White House issues new hydraulic fracturing rule

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WASHINGTON -- The Obama administration on Friday issued a proposed rule governing hydraulic fracturing for oil and gas on public lands that will for the first time require disclosure of the chemicals used in the process.

But in a significant concession to the oil industry, companies will have to reveal the composition of fluids only after they have completed drilling, not before -- a sharp change from the government's original proposal, which would have required disclosure of the chemicals 30 days before a well could be started.

The walk-back of the rule followed a series of meetings at the White House after the original regulation was proposed in February. Lobbyists representing oil industry trade associations and individual major producers such as Exxon Mobil, XTO Energy, Apache, Samson Resources and Anadarko Petroleum met with Office of Management and Budget officials, who reworked the rule to address industry concerns about overlapping state regulations and the cost of compliance.

Production of domestic oil and natural gas has surged in recent years as hydraulic fracturing and horizontal drilling have opened new fields and allowed renewed production from formations that had seemed depleted.

President Barack Obama has strongly endorsed the new production as a boon to the economy and energy security. And the president, under criticism of his energy policies from Republicans and oil industry officials as he faces re-election, has recently taken steps to ease government regulation of oil operations.

In its original proposal that oil companies disclose the chemicals they intended to use in drilling at least 30 days before starting a well, the Interior Department was seeking to address the concerns of landowners and communities about potential pollution of groundwater. But industry objected, saying the additional paperwork would slow the permitting process and potentially jeopardize trade secrets.

The government then agreed to allow companies to reveal the contents of drilling fluids after the fracking operation has been completed. Interior Department officials said having a record would allow scientists to trace any future contamination, and that it did not matter whether the fluids were disclosed before or after drilling.

Interior Secretary Ken Salazar said the proposed rule was part of the administration's overall energy strategy. "As we continue to offer millions of acres of America's public lands for oil and gas development, it is critical that the public have full confidence that the right safety and environmental protections are in place," he said.

Friday's draft rule affects drilling operations on the 700 million acres of public land administered by the Interior Department's Bureau of Land Management as well as 56 million acres of Indian lands. The agency estimates that 90 percent of the 3,400 wells drilled each year on public and Indian lands use hydraulic fracturing -- commonly known as fracking -- in which large volumes of water, sand and chemicals are injected under high pressure into shale rock formations to stimulate the flow of oil and gas.

The process has raised concerns about contamination of groundwater, well integrity and treatment of the tainted water that flows out of wells during and after fracking operations.

The majority of the 13,000 wells drilled each year by fracking are on private lands and thus fall primarily under state regulation, as they have for 60 years. Although rules and the rigor of enforcement vary, there have been efforts in recent years to standardize reporting under such government and industry bodies as the Ground Water Protection Council and the Interstate Oil and Gas Commission.

The federal government's rules regarding oil and gas fracturing on public lands were last revised in 1988, before many modern techniques were adopted. The states where much of the activity occurs on public and private lands -- including Colorado, Wyoming, Arkansas, Texas and North Dakota -- have updated their rules and require disclosure of fracking chemicals at a website called FracFocus. The new federal rule seeks to integrate the state and federal reporting efforts, although environmental and citizen groups say the state database is difficult to use.

The Interior Department said the rule imposed few new regulatory requirements not already being met at the state level, and that it would not slow granting of drilling permits. Barry Russell, president of the Independent Petroleum Association of America, said companies were already having trouble getting permission to drill on public land.

"BLM's proposed regulations, which would mandate one-size-fits-all regulations on well construction and hydraulic fracturing operations on these lands, are redundant," he said in a statement. "They will undoubtedly insert an unnecessary layer of rigidity into the permitting and development process."



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