------
\96\ 42 U.S.C. Sec. 6903(27) (2012); see also Sheldon M. Novick &
Donald W. Stever, Envtl. L. Inst., 2 Law of Environmental Protection
Sec. 14:32 (2015) (discussing this exemption and noting that ``[t]he
boundaries between RCRA and other statutes are marked by a series of
exclusions from the definition of `hazardous waste.' '').
\97\ Jones v. E.R. Snell Contractor, Inc., 333 F.Supp.2d 1344, 1350
(N.D. Ga. 2004).
\98\ Regulatory Determination, supra note 92.
\99\ 42 U.S.C. Sec. 9607(a) (2012).
---------------------------------------------------------------------------
C. Federal environmental statutes aim primarily at private actors and
do not comprehensively address the unique responsibilities of
Federal agencies to protect public natural resources
The CWA, SDWA, Clean Air Act, and other Federal environmental
statutes primarily address the many corporations and other entities
that engage in profitable activity while also producing externalities
in the form of pollution. These acts were not designed with the primary
intent of addressing additional responsibilities of Federal agencies
managing activities that occur on public lands--lands that the agencies
must manage for multiple uses for current and future generations. There
are, as a result, numerous examples of activities that are exempt from
at least one Federal environmental statute but are regulated by the
BLM. For example, the CWA exempts soil runoff from certain agricultural
and timber harvesting operations from certain CWA requirements
administered by the Environmental Protection Agency and states.\100\
However, the BLM regulates soil runoff from farming, ranching, or
certain timber harvesting to protect waters and federally-protected
endangered species in those waters.\101\ Indeed, a failure of the BLM
to regulate the environmental impacts of these activities might violate
Congressional directives for the agency, which require, inter alia,
regulation of land use to protect environmental resources.\102\
Similarly, a failure of the BLM to regulate the environmental impacts
of oil and gas extraction on public lands, simply because certain
aspects of oil and gas extraction are exempt from the SDWA, RCRA, and
other Federal acts, would be an abdication of the BLM's statutorily
defined responsibilities on public lands.
---------------------------------------------------------------------------
\100\ See 33 U.S.C. Sec. 1342(l) (2012) (exempting from the Clean
Water Act National Pollutant Discharge Elimination System permitting
requirement ``silviculture activities,'' including ``harvesting
operations,'' and ``agricultural return flows''); 33 U.S.C.
Sec. 1362(14) (2012) (exempting from the definition of a ``point
source'' of pollution ``agricultural stormwater discharges and return
flows from irrigated agriculture''). These sources are regulated as
nonpoint sources, particularly where a total maximum daily load has
been established for a water into which the sources discharge.
\101\ See, e.g., Bureau of Land Mgmt., U.S. Dep't. of the Interior,
Draft Resource Management Plan/Environmental Impact Statement: Western
Oregon at 3-908 (2015), available at, http: // www.blm.gov/or/plans/
rmpswesternoregon/files/draft/RMP_EIS_Volume3.pdf (in management
directions for forested lands and timber harvesting, prohibiting
mechanical treatments on ``steep slopes'' or ``sensitive soils'' to
protect ``[p]erennial and fish-bearing streams'').
\102\ See supra Part II of this testimony.
---------------------------------------------------------------------------
v. the hf rule does not duplicate state regulations and will augment
state regulation and enforcement in useful ways
In addition to providing important environmental protection and
following statutorily defined duties to enable multi-use development of
public lands, the HF Rule beneficially augments state regulation of oil
and gas development, including fracturing. The rule provides an
important overlay above various (and variable) state requirements. The
portions of the HF Rule that are not more stringent than existing state
and tribal regulations will likely not require variances \103\ because
BLM rules already serve as a floor, not a ceiling, to state rules.\104\
And the HF Rule portions that are more stringent than state regulations
protect important Federal values without imposing a one-size-fits-all
approach. For example, if the BLM determines that well integrity was
compromised during fracturing or that cement in the well was
inadequate, a remediation strategy will be formed on a case-by-case
basis.\105\
---------------------------------------------------------------------------
\103\ Oil and Gas; Hydraulic Fracturing on Federal and Indian
Lands, supra note 2, at 16,221.
\104\ Second Declaration of Steven Wells para. 22, Wyoming v. U.S.
Dept. of the Interior, No. 2:15-CV-43-SWS (D. Wyo. June 12, 2015).
\105\ Oil and Gas; Hydraulic Fracturing on Federal and Indian
Lands, supra note 2, at 16,219-16,220.
---------------------------------------------------------------------------
Several portions of the BLM rule demonstrate how the rule is more
stringent than certain state requirements and less stringent than
others, thus revealing the variability of state regulations that
currently apply to oil and gas operations. For example, Colorado
requires operators to run a cement bond log--a specific type of cement
evaluation log--when operators use certain types of casing,\106\ and
New Mexico requires these logs in some counties.\107\ Other states do
not require these logs.\108\ But in states where evaluation logs have
been required, oil and gas development does not appear to have been
inhibited.\109\ Thus, the HF Rule provides a consistent requirement for
fracturing on Federal lands without imposing an unduly burdensome
requirement.
---------------------------------------------------------------------------
\106\ 2 Colo. Code Regs. Sec. 404-1:317(p) (2015).
\107\ N.M. Admin. Code R, Sec. Sec. 19.15.39.8, 19.15.39.9 (2015).
\108\ For example, Utah requires well completion or recompletion
reports but does not appear to require a specific cement evaluation
log. Utah Admin Code R. Sec. 649-3-21 (2015). It appears that Wyoming
only requires a description of the cementing program. Wyo. Rules and
Regs., Oil Gen. Ch. 3 Sec. 8(c)(8).
\109\ For natural gas wells alone, in 2014 Colorado had 32,371
producing gas wells, and New Mexico had 27,957 producing gas wells.
Energy Info. Admin., Number of Producing Gas Wells, http://www.eia.gov/
dnav/ng/ng_prod_wells_s1_a.htm (last visited July 5, 2015).
---------------------------------------------------------------------------
In another example of a portion of the HF Rule that is equally as
stringent as certain state regulations and more stringent than others,
the rule (as discussed above) generally requires the use of tanks for
the storage of flowback, \110\ subject to certain exceptions. Colorado
requires operators to use tanks for drilling and/or fracturing within a
certain number of feet of a public water system, \111\ and New Mexico
allows pits but requires operators using pits to obtain a permit and to
follow specific siting, construction, and operational guidelines for
pits or tanks.\112\ Although Utah does not appear to require tanks for
flowback, the state requires oil and gas operators to ``[m]aintain
[flowback] tanks in a workmanlike manner that will preclude leakage and
provide for all applicable safety measures . . . .'' \113\
---------------------------------------------------------------------------
\110\ Oil and Gas; Hydraulic Fracturing on Federal and Indian
Lands, supra note 2, at 16,220.
\111\ 2 Colo. Code Regs. Sec. 404-1:317B (2015).
\112\ N.M Admin. Code R. Sec. 19.15.17.9 (2015).
\113\ Utah Admin Code R. Sec. 649-3.1.2.4 (2015).
---------------------------------------------------------------------------
To the extent that portions of the HF Rule duplicate state or
tribal requirements, operators have several options. A variance may be
granted (or may be unnecessary) if the state or tribal rule meets or
exceeds the objectives of BLM regulation. Further, because most of the
HF Rule requirements are informational--requiring information about
geology, fracturing chemicals used, and cement evaluation logs
prepared, for example--operators can meet any duplicative state
requirements by submitting the same information to the BLM and to the
state or tribe.\114\ Indeed, the HF Rule requires much of the
information to be submitted through the Web site FracFocus, just as
many states do. By inputting information into FracFocus, the operator
will comply simultaneously with certain state, tribal, and Federal
requirements.
---------------------------------------------------------------------------
\114\ For example, Wyoming (like the BLM in its HF Rule) requires
information on the geologic formation into which well stimulation
fluids will be injected, well stimulation design including anticipated
pressures, the base fluid for fracturing, and chemicals used in
fracturing. Wyo. Rules and Regs., Oil Gen. Ch. 3 Sec. 45(c)-(e) (2015).
