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Natural Gas

EPA Seeks To Identify Gaps In State Laws To Inform TSCA Fracking Rules

EPA is seeking to identify potential gaps in a patchwork of state laws governing when and how energy companies must disclose hydraulic fracturing chemicals to ensure that its planned Toxic Substances Control Act (TSCA) rules for the sector "complement" existing state regulations, an agency lawyer says.

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Senators Question EPA Fracking Guide

A bipartisan group of senators is raising concern over EPA's pending guidance for issuing Safe Drinking Water Act (SDWA) permits for hydraulic fracturing operations that use diesel fuels, questioning whether the guide suggests the possibility that EPA could take over a state's fracking permit oversight authority if the state refuses to implement the guidance.

In a Sept. 27 letter to EPA Administrator Lisa Jackson, the group of five senators seek “clarifications” on the guide. “Specifically, we are concerned with the impetus of this guidance, its vagueness and lack of certainty it provides to states and businesses,” its impact on states that have been delegated primacy permitting authority for SDWA underground injection control (UIC) permits, and additional requirements the guide could impose on primacy states, the senators say -- though they do not set a deadline for EPA to respond.

“Even if EPA itself does not challenge state primacy delegation under the SDWA, state regulatory systems could be open to legal challenge by outside groups, and there is precedent for this occurring,” write Sens. James Inhofe (R-OK), ranking member on the environment panel, Lisa Murkowski (R-AK), John Hoeven (R-ND), Mary Landrieu (D-LA) and Joe Manchin (D-WV)

EPA's draft guidance details how permit writers should set permitting conditions to account for the unique characteristics of fracking wells that inject diesel fuels under SDWA's UIC program. The 2005 energy law barred EPA from regulating fracking operations under the UIC program, but preserved EPA's power to permit operations where diesel fuels are used as part of fracking fluid.

EPA took public comment on its May 4 draft guidance through Aug. 23.

The senators say the guide raises “serious questions” about how it could impact UIC permitting authority for delegated states, though EPA says in the proposal that the document is only intended for agency permit writers in states without primacy, including Pennsylvania and Kentucky.

Acting EPA water chief Nancy Stoner also told a May 31 hearing of the House oversight committee's technology and information policy panel that, “We don't intend to take away primacy from our state partners” with the guidance.

However, for a state to retain primacy under SDWA, it must be able to demonstrate that its UIC regulations are at least as strict as those of EPA, leading to concerns from states and industry that states that do not implement the guidance could face a threat to their oversight authority from both the agency and from environmentalists' citizen suits. “Therefore, EPA's decisions to create a regulatory system under its UIC authority will not be similar to the current state regulatory systems and, as such, raise questions relating to states' primacy authority,” the senators say in the letter.

The senators warn that environmentalists could file lawsuits against states that refuse to adopt the guidance, potentially resulting in a state losing its permitting oversight authority. To bolster their claim, the senators cite precedent in the U.S. Court of Appeals for the 11th Circuit suit, Legal Environmental Assistance Foundation v. EPA, where the court ruled that fracking “fits squarely” within the UIC program. The letter also says that during a Congressional briefing on the draft guidance, EPA staff “indicated primacy states would be forced to meet certain requirements to comply with the guidance and retain primacy.”

The senators are seeking a description and analysis of all requirements that may be imposed on states that have delegated authority as a result of the guidance.

Hoeven and Murkowski also recently introduced legislation, S. 3573, aimed at maintaining state primacy for delegated states as they seek to implement the guidance.

The senators also seek an explanation of how EPA intends to address uncertainty over the draft definition of “diesel fuels,” which has become a flash point in the debate over the guidance.  “We are concerned that EPA's definition of 'diesel fuels' is not precise and could jeopardize state primacy delegations under the SDWA,” the letter says.  “The lack of a proper definition creates uncertainty and does not allow operators to determine whether they are subject to EPA's proposal.”

In the draft document, the agency proposes to define “diesel fuels” for the purposes of triggering the permitting requirements if injected during the fracking process as six substances identified by their chemical abstract service (CAS) numbers.

But the fracking industry, which sought a more narrow definition that would only be linked to two specific CAS numbers, says some of the substances EPA is proposing to include, such as kerosene or marine oils, reach beyond the scope of SDWA because they are not considered diesel fuels.

