Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 27691 

Medicare CF in effect at the beginning 

of CYs 2013 or 2014 (or the CY 2009 CF, 

if higher) and the CY 2013 and 2014 

relative value units (RVUs). 

(2) The provider’s actual billed charge 

for the service. 

(b) For vaccines provided under the 

Vaccines for Children Program in CYs 

2013 and 2014, a State must pay the 

lesser of: 

(1) The Regional Maximum 

Administration Fee; or, 

(2) The Medicare fee schedule rate in 

CY 2013 or 2014 (or, if higher, the rate 

using the 2009 conversion factor and the 

2013 and 2014 RVUs) for code 90460. 

§ 447.410 State plan requirements. 

The State must amend its plan to 

reflect the increase in fee schedule 

payments in CYs 2013 and 2014 unless, 

for each of the billing codes eligible for 

payment, the State currently reimburses 

at least as much as the higher of the CY 

2013 and CY 2014 Medicare rate or the 

rate that would be derived using the CY 

2009 conversion factor and the CY 2013 

and 2014 Medicare relative value units 

(RVUs). 

§ 447.415 Availability of Federal financial 

participation (FFP) 

(a) For primary care services 

furnished by physicians specified in 

§ 447.400, FFP will be available at the 

rate of 100 percent for the amount by 

which the payment required to comply 

with § 447.405 exceeds the Medicaid 

payment that would have been made 

under the approved State plan in effect 

on July 1, 2009. 

(b) For purposes of calculating the 

payment that would have been made 

under the approved State plan in effect 

on July 1, 2009, the State must consider 

all supplemental and increased 

payments made for the individually 

billed codes, including any incentive 

payments and other supplemental 

payment in effect at that time. 

(c) For vaccine administration, the 

State must impute the payment that 

would have been made under the 

approved Medicaid State plan in effect 

on July 1, 2009 by calculating the 

average payment for codes 90465, 

90466, 90467 and 90468 weighted by 

volume. 

(d) For any payment made under a 

bundled rate methodology, including 

bundled rates for vaccines and vaccine 

administration, the amount directly 

attributable to the applicable primary 

care service must be isolated for 

purposes of determining the availability 

of the 100 percent FFP rate. 

Authority: (Catalog of Federal Domestic 

Assistance Program No. 93.778, Medical 

Assistance Program.) 

Dated: April 17, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: April 18, 2012. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2012–11421 Filed 5–9–12; 11:15 a.m.] 

BILLING CODE 4120–01–P 

DEPARTMENT OF THE INTERIOR 

Bureau of Land Management 

43 CFR Part 3160 

[WO–300–L13100000.FJ0000] 

RIN 1004–AE26 

Oil and Gas; Well Stimulation, 

Including Hydraulic Fracturing, on 

Federal and Indian Lands 

AGENCY: Bureau of Land Management, 

Interior. 

ACTION: Proposed rule. 

SUMMARY: The Bureau of Land 

Management (BLM) is proposing a rule 

to regulate hydraulic fracturing on 

public land and Indian land. The rule 

would provide disclosure to the public 

of chemicals used in hydraulic 

fracturing on public land and Indian 

land, strengthen regulations related to 

well-bore integrity, and address issues 

related to flowback water. This rule is 

necessary to provide useful information 

to the public and to assure that 

hydraulic fracturing is conducted in a 

way that adequately protects the 

environment. 

DATES: Send your comments on this 

proposed rule to the BLM on or before 

July 10, 2012. 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 proposed rule, please note that the 

Office of Management and Budget 

(OMB) is required to make a decision 

concerning the collection of information 

contained in this 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 11, 2012. 

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_docket@omb.eop.gov. Please 

indicate ‘‘Attention: OMB Control 

Number 1004–XXXX,’’ 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 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 experienced significant oil 

and gas development. The extension of 

the practice has caused public concern 

about whether fracturing can allow 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 

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27692 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

mineral estate and 56 million subsurface 

acres of Indian mineral estate across the 

United States. The BLM proposes to 

modernize its management of well 

stimulation activities, including 

hydraulic fracturing, to ensure that 

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 lands; (2) confirmation that 

wells used in fracturing operations meet 

appropriate construction standards; and 

(3) a requirement that operators put in 

place appropriate plans for managing 

flowback waters from fracturing 

operations. 

The BLM proposes to apply the same 

rules and standards to Indian lands so 

that these lands and communities 

receive the same level of protection 

provided for public lands. Most of these 

requirements in this rule can be 

satisfied by submitting additional 

information during the process that the 

BLM currently applies to operators who 

are drilling on public or Indian lands. 

The proposed 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 is intended 

to be posted on a public web site, and 

the BLM is working with the Ground 

Water Protection Council to determine 

whether the disclosure can be integrated 

into the existing Web site known as 

FracFocus.org. 

The BLM has developed the draft 

with an eye toward improving public 

awareness and oversight without 

introducing complicated new 

procedures or delays in the process of 

developing oil and gas resources on 

public and Indian lands. Some states 

have started requiring similar 

disclosures and oversight for oil and gas 

drilling operations under their own 

jurisdiction. This proposal seeks to 

create a consistent oversight and 

disclosure model that will work in 

concert with other regulators’ 

requirements while protecting Federal 

and tribal interests and resources. 

The BLM proposes these changes to 

existing well stimulation oversight 

partly in response to recommendations 

put forward by the Secretary of Energy’s 

Energy 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 activities. In 

preparing this proposed rule, the BLM 

has received input from members of the 

public and stakeholders, and has 

initiated consultation with tribal 

representatives. The BLM is looking 

forward to obtaining additional public 

input and to ongoing tribal 

consultations regarding the specific 

proposed provisions that are set forth 

herein. 

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 benefits range 

from $12 million to $50 million per 

year, with the range being based on the 

discount rate used for the analysis, and 

the estimates of the underlying risk 

reduced, and remediation costs avoided, 

by the regulation. The estimated costs 

range from $37 million to $44 million 

per year, and do not vary based on the 

uncertainty in the underlying risk 

reduced by the rule. Given the 

assumptions made about the costs of 

remediating contamination and the fact 

that certain benefits were not quantified, 

the BLM believes that the quantified 

range of estimated outcomes could 

underestimate actual net benefits. 

I. Public Comment Procedures 

II. Background 

III. Discussion of 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 

2134 LM, 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_docket@omb.eop.gov. 

Please include ‘‘Attention: OMB Control 

Number 1004–XXXX’’ 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 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 in the Administrative Record 

for the rule comments received after the 

close of the comment period (see DATES) 

or comments delivered to an address 

other than those listed above (see 

ADDRESSES). 

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 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 generate flow of 

hydrocarbons to well bores unless 

mechanical changes to the properties of 

the rock can be induced. The 

development of horizontal drilling, 

combined with hydraulic fracturing, 

have made the production of oil and gas 

from shale possible. 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, that are 

carried into the newly fractured rock 

and help keep the fractures open once 

the pressure from the fracturing 

operation is released. The proppantfilled fractures become conduits for 

fluid migration from the reservoir rock 

to the wellbore and the fluid is 

subsequently brought to the surface. In 

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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. 

The BLM estimates that about 90 

percent (approximately 3,400 wells per 

year) of wells currently drilled on 

Federal and Indian lands are stimulated 

using hydraulic fracturing 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 oil or gas. The 

resulting expansion of oil and gas 

drilling into new parts of the country as 

a result 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. 

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 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. 

Around the time of the BLM’s forums, 

at the President’s direction, the 

Secretary of Energy’s Advisory Board 

convened a Natural Gas Subcommittee 

(Subcommittee) to evaluate hydraulic 

fracturing issues. The Subcommittee 

met with industry, service providers, 

state and Federal regulators, academics, 

environmental groups, and many others 

stakeholders. Initial recommendations 

were issued by the Subcommittee on 

August 18, 2011. Among other things, 

the report recommended that more 

information be provided to the public, 

including disclosure of the chemicals 

used in fracturing fluids. The 

Subcommittee also recommended the 

adoption of progressive standards for 

wellbore construction and testing. The 

initial report was followed by a final 

report that was issued on November 18, 

2011. The final report recommended, 

among other things, that operators 

engaging in hydraulic fracturing prepare 

cement bond logs and 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. 

The BLM’s proposed rule is 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). 

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, the BLM is 

proposing to make critical 

improvements to its regulations for 

hydraulic fracturing. The proposed 

regulations would be applied 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 effort, and the Department is 

committed to making sure tribal leaders 

play a significant role as we work 

together to develop resources on public 

and Indian lands in a safe and 

responsible way. The BLM has initiated 

government-to-government consultation 

with tribes on this proposal and has 

offered to hold follow-up consultation 

meetings with any tribe that desires to 

have an individual meeting. The BLM 

held four tribal consultation meetings, 

to which over 175 tribal entities were 

invited. These initial consultations were 

held in Tulsa, Oklahoma on January 10, 

2012; in Billings, Montana on January 

12, 2012; in Salt Lake City, Utah on 

January 17, 2012; and in Farmington, 

New Mexico on January 19, 2012. 

Eighty-one tribal members representing 

27 tribes attended the meetings. In these 

sessions, tribal representatives were 

given a discussion draft of the hydraulic 

fracturing rule to serve as a basis for 

substantive dialogue about the 

hydraulic fracturing rulemaking 

process. The BLM asked the tribal 

leaders for their views on how a 

hydraulic fracturing rule proposal might 

affect Indian activities, practices, or 

beliefs if it were to be applied to 

particular locations on Indian and 

public lands. A variety of issues were 

discussed, including 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. One of 

the outcomes of these meetings is the 

proposed requirement in this rule that 

operators certify that operations on 

tribal lands comply with tribal laws. 

The BLM has been and will continue 

to be proactive about tribal consultation 

under the Department’s newlyformalized 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. The BLM will continue to 

consult with tribal leaders throughout 

the rulemaking process. Responses from 

tribal representatives will inform the 

agency’s actions in defining the scope of 

acceptable hydraulic fracturing rule 

options. Tribal governments, tribal 

members, and individual Native 

Americans are also invited to comment 

directly on this proposed rule through 

the process described in the Public 

Comment Procedures section of this 

document. 

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 these state 

efforts by providing a consistent 

standard across all public and Indian 

lands. The BLM is also actively working 

to minimize any duplication between 

the reporting required for state 

regulations and for this regulation and 

to make reported information consistent 

and easily accessible to the public. For 

instance, the BLM is working closely 

with the Ground Water Protection 

Council and the Interstate Oil and Gas 

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27694 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

Commission in an effort to integrate the 

disclosure called for in this rule with 

the existing Web site known as 

FracFocus. The FracFocus.org Web site 

is already well established and used by 

many states. This online database 

includes information from oil and gas 

wells in roughly 12 states and includes 

information from over 206 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. 

