EPA has posted on its website a power point describing the Agency’s ongoing development of permitting guidance for fracking activities using diesel fluids.  [PDF] If the slides are any indication of what the eventual guidance will look like, all signs point to a broad, rulemaking-type EPA action. Several items are particularly noteworthy. Although EPA states that it “cannot set new regulations or change existing regulations,” the “overview of discussion questions” on slide 13—and the remaining content of the document—points toward a new and expansive permitting regime for operations using diesel fluid (and potentially even those that do not). For example, EPA poses questions like:

  • “What should the permit duration be, considering the intermittent nature of HF and Class II plugging and abandonment provisions?
  • What well construction requirements should apply to HF wells using diesel fluids?
  • What well operation and mechanical integrity requirements should apply to HF wells using diesel fuels?
  • What well monitoring and reporting requirements should apply to HF wells using diesel fuels?
  • How do Class II financial responsibility (FR) requirements apply to wells using diesel fuels for hydraulic fracturing?
  • What information should be submitted with the permit application?

None of these questions are necessarily specific to the use of diesel fuel in a fracking operation; rather, collectively appear to be more focused on increasing the general stringency of UIC permitting requirements across a broad spectrum of well-drilling activities (i.e., well construction requirements, operation and mechanical integrity, and monitoring and reporting requirements etc.).

The extensive review and public participation process is also more indicative of a rulemaking. EPA has already held several meetings in the “stakeholder process” portion of the guidance development and will hold a public webinar on June 15—all prior to publishing the proposed guidance. Once the draft guidance is issued, it will go to the Office of Management and Budget (OMB) for review, and there will be an additional public comment period this Fall, prior to publication of the final guidance.

Despite this lengthy public process, concerns remain about EPA’s compliance with administrative rulemaking requirements. As this blog has covered previously, IPAA has challenged EPA’s initial statement last Fall on its website requiring—for the first time—UIC Class II permits for wells using diesel fracking fluid. In that litigation, IPAA argues [PDF] that EPA changed legal obligations under the UIC without undertaking notice and comment rulemaking procedures as required by the Administrative Procedure Act.

The question in the IPAA case centers on whether EPA’s website posting was a judicially reviewable final agency action.  The impending diesel guidance, given its broad scope and potential new permitting requirements, will likely prompt similar, but slightly different, legal questions focused on whether the guidance imposes new regulatory requirements from which legal consequences will flow without following proper rulemaking procedures based on substantial evidence in an administrative record. See Appalachian Power Co. v. EPA, 208 F.3d 1015, 1023 (D.C. Cir. 2000) (an EPA guidance document was held to have "legal consequences" because it gave the States their “marching orders”).

At a minimum, the new slides raise skepticism about the Agency’s overall approach, and whether it is coordinating multiple related efforts, including its fracking study, and its examination of new and more stringent Clean Water Act and Clean Air Act standards. With respect to development of the diesel guidance, because a favorable outcome under Appalachian (and related cases) is far from certain (i.e., a judicial determination that the guidance may not be implemented because it violates the APA, which would require EPA to undertake a rulemaking and establish a more formal administrative record), industry players should fully participate in the diesel guidance-development process, attending stakeholder meetings and submitting detailed comments. For now, in the absence of an informal APA rulemaking process, it will be critical for drilling companies to build a record that creates and preserves all possible legal and technical arguments for what is likely to be inevitable litigation.