As part of its 2013 budget proposal, the White House is allocating $45 million among three federal agencies to study the effects of hydraulic fracturing on health, safety, and the environment. This figure represents an approximately ten-fold increase in the funds requested for investigation into hydraulic fracturing just last year.
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This increased funding is yet another indication that the industry should brace for the coming of a comprehensive federal regulatory scheme, and is, by any measure, significant because the United States Environmental Protection Agency (EPA) has very little direct authority to regulate hydraulic fracturing.
If developments in Pennsylvania and West Virginia are any indication, extracting natural gas through hydraulic fracturing is an engine of economic growth – one that, to this point, has been regulated largely at the state level. In his 2012 State of the Union address, President Obama stated that while his administration favored the development of unconventional natural gas, he noted that "America will develop this resource without putting the health and safety of our citizens at risk." The 2013 White House budget proposal is a strong indication that the Obama administration considers it a priority to determine the environmental impact of hydraulic fracturing, with an eye towards federal regulation of the activity.
The 2013 budget proposal allocates approximately $14 million to the EPA, $12 million to the United States Department of Energy (DOE), and $18.6 million to the United States Geological Survey to study hydraulic fracturing. The three agencies will coordinate to allocate respective responsibilities for the investigation. An EPA press release states that the "$14 million investment will begin to assess potential impacts of hydraulic fracturing on air quality, water quality, and ecosystems." According to EPA's 2013 Budget in Brief, the EPA intends to utilize these funds to assess potential air, ecosystem, and water quality impacts of hydraulic fracturing. It will be interesting to see how DOE avoids duplicating EPA's efforts because the budget summary for DOE states that "DOE, in collaboration with the Environmental Protection Agency and the U.S. Geological Survey, will focus on understanding and reducing the environmental, health, and safety risks of natural gas and oil production from hydraulic fracturing in shale and other geologic formations."
Pursuant to a congressional mandate, the EPA is already investigating the impacts of hydraulic fracturing on groundwater, in particular on drinking water resources. The EPA has proposed to release the final report of this study in 2014, though the agency expects to release preliminary findings later in 2012. The 2012 budget proposal requested approximately $4.4 million to carry out this study. The 2013 budget proposal, therefore, represents an approximately ten-fold increase in the funds requested for investigation into hydraulic fracturing.
This proposed dramatic increase in funding reflects intensified federal efforts to investigate an activity that is largely outside of EPA's purview. Apart from indirect air emission regulation under the Clean Air Act, the states are the primary regulators of hydraulic fracturing. But this proposed allocation of federal funds signals a shift towards expanded federal regulation of hydraulic fracturing. Of course, because this budget proposal must garner congressional approval, it is anyone's guess how much will ultimately be allocated to study the impacts of hydraulic fracturing.
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