The full spectrum of the oil and gas industry is regulated from start to finish by multiple layers of local, state, and federal law. Additionally, administrative rules from state and federal agencies further regulate oil and natural gas production for the safety of workers and the public, and for the protection of the environment.
The Montana Oil and Gas Conservation Commission was formed in 1954 with broad authority: to track production; reduce waste and boost secondary production; set spacing requirements in certain fields, and oversee well closures and the disposal of salt water and oil field wastes.
Oil and gas production in Montana is governed primarily by state statute (MCA), federal law, and administrative rules (ARM) promulgated by the Montana Board of Oil and Gas Conservation (BOGC) and the Montana Department of Environmental Quality (DEQ).
The seven member, Governor appointed BOGC issues drilling permits, oversees industry activity, and follows Montana’s oil and gas laws in a manner consistent with the goals of conservation, efficient resource development, waste prevention, and protection of surface owner rights and mineral rights.
Field inspectors throughout Montana monitor and report to the BOGC. They are tasked with conducting well inspections to ensure field compliance; supervision of well abandonment and reclamation projects; geophysical inspections; and problem resolution including, but not limited to spills, leaks, fires; and filing deficiency reports.
Montana’s Constitution includes provisions for reclamation of disturbed lands, protection and improvement of environmental life, prevention of unreasonable resource depletion, and preservation of cultural resources. These provisions are spelled out in numerous state statutes.
The Clean Air Act and Water Quality Act play significant roles in regulating the environmental impacts of oil and gas development in Montana. These Acts are in addition to state and federal law, and are administered by the Montana Department of Environmental Quality (DEQ). Acts are supplemented by agency-issued rules and regulations pertaining to environmental quality.
The Montana Environmental Policy Act guides the process for environmental permitting.
The public also plays a role in the regulatory environment for oil and gas operations. Here are the ways Montana law directs communication between industry and the public.
Geologists locate potential hydrocarbon deposits using geologic data and a variety of technologies, including seismic surveys. A notice of intent to explore subsurface (geophysical) resources must be filed with the Clerk of Recorder within the county (MCA 82-1-103).
Next, “landmen” research land and mineral ownership, and arrange meetings with property owners to discuss leasing opportunities. Oil/gas developers must give the surface owner and any purchaser under contract for deed written notice of planned drilling operations (MCA 82-10-503).
Oil and gas developers also use professional surveyors to define areas of interest. At least 15 days before the desired date of land entry, a surveyor must give notice to the owner of the land (MCA 70-16-111).
Then, companies must submit detailed drilling plans and file an application for a permit to drill with the BOGC. These applications are posted on the BOGC website and in the newspaper. In Montana, the public has broad access to the BOGC, and may provide comments and concerns to the Board ahead of permitting.
Once an permit to drill is approved, operators must give notice of intent to drill to surface owners (MCA 82-11-122).
At the end of production (up to 30-40 years) notice must be given to surface owners ahead of abandonment (MCA 82-10-401, ARM 36.22.1302). Well plugging and reclamation are mandated under ARM 36.22.502, 36.22.1303, and 36.22.1307.
Air quality impacts, such as emissions, are limited by local, state, tribal, and federal air quality regulations. This includes but is not limited to, the regulation of diesel engines used during drilling; emissions from tank batteries at production locations; natural gas processing, and oil refining.
Federally, the US National Ambient Air Quality Standards (NAAQS) are standards established by the United States Environmental Protection Agency under authority of the Clean Air Act (42 U.S.C. 7401 et seq.) to limit the amount of volatile organic compounds (VOCs) which can be emitted into the atmosphere.
Emitting sources, including production equipment, storage tanks, natural gas compression and processing facilities, and refineries, are monitored routinely and managed according to applicable law to ensure the health and safety of workforces and surrounding communities.
Water quality is regulated by state and federal law, and administrative rules of Montana.
The Montana Bureau of Mines and Geology conducts statewide monitoring of water quality and quantity. Information on monitoring wells is made available to the public online through the Groundwater Information Center. Oil and gas operators pay Resource Indemnity and Groundwater Assessment (RIGWA) taxes, which fund the statewide monitoring program.
Montana’s Water Quality Act aims to “conserve water by protecting, maintaining, and improving the quality of water” throughout the state and to “provide a comprehensive program for the prevention, abatement, and control of water pollution.” The DEQ administers the Act with the assistance of the Water Pollution Control Advisory Council.
Various agencies of the Federal Government regulate exploration and production of oil and gas on federal lands to ensure safe and environmentally responsible development, and the payment of production royalties and taxes for the public benefit.
These agencies include:
- Federal Energy Regulatory Commission, which regulates the interstate transmission of natural gas, oil, and electricity. FERC also regulates natural gas and hydropower projects.
- Environmental Protection Agency, whose mission is to protect human health and the environment
- The Department of the Interior’s Bureau of Land Management, which oversees permitting and operations of mineral extraction on federal lands
- The Department of Labor’s Occupational Safety and Health Administration, which assures safe and healthful working conditions by setting and enforcing standards and by providing training, outreach, education and assistance
- The Bureau of Safety and Environmental Enforcement, which works to promote safety, protect the environment, and conserve resources offshore through vigorous regulatory oversight and enforcement.
- The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, which establishes national policy, sets and enforces standards, and conducts research to prevent incidents. PHSMA works to prepare the public and first responders to reduce consequences if an incident does occur.