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95–274 2016

S. HRG. 114–330 

THE BUREAU OF LAND MANAGEMENT’S FINAL 

RULE ON HYDRAULIC FRACTURING 

HEARING 

BEFORE THE 

SUBCOMMITTEE ON PUBLIC LANDS, FORESTS, AND 

MINING 

OF THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

APRIL 30, 2015 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 

Available via the World Wide Web: http://www.fdsys.gov 

(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

BILL CASSIDY, Louisiana 

CORY GARDNER, Colorado 

ROB PORTMAN, Ohio 

JOHN HOEVEN, North Dakota 

LAMAR ALEXANDER, Tennessee 

SHELLEY MOORE CAPITO, West Virginia 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, JR., Maine 

ELIZABETH WARREN, Massachusetts 

SUBCOMMITTEE ON PUBLIC LANDS, FORESTS, AND MINING

JOHN BARRASSO, Chairman 

SHELLEY MOORE CAPITO 

JAMES E. RISCH 

MIKE LEE 

STEVE DAINES 

BILL CASSIDY 

CORY GARDNER 

JOHN HOEVEN 

JEFF FLAKE 

LAMAR ALEXANDER 

RON WYDEN 

DEBBIE STABENOW 

AL FRANKEN 

JOE MANCHIN III 

MARTIN HEINRICH 

MAZIE K. HIRONO 

ELIZABETH WARREN 

KAREN K. BILLUPS, Staff Director 

PATRICK J. MCCORMICK III, Chief Counsel 

LUCY MURFITT, Senior Counsel and Natural Resources Policy Director 

ANGELA BECKER-DIPPMANN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SPENCER GRAY, Democratic Professional Staff Member 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Barrasso, Hon. John, Subcommittee Chairman and a U.S. Senator from Wyoming ...................................................................................................................... 1 

WITNESSES 

Kornze, Hon. Neil, Director, Bureau of Land Management, U.S. Department 

of the Interior ....................................................................................................... 4 

Baizel, Bruce, Energy Program Director, Earthworks ......................................... 12 

Sgamma, Kathleen, Vice President of Government & Public Affairs, Western 

Energy Alliance .................................................................................................... 18 

Watson, Mark, State Oil and Gas Supervisor, Wyoming Oil and Gas Conservation Commission .......................................................................................... 25 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED 

Baizel, Bruce 

Opening Statement ........................................................................................... 12 

Written Testimony ............................................................................................ 14 

Responses to Questions for the Record ........................................................... 81 

Barrasso, Hon. John 

Opening Statement ........................................................................................... 1 

Letter to Secretary Jewell dated August 19, 2013 ........................................ 2 

Kornze, Hon. Neil 

Opening Statement ........................................................................................... 4 

Written Testimony ............................................................................................ 7 

Responses to Questions for the Record ........................................................... 43 

Sgamma, Kathleen 

Opening Statement ........................................................................................... 18 

Written Testimony ............................................................................................ 20 

Responses to Questions for the Record ........................................................... 83 

Watson, Mark 

Opening Statement ........................................................................................... 25 

Written Testimony ............................................................................................ 27 

Responses to Questions for the Record ........................................................... 89 

(1) 

THE BUREAU OF LAND MANAGEMENT’S 

FINAL RULE ON HYDRAULIC FRACTURING 

THURSDAY, APRIL 30, 2015 

U.S. SENATE

SUBCOMMITTEE ON PUBLIC LANDS, FORESTS, AND MINING

COMMITTEE ON ENERGY AND NATURAL RESOURCES

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:31 p.m. in Room 

SD–366, Dirksen Senate Office Building, Hon. John Barrasso, 

Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF HON. JOHN BARRASSO, 

U.S. SENATOR FROM WYOMING 

Senator BARRASSO. The committee will come to order. 

This afternoon the Subcommittee on Public Lands, Forests, and 

Mining will hold its first hearing of the 114th Congress. I am 

pleased to chair this subcommittee, and I look forward to working 

with the Subcommittee’s Ranking Member, Senator Wyden. He and 

I visited a little earlier. He has a packed schedule and will try to 

make it to the subcommittee hearing. Other members have conflicts but will also try to be here to hear the testimony and take 

part in the questioning. 

Senator Wyden has always been an engaging and willing listener 

when he chaired this panel, and I intend to extend the same courtesy to him and to all members of the committee. 

The Public Lands Subcommittee is especially important to my 

home State of Wyoming. In Wyoming, about 47 percent of the surface estate and 67 percent of the mineral estate is owned by the 

Federal Government. This means that decisions made in Washington have an extraordinary impact on the people of Wyoming. 

As Chairman, I will ensure that we bring scrutiny to these decisions, especially those that put Federal lands in the West at a competitive disadvantage to other areas of the country when it comes 

to energy and specifically mineral production. 

Today, this subcommittee will examine the Bureau of Land Management’s final rule on hydraulic fracturing. BLM issued its final 

rule on March 20th, 2015. It is scheduled to take effect on June 

24th. I continue to believe that the BLM’s rule is a solution in 

search of a problem. Wyoming has among the strictest hydraulic 

fracturing regulations in the country, and these regulations already 

apply to Federal lands within our state. 

In 2013, the Wyoming delegation called on Secretary Jewell to 

exempt Wyoming and other states from this rule. 

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Secretary Jewell rejected this request and instead provided 

states with an opportunity to obtain a so-called variance from the 

BLM’s rule. I am interested to know how the variance process 

works and whether states have any interest in pursuing it. 

I am also interested in understanding the larger impact that this 

rule and other regulations will have on oil and gas production in 

the West. In addition to the hydraulic fracturing rule, the Obama 

Administration plans to issue three other major rules for oil and 

gas on Federal lands. The Administration plans to issue a new rule 

for natural gas venting and flaring and also rules which would increase royalty rates. These regulations and those the Administration has already imposed have put Wyoming and the West at an 

even greater disadvantage to other areas of the country. 

According to the Energy Information Administration (EIA), Federal onshore natural gas production has decreased by 22 percent 

since 2009. EIA has found that Federal onshore natural gas production makes up a smaller percentage of total U.S. gas production 

than it has in the last 11 years. Federal onshore oil production also 

makes up a smaller percentage of total U.S. oil production than it 

has in nine years. While these numbers reflect new production on 

State and private lands, they also show that Federal lands are becoming less competitive with State and private lands. 

Oil and gas production provides thousands of good-paying jobs in 

the West. These jobs are available to individuals from all walks of 

life. They are jobs that can support an entire family and allow parents to send their kids to college. The people of Wyoming want 

these jobs, and I will fight to keep them in our state. 

If BLM wants to be a good neighbor to the people of Wyoming 

and other Western states, I think it must not only listen to their 

concerns but be responsive to them. Mr. Kornze, I expect you to 

lead in that effort. 

