Tomorrow in the federal register, the BLM will be publishing an advanced notice of proposed rulemaking that will substantially impact future leasing on federal lands. The BLM will be seeking industry input on several questions relating to changing the royalty rates for competitive leases, increasing annual rentals, increasing minimum bid amounts, increasing bonding and increasing civil penalty levels. Included in the notice will be a five page list of questions which I would urge you or your land departments to review. Below are the notice of proposed rulemaking and the five page list of questions.

The BLM will be asking for comment within 45 days of tomorrows publication.

Notice of Proposed Rulemaking

List of Questions

On March 20, 2015 the U.S. Department of the Interior released the new Hydraulic Fracturing Rule that will regulate hydraulic fracturing on public lands managed by the BLM. This will affect approximately 700 million acres of mineral estate underlying both federal and nonfederal lands and an additional 56 million acres of American Indian lands. The BLM estimates that the new well requirements would affect 3,800 oil and gas wells annually.

The new rule will expand the existing BLM regulations on oil and gas operations specified at 43 CFR § 3162.3-1 and Onshore Oil and Gas Orders 1, 2, and 7.

Summary by Baker Hostetler

On March 23rd, the NMOCD posted on its website a notice to all operators requesting information relating to wellbore(s) that have communicated with another wellbore(s) to the appropriate OCD office by April 22nd. The NMOCD states, “there has been evidence showing that inter-well communication and/or pressure increases may injure producing formations, injection intervals, casing or case seats and may create underground waste.” The request of the NMOCD requires all operators to give the agency information regarding “communication of any kind through drilling, completion, stimulation or production operations relating to both horizontal or vertical wells.” Reporting must be in accordance with 19.15.16.17 (C-103) and or 19.15.29 NMAC (on a C-141 form).

The NMOCD further states that “completion operators will be required to IMMEDIATELY report any instances of inter-well communication resulting from stimulation. Releases must be reported on a C-141 form while only pressure increases or decreases must be reported on a C-103 form.”

Affected operators must also IMMEDIATELY report any instances of inter-well communications on a C-141 form and they are also advised to contact the operator performing the stimulation.

Note that the NMOCD provides a “clarification” that “any fluid or gas released from an affected well will be considered a release. This includes but is not limited to, any mixture of completion and/or formation gases vented from the production equipment due to the inter-well communication.”

OCD Notice

Last week, April 2nd, there was a meeting between several company representatives, the BLM and members of the New Mexico Congressional delegation. The topic of the meeting was the potential merger of the New Mexico BLM and the Arizona BLM due to budget constraints. The Department of Interior is planning to move only the State Director from Arizona over to New Mexico to run the New Mexico office. Thus, the 12.2 million acres currently managed by the BLM will be added to the 13.5 million surface acres and 26 million subsurface acres already managed by the Santa Fe Office. It is also interesting to note that the Arizona office does not manage any oil and gas resources while the New Mexico office has the largest office in the country. As an IPANM member, it is important that our congressional delegation hears from us on this issue. Please consider contacting them.

In addition, today, the NM BLM announced that is has postponed the April 22, 2015 lease sale due to “priority workloads.” The 17 parcels totaling 3,295 acres from the Oklahoma Field Office will be added to the July 22, 2015 lease sale. This newest development is very concerning given the move to combine offices without a significant increase in personnel.

If you have any questions regarding the NM BLM lease sales, please contact Becky Hunt, Natural Resource Specialist at 505-954-2154 or rhunt@blm.gov.

Contacts for NM Congressional Offices –
Rep. Steve Pearce: 202-225- 2365
Rep. Michelle Lujan-Grisham: 202-225-6316
Rep. Ben Ray Lujan: 202-225-6190
Sen. Tom Udall: 202-225-6621
Sen. Martin Heinrich: 202-225-5521

On March 17, 2015 the Subcommittee on Conservation and Forestry of the US House of Representatives met to discuss the impacts of the EPA’s proposal on expanding the definition of ‘Waters of the US’ (WOTUS). Last fall, IPANM submitted extensive comments on the proposed rule, arguing the US Supreme Court has already stated twice that the EPA and Army Corps have impermissibly expanded their regulatory authority and the proposed definitional change to WOTUS was just another substantial overreach. NM Congresswoman Lujan-Grisham provided opening remarks and invited our New Mexico Secretary of Agriculture, Jeff Witte to speak on behalf of our state and the National Association of State Departments of Agriculture. Mr. Witte testified that the EPA was substantially overreaching their authority with the new definition of WOTUS. Mr. Witte also cited the New Mexico Environment Department comments which also strongly opposed the EPA expanded Waters of the US definition. Every other witness before the Committee also asked the EPA to withdraw or re-propose the rule.

Today, EPA Administrator and the Army Corps of Engineers had a press conference to announce the introduction of the final rule and definition for ‘Waters of the US.” The press release is at:

http://yosemite.epa.gov/opa/admpress.nsf/0/62295CDDD6C6B45685257E52004FAC97. The final rule has not been published in the federal register yet, but it will be final within 60 days from today or tomorrow. The preamble to the rule is 299 pages and is available on the EPA website but the key document is the actual regulation defining WOTUS which is at: http://www2.epa.gov/sites/production/files/2015-05/documents/clean_water_rule_part_230_3_1.pdf Note that this document is a prepublication document to the one that will be posted in the federal register tonight or tomorrow.

Of note in the new definition, ephemeral washes or temporary ditches are not considered WOTUS, nor are manmade pools or holding ponds or wastewater recycling facilities. The EPA also ‘clarified’ definitions of adjacent and tributary. It is expected that both the agricultural industry and the oil and gas industry will take a hard look at this new rule to determine whether litigation is needed.