[Federal Register Volume 69, Number 68 (Thursday, April 8, 2004)]
[Rules and Regulations]
[Pages 18478-18480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-7974]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 147

[FRL-7644-8]


State of Alabama: Underground Injection Control Program Revision; 
Proposed Response to Court Remand

AGENCY: Environmental Protection Agency.

ACTION: Proposed determination on remand of final rule; request for 
public comment.

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SUMMARY: In this document, the Environmental Protection Agency (EPA) is 
requesting public comment on its proposed response to the Eleventh 
Circuit Court of Appeals' remand in Legal Environmental Assistance 
Foundation, Inc., v. United States Environmental Protection Agency, 276 
F.3d 1253 (11th Cir. 2001) (hereinafter LEAF II), directing EPA to 
determine whether Alabama's revised underground injection control (UIC) 
program covering hydraulic fracturing of coal bed seams to recover 
methane gas complies with the requirements for Class II wells. In LEAF 
II, the Eleventh Circuit Court affirmed EPA's decision to review 
Alabama's hydraulic fracturing program pursuant to the approval 
criteria in section 1425 of the Safe Drinking Water Act (SDWA), 42 
U.S.C. 300h et seq., instead of the approval criteria in section 1422 
of the SDWA, and rejected LEAF's claim that EPA's approval of the 
program pursuant to section 1425 was arbitrary. However, the Court 
remanded the matter, in part, for EPA ``to determine whether Alabama's 
revised UIC program complies with the requirements for Class II 
wells.'' After considering this issue, EPA has preliminarily determined 
that the hydraulic fracturing portion of the State's UIC program 
relating to coal bed methane production, which was approved under 
section 1425 of the SDWA, complies with the requirements for Class II 
wells within the context of section 1425's approval criteria. EPA is 
requesting comment on this proposed determination.

DATES: Comments on this proposed response to the Court remand must be 
in writing and either postmarked or received by the docket for this 
action by May 10, 2004.

ADDRESSES: Send written comments to: Larry Cole, U.S. Environmental 
Protection Agency, Region 4, Water Management Division, Ground Water 
and Drinking Water Branch, Sam Nunn Atlanta Federal Center, 61 Forsyth 
Street, SW., Atlanta, Georgia 30303. When submitting written comments, 
please submit an original and three copies of your comments and 
enclosures (including any references). Documents relevant to this 
action are available for inspection at this same address between 8 a.m. 
and 5 p.m., Monday through Friday, excluding legal holidays. A 
reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: General questions and questions on 
technical issues concerning today's document should be directed to 
Larry Cole at (404) 562-9474, or at the address above. Questions on 
legal issues concerning today's document should be addressed to Zylpha 
Pryor, Office of Environmental Accountability, U.S. Environmental 
Protection Agency--Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 
30303, telephone (404) 562-9535.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background Information
    A. Court Decisions
    B. Section 1425 of the SDWA
II. EPA's Response to Court Remand

I. Background Information

A. Court Decisions

    On May 3, 1994, the Legal Environmental Assistance Foundation, 
Inc., (LEAF) submitted a petition to EPA to withdraw Alabama's UIC 
program, asserting that the State was not appropriately regulating 
injection activities associated with coal bed methane gas production 
wells. Following the Agency's May 5, 1995, denial of the petition, LEAF 
sought review of this decision by the United States Court of Appeals 
for the Eleventh Circuit. On August 7, 1997, in LEAF v. EPA, 118 F. 3d 
1467 (11th Cir. 1997) (LEAF I), the Court held that hydraulic 
fracturing activities constitute underground injection under Part C of 
the SDWA and must be regulated by permit or rule. On February 18, 1999, 
the Eleventh Circuit directed EPA to implement the Court's August 1997 
decision. The Court established a schedule for EPA to follow in 
determining whether, in light of the Court's ruling regarding hydraulic 
fracturing, EPA should withdraw approval of Alabama's UIC program. In a 
January 19, 2000, Federal Register (FR) final rule, EPA announced its 
determination that Alabama's UIC program regulating hydraulic 
fracturing associated with coal bed methane production was consistent 
with the requirements of the SDWA and the

