State and US Regional Policies

Fracking on Federal Lands: Stewards, not Regulators

Last week, the Bureau of Land Management proposed new rules for oil and gas fracking on federal lands. Some industry critics immediately attacked the proposal, arguing not that it was too strict, but that it shouldn't exist at all. These arguments miss the mark. (Side note: We have not yet digested the package of rules, so don’t have anything to say about their content yet.)

Industry’s basic claim is that the federal government should not regulate fracking, leaving responsibility for doing so to the states. There are good arguments for this: for one, states are the traditional regulators of oil & gas development, at least on shore, and many of them have a great deal of experience. Also, local conditions and therefore environmental risks may also differ among states.

But BLM is not acting as a regulator here. Instead, they are a landowner (or, more accurately, a steward of lands held by the people, or by Indian tribes). BLM’s rules only apply to fracking activity on federal lands. It’s true that these lands are all located in states that have their own regulations. This means, for one thing, that BLM’s rules could not allow practices that state law does not. But BLM’s rules can be more strict.

In this respect, the federal government’s rights are identical to those of any landowner. When leasing mineral rights, any owner can (presumably) assume operators will follow relevant state rules. But he or she can also impose other restrictions, from the mundane (“don’t drill wells near my house”) to the complex (“disclose all components of fracturing fluid that you use when drilling on my land”).

Industry might argue that state regulations are adequate and that there is little reason for rights holders—whether individuals or large institutional landowners—to insist on greater protections. But landowners clearly have a right to do so, and some good reasons too. Owners may have a lower risk tolerance than that implicitly embodied by state rules. Or they might be aware of particular risks on their land (this is the same argument as for state over federal regulation, in microcosm). Or their land might just have special value for them. All of these things might be true about federal lands— and add the fact that these lands are held in the public trust, which arguably should make the government less tolerant of risk.

The best illustration of the rights and duties of landowners is the states themselves. Like the federal government, many states are large landowners. And they frequently require users of those lands, including oil & gas operators, to follow rules that go beyond general state regulations. For example, Pennsylvania allows drilling in some of its state forests, but imposes significant additional rules. Few in industry criticize states for doing this. So why criticize Washington for doing the same thing?

A related industry complaint is that BLM rules impose extra procedural burdens—more paperwork and permit delays. This may be true, and if the rules don’t impose meaningful substantive requirements that justify these burdens, industry is right to complain. But again, landowners can and often do impose such extra process burdens. To again use Pennsylvania as an example, operators must always get a drilling  permit from the state Department of Environmental Protection, but on state forest lands must also sign a lease with the state, the terms of which are separately enforced by the Department of Forestry.

There might be good reasons to criticize the content of BLM’s proposed rules, but it is entirely appropriate for the federal government to impose restrictions on the land it owns and administers. Attacking BLM’s proposal as federal overreach into state affairs hinders real debate about the rules’ content, and about the right balance of federal, state, and local drilling regulation in general.