Senator Wyden will offer opening remarks if he arrives. 

Senator BARRASSO. At this point I would like to welcome our witnesses. Joining us this afternoon is the Honorable Neil Kornze, Director of the Bureau of Land Management; Mr. Bruce Baizel, the 

Energy Program Director of Earthworks; Ms. Kathleen Sgamma, 

Vice President of the Western Energy Alliance; and Mr. Mark Watson, the Supervisor of the Wyoming Oil and Gas Conservation 

Commission. Welcome to all of you. I look forward to the testimony, 

and your complete statements will be included in the record. If you 

could keep your testimony to five minutes, I would certainly appreciate it. Mr. Kornze, we will begin with you. 

STATEMENT OF HON. NEIL KORNZE, DIRECTOR, BUREAU OF 

LAND MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR 

Mr. KORNZE. Thank you, Mr. Chairman. It is great to be here 

with you today. I appreciate the invitation. 

The Bureau of Land Management manages nearly 250,000,000 

acres of surface property and 700,000,000 acres of subsurface estate in the nation. That equates to 10 percent of the nation’s surface and nearly a third of its minerals and soils. We manage these 

lands under the dual mission of multiple use and sustained yield. 

The Bureau’s work is now more complex than ever, and the professionals at the BLM have to make very difficult choices every 

5 

day, but throughout that work we make sure that the public has 

a very strong voice in the work that we do. 

More than 450,000 jobs were supported by the agency and the 

lands that we managed last year, and we are one of only a handful 

of agencies that returns more dollars than we receive in appropriations. In fact, for every dollar you appropriate here in Congress, we 

return $5. 

The BLM works diligently to fulfill its role in securing America’s 

energy future by supporting the development of oil and gas resources on public and Indian lands. From 2008 to last year, oil production from those lands increased 81 percent. Now, that increase 

has tracked or exceeded trends on comparable State and private 

lands. Now, natural gas has gone down in recent years, but this 

too has generally tracked the rate of production on nearby private 

and State lands. 

Overall in Fiscal Year 2014, onshore Federal oil and gas royalties exceeded $3 billion and tribal royalties exceeded $1 billion. The 

BLM is proud to play a critical role in meeting the nation’s energy 

needs, and with even more than 100,000 wells to monitor and oversee, we continue to make lands for oil and gas development available in excess of industry demand. Right now, the industry has 

roughly 34,000,000 acres under lease, but it is only producing from 

a third of those lands. And last year, the BLM approved 4,400 drilling permits and nearly a third of those permits went unused. In 

total, the industry now holds roughly 6,000 permits that are available for use today with no further review, no further permitting. 

They are ready to go. That equates to roughly two years worth of 

drilling potential on public lands. We would like to see those permits used to bring American jobs and American energy forward. 

In supporting this energy development, our oil and gas program’s 

highest priority is ensuring that operations are safe and responsible. The hydraulic fracturing rule is critical to meeting that responsibility. 

Over 90 percent of the wells that are drilled on public lands are 

hydraulically fractured using techniques that are significantly more 

complex than those of the past. Today’s wells are often much deeper and coupled with advanced horizontal drilling techniques, which 

are quite incredible. 

While these technological advances and the tremendous increase 

in their use has facilitated greater access to oil and gas resources, 

it has also necessitated that the BLM revisit its existing rules, 

which were last updated over 30 years ago. The BLM’s new rule 

establishes reasonable, common sense standards requiring operators to construct sound wells, to disclose the chemicals they use, 

and to safely recover the wastewater that comes back from that 

drilling process. This rule establishes a baseline that many operators are comfortable with because they are in many places already 

implementing the practices that we have required. 

Our rule was informed by the technical expertise of our engineers in the field, as well as that of state regulators, Indian regulators, and industry. The final rule specifically recognizes the experience and expertise of our partners. 

We have a track record at the BLM of working successfully with 

states and others to make sure that we avoid duplication and 

6 

delay, and the implementation of the hydraulic fracturing rule will 

be no different. We are actively working with many states and 

tribes that have standards in place for hydraulic fracturing to 

evaluate potential variances from various aspects of the BLM rule. 

These discussions will continue as we work closely with states and 

tribes to ensure successful implementation. 

Mr. Chairman, members of the committee, the BLM’s rule establishes common sense standards that are essential to protecting our 

shared environment while also making sure that we have robust 

energy development in this nation. 

I appreciate the time. 

[The prepared statement of Mr. Kornze follows:] 

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Senator BARRASSO. Thank you, Mr. Kornze. 

Mr. Baizel? 

STATEMENT OF BRUCE BAIZEL, ENERGY PROGRAM 

DIRECTOR, EARTHWORKS 

Mr. BAIZEL. Chairman Barrasso, Ranking Member, other members of the subcommittee, thank you very much for the opportunity 

to testify before you on the Bureau of Land Management’s hydraulic fracturing rule. My name is Bruce Baizel. I am the Energy Program Director at Earthworks. 

It is Earthworks’ hope and the hope of the many communities we 

work with on the ground who experience the impacts of oil and gas 

development that we transition using our public lands for clean, renewable energy, not polluting fossil fuels, in addition to the recreational opportunities we all enjoy. My wife is a ski instructor. 

She works on public lands. We certainly enjoy that. 

Until that transition, we feel it is important to take steps to carefully regulate the oil and gas industry to minimize harm to our 

natural resources and public lands. Over roughly the last 15 years, 

the shale revolution has spread across our country. The BLM, however, has not updated its oil and gas regulations since the 1980’s. 

In the absence of updated rules to accommodate this rapidly growing industry, states have created a patchwork of regulations that 

continue to evolve with changing industry practices. Yet, a new poll 

from the University of Texas was released today that makes it 

clear that there is support for these new regulations. 60 percent of 

Americans support stronger oversight of hydraulic fracturing on 

public lands. 

While there are many more regulatory improvements that could 

be made, the BLM’s final rule governing hydraulic fracturing creates a minimum standard, a basic level of protection for our public 

lands, the water that flows through them, and the citizens that 

enjoy their use daily. It also delivers the regulatory certainty and 

consistency that the oil and gas industry said it desires. 

The facts are clear. Many states and operators already follow the 

directives contained in the rule, and for these, the compliance costs 

will be negligible. The average well costs about $5 million to drill, 

yet this rule adds only a few thousand dollars to that cost. For operators who already follow these reasonable standards, the rule 

will provide little change from business as usual. 

This rule also provides states with flexibility by providing a 

waiver procedure for states whose rules are at least as protective 

as the BLM rule. This will ensure that these rules are not duplicative of what states currently have in place while also allowing 

states to pass more stringent regulations if they so desire. 