---------------------------------------------------------------------------
Just as the HF Rule provides consistent requirements for drilling
and fracturing on Federal lands above varied state requirements, the
BLM's enforcement resources can help complement what are often limited
state enforcement resources. In a number of states, inspectors have
done an admirable job of visiting more well sites and noting potential
violations of state laws at these sites in the midst of a drilling and
fracturing boom. But state resources are limited, in part due to
funding limitations. For example, in 2012 Colorado had approximately 36
oil and gas inspectors and 49,062 active conventional and
unconventional oil and gas wells, whereas New Mexico had approximately
12 inspectors for 56,366 active conventional and unconventional
wells.\115\ The most important inspections occur during the drilling,
completion, and fracturing of the well, and a far smaller number of
wells are drilled, fractured, and completed each day than the total
number of active wells listed. But active, producing wells, too, can
cause environmental problems, such as leaking oil, condensate, or
produced water from tanks \116\ or from on-site equipment that does
minimal processing.\117\ Thus, inspectors' time must be split between
wells being drilled, completed, and fractured and those under
production, and enforcement resources are often thin. States often fund
oil and gas enforcement programs through permitting fees and other
fees, and where these fees are statutorily prescribed, they have in
some cases not been adjusted for inflation for many years.\118\ As a
result of these and other state deficiencies, ``[e]nforcement rates for
spills and other shale gas waste pollution incidents are low, and the
punishment may not be deterring risky behavior.'' \119\
---------------------------------------------------------------------------
\115\ Hannah Wiseman, Regulatory Risks in Tight Oil and Gas
Development, 29 Nat. Gas & Electricity 6 (2012).
\116\ Envtl. Protection Agency, Assessment of the Potential
Impacts, supra note 55, at 7-31 through 7-36.
\117\ See, e.g., Bradford Cty., Pa., API Permit 015-20425,
Violation ID 600818, Dec. 2, 2010 (``Orange liquid seaping [sic] out
from underneath seperator [sic] and heater treater.''); Washington
Cty., Pa., API Permit 125-22688, Violation ID 619012, June 28, 2011
(noting brine/condensate leak from separator).
\118\ See Hannah J. Wiseman, The Capacity of States to Govern Shale
Gas Development Risks, 48 Envtl. Sci. & Tech. 8376, 8384 (2014).
\119\ Katherine E. Konschnick & Mark K. Boling, Shale Gas
Development: A Smart Regulation Framework, 48 Envtl. Sci. & Tech. 8404,
8409 (2014). See also Terrence J. Centner & Laura Kathryn O'Connell,
Unfinished Business in the Regulation of Shale Gas Production in the
United States, 476-477 Sci. Total Env't. 359, 364 (2014) (noting that
``some governments are placed in an uncomfortable position of having
laws and regulations to protect people but an inadequate infrastructure
for the enforcement of the requirements'').
---------------------------------------------------------------------------
While the BLM, too, has limited enforcement resources, \120\
combining the expertise and resources of the BLM with states can help
to ensure that wells on Federal lands are regularly inspected and that
violations--which can sometimes result from vandalism, weather, or
other issues beyond the direct control of the operator--are quickly and
effectively addressed. Between Fiscal Year 2007 and 2012, the BLM
increased the number of environmental inspections of wells ``by
approximately 63 percent'' and conducted a total of 17,866
environmental inspections in Fiscal Year 2012.\121\
---------------------------------------------------------------------------
\120\ U.S. Govt. Accountability Office, Oil and Gas Development,
GAO-13-572, BLM Needs Better Data to Track Permit Processing Times and
Prioritize Inspections (2013), available at http://www.gao.gov/assets/
660/657176.pdf.
\121\ Id. at 30.
---------------------------------------------------------------------------
conclusion
The BLM's HF Rule provides a needed update to Federal oil and gas
rules that have not kept up with rapid changes in U.S. oil and gas
development. The BLM has long regulated the casing and cementing of
wells, storage of oil and gas wastes, and provision of data to Federal
authorities to follow its statutory requirements--namely, to ensure
that oil and gas development is compatible with other uses of Federal
lands for current and future generations and to protect water and
environmental resource values, among other values. The HF Rule further
achieves these goals. Primarily through informational requirements, the
rule informs BLM officials about potential problems with wells, such as
wells drilled in areas with old wells--which could pose a risk if
fracturing intercepted other wells--and wells that have inadequate
cement to secure casing and prevent leakage of substances from and into
the well. The rule augments rather than conflicts with other Federal
requirements, fulfilling agency-specific mandates that are not
contained within other Federal environmental statutes. The HF Rule also
complements and improves upon state requirements and provides a
variance provision in the event that duplicative informational rules--
which could simply require an operator to submit the same report to a
state and Federal official--are deemed onerous and unnecessary.
______
Dr. Fleming. Thank you, Ms. Wiseman. At this point we are
going to move along to questions from the dais. We will be
recognizing Members for 5 minutes, and I now recognize myself
for 5 minutes.
I would like to say in the opening here, that both
Secretaries Jewell and Salazar of the Interior have testified
that they are not aware of any harm from hydraulic fracturing
over the 50 or 60 years of its history to human beings, or
contamination of any water supply, which really begs the
question in a period of an $18 trillion national debt, why we
want to add another layer of regulations for fracturing and
horizontal drilling. Mr. Lowenthal suggests that this is just a
floor on regulations. But if the floor is all the way up to the
ceiling, then that really doesn't give operators much room to
move.
My first question is to Director Kornze. As you know, the
state of Louisiana has been effectively regulating hydraulic
fracturing for some time. It has been claimed that the BLM will
grant states a variance if their regulation meets or exceeds
the Federal rule. Does that mean that you would delegate
authority to the state to regulate on behalf of the Federal
Government?
Mr. Kornze. Chairman, I appreciate the question. We have
authorities to regulate on public lands. Those are found in the
Federal Land Policy and Management Act, in the Mineral Leasing
Act, and the Indian Mineral Leasing statutes. We use those to
set forth our standards, and we have a very long history of
working with states in a cooperative manner to make sure that
oil and gas regulation works on the ground. So we have that
history in Louisiana, we have that history in all the states
present here that----
Dr. Fleming. But would you be delegating that authority to
the state in that instance?
Mr. Kornze. In my opening statement, I mentioned that there
will be areas that are central to the litigation in question
that I won't be able to go into. This is one of those central
questions about authority delegation. So, I am going to have to
politely decline to get into that question deeply, but I----
Dr. Fleming. So you decline to answer. You are saying that
BLM will duplicate the work of the state in requiring to see
all the same documents, approve the same permits, and
accomplish the same regulatory enforcement. In other words, we
would have duplication of effort. You, or whoever is regulating
this on the Federal level, would be essentially reviewing the
same documents, the same process that the state would,
simultaneously.
Mr. Kornze. Well, I think it is important to clarify that
we have a very long history, which I think the professor did an
excellent job of laying out----
Dr. Fleming. Well, before you go into all that detail, just
give me a yes or a no on that, please.
Mr. Kornze. Well, I think it is essential to talk about the
fact that we have----
Dr. Fleming. Let's start with a yes or no answer. Would you
be duplicating efforts?
Mr. Kornze. I don't believe there is duplication, because
there is no fundamental change from this rule, in terms of how
this relationship works. Since the Mineral Leasing Act in 1920,
the Federal Government has stepped forward and had this rule
that we have today----
Dr. Fleming. Well, let's fast-forward to today. Have there
been any variances granted to date?
Mr. Kornze. We have not signed any formal documents related
to variances, but we have had some very productive
conversations with states, and have identified places where we
do think that variances would be available.
Dr. Fleming. So, no variance would be granted while the
litigation is pending. Is that correct?
Mr. Kornze. The judge has requested that we not implement
the rule, that he has postponed the enforcement date. So, as
part of that, we have stood down on the----
Dr. Fleming. Even in the cases of the states that are not
affected, you would not grant variances in those states either?
Mr. Kornze. ``Not affected'' ? What does that mean?
Dr. Fleming. Well, those states that aren't involved in the
lawsuit, the litigation itself.
Mr. Kornze. Yes, the judge's order, to my understanding,
applies to the rule everywhere.
Dr. Fleming. OK. Now, I would like to turn to how this rule
directly affects my district in Louisiana. In my district there
are certain areas of split estate ownership. I am running low
on time, so I will try to abbreviate this a bit. Basically, we
may have instances where drilling, particularly horizontal
drilling, may interface with both multiple private property
owners and the Federal Government.
How does this rule--how do we deal with this, when we have
a hodge-podge, if you will, of private owners, private mineral
interests, as well as on private land, with Federal land? And
in some cases it may be Federal land with private ownership of
the minerals themselves.
