Action is hot and heavy on the regulatory front. Just this past week, EPA announced its proposal for permit guidance for fracking operations utilizing some form of diesel in injection fluids, and the Bureau of Land Management proposed regulations for operations occurring on public lands and Indian territory. Meanwhile, states such as Tennessee and Ohio have announced tighter new rules. These initiatives have received widespread publicity and are far too complex to detail here. We do have some thoughts and observations worth sharing, starting today with the EPA’s new guidelines.
With stunning alacrity, the United States Supreme Court issued its opinion [PDF] today in Sackett v. EPA (roughly two months since oral argument), resolutely and unanimously striking down EPA’s position that the Clean Water Act (CWA) does not provide pre-enforcement judicial review of compliance orders. This blog has covered the Sackett case and explored the potential ramifications for EPA’s pursuit of regulatory authority over hydraulic fracturing. In this respect, the opinion is surprisingly broad and is not grounded in distinctions between a non-emergency administrative order (like the CWA order at issue in Sackett) and an emergency-type administrative order under other statutes (e.g., the Safe Drinking Water Act (SDWA) or CERCLA). Accordingly, following Sackett, EPA’s ability to regulate hydraulic fracturing under the guise of emergency SDWA authority appears less clear.
The Ohio Department of Natural Resources (ODNR) has announced it will be strengthening requirements for Class II injection wells [PDF] as a result of recent earthquakes in the Youngstown area. ODNR has proposed a suite of new seismic requirements to be imposed on Class II injection well permits through specialized attached permit conditions until proposed changes to state regulations can be codified.
Critics of hydraulic fracturing have used the recent earthquakes as part of a broader push for additional regulation over the oil and gas industry. It is critical, however, to separate hydraulic fracturing from the disposal of brine associated with oil and gas extraction into Class II injection wells (see here for a good example of how the two issues often are conflated). Indeed, EPA noted in its draft hydraulic fracturing study plan [PDF] that the two most recent studies, one by the University of Texas and one by Southern Methodist University, linked seismic risk with well injection but found no link between hydraulic fracturing and seismic risk. It is injection well disposal—and not hydraulic fracturing—which the new ODNR rules will address.
As reported last week, two lower courts in New York upheld municipal bans (one enacted by the Town of Middlefield, the other by the Town of Dryden) on oil and gas exploration and production within town limits. The concerns surrounding hydraulic fracturing prompted these bans, and the response is now being closely watched across the nation. Please watch the LXBN TV interview below where Kelley Drye associate Eric Waeckerlin discusses why these bans will most likely be overturned and what potential precedent these cases may set.
When one thinks of a Superfund site, the image is of a large landfill, a former mining pit, or an industrial site like Love Canal; places where massive contamination has released into the air, ground, or water over many, many years and where it is not safe to live, animals and benthic organisms may not even exist, and where the full power of the federal government is often needed simply to restore environmental and public health to minimal levels. A private water well containing somewhat elevated levels of several naturally occurring substances (like manganese, arsenic, or sodium) is not typically among these images.
Yet, in both Dimock, Pennsylvania and Pavillion, Wyoming, EPA has used its authority under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to investigate claims of drinking and ground water contamination. While EPA has broad authority under CERCLA to investigate all types of potentially contaminated sites, the Agency’s use of CERCLA at these two sites raises serious policy and legal questions.
The controversy over hydraulic fracturing has ushered in an unprecedented wave of scrutiny over the oil and gas industry from nearly every angle—new lawsuits, more state regulations, constant press (often misleading as captured well in this recent Forbes article), local protests, and city council moratoriums. At the same time the President has reeled off a series of positive statements about the future of natural gas (the most recent being his support for tax credits and other incentives to spur natural gas truck fleets), other factions in the administration are undermining the message. Companies trying to make intelligent business decisions and major capital investments—in addition to trying to gauge the whims of the market and project future demand—are being forced to navigate what is quickly becoming an increasingly uncertain and unclear regulatory environment. To try and make sense of what’s going on in Washington D.C., here are four key federal initiatives every company should be watching.
Recent earthquakes near Youngstown, Ohio are alleged to have been caused by the increased underground injection of wastewater produced in the hydraulic fracturing boom in the Marcellus and Utica region. After reports that the wells may have been sited on a geologic fault line, environmentalists have been quick to use the quakes to call for broader federal regulation and drilling moratoriums.
