[Federal Register Volume 78, Number 101 (Friday, May 24, 2013)]
[Proposed Rules]
[Pages 31635-31677]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-12154]



[[Page 31635]]

Vol. 78

Friday,

No. 101

May 24, 2013

Part II





Department of the Interior





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Bureau of Land Management





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43 CFR Part 3160





Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands; Proposed 
Rule

Federal Register / Vol. 78 , No. 101 / Friday, May 24, 2013 / 
Proposed Rules

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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3160

[WO-300-L13100000.FJ0000]
RIN 1004-AE26


Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands

AGENCY: Bureau of Land Management, Interior.

ACTION: Supplemental notice of proposed rulemaking and request for 
comment.

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SUMMARY: On May 11, 2012, the Bureau of Land Management (BLM) published 
in the Federal Register a proposed rule entitled Oil and Gas; Well 
Stimulation, Including Hydraulic Fracturing, on Federal and Indian 
Lands. The BLM has used the comments on that draft to make improvements 
and is now seeking additional comment on a revised proposed rule. Key 
issues in this updated draft include: the use of an expanded set of 
cement evaluation tools to help ensure that usable water zones have 
been isolated and protected from contamination; and more detailed 
guidance on how trade secrets claims will be handled, modeled on the 
procedures promulgated by the State of Colorado. The revised proposed 
rule would also provide opportunities for the BLM to coordinate 
standards and processes with individual States and tribes to reduce 
administrative costs and to improve efficiency.

DATES: Send your comments on this supplemental notice of proposed 
rulemaking (SNPR) to the BLM on or before June 24, 2013. The BLM need 
not consider, or include in the administrative record for the final 
rule, comments that the BLM receives after the close of the comment 
period or comments delivered to an address other than those listed 
below (see ADDRESSES). If you wish to comment on the information 
collection requirements in this SNPR, please note that the Office of 
Management and Budget (OMB) is required to make a decision concerning 
the collection of information contained in this SNPR between 30 to 60 
days after publication of this document in the Federal Register. 
Therefore, a comment to OMB is best assured of being considered if OMB 
receives it by June 24, 2013.

ADDRESSES: Mail: U.S. Department of the Interior, Director (630), 
Bureau of Land Management, Mail Stop 2134 LM, 1849 C St. NW., 
Washington, DC 20240, Attention: 1004-AE26. Personal or messenger 
delivery: Bureau of Land Management, 20 M Street SE., Room 2134 LM, 
Attention: Regulatory Affairs, Washington, DC 20003. Federal 
eRulemaking Portal: http://www.regulations.gov. Follow the instructions 
at this Web site.
    Comments on the information collection requirement: Fax: Office of 
Management and Budget (OMB), Office of Information and Regulatory 
Affairs, Desk Officer for the Department of the Interior, fax 202-395-
5806. Electronic mail: oira_submission@omb.eop.gov. Please indicate 
``Attention: OMB Control Number 1004-0203,'' regardless of the method 
used to submit comments on the information collection burdens. If you 
submit comments on the information collection burdens, please provide 
the BLM with a copy of your comments, at one of the addresses shown 
above.

FOR FURTHER INFORMATION CONTACT: Steven Wells, Division Chief, Fluid 
Minerals Division, 202-912-7143 for information regarding the substance 
of the rule or information about the BLM's Fluid Minerals Program. 
Persons who use a telecommunications device for the deaf (TDD) may call 
the Federal Information Relay Service (FIRS) at 1-800-877-8339 to 
contact the above individual during normal business hours. FIRS is 
available 24 hours a day, 7 days a week to leave a message or question 
with the above individual. You will receive a reply during normal 
business hours.

SUPPLEMENTARY INFORMATION: 

Executive Summary

    ``Hydraulic fracturing,'' a process used to stimulate production 
from oil and gas wells, has been a growing practice in recent years. 
Public awareness of hydraulic fracturing has grown as new horizontal 
drilling technology has allowed increased access to shale oil and gas 
resources across the country, sometimes in areas that have not 
previously or recently experienced significant oil and gas development. 
The rapid expansion of this practice has caused public concern about 
whether fracturing can lead to or cause the contamination of 
underground water sources, whether the chemicals used in fracturing 
should be disclosed to the public, and whether there is adequate 
management of well integrity and the ``flowback'' fluids that return to 
the surface during and after fracturing operations.
    The Bureau of Land Management (BLM) oversees approximately 700 
million subsurface acres of Federal mineral estate and 56 million 
subsurface acres of Indian mineral estate across the United States. 
This revised proposed rule and the initial proposed rule would 
modernize BLM's management of hydraulic fracturing operations by 
ensuring that hydraulic fracturing operations conducted on the public 
mineral estate (including split estate where the Federal Government 
owns the subsurface mineral estate) follow certain best practices, 
including: (1) The public disclosure of chemicals used in hydraulic 
fracturing operations on Federal and Indian lands; (2) Confirmation 
that wells used in fracturing operations meet appropriate construction 
standards; and (3) A requirement that operators put appropriate plans 
in place for managing flowback waters from fracturing operations.
    Like the initial proposed rule, this revised proposed rule would 
apply to Indian lands so that these lands and communities receive the 
same level of protection provided on public lands. In most cases, the 
requirements in this rule can be satisfied by submitting additional 
information during the existing process that the BLM currently applies 
to operators when reviewing and approving an operator's Application for 
Permit to Drill (APD) on public or Indian lands. The rule would require 
that disclosure of the chemicals used in the fracturing process be 
provided to the BLM after the fracturing operation is completed. This 
information may be submitted to the BLM through an existing Web site 
known as FracFocus.org, already used by some states for reporting 
mandatory chemical disclosure of hydraulic fracturing chemicals. 
Submission of this information through this Web site allows an operator 
to provide the public and many State and tribal regulators with prompt 
access. This approach also has the benefit of reducing reporting 
burdens for oil and gas operators by avoiding duplicative reporting 
requirements and administrative duties for the BLM in many instances.
    The BLM developed this revised proposed rule and the initial 
proposed rule with the intention of improving public awareness and 
strengthening oversight of hydraulic fracturing operations without 
introducing unnecessary new procedures or delays in the process of 
developing oil and gas resources on public and Indian lands. Some 
states, like Colorado, Wyoming, Arkansas, and Texas, have issued their 
own regulations addressing disclosures and oversight for oil and gas 
drilling operations. Operators with leases on Federal lands must comply 
with both BLM's regulations and with State

[[Page 31637]]

operating requirements, including State permitting and notice 
requirements to the extent they do not conflict with BLM regulations. 
State regulations pertaining to hydraulic fracturing operations are not 
uniform. The States that have regulated hydraulic fracturing typically 
require some notification to a state agency and some require reporting 
on FracFocus. Other States have not taken action in this area. This 
revised proposed rule seeks to create a consistent oversight and 
disclosure model that will apply across all public and Indian lands 
that are available for oil and gas development, and aims to streamline 
and minimize the efforts required to comply with any new requirements, 
while also protecting Federal and tribal interests and resources. 
Currently nearly 36 million acres of Federal land are under lease for 
potential oil and gas development. These leases can be found on public 
land and for public minerals in 24 states The BLM has revised the 
proposed rule to reduce some of the information requirements to avoid 
duplication with the requirements of States (on Federal land) and 
tribes (on tribal land). The BLM has considered various options to 
encourage streamlining, flexibility, and more efficient operation on 
both BLM and tribal leases.
    The BLM has for many years had a number of agreements with certain 
States and tribes concerning implementation of the various regulatory 
programs in logical and effective ways. The BLM will work with States 
and tribes to establish formal agreements that will leverage the 
strengths of partnerships, and reduce duplication of efforts for 
agencies and operators, particularly in implementing the revised 
proposed rule as consistently as possible with State or tribal 
regulations.
    Similarly, the BLM has been looking to State regulations governing 
hydraulic fracturing for elements that should be incorporated into the 
revised proposed rule. Examples include allowing disclosure of chemical 
constituents of fracturing fluids through FracFocus, as required by 
several states, and adoption of the Colorado system of having operators 
submit an affidavit that undisclosed information about chemicals is 
entitled to protection as trade secrets.
    Regarding Indian lands, the BLM fully embraces the statutes, 
Executive Orders, and other statements of governmental or departmental 
policy in favor of promoting tribal self-determination and control of 
resources. The Indian Mineral Leasing Act (IMLA), however, subjects all 
oil and gas operations on trust or restricted Indian lands to the 
Secretary's regulations and does not authorize the Secretary to allow 
tribes to opt out of these regulations. Nonetheless, the BLM is 
actively addressing ways to use tribal rules in the implementation of 
the revised proposed rule. For example, the proposed rule recognizes 
the authority that may be delegated to the States and the tribes to 
implement various environmental programs under the Safe Drinking Water 
Act to protect underground sources of drinking water and has been 
revised to defer to State (on Federal land) or tribal (on tribal land) 
designations of aquifers as either requiring protection from oil and 
gas operations, or as exempt from any requirement to isolate water-
bearing zones in section 3162.3-3(b).
    The revised proposed rule also adds a provision allowing the BLM to 
approve a variance that would apply to all lands within the boundaries 
of a State, a tribe, or described as field-wide or basin-wide, that is 
commensurate with the state or tribal regulatory scheme. The BLM must 
determine that the variance would meet or exceed the effectiveness of 
the revised proposed rule. State and tribes would be invited to work 
with the BLM to craft variances that would allow technologies, 
processes or standards required or allowed by the State or tribe to be 
accepted as compliance with the rule. Such variances would allow the 
BLM and the States and tribes to improve efficiency and reduce costs 
for operators and for the agencies.
    The proposed changes to existing hydraulic fracturing oversight are 
partly in response to recommendations put forward by the Shale Gas 
Production Subcommittee of the Secretary of Energy's Advisory Board in 
2011. Also, current BLM regulations governing hydraulic fracturing 
operations on public lands are more than 30 years old and were not 
written to address modern hydraulic fracturing technologies and 
practices. In preparing this revised proposed rule, the BLM received 
input from members of the public and stakeholders, and consulted with 
tribal representatives.
    The changes from the original proposed well stimulation rule are 
discussed in greater detail below, but some of the notable changes 
include the following. This revised proposed rule would require use of 
cement evaluation logs (CELs) in the place of the originally proposed 
cement bond logs (CBL). The use of the broader term of CEL is intended 
to allow a variety of logging methods to be used to show the adequacy 
of cementing, including technologies such as ultrasonic logs, variable 
density logs, micro-seismograms, standard CBLs, CBLs with directional 
receiver array, ultrasonic pulse echo technique, and isolation 
scanners. CBLs would be accepted because they are one of the 
technologies included in CELs. However, if a State (on Federal land) or 
tribe (on Indian land) designates some other technology to meet its 
requirements for hydraulic fracturing wells that is at least as 
effective in assuring adequate cementing, the BLM may allow use of that 
technology as a variance from the CEL requirement.
    The revised proposed rule would also change the operation of the 
trade secrets provision. The revised proposed rule allows operators to 
submit to the BLM an affidavit asserting exemption from disclosure of 
certain information having to do with the hydraulic fracturing fluid. 
The rule also gives the BLM the ability to demand the specific chemical 
details of any materials being proposed for trade secret exemption.
    Further, although the BLM is not proposing a material change in the 
provision that allows hydraulic fracturing flowback fluids to be stored 
either in tanks or in lined pits, the BLM seeks comments on the costs 
and benefits of requiring flowback fluids to be stored only in closed 
tanks. Other provisions of the initial proposed rule have been modified 
for clarity or in response to comments. Accordingly, the entire revised 
proposed rule is available for public comment.
    The BLM has analyzed the costs and the benefits of this proposed 
action in an accompanying Regulatory Impact Analysis available in the 
rulemaking docket. The estimated costs range from $12 million to $20 
million per year. The range reflects uncertainty about the 
generalization of costs across all hydraulic fracturing operations. The 
potential benefits of the rule are more challenging to monetize than 
the costs, but that does not mean that the rule is without benefits. 
The rule creates a consistent, predictable regulatory framework, in 
accordance with the BLM's stewardship responsibilities under the 
Federal Land Policy and Management Act and other statutes, for 
hydraulic fracturing involving BLM-administered lands. The rule is 
designed to reduce the environmental and health risk that can be posed 
by hydraulic fracturing operations, particularly in the way the rule 
addresses flowback fluids, well construction, and hydraulic fracture 
design. The rule would ensure that operators demonstrate wellbore 
integrity with pressure tests on 100 percent of the hydraulically 
fractured wells and with

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CELs on the casing strings that protect usable water on each type well. 
A type well is an oil and gas well that can be used as a model for well 
completion in a field where geologic characteristics are substantially 
similar. The authorized officer would evaluate whether substantially 
similar geologic conditions exist during review of the APD or sundry 
notice requesting approval of a group of wells for a field. CELs would 
be required only of type wells, ``wildcat'' wells that are not approved 
as part of a field development proposal, and whenever there is evidence 
of a problem with the cement job. The BLM is asking for comments on the 
effectiveness of this proposal.

I. Public Comment Procedures
II. Background
III. Discussion of the Revised Proposed Rule and Comments on the 
Proposed Rule
IV. Procedural Matters

I. Public Comment Procedures

    If you wish to comment, you may submit your comments by any one of 
several methods: Mail: You may mail comments to U.S. Department of the 
Interior, Director (630), Bureau of Land Management, Mail Stop 2134LM, 
1849 C Street NW., Washington, DC 20240, Attention: 1004-AE26. Personal 
or messenger delivery: Bureau of Land Management, 20 M Street SE., Room 
2134LM, Attention: Regulatory Affairs, Washington, DC 20003. Federal 
eRulemaking Portal: http://www.regulations.gov. Follow the instructions 
at this Web site.
    You may submit comments on the information collection burdens 
directly to the Office of Management and Budget, Office of Information 
and Regulatory Affairs, Desk Officer for the Department of the 
Interior, fax 202-395-5806, or oira_submission@omb.eop.gov. Please 
include ``Attention: OMB Control Number 1004-0203'' in your comments. 
If you submit comments on the information collection burdens, please 
provide the BLM with a copy of your comments, at one of the addresses 
shown above.
    Please make your comments as specific as possible by confining them 
to issues directly related to the content of this revised proposed 
rule, and explain the basis for your comments. The comments and 
recommendations that will be most useful and likely to influence agency 
decisions are:
    1. Those supported by quantitative information or studies; and
    2. Those that include citations to, and analyses of, the applicable 
laws and regulations.
    The BLM is not obligated to consider or include the comments 
received after the close of the comment period (see DATES) or comments 
delivered to an address other than those listed above (see ADDRESSES) 
in the Administrative Record for the rule.
    Comments, including names and street addresses of respondents, will 
be available for public review at the address listed under ADDRESSES 
during regular hours (7:45 a.m. to 4:15 p.m.), Monday through Friday, 
except holidays. Before including your address, telephone number, email 
address, or other personal identifying information in your comment, be 
advised that your entire comment--including your personal identifying 
information--may be made publicly available at any time. While you can 
ask in your comment to withhold from public review your personal 
identifying information, we cannot guarantee that we will be able to do 
so.

II. Background

    Well stimulation techniques, such as hydraulic fracturing, are 
commonly used by oil and natural gas producers to increase the volumes 
of oil and natural gas that can be extracted from wells. Hydraulic 
fracturing techniques are particularly effective in enhancing oil and 
gas production from shale gas or oil formations. Until quite recently, 
shale formations rarely produced oil or gas in commercial quantities 
because shale does not generally allow flow of hydrocarbons to 
wellbores unless mechanical changes to the properties of the rock can 
be induced. The development of horizontal drilling, combined with 
hydraulic fracturing, has made the production of oil and gas from shale 
feasible. Hydraulic fracturing involves the injection of fluid under 
high pressure to create or enlarge fractures in the reservoir rocks. 
The fluid that is used in hydraulic fracturing is usually accompanied 
by proppants, such as particles of sand, which are carried into the 
newly fractured rock and help keep the fractures open once the 
fracturing operation is completed. The proppant-filled fractures become 
conduits for fluid migration from the reservoir rock to the wellbore 
and the fluid is subsequently brought to the surface. In addition to 
the water and sand (which together typically make up 98 to 99 percent 
of the materials pumped into a well during a fracturing operation), 
chemical additives are also frequently used. These chemicals can serve 
many functions in hydraulic fracturing, including limiting the growth 
of bacteria and preventing corrosion of the well casing. The exact 
formulation of the chemicals used varies depending on the rock 
formations, the well, and the requirements of the operator.
    Hydraulic fracturing is a common and accepted practice, and has 
been, in oil and gas production for decades. The BLM estimates that 
about 90 percent (approximately 3,400 wells per year) of wells drilled 
on Federal and Indian lands are stimulated using hydraulic fracturing 
techniques. Although many of these are conventional wells, much of the 
new activity occurs on wells designed to produce shale oil and gas or 
to employ horizontal drilling techniques. Over the past 10 years, there 
have been significant technological advances in horizontal drilling, 
which is frequently combined with hydraulic fracturing. This 
combination, together with the discovery that these techniques can 
release significant quantities of oil and gas from large shale 
deposits, has led to production from geologic formations in parts of 
the country that previously did not produce significant amounts of oil 
or gas. The resulting expansion of oil and gas drilling into new parts 
of the country because of the availability of new horizontal drilling 
technologies has significantly increased public awareness of hydraulic 
fracturing and the potential impacts that it may have on water quality 
and water consumption, unless adequately regulated and safely 
implemented.
    The BLM's existing hydraulic fracturing regulations are found at 43 
CFR 3162.3-2. These regulations were established in 1982 and last 
revised in 1988, long before the latest hydraulic fracturing 
technologies became widely used. In response to public interest in 
hydraulic fracturing and in the BLM's regulation of hydraulic 
fracturing, in particular, the Department of the Interior (Department) 
held a forum on hydraulic fracturing on November 30, 2010, in 
Washington, DC, attended by the Secretary of the Interior and more than 
130 interested parties. The BLM later hosted public forums (in 
Bismarck, North Dakota on April 20, 2011; Little Rock, Arkansas on 
April 22, 2011; and Golden, Colorado on April 25, 2011) to collect 
broad input on the issues surrounding hydraulic fracturing. More than 
600 members of the public attended the April 2011 forums. Some of the 
comments frequently heard during these forums included concerns about 
water quality, water consumption, and a desire for improved 
environmental safeguards for surface operations. Commenters also 
strongly encouraged the agency to require public disclosure of the 
chemicals used in hydraulic fracturing operations on Federal and Indian 
lands. Commenters from the oil and gas industry suggested

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changes that would make the implementation of the rule more 
practicable, from their perspective, and some opposed adoption of any 
such rules affecting hydraulic fracturing on the Federal mineral 
estate. Further, the BLM distributed copies of the then-draft rule to 
affected federally recognized tribes in January 2012 and invited 
comments from affected tribes.
    Around the time of the BLM's forums, at the direction of President 
Barack Obama, the Secretary of Energy convened a Shale Gas Production 
Subcommittee (Subcommittee) of the Secretary of Energy Advisory Board 
to evaluate hydraulic fracturing issues. The Subcommittee met with 
industry, service providers, state and Federal regulators, academics, 
environmental groups, and many other stakeholders. On August 18, 2011, 
the Subcommittee issued initial recommendations in its ``90-day Interim 
Report.'' The Subcommittee issued its final report, entitled ``Shale 
Gas Production Subcommittee Second Ninety Day Report'' on November 18, 
2011. The Subcommittee recommended, among other things, that more 
information be provided to the public about hydraulic fracturing 
operations whether or not they occur on the Federal mineral estate, 
including disclosure of the chemicals used in fracturing fluids. The 
Subcommittee also recommended the adoption of stricter standards for 
wellbore construction and testing. The final report also recommended 
that operators engaging in hydraulic fracturing undertake pressure 
testing to ensure the integrity of all casings. These reports are 
available to the public from the Department of Energy's Web site at 
http://www.shalegas.energy.gov.
    On May 11, 2012, the BLM published in the Federal Register the 
initial proposed rule entitled ``Oil and Gas; Well Stimulation, 
Including Hydraulic Fracturing, on Federal and Indian Lands'' (77 FR 
27691). The comment period on the initial proposed rule closed on July 
10, 2012. At the request of public commenters, on June 26, 2012, the 
BLM published in the Federal Register a notice extending the comment 
period for 60 days (77 FR 38024). The extended comment period closed on 
September 10, 2012. The BLM received over 177,000 comments on the 
initial proposed rule from individuals, Federal and state governments 
and agencies, interest groups, and industry representatives. After 
reviewing the comments on the proposed rule, the BLM now proposes to 
revise the initial proposed rule. As did the initial proposed rule, 
this revised proposed rule would apply to all wells administered by the 
BLM, including those of Federal, tribal, and individual Indian trust 
lands. Substantive comments on the initial proposed rule that informed 
the BLM's decisions on the revised proposed rule are discussed in the 
section-by-section discussion of this preamble. In the final rule, the 
BLM will provide a complete discussion of the comments submitted on the 
initial proposed rule (although some are discussed in this preamble) 
and those received as a result of this revised proposed rule.
    The BLM's revised proposed rule is generally consistent with the 
American Petroleum Institute's (API) guidelines for well construction 
and well integrity. See API Guidance Document HF 1, Hydraulic 
Fracturing Operations--Well Construction and Integrity Guidelines, 
First Edition, October 2009. HF1 discusses the importance of 
maintaining wellbore integrity with casing and a cementing program. It 
recommends pressure tests after cementing casing strings, and describes 
some circumstances where CBLs are used to verify adequate cementing. 
The API also has published guidelines for water management that support 
the use of lined pits for water management. See API Guidance Document 
HF 2--Water Management Associated with Hydraulic Fracturing, First 
Edition, 2010.
    Based on the input provided from a broad array of sources, 
including the individuals who spoke at the BLM's public forums and the 
recommendations of the Subcommittee, BLM proposed critical improvements 
to its regulations for hydraulic fracturing on May 11, 2012. Careful 
consideration of the comments received on the proposed rule, however, 
showed that further improvements and clarifications were appropriate. 
As did the initial proposed rule, this revised proposed rule would 
apply to all wells administered by the BLM, including those on Federal, 
tribal, and individual Indian trust lands.
    Tribal consultation is a critical part of this rulemaking effort, 
and the Department is committed to making sure tribal leaders play a 
significant role as BLM and the tribes work together to develop 
resources on public and Indian lands in a safe and responsible way. 
During the proposed rule stage, the BLM initiated government-to-
government consultation with tribes on the proposed rule and offered to 
hold follow-up consultation meetings with any tribe that desires to 
have an individual meeting. In January 2012, the BLM held four regional 
tribal consultation meetings, to which over 175 tribal entities were 
invited. To build upon established local relationships, the individual 
follow-up consultation meetings involved the local BLM authorized 
officers and management, including State Directors. After the issuance 
of the proposed rule, tribal governments, tribal members, and 
individual Native Americans were also invited to comment directly on 
the proposed rule.
    In June 2012, the BLM held additional regional consultation 
meetings in Salt Lake City, Utah; Farmington, New Mexico; Tulsa, 
Oklahoma; and Billings, Montana. Eighty-one tribal members representing 
27 tribes attended the meetings. In these sessions, the BLM and tribal 
representatives engaged in substantive discussions of the proposed 
hydraulic fracturing rule. A variety of issues were discussed, 
including but not limited to the applicability of tribal laws, 
validating water sources, inspection and enforcement, wellbore 
integrity, and water management, among others. Additional individual 
consultations with tribal representatives have taken place since that 
time. Also consultation meetings were held at the National Congress of 
American Indian Conference in Lincoln, Nebraska, on June 18, 2012, and 
at New Town, North Dakota on July 13, 2012.
    Responses from tribal representatives informed the agency's actions 
in defining the scope of acceptable hydraulic fracturing operations. 
One of the outcomes of these meetings is the requirement in this rule 
that operators certify that operations on Indian lands comply with 
tribal laws.
    The revised proposed rule also seeks to create less of an 
administrative burden than the initial proposed rule while providing 
the same benefits. This change was made in response to both tribal and 
industry comments.
    The BLM has been and will continue to be proactive about tribal 
consultation under the Department's newly formalized Tribal 
Consultation Policy, which emphasizes trust, respect and shared 
responsibility in providing tribal governments an expanded role in 
informing Federal policy that impacts Indian lands. Consultation will 
continue during the comment period of this revised proposed rule. 
Tribal governments, tribal members, and individual Native Americans 
were also invited to comment directly on the proposed rule, as they are 
invited to comment on the revised proposed rule.
    Several tribal representatives and tribal organizations have 
commented that the hydraulic fracturing rule should not apply on Indian 
land, or that tribes should be allowed to decide not to have the rule 
apply on their land (that is, ``opt out'' of the rule). The BLM fully

[[Page 31640]]

embraces the statutes, Executive Orders, and other statements of 
governmental or departmental policy in favor of promoting tribal self-
determination and control of resources. In addition, the Department 
remains bound by specific statutes in which Congress has delegated 
specific authority and duties to the Department regarding the 
management and regulation of resources. The IMLA provides in pertinent 
part as follows: ``All operations under any oil, gas, or other mineral 
lease issued pursuant to the terms [hellip] of this title or any other 
Act affecting restricted Indian lands shall be subject to the rules and 
regulations promulgated by the Secretary of the Interior.'' 25 U.S.C. 
396d. The Department has consistently interpreted this statutory 
directive as allowing uniform regulations governing mineral resource 
development on Indian and Federal lands. Thus, an opt-out provision 
would not be consistent with the Department's procedures under IMLA, 
and the revised proposed rule does not provide such an option.
    There has also been a suggestion that the Secretary should delegate 
her regulatory authority to the tribes if the tribe has regulations 
that meet or exceed the standards in the BLM regulation. The IMLA does 
not authorize the Secretary to delegate her regulatory responsibilities 
to the tribes, and therefore the revised proposed rule does not include 
a delegation provision. Nonetheless, there are opportunities for tribes 
to assert more control over oil and gas operations on tribal land by 
entering into Tribal Energy Resource Agreements under the Indian Energy 
Development and Self-Determination Act (part of the Energy Policy Act 
of 2005), and to pursue contracts under the Indian Self-Determination 
and Education Assistance Act of 1975.
    Also, the proposed rule has been revised to defer to State (on 
Federal land) or tribal (on Indian land) designations of aquifers as 
either requiring protection from oil and gas operations, or as exempt 
from the requirement to isolate water-bearing zones in section 3162.3-
3(b). Revised section 3162.3(k) provides that for lands within the 
jurisdiction of a State or a tribe that State or tribe could work with 
the BLM to craft a variance that would allow compliance with State or 
tribal requirements to be accepted as compliance with the rule, if the 
variance meets or exceeds this rule's standards. The BLM is also 
seeking comments on whether compliance with State or tribal 
requirements to disclose chemical constituents of hydraulic fracturing 
fluids should be deemed as compliance with the proposed rule if the 
State or tribal requirements meet or exceed the standard in the rule at 
section 3162.3-3(i).
    As explained elsewhere in this preamble, the BLM intends to reach 
out to States and to tribes to review existing agreements, to 
strengthen those that could provide a greater role for States and 
tribes, and to reach new agreements where there have been none. The BLM 
will seek new and improved agreements to reduce regulatory burdens and 
to increase efficiency, while fulfilling the Secretary's 
responsibilities mandated by statutes as steward for the public lands 
and trustee for Indian lands.
    The BLM invites the public's comments on whether there are other 
opportunities in the revised proposed rule to incorporate or to defer 
to State or tribal standards or requirements.
    Although greater use of State or tribal standards or procedures 
could reduce compliance costs for operators and increase consistency, 
enforcement issues could arise. On Federal lands, the BLM enforces the 
Federal regulations and lease conditions, and the States enforce their 
regulations. On Indian lands, the BLM enforces the Federal regulations 
and the terms of the leases, and the tribes have the power to enforce 
their own law. Comments are requested on practical enforcement 
challenges that might arise if the BLM incorporates or defers to State 
or tribal laws or procedures, and on any proposed solutions.
    Over the past few years, in response to strong public interest, 
several States--including Colorado, Wyoming, Arkansas, and Texas--have 
substantially revised their State regulations related to hydraulic 
fracturing. One of the BLM's key goals in updating its regulations on 
hydraulic fracturing is to complement State efforts by providing a 
consistent standard across all public and Indian lands nationwide. The 
BLM has revised the initial proposed rule to make reported information 
consistent and easily accessible to the public. For instance, the BLM 
is working closely with the Groundwater Protection Council and the 
Interstate Oil and Gas Compact Commission so that operators may report 
chemicals used in hydraulic fracturing operations to BLM through the 
existing FracFocus.org Web site, which is already well established and 
used by many States. This online database includes information from oil 
and gas wells in approximately 12 States and includes information from 
over 500 companies. The BLM understands that the database is in the 
process of being improved and will in the near future have enhanced 
search capabilities and allow for easier reporting of information. If 
operators are unable to use FracFocus or elect not to, they may elect 
to report chemicals used on Federal or Indian lands directly to the 
BLM. The BLM intends to report that information to the public through 
FracFocus.
    The BLM recognizes the efforts of some States to regulate hydraulic 
fracturing and seeks to avoid duplicative regulatory requirements. 
However, it is important to recognize that a major impetus for a 
separate BLM rule is that States are not legally required to meet the 
stewardship standards applying to public lands and do not have trust 
responsibilities for Indian lands under Federal laws. Thus, the rule 
may expand on or set different standards from those of States that 
regulate hydraulic fracturing operations, but do not need to adhere to 
the same resource management and public involvement standards 
appropriate on Federal lands under Federal law. This revised proposed 
rule encourages efficiency in the collection of data and the reporting 
of information by proposing to allow operators in States that require 
disclosure on FracFocus to meet both the State and the BLM requirements 
through a single submission to FracFocus.

