Episode 2: Loophole Extravaganza

Episode 2: Loophole Extravaganza

The state agency that is supposed to protect public health and natural resources in Texas is broken, putting fossil fuel profits above people. The Texas Field Team at Earthworks go on a deep dive into the vast shortcomings of the regulatory system that allowed the Permian fracking boom to happen in the first place.

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Episode Transcript

(music)

Donald Trump: I really am thrilled to be here in Midland, Texas. 

Joe Biden: It’s simply not true that my administration or policies are holding back domestic energy production. 

Donald Trump: While I’m President, America will remain the number one producer of oil and natural gas on Earth 

Joe Biden: That’s simply not true. Even amid the pandemic, companies in the United States pumped more oil during my first year in office than they did during my predecessor’s first year. 

Donald Trump: We unlocked the full energy potential of Texas and New Mexico, and New Mexico, we’re proud to have been here, we’re proud to help. 

Joe Biden: We’re approaching record levels of oil and gas production in the United States and we’re on track to set a record of oil production next year. 

Donald Trump: You have been fantastic 

Joe Biden: The oil and gas industry has millions of acres leased, they have 9,000 permits to drill now. They can be drilling right now, yesterday, last week, last year. They have 9,000 to drill onshore that are already approved. 

Donald Trump: See a lot of big beautiful rigs behind me. 

Joe Biden: These are the facts. We should be honest about the facts. 

Donald Trump: We will remain…

Joe Biden and Donald Trump simultaneously: …energy independent. 

(sound of natural gas flare)

Miguel Escoto: So, Jack, what are we listening to right now?

Jack McDonald: We’re listening to a natural gas flare in West Texas.

Miguel Escoto: I am going to describe this as a ball of fire, that of which I can feel the heat all the way from here. We’re about 200 yards away. And this is what it sounds like. What is the purpose of this flare?

Jack McDonald: Yeah. So natural gas operators, what they’ll do, is once the gas comes out of the ground it has to go somewhere, because if it doesn’t the pipes explode. So either they have to sell the gas or they have to flare it. Obviously, you would expect that they would all sell the gas. However, in some cases, operators decide that it’s more responsible of them to just burn off the gas on site. And when I say responsible, I don’t actually mean that it’s better for anyone other than themselves, because typically the reason this happens is because it costs money to send the gas down the pipe to be sold. And sometimes the gas is worth less than that cost. So the operator decides it’s cheaper to just burn it on site so that no one can use it. So, that gas is being flared and we’re not getting anything out of it, not being used to generate power, not being used to keep homes warm, just being burned straight off into the atmosphere.

Miguel: And we can also see that there is a trail of smoke coming off of this flare. Um… That’s normal, right?

Jack: No. So with these flares, if they’re operating properly, they’ll combust all of the natural gas, which doesn’t actually produce any smoke. But if a flare isn’t combusting everything coming up the flare stack, what’ll happen is some of it will just escape into the atmosphere and that appears to look like smoke. So, the fact that we see smoke means that this is just pumping pollutants into the air, unfortunately.

Miguel: And you could even smell it. We were driving past here. It did smell funky. Yeah. So that might be some of what we’re smelling.

Jack: Exactly. You can still even smell, even though we’re upwind of the flare.

(music)

Miguel Escoto: Welcome to today’s episode – Loophole Extravaganza. At the beginning of the episode, you heard both Trump and Biden boast about how well oil and gas production is going in the U.S. As President Biden mentioned in that clip, the oil and gas production levels under his reign have, in fact, surpassed Trump’s years. Well, today we’re going to take a deep dive into the policy framework which creates this reality on the ground in the oil fields. As we’ll learn, much of the regulations which oil and gas operators interact with are actually at a state level, not a federal level. So exactly what type of regulatory system have Texas state agencies created for oil and gas operators? These state environmental agencies, which are tasked with keeping oil and gas companies accountable – can we trust them? Well, if you listen to the first episode, you know the spoiler: the system is overwhelmingly captured by the fossil fuel industry. And in this episode, we will elaborate on this absurd state political framework which values profits over people. 

We’re joined by Jack McDonald, Texas field analyst, who has co-written three reports analyzing the TCEQ and the Railroad Commission’s permitting loopholes and deficiencies. And we’re also joined by Sharon Wilson, seasoned thermographer who has documented oil and gas site emissions for years. We’ll talk about some of the worst instances of pollution loopholes and we’ll discuss, too, how that’s related to what we see on the ground. This episode, we will discuss the loopholes of Texas environmental regulations, regarding the  permitting of oil and gas sites and the supposed enforcement of existing environmental laws. So without further ado, here’s my conversation with Sharon and Jack.

(music)

Miguel Escoto: So welcome, Sharon, and welcome Jack to join us in this discussion about how the Texas state government is failing on permitting, regarding oil and gas extraction. So what I’m hoping we can start off with is before we go into all of the loopholes that are included in the permitting, I was hoping we can discuss just a bit of background for our listeners to help us understand what the oil field looks like and how this whole system works. So one of the first things I want to ask you all is: what is flaring? Why do oil and gas operators do that in the Permian? And what is flaring versus venting?