Like other oil and gas drilling techniques, hydraulic fracturing produces brine wastewater that must be treated and appropriately disposed. Publicly owned treatment works (POTW) treat many kinds of wastewater, but concerns have been raised about the POTWs’ ability to adequately treat wastewater from fracking operations. In response, certain states, like Pennsylvania, have imposed moratoriums on the treatment of fracking wastewater at POTW’s. The alternative, and EPA-preferred method of disposal, has long been injection into underground wells.
Environmental and community groups continue to assert home rule authority, as well as seek additional authority, in efforts to regulate or ban oil and gas drilling that uses hydraulic fracturing. As recent events in West Virginia demonstrate, these groups face an uphill legal battle. Most states have long regulated the oil and gas industry under state statute, and courts have generally upheld this scheme as preventing municipalities (and sometimes counties) from duplicative regulation. This history, however, does not appear to have slowed the growing movement. For example, the Community Environmental Legal Defense Fund, an organization leading a local fracking ban movement in Pennsylvania, acknowledges that the chances in court are slim. The group’s objective, rather, is to slow the pace of drilling and draw the process out into the open, forcing companies and the courts to make public decisions.
Last week, two social- and environment-focused shareholder coalitions released an investor guide on fracking disclosure. The guide, “Extracting the Facts: An Investor Guide to Disclosing Risk from Hydraulic Fracturing Operations,” is clearly investor focused, but does reflect many current market practices. The Investor Environmental Health Network and the Interfaith Center on Corporate Responsibility, the groups that created the guide, stated that the effort is a response to investor concern about the impacts of fracking as well as corporate questions about what kinds of disclosure investors are seeking.
The IEHN/ICCR guide hits the market as demand for disclosure on fracking practices is already at a fever pitch. Earlier this month, ISS issued pro-disclosure recommendations for fracking companies in its annual proxy guidelines. The SEC has also reportedly been seeking additional fracking-related disclosure from filing companies. In fact, IEHN noted that one of the benefits of the guide could be to assist companies to better respond to SEC information requests.
Leading corporate governance advisory company Institutional Shareholder Services has issued, for the first time, specific guidelines related to hydraulic fracturing. The guidance, which is part of ISS’s U.S. Corporate Governance Policy 2012 Updates [PDF], was published in November and recommends that investors generally vote for proposals requiring greater disclosure surrounding natural gas/hydraulic fracturing operations, including disclosure of any measures taken to manage or mitigate potential community and environmental impacts of those operations. ISS’s position is one more indicator of increased pressure and focus on fracking within the investor relations arena. Earlier this year, Glass Lewis & Co., another major proxy advisory service, supported a similar shareholder proposal at Ultra Petroleum for increased transparency and risk management of its hydraulic fracturing operations.
With the EPA juggernaut chugging full speed ahead towards expansive new federal oil and gas regulation, its air rules are going to come first and may prove to be the most controversial. Flaws in the rule also demonstrate why the states are in the best position to oversee this industry—as they have for decades.
In August, EPA proposed new NSPS and NESHAP standards [PDF] for the oil and gas sector. Despite the complexity of the rules, EPA projects a final rule to be issued by April of 2012—a date most consider impossible to meet. The rules would significantly expand the universe of currently covered affected facilities and equipment and add requirements specific to hydraulic fracturing. Emissions reductions under the proposal would be achieved by controlling volatile organic compounds (VOC’s), sulfur dioxide, and other toxic pollutants, largely through green completions (new technologies and processes for enhanced gas recovery) and pit flaring (burning off unusable gas). The industry has generally raised concerns, not with the control of air emissions per se, but with the one-sized-fits-all requirements, and the underlying assumptions.
Last Wednesday, EPA quietly announced it would grant part of Earthjustice’s TSCA petition [PDF] concerning chemical substances and mixtures used in the fracking process of oil and natural gas production. The announcement is a significant development in EPA’s continued quest to exert additional and new federal oversight over the oil and gas industry.
EPA granted Earthjustice’s section 8(a) and 8(d) requests. The section 8(a) component will ultimately require chemical manufacturers and processors to submit broad and detailed reports on all aspects of chemical manufacture and use, including chemical names, molecular structure, category of use, volume, by-products, existing environmental and health effects data, disposal practices, and worker exposure. The section 8(d) component will require manufacturers and processors to submit all existing health and safety studies known to, or initiated by, them for any substance or mixture. Both section 8 rules will apply only to chemicals and mixtures used in the fracking process, and will not apply to the broader suite of chemicals used across oil and gas exploration and production (E&P) as Earthjustice had requested.
