Wellinghoff Departs FERC

July 2013, Vol. 68, No. 7

Early indications are that the Department of Interior (DOI) made some favorable changes to its proposed rule on fracing -- formally called the well stimulation rule. The proposed rule that department issued on May 11 appears to take into account some of the objections oil and gas companies raised when the DOI issued an earlier proposed rule one year ago. Groups such as America's Natural Gas Alliance criticized that earlier proposal for creating a federal regulatory structure which would supersede what many believe is strong state regulation already in place.

Drilling on federal and Indian lands has dropped off precipitously over the past few years compared to drilling on non-private lands. Some of that fall off may have been due to the recession. But industry groups argue that the difficulty of obtaining federal permits is a serious impediment to drilling, and that a new federal regulatory program tied to fracing would only exacerbate that situation.

To answer that concern, the new proposed rule adds a provision allowing the Bureau of Land Management (BLM), the agency with jurisdiction within the DOI, to approve a variance of any new federal standard that would allow technologies, processes or standards required or allowed by the state or tribe to be accepted as compliance with the upcoming BLM rule.

Amy Farrell, vice president of regulatory affairs for America’s Natural Gas Alliance, said "It is encouraging that the administration revisited its original proposal and appears to have made some favorable changes, including accounting for the expertise and work being done at the state level. We will reserve judgment on the proposal more broadly until we have had a chance to thoroughly evaluate it."

But the American Petroleum Institute (API) continues to question the need for any new federal regulatory program. Erik Milito, API director of upstream and industry operations, says rigorous state rules and state-based tools, such as FracFocus.org, are already in place to ensure responsible oil and natural gas development. “States have led the way in regulating hydraulic fracturing operations while protecting communities and the environment for decades," he states. "While changes to the proposed rule attempt to better acknowledge the state role, BLM has yet to answer the question why BLM is moving forward with these requirements in the first place."