The BLM recognizes the efforts of 

states to regulate hydraulic fracturing 

and is focused on coordinating closely 

with individual state governments to 

avoid duplicative regulatory 

requirements. The agency has a long 

history of working cooperatively with 

state regulators and the BLM often 

enters into memorandums of 

understanding or establishes working 

groups to coordinate state and Federal 

activities, such as the oil and gas 

working groups that currently exist in 

many of our oil and gas states. The BLM 

is applying the same approach to this 

effort and will work closely with 

individual states on the implementation 

of the proposed regulation. The BLM’s 

intent is to encourage efficiency in the 

collection of data and the reporting of 

information. The BLM routinely shares 

information on oil and gas operations 

with state regulatory authorities and the 

BLM will continue to work with 

individual states to ensure that 

duplication of efforts is avoided to the 

extent possible. Since the BLM is 

looking for all opportunities to avoid 

duplication of the collection of data and 

the reporting of information, we are 

specifically asking for public comment 

on how best to avoid duplication of 

requirements under this proposed rule 

with existing state requirements. 

The BLM acknowledges that some 

states already have in place rules and 

regulations that address hydraulic 

fracturing and that these rules may be 

either more or less stringent than the 

provisions in this proposal. In keeping 

with longstanding practice and 

consistent with relevant statutory 

authorities, it is the intention of the 

BLM to implement on public lands 

whichever rules, state or Federal, are 

most protective of Federal lands and 

resources and the environment. 

III. Discussion of the Proposed Rule 

The BLM proposes to revise 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 lands using 

the principles of multiple use and 

sustained yield. FLPMA declares 

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 nonrenewable 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 Indian Mineral Leasing 

Act assigns regulatory authority to the 

Secretary over Indian oil and gas leases 

on trust lands (except those excluded by 

statute). As stewards of the public lands, 

and as the Secretary’s regulator for oil 

and gas leases on Indian lands, the BLM 

has evaluated the increased use of well 

stimulation practices over the last 

decade and determined that the existing 

rules for well stimulation require 

updating. 

The current regulations make a 

distinction between routine fracture jobs 

and nonroutine fracture jobs. However, 

the terms ‘‘routine’’ and ‘‘nonroutine’’ 

are not defined in 43 CFR 3162.3–2 or 

anywhere else in BLM regulations, 

making this distinction functionally 

difficult to apply and confusing for both 

the agency and those attempting to 

comply with the regulations. As 

previously stated, the regulations are 

now 30 years old and need to be 

updated to keep pace with the many 

changes in technology and current best 

management practices. As discussed in 

the background section of this 

document, the increased use of well 

stimulation activities over the last 

decade has also generated concerns 

among the public about well stimulation 

and about the chemicals used in 

hydraulic fracturing. The proposed rule 

is intended to increase transparency for 

the public regarding the fluids used in 

the hydraulic fracturing process, in 

addition to providing assurances that 

well bore integrity is maintained 

throughout the fracturing process and 

that the fluids that flow back to the 

surface from hydraulic fracturing 

operations are properly stored and 

disposed of or treated. 

The following chart explains the 

major changes between the existing 

regulation(s) and the proposed 

regulation(s). 

Existing regulation Proposed regulation Substantive changes 

43 CFR 3160.0–5 Onshore Oil 

and Gas Operations: General 

Definitions.

43 CFR 3160.0–5 Onshore Oil 

and Gas Operations: General 

Definitions.

This proposal would replace the current definition of usable water 

found in 43 CFR 3162.5–2(d) and define six other terms used in 

the oil and gas drilling industry to make the rule clearer and easier 

to understand. The definitions would be consistent with those used 

in the BLM’s Oil and Gas Onshore Orders and by industry. 

43 CFR 3162.3–2(a) Subsequent 

Well Operations.

43 CFR 3162.3–2(a) Subsequent 

Well Operations.

This proposal would remove the phrase ‘‘performing nonroutine fracturing jobs.’’ 

43 CFR 3162.3–2(b) Subsequent 

Well Operations.

43 CFR 3162.3–2(b) Subsequent 

Well Operations.

This proposal would remove the phrase ‘‘routine fracturing or 

acidizing jobs, or * * * ’’ 

No existing regulation ..................... 43 CFR 3162.3–3(a) through (j) .... This proposal would add provisions addressing well stimulation operations, would require disclosure of well stimulation fluids, and 

would require approval of well stimulation operations. The proposed rule would also require that mechanical integrity tests be 

conducted before well stimulation activities are conducted and 

would require full reporting of the results of the well stimulation activity within thirty days of its completion. This proposal would also 

add a section allowing the authorized officer to grant a variance to 

specific conditions of these rules if the operator can demonstrate 

that alternative procedures would meet or exceed the intent of the 

minimum standards in this rule. This variance language is consistent with that found in the BLM’s Oil and Gas Onshore Orders. 

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Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 27695 

Existing regulation Proposed regulation Substantive changes 

43 CFR 3162.5–2(d) Protection of 

fresh water and other minerals.

43 CFR 3162.5–2(d) Protection 

of fresh water and other minerals.

This proposal removes the definition of usable water from this section. The new definition of usable water would be placed in 43 CFR 

3160.0–5. 

Section-by-Section Discussion of 

Proposed Changes 

As an administrative matter, the 

proposed rule would amend the 

authorities section for the BLM’s oil and 

gas operations management 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. 

The proposed rule would remove the 

terms ‘‘nonroutine fracturing jobs,’’ 

‘‘routine fracturing jobs,’’ and ‘‘acidizing 

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 well 

stimulation activities. In the proposed 

rule, there would be no distinction 

drawn between what was previously 

considered nonroutine or routine well 

stimulations. Prior approval would be 

required for well stimulation activities, 

generally in connection with the prior 

approval process that already is in place 

for general well drilling activities 

through the Application for Permit to 

Drill (APD) process. Operators also will 

be required to submit cement bond logs 

before fracturing operations begin. The 

running of cement bond logs on surface 

casing, which is currently an optional 

practice, would now be required for 

new wells. Existing wells would require 

mechanical integrity testing prior to 

hydraulic fracturing. 

The proposed rule would include six 

new definitions for technical terms used 

in the proposed rule. These definitions 

will improve readability and clarity of 

the regulations. 

The proposed rule intends to add 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. 

• 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. 

• Stimulation fluid means the liquid 

or gas, and any accompanying solids, 

used during a treatment of oil and gas 

wells, such as the water, chemicals, and 

proppants used in hydraulic fracturing. 

• Usable water means water 

containing up to 10,000 ppm of total 

dissolved solids. 

• Well stimulation means those 

activities conducted in an individual 

well bore designed to increase the flow 

of hydrocarbons from the rock formation 

to the well bore by modifying the 

permeability of the reservoir rock. 

Examples of well stimulation operations 

are acidizing and hydraulic fracturing. 

The proposed rule would delete the 

definition of ‘‘fresh water.’’ The BLM 

has maintained a definition of fresh 

water in its oil and gas operating 

regulations since 1988. However, in its 

onshore orders, the BLM has sought to 

protect all usable waters during drilling 

operations, not just fresh water. This 

distinction has led to confusion in the 

regulations. Usable water includes fresh 

water and water that is of lower quality 

than fresh water. The BLM intends to be 

more protective when it seeks to protect 

all usable water during drilling 

operations, not just fresh water. 

Therefore, the BLM proposes to delete 

the definition of fresh water. 

Revised section 3162.3–2(a) would 

remove the phrase ‘‘perform nonroutine 

fracturing jobs’’ from the current 43 CFR 

3162.3–2(a). The phrase ‘‘routine 

fracturing jobs or acidizing jobs, or’’ 

would also be removed from existing 

section 3162.3–2(b). Well stimulation 

activities would be addressed under the 

new proposed 43 CFR 3162.3–3. 

Proposed section 3162.3–3(a) would 

make it clear that this section applies 

only to well stimulation activities and 

that all other injection activities must 

comply with section 3162.3–2. This 

language is necessary to make the 

distinction between well stimulation 

activities and other well injection 

activities, such as secondary and tertiary 

recovery operations. 

Proposed section 3162.3–3(b) would 

require the BLM’s approval of all well 

stimulation activity. For new wells, the 

operator has the option of applying for 

the BLM’s approval in its application for 

permit to drill (APD). For wells 

permitted prior to the effective date of 

this section or for wells permitted after 

the effective date of this section, the 

operator would submit a Sundry Notice 

and Report on Wells (Form 3160–5) for 

the well stimulation proposal for the 

BLM’s approval before the operator 

begins the stimulation activity. This 

section would supersede and replace 

existing section 3162.3–2(b) that states 

that no prior approval is required for 

routine fracturing. This reference in the 

existing section would be deleted. Also, 

an operator must submit a Sundry 

Notice prior to well stimulation activity 

if the BLM’s previous approval for well 

stimulation is more than five years old, 

or if the operator becomes aware of 

significant new information about the 

relevant geology, the stimulation 

operation or technology, or the 

anticipated impacts to any resource. The 

five-year period is consistent with 

common state practices, including those 

of Montana, Wyoming, and Colorado, 

which require that operators reconfirm 

well integrity for fracturing operations 

through a pressure test every five years. 

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 well stimulation-related 

information with APD applications will 

impact the timing of the approval of 

drilling permits. The BLM believes that 

the additional incremental 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 well 

stimulation activities on existing wells 

that have been in service more than five 

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. 

Proposed section 3162.3–3(c)(1) 

would require a report that includes the 

geological names, a geological 

description, and the depth of the top 

and the bottom of the formation into 

which well stimulation 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 

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the confining rocks above and below the 

zone that would be stimulated. 

Proposed section 3162.3–3(c)(2) 

would require the operator to submit 

information in the form of a cement 

bond log, which will help the BLM in 

its efforts to make sure that water 

resources are protected. A cement bond 

log is a tool used to gauge the extent to 

which water bearing formations are 

isolated from the casing string. The log 

is a document that reports the data from 

a probe of the wellbore that uses sonic 

technology to detect gaps or voids in the 

cement and the casing. This log would 

be used to verify that the operator has 

taken the necessary precautions to 

prevent migration of fluids in the 

annulus from the fracture zone to the 

usable water horizons. The proposed 

regulation would allow for the use of 

other evaluation tools acceptable to the 

BLM in order to allow the substitution 

of equally effective tools or procedures. 

For example, an operator could request 

a variance from the requirements of 

proposed section 3162.3–3(c)(2) that it 

submit cement bond logs to prove that 

the occurrences of usable water have 

been isolated to protect them from 

contamination. The BLM could grant a 

variance to allow for the use of logs 

other than cement bond logs (e.g., slim 

array sonic tool, ultrasonic imager tool) 

if it was satisfied that the alternative 

logs would meet or exceed the 

objectives of section (c)(2). The BLM 

recognizes that the cement bond log 

would not be available prior to drilling 

a well. Therefore, when the operator 

takes advantage of the option to submit 

its well stimulation information as part 

of its APD, the cement bond log would 

be required after approval of the permit 

to drill and prior to commencing well 

stimulation activities. Many operators 

routinely perform cement bond logs for 

the zones of interest, so the BLM does 

not expect this step to be a burden for 

operators. The best available means for 

the BLM to help ensure that well 

stimulation activities do not 

contaminate aquifers is to require 

cement bond logs for the cement behind 

the pipe along all areas intersecting 

useable water, including running 

cement bond logs on the surface casing. 