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Clarity Sought On Fracking Review

Oil and gas producer Encana is seeking clarity from EPA that it will peer review its draft findings that the company's hydraulic fracturing operations likely contributed to Wyoming groundwater contamination to the same level as a “highly influential scientific assessment” (HISA), rather than the “influential scientific information” (ISI) review EPA has suggested.

Encana wants the more stringent level of review under an HISA because the company has major doubts over the findings, which it fears the agency or environmentalists might use to make the case for stricter regulation of fracking. Critics of the study's findings say a HISA peer review is more likely to uncover what they say are flaws in the agency's conclusions than an ISI review.

Enanca recently sent a letter to EPA in which it raised concerns that the agency has not declared the draft report as a HISA, and may instead designate it an ISI. Encana cites a June 12    agency response to the House science panel's energy subcommittee that the company says “suggests that EPA may be backing off” its earlier commitment to treat the report as a HISA “in certain respects, particularly relating to the HISA requirement for a panel report.”

The company's letter to EPA Administrator Lisa Jackson says, “Please confirm that EPA still intends to comply with all HISA requirements for its peer review” of its investigation into alleged groundwater contamination near Encana's fracking activities in Pavillion, WY.

Encana also cites a Feb. 14 letter from then-EPA research chief Paul Anastas saying the agency would follow HISA requirements for the peer review of the Pavillion study “with respect to the expertise, balance, conflict of interest and independence of the Reviewers; transparency; and public involvement. (i.e. providing opportunities for the public to nominate reviewers, submit written comments on the report, and attend a public meeting where oral presentations on scientific issues can be made to the peer reviewers).”

The draft report represents the first time EPA has publicly indicated that the fracking injection process could have contaminated a drinking water aquifer, as opposed to poor cementing or other aspects of natural gas drilling. That has prompted some fracking companies and other critics of the findings to urge EPA to designate the draft findings as a HISA -- a White House Office of Management & Budget (OMB) classification that requires the level of peer review to comply with OMB's 2005 information quality guidelines. Under the guidance, any document meeting criteria for either an ISI or a HISA must make both the documents and plans for peer reviews.

OMB generally defines HISAs as assessments that could have a potential impact of more than $500 million in any year or those that are novel, controversial, precedent-setting or have significant inter-agency interest. However, EPA has determined that the Pavillion draft report clearly fits within the designation of an ISI, which OMB describes as "scientific information the agency reasonably can determine will have or does have a clear and substantial impact on important public policies or private sector decisions,” an agency spokeswoman previously said.

EPA says that the draft report would not be considered a HISA because that criteria is described by OMB as a synthesis of information culled from multiple review of analyses, not a single study.

“However, in recognition of the high profile of this investigation, the Agency is treating the draft report as if it is a HISA for the purpose of peer review,” the agency spokeswoman said in a March 1 email, adding that by taking public comment on the draft charge to the peer review panel, EPA is going beyond what is required under the OMB guidelines for a HISA.

In the Sept. 6 letter to Jackson, Encana also urges EPA to extend its comment period on the study. EPA is taking public comment on an external peer review charge for its draft report, “Investigation of Ground Water Contamination near Pavillion, Wyoming,”through Oct. 16, after which it will plan a peer review conducted by independent contractor Eastern Research Group, Inc.

Encana also asks EPA to clarify its plans for incorporating the latest round of studies in conjunction with U.S. Geological Survey (USGS) into the draft report prior to peer review. “We are concerned that EPA and USGS efforts have not been properly coordinated,” Encana says. “We also do not know if the agencies intend to provide a single or multiple interpretations of the new data and whether such data will be integrated into a revised version of the December 2011 Draft Report.”

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Proposed Natural Gas Plant May Set Tighter GHG BACT Permit Precedent

A proposed combined-cycle natural gas-fired power plant in California that will serve multiple purposes -- including serving local capacity -- would cut greenhouse gases (GHGs) more than other plants and could set a precedent for stricter best available control technology (BACT) controls in GHG permits, says a source involved with the facility.

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Challenge To Refinery 'Aggregation'

Environmentalists are challenging Pennsylvania's novel decision to allow two refineries located 17 miles apart to use “aggregation” to combine their emissions for Clean Air Act permitting purposes, saying the approach would violate the air law and allow emissions increases.

