Appendix C: Overview of the U.S. Legal and Regulatory Framework for Shale Gas Development

U.S. Federal Legislation & Regulation

WATER QUALITY

At the request of Congress, the EPA has been studying the potential impact of shale development operations on drinking water resources. The agency released a draft assessment summarizing existing science and new EPA research in June 2015. 1 The draft is currently undergoing review by EPA’s Science Advisory Board. Once finalized, it is anticipated to serve as a resource for the protection of drinking water resources. 2

Safe Drinking Water Act

The EPA protects underground sources of drinking water (USDW) through its regulatory authority under the SDWA. The Underground Injection Control (UIC) Program is the principal means of protecting USDWs, which requires permits for the use of underground injection as a means of waste disposal. States that have demonstrated an ability to meet EPA’s requirements for enforcement of the UIC program have been granted primary enforcement authority, called primacy. These states have established regulations for the protection of USDWs for Class II injection wells, including on injection pressure and monitoring, well testing, and reporting. In states that have not received primacy, the EPA directly implements the regulations.

There are six categories (or classes) of UIC injection wells, depending on the kind of fluid and depth at which the fluid is injected. The oil and gas industry uses Class II injection wells to 1) permanently dispose of wastewater; 2) reinject it at the site of a production well in order to improve the recovery of the resource; and 3) to store hydrocarbons beneath the surface to be pumped out later for processing and use. As of September 2013, the Ground Water Protection Council estimated that 31 states host approximately 168,000 Class II injection wells. 3

Prior to well construction, the site is evaluated to ensure that the injected fluids will be appropriately isolated from drinking water sources and that construction and operation procedures will be protective of USDWs. Well construction techniques use layers of steel casing and cement to prevent any subsurface fluid migration. Once constructed, the wells are tested prior to injection. After the wells enter into operation, they are monitored for injection pressures and volumes to ensure proper operation and to allow for the identification of any problems. Wells must also be tested at least once every five years to check the performance of the well and the subsurface conditions. When operations cease, wells must be closed in a manner that protects USDWs and are typically sealed with a series of cement plugs.

Is hydraulic fracturing considered underground injection?

Some stakeholders have raised the question of whether hydraulic fracturing constitutes underground injection and should be regulated under the UIC program. 4 In response to such questions, Congress declared in the Energy Policy Act of 2005 that the injection of hydraulic fracturing fluids for oil and gas development activities (except those containing diesel fuel) is not considered underground injection and is therefore excluded from regulation under the SDWA. 5 Following on this decision, in May 2012 the EPA issued draft guidance indicating that when operators use hydraulic fracturing fluids containing diesel fuel, they are required to obtain a permit under the UIC program. 6 

Clean Water Act

The discharge of oil and gas wastewaters into the surface waters of the United States is regulated by the EPA under the CWA. The CWA controls industrial discharges directly to surface waters (e.g., through stormwater systems) and industry’s indirect discharges to publicly owned treatment works (POTWs). Any discharges to surface waters must be below the limits set under the CWA National Pollutant Discharge Elimination System (NPDES). NPDES may authorize a permit that allows discharging of chemicals into U.S. waters, provided that they are below EPA standard limits. 7 Permitting generally occurs at the federal level; however, NPDES has authorized some states to issue permits directly.  

Waste Disposal

As with other oil and gas wastes, shale development wastes are classified as “special waste” and are therefore exempt from hazardous waste regulations under Subtitle C of the Resource Conservation and Recovery Act (RCRA). 8While exempt from RCRA Subtitle C pertaining to hazardous wastes, wastes from shale development are still subject to other federal regulations (e.g., CWA, SDWA), RCRA Subtitle D solid waste regulations, and state regulations. 9 If hazardous substances from shale development contaminate a site and pose a threat to public health or the environment, operators can potentially be liable under CERCLA for natural resource damages, cleanup costs, and the cost of public health studies. 10

Shale Development on Federal and Tribal Lands

In March 2015, the BLM issued new standards for shale development on federal and tribal lands. The BLM controls 700 million acres of federal subsurface minerals and is the regulatory agency for an additional 56 million acres of tribal subsurface minerals. 11 To date, there are over 100,000 oil and gas wells on federal lands, with 90% of the wells currently being drilled using hydraulic fracturing techniques. 12 The new rule includes new requirements for ensuring well integrity, the disclosure of the chemicals used in hydraulic fracturing, higher standards for wastewater storage, and a requirement that operators provide additional information on preexisting wells, with the goal of reducing the potential for cross-well contamination. In September 2015, however, a federal judge issued an injunction blocking the implementation of the new regulations until an industry challenge to the regulations can be heard in court later in the year. 13

Notes:

  1. U.S. EPA Office of Research and Development, Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources:  Executive Summary (External Review Draft) (Washington, DC:  June 2015).
  2. U.S. EPA, “Questions and Answers about EPA’s Hydraulic Fracturing Study” last updated October 8, 2015.
  3. Ground Water Protection Council (GWPC), “Injection Wells:  An Introduction to Their Use, Operation, & Regulation” (September 1. 2013), 13.
  4. GWPC, “Injection Wells,” 28.
  5. U.S. EPA, “Regulation of Hydraulic Fracturing under the Safe Drinking Water Act,” last updated February 11, 2014.
  6. U.S. EPA, “Fact Sheet: Underground Injection Control (UIC) Program Permitting Guidance for Oil and Gas Hydraulic Fracturing Activities Using Diesel Fuels, UIC Program Guidance #84 – Draft” (May 2012).
  7. U.S. EPA, “Natural Gas Drilling in the Marcellus Shale:  NPDES Program Frequently Asked Questions,” attachment to memorandum from James Hanlon, Director of EPA’s Office of Wastewater Management to the EPA Regions titled, “Natural Gas Drilling in the Marcellus Shale under the NPDES Program” (March 16, 2011): 6.
  8. U.S. Environmental Protection Agency, “Crude Oil and Natural Gas Waste,” last updated 4/7/14.
  9. U.S. EPA, “Exemption of Oil and Gas Exploration and Production Wastes from Federal Hazardous Waste Regulations,” 5, 20.
  10. Adam Vann, Brandon J. Murrill, and Mary Tiemann, Hydraulic Fracturing. 
  11. U.S. Department of the Interior Bureau of Land Management (BLM), “Interior Department Releases Final Rule to Support Safe, Responsible Hydraulic Fracturing Activities on Public and Tribal Lands” (March 20, 2015). 
  12. BLM, “Interior Department Releases Final Rule.”
  13. Coral Davenport, “Judge Blocks Obama Administration Rules on Fracking,” The New York Times (September 30, 2015).