The Trillion-Gallon Loophole 

Drillers that inject pollutants into the earth face lax rules.

Page 2 of 6

Some at the EPA and at the Department of Justice, which prosecutes environmental crimes, say the system’s blind spots suggest that many more violations likely go undiscovered – at least until they mushroom into a crisis.

That’s what happened at Rosharon.

The accident prompted the EPA to examine what else had been dumped at the site, ultimately exposing a scheme by a company that was not involved in the explosion, Texas Oil and Gathering, to pass off deadly chemicals from a petroleum refining plant as saltwater from drilling.

The switch saved the company substantial fees by allowing it to dispose of the material in a Class 2 well, instead of a more stringently controlled well for hazardous waste, federal investigators said.

Texas Oil and Gathering’s owner and operations manager were convicted of conspiring to dump illegal waste and violating the Safe Drinking Water Act. Both declined to comment for this article.

Texas officials acknowledged that they had not looked beyond the paperwork submitted by the operators using the well. The delivery trucks weren’t inspected; the wastewater was not sampled. “Staff had no reason to believe at the time that such testing was necessary at this facility,’’ Ramona Nye, a spokeswoman for the Railroad Commission of Texas, which regulates the oil and gas industry activity in the state, wrote in an email. “The likelihood of unpermitted material being disposed of is low.’’

William Miller, the EPA’s chief investigator on the case, points out that the only reason anyone was held accountable for injection-related violations was because the site blew up. “If you can get the stuff down the well how is anyone ever going to know what it was?” said Miller, who retired from the EPA in 2011. “There is no way to recover it. It’s an easy way to commit a crime and not have any evidence left of it afterwards.”

One reason that Texas Oil and Gathering was able to dump toxic waste for years without getting caught is that environmental regulations governing how the oil and gas industry disposes of material underground were weakened almost as soon as they were written.

A series of injection accidents beginning in the 1960s – involving pesticide waste in Colorado, dioxins in Beaumont, Texas, and drilling waste that spread for miles through a drinking water aquifer in Arkansas – prompted lawmakers to impose tougher rules on injection wells.

Wells were divided into classes, depending on the source of the waste they handled. Class 1 wells for chemical, pharmaceutical and other industrial wastes, along with Class 2 wells for the oil and gas industry, were subjected to tough controls under the Safe Drinking Water Act of 1974. From the start, the EPA says, oil and gas waste was treated as less toxic than waste from other industries, but all such material was seen as dangerous to drinking water.

Companies drilling the wells were required to do geological modeling to ensure that surrounding rock layers would not allow waste to escape through fissures or fault lines. They also were required to check for the presence of other wells that could be a conduit for contamination. The EPA set baseline standards and mandated periodic inspections for defects. In many cases, states oversaw their implementation.

The ink had barely dried on the new regulations when the oil and gas industry – aided by sympathetic state regulators who thought their existing oversight was sufficient – began arguing that its waste should be treated differently.

Industry officials lobbied for state oil and gas agencies, some of which already had rules in place, to oversee Class 2 wells, not federal or local environmental officials. Some argued state energy regulators had greater expertise in well construction and regional geology.

In 1980, California Rep. Henry Waxman sponsored a measure that allowed the EPA to delegate authority to oversee Class 2 injection to state oil and gas regulators, even if the rules they applied varied from the Safe Drinking Water Act and federal guidelines.

A few years later, Dick Stamets, New Mexico’s chief oil and gas regulator at the time, told a crowd of state regulators and industry representatives that the Waxman amendment was a biblical deliverance from oppressive federal oversight for the drilling industry.

“The Pharaoh EPA did propose regulations and there was chaos upon the earth,” Stamets said. “The people groaned and labored, and great was their suffering until Moses Section 1425 (the Waxman amendment) did lead them to the Promised Land.”

In the late 1980s, the EPA moved to impose more stringent measures on injection wells after Congress banned injection of ”hazardous” waste. The new rules barred underground dumping unless companies could prove the chemicals weren’t a health threat. To earn permission to inject the waste, companies would have to conduct exhaustive scientific reviews to dispose of hazardous materials, proving their waste wouldn’t migrate underground for at least 10,000 years.

The energy industry moved preemptively to shield itself from these changes, too. The Safe Drinking Water Act prohibited the EPA from interfering with the economics of the oil and gas industry unless there was an imminent threat to health or the environment. The industry argued that its waste was mostly harmless brine and that testing and inspecting hundreds of thousands of wells for waste that would qualify as “hazardous” would delay drillers or cost them a fortune.


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