The Montana Board of Oil and Gas Conservation (BOGC) will hold a special one-hour public session on Wednesday, June 24 to consider whether to regulate oil and gas “setbacks” — the distance between a well and a water source or an occupied dwelling, school, or hospital. This is an opportunity for your voice to be heard, either in person or by email, to help set rules on this critical issue.

The meeting will be at 1:00pm in the Hearing Room at the BOGC office at 2535 St. Johns Avenue in Billings.

BOGC consideration of this issue is long overdue. One of the most critical tensions between the rights of communities and those of oil and gas operators is the distance of the “setback” between a well and occupied dwellings. Most state setback laws are antiquated. They date back to the pre-fracking period when all wells were vertical, and most drilling occurred in rural areas.

But fracking has changed all that. Today over 15 million people live with a mile of a well. The footprint of wells has expanded substantially. There can be eight wells on a pad, and drilling activity brings a constant flow of truck traffic, 24×7 noise, flaring and a stream of workers. Fracking has moved drilling to small towns and urban areas, and progressive states are increasing their setback limits  to take this new reality into account.

Montana’s setback rules are not antiquated — they don’t exist. That’s right. In Montana there is no legal buffer between a wellhead and where people live, where kids go to school, where patients are treated. Operators have legal discretion to place a wellhead pretty much anywhere they choose.

The Montana Legislature had a chance to rectify this in the 2015 session, but they failed to do so. Senate Bill 177, which would have established a 1,000 foot setback from a home, water well or surface water, was tabled in committee and never made it to the floor for a vote.

How you can make a difference
You can make your voice heard in two ways:

1. Attend the meeting and address the BOGC. If you plan to attend, there will be a prep meeting at 11:30am on Wednesday at Northern Plains Resource Council, 220 S 27th St in Billings.
2. Submit written comments. Send your comments to ogsetback.comments@northernplains.org, and they will be submitted to the BOGC. Be sure to make the comments personal. State your name, where you’re from, and any special interest you have in the subject. Feel free to use the content in this post as you see fit.

Why setbacks are important
There are many reasons why Montana needs to codify adequate setbacks. Here are four of the most important ones you might consider citing in your oral or written comments:

1. The division in property rights between surface and mineral estates is fundamentally unfair to surface owners. In Montana and much of the West, property rights on a piece of land are split between surface and mineral estates. In some cases these estates are unified — the same owners owns the surface and mineral rights. But in many cases, the estate is split, and the surface rights are severed from the mineral rights.

When an estate is split, mineral rights are dominant. In 1963, the Montana legislature adopted Mont. Code Ann. § 76-2-209 as part of the Montana Zoning and Planning Act (MZPA). This law effectively prohibits governments from

prevent(ing) the complete use, development or recovery of any mineral, forest, or agricultural resource.

In practice, this means that mineral rights are dominant. An operator typically offers a surface rights holder a one-time fee in the neighborhood of $1500 per acre used, and puts up a small bond to pay for damages. Then, depending on the setback limits, they can place a well where they choose and have 24×7 access to the property.

This is fundamentally unfair. At the very least, significant setbacks are required to protect the property and livelihoods of surface owners.

A northern Colorado home with a pump jack in front and a rig behind it. Credit: Stephanie Joyce

2. If setbacks from water supplies are inadequate, water used for agriculture, ranching, and drinking can become contaminated. The risk of water contamination has been a continuous theme on this site. There is ample evidence that drilling causes water contamination. A recent EPA report identifies five ways in which fracking makes water supplies vulnerable:

• water withdrawals in areas with low water availability;
• hydraulic fracturing conducted directly into formations containing drinking water resources;
• inadequately cased or cemented wells resulting in below ground migration of gases and liquids;
• inadequately treated wastewater discharged into drinking water resources; and
• spills of hydraulic fluids and hydraulic fracturing wastewater, including flowback and produced water.

All of these risks are increased with proximity of the well to water supplies. Strong setbacks are required to protect our water.

