43 CFR Part 3160 - ONSHORE OIL AND GAS OPERATIONS

This final rule adjusts the level of civil monetary penalties contained in the Bureau of Land Management's (BLM) regulations governing onshore oil and gas operations as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and consistent with applicable Office of Management and Budget (OMB) guidance. The adjustments made by this final rule constitute the 2018 annual inflation adjustments, accounting for one year of inflation spanning the period from October 2016 through October 2017.

On March 26, 2015, the Bureau of Land Management (BLM) published in the Federal Register a final rule entitled, “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands” (2015 rule). With this final rule, the BLM is rescinding the 2015 rule because we believe it imposes administrative burdens and compliance costs that are not justified. This final rule returns the affected sections of the Code of Federal Regulations (CFR) to the language that existed immediately before the published effective date of the 2015 rule (June 24, 2015), except for changes to those regulations that were made by other rules published between the date of publication of the 2015 rule and now, and the phrase “perform nonroutine fracturing jobs,” which is not restored to the list of subsequent operations requiring prior approval. None of the changes by other rules are relevant to this rulemaking.

The Bureau of Land Management (BLM) is promulgating a final rule (2017 final delay rule) to temporarily suspend or delay certain requirements contained in the rule published in the Federal Register on November 18, 2016, entitled, “Waste Prevention, Production Subject to Royalties, and Resource Conservation” (2016 final rule) until January 17, 2019. The BLM has concerns regarding the statutory authority, cost, complexity, feasibility, and other implications of the 2016 final rule, and therefore intends to avoid imposing likely considerable and immediate compliance costs on operators for requirements that may be rescinded or significantly revised in the near future. The 2017 final delay rule does not substantively change the 2016 final rule, but simply postpones implementation of the compliance requirements for certain provisions of the 2016 final rule for 1 year.

On November 18, 2016, the Bureau of Land Management (BLM) published in the Federal Register a final rule entitled, “Waste Prevention, Production Subject to Royalties, and Resource Conservation” (2016 final rule). The BLM is now proposing to temporarily suspend or delay certain requirements contained in the 2016 final rule until January 17, 2019. The BLM is currently reviewing the 2016 final rule and wants to avoid imposing temporary or permanent compliance costs on operators for requirements that may be rescinded or significantly revised in the near future.

On March 26, 2015, the Bureau of Land Management (BLM) published in the Federal Register a final rule entitled, “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands” (2015 final rule). The BLM is now proposing to rescind the 2015 final rule because we believe it is unnecessarily duplicative of state and some tribal regulations and imposes burdensome reporting requirements and other unjustified costs on the oil and gas industry. This proposed rule would return the affected sections of the Code of Federal Regulations (CFR) to the language that existed immediately before the published effective date of the 2015 final rule.

In accordance with a January 20, 2017, Memorandum for the Heads of Executive Departments and Agencies (memorandum) from the White House, the Bureau of Land Management (BLM) is delaying the effective date of a rule published on January 10, 2017.

This rule adjusts the level of civil monetary penalties contained in the Bureau of Land Management's regulations governing onshore oil and gas operations as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “Act”). The adjustments made by this final rule constitute the annual inflation adjustments contemplated by the Act, and are consistent with applicable Office of Management and Budget (OMB) guidance.

The Bureau of Land Management (BLM) hereby amends its existing Onshore Oil and Gas Order Number 1 (Onshore Order 1) to require the electronic filing (or e-filing) of all Applications for Permit to Drill (APD) and Notices of Staking (NOS). Previously, Onshore Order 1 stated that an “operator must file an APD or any other required documents in the BLM Field Office having jurisdiction over the lands described in the application,” but allowed for e-filing of such documents as an alternative. This change makes e-filing the required method of submission, subject to limited exceptions. The BLM is making this change to improve the efficiency and transparency of the APD and NOS processes.

The Bureau of Land Management (BLM) is promulgating new regulations to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian (other than Osage Tribe) leases. The regulations also clarify when produced gas lost through venting, flaring, or leaks is subject to royalties, and when oil and gas production may be used royalty-free on-site. These regulations replace the existing provisions related to venting, flaring, and royalty-free use of gas contained in the 1979 Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost (NTL-4A), which are over 3 decades old.

The Bureau of Land Management (BLM) is proposing to amend its existing Onshore Oil and Gas Order Number 1 (Onshore Order 1) to require the electronic filing (or e-filing) of all Applications for Permit to Drill (APD) and Notices of Staking (NOS). Currently, Onshore Order 1 states that an “operator must file an APD or any other required documents in the BLM Field Office having jurisdiction over the lands described in the application,” but allows for e-filing of such documents in the alternative. This proposal would change that structure to make e-filing the required method of submission, subject to limited exceptions. The BLM is making this change to improve the efficiency and transparency of the APD and NOS processes.