Mr. Kornze. So the way that it works, Chairman--and I
appreciate the question--is that if your wellbore penetrates
Federal minerals, then this rule applies.
Dr. Fleming. All right, very good. Thank you. The Chair now
recognizes the Ranking Member for 5 minutes.
Mr. Lowenthal. Thank you.
Ms. Wiseman, the states of Colorado and Wyoming use a line
from one of your articles to support their argument that the
Halliburton loophole in the 2005 Energy Policy Act was intended
to keep the Federal Government out of fracking regulations
entirely. Do you agree with that?
Ms. Wiseman. I do not agree with that statement. With due
respect to the states, I believe that they quote my article out
of context. The article explores the history of the exemption
of hydraulic fracturing from the Safe Drinking Water Act and
the activities leading up to that exemption, and it focuses
only on the Safe Drinking Water Act. The article concludes
that, under the Safe Drinking Water Act, Congress clearly and
expressly exempted the regulation of hydraulic fracturing, with
the exception of diesel fuel, from the Safe Drinking Water Act.
But the article goes on to discuss the other ways in which
other Federal laws could potentially still apply to hydraulic
fracturing, and have applied to hydraulic fracturing. The
article also does not address the authority of Federal agencies
to regulate hydraulic fracturing on Federal lands.
Mr. Lowenthal. Thank you. I would also like to point out
that these same states quote two Members of Congress from 2005
to support their argument. Then it was Congressman Markey and
Senator Feingold. We contacted now-Senator Markey--it was
Congressman Markey at the time--we contacted Senator Markey
about this, and he said, and I quote, ``Congress didn't write a
get-out-of-any-regulation-forever-free card for fracking. Any
attempt to extract any other reading out of the Congressional
Record clearly fractures credulity.''
Director Kornze and Professor Wiseman, the Chairman of this
Full Committee said recently, and I quote, ``The DOE and the
EPA have both found fracturing safe.'' Factcheck.org has
already pointed out this is not what the EPA found. But could
either of you clarify what the Department of Energy has said?
Ms. Wiseman. The Department of Energy, in its Shale Gas
Production Subcommittee report, notes a need to improve certain
aspects of the regulation of fracturing, including concerns
about hydraulic fracturing with diesel fuel, and concerns about
the integrity of well casing.
With respect to the Environmental Protection Agency, page
6-15 of the Environmental Protection Agency Water Quality
Study, in one example, points to an incident in Dunn County,
North Dakota, when the production surface and conductor casing
of a particular well ruptured, and sampling of two monitoring
wells in the drinking water aquifer identified brine
contamination and tert-Butyl alcohol that was potentially a
product of the hydraulic fracturing fluid. That is just one
example from the Environmental Protection Agency report.
Mr. Lowenthal. Thank you. I am going to move on to Director
Kornze. It seems to me that the Republican argument starts with
the conclusion that this rule being astronomically expensive,
it is going to impose crushing operational administrative
burdens on oil and gas drillers. Your agency says that is not
the case. I would like to know how you came up with your
estimates, and I want you to answer, did you just make these
estimates up to make the rule look more affordable?
Mr. Kornze. Ranking Member, I appreciate the question. We
have a team of very accomplished economists that look at
publicly available information, that work with our engineers in
the field, and use our knowledge from the ground, that look at
publications from journals, that take information from the
Energy Information Administration, that look at API documents.
These are professional documents that are put together, with
some significant effort and significant review, including at
the Office of Management and Budget, where economists look at
them over there. So we feel very good about the product that we
have put forward.
Mr. Lowenthal. Thank you. Again, Director Kornze, this is
my last question for this--we have heard here, and my colleague
from Wyoming is very proud of the strong fracking rules her
state has implemented. There is concern that once the BLM rule
goes into effect, these strong rules would be overturned. I
could certainly understand her concern if that was the case.
But let's say your rule went into effect tomorrow, the
litigation was completed. Would a company drilling on Federal
land in Wyoming need to stop doing those things that the state
requires, in order to come into compliance with the BLM rule?
Mr. Kornze. If the company is complying with the BLM rule
and the Wyoming rule, they are good to go.
Mr. Lowenthal. So it would be required to comply with the--
as long as it complied with the BLM, the floor, it would be
required, in Wyoming, to also comply with the Wyoming rule. Is
that not true?
Mr. Kornze. As long as they are meeting the floor, they are
good.
Mr. Lowenthal. Thank you, and I yield back.
Dr. Fleming. The gentleman yields back. Dr. Gosar is
recognized for 5 minutes.
Dr. Gosar. Thank you very much.
Councilmember Olguin, you testify, and I quote,
``Notwithstanding our requests and suggestions, BLM proceeded
to develop draft proposed regulations in isolation and without
disclosing its activities to the tribes.'' Do you believe that
one of the main reasons BLM's final fracking rule is so flawed
is because the agency didn't adequately consult with the tribes
to involve them in this rulemaking?
Mr. Olguin. Yes, I do. And the reason I say that, if I may,
is being involved in the initial consultation, it was more of
an invitation to come and listen to what the rulemaking was all
about. However, it wasn't until later on that the actual true
spirit of consultation really became evident, that tribes were
being considered. So, yes.
Dr. Gosar. Director Kornze, why did the BLM not adequately
consult the tribes before putting out its over-reaching
fracking rule?
Mr. Kornze. Congressman, we undertook a major consultation
effort with hundreds of tribes across the country. We held
regional meetings, we held a great number of individual
meetings. I personally went out to some of these meetings,
including to North Dakota, where there is very heavy oil and
gas development, to sit down with tribes. We are always
striving to do better in the area of consultation. It is
something that is very important to us.
Dr. Gosar. So how do you address the Councilman right to
your left? Are you calling him a liar?
Mr. Kornze. I don't think we are anywhere near that. My
point is that we have----
Dr. Gosar. No, I am very aware of what the Federal
Government does with tribes and what they consider
consultation, and it is a far cry from applications that you
are putting forth, whether it be from health care to now, with
mineral rights. It is despicable.
Councilmember Olguin, BLM proceeded to develop the draft
proposal regulations in isolation without disclosing its
activities to Tribes--let me skip forward. Then let me restate
my question, Director Kornze. Why did the BLM not adequately
consult the tribes before putting its over-reaching fracking
rules forward?
Mr. Kornze. So my answer remains the same, that we had a
very significant consultation effort nationwide, and on an
individual basis, and on a regional basis, and we are always in
dialog with tribes. These are important relationships for us.
We also made changes in the rule that is clarified in our final
draft, in the rule that was promulgated, laying out where those
ideas came from, and what changes we made in response to tribal
concerns.
Dr. Gosar. Director Kornze, as you know, the BLM proposed
to consolidate its New Mexico and Arizona state offices. Last
month, the House Appropriations Committee released the Fiscal
Year 2016 Interior and Environmental Appropriations Bill, and
included the strong language and accompanying reporting that is
stating, and I quote, ``The committee directs the Bureau not to
consolidate the Arizona and New Mexico state offices, and
reminds the Bureau that the office consolidation proposals are
subject to the committee's reprogram requirements.''
Is your agency still planning to move forward with this
proposal merger, or will you adhere to the House Appropriation
Committee's direction?
Mr. Kornze. Congressman, we are still looking at the
matter. We are aware of the language. We have heard your
concerns loudly, we have also heard concerns from the Ranking
Member of the Full Committee. We are taking that all into
account.
As we have stated previously, we have a strong priority in
pushing resources and positions to our field and district
offices where that work takes place. In the last 5 years, we
have lost 1,300 employees, positions in the Bureau of Land
Management. So we have some large stresses in the organization,
and I appreciate the work of this committee and your own
commitment to work with us to find ways to strengthen the
organization.
So, all those things are being looked at right now, and we
will be getting back to you in a formal manner, when the time
is right, related to that question.
Dr. Gosar. Councilmember Olguin, thank you again for being
here. At the preliminary injunction hearing, the judge asked a
government attorney if he knew what percentage of tribal trust
lands would have been--which have no regulation of hydraulic
fracturing. ``If this rule does not go into effect,'' the
attorney responded, ``I don't know, and I don't know if we
know.''
The attorney further continued that, in order to know such
a number, it would require knowledge of many different tribal
codes, but that he didn't think that the specific information
was gathered. When the judge heard this, he responded that,
``You might want to consult with the Ute Tribe some more,'' to
which the attorney responded, ``I understand some tribes are a
little less happy than others.''
