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Industry Accuses Obama EPA of Bias Against Oil, Gas

Citing the the recent disclosure of a "crucify them" enforcement mentality of a former Environmental Protection Agency (EPA) official and several agency missteps involving the use of hydraulic fracturing to develop unconventional gas, Congress Wednesday was called upon to exercise greater oversight over EPA's regional officials and their activities.

The "crucify them" remarks by former EPA Region 6 Administrator Al Armendariz, which were videotaped in 2010 but only surfaced in April, "suggest that Congress must exercise greater oversight of EPA regional offices and that EPA regional administrators should be subjected to Senate confirmation," said Robert J. Sullivan Jr., chairman of the Oklahoma Independent Petroleum Association, during a House Energy and Commerce subcommittee hearing.

Armendariz resigned as head of the regional office in April following public outcry over his remarks regarding his apparent approach to enforcement of the oil and natural gas industry (see Shale Daily, May 1). In the video, he said his approach "was kind of like how the Romans used to conquer little villages in the Mediterranean. They'd go into a little Turkish town somewhere; they'd find the first five guys they saw and they would crucify them. And then you know that town was really easy to manage for the next few years."

In light of the "EPA's recent missteps and Armendariz's overt political activism, we must -- at minimum -- have a full investigation of Armendariz's actions during his tenure as administrator so that we may determine how often, and to what extent, he crossed the line and harmed our economy and energy future," said Barry T. Smitherman, chairman of the Railroad Commission of Texas (RRC).

Armendariz was scheduled to testify at the hearing but he canceled at the last minute. Rep. Fred Upton (R-MI), chairman of the full committee, plans to send letters to both Armendariz and the EPA to find out why he did not attend the hearing.

Armendariz's remarks reflect the Obama administration's EPA agenda, industry and state officials said. "I do think there is a bias [against fossil fuels]. And I think it comes from the top [President Obama]," Sullivan said. "Armendariz seems to have operated in a manner consistent with that of the rest of President Obama's administration. To cite his own imagery, I have no doubt that Armendariz simply believed he was 'crucifying' oil and gas producers as a loyal Roman soldier serving the emperor," he noted.

But Joel Mintz, a law professor at Nova Southeastern University Law Center in Fort Lauderdale, FL, disputed industry claims that EPA is "overzealous" in its enforcement actions. "For the past three and a half years EPA's approach to enforcement has employed the same overall philosophy and strategy that have characterized EPA enforcement since the early 1970s [when the agency was created under President Richard Nixon]. Rather than being uniquely overzealous or draconian, EPA enforcement in the Obama years has followed long-standing patterns, established at EPA well before 2009," when Obama took office.

He noted that the EPA in the first three years of the Obama administration assessed fewer civil penalties ($115 million per year) than were assessed during the eight years of the Bush administration ($117 million per year). "Similarly EPA enforcement actions against the oil and gas industry declined during the Obama presidency, as compared with the preceding administration. EPA brought only 87 enforcement actions against this industry in 2011, while it initiated 224 such actions in 2002," Mintz said.

"Soon after...Armendariz spoke of crucifying oil companies like Romans used to crucify villagers, EPA targeted operators in Texas [Range Resources Corp.], Wyoming [Encana Corp.] and Pennsylvania [Cabot Oil and Gas Corp.]. EPA deliberately created a public media frenzy in these three cases by asserting that hydraulic fracturing had caused water pollution, only to quietly withdraw or temper those false accusations at a later date once proven wrong," Smitherman said.

In early April EPA withdrew its "imminent and substantial endangerment order" that it had issued in December 2010 against Range Resources for alleged contamination of water wells in the Texas Barnett Shale, but only after the company was forced to spend $4 million defending itself against EPA's "persecution," he said (see Shale Daily, April 2).

The EPA issued the endangerment order even though it had been advised by RRC that an investigation was ongoing by the state and that no final conclusions had been reached yet, Smitherman said. "EPA acted prematurely."

"EPA has acted with similar haste in Pavillion, WY, and Dimock, PA, where EPA accused oil and gas [Encana and Cabot, respectively] of groundwater contamination from their hydraulic operations without sufficient evidence to justify those accusation. In both cases, like with Range Resources, EPA ignored the facts and the science, whipped the public into hysteria and then quietly backed away from its initial allegations," Smitherman noted.

In mid-March after several years of on-again-off-again investigations, EPA concluded that test results of water samples taken from households in Dimock Township did not indicate any level of contamination from wells drilled by Cabot (see Shale Daily, March 19).

And in early March EPA Administrator Lisa Jackson agreed to cooperate in a joint review with Wyoming officials of earlier EPA testing that found the groundwater in Pavillion contained chemicals normally used in natural gas production practices (see Shale Daily, March 12). Wyoming Gov. Matt Mead got involved, pursuing further investigations by a joint state-federal panel after Encana disputed EPA draft report findings on contaminants in groundwater near its wells (see Shale Daily, Dec. 21, 2011). Mead and Wyoming legislators further lay claim to the issue, passing a bill that would provide state funding for a long-term water solution for residents outside of Pavillion (see Shale Daily, May 29).

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