Proposed section 3162.3–3(c)(3) 

would require reporting of the measured 

depth to the perforations in the casing 

and uncased hole intervals (open hole). 

This proposed 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 and the need for any 

mitigation applicable to Federal and 

Indian lands. This section would also 

require the operator to disclose the type 

of materials (proppants) that would be 

injected into the fractures to keep them 

open and the anticipated pressures to be 

used in the well stimulation operation. 

Proposed section 3162.3–3(c)(4), 

consistent with protecting public health 

and safety and preventing unnecessary 

or undue degradation to the public 

lands, would require operators to certify 

in writing that they have complied with 

all applicable Federal, tribal, state, and 

local laws, rules, and regulations 

pertaining to proposed stimulation 

fluids. The BLM will use this 

information to make an informed 

decision on the proposed action. This 

section also would require the operator 

to certify that it has complied with all 

necessary permit and notice 

requirements. The BLM acknowledges 

that other Federal, state, tribal, and local 

agencies may have regulatory 

requirements that would apply to 

chemical handling, injecting fluids into 

the subsurface, and the protection of 

groundwater. It remains the 

responsibility of the operator to be 

aware of and comply with these 

regulatory requirements. The BLM will 

rely on the operator’s certification that 

it has complied with all of the laws and 

regulations that apply to its operation. 

Proposed section 3162.3–3(c)(5) 

would require the operator to submit a 

detailed description of the well 

stimulation engineering design to the 

BLM for approval. This information is 

needed in order for the BLM to be able 

to verify that the proposed engineering 

design is adequate for safely conducting 

the proposed well stimulation. 

Proposed section 3162.3–3(c)(5)(i) 

would require the operator to submit to 

the BLM an estimate of the total volume 

of fluid to be used in the stimulation. 

Proposed section 3162.3–3(c)(5)(ii) 

would require the operator to submit to 

the BLM a description of the range of 

the surface treating pressures 

anticipated for the stimulation. 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 well 

stimulation operation. 

Proposed section 3162.3–3(c)(5)(iii) 

would require the operator to submit to 

the BLM the proposed maximum 

anticipated injection pressure for the 

stimulation. This information is needed 

by the BLM to verify that the maximum 

allowable injection pressure will not be 

exceeded at any stage of the well 

stimulation operation. 

Proposed section 3162.3–3(c)(5)(iv) 

would require the operator to submit to 

the BLM the estimated or calculated 

fracture length and height anticipated as 

a result of the stimulation, so that the 

BLM can verify that the intended effects 

of the well stimulation operation will 

remain confined to the petroleumbearing rock layers and will not have 

unintended consequences on other rock 

layers, such as aquifers. 

Proposed section 3162.3–3(c)(6) 

would require the operator to provide 

information pertaining to the handling 

of recovered fluids that will be used for 

the stimulation activities for approval. 

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. 

Proposed section 3162.3–3(c)(6)(i) 

would require the operator to submit to 

the BLM an estimate of the volume of 

fluid to be recovered during flow back, 

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. 

Proposed section 3162.3–3(c)(6)(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 of public health and safety. 

Proposed section 3162.3–3(c)(6)(iii) 

would require the operator to submit to 

the BLM a description of the proposed 

disposal method of the recovered fluids. 

This is currently required by existing 

BLM regulations (i.e., Onshore 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 and to 

prevent unnecessary or undue 

degradation of the public lands. The 

BLM specifically requests comments on 

whether the operator should be required 

to submit as part of the Sundry Notice 

application additional information 

about how it will dispose of waste 

streams not specifically addressed in 

this proposal. 

Proposed section 3162.3–3(c)(7) 

would require the operator to provide, 

at the request of the BLM, additional 

information pertaining to any facet of 

the well stimulation proposal. For 

example, the BLM may require new or 

different tests or logs in cases where the 

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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. Such 

information may include, but is not 

limited to, tabular or graphical results of 

a mechanical integrity test, 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 

stimulation. This provision would allow 

the BLM to obtain additional 

information about the proposed well 

stimulation activities. For example, after 

initial cementing activities, an operator 

may be asked to perforate the well 

casing and squeeze cement into the 

areas with inadequate cement bonding. 

In this case, the BLM may ask for 

additional information to show that the 

corrective action was successful and to 

ensure that the corrective work 

addressed any cement bonding 

deficiencies. The BLM wants to ensure 

that any additional information 

requested under this provision is the 

least burdensome to operators as 

possible while still accomplishing the 

goal of protecting the public lands and 

resources; therefore, the BLM is 

specifically requesting public comment 

on how this may be best achieved. 

Proposed section 3162.3–3(d) would 

require the operator to perform a 

successful mechanical integrity test 

before beginning well stimulation 

operations. This requirement is 

necessary to help ensure the integrity of 

the wellbore under anticipated 

maximum pressures during well 

stimulation operations. 

Proposed section 3162.3–3(d)(1) 

would require the mechanical integrity 

test to emulate the pressure conditions 

that would be seen in the proposed 

stimulation process. This test would 

show that the casing is strong enough to 

protect water and other subsurface 

resources during well stimulation 

activities. 

The proposed section 3162.3–3(d)(2) 

would establish the engineering criteria 

for using a fracturing string as a 

technique during well stimulation. 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 Number 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 stimulation process in order to 

ensure that the casing used in the well 

would be robust enough to handle the 

pressures. 

Proposed section 3162.3–3(d)(3) 

would require the use of the pressure 

test time requirement of holding 

pressure for 30 minutes with no more 

than 10 percent pressure loss. This 

requirement is the same standard 

applied in Onshore Order Number 2, 

Drilling, (53 FR 46790) Section III.B.h., 

to confirm the mechanical integrity of 

the casing. This language does not set a 

new standard in the BLM’s regulations. 

This test, together with the other 

proposed requirements, would 

demonstrate if the casing is strong 

enough to protect water and other 

subsurface resources during well 

stimulation activities. 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 well stimulation 

activities. 

Proposed section 3162.3–3(e)(1) 

would require the operator to 

continuously monitor and record the 

pressure(s) during the well stimulation 

operation. The pressure during the 

stimulation should be contained in the 

string through which the stimulation is 

being pumped. Unexpected changes in 

the monitored and recorded pressure(s) 

would provide an early indication of the 

possibility that well integrity has been 

compromised. This information is 

needed by the BLM to ensure that well 

stimulation activities are conducted as 

designed. This information would also 

show that stimulation fluids are going to 

the formation for which they were 

intended. 

Proposed section 3162.3–3(e)(2) 

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 stimulation 

operation the annulus pressure 

increases by more than 500 pounds per 

square inch over the annulus pressure 

immediately preceding the stimulation. 

Within 15 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 stimulation 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 well 

stimulation. Consistent with the BLM’s 

Onshore Order Number 2, Drilling 

Operations, the operator must repair the 

casing should a breach occur. 

Proposed section 3162.3–3(f) 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, whichever the 

operator determines is the least 

burdensome or costly option for the 

storage of flowback fluid. The BLM is 

proposing this requirement because 

flowback fluids could contain 

hydrocarbons from the formation and 

could also contain additives and other 

components that might degrade surface 

and ground water if they were to be 

released without treatment. This 

provision 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). Section 

302(b) of the Federal Land Policy and 

Management Act (43 U.S.C. 1732(b)) 

states that ‘‘In managing the public 

lands, the Secretary shall, by regulation 

or otherwise, take any action necessary 

to prevent unnecessary or undue 

degradation of the public lands.’’ In 

addition, existing BLM regulations at 43 

CFR 3161.2 requires that ‘‘all operations 

be conducted in a manner which 

protects other natural resources and the 

environmental quality.’’ Because the use 

of lined pits or tanks for the storage of 

recovered fluids are methods that best 

and reasonably protect the public lands 

from spills or leaks of recovered fluids, 

the BLM believes that this provision is 

in keeping with FLPMA’s mandate to 

prevent unnecessary or undue 

degradation of the public lands and the 

BLM regulation’s requirement to protect 

environmental quality. 

Additional conditions of approval for 

the handling of flowback water may be 

placed on the project by the BLM if 

needed to ensure protection of the 

environment and other resources. The 

BLM specifically requests comments on 

whether this rule should impose 

additional requirements that would 

require tanks or lined pits for drilling 

fluids and any other fluids associated 

with well stimulation operations. The 

BLM recognizes the ongoing efforts of 

states to regulate hydraulic fracturing 

operations. In implementing this rule, 

the BLM intends to avoid duplication of 

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existing state requirements and will 

continue to engage states in cooperative 

efforts to avoid duplication. Please 

comment on whether this proposed 

provision would be duplicative of 

provisions of state rules and whether it 

is unnecessarily burdensome. 

Proposed section 3162.3–3(g) would 

require the operator to submit to the 

BLM the post-operation data on a 

Subsequent Report Sundry Notice (Form 

3160–5, Sundry Notices and Report on 

Wells) following the completion of the 

stimulation activities. The BLM would 

determine if the well stimulation 

operation was conducted as approved. 

This information would be retained by 

the BLM as part of the individual well 

record and would be available for use 

when the well has been depleted and 

the plugging of the well is being 

designed. 

Proposed section 3162.3–3(g)(1) 

would require reporting of the actual 

measured depth to the perforations and 

open hole interval. This information 

identifies the producing interval of the 

well and will be available for use when 

the well has been depleted and plugging 

of the well is being designed. Specific 

information as to the actual source of 

water, including location of the water 

being used as the base fluid, is required 

because the BLM needs the information 

to determine the impacts associated 

with operations and the need for any 

mitigation applicable to Federal and 

Indian lands. 

Proposed section 3162.3–3(g)(2) 

would require the operator to submit to 

the BLM the actual total volume of fluid 

used, including water, proppants, 

chemicals, and any other fluid used in 

the stimulation(s) in order for the BLM 

to maintain a record of the stimulation 

operation as actually performed. 

Proposed section 3162.3–3(g)(3) 

would require the operator to submit to 

the BLM a report of the surface pressure 

at the end of each stage pumped and the 

rate at which the fluid was pumped at 

the completion of each stage (i.e., just 

prior to shutting down the pumps). In 

addition to the information provided for 

the individual stages, the pressure 

values for each flush stage must also be 

included. This information is needed by 

the BLM for it to ensure that the 

maximum allowable pressure was not 

exceeded at any stage of the well 

stimulation operation. 

