Companion bills were introduced on Tuesday in the U.S. House of Representatives and the U.S. Senate to repeal the hydraulic fracturing exemption currently contained in the Safe Drinking Water Act's Underground Injection Control (UIC) program. The bills would require EPA to regulate hydraulic fracturing under the UIC program, and would require companies to disclose the chemical constituents of their fracing fluid recipes to the relevant agency. EPA or the delegated state agency would then post the constituents on a website for the general public.
Background of Hydraulic Fracturing Regulation and the SDWA Exemption
Hydraulic fracturing is a well-established oil and gas recovery
technique used for nearly a century to enhance production within
certain geologic formations. A fluid mixture of water, sand and
chemical constituents ("fracing fluid") is injected under
high pressure into deep formations, creating fissures that release
otherwise unobtainable oil and gas trapped within the rock.
Increasingly, hydraulic fracturing is being used to recover natural
gas from unconventional sources, the best known of which are the
vast shale formations underlying more than a dozen states.
For much of the 1980s and 1990s, EPA affirmatively declined to
regulate hydraulic fracturing under the UIC program, reasoning that
injection for oil and gas extraction was not covered by the
program. The Eleventh Circuit disagreed with EPA's
interpretation of the UIC program in a case challenging
Alabama's UIC program. That case, however, only resulted in a
remand of Alabama's UIC program, and the state quickly complied
with the court's decision by adding a specific provision
addressing hydraulic fracturing.
Because Alabama resolved the Eleventh Circuit's concern by
adding a specific provision not found in the federal regulations,
it was never clear how EPA would regulate hydraulic fracturing
under the UIC program as laid out in the federal regulations. This
question was quickly superseded by events, however, as a 2004 EPA
study indicated that the threat to drinking water resources from
hydraulic fracturing was "minimal." Following the
promulgation of that study, Congress included a provision in the
Energy Policy Act of 2005 that specifically exempted hydraulic
fracturing from the UIC program, effectively overruling the
Eleventh Circuit decision.
As natural gas exploration and production activities have ramped up
in these shale deposits, the public profile of hydraulic fracturing
has correspondingly increased. The practice is meeting notable
resistance in the Marcellus shale region, particularly in New York
and Pennsylvania.
The Fracturing Responsibility and Awareness of Chemicals Act
On June 9, 2009, Representatives Diana DeGette (D-CO), Maurice
Hinchey (D-NY) and Jared Polis (D-CO) introduced a bill into the
House of Representatives dubbed the "FRAC Act," or
Fracturing Responsibility and Awareness of Chemicals Act, HR 2766,
to give EPA the authority to regulate hydraulic fracturing under
the UIC program within the Safe Drinking Water Act. H.R. 2766 has
been referred to the House Committee on Energy and Commerce for
consideration. An identical bill, S.1215 was introduced by Senator
Bob Casey (D-PA) and Senator Chuck Schumer (D-NY) and referred to
the Senate Committee on Environment and Public Works. The text of
the Senate bill has yet to be released.
The language of the companion bills is notable in two ways. First,
it does more than repeal the exemption; it modifies the definition
of "underground injection" specifically to
include hydraulic fracturing, meaning that EPA may have no
discretion not to regulate the practice. Second, it
imposes an affirmative obligation on oil and gas operators to
disclose fracing fluid constituents to the applicable regulatory
agency, which is then obligated to make that list available to the
public. One of the major concerns of industry regarding attempts to
regulate hydraulic fracturing is treatment of proprietary fracing
"recipes." The bill attempts to address this concern by
requiring companies to only disclose constituents, not the
"proprietary chemical formulas," but it remains to be
seen whether this protection is sufficient. Furthermore, the
regulatory agency that receives the fracing fluid constituent
disclosures is obligated to make such disclosures available to the
public.
The future of these bills is unclear. A similar bill was introduced
last year by Reps. DeGette and Hinchey, along with Representative
John Salazar (D-CO), but did not make it out of committee. Notably,
the prior bill did not include an obligation to disclose fracing
fluid constituents. Another distinction is that there was no
companion bill in the Senate last year. Both of these distinctions
may raise the public profile of this effort to regulate hydraulic
fracturing, but the inclusion of a disclosure obligation may also
elevate the stakes between industry and government.
It is not yet clear how this effort will play out in relation to
the Waxman-Markey climate change bill, including whether Rep.
DeGette will offer it as an amendment when that bill comes to the
House floor for a vote. As an amendment, approval by the House
rules committee would be required. Such approval is influenced
heavily by the Speaker and Majority Leader. It is also possible
that Sen. Casey may attempt during floor consideration to offer the
language from the companion hydraulic fracturing bills as an
amendment to the energy bill currently being marked up in the
Senate Energy and Natural Resources Committee. The Committee took
up the oil and gas provisions of the energy bill on June 9.
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