Oil and Gas Provisions

Although Title II contains a number of noncontroversial provisions, it also includes several new provisions that undermine environmental protections under current law.

Section 2201 eliminates authority under the Safe Drinking Water Act that ensures that hydraulic fracturing for oil and gas production does not endanger underground sources of drinking water. Section 2401 amends the Coastal Zone Management Act to limit the record for appeals of federal agency decisions concerning construction of interstate natural gas pipelines (including liquefied natural gas facilities) to that developed by the Federal Energy Regulatory Commission, thereby marginalizing the Secretary of Commerce and the coastal state’s roles. Section 2403 amends the Clean Water Act to enlarge a current loophole for the oil and gas industry, exempting all of their exploration and production activities from EPA storm water permit requirements.

Hydraulic Fracturing and Safe Drinking Water (Section 2201)

Part C of the Safe Drinking Water Act (SDWA) is designed to protect underground drinking water sources from contamination caused by underground injection of fluids. In two separate decisions in 1997 and 2001 the United States Court of Appeals for the Eleventh Circuit concluded that hydraulic fracturing activities constitute injection under Part C of the SDWA and that wells used for the injection of hydraulic fracturing fluids should be regulated as Class II wells. No other Federal court has addressed the issue or concluded otherwise.

Hydraulic fracturing is a technique used to enhance the recovery of methane gas from coal beds. The Environmental Protection Agency (EPA) defines hydraulic fracturing as a "temporary and intermittent process in which fluids are injected underground at high pressures to create fractures in the coals seam that enhance the recovery of methane gas by creating pathways for the gas to flow to the surface."

The EPA has been conducting a narrowly focused study to address hydraulic fracturing of coal bed methane wells, but not all hydraulic fracturing practices. The study has not yet been completed or finalized but a draft evaluation of impacts to underground sources of drinking water by hydraulic fracturing of coal bed methane reservoirs was publicly released in August 2002. The EPA is currently reviewing and incorporating the comments received from the public on the draft evaluation.

The Committee Print that was provided to the minority members approximately 72 hours before the Committee markup contained a new provision (Section 2201) amending the Safe Drinking Water Act (SDWA). Section 2201 eliminates existing statutory authority under SDWA to ensure that hydraulic fracturing does not endanger underground sources of drinking water by removing hydraulic fracturing for oil and gas operations from the term "underground injection" in Section 1421.

In doing so the majority is acting before the EPA study is completed and without the benefit of a final report incorporating the public’s comments. Rather, the majority provision in Section 2201 eliminates all EPA authority under the Safe Drinking Water Act to protect sources of drinking water from improper or harmful hydraulic fracturing practices now or in the future. It does not allow for a regulatory determination by the EPA after a completed study. Further, the majority action is taken without the benefit of any hearings on this matter by the Subcommittee on Environment and Hazardous Materials which has jurisdiction over Safe Drinking Water Act matters.

While the EPA’s initial findings indicated that the threat to public health from hydraulic fracturing appears to be low, it did indicate that the use of diesel fuel in fracturing fluids by some companies introduced the majority of constituents of concern to underground sources of drinking water. The EPA also stated that water-based alternatives exist and from an environmental perspective are preferable to the injection of diesel fuel in underground sources of drinking water.

Underground sources of drinking water are the source of groundwater for all current and future drinking water supplies across the country. Over 50% of all Americans rely on groundwater for their drinking water. Recognizing the importance of protecting current and future supplies of drinking water Representative Dingell offered an amendment to the Committee Print for Section 2201. In summary, Rep. Dingell’s amendment provided for:

• A completed study and independent scientific review by the National Academy of Science;
• A regulatory determination by the Administrator of the EPA;
• Preservation of federal authority to respond in the future where endangerment of underground sources of drinking water or adverse health effects are established; and
• Prevention of lawsuits that would force state regulation under the Safe Drinking Water Act.

This approach is based on a bipartisan staff agreement that was circulated for inclusion in the conference report last fall. We believe this approach which preserves authority under the Safe Drinking Water Act to protect underground sources of drinking water but addresses industry fears of lawsuits forcing regulation is a far sounder public policy approach than the one set forth in Section 2201 of the Committee Print.

Coastal Zone Management Act (section 2401)

Section 2401 essentially guts the process envisioned under the Coastal Zone Management Act (CZMA) for considering the environmental effects of siting interstate natural gas pipelines (including liquefied natural gas facilities) offshore, including the states’ role in determining the consistency of any proposal with state coastal management policies. The section alters current law by declaring that the record developed by the Federal Energy Regulatory Commission (FERC) under section 7 of the Natural Gas Act, in proceedings primarily concerned with economic issues, shall be the "exclusive" record for reviewing any appeals. In so doing, it would require administrative appeal decisions of the Secretary of Commerce under the CZMA to be based on a record compiled for a different purpose.

