By Shaun Gehan and Michele Hallowell

On October 24, 2012, the Environmental Integrity Project (EIP), joined by a slew of environmental groups, petitioned the U.S. Environmental Protection Agency (EPA) to subject the oil-and-gas extraction industry to toxic release inventory (TRI) reporting under the Emergency Planning and Community Right-to-Know Act (EPCRA).  For the first time since TRI reporting was launched in 1988, the oil-and-gas extraction industry, identified by Standard Industrial Code 13 and multiple North American Industry Classification codes, would be added to the list of facilities that must annually report  releases of 682 listed chemicals.

The petition is not surprising.  Environmental advocates have long pressed for additional regulation of the hydraulic fracturing industry.  (See also, here.)  Although states have been proactive in regulating the industry (see Kelley Drye’s latest state roundup), the EPA has not moved quickly enough in the eyes of EIP and others.  (Although EPA is moving forward with its study on drinking water impacts, a prelude many fear to increased regulatory oversight.)  The environmental community faults lack of transparency and usable information as main causes for lagging regulation.  Unsatisfied with voluntary reporting efforts, such as through the industry-sponsored FracFocus – the environmental community is pushing for TRI reporting by the oil-and-gas-extraction industry to fill the gap.  Indeed, the petition’s objective is to generate information to be used to advance additional regulation of the industry and to arm the plaintiffs’ bar for toxic tort suits.

If the petition is successful, many/most individual wells would still not be required to report because their emissions would fall below the reporting thresholds.  The TRI program generally requires reporting of releases if the facility manufactures or processes more than 25,000 pounds or uses more than 10,000 pounds of a listed chemical.   The environmentalist petitioners recognized this limitation and, via the petition, call on EPA to aggregate multiple wells and supporting infrastructure as one “facility” so that the aggregated emissions exceed the 10,000 pound use threshold.  (EPCRA defines “facility” to mean all buildings, equipment, structures, and other stationary items located on a single site or on contiguous or adjacent sites that are owned or controlled by the same person.)

Aggregation, particularly on a basin-level, has the potential to create significant public confusion.  TRI reports are primarily intended to inform communities about the emissions profile of their industrial neighbors. Improperly lumping emissions from disparate and sometimes distant sources until the number is high enough to meet reporting thresholds does not provide useful information to local communities.

It is also not legal. The Sixth Circuit Court of Appeals has soundly rejected EPA’s attempts to aggregate emissions from disparate fracking facilities, a tactic which could subject an operation to more stringent “major” source air permitting requirements.  Specifically, the court rejected EPA’s “functional” definition of adjacent, which considered “factors such as the ‘nature of the relationship between the facilities’ and the ‘degree of interdependence between them’ [as] important to the question of whether two facilities were adjacent.”  The appellate panel found no support for this position, holding “that two entities are adjacent when they are ‘[c]lose to; lying near ... [n]ext to, adjoining.’”  No other court has found otherwise.

Rather than getting into court battles over adjacency, however, the better position is to argue that this is an unnecessary federal intrusion into an area the states and the industry are already addressing.  While the EPA has significant discretion to reject the petition out of hand, we would expect to see a notice of proposed rulemaking in the not too distant future, which will provide an opportunity to make this case.