Jack McDonald: Yeah, sure. So flaring is burning gas as a company or operator is releasing it into the atmosphere. So the idea is that by burning the gas, it’s causing less of a climate impact than not burning the gas as it’s released. But either way, they’re releasing gas into the atmosphere. In terms of the difference between that and venting, venting is just releasing gas into the atmosphere without burning it. So that’s kind of the major distinction between the two. Operators do both flaring and venting for a variety of different reasons. One of the most common reasons, though, is economic, where an operator decides that the value of gas is not high enough to foot the cost of producing the gas. So in their financial interest, they would prefer to release the gas into the atmosphere either by venting it or by flaring it, rather than bringing it to market and selling it.

Miguel Escoto: And bringing it to market and all of those economic considerations – we’re going to talk about those later in the reasons oil and gas uses to justify this. But like you said, it’s a cleaner version. It looks like a ball of fire coming from a pipe that’s sticking up from the ground. It looks terrifying. It is terrifying because it’s emitting. But again, it’s less harm to the climate than venting, which is invisible to the naked eye unless we use an optical gas imaging camera. And, Sharon, if you can tell us a little bit about what we see through an OGI video, if we go to, for example, Shaw Road near Pike.

Sharon Wilson: Okay, I can do that. But first I want to note that the main reason for venting is because they have to release pressure and that’s required. It’s allowed. It’s routine. They have to release pressure because you cannot keep a volatile gas inside pipes and tanks. It will build up pressure and explode. So the main reason that they vent is to release pressure and then they use that excuse to just vent a whole lot because they are dumping the gas in the atmosphere, because it’s cheap and they’re not going to make that much money on it. So there are many ways that that gas is released and dumped into our atmosphere. Some of it… most of it is intentional, it’s routine, and it is allowed. And then some of it are leaks. People like to use the term ‘leak’, but when they use “methane leaks”, most of the time they’re using it incorrectly because most of the gas that is released into our atmosphere is intentional, it’s routine, and the system is designed to release gas and to the atmosphere. And if people could see through my lens what the oil and gas patch looks like, they would see gas coming out everywhere – many different places. Flares that are not lit — and therefore just venting raw gas that you cannot see with your naked eye just looks like a pie. Flares that are lit but are not combusting properly. So they’re not burning all the gas off and there’s a big plume coming from a lit flare. You can see pipes that are emitting… tanks that are emitting… blow downs that are intentional releases when they just want to dump the gas into the air because they’re doing some routine maintenance or they’re working on the equipment. And there are emergencies and equipment malfunctions. And when a piece of equipment malfunctions, the industry can say, well, that was, you know, beyond our ability to control this or it was something out of our control and they don’t get a violation for that.

Miguel Escoto: Right. And that distinction that you mentioned about a leak versus a release in terms of pollution is very important for listeners to understand, because when we say ‘leak’, it sounds kind of innocuous. It sounds kind of like… not so drastic. Right? But when we see through the OGI camera… correct me if I’m wrong, Sharon, there is a very, very obvious distinction between a leak and the release. Right?

Sharon Wilson: Right. A leak…When you use the term leak, you think of a drippy faucet. You wouldn’t think of your garden hose turned on full blast as a leak. And we see… It’s pretty rare that we see an actual leak because you have to get up close to see those. And the part of the reason that the public and the media uses the term leak is because the industry wants us to say leak. And I tell people that, you know, I lose life force every time I hear someone say leak, because you are reinforcing what the industry wants the public to believe — that it’s just a little leak. And most of what we see… a leak is accident. You don’t have a drippy faucet on purpose. A leak implies that it is unintentional. What we see are intentional leaks. And the media has misinformed the public and reinforced the industry’s talking point by using ‘leaks’ incorrectly.

Miguel Escoto: Right. And that is very important background for us to understand when we’re going into this discussion, especially because we’re talking about something that cannot be regulated too effectively. So first thing I want to ask you all is just if you can walk us through a little bit about what an operator needs to do to start extracting oil and gas.

Jack McDonald: Yeah. So the first thing they need to do is get a permit to start drilling for that gas. They do that through the Railroad Commission. They go to the Railroad Commission. They present why they want the permit. It’s called the W1 – the form that they fill out. And then the Railroad Commission approves that and they begin the process of prepping the well. They also need to go to the TCEQ and get permits for the air pollution that the well is going to release. The TCEQ has a number of different permits that they have that are basically tiered based on how much pollution the operators are going to release and the operator goes and gets whichever one of those is appropriate or if the pollution is ostensibly low enough, they can go without one of those permits. And once they have all of those TCEQ and Railroad Commission permits, they can start drilling. At that point there are some other things that they need to do, like submit production reports to the Railroad Commission and test the wells’ sour gas concentration, which is also reported to the Railroad Commission.

Sharon Wilson: Okay. What Jack just did is tell you what the rules are, not what actually happens.

(laughter)

Jack McDonald: That’s fair. 

Sharon Wilson: I mean, they don’t wait until they have all the permits to start drilling. They don’t wait until they have – sometimes they don’t ever get all the permits. They just start drilling and, you know, see, I don’t know. See if they can get away with it. Maybe they don’t know enough about the oil and gas industry and how it works to even know that they need to get these permits.

