Deep Injection Wells: EPA Needs to Involve Communities Earlier
and Ensure That Financial Assurance Requirements Are Adequate
(13-JUN-03, GAO-03-761).
Billions of gallons of hazardous liquid waste are injected into
underground wells each year. These Class I hazardous deep
injection wells are designed to inject waste into an area below
the lowermost underground source of drinking water. EPA and the
states grant permits to commercial operators to construct and
operate these wells and must obtain public comments on the
permits. Communities often raise concerns about well safety and
other matters. GAO examined the extent to which EPA and the
states (1) address these community concerns, (2) consider
environmental justice issues, and (3) ensure that financial
assurances adequately protect the taxpayer if bankruptcy occurs.
GAO, among other things, examined the permit process in the four
states that have commercial Class I wells.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-03-761
ACCNO: A07194
TITLE: Deep Injection Wells: EPA Needs to Involve Communities
Earlier and Ensure That Financial Assurance Requirements Are
Adequate
DATE: 06/13/2003
SUBJECT: Environmental law
Waste treatment
Water quality
Hazardous substances
Environmental monitoring
Potable water
EPA Underground Injection Control
Program
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GAO-03-761
Report to the Honorable Lynn C. Woolsey, House of Representatives
United States General Accounting Office
GAO
June 2003 DEEP INJECTION WELLS
EPA Needs to Involve Communities Earlier and Ensure That Financial
Assurance Requirements Are Adequate
GAO- 03- 761
Although EPA provides opportunities for public comment on proposed
commercial Class I deep injection wells as required by regulations, these
opportunities come late in the process, after a draft permit has been
prepared and this timing may limit the extent to which concerns are
addressed. EPA responds to all public comments, but it cannot deny a
permit on the basis of community concerns if all regulatory requirements
for protecting drinking water are met. However, earlier involvement could
give communities more time to contact appropriate state or local officials
to address concerns that are not within the scope of EPA*s authority. In
Michigan, where EPA issues injection well permits, communities believe
that their concerns are often not fully resolved; in some instances,
communities
have filed legal actions and complaints to prevent well construction. In
contrast, the three states to which EPA has authorized responsibility for
issuing permits have enacted requirements for earlier and more public
involvement. Overall, they believe that early involvement better addresses
community concerns, mitigates controversial issues, and avoids litigation.
EPA addresses environmental justice issues in two basic ways* first, as
part of its process for deciding whether to issue a permit for well
construction, and second, in response to specific civil rights complaints
filed with the agency after permits are issued. EPA encourages its
regional offices issuing construction permits to determine if minority and
low- income populations are disproportionately affected by a proposed
well*s location. Individuals and communities may appeal EPA permit
decisions with EPA*s Environmental Appeals Board or, for other permit
decisions, file complaints under Title VI of the Civil Rights Act with
EPA*s Office of Civil Rights. Only one community has filed complaints
related to deep injection wells; these complaints did not result in
changes to the permit decisions. Court decisions have recently limited the
basis for filing Title VI complaints, making the process an unlikely
avenue for changing permit decisions.
Current financial assurance requirements may not ensure that adequate
resources are available to close a commercial deep injection well in the
event of bankruptcy or ceased operations. While only four sites have gone
into bankruptcy or ceased operating since the program began in 1980; two
did not have adequate financial resources to plug and abandon wells and
for the other two, financial assurance was not tested because other
companies purchased and continued operating the wells. EPA has questioned
the adequacy of some financial assurance requirements in other programs
that are similar to those for Class I deep injection wells. EPA*s Office
of
Inspector General has reported that financial assurance requirements for
another waste management program, which the requirements for deep
injection wells mirror, may not be adequate to close facilities; an EPA
working group is also reviewing similar aspects of financial assurance
requirements for a different type of injection well for possible changes.
Billions of gallons of hazardous
liquid waste are injected into underground wells each year. These Class I
hazardous deep
injection wells are designed to inject waste into an area below the
lowermost underground source of
drinking water. EPA and the states grant permits to commercial operators
to construct and operate these wells and must obtain public comments on
the permits. Communities often raise concerns about well safety and other
matters. GAO examined the extent to which EPA and the states (1) address
these community concerns, (2) consider environmental justice issues, and
(3) ensure that financial assurances adequately protect the taxpayer if
bankruptcy occurs. GAO, among
other things, examined the permit process in the four states that have
commercial Class I wells. GAO recommends that EPA involve the public
earlier in the
permitting process to allow more time for community concerns to be
addressed; and determine if the program*s
financial assurance requirements need to be strengthened. EPA did not
agree with GAO*s
recommendations and stated that (1) public involvement is limited by
program regulations and (2) financial assurance requirements are not
deficient. GAO maintains the recommendations are sound.
