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API: BLM HF rule could cost $2.7B per year

August 26, 2013
The American Petroleum Institute submitted comments to the U.S. Department of the Interior's Bureau of Land Management criticizing the agency's proposed rule on hydraulic fracturing on federal and Native American lands as costly and providing little or no environmental or safety benefit.

"A new layer of duplicative regulations would raise costs and create needless delays for domestic energy production, threatening jobs and revenues that are driving U.S. growth," API Director of Upstream and Industry Operations Erik Milito said in an Aug. 23 statement.

"The BLM has taken steps to improve its proposal from last year, and it wisely follows the lead of states that have already adopted FracFocus to improve transparency, but there is still no clear benefit to imposing additional federal rules on top of state environmental stewardship."

In the API comments, the group said the proposed rule establishes "vague and conflicting guidelines" that would result in costs ranging from $30 million to $2.7 billion per year. It also would conflict with federal and state regulations, worsen delays in permitting and production and impose standards that ignore local hydrology and geology.

The proposal has drawn concern from parties on both sides of the fracking argument, but Interior Secretary Sally Jewell repeatedly defended the rule against its critics at a House Natural Resources Committee hearing July 17.

The BLM on May 16 released an updated draft rule for hydraulic fracturing on public and Native American lands. Consistent with an original draft in May 2012, the revision focused on three areas: chemical disclosure, well-bore integrity and water management plans. Changes were designed to increase flexibility for drillers and allow for integration with state standards, two areas that triggered industry and state criticism in the original.

The updated rule included a variance process that defers to states that have regulations that meet or exceed BLM rules. The BLM said that by including the variance process, the rule would complement the efforts of Western states with strong fracking regulations.

Sean Sullivan, SNL Financial,
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