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Posturing Continues Regarding Federal Frack Rules

Although it is not likely to subside in the months ahead, concern among state officials regarding proposed federal rules on hydraulic fracturing (fracking) is creating a lot of posturing from both political and legal standpoints. North Dakota is in the middle of the messy states' rights public debate.

When pressed in the wake of local news reports Sunday in Bismarck, ND, that the state's thriving oil and gas production was in danger of being stopped in its tracks by the federal Environmental Protection Agency (EPA) draft fracking rules, North Dakota officials have told NGI's Shale Daily that they think the current uncertainty and debate will be settled, but in case it isn't North Dakota is prepared to lead a consortium of states in a legal action seeking to get the courts to block implementation of any federal rules (see Shale Daily, Nov. 8).

And in the meantime, North Dakota expects to have its own new fracking rules in place through its Industrial Commission by 2013, and many states have sounded alarm bells in recent years as fracking has drawn increasing federal attention (see Shale Daily, Feb. 9; Feb. 4).

The three-member commission, composed of North Dakota's governor, attorney general and agricultural commissioner, wrote EPA in November to go on record as opposing federal regulation of hydraulic fracturing, arguing the federal agency should not set any rules until after some congressionally mandated studies of fracking in several shale plays are completed (see Shale Daily, Nov. 4).

"The state of North Dakota, through the Oil and Gas Division of the Department of Mineral Resources, has proven more than capable of regulating oil and gas recovery processes and ensuring the safety of workers while protecting the environment and is best situated to closely monitor oil and gas drilling and fracturing operations to ensure they are conducted in an environmentally sound manner," said the commission's letter to EPA's Office of Ground Water and Drinking Water.

The Industrial Commission already asked for and was granted funds from the legislature for if and when a lawsuit would be necessary, said the commission's spokesperson. "It remains to be seen if a lawsuit is even needed at this point."

"We would look to have other states join us in legal action should it be necessary," a spokesperson for the state industrial unit told NGI's Shale Daily Tuesday, citing Texas, Alabama, Pennsylvania, and Oklahoma as being among the states that might join North Dakota in challenging the rules. "Any states that we would join with would all be contingent on if there is a need for a lawsuit. I'm not going to speculate at this point on what the process would be if and when EPA sets forth rules."

The timetable for the state's new rules calls for them taking effect April 1 next year, according to the state spokesperson. How they may differ from any similar rules coming from EPA is unclear. "We can't speculate," the spokesperson said.

Lynn Helms, director of the Department of Mineral Resources in the state Oil and Gas Division, said earlier there is "no reasonable basis" to predict the ongoing federal review of possible fracking regulations. The Independent Petroleum Association of America (IPAA) currently has challenged the EPA's process for establishing the need for fracking regulations under the federal Safe Drinking Water Act, saying there has not been the legally required notice and comment period for the proposed rules.

Earlier in November an oral argument on the proposed rules was canceled and a joint motion filed with the U.S. Court of Appeals for the DC Circuit by EPA and IPAA, noting that settlement discussions were under way, but giving no details of the possible settlement, according to an analysis from Washington, DC-based analysts at Baird Equity Research.

In the meantime, North Dakota has received what one official called "a record amount of feedback" from the industry and general public on its proposed fracking rules.

Industry concerns continue to be high and focus on federal or state regulations is zeroed in on keeping certain proprietary information confidential.

Under the state proposed rules, industry oil/gas operators "would be required to submit the chemicals they use [in fracking], but not how much or how they are mixed and compounded with other ingredients," the spokesperson said. "Think of it like the [trade secret protected] Coca-Cola recipe. You know what's being used, [but] just not in exact amounts."

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