www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 761. To view the full product,
including the scope and methodology, click on the link above. For more
information, contact John B. Stephenson at (202) 512- 3841 or stephensonj@
gao. gov. Highlights of GAO- 03- 761, a report to
the Honorable Lynn C. Woolsey, House of Representatives
June 2003
DEEP INJECTION WELLS
EPA Needs to Involve Communities Earlier and Ensure That Financial
Assurance Requirements Are Adequate
Page i GAO- 03- 761 Deep Injection Wells Letter 1 Results in Brief 3
Background 5 Community Concerns Could Be More Comprehensively Addressed
Before Draft Permits Are Completed 9 Environmental Justice Concerns Are
Addressed during the Permitting Process and in Response to Civil Rights
Complaints 14 Financial Assurance Requirements May Not Be Adequate for
Closing Wells 17 Conclusions 22 Recommendations for Executive Action 23
Agency Comments 23 Appendix I Chronology of Events for the Construction of
Deep Injection Wells by the Environmental Disposal Systems Company 26
Appendix II Scope and Methodology 29
Appendix III Comments from the Environmental Protection Agency 31
Appendix IV GAO Contacts and Staff Acknowledgments 36
Table
Table 1: Status of Title VI Complaints Filed with EPA*s OCR (October
1,1993, through May 5, 2003) 17 Figures
Figure 1: Construction Design for a Class I Deep Injection Well 7 Figure
2: UIC Deep Injection Well Permitting and Public Comment Processes 11
Contents
Page ii GAO- 03- 761 Deep Injection Wells List of Abbreviations
EAB Environmental Appeals Board EDS Environmental Disposal Systems, Inc.
EPA Environmental Protection Agency MDEQ Michigan Department of
Environmental Quality NAPA National Academy of Public Administration OCR
Office of Civil Rights OIG Office of Inspector General RCRA Resource
Conservation and Recovery Act RECAP Romulus Environmentalists Care About
People SDWA Safe Drinking Water Act TCEQ Texas Commission on Environmental
Quality
UIC Underground Injection Control
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Page 1 GAO- 03- 761 Deep Injection Wells June 13, 2003 The Honorable Lynn
C. Woolsey
House of Representatives Dear Ms. Woolsey: Billions of gallons of
hazardous liquid waste are injected into underground wells each year.
These wells, known as Class I deep injection wells, are built to contain
hazardous waste* from the pharmaceutical, chemical manufacturing, and
metalworking industries, among others* below the lowest underground source
of drinking water. Class I deep injection wells may either be owned and
used by a facility to handle the waste it generates itself (noncommercial
wells) or may be wells operated by companies that accept waste from
multiple facilities and may be far from any particular waste- generating
site (commercial wells). 1 Thirteen commercial wells operate in the United
States; they are located in Louisiana, Ohio, and Texas. In addition, two
commercial wells have been constructed in Michigan but are not yet
operating. Under the Safe Drinking Water Act (SDWA), the Environmental
Protection Agency (EPA) is responsible for establishing standards for and
issuing permits for the construction and operation of these wells. EPA can
authorize states to administer the program* giving them primacy* as long
as the state requirements are at least as stringent as the federal
requirements. EPA has granted primacy to Louisiana, Ohio, and Texas.
Michigan has not applied for primacy and has
no plans to do so because it does not believe it has enough wells to
warrant devoting staff and resources to permitting and regulating them.
In order to operate a commercial well that accepts hazardous waste, well
owners need to obtain several different permits that establish conditions,
including requirements under EPA regulations. First, under the Underground
Injection Control (UIC) program, owners must obtain a construction permit,
which, among other things, specifies how the well is to be constructed to
prevent the injected waste from migrating to sources of drinking water.
The wells must also be located in geologically suitable areas* areas that
are not susceptible to earthquakes* to ensure that the
1 This report focuses only on commercial Class I wells that accept
hazardous waste, which are of greater concern to communities.
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 03- 761 Deep Injection Wells waste will not migrate. Second,
under the Resource Conservation and Recovery Act (RCRA), owners must
obtain a permit to ensure that any
above- ground treatment and storage facilities can be operated safely;
owners frequently treat and store the waste on the surface before
injecting it below ground. Under RCRA, they must also demonstrate that
injected waste will be contained within a defined underground area.
Finally, owners must have a UIC operating permit from EPA or the state
before injecting any waste. Both UIC and RCRA regulations require EPA or
the state to obtain public comments before they issue permits.