Preliminary results from a comprehensive study at University of Texas study reveal no direct link between hydraulic fracturing and groundwater contamination. The effort is notable because the Environmental Defense Fund is helping to gather and analyze the data. The preliminary review shows that problems associated with wastewater pits and well cement/casing are more prevalent at fracking sites, and more likely to cause problems than the fracking process itself. Such surface problems can occur with any type of drilling operation. Critically though, the study did not find any evidence that casing/cement issues have resulted in any significant groundwater contamination. According to the lead author, Chip Groat, the goal of the study is “simply [to] separate fact from fiction,” noting that the scientific community has done few studies on the relevant issues, and the media coverage has been largely negative (if not inaccurate).
Admittedly, separating fact from fiction can be a difficult task.
Today, the Department of Energy’s Shale Gas Subcommittee issued a draft of its second of two ninety-day reports [PDF] on steps that can be taken to reduce the environmental impact of shale gas production. The first report made twenty recommendations on needed improvements. This second report prioritizes those recommendations, and makes suggestions on how each might be implemented. The subcommittee continued to stress the need for “collaborative efforts” and “continuous improvement” by companies involved in shale gas production (including service companies), and focused again on the need for public involvement and transparency. While sanguine about the potential of “arguably the country’s most important domestic energy resource,” the subcommittee noted that “the progress to date is less than the Subcommittee hoped and it is not clear how to catalyze action at a time when everyone’s attention is focused on economic issues, the press of daily business, and an upcoming election.”
Events are unfolding rapidly in the regulatory arena for the natural gas and oil industry. Even though hydraulic fracturing has been used for decades, and is but one stage in the drilling process, the controversy over “fracking” has prompted swift and broad regulatory movement—both at the federal and state levels. Federal and state agencies are racing to develop new regulations or bolster existing ones. While industry has generally eschewed these efforts (particularly at the federal level, arguing that a state-based regulatory scheme is appropriate), recent guidance issued by the Pennsylvania Department of Environmental Protection (PADEP) demonstrates that sometimes new regulations (or interpretations) can be a good thing.
One issue that has long perplexed the industry is the regulation of air emissions—or more precisely, how to “aggregate” various aspects of an oil or gas drilling operation for purposes of air permitting.
EPA announced last week that, by 2014, it will propose rules governing pre-treatment standards for water discharges from shale gas fracking operations. As part of the Agency’s effluent guideline program, the shale gas wastewater discharge standards will impose federal pre-treatment standards for all operations disposing of wastewater from shale gas operations. As this blog noted back in March, the development of effluent limit guidelines (ELGs) for fracking operations was anticipated.
Concern was first raised by the New York Times this Spring over the salinity and potential radioactivity associated with flowback water being treated at wastewater treatment plants in the Marcellus. Critics have also voiced concerns about the potential for drilling wastewater to overwhelm treatment plants and adversely affect their treatment systems. Tests released by the Pennsylvania Department of Environmental Protection (PADEP) downstream from treatment plants, however, have shown no elevated levels of radiation or other pass through contaminants.
As the pace of natural gas and oil drilling in unconventional plays increases, the industry continues to be faced with a broad suite of environmentally-related legal concerns. These include multiple regulatory initiatives both at the Federal and State levels (including EPA’s and DOE’s ongoing studies) and federal legislation (including the Breathe and Frac Acts). As companies plan future strategies in this complex, dynamic legal environment, there are several key trends emerging that are likely to influence where and how companies operate. Understanding these trends can help companies optimize resource allocation and potentially gain crucial competitive advantages.
The United States Geological Survey (USGS) issued a report this week indicating that the Devonian Marcellus Shale formation holds an estimated 84 trillion cubic feet (Tcf) of technically recoverable undiscovered natural gas (with an additional 3.3 Tcf of undiscovered natural gas liquids). As The New York Times’s Ian Urbina notes, the USGS's estimate is much lower than the approximately 400 Tcf estimated as a recoverable resource by the Energy Information Administration (EIA) in its Annual Energy Outlook 2011 [PDF; see page 80]. Importantly however, the latest USGS estimate is a dramatic increase from the Agency’s pre-Marcellus development estimate in 2002 of only 2 Tcf.
It is too early to know the exact reason for the large discrepancy. For one, the precise methodologies and assumptions made by the USGS and EIA in their respective calculations are not fully understood. For example, it is unclear whether “technically recoverable undiscovered” gas described in the USGS report is the same as the “recoverable resources” noted in the EIA report. The answer to this question needs to be explored and may very well help explain the difference. Regardless, the EIA report makes abundantly clear that the estimates of shale reserves are riddled with uncertainty and assumptions “starting with the estimated size of the technically recoverable shale gas resource.” The EIA report goes on to note that the conclusions are best estimates (due to numerous uncertain technical and economic variables) and "embody many assumptions that might prove to be incorrect over the long term." Yet, the NYT's article fails to note these statements, or acknowledge that these types of estimations are difficult, inherently uncertain, and perpetually dynamic. Indeed, EIA has already indicated it will revisit and update its estimates in light of the USGS report.
