The Obama administration began a process that may result in the first federal regulation of chemicals used in fracking, a drilling technique that has transformed energy production while eluding oversight sought by environmentalists.

After three years of delay, the U.S. Environmental Protection Agency said today it’s considering rules requiring oilfield service companies such as Halliburton (HAL) Co. to send it details on the health and safety of the chemicals used. The agency said it may decide to stop short of rules, and use incentives or voluntary steps.

“It’s unfortunate that this process has taken so long, as it addresses a critical need to ensure the safety of chemicals used in fracking,” Richard Denison, the lead scientist of the Environmental Defense Fund, said in a blog post. “This is only the first baby step toward initiating the rulemaking process EPA said it would undertake.”

Environmental groups have been pressing the agency to collect information on the fluids injected with water and sand to break apart underground rocks, saying they may be a danger to human health or the environment. The oil and natural gas industries have tried to fend off any federal oversight of the practice, saying states can best oversee it. Oilfield service providers also say their recipes are trade secrets.
‘Important Step’

The EPA earlier said it would consider gathering the information under a provision of the toxic substances act. The action today is the next step, and it came without a specific guarantee of a regulation that the environmental groups sought.

“Today’s announcement represents an important step in increasing the public’s access to information on chemicals used in hydraulic fracturing,” James Jones, the EPA’s assistant administrator, said in a statement. The plan will “complement but not duplicate existing reporting requirements,” he said.

Industry, which has fought to preempt federal oversight of oil and gas drilling, reacted cautiously to EPA’s announcement.

“Our members are committed to the continued safe and responsible development of America’s abundant natural gas resource and to being good neighbors in communities in which we operate,” Dan Whitten, a spokesman for the America’s Natural Gas Alliance, said in an e-mail. “We look forward to engaging with EPA to see that any new regulatory or voluntary program employ a common sense, workable and effective approach.”
Gas Boom

Fracking has led to a natural-gas boom in Pennsylvania, Ohio and Texas, sparking opposition among some residents who say the technology may contaminate drinking water and add to air and soil pollution. Many drilling companies are disclosing chemical information on the industry website FracFocus.org. Some states require drillers to submit data to the site.

Critics say the website allows too many exemptions that keep ingredients secret and doesn’t permit easy aggregation of information. And drilling companies may not know the full list of chemicals used in their fracking fluids, they say. The EPA has the authority to make more broad demands, and, if necessary, keep the information private.

“The presumption should be on behalf of disclosure,” Deborah Goldberg, a lawyer at Earthjustice which, along with EDF, petitioned the EPA in 2011 to require the chemical disclosure. “One of the best incentives for safer chemicals is forcing disclosure of toxic chemicals.”
Baker Hughes

Already, one supplier to the drilling industry is acting.

Baker Hughes Inc. (BHI), the world’s third-largest oilfield services provider, in April said it will disclose all the chemicals used in fracking fluids after negotiating with suppliers and customers.

Halliburton reports its fracking fluids to FracFocus, said Susie McMichael, a spokeswoman for the company.

“Halliburton has been working and continues to work with the EPA and other regulatory agencies in answering questions and providing them with information as requested,” she said in an e-mail.

Schlumberger Ltd. (SLB), the world’s largest oilfield services provider, declined to comment.

The EPA, in its notice of proposed rulemaking today, is giving companies, environmentalists and interested members of the public 90 days to respond, and will subsequently decide on its next step.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Steve Geimann