American Oil and Gas Reporter - August 2017 - 28

Federal Update

Trump Targets WOTUS, BLM Frac Rule
WASHINGTON-Trump administration agencies took aim at two more rules
opposed by the U.S. oil and gas industry
in late June and July when the Environmental Protection Agency proposed to
rescind the Clean Water Rule and the
Bureau of Land Management proposed
to repeal its fracturing regulations.
In addition, the Department of Interior
opened comments on developing a new
five-year Outer Continental Shelf leasing
program, and Secretary Ryan Zinke signed
an order to expedite onshore leasing and
streamline the permitting process.
However, new opposition to the Trump
administration's pro-energy policies surfaced when environmental groups challenged BLM's decision to postpone compliance requirements for key parts of its
venting and flaring rules. In addition, a
federal appeals court ordered EPA to
move ahead with its methane regulations.
On June 27, EPA and the Army Corps
of Engineers announced a proposed rule
to rescind the Clean Water Rule and to
redefine waters of the United States that
are subject to federal regulation under
the Clean Water Act.
"This is the first step in a two-step
process," stated EPA Administrator Scott
Pruitt in making the announcement, noting
that the rule making followed President
Trump's Feb. 28 executive order, Restoring the Rule of Law, Federalism, and
Economic Growth by Reviewing the
"Waters of the United States" Rule.
EPA says the proposed rule seeks to
recodify "the identical regulatory text
that was in place prior to the 2015 Clean
Water Rule." Noting that the U.S. Court
of Appeals for the 6th Circuit stayed the
Clean Water Rule in October 2015, EPA
adds that its action "will not change
current practice with respect to how the
definition applies."
The second part of the process, the
agency continues, is another rule making
"in which the agencies will engage in a
substantive re-evaluation of the definition
of 'waters of the United States,'" which
EPA says will be "implemented in accordance with Supreme Court decisions,
agency guidance and longstanding practice."
National Stripper Well Association
Chairwoman Darlene Wallace calls the
announcement "another sign that relief
for American business is on the way,"
while Heartland Institute Research Fellow

28 THE AMERICAN OIL & GAS REPORTER

on Energy Policy Bette Grande says it is
"a fresh breath of federalism from Washington."
Among state officials hailing the announcement are Arkansas Governor Asa
Hutchinson and Texas Governor Greg
Abbott, whom the Texas Alliance of Energy Producers recalls helped file the
lawsuits challenging the Clean Water
Rule in his capacity at the time as Texas
attorney general.

BLM Frac Rule
BLM published its proposal to rescind
its fracturing regulations in the July 25
Federal Register. Oil and Gas; Hydraulic
Fracturing on Federal and Indian Lands
was finalized in March 2015 (AOGR,
April 2015, pg. 54).
In its Federal Register notice, BLM
says it is proposing to withdraw the rule
"because we believe it is unnecessarily
duplicative of state and some tribal regulations, and imposes burdensome reporting
requirements and other unjustified costs
on the oil and gas industry."
"This proposed rule would return the
affected section of the Code of Federal
Regulations (43 CFR Part 3160) to the
language that existed immediately before
the effective date of the 2015 final rule,"
the bureau adds.
The notice mentions that on March
28, President Trump issued EO 13783,
Promoting Energy Independence and
Economic Growth, which directed DOI
to review specific rules, including the
frac rule "for consistency with the order's
objective 'to promote clean and safe
development of our nation's vast energy
resources, while at the same time avoiding regulatory burdens that unnecessarily
encumber energy production, constrain
economic growth and prevent job creation.'"
The following day, Secretary Zinke
issued Secretarial Order 3349, which directed BLM to "proceed expeditiously
in proposing to rescind the 2015 final
rule," the agency adds.
The regulatory impact analysis BLM
says it conducted for the 2015 final rule
determined compliance costs could run
between $32 million and $45 million a
year. "As a result of (its review of the
fracture rule mandated by Secretarial
Order 3349), the BLM believes that the
compliance costs associated with the final
rule are not justified," the Federal Register
notice observes.

When the 2015 rule was issued, BLM
goes on, 20 of the 32 states that had
federal oil and gas leases regulated hydraulic fracturing. Since then, the bureau
says, 12 more states have introduced laws
or regulations addressing fracturing. "As
a result," it concludes, "all 32 states with
federal oil and gas leases have laws or
regulations that address hydraulic fracturing."
BLM also notes that 23 states require
chemical disclosure of frac fluid components on FracFocus.org.
"Considering state regulatory programs,
the sovereignty of tribes to regulate operations on their lands, and the preexisting authorities in other federal regulations, the proposed rescission of the
2015 final rule would not leave hydraulic
fracturing operations entirely unregulated,"
BLM states.

OCS Leasing Program
Secretary Zinke announced DOI's intent to prepare a new 2019-24 OCS Oil
and Gas Leasing Program on June 29,
saying that comments would be accepted
for 45 days following publication in the
July 3 Federal Register.
"Offering more areas for energy exploration and responsible development
was a cornerstone of (President Trump's)
campaign, and this action is the first step
in making good on that promise for offshore oil and gas," Zinke says, remarking
that "under the last administration, 94
percent of the OCS was off limits to responsible development."
He notes that a new five-year leasing
plan is a key component of EO 13795,
America First Offshore Energy Strategy,
announced by President Trump on April
28 and amplified by DOI Order 3350 on
May 1.
He adds that the 2017-22 OCS Leasing
Program prepared by the Obama administration "will continue to be executed
until the new national OCS program is
complete."
In a separate note to stakeholders released July 6, the Bureau of Ocean Energy
Management announced it was setting
the royalty rate for leases located in water
depths less than 200 meters at 12.5 percent
for Gulf of Mexico Lease Sale 249, scheduled for Aug. 16. Sale 249, which includes
all available blocks in all Gulf of Mexico
planning areas, is the first to be held
under the 2017-22 program.
BOEM notes the royalty rate for shal-
http://www.FracFocus.org
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