Proposed sections 3162.3–3(g)(4) and 

(5) would require the operator to 

identify to the BLM the stimulation 

fluid by additive trade name and 

additive purpose, the Chemical 

Abstracts Service Registry Number, and 

the percent mass of each ingredient 

used in the stimulation operation. This 

information is needed in order for the 

BLM to maintain a record of the 

stimulation operation as performed. The 

information is being required in a 

format that does not link additives 

(required by 3162.3–3(g)(4)) to chemical 

composition of the materials (required 

by 3162.3–3(g)(5)) to minimize the risk 

of disclosure of any formulas of 

additives. This approach is similar to 

the one the State of Colorado adopted in 

2011 (Colorado Oil and Gas 

Conservation Commission Rule 

205A.b2.ix–xii). The BLM intends to 

place this information on a public Web 

site and is working with the Ground 

Water Protection Council in an effort to 

integrate this information into the 

existing Web site known as 

FracFocus.org. The disclosure of the 

fluids used in hydraulic fracturing 

would only be required after the 

fracturing operation has taken place. 

Proposed section 3162.3–3(g)(6) 

would require the actual, estimated, or 

calculated fracture length and height of 

the stimulation(s) to be reported to the 

BLM so that it can verify that the 

intended effects of the well stimulation 

operation remain confined to the 

petroleum-bearing rock layers and will 

not have unintended consequences on 

other rock layers or aquifers. This 

section would require the operator to 

show that the well stimulation activity 

was successfully implemented as 

designed and that the integrity of the 

well was maintained during 

stimulation. 

Proposed section 3162.3–3(g)(7) 

would allow the operator flexibility to 

report online the information listed in 

proposed sections 3162.3–3(g)(1) 

through 3162.3–3(g)(6) by attaching a 

copy of the service company 

contractor’s job log or report, provided 

the information required is adequately 

addressed. The operator is responsible 

for ensuring the accuracy of any 

information provided to the BLM, even 

if originally drafted by a third party. 

Proposed section 3162.3–3(g)(8), 

would require operators to certify they 

have complied with all applicable 

Federal, state, tribal, and local laws, 

rules, and regulations pertaining to the 

stimulation fluids that were actually 

used during well stimulation 

operations. The proposed section would 

also require that the operator certify that 

it has complied with all necessary 

permit and notice requirements. This 

information would be retained by the 

BLM as part of the well record and be 

available for use when the well has been 

depleted and closure of the well is being 

designed. The information is also 

needed for the BLM to fulfill its 

obligation to prevent unnecessary or 

undue degradation of the public land. 

Proposed section 3162.3–3(g)(9) 

would require operators to certify that 

wellbore integrity was maintained 

throughout the operation. This 

information is needed because the BLM 

has a mandate to protect human health 

and safety and prevent contamination of 

the environment. 

Proposed section 3162.3–3(g)(10) 

would require the operator to provide 

information describing the handling of 

the fluids used for the stimulation 

activities, flow-back fluids, and 

produced water. The operator must also 

report how it handled those fluids after 

operations were completed. 

Proposed section 3162.3–3(g)(10)(i) 

would require the operator to report the 

volume of fluid recovered during flow 

back, swabbing, or recovery from 

production facility vessels. 

Proposed section 3162.3–3(g)(10)(ii) 

would require the operator to report the 

methods of managing the recovered 

fluids. 

Proposed section 3162.3–3(g)(10)(iii) 

would require the operator to report the 

disposal method of the recovered fluids. 

This section also makes it clear that the 

fluid disposal methods must be 

consistent with Onshore Order Number 

7, Disposal of Produced Water (58 FR 

47353). This information is needed so 

that the BLM can help protect human 

health and safety and prevent the 

contamination of the environment. The 

BLM also needs to confirm that the 

disposal methods used are those that 

were approved and conform to the 

regulations. 

Proposed section 3162.3–3(g)(11) 

would require the operator to submit 

documentation and an explanation if 

the actual operations deviated from the 

approved plan. Understanding the 

complexities of well stimulation, the 

BLM expects there to be slight 

differences between the proposed plan 

and the actual operation. 

Proposed sections 3162.3–3(h) and (i) 

would notify the operator of procedures 

it needs to follow to identify 

information required to be submitted 

under this section that the operator 

believes to be exempt, by law, from 

public disclosure. If the operator fails to 

specifically identify information as 

exempt from disclosure by Federal law, 

the BLM will release that information. 

The BLM may also release information 

which the operator has marked as 

exempt if the BLM determines that 

public release is not prohibited by 

Federal law after providing the operator 

with no fewer than 10 business days’ 

notice of the determination. All other 

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1U.S. Department of the Interior, Bureau of Land 

Management, www.blm.gov, Oil and Gas Statistics. 

information submitted by the operator 

will become a matter of public record. 

Proposed section 3162.3–3(j) would 

provide the operator with a process for 

requesting a variance from the 

minimum standards of this regulation. 

Variances apply only to operational 

activities and do not apply to the actual 

approval process. The proposed 

regulation would make 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 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 requirements of 

proposed section 3162.3–3(c)(2) that it 

submit cement bond logs to prove that 

the occurrences of usable water have 

been isolated to protect them from 

contamination. The BLM could grant a 

variance to allow for the use of logs 

other than cement bond logs if it was 

satisfied that the alternative logs would 

meet or exceed the objectives of section 

(c)(2). This variance provision is 

consistent with existing BLM regulation 

such as Onshore Order Number 1 (see 

section X. of Onshore Oil and Gas 

Operations; Federal and Indian Oil and 

Gas Leases; Onshore Oil and Gas Order 

Number 1, Approval of Operations (72 

FR 10308, 10337). 

Revised section 3162.5–2(d) would 

remove the references to fresh water and 

remove the phrase ‘‘containing 5,000 

ppm or less of dissolved solids.’’ This 

revision would require the operator to 

isolate all usable water. This language 

does not set a new standard in the 

BLM’s regulations. Since 1988, Onshore 

Order Number 2, Drilling Operations, 

(53 FR 46790) Section II.Y. has defined 

usable water and Onshore Order 

Number 2, Drilling Operations, Section 

III.B. has required the operator to 

‘‘protect and/or isolate all usable water 

zones.’’ Section 3162.5(d) was not 

revised when Onshore Order Number 2, 

Drilling Operations, was promulgated, 

which has led to some confusion in 

implementing and interpreting the 

regulations. 

IV. Procedural Matters 

Federal and Indian Oil and Gas Leasing 

Activity 

To understand the context of costs 

and benefits of the proposed rule, 

background information concerning the 

BLM’s leasing of Federal oil and gas, 

and management of Federal and Indian 

leases may be helpful and is included 

here. This discussion is provided to 

explain the basis for the conclusions 

related to the procedural matters 

sections that follow. The BLM Oil and 

Gas Management program is one of the 

most important mineral leasing 

programs in the Federal Government. 

There were 49,173 Federal oil and gas 

leases covering 38,463,410 acres at the 

end of fiscal year (FY) 2011. For FY 

2011, there were 90,452 producible and 

service drill holes and 96,606 

producible and service completions on 

Federal leases.1

For FY 2011, onshore Federal oil and 

gas leases produced about 98 million 

barrels of oil, 2.97 billion Mcf of natural 

gas, 2.55 billion gallons of natural gas 

liquids, and approximately $2.7 billion 

in royalties. The production value of the 

oil and gas produced from public lands 

exceeded $23 billion. Oil and gas 

production from Indian leases was 

almost 20 million barrels of oil, 255 

million Mcf of natural gas, and 143 

million gallons of natural gas liquids, 

with a production value of $2.7 billion 

and generating royalties of $433 million. 

TABLE 1—FEDERAL AND INDIAN OIL AND GAS PRODUCTION AND ROYALTIES, FISCAL YEAR 2011 

Sales volume Sales value 

($MM) 

Royalty 

($MM) 

Federal Leases: 

Oil (bbl) ............................................................................................................................. 97,721,813 $8,374 $1,111 

Gas (Mcf) .......................................................................................................................... 2,974,916,041 12,556 1,360 

NGL (Gal) ......................................................................................................................... 2,551,994,725 2,474 254 

Subtotal ..................................................................................................................... ............................ 23,404 2,725 

Indian Leases: 

Oil (bbl) ............................................................................................................................. 19,550,536 1,571 271 

Gas (Mcf) .......................................................................................................................... 255,401,453 950 145 

Source: ONRR, Federal Onshore Reported Royalty Revenue, Fiscal Year 2011 and American Indian Reported Royalty Revenue, Fiscal Year 

2011. 

Estimating Benefits and Costs 

This analysis attempts to capture the 

potential benefits and costs that would 

result if the BLM implemented the 

proposed rule. As such, the current 

operating environment is the reference 

point from which the change is 

measured. 

Current regulations require operators 

conducting a ‘‘non-routine’’ well 

stimulation operation to submit a Notice 

of Intent Sundry and all operators, 

regardless of the type of well 

stimulation, to submit a Subsequent 

Report Sundry. The proposed rule 

would require BLM approval for all 

hydraulic fracturing events. For each 

event, operators would obtain the BLM’s 

approval prior to the event and submit 

a Subsequent Report Sundry within 30 

days of the event. The operator, if it so 

chooses, may seek approval for the 

stimulation operation at the same time 

that it submits the APD. Other 

information would be required if an 

incident occurs during a fracturing 

operation or if the BLM determines that 

there is a need for additional 

information. For example, the BLM may 

require new or different information in 

cases where the original information 

submitted in the Subsequent Report was 

inadequate or incomplete. 

Potential costs and benefits rely on 

the number of well stimulation events 

estimated to occur in the future. Those 

estimates depend on a number of 

factors, including, but not limited to, 

future oil and gas prices, the number of 

applications to drill, the number of 

wells completed, and the portion of 

wells that are stimulated. Expected costs 

and benefits are anticipated to increase 

in the future because the number of 

wells drilled and well stimulation 

activities are expected to increase in the 

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future, considering projected 

commodities prices and production. 

Administrative costs include only the 

additional burden posed by the 

requirements. For operators, this burden 

includes the submission of forms and 

supporting documentation that are not 

currently required. The reporting 

requirements would also pose an 

additional burden on the BLM, since it 

would review an additional number of 

sundry forms and additional 

information per form. The efficiency of 

processing applications could also be 

impacted if operators submit incomplete 

or inadequate information, thereby 

requiring additional communication 

between the BLM and the operators. 

The proposed rule seeks to achieve 

benefits by making more information 

available to the public about the 

chemicals injected in well stimulation 

fluids, while protecting trade secrets 

and confidential business information. 

The information that would be 

submitted to the BLM under this section 

would generally be made available to 

the public. The proposed rule, however, 

would allow an operator to identify 

specific information that it believes is 

protected from disclosure by Federal 

law, and to substantiate those claims of 

exemption. Under existing law, the BLM 

may nonetheless make that information 

available to the public, but only if it 

determines that the information is not 

protected by Federal law, and provides 

not less than 10 business days notice to 

the operator before releasing the 

information. 