The Department of Energy’s Shale Gas Subcommittee issued its first of two reports [PDF] on measures that can be taken to reduce the environmental impacts of shale gas production. While focusing on the need for more comprehensive disclosure, the development of best practices, as well as the overall importance of ensuring environmentally safe practices, the report takes direct aim at environmentalists’ claims that fracking itself presents substantial risks to drinking water:
The Subcommittee shares the prevailing view that the risk of fracturing fluid leakage into drinking water sources through fractures made in deep shale reservoirs is remote.
The report notes that “in the great majority of regions where shale gas is being produced, [large depth separation between drinking water sources and the producing zone] exists, and there are few, if any, documented examples of such migration.” Instead, the Subcommittee focuses on poor well construction, design, and casing as presenting the largest risks to drinking water—something it recommends be managed through industry best practices like those taken by Northeast Energy and highlighted in a recent post on this site.
Earthjustice, Environmental Defense Fund, the Natural Resources Defense Council, and dozens of other smaller environmental groups, have filed an anticipated petition [PDF] asking EPA to promulgate rules under the Toxic Substances Control Act (TSCA) regulating oil and gas exploration and production (E&P) chemicals. The petition requests that EPA adopt a rule under section 4 of TSCA requiring manufacturers and distributors (not drilling companies) to conduct toxicity testing of all E&P chemicals and make the information publicly available. The petition also requests a rule under section 8 of TSCA requiring maintenance and production of various records related to E&P chemicals, including the submission of existing health and safety studies related to E&P chemicals. EPA has 90 days to respond to the petition.
Earthjustice alleges that multiple loopholes in the current regulatory scheme, including E&P exemptions under the Resource Recovery and Conservation Act (RCRA) and limitations in reporting requirements under the Emergency Planning and Community Right to Know Act (EPCRA) require more stringent TSCA regulation. Earthjustice also claims that TSCA disclosure rules are needed to fill gaps in state regulation, arguing disclosure rules like those recently adopted by the Wyoming Oil and Gas Conservation Commission (WYOGCC) “fall short of what a rulemaking under TSCA sections 4 and 8 would provide.”
The United States Supreme Court has accepted certiorari (cert) in a case that may have ramifications for the Agency’s ongoing initiative to use the Safe Drinking Water Act’s (SDWA) emergency authority to regulate fracking. The issue in Sackett v. EPA, which the Court agreed last week to hear next term, centers on whether the Sacketts—who filled in a half acre of their property near Priest Lake, Idaho with dirt and rock—have a due process right to pre-enforcement review of an EPA-compliance order under Section 404 of the Clean Water Act (dredge and fill permit requirement). The compliance order prevented further construction and required the Sacketts to restore the wetland.
The case comes to the court with several layers of notable context over and above any implications for fracking. First, the Court recently declined to address a similar issue—due process rights to pre-enforcement review of an EPA CERCLA § 106 order—when it denied cert in the closely watched General Electric v. Jacksoncase. If the Court really wanted to decide the due process issue, it could have accepted cert in the GE case (although EPA’s emergency CERCLA authority is arguably different from a compliance order under the CWA). This has prompted speculation that the Court has an ulterior motive. And that is the Court’s ongoing vexation with EPA’s jurisdiction over wetlands. The 2006 decision in Rapanos v. U.S., saw the conservative wing of the Court, led by Justice Scalia, adopt a very narrow view of EPA’s jurisdiction over wetlands. EPA has since grappled with how to regulate wetlands. Accepting Sackett may have as much to do with the Court’s concern with this issue, as anything else—particularly because EPA's alleged expansive definition of wetlands in Sackett has arguably led to property right infringement.
EPA has posted on its website a power point describing the Agency’s ongoing development of permitting guidance for fracking activities using diesel fluids. [PDF] If the slides are any indication of what the eventual guidance will look like, all signs point to a broad, rulemaking-type EPA action. Several items are particularly noteworthy. Although EPA states that it “cannot set new regulations or change existing regulations,” the “overview of discussion questions” on slide 13—and the remaining content of the document—points toward a new and expansive permitting regime for operations using diesel fluid (and potentially even those that do not). For example, EPA poses questions like:
What should the permit duration be, considering the intermittent nature of HF and Class II plugging and abandonment provisions?
