Source: http://www.lexology.com, May 19, 2014
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:
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ANPR focused on the reporting of chemical substances and mixtures used in hydraulic fracturing, including submission of unpublished health and safety studies.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 today, 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:
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:
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 (BLM); 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 non-regulatory 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.