Councilmember, do you have any comment on this exchange,
particularly in respect of how the attorney stated that some
tribes are a little less happy than others?
Mr. Olguin. I am not sure I have the answer to that, not
being present. If I may have a moment?
Dr. Gosar. Sure.
Mr. Olguin. It has been clarified for me. The tribe that
was mentioned in that conversation was the Ute Indian Tribe,
which is the tribe out of Utah. We, ourselves, as Southern Utes
located in Colorado, we actually developed our own hydraulic
fracturing rule, which, in essence, is--we don't agree with it.
Dr. Gosar. So one last question. Does the variance
provision do enough to address your concerns about the final
rule? Why or why not?
Mr. Olguin. The variance, we are not even going to seek it.
And it is really for the reason that we are going to exercise
our tribal sovereignty, which is the reason why we passed our
own regulation.
Dr. Gosar. So, if this rule goes into effect as written--
oh, I am sorry. I yield back the balance of my time.
Mr. Lamborn [presiding]. Representative Polis.
Mr. Polis. I thank the gentleman from Colorado, the great
state of the Southern Utes, for the time. My question is to the
Councilmember from the Southern Utes, Mr. Olguin.
I want to thank you for being here. Of course, it is
critical that Indian Country is a part of these discussions.
Tribes, like communities, like counties and cities and states,
should have authority to determine whether or not they want to
use fracking as an element of their economic development
strategy, how they want to use it. That is a discussion across
Colorado. Counties and municipalities in my district and across
our state are having these discussions, whether fracking is
something they want to see on their lands and their
jurisdiction, where and how they want to have it--which brings
me to an issue that you have been very involved with, Mr.
Olguin, the issue of sovereignty and local control.
While my colleagues across the aisle seem to argue for
those pillars of democracy at times, they continue to act in
support of state preemption when it comes to the ability of a
municipality or a county to restrict or ban fracking within its
bounds.
My question for you, since you are, of course, a champion
of sovereignty for your people and the Southern Utes, I want to
get your opinion on the matter. I think that we should allow
tribes or states or counties to decide how to implement
fracking, whether to have it or not, where to have it, and the
rules under which it occurs. And I want to ask whether you
agree with that premise, Councilmember, that it should be
locally determined, as to how and when and if to implement
fracking.
Mr. Olguin. Well, as far as me being able to answer that, I
can only speak for us, as the Southern Ute Tribe. And, yes, I
honestly feel very truly and wholeheartedly that it is up to
the Southern Ute Indian Tribal Council to determine what rules
it will implement, and how those rules will be carried forward.
Mr. Polis. So if your council didn't want fracking, you
don't think that the Federal or state government should force
fracking to occur on your lands. Is that correct?
Mr. Olguin. Correct.
Mr. Polis. And, of course, if you do want fracking, you
want to make sure that it is done in the manner under the
direction of your council, as opposed to by the Federal or
state government. Is that correct?
Mr. Olguin. Yes.
Mr. Polis. OK. That is certainly consistent with my
viewpoint. We have, as you know, a problem in Colorado--and
different counties and cities have differing opinions. There
are some counties that embrace fracking, like Weld County. It
is an important part of their economic development strategy. We
have other cities, like the city of Fort Collins, which I
represent, which has banned fracking, but is being sued to
force them to have it, even though they have chosen not to. I
think that that would be a dangerous precedent, if that
decision goes the wrong way.
I think that for all of us to get along, we need to reflect
the diversity of the country. Of course, on the tribal side
there will be some tribes that want to embrace fracking, and
even those tribes will probably limit the areas it occurs. I
would imagine you might have areas that are ancestral holy
areas, or burial grounds, where you may not want to have that
kind of activity, and you will have other areas where you do.
But that should certainly be left up to you, not entities in
other areas of the government.
I do want to go to Mr. Kornze, as well. I want to thank Mr.
Kornze for being here. We have, of course, some fracking
regulations. And many are arguing that fracking is safe. But,
according to recently released data, there are health-based
rules that are being violated every day with regard to
fracking. Between 2011 and 2014, the top 20 offending fracking
companies across the state committed an average of 1.5
violations a day. That is just in Pennsylvania.
So, I am not here to argue about whether fracking is safe
or not, but I want to talk about a series of bills that
Representative Cartwright, DeGette, Schakowsky, and I have
introduced, the frack pack, to increase safeguards around
fracking and, of course, in the belief that they should be
implemented.
Now, that kind of action needs to come from this body. But
if you agree with the premise that fracking, to the extent it
is done, should be done safely, I want to ask what you can do
administratively, above and beyond the rules in question that
are being litigated, to ensure that violating companies and
decidedly unsafe practices are kept to a minimum.
Mr. Kornze. Well, thank you, Congressman, for the
question--we work closely with industry, state regulators, and
many others, to make sure that, one, we have the best practices
taking place in the field, and that we are working as a team.
And also, that when we see violations, that we are addressing
them. So that, in addition to the long history of Federal
regulation of oil and gas development on public lands and
Indian lands, it is a joint cooperative effort that we do to
address the point you raised.
Mr. Polis. Now, it is my understanding that inspections and
compliance are insufficient. Is there anything you can do to
beef up inspections to ensure compliance of existing rules?
Mr. Kornze. At this point, we do have a great need that the
Inspector General and the Government Accounting Office have
both pointed out. BLM needs to do our job correctly for the
100,000-plus wells that we have oversight responsibility for.
We need about 220 inspectors.
Mr. Polis. How many do you have?
Mr. Kornze. Right now we have about 160. So we have
repeatedly, through the years, put forward a proposal in our
budget to get the funding that we need for that part of our
program. And I do hope that this year the Congress will grant
us that part of our program, so that we can do the job when it
comes to oversight.
Mr. Polis. Thank you. I yield back.
Mr. Lamborn. OK, thank you. Before I start my questions,
let me first say I apologize for not being here earlier. I was
in another committee, where we had a critical markup on a piece
of legislation that had to go to the Floor, so that is why I
was late. But I am so glad that we are having this hearing
today. Thank you, Director, for being here, and everyone who is
here, including the gentleman from Colorado.
And let me also say that we have had many hearings on this
subject while the BLM was working on this proposed regulation.
For years, for several Congresses now, we have had a number of
hearings. We have had field hearings, like one in Denver at the
State Capitol. And here in Washington, we have had a number of
hearings. So it is so good that we can continue the scrutiny on
this important subject.
With that, I would like to ask Director Kornze a question.
The rule that you are working on states that one of the goals
of a final rule is to ``promote the development of more
stringent standards by state and tribal governments.'' Can you
tell the committee specifically which states and tribes do not
have stringent-enough standards?
Mr. Kornze. Mr. Chairman, good to see you. I had the chance
to be in your great state a few weeks ago. Look forward to
going back.
Our rule--we actually had a similar discussion in the
Senate when I testified on this matter. We did not take the
approach to sort of give grades to the states and other
regulators that are out there. What we looked at is what best
management practices are. We took in 1.5 million public
comments on this rule, and we had two draft versions for the
world to work on with us.
So, we took a holistic view about where has industry gone,
where have best practices gone, and what should a basic floor
be, in terms of standards for Federal lands.
Mr. Lamborn. OK. With that in mind, then, you are not
contending that a state like Colorado, for instance, which has
a very active regulatory regime, has been insufficient in its
regulations. You've never made a finding like that concerning
Colorado, did you?
Mr. Kornze. No, sir.
Mr. Lamborn. OK, thank you. Then why is it that you feel
Colorado has to have an additional layer of regulation, if you
haven't found them to be lacking in some way?
Mr. Kornze. When it comes to regulated oil and gas, the BLM
has, for instance, we have updated more than 40 different
regulations--well, excuse me, almost 40 different regulations
since the 1980s for the oil and gas program. So, not only have
we been regulating a complex oil and gas regime on public
lands, on tribal lands, but we have continuously been updating
that system.
So, the concept that this update is any different than
those before, I think, is difficult to get my arms around, in
that this is a--as industry progresses, our regulation
progresses, to make sure that we are matching robust
development with responsible protection of the public lands.
Mr. Lamborn. OK. Getting back to Colorado as an example,
because I am most familiar with that. If they were already
doing an adequate job--I mean you are not saying that they were
dropping the ball in some tangible, specific way--then why were
they not allowed to continue on doing their regulations, and
you only stepping in to states that were not doing a good job?
