H.R. 2728: Protecting States' Rights to Promote American Energy Security Act

H.R. 2728

Protecting States' Rights to Promote American Energy Security Act

Date
November 20, 2013 (113th Congress, 1st Session)

Staff Contact
Emily Leviner

Floor Situation

 On Wednesday, November 20, 2013, the House will begin consideration of H.R. 2728, the Protecting States’ Rights to Promote American Energy Security Act, under a rule.  The Rules Committee Print of H.R. 2728 also includes the text of H.R. 2850, the EPA Hydraulic Fracturing Study Improvement Act

H.R. 2728 was introduced on July 18, 2013 by Rep. Bill Flores (R-TX).  H.R. 2728 was marked up on July 31, 3013 by the House Committee on Natural Resources and was ordered reported, as amended, by a vote of 23-15.[1]  H.R. 2850, the EPA Hydraulic Fracturing Study Improvement Act, was introduced on July 30, 2013 by Rep. Lamar Smith (R-TX), Chairman of the House Committee on Science, Space, and Technology.  H.R. 2850 was marked up on August 1, 2013 by the House Committee on Science, Space, and Technology and was ordered reported, as amended, by a voice vote.[2]

Bill Summary

The Rules Committee Print of H.R. 2728 combines the text of the Protecting States’ Rights to Promote American Energy Security Act and H.R. 2850, the EPA Hydraulic Fracturing Study Improvement Act.

The Protecting States’ Rights to Promote American Energy Security Act recognizes states’ authority to regulate hydraulic fracturing[1] by prohibiting the Department of the Interior (DOI) from enforcing any Federal regulation governing hydraulic fracturing in a state that has its own regulations.  The bill also prohibits the DOI from enforcing any Federal regulation governing hydraulic fracturing on lands held in trust or restricted status for the benefit of Indians without express consent.

The EPA Hydraulic Fracturing Study Improvement Act sets requirements for the EPA Administrator in conducting its study of the potential impact of hydraulic fracturing on drinking water resources, seeking to ensure an objective evaluation.  The requirements improve the study by requiring that prior to issuing a final or interim report, the EPA Administrator 1) designate it as a Highly Influential Scientific Assessment (HISA) and require peer reviews in accordance with federal guidelines governing such assessments[2]; 2) require the reports to meet certain standards and procedures to ensure information quality[3]; and 3) “include a risk assessment with any identification of possible impacts of hydraulic fracturing on drinking water.  This will ensure that any identification of possible risks is accompanied by an assessment of such risks, which will provide context regarding the likelihood that such impacts might occur.”[4] 

The bill requires EPA to issue its final report by September 30, 2016.[5]


[1] H.R. 2728 defines “hydraulic fracturing” as “the process by which fracturing fluids (or a fracturing fluid system) are pumped into an underground geologic formation at a calculated, predetermined rate and pressure to generate fractures or cracks in the target formation and thereby increase the permeability of the rock near the wellbore and improve production of natural gas or oil.

[2] “This includes the guidelines from the EPA’s Peer Review Handbook, which lays out the Agency's policies and procedures governing peer review; the EPA's Scientific Integrity Policy, which establishes the Agency's framework to promote scientific integrity and promote standards, including those governing information quality, communication with the public and the use of peer review and advisory committees; and the OMB's Final Information Quality Bulletin for Peer Review, which establishes government-wide guidance aimed at enhancing the practice of peer review of government-wide science documents.”  House Committee Report 113-252 at 8.

[3] The bill provides that the reports must meet the standards and procedures for the dissemination of influential scientific, financial, or statistical information set forth in the EPA’s Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility, and Integrity of Information Disseminated by the EPA.

[4] House Committee Report 113-252 at 8.

[5] Currently, there is no deadline for the report.

Background

Protecting States’ Rights to Promote American Energy Security Act

America’s recent shale oil and shale gas revolution is largely attributable to innovations in horizontal drilling and hydraulic fracturing (HF).  These advances have unlocked vast domestic oil and gas reserves—some of the largest in the world—many of which were historically inaccessible.  “This technology is enabling the development of unconventional domestic oil resources, such as the Bakken Formation in North Dakota and Montana, which is thought to hold 4 billion barrels of oil (second only to Alaska) and has kept North Dakota’s unemployment rate the lowest in the nation.  However, much of this production occurs on private and state land, as developers aim to avoid burdensome and time-consuming federal regulations.  Currently, 93% of shale wells are located on private land, with 7% located on federal land.”[1]

In particular, HF technology has caused a dramatic increase in domestic natural gas production, increasing exploration and production both in areas with prior activity and in areas with little or no previous activity.  “In 2000, shale gas provided 1% of our nation’s gas supplies; today it is 25%.  Half of the natural gas consumed today is produce[d] from wells drilled within the last 3.5 years.  Prior to the shale breakthrough, U.S. natural gas reserves were in decline, prices exceeded $15 per million btu and investors were building ports to import liquid natural gas.  Today proven reserves are the highest since 1971, and prices have fallen close to $4 per million btu.”[2]

HF technology has existed for decades and has been appropriately regulated by the states, as they are uniquely positioned to understand their distinct geology and water resources.[3]  State regulations are complimented by new industry standards for HF, including recommendations for well construction, environmental safety, and water use management.[4]

Despite critics’ assertions that HF is not safe and adversely impacts groundwater, “there have been no confirmed reports of groundwater contamination from [HF].”[5]  Current and former Obama Administration officials have testified to this fact on a number of occasions.[6] 

Nevertheless, the Obama Administration, in May of 2013, proposed new federal regulations for HF on public lands.[7]  These burdensome and duplicative regulations threaten to significantly drive up the cost of HF:  while the Administration estimates that the proposed regulations will cost only $11,000 per well and have little impact on economic development, a recent analysis estimates the proposed regulations, if finalized, will cost $345 million annually—or $96,913 per well.[8]

The Protecting States’ Rights to Promote American Energy Security Act would ensure that states are able to continue their appropriate regulation of HF.