The state-based Clean Air Council (CAC) filed an administrative appeal to Pennsylvania's Environmental Hearing Board challenging the aggregation decision. The state combined two Sunoco refineries as one source for air permitting, allowing one refinery to meet air pollution control mandates by using credit for emissions cuts achieved by the second refinery, which is slated to close. The emissions cuts are the result of a 2005 consent decree with EPA over alleged air law violations.

Separately, the group filed comments on a proposed consent decree between EPA and Sunoco -- operator of the two refineries -- that would allow Pennsylvania to proceed with its plan by allowing the emissions reductions under the 2005 pact to be used for credit at the other refinery.

The challenge is the latest in a long-running bid by environmentalists to force a stringent approach to aggregation. If dispersed oil and gas facilities have to combine their emissions, it could push the facilities over the threshold for a major source air permit with stringent controls. Industry has sometimes pushed against aggregation in order to win less stringent minor source permits.

Environmentalists claim Pennsylvania's Department of Environmental Protection (DEP) in particular is inconsistently implementing its aggregation policy to industry's benefit. Despite DEP's position against aggregation of natural gas drilling equipment, DEP agreed with Sunoco's request to aggregate the two refineries that are miles apart but connected by a pipeline.

DEP made the determination based on the fact the facilities are “contiguous or adjacent,” one of the three elements of EPA's test for aggregation. The other two tests are whether facilities are in “common control” and whether they are part of the same industrial grouping.

Environmentalists claim that in the Sunoco case, Pennsylvania used the same adjacency criteria it has been unwilling to use in aggregation determinations at drilling sites. The fight is seen as putting pressure on EPA to codify its aggregation policy through a rulemaking.

Until the agency crafts such a rule, environmentalists will continue to fight aggregation decisions they see as leading to emissions increases. In a Sept. 24 notice of appeal of the DEP decision on the Sunoco refineries, CAC says, “The decision is counter to both the Department's position on aggregation as well as state and federal laws.” The filing with the state's Environmental Hearing Board says, “The decision is a blatant attempt to obtain emissions reduction credits and offsets available in a consent decree without regard to the confines of law.”

CAC argues that DEP's decision to aggregate is flawed because it adds a fourth prong to its single source determination analysis, which allowed it to reverse its previous and longstanding finding that the two facilities were separate sources for permitting purposes.

The U.S. Court of Appeals for the 6th Circuit recently scrapped EPA's "adjacency" definition, which allowed aggregation if it could be demonstrated that the facilities shared a “functional interrelationship.” Sources have said that the decision in Summit Petroleum Corporation v. EPA could embolden state efforts to pursue aggregation policies based on a "proximate" distance test that activists warn would capture fewer facilities than EPA's approach -- such as 2011 Pennsylvania DEP guidance that sets a quarter-mile boundary for natural gas operations.

In the Sunoco determination, however, activists charge that DEP violated EPA's and its own policies by improperly considering the “functional interrelationship” test as a fourth prong instead of considering it as a means of determining whether the refineries were contiguous or adjacent.

CAC says while DEP found the refineries are under the same industrial grouping and under common control, they are neither contiguous nor adjacent because they are located so far apart. “Despite this finding, it added a fourth prong to its single source determination and stated that the refineries are functionally interrelated and therefore should be aggregated despite not being contiguous or adjacent,” CAC argues. While EPA has used the “functional interrelationship” test to help determine whether facilities are “adjacent,” in addition to proximity, “There is not precedent for finding that two facilities are not adjacent or proximate but that the interdependence overcomes that finding.”

In addition, DEP's decision -- which rested on the fact that a pipeline connects the facilities -- improperly rests on the historic relationship between the two refineries rather than their current relationship, considering that the refining operations at Marcus Hook are not longer in operation and therefore the pipeline is not in use, according to CAC's comments. “Because the refineries are no longer interdependent nor are they anticipated to be in the future, aggregation of the Marcus Hook Refinery and the Philadelphia Refinery is improper,” CAC says.

The group also makes a procedural challenge that the single source determination cannot be made in an administrative amendment, as DEP has done, because it fails to meet the criteria under Pennsylvania law, and that DEP did not propose the change for notice and comment.