III. Discussion of the Revised Proposed Rule and Comments on the 
Proposed Rule

    As was discussed in the proposed rule, the BLM is revising its 
hydraulic fracturing regulations, found at 43 CFR 3162.3-2, and adding 
a new section 3162.3-3. Existing section 3162.3-3 would be retained and 
renumbered.
    The Federal Land Policy and Management Act (FLPMA) directs the BLM 
to manage the public lands so as to prevent unnecessary or undue 
degradation, and to manage those lands using the principles of multiple 
use and sustained yield. FLPMA defines multiple use to mean, among 
other things, a combination of balanced and diverse resource uses that 
takes into account long-term needs of future generations for renewable 
and non-renewable resources. FLPMA also requires that the public lands 
be managed in a manner that will protect the quality of their 
resources, including ecological, environmental, and water resources. 
The Mineral Leasing Act and the Mineral Leasing Act for Acquired Lands 
authorize the Secretary to lease Federal oil and gas resources, and to 
regulate oil and gas operations on those leases, including surface-
disturbing activities. The Act of March 3, 1909, the

[[Page 31641]]

Indian Mineral Leasing Act and the Indian Mineral Development Act 
assigns regulatory authority to the Secretary over Indian oil and gas 
leases on trust lands (except those excluded by statute, i.e., the Crow 
Reservation in Montana, the ceded lands of the Shoshone Reservation in 
Wyoming, the Osage Reservation in Oklahoma, and the coal and asphalt 
lands of the Choctaw and Chickasaw Tribes in Oklahoma). As stewards of 
the public lands and minerals and as the Secretary's regulator for 
operations on oil and gas leases on Indian lands, the BLM has evaluated 
the increased use of hydraulic fracturing practices over the last 
decade and determined that the existing rules for hydraulic fracturing 
require updating. The Secretary delegated to the BLM his authority to 
oversee operations on Indian mineral leases through the Departmental 
Manual (235 DM 1.K) under the Indian Allotted Lands Leasing Act and the 
Tribal Lands Leasing Act. The Secretary also approved the authorities 
section of the regulations which give the BLM authority under 
additional Indian related statutes.
    As discussed in the background section of this preamble, the 
increased use of well stimulation activities over the last decade has 
also generated concerns among the public about hydraulic fracturing and 
about the chemicals used in hydraulic fracturing. The proposed rule and 
this revised proposed rule are intended to increase transparency for 
the public regarding the fluids used in the hydraulic fracturing 
process, in addition to providing assurances that wellbore integrity is 
maintained throughout the fracturing process and that the fluids that 
flow back to the surface from hydraulic fracturing operations are 
properly stored, disposed of, or treated. The following chart explains 
the major changes between the proposed regulations and the regulations 
in this revised proposed rule.

----------------------------------------------------------------------------------------------------------------
      Initial proposed  regulation        Revised proposed pegulation             Substantive changes
----------------------------------------------------------------------------------------------------------------
43 CFR 3160.0-5 Definitions.............  43 CFR 3160.0-5 Definitions  This revised proposed rule would revise
                                                                        the proposed term ``stimulation fluid''
                                                                        to ``hydraulic fracturing fluid'' to be
                                                                        consistent with other changes to the
                                                                        rule. It also would delete the
                                                                        definition of ``well stimulation'' and
                                                                        add a definition of ``hydraulic
                                                                        fracturing,'' which excludes acidizing,
                                                                        enhanced secondary recovery and tertiary
                                                                        recovery. The terms used in other
                                                                        sections of this rule were also revised
                                                                        to make those sections consistent with
                                                                        the changes here. The rule would also
                                                                        include definitions of the terms
                                                                        ``refracturing'' and ``type well.''
                                                                        ``Refracturing'' is defined as a
                                                                        hydraulic fracturing operation
                                                                        subsequent to an initial completion of
                                                                        an oil and gas well which used hydraulic
                                                                        fracturing previously. ``Type well'' is
                                                                        defined in this section to mean an oil
                                                                        and gas well that can be used as a model
                                                                        for other wells drilled by the same
                                                                        operator across the field. The revised
                                                                        proposed rule also clarifies the
                                                                        definition of ``usable water'' by
                                                                        specifying types of geologic zones that
                                                                        would be deemed to contain usable water,
                                                                        and other types that would be deemed not
                                                                        to contain usable water.
43 CFR 3162.3-2(a) Subsequent Well        43 CFR 3162.3-2(a)           The revised proposed rule would replace
 Operations.                               Subsequent Well Operations.  the term ``commingling'' with the term
                                                                        ``combining'' to avoid confusion with
                                                                        the term ``commingling'' that is used in
                                                                        calculating royalties on production.
43 CFR 3162.3-3(a) Subsequent Well        43 CFR 3162.3-3(a)           The revised proposed rule would change
 Operations; Well Stimulation.             Subsequent Well              the scope of the regulation to apply
                                           Operations; Hydraulic        only to hydraulic fracturing operations,
                                           Fracturing.                  and not to other ``well stimulation''
                                                                        activities. It would clarify that the
                                                                        regulation also applies to refracturing
                                                                        operations.
(None)..................................  43 CFR 3162.3-3(b)           This new paragraph would require that all
                                           Isolation of Usable Water    fracturing and refracturing operations
                                           to Prevent Contamination.    meet the performance standard in section
                                                                        3162.5-2(d), which requires that
                                                                        operators must isolate all usable water
                                                                        and other mineral-bearing formations and
                                                                        protect them from contamination.
43 CFR 3162.3-3(c) What the Notice of     43 CFR 3162.3-3(d) What the  The revised proposed rule would add a new
 Intent Sundry Must Include.               Notice of Intent Sundry      provision that allows the Notice of
                                           Must Include.                Intent (NOI) Sundry to be submitted for
                                                                        a single well or a group of wells with
                                                                        the same geological characteristics. If
                                                                        it is for a group of wells, the
                                                                        information should be for a ``type
                                                                        well.''
43 CFR 3162.3-3(c)(2)...................  43 CFR 3162.3-3(d)(2)......  The revised proposed rule would delete
                                                                        the requirement to submit a CBL for
                                                                        approval prior to commencing fracturing
                                                                        operations. Section 3162.3-3(i)(8),
                                                                        would require that a CEL be submitted
                                                                        after fracturing operations, unless
                                                                        there are problems with the cement job.
                                                                        The revised proposed rule would also add
                                                                        a requirement that the depths of usable
                                                                        water aquifers be based on a drill log
                                                                        of the subject well or of another well
                                                                        in the field.
43 CFR 3162.3-3(c)(4)...................  Deleted....................  The revised proposed rule would delete
                                                                        the requirement that the operator submit
                                                                        a pre-hydraulic fracturing certification
                                                                        that it will comply with all applicable
                                                                        permitting and notice requirements.
43 CFR 3162.3-3(c)(3)...................  43 CFR 3162.3-3(d)(3)......  The revised proposed rule would add to
                                                                        the list of the source and location of
                                                                        water supply ``reused or recycled
                                                                        water.''
43 CFR 3162.3-3(c)(5)...................  43 CFR 3162.3-3(d)(4)......  The revised proposed rule would add to
                                                                        the requirements for a hydraulic
                                                                        fracturing design that the operator must
                                                                        include the estimated fracture direction
                                                                        and propagation plotted on the well
                                                                        schematics and on a topographical map of
                                                                        the same scale as the map used in the
                                                                        APD. It would also add a requirement to
                                                                        supply the estimated vertical distance
                                                                        to the nearest usable water aquifer
                                                                        above the fracture zone.

[[Page 31642]]

 
43 CFR 3162.3-3(c)(6)...................  43 CFR 3162.3-3(d)(5)......  The revised proposed rule would remove
                                                                        ``chemical composition'' from the
                                                                        information that is required to be
                                                                        submitted regarding the handling of
                                                                        recovered fluids.
43 CFR 3162.3(d) Mechanical Integrity     43 CFR 3162.3-3(f)           The revised proposed rule would add
 Testing Prior to Well Stimulation.        Mechanical Integrity         clarification that a mechanical
                                           Testing Prior to Hydraulic   integrity test (MIT) would be required
                                           Fracturing.                  for a re-fracturing operation.
(None)..................................  43 CFR 3162.3-3(e)(1)        The revised proposed rule would add a new
                                           Monitoring of Cementing      paragraph requiring that during
                                           Operations and Cement        cementing operations the operator must
                                           Evaluation Log Prior to      monitor and record the flow rate,
                                           Hydraulic Fracturing.        density, and treating pressure, and then
                                                                        submit the monitoring report to the BLM
                                                                        within 30 days of completion of the
                                                                        hydraulic fracturing.
43 CFR 3162.3-3(c)(2)...................  43 CFR 3162.3-3(e)(2)......  The revised proposed rule would add a new
                                                                        paragraph stating a general rule that an
                                                                        operator must run a CEL on each casing
                                                                        that protects usable water. A CEL may be
                                                                        ultrasonic logs, variable density logs,
                                                                        micro-seismograms, standard CBLs, CBLs
                                                                        with directional receiver array,
                                                                        ultrasonic pulse echo technique, an
                                                                        isolation scanner or other tool of equal
                                                                        effectiveness.
(None)..................................  43 CFR 3162.3-3(e)(3)......  The revised proposed rule would add a new
                                                                        paragraph that provides an exception to
                                                                        the CEL requirement where an operator's
                                                                        ``type well'' has been shown to have
                                                                        successful cement bonding and subsequent
                                                                        wells have the same specifications and
                                                                        geologic parameters as the ``type
                                                                        well,'' and the cementing operations
                                                                        monitoring data parallels those of the
                                                                        type well.
(None)..................................  43 CFR 3162.3-3(e)(4)......  The revised proposed rule would add a new
                                                                        paragraph that if there is any
                                                                        indication of inadequate cementing, the
                                                                        operator must report it to the BLM
                                                                        within 24 hours, with written
                                                                        confirmation within 48 hours. The
                                                                        operator would be required to run a CEL
                                                                        showing that it has corrected the
                                                                        cementing job, and that usable water has
                                                                        been isolated to protect it from
                                                                        contamination. At least 72 hours prior
                                                                        to starting fracturing operations, the
                                                                        operator must submit to the BLM a
                                                                        certification indicating that it
                                                                        corrected the inadequate cement job and
                                                                        documentation showing that there is
                                                                        adequate cement bonding.
(None)..................................  43 CFR 3162.3-3(e)(5)......  The revised proposed rule would add a new
                                                                        provision stating that the operator must
                                                                        submit the information required by
                                                                        (e)(1) and (2) to the BLM in a
                                                                        Subsequent Report Sundry Notice.
43 CFR 3162.3-3(e)(1)...................  43 CFR 3162.3-3(g)(1)......  This paragraph would be revised to apply
                                                                        to refracturing operations as well as
                                                                        fracturing operations. It also would be
                                                                        revised to make it clear that that the
                                                                        pressure in the annulus between any
                                                                        intermediate casings and the production
                                                                        casing must be continuously monitored
                                                                        and recorded.
43 CFR 3162.3-3(e)(2) Monitoring and      43 CFR 3162.3-3(g)(2)        This paragraph would be revised to apply
 Recording During Well Stimulation.        Monitoring and Recording     to refracturing operations as well as
                                           During Hydraulic             fracturing operations. For any incident
                                           Fracturing.                  of the annulus pressure increasing by
                                                                        more than 500 psi, the revised proposed
                                                                        rule would change the due date for a
                                                                        Subsequent Report Sundry Notice from 15
                                                                        days after the occurrence to 30 days
                                                                        after completion of fracturing
                                                                        operations.
43 CFR 3162.3-3(g) Information that Must  43 CFR 3162.3-3(i)           Changes to this section would add a
 be Provided to the Authorized Officer     Information that Must be     clarification that the information is
 After Completed Operations.               Provided to the Authorized   required for each well fractured or
                                           Officer After Completed      refractured, even if the BLM approved a
                                           Operations.                  Notice of Intent Sundry for a group of
                                                                        wells. The new provision would allow
                                                                        reporting of chemical information to the
                                                                        BLM either directly or through FracFocus
                                                                        or other database that the BLM
                                                                        specifies. The revised proposed rule
                                                                        would add a new provision that the
                                                                        operator submitting chemical information
                                                                        through FracFocus must specify that the
                                                                        information is for a Federal or Indian
                                                                        well, certify that the information is
                                                                        correct, and certify that the operator
                                                                        complied with applicable laws governing
                                                                        notice and permits. The revised proposed
                                                                        rule would also add a new provision
                                                                        clarifying that the operator is
                                                                        responsible for information submitted by
                                                                        its hydraulic fracturing contractor.
43 CFR 3162.3-3(g)(1)...................  43 CFR 3162.3-3(i)(2)......  This revised section would delete the
                                                                        requirement that the operator report the
                                                                        actual access route and transportation
                                                                        method for all water used in stimulating
                                                                        the well, since this information is
                                                                        provided before the operation is
                                                                        approved.

[[Page 31643]]

 
43 CFR 3162.3-3(g)(2), (4) and (5)......  43 CFR 3162.3-3(i)(1)......  The proposed regulation required two
                                                                        separate reports or tables (one for all
                                                                        additives of the actual stimulation
                                                                        fluid by trade name and purpose, and
                                                                        another for the complete chemical makeup
                                                                        (including the Chemical Abstracts
                                                                        Service Registry Number [CAS number]) of
                                                                        all materials used in the actual
                                                                        stimulation fluid). The revised proposed
                                                                        rule would require the information
                                                                        required in the FracFocus form: True
                                                                        vertical depth of the well, total water
                                                                        volume used, and for each chemical used
                                                                        (including the base fluid) the trade
                                                                        name, supplier, purpose, ingredients,
                                                                        CAS number, maximum ingredient
                                                                        concentration in the additive, and
                                                                        maximum ingredient concentration in the
                                                                        fracturing fluid.
43 CFR 3162.3-3(g)(6)...................  43 CFR 3162.3-3(i)(4)......  A new requirement would be added by this
                                                                        rule to report the actual, estimated, or
                                                                        calculated direction of the fractures.
43 CFR 3162.3-3(g)(7)...................  Deleted....................  This revised proposed rule would delete
                                                                        the provision that would have expressly
                                                                        allowed the Subsequent Report Sundry
                                                                        Notice to be completed in part by
                                                                        attaching the hydraulic fracturing
                                                                        contractor's job log so long as the
                                                                        required information was included and
                                                                        readily apparent.
43 CFR 3162.3-3(g)(8) and (9)...........  43 CFR 3162.3-3(i)(7)......  The revised proposed rule would revise
                                                                        the requirement for certification of
                                                                        wellbore integrity to include the
                                                                        monitoring of cementing operations and
                                                                        the CEL. It would also clarify that the
                                                                        certification of compliance with
                                                                        applicable law is different for Indian
                                                                        lands than for Federal lands.
(None)..................................  43 CFR 3162.3-3(i)(8)......  This rule would add a new paragraph
                                                                        requiring operators to submit the actual
                                                                        cement operations monitoring report, any
                                                                        CEL, and the MIT results.
(None)..................................  43 CFR 3162.3-3(i)(9)......  This rule would add a new paragraph
                                                                        allowing the BLM to require the operator
                                                                        to provide further information about any
                                                                        representation submitted under paragraph
                                                                        (i).
43 CFR 3162.3-3(h) and (i)..............  43 CFR 3162.3-3(j)(1)        In this revised proposed rule these
                                           through (4).                 sections have been significantly
                                                                        revised. The regulations would no longer
                                                                        require operators to submit all
                                                                        information about chemicals to the BLM,
                                                                        to segregate trade secrets, and to
                                                                        justify the assertion of trade secret
                                                                        protection. Instead, the regulations
                                                                        would instruct operators not to disclose
                                                                        trade secret information to the BLM or
                                                                        on FracFocus. Operators would submit an
                                                                        affidavit stating that the withheld
                                                                        information is entitled to withholding
                                                                        from the public under Federal statute or
                                                                        regulation. The BLM would retain
                                                                        authority to require operators to submit
                                                                        the claimed trade secret information.
(None)..................................  43 CFR 3162.3-3(j)(4)......  This rule would add a new paragraph
                                                                        requiring operators to keep the
                                                                        information claimed to be trade secrets
                                                                        for 6 years, by reference to existing 43
                                                                        CFR 3162.4-1, which applies to all lease
                                                                        operations.
* * *...................................  43 CFR 3162.3-3(k).........  This rule would add a new provision
                                                                        allowing States and tribes to work with
                                                                        the BLM to create variances applicable
                                                                        to all lands within a field, a basin, a
                                                                        State, or Indian lands. Such a variance
                                                                        would have to meet or exceed the
                                                                        effectiveness of the rule provision it
                                                                        replaces.
----------------------------------------------------------------------------------------------------------------

Section-by-Section Discussion of the Revised Proposed Rule and 
Discussion of Comments

Comments Addressed in This Revised Proposed Rule
    In this revised proposed rule, the BLM discusses many of the 
comments received on the proposed rule. The BLM will fully discuss 
comments on the initial proposed and revised proposed rules in the 
eventual announcement of the final rule. Commenters provided detailed 
and helpful information. The BLM desires to demonstrate how public 
comment assisted in framing the issues and to ultimately produce this 
revised proposed rule. The Department does not address every comment in 
this revised rule, because the changes in this revised proposed rule 
have mooted some comments on the initial proposed rule. Other comments 
were not central to the re-evaluation the BLM has undertaken, and thus 
discussion of those few comments would not contribute to the public's 
understanding of the reasons the BLM is publishing the revised proposed 
rule.
    Additionally, not every change in the revised proposed rule 
responds to a specific comment. Some revisions clarify the proposed 
rule, and still other revisions allow this revised rule to be more 
effective with reduced costs and delays to operators and to the BLM.
    This revised proposed rule identifies some issues on which the BLM 
specifically seeks comments. The public, however, may submit comments 
on any provision of the revised proposed rule. All comments received in 
response to the initial proposed rule will be in the record of any 
final rule; accordingly, the public does not need to resubmit comments 
to the initial proposed rule in response to this revised proposed rule.
General Comments on the Initial Proposed Rule
    The BLM received comments both supporting and questioning the need 
for a rule regulating hydraulic fracturing. Supporters stated, among 
other things, that the rule protects groundwater and ensures that 
operators properly handle flowback water. In general, the opposition 
stated that BLM regulation of hydraulic fracturing is unnecessary and

[[Page 31644]]

argued that no scientific basis exists that hydraulic fracturing causes 
groundwater contamination and that it is a low-risk operation. The 
opposition further argued that States should regulate hydraulic 
fracturing and that many States already have current rules. The BLM 
acknowledges that many States do have regulations in place; however, 
not all of the States that contain Federal lands under the BLM's 
jurisdiction have hydraulic fracturing regulations. Further, FLPMA and 
other Federal law provide for public involvement that is not always 
required in State law. In addition, the BLM has responsibilities for 
Indian resources and State regulations do not apply to Indian lands. 
Furthermore, States do not uniformly require measures that would uphold 
the BLM's responsibilities for federally managed public resources, to 
protect the environment and human health and safety on Federal and 
Indian lands, and to prevent unnecessary or undue degradation of the 
public lands. By taking additional steps to ensure wellbore integrity 
and to control the handling of flowback water, potential impacts of 
hydraulic fracturing can be mitigated.
    Some commenters questioned whether the BLM's proposed regulations 
are premature, because the Environmental Protection Agency (EPA) is 
currently conducting a multi-year study on the potential impact of 
hydraulic fracturing on drinking water resources, with a final report 
due in 2014. The BLM is aware of the ongoing EPA study relating to the 
impacts of hydraulic fracturing. While the EPA study may offer 
additional information regarding the potential impacts of hydraulic 
fracturing, nothing in the revised proposed regulations would 
contradict or conflict with the EPA study, which does not focus on the 
management of public lands and resources subject to Federal public 
lands law. Notwithstanding the findings that will be included in the 
EPA's anticipated study, this revised regulation prevents undue or 
unnecessary degradation of public lands and furthers the Secretary's 
trust responsibilities on Indian lands.
    Some commenters disputed the authority of the BLM to regulate well 
construction and regulate water supplies used for, or potentially 
impacted by, hydraulic fracturing. Other commenters asserted that the 
proposed rule infringes upon State and tribal water rights authority. 
FLPMA directs the BLM to manage the public lands so as to prevent 
unnecessary or undue degradation. FLPMA also requires that the public 
lands be managed in a manner that will protect the quality of 
resources, i.e. ecological, environmental, and water resources. 
Regulating wellbore construction meets these mandates. The Indian lands 
leasing statutes direct the Secretary to regulate oil and gas 
operations on Indian lands. The Secretary has delegated his authority 
for regulating downhole activities on Indian mineral leases to the BLM. 
The BLM has historically regulated the construction of wellbores 
through approvals of APDs (applying the Onshore Oil and Gas Order 
Numbers 1 and 2). This rule would supplement existing regulations 
regarding wellbore construction (Onshore Oil and Gas Order Number 2, 
Drilling (53 FR 46790)).
    The revised proposed regulations at sections 3162.3-3(d)(3) and 
3162.3-3(i)(2) would require submission of information on water sources 
to assist the BLM in assessing the environmental effects of individual 
drilling operations. The National Environmental Policy Act and the 
implementing regulations by the Council on Environmental Quality 
require that Federal agencies assess the environmental impacts of their 
proposed actions and inform their decision-making. The information on 
water sources will be part of an environmental assessment regarding how 
water is being supplied for the hydraulic fracturing operation. The BLM 
does not intend to regulate water use, but instead to acquire 
information on the water used incidental to oil and gas operations on 
Federal and Indian lands. Acquisition of this information is similar to 
requirements in Onshore Oil and Gas Order No. 1, Approval of Operations 
(72 FR 10308) for drilling a well. Onshore Order No. 1 requires the 
operator to identify the source, access route, and transportation 
method for all water anticipated for use in drilling the proposed well. 
Based on information received at this time, the requirement in Onshore 
Order No. 1 has not caused conflicts with State or tribal water rights 
authorities. Likewise, based on BLM's previous experience with the 
information requirements of its existing onshore orders, BLM does not 
anticipate that the requirements proposed here will cause any 
conflicts. The revised proposed regulation does not regulate Indian, 
State, and private water rights. Accordingly, the Department made no 
revisions to the initial proposed rule as a result of these comments.
    The BLM received some comments stating that the rule should clarify 
the jurisdiction or scope of this rule. The revised proposed rule falls 
under 43 CFR part 3160. The jurisdiction (scope) of all sections under 
part 3160, which would include this revised proposed rule, is defined 
in existing regulations at 43 CFR 3161(a), which states: ``[a]ll 
operations conducted on a Federal or Indian oil and gas lease by the 
operator are subject to the regulations in this part.'' Therefore, this 
revised proposed rule would not apply to hydraulic fracturing 
operations on private or State leases, even leases included in a 
Federal or Indian agreement. The BLM's only jurisdiction on private and 
State leases is for site security, measurement, and reporting of 
production when the private or State lease is committed to a Federal or 
Indian agreement. Existing regulations already define the jurisdiction 
or scope of the revised proposed rule, so the Department made no 
revisions to the initial proposed rule as a result of these comments.
    Some commenters requested that the BLM coordinate permitting and 
reporting with States to avoid duplication. Some commenters faulted the 
BLM for undermining the efforts of State oil and gas commissions to 
regulate hydraulic fracturing. The BLM has revised the initial proposed 
rule to avoid duplication with State requirements. Nonetheless, the BLM 
needs to have accurate information about the construction and 
completion of oil and gas wells on Federal and Indian land. The BLM 
acknowledges the efforts necessary to comply with State or tribal and 
BLM regulations, but modern information technology significantly 
reduces the time and expense of reporting the same information to both 
a State or tribal agency and to the BLM. Federal law is clear that the 
Federal Government has extensive authority over Federal lands and 
Indian lands, and that State governments may exercise certain powers on 
non-Indian lands, except in instances where Federal law preempts State 
law. The notice, approval, testing, operational, and reporting 
requirements of the revised proposed regulation would in no way 
undermine the efforts of State agencies to regulate hydraulic 
fracturing. The BLM recognizes the advantages to building upon existing 
relationships established with the different States and tribes as a 
prudent approach to maintaining efficiency and flexibility while 
reducing duplication. It makes sense for both the BLM and the States or 
tribes with oil and gas activity to explore ways to coordinate 
implementation of this revised proposed rule. For States or tribes that 
maintain hydraulic fracturing rules that meet or exceed the standards 
that would be imposed by this revised proposed rule, the BLM will 
pursue amending or

[[Page 31645]]

updating the existing agreement with each State or tribe to reflect the 
expectation and responsibilities for each agency. An example of an 
existing agreement is the State of Colorado which has a Memorandum of 
Agreement with the BLM (and the United States Forest Service) for 
Permitting and Oil and Gas Operations on BLM and National Forest 
Service Lands in Colorado.
    The BLM is committed to working with tribes to coordinate 
implementation of this revised proposed rule with the tribes' laws, 
rules, and permitting and inspection programs. The contents of such 
agreements or understandings might be different for each tribe, but 
such agreements actively seeking opportunities to share standards, 
information, and processes should yield more consistency for operators 
and better efficiency for the BLM and tribal agencies.
    Some commenters said that the proposed rule is inconsistent with 
existing laws or regulations such as the Energy Policy Act of 2005 and 
EPA's New Source Performance Standards. For instance, some commenters 
believed that the proposed permitting requirements would cause delays 
in permitting that would violate the timeframes mandated by the Energy 
Policy Act. The BLM disagrees with these comments. Changes from the 
initial proposal in this revised proposed rule would reduce possible 
permitting delays and BLM projected workload. The BLM would meet the 
requirements of the Energy Policy Act by informing the operator what 
steps remain to be completed and the schedule for completion of these 
requirements for processing of their drilling permits. Often delays 
occur from submittal of incomplete information or surveys as part of 
the drilling permit proposal, or due to turnover in industry permitting 
specialists. The BLM has increased the number of drilling permits 
approved over the past 3 years, and does not believe such productivity 
gains will be negatively impacted by this revised proposed rule. The 
BLM received some comments that certain definitions and requirements in 
the proposed rule were vague. The commenters stated that without 
clarification, this purported vagueness could lead to misinterpretation 
by operators and inconsistent application by BLM engineers and 
inspectors. Because the revised proposed rule uses different approaches 
to regulation than the initial proposed rule, some definitions have 
been revised. The BLM worked to ensure the revisions also increased 
clarity. The BLM believes that the definitions are sufficiently clear 
to the industry, the BLM, and the public. To the extent that some 
definitions might be construed as open-ended, it is because the rule 
must allow for some degree of flexibility to accommodate the wide range 
of geologic and environmental conditions encountered on Federal and 
Indian leases.
    Some commenters stated that the BLM does not have the staffing, 
budget, or the number of experts needed to implement the rule, which 
will cause delays in approvals. The BLM does not agree with the 
assertion regarding the lack of BLM staff expertise. Also the revisions 
proposed in this revised proposed rule would reduce the amount of staff 
time required to implement the rule and limit any permitting delays. 
The changes include the option of including multiple wells with 
substantially similar geology in the permit application (type wells), 
narrowing the scope of the rule to include only hydraulic fracturing, 
and the elimination of the proposed requirement for the BLM to review 
and approve CBLs prior to hydraulic fracturing. These changes are 
discussed further in other sections of this rule.
    Some BLM offices, especially those that process a large volume of 
drilling applications, may experience delays in implementing the 
revised proposed rule. The BLM is mindful of this issue and already 
provides remote assistance from other offices. As with the 
implementation of any new rule, some delays may be inevitable. This 
rule, however, will help prevent unnecessary or undue degradation of 
public lands and to provide protection to Indian trust resources.
    Some commenters recommended that the BLM, State, or tribes should 
inspect all hydraulic fracturing operations on Federal and Indian land. 
The BLM did not revise the rule as a result of these comments. As part 
of the BLM's annual inspection strategy, the BLM inspects all workover 
operations, including hydraulic fracturing, on Federal and Indian lands 
that are rated as a high priority. This rating depends on measuring 
many factors, including the type of operation, the location, and the 
potential impacts of the operation.
    The BLM received some comments objecting to the application of the 
rule to ``well stimulation'' operations which, as defined in the May 
2012, proposed rule, includes any operation designed to increase the 
permeability of the reservoir rock. The definition specifically 
included acidization, but could also be interpreted to mean other 
operations such as thermal stimulation and maintenance fracturing, 
designed to open up fractures near the wellbore. Some of the commenters 
stated that the requirements in the proposed rule were too onerous for 
what they considered to be routine maintenance operations. The 
commenters requested that the rule apply only to hydraulic fracturing 
operations.
    The BLM agrees with these comments and made several revisions to 
the revised proposed rule as a result. Section 3162.3-3(a) has been 
revised to apply only to hydraulic fracturing and refracturing, rather 
than to well stimulation as stated in the proposed rule.
    In addition, definitions of ``hydraulic fracturing'' and 
``refracturing'' have been added to the revised proposed rule (section 
3160.0-5) instead of the previous definition of well stimulation. In 
this revised proposed rule, the term ``hydraulic fracturing'' 
specifically excludes enhanced secondary recovery, such as water 
flooding, tertiary recovery, recovery through steam injection, and 
other types of well stimulation such as acidizing.
    Some commenters requested clarification of the requirements for 
operators who conduct hydraulic fracturing operations on or near land 
managed by other Federal agencies such as the National Park Service 
(NPS) and the United States Forest Service (USFS). One commenter wanted 
to ensure that a comprehensive NEPA document was prepared and that the 
BLM include the NPS as a cooperating agency when hydraulic fracturing 
operations are near National Parks. Another commenter wanted the rule 
to specify that it applied to USFS managed land. When warranted, the 
BLM invites other agencies, including the USFS and the NPS, to 
participate in the preparation of the NEPA analysis.
    The involvement of other agencies reflects the site-specific issues 
and potential impacts to resources. On USFS lands, the USFS typically 
has the lead responsibility for compliance with NEPA as part of its 
review of the surface use plan of operation, and the BLM serves as a 
cooperating or joint lead agency. The revised proposed rule, as with 
all of the other regulations in 43 CFR part 3160 (see 43 CFR 3161.1--
Jurisdiction), would apply to USFS lands. No revisions were made to the 
rule as a result of these comments.
    The BLM received some comments requesting that the rule include a 
ban on the use of diesel fuel in hydraulic fracturing operations. 
Jurisdiction over the use of diesel fuel in hydraulic fracturing 
operations lies with the EPA through its administration of the 
Underground Injection Control (UIC)

