BLM releases revised proposed rules on hydraulic fracturing

The U.S. Bureau of Land Management (BLM) oversees approximately 700 million subsurface acres of federal mineral estate and 56 million subsurface acres of tribal mineral estate across the United States. Currently, nearly 36 million acres of federal land are under lease for potential oil and gas development.

On May 11, 2012, BLM published a proposed rule governing hydraulic fracturing on federal and tribal lands for public comment. The May 2012 proposal sought to update rules for oil and gas drilling on public and Indian lands by requiring the disclosure of fracturing fluids, satisfaction of various well construction standards, and management of flowback waters. BLM received over 177,000 public comments on the proposed rule.

Today, BLM released a Supplemental Notice of Proposed Rulemaking and Request for Comment, updating its earlier proposal. The supplemental proposed rule revises the set of evaluation tools oil and gas operators may use to show that groundwater is being protected and provides more detailed guidance on how trade secrets claims will be handled, modeled on the procedures promulgated by the State of Colorado.

The 30-day public comment period will start when the proposed rules are published in the Federal Register.


This post was prepared by Heather M. Corken (hcorken@fulbright.com or 713 651 8386) and Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.
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House reintroduces FRAC Act

On May 9, 2013, the Fracturing Responsibility and Awareness of Chemicals Act of 2013 (the “FRAC Act”) was reintroduced in the U.S. House of Representatives.

The FRAC Act was first introduced to Congress in 2008. If passed, the FRAC Act would repeal the exemption for hydraulic fracturing in the Safe Drinking Water Act. The Act establishes groundwater protection safeguards for hydraulic fracturing operations and requires the disclosure of chemicals used during the hydraulic fracturing process.

Specifically, the FRAC Act would require that persons conducting hydraulic fracturing operations disclose to the state:


  1. a list of chemicals intended for use; 
  2. the Chemical Abstracts Service numbers for each chemical and constituent; 
  3. Material Safety Data Sheets when available; and 
  4. the volume of each chemical used. 


The same information must also be submitted within 30 days after hydraulic fracturing operations end. Similar to chemical disclosure rules adopted by many states, the FRAC Act would not require the public disclosure of proprietary chemical formulas.

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Senate Committee to hold forum on shale development

The U.S. Senate Committee on Energy & Natural Resources will hold a Full Committee Forum on “Shale Development: Best Practices and Environmental Concerns” on May 23, 2013, beginning at 10 a.m. EDT. Witnesses will include representatives from oil and gas companies, environmental groups, and state and federal regulatory agencies. The forum will be webcast at FULL COMMITTEE FORUM: Shale Development: Best Practices and Environmental Concerns - Hearings and Business Meetings - Hearings - U.S. Senate Committee on Energy and Natural Resources. An archived video will be available on the Committee’s website shortly after the forum.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.
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Ohio voters reject proposal to ban hydraulic fracturing in northeast Ohio

In February 2013, the City Council of Youngstown, Ohio agreed to include on its ballot a proposal to ban hydraulic fracturing within the city limits after an anti-fracking organization, Frackfree Mahoning Valley, collected sufficient signatures for a successful petition. The unofficial results of the election held on May 7, 2013 show voters rejected this proposal by a significant margin: 57 percent opposing the proposal vs. 43 percent supporting the proposal.

In Youngstown, the proposal resulted in an unusual alliance of interest groups united in their opposition to the ban. The local business community actively campaigned against the proposal and argued this prohibition and the litigation likely to arise from the ban would have prompted companies to reevaluate their decisions to invest and expand in the area. Likewise, organized labor opposed the proposal arguing the prohibition would have negatively impacted the economic recovery of the community.

This debate over hydraulic fracturing is increasingly on display in local level elections as anti-fracking organizations pursue similar proposals to ban or otherwise restrict operations within resource-rich eastern Ohio. In November 2012, voters in Mansfield and Broadview Heights approved proposals to amend their city charters to permit the regulation of injection wells capable of storing waste associated with hydraulic fracturing operations. In Athens, an organization named the Bill of Rights Committee is collecting signatures to put the issue on the upcoming November ballot as a referendum.

Ohio sits atop the gas-rich Utica Shale formation and will likely remain a key battleground for the legal and political struggle over hydraulic fracturing. State officials anticipate the development of this formation will generate much-needed tax revenue and employment opportunities for the region.