It would preclude language in the CZMA requiring the Secretary to provide "a reasonable opportunity for detailed comments" from interested federal agencies and from the state, and preclude the Secretary from considering new information relevant to administrative appeals that was not covered in the FERC proceeding. Section 2401 also includes a "sense of Congress" provision directing Federal and State agencies to coordinate their proceedings concerning pipeline construction with FERC’s procedural timelines, which would prevent an adequate opportunity for parties in an appeal under the CZMA to present information to the Secretary in support of their position.

Oil and Gas Exploration and Production Defined (Section 2403)

Sec. 2403 of the Committee Print adds a definition to the Federal Water Pollution Control Act for "oil and gas exploration and production" that includes all related activities, including construction activities.

Currently, the Clean Water Act includes an exemption from the National Pollutant Discharge Elimination System for oil and gas facilities for storm water runoff that does not come in contact with "any overburden, raw material, intermediate products, finished product, byproduct, or waste products located on the site of such operations."

Previously, the Environmental Protection Agency interpreted this exemption to exclude construction activities. Thus, construction activities, including those at oil and gas exploration and production sites have been required to get a storm water permit. Initially, the permit requirements only applied to sites greater than 5 acres in size (phase I). In December 1999, EPA issued rules that required permits for sites from 1 to 5 acres in size (phase II). This permit requirement should have taken effect on March 10, 2003. However, on March 10, 2003, EPA issued a rule that delayed for two years the permit requirement for oil and gas construction sites from 1 to 5 acres in size. (68 Fed. Reg. 11325)

The language in the Republican bill would provide two immediate benefits for the oil and gas industry at the expense of the environment:

1. 1-5 acre (Phase II) oil and gas facilities would not have to gain storm water permits for any activity related to field operations, and the requirement for construction activities at oil and gas sites greater than 5 acres (Phase I) would become invalid.

2. No legal challenge to EPA’s extension language would be possible.

Adoption of this provision would provide the "certainty" that Majority Counsel said the oil and gas industry was looking for at the Subcommittee markup on March 19, 2003, when questioned by Ranking Member Dingell regarding this section, but this would be the "certainty" that the industry could pollute with impunity. We do not believe that any coherent argument has been made for granting the oil and gas industry this type of exemption.

The Republican language ignores the fact that construction is construction. The purpose of the permits is to ensure that polluters take steps to reduce the harm they are causing to our nation’s waters. The primary water pollution problem from construction is erosion. Construction activities cause excessive sediment to flow into the nation’s waterways, harming drinking water supplies and aquatic life. At oil and gas sites, there is the additional problem of toxics including benzene, toluene and heavy metals. While toxics may not necessarily be a problem at a completely new drilling site, most construction is occurring at existing sites where oil and waste products can be easily disturbed and enter the nation’s waters. EPA has no evidence whatsoever that construction at oil and gas sites causes less pollution than other construction activities.

Including this non-germane section in the Energy and Commerce Committee’s print and then blocking the Markey amendment to delete this non-germane provision on grounds of germaneness was unfair and denied the full legislative consideration of this change to the Clean Water Act. The Energy and Commerce Committee does not have jurisdiction over the Clean Water Act and has had no hearings on this issue. The Committee has not heard from EPA regarding the implementation of this program or from industry regarding the effect of these regulations on their practices. In a letter to Representative Don Young, Chairman of the Committee on Transportation and Infrastructure – the committee of jurisdiction on this section -- Representative Oberstar, Ranking Member of that Committee, expressed his view that no legislation within the jurisdiction of the Transportation Committee should be included in another committee’s legislation unless it had been specifically considered by the Transportation Committee and urged that the provision be deleted from the bill.

The oil and gas industry says that it is possible to develop in an environmentally responsible way, yet this language would exempt them from pollution control requirements that other industries have to follow. If they are serious about their claims, they should follow the rules every other industry has learned to live with.

We continue to believe that Sec. 2403 is unwise, harmful to the environment and urge its deletion from the bill.

JOHN D. DINGELL
BART GORDON
ELIOT L. ENGEL
ED MARKEY
LOIS CAPPS
JAN SCHAKOWSKY
FRANK PALLONE, JR.
ANNA ESHOO
HILDA L. SOLIS
SHERROD BROWN
KAREN McCARTHY
JIM DAVIS
HENRY A. WAXMAN