Furthermore, the disclosure 

mechanism in the proposed rule would 

require a table of the additives by trade 

name and the purpose for which they 

are included in the well stimulation 

fluid. It would also require a separate 

table listing all the chemicals used by 

the Chemical Abstracts Service Registry 

Number. This design will inhibit 

reverse-engineering of specific 

additives. 

Potential costs include those to 

perform tests or take other actions that 

might not have been conducted 

otherwise. Operational costs include the 

cost of any additional logs, tests, or 

other requirements needed to prepare 

all documents required by the proposed 

rule that are not currently required. 

Depending on the well and the operator, 

these tests or other requirements 

currently may be conducted or practiced 

pursuant to other permits, general well 

testing, etc. 

New wells, where operators are 

conducting hydraulic fracturing 

operations, should already comply with 

many of the standards provided in this 

proposed rule, with the exception of 

running cement bond logs on the 

surface casing. Typically, an operator 

will assume that the casing is fully 

cemented if cement circulates to the 

surface during the cementing process. 

However, circulation to the surface does 

not confirm that there is appropriate or 

proper bonding. A cement bond log will 

provide confirmation that there is 

proper bonding by providing a graphical 

representation that proper bonding has 

occurred. Old vertical wells that are 

converted to horizontal wells already 

require a deepening sundry, a separate 

process that addresses some of the 

requirements in this proposed rule. 

The potential benefits of the proposed 

regulations include reduced surface and 

subsurface contamination. The analysis 

assumes that, absent this regulation, a 

certain number of well stimulation 

events may result in contamination and 

pose a cost to society. The proposed rule 

is designed to identify potential issues 

regarding wellbore integrity and the 

design of the operations, thereby 

reducing the likelihood of 

contamination events. 

Estimating the benefits of the 

proposed regulation is uncertain and 

subject to assumptions about the 

number of deficiencies, likelihood of 

contamination if a deficiency was 

present, and costs of remediation. One 

way to measure this benefit is by 

estimating the cost of internalizing the 

contamination, which for a subsurface 

event may include restoring a source of 

drinking water or remediation of an 

aquifer. 

There are other benefits that are 

difficult to quantify in monetary terms 

though they exist. The disclosure 

requirements might encourage operators 

to use fewer or safer chemicals in the 

hydraulic fracturing fluid. The public 

would benefit from increased 

knowledge about the fluids used. 

Increased transparency is also likely to 

benefit scientists, state and Federal 

agencies, and other organizations that 

study the potential impacts of hydraulic 

fracturing operations, and the BLM 

would have more information with 

which to make resource management 

decisions or respond to incidents. 

Methodology 

This analysis presents 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. Net benefits are 

discounted using 7 and 3 percent 

discount rates. The analysis presents a 

range of expected outcomes since the 

number of well stimulation events 

occurring in the future is highly variable 

and subject to future conditions. 

The proposed regulation is designed 

to reduce the risk that well stimulation 

events may pose to the environment. 

Any contamination event that occurs is 

expected to require remediation. Since 

the remediation costs are uncertain, the 

analysis makes assumptions about 

remediation costs which may 

underestimate the true costs of 

remediation. The analysis assumes two 

scenarios: A low remediation cost—low 

environmental risk scenario and a high 

remediation cost—high environmental 

risk scenario. The benefits, while 

representing the value of risk reduction, 

will underestimate or overestimate the 

true benefits if the true risk of well 

stimulation operations varies from the 

assumptions. 

Discounted Present Value 

There is a time dimension to 

estimates of potential benefits and costs. 

The potential events described, if they 

occur at all, may be in the distant future. 

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 (the discount factor equals 

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 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. 

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 explains the use 

of that 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 

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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.’’ 

Uncertainty 

The benefits and costs provided in 

this analysis are indeed estimates and 

come with uncertainty. Estimated costs 

and benefits rely on the number of well 

stimulation events occurring in future 

years and those estimates are uncertain. 

This analysis estimates the number of 

future well stimulation events using 

regression models and future 

projections of commodity prices. 

Assuming the number of well 

stimulation events is known, though 

administrative costs are more easily 

estimated, the operational costs required 

by producers to comply with the 

regulations are subject to assumptions 

about the number of wells that would 

require such expenditures. 

Further uncertainty lies in the 

estimation of benefits and remediation 

costs. For the purposes of this analysis, 

a range of assumed average costs of 

remediating both subsurface and surface 

contaminations are used. This 

assumption may be too low or too high 

in the real world, depending on the 

location, severity, consequences, 

duration of the contamination, and if a 

causal link between the source and 

contamination can be made. 

This analysis does not quantify other 

benefits that are undoubtedly relevant, 

such as the benefit that disclosing the 

components of fracturing fluids will 

have for public health research and the 

remediation of contamination events. It 

is also uncertain what additional 

benefits, if any, would result from the 

disclosure requirements, for instance, if 

companies find safer substitutes for the 

chemicals in the fracturing fluids. 

Results 

The analysis estimates the effects of 

the proposed regulations over a baseline 

scenario, where no action is taken. The 

BLM considered an alternative to the 

proposed regulation which would 

remove the requirement for operators to 

use lined pits if they choose to use pits 

to store hydraulic fracturing fluids. 

A summary of the results appears in 

Table 2 and Table 3, with the entire 

results available in the full Economic 

Analysis and Initial Regulatory 

Flexibility Analysis available at the 

address listed in the ADDRESSES section 

of this rule. 

TABLE 2—ANNUALIZED VALUE OF NET BENEFITS OF THE PROPOSED REGULATIONS AND ALTERNATIVES

[7% Discount rate; $MM] 

Low remediation cost/low 

environmental risk 

High remediation cost/high 

environmental risk 

Proposed Regulations 

Social Benefits .................................................................. 11.70 13.79 42.67 50.27 

Costs ................................................................................. 37.34 43.99 37.34 43.99 

Net Benefits ............................................................... ¥25.63 ¥30.20 5.33 6.28 

Alternative 1: No Requirement for Lined Pits 

Social Benefits .................................................................. 0.01 0.02 7.60 8.95 

Costs ................................................................................. 34.68 40.86 34.68 40.86 

Net Benefits ............................................................... ¥34.67 ¥40.84 ¥27.08 ¥31.90 

Estimated Number of Well Stimulations Low High Low High 

Total .................................................................................. 31,328 37,015 31,328 37,015 

Annual Average ................................................................ 3,133 3,701 3,133 3,701 

TABLE 3—ANNUALIZED VALUE OF NET BENEFITS OF THE PROPOSED REGULATIONS AND ALTERNATIVES

[3% Discount rate; $MM] 

Low remediation cost/low 

environmental risk 

High remediation cost/high 

environmental risk 

Proposed Regulations: 

Social Benefits .................................................................. 11.74 13.85 42.79 50.27 

Costs ................................................................................. 37.44 44.18 37.44 44.18 

Net Benefits ............................................................... ¥25.70 ¥30.33 5.35 6.31 

Alternative 1: No Requirement for Lined Pits: 

Social Benefits .................................................................. 0.01 0.02 7.62 8.99 

Costs ................................................................................. 34.77 41.04 34.77 41.04 

Net Benefits ............................................................... ¥34.76 ¥41.02 ¥27.15 ¥32.04 

Estimated Number of Well Stimulations Low High Low High 

Total .................................................................................. 31,328 37,015 31,328 37,015 

Annual Average ................................................................ 3,133 3,701 3,133 3,701 

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Results for the Proposed Regulations 

(Preferred Approach) 

Benefits: Under the proposed 

regulations, it is assumed that the 

regulations would remove much of the 

risk associated with potential wellbore 

integrity issues and unlined pits. The 

change in social benefits from the 

baseline scenario is positive. If you 

assume that there is low environmental 

risk posed by wellbore integrity issues 

and storage of hydraulic fracturing 

fluids in unlined pits and the costs of 

surface and subsurface remediation is 

low (on the range assumed), then the 

change in social benefit as a result of the 

proposed regulation is positive and 

ranges between $11.70MM and 

$13.79MM per year using a discount 

rate of 7% and between $11.74MM and 

$13.85MM per year using a discount 

rate of 3%. If you assume that 

environmental risks are high and 

remediation costs are high (on the range 

assumed), then the social benefits of the 

proposed regulation is positive and 

ranges between $42.67MM and 

$50.27MM per year using a discount 

rate of 7% and between $42.79MM and 

$50.49MM per year using a discount 

rate of 3%. Tables 7 and 8 (below) show 

the annual change in benefits over the 

baseline. 

Note that the figures for the estimated 

benefits of the proposed rule do not 

include such benefits as avoiding harm 

to water users that cannot be 

compensated by later providing 

alternative water sources. The increase 

in information about additives could aid 

water users when they consider the 

potential effects of well stimulation 

operations and constituent chemicals. 

Costs: The costs include both costs to 

the industry and the BLM under this 

alternative. Costs include operational 

tests that demonstrate wellbore integrity 

and those associated with lining open 

pits in the instances where operators 

use pits instead of storage tanks. The 

change in costs over the baseline ranges 

between $37.34MM and $43.99MM per 

year using a discount rate of 7% and 

between $37.44MM and $44.18MM per 

year using a discount rate of 3%, 

assuming low remediation costs and 

low environmental risks. The change in 

costs ranges between $37.34MM and 

$43.99MM per year using a discount 

rate of 7% and between $37.44MM and 

$44.18MM per year using a discount 

rate of 3%, assuming high remediation 

costs and high environmental risks. 

Tables 7 and 8 (below) show the annual 

change in costs over the baseline. 

Net Benefits: The change in net 

benefits for the proposed regulations 

varies depending on the amount of 

environmental risk associated with 

wellbore integrity issues and unlined 

pits and the level of remediation costs 

associated with contamination events. 

Assuming low remediation costs and 

low environmental risks, the change in 

net benefits from the baseline is 

negative and ranges from ¥$25.63MM 

and ¥$30.20MM per year using a 

discount rate of 7% and between 

¥$25.70MM and ¥$30.33MM per year 

using a discount rate of 3%. Assuming 

high remediation costs and high 

environmental risks, the change in net 

benefits is positive and ranges between 

$5.33MM and $6.28MM per year using 

a discount rate of 7% and between 

$5.35MM and $6.31MM per year using 

a discount rate of 3%. 

Given the assumptions made and the 

fact that certain benefits were not 

quantified, the range of estimated 

outcomes could underestimate the 

actual net benefits, i.e., where net 

benefits are estimated to be negative, the 

net benefits would be greater (or less 

negative). 

