By Michael Weller and Heather Palmer, Bracewell & Giuliani LLP
The U.S. Environmental Protection Agency (EPA) has taken its first official step toward creating a federal regulatory program that would require disclosure and reporting concerning chemicals used in the hydraulic fracturing process. On May 9, 2014, EPA released an Advanced Notice of Proposed Rulemaking (ANPR) under the Toxic Substances Control Act (TSCA) that seeks public comment on the types of information that should be reported or disclosed for hydraulic fracturing substances or mixtures and the mechanism for obtaining this information.
While the ANPR is directed to the public in general, companies in the oil and gas industry, particularly those that manufacture, import, process or distribute chemical substances used in hydraulic fracturing treatments, should take note.
In August 2011, Earthjustice and 114 other organizations petitioned EPA under section 21 of TSCA to adopt a rule that would require, among other things, mandatory disclosure and reporting of the chemicals used in oil and gas exploration and production (E&P).
Specifically, the petition requested that EPA adopt a rule pursuant to TSCA section 8(a) requiring manufacturers and processors of E&P chemical substances and mixtures to maintain records and submit reports to EPA disclosing:
1. The identities, categories, and quantities of E&P chemical substances and mixtures,
2. Descriptions of byproducts of E&P chemical substances and mixtures,
3. All existing data on potential or demonstrated environmental and health effects of E&P chemical substances and mixtures, and
4. The number of individuals potentially exposed to E&P chemical substances and mixtures.
In addition, Earthjustice petitioned EPA to adopt a rule pursuant to TSCA section 8(d) to require submittal of all existing, not previously reported health and safety studies related to the health and/or environmental effects of all E&P chemical substances and mixtures.
In November 2011, the EPA granted in part the TSCA section 8(a) and 8(d) petitions for chemical substances and mixtures used in hydraulic fracturing but denied the petitions to the extent they addressed E&P chemicals not used in hydraulic fracturing, finding that the request was overly broad and petitioners had failed to demonstrate that such a broad rule was necessary. EPA also rejected companion petitions under TSCA section 4 (for lack of foundation) and section 8(c) (which does not authorize petitions).
In July 2013, EPA released a document that set forth the Agency’s reasons for denying in part Earthjustice’s petition and announced its plans to move forward with an ANPR focused on the reporting of chemical substances and mixtures used in hydraulic fracturing, including submission of unpublished health and safety studies.
In the ANPR published recently, EPA seeks comment on the types of information associated with hydraulic fracturing chemicals and mixtures that should be disclosed, in addition to the options for reporting related health and safety studies.
The Agency has not yet decided whether disclosure should be mandatory, voluntary, or a combination of both. EPA solicits views on this question and also asks whether best management practices should be disclosed, whether third-party certification and collection should be required, and whether EPA should employ incentives for disclosure of information.
Chemical Disclosure Under TSCA Section 8(a)
According to EPA, TSCA section 8(a) gives the Agency the authority to require, by rulemaking, chemical manufacturers and processors to maintain records and submit to EPA such reports as EPA may reasonably require, including reports regarding the following:
· The common or trade name, the chemical identity, and the molecular structure of each chemical substance or mixture for which such a report is required.
· The categories or proposed categories of use of each chemical substance or mixture.
· The total amount of each chemical substance or mixture manufactured or process, reasonable estimates of the total amount to be manufactured or processed, the amount manufactured or processed for each of its categories of use, and reasonable estimates of the amount to be manufactured or processed for each of its categories of use or proposed categories of use.
· A description of the byproducts resulting from the manufacture, processing, use or disposal of each chemical substance or mixture.
· All existing data concerning the environmental and health effects of each chemical substance or mixture.
· The number of individuals exposed, and reasonable estimates of the number who will be exposed, to each chemical substance or mixture in their places of employment and the duration of such exposure.
· The manner or method of disposal of each chemical substance or mixture, and any subsequent changes to such manner or method.