Mr. Kornze. Well, as we interact with the public on this
issue, we received many, many requests--and folks like the
Secretary of Energy's Advisory Board over at DOE and others,
have pointed to the fact that there needs to be a serious
upgrade in the regulations that the Federal Government has,
when it comes to hydraulic fracturing, to address modern
practices. The last time that our regulations on this issue,
which I think the professor well pointed out, regulating on
stimulation has stretched back to the 1940s, so there is
nothing new about this.
But in terms of the last regulatory upgrade on the BLM
side, that was in the 1980s, and we have seen a huge change in
the industry in the late 1990s and early 2000s related to the
use of hydraulic fracturing and horizontal drilling. So we are
excited about the energy development that comes with that, we
are excited about the additional progress for western
economies. But at the same time, we need to make sure that we
have the rules of the road in place to make sure it is done
safely. There have been a lot of concerns on the part of the
public, and so we are working to balance that situation.
Mr. Lamborn. Now, let me point out for the record that the
1940's regulation you talked about was just a notice, a
requirement of notice. It wasn't a full-blown regulation.
So, if states like Colorado were acting in the presence of
a vacuum, you might say, by BLM, and you don't allege that they
were doing anything wrong, why did you not allow them or
responsible tribes, like the Ute Indians, why were they not
allowed to continue with responsible regulations, and you only
regulate those states that did not have regulations in place,
or had poor regulations in place? Why didn't you give them that
right?
Mr. Kornze. Well, the way it works with states like
Colorado, is Colorado looks at modern practice, and they update
their regulations on a regular basis, similar to us. We update
our regulations as practices change. The tribe, I understand,
in the last few weeks has updated their regulations. So this is
a system that is ongoing, and it is a cooperative, broad
relationship that has existed and will continue to exist.
Mr. Lamborn. OK. Now, with everyone's indulgence, I am
going to ask a 30-second question of Mr. Hetrick. And I have to
be leaving, I won't be able to stay until the end of the
hearing for the second round, so I apologize.
But, Mr. Hetrick, what happens economically with drillers
and producers when they have two layers of regulation to deal
with, Federal and state, as opposed to just a responsible state
like Colorado only?
Mr. Hetrick. Well, in 2014, in the state of Utah, we
submitted about 250 permits under BLM jurisdiction, and we got
completeness letters for 248 of them. So for all but two we
were complete within 10 days, and we received their
acknowledgment for it. But the approval time was from 180 to
270 days for those Federal permits, where on the state side we
get the approval in weeks.
So, because of the additional lead time to get approval for
these permits, we have to request additional ones to cover
operational options that may happen 6 or 9 months down the
road.
Mr. Lamborn. OK, thank you very much. The Chair now
recognizes Representative Cartwright.
Mr. Cartwright. Thank you, Mr. Chairman. I would like to
yield for a moment to Mr. Polis of Colorado.
Mr. Polis. I just wanted to clarify that the sentiments
expressed by the Chair are far from universal in Colorado. I
think the majority of Coloradans believe that we have,
effectively, no regulations around fracking, because we don't.
We have an outdated patchwork from the 1950s. No meaningful
state safety regulations. We welcome any Federal floor. I have
expressed the same to Secretary Jewell, because we are an
example of a state that has, effectively, no regulations around
fracking safety.
And I will yield back to the gentleman from Pennsylvania.
Mr. Cartwright. Thank you, Mr. Polis.
Mr. Chairman, every time we have a hearing on this subject,
the Majority gets somebody to say that there is no proven case
of fracking contaminating a water supply. That is a semantics
game, since there are plenty of cases of oil and gas drilling
contaminating water supplies.
EPA highlighted instances of casing or cementing failures
that led to drinking water contamination in Ohio, North Dakota,
and Colorado. It found that 600 wells drilled in 2009 and 2010
did not have cement covering, supposedly protecting groundwater
resources, leaving them at high risk for contamination.
Now, I am from Pennsylvania. Pennsylvania groundwater
contamination has been linked to leaky, failing, or improperly
designed casings. And there are cementing casings or well
construction violations at 3 percent of all shale gas wells.
In 2013, there were nearly 600 documented cases of
wastewater and chemical spills in Pennsylvania. The EPA
estimates that there are as many as 12 chemical spills for
every 100 oil and gas wells in Pennsylvania, of which there are
almost 8,000 currently operating gas wells in the Commonwealth.
While well construction problems, leaky pits, or surface spills
undeniably cause water contamination, the Majority always falls
back on the fact that no one could point to a case where
contamination was due to the fracking part of the process
itself.
But just 2 months ago, a paper in the proceedings of the
National Academy of Sciences studied a contaminated aquifer in
Pennsylvania and found ``the most likely explanation is that
stray natural gas and drilling, or hydraulic fracturing
compounds, were driven 1 to 3 kilometers along shallow to
intermediate-depth fractures to the aquifer used as a potable
water source.''
More importantly, it doesn't matter to the family whose
water is undrinkable whether that is due to fracking, a poorly
built well, or a spill. It is all related to the fracking
activity.
If we are going to move forward with fracking as part of
the solution under the all-of-the-above energy strategy, we
need to make sure that the process, the entire process, is
safe, from start to finish.
Professor Wiseman, could you tell us briefly about some of
the problems that you are aware of that oil and gas activities
surrounding fracking, in addition to the frack itself, pose to
drinking water supplies?
Ms. Wiseman. Thank you, Congressman Cartwright. In addition
to the Environmental Protection Agency incident that I
mentioned previously in North Dakota, in which the incident
appears to have occurred during fracturing and appears to have
potentially sent chemicals into groundwater, as you mentioned,
there have been multiple instances of the casing of the wells
having problems with integrity.
I refer to those instances in my written testimony, several
examples from the state of Pennsylvania noted by inspectors:
December 2010, methane migrated to the surface through cement
in the 9\5/8\-inch annulus; Bradford County, Pennsylvania,
initial complaint water well shows methane levels increased
from non-detectable to 82.7 milligrams per liter; Chesapeake
caused or allowed gas from lower formations to enter fresh
groundwater.
You also mentioned spills. I believe there have been more
incidents of spills noted than of well integrity problems,
spills of flowback fluid, as well as hydraulic fracturing
chemicals. In 2013, one paper estimates approximately 439
flowback spills in Pennsylvania. Those are several examples
from the literature.
Mr. Cartwright. Well, thank you, Professor. I think this
really emphasizes the need to have and enforce strong
regulations at all levels. When you are dealing with public
health and safety, you shouldn't have to wait for the Deepwater
Horizon-like disaster to happen before implementing prudent
precautionary regulations.
We don't have a widespread systemic problem with plane
crashes in this country, but we have strong aviation
regulations designed to prevent that and protect public safety.
I think drinking water is just as important. I yield back.
Mr. Bishop [presiding]. Thank you.
Mr. Gohmert.
Mr. Gohmert. Thank you, Mr. Chairman. I think we have
highlighted what are the problems that most Americans have with
the Federal Government. Comments along the lines that it
doesn't matter whether pollution is the result of fracking or
casing or whatever; if it is polluted, it doesn't matter. See,
that is a problem. Because for some of us who care deeply about
the poorest in our country that cannot afford to pay their
energy bills, and cannot afford to have a government over-reach
and put regulations that raises the cost, that make them decide
between gasoline and food, it does matter.
And I thought when we got an EPA study back that said--and
this was a multi-year, exhaustive study, and it was one that
Secretary Salazar, sitting where you guys are, actually was
commenting on in this room. I kept asking him, ``Is there any
study that directly shows that hydraulic fracturing has
polluted groundwater,'' and he kept beating around the bush
several times. Finally he had to say, ``No, there is not, but
the EPA is doing an exhaustive study and we don't have that
back yet.''
Well, we got it back. And it says that fracking has had no
widespread systemic impacts on drinking water resources in the
United States.
Mr. Kornze, your testimony claims the rule ``establishes
requirements designed to prevent problems with complex
hydraulic fracturing regulations.'' Well, there is no problem
that existed.
Secretary Salazar said, ``We haven't found one yet, but
hold on, the EPA is out there studying, and they will tell us.
We think they will find something.'' Well, they didn't. Yet you
come in with your regulations that are going to raise the cost
of gasoline, of all kinds of things that the poorest in this
Nation need just to get by, and you don't care, because it
doesn't matter to you whether the pollution comes from fracking
or casing or some other problem. Well, it matters to the
poorest in this country, whether they are going to be able to
buy food or gasoline.