I sit on the board of an organization called STRONGER, which 

stands for the State Review of Oil and Natural Gas Environmental 

Regulations. That organization works toward the continuous improvement of state oil and gas regulations. We are a nonprofit, 

multi-stakeholder organization that includes representatives from 

state government, industry, and environmental representatives. I 

am one of three environmental representatives. 

I was part of STRONGER’s original workgroup that in 2009 and 

2010 developed the hydraulic fracturing guideline that states 

13 

should follow. So far, only six states have had STRONGER review 

their hydraulic fracturing regulations, and only one of these states 

has significant public lands, Colorado. Montana and Utah have 

never been reviewed. Wyoming was last reviewed in 1994, New 

Mexico in 2001, and California in 2002, years before the current 

shale oil and gas boom. 

The result is that neither the public nor policymakers have a real 

sense of whether states have the necessary regulations in place to 

effectively protect the people and the environment from the impacts of oil and gas development. 

Studies performed by Resources for the Future and the Groundwater Protection Council illustrate the variations and inconsistencies on everything from casing standards to definitions of usable 

groundwater among the Western states with significant public minerals. Some states have lessened the risks of groundwater contamination from hydraulic fracturing, my own state being an example, 

by tightening their regulations in the areas of well integrity, casing, cementing, chemical disclosure, and waste disposal, but others 

have not. 

BLM commonly enters into a memorandum of understanding 

with states to help achieve better coordination. Colorado’s memorandum of understanding was signed in 2009. 

The variance procedure within the BLM hydraulic fracturing rule 

also fosters this type of cooperation. Rather than duplicating, the 

rule supplements in areas where states have yet to make important upgrades. Without the baseline standard provided in this rule, 

BLM would be putting all taxpayers at risk as the owners of public 

land and public minerals. 

Thank you for the opportunity to present the views of 

Earthworks on this important topic, and we appreciate the committee’s consideration of this important issue. 

[The prepared statement of Mr. Baizel follows:] 

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Senator BARRASSO. Thank you, Mr. Baizel. 

Ms. Sgamma? 

STATEMENT OF KATHLEEN SGAMMA, VICE PRESIDENT OF 

GOVERNMENT & PUBLIC AFFAIRS, WESTERN ENERGY ALLIANCE 

Ms. SGAMMA. Thank you, Mr. Chairman and members of the 

committee. 

Western Energy Alliance represents about 450 companies engaged in all aspects of environmentally responsible exploration and 

production of oil and natural gas in the West. Our members are 

proud to produce nearly a quarter of the nation’s natural gas and 

oil production while disturbing less than a tenth of a percent of 

public lands. 

The fundamental question related to BLM’s rule before us today 

is whether we as a nation want to encourage the continued environmentally responsible production of oil and natural gas on public 

lands or do we want to shut it down. If indeed the answer is that 

we want to encourage the continued environmentally responsible 

development, then this rule is counterproductive to that goal. 

I would like to make three main points: that the rule has not 

been properly justified; it is redundant with state regulation; and, 

that it cannot be efficiently implemented. 

For the first point, BLM has finalized a costly rule with no justification. It can point to no single incident on Federal lands that 

necessitates this rule nor can it articulate one risk that is reduced 

because of this rule. The best BLM does to justify the rule is to cite 

vague notions of public concern, but are those concerns valid or just 

the result of misinformation and agitation? A regulator has an obligation to the regulated community and to the public to show that 

there is a tangible benefit for any cost, and regulatory costs affect 

not just the regulated industry but society at large in the form of 

higher energy prices, less job creation, and slower economic growth. 

BLM has failed in its obligation, which brings me to my next point. 

Why is BLM infringing on state and tribal authority? The rule 

duplicates what states are already doing to protect the environment, yet BLM can show no deficiency in state regulation that 

would motivate this rule and it has no evidence that this costly 

rule will be more effective than existing state regulations. When 

the Federal Government feels compelled to take action that upsets 

the balance between States and the Federal Government, there 

should be a compelling reason to do so. Lack of a single incident 

or inability to articulate a single risk that is reduced hardly seems 

compelling. 

In fact, BLM in the rule shows that 99.3 percent of all completions over the last couple of years were in states that have strict 

hydraulic fracturing regulations, and if you look at APD’s approved 

last year, 99.97 percent are in states that have recently updated 

the regulations. That .3 percent represents one well in Kansas, and 

oh, by the way, Kansas is updating the rules as we speak. 

BLM has tried to deflect criticism regarding the duplication of 

state regulation by suggesting that states can obtain a variance if 

the rules meet or exceed the requirements of the rule; however, 

there is no genuine mechanism in this rule for them to do so. State 

19 

regulations already meet the goals of BLM’s rule, yet they are not 

doing it in the exact prescriptive manner that BLM now demands. 

States are tailored to conditions on the ground, and states wisely 

retain flexibility to enable them to innovate and do things like 

more water recycling and more reuse of water, less fresh water 

need. 

Finally, a major problem of this rule is that BLM simply does not 

have the resources or wherewithal to implement it. BLM petroleum 

engineering personnel are already spread too thin, and this rule 

will result in longer delays in the permitting process. Leadership 

at BLM has tacitly admitted this fact as they are hurrying to meet 

with states and try to convince them to sign MOU’s. Were the rules 

designed to provide a genuine mechanism for granting a state variance and truly deferring to state rules, then an MOU so stating 

would make sense. But in the absence of such a mechanism, states 

are wise to refrain from entering into an MOU. 

So here before us, we have a rule that is not properly justified 

with discernible environmental benefit. It infringes on state authority and cannot be reasonably implemented. We urge this subcommittee to pass legislation to roll back the rule. 

Thank you very much. 

[The prepared statement of Ms. Sgamma follows:] 

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Senator BARRASSO. Thank you very much, Ms. Sgamma. 

Mr. Watson? 

STATEMENT OF MARK WATSON, STATE OIL AND GAS SUPERVISOR, WYOMING OIL AND GAS CONSERVATION COMMISSION 

Mr. WATSON. Thank you, Chairman Barrasso and members of 

the committee. 

Wyoming was one of the first states to implement comprehensive 

rules on hydraulic fracturing, or fracking, and these rules have 

been enforced on all State, private, and Federal minerals since 

2010. We were the first state to require disclosure of all chemicals 

used in the fracking process prior to issuing a permit. In fact, Secretary of the Interior Sally Jewell often cites Wyoming’s rules on 

fracking as a standard for other states to follow. Our rules governing wellbore integrity and water management have been in 

place for decades and are updated as new technologies become commonplace in the energy industry. Wyoming’s new baseline water 

quality rule, which requires testing of offsite water wells before and 

after the drilling of a well, and air quality rules in the Pinedale 

area are but a few of the many examples of Wyoming’s progressive 

approach to rulemaking. 