[[Page 31646]]

program. (SDWA, Section 1421(d)(1)(B), 42 U.S.C. 300h(d)(1)(B)(ii,40 
CFR 144.11). Owners or operators who inject diesel fuels during 
hydraulic fracturing related to oil and gas operations must obtain a 
UIC permit before injection begins. The EPA published draft permitting 
guidance for oil and gas hydraulic fracturing operations using diesel 
fuels in May 2012. Thus the BLM did not revise the rule as a result of 
these comments.
    The BLM received some comments that certain provisions of the 
proposed rule were open ended, which would give BLM too much discretion 
and would result in uncertainty, delays, and increased costs for 
operators. For example, some comments suggested that the ability of the 
BLM to request additional information in the Sundry Notice requesting 
approval for hydraulic fracturing (section 3162.3-3(d)(7)) was open 
ended. The BLM believes that the provisions in the revised proposed 
rule are necessary to provide the flexibility essential to regulating 
operations over a broad range of geologic and environmental conditions. 
Requests for information from the Authorized Officer are 
administratively appealable if an operator believes the directive lacks 
a proper basis. The BLM did not revise the rule as a result of these 
comments.
    The BLM received some comments suggesting that all wells permitted 
prior to the effective date of the rule should be exempt from the 
provisions of the rule, that the rule be phased in over a period of 180 
days, and that older wells should be reviewed for information only. The 
BLM understands the commenters' concerns. Nonetheless, the primary goal 
of this rule is to ensure that hydraulic fracturing does not cause 
negative impacts to Federal or Indian resources, including groundwater 
and surface water. This is achieved by ensuring wellbore integrity is 
maintained throughout the hydraulic fracturing process and placing 
restrictions on the handling of flowback water. Achieving these goals 
is critical regardless of when the BLM approved the APD or if the 
proposed operation will take place immediately after the effective date 
of the rule or 180 days after the effective date of this rule. The BLM 
did not revise the rule as a result of these comments.
Section Discussion
    As an administrative matter, this rule would amend the authorities 
section for the BLM's oil and gas operations regulations at 43 CFR 
3160.0-3 to include FLPMA. Section 310 of FLPMA authorizes the 
Secretary of the Interior to promulgate regulations to carry out the 
purposes of FLPMA and other laws applicable to the public lands. See 43 
U.S.C. 1740. This amendment would not be a major change and would have 
no effect on lessees, operators, or the public.
    This rule would remove the terms ``nonroutine fracturing jobs,'' 
and ``routine fracturing jobs,'' from 43 CFR 3162.3-2(a) and 43 CFR 
3162.3-2(b). It would add a new section, 43 CFR 3162.3-3, for hydraulic 
fracturing operations. In this rule, there would be no distinction 
drawn between ``nonroutine'' or ``routine'' hydraulic fracturing 
operations. Prior approval would be required for hydraulic fracturing 
operations, but would be available concurrently with the prior approval 
process that is already in place for general well drilling activities 
through the APD process. The running of CELs on surface or intermediate 
casing strings, which is currently an optional practice, would be 
required for new wells where the casing protects usable water, except 
for wells substantially similar to an operator's ``type well'' for 
which the operator has demonstrated the efficacy of the cement bonding 
of casing under similar geological conditions within the same field. 
All wells would require mechanical integrity testing prior to hydraulic 
fracturing.
    The revised proposed rule includes eight new definitions for 
technical terms used in the rule. These definitions will improve 
readability and clarity of the regulations.
    Published in this rule are the following definitions:
     Annulus means the space around a pipe in a wellbore, the 
outer wall of which may be the wall of either the borehole or the 
casing; sometimes also called the annular space.
     Bradenhead means a heavy, flanged steel fitting connected 
to the first string of casing that allows suspension of intermediate 
and production strings of casing, and supplies the means for the 
annulus to be sealed off.
     Hydraulic fracturing means those operations conducted in 
an individual wellbore designed to increase the flow of hydrocarbons 
from the rock formation to the wellbore through modifying the 
permeability of reservoir rock by breaking it. Hydraulic fracturing 
does not include enhanced secondary recovery such as water flooding, 
tertiary recovery, recovery through steam injection, or other types of 
well stimulation operations such as acidizing. The BLM changed the 
proposed rule's term ``stimulation fluid'' to ``hydraulic fracturing 
fluid'' throughout these regulations.
     Hydraulic fracturing fluid means the liquid or gas, and 
any associated solids used in hydraulic fracturing, including 
constituents such as water, chemicals, and proppants.
     Proppant means a granular substance (most commonly sand, 
sintered bauxite, or ceramic) that is carried in suspension by the 
fracturing fluid and that serves to keep the cracks open when 
fracturing fluid is withdrawn after a hydraulic fracture treatment.
     Refracturing means a hydraulic fracturing operation 
subsequent to the completion of a prior hydraulic fracturing operation 
in the same well. For purposes of this definition, a hydraulic 
fracturing operation is completed when a well begins producing oil or 
gas, or when equipment necessary to inject the hydraulic fracturing 
fluid at sufficient pressure to fracture the stratum is removed from 
the well pad, whichever occurs earlier.
     Type well means an oil and gas well that can be used as a 
model for well completion in a field where geologic characteristics are 
substantially similar within the same field, and where operations such 
as drilling, cementing, and completions using hydraulic fracturing are 
likely to be successfully replicated using the same design.
    Usable water means generally those waters containing up to 10,000 
ppm of total dissolved solids.
    The proposed rule used the term ``well stimulation'' to describe 
the activities being regulated by this rule. In this revised proposed 
rule, that term is replaced with the term ``hydraulic fracturing.'' The 
reason for the change is because, after reviewing all of the comments 
and considering the available information, the BLM has determined that 
only hydraulic fracturing operations require the additional measures in 
this rulemaking. This definition also has language that explains the 
types of secondary recovery activities to which this rule does not 
apply.
    This rule also includes the following three terms that were not in 
the proposal: Hydraulic fracturing fluid; refracturing; and type well. 
These terms are defined so that there is a common understanding of the 
regulatory provisions that follow.
    This rule would delete the definition of ``fresh water,'' and is 
consistent with how the BLM has been protecting all usable waters in 
its onshore orders. Usable water includes fresh water (often defined as 
water containing less than 5,000 parts per million (ppm) of total 
dissolved solids (TDS)) and water that is

[[Page 31647]]

of lower quality than fresh water. The BLM has been more protective 
when it seeks to protect all usable water during drilling operations, 
not just fresh water. This policy was established upon the effective 
date of Onshore Order No. 2, December 19, 1988. Water with up to 10,000 
ppm TDS may be used for some agricultural or industrial purposes, often 
with some treatment, and thus would continue to be protected under this 
revised proposed rule. Not all waters of up to 10,000 ppm TDS need to 
be isolated or protected from hydraulic fracturing operations; 
clarifying edits have been added to help the public understand how the 
rule will affect operations.
    The rule would revise section 3162.3-2(a) by removing the phrase 
``perform nonroutine fracturing jobs'' from the current 43 CFR 3162.3-
2(a). The phrase ``routine fracturing jobs, or'' would also be removed 
from existing section 3162.3-2(b). This rule does not affect 
requirements for acidizing jobs, and this rule would not remove the 
reference to acidizing jobs from section 3162.3-2(b). Hydraulic 
fracturing operations are addressed under section 3162.3-3.
    In paragraph (a) of this section, the term ``commingling'' in the 
initial proposed rule would be replaced with the term ``combining'' to 
clarify the intent of this requirement and to avoid confusion with the 
meaning of ``commingling'' as that term is used in a production 
accounting context and in sections 3162.7-2 and 3162.7-3 of this title. 
The term ``commingling'' in a production accounting context refers only 
to the combining of production from different leases, communitized 
areas (CA), participating areas (PA), or State or private mineral 
estates prior to royalty measurement. Commingling, whether it is 
downhole commingling or surface commingling, requires BLM approval to 
ensure that the allocation method is consistent with Onshore Oil and 
Gas Order Number 3, Site Security (54 FR 8056), Onshore Oil and Gas 
Order Number 4, Measurement of Oil (54 FR 8086), and Onshore Oil and 
Gas Order Number 5, Measurement of Gas (54 FR 8100), for royalty 
measurement purposes. The combining of production from different 
intervals or zones within a wellbore also requires BLM approval to 
ensure that the zones proposed for combining are compatible from a 
reservoir standpoint, regardless of the royalty implications. The 
intent of the requirement in this section would be to address reservoir 
concerns from combining zones or intervals; therefore, the word 
``commingling'' was changed to ``combining.'' The royalty implications 
of commingling production from different leases, CAs, PAs, or State and 
private properties are handled under a separate approval process in 43 
CFR 3162.7-2 and 3162.7-3.
    Refracturing operations within 5 years from the approval of a 
Notice of Intent Sundry would be considered a ``recompletion'' under 
section 3162.3-2(b). The subsequent report on those operations would 
require the information and certifications prescribed in section 
3162.3-3(i) of this rule. Under section 3162.3-3(c)(3)(i), a 
refracturing operation more than 5 years after the approval of the 
Notice of Intent Sundry would require BLM's approval of a new Notice of 
Intent Sundry.
    The revised proposed rule would change the scope of the regulation 
to apply only to hydraulic fracturing operations and not to other well 
stimulation activities. Section 3162.3-3(a) would make it clear that 
this section applies only to hydraulic fracturing operations and that 
all other injection activities must comply with section 3162.3-2. This 
language is necessary to make the distinction between hydraulic 
fracturing and other well injection activities, such as secondary and 
tertiary recovery operations. Secondary and tertiary recovery 
operations do not involve the injection of chemicals at pressures high 
enough to fracture strata, and thus do not raise the same concerns of 
breaching the well bore and migrating into usable water.
    New paragraph 3162.3-3(b) would require that all fracturing and 
refracturing operations meet the performance standard in section 
3162.5-2(d) of this title. Among other things, that section requires 
operators to isolate all usable water and other mineral-bearing 
formations and protect them from contamination.
    Some commenters requested more clarity on how the definition of 
usable water would apply to the requirement to isolate and protect 
usable water from contamination from hydraulic fracturing operations. 
The BLM has revised the definition of usable water to specify that, for 
purposes of the hydraulic fracturing regulations, usable water includes 
underground sources of drinking water, zones actually used for water 
supply for industrial or agricultural purposes (unless the operator 
shows that the industrial or agricultural user would not be harmed by 
failure to protect or isolate), and zones designated by the State or 
the tribe as requiring isolation or protection from oil and gas 
operations. The BLM has also revised the section to specify that, for 
the purposes of the hydraulic fracturing regulations, usable water does 
not include the zone authorized for hydraulic fracturing, zones 
designated as ``exempted aquifers'' under the Safe Drinking Water Act 
(SDWA), and zones that the State or tribe have explicitly designated as 
exempt from any requirement for oil and gas operators to isolate or 
protect. Any other zones containing water that does not exceed 10,000 
ppm TDS would be considered usable water. The BLM recognizes that 
including aquifers not otherwise exempted would be consistent with its 
Oil and Gas Onshore Orders, but may make the rule more stringent than 
other Federal, State, and tribal laws. The BLM invites comments 
specifically on the incremental costs associated with protecting zones 
that contain up to 10,000 ppm of total dissolved solids, that are not 
already protected under SDWA or equivalent State or tribal law, and not 
excluded in the proposed definition (i.e., those aquifers protected by 
part (4) in the proposed definition of usable water). BLM may consider 
excluding such zones in the final rule.
    The BLM believes that the revised language makes explicit the 
appropriate deference to the expertise and professional judgment of the 
State or tribal agencies entrusted to manage the groundwater resources 
under their respective jurisdictions.
    Section 3162.3-3(c) would require the BLM's approval of all 
proposals for hydraulic fracturing or refracturing activity. The 
operator has the option of applying for the BLM's approval in its APD, 
including the information required by paragraph (d) of this section.
    The operator may submit a Sundry Notice and Report on Wells (Form 
3160-5) as a Notice of Intent Sundry for the hydraulic fracturing 
proposal for the BLM's approval before the operator begins the 
fracturing activity. This section would supersede and replace existing 
section 3162.3-2(b) that states that no prior approval is required for 
routine fracturing. That reference in the existing section would be 
deleted. Also, an operator must submit a new Sundry Notice prior to 
hydraulic fracturing activity:
     If the BLM's previous approval for hydraulic fracturing is 
more than 5 years old,
     If the operator becomes aware of significant new 
information about the relevant geology, the fracturing operation or 
technology, or the anticipated impacts to any resource, or
     If the operator proposes refracturing of the well.
    The 5-year period is consistent with practices in some States, 
including Montana, Wyoming, and Colorado,

[[Page 31648]]

which require that operators reconfirm well integrity for fracturing 
operations through a pressure test every 5 years. The requirement to 
submit a new NOI for refracturing is new to this revised proposed rule 
and is added to clarify that approval of a single hydraulic fracturing 
operation in a well does not allow for multiple refracturing procedures 
without compliance with the notice, monitoring, and reporting 
requirements.
    The BLM understands the time-sensitive nature of oil and gas 
drilling and well completion activities and does not anticipate that 
the submittal of additional hydraulic fracturing-related information 
with APD applications will significantly impact the timing of the 
approval of drilling permits. The BLM believes that the additional 
information that would be required by this rule would be reviewed in 
conjunction with the APD and within the normal APD processing time 
frame. Also, the BLM anticipates that requests to conduct hydraulic 
fracturing operations on existing wells that have been in service more 
than 5 years will be reviewed promptly. The BLM understands that delays 
in approvals of operations can be costly to operators and the BLM 
intends to avoid delays whenever possible. Furthermore, if an operator 
believes that approval of hydraulic fracturing would be swifter if it 
is not part of the APD, the operator has the option of submitting the 
Notice of Intent Sundry at a later date. However, the operator does not 
obtain an exemption from any requirement of this regulation by 
submitting a Notice of Intent Sundry after drilling and cementing 
operations have commenced.
    Section 3162.3-3(d) has been revised from what was originally 
proposed to allow the Sundry Notice required by this section to be 
submitted for a single well or a group of wells. If the submission is 
for a group of wells that share substantially similar geological 
characteristics, the information should describe the ``type well.'' 
``Type well'' is a term commonly used in the oil and gas industry and 
the BLM added it as a new definition in section 3160.0-5 of this rule. 
By constructing and monitoring a type well, including running a CEL on 
casing that encounters usable water, the operator demonstrates that its 
engineering design and execution effectively isolate aquifers with 
usable water in the field. The same operator may then replicate the 
type well for each of the wells in the approved group for the same 
field. The operator would not need to run a CEL on those wells unless 
the monitoring data indicated a problem with the cementing.
    Section 3162.3-3(d)(1) would require a report that includes the 
geological names, a geological description, and the proposed measured 
depth of the top and the bottom of the formation into which hydraulic 
fracturing fluids would be injected. The report is needed so that the 
BLM may determine the properties of the rock layers and the thickness 
of the producing formation and identify the confining rocks above and 
below the zone that would be stimulated.
    Under this revised proposed rule, section 3162.3-3(d)(2) would be 
revised by removing the reference to the CBL, because under this rule 
prior approval of a CBL or other CEL would no longer be routinely 
required. The change in this section is as a result of changes to 
paragraph (e) and is necessary to make this section consistent with 
those changes. Section 3162.3-3(d)(2) would be revised to require the 
operator to submit the measured or estimated depths of all occurrences 
of usable water using a drill log from the subject well or any other 
well sharing the same geological characteristics within the same 
geologic formation, which will help the BLM in its efforts to make sure 
that water resources are protected. As it pertains to the depths of all 
occurrences of usable water, the word ``estimated'' has been added 
because at the planning stages of the operation, the actual measured 
depths would not generally be available.
    Although prior approval of a CEL would no longer be routinely 
required, operators would be required to submit to the BLM the results 
of a CEL with the post-completion sundry notice. The BLM will be 
reviewing the well drilling and completion records and logs including 
the CEL, to help verify that operators have complied with their duty to 
assure that the casings are properly cemented.
    Section 3162.3-3(d)(3) would require reporting of the measured 
depth to the perforations in the casing and uncased hole intervals 
(open hole). This section would also require the operator to disclose 
specific information about the water source to be used in the 
fracturing operation, including the location of the water that would be 
used as the base fluid. The BLM needs this information to determine the 
impacts associated with operations. This rule would add ``reused or 
recycled water'' to the example list of sources and location of the 
water supply to be used for fracturing operations. The rule makes it 
clear that reused or recycled water is a recognized source of water 
supply for these types of operations. The information required by this 
paragraph does not interfere with State or tribal regulation of water 
allocation. The operators would need to comply with all State or tribal 
water laws, but need not disclose to the BLM the documents evidencing 
their rights to use the water. This regulation would in no way 
discourage operators from reusing or recycling water for new hydraulic 
fracturing operations.
    Initial proposed section 3162.3-3(c)(4) would have required 
operators to certify in writing that they have complied with all 
applicable Federal, tribal, State, and local laws, rules, and 
regulations pertaining to fracturing fluids before a fracture is 
attempted. This section has been deleted from the revised proposed rule 
because the BLM believes that requiring this certification after the 
operator has completed hydraulic fracturing operations (see section 
3162.3-3 (i)(7)) adequately protects Federal and Indian lands and 
resources and, therefore, the burden on industry of providing and on 
the BLM of reviewing that information ahead of operations is not 
justified.
    Section 3162.3-3(c)(5) has been renumbered in this revised proposed 
rule as section 3162.3(d)(4) and has been revised. Section 3162.3-
3(d)(4) would require the operator to submit a plan for the hydraulic 
fracturing design. This information is needed in order for the BLM to 
be able to verify that the proposed hydraulic fracturing design is 
adequate for safely conducting the proposed well stimulation.
    Section 3162.3-3(d)(4)(i) would require the operator to submit the 
estimated total volume of fluids that will be used in the hydraulic 
fracturing operations.
    Section 3162.3-3(d)(4)(ii) would require submission of the 
anticipated surface treating pressure range. This information is needed 
by the BLM to verify that the maximum wellbore design burst pressure 
will not be exceeded at any stage of the hydraulic fracturing 
operation.
    Section 3162.3-3(d)(4)(iii) would require the maximum injection 
treating pressure information to be submitted. This information is 
needed by the BLM to verify that the maximum allowable injection 
pressure will not be exceeded at any stage of the hydraulic fracturing 
operation.
    Section 3162.3-3(d)(4)(iv) would require the operator to submit the 
estimated fracture direction, length, and height, including the 
fracture propagation plotted on a map so that the BLM can ensure that 
the fracturing operations do not threaten aquifers, other resources, or 
other operations. The rule would also require that the information 
include the estimated

[[Page 31649]]

fracture propagation plotted on the well schematics and on a map. The 
rule would require that the map must be of a scale no smaller than 
1:24,000, which is the scale required for the map included in an APD.
    The rule also would add a new paragraph 3162.3-3(d)(4)(v) that 
requires submission of the estimated vertical distance to the base of 
the nearest usable water aquifer above the fracture zone. The rule 
would require this information to assure that usable water is isolated 
from propagated fissures. Fracturing operations that are expected to 
propagate fissures vertically to depths near those of usable water may 
require closer scrutiny by the BLM than those with thousands of feet 
between the fissures and aquifers.
    Section 3162.3-3(d)(5) would require the operator to provide for 
BLM's approval information about the handling of recovered fluids. This 
information is being requested so that the BLM has all necessary 
information regarding chemicals being used in the event that the 
information is needed to help protect health and safety or to prevent 
unnecessary or undue degradation of the public lands. The BLM has 
deleted the requirement for operators to provide the estimated chemical 
composition of flowback fluids because it would in effect require 
operators to reveal the total chemical constituents of their hydraulic 
fracturing fluids prior to operations. It would also require 
speculation as to the chemistry of fluids in the target zone, and their 
reactions, if any, with the hydraulic fracturing fluids. The BLM has 
determined that operators may justifiably change the chemical 
composition of hydraulic fracturing fluids after approval of fracturing 
operations, and even during those operations in response to such 
factors as availability of chemicals and unexpected geologic 
conditions. Thus, the reliability of the pre-operational estimated 
composition of flowback fluids could be imperfect. The composition of 
actual flowback fluids could be appropriately determined from the post-
operational disclosure of the chemicals used in the fracturing 
operations. It is most important at the approval stage, however, for 
the operator to show that it has an adequate plan to manage and contain 
the recovered fluids that would prevent them from contaminating surface 
water or groundwater without regard to their specific chemical 
composition.
    Section 3162.3-3(d)(5)(i) would require the operator to submit to 
the BLM an estimate of the volume of fluid to be recovered during 
flowback, swabbing, and recovery from production facility vessels. This 
information is required to ensure that the facilities needed to process 
or contain the estimated volume of fluid will be available on location.
    Section 3162.3-3(d)(5)(ii) would require the operator to submit to 
the BLM the proposed methods of managing the recovered fluids. This 
information is needed to ensure that the handling methods will 
adequately protect public health and safety.
    Section 3162.3-3(d)(5)(iii) would require the operator to submit to 
the BLM a description of the proposed disposal method of the recovered 
fluids. This is consistent with existing BLM regulations for produced 
waters (i.e., Onshore Oil and Gas Order Number 7, Disposal of Produced 
Water, (58 FR 47354)). This information is requested so that the BLM 
has all necessary information regarding disposal of chemicals used in 
the event it is needed to protect the environment and human health and 
safety on Federal and Indian lands and to prevent unnecessary or undue 
degradation of the public lands.
    Section 3162.3-3(d)(6) would require the operator to provide, at 
the request of the BLM, additional information pertaining to any facet 
of the hydraulic fracturing proposal. For example, the BLM may require 
new or different tests or logs in cases where the original information 
submitted was inadequate, out of date, or incomplete. Any new 
information that the BLM may request will be limited to information 
necessary for the BLM to ensure that operations are consistent with 
applicable laws and regulation, or that the operator is taking into 
account site-specific circumstances. Such information may include, but 
is not limited to, tabular or graphical results of an MIT, the results 
of logs run, the results of tests showing the total dissolved solids in 
water proposed to be used as the base fluid, and the name of the 
contractor performing the hydraulic fracturing operation.
Comments on What the Notice of Intent Sundry Must Include
     Some commenters requested baseline water testing prior to 
hydraulic fracturing operations; however, the BLM cannot authorize 
operators to enter non-Federal land to conduct baseline water testing, 
so the BLM did not change the revised proposed rule as a result. 
Whether to require baseline water testing on Federal land will be 
addressed, as is the current practice, as part of the analysis under 
the National Environmental Policy Act (NEPA) review, and the ``downhole 
review'' by the BLM authorized officer pursuant to Onshore Oil and Gas 
Orders Nos. 1 and 2. For example, if local drilling or geologic 
conditions, such as downhole stratigraphy involving faults, fissures, 
natural fractures, karst/limestone or other similar conditions require 
extra vigilance for any leaks of wellbore fluids to the usable water, 
then additional testing for baseline water could be required by the BLM 
as a condition of approval (COA) of a drilling permit. Similarly, the 
site-specific NEPA analysis of a drilling permit might reveal local 
environmental conditions that indicate a need to require baseline 
testing as a COA.
    The BLM received some comments requesting that the BLM require up-
front disclosure of the chemicals proposed for use in the hydraulic 
fracturing fluid. Commenters indicated that only through full up-front 
disclosure could the BLM and the public assess impacts to water, land, 
air quality, and human health and safety. The proposed rule was not 
revised based on these comments. Analysis of the impacts from hydraulic 
fracturing is done as part of the NEPA analysis conducted prior to the 
issuance of permits. For the purposes of NEPA compliance, the exact 
composition of the fluid proposed for use is not required because 
chemicals used in the hydraulic fracturing process are generally 
considered potentially hazardous for the purpose of impact analysis and 
mitigation. Operators will be aware that the rule requires disclosure 
of hydraulic fracturing chemicals after operations are complete and 
operators will also be required to certify that the hydraulic 
fracturing fluid used complied with all applicable permitting and 
notice requirements and all applicable Federal, State, and local laws, 
rules, and regulations (a separate but similar certification is 
required for Indian lands). The operator would also be required to 
certify that wellbore integrity was maintained prior to and throughout 
hydraulic fracturing operations. The BLM believes that the post-
fracturing disclosures and certifications would provide adequate 
assurances that the hydraulic fracturing operations protect public 
health and safety and protect Federal and Indian resources.
    The BLM also received comments in opposition to pre-disclosure of 
chemical constituents because of trade secret concerns and positing 
that the actual chemicals used will change from the pre-drilling stage 
based on the results encountered during drilling. While the BLM agrees 
with these comments, no revisions to the revised proposed rule were 
made because neither the initial proposed rule nor the revised proposed

[[Page 31650]]

rule would require pre-disclosure of chemicals.
    The BLM received some comments expressing concern about additional 
delays that would be caused by the permitting process in the proposed 
rule. According to the comments, unnecessary delays would be caused by 
having to submit voluminous amounts of information for each well 
proposed for hydraulic fracturing or acidization, the review and 
approval of CBLs prior to hydraulic fracturing, and the lack of BLM 
staff to perform these additional reviews. Based on consideration of 
these comments, the initial proposed rule has been revised. The changes 
include the option of including multiple wells with similar geology in 
the permit application (``type wells''), narrowing the scope of the 
rule to include only hydraulic fracturing, and the elimination of the 
requirement for the BLM to review and approve CBLs prior to hydraulic 
fracturing. These changes are discussed further in other sections of 
this preamble.
    The BLM received some comments regarding the amount of information 
required in section 3162.3-3(c) of the proposed rule in order for the 
BLM to grant approval of hydraulic fracturing operations. The 
commenters stated that much of this information, such as flowback time 
and flowback volume, is speculative. Commenters indicated that data 
such as treatment volumes, chemical composition, and other specific 
design parameters can only be determined after the well has been 
drilled. Commenters also suggested that instead of providing site-
specific design details which could change, the BLM should allow 
operators to submit a generic master design plan or type well proposal.
    The BLM agrees with these comments. The revised proposed rule 
(section 3162.3-3(d)) would provide for a more streamlined permitting 
process by allowing a Notice of Intent Sundry Notice to cover a group 
of wells with similar geologic characteristics, rather than just a 
single well. If the Sundry Notice is for a group of wells, the 
information required in section 3162.3-3(d) would be submitted for a 
type well that represents a typical completion and hydraulic fracturing 
procedure for the group of wells included in the Sundry Notice. The 
requirement to submit a CBL prior to the BLM granting approval for 
hydraulic fracturing is also being removed in the revised proposed 
rule.
    The BLM received some comments that suggested that more information 
should be required prior to approving a plan or application for a 
permit to hydraulically fracture a well. Some of the additional 
information suggested to be obtained included the total amounts of 
waste, recycling methods, produced fluid disposal plans, fluid 
transportation plans, on-site storage and chemical composition of 
flowback water, more geologic data, an emergency spill response plan, 
and information about confining zones. All of the suggestions are 
already parts of required APD components and other BLM regulations 
including Onshore Orders Nos. 1, 2, and 7. The BLM did not revise the 
rule as a result of these comments.
    Some comments suggested that the BLM require more information both 
pre- and post-hydraulic fracturing, including common chemical names, 
composition of recovered fluids, sources of water used and storage/
containment methods. Existing regulations require advance approval of 
plans for handling waste and hazardous materials and sources of water 
used in drilling and completing wells on Federal and Indian lands. The 
BLM did not revise the rule as a result of these comments.
    The BLM received some comments stating that the proposed rule 
should provide for ``estimates'' rather than actual information in the 
permit application. The reason given for providing estimates is that 
the hydraulic fracturing plan could change from the time it is approved 
based on conditions encountered during drilling and for other reasons. 
The BLM partially agrees with this comment and has revised the rule so 
that it would allow the operator to submit information for a type well 
drilled in an area of similar geology in lieu of submitting information 
specific to every well proposed for hydraulic fracturing. The BLM 
understands that some of the information such as formation depths, will 
be estimations of various parameters; for example, well-specific 
geological strata, formation depth/zone of perforation and fracture, 
expected amount of fracturing fluid injection volumes and flowback from 
the wellbore, expected pressure and temperature during drilling and 
completions, etc. However, the BLM also requires that the operator 
submit a Sundry Notice if major changes from the approved permit are 
requested.
    The BLM received some comments that the proposed rule requires 
documentation that is duplicative of other regulatory requirements and 
documents already submitted to the BLM, particularly the APD and Well 
Completion reports. The BLM agrees that some of the data that would be 
required in this rule is similar to that found or contained in other 
reports, forms and approved plans. However, the BLM believes that the 
requested information is unique to the hydraulic fracturing operation 
and is necessary for the BLM to ensure that operations are conducted in 
a manner that will protect groundwater, surface water, and other 
resources. The BLM did not revise the rule as a result of this comment. 
The BLM received some comments regarding the timeframes for hydraulic 
fracturing permit approvals. The commenters suggested that the rule 
should specify a set amount of time in which the BLM must complete its 
review of hydraulic fracturing proposals, and if that time was 
exceeded, the proposal would be automatically approved. The BLM did not 
revise the rule as a result of these comments because the imposition of 
a timeframe or ``automatic'' approvals could limit the BLM's ability to 
ensure protection of usable water and other resources. The BLM cannot 
abdicate its statutorily mandated responsibilities to prevent 
unnecessary or undue degradation of public lands and to protect Federal 
and Indian resources by establishing an artificial deadline. As 
discussed in other sections, however, the revised proposed rule would 
make several changes to the permitting process that would reduce the 
possibility of unreasonable delays.
    The BLM received some comments questioning the rationale or need 
for the information requested in both the permit and the subsequent 
report. The BLM has determined that the requested information is 
important to assess the environmental impacts of the proposed operation 
as well as to ensure that hydraulic fracturing operations will be 
conducted in a manner that prevents waste of valuable minerals, 
protects other resources, and ensures public health and safety. No 
revisions to the rule were made as a result of this comment.
    The BLM received some comments objecting to the requirement to 
estimate or calculate fracture lengths both in the application for 
hydraulic fracturing (section 3162.3-3(d)) and in the subsequent report 
(section 3162.3-3(i)). The primary objection expressed by the 
commenters is the difficulty, expense, and high degree of uncertainty 
in estimating, calculating, or measuring fracture lengths. According to 
the commenters, calculating fracture lengths requires elaborate 
computer models, which are often proprietary, and measuring fracture 
lengths requires seismic monitoring which adds time and expense. Some 
commenters questioned the need for this information, especially given 
that the target zone is usually thousands of feet below any known 
usable water zones. Other commenters stated that there is a