Miguel Escoto: Well, the good thing for our climate and for our health is that the Railroad Commission keeps a very, very strict and meticulous documentation of every single flare that is being lit in the Permian… Is that correct, Jack and Sharon?

Jack McDonald: Yeah, not quite. The Railroad Commission across the board has massive recordkeeping issues. So we found that there are over 80% of the flares that are happening across the Permian Basin are unpermitted. They’re not reported to the Railroad Commission. The Railroad Commission does not know about those flares. The Railroad Commission’s response to that was, no, it’s not 84%, it’s just 69%. So that gives you an idea of kind of where they think is appropriate… like, what they think is okay, because they consider that to be a win. Moreover, across their records, there are other issues with record keeping wells that don’t have complete information on record, just wells that don’t exist in any of their records, things like that, where the Railroad Commission… it’s virtually impossible for them to actually enforce these regulations because in many instances they don’t know the information they need about the well in order to do like, proper inspections. And a lot of that is because those operators know that the Railroad Commission is not going to do its due diligence and punish the operators for doing so.

Miguel Escoto: And I think we can count that as the very first and the very fundamental loophole of Texas, quote unquote, “regulation of oil and gas,” is that they just don’t, they just don’t count them. And like you said it wildly makes their data incomplete and unreliable. So just going off of this same topic, of the government just simply not permitting, I was hoping if we can talk a little bit about the fact that what’s called the H9 permit rate and how that relates to health and this thing called hydrogen sulfide.

Jack McDonald (from the field): You can’t smell it until it’s at 1ppm. The detector doesn’t pick it up until 2ppm. But the limit on emissions is .8ppm. Just the fact that we can smell it is a pretty good indication that there’s a violation on our gas.

Miguel Escoto: It smells extensively here. 

Jack McDonald: Yeah. 

Miguel Escoto: We’re driving down Shaw Road. This is where huge concentrations of MDC Texas operator sites are. And unsurprisingly, we do smell the sour gas. Jack has a sour gas detector and H2S detector. Is anything picking up there? 

Jack McDonald: Nope. No, this thing doesn’t pick up, though, until 2 ppm. And when you’re talking about 2 ppm., you’re starting to get into the area where people are going to start to feel health effects. So even though we can smell it, it’s not quite high enough to be picked up on the detector.

Miguel Escoto: And when you drive past these sites, the first thing you see is the supposedly what’s supposed to be there is a sign that tells you the operator name, the site name. And most of them do have that warning that says “H2S danger.” As well, we’ve seen… One of the things that’s very common is that the oil rig workers have one of these detectors that Jack has strapped to their body so that they can escape if they hear the detector go off. It’s an extremely dangerous pollutant that can cause, in very high concentrations, blindness or even death. Is that right, Jack?

Jack McDonald: Yeah. So it’s all in like the dosage of it. At lower concentrations, it can be lethal in about 48 hours. And then as you get into higher concentrations up above 500 ppm, it can actually kill you with just breathing in one breath of it, which is pretty scary stuff. Especially considering that that happens often enough that OSHA actually keeps a record of how many people die from it each year. And double digit numbers of people actually die from just exposure to H2S out in industry. 

Miguel Escoto: But of course, it’s impeccably regulated by the state of Texas. No need to worry here.

Jack McDonald: Yeah, it’s so well regulated that the ambient air in parts of Odessa would actually be considered a violation if an operator were emitting it.

Miguel Escoto: Can you repeat that? How. How crazy is that?

Jack McDonald: So if the TCEQ actually did their job and walked onto a site and took readings, the readings of just like regular air in parts of Odessa and this like Permian Basin… Like literally they took readings of just a random neighborhood. And in that neighborhood, in some areas, the concentrations were so high that if they were found at an operator’s facility, they would have been issued a violation, at least in theory.

News anchor 1 (from a local news broadcast): A husband and wife are dead in Ector county from gas poisoning. Good evening and thanks for joining us for Fox 24 News, first at 9 a.m., Monica Quintero.

Narrator 1 (from the United States Chemical Safety and Hazard Investigation Board): On October 26, 2019. The AGHorn Operating Inc. Water Floods Station near Odessa, Texas. One AG Horn employee succumbed to toxic hydrogen sulfide gas that had escaped through a damaged pump. His spouse was also fatally injured by the hydrogen sulfide gas while searching for him at the facility after he didn’t return home.

Speaker 1 (from the United States Chemical Safety and Hazard Investigation Board): Hydrocarbons from the Permian Basin, in particular, are known to contain high concentrations of hydrogen sulfide that are immediately dangerous to life or health. Our review of this event is about the unfortunate loss of two lives.

