Thursday, July 20, 2017

Shale Law in the Spotlight: Chemical Disclosure

Written by Chloe Marie – Research Fellow

Hydraulic fracturing involves the injection of fluids containing a mixture of water, proppant and chemical additives in order to either expand existing fractures or open newly created ones within rock formations for the exploration or exploitation of oil and gas. The nature of the chemicals used during the hydraulic fracturing process has received a lot of attention in recent years amid concerns over potential health and environmental effects. These concerns have led to the voluntary disclosure of chemicals by some companies as well as efforts at both the federal and state levels to impose mandatory chemical disclosure requirements upon well operators. This article will briefly address chemical disclosure at the state level and then provide a more comprehensive discussion of efforts to mandate chemical disclosure at the federal level.  

As a means of providing for voluntary disclosure, the Groundwater Protection Council, together with the Interstate Oil and Gas Compact Commission, launched the website FracFocus in 2011. This national hydraulic fracturing chemical registry provides public access to the reported chemicals used for hydraulic fracturing in oil and gas wells within specific geographic areas. FracFocus has identified 59 chemicals “routinely” used in the hydraulic fracturing process; however, it stated that “there are dozens to hundreds of chemicals which could be used as additives.”

As states have enacted mandatory chemical disclosure, many of these states require that well operators utilize the FracFocus website to accomplish the required disclosure.  At least 23 states use FracFocus for chemical reporting, including the states of California, Nevada, Idaho, Utah, Montana, Colorado, North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Texas, Louisiana, Mississippi, Alabama, Tennessee, Kentucky, Ohio, Michigan, North Carolina, West Virginia, and Pennsylvania.

More information on the details of state requirements can be obtained by reviewing individual state statutes including Wyoming (Wyoming Oil & Gas Conservation Commission, Chapter 3, § 45), Arkansas (Arkansas Oil & Gas Commission Rule B-19), Louisiana (LAC Title 43:XIX § 118), Michigan (Supervisor of Wells Instruction 1-2011), Montana (Mont. Adm. Code Rule: 36.22.1015), West Virginia (W. Va. Code § 22-6A-7), Colorado (2 CCR §404-1:205A), Idaho (IDAPA, Indiana (312 IAC Rule 12-292), New Mexico (NMAC§, North Dakota (N.D. Admin. Code § 43-02-03-27.1), Ohio (Ohio Rev. Code § 1509.10; Ohio Admin Code § 1509), Pennsylvania (58 Pa. Cons. Stat. § 3222.1), Texas (16 Tex. Admin. Code § 3.29), and Oklahoma (Okla. Adm. Code § 165:10-3-10). 

At the federal level, President Barack Obama issued, in March 2011, a Blueprint for a Secure Energy Future within which he called upon the Secretary of Energy to implement a more environmentally focused approach to the use of hydraulic fracturing in the United States. In May 2011, following the Blueprint release, a Shale Gas Subcommittee was commissioned to provide the Secretary of Energy Advisory Board (SEAB) with recommendations on the immediate actions that needed to be taken to ensure that measures were in place to provide for environmental and public health protection from shale gas exploration and development activities.

On August 11, 2011, the Shale Gas Subcommittee issued a report publicizing its findings and recommendations for reducing the environmental impacts of shale gas development. The Subcommittee recommended, among other things, the disclosure of information on the composition of hydraulic fracturing fluids, stating that “there is no economic or technical reason to prevent public disclosure of all chemicals in fracturing fluids, with an exception for genuinely proprietary information.”

In January 2012, during the State of the Union Address, President Obama declared that the government would require all energy companies to disclose any of the chemicals used during the process of hydraulic fracturing on federal lands. Subsequently, on May 11, 2012, the Interior Department’s Bureau of Land Management (BLM) published in the Federal Register a proposed rule titled Oil and Gas; Well Stimulation, Including Hydraulic Fracturing, on Federal and Indian Lands providing, among other measures, disclosure to the public of chemicals used in hydraulic fracturing on public and Indian lands. BLM released its Final Rule on March 26, 2015, requiring public disclosure of all chemicals after fracturing operations are completed, notably through the FracFocus Chemical Disclosure Registry. The Final Rule was to become effective on June 24, 2015.

On the same day of the issuance of the Final Rule, the state of Wyoming filed a petition for review in the U.S. District Court for the District of Wyoming alleging that BLM exceeded its statutory jurisdiction in regulating hydraulic fracturing (state of Wyoming v. U.S. Department of the Interior, docket no. 2:15-cv-043). As part of their arguments, the state of Wyoming argued that states have sole authority to legislate on hydraulic fracturing pursuant to the Safe Drinking Water Act and the 2005 Energy Policy Act.

On June 24, 2015, the U.S. District Court issued a temporary order delaying the effective date of BLM’s Final Rule governing hydraulic fracturing on Federal and Indian lands. This temporary order remained in effect until the U.S. District Court made a final ruling in favor of Wyoming on June 22, 2016, that BLM did not have the authority to promulgate such rule. Two days later, the U.S. Department of the Interior filed a notice of appeal to the U.S. Court of Appeals for the Tenth Circuit (docket no. 16-8068). The appeal is still pending at the present time. Thus, at the present time, the BLM Final Rule is not in effect.

Meanwhile, EPA also has initiated the regulatory process to mandate chemical disclosure for hydraulic fracturing operations through the issuance of an Advance Notice of Proposed Rulemaking (ANPR) on May 19, 2014. This ANPR sought public comment on the types of chemical information that should be reported and disclosed and the means by which this information could be obtained. This action by EPA followed the submission of a petition from Earthjustice and 114 other non-governmental organizations in August 2011 asking the agency to issue specific rules about toxicity testing and reporting of chemical substances and mixtures used in oil and gas exploration or production under Section 21 of the Toxic Substances Control Act (TSCA). In the ANPR, EPA decided to address only the regulatory issue of chemical reporting. The public comment period closed in September 2014. EPA has not yet issued a Notice of Proposed Rulemaking though, in the past, it has indicated an intention to do so in order to obtain data on hydraulic fracturing chemical substances and mixtures.

There also have been legislative attempts to impose mandatory disclosure requirements for chemicals used during the hydraulic fracturing process by amending the Safe Drinking Water Act. On April 6, 2017, U.S. Senator Robert Casey, Jr., introduced S. 865 seeking to repeal the exemption for hydraulic fracturing in the Safe Drinking Water Act and to provide for the mandatory disclosure of hydraulic fracturing chemicals. S. 865 is known as the Fracturing Responsibility and Awareness of Chemicals Act or FRAC Act. This legislation requires operators to disclose a list of chemical constituents intended to be used for hydraulic fracturing prior to the commencement of any operations as well as a list of chemicals actually used following the conclusion of operations. Similar legislation has been introduced in past legislative sessions, but has not advanced through the legislative process. 

Thus, administrative and legislative efforts to date have not resulted in specific federal laws regulating chemical disclosure relating to hydraulic fracturing. There are, however, some statutes that address broadly the issue of chemical disclosure for operators carrying out hydraulic fracturing operations. These statutes include the Toxic Substances Control Act, cited above, requiring chemical manufacturers and processors to maintain and develop data on the effects of chemicals on human health and the environment; the Occupational Safety and Health Act, requiring chemical manufacturers and importers to provide detailed information through Material Safety Data Sheets (MSDS) to workers on the chemicals used and handled during the work process; and the Emergency Planning and Community Right-to-Know Act, establishing programs with the aim of providing public access to information on hazardous chemicals found in the environment.

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