Recently the Bureau of Land Management announced a new rule 

on fracking. Not only does this rule come late, it adopts the onesize-fits-all approach. It creates confusion and bureaucracy in an 

already complex process. It will inevitably lead to delays in the permitting process for operators without increasing environmental 

protection or providing more information for the public to review. 

Wyoming maintains public access to the fracking plans, which include all the chemicals used, as well as pre-and post-reporting on 

fracking operations, in its files and electronically on its website. All 

the information collected on fracking operations is available to the 

public, to industry, and to other regulators for use in reviewing 

best management practices, determining fracking impacts to offset 

wells, or even for a homeowner who wants to know what is going 

on at the well near their home. 

Despite Mr. Kornze’s testimony, the BLM frack rule has no current method to provide any information on a publicly-available 

website other than the post-fracking operations chemical disclosure 

reported to FracFocus. While reporting the chemical information to 

FracFocus or another publicly available data base is vital, reviewing other details concerning the fracking operations can be just as 

important. It would be very difficult for anyone outside of the BLM 

staff to review information related to cement quality, well integrity, 

injection pressures, etcetera using the current information systems 

employed by the BLM. All this data is readily available on our 

website for public viewing. 

In its response to comments under federalism assessment, the 

BLM noted that they do not believe that production from Federal 

lands will be reduced and therefore no financial impacts would 

occur to states as a result of the new fracking rule. Currently in 

Wyoming, 54 percent of our oil production and 76 percent of gas 

production comes from Federal minerals. To make a statement that 

the new fracking rule will not impact states such as Wyoming is 

26 

simply wrong. Currently Wyoming’s average time for processing a 

drilling permit is 60 days while the BLM processing time is 200 

days. Further delays will occur with the BLM using the same staff 

that approves drilling permits to now also approve fracking operations. The practice of horizontal well drilling further complicates 

the approval of fracking operations. More of the proposed wells in 

Wyoming are encountering a combination of minerals by drilling 

through and producing from a mixture of Federal, fee, and State 

minerals. The uncertainty and potentially long wait times for BLM 

approval of fracking operations will act as encouragement for operators to exclude the Federal minerals from the planned well. This 

will potentially strand the Federal minerals, leaving them out of 

the production of the well and thus creating waste. There have already been several cases of Federal minerals being excluded from 

drilling and spacing units that have been approved by my agency 

due to the length of time it takes for a BLM permit to be approved. 

The additional delays for approval of fracking operations by the 

BLM will clearly provide a disincentive to develop production on 

Federal minerals. 

In comments to the Federal fracking rule, several states, including Wyoming, requested exemptions for those states that already 

had comprehensive frack rules in place. The BLM, in an attempt 

to address those concerns, included a section in the final rule allowing for states to apply for a variance for all wells within the state. 

However, upon further review and meetings with BLM officials in 

Wyoming, it became apparent that the variance was simply a requirement that allowed the BLM to require additional information 

if the state’s requirements exceeded those objectives of the BLM 

frack rule. In other words, it was a variance for the Federal Government; the goal being that both the state and the BLM would receive the same package of information. This is clearly a duplication 

of effort that forces operators to comply with two regulatory agencies. The Wyoming Oil and Gas Conservation Commission has one 

office versus the BLM who has nine field offices in Wyoming, which 

can lead to varying interpretations when implementing the new 

frack rule. This creates confusion and uncertainty and leads to unnecessary delays in the permitting process. 

A better solution would be a mechanism to allow states to apply 

for primacy if they could demonstrate that the objectives of the 

BLM frack rule could be met by the states’ rules and regulations. 

This would provide certainty and uniformity in enforcing a frack 

rule for the benefit of citizens and the oil and gas industry. The 

Underground Injection Control Program, a program that regulates 

injection wells, is a prime example of a Federal rule that is implemented and enforced by the states. 

In conclusion, Wyoming believes that the states are best positioned to regulate hydraulic fracturing. Wyoming has successfully 

imposed its hydraulic fracturing rule on Federal, State, and private 

minerals for five years and has an experienced and qualified staff 

to enforce these rules. 

This concludes my oral testimony. Thank you. 

[The prepared statement of Mr. Watson follows:] 

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Senator BARRASSO. Thank you very much, Mr. Watson. 

Some of the members have questions, and we will start with Senator Capito. 

Senator CAPITO. Thank you, Mr. Chairman, and I appreciate all 

of our witnesses today. 

I wanted to followup with Mr. Kornze. Some of the comments 

that were made by Ms. Sgamma. She mentioned in her presentation that you had not identified a single environmental problem 

related, you had not had a single incident that your rule was trying 

to help or an incident that had happened. The question it raised 

in my mind is, have you uncovered any new or previously unknown 

environmental problems or incidents that your rule would fix which 

are not addressed by state laws that you could share with us 

today? 

Mr. KORNZE. So the goal of the rule is to address the same issues 

that state regulators are addressing but to do it on a nationwide 

basis, and part of the important point here is that the Bureau of 

Land Management has responsibility for oil and gas leases in 32 

different states. There are some states who have done an excellent 

job in this area. Not all states have been as advanced as states like 

Wyoming, for instance. 

So related to sort of the purpose of stepping forward on this, the 

same need that the states saw is the same need that we see, which 

is you have much more sophisticated drilling techniques being 

used. You have very intense pressures, a whole different scale of 

pressure being applied to these wells than 10, 30, 40 years ago 

when a lot of our regulations were put in place. And so the same 

quality standards that the states see a necessity to bring forward 

new regulation is what has also been driving our efforts. 

Senator CAPITO. But the base question I was asking was is there 

an incident? Has something prompted this in more recent history? 

Mr. KORNZE. No single incident, no. 

Senator CAPITO. Let me ask a question about something that Mr. 

Watson mentioned in his opening statement. He mentioned transparency, and I think this has been an issue in West Virginia. 

Transparency was one of the issues that the state legislature tried 

to address. He mentioned that all of the chemicals and all of the 

information is there basically in real time. Is that basically the interpretation I had, Mr. Watson, of what is going on? 

Mr. WATSON. As far as the BLM website? 

Senator CAPITO. No, your website. 

Mr. WATSON. Oh, yes. Our website has all the information, not 

just the chemicals. 

Senator CAPITO. But you said that your understanding of the 

BLM rule would be that theirs would not be as transparent as 

what you have at the state right now. Is that correct? 

Mr. WATSON. That is correct. 

Senator CAPITO. Do you have a response to that? 

Mr. KORNZE. Yes, I found that to be an interesting point. That 

actually is something that we are very interested in. We have what 

I think we would broadly recognize as a very old system. So we are 

still using paper files in most offices, and so we have a very strong 

desire to step forward. One thing we are working on right now is 

catching up states like Colorado in terms of with our drilling perVerDate Nov 24 2008 10:20 Aug 22, 2016 Jkt 095274 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\95274\C95274.TXT C95274
31 

mit application. We are making an effort hopefully by the end of 

this year to go online nationwide so that you can submit your drilling permit application electronically. You can know where we are 

at in the processing, and that we can hopefully provide better online information so you can have the kind of transparency that Wyoming has. 