Narrator 1: At the time of the incident, there were two pumps in the pump house. The pump house also contains a control room from which employees run the station. The station was also equipped with a hydrogen sulfide detection and alarm system that would trigger a separate automated phone call to the pumper on duty if it detected dangerous levels of the toxic gas. The system would also illuminate a rotating red beacon light on top of the pump house. But the CSB found that this critical detection and alert system was not functional on the night of the incident. The pumper drove to the water flood station. The hydrogen sulfide beacon light was not illuminated when the pumper arrived at the water flood station or at any time for the rest of the night. The pumper parked near the water flood station, leaving his personal hydrogen sulfide monitor inside his truck. The pumper went into the control room where the control system indicated the alarm was for pump number one. The pumper then walked to the pumps. He closed pump number one’s discharge valve and partially closed the pump’s intake valve. 

While the pumper was near the pump, he was overcome and fatally injured by toxic hydrogen sulfide gas. After several hours when the pumper did not return home, his spouse drove with their two children to the station to check on him. She entered the water flood station facility and searched for him. She soon found him on the floor in the pump house. She then was also overcome and fatally injured by the toxic hydrogen sulfide gas. A short time later, emergency responders approached the pump house. They detected a very strong smell of hydrogen sulfide. This required them to set up the command post outside the front gate of the facility and wear self-contained breathing apparatus. They found the pumper and his wife deceased inside the pump house and water spilling from pump number one. The responders rescued the two children who were inside the spouse’s car.

(noise from local news station)

News anchor 1: The local couple left behind two children. It happened over the weekend during what was supposed to be a routine job at an energy company. Fox 24 station Jeon Kim has the latest as she joins us now live from the sheriff’s office with the details, Jeon. 

News anchor 2: That’s right. Such a tragic accident. Husband Jacob Dean was an employee of Alcorn Energy. Now, he was called in that night for a maintenance check. Sheriff Griffis tells me the water coming from a broken equipment inside that pump house was concentrated with H2S gas.

Sheriff (on the news): And it’s just an awful, awful situation. Two little kids have lost their parents. And we just need to pray for those folks.

Jack McDonald: Yeah. So I mentioned this a little bit earlier. I mentioned it calling it sour gas. Sour gas, Hydrogen sulfide. Those are effectively the same thing. Sour gas is gas produced by a well that has hydrogen sulfide in it. Hydrogen sulfide is really, really dangerous stuff. It can cause all kinds of different health problems for people who are exposed to it chronically. And in addition to that, acute, like short term exposure in high concentrations, can kill people or cause long term damage to the person. There have been numerous deaths attributed to hydrogen sulfide in Texas. Because of all of the different things that have happened to the hydrogen sulfide Texas passed several decades ago, laws and regulations that manage how hydrogen sulfide is approved in Texas. Those laws are enforced by the Railroad Commission under something called Rule 36, which requires operators to test their well and figure out how much hydrogen sulfide is coming out of their well. Not every operator is required to do that test. But among the ones that are, Earthworks has found through research that well over half of them are not actually going and testing their wells and giving that information to the Railroad Commission so that the Railroad Commission can properly enforce regulation.

Miguel Escoto: That is terrifying. That is terrifying, especially because of the extreme health impacts that can result. Right. Um, but yeah, like I, like I say, these are kind of like black sites. They’re, they’re just unacknowledged by the government. They’re just not counted. Um… so, and I was hoping we can talk now about situations where they, where the TCEQ does decide to, you know, do their job at least a little bit and say, “okay, we acknowledge that you need a permit and we will give you this permit.” Even when that happens, that’s not a victory because there’s still a whole host of loopholes there. So if you can walk us through…what is the flaw in this whole standard permit by rule de minimis system?

Jack McDonald: Yeah. So the de minimis standard is the lowest permitting level that the TCEQ has. So as I mentioned earlier, operators are sorted into a bunch of different levels of pollution and they get permits based on those levels. De minimis is the lowest level and what it is, is it’s a level where the TCEQ says that the pollution coming out of the site is negligible therefore the site does not need to actually get an air permit. That in and of itself, like on face, that might sound like a normal thing. Where this becomes a really problematic system is that the operator does not actually have to approach the TCEQ with any of that information. So it’s not the TCEQ making the determination that a site is de minimis. It’s the operator deciding that they are not going to emit enough to be put into one of the higher categories and then just not reporting themselves to the TCEQ. That means that the TCEQ has no idea the site is out there, potentially, and may not know what the permitting situation is with that well. This is important because…in order for the system to work, it relies on the operators holding themselves to a de minimis level of pollution, which Earthworks as found through onsite investigations, is not always the case.

Miguel Escoto: And that there, I count at least two loopholes. One of them being, like you said, how would it make sense for the operator to tell them themselves? That it’s a conflict of interest inherently. Secondly… if you don’t count the smaller parts, if you don’t count smaller levels of pollution, you fail to appreciate the whole. Right?

Jack McDonald: Right.

Miguel Escoto: All of these smaller levels of emissions can contribute to a larger hole which is creating the climate crisis. And again, that’s just not being counted or properly addressed. 

Jack McDonald: Yeah, and the TCEQ has no real way to tell us how much of an impact the de minimis sites are having on the climate because, by design, they don’t track it. So we don’t really know how many de minimis sites are out there, how many of them are polluting and at what levels. And without that information, it’s really hard to get a complete picture of what air pollution looks like in Texas. Which is really scary because the data we do have is already scary enough. So the idea that that data is underreported is pretty terrifying. 