There are very real reasons to be concerned about this. Energy Corporation of America, which has been active along the Beartooth Front, has been cited multiple times in Pennsylvania for violations related to the risks mentioned in the EPA report.

3. Oil and gas drilling negatively impacts human health and safety. This has been another continuous theme on this site. Study after study has shown that when people are exposed to oil and gas drilling, particularly the chemicals used in fracking, their health is negatively impacted.

Rather than go into detail here, I invite you to look at two summaries, written by credible organizations, that clearly show the risk to health of oil and gas drilling:

Click to download complete study

Physicians, Scientists and Engineers Healthy Energy Literature Review
You can click at left to read an analysis of peer-reviewed scientific research on the health impacts of fracking by PSE Healthy Energy, a collaborative of science professionals that provides a multi-disciplinary approach to identifying “reasonable, healthy, and sustainable energy options for everyone.”

Their findings:

• 96% of all papers published on health impacts indicate potential risks or adverse health outcomes.
• 87% of original research studies published on health outcomes indicate potential risks or adverse health outcomes.
• 95% of all original research studies on air quality indicate elevated concentrations of air pollutants.
• 72% of original research studies on water quality indicate potential, positive association, or actual incidence of water contamination.
• There is an ongoing expansion in the number of peer-reviewed publications on the impacts of shale and tight gas development: approximately 73% of all available scientific peer-reviewed papers have been published in the past 24 months, with a current average of one paper published each day.

Click to download compendium

Concerned Health Professionals of New York Compendium
A second compendium of scientific and medical findings was released last December by an alliance of health professionals called the Concerned Health Professionals of New York. You can download the compendium by clicking on the graphic at right. We reported on the first compendium here.

The compendium provides a list of studies that demonstrate many health issues related to fracking, including

• Air pollution
• Water contamination
• Inherent engineering problems that worsen with time
• Radioactive releases
• Occupational health and safety hazards
• Noise pollution, light pollution, and stress
• Earthquake and seismic activity
• Abandoned and active oil and natural gas wells as pathways for gas and fluid
  migration
• Flood risks
• Threats to agriculture and soil quality
• Threats to the climate system
• Inaccurate jobs claims, increased crime rates, and threats to property value and
  mortgages
• Inflated estimates of oil and gas reserves and profitability
• Serious risk to investors

You can go to the compendium and see a list of studies that document each of these issues.

4. Drilling reduces property values for homes close to oil wells. There is now extensive evidence that buyers are reluctant to purchase properties close to drilling sites. I have written often on this topic, but recommend you read this post, which summarizes data from all over the United States showing buyers are reluctant to bid on properties close to drilling sites, and when they do bid they reduce the amount they are willing to pay.

As Denver Realtor Adam Cox put it, “Potential buyers balk at buying homes near a drilling site, even though that’s often where the discounted homes are” because they are so close to oil and gas activity. Similarly, he said, homeowners near drilling sites “often have to sell at significantly lower prices than when originally purchased due to the oil and gas industry neighbors.”

According to another study done at Duke University and the University of Calgary, properties with private wells, such as those along the Beartooth Front, lose 10% more value than those with municipal water supplies.

It is fundamentally unfair for surface owners to be penalized because there are wells close to their properties. Strong setbacks help keep that from happening.

What setback distance should be required?
The map below shows the required setback distances, in feet, for individual states as of June 2013. These are mostly older regulations, set long before fracking brought wells into populated areas. Many states are working toward increasing their setback requirements, and many communities are setting their own setback limits to protect their citizens from unregulated drilling.

As you can clearly see from the map, Montana is one of the few oil and gas states with no setback requirements.

Source: Resources for the Future, “The State of State Shale Gas Regulations,” June 2013

 The literature offers slightly conflicting views of the ideal setback distance, but here are some things you might consider:

• The Northern Plains Resource Council in Montana and the Powder River Resource Council in Wyoming have called for a quarter mile (1320 feet) setback from occupied buildings.
• Individual cities and towns in Texas, Colorado and elsewhere are enacting ordinances that tend to establish setbacks of 1000 to 1500 feet. Since it is unlikely Montana will establish different setbacks for populated and unpopulated areas, this is a reasonable guideline to consider.
• The oil and gas industry will resist the establishment of any setbacks. Therefore the BOGC will feel significant pressure not to set a significant setback. It makes sense to push as hard as possible for significant setbacks that will protect property, water and health.