This analysis also does not capture 

the potential benefits associated with 

the disclosure of fracturing fluids. For 

example, disclosure might encourage 

operators to use fewer or safer chemicals 

in the hydraulic fracturing fluid. The 

public would benefit from increased 

knowledge about the fluids used. This 

transparency is also likely to benefit 

scientists, state and Federal agencies, 

and other organizations that study the 

potential impacts of well stimulation 

operations. The BLM would be able to 

make more informed resource decisions 

and respond effectively to events where 

environmental resources have been 

compromised. 

Also, the variance language might also 

enable operators to reduce costs, in 

which case, these estimates may 

overestimate the actual costs and 

underestimate the change in net 

benefits. 

It should be noted that the low cost 

and risk scenario results in negative net 

benefits while the high cost and risk 

scenario results in positive net benefits. 

The primary difference is not a result of 

the administrative or operational costs 

changing between the scenarios. 

Instead, the difference is due to the 

valuation of social benefits. If the 

assumed risk of contamination is greater 

and the costs of remediation are higher, 

then benefits of the proposed rule 

would be greater and offset the 

compliance costs. 

The annual cost per well stimulation 

does not vary greatly between the cost 

and risk scenarios, but the benefits do. 

The average annual cost per well 

(including administrative and 

operational costs) is estimated to be 

about $11,833. However, the average 

annual benefit ranges more widely, 

between $3,754 and $13,688. The 

uncertainty about risk and damages 

causes this variability. The net benefit 

ranges from ¥$8,079 to $1,855 on a per 

well stimulation basis. 

Note that the figures for the estimated 

benefits of the proposed rule do not 

include such benefits as avoiding harm 

to water users that cannot be 

compensated by later providing 

alternative water sources. The increase 

in information about additives could aid 

water users when they consider the 

potential effects of well stimulation 

operations and constituent chemicals. 

Economic Impact Analysis and 

Distributional Assessments 

Energy System Impact Analysis 

Executive Order 13211 provides 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 

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.’’ 

This analysis estimates the additional 

cost burden per well stimulation event 

and finds that the average burden per 

stimulation is about $11,833 in 2013. 

The BLM believes that the additional 

cost per well stimulation resulting from 

this proposed rule is insignificant when 

compared with the drilling costs in 

recent years, the production gains from 

hydraulically fractured well operations, 

and the net incomes of entities within 

the oil and natural gas industries. 

Table 4 presents drilling costs per 

well for a range of wells from 1998 to 

2007. The data clearly show that drilling 

costs increased during this time. Using 

the estimates for the average burden per 

well stimulation and the average cost of 

drilling wells in 2007, the annual costs 

of this proposed rule represent about 

0.3% of the drilling cost of a well. 

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As such, the proposed regulations are 

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 4—PER WELL COSTS OF CRUDE OIL AND NATURAL GAS WELLS DRILLED

Year 

Crude oil, 

natural gas, 

and dry wells 

drilled 

(nominal $) 

Crude oil wells 

drilled 

(nominal $) 

Natural gas 

wells drilled 

(nominal $) 

1998 ............................................................................................................................................. 769,100 566,000 815,600 

1999 ............................................................................................................................................. 856,100 783,000 798,400 

2000 ............................................................................................................................................. 754,600 593,400 756,900 

2001 ............................................................................................................................................. 943,200 729,100 896,500 

2002 ............................................................................................................................................. 1,054,200 882,800 991,900 

2003 ............................................................................................................................................. 1,199,500 1,037,300 1,106,000 

2004 ............................................................................................................................................. 1,673,100 1,441,800 1,716,400 

2005 ............................................................................................................................................. 1,720,700 1,920,400 1,497,600 

2006 ............................................................................................................................................. 2,101,700 2,238,600 1,936,200 

2007 ............................................................................................................................................. 4,171,700 4,000,400 3,906,900 

Source: Energy Information Administration (2012), ‘‘Costs of Crude Oil and Natural Gas Wells Drilled’’. 

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 analysis seeks to inform the 

discussion of labor demand and job 

impacts by providing an estimate of the 

employment impacts of the proposed 

regulations using labor requirements for 

the additional administration and 

operational needs. 

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 onetime event. Compliance with the 

operational requirements would shift 

resources within the industry from the 

operators to firms providing the services 

or supplies. For example, the 

requirement for a cement bond log 

represents an additional cost to the 

operator, but a benefit to the company 

running the log. 

In 2013, the BLM estimates that the 

labor requirements for operators to meet 

additional administrative and 

operational needs are estimated to be 

about 15 to 18 full time equivalents in 

each of the next three years. According 

to the U.S. Census Bureau, employment 

in the related sectors was 257,302 

persons in 2007. Note that these impacts 

are only for the regulated sector. The 

BLM cannot predict the net national 

employment impact, i.e., whether the 

increased employment in the regulated 

sector comes from previously 

unemployed workers or is displaces 

workers actively employed in other 

sectors. 

Another area of 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. As with 

the results in the earlier discussion, the 

BLM believes that the proposed rule 

would result in an additional cost per 

well stimulation that is small and would 

not alter the investment or employment 

decisions of firms. Therefore, 

considering the labor requirements and 

those operators would not likely reduce 

investment, the BLM anticipates an 

overall net gain in employment in the 

sectors. 

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 proposed requirement 

that operators provide to the BLM 

information regarding well stimulation 

activities that they are not currently 

providing to the BLM. 

This proposed rule would not create 

inconsistencies or otherwise interfere 

with an action taken or planned by 

another agency. This proposed 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 

proposed 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 proposed 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, we will assume that all entities 

(all lessees and operators) that may be 

affected by this proposed rule are small 

entities, even though that is not actually 

the case. 

The proposed rule deals with well 

stimulation on all Federal and Indian 

lands (except those excluded by statute). 

There would be some increased costs 

associated with the proposed enhanced 

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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 proposed 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% 

of the entities operating in the relevant 

sectors are small businesses in that they 

employ fewer than 500 employees. Also, 

small firms account for 74% of the total 

value of shipments and receipts for 

services, 86% of the total cost of 

supplies, 78% of the total capital 

expenditures (excluding land and 

mineral rights), and 67% of the paid 

employees. 

Small entities represent the 

overwhelming majority of entities 

operating in the onshore crude oil and 

natural gas extraction industry. As such, 

the proposed rule is likely to affect a 

significant number of small entities. To 

examine the economic impact of the 

rule on small entities, the BLM 

performed a screening analysis for 

impacts on a sample of expected 

affected small entities by comparing 

compliance costs to entity net incomes. 

Under the cost and risk scenarios, the 

average cost per entity in 2013 is 

estimated to represent between 0.002% 

and 0.22% of the 2010 net incomes of 

the sampled companies, depending on 

the U.S. Energy Information 

Administration’s Annual Energy 

Outlook commodity price forecasts. The 

proportions do not change substantially 

over the outlook period. 

After considering the economic 

impact of the proposed rule on these 

small entities, the screening analysis 

indicates that this proposed 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. 

Unfunded Mandates Reform Act 

This proposed 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 proposed rule 

is also not subject to the requirements 

of Sections 202 or 205 of the Unfunded 

Mandates Reform Act (UMRA). 

This proposed 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 

proposed rule would not have 

significant takings implications. A 

takings implication assessment is not 

required. This proposed 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 proposed rule conforms to the 

terms of those Federal leases and 

applicable statutes, and as such the 

proposed rule is not a governmental 

action capable of interfering with 

constitutionally protected property 

rights. Therefore, the proposed rule 

would not cause a taking of private 

property or require further discussion of 

takings implications under this 

Executive Order. 

Executive Order 13352, Facilitation of 

Cooperative Conservation 

Under Executive Order 13352, the 

BLM has determined that this proposed 

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 will 

involve Federal, State, local and tribal 

governments, private for-profit and 

nonprofit institutions, other 

nongovernmental entities and 

individuals in the decision-making. The 

process would provide that the 

programs, projects, and activities are 

consistent with protecting public health 

and safety. 

Executive Order 13132, Federalism 

Under Executive Order 13132, this 

proposed rule would not have 

significant Federalism effects. A 

Federalism assessment is not required 

because the proposed 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 proposed rule 

would not have any effect on any of the 

items listed. The proposed 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 the proposed 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), and 512 

Departmental Manual 2, the BLM 

evaluated possible effects of the 

proposed 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 

proposed rule has the potential to affect 

Indian tribes. In conformance with the 

Secretary’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. Comments 

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Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 27705 

from tribes will be received and 

consultation will continue as this 

rulemaking proceeds. 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 ground 

water; and the operator having to 

provide documentation that the water 

used for the fracturing operation was 

legally acquired. The BLM will further 

address these concerns during the 

drafting of the final rule. 

Executive Order 12988, Civil Justice 

Reform 

Under Executive Order 12988, the 

Office of the Solicitor has determined 

that the proposed 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 proposed 

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)). 

In accordance with the PRA, the BLM 

is inviting public comment on its 

request that OMB assign a new control 

number for proposed 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 wellstimulation 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 well-stimulation 

operations. Once the BLM is authorized 

to collect well-stimulation information 

in accordance with finalized new 

section 3162.3–3 and a new control 

number, the BLM will request revision 

of control number 1004–0137 to: 

• Add the new well-stimulation uses 

and burdens of Form 3160–5 to control 

number 1004–0137, and 

• Remove the existing wellstimulation uses and burdens from the 

existing approval of Form 3160–5. 

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 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 Barbara Gamble at 

barbara_gamble@blm.gov or by 

telephone request to 202–912–7148. 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 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 11, 

2012. 

Summary of Information Collection 

Requirements 

The proposed rule is intended to 

increase transparency for the public 

regarding the fluids and additives used 

in well stimulation. The proposed 

provisions that include information 

collection requirements are 

amendments to 43 CFR 3162.3–2 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 amended, section 

3162.3–2 would no longer include well 

stimulation 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 wellstimulation 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 well-stimulation 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 well 

stimulation operations, and to submit a 

report on subsequent actual well 

stimulation 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. 

Request for Prior Approval (i.e., Notice 

of Intent Sundry) 

New section 3162.3–3(b) would 

require operators to seek and obtain 

prior approval by the BLM for proposed 

well stimulation operations. Submission 

of the information, called a Notice of 

Intent (NOI) Sundry in the proposed 

rule, would be required at least 30 days 

before the date the operator wants to 

begin well stimulation operations. The 

information to be included in this 

Notice of Intent Sundry, and the reasons 

for requiring it, are listed in the 

following table: 

Proposed regulation 43 CFR Proposed regulatory text Rationale 

§ 3162.3–3(c)(1) ................... The geological names, a geological description, and the 

proposed measured depth of the top and the bottom 

of the formation into which well stimulation fluids are 

to be injected.

The BLM would use the information to 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. 

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27706 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

Proposed regulation 43 CFR Proposed regulatory text Rationale 

§ 3162.3–3(c)(2) ................... The proposed measured depths (both top and bottom) 

of all occurrences of usable water and the Cement 

Bond Logs (or another log acceptable to the authorized officer) proving that the occurrences of usable 

water have been isolated to protect them from contamination.