According to a 2001 EPA study of the risks associated with Class I wells,
deep injection wells are relatively safe. 2 Nonetheless, communities where
commercial wells are located have raised concerns about the hazards that
these wells may pose. In particular, they point out that the aboveground
activities at the well site, such as trucks that transport waste and
treatment and storage facilities that handle waste, increase the
possibility of accidental hazardous waste spills, noise, and odor
pollution, and may reduce property values.
Several grassroots and environmental organizations have also voiced
environmental justice concerns, charging that low- income, minority
communities are unfairly targeted as locations for hazardous facilities of
all types, including commercial deep injection wells. Executive Order
12898, issued in 1994, directs federal agencies, as appropriate, to
identify and address the disproportionately high and adverse health and
environmental effects of its programs, policies, and activities on
minority
and low- income populations. Although this order does not create a right
to judicial review, individuals who have environmental justice concerns
may file a petition for review with EPA*s Environmental Appeals Board, if
EPA is the involved party, or a Title VI complaint with EPA*s Office of
Civil Rights, if the involved party is a recipient of EPA financial
assistance, such as a state office.
Finally, EPA requires a Class I well owner or operator to establish
financial assurance to cover the estimated cost of the plugging and
abandonment of the well. Financial assurance can be provided in several
approved forms, such as trust funds or as surety bonds. Each year, the
2 U. S. Environmental Protection Agency, Class I Underground Injection
Control Program: Study of the Risks Associated with Class I Underground
Injection Wells
(Washington, D. C.: 2001).
Page 3 GAO- 03- 761 Deep Injection Wells owner or operator must review the
cost estimate on which the financial assurance is based to determine
whether it is still adequate to cover
anticipated costs due to inflation and make any needed changes. You asked
us to examine the extent to which EPA and the states (1) address community
concerns in permitting well construction, (2) address environmental
justice issues in the construction permit process, and (3) ensure that
financial assurances adequately protect the taxpayers if an owner goes
bankrupt. To address these issues, we, among other things, examined the
permitting process in the four states that have commercial Class I deep
injection wells: Louisiana, Michigan, Ohio, and Texas. Because Michigan
does not have primacy, EPA manages the permitting process.
EPA requires opportunities for public comment on proposed commercial Class
I deep injection wells during the permitting process, but these
opportunities come late in the process and, therefore, may limit the
extent to which community concerns are addressed. Specifically, for
commercial
wells, EPA must issue a public notice that a draft construction permit has
been prepared; provide at least a 30- day comment period; hold public
hearings, if needed; and issue final permit decisions and responses to
public comments. However, EPA and the applicant may have worked together
for more than a year to draft the permit before EPA releases it for public
comment. Therefore, EPA and the well owner have already invested
extensively in the draft permit and may be reluctant to change it as a
result of community concerns. Furthermore, while EPA must respond to all
public comments and could alter the draft permit in response to some
community concerns under the Safe Drinking Water Act, EPA cannot deny a
permit on the basis of community concerns if proposed wells meet all of
the regulatory requirements. However, earlier public involvement would
allow more time for individuals to approach appropriate state or local
officials with their other concerns and potentially increase the
likelihood that these concerns would be addressed and avoid project
delays. For example, in Michigan, where EPA is the permitting authority,
agency officials closely adhered to public participation requirements for
the two wells under construction. However, community residents believed
that their concerns were not fully addressed and filed legal actions and
complaints to prevent the project*s construction. These actions have
delayed the project for many months. In contrast, the states with primacy
have recognized the need for greater public involvement early in the
permitting process. For example, Texas requires public involvement even
before the state and the owner draft the construction permit. As a result,
Results in Brief
Page 4 GAO- 03- 761 Deep Injection Wells according to the National Academy
of Public Administration, states have mitigated or avoided controversial
issues and costly litigation surrounding the permitting of commercial
Class I deep injection wells. We are
recommending that the Administrator, EPA, involve the public earlier in
the permitting process to allow more time for community concerns to be
addressed.
EPA addresses environmental justice issues in two basic ways* first, as
part of its process for deciding whether to issue a permit for well
construction, and, second, in response to specific civil rights complaints
filed with the agency after permits are issued. While EPA has yet to issue
a national policy on environmental justice, it encourages regional offices
that issue construction permits to determine if minority and low- income
populations are disproportionately affected by a proposed well*s location.