[[Page 31651]]

significant economic incentive to contain fractures to the target zone 
in order to minimize the volume of fluid required in the fracturing 
process.
    In order to evaluate the potential impacts of the proposed 
hydraulic fracturing application, the BLM must have information showing 
the estimated fracture lengths. This information is used to help ensure 
that fractures will not intersect known fault zones, communicate with 
older unplugged wells with questionable wellbore integrity, or 
communicate with usable water zones. The BLM is aware that the fracture 
lengths provided in the application and subsequent report are 
estimates. For the subsequent report, the reporting of actual fracture 
lengths can be used to identify potential problems. The BLM did revise 
section 3162.3-3(i) as a result of these comments; moreover, section 
3162.3-3(d) was revised to clarify how the estimated fracture lengths 
are to be provided to the BLM in the application.
Section Discussion
    Section 3162.3-3(e) is new to the rule. This section would require 
monitoring of cementing operations and would require a CEL prior to 
hydraulic fracturing operations for each casing that protects usable 
water. The requirements are necessary to ensure that the usable water 
aquifers intersected during well drilling have been isolated to protect 
them from contamination. Because aquifers are permeable, operators 
routinely isolate them from hydraulic fracturing operations by lining 
the wellbore with a tubular casing (typically metal casing). ``Surface 
casings'' are typically run for the top 1,000 to 1,500 feet of a well. 
``Intermediate casings'' are used where necessary at greater depths. 
Operators pump cement to the outside of the casing to assure that the 
casing will transmit the pressures of hydraulic fracturing to the 
surrounding rock without failure, and to assure that neither fracturing 
fluids nor produced oil and gas leak through or around the casing and 
are lost. Cementing operations, however, do not always yield a perfect 
result. There may be gaps, voids, or channels between a casing and the 
rock wall of the wellbore that lack adequate cement, and thus may be 
vulnerable to failure or leaks. A CEL is a class of tools that can be 
run down a casing to assess whether there are any significant gaps or 
voids in the cement behind a casing. Operators typically run a CEL on 
intermediate casings, but not on surface casings when the cement flows 
back to the surface. For surface casing an operator generally observes 
the cement in the annulus, and uses additional cement as needed. The 
initial proposed regulations at section 3162.3-3(c)(2) would have 
required a CBL prior to all hydraulic fracturing operations. However, a 
CBL is only one of a suite of technologies that are described as CELs. 
Under this revised proposed rule, other cement evaluation technologies, 
either existing or developed in the future, that are equally effective 
may be used. An ``equally effective'' technology in this context would 
be any methodology or tool that is at least as reliable as a CBL in 
detecting gaps or voids in the cement behind a casing and meets the 
performance objective of validating the wellbore integrity and 
isolating zones of usable water.
    Operators may choose from several well logging techniques to 
evaluate the quality of the cement behind casing. Various types of logs 
provide different types of information. For example, a CBL presents the 
reflected amplitude of an acoustic signal transmitted by a logging tool 
inside the casing. Another acoustic log presents the waveforms of the 
reflected signals detected by the logging tool receiver and provides 
qualitative insights concerning the casing, the cement sheath and the 
formation. Ultrasonic logging tools measure the resonant echoes.
    Under this rule, operators would have the flexibility of using 
suitable logs to confirm a good cement bond behind the casing to 
protect and isolate usable water. The BLM will review those logs after 
post-completion submission by the operator.
    New section 3162.3-3(e)(1) would require the operator to monitor 
and record the flowrate, density, and treating pressure, and to submit 
a cement operation monitoring report to the BLM within 30 days after 
completion of hydraulic fracturing operations. The required monitoring 
data would provide important indications of problems with the cementing 
of casings. That monitoring data would help to verify the results of a 
CEL and for wells where no CEL is required will provide the primary 
assurance that cementing operations conformed to those of a proven type 
well.
    New section 3162.3-3(e)(2) would require the operator to run a CEL 
for each casing that protects usable water, unless it is exempt from 
doing so under (e)(3) of this section, and to submit these logs to the 
BLM within 30 days after completion of the hydraulic fracturing 
operations. A CEL includes, but is not limited to, a CBL, ultrasonic 
imager, variable density logs, micro-seismograms, CBLs with directional 
receiver array, ultrasonic pulse echo technique, or isolation scanner.
Comments on Cement Bond Logs
    The BLM received some comments in response to proposed sections 
3162.3-3(b)(i), 3162.3-3(b)(ii), 3162.3-3(c)(2), that would have 
required operators to run CBLs and obtain approval from the BLM prior 
to commencing hydraulic fracturing operations. The commenters focused 
on seven main issues: (1) Allowing the use of other technology besides 
CBLs; (2) The use of other metrics to demonstrate zonal isolation; (3) 
Delays and costs associated with running and obtaining approval of CBLs 
prior to commencing hydraulic fracturing operations; (4) Reliability 
and interpretation of CBLs; (5) The incorporation of API Standard 65-2; 
(6) The ability for operators to challenge or appeal findings from the 
BLM regarding CBL results; and (7) The possibility of requiring CBLs on 
all casing strings, not just the surface casing. These comments are 
discussed in further detail below.
    Some commenters suggested that the BLM should allow the use of 
other technologies in lieu of a CBL. The other technologies that were 
suggested include ultrasonic logs, variable density logs, micro-
seismograms, standard CBLs, CBLs with directional receiver array, 
ultrasonic pulse echo technique, and isolation scanners. The BLM agrees 
with this comment and believes that these technologies could be 
effective at demonstrating zonal isolation. Therefore, section 3162.3-
3(e)(2) would replace the term CBL with a more generic term, ``cement 
evaluation log,'' (CEL) which would include the technologies suggested 
by the commenters. It would also permit operators to use logging tools 
which are the most appropriate in any given situation.
    Some commenters stated that a CBL provides only one indication of 
the quality of a cement job. The comments said that there are other, 
perhaps more reliable, methods of determining the quality of the cement 
job such as:
     Monitoring cement returns to the surface during the cement 
job. If good cement returns are achieved, it is a positive indication 
that there were no unexpected or untreated voids or fractures in the 
wellbore, which helps ensure that cement was properly placed between 
the wellbore and the casing;
     Placing centralizers on the lower joints of casing to 
ensure the casing is concentric to the wellbore, allowing a uniform 
cement sheath to form between the casing and the wellbore;

[[Page 31652]]

     Witnessing the amount of ``fall back'' of cement in the 
annulus; while it is normal for the top of the cement to retreat down 
the annulus as the cement sets, excessive fall-back can indicate that 
problems were encountered during the cement job;
     Monitoring the pressures, flow rates, volumes, and 
densities of cement during the cement job. If these parameters are 
consistent with the values anticipated during the design of the cement 
job, it is a good indication that no unexpected conditions were 
encountered during the cementing and that a cement seal has been 
established;
     Ensuring that there were no equipment failures during the 
cement job, such as line breaks or pump failures; and
     Applying other analytic techniques such as temperature 
logs and formation integrity tests.
    Some commenters stated that the BLM should require the operator to 
run a CBL only if one or more of these methods indicated a problem with 
the cement job. The BLM agrees with these comments and proposes several 
revisions in the revised proposed rule as a result. The revised 
proposed rule includes a new section 3162.3-3(e)(1) that would 
establish requirements for monitoring cementing operations, including 
the need to monitor and record flow rate, density, and pumping pressure 
of the cement. In addition, section 3162.3-3(e)(4) would require the 
operator to run a CEL if there are indications of an inadequate cement 
job such as lost returns, cement channeling, gas cut mud, or equipment 
failure. If the monitoring information provides indications of an 
inadequate cement job, the operator would also be required to notify 
the BLM within 24 hours, submit a written report within 48 hours, and 
to certify that the inadequate cement job had been corrected and 
document that zonal isolation had been achieved prior to starting 
hydraulic fracturing operations. The BLM also agrees with the 
importance of centralizers in obtaining zonal isolation; however, 
because Onshore Order No. 2 (Section III.B.1.f) already requires 
centralizers on the bottom 3 joints of surface casing, an additional 
requirement to run centralizers is not needed in this rule.
    Some commenters objected to the cost of running a CBL on every well 
and, perhaps more importantly, the delay associated with the BLM review 
of CBLs prior to allowing operators to start hydraulic fracturing 
operations. Some comments referenced the current delays in permitting 
due to lack of staff and stated that this additional approval step 
would only serve to exacerbate these delays. Several revisions are 
included in the revised proposed rule as a result of these comments. 
For wells where there are no indications of an inadequate cement job, 
section 3162.3-3(e)(3) would provide an option to run a CEL only on a 
type well that is representative of local geology and typical drilling 
and completion techniques. If the CEL run on the type well demonstrated 
zonal isolation, CELs would not be required on subsequent wells where 
there were no indications of an inadequate cement job. However, Section 
3162.3-3(e)(4) would require an operator to run a CEL on all wells 
where there are indications of an inadequate cement job, such as, but 
not limited to, lost returns, cement channeling, gas cut mud, or 
failure of equipment, that show that remedial action and evaluation are 
necessary. In addition, the revised proposed rule would eliminate the 
need for the BLM to review and approve the CEL prior to commencing 
hydraulic fracturing operations. Instead, operators would submit CELs 
run under section 3162.3-3(e)(2) within 30 days of completing hydraulic 
fracturing operations. CELs for type wells would have to be submitted 
prior to exempting subsequent wells under 3162.3-3(e)(3) from the 
requirement to run a CEL. Operators would submit CELs run under 3162.3-
3(e)(4) at least 72 hours prior to commencing hydraulic fracturing 
operations; however no approval from the BLM would be necessary. The 
BLM considered a requirement for operators to receive BLM approval 
prior to commencing hydraulic fracturing operations in these cases. The 
BLM believes that the combination of the proposed notice and 
certification requirements would provide adequate assurance of wellbore 
integrity prior to hydraulic fracturing without incurring additional 
delay or workload. The proposed 24-hour notice would also allow the BLM 
time to prioritize inspections of the hydraulic fracturing operation to 
verify compliance with these proposed regulations, Onshore Order Number 
2, and the approved APD.
    The BLM received some comments expressing concern about the 
reliability of CBLs and the difficulties of interpreting CBLs. Some 
commenters stated that CBLs are not effective until the cement has 
reached a certain compressive strength because CBLs work on the 
principal of acoustic attenuation. At low compressive strengths, 
commenters stated that the acoustic properties of cement and water are 
very similar and it is difficult to delineate between the two when 
interpreting logs. The commenters went on to state that the problem is 
more pronounced in surface casing because the lower formation 
temperature near the surface prolongs the setting process, requiring 
more time to achieve levels of compressive strength that are required 
for reliable log interpretation. Comments about the additional waiting 
times varied. One commenter suggested that a CBL on the surface casing 
and intermediate casing would delay drilling operations 24 hours for 
each test. Other commenters suggested that the CBL requirement would 
delay drilling operations by up to 72 hours for the surface casing 
alone. The commenters suggested that during this time, operators would 
be required to maintain idle drilling equipment on site, at a 
significant cost to the operators.
    After researching these concerns, the BLM acknowledges the 
potential difficulties of running and interpreting CBLs. As a result, 
the BLM has determined that requiring CBLs on every well may be 
unnecessarily expensive, may induce unnecessary delay, and will not 
provide increased protection beyond what will be available by requiring 
a CEL on type wells. Therefore, the revised proposed rule would give 
operators the option of running a CEL on a type well as discussed 
previously. A CEL would still be required on all wells where there are 
indications that there is an inadequate cement job. The BLM also 
believes that allowing the use of other technology such as ultrasonic 
logs could make the log interpretation less subjective.
    The BLM also received some comments expressing concerns about the 
ability of BLM staff to properly interpret CBLs. According to the 
commenters, without adequate training and experience, the BLM could 
misinterpret a CBL run in a wellbore with an adequate cement job and 
conclude that there was an inadequate cement job. This 
misinterpretation would result in additional time and expense for the 
operator to either challenge the BLM's finding or to conduct expensive 
and unnecessary remedial work. The BLM does not agree with the 
assertion regarding the lack of staff training and experience. However, 
the BLM believes that the previously discussed changes, including 
providing a type well option, and eliminating the need for a 
requirement to obtain BLM approval of CELs prior to starting hydraulic 
fracturing operations, address the commenters' concerns.
    The BLM received some comments which requested that the rule 
include an appeal process for operators if the BLM

[[Page 31653]]

were to deny hydraulic fracturing on a well because the CBL could not 
demonstrate zonal isolation. The BLM did not revise this rule as a 
result of this comment because a BLM decision to deny authorization to 
hydraulically fracture a well would be subject to the administrative 
reviews already established in 43 CFR 3165.3 and 3165.4. In addition, 
as discussed earlier, the revised proposed rule would eliminate the 
requirement for operators to obtain BLM approval of CELs prior to 
starting hydraulic fracturing operations.
    Some commenters recommended that the BLM require operators to run 
CELs on all casing strings, not just the surface casing because the 
isolation of usable water, as required in Onshore Order No. 2, may be 
accomplished by other casing strings. The proposed rule published in 
May 2012 required CBLs on all casing strings protecting usable water. 
The BLM clarified this requirement in 3162.3-3(e)(2), with exceptions 
for type wells, in this revised proposed rule.
Section Discussion
    New section 3162.3-3(e)(3) would explain that an operator is not 
required to run a cement evaluation log on the casings if the operator:
    (1) Had submitted a CEL for a type well that showed successful 
cement bonding to protect against downhole fluid cross-migration; and
    (2) Completes a subsequent well or wells with the same 
specifications and geologic characteristics as the type well, and 
approved in the same group sundry notice for a single field, and the 
cementing operations monitoring data parallels those of the type well.
    The BLM believes that where an operator has designed a type well to 
be replicated across a field (and often from the same well pad), and 
the cement monitoring data for each well and the CEL for the type well 
show no indications of cement problems, the operator should be allowed 
to construct the other wells in an approved group within the same field 
without the expense and potential delays of running a CEL for each 
well. The same well design and construction repeated within the same 
field with the same monitoring data should yield the same result: 
adequate cementing. After considering the comments, the BLM believes 
that requiring each well to have a CEL for the surface casing as 
originally proposed would impose costs and possibly delays on operators 
without providing significant additional assurance of adequate 
cementing to protect usable water aquifers. In view of the comments 
that insist that a CBL on surface casing is unnecessary when the cement 
returns to the surface, the BLM is also seeking comments on whether the 
requirements to run a CEL on wells where there is no indication of an 
inadequate cement job, as proposed in paragraphs 3162.3-3(e)(2) and 
(e)(3), is appropriate, including specific information about the costs 
and benefits of requiring CELs in such cases. Under new section 3162.3-
3(e)(4), for any well, if there is any indication of an inadequate 
cement sheathing behind the casing such as, but not limited to, lost 
returns, cement channeling, gas cut mud, or failure of equipment, the 
operator would be required to notify the BLM within 24 hours of the 
occurrence, followed by a written report within 48 hours. Furthermore, 
the operator would be required to remedy the situation first following 
the standard industry practice. When logging operations indicate that 
the cement job is defective, either in the form of poor cement bonding 
or communication between zones, a remedial cementing technique known as 
squeeze cementing may be performed to establish zonal isolation. The 
commonly used steps to remedy such problems include perforating the 
casing at the defective interval and forcing, or ``squeezing,'' cement 
slurry through the perforations and into the annulus to fill the voids. 
In addition, squeeze cementing may be an effective technique for 
repairing casing leaks caused by a corroded or split casing. The 
objective is to restore the barrier integrity of the formations that 
were disrupted by drilling. To confirm a good cement sheathing behind 
the casing, the operator must run a CEL showing that usable water has 
been isolated to protect it from contamination. If deemed necessary, 
the BLM could require the operator to submit the CEL for BLM approval 
prior to continued operations. At least 72 hours prior to commencing 
hydraulic fracturing operations, the operator would be required to 
submit to the BLM a signed certification indicating that the operator 
corrected the inadequate cement job and documentation showing that 
there is adequate cement bonding. These requirements were added because 
the revised proposed rule has eliminated the requirement to submit a 
CBL for each well for approval by the BLM prior to continuing 
operations. Accordingly, where there are indications of a problem with 
cementing, the BLM needs to have timely and complete information 
showing correction of the problem. If an operator failed to report a 
cementing problem, the BLM would utilize one or more of its existing 
enforcement options. This could include: shutting down operations on 
the well until the operator takes the appropriate corrective actions; 
issuing an order of the authorized officer requiring remedial action; 
or monetary assessments for failure to comply. The BLM would enforce 
the appropriate action regardless of whether the original requirements 
for the well included the running of a CEL. Also, the BLM would put a 
high priority on witnessing that operator's operations on this and 
future wells to ensure compliance with these proposed regulations, 
Onshore Order Number 2, and the approved APD.
    New section 3162.3-3(e)(5) would require operators to include in 
the Subsequent Report Sundry Notice under section 3162.3-3(i) the 
records and logs produced under sections 3162.3-3(e)(1) and (e)(2).
    Section 3162.3-3(f) would require the operator to perform a 
successful MIT before beginning hydraulic fracturing or refracturing 
operations. This requirement is necessary to help ensure the integrity 
of the wellbore under anticipated maximum pressures during hydraulic 
fracturing operations. Wellbore integrity may be degraded over time, 
and thus it is necessary to perform a MIT prior to each refracturing 
operation.
    Section 3162.3-3(f)(1) would require the MIT to emulate the 
pressure conditions that would be seen in the proposed hydraulic 
fracturing. This test would show that the casing is strong enough to 
protect usable water and other subsurface resources during hydraulic 
fracturing operations.
    Section 3162.3-3(f)(2) would establish the minimum engineering 
criteria for using a fracturing string as a technique during hydraulic 
fracturing. The requirement to be 100 feet below the cement top would 
be imposed to ensure that the production or intermediate casing is 
surrounded by a competent cement sheath as required by Onshore Order 
No. 2. The 100 foot requirement is required by some State statutes 
(e.g., Montana Board of Oil and Gas Conservation, section 36.22.1106, 
Hydraulic Fracturing) and is a generally accepted standard in the 
industry. Testing would emulate the pressure conditions that would be 
seen in the proposed hydraulic fracturing in order to ensure that the 
casing used in the well would be robust enough to handle the pressures.
    Section 3162.3-3(f)(3) would require the well to hold the pressure 
for 30 minutes with no more than 10 percent pressure loss. This 
requirement is the same standard applied in Onshore Order No. 2, 
Section III.B.h., to confirm the mechanical integrity of the casing.

[[Page 31654]]

This language does not set a new standard in the BLM's regulations. 
This test, together with the other requirements, would demonstrate if 
the casing is strong enough to protect water and other subsurface 
resources during hydraulic fracturing operations. The BLM believes that 
all of these tests are important to show that reasonable precautions 
have been taken to ensure the protection of other resources during 
hydraulic fracturing operations.
Comments on Mechanical Integrity Testing
    Some commenters objected to the cost of the requirement for an MIT 
prior to hydraulic fracturing due primarily to the delay and the cost 
of rig time. The BLM disagrees with this comment. A casing pressure 
test is already required by Onshore Order No. 2. Section III.B.1.h. of 
Onshore Order No. 2 requires that operators test all casing strings 
below the conductor to 0.22 psi per foot of casing string length or 
1,500 psi, whichever is greater, but not to exceed 70 percent of the 
minimum internal yield. While the test pressure for the MIT may differ 
from what is required by Onshore Order No. 2, there is no significant 
increase in rig time required to run the MIT as proposed.
    Mechanical integrity testing is a common hydraulic testing method; 
operators typically conduct such tests after every surface- or 
intermediate-casing cement job. Operators first perform a casing 
pressure test to verify the mechanical integrity of the tubular string 
and then drill out the casing shoe. Next, they perform a pressure 
integrity test by increasing the internal casing pressure until it 
exceeds the pressure that will be applied during the next drilling 
phase. If no leakage is detected, the cement seal is deemed successful.
    The BLM believes that performing a successful MIT prior to starting 
hydraulic fracturing is essential to ensuring the casing and fracture 
string (if used) are capable of withstanding the pressure used and 
serves as an early indicator whether the applied pressures can be 
successfully supported. No revisions to the initial proposed rule were 
made as a result of this comment.
    The BLM received some comments stating that an MIT is not needed on 
every well and should only be required on wells that are more than 5 
years old or if pressure exceeds 80% of casing yield. The BLM believes 
that the requirements in section 3162.3-3(f)(1) of the revised proposed 
rule are standard industry practice and are required to ensure the 
casing is capable of withstanding the pressures applied during 
hydraulic fracturing operations. No revisions to the revised proposed 
rule were made as a result of this comment.
    Some comments suggested that the BLM require the operator to 
perform an MIT before and after hydraulic fracturing to ensure that 
there were no casing failures during the hydraulic fracturing process. 
No revisions to the revised proposed rule were made as a result of this 
comment. Sections 3162.3-3(f)(1) and (f)(2) of this rule would require 
the operator to test the casing and fracture string (if used) to the 
maximum anticipated treating pressure. If the MIT is successful prior 
to hydraulic fracturing and the treatment pressure does not exceed the 
MIT test pressure, there is no reason to run another MIT after 
treatment. The BLM believes that the tests required under this rule are 
sufficient to show that the casing is strong enough to protect water 
and other subsurface resources during hydraulic fracturing operations.
    Some comments suggested changing the term ``MIT'' to ``pressure 
testing.'' No revisions to the initial proposed rule were made as a 
result of this comment. The BLM believes that the term ``Mechanical 
Integrity Test'' is widely understood by industry, is used by many 
State regulatory agencies, and accurately describes the intent of the 
test. Nonetheless, we invite comments as to whether there are other 
tests that would be equally effective as an MIT for confirming that 
well casings will withstand the pressures of hydraulic fracturing 
operations.
    One comment recommended that the BLM should require reporting the 
results of the MIT with the subsequent report rather than prior to 
hydraulic fracturing. The BLM did not revise the rule as a result of 
this comment because there is no specific provision in the revised 
proposed rule that would require the operator to submit the MIT results 
to the BLM prior to fracturing. A related comment suggested that the 
BLM should be notified of any failures or anomalies in the MIT prior to 
hydraulic fracturing. The BLM does not believe that a requirement to 
notify the BLM of a failed MIT is necessary to ensure wellbore 
integrity prior to fracturing. The revised proposed rule (section 
3162.3-3(f)) would require a successful MIT prior to hydraulic 
fracturing; therefore, if the MIT failed and the operator proceeded 
with hydraulic fracturing operations, the operator would be in 
violation of the rule and would be subject to enforcement actions. No 
revisions to the initial proposed rule were made as a result of this 
comment.
    The BLM received some comments suggesting that the proposed 10 
percent allowable loss in pressure during the MIT is excessive. No 
revisions to the revised proposed rule were made as a result of this 
comment. The proposed 10 percent allowable pressure drop for the MIT is 
the same as the allowable pressure drop during the testing of casing 
and blowout prevention equipment in Onshore Order No. 2. The allowable 
pressure drop is included to set objective and enforceable standards of 
what the BLM considers to be a successful test.
Section Discussion
    Section 3162.3-3(g)(1) would require the operator to continuously 
monitor and record the annulus pressure at the bradenhead and has been 
revised to apply to refracturing as well as fracturing operations. The 
pressure in the annulus between any intermediate casing and the 
production casing must also be continuously monitored and recorded. The 
pressure during the fracturing should be contained in the string 
through which the fracturing fluid is being pumped. Unexpected changes 
in the monitored and recorded pressure(s) provide an early indication 
of the possibility that well integrity has been compromised and that 
immediate action should be taken to prevent well failure. This 
information is needed by the BLM to ensure that hydraulic fracturing 
operations are conducted as designed. This information also shows that 
fracturing fluids are going to the intended formation and not into 
other geologic horizons such as aquifers. This section is different 
from the proposal in that it would require monitoring and recording of 
pressure between the annulus and any intermediate casing. This revised 
proposed rule makes this distinction because monitoring and recording 
of pressure in the annuli between all intermediate casings and the 
production casing more accurately shows downhole conditions, whereas 
the initial proposed rule required only monitoring and recording 
pressure in the annulus between the production casing and the 
intermediate string adjacent to the production string. Failure in other 
casing strings would not have been identified. The revision is proposed 
in order to detect potential failures of any casing string that may 
contribute to cross zonal flow.
    Section 3162.3-3(g)(2) has been revised to apply to fracturing and 
refracturing operations and would require the operator to orally notify 
the BLM as soon as possible, but no later than 24 hours following the 
incident, if during the fracturing operation the

[[Page 31655]]

annulus pressure increases by more than 500 pounds per square inch over 
the annulus pressure immediately preceding the fracturing. Within 30 
days after the occurrence, the operator must submit a Subsequent Report 
Sundry Notice (Form 3160-5, Sundry Notices and Report on Wells) to the 
BLM containing all details pertaining to the incident, including 
corrective actions taken. This information is needed by the BLM to 
ensure that fracturing fluids are going into the formation for which 
they were designed. The BLM also needs to obtain reasonable assurance 
that other resources are adequately protected. An increase of pressure 
in the annulus of this amount could indicate that the casing had been 
breached during hydraulic fracturing. Consistent with the BLM's Onshore 
Order No. 2, the operator must repair the casing should a breach occur. 
This section is different from the initial proposed rule. The initial 
proposed rule required the submission of the Subsequent Report Sundry 
Notice within 15 days after the occurrence. The revised proposed rule 
would require submission within 30 days after the occurrence. This 
revision was made to this rule to reduce the number of reports required 
from operators. The report can be part of the same Subsequent Report 
Sundry Notice required in revised proposed section 3162.3-3(i).
    Section 3162.3-3(h) would require the operator to store recovered 
fluids in tanks or lined pits. This provision grants flexibility for 
the operator to choose using either a lined pit or a storage tank. This 
provision is necessary because flowback fluids could contain 
hydrocarbons from the formation and could also contain additives and 
other components that might degrade surface and groundwater if they 
were to be released without treatment. This section is consistent with 
existing industry practice and American Petroleum Institute (API) 
recommendations for handling completion fluids, including hydraulic 
fracturing fluids (see Section 6.1.6 of API Recommended Practice 51R, 
Environmental Protection for Onshore Oil and Gas Production Operations 
and Leases, First Edition, July 2009). Because the use of lined pits or 
tanks for the storage of recovered fluids reasonably protects land and 
water from spills or leaks of recovered fluids, the BLM believes that 
this provision is consistent with FLPMA's mandate to prevent 
unnecessary or undue degradation of the public lands and the BLM's 
obligations to protect environmental quality and Indian trust 
resources.
    Typically, most of the hydraulic fracturing fluid that will be 
recovered from a well is recovered before the well begins producing 
significant quantities of oil or gas. Traces of the fracturing fluids, 
however, may be produced for long periods of time thereafter, usually 
with water from the formation. It is not the BLM's intent for the 
proposed rule to displace Onshore Order No. 7 for disposal of produced 
water. The BLM invites comments on the potential benefits of 
distinguishing flowback fluid from produced water and suggested ways to 
distinguish the two.
    Commenters should consider that Onshore Order No. 7 allows for 
temporary storage in reserve pits for up to 90 days, with the 
possibility of an extension. Onshore Order No. 1 requires all pits to 
be reclaimed within six months of well completion or well plugging, 
with the possibility of a variance.
    Additional conditions of approval for the handling of flowback 
water may be placed on the operation by the BLM if needed to ensure 
protection of the environment and other resources. The BLM recognizes 
the ongoing efforts of States to regulate hydraulic fracturing 
operations. This regulation would not preempt any State or tribal law 
that might require use of such technologies as double-lined pits or 
tanks as part of a reuse or recycling requirement.
Comments on the Handling of Recovered Fluids
    Commenters expressed a variety of views on proposed section 3162.3-
3(f). That section would require storage of flowback fluids in lined 
pits or tanks. Some commenters were critical of allowing storage of 
flowback fluids in lined pits, stating that pits increase the 
likelihood of accidental discharges, that pit liners may react with 
flowback fluids and cause failures and seepage, that pits must be 
fenced to exclude wildlife, and that the fluids stored in pits would 
cause air pollution. Those commenters recommended that pits be double-
lined, that they be equipped with leak detection systems, or that 
storage in pits be prohibited and that the rule should require flowback 
fluid to be stored in tanks, or in a closed-loop containment and reuse 
system. Some commenters were in favor of BLM's proposal to require a 
plan for handling flowback fluids, as in proposed section 3162.3-
3(c)(6), but sought additional encouragement in the rule for injection 
and recycling of those fluids.
    Other commenters believed that requiring lined pits or tanks for 
flowback fluids was appropriate. Some, though, argued that those 
requirements were duplicative of the requirements of some State 
regulations. Some commenters recommended that the rule simply adopt the 
requirements of Onshore Order No. 7 for flowback pits.
    The BLM shares commenters' concerns about contributions of pits to 
air quality problems, and the possibility of failures, leaks, and 
overflow events. The BLM is also concerned about excluding wildlife, 
including migratory birds, from pits on well sites, but a separate 
Instruction Memorandum has been issued and describes appropriate 
fencing, netting, and other actions to help prevent wildlife and 
livestock injury or mortality from various aspects of oil and gas 
operations, including open pits. See the BLM's Instruction Memorandum 
WO-IM-2013-033 of December 13, 2012. The BLM is also interested in 
evaluating the costs of requiring flowback fluids to be stored in 
closed tanks.
    In a sampling of State regulations, it was found that most States 
require flowback fluids to be stored in lined pits or tanks. One State, 
California, requires storage in tanks, and another, New Mexico, allows 
lined pits to be approved as a variance from requiring storage in 
tanks. It also appears that some States, such as Texas and Oklahoma, 
are encouraging the use of mobile recycling systems.
    Onshore Order No. 7 allows disposal of produced water in unlined 
pits in certain circumstances. The BLM does not believe that storage of 
hydraulic fracturing flowback fluids in unlined pits is appropriate 
because of the far greater volume of flowback fluids compared with 
typical volumes of produced water, and because of the chemical 
constituents of flowback fluids may pose different or increased risks 
if they come into contact with surface water or groundwater.
    The revised proposed rule at 3162.3-3(h) has not been materially 
changed in response to the comments on the proposed rule. The revised 
proposed rule would not preempt State laws that require the use of 
tanks, or efforts to expand use of mobile recycling systems.
    Some comments were also received requesting that the final rule 
state that all flowback water be captured in tanks and removed from the 
site without the use of pits. This would require that the BLM 
distinguish flowback water from produced water and also require 
additional tankage since flowback water is generally returned to the 
surface mixed with water produced from the formation. The BLM seeks 
comments on whether the following is an appropriate distinction: fluids 
recovered from a hydraulically fractured well before it

[[Page 31656]]

begins production of oil or gas will be considered flowback and subject 
to revised proposed rule section 3162.3-3(h); fluids recovered from a 
hydraulically fractured well after it begins production of oil or gas 
will be considered produced water and subject to Onshore Order No. 7. 
The BLM is also interested in the public's views on whether such a 
distinction should be in the regulation, or be issued as non-binding 
guidance.
    In view of comments raising concerns that flowback fluids present 
hazards to the environment beyond those that can be controlled in lined 
pits, the BLM is specifically requesting comments on whether the rule 
should require flowback fluids to be stored only in closed tanks, and 
not allow them to be stored in lined pits. Is the exclusive use of 
tanks preferable for the handling of flow-flowback water from either an 
environmental or economic perspective? Are there additional 
environmental or economic concerns that should be considered as the BLM 
considers a requirement for the use of tanks for the disposal of flow-
flowback waters? Another alternative would be for the rule to specify 
that a lined pit must be equipped with a leak detection system, as is 
required for lined pits for produced water under Onshore Order No. 7. 
Some commenters advocated for requiring double-lined pits. The BLM asks 
for comments on the costs and benefits of the foregoing alternatives 
for storage of flowback fluids. Specific information about the 
environmental and economic costs and benefits of those alternatives 
would be most useful. Information on the prevalence of tank use versus 
lined pits would also be helpful.
    A number of comments were received on the proposed rule that raised 
issues that are already addressed in other places in the BLM's Oil and 
Gas operations regulations and the Onshore Orders. The Onshore Orders 
may be viewed at: http://www.blm.gov/mt/st/en/prog/energy/oil_and_gas/operations/orders.print.html.
Section Discussion
    Section 3162.3-3(i) has been reorganized from what was in the 
proposed rule and would require the operator to submit to the BLM 
certain information within 30 days after fracturing or refracturing 
operations are complete. The information required by paragraph (i)(1) 
of this section on the depth of the well, water volume used, and 
information about the chemicals used in the fracturing fluid may be 
submitted through FracFocus or another BLM-designated database, or in 
the Subsequent Report Sundry Notice. If the information is submitted 
through FracFocus, or another BLM-designated database, the operator 
must specify whether the information is for a Federal or Indian well, 
certify that the information is correct, and certify compliance with 
applicable law. All other information required under paragraph (i) 
would be submitted in the Subsequent Report Sundry Notice. If, for some 
reason, the operator is unable to submit the information about the 
chemicals through FracFocus or another BLM-designated database, the 
operator must timely submit the required information directly to the 
BLM. The BLM would determine if the hydraulic fracturing operation was 
conducted as approved and would retain this information as part of the 
individual well record and it would be available for use when the well 
has been depleted and the plugging of the well is being designed. This 
section would also make it clear that any information submitted by a 
contractor or agent of the operator is considered to have been 
submitted directly from the operator to the BLM. In other words, the 
operator is responsible for information submitted by contractors or 
agents. This section also would require the operator to submit 
information to the BLM within 30 days after the hydraulic fracturing 
operations are completed for each well, even if the BLM approved 
hydraulic fracturing of a group of wells (see section 3162.3-3(c)).
    Section 3162.3-3(i)(1) is new to the rule and would require that 
the operator submit to the BLM the true vertical depth of the well, 
total water volume used, and for each chemical used (including base 
fluid) the trade name, supplier, purpose, ingredients, Chemical 
Abstract Service Number (CAS ), maximum ingredient 
concentration in additive (% by mass), and maximum ingredient 
concentration in hydraulic fracturing fluid (% by mass). Total water 
volume includes ``new'' water and any produced water or water reused or 
recycled from prior hydraulic fracturing operations. The percent mass 
value is the mass value for each component (Mc) divided by the value of 
the entire fluid mass (Mt) times 100. (Mc/Mt)*100 = percent value. The 
information should be based on the maximum potential for concentration, 
and thus the total may exceed 100 percent by a reasonable, but minimal, 
amount. The percent mass values should be for the entire stimulation 
operation, not for the individual stages. Table 1 presents an example 
of the kind of information that may be submitted.