Senator CAPITO. I think this points to a good illustration in that 

the State of Wyoming is so much more forward-leaning than what 

you have just described at the BLM. Why not cede to the State of 

Wyoming this transparency and let them have the state primacy 

over this? Because they do have a system that is fully developed 

and fully fleshed out. That is what I do not understand. 

Mr. KORNZE. This goes back to my initial offering that we have 

responsibilities nationwide, and so what we have tried to build in 

this rule is something that provides a basic foundation. I think the 

operators that are working in Wyoming are going to have no problem following the rule that BLM has laid out because it is very 

similar to what Wyoming has in place. 

So what we developed, the variance process, which has been discussed a little bit, to make sure that as has been the case for many, 

many years, when there are Federal rules in place and State rules 

in place, the higher standard is followed and everyone carries forward. And so this is the way that oil and gas has worked and this 

is the way that we have worked together as a Federal Government 

and as states for ages. And so there is nothing fundamentally different about this rule and about how it will work. So we have got 

a baseline, and I think we are excited to work closely with states 

like Wyoming. 

Senator CAPITO. Mr. Watson, is that how you see this rule in 

terms of working State/Federal? You basically said you have been 

working like this anyway, and it is going to have very little impact 

in Wyoming. 

Mr. WATSON. Well, that is not true as far as fracking because the 

BLM has not imposed any fracking rules. So for the last five years, 

we have imposed our rule on Federal lands. 

Senator CAPITO. All right, thank you. 

Senator BARRASSO. Thank you, Senator Capito. 

Next, Senator Daines. 

Senator DAINES. Thank you, Mr. Chairman. 

Kind of building on where Senator Capito was going there, I 

guess I just heard there was not an incident that triggered these 

additional regulations. Is that right, Mr. Kornze? 

Mr. KORNZE. That is correct. 

Senator DAINES. Furthermore, I have just heard states like Wyoming, Colorado—I know there are others—are actually ahead in 

terms of their systems processes and so forth than even the BLM 

processes. Is that correct? 

Mr. KORNZE. In some cases, that is true. 

Senator DAINES. We in Montana updated our hydraulic fracturing rules in 2011. In fact, we have some of the most robust 

chemical disclosure rules in the country. What would I tell a Montanan right now and say why the Federal Government knows better than we in the state? What do I tell a Montanan right now 

when we have state-of-the-art regulations in place? It is working 

32 

beautifully. We have got to drink the water, breathe the air, recreate on these lands. It is close to us. We want to preserve and protect it. What do I tell a Montanan around why the BLM can come 

in and tell us a better way to do it? 

Mr. KORNZE. So without knowing the—I mean, we would want 

to sit down and look side-by-side in terms of if there are differences. My guess would be if you do have one of the most forward-leaning disclosure rules in the country, that our rule will not 

change the standards that you have to follow. So I think what you 

would tell a Montanan is the Federal Government, which has responsibility to a nationwide regulated community, all Americans, 

has made sure that the standards we have—that there is a similar 

standard nationwide to what we have done in Montana. So we in 

Montana can be proud—— 

Senator DAINES. But also we pay a lot of Federal taxes as well. 

I think they would ask themselves what are we getting for our return investment of having Federal hours and tax dollars spent with 

the redundancy arguably putting regulations in place that are even 

backward-looking versus states that really have forward-looking, 

state-of-the-art regs? 

Mr. KORNZE. Well, I think it is important to understand how oil 

and gas regulations work. So this goes back to the States and the 

Federal Government working together. So I think the gentleman 

from Wyoming said that has not been the case in hydraulic fracturing because BLM has not had a modern rule. We had one in the 

early 1980’s but had to be revised to sort of catch up to modern 

practice, which is what we have done. But in all other areas, since 

1981, the Bureau of Land Management has updated 37 different oil 

and gas regulations. So to us updating and in a dance on this nationwide scale with states is nothing new. Some states are ahead 

of us, some states are behind us, and this is how the process has 

rolled forward. 

But I think for your Montanan, you can say, hey, look, this is not 

an onerous rule. This is a common sense rule that dovetails well 

with what we have and—— 

Senator DAINES. Well, I can tell you most Montanans—when the 

Federal Government comes in and says this is not going to be an 

onerous rule, we do not believe it. It is based on our experience. 

I guess this really leads me to another question, which is just geological differences and so forth there across the country, as we 

look at hydraulic fracturing. Can you help me understand the 

thought process of BLM when this rule is designed without application to legacy shallow gas wells and conventional fields? 

Mr. KORNZE. Can you restate the question? 

Senator DAINES. So the rule did not take into account the application of legacy shallow gas wells and conventional fields. 

Mr. KORNZE. Well, anyone that drills a well after June 24th, I 

believe the day is, will have to follow this if they are using hydraulic fracturing. So it applies—— 

Senator DAINES. I thought there was an exception for the rule for 

shallow gas wells. 

Mr. KORNZE. Not that I am aware of. If I am incorrect, I will 

come back to you. 

33 

Senator DAINES. Okay, because more than half the wells in Montana will need exception to that rule. So I am just concerned this 

approach is a one-size-fits-all when clearly just looking at geology, 

there is a lot of difference between deep and shallow wells. 

How many years has the BLM been working on this rule? 

Mr. KORNZE. I believe—well, Secretary Salazar held a forum in 

I believe it was October 2010—October or November. 

Senator DAINES. So it has been about five years, roughly. 

Now, I am understanding the rule needs to be implemented less 

than 90 days after it was released in March. Is that correct? 

Mr. KORNZE. That is true. And by law, we are only required 60 

days. We extended 30 additional days because we were doing outreach with industry and with states and making sure that we have 

more time. 

Senator DAINES. If it was a five-year process to develop the rule, 

is there a reason you are only giving the states less than 90 days 

for enforceability? 

Mr. KORNZE. Well, I will tell you throughout this process I am 

proud of the outreach that we have done and the coordination with 

states. I have spent time in Denver sitting down with the State of 

Wyoming’s regulators, the State of Colorado’s regulators, with 

Utah, with tribes. I have gone to reservations in North Dakota to 

sit down with tribal members and tribal regulators to understand 

how they are approaching this. So I think we have been robust in 

our engagement. We actually took the unusual step of having two 

different draft rules. So we had one in 2012 and I believe one—— 

Senator DAINES. But the states will have less than 90 days before they must enforce the rules. Is that right? 

