EPA Releases Revised Guidance on SDWA Permitting for Hydraulic Fracturing with Diesel

On February 11, 2014, the U.S. Environmental Protection Agency (EPA) released a Revised Guidance clarifying the application of the Safe Drinking Water Act's (SDWA's) Underground Injection Control (UIC) program requirements to the injection of diesel fuels during hydraulic fracturing operations. The Revised Guidance confirms EPA's position that an owner or operator must obtain a Class II UIC program permit before commencing any hydraulic fracturing activities related to the injection of diesel fuels. The Revised Guidance also identifies the "diesel fuels" whose injection will trigger the permitting requirements and provides technical guidance for permit writers on how to apply the existing UIC Class II regulations to hydraulic fracturing. Although characterized as interpreting existing regulations and offering "non-binding" recommendations, the Revised Guidance will have direct impacts on both hydraulic fracturing operations and states' regulatory regimes.

Despite receiving over 97,000 comments on the Draft Guidance published in May 2012, EPA incorporated only a few of the suggested substantive changes. One of the more significant changes was EPA's removal of crude oil distillates (CAS number 68410-00-4) from the list of "diesel fuels" and also the elimination of references to "diesel fuel constituents." These changes narrow the scope of substances that would trigger permitting. But EPA kept other chemicals on the list, including both Fuel Oil No. 4 (CAS number 68476-31-3) and kerosene (CAS number 8008-20-06), despite numerous comments that those chemicals are not commonly understood to be "diesel fuels" and therefore are not subject to regulation under the SDWA when injected during hydraulic fracturing. 

EPA rejected several other suggestions directed at increasing the certainty and stability of the diesel fluids permitting scheme. First, EPA declined to institute a de minimis threshold for triggering the diesel fuel permit requirements. Also, despite removing controversial language on its future identification of new "diesel fuels," EPA maintained in its summary response to comments that it is not required to undergo formal rulemaking to make such changes and leaves open the possibility that it will do so. 

Although characterized as non-binding recommendations directed at EPA Regional offices directly implementing the UIC Class II Program in states without primacy, the Revised Guidance will have real and direct impacts on both operators and state regulators. First, EPA recognizes that operators who fail to obtain the required diesel fuels injection permit may be vulnerable not only to federal enforcement action but also to citizen suits. EPA declined to take a position on whether it will pursue enforcement actions based on past unpermitted uses of diesel fuels in hydraulic fracturing operations, creating significant enforcement uncertainty for operators. 

The Revised Guidance also directly impacts states with primary UIC regulatory authority. Although states and tribes with primacy are not required to follow the Guidance to the letter, EPA clearly expresses that existing law and regulations require them to issue permits for hydraulic fracturing activities related to the injection of diesel fuels. EPA further explains that it may withdraw approval of state primacy programs if states fail to implement permitting or to comply with the federal requirements. Citizen groups may also petition EPA to withdraw primacy from a state based on a state's failure to implement the diesel fuel permitting requirements. Thus, states seeking to preserve their primacy may rely heavily on the Revised Guidance's permitting "recommendations."

The larger impact of this Guidance may be on the regulation of broader hydraulic fracturing activities. EPA views its recommendations as reflecting best practices for hydraulic fracturing and expects that industry and states will adopt the practices into their operations and regulatory activities. Indeed, as states continue to develop and amend their hydraulic fracturing regulations in response to multi-stakeholder pressures, the articulation of "best practices" guidelines by EPA could have significant influence.