(music)

Miguel Escoto: So I do have a few other, um, loopholes here that we can discuss. Um, we can talk about, um, the whole affirmative defense situation right, where industry claims something is technically infeasible. What’s the flaw there?

Jack McDonald: Yeah. So the affirmative defense is not so much related to the air permits themselves as much as the enforcement when an operator violates their air permit. So if the TCEQ goes out and investigates a site and determines that the site committed a violation—which Sharon can explain why that is exceedingly rare—but if that actually happens and it goes before a court so that they can determine like a fine or a penalty or something like that, the operator has access to what’s called the affirmative defense. An affirmative defense is like a term of art in the legal profession. But basically what it means in this context is that if the operator can prove that the event that they’re getting a violation for—the pollution, the leak, the emissions, whatever—was the result of the startup of equipment, the shutdown of equipment, maintenance of equipment or a malfunction of equipment, and that it would have been technically infeasible to prevent that emissions event, the operator will not get a violation, will not get a penalty, will not get a fine. The system is really, really scary because it means that operators can, by their own admission, violate the law and pollute more than the legal limit. And as long as they prove this affirmative defense, they will not get a fine for that violation. The other thing that’s really scary about this is that it’s ridiculously difficult to falsify whether or not the affirmative defense is true. So the burden is on the TCEQ… effectively, to disprove the affirmative defense because of how hard it is to falsify. And since they can’t falsify it, inevitably the affirmative defense is called in these cases. Environment Texas has a study that found that 97% of violations that were brought before a court, the operator claimed the affirmative defense. To give you an idea of how widespread the system is abused.

Miguel Escoto: It’s like a get-out-of-jail-free card.

Jack McDonald: Exactly.

Miguel Escoto: Once again, another loophole. I wish we were done, but we aren’t.

(music)

Sharon Wilson: I want to just talk about what I’ve been doing since 2014, which is getting video evidence of egregious emissions, submitting the videos to TCEQ with the complaint, and then TCEQ sends me a watered down version of their quote-unquote “investigation” that they do. Which is sometimes just looking in the files and not actually going to the site. And then later, I do a public information request and find out the correspondence and the details that went on between the TCEQ and the operator. And those tell a story. And the story is these were routine emissions. They were allowed emissions. Nobody measures anything to see if they’re exceeding their permit. But the operator says they’re routine, they’re allowed, or we couldn’t help it. It was out of our control. Or in some cases, like when one operator admitted they drilled holes in 18 of their tanks, the TCEQ just ignores it.

Miguel Escoto: And that is nothing less than intentional. It seems like this, like you said, it paints a picture. This doesn’t happen on accident. If you can tell us a little bit about the… what we call the black carbon loophole. Like Sharon mentioned at the beginning of this conversation, flares can be lit, but they can be dirty and malfunctioning. What happens in that case in terms of the climate?

Jack McDonald: Yeah. I think, Sharon, this is something you’re better suited to answer than me.

Sharon Wilson: Well they can be unlit and they’re just blasting out a lot of methane, which is vastly more powerful than carbon dioxide at warming our planet. Or they can be, you know, improperly combusting. And there, again, there’s a lot of climate harming and health harming pollution. Any of this, if you live nearby, is very damaging to people and their health. 

Miguel Escoto: Yeah and when you’re out on the field, it looks like…there’s still a ball of fire. But then there’s like this like dirty black smoke that’s streaking from the flare. And that’s… that’s pretty common to see out on the fields, but it’s technically not supposed to be allowed, right? It’s not supposed to be a thing.

Sharon Wilson: No… in Texas…a flare is not supposed to smoke for more than two minutes in an hour. I think that’s the rule. But all the operator has to do is say we have an emergency or we had a startup or we have a shut down or whatever, there’s a loophole. And so if you record a five minute video showing that it is constantly emitting during that five minute video, you might think that they have broken the rule, but they always use some kind of an excuse, a loophole to get out of a violation. And the flares that smoke and burn black are very damaging to climate because it’s black carbon and it’s a very powerful actor on our climate. It doesn’t stay in the atmosphere that long, but while it’s in the atmosphere…

Narrator 1 (from Action Climate Emergency video on Black Carbon): Hi, I’m soot. You might know me by a few different names as scientists call me fine particulate matter… PM 2.5… or even aerosol. But I’ve been working on my personal brand and I’m leaning towards black carbon. You got to say it like that. Black carbon. The thing is, I don’t get enough respect around here. I know I’m not the main character, but I’m still a pretty big deal. That’s why I’m launching a new campaign to build brand awareness for black carbon everywhere. In fact, after CO2, black carbon is the second most significant pollutant driving climate change today. Thank you. Thank you. It’s nothing really.

Sharon Wilson: It’s very powerful and it’s super damaging to health because it’s particulate that once you breathe it in your body, it can get lodged in your organs and cause a lot of health… damage to your health. The Texas regulatory agencies and our elected officials are embedded with the oil and gas industry. It’s very corrupt and…but none of that really matters because it doesn’t matter how Texas permits, it doesn’t matter how they regulate. Science tells us we have to stop using oil and gas. The International Energy Agency that was created to ensure that we had a steady supply of oil and gas, said recently that there should be no new investment in oil and gas. So that’s your bottom line. We have to stop permitting and start transitioning to renewable energy.