               Table 1--Sample Hydraulic Fracturing Fluid Product Component Information Disclosure
                          Well Identification/Location and Other Fracturing Information
----------------------------------------------------------------------------------------------------------------
                                                       Value                             Remarks
----------------------------------------------------------------------------------------------------------------
Fracture Date............................  Start mm/dd/yyyy............  Finish mm/dd/yyyy
State....................................  Wyoming.....................
County...................................  Sublette....................
API Number...............................  XX-XXX-XXXX.................
Operator Name:...........................  XYZ COMPANY.................
Well Name and Number.....................  Name and Number.............
Longitude................................  -109.123456.................
Latitude.................................  42.54321....................
Production Type..........................  Gas, wet gas, oil...........
True Vertical Depth (TVD) in feet........  14,193......................
    Total Fluid Volume Injected (gal)....  X,XXX,XXX...................
----------------------------------------------------------------------------------------------------------------


[[Page 31657]]


                                                         Hydraulic Fracturing Fluid Composition
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Chemical      Max. ingredient    Max. ingredient
                                                                                     abstract      concentration in   concentration in
         Trade name               Supplier         Purpose        Ingredients     service number   additive  (% by    HF Fluid  (% by       Comments
                                                                                 (CAS )        mass)             mass)**
--------------------------------------------------------------------------------------------------------------------------------------------------------
SAND........................  XYZ Corp.......  Proppant.......  Crystalline      14808-60-7.....             100.00            7.48357
                                                                 silica, quartz.
LGC-39 UC...................  XYZ Corp.......  Liquid Gel       Polysaccharide.  Confidential                 60.00            0.16265
                                                Concentrate.                      Business
                                                                                  Information.
--------------------------------------------------------------------------------------------------------------------------------------------------------
** A long list of other materials may follow

    The information required in paragraph 3162.3-3(i)(1) may be 
submitted directly to the BLM or through FracFocus or another BLM-
designated database service. Substantially similar information required 
to be submitted by this section was proposed in sections 3162.3-3(g)(4) 
and (g)(5). The required information has been restated to conform to 
the fields for disclosure provided by FracFocus. Disclosure through 
FracFocus, though voluntary, would save operators from submitting data 
both to FracFocus and to the BLM in the States that require posting to 
FracFocus. It would also provide to the public timely information from 
a single Web site on fracturing operations on Federal, Indian (under 
these regulations), and non-Federal/non-Indian wells (through State law 
or voluntary submission). If the operator experiences any problem with 
submitting required information through FracFocus, it should notify the 
BLM promptly. The operator would be required to submit the information 
to the BLM within 30 days after completing the hydraulic fracturing 
operation, whether or not it is able to submit it through FracFocus.
    Some commenters on the proposed rule were critical of FracFocus 
because of limitations in its ability to search and aggregate data 
across individual wells. The BLM has been in discussions with persons 
responsible for FracFocus and expects that recent and foreseeable 
improvements to the system will address many of these concerns.
    Section 3162.3-3(i)(2) would require the operator to submit 
information on the actual measured depth of perforations or the open-
hole interval (i.e., non-cased wellbore), the source and location(s) of 
the water used in the hydraulic fracturing fluid, and actual pump 
pressures. This information identifies the producing interval of the 
well and would be available for use when the well has been depleted and 
plugging of the well is being designed. The level of detail of the 
required information about the sources of the water used has been 
reduced from that in initial proposed section 3162.3-3(g)(1), because 
the deleted information (access route and transportation method) would 
not be useful to the BLM after the conclusion of operations. Requiring 
a subsequent report on the actual sources of water used, however, would 
allow the BLM to check the accuracy of the pre-fracturing notice and to 
remain informed of important trends in sourcing of water for hydraulic 
fracturing operations.
    Section 3162.3-3(i)(3) would require submission of information on 
the actual surface pressure and rate at the end of each fluid stage, 
and the actual flush volume, rate, and final pump pressure. This 
information is needed by the BLM for it to ensure that the maximum 
allowable pressure was not exceeded at any stage of the hydraulic 
fracturing operation.
    Section 3162.3-3(i)(4) would require submission of information 
pertaining to the actual, estimated, or calculated fracture length, 
height, and direction. This information is required so that the BLM can 
verify that the intended effects of the hydraulic fracturing operations 
remain confined to the petroleum-bearing rock layers and will not have 
unintended consequences on other rock layers or aquifers. The revised 
rule requires an operator to indicate the direction of hydraulic 
fracture. This was not in the initial proposed rule, and is necessary 
for the BLM to have accurate information pertaining to the extent and 
direction of the fracturing operations.
    Section 3162.3-3(i)(5) would require submission of the following 
information concerning the handling of recovered fluids:
    (1) The volume of fluid recovered during flowback, swabbing, or 
recovery from production facility vessels;
    (2) The methods of handling the recovered fluids, including, but 
not limited to, transfer pipes and tankers, holding pond use, re-use 
for other stimulation activities, or injection; and
    (3) The disposal method of the recovered fluids, including, but not 
limited to, injection, hauling by truck, or transporting by pipeline. 
The disposal of fluids produced during the flowback from the hydraulic 
fracturing process must follow the requirements set out in Onshore 
Order No. 7, Disposal of Produced Water, Section III. B.
    The information is necessary to assure that the lands and waters 
have not been contaminated by flowback fluids. The proposed regulation 
at 3162.3-3(g)(10) included a requirement for information on pipeline 
requirements. Pipeline systems are not ordinarily used for transfer of 
flowback fluids. This revised proposed rule at section 3162.3-
3(h)(5)(ii), instead would require information on transfer pipes and 
tankers.
    Section 3162.3-3(i)(6) would state that if the actual operations 
deviate from the approved plan, the deviation(s) must be documented and 
explained. Understanding the complexities of hydraulic fracturing, the 
BLM expects there often to be slight differences between the proposed 
plan and the actual operation. The explanation would provide the BLM 
with a better understanding not only of the particular well, but also 
of the technologies used in various geologic areas.
    Section 3162.3-3(i)(7) is a renumbered section that would require 
the operator to submit to the BLM a certification signed by the 
operator that:
    (1) Wellbore integrity was maintained prior to and throughout the 
hydraulic fracturing operation, as required by paragraph (b) of this 
section. This requirement was originally proposed in section 3162.3-
3(h)(9). It would also require the operator to certify that it complied 
with the requirements of paragraphs (e), (f), (g) and (h) of this 
section; and
    (2) For Federal lands, the hydraulic fracturing fluid used complied 
with all applicable permitting and notice requirements as well as all 
applicable Federal, State, and local laws, rules, and regulations; or
    (3) For Indian lands, the hydraulic fracturing fluid used complied 
with all applicable permitting and notice requirements as well as all 
applicable

[[Page 31658]]

Federal and tribal laws, rules, and regulations.
    Operators must certify that they have complied with the 
requirements for monitoring cementing operations, mechanical integrity 
testing, and monitoring during fracturing operations; the accuracy of 
these certifications will be checked through the submission of the 
monitoring and testing data as required in section 3162.3-3(i)(8). 
Assurances of wellbore integrity are critical for knowing whether 
further inquiries are needed to assess any environmental contamination. 
The certification of compliance with applicable permitting and notice 
requirements was in the proposed regulation both for the notice of 
intent and for the subsequent operations. This rule would require only 
that the certification be included with the Subsequent Operations 
Sundry Notice.
    In response to comments provided in meetings with tribal 
representatives, in this revised proposed rule, the certification 
required for Indian lands is detailed separately from the certification 
required for Federal lands. Consistent with the overall approach of 
this rule, the revision is to clarify that this part does not apply 
State or local law to Indian lands. This section does not specify which 
laws apply on Indian or on Federal lands, but only the necessary 
certification.
    Section 3162.3-3(i)(8) is also new to the revised proposed rule and 
it would require the operator to submit evidence supporting the 
information required in paragraphs (e)(1), (e)(2), and (f) of this 
section, including the cement operations monitoring report, any CEL, 
and the result of any MIT. The initial proposed rule would have 
required submission to the BLM of cement bond logs prior to completing 
operations, but that requirement has been revised in response to 
comments that the costs of delays for CBLs would be excessive. As 
mentioned above, requiring the monitoring and testing data, including 
any CELs after operations, will be sufficient to check the accuracy of 
operators' certification that the operations were in compliance with 
the rule.
    New section 3162.3-3(i)(9) would provide that the BLM may require 
submission of data substantiating the information required in paragraph 
(i) of this section. The required information would provide a more 
complete record of the well. If there is an indication that a closer 
examination is necessary, the operator would provide the authorized 
officer with the data relevant to the information reported with the 
Subsequent Operations Sundry Notice.
Comments on Information That Must Be Provided to the BLM After 
Completed Operations
    The BLM received some comments regarding the disclosure through the 
FracFocus Web site of chemical constituents used by operators during 
hydraulic fracturing operations. This online database includes 
information from oil and gas wells in roughly 12 States and includes 
information from over 500 companies. The commenters were divided 
between those supporting disclosure using FracFocus and those opposed 
to its use. Supporters of FracFocus indicated it was a common database 
which many State agencies already use, that the BLM does not have the 
necessary manpower to process and post information on their own, and 
that FracFocus allows for transparency of data to the public.
    The BLM agrees with these comments and has proposed revisions to 
the proposed rule at section 3162.3-3(i) that would recognize FracFocus 
as an approved method of disclosing chemicals. However, the BLM would 
also accept other methods of disclosure, including the submittal of a 
Sundry Notice, or the posting of the information in another BLM-
designated database. The revised proposed rule makes it clear that an 
operator should not disclose any information on the Subsequent Report 
Sundry Notice or on FracFocus that it believes to be exempt from 
disclosure under the Trade Secrets Act or other Federal law. However, 
under the revised proposed rule, the BLM would have the authority to 
require the submittal Trade Secret information on a case-by-case basis. 
A more detailed discussion of the Trade Secrets Act is provided under 
that section of the preamble.
    Commenters objecting to the use of FracFocus were concerned that 
the database lacks search capability or filtering and sorting of 
information, provides incomplete disclosure, and that copyright 
protection prohibits data from being copied. Commenters also expressed 
concerns that FracFocus is not updated in a timely manner, needs a 
dedicated funding source independent from the oil and gas industry, and 
that FracFocus is not a government run Web site and not subject to 
Federal laws or oversight. Some comments proposed that the BLM develop 
an independent government-run database for chemical disclosure.
    While the BLM did not revise this rule in response to these 
comments, it understands that FracFocus is in the process of improving 
the database with enhanced search capabilities to allow for easier 
reporting of information. In addition, information submitted to the BLM 
through FracFocus will still be required to comply with this rule. The 
BLM believes that working with the Groundwater Protection Council and 
the Interstate Oil and Gas Compact Commission to improve FracFocus will 
be more cost-effective and beneficial than creating a separate database 
for Federal and Indian wells.
    The BLM received some comments that suggested that the rule should 
require the reporting of the maximum concentration of each constituent 
in the hydraulic fracturing fluid instead of the actual concentration, 
as was stated in the proposed rule. Commenters also suggested that the 
concentration in percent of total fluids should be reported. The BLM 
agrees with these suggestions because by using maximum concentration, 
the information is consistent with the data fields in FracFocus and the 
requirements of this rule. Most hydraulic fracturing operations are 
conducted on one section or segment at a time along the length of the 
horizontal well bore within the target zone. Operators may adjust or 
vary the actual concentrations of chemicals in later fracturing 
segments based on results in the earlier segments. In such a situation, 
there may be no one concentration of certain chemicals, but the maximum 
concentration could be readily reported. In addition, the maximum 
concentration expressed in percent of total fluid would be helpful in 
determining the toxicity of the fluid in case of accidental spill or 
exposure. For these reasons, the revised proposed rule (section 3162.3-
3(i)(1)) would require the maximum concentration of each chemical used 
in both the additive and in the hydraulic fracturing fluid.
    The BLM received some comments objecting to the amount of 
information required in the subsequent report required in section 
3162.3-3(g). Some commenters suggested that the reporting of chemical 
constituents should include only those constituents that were added and 
not chemicals that could be native to the target zone. One comment 
objected to the requirement that the subsequent report must be 
submitted to the BLM and suggested that the operator maintain the 
information and submit it only upon request. Some comments stated that 
not all chemicals have a Chemical Abstracts Service Registry Number 
(CAS) assigned to them and, therefore, should not be required. 
The BLM did not change the revised proposed rule as a result of these 
comments because the information required is important to its overall 
goal of ensuring public safety and environmental protection.

[[Page 31659]]

    The BLM received some comments that more information should be 
required in the subsequent report, including the volume of the base 
fluid and each chemical used and proppants. The BLM did not revise the 
revised proposed rule as a result of these comments because the 
information already required is sufficient to ensure public safety and 
environmental protection.
    The BLM also requests comments on whether, if the State (for 
Federal lands) or the tribe (for Indian lands) requires submission of 
the same or more information about the chemical constituents of 
hydraulic fracturing fluids, and provides that the information would be 
publicly available (except for trade secrets protected under State or 
tribal law), the BLM should deem compliance with those disclosure 
requirements within 30 days from completion of hydraulic fracturing 
operations to be compliance with proposed section 3162.3-3(i)(1). Such 
an amendment would reduce the compliance burden on operators in some 
areas, compared with the revised proposed section 3162.3-3(i)(1). 
However, if the State or the tribe does not require posting of the data 
on FracFocus, it could be less convenient for the public or the BLM to 
obtain the data, or to compare data across jurisdictions.
    The BLM received some comments that stated an operator cannot 
certify actions of a third party or a contractor. The BLM disagrees 
with this comment. Existing regulations (43 CFR 3162.3(b)) specify that 
an operator is responsible for the conduct of every contract service 
provider on the operator's well site and lease, including the on-site 
activities and regulatory compliance of any hydraulic fracturing 
contractor. This requirement in the revised proposed rule is consistent 
with existing Federal regulations; therefore the BLM did not revise 
this rule as a result of this comment.
    Some comments stated that the rule needs clarification on how to 
certify that wellbore integrity has been maintained throughout the 
hydraulic fracturing process. Certification of wellbore integrity would 
include certification of the monitoring requirements proposed in 
section 3162.3-3(f)(2). No revisions to the initial proposed rule were 
made as a result of this comment.
    The BLM received some comments that said the rule should require 
operators to certify that they have complied with all Federal, State, 
and local laws. The BLM did not revise the rule as a result of these 
comments. The BLM believes, since all lease exploration, development, 
construction, production, operations, and reclamation activity is 
required to be conducted in a manner which conforms to all applicable 
Federal, State, and local laws and regulations, that requiring 
additional certifications, as suggested, would be redundant and cause 
unnecessary delays in approval and processing of APDs and sundry 
notices. All lease operations are already subject to the terms of the 
lease and its stipulations, the regulations of 43 CFR part 3100, 
Onshore Oil and Gas Orders, NTLs, the approved APD, and any written 
instructions or orders of the BLM authorized officer. In addition, the 
initial proposed rule and the revised proposed rule at section 3162.3-
3(i)(7) would require the operator to certify that the hydraulic 
fracturing fluid used complied with all applicable permitting and 
notice requirements as well as all applicable tribal or Federal, State, 
and local laws, rules, and regulations. The BLM did not revise the rule 
as a result of this comment. However, we note that BLM would not 
normally take enforcement action based on an operator's innocent use of 
chemicals inadvertently mis-labeled by the manufacturer. BLM does not 
want to create an incentive in the rule that would make mis-labeled 
chemicals more valuable than properly labeled chemicals.
    Section 3162.3-3(j) is substantially different from the proposed 
rule. This section would notify the operator of procedures it needs to 
follow to identify information otherwise required to be submitted under 
this section that the operator believes to be exempt, by law, from 
public disclosure. The operator should not disclose any particular 
information on the Subsequent Report Sundry Notice or through FracFocus 
that it believes to be exempted from public disclosure by the Trade 
Secrets Act or other Federal law. Instead, the operator should identify 
that particular information as a trade secret. For any information 
submitted under section 3162.3-3(j)(1), the operator would be deemed to 
have waived any right to protect that information from public 
disclosure. For the claimed exemption of any information required under 
paragraph (i)(1) of this section, the operator would be required to 
submit to the BLM an affidavit that:
    (1) Identifies the Federal statute or regulation that prohibits the 
public disclosure;
    (2) Affirms that the information is not publicly available;
    (3) Affirms that the information is not required to be publicly 
available under any applicable law;
    (4) Affirms that the release of the information would likely harm 
the operator's competitive position; and
    (5) Affirms that the information is not readily apparent through 
reverse engineering.
    For information which the operator does not believe to be exempt 
from public disclosure, this regulation is similar to the proposed 
regulations. Under section 3162.3-3(j)(2), any information provided in 
a Subsequent Report Sundry Notice or through FracFocus or other 
designated database would not be protected by the Trade Secrets Act or 
other Federal law.
    For information claimed to be exempt from public disclosure, this 
rule is different from the proposed rule's exemption requirements. The 
proposed regulation would have required operators to submit the 
identities of all the chemicals used in the fracturing operations, to 
segregate the information the operator considered to be exempt from 
disclosure, and to justify the exemption. This rule does not require 
submission to the BLM information exempt by law from public disclosure. 
Instead, under section 3162.3-3(j)(1), the operator would submit an 
affidavit similar to the one required by regulations in the State of 
Colorado. If the affidavit is complete, it is possible that the 
operator may not be asked to submit any additional information 
regarding the claimed trade secrets. The BLM would have the discretion 
to require the operator to submit the undisclosed information for the 
BLM's review. Also, the BLM retains the discretion to adjudicate 
whether the undisclosed chemicals are exempt from public disclosure. If 
the BLM requested the information and determined that the information 
is exempt from disclosure, it would be kept confidential to the extent 
allowed by law.
Comments On Information Claimed To Be Exempt From Public Disclosure
    Some commenters addressed the BLM's management of information about 
chemicals used in hydraulic fracturing operations. The proposed 
regulation would have required operators to provide information 
identifying all of the chemicals used in hydraulic fracturing fluids. 
For information that operators believed to be exempt from public 
disclosure under Federal law (referred to here as ``trade secrets''), 
the proposed regulation would have required operators to submit that 
information to the BLM, mark that information as a trade secret and 
provide a justification for not releasing that information to the 
public. A commenter noted that not all States

[[Page 31660]]

with oil and gas operations require public disclosure of the chemicals 
used in hydraulic fracturing fluids and that those that do require 
public disclosure are not uniform in their requirements. Some 
commenters wanted the BLM to provide for disclosure of trade secrets to 
the public, either upon demand of health officials or first responders 
or at the request of any member of the public. Other commenters wanted 
additional assurances that trade secrets would be kept confidential, or 
objected to providing trade secret information to the BLM, and some 
stated that uncertainty in protection of trade secrets could stifle 
innovation.
    The Federal Trade Secrets Act makes it a crime for any Federal 
employee to make an unauthorized disclosure of a trade secret. See 18 
U.S.C. 1905. The BLM lacks statutory authority to exclude hydraulic 
fracturing chemicals by regulation from the scope of the Trade Secrets 
Act. A commenter argued that the general rulemaking authority of the 
Secretary found in FLPMA, the Mineral Leasing Act, and the Indian 
mineral leasing statutes is sufficient for the BLM to require public 
disclosure of all chemicals without regard to the Federal Trade Secrets 
Act. The judicial opinions cited by that commenter, though, are 
distinguishable because the statutes at issue in those cases clearly 
contemplated public disclosure, and thus provided the necessary legal 
authorization for disclosure. The commenter's assertion that more 
information provided to the public would assist the BLM in its 
statutory duties does not render disclosure of operators' trade secrets 
``authorized by law.''
    Some States that require submission of trade secret information 
about hydraulic fracturing chemicals have laws which allow disclosure 
under certain circumstances to medical providers, public health 
officials, land owners, or first responders. The Federal Trade Secrets 
Act, however, does not provide for such exceptions.
    The BLM believes that the initial proposed rule requiring operators 
to disclose trade secret information with justification for protecting 
each piece of information and requiring the BLM to maintain the 
confidentiality of all trade secret chemicals would not be the best 
solution. It would increase paperwork burdens on operators, and 
custodial requirements for the BLM. Because the BLM could not reveal 
trade secret information, the benefits of requiring operators to submit 
all such information would be limited. Revised section 3162.3-3(j) 
would instead instruct operators not to submit trade secret information 
with their disclosure of non-trade secret chemical information. Rather, 
operators claiming that some chemical information is a trade secret 
would withhold the information and submit an affidavit, modeled on the 
one used by the State of Colorado, to affirm that the undisclosed 
information is entitled to protection from public disclosure. The 
original affidavit may be submitted to the BLM with the subsequent 
report sundry notice within 30 days of completion of hydraulic 
fracturing operations, or an electronic version acceptable to the BLM 
field office may be submitted within that time. The electronic version 
would have the same legal effect as an original affidavit.
    The operators would keep the undisclosed information for 6 years, 
under existing 43 CFR 3162.4-1(d). The BLM would have the discretion to 
require any operator to provide the withheld information. The BLM might 
demand withheld chemical information for reasons that could include the 
need to assist in tracing the origin of chemicals in a possible 
contamination event or to assure that operators are not claiming trade 
secret protection without justification.
    Some commenters asserted that various engineering and construction 
features of oil and gas wells may be deserving of trade secret 
protection. For information, other than that required in revised 
proposed section 3162.3-3(i)(1), believed to be protected from public 
disclosure, the submitter must comply with the existing regulations at 
43 CFR 3100.4. The procedure in revised proposed section 3162.3-3(j) 
applies only to the information required in revised proposed section 
3162.3-3(i)(1).
    Some commenters directed the BLM's attention to statutes such as 
the Occupational Safety and Health Act and the Emergency Response and 
Community Right to Know Act, and to regulations promulgated by other 
Federal agencies under the authority of such Acts. Those statutes, 
though, do not authorize the BLM to regulate the information required 
under those programs or to authorize disclosure of trade secrets. The 
revised proposed rule, however, would not interfere with other Federal 
agencies administering their programs, and would not preempt applicable 
State, local, or tribal laws that might require operators or other 
agencies to make chemical information available.
    Other commenters asserted that operators should not be responsible 
for asserting and justifying trade secret protection for chemicals 
selected by service contractors. On the contrary, operators are 
responsible for all operations on their well sites and for compliance 
with all of the BLM's operating and reporting regulations. Some 
commenters believed that 10 days notice of a decision by the BLM before 
information would be released to the public was not sufficient to 
obtain temporary relief from a court. However, ten days is the notice 
for such decisions under the Department's FOIA regulations at 43 CFR 
4.23(g). Some commenters suggested that trade secret issues should be 
centrally coordinated within the agency rather than be subject to field 
office case-by-case determinations. Trade secret issues are inherently 
specific to technologies, well locations, fracture zones, and times. 
The BLM will address trade secret issues at the most appropriate level 
of its organization, but that does not need to be specified in 
regulation.
Section Discussion
    Under new section 3162.3-3(j)(4), information that the operator 
claimed to be exempt from disclosure would be required to be maintained 
in the operator's records for 6 years after the completion of the 
hydraulic fracturing operations, by referring to existing regulations 
at 43 CFR 3162.4-1(d). That time period will assure that records are 
available, but should not be unduly burdensome for operators. Section 
3162.3-3(j)(4) has been added because the revised proposed rule has 
eliminated the requirement that operators routinely report information 
on trade secret chemicals to the BLM. In order for the BLM to have 
access to the withheld information, the rule needs a mandatory 
retention requirement. Existing section 3162.4-1(a) requires retention 
of ``accurate and complete records with respect to all lease 
operations,'' and subsection (d) of that section requires those records 
be retained for 6 years from the date they were generated. The 
reference to section 3162.4-1(d) is to provide consistency for 
operators. The BLM, however, is interested in comments with 
environmental and economic information that would show that another 
time period would be more appropriate.
    Section 3162.3-3(k) would provide the operator with a process for 
requesting a variance from the minimum standards of this regulation. 
Variances apply only to operational activities, including monitoring 
and testing technologies, and do not apply to the actual approval 
process. The revised proposed rule adds a provision allowing the BLM to 
designate a variance applicable to all wells in a field, a basin,

[[Page 31661]]

a State, or within Indian lands. Such a variance would be based on the 
BLM's determination that the variance will meet or exceed the 
effectiveness of the regulation and would allow the BLM to adapt the 
regulatory requirements to the unique geology of an area. It would also 
be another way that the BLM could defer to a standard, technology, or 
process required or allowed by State or tribal law that meets or 
exceeds the effectiveness of the revised proposed rule. Under section 
3162.3-3(k)(1) a request for a variance would be required to 
specifically identify the regulatory provision of this section for 
which the variance is being requested, explain the reason the variance 
is needed, and demonstrate how the operator will satisfy the objectives 
of the regulation for which the variance is being requested.
    Section 3162.3-3(k)(2) states that the BLM must make a 
determination that the variance request meets or exceeds the objectives 
of the regulation. For example, an operator could request a variance 
from the requirement to monitor pressure in the annulus between any 
intermediate casing string and the production string because the last 
intermediate string was run as a liner and did not extend to the 
surface. The BLM could grant a variance in this situation because 
monitoring the annulus between the production casing and an 
intermediate string that did extend to the surface meets the objective 
of ensuring mechanical integrity is maintained during the hydraulic 
fracturing operation. This variance provision is consistent with 
existing BLM regulations such as Onshore Order Number 1 (see Section X. 
of Onshore Order No. 1).
    Section 3162.3-3(k)(3) would state that a variance under this 
section does not constitute a variance to provisions of other 
regulations, laws, or orders.
    Section 3162.3-3(k)(4) makes clear that the BLM has the right to 
rescind a variance or modify any condition of approval due to changes 
in Federal law, technology, regulation, field operations, 
noncompliance, or other reasons. The BLM would intend for an operator 
to rely on a variance, and thus would not expect to rescind it. When 
BLM finds that rescinding a variance is necessary, ordinarily, the 
BLM's rescission of a variance would be effective only prospectively. 
Conceivably, an operator might obtain a variance through such 
misrepresentations that it must not continue to benefit from the 
variance, or a variance is issued in violation of a statute or causes 
such significant harm that it must be rescinded retroactively, but such 
situations should rarely occur.
    Section 3162.5-2(d) would remove the references to fresh water and 
removes the phrase ``containing 5,000 ppm or less of dissolved 
solids.'' This rule would require the operator to isolate all usable 
water and other mineral bearing formations and protect them from 
contamination. This language does not set a new standard in the BLM's 
regulations and does not create new compliance requirements for those 
operating on public and Indian lands. Since 1988, Onshore Order No. 2, 
Section II.Y., has defined usable water and at Section III.B. has 
required the operator to ``protect and/or isolate all usable water 
zones.'' Revised proposed section 3162.5-2(d) brings these regulations 
into conformity with Onshore Order No. 2, and provides the appropriate 
standard for control of wells, including hydraulic fracturing 
operations. Properly constructed and cemented production casing, and 
where appropriate, intermediate casing, will in most cases provide 
effective isolation of usable water and other mineral-bearing 
formations below the surface casing.

