The Independent Petroleum Association of America (IPAA) and the US Oil & Gas Association have settled their suit against the U.S. Environmental Protection Agency (EPA). IPAA filed a petition for review to challenge EPA’s Website pronouncement that it would regulate hydraulic fracturing using diesel fuel under the Safe Drinking Water Act’s (SDWA) Underground Injection Control (UIC) regulations.

In 2005, during the Bush administration, hydraulic fracturing was exempted from federal regulation. Specifically, section 1421(d)(1) of the SDWA stated that the term “underground injections” excludes the injection of fluids or propping agents used in hydraulic fracturing operations related to oil, gas or geothermal activities. In fall 2009, however, EPA posted a statement on its Website indicating that it will consider hydraulic fracturing injection wells receiving diesel fuel as Class II wells under the UIC and that all service companies performing hydraulic fracturing using diesel fuels must receive prior authorization.

EPA’s position surprised the oil and gas industry as it conflicted with the SDWA exemption and nothing EPA had done beforehand indicated that the agency was trying to regulate hydraulic fracturing operations. The IPAA’s petition for review argued that EPA was attempting to regulate by making a Web posting, rather than following the rulemaking process established by the Administrative Procedure Act.  

The suit settled on February 23, 2012. While the settlement agreement specifically states that it shall not constitute an admission or evidence of EPA wrongdoing, the settlement requires EPA to modify the hydraulic fracturing page of its Website by:

  1. Removing the language which states that hydraulic fracturing injection wells receiving diesel fuel are considered Class II wells;
  2. Adding a paragraph indicating that state oil and gas agencies may regulate hydraulic fracturing; and
  3. Indicating that service companies may get permits to use diesel fuel in their hydraulic fracturing operations.