Tuesday, February 12, 2013

CRS Report Released: Hydraulic Fracturing and Safe Drinking Water Act Regulatory Issues

The Congressional Research Service (CRS), the public policy research arm of Congress, recently issued the report Hydraulic Fracturing and Safe Drinking Water Act Regulatory Issues (Jan. 10, 2013). The 43-page report authored by Mary Tiemann and Adam Vann discusses the following:


Hydraulic fracturing is a technique developed initially to stimulate oil production from wells in declining oil reservoirs. With technological advances, hydraulic fracturing is now widely used to initiate oil and gas production in unconventional (low-permeability) oil and gas formations that were previously inaccessible. This process now is used in more than 90% of new oil and gas wells. Hydraulic fracturing is done after a well is drilled and involves injecting large volumes of water, sand (or other propping agent), and specialized chemicals under enough pressure to fracture the formations holding the oil or gas. The sand or other proppant holds the fractures open to allow the oil or gas to flow freely out of the formation and into a production well. Its application, along with horizontal drilling, for production of natural gas (methane) from tight gas sands, unconventional shale formations, and coal beds, has resulted in the marked expansion of estimated U.S. natural gas reserves in recent years. Similarly, hydraulic fracturing is enabling the development of tight oil resources, such as the Bakken and Eagle Ford formations. The rapid growth in the use of fracturing has raised concerns over its potential impacts on groundwater and drinking water sources, and has led to calls for more state and/or federal oversight of this activity.

Historically, the Environmental Protection Agency (EPA) had not regulated the underground injection of fluids for hydraulic fracturing of oil or gas production wells. In 1997, the U.S. Court of Appeals for the 11th Circuit ruled that fracturing for coalbed methane (CBM) production in Alabama constituted underground injection and must be regulated under the Safe Drinking Water Act (SDWA). This ruling led EPA to study the risk that hydraulic fracturing for CBM production might pose to drinking water sources. In 2004, EPA reported that the risk was small, except where diesel was used, and that national regulation was not needed. However, to address regulatory uncertainty the ruling created, the Energy Policy Act of 2005 (EPAct 2005) revised the SDWA term “underground injection” to explicitly exclude the injection of fluids and propping agents (except diesel fuel) used for hydraulic fracturing purposes. Thus, EPA lacks authority under the SDWA to regulate hydraulic fracturing, except where diesel fuel is used. As the use of the process has grown, some in Congress would like to revisit this statutory exclusion. In EPA’s FY2010 appropriations act, Congress urged the agency to study the relationship between hydraulic fracturing and drinking water quality. In late 2012, EPA issued a research progress report. In May 2012, EPA issued draft permitting guidance for hydraulic fracturing operations using diesel.

Several relevant bills were offered in the 112th Congress, but none was enacted. H.R. 1084/S.587 proposed repealing the hydraulic fracturing exemption established in EPAct 2005, and amending the term “underground injection” to include the injection of fluids used in hydraulic fracturing operations, thus authorizing EPA to regulate this process under the SDWA. The bills also would have required disclosure of the chemicals used in the fracturing process. In response to rules proposed by the Bureau of Land Management (BLM) in 2012, S. 2248/H.R. 4322 proposed that a state would have sole authority to regulate hydraulic fracturing on federal lands within state boundaries; H.R. 3973 would have prohibited the rule from having any effect on Indian lands; and H.R. 6235 would have barred a final rule for 10 years, pending an impact study. At the state level, many states have revised laws and rules to address high-volume hydraulic fracturing.

This report reviews past and proposed treatment of hydraulic fracturing under the SDWA, the principal federal statute for regulating the underground injection of fluids to protect groundwater sources of drinking water. It reviews current SDWA provisions for regulating underground injection activities, and discusses some possible implications of the enactment of legislation authorizing EPA to regulate hydraulic fracturing (beyond diesel) under this statute.

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