IV. Procedural Matters

Federal and Indian Oil and Gas Leasing Activity

    To understand the context of the costs and benefits of this rule, 
BLM includes background information concerning the BLM's leasing of 
Federal oil and gas, and management of Federal and Indian leases. This 
analysis explains the basis for the conclusions related to the 
procedural matters sections that follow. The BLM Oil and Gas Management 
program is one of the largest mineral leasing programs in the Federal 
Government. At the end of fiscal year (FY) 2012, there were 48,699 
Federal oil and gas leases covering 37,792,212 acres. For FY 2012, 
there were 92,583 producible and service drill holes and 99,015 
producible and service completions on Federal leases. In FY 2012, 
onshore Federal oil and gas leases produced about 118 million barrels 
(Bbl) of oil, 2.81 billion Mcf (thousand cubic feet) of natural gas, 
and 2.84 billion gallons (Gal) of natural gas liquids, with a 
production value of almost $23 billion and generating royalties of 
almost $2.6 billion. Oil and gas production from Indian leases was 
almost 29 million barrels of oil, 256 million Mcf of natural gas, and 
155 million gallons of natural gas liquids, with a production value of 
$3.4 billion and generating royalties of $561 million.

               Table 2--Federal and Indian Oil and Gas Production and Royalties, Fiscal Year 2012
----------------------------------------------------------------------------------------------------------------
                                                                              Sales value ($       Royalty ($
                                                            Sales volume         million)           million)
----------------------------------------------------------------------------------------------------------------
Federal Leases:
    Oil (Bbl)..........................................        118,142,826            $10,442             $1,275
    Gas (Mcf)..........................................      2,806,572,692              9,258                976
    NGL (Gal)..........................................      2,839,924,280              2,947                298
                                                        --------------------------------------------------------
        Subtotal.......................................  .................             22,648              2,550
                                                        ========================================================
Indian Leases:
    Oil (Bbl)..........................................         28,989,309              2,441                424
    Gas (Mcf)..........................................        256,176,345                762                116
    NGL (Gal)..........................................        155,313,421                183                 21
                                                        --------------------------------------------------------
        Subtotal.......................................  .................              3,386                561
----------------------------------------------------------------------------------------------------------------
Source: Office of Natural Resource Revenue, Federal Onshore Reported Royalty Revenue, Fiscal Year 2012 and
  American Indian Reported Royalty Revenue, Fiscal Year 2012.


[[Page 31662]]

Estimating Benefits and Costs

    This analysis estimates the potential costs and benefits that would 
occur as a result of the rule. Therefore, this analysis measures the 
impacts in relation to the current operating environment (or the 
baseline).
    In analyzing the costs and benefits of the rule, it is important to 
differentiate between the activities that operators currently conduct 
and those additional activities that the rule would compel. This change 
in behavior provides the basis of the cost and benefit estimates.
    OMB Circular A-4 recognizes that not all benefits and costs can be 
described in monetary or even in quantitative terms. In such cases, the 
circular directs agencies to present any relevant quantitative 
information along with a description of the unquantifiable effects.
Measuring the Incremental Change
    Many of the provisions in the rule are conducted voluntarily by 
operators as a matter of company practice or standard industry 
practice. Operators have a vested interest in ensuring that wells are 
constructed properly to avoid problems that might jeopardize their 
investment. As a matter of industry practice, operators typically 
perform the following tasks:
     Develop a plan for the hydraulic fracturing operation;
     Monitor the cementing processes;
     Cement the casing to protect water zones;
     Conduct pressure tests on casing strings during the 
drilling process or before hydraulic fracturing operations;
     Maintain drill logs identifying usable water zones;
     Run CBLs and/or other evaluation logs on the production 
casing and sometimes on the intermediate casing, if formations of 
interest that are above the producing zone or to maintain compliance 
with State regulations, State permit requirements, or Federal permit 
requirements;
     Monitor annulus pressures during the hydraulic fracturing 
operation; and
     Manage the flowback of fluids.
    Some practices required in the rule are already conducted by 
operators in order to comply with existing applicable State regulations 
or requirements. Such State regulations often dictate how an operator 
cements a well, what tests or logs it conducts, how it handles 
flowback, or whether it must disclose the chemical contents of the 
hydraulic fracturing fluid. In addition to regulations, states may 
place requirements in the drilling permits as conditions of approval.
    Some of the provisions in the rule repeat existing Federal 
requirements. Operators on Federal and Indian lands are already in 
compliance with those provisions, and therefore the rule does not pose 
an additional burden. For example, the BLM has casing and cementing 
requirements to protect and/or isolate usable water zones, found in 
Onshore Order No. 2, that are consistent with the final rule. Operators 
on Federal and Indian leases who are drilling in compliance with 
Onshore Order No. 2 would also be in compliance with this rule; 
accordingly the rule poses no additional burden for drilling and 
cementing operations, but does require testing and reporting to assure 
that usable water zones are isolated. Like State regulatory 
authorities, the BLM or a tribe may also place requirements on 
operators as a condition of approval for the drilling permit. Where 
appropriate and possible, the analysis does not consider impacts in 
areas where operators already adhere to the rule's provisions as a 
matter of voluntary practice or regulatory compliance with existing 
Federal, tribal or State regulations or requirements in conditions of 
approval.
Costs Framework
    To examine the costs of the rule, the analysis considers the number 
of hydraulic fracturing operations that would be subject to the various 
requirements and the costs of the various requirements. While the rule 
would apply to all hydraulic fracturing operations on Federal and 
Indian lands, specific provisions in the rule may apply only to a 
subset of those operations. For example, the rule requires Subsequent 
Report (SR) Sundry submissions for all hydraulic fracturing operations. 
However, the number of required NOI Sundry requests and the CELs 
conducted would be fewer.
    The three key components to the cost formulation are the estimated 
number of hydraulic fracturing operations, the applicability of 
provisions to those operations, and the compliance costs to satisfy the 
provisions. Lower estimates in either of these areas would lead to 
lower estimates of the total costs of the rule. Likewise, higher 
estimates would lead to higher estimated total costs.
    Protecting usable water: The BLM already requires casing and 
cementing to protect usable water zones that are consistent with the 
final rule. Therefore, the rule does not pose an additional burden to 
operators.
    Pressure Testing Requirement: The pressure testing requirement is 
consistent with standard industry practice, State regulations, and BLM 
regulations. The requirement does not pose an additional burden to 
operators.
    Pit liner or storage tank requirement: The requirement to manage 
flowback in lined pits or storage tanks is consistent with almost all 
existing State regulations in States where new oil and gas activity is 
occurring on BLM-managed lands. The requirement would pose an 
additional burden to operators only on Federal and Indian leaseholds in 
States or on Indian lands without existing requirements and for those 
operators that do not voluntarily comply.
    Disposal of flowback: The revised proposed rule would require that 
operators comply with applicable laws and is consistent with Onshore 
Order No. 7 disposal requirements for produced water. We do not expect 
that these provisions will pose additional burdens to operators.
    Cement evaluation logs on casing strings that protect usable water: 
The rule has a provision to conduct CELs on the casing strings that 
protect usable water. The applicable casing strings include the surface 
casing and sometimes the intermediate casing. Operators do not 
typically run CELs to evaluate the cement behind the surface casing, so 
the rule would require an additional step and cost in the drilling 
process. Not all wells require intermediate casing, and wells that 
require intermediate casing may do so for reasons other than to protect 
usable water. In addition to requiring a CEL on the surface casing of 
type wells and wells not associated with a type-well development 
proposal, the rule would compel CELs on intermediate casing that 
protects usable water, and further, is deemed to compel CELs only on 
those intermediate casings where the operator would not otherwise 
conduct a CEL in compliance with State regulations or conditions of 
approval or do so voluntarily.
    Subsequent wells under a type well approval: Under the revised 
proposed rule, not all wells would be subject to the CEL requirement. 
The subject activity should reflect the number of CELs on single wells 
and on type wells, but not for the subsequently drilled wells under a 
type well approval.
    Requiring a CEL when there is an indication of inadequate 
cementing: Under the rule, operators on all wells (single wells, type 
wells, and subsequent wells to a type well) are required to run a CEL 
when there is an indication of inadequate cementing of a casing string 
that protects usable water. The BLM and many State regulations and 
requirements have established protocols for remedial actions in the 
event of inadequate cementing. Those protocols require operators to 
remediate

[[Page 31663]]

to the authorized officer's satisfaction and where the regulatory 
authority may request results from a CEL. For example, Onshore Order 2 
requires that operators perform remedial cementing if cement is not 
circulated back to the surface for the surface casing (Section 
III.B.1.c). Onshore Order 2 also requires an additional pressure test 
or remedial action as specified by the authorized officer if a pressure 
test indicates that casing strings do not meet minimum standards 
(Section III.B.1.h). Onshore Order 2 lists other minimum standards and 
corrective actions, including some that require logging or testing, 
remedial cementing, and actions specified by the authorized officer.
    Measuring the costs of a CEL: The rule introduces a new step (or 
steps) to the drilling process, depending on the well. This new step 
potentially poses an additional cost burden to operators for the costs 
of the CEL and the costs to maintain idle drilling equipment if the 
drilling process is delayed.
    After cementing the casing, operators must wait for a period of 
time for the cement to harden before conducting any well tests and 
drilling the plug. The BLM requires operators to wait until the cement 
at the casing shoe reaches a compressive strength of 500 psi. States 
generally have compressive strength standards similar to the BLM's. For 
example, the State of Montana requires operators to wait 8 hours and 
New Mexico requires operators to wait anywhere from 8 to 18 hours.
    While waiting for the cement behind the surface casing to set, 
operators will install other required equipment on the well, including 
blowout preventers. After the cement has hardened sufficiently and the 
operator has satisfied Federal or State requirements, operators would 
normally conduct a pressure test on the surface casing, drill through 
the plug, drill for an additional interval into the formation, and then 
test the shoe. After a successful shoe test, operators then drill the 
intermediate hole. The process is generally the same for the 
intermediate casing; however, operators may also run a log on the 
intermediate casing depending on the circumstances described before.
    We received some comments on the proposed rule suggesting that, by 
requiring CBLs, the rule would force all operators to maintain idle 
drilling equipment while the cement reached additional compressive 
strength sufficient for a CBL to show meaningful results. At issue is 
the idea that an operator would need to wait an additional amount of 
time before pressure testing the casing or drilling through the plug.
    An operator does not have to stand idle at this point in time. For 
example, an operator may pressure test the surface casing, drill out 
the plug, test the shoe, and then drill the intermediate hole. An 
operator may then perform a CEL at any point in time before setting the 
intermediate casing, i.e., while replacing a drill bit. In any of these 
scenarios, however, ancillary delays associated with the availability 
of the logging company and the time required to run the log could still 
result.
    Operators drilling multiple wells on a pad should also be able to 
run a CEL and avoid potential drilling delays. When drilling multiple 
wells on a pad, an operator may use a smaller drilling rig (known 
throughout the industry as a ``double'' rig) to sequentially drill a 
casing hole, set casing, and cement casing of each well, one by one. 
After the surface holes have all been sequentially drilled, cased, and 
cemented, the operator will remove the small drilling rig from the pad, 
and bring in a large drilling rig to drill the subsequent sections of 
each well. If an operator is drilling multiple wells in this fashion, 
then it may continue the drilling process while the cement sets on the 
first well, and log that well at the operator's convenience. In these 
situations, the operator would incur no additional costs associated 
with maintaining idle drilling equipment.

Benefits Framework

    While the potential benefits of the rule are more challenging to 
monetize than the costs, they are significant. The rule is designed to 
reduce the environmental and health risk posed by hydraulic fracturing 
operations, particularly in its treatment of flowback fluids, well 
construction, and hydraulic fracture design. Stronger field operations 
with sound resource protections provide improved efficiency for the BLM 
to administer the program management for oil and gas with fewer 
protests, fewer compliance problems, fewer FOIAs, and other activities 
that divert limited available staff.
    The primary challenge in monetizing benefits lies in the 
quantification of a risk that is largely unknown. Risk is the product 
of the likelihood of an incident occurring and the impact that would 
result. In this context, risk is the probability of an incident 
occurring from hydraulic fracturing times the cost of the damage. The 
monetized benefit of this rule would be the reduction in risk 
attributed to the rule, which also represents the avoided costs of 
remediating damage.
    Though operators are required to remediate damage when it occurs, 
there may be uncertainty about the true cost or extent of the damage or 
limitations in connecting an incident with an operation. Even if the 
damage is internalized, the overall benefit to society would be less 
than if the incident was avoided (if the compliance costs are less than 
the damage costs), since resources would have been unnecessarily 
dedicated to the remediation.
    Operators are required to notify the BLM when undesirable events 
occur. Undesirable events may include accidents, or accidental spills 
or releases of hydrocarbon fluids, produced water, hydraulic fracturing 
flowback fluids, or other substances. These events have the potential 
to adversely affect public lands and other important resources; reduce 
the value of the minerals and lands; plus add expensive costs to the 
BLM inspection and enforcement by diverting limited staff.
    There are limitations in using the BLM data on undesirable events 
for this analysis. First, the data do not specify whether the 
undesirable events occurred as a result of any of the drilling or 
completion activities associated with the hydraulic fracturing 
operations. In addition, the available data cannot be readily matched 
with particular provisions in the rule. The data provides figures for 
the incidence of spills, accidents, injuries, and other impacts on a 
well, but the pit liner information is generally not specified in the 
incident reports for spills or leaks. As such, there is difficulty in 
quantifying the level of risk reduction that would be attributed to the 
regulations, even though the regulations would most certainly reduce 
risk.
    Damage, in general, is unknown, particularly when attempting to 
generalize damage costs which may vary by expected magnitude and 
reversibility of effects. Also, the valuation of the damage may also 
take many and highly variable forms. For example, an undesirable 
incident occurring during hydraulic fracturing might require the 
remediation of surface or subsurface areas. The incident might also 
require that the operator shut-in temporarily or plug the well before 
it may produce all of the mineral resources. In this case, the operator 
would lose revenue and society would not benefit from the produced 
resources. Such would be the same for spills.

Discounted Present Value

    There is a time dimension to estimates of potential costs and 
benefits. The potential events described, if they occur at all, may be 
in the distant future.

[[Page 31664]]

The further in the future the benefits and costs are expected to occur, 
the smaller the present value associated with the stream of costs and 
benefits. As such, future costs and benefits must be discounted.\1\ The 
discount factor is then used to convert the stream of costs and 
benefits into ``present discounted values.'' When the estimated 
benefits and costs have been discounted, they can be added to determine 
the overall value of net benefits.
---------------------------------------------------------------------------

    \1\ Discount factor = 1/(1+ r)\t\ where r is the discount rate 
and t is time measured in years during which benefits and costs are 
expected to occur.
---------------------------------------------------------------------------

    The OMB's basic guidance on the appropriate discount rate to use is 
provided in OMB Circular A-94. The OMB's Circular A-94 states that a 
real discount rate of 7 percent should be used as a base-case for 
regulatory analysis. The OMB considers the 7 percent rate as an 
estimate of the average before-tax rate of return to private capital in 
the U.S. economy. It is a broad measure that reflects the returns to 
real estate and small business capital as well as corporate capital. It 
approximates the opportunity cost of capital, and it is the appropriate 
discount rate whenever the main effect of a regulation is to displace 
or alter the use of capital in the private sector.
    OMB Circular A-4 also states that a 3 percent discount rate should 
be used for regulatory analyses and provides an explanation of the use 
of the discount rate as follows: ``The effects of regulation do not 
always fall exclusively or primarily on the allocation of capital. When 
regulation primarily and directly affects private consumption (e.g., 
through higher consumer prices for goods and services), a lower 
discount rate is appropriate. The alternative most often used is 
sometimes called the `social rate of time preference.' This simply 
means the rate at which `society' discounts future consumption flows to 
their present value.''
    The analysis also examines potential costs and benefits using 10 
and 12 percent discount rates. The consideration of higher discount 
rates are appropriate for this analysis, since the rule imposes costs 
on the oil and gas industry and the opportunity cost of not having that 
available capital is generally higher than 3 and 7 percent. The higher 
rates also serve as a sensitivity test.

Uncertainty

    The costs and benefits provided in this analysis are estimates and 
come with uncertainty. We describe the primary sources of uncertainty 
below:
     Type well applicability: The estimates for the rule rely 
largely on the concept of the type well. In terms of cost calculations, 
the uncertainty lies in an average number of wells that would be 
covered under a type well approval. While the BLM is confident that the 
average number of wells that an operator completes in a field is a good 
measure with which to base the estimate, the measure is positively 
skewed by a fewer number of firms with a high number of wells. This 
does not suggest a problem with the data, but rather that the 
experiences of operators will vary, and that the likely scenario is 
that the typical operator completes fewer wells than the average. In 
terms of benefit calculations, there is uncertainty about the 
effectiveness of the type well concept, and how reliably the CEL 
results on casing strings of a type well assure adequate cementing for 
subsequent wells in the same geologic area.
     Length of delay time to run a CEL: A large source of 
uncertainty is the amount of time that the CEL requirement might delay 
drilling operations. The BLM received comments suggesting that the CEL 
would delay drilling operations for up to 72 hours. The CEL on the 
surface casing, in particular, poses a new step in the drilling process 
for operators. A large source of uncertainty is the extent to which 
operators would be subject to delays, and if so, how they will be able 
to incorporate this new requirement and minimize or eliminate potential 
delays through operating efficiencies.
     Percent of wells encountering problems during the 
cementing process: Cementing problems and downhole conditions, in 
general, are not widely reported metrics. This analysis uses 3 percent 
as the basis for calculating the potential costs and benefits.
     Benefits of specific provisions for well integrity and NOI 
Sundry submission: Further uncertainty lies in the estimation of 
benefits and the cumulative effect of the rule's provisions on 
mitigating the potential risks of hydraulic fracturing operations. This 
rule has specific provisions that would help operators and the BLM 
better identify potential issues in wellbore integrity and fracturing 
design, before operations begin. However, it is difficult to attribute 
benefits to one single test (for instance the CEL) when that is only 
one part of the overall evaluation of wellbore integrity.

Results

    Where appropriate, this analysis monetizes costs and benefits 
expected to occur over the next 10 years, from 2013 to 2022. This 
period of analysis was chosen because 10 years is the length of the 
primary lease term on BLM-managed lands. The analysis presents a range 
of expected outcomes due to uncertainty about the generalization of 
costs and benefits across all hydraulic fracturing operations. In 
developing the rule, the BLM considered several alternatives. The 
alternatives primarily focused on two topic areas: Verification of 
proper cementing behind casing strings through CELs and the management 
of flowback fluids from operations. One alternative would require CELs 
on casing strings protecting usable water for all wells and the use of 
storage tanks to manage flowback. A second alternative would require 
CELs on casing strings protecting usable water for all wells but does 
not establish requirements for storage tanks or lined pits. Table 3 and 
Table 4 show a summary of incremental costs and benefits, respectively, 
for the rule and the alternatives examined. To annualize the 
incremental costs and benefits, the analysis calculates the annualized 
value (AV). Where monetized, the results are presented in 2012 dollars.
    The entire results are available in the full Economic Analysis and 
Regulatory Flexibility Analysis available at the address listed in the 
ADDRESSES section of this rule.

                                            Table 3--Summary of Costs
                                                   [$Million]
----------------------------------------------------------------------------------------------------------------
                                                                      Revised
                        Annualized value                           proposed rule   Alternative 1   Alternative 2
----------------------------------------------------------------------------------------------------------------
Undiscounted....................................................           12-20         119-213         119-213
Discounted at 3%................................................           12-19         118-213         118-213

[[Page 31665]]

 
Discounted at 7%................................................           12-19         118-212         118-212
Discounted at 10%...............................................           12-19         117-211         117-211
Discounted at 12%...............................................           12-19         117-211         117-211
----------------------------------------------------------------------------------------------------------------

    The annualized values of the costs do not vary significantly across 
different discount rates. This is expected for several reasons. When 
the original cost schedule is relatively constant over time (neither 
front-loaded nor back-loaded) the AV will be relatively similar to the 
average cost. This is expected with compliance costs related to this 
rule, since the total compliance costs for the rule are expected to be 
relatively similar over future years, owing to similar activity data 
(i.e., the number of hydraulic fracturing operations) and that the 
compliance costs for a single operation are contained within a short 
timeframe.

                                   Table 4--Summary of Non-Monetized Benefits
----------------------------------------------------------------------------------------------------------------
                                                                       Rule        Alternative 1   Alternative 2
                     Non-monetized benefits                          (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Percent of individual hydraulic fracturing plans reviewed by the              11             100             100
 BLM............................................................
Percent of hydraulic fracturing operations using unlined pits...               0               0            0.15
Percent of individual wells where wellbore integrity is                        8              96              96
 demonstrated with CELs on casing strings that protect usable
 water..........................................................
Percent of wells where wellbore integrity is demonstrated with               100             100             100
 pressure tests.................................................
Percent of hydraulic fracturing operations where chemical                    100             100             100
 content of fluids are disclosed................................
----------------------------------------------------------------------------------------------------------------


 
                                                     Estimated
             Non-monetized benefits                  baseline          Rule        Alternative 1   Alternative 2
                                                     (percent)
----------------------------------------------------------------------------------------------------------------
Likelihood of Minor Incident....................            2.70             N/A             N/A             N/A
Likelihood of Major Incident....................            0.03             N/A             N/A             N/A
----------------------------------------------------------------------------------------------------------------

Estimated Costs of Revised Proposed Rule

    Annualized costs to the industry are estimated to be between about 
$12 and $20 million when undiscounted and when using discount rates of 
3, 7, 10, and 12 percent. The net present value of total costs over the 
10-year period are estimated to be between $102 to $166 million when 
discounted at 3 percent, between $84 and $136 million when discounted 
at 7 percent, between $73 and $119 million when discounted at 10 
percent, and between $67 and $109 million when discounted at 12 
percent.
    The largest cost burden lies with the CEL requirement, which is 
also the source of the greatest amount of uncertainty when developing 
estimates. Drilling methods, procedures, and requirements vary across 
operations, locations, and States, so it is challenging to place an 
exact dollar figure on the appropriate cost.
    The estimated costs for the CEL requirement are driven to a large 
extent by the amount of time operators might have to maintain idle 
drilling equipment on-site. The lower bound of the estimated CEL 
requirement includes the annual costs of conducting CELs on the surface 
casing, assuming that operators using a small rig to drill the surface 
holes of wells would likely avoid the costs of maintaining idle 
drilling equipment. The estimate possibly represents the lowest 
possible cost; however, there is a chance it could be even lower 
depending on the ability of the operators on other wells to maximize 
efficiencies and reduce delays. The upper bound of the estimated CEL 
requirement does not account for the potential of operators to reduce 
delays below 24 hours per CEL on the surface casing and 48 hours on the 
intermediate casing. While the estimate possibly represents the maximum 
total cost, it may underestimate the total costs if CELs result in 
delays assumed.
    The BLM has assumed delay times to account for additional 
compressive requirements and ancillary delays that could occur. 
However, there are several ways for operators to reduce the amount of 
idle time. The Economic Analysis prepared for this rule analyzed the 
sensitivity of the upper bound total estimates to assumed idle times. 
If operators are able to reduce the assumed delays by 25 percent, then 
the upper bound costs estimates would be reduced by 19 percent. On the 
other hand, if the assumptions underestimate the delay times by 25 
percent, then the upper bound estimate would be increased by 19 
percent.
    The administrative compliance costs are non-trivial and are based 
on a per submission cost of $478. It is likely that operators, over 
time, will be able to gain efficiencies and reduce costs below the 
estimates provided.
    The costs provided are estimates of the direct costs and not the 
overall costs to society. There is uncertainty about the effect that 
the rule would have across all potential hydraulic fracturing 
operations. The rule has a provision for type well approval of the NOI 
Sundry and log requirements (unless the operator encounters problems 
with improper cementing) and affords operators drilling many wells in a 
geologic area greater efficiency than it does for operators drilling a 
single well or few wells. If one assumes that operators cannot derive 
efficiencies to avoid the costs of idle rig time, it could favor 
activity in development fields over exploratory areas.
    There is also flexibility in how the various BLM authorized 
officers might treat applications for variances, and to what extent 
that will allow operators to potentially reduce costs. There are well

[[Page 31666]]

construction methods, such as the use of a ``frac string,'' that reduce 
the pressures placed on the intermediate casing and surface casing 
strings during hydraulic fracturing operations. This is one potential 
area where an operator might receive a variance.

Average Compliance Costs for Operators

    The provisions of the rule would result in compliance costs ranging 
from $3,138 to $5,110 for all hydraulic fracturing operations 
differentially, for example, if the operation is for a type well versus 
a subsequent well. Averaging the total compliance costs for the 
industry in the first year of regulation by the number of hydraulic 
fracturing operations, the BLM expects the compliance costs to range 
from $3,138 to $5,110 per operation. The CEL requirements represent the 
bulk of that portion, $2,591 to $4,564. Average compliance costs per 
operation for each of the policy options are shown in Table 5.

 Table 5--Average Compliance Costs in 2013 Across All Operations for the Rule, Alternative 1, and Alternative 2
----------------------------------------------------------------------------------------------------------------
                                                            Average across all operations
                                   -----------------------------------------------------------------------------
            Requirement               Revised proposed rule         Alternative 1             Alternative 2
                                   -----------------------------------------------------------------------------
                                        Low          High         Low          High         Low          High
----------------------------------------------------------------------------------------------------------------
Count of Hydraulic Fracturing
 Operations (in 2013).............            3,566
                                              3,566
                                              3,566
                                   -----------------------------------------------------------------------------
CEL on Surface Casing.............       $1,980       $3,953      $24,894      $49,692      $24,894      $49,692
CEL on Intermediate Casing........          409          409        5,140        5,140        5,140        5,140
CEL if Inadequate Cementing.......          202          202            0            0            0            0
Lining Pits.......................            9            9            9            9            0            0
NOI Sundry........................           54           54          478          478          478          478
SR Sundry.........................          478          478          478          478          478          478
Variance Requests.................            5            5           48           48           48           48
                                   -----------------------------------------------------------------------------
    Total.........................        3,138        5,110       31,047       55,845       31,038       55,836
----------------------------------------------------------------------------------------------------------------

BLM Administrative Burden

    The processing of NOI Sundry, SR Sundry, and variance requests 
associated with the rule would pose additional burden to the BLM; 
however, it is unclear the extent to which the BLM can meet the 
additional burden with existing capacity. An additional 8.44 FTE of 
workload is estimated to be required to meet the administrative burden 
of the rule in the first year of implementation.

Benefits of the Revised Proposed Rule

    The rule provisions, as described in the revised proposed rule, 
would require an operator to conduct tests on a well before it conducts 
hydraulic fracturing operations on that well. For all operators on 
Federal and Indian land the revised proposed rule would compel 
operators to conduct an average of 293 CELs per year on surface 
casings, 14 CELs per year on intermediate casings, and 110 CELs per 
year on casing strings where there is an initial indication of 
inadequate cementing.
    Relative to the initial proposed rule, the revised proposed rule 
would not compel as many CELs. Therefore, there is a chance that the 
rule would not reduce as much risk as the alternatives. The rule would 
ensure that operators demonstrate wellbore integrity with pressure 
tests on 100 percent of the wells and with CELs on the casing strings 
that protect usable water on 8 percent of wells. The level of risk 
reduction across subsequent wells relies on the replication of adequate 
cementing across multiple wells in a geographic area with the same 
geologic characteristics.
    The rule would compel 110 CELs to demonstrate that inadequate 
cementing was corrected by operators. As such, it requires a 
verification of proper remedial cementing on the very wells that pose 
greater risk.
    Under the rule, operators would submit an average of 432 NOI Sundry 
applications per year covering about 3,816 hydraulic fracturing 
operations (average over the 10-year period, 2013-2022). The BLM would 
receive individual hydraulic fracturing plans for an estimated 11 
percent of the expected operations, and the remaining 89 percent of 
operations would be for subsequent wells to a type well. The type well 
provision, relative to the alternatives, reduces burden on the industry 
and the BLM. The submission of NOI Sundry applications would provide 
the BLM with the necessary information to make informed decisions about 
the public's resources and thus improve the public welfare, and have 
the same benefits for Indian resources and Indian welfare.
    The rule is estimated to compel only six additional lined pits per 
year, simply because most of the States where the BLM manages oil and 
gas resources already require lined pits. For those six pits, the 
requirement would immediately remove sources of harm to the environment 
and the public from the contamination of the surface environment with 
fracturing fluids.
    The rule would compel 3,816 Sundry reports and public disclosures 
of the chemical content of the hydraulic fracturing fluids. The 
increase in information about additives could aid water users when they 
consider the potential effects of hydraulic fracturing operations and 
constituent chemicals.
    Overall, the rule would potentially reduce the risks associated 
with hydraulic fracturing operations. The BLM estimated the likelihood 
of an incident resulting from a hydraulic fracturing operation could be 
between 0.03 and 2.70 percent. Damage from an incident could cost 
between $15,000 and $1 million for remediation plus any lost revenue 
from unrecoverable resources, including spilled or stranded resources.

