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.
At the heart of the dispute is EPA’s pronouncement on its website in late 2010 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. Prior to this announcement the EPA had not required a federal class II UIC permit prior to drilling despite the fact that fracking operations that used diesel were subject to Safe Drinking Water Act (SDWA) regulation. Instead, the UIC program (and concomitant permit requirements) is and has been operated almost exclusively by the individual states. EPA’s website statement, if ruled legal, could mean a wholesale change in how the natural gas industry is regulated in this country. While IPAA’s lawsuit is about much broader national policy issues, the legal basis for the challenge centers on whether the website posting of the UIC permitting requirements constitutes a “final agency action” under the APA.
Generally, two conditions must be met for an agency’s action to be deemed final under the APA: (1) the action must represent “consummation” of the decision making process (i.e., it must not be merely tentative or interlocutory); and (2) the action has been one in which “rights or obligations have been determined” or one in which “legal consequences will flow.” EPA claims its website is not a final agency action, merely “a description of existing legal obligations under the statute,” consistent with the Eleventh Circuit Court of Appeals decisions in Legal Environmental Assistance Foundation, Inc. v. EPA, 118 F.3d 146 (1997) (LEAF I) (holding that hydraulic fracturing constitutes “underground injection” under the SDWA) and Legal Environmental Assistance Foundation, Inc. v. EPA, 276 F.3d 1253 (2001) (LEAF II) (holding that wells used for the injection of fracking fluids must be regulated as Class II wells under the UIC program).
The timing of EPA’s restatement of “existing legal obligations” via its website, is curious—particularly in light of the fact that the Agency has never issued or required a federal Class II permit under its UIC jurisdiction for a well solely because the well uses hydraulic fracturing processes. Indeed, such a requirement runs counter to the long-standing, fundamental structure of the state-centric UIC program, and would seemingly require a substantial rulemaking initiative.
With Congressional pressure mounting from House and Senate Republicans that believe the EPA has overstepped its bounds in a number of areas beyond fracking, it is quite possible that this issue will see a Congressional response long before judicial resolution.