Individuals and communities may appeal permit decisions with EPA*s
Environmental Appeals Board or file complaints under Title VI of the Civil
Rights Act with EPA*s Office of Civil Rights. Members of one community*
Romulus, Michigan* have challenged EPA*s approval of Class I deep
injection well permits on environmental justice grounds. EPA*s
Environmental Appeals Board denied the community*s petition for review
because it found no basis for review. EPA*s Office of Civil Rights also
denied the Title VI complaint because it did not find any discrimination
in violation of Title VI or EPA implementing regulations. Court decisions
have recently limited the basis for filing Title VI complaints, making the
process an unlikely avenue for changing permit decisions.
Current financial assurance requirements may not ensure adequate resources
to close a commercial deep injection well in the event of bankruptcy or if
the well ceases operations. According to EPA and state officials, the
owners of the 13 operating wells have provided financial assurance, such
as trust funds or surety bonds, that are sufficient to cover the costs of
the plugging and abandonment of a well. While only four sites have gone
into bankruptcy or have ceased operating since the program began in 1980,
two did not have adequate financial resources to plug and abandon the
wells; for the other two, financial assurance was not tested
because other companies purchased and continued operating the wells. Both
sites that did not have adequate financial resources involved unique
circumstances but demonstrate there is a potential burden to taxpayers if
financial assurance requirements are not adequate. In one case, the
insurance company that issued the surety bonds for the owner*s two wells
cancelled the bonds, leaving the company without financial assurance. In
1997, citing several environmental problems and the owner*s lack of
cooperation with federal requirements, the state revoked the owner*s
Page 5 GAO- 03- 761 Deep Injection Wells UIC and RCRA permits. EPA assumed
responsibility for this site under the Comprehensive Environmental
Response, Compensation and Liability Act
(Superfund), and is currently overseeing the cleanup of the site and
identifying primary responsible parties to participate in conducting and
funding the site*s remediation. In a second case, a company seeking a UIC
construction permit allowed its financial assurance to expire as it tried
to resolve issues resulting from the death of the company*s owner. The
state is currently negotiating with the owners to determine who will pay
for the closure. In March 2001, EPA*s Office of Inspector General reported
that certain financial assurance requirements for RCRA facilities, which
the deep injection well requirements mirror, may not adequately ensure
sufficient resources to properly close facilities. An EPA working group is
also reviewing similar aspects of financial assurance requirements for a
different type of injection well for possible changes, but not Class I
deep injection wells. We are recommending that the Administrator, EPA,
review and, if warranted, strengthen financial assurance requirements.
Disposing of wastewater through underground wells began in the 1930s, when
oil companies started pumping brine produced from oil and gas production
into porous rock formations underground. This disposal method is more cost
effective than treating and reusing wastewater. This disposal method was
increasingly used by the chemical and petrochemical industries in the
1960s and 1970s, and EPA raised concerns that injected waste could
contaminate underground drinking water. Underground water supplies are
used to provide about 50 percent of the public water in the United States
and are vulnerable to contamination. The Safe Drinking Water Act (SDWA) of
1974 authorized EPA to regulate underground injection wells in order to
protect drinking water sources. EPA published regulations establishing the
Underground Injection Control (UIC) program in 1980, specifying safeguards
to prevent injection wells from endangering underground sources of
drinking water.
The UIC program encompasses five classes of underground wells. Class I
wells, which are the focus of this report, inject hazardous and
nonhazardous waste from manufacturing and other sources below the
lowermost underground source of drinking water located within a quarter
mile of the well. Approximately 500 Class I wells operate nationwide, many
concentrated in midwestern and southern states. The other four classes
range from Class II wells involved in oil and natural gas production to
Class V wells that include waste from agricultural runoff and septic
systems. Background
Page 6 GAO- 03- 761 Deep Injection Wells Of the 473 Class I deep injection
wells that exist nationwide, only 13 wells are at commercial sites that
accept and inject hazardous waste from
various manufacturing facilities, according to the most recent EPA data
(2001). Two more commercial wells have been constructed in Michigan and
are awaiting final approval for operation. The other noncommercial Class I
wells are owned by companies that use them exclusively to dispose of their
own manufacturing waste. Because hazardous waste is injected into Class I
wells, EPA imposes stringent technical requirements on the wells to
protect drinking water supplies through both UIC and RCRA regulations.
Class I hazardous well owners and operators must meet certain requirements
to construct a well. For example, they must review the area to ensure that
the site is geologically suitable. One purpose of this review
is to ensure that other existing or abandoned wells nearby do not provide
avenues for the injected waste to enter underground sources of drinking
water.
