11/11/2018 - CleanLaw Podcast - EELP News

Podcast with Cynthia Giles – EPA Enforcement of Oil & Gas

Click here for a full transcript of this episode.

Our executive director Joe Goffman recently interviewed Cynthia Giles, former Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance for the entire Obama Presidency. Cynthia and Joe talk about the Trump EPA’s enforcement policies, including a recent initiative focusing on the oil and gas industry, and the impact they have on air quality and public health.

Podcast with Cynthia Giles – November 8

Key points from our interview:

  • There are a variety of “under the radar” actions in the realm of enforcement that are threatening public health protections. Many of these policies and programs appear to be facially neutral and seem to represent a common-sense view of enforcement, yet these policies have a dramatic effect on environmental quality and public health.
  • The New Owner Clean Air Act Audit Program for the oil and natural gas industry is an example of one of these programs which is concerning given the ongoing pollution issues with the industry.
  • After it came into office, the Trump administration swiftly pulled back air pollution rules adopted by the Obama administration and pulled back from vigorous enforcement of the remaining pollution rules in the oil and gas sector, where there are over 1 million pollution sources.
  • The shift away from enforcement actions to focus on voluntary programs like the New Owner Clean Air Act Audit Program does not provide the general deterrence effect that enforcement actions provide and allows those companies who do not volunteer to go unnoticed and likely engage in unlawful pollution.
  • Reducing enforcement actions is particularly problematic in the oil and gas sector where pollution rule violations and non-compliance are rampant, yet hard to detect unless EPA invests in inspecting sites and reviewing records carefully.
  • The agency has been wrapping itself in red tape with its focus on the new voluntary audit program and the requirement for regional offices to obtain approval from headquarters before sending out requests for information from companies within their region. Another new hurdle is the requirement that states agree with new enforcement cases being filed and resolved.
  • EPA’s enforcement budget is likely being stretched by its work with companies on a voluntary basis which constrains the potential for agency enforcement actions as well.

Summary:

  • There are over 1 million active oil and gas wells in the U.S. and that number is growing. These wells are a large source of volatile organic compounds (VOCs) that contribute to ozone air pollution, often in populated areas.
  • During the Obama administration, the EPA observed that in areas linked to oil and gas sector pollution, ozone smog was increasing dramatically. After investigation, the EPA determined that rising pollution was the result of violations of mandatory pollution limits at oil and gas operations, plagued, for example, by widespread failure to design pollution controls to meet standards or to maintain common sense practices like closing storage tank hatches to prevent pollutant releases.
  • Even the Trump administration has acknowledged that there are numerous sources in the sector that pollute above legal limits.
  • Because it has been challenging to enforce these limits, emissions violations in the oil and gas sector had been a major focus for the Obama administration, which pursued a strategy using enforcement actions against major violators to send a clear message to the industry: energy resources need to be developed in compliance with environmental laws to protect public health.
  • The three largest cases required three companies to spend over $100 million to fix problems with their pollution control equipment and to pay $8 million in fines because they had systematically failed to make the investments needed to comply with the law.
  • Some oil and gas companies responded to Obama EPA’s enforcement initiative by working with EPA to create long-term solutions to non-compliance issues.
  • The major cases had a clear deterrent effect that resulted in reductions beyond just the companies that were subject to enforcement actions as other companies came into compliance after realizing their legal liability.
  • The Trump administration swiftly pulled back from this enforcement strategy and advanced a new approach: companies know what they need to do and they should fix problems on their own as they find them. The net effect of this new approach is less protection of air quality and public health.
  • The shift away from enforcement actions to focus on companies that volunteer to cooperate with EPA allows those companies who do not volunteer to go unnoticed at the risk that violations with go undetected.
  • The new self-auditing program does not provide a general deterrence effect since focuses only on companies that volunteer at the time they take ownership of individual wells and production sites.
  • Notably, this program is very time-intensive and EPA has limited resources, so the more time EPA spends with companies in this program, the less time EPA has to focus on other efforts and entities like companies that have not volunteered for this program.
  • This leads to the question of whether the agency is draining its enforcement resources and getting less leverage and impact.
    • The answer seems to be yes.
  • If the agency wanted to wrap itself in red tape, this program is the blueprint to do so.
  • Aggravating the agency’s self-imposed internal “red tape” are changes to enforcement at the regional level.
  • EPA has been slowing its enforcement activity by requiring regional offices to obtain approval from headquarters before sending out requests for information from companies within their region. This process has led to a stunning decline in enforcement actions by crippling the primary information-gathering function of the regional offices.
  • Another new hurdle is the requirement that states agree with new enforcement cases being filed and resolved. If the state does not agree, the issue can be appealed up to the Assistant Administrator.
  • This presents an additional obstacle for regional offices’ enforcement actions, as states may be emboldened to push back against EPA headquarters and regional enforcement priorities.
  • States bring different views to enforcement from those of EPA regional offices, often reflecting both understanding of local community concerns and sensitivity to the economic effects of enforcement on sectors or operators of importance in their state.
  • One of EPA’s essential functions is to approach enforcement issues from a position removed from the political pressure that states are subject to, in order to level the playing field nationally and strike a balance among competing considerations. Some of these cases also require resources and sophistication that not every state has available.
  • EPA has an important role to play to reduce pollution according to statutory mandates as the federal enforcement authority, and when it steps back there is less protection for communities. Paradoxically, the increased role now granted the states increases their susceptibility to political pressure even when they would prefer to see enforcement actions go forward: local industries know they have a decision-making role in enforcement where they did not previously.