What well construction requirements should apply to HF wells using diesel fluids?
What well operation and mechanical integrity requirements should apply to HF wells using diesel fuels?
What well monitoring and reporting requirements should apply to HF wells using diesel fuels?
How do Class II financial responsibility (FR) requirements apply to wells using diesel fuels for hydraulic fracturing?
What information should be submitted with the permit application?
None of these questions are necessarily specific to the use of diesel fuel in a fracking operation; rather, collectively appear to be more focused on increasing the general stringency of UIC permitting requirements across a broad spectrum of well-drilling activities (i.e., well construction requirements, operation and mechanical integrity, and monitoring and reporting requirements etc.).
EPA has made available the initial review (PDF) of its Draft Hydraulic Fracturing Study by its Science Advisory Board (SAB). While the SAB requests the draft review not be cited or quoted, the lengthy report makes clear that the SAB is very concerned with the proposed scope and outcome of EPA’s upcoming study. The heart of the SAB’s concerns lie with the practical reality that drilling for natural gas—and by extension studying the impacts—differs dramatically throughout the country. The unconventional resources being tapped vary significantly in depth and in the volume and type of water that flows back. In many places, like Texas, local geology allows produced water to be injected back into the ground for storage, whereas in other states like Pennsylvania, the geology makes re-injection impracticable, requiring other management options (i.e., wastewater treatment, or storage ponds). Similarly, water acquisition carries vastly different implications depending on where the watershed is—i.e., the arid West vs. in the wetter East (Marcellus) and Southeast (Haynesville). Simply put, the SAB appears to be concerned that regardless of the scientific approach EPA ultimately uses in its study, the results may not be scientifically robust or meaningful enough to support difficult federal policy and regulatory decisions.
The U.S. House of Representatives Committee on Science held a hearing this morning, May 11, 2011, on the technology and practices of hydraulic fracturing for energy production. A copy of the Science Committee’s hearing briefing material can be found here (PDF).
Witnesses at the hearing included representatives from the Texas Railroad Commission (TRRC) and the U.S. Environmental Protection Agency (EPA). In his introductory remarks, Committee Chairman, Ralph Hall (R-TX), argued that any potential environmental risks posed by hydraulic fracturing must be examined objectively and without political rhetoric. Hewing to the committee’s jurisdiction, Chairman Hall argued that science must drive the debate on fracking. To that point, Chairman Hall claimed that EPA’s draft fracking study plan was not objective and that the EPA must work to quantify the environmental risk posed by fracking.
EPA’s Administrator, Lisa Jackson, said yesterday EPA will issue guidance soon on the use of diesel fuel as a chemical additive in hydraulic fracturing fluids for oil and natural gas production. The forthcoming guidance comes in the wake of much industry uncertainty caused by the EPA’s website posting in August of 2010 stating that “[a]ny service company that performs hydraulic fracturing” using diesel fuel in the fracking fluid must obtain Underground Injection Control (UIC) program permits as Class II wells. Currently EPA has not required such a federal permit, and the forthcoming guidance marks the first time EPA has meaningfully weighed in on this issue.
Indeed, EPA’s website pronouncement is the subject on ongoing litigation in the United States Court of Appeals for the District of Columbia in a challenge brought by IPAA—a national trade association comprised of independent oil and gas producers and field service providers. While IPAA does not dispute the EPA’s authority under the Safe Drinking Water Act (SDWA) to regulate fracking operations that use diesel fuel, it asserts that EPA circumvented federal administrative law in an attempt to regulate hydraulic fracturing outside of comment-and-notice rulemaking. Without a clear federal mandate to obtain a federal permit and no practical means of doing so (at least currently), significant uncertainty remains for operators who have used or are using diesel without being expressly permitted.
Currently, EPA is evaluating “the entire range of operations” with respect to evaluating four existing oil and gas air regulations: two new source performance standards (NSPS) applicable to new and modified facilities, including the regulation of VOCs from leak detection and repair for gas processing plants and the regulation of sulfur dioxide from gas processing plants; and two national emissions standards for hazardous air pollutants (NESHAP) applicable to new and existing facilities, including new rules for major and area sources. EPA is under court order to issue proposed rules by April 29, 2011 and final rules by November 30, 2011.
