Thursday, January 5, 2012

Status of the FRAC Act: Gone today, here tomorrow?

Remember the Fracturing Responsibility and Awareness of Chemicals Act, a.k.a. the FRAC Act?

The legislation was first introduced in Congress in 2008 by Rep. Maurice Hinchey, a Democrat who represents an upstate constituency, including Binghamton and Ithaca, with significant stakes in shale gas development. The bill would eliminate the industry exemption—the so called “Halliburton Loophole”—provided in the 2005 national energy bill that dismisses companies from the burden of disclosing the concentrations and formulas of chemical solutions they inject into the ground to stimulate shale gas production. The FRAC act would require the federal Safe Drinking Water Act – by which other industries must abide – to apply to the drilling industry. Well service companies such as Halliburton would be subject to full disclosure of what exactly they inject into the ground. Consequent revelations could open the door to controls and limits on hydraulic fracturing formulas per federal laws.

The FRAC Act was proposed in 2008 and 2009 with some fanfare and, not surprisingly, it met opposition from the industry, which characterizes any regulation as a determent to economic growth. Although it was reintroduced in 2011 by Reps Diana DeGette and Jared Polis, both Colorado Democrats who also sponsored the original bill, the FRAC Act has been a non-issue due to the Republican-controlled House of Representatives.

This week I chatted with Michael Morosi, a spokesman for Hinchey, about the status of the FRAC Act. I learned that the bill lives as a prototype for a legislative tool that can be quickly taken off the shelf to regulate fracking, depending on two things that will become acutely relevant this election year:

The political climate in Washington;

How the EPA decides to handle the fracking issue.

Regarding the EPA’s approach: Preliminary results of the agency’s study looking into the safety of hydraulic fracturing is expected by year end. The study, supported by Hinchey as a member of the House Appropriations Committee, began in 2010 to reassess a previous determination in 2005, by the Bush EPA, that fracking was not a significant threat to water. This determination, which gave rise to the Haliburton Loophole, has become widely suspect in light of recent contamination blamed on the type of extensive fracking used for shale gas development.  The EPA is looking at cases in Dimock, Pennsylvania, Pavilion, Wyoming, and other places that could influence the agency’s approach to regulating the industry.

The EPA, of course, is subject to another influential force: the national political climate. You can count on that to be unsettled during the run-up to November’s elections. After that you can count on this: The threat of a FRAC Act will not be a factor in a Republican-controlled Congress. It could likely become a factor in a Congress controlled by Democrats, depending how the EPA proceeds after its study is completed. Now add this to the mix: Rumors have circulated that the 73-year-old Hinchey will retire at the end of the year, although his office strongly denies it. (So far there have been no public nods to a possible successor in the Democratic party.)

While the FRAC Act is yet to make it to the floor, its very existence has been an effective political tool to raise awareness and provoke talking points about the Haliburton Loophole, and stimulate a very public debate about the pros and cons of the issue. FRAC Act… Shale gas industry leaders would be happy if they never heard those words again, and they would also be the first to welcome the retirement of the Congressman who introduced it.

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