This post was prepared by Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.
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USGS assesses undiscovered oil resources in Bakken and Three Forks Formations

The U.S. Geological Survey (USGS) recently completed a geology-based assessment of the oil and gas resources of the Bakken and Three Forks Formations, located in North Dakota, Montana, and South Dakota, finding that these formations together hold an estimated mean of 7.38 billion barrels of oil, 6.7 trillion cubic feet (tcf) of gas, and 0.53 billion barrels of natural gas liquids. See USGS Fact Sheet 2013–3013: Assessment of Undiscovered Oil Resources in the Bakken and Three Forks Formations, Williston Basin Province, Montana, North Dakota, and South Dakota, 2013. The Three Forks Formation was found to have 3.73 billion barrels of estimated mean resource of oil, with the Bakken Formation having a 3.65 billion barrels (approximately the same amount as was found in the USGS’ 2008 assessment of the Bakken Formation). The formations combined estimate ranges from 4.42 million barrels with a 95% change of production to 11.43 billion barrels with a 5% chance. Gas estimates ranged from 3.43 tcf (with a 95% chance of production) to 11.25 tcf (with a 5% chance) and 0.23 billion barrels (95%) to 0.95 billion barrels (5%) of natural gas liquids. This assessment was undertaken as part of the USGS’ nationwide project to assess U.S. petroleum basins using standardized methodology and protocol. Data for this assessment was provided by the North Dakota Geological Survey, North Dakota Industrial Commission, Montana Board of Oil and Gas, and multiple industry groups working in the formations.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.
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Pending hydraulic fracturing bills in Illinois legislatures

Currently there are four bills pending in the Illinois legislatures relating to high volume hydraulic fracturing activities. One bill creates the Illinois Hydraulic Fracturing Regulatory Act, two bills would ban fracking, and one requires fracking regulations to be added to the Illinois Oil and Gas Act. All of these bills are currently in committees.

House Bill 2615 which creates the Illinois Hydraulic Fracturing Regulatory Act has provisions requiring permits for hydraulic fracturing and the disclosure of fracking fluids.
  • High volume hydraulic fracturing operations require a permit. The permit application must contain detailed well and operations information, including: 
    • A detailed description of the proposed well to be fracked, including total depth, proposed angle and direction, the approximate depth at which well deviates from vertical, angle and direction non-vertical portion of the wellbore, and estimated length and direction of proposed horizontal lateral or wellbore. 
    • Estimated depth and elevation of the lowest potential fresh water along the entire length of the proposed wellbore. 
    • A detailed description of the proposed high volume hydraulic fracturing operations, including the formation affected by the operation, the anticipated surface treating pressure range, the maximum anticipated injection treating pressure, the estimated fracture pressure of the producing and confining zones, and the planned depth of all proposed perforations or depth to the top of the open hole section. 
    • A chemical disclosure report identifying each chemical and proppant anticipated to be used in the fracking fluid for each stage of the fracturing operation, including the anticipated total volume of water, fracturing additives to be used, each chemical to be intentionally added to the base fluid, and percent concentration of each chemical added. Trade secrets can be protected with appropriate information provided to the Department of Natural Resources. 
    • A plan for handling, storage, transportation, and disposal or reuse of hydraulic fracturing fluids and hydraulic fracturing flowback. 
  • Within 60 days after concluding hydraulic fracturing operations, the operator must file a high volume horizontal hydraulic fracturing operations completion report which requires the following information: 
    • The total water volume used and the type and total volume of base fluid used. 
    • The quantity of hydraulic fracturing flowback recovered from the well and a description of its disposal or re-use. 
    • A chemical disclosure report identifying each chemical and proppant used in the fracturing fluid for each stage of the hydraulic fracturing process. Trade secrets can be protected if the party seeking protection presents: 
      • Redacted and unredacted copies of documents that contain the chemical disclosure information. 
      • A justification of the claim containing a detailed description of how the information has been protected, identification of persons to whom the information has been disclosed, a certification that the information has not been published, an explanation of why the information is of competitive value, and any other information supporting the claim. 

House Bill 3086 and Senate Bill 1418 would amend the Illinois Oil and Gas Act to create the Hydraulic Fracturing Task Force to gather information, evaluate and make recommendations for the regulation of hydraulic fracturing in Illinois. Until the Task Force provides its findings, all high volume horizontal hydraulic fracturing operations are banned.