Economic Impact Analysis and Distributional Assessments Energy System 
Impact Analysis

    Executive Order 13211 requires that agencies prepare and submit to 
the Administrator of the Office of Information and Regulatory Affairs 
(OIRA), OMB, a Statement of Energy Effects for certain actions 
identified as significant energy actions. Section 4(b) of Executive 
Order 13211 defines a ``significant energy action'' as ``any action by 
an agency (normally

[[Page 31667]]

published in the Federal Register) that promulgates or is expected to 
lead to the promulgation of a final rule or regulation, including 
notices of inquiry, advance notices of proposed rulemaking, and notices 
of proposed rulemaking: (1)(i) That is a significant regulatory action 
under Executive Order 12866 or any successor order, and (ii) is likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy; or (2) that is designated by the Administrator of OIRA 
as a significant energy action.''
    The additional burden posed by this rule would vary by the type of 
well proposed for hydraulic fracture. A key consideration is the extent 
to which the costs of the requirements might impact investment, 
production, employment, and a number of other factors. That is, to what 
extent, if any, would an operator choose to invest in other areas, non-
Federal and non-Indian lands, when faced with the cost requirements of 
the rule. Since the bulk of the costs would apply to hydraulic 
fracturing operations on wells that are yet to be drilled (and not on 
existing wells and to refracturing operations), operators will be able 
to account for any cost increases up front when making investment 
decisions. The BLM believes that the additional cost per hydraulic 
fracturing operation is insignificant when compared with the drilling 
costs in recent years, the production gains from hydraulically 
fractured wells operations, and the net incomes of entities within the 
oil and natural gas industries.
    Table 6 shows the average compliance costs, by well type or 
operation, as a percent of the total costs of drilling a well. For a 
single well or a type well, the compliance costs represent about 0.4 to 
1.4 percent of the costs of drilling a well. For a subsequent well to a 
type well, the costs represent between 0.01 and 0.02 percent of the 
total drilling costs. For existing wells and refracture operations, the 
percentages are even lower, at about 0.01 to 0.03 percent. When 
averaging the compliance costs across all operations, the costs 
represent between 0.04 and 0.13 percent of the costs of drilling a 
well.
    Since the estimated compliance costs are not a substantial when 
compared with the total costs of drilling a well, the BLM believes that 
the rule is unlikely to have an effect on the investment decisions of 
firms, and the rule is unlikely to affect the supply, distribution, or 
use of energy.

                         Table 6--The Average Compliance Costs of the Revised Proposed Rule as a Percent of Total Drilling Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Well type fracturing operation                     Average across all
                                                              -----------------------------------------------------------------   operations (percent)
                                                               Type well or single well   Subsequent                           -------------------------
                           Activity                           --------------------------  well under    Existing    Refracture
                                                                                          type well       well      operation       Low          High
                                                                   Low          High       approval    (percent)    (percent)    (percent)    (percent)
                                                                (percent)    (percent)    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent of Drilling Costs for a Crude Oil, Natural Gas, and         0.7128       1.3301       0.0167       0.0243       0.0241       0.0752       0.1225
 Dry Well (2007$) \1\........................................
Percent of Drilling Costs for a Crude Oil Well (2007$) \1\...       0.7434       1.3871       0.0174       0.0253       0.0251       0.0784       0.1277
Percent of Drilling Costs for a Natural Gas Well (2007$) \1\.       0.7611       1.4202       0.0178       0.0259       0.0257       0.0803       0.1308
Percent of Drilling Costs for a horizontal well in the Bakken       0.5507       1.0275       0.0129       0.0188       0.0186       0.0581       0.0946
 Three Forks (reported in 2010) \2\..........................
Percent of Drilling Costs for a horizontal well in the              0.3913       0.7301       0.0092       0.0133       0.0132       0.0413       0.0672
 Marcellus Shale (reported in 2011) \3\......................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\1\ Average drilling costs in 2007 range from $3.9 million to about $4.2 million. U.S. Energy Information Administration (January 31, 2012). Costs of
  Crude Oil and Natural Gas Wells Drilled.
\2\ Costs of $5.4 million cited by Investopedia from Continental Resources. Investopedia (March 12, 2010). Oil Service Costs to Move Higher.
\3\ Costs of $7.6 million cited by Marcellus Drilling News from a University of Pittsburgh Study (Marcellus Drilling News (September 2011) How much does
  it cost to drill a single Marcellus well? $7.6M.

Employment Impact Analysis

    Executive Order 13563 reaffirms the principles established in 
Executive Order 12866, but calls for additional consideration of the 
regulatory impact on employment. It states, ``Our regulatory system 
must protect public health, welfare, safety, and our environment while 
promoting economic growth, innovation, competitiveness, and job 
creation.'' An analysis of employment impacts is a standalone analysis 
and the impacts should not be included in the estimation of benefits 
and costs.
    This proposed rule would require operators, who have not already 
done so, to conduct one-time tests on a well or make a one-time 
installation of a mitigation control feature. In addition, operators 
would be required to perform administrative tasks related to a one-time 
event.
    Compliance with the operational requirements is expected to shift 
resources from firms in the crude oil and natural gas extraction 
industries (NAICS codes:: 211111--Crude Petroleum and Natural Gas 
Extraction, 211112--Natural Gas Liquid Extraction) to firms providing 
support services for drilling oil and gas wells (NAICS code: 213111--
Drilling Oil and Gas Wells). For example, the requirement for a CEL on 
the surface casing represents a burden to the operator, but a benefit 
to the company running the log.
    Of principal interest is the extent to which the financial burden 
is expected to change operators' investment decisions. If the financial 
burden is not significant and all other factors are equal, then one 
would expect operators to maintain existing levels of investment and 
employment. The BLM believes that the proposed rule would result in an 
additional cost per well stimulation that is small and will not alter 
the investment or employment decisions of firms.

[[Page 31668]]

    Firms in the support services for oil and gas drilling industry are 
likely to benefit from the rule, since they would likely carry out the 
operational requirements of the rule. Though we do not know the 
incremental revenue gains from performing these services, the 
operational requirements themselves are likely to require additional 
capacity.
Executive Order 12866, Regulatory Planning and Review
    In accordance with the criteria in Executive Order 12866, the 
Office of Management and Budget has determined that this rule is a 
significant regulatory action.
    The rule will not have an annual effect on the economy of $100 
million or more or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities. However, the rule may raise novel policy 
issues because of the requirement that operators provide to the BLM 
information regarding hydraulic fracturing operations that they are not 
currently providing to the BLM.
    This rule would not create inconsistencies or otherwise interfere 
with an action taken or planned by another agency. This rule would not 
change the relationships of the oil and gas operations with other 
agencies. These relationships are included in agreements and memoranda 
of understanding that would not change with this rule. In addition, 
this rule would not materially affect the budgetary impact of 
entitlements, grants, loan programs, or the rights and obligations of 
their recipients. Please see the discussion of the impacts of the rule 
as described earlier in this section of the preamble.
Regulatory Flexibility Act
    Congress enacted the Regulatory Flexibility Act of 1980 (RFA), as 
amended, 5 U.S.C. 601-612, to ensure that Government regulations do not 
unnecessarily or disproportionately burden small entities. The RFA 
requires a regulatory flexibility analysis if a rule would have a 
significant economic impact, either detrimental or beneficial, on a 
substantial number of small entities. For the purposes of this 
analysis, the BLM assumes that all entities (all lessees and operators) 
that may be affected by this rule are small entities, even though that 
is not actually the case.
    The rule deals with hydraulic fracturing on all Federal and Indian 
lands (except those excluded by statute). There would be some increased 
costs associated with the enhanced recordkeeping requirements and some 
new operational requirements. However, the BLM expects that these costs 
would be minor in comparison to overall operations costs. Therefore, 
the BLM has determined under the RFA that the rule would not have a 
significant economic impact on a substantial number of small entities. 
Please see the discussion earlier in this section of the preamble for a 
discussion of the impacts of the rule.
Small Business Regulatory Enforcement Fairness Act
    The Regulatory Flexibility Act as amended by the Small Business 
Regulatory Enforcement Fairness Act (SBREFA) generally requires an 
agency to prepare a regulatory flexibility analysis of any rule subject 
to notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute, unless the agency certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small governmental jurisdictions, or small not-for-profit enterprises.
    The BLM reviewed the Small Business Administration (SBA) size 
standards for small businesses and the number of entities fitting those 
size standards as reported by the U.S. Census Bureau in the 2007 
Economic Census. Using the Economic Census data, the BLM concludes that 
about 99 percent of the entities operating in the relevant sectors are 
small businesses in that they employ fewer than 500 employees.
    The BLM also examined potential impacts on small businesses that 
are most likely to be impacted by the rule and, more specifically, the 
requirements that would pose a burden to operators. Using Automated 
Fluid Mineral Support System data for well completions, the BLM 
compiled a list of firms that completed wells within the past 5 years. 
The BLM expects that these firms are most likely to be financially 
impacted by the CEL requirements. From that list the BLM researched 
company annual report filings with the SEC to determine annual company 
net incomes and employment figures. From the original list, the BLM 
found 55 company filings. Of those, 33 firms were classified as small 
businesses.
    Using the net income data for the small businesses that filed SEC 
Form 10-K, the BLM used the estimated compliance costs per well type or 
fracturing operation, and the average costs across all operations to 
calculate the percent of compliance costs as a portion of annual 
company net incomes for 2011. Averaging results for the small 
businesses that the BLM examined, the average costs of the rule are 
expected to represent between 0.041 and 0.066 percent of the company 
net incomes.
    Therefore, after considering the economic impact of the rule on 
these small entities, the screening analysis indicates that this rule 
will not have a significant economic impact on a substantial number of 
small entities.
Unfunded Mandates Reform Act
    Under the Unfunded Mandates Act, agencies must prepare a written 
statement about benefits and costs prior to issuing a proposed or final 
rule that may result in aggregate expenditure by State, local, and 
tribal governments, or by the private sector, of $100 million or more 
in any one year.
    This rule does not contain a Federal mandate that may result in 
expenditures of $100 million or more for State, local, and tribal 
governments, in the aggregate, or to the private sector in any one 
year. Thus, the rule is also not subject to the requirements of 
Sections 202 or 205 of the Unfunded Mandates Reform Act (UMRA).
    This rule is also not subject to the requirements of Section 203 of 
UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments; it contains no 
requirements that apply to such governments nor does it impose 
obligations upon them.
Executive Order 12630, Governmental Actions and Interference With 
Constitutionally Protected Property Rights (Takings)
    Under Executive Order 12630, the rule would not have significant 
takings implications. A takings implication assessment is not required. 
This rule would establish recordkeeping requirements for hydraulic 
fracturing operations and some additional operational requirements on 
Federal and Indian lands. All such operations are subject to lease 
terms which expressly require that subsequent lease activities be 
conducted in compliance with subsequently adopted Federal laws and 
regulations. The rule conforms to the terms of those Federal leases and 
applicable statutes, and as such the rule is not a governmental action 
capable of interfering with constitutionally protected property rights. 
Therefore, the rule would not cause a taking of private property or 
require further discussion of takings implications under this Executive 
Order.

[[Page 31669]]

Executive Order 13352, Facilitation of Cooperative Conservation
    Under Executive Order 13352, the BLM has determined that this rule 
would not impede facilitating cooperative conservation and would take 
appropriate account of and consider the interests of persons with 
ownership or other legally recognized interests in land or other 
natural resources. This rulemaking process involved Federal, State, 
local and tribal governments, private for-profit and nonprofit 
institutions, other nongovernmental entities and individuals in the 
decision-making. The process provides that the programs, projects, and 
activities are consistent with protecting public health and safety.
Executive Order 13132, Federalism
    Under Executive Order 13132, this rule would not have significant 
Federalism effects. A Federalism assessment is not required because the 
rule would not have a substantial direct effect on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. The rule would not have any effect on any of the items 
listed. The rule would affect the relationship between operators, 
lessees, and the BLM, but would not impact States. Therefore, under 
Executive Order 13132, the BLM has determined that this rule would not 
have sufficient Federalism implications to warrant preparation of a 
Federalism Assessment.
Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments
    Under Executive Order 13175, the President's memorandum of April 
29, 1994, ``Government-to-Government Relations with Native American 
Tribal Governments'' (59 FR 22951), The Department of the Interior 
Policy on Consultation with Indian Tribes (Dec. 1, 2011), and 512 
Departmental Manual 2, the BLM evaluated possible effects of the rule 
on federally recognized Indian tribes. The BLM approves proposed 
operations on all Indian onshore oil and gas leases (except those 
excluded by statute). Therefore, the rule has the potential to affect 
Indian tribes. In conformance with the Department's policy on tribal 
consultation, the Bureau of Land Management held four tribal 
consultation meetings to which over 175 tribal entities were invited. 
The consultations were held in:
     Tulsa, Oklahoma on January 10, 2012;
     Billings, Montana on January 12, 2012;
     Salt Lake City, Utah on January 17, 2012; and
     Farmington, New Mexico on January 19, 2012.
    The purpose of these meetings was to solicit initial feedback and 
preliminary comments from the tribes. To date, the tribes have 
expressed concerns about the BLM's Inspection and Enforcement program's 
ability to enforce the terms of this rule; previously plugged and 
abandoned wells being potential conduits for contamination of 
groundwater; and the operator having to provide documentation that the 
water used for the fracturing operation was legally acquired. The BLM 
considered these concerns during the drafting of the proposed rule.
    After publication of the proposed rule, the BLM held another series 
of meetings to obtain comments and recommendations from tribes and 
tribal organizations. Those meetings were held in June 2012 in Salt 
Lake City, Utah; Farmington, New Mexico; Tulsa, Oklahoma; and Billings, 
Montana. The BLM also engaged in one-on-one consultations as requested 
by several tribes. Some tribal representatives were concerned about 
risks to the quality of their vital water supplies. Others, though, 
were more concerned with the risk that increased compliance costs would 
drive the industry off of Indian lands, and deprive the tribes of much-
needed revenues and economic development.
    The BLM has considered and responded to the concerns expressed by 
the tribal representatives both orally and in written comments, as 
described above. In particular, it has made changes that will reduce 
economic burdens of compliance for many operators. Several tribes 
provided written and oral comments critical of the proposed rule. Other 
tribes argued that the proposed rules violated tribal sovereignty. The 
proposed rule, however, is not unique. Regulations promulgated by the 
Bureau of Indian Affairs render the BLM's operating regulations in 43 
CFR part 3160 applicable to oil and gas leases of trust and restricted 
Indian lands, both tribal and individually-owned. See 25 CFR 211.4, 
212.4, and 225.4.
    Some tribes insist that those BIA regulations are in violation of 
FLPMA, which they argue restricts the BLM's authority to Federal lands. 
Section 301 of FLPMA, however, charges the Director of the BLM to carry 
out functions and duties as the Secretary may prescribe with respect to 
the lands and the resources under the Secretary's jurisdiction 
according to the applicable provisions of FLPMA and any other 
applicable law. 43 U.S.C. 1731(a). See also 43 U.S.C. 1731(b). The Act 
of March 3,1909 (1909 Act) (at 25 U.S.C. 396), the Indian Minerals 
Leasing Act (IMLA) (at 25 U.S.C. 396d) and the Indian Mineral 
Development Act (IMDA) (at 25 U.S.C. 2107) provide the Secretary of the 
Interior with authority to promulgate regulations governing oil and gas 
operations and mineral agreements on certain Indian lands. As 
previously cited, the Secretary, through the regulations promulgated by 
the BIA, has assigned to the BLM part of the Secretary's trust 
responsibilities to regulate oil and gas operations on those Indian 
lands. This rule concerning Indian lands is promulgated pursuant to the 
1909 Act, the IMLA, and the IMDA, and will be implemented by the BLM 
under those authorities, consistent with Section 301 of FLPMA.
    Some tribes have asked that the proposed rule exempt Indian lands 
from its scope. Such an exemption would require the Secretary of the 
Interior to conclude, among other things, that usable waters in Indian 
lands, and the persons who use such waters, are less deserving of 
protection than waters and water users on Federal land. The Department 
of the Interior declines to reach that conclusion.
    Some tribes have advocated that the proposed rule should allow 
Indian tribes to decide individually whether the hydraulic fracturing 
regulations would apply on their lands. The BIA's regulations, however, 
apply all of the BLM's oil and gas operating regulations to Indian 
lands, and do not allow the tribes to pick and select which of the 
BLM's regulations apply on their lands.
    The tribes, however, report that industry representatives have 
threatened not to bid on Indian leases if the initial proposed rule 
were promulgated. The tribes are concerned that a major source of 
revenue and of economic development might leave Indian lands because of 
the costs of compliance with the proposed rule. The BLM has carefully 
considered the tribes' comments, along with those of the oil and gas 
industry and of concerned citizens and governments. The revised 
proposed rule includes several changes from the initial proposed rule 
to reduce the costs and other burdens of compliance. Examples include 
allowing operators to use any one of a class of CELs to verify the 
adequacy of cement casings, not requiring the CEL to be submitted or 
approved before fracturing operations if there is no indication of 
problems with the cementing, and the ``type well'' approach allowing an 
operator's approved group of wells that conform to the operator's 
proven type

[[Page 31670]]

well in the same field to be hydraulically fractured without additional 
CELs, unless there is a problem with the cementing. The revised 
proposed rule also explicitly states that BLM will require isolation of 
zones that the tribes designate for protection from oil and gas 
operations, and will not require isolation of zones that tribes have 
exempted from protection. (Note, though, that the revised proposed rule 
would not exempt an operator from the provisions of the SDWA.) 
Furthermore, the BLM could approve a variance applicable to all or 
parts of Indian lands, provided the variance meets or exceeds the 
effectiveness of the revised proposed rule. Such a variance could allow 
an operator's compliance with a tribe's standard or procedure to be 
accepted as compliance with the revised proposed rule, thus reducing 
the compliance burdens for operators. Such changes should significantly 
reduce compliance costs for operators while still assuring protection 
of usable water resources.
    The BLM is aware that the revised proposed rule would nonetheless 
result in some higher costs for operators on Federal and Indian lands, 
compared with compliance costs for hydraulic fracturing on non-Federal, 
non-Indian lands in several States. Regulatory compliance costs, 
however, are only one set in a long list of costs that operators 
compare to anticipated revenues when deciding whether and how much to 
bid on a Federal or Indian lease. It has not been the BLM's experience 
that regulatory compliance costs have caused the industry as a whole to 
avoid valuable oil and gas resources on Federal and Indian lands.
Executive Order 12988, Civil Justice Reform
    Under Executive Order 12988, the Office of the Solicitor has 
determined that this rule would not unduly burden the judicial system 
and meets the requirements of Sections 3(a) and 3(b)(2) of the Order. 
The Office of the Solicitor has reviewed the rule to eliminate drafting 
errors and ambiguity. It has been written to minimize litigation, 
provide clear legal standards for affected conduct rather than general 
standards, and promote simplification and avoid unnecessary burdens.
Paperwork Reduction Act
    The Paperwork Reduction Act (PRA) (44 U.S.C. 3501-3521) provides 
that an agency may not conduct or sponsor, and a person is not required 
to respond to, a ``collection of information,'' unless it displays a 
currently valid control number. Collections of information include 
requests and requirements that an individual, partnership, or 
corporation obtain information, and report it to a Federal agency (44 
U.S.C. 3502(3); 5 CFR 1320.3(c) and (k)).
    The BLM included its information collection request in the proposed 
rule and invited public comment. OMB did not approve or disapprove the 
request at that time. The BLM has revised the information collection 
that was in the proposed rule and has re-submitted its information 
collection request. In accordance with the PRA, the BLM is inviting 
public comment on its request that OMB approve new uses of Form 3160-5 
(Sundry Notices and Reports on Wells). The BLM is proposing that these 
new uses would replace certain existing uses of Form 3160-5 for 
hydraulic fracturing operations.
    OMB has approved the use of Form 3160-5 under control number 1004-
0137, Onshore Oil and Gas Operations (43 CFR part 3160), to collect 
information on a number of operations, including some hydraulic 
fracturing operations. Once the BLM is authorized to collect hydraulic 
fracturing information in accordance with finalized new section 3162.3-
3 and new control number 1004-0203, the BLM will request revision of 
control number 1004-0137 to:
     Add the new hydraulic fracturing uses and burdens of Form 
3160-5 to control number 1004-0137;
     Remove the existing hydraulic fracturing uses and burdens 
from the existing approval of Form 3160-5; and
     Discontinue new control number 1004-0203.
    The new collection of information would be required to obtain or 
retain a benefit for the operators of Federal and Indian (except on the 
Osage Reservation, the Crow Reservation, and certain other areas) 
onshore oil and gas leases, units, or communitization agreements that 
include Federal leases. The BLM has requested a 3-year term of approval 
for the new control number.
    The information collection request for this revised proposed rule 
has been submitted to OMB for review under 44 U.S.C. 3504(h) of the 
Paperwork Reduction Act. A copy of the request can be obtained from the 
BLM by electronic mail request to Candice Money at cmoney@blm.gov or by 
telephone request to 202-912-7144. You may also review the information 
collection request online at http://www.reginfo.gov/public/do/PRAMain.
    The BLM requests comments to:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    Comments on the information collection requirements should be sent 
to both OMB and the BLM as directed in the ADDRESSES section of this 
preamble. OMB is required to make a decision concerning the collection 
of information contained in this revised proposed rule between 30 to 60 
days after publication of this document in the Federal Register. 
Therefore, a comment to OMB is best assured of having its full effect 
if OMB receives it by June 24, 2013.
Summary of Information Collection Requirements
    The revised proposed rule is intended to increase transparency for 
the public regarding the fluids and additives used in hydraulic 
fracturing, and to protect Federal and Indian resources. The proposed 
provisions that include information collection requirements are 
amendments to 43 CFR 3162.3-2 and new 43 CFR 3162.3-3.
    OMB has approved the use of Form 3160-5 under control number 1004-
0137 for the operations listed in existing section 3162.3-2. As revised 
in the proposed rule, section 3162.3-2 would no longer include 
hydraulic fracturing jobs (i.e., nonroutine fracturing, routine 
fracturing, and acidizing) on the list of operations for which prior 
approval and subsequent reports would be required. Other categories of 
operations would remain subject to the information collection 
requirements in section 3162.3-2. Once the BLM is authorized to collect 
hydraulic fracturing information under new section 3162.3-3 and a new 
control number, the BLM will request revision of control number 1004-
0137 by removing the hydraulic fracturing burdens from the existing 
approval of Form 3160-5. New section 3162.3-3 would require operators 
to use Form 3160-5 both to seek prior BLM approval of hydraulic 
fracturing operations, and to submit a report on

[[Page 31671]]

subsequent actual hydraulic fracturing operations. It would also 
encourage operators to use Form 3160-5 if they want to request a 
variance from the requirements of new section 3162.3-3.
    In accordance with the PRA, the BLM invited public comments on the 
information collection in the initial proposed rule. One commenter 
submitted comments specifically in response to this opportunity. In 
addition, some commenters addressed the necessity, practical utility, 
and/or estimated burdens of the proposed collections.
1. Necessity/Avoidance of Unnecessary Duplication
    The PRA requires each Federal agency to certify that its 
collections of information are necessary for the proper performance of 
agency functions, and are not unnecessarily duplicative of information 
otherwise reasonably accessible to the agency. 43 U.S.C. 3506(c)(3)(A) 
and (B).
    One commenter stated that the proposed collections are unnecessary, 
given the existing Eight-Point Drilling Program associated with APDs 
and the subsequent well completion reports. In addition, the commenter 
stated that operators on Indian lands already comply with Colorado 
State rules that make Federal disclosure a redundant and unnecessary 
burden on operators.
    Other commenters also questioned whether the proposed collections 
are necessary and avoid unnecessary duplication. For example:
     One commenter stated that the proposed collection of both 
pre- and post-fracturing information is a requirement to submit 
basically the same information twice, and recommended that the BLM 
consider requiring submission of pre-completion information and then 
requiring operators to advise the BLM of any post-completion changes or 
deviations;
     Another commenter recommended that operators be allowed to 
submit a generic or Master Plan for similar operations on a plan of 
development, at the field or unit level;
     One commenter stated that the proposed collection of 
information about the water source to be used in hydraulic fracturing 
duplicates protections afforded by the Environmental Protection Agency 
and States under the Clean Water Act and the Safe Drinking Water Act;
     One commenter stated that the proposed collections 
duplicate State-required collections in Colorado, New Mexico, Alabama, 
and Texas;
     One commenter stated that the proposal to collect an 
estimate of the volume of fluid to be recovered during flowback, 
swabbing, and recovery from production facility vessels (43 CFR 3162.3-
3(c)(6)(i)) duplicates a requirement in Wyoming for post-fracturing 
reporting as to the amounts, handling, and disposal or reuse of 
hydraulic fracturing fluid; and
     One commenter stated that the information in the NOI 
Sundry and the Subsequent Report Sundry Notice duplicates information 
required and approved by individual States, and suggested that the BLM 
provide for exemptions for operators in States that have adopted 
hydraulic fracturing regulations, or accept information filed under 
State laws or regulations in lieu of requiring operators to submit 
duplicative information to the BLM for approval.
    Some commenters specifically questioned the necessity of proposed 
section 3162.3-3(c)(2), which would have required the Notice of Intent 
Sundry to include the ``proposed measured depths (both top and bottom) 
of all occurrences of usable water and the CBLs (or another log 
acceptable to the authorized officer) proving that the occurrences of 
usable water have been isolated to protect them from contamination.''
    Some comments included statements of support. One commenter stated 
that full disclosure of chemicals involved in the hydraulic fracturing 
process results in a transparent process that benefits industry, 
regulatory agencies, and the public.
    Some other commenters generally supported transparency and full 
disclosure of pollution data. For example, one commenter stated that 
the post-fracturing collection of information on the volume of water 
used in the fracturing process will aid water resource managers in 
planning water resources on and near Federal lands, and suggested that 
the same type of information be collected on the Notice of Intent 
Sundry.
    Some commenters were supportive of disclosure of information 
through FracFocus.org to avoid duplicating or creating another platform 
for disclosure.
    Response: Because hydraulic fracturing has been a growing practice 
in recent years, the BLM has determined that the collections of 
information in the revised proposed rule are necessary to enable the 
BLM to meet its statutory obligations to regulate operations associated 
with Federal and some Indian oil and gas leases; prevent unnecessary or 
undue degradation; and manage public lands using the principles of 
multiple use and sustained yield. The collections of information will 
assist in the modernization of the BLM's management of hydraulic 
fracturing operations in ways not anticipated when the existing 
collection requirements approved under control number 1004-0137 were 
developed, and will enable the BLM to ensure that operators are using 
best practices in fracturing operations. Moreover, the information that 
States, tribes, or other Federal agencies collect is not necessarily 
reasonably accessible to the BLM. For these reasons, the BLM has 
determined that the collections in the revised proposed rule are 
necessary, and are not unnecessarily duplicative of existing Federal, 
tribal, or State collection requirements. Accordingly, the BLM is not 
adopting the suggestion that it provide for exemptions for operators on 
Indian lands or in States that have promulgated hydraulic fracturing 
regulations; or that the BLM accept information filed under State or 
tribal laws or regulations in lieu of information that meets BLM 
standards. However, if information submitted in accordance with State 
laws or regulations meets the standards prescribed by the BLM, such 
information may be submitted to the BLM in accordance with the revised 
proposed rule.
    In response to comments that requiring both pre- and post-
fracturing information amounts to a requirement to submit basically the 
same information twice, the BLM has deleted the following pre-
fracturing collections:
     Submission of a CBL for approval before commencing 
fracturing operations, which was part of proposed 43 CFR 3162.3-
3(c)(2); and
     Submission of a pre-fracturing certification of compliance 
with all applicable permitting and notice requirements, which was 
proposed as 43 CFR 3162.3-3(c)(4).
    The revised proposed rule (at 43 CFR 3162.3-3(d)) also allows an 
NOI Sundry to be submitted for a single well or a type well covering a 
group of wells sharing substantially similar geological characteristics 
within the same geologic formation. If the submission is for a group of 
wells, the information should describe a ``type well,'' defined in the 
revised proposed rule to mean an oil and gas well that can be used as a 
model for well completion in a field where geologic characteristics are 
substantially similar across the field, and operations such as 
drilling, cementing, and hydraulic fracturing are likely to be 
successfully replicated using the same design. This provision will give 
operators an opportunity to streamline the submission of pre-fracturing 
information in appropriate

[[Page 31672]]

circumstances. However, the revised proposed rule provides (at 43 CFR 
3162.3-3(e)(4)) that where there are indications of problems with the 
cementing of casings, the operator must submit information showing that 
the problem has been corrected before commencing hydraulic fracturing 
operations, and (at 43 CFR 3162.3-3(i)) that post-fracturing data for 
each well is required.
    The BLM has taken these actions in recognition that:
     The BLM can meet its statutory responsibilities without 
collecting a full complement of pre-fracturing data; but
     The BLM needs more complete post-fracturing information in 
order to meet its statutory responsibilities.
    The BLM has not adopted the suggestions to:
     Allow operators to meet their pre-fracturing information-
submission obligations by submitting a generic or master plan for 
similar operations on a plan of development, at the field or unit 
level;
     Allow operators to meet their post-fracturing obligations 
solely by advising the BLM of any post-completion changes or 
deviations; or
     Require data about water volume in pre-fracturing as well 
as post-fracturing information collections.
    Both the proposed rule and the revised proposed rule include 
provisions that require more detailed data after fracturing than before 
fracturing. For example, the information about water volume that is 
required before fracturing is limited to a plan that includes the 
estimated total volume of fluid to be used. See section 3162.3-3(d)(4) 
of the revised proposed rule (proposed as 43 CFR 3162.3-3(c)(5)).
    Regarding post-fracturing information, the BLM has revised proposed 
section 3162.3-3(g)(1) (designated as section 3162.3-3(i)(1) of the 
proposed rule) to require the total water volume used and in other 
paragraphs within subsection (i) of the revised proposed rule, 
operators are required to provide:
     The actual surface pressure and rate at the end of each 
stage of the hydraulic fracturing operation, and the actual flush 
volume, rate, and final proposed pump pressure (section 3162.3-
3(i)(3)); and
     The volume of fluid recovered during flowback, swabbing, 
or recovery from production facility vessels (section 3162.3-3 
(i)(5)(i)).
    In both the initial proposed and revised proposed rule, the BLM has 
identified water volume to be a necessary element of both pre- and 
post-fracturing information collections. The BLM is requiring all 
hydraulic fracturing and refracturing operations to isolate all usable 
water and other mineral-bearing formations and protect them from 
contamination. 43 CFR 3162.3-3(b) and 3162.5-2. Operators are thus on 
notice that they must meet this performance standard during all 
operations covered by this rule. The commenter's suggestion seems to be 
to collect pre-fracturing information about water volume that is as 
detailed, or similarly detailed, as that which will be collected after 
fracturing. However, upon consideration of this comment, the BLM has 
determined that the same amount of detail both before and after 
fracturing is not necessary in order to enable the BLM to verify that 
the proposed engineering design is adequate for safely conducting the 
proposed hydraulic fracturing. In addition, the BLM understands that 
such detail is unlikely to be available before commencing hydraulic 
fracturing. The BLM, therefore, has not adopted the commenter's 
suggestion. Regarding the comments about FracFocus, section 3162.3-3(i) 
of the revised proposed rule allows the following required post-
fracturing information to be submitted to the BLM through FracFocus, 
another data base specified by the BLM, or in a Subsequent Report 
Sundry Notice:
     True vertical depth of the well;
     Total water volume used; and
     For each chemical used (including base fluid) the trade 
name, supplier, purpose, ingredients, Chemical Abstract Service Number 
(CAS ), maximum ingredient concentration in additive (% by 
mass), and maximum ingredient concentration in hydraulic fracturing 
fluid (% by mass).
    The initial proposed rule, at 43 CFR 3162.3-3(g), would have 
required that this information, as well as additional information, be 
included in SR Sundry Notices, and provided no other options for 
submission. However, the preamble to the initial proposed rule 
indicated that this information is intended to be posted on a public 
Web site, and that the BLM was working with the Groundwater Protection 
Council to determine whether the disclosure can be integrated into 
FracFocus. Some commenters expressed concerns that this statement in 
the preamble could result in duplicative submissions of information. By 
clarifying the regulatory text, the BLM is preventing such unnecessary 
duplication.
2. Practical Utility
    The PRA requires each Federal agency to certify that its 
collections of information have ``practical utility.'' 43 U.S.C. 
3506(c)(3)(A). A collection has practical utility if the agency can use 
the information that is collected.
    Some commenters questioned whether the BLM has sufficient expertise 
and staffing to use the information that is collected. One commenter 
specifically stated that it has seen no indication that the BLM intends 
to provide the training and education to enable its staff to use the 
information.
    One commenter also stated that the proposed collections could 
result in submissions of inaccurate information to the BLM because the 
details of a hydraulic fracturing design are typically not available to 
operators until after a well has been drilled and specific details 
regarding the target formation have been obtained. The commenter 
suggested that a more appropriate approach would be to collect 
appropriate information as it is obtained and for information purposes 
only.
    Response: The BLM employs many petroleum engineers and technicians, 
and they are well qualified to use the information required by the 
revised proposed rule, and thus disagrees with commenters that question 
the BLM's ability to use the information that is required in the 
revised proposed rule. The BLM also disagrees with statements to the 
effect that pre-fracturing data will be inaccurate. The industry has 
many years of experience collecting and enhancing the accuracy of pre-
fracturing engineering and data collection.
3. Reduction of Burdens on the Public
    The PRA requires each Federal agency to certify that its 
collections of information:
     Reduce respondents' burdens to the extent practicable and 
appropriate;
     Are written using plain, coherent, and unambiguous 
terminology that is understandable to those who are to respond;
     Will be implemented in ways consistent and compatible, to 
the maximum extent practicable, with respondents' existing reporting 
and recordkeeping practices; and
     To the maximum extent practicable, use information 
technology to reduce burden and improve data quality, agency 
efficiency, and responsiveness to the public.