This rule adjusts the level of civil monetary penalties contained in the Bureau of Land Management's regulations governing onshore oil and gas operations as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “Act”). The adjustments made by this interim final rule constitute the initial catch-up adjustments contemplated by the Act, and are consistent with applicable Office of Management and Budget (OMB) guidance.

On February 8, 2016, the Bureau of Land Management (BLM) published in the Federal Register a proposed rule that would reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian leases. The proposed rule would also clarify when produced gas lost through venting, flaring, or leaks is subject to royalties, and when oil and gas production used on site would be royalty-free. The proposed rule would replace existing provisions related to venting, flaring, and royalty-free use of gas contained in the 1980 Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost (NTL-4A), which is over 3 decades old. Today's Federal Register Notice extends the public comment period for 14 days beyond the initial comment period deadline.

The Bureau of Land Management (BLM) is proposing new regulations to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian leases. The regulations would also clarify when produced gas lost through venting, flaring, or leaks is subject to royalties, and when oil and gas production used on site would be royalty-free. These proposed regulations would be codified at new 43 CFR subparts 3178 and 3179. They would replace the existing provisions related to venting, flaring, and royalty-free use of gas contained in the 1979 Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost (NTL-4A), which are over 3 decades old.

In July, September, and October, 2015, the Bureau of Land Management (BLM) published three separate proposed rules in the Federal Register that would update and replace its existing oil and gas rules and standards for site security (Onshore Oil and Gas Order (Order) No. 3), oil measurement (Order No. 4), and gas measurement (Order No. 5) at onshore oil and gas facilities located on Federal and Indian (except Osage Tribe) lands. This document reopens the comment period for the proposed rule pertaining to site security (Order 3) and extends the comment period for the proposed rule pertaining to oil measurement (Order 4). It also announces the times and locations of three public meetings to take public input on the proposed rules.

This proposed rule would revise and replace Onshore Oil and Gas Order No. 5 (Order 5) with a new regulation that would be codified in the Code of Federal Regulations. This proposed rule would establish the minimum standards for accurate measurement and proper reporting of all gas removed or sold from Federal and Indian leases (except the Osage Tribe), units, unit participating areas, and areas subject to communitization agreements, by providing a system for production accountability by operators, lessees, purchasers, and transporters. This proposed rule would include requirements for the hardware and software related to approved metering equipment, overall measurement performance standards, and reporting and record keeping. The proposed rule would identify certain specific acts of noncompliance that would result in an immediate assessment and would provide a process for the BLM to consider variances from the requirements of this proposed rule.

This proposed rule would replace Onshore Oil and Gas Order Number 4, Measurement of Oil (Order 4) with new regulations that would be codified in the Code of Federal Regulations (CFR). Order 4 establishes minimum standards for the measurement of oil produced from Federal and Indian (except Osage Tribe) leases to ensure that production is accurately measured and properly accounted for. Order 4 was issued in 1989. The changes contemplated as part of this proposed rule would strengthen the Bureau of Land Management's (BLM) policies governing production accountability by updating its minimum standards for oil measurement to reflect the considerable changes in technology and industry practices that have occurred in the 25 years since Order 4 was issued. This proposed rule addresses the use of new oil meter technology, proper measurement documentation, and recordkeeping; establishes performance standards for oil measurement systems; and includes a mechanism for the BLM to review, and approve for use, new oil measurement technology and systems. The proposed rule expands the acts of noncompliance that would result in an immediate assessment under the existing regulations. Finally, it sets forth a process for the BLM to consider variances from these requirements.

On July 13, 2015, the Bureau of Land Management (BLM) published in the Federal Register a proposed rule to establish minimum standards for site security at oil and gas facilities located on Federal and Indian (except Osage Tribe) lands. This proposed rule would replace Onshore Oil and Gas Order No. 3, Site Security (Order 3), with new regulations that would be codified in the Code of Federal Regulations. It includes provisions intended to ensure that oil and gas produced from Federal and Indian oil and gas leases are properly and securely handled, to ensure accurate measurement, production accountability, and royalty payments, and to prevent theft and loss. The changes proposed as part of this proposed rule would allow the BLM to strengthen its policies governing production verification and accountability by updating Order 3's requirements to address changes in technology and industry practices that have occurred in the 25 years since Order 3 was issued, and to respond to recommendations made by the Government Accountability Office with respect to the BLM's production verification efforts. This notice extends the public comment period for 28 days beyond the initial comment-period deadline on the proposed rule.