Andrew Revkin, of the New York Times, has written a short, but very reasonable and worthwhile piece on the ongoing public debate/controversy/vitriol/rhetoric surrounding the shale-gas boom, and the use of hydraulic fracturing (fracking) (which as many do, and should, point out, is a process used to drill for natural gas and oil in certain geologic formations, is not new, and does not, without more [e.g., a spill, broken well casing etc.], cause environmental or public health harms). Revkin argues that inherent human predispositions toward certain outcomes make objective and calm scientific debate difficult, citing global warming as exhibit A. His thesis and plea for reason should be welcomed in the ongoing and nascent fracking debate—which has already seen its share of outlandish claims from all sides. Perhaps Revkin sums up best how to achieve a rational debate in the following statement -
In the absence of data comes spin and overstatement - and a reliance on advocates of one stripe or another, including scientists staking advocacy positions. None of this is a good thing.
The ball is in the industry’s court to acknowledge that there are bad actors and to move toward far deeper transparency and accountability on methods, or it will justifiably lose public faith and the prospect of stronger regulation. The shale gas rush (and a similar oil rush under way in other regions) is clearly in it[s] frontier days.
Yesterday, the Senate Environment and Public Works (EPW) Committee held a joint hearing with its Water and Wildlife Subcommittee to discuss the environmental and public health impacts of hydraulic fracturing (fracking). In perhaps the most sensational portion of the hearing, EPA Deputy Administrator Robert Perciasepe stated that drillers who use or have used diesel in their fracking fluid and do not have a federal permit are in violation of the Safe Drinking Water Act (SDWA). Perciasepe’s comments mark the first time the Agency has taken a concrete position on this issue, which is currently in litigation in the United States Courts of Appeals for the District of Columbia.
Perciasepe went on to characterize EPA’s goal as ensuring public confidence in fracking so that the practice can move forward. When pushed to explain how the Agency has responded to reports of problems associated with fracking practices, Perciasepe recognized that the states “are on the front lines.” He stated that EPA’s current role has been to provide oversight to the state programs and take action where endangerment exists—explaining that the Agency has legal authority under multiple federal statutes to regulate hydraulic fracturing and is more than willing to use it.
Although the practice of using hydraulic fracturing to produce oil and natural gas is decades old, over the next year, at least three major federal-level fracking studies are set to analyze various aspects of the practice. In addition to EPA’s congressionally mandated study (PDF), Inside EPA reports that the Government Accountability Office’s (GAO) natural resource and environment division has begun its own study on produced water from oil and natural gas production, and the Obama administration’s recent “Blueprint for a Secure Energy Future” (PDF) requires the Department of Energy (DOE) to take the lead in developing recommendations within six months for necessary immediate steps and best practices that can be taken to protect public health and the environment.
On top of these three studies, last week several environmental groups petitioned (PDF) the White House Council on Environmental Quality (CEQ) to perform a programmatic environmental impact statement (PEIS) under the National Environmental Policy Act (NEPA) and develop concomitant regulations addressing the cumulative impacts of natural gas drilling in the Marcellus and deeper Utica shale formations. The petition relies on a novel and somewhat unusual interpretation of NEPA and it is unclear whether CEQ has the authority to grant it. In lieu of pointing to any one “major federal action” or federal program triggering NEPA review, the petition focuses on potential drilling impacts in the federally-protected Chesapeake Bay area and in addition argues that CEQ has authority to perform a PEIS because
Many drilling sites and associated facilities such as pipelines will be located on federal land and will be considered a major federal action. However, many of the drilling sites, while not on federal land, are regulated by the states through federally delegated programs.
As a result of a revised briefing schedule, the Independent Petroleum Association of America (IPAA) is poised to file its brief challenging the Environmental Protection Agency’s (EPA) website notice of federal permitting requirements for hydraulic fracturing (fracking) operations that use diesel fuel. Under the revised briefing schedule, the IPAA brief is due today. The EPA’s response brief is due June 1, 2011.
As background, on August 21 2010, the IPAA—a national trade association comprised of independent oil and gas producers and field service providers—filed a petition in the United States Court of Appeals for the District of Columbia (D.C. Circuit) alleging that the EPA surreptitiously created new federal regulatory requirements related to fracking in contravention of federal administrative law. The IPAA asserts that the EPA’s actions “have serious and economic consequences and constitute reviewable final agency action.” The EPA, the IPAA asserts, should have adhered to the Administrative Procedure Act (APA) notice and comment rulemaking requirements when issuing its fracking permitting notice.
President Obama is scheduled to give a speech on reducing the United States’ dependence on foreign oil and increasing production of America’s own energy reserves this morning at Georgetown University in Washington, D.C.
The White House released a fact sheet in advance of the hearing that calls for “[e]ncouraging responsible development practices for natural gas.” The White House fact sheet calls for the safe and responsible development of natural gas, suggesting the administration will press for the disclosure of the chemical constituents of fracking fluids. The fact sheet also hints at a task force or working group that will be charged with developing best practices for shale gas extraction.
