In the State of the Union address in late January, President Obama offered his support to further develop natural gas as an energy source and stated that “my administration will take every possible action to safely develop this energy.” The President also underscored that this development requires environmental safeguards. He added: “I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use. America will develop this resource without putting the health and safety of our citizens at risk.” In this context, what can we expect from environmental regulators this year? In our outlook for 2012, we identify 10 environmental legal issues to watch.
1. U.S. Environmental Protection Agency’s First Report on the Impact of Hydraulic Fracturing on Drinking Water Resources
The U.S. Environmental Protection Agency (EPA) is studying the impacts of hydraulic fracturing on drinking water resources primarily in shale formations. Look for EPA’s initial study results this year and an additional report based on long-term study projects in 2014.
The results will no doubt be an impetus for regulatory and policy changes that could have a significant impact on the shale gas industry. Hydraulic fracturing involves injecting water, sand and chemicals deep underground to break up shale rock formations that contain natural gas. Under the study, EPA researchers, in collaboration with outside experts from the public and private sector, will examine the impacts of: large volume water withdrawals from ground and surface waters; surface spills resulting from hydraulic fracturing fluids; the injection and fracturing process; surface spills of flowback and produced water; and wastewater treatment and waste disposal.
2. EPA’s Development of Hydraulic Fracturing Wastewater Standards
EPA is also developing national standards for wastewater discharges produced by natural gas extraction from underground coalbed and shale formations. The federal Clean Water Act (CWA) effluent guidelines program sets national standards for industrial wastewater discharges based on best available technologies that are economically achievable. Effluent guidelines for oil and gas extraction prohibit the on-site direct discharge of wastewater from shale gas extraction into waters of the United States. While some of the wastewater from shale gas extraction is reused or re-injected, the rest still requires disposal. Currently, the disposal of wastewater generated by shale gas production activities is regulated by the states. In some states, wastewater is injected into deep underground shafts, while in others wastewater has been sent to sewage treatment plants.
In 2012, EPA plans to gather data, consult with stakeholders – including industry stakeholders — and solicit public comment on a proposed rule for wastewater discharges produced by natural gas extraction from coalbed methane in 2013 and a proposed rule for shale gas in 2014. The schedule for coalbed methane is shorter because EPA has already gathered data in this area. In particular, EPA will be looking at the potential for cost-effective steps for pretreatment of wastewater based on practices and technologies that are already available and being deployed or tested by industry to reduce pollutants in these discharges.
3. EPA’s Permitting Guidance on Underground Injection Control for Facilities that Use Diesel Fuels in Injection Fluids
The Safe Drinking Water Act’s (SDWA) Underground Injection Control (UIC) program establishes requirements for proper well siting, construction, and operation to minimize risks to underground sources of drinking water. Even though the Energy Policy Act of 2005 excluded hydraulic fracturing for oil and gas production from permitting under the UIC Program, the exclusion did not include fracturing using diesel fuel. Armed with the authority to regulate hydraulic fracturing using diesel fuel, EPA is developing permitting guidance for fracturing activities that use diesel fuels in fracturing fluids. The permitting guidance is expected this year and EPA has indicated that it will include a broad definition of diesel fuel, e.g., a definition that includes substances with physical and chemical characteristics of diesel such as BTEX compounds (benzene, toluene, ethyl benzene and xylene).
4. EPA to Start Rulemaking Process on the Disclosure of Chemicals Used in Hydraulic Fracturing
In November 2011 EPA stated that it will begin a rulemaking procedure under the Toxic Substances Control Act (TSCA) to require companies to disclose information on the chemicals used in hydraulic fracturing. In a response to a petition filed by Earthjustice and 120 other organizations, EPA stated that it “believe[s] there is value in initiating a proposed rulemaking process using TSCA authorities to obtain data on chemical substances and mixtures used in hydraulic fracturing.” EPA has not stated what information will be subject to disclosure, but has limited disclosure to substances used in hydraulic fracturing. EPA said it will attempt to avoid duplication of “the well-by-well disclosure programs already being implemented in several states,” and its regulations will “focus on providing aggregate pictures of the chemical substances and mixtures used in hydraulic fracturing.” In 2012, EPA is expected to issue an advanced notice of proposed rulemaking followed by stakeholder process and public comment period.
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