Regulators in North Dakota are considering a lawsuit to block the U.S. Environmental Protection Agency (EPA) from regulating hydraulic fracturing (fracking) well stimulation. The state’s Industrial Commission might ask lawmakers for $1 million for the effort.

The money would be used to hire a lawyer with petroleum exploration expertise. The Independent Petroleum Association of America (IPAA) already is suing EPA over fracking (see Shale Daily, Jan. 24).

The Energy Policy Act of 2005 exempted the practice of fracking from regulation by the federal government. However, the Safe Drinking Water Act of 1974 still bars fracturing with diesel fuel without prior oversight. IPAA took issue with the agency’s failure to follow the proper rulemaking process in seeking to require permitting for producers who use diesel fuel, said Lee Fuller, IPAA vice president of government relations.

In North Dakota half of the anti-regulation war chest could come from the state’s general fund and the rest from the Bank of North Dakota as a loan, the commission said.

“We are concerned that the EPA will remove the state of North Dakota from its regulatory role and proceed to abolish hydraulic fracturing,” said Gov. Jack Dalrymple. “We need to be prepared for legal action at any time.”

North Dakota Attorney General Wayne Stenehjem said partnering with other states to defend fracking could defray legal costs. “But we need to be ready,” he said. “If the EPA regulates fracking, it would likely put an end to fracking, and that would stop oil development in North Dakota.”

The state’s energy industry has been enjoying a boom thanks to the Bakken Shale play. According to NGI’s Shale DailyUnconventional Rig Count, the Bakken/Sanish/Three Forks has seen a 29% increase in rigs to 197 since a year ago.

State lawmakers began meeting in special session on Monday.

IPAA is suing EPA over its attempt to bypass a federal rulemaking process by issuing guidance documents on how it regulates fracking with diesel fuel. EPA has also said it wants to redefine diesel fuel in the Energy Policy Act of 2005 to include anything chemically found in diesel fuel, the commission asserted.

“It’s this redefinition that could halt oil production in the state,” said Lynn Helms, director of North Dakota’s Department of mineral resources. “Typical North Dakota hydraulic fracturing fluid contains 0.008% petroleum distillate — a very, very small amount of which should not trigger national regulation by the EPA.”