Look for more information from HFI following the President’s speech.
In a closely watched case of national importance, the Texas Railroad Commission (TRRC) today voted unanimously to finalize a prior order finding Range Resources not responsible for the contamination of private drinking wells near two of its hydraulic fracturing operations in the Barnett Shale. After holding a hearing and receiving evidence from Range Resources, TRRC found that any contamination in the drinking wells was due to natural causes, likely from the separate and shallower Strawn formation, and was unrelated to Range’s drilling operations in the deeper Barnett formation.
In a strongly worded statement, Texas state Rep. Jim Keffer, Chairman of the Texas House Energy Resources Committee, said of TRRC's findings:
[EPA] did this on hype . . .they thought they had a smoking gun and they didn’t. They overstepped . . .they overreached.
EPA countered that it stood by the order issued to Range Resources. "The decision by the Texas Railroad Commission is not supported by EPA’s independent, scientific investigation, which concluded that Range Resources Corporation and Range Production Company have contributed to the contamination of homeowners’ drinking water wells,” EPA's statement said.
Both EPA and Range Resources have pending lawsuits related to EPA’s allegations, which were the subject of TRRC’s order.
The Railroad Commission of Texas (Commission) has issued its much anticipated Proposal for Decision and Proposed Order following a hearing on EPA’s claims that Range Production Company’s fracking operations contaminated private drinking water wells in the Fort Worth, Texas area. The Commission concluded that any contamination was due to natural migration from the much closer Strawn geologic formation and not Range’s nearby natural gas wells. Despite having received notice, EPA did not send any representatives to the January Commission hearing, nor present any substantiating or rebuttal evidence. The Commission will decide whether to issue a final order on March 22.
Notable highlights from the report and proposed order include:
As EPA moves forward with its fracking study (PDF), comments this week from the Agency’s science advisors may provide a clue into EPA’s thinking on how to increase regulation over the natural gas industry. EPA’s Science Advisory Board (SAB) spoke publicly this week on their thoughts for the scope of the fracking study. Much of the comments were focused on keeping the scope of the study narrow—somewhat surprisingly in light of recent criticism of EPA’s oversight of the natural gas industry.
Echoing some of industry’s comments (PDF) members of the SAB raised concerns about taking on too much in the study in light of constrained budget and time pressures (the study is due out by the end of 2012). For example, several members of the SAB panel noted that detailed toxicological studies based on data from the proposed case studies would be too expensive and take too long. The chairman of EPA’s SAB, Dr. David Dzombak, suggested the study should take a risk-based approach that focuses on the potential impacts of produced water once it reaches the surface, and prioritize based on the highest-volume and highest-hazard chemicals typically used in fracking fluid.
Ian Urbina’s polemical three part series on fracking, which ran in the New York Times last week, has caused a mighty uproar from environmentalists to industry and everyone in between. In Pennsylvania, the epicenter of Urbina’s allegations that natural gas companies and water authorities have been dumping untreated, radioactive-laden wastewater into public waterways, two water providers committed last Thursday to begin testing for radioactive contamination in drilling water. Today, the Environmental Protection Agency (EPA) notified the state it is required to test for radioactivity at drinking water intake plants within 30 days. Meanwhile, in response to the series’ reporting on ozone levels in Wyoming, the Wyoming Department of Environmental Quality announced plans late last week to increase inspections and monitoring related to ozone non-compliant counties. And in the wake of recent unexplained earthquakes in Arkansas in the vicinity of natural gas drilling operations, two companies with drilling operations in Arkansas announced they would no longer inject used natural-gas drilling fluid in two nearby wells.
The New York Times's series and the reactions out of those three states demonstrates that environmentalists are “on message” and industry’s response has largely been reactionary. That is not to say industry does not have a persuasive counter-position. Lost in the disturbing images of tap water on fire and radioactive contaminated drinking water, are often the facts about fracking (for example see Energy In Depth's factual rebuttal to the Oscar-nominated film "Gasland"), the actual risks of environmental harm from drilling operations, and the scope of existing regulatory oversight. Regarding the latter, former Pennsylvania Governor Ed Rendell authored a short but poignant op-ed in this weekend’s New York Times on Pennsylvania’s ongoing efforts to ensure safe drilling operations. In many respects from the increased use of closed-loop water recycling, to better well-design procedures, to the reality that the fracking zone is often separated from drinking water by thousands of feet of impermeable rock, industry has a positive story to tell. At a minimum, industry should look to create an honest dialogue based on facts and sound science. As EPA’s fracking report moves forward and pressure for Congressional oversight continues, it will be critical for industry to find its voice; separating and addressing legitimate concerns from unsubstantiated rhetoric. And perhaps most importantly, calming the overheated public conversation.
