EPA hits gas driller with historic civil penalty for filling W.Va. wetlands
The civil penalty is one of the largest ever levied by EPA for filling wetlands, rivers or streams without a Clean Water Act permit.
The agreement requires Chesapeake, the country’s second-largest natural gas producer, to implement a plan to ensure compliance with federal and state water laws at its natural gas drilling sites in West Virginia — including many that involve hydraulic fracturing.
“With this agreement, Chesapeake is taking important steps to comply with state and federal laws that are essential to protecting the integrity of the nation’s waters, wetlands and streams,” said Robert Dreher, acting assistant attorney general of the Justice Department’s Environment and Natural Resources Division.
EPA and West Virginia alleged that Chesapeake Appalachia LLC funneled discharged sand, dirt, rocks and other fill material into streams and wetlands to construct well pads and other platforms for natural gas operations.
The agency said the 27 sites affected 2.2 miles of streams and more than 3 acres of wetlands. Sixteen of the sites involved the controversial practice of hydraulic fracturing, or fracking.
Chesapeake will be required to fully restore the wetlands and streams where feasible under the settlement. It will also undertake other mitigation projects for areas that cannot be restored.
Gordon Pennoyer, a spokesman for Chesapeake, called the settlement a “key milestone” in resolving claims relating to surface construction that occurred before November 2010.
“The company is fully committed to regulatory compliance and is working with the Environmental Protection Agency, Army Corps of Engineers and West Virginia Department of Environmental Protection to restore the impacted sites,” Pennoyer said.
EPA discovered the discharges through public tips as well as routine inspections. Chesapeake also disclosed 19 potential violations after an internal audit. EPA issued compliance orders for violations at 11 of the sites in 2010 and 2011, and since then Chesapeake has taken steps to restore those areas.
EPA’s settlement comes a year after Chesapeake also pleaded guilty to three Clean Water Act violations at a natural gas site in Wetzel County that is also at issue in today’s action. Last year, Chesapeake was sentenced to pay a $600,000 penalty to the government for allegedly discharging crushed stone into a local stream.
Industry-backed review blasts economic analysis for CWA rule
The analysis significantly underestimates the number of additional waters and wetlands that would receive Clean Water Act protections under the draft regulation, a consultant for the industry group Waters Advocacy Coalition told reporters today. It also underestimates the costs that would be associated with permitting these additional waters, and it relies on “simplistic assumptions” about the benefits of protecting the waters, he said.
“No matter which side of this debate you fall on, this is not an analysis that comes close to doing justice to the problem,” said David Sunding, an economics professor in the College of Natural Resources at the University of California, Berkeley, who served as an economist for the Council of Economic Advisers during the Clinton administration.
Sunding’s study is based on a leaked economic analysis of a draft proposed Clean Water Act regulation. U.S. EPA has not publicly confirmed that the leaked analysis is the document that was sent to the White House Office of Management and Budget with the draft proposed rule, but stakeholders have been treating it as such and say agency staff have privately confirmed its veracity (E&ENews PM, Dec. 6).
The Waters Advocacy Coalition, the industry group that commissioned Sunding’s study of the economic analysis, represents agricultural, real estate development, mining, and oil and gas interests. Representatives of the coalition intend to lay out Sunding’s analysis during a meeting with members of the administration at OMB on Monday, they said.
“They just want the hammer and, unfortunately, this type of regulation plays into their strong suit, which is, ‘we want to regulate,’” said Don Parrish, senior director of regulatory relations at the American Farm Bureau Federation, who hosted today’s call with Sunding.
Sunding said the fundamental problem with the economic analysis is that it is premised on an “implausibly low” number of waters that are not regulated today but would be under the new regulation.
By examining information in an Army Corps of Engineers database about waters that were previously ruled nonjurisdictional, the analysis authors estimate that all streams and wetlands near a major water would be ruled jurisdictional under the draft regulation, as well as an additional 2.7 percent of other waters such as isolated wetlands.
But Sunding said that 2.7 percent estimate is “farfetched in the extreme.”
The problem, he said, is methodological. Not all developers go to the corps for a jurisdictional determination if the waters on their site clearly wouldn’t fall under today’s regulations.
“If you think about the universe of all projects — all development projects — not all of them submit information to the corps for a jurisdictional determination,” he said. “If you think about the impacts of a rule like this, its intent is to bring more projects into the regulatory apparatus, but the way the EPA did the analysis, they completely ignore impacts on any project that wouldn’t have submitted information for a jurisdictional determination.”
Moreover, the period of time from which the authors drew their sample — 2009 to 2010 — was one of the slowest periods of development since World War II, Sunding said, further biasing the estimate.