The quarter-mile recommendation is a reasonable standard to push for.

What’s happened in Wyoming: a point of reference
To consider what is likely to happen in Montana, it is useful to look at what is going on in Wyoming, a neighboring rural oil and gas state with similar political structures to Montana’s. Wyoming is about a year ahead in this process of regulating setbacks, so we can see where this process took that state to anticipate what will happen in Montana . The results are not encouraging.

Wyoming setbacks are defined by rule as follows: “Pits, wellheads, pumping units, tanks, and treaters shall be located no closer than three hundred fifty feet (350′)” from “water supplies, residences, schools, hospitals, or otherstructures where people are known to congregate.” (see Section 22 (b) on page 3-32). This is a decades-old rule.

As drilling has expanded in Wyoming and has come closer to homes in populated areas of Converse, Campbell, Johnson and Laramie Counties, residents have begun to speak out in alarm at the proximity of drilling activities to occupied residences. Governor Matt Mead, who by law is chair of the Wyoming Oil and Gas Commission, indicated a willingness to consider increasing setback laws in the state. He asked for citizen input, and had staff look at the issue and make a recommendation.

Meanwhile the oil and gas industry actively lobbied for a setback limit of 500 feet, an increase from 350 feet. They made this proposal last November, citing “a substantial burden on land and mineral owners without compensation for the loss of mineral reserves and…serious harm to our communities’ ability to provide important public services like schools, roads and public safety” if the limits were increased.

Oil and Gas Commission staff looked at the issue and recommended required setbacks be 750 feet.

Citizen groups, including the Powder River Resource Council, argued that limit be increased to a quarter mile, or 1320 feet.

Guess what happened?

The Commission adopted the oil and gas industry’s 500 foot proposal, with two stipulations:

1. Companies have to notify landowners living within 1000 feet of a well pad of their drilling plans between 30 and 180 days before drilling starts.
2. Companies have to submit a mitigation plan to the Oil and Gas Supervisor detailing how they’re going to minimize impacts on neighbors. They wouldn’t be able to start drilling until that plan is approved.

Neither of these has much teeth. A 30-day notification is precious little time for a landowner to take action if a property is to be drilled, and it’s hard to believe the Oil and Gas Supervisor has any incentive to be heavy-handed in imposing restrictions on an operator. As Wyoming landowner Alex Bowler put it, the Wyoming Oil and Gas Conservation Commission “only has two priorities”: preventing the waste of oil and gas resources, and maximization of mineral-related tax revenues. “The health and safety of local residents … and the potential devaluation of property are not really on the (agency’s) radar.”

You can listen to a Wyoming Public Radio piece on this subject by clicking below.

Time for Montana residents to take action
Things in Montana are very similar. The primary mission of the Montana BOGC is threefold:

1. To prevent waste of oil & gas resources,
2. To conserve oil & gas by encouraging maximum efficient recovery of the resource, and
3. To protect the correlative rights of the mineral owners, i.e., the right of each owner to recover its fair share of the oil & gas underlying its lands.

That’s pretty clear. The word “conservation” in the agency’s name is not about conserving natural resources, but about conserving oil and gas, and protecting the rights of mineral holders.

That is why you should take the opportunity to step up and either attend Wednesday’s meeting or submit written comments to ogsetback.comments@northernplains.org. This is important. It appears likely that the BOGC will take up the issue of setbacks, but if they are going to be more than a small amount, you are going to have to make your voice heard.

And you can be sure that the Montana Petroleum Association will make its voice heard, fighting any regulation that will restrict when and where they pull oil out of the ground.

Now is the time to speak.

More: The State of State Shale Gas Regulation: State-by-State Tables
Great Falls Tribune letter to the editor on setbacks. A good model.