Monday, May 07, 2012

EPA Releases Draft Guidance For UIC Fracking Permits

May 4: Late Friday afternoon, U.S. EPA released draft underground injection control (UIC) program permitting guidance for class II wells that use diesel fuels during hydraulic fracturing (fracking) activities. EPA developed the draft guidance to clarify how companies can comply with Energy Policy Act (EP Act),passed by Congress in 2005, which exempted hydraulic fracturing operations from the requirement to obtain a UIC permit, except in cases where diesel fuel is used as a fracturing fluid. EPA will take public comment on the draft guidance for 60 days upon publication in the Federal Register to allow for stakeholder input before it is finalized.

    The draft guidance outlines for EPA permit writers, where EPA is the permitting authority, requirements for diesel fuels used for hydraulic fracturing wells, technical recommendations for permitting those wells, and a description of diesel fuels for EPA underground injection control permitting. The draft guidance describes diesel fuels for these purposes by reference to six chemical abstract services registry numbers (CASRN). The Agency is requesting input on this description.

    EPA said that while the guidance undergoes public notice and comment, decisions about permitting hydraulic fracturing operations that use diesel fuels will be made on a case-by-case basis, considering the facts and circumstances of the specific injection activity and applicable statutes, regulations and case law, and will not cite this draft guidance as a basis for decision. EPA said it continues to work with states, industry and other stakeholders to help ensure that natural gas is developed safely and responsibly. 
    The prepublication copy of the draft guidance indicates it, "includes EPA's interpretation of the Safe Drinking Water Act (SDWA) and regulations regarding UIC permitting of oil and gas hydraulic fracturing operations using diesel fuels as a fracturing fluid or as a component of a fracturing fluid, specifically that they are subject to Class II UIC permitting requirements. EPA's goal is to provide greater regulatory clarity and certainty to the industry, which will in turn improve compliance with the SDWA requirements and strengthen environmental protections consistent with existing law. The draft guidance will not impose any new requirements."
    Specifically, the EP Act revised the SDWA definition of "underground injection" to specifically exclude from UIC regulation the "underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities" (SDWA Section 1421(d)(1)(B)). The specific CASRN numbers include: 68334-30-5, Fuels, diesel; 68476-34-6, Fuels, diesel, no. 2; 68476-30-2, Fuel oil No. 2; 68476-31-3, Fuel oil, no. 4; 8008-20-6, Kerosene; and 68410-00-4, Distillates (petroleum), crude oil.
    EPA's draft guidance follows the Department of Interior's (DOI's) announcement, also on Friday, of a proposed rule to require companies to publicly disclose the chemicals used in fracking operations on public and Indian lands. DOI's proposal would require public disclosure of chemicals used during hydraulic fracturing "after fracturing operations have been completed." Environmental groups said the DOI proposal needed to be strengthened and indicated the oil and gas industry needs to disclose the chemicals they'll be using in fracking before they are pumped into the ground [See WIMS 5/4/12]. It would appear that there could be conflicts between the two proposals.
    Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works (EPW), said that the Obama EPA's Draft Permitting Guidance for Diesel Fuel, was "the second Administration announcement today in a recent barrage of federal efforts designed to stunt hydraulic fracturing by putting more and more authority over the process into the hands of the federal government." The Senator has issued an earlier statement on the DOI proposed rule on fracking operation on public and Indian lands saying it was "yet another rule designed to strangle American energy production." He said, "The first use of hydraulic fracturing happened in 1949 in Duncan Oklahoma, and it has been safely regulated at the state level for over 60 years. "
    Regarding the EPA proposal he said, "Once again, the Obama EPA has released a plan they know few will like at a time they hope no one will notice: EPA's draft permitting guidance for diesel fuel is the second attempt today to put forth rules that will severely hinder hydraulic fracturing, and therefore the development of America's vast natural resources. While I continue to look further into this proposed guidance, my initial concern is that since Congress gave EPA very narrow optional authority over 'diesel fuel' under the Underground Injection Control (UIC) program, any attempt by EPA to broaden that definition increases the chance that the federal government can step in to stifle hydraulic fracturing. At first glance, this appears to be exactly what EPA's guidance is designed to do. . ."
    House Energy and Commerce Committee Chairman Fred Upton (R-MI) issued a statement commenting on both the EPA and DOI fracking regulation proposals saying, "The administration continues to dispense more and more red tape at the expense of our economy and energy security. New production techniques have led to an energy renaissance in this country, creating jobs, generating government revenues, and helping to advance our nation's energy security. Instead of allowing this industry [to] flourish and states to use their experience and expertise to oversee the process, he continues to administer regulations and restrictions that could impair job growth and slow energy production.
    "The president likes to say that oil and gas production has escalated under his watch, but the truth is, our energy sector is thriving in spite of the president's actions, certainty not because of them. Almost 96 percent of our nation's increase in oil production has occurred on non-federal lands since 2007. Oil production on federal lands decreased by an average of 275,000 barrels per day in 2011. Energy production has shifted to state and private lands in large part because the federal government has little to no involvement. More red tape on federal lands is the wrong direction for federal land policy, and will only drive investment further away.
    "EPA's proposed guidance on diesel fuels represents a paradigm shift that requires careful review and analysis. Hydraulic fracturing has been safely used to extract oil and gas for over 60 years under state regulation. In this case, EPA is inserting itself into that long-standing relationship by broadly interpreting the definition of diesel, so that companies who safely fracture wells could face needless regulatory burdens, and states could have their working programs complicated. EPA seems intent on involving itself in fracking regulation whenever and wherever it can. EPA should not compete with the state regulators, it should learn from them and respect their decades of prior experience in this field. As the debate on this rule unfolds, EPA has an obligation to be transparent and forthright."
    Energy and Commerce Committee Ranking Member Henry Waxman (D-CA), Natural Resources Committee Ranking Member Edward Markey (D-MA), and Oversight and Investigations Subcommittee Ranking Member Diana DeGette (D-CO) released a joint statement commenting on EPA's proposed draft guidelines saying, "Last year, an investigation by the House Committee on Energy and Commerce Democrats revealed that oil and gas companies had used at least 32 million gallons of diesel fuel or hydraulic fracturing fluids containing diesel fuel over a five year period. This investigation also found that none of the companies sought -- and no state and federal regulators issued -- permits for diesel fuel use in hydraulic fracturing, as required by the Safe Drinking Water Act. By issuing this guidance, EPA is taking a long-overdue step to explain existing requirements for the use of diesel fuel in hydraulic fracturing fluids.  We look forward to examining the proposed guidance in more detail."
    Several environmental groups including Sierra Club, Clean Water Action, Earthworks, Natural Resources Defense Council, and Earthjustice, called on EPA to simply ban the use of diesel in hydraulic fracturing or 'fracking' fluids, instead of issuing guidance for regulating the practice. They said, "The use of diesel in fracking fluid is just one of many harmful industry practices that the government must clean up. Strong federal protections are needed to protect American families nationwide from all of the consequences of dirty fracking."

    Access a release from EPA (click here). Access complete details on the draft guidance (click here). Access a lengthy release from DOI/BLM with additional details and link to the proposed rule, economic analysis, appendix and related information (click here). Access a release from Sen. Inhofe with additional comments and background on the EPA proposal (click here); and the DOI proposal (click here). Access the statement from Rep. Upton (click here). Access joint statement from House Democrats and link to more details on their recommendations (click here). Access a joint release from environmental organizations (click here). [#Water/Frack, #Energy/Frack]
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