On the same day that the Bureau of Land Management (BLM) issued its proposed rules governing hydraulic fracturing operations on federal and Indian land (read the DGS Alert), the U.S. Environmental Protection Agency (EPA) issued a draft of its long-awaited “Permitting Guidance for Oil and Gas Hydraulic Fracturing Activities Using Diesel Fuels.” The guidance is intended to aid in the permitting of oil and gas hydraulic fracturing using diesel fuels under the Safe Drinking Water Act’s (SDWA) Underground Injection Control Program (UIC) where EPA is the permitting authority – including, importantly, in Pennsylvania and New York. The guidance, however, suggests that it also would prove useful to state UIC permit writers. It also notes that some states may seek to revise their current UIC program to follow the guidance.

With respect to the definition of “diesel fuels,” EPA is proposing a compromise position, eschewing calls for a broad, open-ended definition, but also including more categories than the industry preferred. Specifically, EPA has recommended defining “diesel” according to six Chemical Abstract Service Registry Numbers (CASRNs) (68334-30-5; 68476-34-6; 68476-30-2; 68476-31-3; 8008-20-6; and 68410-00-4). Each one of the CASRNs contains the term “diesel fuel” and, according to EPA, meets the chemical and physical description of diesel fuel (i.e., petroleum-derived, not including biodiesel). If the hydraulic fracturing fluid contains any amount of the CASRNs, including as a constituent in a mixture, the activity will be subject to the UIC permitting requirements. Based on this definition, EPA estimates that approximately two percent of wells would be subject to SDWA UIC permitting requirements in states where EPA administers the program.

The draft guidance goes beyond merely defining “diesel fuel” and suggests several new or different permitting requirements from existing Class II UIC requirements. These include:

  • A suggested modification to the traditional one-quarter mile fixed radius Area of Review requirement;
  • Additional information submissions, including descriptions of geologic formations, physical and chemical characteristics of the formation fluids in the injection zone, location and operating procedures of other nearby active hydraulically fractured wells, and proposed cementing plans;
  • Potential additional financial responsibility requirements;
  • A variety of best management practices recommended by the American Petroleum Institute which are not currently required by EPA’s Class II program; and
  • Alternative approaches for permit duration and well closure.

The draft guidance raises numerous concerns, which warrant the industry’s participation during the notice and comment period (which is scheduled for 60 days following publication in the Federal Register, but has not yet occurred). Perhaps the threshold legal question will be whether this substantive guidance imposes new or different permitting requirements from which legal consequences will flow such that EPA must promulgate the changes through rulemaking under the Administrative Procedure Act. In addition, it is unclear whether the traditional Class II requirements, which focus on protecting permanent injection wells, will be practicable or effective when applied in the context of temporary hydraulic fracture jobs. Finally, similar to BLM’s proposal last week, the draft guidance raises growing concern about duplicative, and potentially conflicting, federal regulatory requirements that may stymie production or create compliance and enforcement problems.