Senate Bill 3280 would amend the Illinois Oil and Gas Act to require well integrity tests before hydraulic fracturing, disclosure of fracking fluids (except for trade secrets), and re-use or disposal of flowback at an appropriate disposal facility. Operators of hydraulically fracked wells would be required to disclose all chemicals used on the FracFocus website. A service company that performed the hydraulic fracturing or a supplier of any additive used in the fracking fluid must provide to the operator the information needed for the operator to respond to the FracFocus.org website. Trade secret information may be withheld.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.
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Proposed hydraulic fracturing legislation and rules in california may chill development in the Monterey Shale

Members of the California legislature have been extremely busy proposing ten (10) laws that would rein in hydraulic fracturing and possibly chill the development of the Monterey Shale formation. This play extends more than 1,700 miles and is believed to contain 15.4 billion barrels of oil, approximately two-thirds of the U.S. shale oil reserves. Legislation in the General Assembly (A.B. 1301) would block hydraulic fracturing until the legislature passes rules specifying under what conditions it could be done safely. A.B. 1323 imposes a moratorium on fracking until regulators examine its health and environmental impacts (a report which is due in 2019). Another Assembly bill (A.B. 649) would ban hydraulic fracturing near an aquifer until a determination is made that the drilling would not endanger health. S.B. 4 [Bill Text - SB-4 Oil and gas: hydraulic fracturing.] would regulate hydraulic fracturing operations, including the construction of wells and well casings and the disclosure of fracturing fluids. It would require an independent scientific study on hydraulic fracturing treatments, and it would prohibit the issuance of hydraulic fracturing permits until the report is completed and peer-reviewed (which would be January 1, 2015 or after).

Along with the proposed moratoriums, the California Department of Conservation proposed rules that would require oil and gas companies to reveal the locations of wells being hydraulically fractured and to disclose the chemicals used.

These potential delays and the required disclosures may have energy firms considering whether the Monterey Shale’s resources are worth the wait.

Additional pending legislation includes the following:
  • S.B. 395 would classify hydraulic fracturing wastewater as a hazardous substance.
  • S.B. 665 would amend bonding requirements for operators of natural gas wells.
  • A.B. 7 would require the disclosure of the chemicals used in hydraulic fracturing, while providing protection for trade secrets.
  • A.B. 288 would give the Division of Oil, Gas and Geothermal Resources 30 days to approve a new drilling permit application, extending the deadline from 10 days.
  • A.B. 669 would require the operator to get approval from the regional water quality control board for the method and location of wastewater disposal before starting to drill.
  • A.B. 982 would require groundwater monitoring before and after any hydraulic fracturing operation.
This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.
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Lawmakers question funds budgeted to EPA for fracking studies

On April 26, 2013, members of the U.S. House of Representatives’ Science, Space and Technology Committee’s Subcommittee on Energy and Subcommittee on Environment Joint Hearing - A Review of Federal Hydraulic Fracturing Research Activities | Committee on Science - U.S. House of Representatives questioned the U.S. Environmental Protection Agency (EPA) about its studies on hydraulic fracturing and the additional monies requested to pursue these studies. The 2014 proposed budget sets aside $38 million to continue a multi-agency study of fracking’s impact, a project that was given $45 million in 2013. The Subcommittee members want the EPA to explain what it plans to do with the additional money, especially in light of the “Administration’s embarrassing track record of unsubstantiated allegations when it comes to hydraulic fracturing.” One of the members questioned whether “a blank check for the Administration is a good policy” and stated that the budget needs to be carefully considered because the “EPA’s past and on-going fracturing studies and investigations demonstrate a cart-before-the-horse approach” to science. The members pointed to the EPA’s “draft” report dated December 2011 which implied that fracking was responsible for water contamination near Pavillion, Wyoming. That report was later revealed to be “deeply flawed.” Even the EPA’s former Administrator indicated that she was not confident that the water contamination in Pavillion was caused by fracking.