To obtain final approval to operate a deep injection well, owners and
operators are required to, among other things
properly design the well to ensure that the waste will not migrate into
an underground source of drinking water; assure that injection pressure
does not cause fractures in the injection
zone or migration of fluids; provide plans for closing the well and
post- closure care; demonstrate and maintain financial assurance (trust
fund, bond, or other
approved forms) to ensure that the well can be properly plugged and
abandoned; establish monitoring and reporting requirements; and
demonstrate that the injected waste will not migrate beyond the
injection zone for 10,000 years, if otherwise prohibited hazardous waste
will be injected into the well.
Well owners must design and construct a well shaft that is made of three
or more protective layers of pipe or tubing that go into the injection
zone. Wastewater is injected through the innermost part of the constructed
well shaft, referred to as the injection tubing. (See fig. 1.)
Page 8 GAO- 03- 761 Deep Injection Wells Owners of Class I injection wells
must obtain RCRA permits if they plan to treat and store waste before
injecting it. These permits are for building
and operating treatment and storage facilities. RCRA prohibits the land
disposal of restricted hazardous waste unless EPA determines the
prohibition is not required in order to protect human health and the
environment for as long as the waste remains hazardous. Under UIC program
regulations, EPA requires owners to demonstrate, among other things, that,
to a reasonable degree of certainty, the restricted hazardous waste will
not migrate out of the injection zone for 10,000 years. EPA determines
compliance with this requirement through its computer simulation models,
which the owners use to enter their specific data to demonstrate the
movement of injected waste under certain geologic conditions. If the owner
successfully demonstrates that waste will not migrate out of the injection
zone, EPA will grant an exemption to the RCRA regulation, sometimes
referred to as a land ban petition or a no- migration petition.
The permitting of deep injection wells can raise environmental justice
concerns within a community, and permit decisions may be challenged based
on environmental justice concerns. Executive Order 12898, issued in 1994,
directed federal agencies to incorporate environmental justice as part of
their missions. Agencies are to identify and address disproportionately
adverse human health or environmental effects on minority or low- income
populations of their programs, policies, or activities. Title VI of the
Civil Rights Act of 1964 prohibits discrimination on the basis of race,
color, or national origin in any program or activity that receives federal
funding; individuals may appeal permit decisions if they believe the
prohibited discrimination occurred. Section 601 of the act prohibits
intentional discrimination on the basis of race, color, or national
origin in programs or activities receiving federal financial assistance.
Section 602 provides federal departments or agencies with the authority to
issue rules or regulations implementing the objectives contained in
section 601. To ensure that financial resources are available to close
wells if they
cease operation, EPA requires financial assurance from owners under the
UIC and RCRA programs. Owners must provide financial assurance for
plugging and abandonment of wells and closing associated RCRA treatment
and storage facilities. For both the UIC and RCRA programs, owners can
provide financial assurance through approved methods such as trust funds,
surety bonds, letters of credit, or insurance. The amount of financial
assurance needed is based on the estimated cost of the plugging and
abandonment of the well or closing the treatment and storage facility.
Page 9 GAO- 03- 761 Deep Injection Wells For example, the estimated cost
for plugging and abandonment of one well in Michigan was $25, 000, while
the estimate for another well in Ohio
was $250,000; the variation in cost was due to difference in the sizes and
depths of the two wells. Each year owners must also certify that the
financial assurance is adequate and make any necessary changes to the type
or amount of financial assurance.
Under EPA regulations, communities can raise concerns during the required
public comment process for deep injection well permits after a draft
permit is issued. EPA bases final approvals on whether a proposed well
meets technical and safety requirements under its regulations and does not
have authority under the Safe Drinking Water Act to deny a permit on the
basis of other concerns. Earlier public involvement would allow more time
for individuals to approach appropriate state or local officials with any
other concerns. When states are the permitting authority, they provide
more and earlier opportunities for obtaining community concerns. The
National Academy of Public Administration believes that states can pay
more attention to these concerns than EPA can and that these actions
mitigate or avoid controversial issues and possible litigation. Community
Concerns Could Be More
Comprehensively Addressed Before Draft Permits Are Completed
Page 10 GAO- 03- 761 Deep Injection Wells EPA regional offices, or state
offices for states with primacy, obtain information about community
concerns regarding UIC permits through
public comment processes. These offices first request public comments
after working with a prospective well owner to complete a draft permit,
which may take as long as 2 years for a construction permit. When the
draft is complete, EPA or state officials establish a list of interested
parties* citizens and local government representatives* and mail a fact
sheet describing the proposed well. 3 The public must be given at least 30
days from the date of the draft permit notice to submit written comments
or request a public hearing, in which case the hearing time and place are
also published in the local newspapers. Last, EPA or a state office makes
a final permit decision and prepares written responses to the public
comments. Figure 2 shows the permitting process, including opportunities
for public comment. 4 3 For EPA- administered programs, the permit
applicant must submit a list of all owners or record of land within a
quarter mile of the facility boundary, unless the area is populous
and the EPA Regional Administrator determines this is impractical. 4 40
CFR Part 124 and 40 CFR Parts 144, 146, and 148 set forth the public
participation process requirements and the permitting and operational
requirements, respectively, for the Underground Injection Control program.
