SEC fights fracking criticism

Backing off: SEC says concerned with financial statements, not environmental rules

The US Securities and Exchange Commission wants to ensure drilling companies are not misleading investors about their natural gas reserves but it is not cracking down on a practice of hydraulic fracturing, its chairman said on Thursday according to a report.

The SEC issued subpoenas to Exco Resources and Quicksilver Resources last month regarding a probe into whether companies are overstating the productivity of their natural gas wells, Reuters reported.

That has led to complaints from some lawmakers, including Rep Bill Posey, a Florida Republican, that the SEC was straying from its traditional area of securities abuse into regulating environmental issues.

SEC Chairman Mary Schapiro said the SEC is not overstepping its boundaries, and instead is only trying to make sure companies are not misleading investors about their reserves.

"We are not regulating fracking in any way," Shapiro told the House Financial Services Committee at a hearing Thursday.

In hydraulic fracturing, or fracking, drillers crack open rocks deep underground with a blast of sand, water and chemicals to unleash natural gas and oil. Environmentalists and communities near drilling sites have fear that fracking can pollute water supplies.

According to a report by the Wall Street Journal, the SEC was also asking oil and gas drillers to provide it with detailed information on chemicals used in the fracking process.

Energy companies are being asked to supply information to the SEC and the agency may require them to publicly disclose some of the data.

Schapiro said staff in the SEC's Corporation Finance division, which reviews public disclosures, has been involved in the reserves issue.

"Our review group for that industry ... has asked questions in their comment letters as they send them back and forth to companies," she said.

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