Miguel Escoto: Howdy, Hello. Firstly, congratulations.

(music)

Miguel Escoto: You’ve made it this far, deep into the circus of madness, which is Texas oil and gas permitting loopholes. I know it’s tough. I know it’s a lot. For this reason, you deserve a brief intermission from all the details. You might be sitting there and asking yourself, Why do I care? How is this going to benefit me? Here’s a quick reminder. The fossil fuel industry pleads, begs, prays, lights a candle in hopes that we, the general public, are oblivious to all of this loophole extravaganza. Oh, my gosh. There is nothing that makes them more happier than masses of people concerned about the climate thinking to themselves, quote, I know that oil and gas is bad, but surely, naturally, the regulatory system in place keeps these corporations in check. Our challenge to you is this. Don’t let the monsters win. Arm yourselves with this deep knowledge of environmental regulation loopholes. This way politicians, corporate ads and state governments won’t be able to fool you in your community. Engage with this detail. Pick up a notebook or your notes app and keep track of this stuff. So far, Sharon, Jack and I have been debunking the permitting aspect of this loophole extravaganza palooza festival party that these corporations have for themselves. Now, to close off the show and prepare us for the remainder of the series, we will focus on the enforcement of such environmental regulatory systems. Say, for the sake of argument that we have passed the most glorious, majestic righteous regulations to keep methane from emitting from these oil fields during production. Well, it begs the question, who is going to enforce this? How is it going to be enforced? You and whose army will be able to keep these corporations at bay? Is it even possible? The last section of this conversation will wrestle with such questions. Sit back and enjoy.

(music)

Miguel Escoto: Briefly, I wanted to ask if we can discuss what is the annual emissions inventory and why is there an inherent conflict of interest here as environmental policy?

Jack McDonald: Sure. So the annual emissions inventory is basically a way for the TCEQ to track all the air pollution that’s happening in the state. The way they do that is operators report their emissions to the TCEQ and the TCEQ aggregates all of it into a big data set. There’s a lot of issues with this program, in large part because it expects operators to self-report their emissions, which is like calling the police on yourself, like who would ever give an accurate summation of their emissions to the TCEQ when that has the potential to get them into trouble? Because of that, it’s usually an incomplete picture of what emissions look like in the state, which is why when third party groups have done similar studies where they’ve analyzed emissions in Texas, they often come away with much larger numbers of emissions than the TCEQ does.

Miguel Escoto: Right. Like you said, it seems to be like right off the bat when we’re talking about enforcement. Boom, an inherent conflict of interest. You wouldn’t call the cops on yourself. So, okay, there we go. We found the first loophole of today.

Jack McDonald: That trend carries across massive chunks of enforcement in Texas. Both the Railroad Commission and the TCEQ heavily rely on self-reported information in order to enforce the law. Which, as you just outlined, is a pretty huge conflict of interest.

Miguel Escoto: Exactly. So let’s go ahead and talk about this superstar enforcement team of the TCEQ. They obviously have all the resources in the world. They’re big enough to battle and go head-to-head with the oil and gas industry. Tell us about their lightning speed and their incredible resources to go to the oil field and bust these operators at the source. How awesome are they?

Sharon Wilson: The TCEQ investigations are not awesome. They take months, sometimes many, many months to even conduct an investigation. And of course, the problem may be over by then. They are pathetically underfunded and the Texas legislature intentionally underfunds the TCEQ and the Railroad Commission, so that they can’t really do a good job of regulating the oil and gas industry. We have far too many wells everywhere, all across Texas, thousands, hundreds of thousands of wells everywhere. So it’s not physically impossible to adequately regulate the oil and gas industry. We have never had a system in place to adequately regulate oil and gas, and it would take an army to do that. So it’s really not possible at this point. It would cost too much and it would take way too many people and too many resources. Just one example, we found egregious emissions at a site called Whiskey River. The flare was unlit and the tanks were emitting and we went there a couple of times. It was very bad, but by the time the TCEQ got to the site for an investigation, they had extracted all of the resources they wanted to, and the site was completely gone. They had completely taken all of the equipment off the site and shut it down.

Miguel Escoto: And to me, that’s the perfect example of the TCEQ and their turtle speed, because like you said, Sharon, by the time they actually get there, the oil field can look entirely different. Notwithstanding that, like you mentioned, it’s kind of physically impossible for this team to regularly and adequately investigate hundreds of thousands of oil and gas sites throughout the state. And… For me, those are two fundamental flaws of how this enforcement system is just flawed. Flawed from the premise. So we can go a little bit into what these investigations actually look like. So it is true that the TCEQ can actually go to the oil and gas site and use an OGI camera. But the vast majority of investigations don’t look like that, right?

Jack McDonald: Yeah, in many cases they don’t even visit the site. They do what’s called a file investigation, which is just them going through their existing files and then asking the operator, Hey, have you committed any crimes lately? And then the operator generally says no. And then that’s the end of the investigation.