The BLM would use the information to help protect 

water resources. 

§ 3162.3–3(c)(3) ................... The proposed measured depth of perforations or the 

open-hole interval, the source and location(s) of the 

water used in the stimulation fluid or trade name of 

the base fluid (if other than water), type of proppants, 

and estimated pump pressures. Information concerning water supply, such as 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. The NOI Sundry must 

also identify the source, access route, and transportation method for all water anticipated for use in stimulating the well.

The BLM would use the information to determine the 

impacts associated with operations and the need for 

any mitigation applicable to Federal and Indian lands. 

§ 3162.3–3(c)(4) ................... A certification signed by the operator that the proposed 

treatment fluid complies with all applicable permitting 

and notice requirements as well as all applicable 

Federal, tribal, state, and local laws, rules, and regulations.

The BLM would use the information to make an informed decision on the proposed well stimulation. 

§ 3162.3–3(c)(5) ................... A detailed description of the proposed well stimulation 

design, including: (i) The estimated total volume of 

fluid to be used; (ii) The anticipated surface treating 

pressure range; (iii) The maximum injection treating 

pressure; and (iv) the estimated or calculated fracture 

length and fracture height 

The information would enable the BLM to verify that the 

proposed engineering design is adequate for safely 

conducting the proposed well stimulation, that the 

maximum wellbore design burst pressure will not be 

exceeded at any stage of the well stimulation operations, and that the intended effects of the well stimulation operation will remain confined to the petroleum-bearing rock layers and will not have unintended consequences for other rock layers, such as 

aquifers. 

§ 3162.3–3(c)(6) ................... The following information concerning the handling of recovered fluids: (i) The estimated volume of fluid to be 

recovered during flow back, swabbing, and recovery 

from production facility vessels; (ii) The proposed 

methods of handling the recovered fluids, including, 

but not limited to, pit requirements, chemical composition of the fluid, 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 

The BLM would use the information to ensure that the 

facilities needed to process or contain the estimated 

volume of fluid will be available on location, that the 

handling methods will adequately ensure protection 

of public health and safety, and 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 and to prevent unnecessary or undue degradation of the public 

lands. 

§ 3162.3–3(c)(7) ................... Additional information, as requested by the authorized 

officer.

The information would allow the BLM to make an informed decision about the proposed well stimulation 

if special circumstances exist. 

Subsequent Report (i.e., Subsequent 

Report Sundry Notice) 

Within 30 days after the completion 

of well stimulation operations, section 

3162.3–3(f) of the proposed rule would 

require operators to submit a 

Subsequent Report Sundry Notice on 

Form 3160–5 (Sundry Notices and 

Report on Wells). The information to be 

included in this Subsequent Report, and 

the reasons for requiring it, are listed in 

the following table. 

Proposed regulation 

43 CFR Proposed regulatory text Rationale 

§ 3162.3–3(e)(1) ................... A continuous record of the annulus pressure must be 

submitted with the required Subsequent Report Sundry Notice (Form 3160–5, Sundry Notices and Reports on Wells) identified in paragraph (g) of this section.

The BLM would use the information to ensure that well 

stimulation activities are conducted as designed. The 

information would also show that stimulation fluids 

are going to the formation for which they were intended. 

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Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 27707 

Proposed regulation 

43 CFR Proposed regulatory text Rationale 

§ 3162.3–3(e)(2) ................... If during the stimulation the annulus pressure increases 

by more than 500 pounds per square inch as compared to the pressure immediately preceding the 

stimulation, the operator must orally notify the authorized officer as soon as practicable, but no later than 

24 hours following the incident. Within 15 days after 

the occurrence, 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).

The BLM would use the information to ensure that stimulation 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. 

§ 3162.3–3(g)(1) ................... The actual measured depth of perforations or the openhole interval, the source and location(s) of the water 

used in the stimulation fluid or trade name of base 

fluid (if other than water), type of proppants, and estimated pump pressures. Information concerning water 

supply, such as 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 source, access 

route, and transportation method for all water used in 

stimulating the well.

The BLM would use the information to determine the 

impacts associated with operations and the need for 

any mitigation applicable to Federal and Indian lands. 

§ 3162.3–3(g)(2) ................... The actual total volume of the fluid used ....................... The BLM would use the information to maintain a 

record of the stimulation operation as actually performed. 

§ 3162.3–3(g)(3) ................... The actual surface pressure and rate at the end of 

each fluid stage, and the actual flush volume, rate, 

and final pump pressure.

The BLM would use the information to ensure that the 

maximum allowable pressure has not been exceeded 

at any stage of the well stimulation operation. 

§ 3162.3–3(g)(4) and (5) ...... (4) A report (table) that discloses all additives of the actual stimulation fluid, by additive trade name and purpose (such as, but not limited to, acid, biocide, 

breaker, brine, corrosion inhibitor, crosslinker, 

demulsifier, friction reducer, gel, iron control, oxygen 

scavenger, pH adjusting agent, proppant, scale inhibitor, or surfactant); and.

(5) A report (table) that discloses the complete chemical makeup of all materials used in the actual stimulation fluid without regard to original source additive 

(see paragraph (g)(4) of this section). For each 

chemical, the operator must provide the Chemical 

Abstracts Service Registry Number as well as the 

percentage by mass. 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 percent mass values 

should be for the entire stimulation operation, not for 

the individual stages.

The BLM would use the information to maintain a 

record of the stimulation operation as performed. 

§ 3162.3–3(g)(6) ................... The actual, estimated, or calculated fracture length and 

fracture height.

The BLM would use the information to verify that the intended effects of the well stimulation operation remain confined to the petroleum-bearing rock layers 

and will not have unintended consequences on other 

rock layers or aquifers. 

§ 3162.3–3(g)(7) ................... The Subsequent Report Sundry Notice (Form 3160–5, 

Sundry Notices and Reports on Wells) may be completed in whole or in part, as applicable, by attaching 

the service contractor’s job log or other report, so 

long as the information required in paragraphs (g)(1) 

through (g)(6) of this section is complete and readily 

apparent.

This provision would allow the operator the flexibility to 

submit a copy of the service company contractor’s 

job log or other report in lieu of all or part of the data 

described above, so long as the required information 

is complete and readily apparent. 

§ 3162.3–3(g)(8) ................... A certification signed by the operator that the treatment 

fluid used complies with all applicable permitting and 

notice requirements as well as all applicable Federal, 

tribal, state, and local laws, rules, and regulations.

The BLM would use the information to help protect 

public health and safety and obtain the operator’s 

self-certification of compliance with all necessary permits and notice requirements. 

§ 3162.3–3(g)(9) ................... A certification signed by the operator that wellbore integrity was maintained throughout the operation, as 

required by paragraphs (d), (e)(1), and (e)(2) of this 

section.

The BLM would use the information to help protect 

public health and safety and obtain the operator’s 

self-certification that wellbore integrity was maintained throughout the operation. 

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27708 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

Proposed regulation 

43 CFR Proposed regulatory text Rationale 

§ 3162.3–3(g)(10) ................. The following information concerning the handling of recovered fluids: (i) The volume of fluid recovered during flow back, swabbing, or recovery from production 

facility vessels; (ii) The methods of handling the recovered fluids, including, but not limited to, pipeline 

requirements, 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 flow back from the well stimulation process must follow the requirements set out in Onshore 

Order Number 7, Disposal of Produced Water, Section III. B.

The BLM would use the information to help protect 

human health and safety and prevent the contamination of the environment. The BLM also needs to confirm that the disposal methods used are those that 

were approved and conform to the regulations. 

§ 3162.3–3(g)(11) ................. If the actual operations deviate from the approved plan, 

the deviation(s) must be documented.

The BLM would use the information to maintain a 

record of any deviations of the operation from the approved plan in the event such information is needed 

to protect health and safety and prevent undue degradation of the environment. 

Requesting a Variance 

Proposed 43 CFR 3162.3–3(j) would 

encourage operators to use Form 3160– 

5 to request a variance from the 

requirements under proposed section 

3162.3–3. Any request for a variance, 

whether filed on Form 3160–5 or not, 

would have 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 would satisfy the objectives of 

the regulation for which the variance is 

being requested. 

Estimated Annual Hour and Cost 

Burdens 

The estimated annual hour and costs 

burdens of each aspect of this 

information collection are shown in the 

following table: 

A. Type of response B. Number of 

responses 

C. Hours per 

response 

D. Total hours 

(column B × 

column C) 

Sundry Notices and Reports on Wells/Well Stimulation/Notice of Intent Sundry, (43 CFR 

3162.3–3), Form 3160–5 ......................................................................................................... 1,700 8 13,600 

Sundry Notices and Reports on Wells/Well Stimulation/Subsequent Report, Sundry Notice, 

(43 CFR 3162.3–3, Form 3160–5 ............................................................................................ 1,700 8 13,600 

Sundry Notices and Reports on Wells/Well Stimulation/Variance Request, (43 CFR 3162.3– 

3), Form 3160–5 ...................................................................................................................... 170 8 1,360 

Totals .................................................................................................................................... 3,570 ........................ 28,560 

National Environmental Policy Act 

The BLM has prepared an 

environmental assessment (EA) that 

concludes that the proposed 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). A detailed statement 

under NEPA would not be required if 

the proposed amendments were 

promulgated as regulations. The BLM 

has placed the EA and the draft Finding 

of No Significant Impact 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 

In accordance with Executive Order 

13211, the BLM has determined that the 

proposed rule will not have substantial 

direct effects on the energy supply, 

distribution, or use, including a shortfall 

in supply or price increase. Please see 

the discussion earlier in this section of 

the preamble for a discussion of the 

impacts of the rule. 

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. 

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Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 27709 

Authors 

The principal authors of this rule are: 

Michael Worden of the BLM 

Washington Office; Nicholas Douglas of 

BLM Washington Office; Adrienne 

Brumley of the BLM New Mexico State 

Office; Donato Judice of the BLM Great 

Falls, Montana Oil and Gas Field Office, 

assisted by Ian Senio and Joe Berry of 

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 proposes to amend 43 CFR 

part 3160 as follows: 

PART 3160—ONSHORE OIL AND GAS 

OPERATIONS 

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; 40 U.S.C. 

4332, and 43 U.S.C. 1732(b), 1733, and 1740. 

Subpart 3160—Onshore Oil and Gas 

Operations: General 

§ 3160.0–3 [Amended] 

2. In section 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),’’. 

3. Amend § 3160.0–5 by adding 

definitions of ‘‘annulus,’’ ‘‘bradenhead,’’ 

‘‘proppant,’’ ‘‘stimulation fluid,’’ 

‘‘usable water,’’ and ‘‘well stimulation’’ 

in alphabetical order and by removing 

the definition of ‘‘fresh water’’: 

The additions read as follows: 

§ 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 suspension of 

intermediate and production strings of 

casing and supplies the means for the 

annulus to be sealed off. 

