EPA Issues Hydraulic Fracturing Chemical Disclosure Advance Notice of Proposed Rulemaking
On May 9, 2014, the Environmental Protection Agency (“EPA”) issued a pre-publication of its Advance Notice of Proposed Rulemaking (“ANPR”) on chemical disclosure for fracturing fluids, with the final version published on May 19, 2014. Pursuant to its authority under sections 8(a) and (d) of the Toxic Substances Control Act (“TSCA”), the EPA is requesting comment on the design and scope of potential regulatory or voluntary regimes for disclosure of chemical substances and mixtures used in hydraulic fracturing (or “fracing”). As discussed in more depth below, the EPA’s openness to making at least part of the program voluntary and questions on technological and economic feasibility are interesting facets of the ANPR. Comments are due on August 18th.
The EPA’s Path to the ANPR
The federal government, thus far, has been deliberate with regard to regulation of hydraulic fracturing. Various factors may have contributed to this caution including the fact that the Resource Conservation and Recovery Act (“RCRA”) exempts oil and gas wastes from regulation as a hazardous waste under Subtitle C. Additionally, while a core element of the Safe Drinking Water Act (“SDWA”) Underground Injection Control (“UIC”) program establishes requirements for proper well siting, construction and operation to protect drinking water resources, the Energy Policy Act of 2005 (“EPAct 2005”), excluded fracing fluids from regulation under the program – except when diesel fuels are involved.
Despite the federal government’s cautious approach to regulation, it has not stayed out of the fracing arena altogether. In rules similar to those under evaluation in the ANPR, the Bureau of Land Management (“BLM”) proposed regulations in 2013 (replacing its 2012 proposal), which were modeled after Colorado’s chemical disclosure regulations, for companies fracing on federal and tribal lands.
The upcoming United States EPA ANPR is being issued in response to a petition filed by Earthjustice and 114 other groups in 2011. The petitioners initially sought to require testing of chemicals used in oil and gas exploration and production (“E&P”) under Section 4 of TSCA and disclosure of chemicals utilized in E&P and information on health and safety studies for such chemicals under Section 8 of TSCA. The EPA denied the request for a Section 4 test rule, but agreed to publish the forthcoming ANPR to identify issues related to chemicals utilized in fracing.
The ANPR’s Proposals and Questions
As expected, the ANPR seeks information that will clarify the chemicals utilized in fracing and maximize the data available for risk characterization of such chemicals. The ANPR relies on EPA’s authority under TSCA to require chemical manufacturers, processors, and distributors to comply with record and reporting requirements for chemical substances. It also cites the EPA’s authority under the Pollution Prevention Act (“PPA”) as support for the action.
“The agency is particularly concerned about the potential for disproportionate impacts from hydraulic fracturing in environmental justice communities, and would like to have a better understanding of the chemicals and mixtures that are used during that process, and subsequently disposed of, in and around these communities.”
Towards this end, the ANPR asks for comments on the design and scope of potential regulatory or voluntary regimes for disclosing information on chemical substances and mixtures used in fracing. It includes a request for information on the roles that various parties play in the fracing process; the frequency, duration, concentration, and volumes of chemicals used in fracing; general management practices of exploration and production companies and service companies; and best management practices generally associated with generation, collection, and reporting of disclosure information associated with fracing activities. The EPA also requests comment on the extent to which parties should be required or incentivized to disclose health and safety studies for chemical substances used in fracing.
Additionally, there is a focused line of inquiry within the ANPR regarding data collection efficiencies and how to minimize duplicative porting or disclosure requirements for entities also reporting to the BLM, state agencies, or others. The EPA asks “How much overlap is acceptable?” and whether the agency should develop a new information collection repository or utilize an existing one such as FracFocus.
How Could the ANPR Impact State Programs
Many states currently regulate disclosure of chemicals utilized in fracing. In fact, chemical disclosure rules represent one of the most prevalent forms of regulation applicable to hydraulic fracturing.
When the BLM opened up its draft chemical disclosure rulemaking for comments, 1,348,451 comments were filed. Several comments demonstrate the tensions at play between environmental groups (desiring that rules be more stringent), states (including a number that characterized the proposed rules as duplicative of their own and unnecessary),
In recognition that the ANPR might overlap with state programs or cause undue burdens, James Jones, EPA assistant administrator for chemical safety and pollution prevention, stated that “EPA looks forward to hearing from the public and stakeholders…, and we will continue working with our federal, state, local and tribal partners to ensure that we complement but not duplicate existing reporting requirements.”
Lastly, when it comes to a requirement to disclosure health and safety studies under Section 8(e), recent case law suggests that such an obligation may well be more onerous than appears at first blush. TSCA § 8(e) provides:
Any person who manufactures, processes, or distributes in commerce a chemical substance or mixture and who obtains information which reasonably supports the conclusion that such substance or mixture presents a substantial risk of injury to health or the environment shall immediately inform the Administrator of such information unless such person has actual knowledge that the Administrator has been adequately informed of such information. (emphasis added)
In a November 12, 2013, opinion by the Chief Administrative Law Judge (ALJ) for the EPA, a manufacturer was assessed a $2.5 million dollar penalty for failing to submit an epidemiological study to the EPA under Section 8(e) of TSCA despite the fact that: (1) the conclusions and many of the findings in the study were known to EPA through the existence of other studies; and (2) the study was conducted more than five years before the violation was cited past the applicable statute of limitations period. The ALJ concluded that regardless of the fact that the study’s conclusions corroborated prior studies, the “new” study was conducted at a different plant and included slightly different considerations (e.g short term workers, smokers in the employee pool, and an assessment of urine) and thus created new information. Further, the ALJ concluded that that the failure to submit the study was a continuing violation and thus the TSCA statute of limitations was not applicable. Assuming the decision is not challenged, this case may well create continual reporting obligations for any company that monitors workplace exposures and tracks employee health records. To the extent such data are compiled, analyzed for patterns or trends, and document or assess adverse health effects, the decision makes it plausible that the findings could be reportable pursuant to TSCA § 8(e) even if the findings are consistent with “known effects” of exposures to a chemical. Thus, commenters concerned with unduly burdensome regulations may wish to consider and address the ramifications of a Section 8(e) obligations on the oil and gas industry.
What Is Coming Next
Interested stakeholders should file comments informing the EPA of any suggestions or concerns associated with the ANPR. For example, the EPA expressed interest in practical considerations, feasibility, duplication of efforts, and voluntary programs. Several questions were specifically listed in the ANPR, as noted above. Interested parties have through August 18th to comment on the ANPR published on May 19th, unless an extension is granted.
If you have any questions concerning these developing issues, please do not hesitate to contact any of the following Paul Hastings lawyers in the Oil & Gas and Environmental Law practices:
Thomas R. Mounteer
Lisa K. Rushton
Paul Hastings LLP
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