Mr. KORNZE. And I appreciate you are trying to get me to answer. So the point is we have had a long, collaborative conversation 

on this, and so there should not be any surprises. 

Senator DAINES. I am out of time. Mr. Chairman, thank you. 

Senator BARRASSO. Thank you, Senator Daines. 

Senator Lee? 

Senator LEE. Thank you, Mr. Chairman. 

Mr. Kornze, you mentioned a minute ago that some states were 

better than others in their existing regulations of hydraulic fracturing. What can you tell me about what issues you might have 

found in Utah? Were there issues with Utah’s regulations that you 

found inadequate, and if so, what were those? 

Mr. KORNZE. I appreciate the question, Senator Lee. 

As we worked on this and we sat down with state regulators, 

with industry, with environmental organizations, with the general 

public, what we were looking at is what are the best management 

practices. So we did not necessarily take it upon ourselves to sort 

of say Utah is good or bad or Kansas is good or bad. We tried to 

look at where is this leaning, where is it now, what are the best 

practices. 

Senator LEE. So it was not necessarily the case that any state 

was inadequate. 

Mr. KORNZE. No. 

Senator LEE. And if no state was inadequate, then why was it 

necessary to come up with a national standard particularly in light 

of the geology that differs from one state to another? 

34 

Mr. KORNZE. Well, I will tell you that only roughly half of the 

states that we have oil and gas leases in that we have oversight 

responsibility for have stepped forward and regulated in this area 

of hydraulic fracturing. 

Senator LEE. Okay. But of those states, you have not found any 

to be inadequate in their regulation? 

Mr. KORNZE. Well, I am saying we have not taken it upon ourselves to make that kind of judgment. So that was not the approach that we took. But roughly half of the states that we regulate in have not stepped forward to regulate in this area. 

Senator LEE. Okay. 

Mr. KORNZE. So our standards that we have just put forward 

would be the baseline standards on public lands. There otherwise 

would not be standards on those Federal lands. 

Senator LEE. Okay, so that is a good point. If that is the case, 

if you have got a number of states that do not have any regulations 

at all and you have got other states that do have regulations, none 

of which are inadequate, why not allow those states that have regulations that you have now acknowledged are adequate to remain 

in effect rather than being replaced by a national rule? 

Mr. KORNZE. So that comes to the variance process and how oil 

and gas has worked in terms of regulation. So if the State of Utah 

historically has had basic standards for, let us say, disposal of 

water or basic drilling techniques, those would be laid against the 

standards that the Bureau of Land Management has put forward 

for Federal lands, and our regulators would work together in the 

field, and they would say which standard is higher, more restrictive, and that standard would apply. So if Utah had exceeded BLM 

standards in a certain area, we would be following Utah’s standards on public lands. 

Senator LEE. Will this not inevitably extend the period of time 

that it takes to get regulatory approval, given that the rule contemplates a need to either get this approval from BLM as part of 

the APD process or outside the process separately? Now, in my 

state, in Utah, it already takes about 200 days to get an APD approved. Do you think it is reasonable to expect BLM field staff to 

take on this added responsibility of approving these fracking permits and to not expect additional delays in the process? 

Mr. KORNZE. So we have looked at this, and I believe this is spoken to in the rule that we expect the additional workload on our 

end is about four hours per drilling application. So there is additional information that we are going to be looking at. So is there 

an increase? Yes. Is it significant? We do not see it as such. Do I 

think that 200 days is a great number? I do not. And so we are 

working aggressively to see what we can do to bring that down. We 

were at 300 days a few years ago. I am proud that we have made 

this progress. And this online permitting system that I mentioned 

earlier, I think, is really going to help us step forward and hopefully make some system changes that will help permitting times 

across the country. 

Senator LEE. Okay. 

I want to get back to the state-by-state issue we talked about a 

minute ago. If the rule allows for variances, is that not basically 

what we were already doing under the process that utilized memoVerDate Nov 24 2008 10:20 Aug 22, 2016 Jkt 095274 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\95274\C95274.TXT C95274
35 

randa of understanding? In the case of Utah, for example, there 

was a memorandum of understanding that had just recently been 

entered into. So in light of that, why not just respect the MOU? 

Why not just honor the MOU and allow that to stand? 

Mr. KORNZE. So the MOU’s are very helpful and important. It 

was mentioned earlier in another witness’ testimony about what 

these are. And I tell you we have been reaching out to states sort 

of since I got involved in the Bureau of Land Management’s oil and 

gas program. The efficiencies that are possible through these 

MOU’s, making sure that—let us say, for instance, in a big state 

like yours that there is one state well down by Kanab, but we have 

100, and vice versa up in Box Elder County, we have got two and 

you guys have got 50. We can sort of have resource sharing and 

workload sharing that can make a big difference. So that is the 

point of some of the MOU’s, but also we can use those MOU’s to 

codify an understanding of what kind of variances might be allowable between State rules and Federal rules. So we have had these 

conversations. 

So the MOU you spoke to is partially focused on efficiency of 

working together, but the MOU’s we are talking about today in the 

context of a variance would be more specific to these rules. So because we now have a rule, that is what prompts the conversation 

and hopefully the updating of that MOU. 

Senator LEE. Thank you for your answers. I appreciate your testimony and your hard work on this, but my time has expired. 

I do want to state for the record I have got concerns. This appears to me to be something that could well be a solution in search 

of a problem. I have not heard testimony today indicating a single 

problem with a single state’s regulation of hydraulic fracturing. Not 

a single one. In light of that, I struggle a lot with the idea that we 

need a new national regulatory scheme. 

Thank you, Mr. Chairman. 

Senator BARRASSO. Thank you, Senator Lee. 

Senator Daines, would you like to go with another round of questioning? Go right ahead. 

Senator DAINES. Thank you, Mr. Chairman. 

I just want to go back on that shallow well issue and clarify. Our 

understanding is there is no exception for shallow wells written in 

the rule, but we have been told by field staff that they would have 

to give exception to shallow wells. Is that your understanding? 

Mr. KORNZE. I have not read into the specific issue, so if I could 

followup with you after the hearing. 

Senator DAINES. Well, that is what we have been hearing back 

in Montana, and the point is about half of the 800 wells in Montana are shallow wells. 

Mr. KORNZE. Are these coalbed methane wells? Is that what you 

are talking about? 

Senator DAINES. They call them shallow legacy wells. They would 

likely receive an exemption, but we would have to make that application for it. So it, again, just looks like, as Senator Lee mentioned, 

it is a solution in search of a problem right now. 

I want to turn to Ms. Sgamma. In the BLM rule, it says it will 

actually facilitate oil and gas development. Do you believe it will 

speed up, facilitate development of Federal lands? 

36 

Ms. SGAMMA. Well, adding more Federal regulation and red tape 

rarely does speed things up. 