EPA Completes Draft Permits Before Addressing
Public Concerns
Page 11 GAO- 03- 761 Deep Injection Wells Figure 2: UIC Deep Injection
Well Permitting and Public Comment Processes
Page 12 GAO- 03- 761 Deep Injection Wells Because the agency and the
prospective well owner have already expended time and resources to develop
the draft permit, communities
have raised concerns that the opportunity for commenting on the proposed
construction permit is often too late in the process to have any effect.
EPA does not have authority under the Safe Drinking Water Act to deny a
permit if it meets technical and safety requirements, even if the
application raises other community concerns. We also believe that, after
this much investment, well owners may not be as willing to make changes in
their planned operations and communities may not have enough time to
contact appropriate state and local officials to have their nontechnical
concerns addressed. Both EPA and the National Academy of Public
Administration (NAPA) have noted the importance of getting the public
involved early in the permitting process. 5 For example, in January 2001,
EPA reported that it is important to involve the public early in its
decision- making process
because stakeholders (such as owners or city officials) and the public
have perspectives that can greatly improve the quality of decision making.
6 Similarly, in December 2001, NAPA raised concerns about how the public
has missed opportunities to provide timely input in the permitting
process. Without timely participation, the public is less able to affect
important decisions at the state and local level, such as site location.
Not providing an opportunity for early public involvement may result in
extensive community opposition to proposed wells. For example, the two
proposed wells in Romulus, Michigan generated extensive opposition.
Community concerns included issues such as possible damage to the
interstate highway as a result of increased traffic traveling to the
wells.
EPA only has authority to base permitting decisions on SDWA requirements
and does not consider the impact of traffic on the interstate highway or
the safety of transporting hazardous waste to Class I facilities. These
particular wells have generated substantial public comment and legal
action by community members. In 1996, the applicant, Environmental
5 National Academy of Public Administration, Environmental Justice in EPA
Permitting: Reducing Pollution in High- Risk Communities is Integral to
the Agency*s Mission (Washington, D. C.: December, 2001). The study was
conducted at EPA*s request to
examine how environmental justice could be incorporated into EPA*s air,
water, and waste permitting programs.
6 U. S. Environmental Protection Agency, Office of Policy Economics, and
Innovation, Stakeholder Involvement and Public Participation at the U. S.
EPA
(Washington, D. C., 2001).
Page 13 GAO- 03- 761 Deep Injection Wells Disposal Systems (EDS), applied
for a construction permit. The public was first notified of the draft
permit 15 months later. After another 2 years, and significant public
comments, EPA issued the construction permit without
significant modifications. As of April 2003, EPA was still engaged in
resolving community concerns through public hearings relating to the
nomigration petition.
Recognizing the importance of public involvement in making decisions that
affect the environment, Texas, Ohio, and Louisiana have gone beyond the
federal minimum public notice and comment requirements to address
community concerns. For example, the Texas Commission on Environmental
Quality (TCEQ) must notify the public when it first receives a completed
permit application* unlike EPA, which requires public notification after
the permit is drafted. Texas*s process increases the opportunity for the
public to provide comments at a point when the state can better address
the comments. In addition, in making permitting decisions, TCEQ must
determine that the well is in the public interest, considering the
following issues:
compliance history of the applicant; whether the applicant will
maintain adequate insurance for bodily injury and property damage caused
by accidents, or will otherwise demonstrate financial responsibility; and
whether there is a reasonably available practical, economic, and
feasible
alternative to an injection well. In addition, the well must not impair
existing rights, including mineral rights. If the well is not in an
industrial area, the applicant must make a reasonable effort to ensure
that the burden on local law enforcement, emergency medical or fire-
fighting personnel, or public roadways will be reasonably minimized or
mitigated.
