An investigation into enforcement in the nation’s largest oil and gas producing states finds that companies have “little to fear from the inspectors and agencies regulating” the industry. This comes days after a panel of experts released a report warning that poor regulatory oversight of natural gas fracking could risk “serious environmental consequences and a loss of public confidence.”
The investigation of state-level data, conducted by Greenwire, shows that only a very small fraction of violations are enforced with fines. And when companies are fined, the penalties are “puny.”
In Texas, 96 percent of the 80,000 violations by oil and gas drillers in 2009 resulted in no enforcement action. West Virginia, a state with 56,000 wells, issued 19 penalties last year. And Wyoming, the center of Rocky Mountain energy, collected $15,500 in fines in 2010.
Pennsylvania, the most aggressive about fining violators, sought penalties for more than a quarter of the violations found last year. It levied fines for 4 percent of the violations, with the penalties totaling $3.7 million. The largest of those was a $900,000 fine against a drilling company that contaminated the water of 16 homes.
That was less than the profits the company makes in three hours.
Some states don’t even track key enforcement data, so regulators don’t know which companies have already been fined repeatedly.
This comes at a time of intense debate over how — or if — federal regulators should do more to monitor natural gas fracking. With the industry growing at around 50% a year, states are struggling to keep pace with the rate of expansion. A recent panel composed of industry professionals, put together by the Department of Energy, recently recommended that the Environmental Protection Agency finalize rules for regulating the practice:
We encourage EPA to complete its current rule making as it applies to shale gas production quickly, and explicitly include methane, a greenhouse gas, and controls from existing shale gas production sources. Additionally, some states have taken action in this area, and others could do so as well.
The Greenwire investigation also looked at oil production, another sector undergoing a substantial boom. Despite claims that Obama is blocking the oil industry, drillers are deploying more rigs today than they have since the mid-1980’s. That increase in activity is adding to the workload of state regulatory bodies, which have reportedly looked to these massive companies to fund investigations of their own violations:
Oil and gas companies are often national or international in scope, and when dealing with states, they start with the advantage of sheer size.
For example, Exxon Mobil’s 2010 revenues of $383 billion are several times the size of the state budget in California ($87 billion), the largest in the nation. Occidental Petroleum Corp. had 2010 revenues of $19 billion, larger than the budget of a midsized state such as Colorado, where it operates as Oxy USA.
At the level of state regulatory agencies, the numbers are much smaller, especially when it comes to fines.
One was, at the time, the largest fine in the history of the agency, $423,300 against Williams Production RMT Co. for poisoning the water supply of Ned Prather’s hunting cabin near DeBeque, Colo.
One day in May 2008, Prather arrived at his cabin and gulped down a cup of water from the kitchen sink. Right away, he told The Denver Post, his throat burned, his head throbbed and he felt like he was suffocating. His wife drove him to the hospital. Tests would later show the water had benzene and related chemicals at a concentration 20 times the safety limit.
State officials asked Williams to lead a group of local drillers with operations in the area to investigate whether drilling had contaminated Prather’s water.
Prather’s lawyer, Richard Djokic, compared the practice to letting the suspects investigate a murder.
“Imagine you have a body on the ground here, and we’re all standing around holding guns,” Djkokic told the Post. “A cop comes and says, ‘Figure out amongst yourselves who did this and let me know.'”
Companies in the fossil energy sector would prefer to see state-by-state regulations rather than stronger federal regulations. But are states equipped to handle the continued surge in drilling activity?