I think BLM has minimized the implementation of this rule. I 

think they have minimized both the cost and the effort. There is 

an entirely new decision point that is in this rule that requires engineering staff at BLM to make determinations on things. And if 

there are certain readings, certain pressure testing readings—and 

probably Mr. Watson can explain that better, but there are things 

that BLM has to be notified of and may require an operator to wait 

until an answer comes back from BLM. And there is nothing in the 

rule that requires BLM to respond in a certain amount of time. So 

we just do not see how this rule can be easily implemented. 

Four hours of staff time when you have got additional engineering information that has to be gone through, decision points on 

whether the hydraulic fracturing process can go forward, and then 

of course, on industry’s side, this is not a simple rule to enforce. 

It is not just a matter of, oh, we are already doing it anyway. An 

operator could be already voluntarily doing most of the things in 

this rule, but the additional paperwork requirements and the additional information that must be supplied will just by necessity take 

additional staff time. 

Senator DAINES. So continuing on that line of thinking, the Administration has proposed increased royalty fees and other fees for 

oil and gas on Federal lands. Will increasing royalty fees on Federal lands in your opinion facilitate or deter oil and gas development? 

Ms. SGAMMA. Well, it will continue the exodus off of Federal 

lands and onto adjacent private and State lands, or what happens 

a lot is producers move from states in the West predominated by 

Federal lands like Montana and Wyoming and other areas of the 

country where they do not have that additional red tape. You 

know, the Interior Department has chosen to take more resources 

from industry in the form of additional regulation. And you know, 

it takes years longer not just at the permitting stage but at every 

stage from leasing to environmental analysis to the permitting 

stage to get a project approved and completed. 

Senator DAINES. So if the exploration moves completely off of 

Federal lands, what does that mean to the taxpayer? 

Ms. SGAMMA. The taxpayer will get much less revenue return, 

and we have seen revenue onshore go down over the last several 

years. 

Senator DAINES. Director Kornze, I want to go back to the discussion about tribes, and I appreciate the outreach you have had to 

tribes. Back in Montana, we believe that our tribes should have the 

freedom to develop their own natural resources if they choose especially due to the high unemployment rates that we see, oftentimes 

in excess of 50 percent, and the need for essential services in their 

communities. Yet, it is my understanding that some tribes have expressed concerns about the BLM’s proposed rule. 

Director, can you expand on the tribal consultation process that 

BLM underwent with Indian tribes on this final rule? 

Mr. KORNZE. We have been consulting with tribes throughout the 

process. We had a very significant collaboration and consultation 

process during the drafting and during the comment periods 

37 

around that. And so that was part of my visit to the Three Affiliated Tribes, was we were holding regional tribal conversation 

where many tribes from Montana attended. 

Senator DAINES. With all of that input that you received, how 

many changes to the final rule occurred to accommodate the tribe’s 

concerns? 

Mr. KORNZE. I am sorry. 

Senator DAINES. With all the input you received from the tribes, 

how many changes occurred to the final rule to accommodate their 

concerns? 

Mr. KORNZE. I could not give you a strict number, but I can tell 

you that tribal input did have an imprint on this bill and you can 

see it in what we developed. 

Senator DAINES. Just maybe as a followup, it would be helpful 

to get the specific changes made to the rule as a result of the input 

the tribes gave this process. 

Mr. KORNZE. We should be able to provide that to you. 

Senator DAINES. All right, thank you. 

Thanks, Mr. Chairman. 

Senator BARRASSO. Thank you much, Senator Daines. 

Mr. Kornze, BLM received public comments urging your agency 

to examine the impacts that the hydraulic fracturing rule was 

going to have on states. The comments called on the BLM to conduct what is known as a federalism assessment under Executive 

Order 13132. BLM responded to the comments in its final rule. The 

final rule says the BLM believes that there will be no financial impacts to the states as a result of this rule. It goes on to say that 

the BLM does not believe that production from Federal lands will 

be reduced as a result of this rule. Therefore, a federalism assessment, it says, is not required. Did the BLM rely on any empirical 

data to show that a rule of this significance would not reduce oil 

and gas production on Federal lands? 

Mr. KORNZE. We can provide you an answer on the federalism 

assessment. That is a fairly specific corner of the rule, but we 

would be happy to get back to you on that. 

Senator BARRASSO. We would like for you to submit any data 

that you used, as part of the hearing record, because we are just 

trying to figure out the basis of BLM’s statement that the rule will 

not reduce oil and gas production on Federal lands. For most of us, 

we think that is hard to believe and we are trying to figure out 

what helped you come to that conclusion. 

Mr. KORNZE. If you do not mind me taking a second, I do think 

there is an interesting narrative that Federal regulation drives 

away investment. We have places like in the Marcellus shale where 

there is an abundance of natural gas opportunity but also significant infrastructure. So we have seen development of natural gas 

move to areas like that and in places like Wyoming that are rich 

in natural gas, there has been a decline. But it does not mean that 

those resources will not be developed when there is more resource. 

I think it is more the market reacting to whatever is happening 

today. 

But there is also an interesting counter-example where if you 

look at where BLM rules apply, they apply to both public lands and 

to tribal lands. And on tribal lands during this Administration 

38 

there has been an almost 500 percent increase in oil production. 

And so that is under the rules the Federal Government has. We 

have seen an almost 500 percent increase, and so I think that tells 

a story of where there is significant opportunity, you will see significant production. 

Senator BARRASSO. I would say as Chairman of the Indian Affairs Committee, 500 percent could be five times the amount of a 

very little amount, just a little bit more, because we continue to 

hear significant stories of inability of the Indian tribes and on Indian reservations opportunities to actually use the resources because of additional impact of Federal regulations making it that 

much harder to use significant amounts of resources that are there. 

Mr. Watson, you have been 31 years on the Wyoming Oil and 

Gas Conservation Commission. Do you believe that this rule is 

going to have a negative impact on oil and gas production on Federal lands? 

Mr. WATSON. Oh, it definitely will, and I have already seen it 

with the delay in permitting. 

Senator BARRASSO. Ms. Sgamma, what are your views on the 

same thing? With all your experience, do you believe the rule will 

negatively impact oil and gas production on Federal lands? 

Ms. SGAMMA. Absolutely. You know, there are just so many additional requirements on Federal lands and so many different policies 

that have been put in place over the last several years that are 

slowing development on Federal lands and just making it more difficult. Our members continually tell us that they avoid at all costs 

Federal lands. 

Senator BARRASSO. In an answer to a previous question, you said 

something about you hardly ever see a situation where more red 

tape and regulations make things actually easier. If you could actually find any time that they have made things easier, if you could 

submit that for the record, I think that would be—— [Laughter.] 

Ms. SGAMMA. I will do some research. 

Senator BARRASSO. Thank you. Do not waste a lot of time, 

though. Thank you. 