I know, apparently, it doesn't matter to you. So you come
in here with these kinds of robust regulations, and you really
are a solution in search of a problem, because the problem has
been found not to exist with fracking. I would think that most
Americans would say, ``Wow, this fracking that is allowing us,
if we will pursue it, to be energy independent, is a gift for
those who believe in nature's God. Wow, nature's God has given
us a gift,'' probably the only country in the world that has
all the different energy and minerals that we have. And then
you come in, in search of a problem with your solution. And it
is outrageous.
When we look at the production from Federal lands and how
it has dramatically dropped compared to the energy being
produced from private lands, it is staggering what you have
done.
Did you not care that the EPA found there was no
groundwater problems with fracking, Mr. Kornze?
Mr. Kornze. Well, sir, I appreciate the opportunity to
answer.
Mr. Gohmert. Oh, I bet you do.
[Laughter.]
Mr. Kornze. Our goal is to make sure that we have robust
energy development on public lands, and it is done safely.
Mr. Gohmert. Wow. Then I wish you would have robust
concerns about not having energy development, and maybe it
would start going up instead of going down. Your concerns are
about to destroy energy on public lands.
Let me ask you, though. Isn't it true that the states
control use of water--this is the old adage--and the Federal
Government is supposed to control the quality of water? Isn't
that right?
Mr. Kornze. Well, sir, on the----
Mr. Gohmert. Do you agree with that old adage?
Mr. Kornze. On the production point, I think it is
important to point out that during this Administration, oil
production on public lands has gone up by roughly--on public
and tribal lands, which you need a BLM permit for both--about
80 percent. So we have gone up dramatically, so----
Mr. Gohmert. Well, you are going to have to show me those
numbers, because the numbers I have officially show that we are
down. Let's see, the total Federal production percentage of
U.S. total was at 36.4 percent in 2010. After your robust
regulation, now it is down to 21.4. Quit helping the energy
industry and it will do a lot better. I yield back.
Mr. Bishop. Thank you. Mr. Grijalva, you are too far away
down there for me to say sarcastic things to you. I am just
going to have to do it by telepathy. But you are also
recognized for 5 minutes.
Mr. Grijalva. And with that telepathy, thank you, Mr.
Chairman. You started way early.
[Laughter.]
Mr. Grijalva. I have been catching them for a while.
Mr. Kornze, just a couple of questions. Yes or no, do you
really care about poor people?
[Laughter.]
Mr. Grijalva. My question is the poorest in our Nation are
also very concerned about the health and safety of themselves
and their families.
Mr. Kornze. Yes.
Mr. Grijalva. And, as a Member here that felt you didn't go
far enough in the rule, the fact remains that you set a floor
here. And, in that floor, my question is--you hear constantly
that industry, left to its own devices, will take care of
everything and go forward, and they will expedite, they will be
able to get more out, faster, lower cost, the consumer will
benefit, and there will be no environmental problems, there
will be no health and safety problems. It will never be
anything that happens that we would consider to be a hazard to
the health and safety of the American people.
Now, the states say, ``We do a much better job.'' Do you
believe the states have demonstrated that there is no need for
any Federal rule here, or are there ways that this rule can
actually help states improve what they are doing, in terms of
how they are regulating?
And, in terms of industry, should they be the only ones to
be the sole arbitrators of what gets done and what doesn't get
done, in terms of regulation? In other words, have none?
Mr. Kornze. OK. Well, thank you, Ranking Member. So I think
two points on that.
One is that this body has given us responsibility to have
oversight responsibility for oil and gas development on public
and tribal lands. That is established in law. So, we are
working on that, we are proud to carry that obligation, which
has been given to us by Congress.
Related to making sure that this is done appropriately, I
think the EPA study has pointed out for us that there are many
things that we can all be doing better. So, I think as more
information comes forward, there is a lot for us to learn, and
there has been a major transformation in the extractive
approach to oil and gas in recent years, and we need to adjust
with it to make sure that we can continue in that direction,
and that we are making sure it is done safely and responsibly.
Mr. Grijalva. Thank you. One last question, Mr. Chairman.
Mr. Councilman, as the whole question of trust
responsibility and sovereignty for native nations evolves in
this country, both in law and in practice, the issue of
sovereign governments, native nations being able to have both
regulatory control over their resources and both--control over
the resources, including this instance, regulation, I
fundamentally don't have a problem with that concept, because I
believe in it. I think sometimes Congress uses it
situationally. In one area, and this one, sovereignty is good.
In other areas, the issue of sovereignty becomes problematic to
people, whether it is the protection of a sacred site and other
things, that becomes a problem. In this instance, it is OK, and
we agree on that.
My question to you, as a representative of tribal
government and your people, is that when the self-determination
comes into a regulatory scheme, and you are regulating the
fracking that is occurring on your own land, as a sovereign
decision, do you see right now what the government is doing as
an intrusion? I understand that. But, in terms of standards and
levels of regulation for health and safety for your members,
how do you see that as an exercise of sovereignty, in terms of
what regulations you put down?
Mr. Olguin. As a person sitting on tribal council, it is
our sworn duty to protect our people, protect our land, and our
resources. And with that, we do exercise sovereignty on a daily
basis, just in the decisions we make. We have to ensure that we
do that in a manner that is in perpetuity, as well.
Mr. Grijalva. Got it.
Mr. Olguin. We have to exercise these rights that were
given to us, and we maintain those rights. It is a constant
battle, dealing with whatever issue it is, because we as a
governing body, we decide for our own people, and we emphasize
that.
Mr. Grijalva. You are self-determined--the regulatory
scheme that you would use on tribal land, that would be
transparent, public, members would know about it. It would be
something that the council would, in their exercise of their
role, make available to all the members----
Mr. Olguin. Yes, we make all our rules and all our laws----
Mr. Grijalva. Yield back, thank you.
Mrs. Lummis [presiding]. The Chair now recognizes herself
for 5 minutes. I want to start by saying, I am not an apologist
for the oil and gas industry. I was raised next to a refinery,
right next to a refinery. And I am glad that RCRA exists,
because that law was necessary for us to enforce or stop the
migration of hydrocarbons from that refinery onto our adjacent
private land. And I am glad that regulations exist so surface
owners who don't own their mineral rights can protect their
surface estates, because I am in that situation, and had a bad
experience with an oil company who signed a surface agreement
and then violated it and damaged our surface.
So, believe me, I am not an apologist for the oil and gas
industry. But I am an advocate for my state. And the state of
Wyoming has done a wonderful job creating a national model for
fracking regulations.
I am sorry that Tom Fitzsimmons, who is a Commissioner on
the Wyoming Oil and Gas Conservation Commission, couldn't be
here today. His plane was canceled, due to weather. But I used
to be on the Oil and Gas Conservation Commission in Wyoming, so
I will do my best to fill in.
Mr. Kornze, the Wyoming Oil and Gas Conservation
Commission, which has rules and regulations that Secretary
Jewell and you have applauded and held up as good examples of
fracking regulations, they sent you a letter on May 29, 2015.
They had requested a variance from the Federal BLM rules,
because of Wyoming's superior regime for regulating fracking.
They haven't heard from you. When do you intend to respond to
that letter?
Mr. Kornze. So, Chairwoman, good to see you. Related to
that specific letter, I mentioned in the opening that one of
the things that has happened as a result of the postponement of
the effective date of the rule is that we have had to put a
pause on some activities like that one, related to giving any
sort of official endorsement that would be part of carrying out
the regulation.
Mrs. Lummis. Well, let me point out that this May 29 letter
to you includes a statement by the Wyoming Oil and Gas
Conservation Commission Supervisor, and I quote, ``There have
already been several cases of Federal minerals being excluded
from drilling and spacing units, due to the length of time it
takes BLM to approve an application for a permit to drill.''
When you have an oil and gas unit, and they drill down, and
then they drill horizontally, they are drilling under fee land,
under state land, under Federal land. And they are also
fracking under those lands. If there is no opportunity for the
state of Wyoming to regulate that fracking, which covers
multiple landowners, it causes serious problems.
Now, considering the fact that Wyoming has a superior
regulatory regime, can we expect you to give Wyoming a
wholesale variance, so it can continue to regulate fracking in
my state?