EPA Hydraulic Fracturing Study Improvement Act

In the FY2010 Department of the Interior, Environment, and Related Agencies Appropriations Act, Congress directed the EPA to conduct a multi-year Study of the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources.[9]  As the report is expected to have significant public policy implications, “Committee correspondence and testimony at hearings since [its] inception . . . have emphasized the importance of assuring the study be conducted in the most scientifically sound manner possible, adhere to all appropriate EPA peer review requirements, and present its conclusions in relevant context.”[10]

The EPA released a final plan for the study in November of 2011 and a progress report in December of 2012.  A draft final report is expected in late 2014, and following a period of peer review and public comment, the final draft is expected in late 2015 or 2016.[11]  “Throughout this process stakeholders have expressed concerns that the study had the potential to produce results that lacked context and were based on what were possible outcomes rather than likely or probable outcomes, as well as concerns with the peer review process.”[12]  Stakeholders also expressed concern that EPA had declined to designate its study as a HISA, a designation that triggers “more rigorous standards for peer review, and thus study design, data quality, and transparency.”[13]  Although EPA has since designated the study as a HISA, “there is still a need to ensure that the requisite policies and procedures governing such scientific undertakings are followed.”[14]

The EPA Hydraulic Fracturing Study Improvement Actaddresses these issues by 1) requiring that peer review and information quality standards be applied to EPA’s report, consistent with standards applied to HISAs; and 2) requiring that any identification of possible impacts of HF technology on drinking water to be accompanied by a risk assessment of their likeliness to occur.



[1] House Committee Report 113-261 at 2 (emphasis added).

[2] Id.

[3] Id. at 2-3.

[4] Id. at 3.

[5] Id. at 3.

[6] Witnesses to House Committee: Federal Government Must Stay Out of Hydro-Fracking Regulation, House Natural Resources Committee (May 8, 2013).  See also What They’ve Said About Hydraulic Fracturing, American Petroleum Institute.

[8] Business Impact of Revised Completion Regulations, John Dunham & Associates (July 22, 2013).  This figure assumes a best case scenario in which BLM approves 100% of all applications.

[9] House Committee Report 113-252 at 2-3.  The EPA was directed to conduct the study in accordance with the following language: “‘The conferees urge the Agency to carry out a study on the relationship between hydraulic fracturing and drinking water, using a credible approach that relies on the best available science, as well as independent sources of information.  The conferees expect the study to be conducted through a transparent, peer-reviewed process that will ensure the validity and accuracy of the data.  The Agency shall consult with other Federal agencies as well as appropriate State and interstate regulatory agencies in carrying out the study, which should be prepared in accordance with the Agency's quality assurance principles.’” Id. at 3.

[10] Id.

[11] Id. at 3-4.

[12] Id. at 4 (emphasis added).  “In the more recent consultation conducted by [EPA’s Science Advisory Board] Hydraulic Fracturing Research Advisory Panel . . . several reviewers also commented on the absence of a risk assessment.  One reviewer noted ‘There is no quantitative risk assessment included in EPA’s research effort.  Thus, the reader has no sense of how risky any operations may be in ultimately impacting drinking water.  This is also a significant limitation of the work.’  Another reviewer noted that ‘To simply discount the regulatory network in place and model ‘what if’ and ‘worse case’ scenarios will not produce realistic results.’”  Id. at 4-5.

[13] Id. at 5.

[14] Id.

Cost

CBO cost estimates for H.R. 2728 and H.R. 2850, as the bills were reported by their respective committees, are provided below.  According to CBO estimates,

  • Implementing H.R. 2728 would have no significant impact on the Federal budget.  If Federal regulations concerned HF technology on federal and Indian lands were to go into effect, the bill could possible reduce federal costs by limiting their implementation.  H.R. 2728 would not affect direct spending.
  • Implementing H.R. 2850 would cost $1 million annually, totaling $5 million over the 2014-2018 period.  H.R. 2850 would not affect direct spending.

Amendments

1)         Reps. Holt (D-NJ), Peters (D-CA), and Polis (D-CO) Amendment #16 – Amendment allows the Secretary of the Interior to issue regulations to reduce methane emissions from oil and gas drilling operations on public lands.

2)         Rep. Flores (R-TX) Amendment #15 – Amendment requires states to submit a copy of their hydraulic fracturing regulations and chemical disclosure requirements to the BLM for public disclosure and provides other technical/clarifying changes.

3)         Reps. Reed (R-NY) and Costa (D-CA) Amendment #17 – Amendment directs the GAO to conduct a study on the economic benefits of domestic oil and gas production as result of hydraulic fracturing including job creation, energy prices and State and Federal revenues.

4)         Rep. DeFazio (D-OR) Amendment #1 – Amendment prohibits the export of natural gas produced from public lands.

5)         Rep. Jackson Lee (D-TX) Amendment #5 – Amendment directs the Secretary to conduct an annual review of any and all state hydraulic fracturing activity and submit a report to Congress. 

Additional Information

For questions or further information contact the GOP Conference at 5-5107.