In this ANPR, EPA is seeking comment on the type of information that should be disclosed, including the identity, quantities, types and circumstances of uses of chemical substances and mixtures used in hydraulic fracturing, as well as what types of health and safety studies should be reported or disclosed. EPA also requests input on how this information should be reported to EPA, either directly or through a third-party certifier, and whether this information should be disclosed publicly.
Protection of trade secrets has been one of the most contentious issues surrounding state disclosure rules for hydraulic fracturing. In the ANPR, EPA seeks comment on whether and how data that are claimed to be trade secrets or confidential business information (“CBI”) could be reported to EPA (or a third-party certifier) and then aggregated and disclosed to the public while protecting the identities of individual products and firms.
Notably, the Agency is considering substantially more information-gathering and public disclosure than the states have required. Specifically, the Agency is considering disclosure of:
1. Basic company information (i.e., company name, mailing address, website, and technical contact information).
2. Steps involved in processing chemicals or mixtures on site before injection. Typical composition and performance standard of hydraulic fracturing fluid as an end use product, before injection.
3. Steps involved in processing chemicals or mixtures for reuse, recycling, and/or reprocessing in the hydraulic fracturing operation.
4. Hydraulic fracturing fluid composition:
a. Common name or trade name of each chemical product in the hydraulic fracturing fluid and a description of each product’s function.
b. Chemical identity (chemical name and Chemical Abstracts Service Registry Number) of each chemical substance in each product.
c. Total volume of the carrier fluid and percentage of the carrier fluid that makes up the total hydraulic fracturing fluid (e.g., water volume and percentage of water in the hydraulic fracturing fluid).
d. Actual amount of each chemical substance or product in the hydraulic fracturing fluid in order to understand the loading (e.g., mass or volume).
5. Production type (i.e., gas and/or oil).
6. Frequency of use of the chemical substance or mixture for hydraulic fracturing (e.g., number of times or per fracture stage or number of wells).
7. Number of workers exposed or likely to be exposed to the chemical substance or mixture.
8. All existing data concerning the human and environmental health effects of the chemical substance or mixture.
EPA also seeks comment on whether mandatory reporting should include chemical substances and mixtures which are formed on site and/or chemicals introduced or intended to be introduced into an oil or gas well for the purpose of maintaining or improving the function and productivity of the well (e.g., acid treatments, corrosion inhibitors, scale reducers, biocides).
Other information for which EPA is requesting input is whether third parties should be used to collect the information requested, and/or to certify the use of best practices; the threshold for the size of entities that should be required to report; how to best minimize duplicative reporting and/or disclosure requirements, particularly for companies that may also report to the Bureau of Land Management; and whether incentives and recognition programs could be used to support the development and use of safer chemicals in hydraulic fracturing.
Related Health and Safety Studies Under TSCA Section 8(d)
According to EPA, TSCA section 8(d) authorizes the Agency to require manufacturers, processors, and distributors of any chemical substance or mixture and persons who propose to manufacture, process, or distribute in commerce any chemical substance or mixture to submit health and safety studies to EPA.
In the ANPR, EPA is also requesting comments on potential options for reporting or disclosure of health and safety studies for chemical substances and mixtures used in hydraulic fracturing. Among other things, EPA is seeking input on whether there are existing mechanisms in place, including nonregulatory mechanisms, for EPA to obtain hydraulic fracturing-related health and safety studies.
EPA is also asking whether it should require reporting of studies for all chemical substances or mixtures used in hydraulic fracturing or focus its efforts on chemical substances and mixtures that EPA believes are not well characterized by health and safety studies.
Because of the wide-ranging impact of the proposal, it is expected that EPA will receive a large number of comments on this ANPR. All comments must be submitted on or before August 18, 2014.
Michael Weller is an associate in Bracewell & Giuliani's Environmental Strategies Group in Washington, D.C.
Heather Palmer is a partner in Bracewell & Giuliani's Environmental Strategies Group in Houston.