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  Hydraulic Fracturing: Tribes roundly reject proposed federal fracking rules      

May 15, 2012
By Ellen M. Gilmer, E&E Reporter, Energy Wire
Fred Fox sighs as he considers looming federal oversight of a newfound source of possibility in his struggling North Dakota community. Historically poor, the Fort Berthold Indian Reservation is now brimming with a golden resource: shale oil.
But getting at that shale is tricky, requiring careful technique. To the U.S. Interior Department, regulation of the process is a responsibility. To Fox, it's an intrusion.
It is Fox's daily work to ensure safe and efficient oil and gas production on the reservation. As energy administrator for the Mandan, Hidatsa and Arikara Nation, he guides energy companies through a permitting process that requires approval from two Interior agencies, the Bureau of Land Management and Bureau of Indian Affairs, plus the tribe's own environmental code.
Fox worries that multiplying regulations would drive away energy companies. Oil and gas production has ticked up at Fort Berthold over the past few years, and tribal members are hoping it reaches the level of the drilling boom that has swept through much of the rest of the Bakken Shale.
And on a broader level, tribal leaders scoff at Interior's move as a step backward from American Indian sovereignty and the agency's policy of consulting with tribes on decisions that affect them.
"New rules could be a hurdle," he said.
"Tribal lands are not public lands," said Leslie Wheelock, director of economic policy at the National Congress of American Indians. "The regulations try to come in and put a layer of control over what the tribes are trying to do."
Tribal nations have long been at odds with the federal government over questions of sovereignty, especially relating to oil and gas production. BLM's proposed rule on hydraulic fracturing, which would uniformly affect public and tribal lands, has stirred up that contention anew.
Costs and benefits
The rule calls for disclosure of ingredients used in the fracking process, which shoots water, sand and chemicals into the ground to break loose oil and gas from shale rock. It also sets standards for well construction, a measure to protect against leakage and groundwater contamination.
Projected cost of compliance per well is around $11,000, an amount deemed "insignificant" by BLM in a cost-benefit analysis accompanying the rule.
"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," the analysis said.
But industry representatives have bristled at that assertion.
"BLM's proposed regulations, which would mandate one-size-fits-all regulations on well construction and hydraulic fracturing operations on these lands, are redundant," the Independent Petroleum Association of America's Barry Russell said in a statement earlier this month.
At an energy expo hosted by the MHA Nation in North Dakota last week, Marathon Oil Co.'s Terry Kovacevich said BLM's rule could discourage production on affected lands. Marathon is one of eight energy companies currently operating on the tribe's bit of the Bakken Shale. Others include XTO Energy Inc. and EOG Resources Inc. About 250 wells have been drilled on the reservation.
Fox said the rule would leave those companies lined up at his office, trying to navigate the new paperwork and delays.
"They're going to be knocking at the door here," he said. "BLM's not going to listen to them. So the tribe's going to have to knock on [BLM's] doors."
BLM has acknowledged that the standards will cost some time and money but has said the net health and safety benefits to society outweigh those negatives.
Oil and gas production and exploration is also occurring in the Blackfeet and Crow nations in Montana, the Ute Nation in Utah, Southern Utes in Colorado and various Alaska Native tribes, among many others.
Overall, oil and gas production from Indian leases totaled 20 million barrels of oil, 255 billion cubic feet of natural gas and 143 million gallons of natural gas liquids in fiscal 2011, according to BLM. A dated but notable capacity projection by Interior's Office of Indian Energy and Economic Development in 2008 estimates that tribal lands contain more than 5 billion barrels of oil and 37 trillion cubic feet of natural gas.
Meaningful consultation
MHA Nation Chairman Tex Hall trumpeted tribal opposition to the rule at an Indian affairs subpanel hearing of the House Committee on Natural Resources last month. It's not chemical disclosure he's opposed to, he said, but the heavy hand of BLM (E&E Daily, April 20).

Hall says Interior did not carry out appropriate discussion with the tribes while drafting the fracking rule. Federal agencies' tribal consultation policy, established by an executive order from President Clinton in 2000 and reiterated by Interior Secretary Ken Salazar last December, calls for government-to-government consultation between tribes and agencies "in a meaningful way early in the planning process."

BLM hosted four meetings over the span of two weeks in January in Tulsa, Okla.; Billings, Mont.; Farmington, N.M.; and Salt Lake City. Critics have argued that the meetings were perfunctory and did not allow for an exchange of ideas.
"The content of these meetings was purely informational," the National Congress of American Indians (NCAI) said in a letter to Salazar. "Tribal leaders were not engaged in a meaningful discussion, instead they were informed of what the BLM plans to do."
Attendees of the meetings have said the language of the proposed fracking rule was not available at some of the meetings, and when it was available, it was handed out only after the meeting ended.
"Lack of consultation equals lack of respect," Hall said in a statement. "We are sovereign nations; the actions of these federal agencies are illegal and disrespectful."
NCAI staffers said that in addition to the lack of consultation, they are concerned that the rule did not give tribes parity with states. Doing so would allow tribes to determine the best practices for their particular geology and technology, said NCAI's Katie Hoyt, a legislative fellow.
"[Tribes] are already going this direction on their own, so why would BLM need to overwrite that?" she asked.
The administration has mostly deferred to states to regulate fracking on their lands, although U.S. EPA recently released a proposed rule that would regulate a small category of fracking that uses diesel fuel in the process.
Tribes can now offer their input on BLM's draft regulation via the 60-day comment period, which started last week with the rule's printing in the Federal Register.
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