Mr. Kornze. We look forward to continuing--when the
postponement is lifted, when the stay is lifted, we look
forward to continuing those conversations. Beyond that, today I
am limited with what I can say on that matter.
Mrs. Lummis. Let me ask, Mr. Kornze, are you engaged in
discussions with other states about potential variances?
Mr. Kornze. I would say there are background conversations
taking place in some places. But in terms of formalizing any of
those understandings, we are not in a position where we can
formalize anything.
Mrs. Lummis. Are some of those states that you are having
background conversations with states that are involved in the
pending litigation over the rule?
Mr. Kornze. Well, there has been some discourse between
your state and the Bureau of Land Management.
Mrs. Lummis. What about other states that are involved in
pending litigation over the rule?
Mr. Kornze. I would have to check with my team.
Mrs. Lummis. What about states that aren't involved in the
litigation?
Mr. Kornze. Again, if you wanted specifics, I would have to
go back and visit with my team.
Mrs. Lummis. Can you provide me with that information?
Mr. Kornze. What is it, specifically, that you are looking
for?
Mrs. Lummis. I am interested in knowing whether you are in
discussions with states, other states, states other than
Wyoming, during the pending litigation over the rule. I am
interested in knowing whether you are talking to both non-
litigants and litigant states about variances regarding the
rule.
Mr. Kornze. We can certainly check into that and follow up
with you.
Mrs. Lummis. Thank you kindly. And I would like to enter
for the record this copy of the May 29 letter from the Wyoming
Oil and Gas Commission to the Acting State Director of the
Wyoming BLM.
[No response.]
Mrs. Lummis. Without objection, so ordered.
I will now recognize the gentleman from Michigan, Mr.
Benishek.
Dr. Benishek. Thank you, Madam Chair.
Well, thanks for being here this morning. I just have a few
questions.
Mr. Kornze, did the BLM give any consideration to the
economic impact that would result from imposing these
regulations?
Mr. Kornze. Yes, we do have a regulatory impact analysis,
which is designed to do exactly that.
Dr. Benishek. So what was the impact?
Mr. Kornze. In terms of the cost of fulfilling the
regulation, the average came out to, per average operation,
about--well, let me first put this in context. You know, each
well that a major operator drills is usually going to cost
between $5 million and $10 million. We came out that the
average cost of implementation of this rule would be an
additional about $11,000. So less than one-quarter of 1 percent
of even the low estimate of the drilling cost.
Dr. Benishek. Mr. Hetrick, do you agree with that?
Mr. Hetrick. No, sir, I don't. No, sir. That wouldn't apply
to my company, the amount of additional time on the front end
to prepare the application would easily surpass that.
There are operational uncertainties that have a much
greater dollar value, anywhere from a few hours of operational
downtime, which could be tens of thousands of dollars an hour,
all the way up to the cost of a well that we drilled but were
not allowed to complete, using hydraulic fracturing, because we
couldn't provide either the cementing assurances, the records
for the cementing assurances, or we had a disagreement on a
cement evaluation log, the CEL, that our interpretation of the
results of the log differed from theirs----
Dr. Benishek. Let me ask you this, then, Mr. Hetrick. Did
you or others that you may know of have any input to this
economic analysis by the BLM?
Mr. Hetrick. We had lots of opportunities to discuss this
with Mr. Kornze and others. They were very generous with
allowing us access to the fundamentals of the rule, the
mechanics of the rule.
I did not engage on the economics, this was a part that we
submitted comments through trade associations and individually,
but I don't recall specifically providing any information on
the economics.
Dr. Benishek. Mr. Kornze, can you give me the names of
those people that told you that it cost $10,000 a well, and
only less than 1 percent? Could you provide me with that
information?
Mr. Kornze. Well, the----
Dr. Benishek. No, I am asking you to get me the names of--
--
Mr. Kornze. I can tell you the key person is our Assistant
Secretary that signs the regulation and all the company
documents. That is----
Dr. Benishek. But I am asking you--people like Mr. Hetrick
here must have given you some input on this economic analysis
that you have done, right? I am asking for the names of those
people that gave you the information that it cost less than 1
percent of the cost of a well to do this. Can you provide me
with that information?
Mr. Kornze. We will be happy to provide you with our
analysis that lays all that out.
Dr. Benishek. All right. Thank you very much.
Mr. Olguin, I understand you are the Council Member for the
Southern Ute Tribe. Could you maybe elaborate a bit about the
BLM's imposition of regulations, and how you feel that has
imposed on your tribe's sovereignty, if at all, or--tell me a
little more about that, because I missed some of the testimony.
Mr. Olguin. The regulations itself, which is why we had to
develop our own, definitely creates delays in respect to the
pre-approval process. And those delays--it creates uncertainty
for producers. When we are looking at that, we want to ensure
certainty so that people are actually producing oil and gas on
our reservation, and certainty is a key component, when it
comes to budgeting for these wells.
And, depending on the BLM through the rules, there is no
guarantee that a decision would be made in a timely manner.
That is the reason that we went in with our regulations, to
state that we will have a 48-hour notification, which in
essence, they tell us what they are going to do, they do it,
and then we get their final reports, which is one of the big
differences. We are providing that certainty to them, as far as
the operator.
Of course, the cementing, as well, where we are requiring
the cementing to be from the different casings to the surface,
to get rid of this component of the usable water, as far as
zoning those out.
Dr. Benishek. Right. Thank you.
Mr. Hetrick, one more question, while I have the time. Can
you tell me about the impact this regulation has had on local
and state government revenues from energy producers? Do you
have any comment on that?
Mr. Hetrick. I have been given information. I provide it in
my written testimony. I would just have to read it from my
written testimony, but I am aware of the state of Utah a year
ago had some 26 rigs running, and now has 6 or 7. Certainly the
revenues, the royalties, all of the economies that flow from
that have stopped. So it is not a good impact.
But I am not implying this is the result of the BLM rule.
It is the global commodity price collapse. But where the BLM
rule is coming in, it is making it more difficult, when prices
do come up, to re-enter those low-margin basins because of the
uncertainty. So we are not blaming BLM for the collapse, but
the re-entry will be more difficult.
Dr. Benishek. Thank you. My time is up.
Mr. Bishop. Thank you. This committee will end shortly
here, so you can be grateful. You also realize we are two
chairman changes away from actually setting a record.
[Laughter.]
Mr. Bishop. That is just not going to work here, I
apologize for that. I still have two more to go here.
I appreciate all of you being here. I know, Director
Kornze, that you would rather be elsewhere than here at this
hearing, to which I would simply say, ``Quit making dippy
rules, and you won't have to show up here at all, it is no
problem.''
I do have a couple of questions for you, if I could. In
your prepared statement, you quoted that the BLM's overall
intent for coordinated efforts with the state is to minimize
duplication and maximize efficiency. And you also said that
some activities have been--implementation of the rules have
been temporarily paused as a result of litigation.
Let's assume we can go back in time. It is June 23, before
the judge has put on that stay for the rule. I know Colorado
was still waiting for their variances. And, as I understand, no
other state actually had variances in place on June 23, did
they?
Mr. Kornze. No. You are correct, sir.
Mr. Bishop. OK. I understand from other testimony--North
Dakota also said they needed 14 new hires to be able to
successfully implement the law. They were not actually
implemented or hired, were they?
Mr. Kornze. Our rule identifies that we would need about 14
additional FTEs.
Mr. Bishop. Yes. They weren't there, though.
Mr. Kornze. Well, we have a flexible system, and we move
where we need to, like when we have to push additional bodies
to high-volume offices.
Mr. Bishop. The bottom line is still they weren't there.
Mr. Kornze. [No response.]
Mr. Bishop. OK. And----
Mr. Kornze. We certainly need more support for our oil and
gas program.
Mr. Bishop. You certainly do. And instructional memoranda
sent to state offices advising them of implementation rules,
that did not exist on June 23, either, did it?
Mr. Kornze. We have the rule itself, which is----
Mr. Bishop. You didn't have the instructional memoranda
with it, did you?
Mr. Kornze. There were no----
Mr. Bishop. OK.
Mr. Kornze. No.
Mr. Bishop. So, at the time just before its implementation,
there were no variances that were out there, the number of
people were inadequate. There was no clear guidance to the
districts. And some states, like my state, which I think had
been doing an excellent job in ensuring protection of the
environment with hydraulic fracturing, basically felt insulted
by that concept.
