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House and Senate Bills Introduced to Regulate Hydraulic Fracturing
June 11, 2009
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 fracking 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 ("fracking 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 This question was quickly superseded by events, however, as a 2004 EPA study indicated that the threat to drinking water resources from hydraulic fracturing was "minimal."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 fracking 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 fracking "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 fracking 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 fracking 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.