[[Page 18479]]

LEAF I Court mandate. See 65 FR 2889 (January 19, 2000).
    LEAF filed a petition for review of EPA's determination with the 
Eleventh Circuit Court, arguing that it should be set aside for three 
reasons. First, LEAF argued that the underground injection of hydraulic 
fracturing fluids to enhance the recovery of methane gas from coal beds 
is not underground injection for the secondary or tertiary recovery of 
natural gas under section 1425 of the SDWA. Second, LEAF contended that 
wells used for the injection of hydraulic fracturing fluids to enhance 
the recovery of methane gas from coal beds are Class II wells as 
defined in 40 CFR 144.6(b), and EPA's classification of hydraulic 
fracturing as a ``Class II-like underground injection activity'' was 
not in accordance with law. Third, LEAF argued that, even if Alabama's 
revised UIC program was covered by the alternative approval procedure 
of section 1425, EPA's approval of the revised program was arbitrary 
and capricious. The Eleventh Circuit generally ruled in favor of EPA, 
holding that: (1) EPA's decision to approve Alabama's hydraulic 
fracturing program pursuant to section 1425 of the SDWA was a 
permissible construction of the statute; and (2) EPA was not arbitrary 
in determining that Alabama's UIC program complies with the section 
1425 statutory approval requirements. LEAF II, 276 F.3d at 1260-61, 
1265. However, the Court remanded, in part, for EPA to determine 
whether Alabama's revised program covering the hydraulic fracturing of 
coal beds to produce methane complies with the requirements for Class 
II wells. Id. at 1264. The purpose of this document is to announce 
EPA's preliminary determination regarding the remanded issue, and to 
request public comment on it. EPA is not soliciting comment on any 
other aspects of its January 2000 approval of Alabama's revised UIC 
program.

B. Section 1425 of the SDWA

    Any State that seeks to acquire primary enforcement responsibility 
for the regulation of Class II wells may, at its option, apply for 
primacy for its Class II UIC program under the approval criteria in 
either section 1422 or section 1425 of the SDWA. Approval under either 
section is aimed at achieving the same fundamental objective of 
protecting underground sources of drinking water from endangerment by 
well injection. However, State program approvals under section 
1422(b)(1) of the SDWA are required to meet a different legal standard 
than State program approvals under section 1425. Section 1425 was added 
as part of the 1980 amendments to the SDWA to offer States an approval 
alternative that was not necessarily tied to the detailed regulatory 
requirements for Class II wells found at 40 CFR Parts 124, 144, 145, 
and 146.
    Approval under section 1422(b)(1)(A) requires that the State UIC 
program meet the requirements of regulations in effect under section 
1421. Those regulations, which are found at 40 CFR Parts 124, 144, 145, 
and 146, are very detailed and specific. However, under the alternate 
section 1425 approval criteria, a State may instead demonstrate that 
the Class II portion of its UIC program meets the requirements of 
section 1421(b)(1)(A) through (D) and represents an ``effective'' 
program to prevent injection which endangers drinking water sources. A 
State has more flexibility in developing a section 1425-approvable 
Class II program than if it were developing the same program for 
approval under section 1422. Similarly, EPA has more discretion to 
approve a Class II program under the section 1425 criteria, because 
that program does not have to ``track'' or be ``as stringent as'' each 
of the Class II-related requirements of 40 CFR parts 124, 144, 145, and 
146. See 40 CFR 145.11(b)(1). If a State makes a satisfactory 
demonstration pursuant to section 1425 that its Class II program 
warrants approval, it has done all that is required to demonstrate that 
its program complies with the requirements for Class II wells.