Miguel: Huh? That’s weird.

(laughter)

Sharon Wilson: Or they send them a video that I’ve taken and they make some excuse. You know, they make some excuse for the emissions, or they just deny that the emissions were really real. And the TCEQ accepts that.

Miguel Escoto: So they’re basically paper surveys in which petroleum engineers can just check off boxes.

Sharon Wilson: Yes, they send them a form and they just go through and check off the form. And that’s pretty much it.

Jack McDonald: And even when an operator admits in that form that they committed, that they did something that sounds like a violation, which is exceedingly rare as we’ve outlined. It’s very rare that TCEQ even gives them a violation for it. Like we found in a public information request a site where the operator had drilled holes in all of their equipment so that gas could escape from the equipment and cause a bunch of emissions that they weren’t tracking. The operator admitted to that, and TCEQ then didn’t issue them a violation.

Miguel Escoto: By the way, folks, that is not normal or best practice.

Sharon Wilson: It may be normal, best practice in Texas, it’s not desirable. But the TCEQ did issue them a violation. But was for not having a permit to pollute in the first place. So they have a permit from TCEQ and they got a violation for that, but they did not get a violation for drilling holes in their tanks to let the gas escape.

Miguel Escoto: So like you mentioned, Jack, it is pretty rare for the TCEQ to actually issue a notice of violation. And I did want to talk about this, a percentage of this fact that an EDF study found, which is that 3% of these cases where there’s a notice of violation, only 3% of those cases do operators actually get a penalty. 

Jack McDonald: Penalty meaning a fine in this case just for those who aren’t familiar with the terms.

Miguel Escoto: Exactly. And so…. Again, here we have another case. We have another example of this system, perfectly engineered, perfectly designed for operators to get away with doing this. With drilling and polluting irresponsibly. So we’ve talked about how the investigation team is wimpy and underfunded and just way too outmatched by industry. We’ve talked about how the actual investigations are inadequate. We’ve talked about how even when they are adequate, they don’t result in a penalty. So let’s talk a little bit about this thing called LDAR, leak detection and repair. It seems to be a fundamental system, a fundamental part of the way environmental regulation works both on a state and federal level. So can you tell us a little bit about what that is? And some of the pitfalls there?

Sharon Wilson: Well, they are supposed to do a survey of their site, looking for leaks, detecting leaks, and then repairing the leaks. And they can have an outside contractor come in and do those surveys or they can do them themselves. If you only do an LDAR inspection a couple of times a year or once a year, you may not find any emissions. Or you may find some and have them and have those fixed at that point. But a couple of hours later, the next day, some time, there could be… some piece of equipment could break and there could be tremendous emissions. And we’re supposed to believe that LDAR is going to solve these emission problems. And it’s only good, really, for when you are on the site and when it’s happening in real time. And it can also be.. we’ve seen it manipulated by the industry. Diamondback used the LDAR excuse when I found egregious emissions at several of their sites, they just replied to the TCEQ with the answer: We passed an LDAR inspection on this date. That date was two days before I was at their site and found egregious emissions. So basically, they told the TCEQ, do not believe your lying eyes with this video that she submitted because we passed an LDAR two days before she took that video. It’s ridiculous and the TCEQ accepted it.

Miguel Escoto: And like you mentioned, the way that an oil and gas site can look like in terms of pollution can vary widely, even within a couple of hours. It can vary widely within a few days. Right. So, in general, what is the… how often is LDAR used on these sites?

Sharon Wilson: The EPA is coming up with new rules. And I don’t know what they’re going to be yet, but I believe in some states they have to do annual LDAR inspections. Yuck, yuck. And in other states, they have to do biannual. And I think what the EPA is looking at right now is having them do quarterly. So that means if you do an LDAR inspection and the next day a piece of equipment breaks and starts emitting, it can emit until the next quarterly inspection is done. I mean, theoretically it could.

Miguel Escoto: Right. Because it varies widely. It’s just the way this works. And before we hop off, I did want to add on top of all of this… talk about the Audit Act. Which sounds innocuous, sounds boring, but is actually pretty terrifying. Jack, can you tell us about what the infamous apocalyptic Audit Act is and why we should care about it?

Jack McDonald: Yes. So the Audit Act is a system that Texas has in place for a lot of different regulations. It becomes relevant in environmental regulations, particularly at the TCEQ, where what the Audit Act does is the Audit Act says that an operator can conduct an audit on their own site. They can look at their site and determine whether or not there are any violations on site. If they find any violations, they can present the violations to the TCEQ with a plan for how they’re going to fix the violations. In return for doing the self-reported violations system, the operator gets a couple of things. The first thing is they will not get a fine for the violation that they found. The other major thing is that the public is not privy to the information contained in the audit, which means if you’re living right next door to a well that’s protected by an audit and they found violations, you won’t even know that those violations were found. Moreover, those violations cannot be used by the TCEQ in enforcement proceedings to show a history of violations. It’s effectively a get out of jail free card that allows operators to fix their violations and then be scott-free for those violations. It’s a really scary system in large part because it allows operators to just hide behind the audit act in order to avoid getting actual fines or penalties for the things that they do wrong. It’s also a system that’s kind of… this might seem a little heady but… it’s a system that’s pretty complicated because even operators get confused by it. I went to a meeting a while ago with the TCEQ and operators where they explained the way the system works. In that meeting they presented a bunch of data about how often the system is used and it’s pretty scary. In 2020, to date, when I went to the meeting, there were over 1,800 violations that did not receive fines simply because they were protected by the Audit Act. That gives you an idea of how widespread abuse of the system is.