Mr. Watson, in your testimony, you discussed the variance process. I understand that a state may apply for a variance if a state’s 

own hydraulic fracturing rule meets or exceeds the objective of the 

BLM’s rule. You explained that a variance does not give a state authority to enforce its own rules on Federal lands. Instead, a variance allows the BLM to apply alternative or additional regulations 

to its final rule. This brings a whole new meaning to the phrase 

‘‘no good deed goes unpunished.’’ 

So if your understanding of a variance is correct, does the State 

of Wyoming have any incentive to obtain a variance? 

Mr. WATSON. Not for Wyoming. There would be no incentive at 

all. 

Senator BARRASSO. So, Mr. Kornze, would you like to comment 

on that? 

Mr. KORNZE. You know, the State of Wyoming and the Bureau 

of Land Management are in the midst of discussions, and so the 

reports I have gotten out of that are general in nature, but there 

is a sense that they have been productive and that Wyoming is 

pursuing these conversations in potential pursuit of a variance. 

39 

Senator BARRASSO. Mr. Watson, I understand the oil and gas 

producers in Wyoming are already taking steps to avoid Federal oil 

and gas. Specifically, oil and gas producers are establishing what 

are known as spacing units which include private and State lands 

but exclude Federal land. Would you discuss this at greater length 

for the committee? 

Mr. WATSON. So a spacing unit just defines the area that one 

well will drain and it includes Federal, State, and fee. So we see 

a lot in the examiner hearings, which I have done a lot of, where 

the actual wellbore at one point there will be Federal lands, and 

they will just cut that out. So basically we call it spacing them out, 

or for instance, the east half might be Federal. The west half is fee. 

They will just space the west half and just leave the Feds out. So 

I see that all the time. 

Senator BARRASSO. Ms. Sgamma, in your testimony, you tell us 

the actions of the Department of the Interior over the last several 

years lead us to the conclusion that the real goal is to discourage 

responsible energy development on Federal lands, pushing it to adjacent private and State lands or to areas of the country that are 

not predominated by public lands. 

Would you please expand upon your comments for the committee? 

Ms. SGAMMA. We have just seen several policies that really are 

not furthering the goal of more oil and natural gas development on 

Federal lands. I mean, I think we can all agree that we want them 

done in a environmentally responsible manner. We feel that we 

have achieved a balance by providing quite a large energy resource 

while disturbing a small percentage of public lands. So some of the 

policies include leasing reforms that have added additional layers 

of NEPA and additional delays in the leasing process. We have 

seen land use planning restrictions and resource management plan 

amendments that leave us scratching our heads trying to think 

how we can possibly operate in areas when there are so many overlaying regulations. You cannot even find a month in a year that 

there is not something that is keeping you off development, and 

those are going to get worse when the sage grouse amendments 

come out. We have seen stalled project environmental analysis. 

There are several projects in Wyoming, for example, that are in the 

eighth year and there is just no end in sight or no plan for moving 

those NEPA documents. 

Recently we have seen very hostile, retroactive audits based on 

new interpretations of the regulations, and we have seen things 

like more acreage being put off. I mean, the latest example is in 

the Arctic National Wildlife Refuge where 12 million acres is not 

going to be considered for oil and gas development. 

And now, as you mentioned, we have got a new rulemaking process on increasing the royalty rate. I mean, when you have already 

made it so much more expensive to operate on Federal lands and 

your breakeven point is so much higher on Federal lands because 

of all of the additional costs, raising the royalty rate simply will 

make a lot of development uneconomic. 

Senator BARRASSO. Thank you. 

Mr. Kornze, I understand the BLM examined state hydraulic 

fracturing regulations as it developed its final rule. BLM reviewed 

40 

existing regulations in Wyoming, as well as California, Colorado, 

Montana, New Mexico, North Dakota, Oklahoma, Texas, and Utah. 

According to BLM, these states accounted for 99.3 percent of the 

total oil and gas wells completed on Federal and Indian lands from 

2010 to 2013. 

Do you know which, if any, of these states have actually failed 

to regulate hydraulic fracturing in a sufficient manner? 

Mr. KORNZE. Well, as noted earlier, we were looking for best 

practices. We have 32 different states that have oil and gas leases 

that we have oversight responsibility for, and so we drew from 

many sources, including many states like the ones you mentioned, 

for those best management practices to lay down a basic common 

sense standard that should apply nationwide wherever Federal 

lands are drilled on. 

Senator BARRASSO. Well, I think it is disappointing to people 

here who are listening in on this that we cannot really get an answer to the question from the Administration of which of these 

states does not measure up. It does not seem that the Administration can find fault in the state hydraulic fracturing regulations of 

any of these states. That to me says that the BLM’s final rule is 

redundant and unnecessary. I think that is the kind of a thing that 

Senator Lee made reference to of a solution in search of a problem. 

I do have one additional question. The BLM has not yet issued 

a final environmental impact statement for an oil and gas project 

in Wyoming since 2008, and it is now 2015. So BLM has not issued 

a final environmental impact statement for an oil and gas project 

in Wyoming since 2008. Currently there nine environmental impact 

statements for oil and gas projects in Wyoming pending with BLM. 

I know you have not been there the whole time. I am well aware 

of that. Some of these impact statements have been pending with 

BLM for eight years. I think it is inexcusable for any Federal agency to be in that situation. 

Do you have any idea when we can expect BLM to issue some 

of these final environmental impact statements for these projects? 

Mr. KORNZE. So I am glad you asked this question. The Governor’s office has raised the same issue with me, so I have looked 

into it. We do have those nine projects that are moving forward. 

About half of those came in in the last two years. 

One of the exciting things about Wyoming in the oil and gas 

realm on public lands is we have 100,000 wells nationwide that we 

have oversight responsibility for right now. There are almost 

40,000 that are going to come online through these nine EIS’s just 

in Wyoming alone. So we are very much leaning forward into the 

process. The Continental Divide-Creston is probably going to be the 

first one to come through that system. So we expect some progress 

on that and one or two other major EIS’s this year that will speak 

to thousands and thousands of additional wells in Wyoming. 

Senator BARRASSO. Well, thank you. 

Ms. Sgamma, do you see these sorts of delays in other states? 

Ms. SGAMMA. Utah. Utah is the other state with several projects 

being held up. 

Senator BARRASSO. Thank you. 

Without any other members here, I appreciate each of you being 

here today to testify, to share your insights. 

41 

The hearing record will stay open for two weeks. Some of the 

other members of the committee who were not able to be here 

today may supply additional questions in writing, and I would hope 

that you would be able to get back to them with answers in a timely manner. Thank you. 

With that, this hearing is adjourned. 

[Whereupon, at 3:31 p.m., the hearing was adjourned.] 

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