To be fair, these rules don’t seem too crazy. And, let’s not forget that these regulations don’t apply to private land or land owned by individual states. To better understand the impact, check out this map (on page 19) from the Bureau of Land Management (BLM). This shows where federal and tribal lands are located. Next, hop over to this map from the US Energy Information Administration (EIA) which shows our nation’s shale plays. You can see that drillers in states like Wyoming and Idaho could be most affected by these regulations. This is likely why a Federal District Court Judge in Wyoming ruled that the US Department of the Interior (DOI) didn’t have the authority to issue these regulations. Some states believe it should be up to them to decide how fracking will be handled.
These rules are likely viewed as a bunch of red tape for drilling companies. Higher storage and disposal standards for frac water translates into higher costs for drillers. As an undoubtedly pro-energy president, Trump believes that fracking will lead to American energy independence. The cost, along with the perception that many of these regulations are duplicative of state and tribal standards, is why Trump is seeking to repeal the Obama-era regulations.
The timeline of this roll-back is uncertain. Currently, the rules are caught up in court and aren’t being enforced. Most expect Trump will kill the regulations, so the case is on hold until there is more definitive direction from the Trump Administration.
All in all, the direct effect of the removal of these rules on MLPs is negligible to slightly positive, but the repeal would certainly be a win for drillers in the Northwest.