43 U.S.C. 3506(c)(3)(C) through (E) and (J).

    One commenter stated that the BLM underestimated the annual costs 
associated with the proposed rule. Some commenters commented generally 
that the BLM has underestimated burdens under the Paperwork Reduction 
Act, other statutes, and various executive orders.

[[Page 31673]]

    Other comments included the following:
     One commenter stated that the BLM should consider ways to 
minimize the submission of information by allowing operators to conduct 
fracturing operations within acceptable operating ranges and allowing 
operators to use standard completion reports; and
     One commenter suggested that, to reduce the burdens on 
operators, the BLM should allow operators to submit generic hydraulic 
fracturing plans for a targeted zone in resource play areas that can be 
referenced when an APD is submitted. Similarly, another commenter 
requested that the rule provide for acceptance of a general Operator's 
Master Fluid Management Plan that may be used consistently across a 
plan of development.
    Response: The BLM has revised its estimates of the burdens to 
respondents, in part because of responses to comments that are 
described above. Specifically, the BLM has deleted some aspects of the 
pre-fracturing collection from the revised proposed rule, and has 
provided in the revised proposed rule for submission of pre-fracturing 
data either for each well or for a type well covering a group of wells 
sharing substantially similar geological characteristics within the 
same geologic formation. These revisions of the proposed rule result in 
a reduction of the estimated annual number of NOI Sundries from 1,700 
to 415. They also result in a reduction of the estimated number of 
Variance Requests, from 170 to 41, because such requests apply to NOI 
Sundries. These estimates are the average of the expected responses 
over the first 3 years of implementation.
    The estimated number of annual SR Sundry Notices has increased 
because the revised proposed rule (at 43 CFR 3162.3-3) now requires 
post-fracturing data on both fracturing and re-fracturing operations. 
This revision results in an increase in the estimated annual responses, 
from 1,700 to 3,657.
    The following table shows the itemized estimated burdens associated 
with the revised proposed rule:

----------------------------------------------------------------------------------------------------------------
                                                                                C.  Hours per
                                                              B.  Number of    response (same   D.  Total hours/
                   A.  Type of response                        responses/       for  proposed   revised proposed
                                                            revised proposed    and  revised    rule (column B x
                                                                  rule         proposed rule)       column C)
----------------------------------------------------------------------------------------------------------------
Sundry Notices and Reports on Wells/Well Stimulation/                    415                 8             3,320
 Notice of Intent Sundry (43 CFR 3162.3-3) Form 3160-5....
Sundry Notices and Reports on Wells/Well Stimulation/                  3,657                 8            29,256
 Subsequent Report Sundry Notice (43 CFR 3162.3-3) Form
 3160-5...................................................
Sundry Notices and Reports on Wells/Well Stimulation/                     41                 8               328
 Variance Request (43 CFR 3162.3-3) Form 3160-5...........
                                                           -----------------------------------------------------
    Totals................................................             4,113  ................            32,904
----------------------------------------------------------------------------------------------------------------

    The general comments about the BLM's analysis under the Paperwork 
Reduction Act, other statutes, and various executive orders did not 
address the specific information collection associated with the 
proposed rule. Therefore, the BLM has not changed the collection in 
response to these comments. However, the BLM invites further comments 
on the revised collection in this revised proposed rule.
    The BLM has not adopted the suggestions to allow operators to 
conduct fracturing operations within acceptable operating ranges, to 
allow operators to use standard completion reports, or to allow 
operators to submit Fluid Management Plans or generic hydraulic 
fracturing plans for a targeted zone in resource play areas that can be 
referenced when an APD is submitted. Such provisions would not enable 
the BLM to meet its statutory responsibilities.
National Environmental Policy Act
    The BLM has prepared an environmental assessment (EA) that 
concludes that this rule would not constitute a major Federal action 
that may result in a significant adverse effect on the human 
environment under section 102(2)(C) of the National Environmental 
Policy Act (NEPA), 42 U.S.C. 4332(2)(C). The EA and the draft Finding 
of No Significant Impact are available for review and on file in the 
BLM Administrative Record at the address specified in the ADDRESSES 
section.
Data Quality Act
    In developing this rule, we did not conduct or use a study, 
experiment, or survey requiring peer review under the Data Quality Act 
(Pub. L. 106-554).
Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    Under Executive Order 13211, agencies are required to prepare and 
submit to OMB a Statement of Energy Effects for significant energy 
actions. This Statement is to include a detailed statement of ``any 
adverse effects of energy supply, distribution, or use (including a 
shortfall in supply, price increases, and increase use of foreign 
supplies)'' for the action and reasonable alternatives and their 
effects.
    Section 4(b) of Executive Order 13211 defines a ``significant 
energy action'' as ``any action by an agency (normally published in the 
Federal Register) that promulgates or is expected to lead to the 
promulgation of a final rule or regulation, including notices of 
inquiry, advance notices of proposed rulemaking, and notices of 
proposed rulemaking: (1)(i) That is a significant regulatory action 
under Executive Order 12866 or any successor order, and (ii) is likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy; or (2) that is designated by the Administrator of OIRA 
as a significant energy action.
    The BLM believes that the additional cost per hydraulic fracturing 
operation is insignificant when compared with the drilling costs in 
recent years, the production gains from hydraulically fractured wells 
operations, and the net incomes of entities within the oil and natural 
gas industries. For a single well or a type well, the compliance costs 
represent about 0.4 to 1.5 percent of the costs of drilling a well. For 
a well subsequent to a type well, the costs represent between 0.04 and 
0.08 percent of the total drilling costs. For existing wells and 
refracture operations, the percentages are even lower, at about 0.01 to 
0.03 percent. When averaging the compliance costs across all 
operations, the costs represent between

[[Page 31674]]

0.04 and 0.13 percent of the costs of drilling a well.
    Since the estimated compliance costs are not a substantial when 
compared with the total costs of drilling a well, the BLM believes that 
the rule is unlikely to have an effect on the investment decisions of 
firms, and the rule is unlikely to affect the supply, distribution, or 
use of energy. As such, the rule is not a ``significant energy action'' 
as defined in Executive Order 13211.
Clarity of the Regulations
    Executive Order 12866 requires each agency to write regulations 
that are simple and easy to understand. We invite your comments on how 
to make these proposed regulations easier to understand, including 
answers to questions such as the following:
    1. Are the requirements in the proposed regulations clearly stated?
    2. Do the proposed regulations contain technical language or jargon 
that interferes with their clarity?
    3. Does the format of the proposed regulations (grouping and order 
of sections, use of headings, paragraphing, etc.) aid or reduce their 
clarity?
    4. Would the regulations be easier to understand if they were 
divided into more (but shorter) sections?
    5. Is the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble helpful in 
understanding the proposed regulations? How could this description be 
more helpful in making the proposed regulations easier to understand?
    Please send any comments you have on the clarity of the regulations 
to the address specified in the ADDRESSES section.
Authors
    The principal authors of this rule are: Subijoy Dutta of the BLM 
Washington Office; Donato Judice of the BLM Great Falls, Montana Oil 
and Gas Field Office, assisted by the BLM's Division of Regulatory 
Affairs and the Department of the Interior's Office of the Solicitor.

List of Subjects 43 CFR Part 3160

    Administrative practice and procedure; Government contracts; 
Indians--lands; Mineral royalties; Oil and gas exploration; Penalties; 
Public lands--mineral resources; Reporting and recordkeeping 
requirements.

43 CFR Chapter II

    For the reasons stated in the preamble, and under the authorities 
stated below, the Bureau of Land Management amends 43 CFR part 3160 as 
follows:

PART 3160--ONSHORE OIL AND GAS OPERATIONS

0
1. The authorities citation for part 3160 is revised to read as 
follows:

    Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 
1751; and 43 U.S.C. 1732(b), 1733, and 1740.

Subpart 3160--Onshore Oil and Gas Operations: General


Sec.  3160.0-3  [Amended]

0
2. In Sec.  3160.0-3 add ``the Federal Land Policy and Management Act 
(43 U.S.C. 1701 et seq.),'' after ``the Mineral Leasing Act for 
Acquired lands, as amended (30 U.S.C. 351-359),''.
0
3. Amend Sec.  3160.0-5 by adding definitions of ``annulus,'' 
``bradenhead,'' ``hydraulic fracturing,'' ``hydraulic fracturing 
fluid,'' ``proppant,'' ``refracturing,'' ``type well,'' and ``usable 
water,'' in alphabetical order and by removing the definition of 
``fresh water''.
    The additions read as follows:


Sec.  3160.0-5  Definitions.

* * * * *
    Annulus means the space around a pipe in a wellbore, the outer wall 
of which may be the wall of either the borehole or the casing; 
sometimes also called annular space.
* * * * *
    Bradenhead means a heavy, flanged steel fitting connected to the 
first string of casing that allows the suspension of intermediate and 
production strings of casing and supplies the means for the annulus to 
be sealed.
* * * * *
    Hydraulic fracturing means those operations conducted in an 
individual wellbore designed to increase the flow of hydrocarbons from 
the rock formation to the wellbore through modifying the permeability 
of reservoir rock by fracturing it. Hydraulic fracturing does not 
include enhanced secondary recovery such as water flooding, tertiary 
recovery, recovery through steam injection, or other types of well 
stimulation operations such as acidizing.
* * * * *
    Hydraulic fracturing fluid means the liquid or gas, and any 
associated solids used in hydraulic fracturing, including constituents 
such as water, chemicals, and proppants.
* * * * *
    Proppant means a granular substance (most commonly sand, sintered 
bauxite, or ceramic) that is carried in suspension by the fracturing 
fluid that serves to keep the cracks open when fracturing fluid is 
withdrawn after a hydraulic fracture operation.
* * * * *
    Refracturing means a hydraulic fracturing operation subsequent to 
the completion of a prior hydraulic fracturing operation in the same 
well. For purposes of this definition, a hydraulic fracturing operation 
is completed when a well begins producing oil or gas, or when equipment 
necessary to inject the hydraulic fracturing fluid at sufficient 
pressure to fracture the stratum is removed from the well pad, 
whichever occurs earlier.
* * * * *
    Type well means an oil and gas well that can be used as a model for 
well completion in a field where geologic characteristics are 
substantially similar within the same field, and where operations such 
as drilling, cementing, and hydraulic fracturing are likely to be 
successfully replicated using the same design.
* * * * *
    Usable water means generally those waters containing up to 10,000 
parts per million (ppm) of total dissolved solids. The following 
geologic zones are deemed to contain usable water:
    (1) Underground sources of drinking water as defined by the U.S. 
Environmental Protection Agency or by State law (for Federal lands) or 
tribal law (for Indian lands);
    (2) Zones in use for supplying water for agricultural or industrial 
purposes, regardless of the concentration of total dissolved solids, 
unless the operator demonstrates that the existing agricultural or 
industrial user would not be adversely affected;
    (3) Zones designated by a State (for Federal lands) or a tribe (for 
Indian lands) as requiring isolation or protection from oil and gas 
operations; and
    (4) Zones containing up to 10,000 ppm of total dissolved solids 
that are not excluded by paragraphs (A), (B), or (C) of this 
definition. The following geologic zones are deemed not to contain 
usable water:
    (A) Zones from which an operator is authorized to produce 
hydrocarbons;
    (B) Zones designated as exempted aquifers pursuant to the Safe 
Drinking Water Act; and
    (C) Zones which the State (for Federal lands) or the tribe (for 
Indian lands) has designated as exempt from any requirement to be 
isolated or protected from oil and gas operations.
* * * * *

[[Page 31675]]

Subpart 3162--Requirements for Operating Rights Owners and 
Operators

0
4. Amend Sec.  3162.3-2 by revising the first sentence of paragraph (a) 
and revising paragraph (b) to read as follows:


Sec.  3162.3-2  Subsequent well operations.

    (a) A proposal for further well operations must be submitted by the 
operator on Form 3160-5 for approval by the authorized officer prior to 
the operator's commencing operations to redrill, deepen, perform casing 
repairs, plug-back, alter casing, recomplete in a different interval, 
perform water shut off, combine production between zones, and/or 
convert to injection. * * *
    (b) Unless additional surface disturbance is involved and if the 
operations conform to the standard of prudent operating practice, prior 
approval is not required for acidizing jobs or recompletion in the same 
interval; however, a subsequent report on these operations must be 
filed on Form 3160-5.
* * * * *
0
5. Revise Sec.  3162.3-3 to read as follows:


Sec.  3162.3-3  Subsequent well operations; Hydraulic fracturing.

    (a) Activities To Which This Section Applies.
    This section applies to all hydraulic fracturing operations, and 
refracturing operations. All other injection activities must comply 
with section 3162.3-2.
    (b) Isolation of Usable Water to Prevent Contamination. All 
hydraulic fracturing and refracturing operations must meet the 
performance standard in section 3162.5-2(d) of this title.
    (c) When an Operator Must Submit Notification for Approval of 
Hydraulic Fracturing. A proposal for hydraulic fracturing or 
refracturing must be submitted by the operator and approved by the BLM 
before commencement of operations. The proposal may be submitted in one 
of the following ways:
    (1) The operator may submit with its application for permit to 
drill the information required in paragraph (d) of this section;
    (2) The operator may submit a proposal for hydraulic fracturing 
operations on Form 3160-5 (Sundry Notices and Reports on Wells) as a 
Notice of Intent Sundry for approval by the authorized officer prior to 
hydraulic fracturing. If the hydraulic fracturing operation would cause 
additional surface disturbance, the proposal must include a surface use 
plan of operations; or
    (3) If an operator has received BLM approval for hydraulic 
fracturing operations, it must submit a new Notice of Intent Sundry if:
    (i) Hydraulic fracturing or refracturing operations have not 
commenced within 5 years after the effective date of approval of the 
fracturing operation;
    (ii) The operator has significant new information about the geology 
of the area, the stimulation operation or technology to be used, or the 
anticipated impacts of the fracturing operation to any resource; or
    (iii) The operator proposes refracturing of the well. For 
refracturing operations, the operator must submit any information in 
this section that is required by the authorized officer, including a 
mechanical integrity test.
    (d) What the Notice of Intent Sundry Must Include. The authorized 
officer may prescribe that each proposal contain all or a portion of 
the information set forth in section 3162.3-1 of this title. The Sundry 
Notice may be submitted for a single well or a group of wells within 
the same geologic formation. If the submission is for a group of wells, 
the information should describe a type well. If the type well has not 
been completed, the cement evaluation log described in paragraph (e)(2) 
of this section must be provided to BLM before drilling operations may 
begin on the other wells in the group. If information submitted in 
accordance with State (on Federal lands) or tribal (on Indian lands) 
laws or regulations meets the standards prescribed by the BLM, such 
information may be submitted to the BLM as part of the Sundry Notice.
    The Notice of Intent Sundry must include the following:
    (1) The geological names, a geological description, and the 
proposed measured depth of the top and the bottom of the formation into 
which hydraulic fracturing fluids are to be injected;
    (2) The measured or estimated depths (both top and bottom) of all 
occurrences of usable water by use of a drill log from the subject well 
or another well in the vicinity and within the same field;
    (3) The proposed measured depth of perforations or the open-hole 
interval, estimated pump pressures, and information concerning the 
source and location of water supply, such as reused or recycled water, 
or rivers, creeks, springs, lakes, ponds, and wells, which may be shown 
by quarter-quarter section on a map or plat, or which may be described 
in writing. It must also identify the anticipated access route and 
transportation method for all water planned for use in fracturing the 
well;
    (4) A plan for the proposed hydraulic fracturing design that 
includes, but is not limited to, the following:
    (i) The estimated total volume of fluid to be used;
    (ii) The anticipated surface treating pressure range;
    (iii) The maximum injection treating pressure;
    (iv) The estimated or calculated fracture direction, length, and 
height, including the estimated fracture propagation plotted on the 
well schematics and on a map. The map must be of a scale no smaller 
than 1:24,000; and
    (v) The estimated vertical distance to the nearest usable water 
aquifer above the fracture zone;
    (5) The following information concerning the handling of recovered 
fluids:
    (i) The estimated volume of fluid to be recovered during flowback, 
swabbing, and recovery from production facility vessels;
    (ii) The proposed methods of handling the recovered fluids, 
including, but not limited to, pit requirements, pipeline requirements, 
holding pond use, re-use for other stimulation activities, or 
injection; and
    (iii) The proposed disposal method of the recovered fluids, 
including, but not limited to, injection, hauling by truck, or 
transporting by pipeline; and
    (6) The authorized officer may request additional information prior 
to the approval of the Notice of Intent Sundry.
    (e) Monitoring of Cementing Operations and Cement Evaluation Log 
Prior to Hydraulic Fracturing.
    (1) During cementing operations the operator must monitor and 
record the flow rate, density, and treating pressure and submit a 
cement operation monitoring report to the authorized officer within 30 
days after completion of the hydraulic fracturing operations.
    (2) The operator must run a cement evaluation log or logs on each 
casing that protects usable water and the operator must submit those 
logs to the authorized officer within 30 days after completion of the 
hydraulic fracturing operations, except as provided under (e)(3) of 
this section. A cement evaluation log, is any one of a class of tools 
that verify the integrity of annular cement bonding, such as, but not 
limited to, a cement bond log, ultrasonic imager, variable density 
logs, micro-seismograms, CBLs with directional receiver array, 
ultrasonic pulse echo technique, or isolation scanner. An operator may 
select the tool used to prepare the CEL, as long as it is at least as 
effective in verifying the integrity of annular cement bonding as is a 
cement bond log.

[[Page 31676]]

    (3) An operator is not required to run a cement evaluation log on 
the casings of a subsequent well where an operator:
    (i) Submitted a cement evaluation log for a type well (see 
paragraph (d) of this section) that shows successful cement bonding to 
protect against downhole fluid cross-migration into water zones; and
    (ii) Completes a subsequent well or wells with the same 
specifications and geologic characteristics as the type well, and 
approved in the same group sundry notice for the same field (see 
paragraph (d) of this section), and the cementing operations monitoring 
data parallels those of the type well.
    (4) For any well, if there is an indication of an inadequate cement 
job (such as, but not limited to, lost returns, cement channeling, gas 
cut mud, or failure of equipment), then the operator must report that 
information to the authorized officer within 24 hours, followed by a 
written report within 48 hours. Prior to commencing hydraulic 
fracturing operations, the operator must run a cement evaluation log 
showing that the inadequate cement job has been corrected and the 
occurrences of usable water have been isolated to protect them from 
contamination. At least 72 hours before commencing the hydraulic 
fracturing operation, the operator must submit:
    (i) A signed certification indicating that the operator corrected 
the inadequate cement job; and
    (ii) Documentation that shows that there is adequate cement 
bonding.
    (5) The operator must submit the information required by paragraph 
(e)(1), and (e)(2) of this section with the Subsequent Report Sundry 
Notice required in paragraph (i) of this section.
    (f) Mechanical Integrity Testing Prior to Hydraulic Fracturing. 
Prior to hydraulic fracturing, or refracturing, the operator must 
perform a successful mechanical integrity test (MIT) of the vertical 
sections of the casing.
    (1) If hydraulic fracturing through the casing is proposed, the 
casing must be tested to not less than the maximum anticipated treating 
pressure.
    (2) If hydraulic fracturing through a fracturing string is 
proposed, the fracturing string must be inserted into a liner or run on 
a packer-set not less than 100 feet below the cement top of the 
production or intermediate casing. The fracturing string must be tested 
to not less than the maximum anticipated treating pressure minus the 
annulus pressure applied between the fracturing string and the 
production or intermediate casing.
    (3) The MIT will be considered successful if the pressure applied 
holds for 30 minutes with no more than a 10 percent pressure loss.
    (g) Monitoring and Recording During Hydraulic Fracturing.
    (1) During any hydraulic fracturing or refracturing operation, the 
operator must continuously monitor and record the annulus pressure at 
the bradenhead. The pressure in the annulus between any intermediate 
casings and the production casing must also be continuously monitored 
and recorded. A continuous record of the annulus pressure during the 
fracturing operation must be submitted with the required Subsequent 
Report Sundry Notice (Form 3160-5, Sundry Notices and Reports on Wells) 
identified in paragraph (i) of this section.
    (2) If during any hydraulic fracturing or refracturing operation 
the annulus pressure increases by more than 500 pounds per square inch 
as compared to the pressure immediately preceding the stimulation, the 
operator must take immediate corrective action and must orally notify 
the authorized officer as soon as practicable, but no later than 24 
hours following the incident. Within 30 days after the hydraulic 
fracturing operations are completed, the operator must submit a report 
containing all details pertaining to the incident, including corrective 
actions taken, as part of a Subsequent Report Sundry Notice (Form 3160-
5, Sundry Notices and Reports on Wells).
    (h) Storage of all recovered fluids must be in either tanks or 
lined pits. The authorized officer may require any other BLM approved 
method to protect the mineral resources, other natural resources, and 
environmental quality from the release of recovered fluids.
    (i) Information that Must be Provided to the Authorized Officer 
After Completed Operations. The information required in paragraphs 
(i)(1) through (i)(8) of this section must be submitted to the 
authorized officer within 30 days after the hydraulic fracturing or 
refracturing operations are completed. The information is required for 
each well, even if the BLM approved fracturing of a group of wells (see 
Sec.  3162.3-3(d)). The information required in paragraph (i)(1) of 
this section must be submitted to the authorized officer through 
FracFocus, another BLM-designated database, or in a Subsequent Report 
Sundry Notice (Form 3160-5, Sundry Notices and Reports on Wells). If 
information is submitted through FracFocus or another designated 
database, the operator must specify that the information is for a 
Federal or an Indian well, certify that the information is correct, and 
certify compliance with applicable law as required by paragraph 
(i)(7)(ii) or (i)(7)(iii) of this section using FracFocus or the 
designated database. The information required in paragraphs (i)(2) 
though (i)(8) of this section must be submitted to the authorized 
officer in a Subsequent Report Sundry Notice. The operator is 
responsible for the information submitted by a contractor or agent, and 
the information is considered to have been submitted directly from the 
operator to the BLM. The operator must submit the following 
information:
    (1) The true vertical depth of the well, total water volume used, 
and for each chemical used (including base fluid) the trade name, 
supplier, purpose, ingredients, Chemical Abstract Service Number (CAS 
), maximum ingredient concentration in additive (% by mass), 
and maximum ingredient concentration in hydraulic fracturing fluid (% 
by mass).
    (2) The actual measured depth of perforations or the open-hole 
interval, and actual pump pressures and the source(s) and location(s) 
of the water used in the hydraulic fracturing fluid.
    (3) The actual surface pressure and rate at the end of each stage 
of the hydraulic fracturing operation, and the actual flush volume, 
rate, and final pump pressure.
    (4) The actual, estimated, or calculated fracture length, height 
and direction;
    (5) The following information concerning the handling of recovered 
fluids:
    (i) The volume of fluid recovered during flowback, swabbing, or 
recovery from production facility vessels;
    (ii) The methods of handling the recovered fluids, including, but 
not limited to, transfer pipes and tankers, holding pond use, re-use 
for other stimulation activities, or injection; and
    (iii) The disposal method of the recovered fluids, including, but 
not limited to, injection, hauling by truck, or transporting by 
pipeline. The disposal of fluids produced during the flowback from the 
hydraulic fracturing process must follow the requirements set out in 
Onshore Order Number 7, Disposal of Produced Water, Section III.B. 
(October 8, 1993, 58 FR 58506).
    (6) If the actual operations deviate from the approved plan, the 
deviation(s) must be documented and explained.
    (7) A certification signed by the operator that:
    (i) Wellbore integrity was maintained prior to and throughout the 
hydraulic fracturing operation, as required by paragraph (b) of this 
section. The operator must also certify that it complied with the 
requirements in

[[Page 31677]]

paragraphs (e), (f), (g), and (h) of this section;
    (ii) For Federal lands, the hydraulic fracturing fluid used 
complied with all applicable permitting and notice requirements as well 
as all applicable Federal, State, and local laws, rules, and 
regulations; and
    (iii) For Indian lands, the hydraulic fracturing fluid used 
complied with all applicable permitting and notice requirements as well 
as all applicable Federal and tribal laws, rules, and regulations.
    (8) The operator must submit well logs and records of adequate 
cement bonds including the cementing operations monitoring report, any 
cement evaluation log, and the result of the mechanical integrity test 
as required by paragraphs (e)(1), (e)(2), and (f) of this section.
    (9) The authorized officer may require the operator to provide 
documentation substantiating any information submitted under paragraph 
(i) of this section.
    (j) Identifying Information Claimed to be Exempt from Public 
Disclosure.
    (1) For the information required in paragraph (i)(1) of this 
section, the operator will be deemed to have waived any right to 
protect from public disclosure information submitted with a Subsequent 
Report Sundry Notice or through FracFocus or another designated 
database. For information required in paragraph (i)(1) of this section 
that the operator claims to be exempt from public disclosure, the 
operator must submit to the BLM an affidavit that:
    (i) Identifies the Federal statute or regulation that allows 
withholding of the information from the BLM or prohibits the BLM from 
disclosing the information if it were in the BLM's possession;
    (ii) Affirms that the information is not publicly available;
    (iii) Affirms that the information is not required to be publicly 
available under any applicable law;
    (iv) Affirms that the release of the information would likely harm 
the operator's competitive position; and
    (v) Affirms that the information is not readily apparent through 
reverse engineering.
    (2) The BLM may require any operator to disclose to the BLM any 
information claimed to be exempt from public disclosure, along with any 
other relevant information.
    (3) If the BLM determines that the information is not exempt from 
disclosure, the BLM will make the information available to the public 
after providing the operator with no fewer than 10 business days' 
notice of the BLM's determination.
    (4) The operator must maintain records of the information claimed 
to be exempt from disclosure for the period of time as required by 
section 3162.4-1(d) of this title.
    (k) Requesting a Variance from the Requirements of this Section. 
The operator may make a written request to the authorized officer for a 
variance from the requirements under this section. The BLM encourages 
submission using a Sundry Notice (Form 3160-5, Sundry Notices and 
Reports on Wells). In cooperation with a State (for Federal lands) or a 
tribe (for Indian lands), the BLM may issue a variance that would apply 
to all wells within a State or within Indian lands, or to specific 
fields or basins within the State or the Indian lands, if the BLM finds 
that the variance meets the criteria in paragraph (k)(2) of this 
section.
    (1) A request for a variance must specifically identify the 
regulatory provision of this section for which the variance is being 
requested, explain the reason the variance is needed, and demonstrate 
how the operator will satisfy the objectives of the regulation for 
which the variance is being requested.
    (2) The authorized officer, after considering all relevant factors, 
may approve the variance, or approve it with one or more conditions of 
approval, only if the BLM determines that the proposed alternative 
meets or exceeds the objectives of the regulation for which the 
variance is being requested. The decision whether to grant or deny the 
variance request is entirely within the BLM's discretion.
    (3) A variance under this section does not constitute a variance to 
provisions of other regulations, laws, or orders.
    (4) Due to changes in Federal law, technology, regulation, BLM 
policy, field operations, noncompliance, or other reasons, the BLM 
reserves the right to rescind a variance or modify any conditions of 
approval. The authorized officer must provide a written justification 
if a variance is rescinded or a condition of approval is modified.
0
6. Amend Sec.  3162.5-2 by revising the first sentence of paragraph (d) 
to read as follows:


Sec.  3162.5-2  Control of wells.

* * * * *
    (d) Protection of usable water and other minerals. The operator 
must isolate all usable water and other mineral-bearing formations and 
protect them from contamination.
* * * * *

Tommy P. Beaudreau,
Acting Assistant Secretary, Land and Minerals Management.
[FR Doc. 2013-12154 Filed 5-23-13; 8:45 am]
BILLING CODE 4310-84-P