All three states have also enacted additional requirements to address
community concerns. For example, under its RCRA program, Texas requires
that new commercial hazardous waste management facilities, including those
associated with Class I deep injection wells, be more than 2,640 feet from
an established residence, church, school, day care center, surface water
body used for a public drinking water supply, or public park. States have
also taken other steps to address community concerns. For
instance, for one commercial Class I deep injection well in Ohio, state
officials assisted a community in speaking directly with the prospective
Some States Require
Community Concerns to Be Addressed Early in the Permitting Process
Page 14 GAO- 03- 761 Deep Injection Wells well owner. During these
discussions, community residents raised concerns about transporting waste
under dangerous weather conditions
and the increased likelihood of spills. In response, the company agreed
not to transport waste to the well site during adverse weather conditions.
EPA addresses environmental justice issues during the process for deciding
on a construction permit and when civil rights complaints are filed with
the agency after permits are issued. While EPA has yet to issue a national
policy on environmental justice, some regional offices have independently
developed and implemented their own guidelines for
considering environmental justice during their decision- making processes.
After permit decisions are made, individuals and communities may raise
environmental justice issues by appealing permit decisions with EPA*s
Environmental Appeals Board or filing complaints under Title VI of the
Civil Rights Act with OCR. Recent court decisions, however, have limited
the basis for filing these complaints, making the process an unlikely
avenue for changing permit decisions. EPA*s Title VI regulations and
administrative processes for Title VI complaints remain in effect.
In 1995, in response to Executive Order 12898, EPA incorporated
environmental justice considerations into its approval process for
construction permits. Under EPA*s strategy, staff must integrate
environmental justice into every EPA program, policy, and activity. EPA*s
Office of Environmental Justice oversees the implementation of
environmental justice, and it has drafted national guidance that will
assist EPA staff in evaluating potential environmental justice concerns
and
taking actions to address them. To date, the national guidance has been
reviewed internally within EPA, but EPA has not yet published it for
comment in the Federal Register. In reviewing the draft guidance, EPA*s
Office of General Counsel raised a number of policy concerns that will be
resolved before the guidance is released for public comment. As of May
2003, Office of Environmental Justice officials could not say when the
guidance would be released for public comment.
In the absence of national EPA guidance on environmental justice, EPA*s
offices in regions V and VI have developed guidelines for evaluating
potential environmental justice considerations; these regions cover the
four states that have commercial Class I deep injection wells. Regional
officials said that environmental justice assessments are routinely being
performed for Class I deep injection wells, although the regional
guidelines only encourage EPA staff to conduct an assessment that
Environmental
Justice Concerns Are Addressed during the Permitting Process and in
Response to Civil Rights Complaints
EPA Regions Are Encouraged to Consider Environmental Justice Issues for
Proposed Well Sites
Page 15 GAO- 03- 761 Deep Injection Wells considers demographic make up
and the potential health risks that the site might pose to area residents.
For example, in assessing demographics for
issuing a permit for a facility, such as a waste treatment facility, staff
in EPA region V would determine whether the number of low- income and
minority residents living within a specific radius of the facility is
greater than or equal to two times the average low- income and minority
population in the state. If that were the case, EPA staff would conduct
community outreach efforts, such as holding public meetings or workshops,
to better understand and respond to community concerns. Regional officials
said they might decide that issuing a permit would present additional
risks to a community already affected by other environmental sites and
they would, therefore, impose special permit requirements, such as
limiting the amount of waste injected into wells or requiring increased
monitoring, to ensure safe operation. EPA region VI has performed
demographic analyses on all current Class I deep injection wells and will
perform them on any new Class I deep injection wells that submit no-
migration petition applications in the future.
Officials from the three states that have primacy for deep injection
wells* Louisiana, Ohio, and Texas* told us that they are not required
under state law to specifically consider environmental justice issues
during permitting processes. However, Title VI prohibits discrimination in
any program that receives federal funds. The state officials were not
aware of any communities that had raised environmental justice concerns.
Individuals or communities with environmental justice concerns may file
petitions with EPA*s Environmental Appeals Board (EAB) to review permit
decisions or file complaints under Title VI of the Civil Rights Act with
EPA*s Office of Civil Rights (OCR). These complaints involve a broad range
of facility permit decisions, not just deep injection wells. Members of
only one community* Romulus, Michigan* have challenged permit decisions
for a commercial Class I deep injection well on environmental justice
grounds. In 1998, two individuals filed petitions with EAB to review EPA*s
issuance of construction permits to Environmental Disposal Systems (EDS).