This proposed rule would replace Onshore Oil and Gas Order No. 3, Site Security (Order 3), with new regulations that would be codified in the Code of Federal Regulations (CFR). Order 3 establishes minimum standards for oil and gas facility site security. It includes provisions intended to ensure that oil and gas produced from Federal and Indian (except Osage Tribe) oil and gas leases are properly and securely handled, so as to ensure accurate measurement, production accountability, and royalty payments, and to prevent theft and loss. Order 3 was issued in 1989. The changes proposed as part of this proposed rule would allow the BLM to strengthen its policies governing production verification and accountability by updating Order 3's requirements to address changes in technology and industry practices that have occurred in the 25 years since Order 3 was issued, and to respond to recommendations made by the Government Accountability Office (GAO) with respect to the BLM's production verification efforts. The proposed rule addresses Facility Measurement Points (FMPs), site facility diagrams, the use of seals, bypasses around meters, documentation, recordkeeping, commingling, off-lease measurement, and the reporting of incidents of unauthorized removal or mishandling of oil and condensate. The proposed rule also identifies certain acts of noncompliance that would result in an immediate assessment. Finally, it sets forth a process for the BLM to consider variances from the requirements of this proposed regulation. The BLM believes these proposed changes will enhance its overall production verification and accountability efforts. As part of those efforts, the BLM also anticipates that it will separately propose new regulations to update and replace Onshore Oil and Gas Orders Nos. 4 (Order 4) and 5 (Order 5) related to measurement of oil and gas, respectively.

On May 11, 2012, the Bureau of Land Management (BLM) published in the Federal Register a proposed rule titled Oil and Gas; Well Stimulation, Including Hydraulic Fracturing, on Federal and Indian Lands. Because of significant public interest in hydraulic fracturing and this rulemaking, on May 24, 2013, the BLM published in the Federal Register a supplemental notice of proposed rulemaking and request for comment titled Oil and Gas Hydraulic Fracturing on Federal and Indian Lands. The BLM has used the comments on the supplemental proposed rule and the earlier proposed rule in drafting this final rule. Key changes to the final rule include the allowable use of an expanded set of cement evaluation tools to help ensure that usable water zones have been isolated and protected from contamination, replacement of the “type well” concept to demonstrate well integrity with a requirement to demonstrate well integrity for all wells, more stringent requirements related to claims of trade secrets exempt from disclosure, more protective requirements to ensure that fluids recovered during hydraulic fracturing operations are contained, additional disclosure and public availability of information about each hydraulic fracturing operation, and revised records retention requirements to ensure that records of chemicals used in hydraulic fracturing operations are retained for the life of the well. The final rule also provides opportunities for the BLM to coordinate standards and processes with individual states and tribes to reduce administrative costs and to improve efficiency.

On May 11, 2012, the Bureau of Land Management (BLM) published in the Federal Register a proposed rule to regulate hydraulic fracturing on Federal and Indian land. Due to the complexity of the rule and the issues surrounding it, the BLM extended the comment period for 60 days beyond the end of the initial comment period. On May 24, 2013, the BLM published a supplemental notice of proposed rulemaking and request for comment. Key issues in the revised proposed rule include: the use of an expanded set of cement evaluation tools to help ensure that usable water zones have been isolated and protected from contamination and more detailed guidance on how trade secrets claims will be handled. The revised proposed rule would also provide opportunities for the BLM to coordinate standards and processes with individual States and tribes to reduce administrative costs and improve efficiency. This notice extends the public comment period on the revised proposed rule for 60 days beyond the initial comment period.

On May 11, 2012, the Bureau of Land Management (BLM) published in the Federal Register a proposed rule entitled Oil and Gas; Well Stimulation, Including Hydraulic Fracturing, on Federal and Indian Lands. The BLM has used the comments on that draft to make improvements and is now seeking additional comment on a revised proposed rule. Key issues in this updated draft include: the use of an expanded set of cement evaluation tools to help ensure that usable water zones have been isolated and protected from contamination; and more detailed guidance on how trade secrets claims will be handled, modeled on the procedures promulgated by the State of Colorado. The revised proposed rule would also provide opportunities for the BLM to coordinate standards and processes with individual States and tribes to reduce administrative costs and to improve efficiency.

On May 11, 2012, the Bureau of Land Management (BLM) published in the Federal Register a proposed rule to regulate hydraulic fracturing on public land and Indian land. The rule would require 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 help ensure that hydraulic fracturing is conducted in a way that adequately protects the environment. Due to the complexity of the rule and the issues surrounding it, the BLM is extending the comment period for 60 days beyond the end of the initial comment period. As a result of this extension, the comment period will now close on September 10, 2012.