Miguel Escoto: Again, as a common theme throughout this, this entire regulatory system, it depends on the goodwill of these operators, right? And there’s an inherent conflict of interest there because and especially in this case, because how can the state of Texas, how can our regulators prevent oil and gas industry from using this Audit Act as a loophole to get away with murder? And by that, I mean: pollute illegally, knowingly, act like they didn’t, and then, quote unquote, “discover” that they have a problem; and enjoy the perks of the act afterwards? What are the guardrails in this system to prevent oil and gas from doing this?

Jack McDonald: Yeah. So the kind of major guardrail is just like this idea that, oh, operators can’t go under Audit Act protection if they don’t… if they cannot go under Audit Act protection for a violation that they are aware exists prior to the audit. So like you can’t commit a violation and then when you get caught say, “Oh no, I’m under the Audit Act.” That at least in theory, wouldn’t work. In practice, operators do this pretty regularly. And the TCEQ, the example they use when they’re talking about the Audit Act, is an operator who does not have air permits. So the TCEQ’s metric of an operator who commits a violation without knowing it is an operator who is operating a well without permits. So the whole system, just like on face, is kind of ridiculous. The idea that operators are out in the Permian operating their wells without even realizing that they’re missing permits is kind of laughably unbelievable.

Miguel Escoto: Exactly, which leads us to our conclusion to the conversation that we have today and the previous one that we had about permitting. I want to throw out this claim, I want to throw out this argument: In Texas, for oil and gas, 100% of their sites are 100% eligible to violate their air permit, be exempt from penalties, and redact all of their history from the public using the Audit Act privilege. This is an intense claim. Do we have evidence to back some of this up? Do we have evidence—considering today’s conversation, considering our previous conversation—that they have enough loopholes to violate air permits without any repercussions?

Sharon Wilson: They can violate their air permit with or without the Audit Act. Nobody meters what they are emitting. So it’s all based on voluntary reporting and petroleum engineers who do calculations on paper. It’s all subject to manipulation. 

Jack McDonald: There are so many different ways that they can kind of get out of these violations. It’s super unlikely that they’ll even get a violation. But even if they get a violation they have protection because of the.. Sorry I’m drawing a blank on the term…of the affirmative defense that we talked about last time. There’s many kinds of decaying averages of… If this happens and there’s a small probability that they move on to the next step; and then if that happens, there’s a small probability that they move on to the next step… that by the end of the entire process, a ridiculously small number of operators actually end up with any violations or pardon me, actually end up with a fine or any kind of punitive action. The TCEQ’s kind of thought process throughout this process is that the most important thing for them is to make sure that the operator fixes the violation. But there’s no punitive action involved, so there’s no consequence for operators if they commit a violation as long as they fix it. Even the fixing of it is questionable whether that happens. But within that system, it’s hard to see why an operator would ever go above and beyond in order to make sure that they are not committing violations when, if they are caught committing a violation, all they have to do is fix it and there’s no consequence. 

Miguel Escoto: Just to wrap up here, what would you tell our listeners who think that we can tweak the system instead of overhauling it? What would you tell to a listener that is walking their dog right now and saying, “Well, it’s just a few tiny little tweaks that we have to do to the TCEQ and the Railroad Commission, and we’re good go the climate is saved.”

Jack McDonald: I think the biggest thing I would say is just that the TCEQ is so structurally broken… There’s so little political will within it to do proper environmental regulation that even if the laws were perfect, even if they rewrote the Audit Act, even if they rewrote the way they do air permits, they got rid of the affirmative defense. You went down the list and listed out the 20 bills that would fix environmental regulation in Texas. Even if all of those bills passed—which would never happen—the TCEQ has such a lacking political will in order to regulate the environment that they would undermine those laws. They wouldn’t be enforced effectively. There would not be any way for them to really effectively reduce air pollution. There aren’t enough investigators. There aren’t people within the TCEQ who want to really hold oil and gas accountable. There’s not really an effective way for the Texans to regulate in the way that it exists right now. And a big part of that is because of the influence that the governor’s office has on the TCEQ’s highest ranking officers. 

Sharon Wilson: Yeah, I’ll add one thing. We have never had a system in place to adequately regulate oil and gas. It would take an army. It would take … We don’t even know what it would take to adequately regulate oil and gas. And it’s too late for that now. We need to transition as fast as we can.

(music)
Miguel Escoto: Thanks for listening. The next couple of episodes, we will amplify voices of former TCEQ regulators to give us an inside look on the culture of this regulatory agency throughout the years. Stay tuned.

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