II. EPA's Response to Court Remand

    During the hydraulic fracturing process, fracturing fluids are 
injected through methane production wells to create fractures in the 
formation through which methane flows to the well and up to the 
surface. In its January 19, 2000, Federal Register final rule approving 
Alabama's UIC program revisions, EPA characterized hydraulic fracturing 
for the production of coal bed methane as a ``Class II-like underground 
injection activity.'' In the final rule, EPA acknowledged that its 
classification scheme recognizes only five classes of wells. However, 
EPA stated that, since the injection of fracture fluids is often a one-
time exercise of extremely limited duration and was ancillary to the 
well's principal function of producing methane, it did not seem 
entirely appropriate to ascribe full Class II status to that activity. 
EPA also based its Alabama well classification decision on the fact 
that the general UIC ``well classification systems found in 40 CFR 
144.6 and 146.5 do not expressly include hydraulic fracturing'' and 
``the various permitting, construction, and other requirements found in 
Parts 144 and 146 do not specifically address hydraulic fracturing.'' 
65 FR at 2892. It is still the case today that EPA has not promulgated 
national regulations expressly and specifically designed to establish 
minimum requirements for State programs that regulate hydraulic 
fracturing of coal beds to enhance methane production.
    The LEAF II Court found EPA's classification of Alabama's 
hydraulically fractured coal bed methane wells as ``Class II-like'' to 
be inconsistent with the plain language of 40 CFR 144.6, which defines 
Class II injection wells. In its opinion, the Court held that, even 
though the injection of fracture fluids is often a one-time exercise of 
extremely limited duration, ``wells used for the injection of hydraulic 
fracturing fluids fit squarely within the definition of Class II 
wells.'' LEAF II, 276 F.3d at 1263; see also 40 CFR 144.6(b)(2). In 
view of its finding that the wells are Class II wells, the Court 
remanded, in part, for EPA to determine whether Alabama's revised UIC 
program complies with the requirements for Class II wells.
    In applying for approval of that part of its Class II UIC program 
regulating hydraulic fracturing of coal beds, Alabama could have sought 
primacy either under section 1422 or section 1425 approval criteria of 
the SDWA. Since Alabama chose to make its demonstration pursuant to 
section 1425, EPA appropriately evaluated that part of Alabama's Class 
II program regulating hydraulic fracturing of coal beds using the 
section 1425 alternative approval requirements.
    To receive approval for its Class II program, or some component 
thereof, under the optional demonstration, section 1425 requires a 
State to show that its program meets the following five criteria: (1) 
Section 1421(b)(1)(A) provides that the State program must prohibit any 
underground injection which is not authorized by permit or rule; (2) 
section 1421(b)(1)(B) provides that the State program require that the 
applicant for a permit satisfy the State that the underground injection 
will not endanger drinking water sources and prohibits the State from 
promulgating any rule which authorizes underground injection which 
endangers drinking water sources; (3) section 1421(b)(1)(C) requires 
that the State program include inspection, monitoring, record keeping, 
and reporting requirements; (4) section 1421(b)(1)(D) provides that the 
State program must apply to underground injections by Federal agencies, 
as well as underground injections by any other person, whether or not 
occurring on

[[Page 18480]]