In addition, the multi-agency study has yet to get off the ground. In April of 2012, President Obama issued an Executive Order -- Supporting Safe and Responsible Development of Unconventional Domestic Natural Gas Resources | The White House creating a senior level task force charged with coordinating federal actions related to the development of unconventional natural gas. Immediately thereafter, the EPA, the Department of Energy, and the Department of Interior signed a Memorandum of Agreement to develop an interagency plan to study environmental impacts of unconventional oil and gas production. These departments committed to release a draft research plan in October 2012 and complete the final plan by January 2013. Neither of these deadlines has been met. According to the Subcommittee members, the “Administration should recognize that shale gas is a solution rather than a problem.”

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group and Heather M. Corken (hcorken@fulbright.com or 713 651 8386) from Fulbright's Environmental Law Practice Group.
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New York legislator sponsors fracking settlement disclosure bill

Settlements arising from hydraulic fracturing disputes have typically included non-disclosure provisions.

 A New York State Senator has proposed S4630-2013 which would prohibit non-disclosure agreements in settlements relating to “fracturing where the facts disclosed in the action relate to a public health or safety threat.” The bill would amend New York’s civil practice law to prohibit the court from approving “a settlement of such action that includes a non-disclosure agreement until the court has reviewed all facts with regard to a threat to public health or safety.”

Because legal actions relating to fracturing involve the impact of toxic chemicals on persons and property, any information revealed in the actions that relates to public health or safety should be available to the public, according to the senator. Besides hydraulic fracturing, this bill would apply to the “storage, transportation and disposal of fluids” used in shale gas drilling.

 This proposed law comes in the wake of a Pennsylvania Court of Common Pleas’ decision that a settlement agreement entered in a case complaining of drilling activities be unsealed and made available to the public. This decision was discussed in this blog on April 2, 2013, Court determines that settlement agreement concerning drilling activities is public record.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.
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Methane in water wells in Franklin Township, Pennsylvania not from natural gas drilling activity

The Pennsylvania Department of Environmental Protection (DEP) announced the results of its 16-month investigation into the alleged methane contamination of three private water wells in Franklin Township, Susquehanna County, where the Marcellus Shale formation is being developed by hydraulic fracturing. The DEP tested water from the three water wells and compared it with the chemical make-up of natural gas samples taken from the nearby drilling rigs and also with samples from water wells in the nearby Salt Springs State Park. The testing showed that the methane in the water from the private wells contained a similar isotopic make-up to the samples from the State Park, indicating that the methane in the wells is naturally occurring shallow gas. The DEP concluded that the methane in the private water wells was not production gas from the nearby gas wells being drilled by WPX Energy Inc. WPX has been paying for delivery of replacement water to the owners of the three water wells and has not yet determined if the deliveries will continue. Despite the DEP’s conclusion, the water well owners continue to believe that gas drilling is responsible for the contamination and will move forward with their lawsuit. Manning v. WPX Energy Inc. and The Williams Companies, Inc., No. 3:12-cv-00646 (M.D. Pa. April 9, 2012).

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.
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Texas' budget benefits from shale development

Towns in the Eagle Ford Shale and other shale formations in Texas are benefiting from the oil and gas boom. The influx of oilfield workers and their families has created the need for more homes, hotels, medical facilities, educational institutions and basic domestic resources. These effects were examined in the Eagle Ford Shale Task Force Report, March 2013. Besides the local economies, shale development has created a windfall for Texas. Taxes on oil and gas development have soared past budget estimates. Oil and gas interests paid $7.4 billion in taxes in 2010, $9.25 billion in 2011, and $12 billion estimated in 2012. Severance tax income from oil production and regulation was 43% higher than estimated, at $2.1 billion, and the natural gas production tax was 38% higher than estimated, at $1.5 billion. The state’s Rainy Day Fund profits from these taxes, which funds can be used to pay for infrastructure projects, such as water. Currently the Fund has approximately $8 billion, but that is expected to rise to $11.8 billion in 2014-2015.

Another effect of the shale boom is the increase in property taxes collected by local governments. The amount collected from oil and gas interests is significant – about $3.6 billion in 2012. Sales tax from oil and gas totaled approximately $2.5 billion in 2012.

As the search for more oil and gas from shale formations continues, Texas will benefit from the lucrative exploration and development activity. Texas has the largest oil and gas field services sector in the nation. This sector includes among others, trucking, hydraulic fracturing fluid production, and drilling equipment. Everything bought by the energy companies and their employees is taxable so the local and state coffers will continue to benefit.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.
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New York appeals court upholds local bans on hydraulic fracturing

On May 2, 2013, a New York state appeals court issued an order upholding a local ordinance banning all activities related to the exploration for, and production or storage of, natural gas and petroleum in the Town of Dryden, New York. The court affirmed the judgment of the lower court, entered on February 22, 2012, which held that certain amendments to the Town of Dryden zoning ordinance are not preempted by New York State’s Oil, Gas and Solution Mining Law (“OGSML”).

