US Chamber of Commerce Small Business Nation – New Federal Fracking Rules Rile Environmentalists, Oil and Gas Industry

SBN-LogoThe Obama administration released its latest version of long-awaited rules proposed to govern hydraulic fracturing on public lands Thursday, angering environmental groups who say the government is selling out to the oil industry at the expense of public health.

The Interior Department’s updated proposal, now open for public comments for the next 30 days, kept key components of the previous draft rules released in May 2012, but backpedaled on requiring companies to disclose the ingredients of fracking fluid, a cocktail of water, sand, and chemicals injected into well heads to break up shale rock and release trapped oil and gas.

While environmental groups argue the ingredients of fracking fluids should be publicly available for health reasons, the industry claims the formulations are proprietary information and publicly disclosing them would jeopardize a firm’s potential competitive advantage.

With the new rules, firms would be required to log most ingredients on an industry-operated web site called FracFocus. While operators would not be required to submit components they consider “trade secret” information, the Bureau of Land Management reserved the right to require operators to submit the claimed trade secret information in cases where disputes arise.

The revised rules disappointed green groups who had hoped for stricter disclosure rules on the chemicals oil and gas companies use in fracking, as well as greater protections for groundwater supplies surrounding well sites.

“This was a big backslide from the proposal last year,” says Jessica Ennis, legislative associate at Earthjustice. “More of the oil and gas industry’s concerns were addressed than the concerns from the environmental and public health community.”

Furthermore, while having companies disclose all chemicals except those considered trade secrets on FracFocus might seems like a consolation prize for green groups and public health advocates, many flaws exist with that approach, Ennis argues.

For starters, the site is industry funded, it’s difficult to navigate, and doesn’t allow users to aggregate well data in their region, she says, meaning they have to search well by well to learn about the composition of frack fluids used.

“The draft proposal would allow the industry to continue hiding behind a veil of secrecy,” Ennis says.

The industry itself criticized the rules,too, arguing that regulation from the federal government would be duplicative of existing rules by states, which have historically regulated energy production.

“The states are the best regulators for the industry,” Chris Faulkner, CEO of TK-based Breitling Energy Companies, said in an E-mail. “The Department of Interior doesn’t need to take on another layer of regulation when they have no personnel or budget to support it.”

Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy said in statement: “BLM’s rule is a solution in search of a problem. States are much better suited to regulate hydraulic fracturing and have done an effective job. The new rule is duplicative to state regulation and the Department of Interior’s rule fails to provide a credible rationale as to why another set of regulations are needed.”

But the hodgepodge of state rules, some of which are stricter or more lenient than others, is exactly why the federal government needs to step in and provide a baseline for regulation of the controversial practice, Ennis argues.

“Some states have highlights in their regs, and every state has lowlights in their regulations,” Ennis says. “The BLM should establish a minimum federal floor. As more and more states are dealing with fracking now, we were hoping [the BLM rules] would be the gold standard, but that’s not how it played out.”