property owned or leased by the United States; and (5) the State 
program must represent ``an effective program'' to prevent underground 
injection which endangers drinking water sources, in accordance with 
section 1425(a). If a State can successfully demonstrate that its Class 
II program satisfies all of these requirements, the program has met all 
the statutory requirements for approval. As previously discussed, under 
section 1425, that program, or a component thereof, does not have to 
demonstrate that it contains requirements as stringent as, or identical 
to, each of the specific Class II requirements found in Parts 144 and 
146 of EPA's regulations. Instead, a finding that such a program, or 
component thereof, meets the Class II approval requirements of section 
1425 means that such a program, by virtue of that finding, necessarily 
complies with all applicable statutory and regulatory requirements for 
Class II wells.
    EPA's determination that Alabama's hydraulic fracturing program 
related to coal bed methane production complied with the section 1425 
requirements for Class II program approval was explained in great 
detail in the January 19, 2000, Federal Register final rule. The LEAF 
II Court held that EPA's determination that Alabama's UIC program 
complies with the SDWA's statutory requirements was not arbitrary. LEAF 
v. EPA, 276 F.3d at 1265. EPA is not reopening that earlier approval 
decision or soliciting additional comment on it. EPA is only seeking 
comment on its proposed response to the LEAF II Court's question on 
remand.
    In reviewing and approving Alabama's coal bed methane-related 
hydraulic fracturing program, EPA was cognizant of the various 
regulatory provisions in Parts 144 and 146 designed to prevent Class II 
injection wells from causing the movement of fluid containing any 
contaminant into an underground source of drinking water (USDW). EPA 
generally expects traditional State Class II programs, i.e., those 
regulating the injection of fluids brought to the surface either in 
connection with conventional oil and gas production or for enhanced 
recovery or storage of oil and gas, to demonstrate their 
``effectiveness'' to prevent underground injection which endangers 
USDWs pursuant to Section 1425 by inclusion of statutory or regulatory 
provisions preventing fluid movement. EPA was concerned that according 
``full'' Class II status to Alabama's hydraulically-fractured methane 
production wells could have been misconstrued as requiring a strict 
application of those ``no fluid movement'' provisions and could have 
unnecessarily impeded methane gas production in Alabama within the 
meaning of SDWA section 1421(b)(2) because Alabama's revised program 
allowed injection of fracturing fluids into USDWs, provided they did 
not cause a violation of any maximum contaminant level (MCL) or 
otherwise adversely affect the health of persons. LEAF v. EPA, F.3d at 
1264 n.12; EPA brief at 30-31. EPA thus decided to characterize wells 
used to inject hydraulic fracturing fluids into Alabama's coal bed 
formations as ``Class II-like,'' rather than Class II. However, this 
characterization of Alabama's hydraulically-fractured methane 
production wells, while designed to further ensure that regulation of 
those wells did not unnecessarily interfere with or impede methane gas 
production, was unnecessary for purposes of EPA's approval due, in 
part, to the unique attributes of hydraulic fracturing in Alabama, and 
because EPA did, in fact, make a substantive finding, which was upheld 
by the LEAF II Court, that Alabama's program does not endanger USDWs 
because, among other requirements, the injection must not cause a 
violation of any MCL or otherwise adversely affect the health of 
persons. EPA thus appropriately exercised the discretion and 
flexibility inherent in SDWA section 1425 to approve Alabama's coal bed 
methane-related hydraulic fracturing program allowing such movement 
where: (1) EPA's Class II regulations were not designed to, and do not 
specifically address the unique technical and temporal attributes of 
hydraulic fracturing, and (2) EPA determined pursuant to section 1425 
that Alabama's program is effective at preventing endangerment of 
USDWs.
    In sum, SDWA gives Alabama more flexibility in developing a section 
1425-approvable Class II program for the hydraulic fracturing of coal 
beds to produce methane than if it were developing the same program for 
approval under the criteria in section 1422. Similarly, EPA has more 
discretion to approve Alabama's revised Class II program relating to 
coal bed methane production under the criteria in section 1425, because 
that program does not have to ``track'' or be ``as stringent as'' each 
of the Class II-related requirements of 40 CFR parts 124, 144, 145, and 
146. See 40 CFR 145.11(b)(1). Because Alabama made a satisfactory 
demonstration pursuant to section 1425 that its coal bed methane-
related hydraulic fracturing program warranted approval, it did all 
that was required to demonstrate that its program complies with the 
requirements for Class II wells.

    Dated: April 5, 2004.
Benjamin H. Grumbles,
Acting Assistant Administrator, Office of Water.
[FR Doc. 04-7974 Filed 4-7-04; 8:45 am]
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