Now, before this rule was actually proposed, prior to that,
the states were regulating hydraulic fracturing on Federal
lands, right?
Mr. Kornze. As was BLM.
Mr. Bishop. The law says the Federal agencies cannot
delegate regulatory authority to states without a specific
statutory approval. What do you claim is that specific
statutory approval?
Mr. Kornze. Could you restate the question?
Mr. Bishop. You can't delegate regulatory authority. You
can be involved in the process, but you can't delegate
regulatory authority, without specific approval to do so. What
do you claim is the specific statutory authority allowing BLM
to delegate regulatory authority to states?
Mr. Kornze. I am not sure I fully grasp the question, but
our authorities are found in FLPMA and in the Mineral Leasing
Act and in the Indian mineral leasing statutes.
Mr. Bishop. Yes, and none of that does the delegation of
regulatory authority, which I understand, because that
authority simply does not exist. And there are some reasons why
the states have been doing it, and it could relate to states'
ownership of the groundwater, that has been proposed here
before.
But in any event, either the states have the right to
regulate hydraulic fracturing before this rule, or because this
rule does not give them that legal change. So either they have
the right to regulate them before this rule, or BLM simply was
negligent for decades in not doing its job in regulating the
fracking by itself.
Mr. Kornze. The BLM has had hydraulic fracturing
regulations since the 1980s.
Mr. Bishop. Regulatory regulations?
Mr. Kornze. Yes.
Mr. Bishop. And from which of those specific catalog of
bills that you told me earlier gave you that right of
regulatory fracking authority?
Mr. Kornze. We can give you the reference after the
hearing, but----
Mr. Bishop. All right. I will look for that, too. Let me
use my last minute of this hearing, actually, just to go and to
follow up. I appreciate you meeting with me the other day. I
asked you some questions about some of the correspondence we
had. I want you to know it is my goal to try and work with the
Department of the Interior to make sure that we can minimize
the requests that we have. But, in addition, I've got to get
something back.
So I told you about the references. I didn't tell you the
specifics. It was between DOI and the Border Patrol--their
correspondence since January of 2014. You all sent us 3,600
pages. Included in that was an ecological study going back to
the Bicentennial. You sent us another one about how astronauts
were trained in the Southwest between 1963 and 1972. You gave
us a copy of a wilderness study EA from 1983 that came from the
University of Minnesota library. You also gave me--the only one
that actually did fit that time frame was celebratory, about
regarding a party that was going to be established after the
Oregon National Monument was identified.
I am sorry, that stuff didn't get to us. I ask you if you
would actually do that. It seems to us as if we are almost
being inundated with things that are in-your-face saying,
``Screw you, we are not going to give you the material that you
want.'' If you guys will work with us in getting those
materials, I want to try and work with you all, and try to
limit the kind of requests that we have.
The same thing happened with the request for data from the
BLM, the Rawlins field office that dealt with bonding. The
question was, ``Were those bond instruments always in BLM's
possession, or were they replaced? '' The data that we got back
from you simply said you've got them now, but it didn't go back
to what the actual question was, did you actually have them or
not.
So, once again, I am going to ask the question. And this is
not just for BLM, this goes for the entire Department. We are
having a difficult time, when we request information, of
getting accurate information. So I would request once again,
especially from BLM. If we are going to ask you for that data,
you know, I appreciate you helped astronauts in 1963, but that
is not what we needed to know.
With that, I would ask if there are any other questions,
but I am the only one left here.
[Laughter.]
Mr. Bishop. Unless you want to ask a question of me, and
no, you don't have the authority to do that, statutorily or
not.
With that, I want to express to the four witnesses my
appreciation of you coming here, spending the time with us. It
is very kind. I know that the Members, as you saw from those
who came in, a whole lot came in to ask questions. It was a
significant issue for them. I appreciate you spending the time
doing that.
And I need to say something just in ending, that you have
10 days to do something. We may have other questions for you,
as you well know. And the official words are--I already thanked
you for your valuable testimony--members of the committee may
have additional questions for witnesses, and we will ask you to
respond to these in writing. Under Committee Rule 4(h), the
hearing record will be open for 10 business days for these
responses.
So, if there is no further business, without objection, the
committee will stand adjourned. Thank you.
[Whereupon, at 12:25 p.m., the subcommittee was adjourned.]
[ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD]
Prepared Statement of the Hon. Matt Cartwright, a Representative in
Congress from the State of Pennsylvania
BLM is currently working toward implementation of a rule that would
modernize horribly outdated oil and gas regulations on Federal land. We
must allow the BLM to proceed with implementing this rule to provide a
national baseline to protect our environment, our water, and our
Federal land from hazardous contamination.
Since the 1980s, the scale and impacts associated with the oil and
gas industry have grown dramatically, but BLM's fracking regulations
have not kept pace. In March 2015, the BLM finalized a modest, common-
sense rule to update its 30-year-old fracking regulations. With these
updates, the BLM is taking responsible steps to improve well integrity,
reduce the impact of toxic wastewater, and increase transparency around
chemicals used in the fracking process. Importantly, the new
regulations will not impact states with robust fracking regulations and
will simply set a regulatory baseline for the states without fracking
regulations. Notably, in 2013, there were still 19 states with
operating fracking wells that had no hydraulic fracturing regulations
in place.
Presently, over 90 percent of the more than 2,500 oil and gas wells
drilled each year on federally managed lands utilize hydraulic
fracturing. And just this month, the EPA released a draft report that
concludes that there are above and below ground mechanisms by which
hazardous hydraulic fracturing chemicals have the potential to impact
drinking water resources.
Because of this, the Federal Government must take the necessary
steps to ensure that toxic and carcinogenic fracking chemicals do not
contaminate America's water supply, streams, rivers, and lakes.
The fracking fluid injected into oil and gas wells contain
thousands of chemicals, many of which can harm humans and the
environment. If fact, the EPA identified over 1,000 different chemicals
that have been used during hydraulic fracturing process, with an
estimated 9,100 gallons of chemicals used for each well.
Due in large part to fracking loopholes and outdated oil and gas
regulations, fracking chemical spills and water contaminations have
occurred. In my home state of Pennsylvania, there were nearly 600
documented cases of wastewater and chemical spills in 2013 alone. In
fact, the EPA estimates that there are as many as 12 chemical spills
for every 100 oil and gas wells in the state of Pennsylvania.
Chemical and wastewater spills associated with fracking operations
harm the environment and have been found to contaminate surface water.
The EPA's draft study found that 8 percent of studied wastewater spills
polluted surface or groundwater.
In addition to chemical spills, improper well construction can lead
to harmful pollution. The EPA has highlighted instances of casing or
cementing failures that led to drinking water contamination in Ohio,
North Dakota, and Colorado. It found that 600 wells drilled in 2009 and
2010 didn't have cement covering supposedly protected groundwater
resources, leaving them at high risk to contamination. In Pennsylvania,
groundwater contamination has been linked to ``leaky, failing, or
improperly installed casings,'' and there are cementing, casing, or
well construction violations at 3 percent of all shale gas wells.
Thankfully, the BLM's rule will help prevent fracking chemicals and
wastewater from contaminating water bodies. It does so by validating
the integrity of fracking wells and increasing the standards for
storage and recovery of waste fluid. The rule will require companies to
publicly disclose the chemicals being pumped into public lands.
I do not think that the new rule will fix all problems related to
fracking. There is no reason that oil and gas development, including
development which involves fracking, should be exempted from our
country's landmark environmental laws. That is why I introduced the
FRESHER and CLEANER Acts, which would require oil and gas development
to comply with the Resources Conservation and Recovery Act and the
Clean Water Act. Though legislation like this is required to further
safeguard public health and safety, this rule is a good start.
I am not opposed to fracking, and I believe we must utilize our
natural resources. But we must do so in a careful manner. There are bad
actors in the oil and gas business that cut corners and do not drill
and frack properly and safely. The states unfortunately do not all have
the expertise and resources to properly manage this exploding industry.
While this rule will set a relatively low bar, it is one which ensures
a baseline across the country to protect our public lands, and should
be implemented.
______
[LIST OF DOCUMENTS SUBMITTED FOR THE RECORD RETAINED IN THE COMMITTEE'S
OFFICIAL FILES]
-- May 29, 2015--Letter from the Wyoming Oil and Gas
Conservation Commission to the BLM Wyoming Office
requesting a variance from the regulatory provision
in each of the rule's sections.
[all]