The appeals court also issued an order upholding a local ordinance banning natural gas drilling in the Town of Middlefield, New York. The court affirmed the judgment of the lower court, entered on August 8, 2012, which held that the Town of Middlefield’s zoning law was not preempted by the OGSML.

The two lower court opinions are discussed in our prior blog post on February 29, 2012, Two New York State Courts Uphold Local Bans on Hydraulic Fracturing.

Town of Dryden


On August 2, 2011 the Town of Dryden amended its zoning ordinance to “ban all activities related to the exploration for, and production or storage of, natural gas and petroleum,” which effectively banned all hydraulic fracturing in the area.

Anschutz Exploration Corporation, a driller and developer of oil and gas wells that owned leases covering approximately 22,200 acres in the Town of Dryden, then filed a declaratory judgment action seeking invalidation of the zoning amendment on the ground that it was preempted by the OGSML.

The lower court ruled in favor of the town, holding that the legislative intent of OGSML was not to preempt local zoning authority. Instead, the purpose of OGSML is to “regulate any development or production of such resources which may occur in a manner that prevents waste, permits greater ultimate recovery of oil and gas, and protects the correlative rights of all persons.”

On appeal, the appellate court affirmed the ruling of the lower court. The appellate court found that the zoning ordinance “does not seek to regulate the details or procedure of the oil, gas and solution mining industries. Rather, it simply establishes permissible and prohibited uses of land within the Town for the purpose of regulating land generally.” The court acknowledged that the zoning ordinance will inevitably have an incidental effect upon the oil and gas industry. Nonetheless, the court found that the OGSML does not preempt a municipality’s authority to enact a local zoning ordinance banning all activities related to the exploration for, and the production or storage of, natural gas and petroleum within its borders.

Town of Middlefield


In June 2011, the Town of Middlefield enacted a new zoning law that categorized all oil, gas and solution mining and drilling as prohibited land uses within the town, which effectively banned all oil and gas drilling within the geographical borders of the township.

Cooperstown Holstein Corporation (“Cooperstown”), a company that owns oil and gas leases on real property in the Town of Middlefield, then filed a declaratory judgment action seeking a declaration that the zoning ordinance was preempted by the OGSML.

The lower court ruled against Cooperstown, holding that the zoning law was not preempted by the OGSML. The court looked to the legislative intent and history of the OGSML to determine that it “does not serve to preempt a local municipality such as defendant from enacting land use regulation within the confines of its geographical jurisdiction and, as such, local municipalities are permitted to permit or prohibit oil, gas and solution mining or drilling on conformity with such constitutional and statutory authority.”

The appellate court agreed with the lower court, affirming the court’s judgment that the Town of Middlefield’s zoning law is valid.

Both decisions are expected to be appealed.
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This article was prepared by Heather M. Corken (hcorken@fulbright.com or 713 651 8386) from Fulbright's Environmental Law Practice Group and Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.
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EPA extends deadline for public input to fracking study

In the April 30, 2013 Federal Register, the U.S. Environmental Protection Agency (EPA) extended its deadline for the public to submit data and scientific literature for its Study of the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources. The deadline for the public to provide feedback is now November 15, 2013.

The EPA extended the deadline to “ensure that [it] is up-to-date on evolving hydraulic fracturing practices and technologies.” This study has been underway since 2011, and it is expected that this extension will not delay the release of the final report in late 2014. 

In a December 2012 progress report, the EPA stated that it was conducting 18 research projects on the relationship between fracking and drinking water and reviewing data on fracking fluids, well construction, chemical spills, and water quality from wells around the country. 

The EPA’s progress report is discussed in our prior blog post on February 27, 2013, EPA Technical Roundtables Concerning Potential Impacts of Hydraulic Fracturing on Drinking Water Resources.

Review the Federal Register notice of the deadline extension.
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This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group and Heather M. Corken (hcorken@fulbright.com or 713 651 8386) from Fulbright's Environmental Law Practice Group.
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