The authors, however, defended their use of the database in the analysis document. While it is true that not all waters are captured in the corps’ database, they write, the waters that developers did not seek a jurisdictional determination for are “also likely to be the most isolated and the least connected to other waters and therefore the least likely to have their status changed under this proposed rule.”
Study also finds fault with cost estimates
In addition to underestimating the total scope of the rule, Sunding argues, the analysis also lowballs the costs associated with this broader jurisdiction.
While the economic analysis counts costs associated with permitting activities and mitigating impacts to waters, it ignores the cost of delays brought about by this process and the costs that will come as industry scales down activities to avoid affecting waters, he said.
“The result of ignoring … a couple of categories of cost is that the cost per permit or cost per acre assumptions that they’re making are way too low,” he said.
While businesses may adapt to longer permitting time frames, some additional costs will be unavoidable, Sunding said, for instance, if a real estate developer pays an annual option on a piece of land.
But Jon Devine, senior attorney at the Natural Resources Defense Council who has also recently met with administration officials about the rule, said businesses operated just fine when the federal government claimed broad jurisdiction over waters before a Supreme Court decision in 2001 blew a hole in their legal theory justifying authority over isolated waters.
“Prior to 2001, these operations certainly knew that they needed permits to discharge into wetlands and small streams,” said Devine, who has been pressing the White House to propose a rule that automatically brings more geographically isolated wetlands under federal jurisdiction without individual analyses. “Between 2001 and now, they still probably should have suspected that they did. … It should not be a revelation to any industry that they might need to comply with the Clean Water Act if they’re polluting or destroying certain kinds of water bodies.”
Finally, Sunding argues that the economic analysis of benefits that would come from protecting additional waters rests on “simplistic assumptions” that “fall short of what would be best practice.”
The studies that the analysis draws on are dated and not always transferrable to the issue at hand, he said.
“A wetland’s not a wetland’s not a wetland, and I think they should have done a better job of differentiating between types,” Sunding says. This “is a very significant regulation, and when you get up into that range [of costs], I think it deserves a more rigorous economic analysis than this has gotten.”
89 House Dems urge swift issuance of proposed rule clarifying scope of CWA
By: Annie Snider, E&E reporter
Published: Tuesday, December 17, 2013
House Democrats yesterday swung back at GOP calls to slow down the process on a new Clean Water Act regulation, with 89 members urging U.S. EPA to swiftly propose the rule to clarify which streams, creeks, bogs and marshes fall under the protection of the federal law.
“For the sake of our communities and the prospects of having waterways clean enough to swim in, fish from, and drink from, we must have a rule that protects all waters of the United States under the Clean Water Act, and we need your leadership to make that vision a reality,” the lawmakers wrote EPA Administrator Gina McCarthy in a letter organized by Reps. John Dingell of Michigan, Louise Slaughter of New York and Jim Moran of Virginia.
Regulators and industry have been stuck in a legal quagmire in recent years following two muddled Supreme Court decisions in 2001 and 2006 that left gaping uncertainties around which waters and wetlands fall under the jurisdiction of the Clean Water Act. EPA sent a draft proposed rule to clarify the law’s scope to the White House for interagency review in September.
House Republicans, however, have taken issue with the fact that the agency submitted the rule to the White House before an outside panel completed its review of a scientific study that EPA has said will form the basis of the final rule.
House Science, Space and Technology Chairman Lamar Smith (R-Texas) has called on the White House Office of Management and Budget to return the draft rule to EPA until the scientific study is finalized. He has also requested that the review panel consider additional questions about the study (E&ENews PM, Nov. 15).
“Putting the regulatory cart before the scientific horse is a direct violation of the EPA’s pledge to make ‘sound science and public participation the backbone of our rulemaking efforts,’” he and Rep. Chris Stewart (R-Utah) wrote last month.
Yesterday, EPA Associate Administrator for Congressional and Intergovernmental Relations Laura Vaught replied to Smith’s letters to the agency and the review panel, saying that some of his suggested questions fall outside of the panel’s scope and that others would fit within the review questions laid out by the agency.
The scientific review panel kicked off its only public meeting yesterday in a Washington, D.C., conference room. The panel chairwoman reminded reviewers from the outset that their scope was science, not policy, but the discussion frequently stumbled upon the challenges of disentangling the two.
Notably, some panel members raised questions about the details of the regulatory context of their work and appeared unaware that a version of the draft regulation had been publicly leaked (Greenwire, Nov. 13). Smith and industry representatives have pressed for the panel to be given a copy of the draft regulation.
Christopher Zarba, acting director for EPA’s Science Advisory Board Staff Office, responded to the issue yesterday, saying the committee will be given a copy of the regulation when it is formally proposed and that it would be “inappropriate” for the committee to be reviewing and commenting on the regulation before it is publicly available.