EPA in Settlement Talks With Oil, Gas Groups Over Permits for Diesel in Fracking

By Amena H. Saiyid

The oil and gas industry and the Environmental Protection Agency are in settlement talks to resolve a lawsuit over a requirement that oil and gas companies obtain drinking water permits if they use diesel oil in hydraulic fracturing (Independent Petroleum Ass'n of America v. EPA, D.C. Cir., No. 10-1233,oral arguments postponed 11/10/11).

The parties were granted a postponement of oral arguments scheduled for Nov. 14 in the U.S. Court of Appeals for the District of Columbia Circuit

In a motion filed Nov. 10, the Independent Petroleum Association of America, the U.S. Oil and Gas Association, and EPA said, “The parties are negotiating in good faith.”

EPA and the industry groups said that “the parties agree that postponing would enable them to focus on finalizing a settlement, securing the approval of the necessary government officials, and, ultimately voluntarily dismissing the current action without further involvement from the court.”

D.C. Circuit Judges Merrick Garland, Janice Brown, and Thomas Griffith gave the industry groups and EPA until Jan. 9, 2012, to file a motion to resolve the dispute or file a status report on negotiations.

At issue is an August 2010 lawsuit filed by IPAA and the U.S. Oil and Gas Association over an EPA statement posted on the agency website, which said drillers using diesel in fracturing fluids “must receive prior authorization” from the underground injection program because a well using such fluids “will be considered Class II wells by the UIC program” (136 DEN B-4, 7/15/11).

Congress Retains Diesel Rules

In the Energy Policy Act of 2005 (Pub. L. No. 109-58), Congress exempted hydraulic fracturing from the Safe Drinking Water Act except when the fracturing fluids contain diesel oil. Hydraulic fracturing is used to extract natural gas, petroleum, coal seam gas, and other substances.

When diesel oil is used in the process, EPA requires a permit under the Safe Drinking Water Act, but the industry groups say EPA overstepped its authority by specifying the group of wells that can be used for the fracking process using diesel.

The oil and gas groups contended that such a statement constituted a rulemaking without notice and comment, as required under the Safe Drinking Water Act and the Administrative Procedure Act.

IPAA spokesman Jeff Eshelman confirmed Nov. 14 that settlement talks were under way. “Both parties have agreed to postpone oral arguments during these discussions,” he said.

EPA and the Justice Department declined to comment, saying they do not comment on pending litigation.

Democrats Seek Hearing on Shale Gas

While EPA and the oil and gas industry continue negotiations, three Democrats on the House Energy and Commerce Committee asked Committee Chairman Fred Upton (R-Mich.) to hold a hearing on the draft findings of the Secretary of Energy Advisory Board Subcommittee on Shale Gas Production.

The draft report, which was released Nov. 10, called on EPA to control air and water pollution from shale gas production through aggressive regulation (219 DEN A-1, 11/14/11)

In their Nov. 14 letter, Reps. Henry Waxman (D-Calif.), ranking member of the Energy Committee; Edward Markey (D-Mass.), ranking member on the House Natural Resources Committee; and Diana DeGette (D-Colo.), ranking member of the Energy and Commerce Subcommittee on Oversight and Investigations, reminded Upton that the committee has held no hearings on shale gas development.

The letter from Democratic lawmakers to Rep. Upton is available at http://democrats.energycommerce.house.gov/sites/default/files/documents/Letter_Upton_11.14.11.pdf .