A February 26 New York Times investigative report titled “Regulation Lax as Gas Wells’ Tainted Water Hits Rivers” has elicited swift responses from lawmakers concerned about the environmental impacts of hydraulic fracturing on water resources. The Times report juxtaposes great increases in natural gas production—and, specifically, the use of hydraulic fracturing—with what it calls a “lax” regulatory environment. The Times, after reviewing “thousands of internal documents” from the EPA and state regulators, claims that the risks for both drinking water and waste water contamination are far higher than previously thought and that state regulators are ill-equipped to cope.
EPA has released its Draft Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Sources to its Science Advisory Board (SAB) for peer review. Conspicuously missing from inclusion on the 23-member panel are any representatives from the oil and gas industry. The Federal Advisory Committee Act (FACA), which governs the scope and operations of any SAB, requires that the membership of any advisory committee be “fairly balanced in terms of the points of view represented and the functions to be performed by the advisory committee.” See 5 U.S.C. § 5(b)(2).
focus on technical issues, not policy issues; risk assessment and engineering issues, not risk management decisions; the adequacy of the scientific foundation on which an Agency position . . . is built, not the position itself.
EPA has assembled an academically well-qualified, but one-sided SAB review panel. The membership potentially runs afoul of section 5 of the FACA. As the comprehensive fracking study moves forward, it will be critical to monitor the SAB’s role to ensure it is in compliance with the FACA and the Agency’s internal rules and guidance governing how the SAB should operate in the context of the Agency’s ultimate decision-making.
EPA has issued its much anticipated Draft Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Sources (PDF) to its Science Advisory Board (SAB) for peer review. For now, the study is focused on a comprehensive life-cycle analysis of water impacts, but EPA has indicated that air quality, aquatic and terrestrial ecosystem, seismic risk, public safety, occupational safety, and economic impacts “should be examined in the future” and the Agency will be taking applications for such extramural research projects during the study through its Science to Achieve Results (STAR) program.
The official scope of the study “includes the full lifecycle of water in hydraulic fracturing, from water acquisition through the mixing of chemicals and actual fracturing to the post-fracturing stage, including the management of flowback and produced water and its ultimate treatment and/or disposal.” EPA will focus on 5 key research questions:
How might large volume water withdrawals from ground and surface water impact drinking water resources?
What are the possible impacts of releases of hydraulic fracturing fluids on drinking water resources?
What are the possible impacts of the injection and fracturing process on drinking water resources?
What are the possible impacts of releases of flowback and produced water on drinking water resources?
What are the possible impacts of inadequate treatment of hydraulic fracturing wastewaters on drinking water resources?
EPA has finalized the members of the review panel for its upcoming fracking study. Dr. David Dzombak, professor of Civil and Environmental Engineering at Carnegie Mellon University, will chair the 23 member panel. The panel, which is formed under the auspices of EPA’s Science Advisory Board to provide advice and recommendations to EPA about the fracking study, consists primarily of university professors and contains no oil and gas industry representatives.
In a January 11th memorandum, EPA concluded that “there are no conflicts of interest or appearances of a lack of impartiality for the members of the Panel.” EPA appears to have carefully selected this panel following significant concern over a controversial 2004 study. The 2004 report, which was confined to potential drinking water impacts from coalbed methane wells, concluded that
injection of hydraulic fracturing fluids into coalbed methane wells poses little or no threat to [underground sources of drinking water] and does not justify additional study at this time . . . EPA did not find confirmed evidence that drinking water wells have been contaminated by hydraulic fracturing fluid injection into coalbed methane wells.
Following this conclusion, an EPA whistleblower wrote to Congress calling the study “scientifically unsound and contrary to the purposes of the law” due specifically to what he perceived as conflicts of interests owing to the industrial members of the review panel. Following the 2004 study, the so called “Halliburton loophole” was enacted in the Energy Policy Act of 2005, which exempted non-diesel fracking from jurisdiction under the Safe Drinking Water Act. Based on the initial representation of the SAB, it looks like EPA is positioned to come to a much different conclusion at the end of this study.
The United States is in the midst of a 21st century gold rush—a natural gas boom, driven in large part by the discovery of vast amounts of gas in unconventional plays. The spotlight is on the practice of fracking, which is quickly becoming one of the most highly visible and controversial environmental issues of the day...
