Proposed rule (May 11, 2012)

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

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.

§ 447.410

43 CFR Part 3160

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).

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§ 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.)

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[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

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

Oil and Gas; Well Stimulation,
Including Hydraulic Fracturing, on
Federal and Indian Lands
Bureau of Land Management,
Interior.
ACTION: Proposed rule.
AGENCY:

27691

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:

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.

Executive Summary

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,

‘‘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

SUMMARY:

DATES:

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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

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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

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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

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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

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27693

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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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.

43 CFR 3162.3–2(a) Subsequent
Well Operations.
43 CFR 3162.3–2(b) Subsequent
Well Operations.
No existing regulation .....................

43 CFR 3162.3–2(a) Subsequent
Well Operations.
43 CFR 3162.3–2(b) Subsequent
Well Operations.
43 CFR 3162.3–3(a) through (j) ....

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.
This proposal would remove the phrase ‘‘performing nonroutine fracturing jobs.’’
This proposal would remove the phrase ‘‘routine fracturing or
acidizing jobs, or * * * ’’
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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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

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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

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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

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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

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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.

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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.

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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

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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

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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

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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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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
Federal Leases:
Oil (bbl) .............................................................................................................................
Gas (Mcf) ..........................................................................................................................
NGL (Gal) .........................................................................................................................
Subtotal .....................................................................................................................
Indian Leases:
Oil (bbl) .............................................................................................................................
Gas (Mcf) ..........................................................................................................................

Sales value
($MM)

Royalty
($MM)

97,721,813
2,974,916,041
2,551,994,725

$8,374
12,556
2,474

$1,111
1,360
254

............................

23,404

2,725

19,550,536
255,401,453

1,571
950

271
145

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

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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

1 U.S. Department of the Interior, Bureau of Land
Management, www.blm.gov, Oil and Gas Statistics.

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

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

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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

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

27701

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
Proposed Regulations
Social Benefits ..................................................................
Costs .................................................................................

High remediation cost/high
environmental risk

11.70
37.34

13.79
43.99

42.67
37.34

50.27
43.99

Net Benefits ...............................................................
Alternative 1: No Requirement for Lined Pits
Social Benefits ..................................................................
Costs .................................................................................

¥25.63

¥30.20

5.33

6.28

0.01
34.68

0.02
40.86

7.60
34.68

8.95
40.86

Net Benefits ...............................................................

¥34.67

¥40.84

¥27.08

¥31.90

Estimated Number of Well Stimulations

Low

Total ..................................................................................
Annual Average ................................................................

High
31,328
3,133

Low
37,015
3,701

High
31,328
3,133

37,015
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

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Proposed Regulations:
Social Benefits ..................................................................
Costs .................................................................................

High remediation cost/high
environmental risk

11.74
37.44

13.85
44.18

42.79
37.44

50.27
44.18

Net Benefits ...............................................................
Alternative 1: No Requirement for Lined Pits:
Social Benefits ..................................................................
Costs .................................................................................

¥25.70

¥30.33

5.35

6.31

0.01
34.77

0.02
41.04

7.62
34.77

8.99
41.04

Net Benefits ...............................................................

¥34.76

¥41.02

¥27.15

¥32.04

Estimated Number of Well Stimulations

Low

Total ..................................................................................
Annual Average ................................................................

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3,133

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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

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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

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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

27703

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
Crude oil,
natural gas,
and dry wells
drilled
(nominal $)

Year

1998
1999
2000
2001
2002
2003
2004
2005
2006
2007

.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................
.............................................................................................................................................

Crude oil wells
drilled
(nominal $)

769,100
856,100
754,600
943,200
1,054,200
1,199,500
1,673,100
1,720,700
2,101,700
4,171,700

566,000
783,000
593,400
729,100
882,800
1,037,300
1,441,800
1,920,400
2,238,600
4,000,400

Natural gas
wells drilled
(nominal $)
815,600
798,400
756,900
896,500
991,900
1,106,000
1,716,400
1,497,600
1,936,200
3,906,900

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

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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

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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

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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.

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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

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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

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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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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.

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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

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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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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 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.
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.
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 BLM would use the information to help protect
water resources.

§ 3162.3–3(c)(3) ...................

§ 3162.3–3(c)(4) ...................

§ 3162.3–3(c)(5) ...................

§ 3162.3–3(c)(6) ...................

§ 3162.3–3(c)(7) ...................

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
Additional information, as requested by the authorized
officer.

Subsequent Report (i.e., Subsequent
Report Sundry Notice)

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Within 30 days after the completion
of well stimulation operations, section

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.

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

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.
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.
The information would allow the BLM to make an informed decision about the proposed well stimulation
if special circumstances exist.

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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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 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 actual total volume of the fluid used .......................

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) ...................

§ 3162.3–3(g)(2) ...................

§ 3162.3–3(g)(3) ...................

§ 3162.3–3(g)(4) and (5) ......

§ 3162.3–3(g)(6) ...................

§ 3162.3–3(g)(7) ...................

§ 3162.3–3(g)(8) ...................

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§ 3162.3–3(g)(9) ...................

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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); 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 actual, estimated, or calculated fracture length and
fracture height.

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.
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.
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.

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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.

The BLM would use the information to maintain a
record of the stimulation operation as actually performed.
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.
The BLM would use the information to maintain a
record of the stimulation operation as performed.

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.
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.

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.
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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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.
If the actual operations deviate from the approved plan,
the deviation(s) must be documented.

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) .................

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,

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.

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:

B. Number of
responses

A. Type of response
Sundry Notices and Reports on Wells/Well Stimulation/Notice of Intent Sundry, (43 CFR
3162.3–3), Form 3160–5 .........................................................................................................
Sundry Notices and Reports on Wells/Well Stimulation/Subsequent Report, Sundry Notice,
(43 CFR 3162.3–3, Form 3160–5 ............................................................................................
Sundry Notices and Reports on Wells/Well Stimulation/Variance Request, (43 CFR 3162.3–
3), Form 3160–5 ......................................................................................................................
Totals ....................................................................................................................................

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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).

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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?

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C. Hours per
response

D. Total hours
(column B ×
column C)

1,700

8

13,600

1,700

8

13,600

170

8

1,360

3,570

........................

28,560

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
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

Subpart 3162—Requirements for
Operating Rights Owners and
Operators

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]

Definitions.

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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

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

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

casing and supplies the means for the
annulus to be sealed off.
*
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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.
*
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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.
*
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*

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

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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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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

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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,

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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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(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
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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

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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.

*

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*
*
*
(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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