The group also filed Sept. 23 comments on EPA's proposed revision to the 2005 consent decree  saying it would allow the refinery that is staying option to “circumvent” air law new source review (NSR) emission control mandates by instead citing pollution cuts at the closing refinery. “Because the emission-trading scheme authorized by the proposed amendment violates the clear requirements of the Clean Air Act, we respectfully request that it be withdrawn,” the comments say.

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EDF Urges New York To Craft First-Time Health Baseline For Fracking Rules

The Environmental Defense Fund (EDF) is calling on New York officials to craft a first-time health baseline database to help determine the effects of future hydraulic fracturing operations, an approach that some federal officials are also seeking to overcome industry reluctance to turn over data that could be used to assess rules' adequacy.

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EPA Said To Weigh Novel 'Regional' Subcategories For Coalbed Methane ELG

EPA is in the early stages of considering whether to create a novel system for subcategorizing drilling operations in the coalbed methane (CBM) sector that will be subject to its forthcoming Clean Water Act (CWA) technology standard -- including one that is based on differences in produced water in the geologic region where it is generated, an industry source says.

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Industry Fears BLM Fracking Rules Create Jurisdictional Conflict With EPA

Oil and gas industry groups are concerned that the Interior Department's Bureau of Land Management (BLM) is proposing a novel definition of "usable water" that must be protected under its draft rules for hydraulic fracturing on public lands, language that is similar to the language in the Safe Drinking Water Act (SDWA) and may overlap with state and EPA regulations.

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GOP Bill Seeks To Preserve State UIC Power In Face Of EPA Fracking Rules

Two GOP senators from key drilling states have introduced a bill aimed at maintaining states' primacy to permit underground injection control (UIC) wells under the Safe Drinking Water Act (SDWA), a measure aimed at relieving concerns that pending EPA and Interior Department (DOI) policies governing hydraulic fracturing operations could undercut states' delegated permit powers.

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API Seeks Experts For Fracking Panel

The American Petroleum Institute (API) is urging EPA to include more industry experts on upstream natural gas drilling operations on its planned Science Advisory Board (SAB) panel that will review findings from its massive hydraulic fracturing study, faulting an earlier SAB panel that examined the scope of the study for lacking industry experts.

“From our perspective, critical opportunities to leverage the tremendous knowledge and experience base offered by the industry have been repeatedly missed,” API says in a Sept. 10 letter to SAB staff director Vanessa Vu.

EPA took comment through Sept. 11 on potential nominees for an ad hoc panel that will review its interim report and eventually, its final 2014 report in the study, according to an Aug. 21 Federal Register notice.

The panel is the second EPA has created in connection with the two-year study, with the first advising the agency last year on the design of the planned study. The chartered SAB approved those recommendations last July.

The study is being jointly conducted by EPA's Office of Research & Development (ORD) and Office of Water, spurred by a request in EPA's 2010 appropriations bill that the agency study the possible adverse effects of fracking on drinking water resources. The analysis is expected to consist of two prospective and five retrospective case studies where EPA will examine how the natural gas operations in several states interact with drinking water supplies in addition to laboratory analysis and other research.

In the Sept. 10 letter, API urges EPA to consider appointing panel members with practical experience in operational aspects of fracking and other aspects of oil and gas extraction, upstream waste and water management, petroleum geology and knowledge of rock mechanics as it relates to fracking.

API also asks that the panel include representatives from the Groundwater Protection Council, which represents state regulators, or the Interstate Oil and Gas Compact Commission, a multi-state agency that oversees domestic oil and gas production.

“Because this new Panel will be tasked with providing EPA's Office of Research and Development with advice on the status of the research undertaken to date and the retrospective site analysis to be included in the Progress Report, it is imperative that the Panel include individuals experienced in upstream oil and natural gas operations which are unique in engineering, scale, distribution, materials, and timing to provide an accurate representation of this highly technical issue and its proper context for this review,” API says in the letter.

The group is also criticizing the previous SAB panel that reviewed the study, saying that it was disappointed in the lack of industry experts and that the panel members, “with just a few exceptions, had virtually no relevant knowledge or understanding of how oil and gas operations in general or hydraulic fracturing in particular related to their respective areas of expertise.”

The American Water Works Association, which represents drinking water utilities, urges EPA in a Sept. 10 letter to include “qualified drinking water professionals” on the panel. The group nominates Kimberlee Kane, of New York City Department of Environmental Protection and Sean Lieske of Aurora Water.

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