Senate Votes to Keep 'Halliburton Loophole'

The Senate sided with the oil and gas industry yesterday and flatly rejected an effort to repeal a provision environmentalists call the "Halliburton loophole."

The measure would have repealed a provision in the 2005 energy bill that exempted the practice from the underground injection control (UIC) provisions of the Safe Drinking Water Act. That prevented U.S. EPA from regulating fracturing or requiring a federal permit.

The 35-63 vote left regulation of hydraulic fracturing firmly in the hands of state agencies, as industry prefers.

It was the first congressional floor vote in years on the question of whether U.S. EPA should be able to regulate hydraulic fracturing, a controversial aspect of drilling that has driven the U.S. boom in oil and gas production.

Sen. Kirsten Gillibrand (D-N.Y.) proposed it as an amendment to legislation to approve the Keystone XL oil pipeline. New York Gov. Andrew Cuomo (D) banned fracking last month (EnergyWire, Dec. 18, 2014).

Oil and gas producers have fought any suggestion of federal regulation of fracking for years. Industry officials, such as Lee Fuller, executive vice president of the Independent Petroleum Association of America, said fracking has a proven safety record.

Gillibrand's proposal, Fuller said, "undercuts the work, investment and dedication America's oil and gas industry puts toward complying with the wide array of existing state and federal laws to ensure the continued health of our environment and groundwater."

Environmental groups, though, said the oil and gas industry has a long record of polluting water.

"Every senator who voted against the Gillibrand amendment prioritized the oil and gas industry's profits ahead of a community's right to safe drinking water," said Lauren Pagel, policy director for the environmental group Earthworks.

All Republicans voted against Gillibrand's proposal except Sen. Marco Rubio (R-Fla.), who did not vote. At least eight of her Democratic colleagues from swing states and oil-producing regions also voted against it, including Sens. Michael Bennet of Colorado, Tim Kaine of Virginia, Tom Udall and Martin Heinrich of New Mexico, Jon Tester of Montana and Heidi Heitkamp of North Dakota.

Sen. James Inhofe (R-Okla.), a strong supporter of oil and gas, called the vote a "collective step in the right direction for the U.S. Senate and hardworking Americans."

Centrist Democrats joined with Republicans in voting against Gillibrand's proposal.

The 2005 exemption has become known as the "Halliburton loophole" because Halliburton Co. had lobbied for the exemption while Dick Cheney ran the company. As vice president under President George W. Bush, Cheney touted it in the energy plan he shepherded for the Bush administration.

It's not clear what repealing the exemption would do. EPA had never broadly regulated fracking before the exemption passed, though it had complied with a 1997 federal appeals court order to require Alabama to regulate it. Without the 2005 exemption, environmental groups might have been able to expand the precedent into other states.

Deep underground injection of oil and gas waste into thousands of wells across the country remains covered by the UIC provision in the law. There have been few complaints about EPA's oversight.

Efforts to end the exemption for fracking have failed to gain traction on Capitol Hill, even when Democrats had full control. Democratic legislation commonly called the "FRAC Act" (short for "Fracturing Responsibility and Awareness of Chemicals") never got a hearing.

Versions of the legislation were included in Senate climate and energy legislation in 2010 but did not come to votes on the floor.

In 2002, the Senate voted 78-21 on a proposal by then-Sen. Jeff Bingaman (D-N.M.) preventing federal regulation of fracturing while EPA conducted a study of what dangers it posed to drinking water.

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