Alabama has yielded to a court mandate requiring that fluids used to fracture coalbed methane reservoirs must meet the U.S. Environmental Protection Agency's primary drinking water standard.
The case has obvious implications for 12 other states with coalbed methane production.
The Legal Environmental Assistance Foundation Inc. (LEAF) sued EPA in 1995, alleging the agency erred by not requiring Alabama to regulate coalbed fracturing under the Safe Drinking Water Act's Underground Injection Control (UIC) program.
As it does elsewhere, EPA had delegated its UIC powers to the state. The Alabama Oil and Gas Board did not regulate fracturing, consistent with EPA's interpretation that the UIC program only covered wells whose "principal function" was the injection of fluids into the ground.
In 1997, the 11th Circuit Court of Appeals ruled against EPA and the state, ruling that fracturing was not a drilling technique because it occurred after a well had been drilled (OGJ, Sept. 15, 1997, p. 25).
LEAF returned to court last February and obtained a court order requiring EPA and the state to enforce the ruling.
Alabama tried to draft rules to allow some fracturing in coalbed methane reservoirs, but EPA decided they did not comply with the court order.
EPA then threatened to revoke the state agency's powers to regulate Class II UIC activities. A July 28 public hearing on the issue was dispersed by the local fire marshal because 240 persons (mostly from the gas industry) jammed into a room designed for 100.
The meeting was rescheduled for Sept. 9 at a large University of Alabama auditorium.
On Aug. 20, the state oil and gas board relented and adopted rules requiring fracturing fluids to meet the primary drinking water standard.
Sens. Jim Inhofe (R-Okla.) and Jeff Sessions (R-Ala.) have filed a bill to exempt hydraulic fracturing. But it is stalled and unlikely to pass the Senate environment committee. There is no companion bill in the House.
Dennis Lathem, executive director of the Coalbed Methane Association of Alabama, said the issue is not a parochial one.
"The entire oil and gas industry needs to be extremely concerned about what happens next. I'm not just talking about coalbed methane. It could affect anybody involved in fracturing anywhere in the nation."
He said Alabama producers could expect months of procedural actions by the state agency, possibly followed by years of litigation on ancillary issues.
Lathem said, "Industry fully understands that the oil and gas board had no choice. It has just been forced on the state of Alabama, without any cost-benefit analysis, economic studies, or risk assessments."
He noted that there has never been a confirmed case of pollution from underground fracturing of coal seams in the 13 states with production.
Lathem said, "It will be a major challenge for industry to comply with these rules, and it could be expensive. All for very little-or no-environmental benefit, I might add."