* * * * * 

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 treatment. 

* * * * * 

Stimulation fluid means the liquid or 

gas, including any associated solids, 

used during a treatment of oil and gas 

wells, such as the water, chemicals, and 

proppants used in hydraulic fracturing. 

* * * * * 

Usable water means generally those 

waters containing up to 10,000 ppm of 

total dissolved solids. 

* * * * * 

Well stimulation means those 

activities conducted in an individual 

well bore designed to increase the flow 

of hydrocarbons from the rock formation 

to the well bore through modifying the 

permeability of the reservoir rock. 

Examples of well stimulation operations 

are acidizing and hydraulic fracturing. 

* * * * * 

Subpart 3162—Requirements for 

Operating Rights Owners and 

Operators 

4. Amend § 3162.3–2 by revising the 

first sentence of paragraph (a) and 

revising paragraph (b) to read as follows: 

§ 3162.3–2 Subsequent well operations. 

(a) A proposal for further well 

operations shall be submitted by the 

operator on Form 3160–5 for approval 

by the authorized officer prior to 

commencing operations to redrill, 

deepen, perform casing repairs, plugback, alter casing, recomplete in a 

different interval, perform water shut 

off, commingling production between 

intervals and/or conversion 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 

recompletion in the same interval; 

however, a subsequent report on these 

operations must be filed on Form 3160– 

5. 

* * * * * 

5. Add a new § 3162.3–3 to read as 

follows: 

§ 3162.3–3 Subsequent well operations; 

Well stimulation. 

(a) This section applies to well 

stimulation activities. All other 

injection activities must comply with 

section 3162.3–2. 

(b) When an Operator Must Submit 

Notification for Approval of Well 

Stimulation. 

A proposal for well stimulation must 

be submitted by the operator and 

approved by BLM before 

commencement of operations. The 

proposal may be submitted in one of the 

following ways: 

(i) For new wells, the operator may 

submit with its Application for Permit 

to Drill the information required in 

paragraph (c) of this section, except for 

the cement bond log required by 

paragraph (c)(2). The approved permit 

to drill will require submission and 

approval of the cement bond log 

required by paragraph (c)(2) prior to 

conducting well stimulation activities; 

(ii) For wells permitted prior to the 

effective date of this section or for wells 

permitted after the effective date of this 

section, if the application for permit to 

drill a well did not include the 

information required in paragraph (c) of 

this section, the operator must submit a 

proposal for well stimulation 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 well stimulation. If there 

is additional surface disturbance, the 

proposal must include a surface use 

plan of operations; and 

(iii) If an operator has received BLM 

approval for well stimulation activities, 

it must submit a new Notice of Intent 

Sundry if either: (A) Well stimulation 

activities have not commenced within 

five years after the effective date of 

approval of the well stimulation 

activity; or (B) 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 

stimulation activity to any resource. 

(c) 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 § 3162.3–1 of 

this title. 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 well stimulation 

fluids are to be injected; 

(2) The proposed measured depths 

(both top and bottom) of all occurrences 

of usable water and the cement bond 

logs (or another log acceptable to the 

authorized officer) proving that the 

occurrences of usable water have been 

isolated to protect them from 

contamination; 

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27710 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

(3) The proposed measured depth of 

perforations or the open-hole interval, 

the source and location(s) of the water 

used in the stimulation fluid or trade 

name of the base fluid (if other than 

water), type of proppants, and estimated 

pump pressures. Information 

concerning water supply, such as 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 source, access route, and 

transportation method for all water 

anticipated for use in stimulating the 

well; 

(4) A certification signed by the 

operator that the proposed treatment 

fluid complies with all applicable 

permitting and notice requirements as 

well as all applicable Federal, tribal, 

state, and local laws, rules, and 

regulations; 

(5) A detailed description of the 

proposed well stimulation design, 

including: 

(i) The estimated total volume of fluid 

to be used; 

(ii) The anticipated surface treating 

pressure range; 

(iii) The maximum injection treating 

pressure; and 

(iv) The estimated or calculated 

fracture length and fracture height; 

(6) The following information 

concerning the handling of recovered 

fluids: 

(i) The estimated volume of fluid to be 

recovered during flow back, swabbing, 

and recovery from production facility 

vessels; 

(ii) The proposed methods of 

handling the recovered fluids, 

including, but not limited to, pit 

requirements, chemical composition of 

the fluid, 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. 

(7) The authorized officer may request 

additional information under this 

subsection prior to the approval of the 

Notice of Intent Sundry. 

(d) Mechanical Integrity Testing Prior 

to Well Stimulation. Prior to the well 

stimulation, the operator must perform 

a successful mechanical integrity test 

(MIT) of the casing. 

(1) If well stimulation through the 

casing is proposed, the casing must be 

tested to not less than the maximum 

anticipated treating pressure. 

(2) If well stimulation 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. 

(e)(1) Monitoring and Recording 

During Well Stimulation. During the 

well stimulation operation, the operator 

must continuously monitor and record 

the annulus pressure at the bradenhead. 

If an intermediate casing has been set on 

the well that is being stimulated, the 

pressure in the annulus between the 

intermediate casing and the production 

casing must also be continuously 

monitored and recorded. A continuous 

record of the annulus pressure during 

the well stimulation must be submitted 

with the required Subsequent Report 

Sundry Notice (Form 3160–5, Sundry 

Notices and Reports on Wells) identified 

in paragraph (f) of this section. 

(e)(2) If during the stimulation the 

annulus pressure increases by more 

than 500 pounds per square inch as 

compared to the pressure immediately 

preceding the stimulation, the operator 

must orally notify the authorized officer 

as soon as practicable, but no later than 

24 hours following the incident. Within 

15 days after the occurrence, 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). 

(f) Storage of all recovered fluids must 

be in either tanks or lined pits. The 

authorized officer may require 

additional measures to protect the 

mineral resources, other natural 

resources, and environmental quality 

from the release of recovered fluids. 

(g) Information that Must be Provided 

to the Authorized Officer After 

Completed Operations. The following 

information must be provided to the 

authorized officer in the required 

Subsequent Report Sundry Notice (Form 

3160–5, Sundry Notices and Reports on 

Wells) within 30 days after the 

operations are completed (see subpart 

3160.0–9(c)(1)): 

(1) The actual measured depth of 

perforations or the open-hole interval, 

the source and location(s) of the water 

used in the stimulation fluid or trade 

name of base fluid (if other than water), 

type of proppants, and actual pump 

pressures. Information concerning water 

supply, such as 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 

source, access route, and transportation 

method for all water used in stimulating 

the well; 

(2) The actual total volume of the 

fluid used; 

(3) The actual surface pressure and 

rate at the end of each fluid stage, and 

the actual flush volume, rate, and final 

pump pressure; 

(4) A report (table) that discloses all 

additives of the actual stimulation fluid, 

by additive trade name and purpose 

(such as, but not limited to, acid, 

biocide, breaker, brine, corrosion 

inhibitor, crosslinker, demulsifier, 

friction reducer, gel, iron control, 

oxygen scavenger, pH adjusting agent, 

proppant, scale inhibitor, or surfactant); 

(5) A report (table) that discloses the 

complete chemical makeup of all 

materials used in the actual stimulation 

fluid without regard to original source 

additive (see paragraph (f)(4) of this 

section). For each chemical, the operator 

must provide the Chemical Abstracts 

Service Registry Number as well as the 

percentage by mass. 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 

percent mass values should be for the 

entire stimulation operation, not for the 

individual stages. 

(6) The actual, estimated, or 

calculated fracture length and fracture 

height; 

(7) The Subsequent Report Sundry 

Notice (Form 3160–5, Sundry Notices 

and Reports on Wells) may be 

completed in whole or in part, as 

applicable, by attaching the service 

contractor’s job log or other report, so 

long as the information required in 

paragraphs (g)(1) through (g)(6) of this 

section is complete and readily 

apparent; 

(8) A certification signed by the 

operator that the treatment fluid used 

complied with all applicable permitting 

and notice requirements as well as all 

applicable Federal, tribal, state, and 

local laws, rules, and regulations; 

(9) A certification signed by the 

operator that wellbore integrity was 

maintained throughout the operation, as 

required by paragraphs (d), (e)(1), and 

(e)(2) of this section; 

(10) The following information 

concerning the handling of recovered 

fluids: 

(i) The volume of fluid recovered 

during flow back, swabbing, or recovery 

from production facility vessels; 

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Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 27711 

(ii) The methods of handling the 

recovered fluids, including, but not 

limited to, pipeline requirements, 

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 

flow back from the well stimulation 

process must follow the requirements 

set out in Onshore Order Number 7, 

Disposal of Produced Water, Section 

III.B. (October 8, 1993, 58 FR 47354). 

(11) If the actual operations deviate 

from the approved plan, the deviation(s) 

must be documented and explained. 

(h) Identifying Information Claimed to 

be Exempt from Public Disclosure. At 

the time of submission of any 

information required under this section, 

operators must: 

(1) Specifically identify particular 

information claimed to be exempted 

from public disclosure by a Federal 

statute or regulation; 

(2) Identify the Federal statute or 

regulation that prohibits the public 

disclosure of each piece of particular 

information, and explain in detail why 

the information is subject to the 

prohibition of the identified Federal 

statute or regulation; and 

(3) Inform the BLM whether the 

particular information is available to the 

public through other means, such as 

disclosures required by state law. 

(i) Any information that is provided 

in accordance with this section for 

which the operator does not substantiate 

a reason for withholding under 

paragraph (h) of this section shall be 

deemed not to be protected by the Trade 

Secrets Act or other Federal law and 

shall be released to the public. If an 

operator identifies information as 

exempt from disclosure, the BLM may 

nonetheless release that information if it 

determines that the information is not 

prohibited from disclosure by Federal 

law, after providing the operator with 

no fewer than 10 business days notice 

of the BLM’s determination. 

(j) Requesting a Variance from the 

Requirements of this Section. The 

operator may make a written request to 

the authorized officer to request 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). 

(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. 

6. Amend § 3162.5–2 by revising the 

first sentence of paragraph (d) to read as 

follows: 

§ 3162.5–2 Control of wells. 

* * * * * 

(d) Protection of usable water and 

other minerals. The operator shall 

isolate all usable water and other 

mineral-bearing formations and protect 

them from contamination. Tests and 

surveys of the effectiveness of such 

measures shall be conducted by the 

operator using procedures and practices 

approved or prescribed by the 

authorized officer. * * * 

Dated: May 4, 2012. 

Marcilynn Burke, 

Acting Assistant Secretary, Land and 

Minerals Management. 

[FR Doc. 2012–11304 Filed 5–10–12; 8:45 am] 

BILLING CODE P 

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