Among other things, the petitions claimed that (1) the permits and EPA*s
response to written comments were not provided in a timely manner for
public review to two libraries, (2) EDS should be required to conduct a
survey of the surrounding area to determine the location of other deep
injection wells because the Michigan Department of Environmental Quality
information was unreliable, and (3) the EPA environmental justice
demographic analysis was flawed because it used data from a 2- mile radius
instead of a 4- mile radius, which would have included a larger minority
population. In October 1998, the EAB concluded Individuals Can Raise
Environmental Justice
Concerns through Civil Rights Complaints Filed with EPA
Page 16 GAO- 03- 761 Deep Injection Wells that the petitions did not
provide a basis for review of the permit decision. Specifically, the board
found that the alleged delay in permit notification
and responses to comments did not affect the petitioner adversely because
EPA provided 6 extra days for public comments. Regarding the survey for
other wells, the EAB stated that the petitioner did not provide any
support for his claim that data from the Michigan Department of
Environmental Quality was unreliable. The EAB stated that the region did
not rely only on this data and that there was no indication that EPA*s
conclusion was erroneous. Lastly, regarding the use of the 2- mile radius
for the demographic analysis, the EAB deferred to the EPA region*s
decision that
2 miles was an appropriate radius for the analysis, stating that
determining the radius is a highly technical judgment based on the
probable dispersion of pollutants.
Another Romulus citizen filed a Title VI complaint with EPA*s OCR, which
was accepted for review in December 2001, raising three issues regarding
Michigan*s RCRA permit decisions on the sites* treatment and storage
facilities. (Michigan has primacy for RCRA.) Two of these issues concerned
procedural matters which OCR rejected. OCR dismissed the third issue: that
citizens of Romulus were disproportionately exposed to pollution and other
environmental dangers. OCR found that the facility would not adversely
impact the community because EPA had concluded that the wells would not
damage water, air, or soil quality, nor would they increase noise
pollution. Moreover, OCR found that the potential facility impacts would
not have a disparate effect on African- Americans for Title VI purposes. A
chronology of the events for the EDS site is presented in appendix I.
Since 1992, in addition to the Romulus petition, EAB has received one
other petition involving environmental justice concerns related to a Class
I deep injection well. In that case, which involved a noncommercial well
in Michigan, individuals claimed that the well permits should be denied
because the area surrounding the site was already host to numerous
burdensome land uses and that the 2- mile area analyzed by EPA was too
small to allow for proper evaluation of the sociological, health, and
financial impacts. The board rejected these claims and denied review on
these issues, stating that the petitioner had failed to show that the
permit
would not protect drinking water sources of populations within 2 miles of
the well site or that citizens at a greater distance would not be
protected. Since 1993, OCR has received 135 Title VI complaints* including
complaints not related to deep injection wells. Most of these complaints*
91* were rejected for investigation or dismissed. Table 1 shows the
disposition of all Title VI complaints as of February 2003.
Page 17 GAO- 03- 761 Deep Injection Wells Table 1: Status of Title VI
Complaints Filed with EPA*s OCR (October 1,1993, through May 5, 2003)
Status of reviews Number of cases Pending
Under review for possible investigation/ rejection/ referral 6 Accepted
for investigation 26 Suspended because complaint is part of other
litigation 7
Closed
Rejected for investigation or dismissed after acceptance 94 Referred to
another federal agency 2 Informally resolved 2 Sources: EPA and GAO.
Recent court decisions have limited the basis for filing Title VI
complaints, making the process an unlikely avenue for challenging permit
decisions. In 2001, the Supreme Court ruled that individuals do not have a
cause of action for violations of disparate impact regulations* those
regulations which prohibit activities that are not intentionally
discriminatory but which, in fact, that have the effect of discriminating.
7 Later in 2001, the U. S. Court of Appeals for the Third Circuit, relying
on the Supreme Court decision, held that individuals could not challenge
disparate impact regulations and that Title VI only prohibits intentional
discrimination. 8 The federal government, however, can still bring
enforcement actions.
It is uncertain whether the financial assurance requirements for closing
deep injection wells can adequately provide the needed financing in cases
of owner bankruptcy or other events that force well closure. EPA and state
officials believe that financial assurance requirements are adequate and
would cover the closing costs for the 13 commercial wells currently in
operation. While only four sites have ceased operation since the UIC
program began in 1980, two did not have adequate financial resources to
plug and abandon the wells, resulting in additional costs to taxpayers.
For two other sites, the financial assurance was not tested because other
companies purchased and continued operating the wells. EPA has questioned
the adequacy of similar aspects of financial assurance requirements in
other programs. In 2001, EPA*s Office of Inspector
7 Alexander v. Sandoval, 532 U. S. 275 (2001). 8 South Camden Citizens in
Action v. New Jersey, DEP, 274 F. 3d 771 (3rd Cir. 2001). Financial
Assurance
Requirements May Not Be Adequate for Closing Wells
Page 18 GAO- 03- 761 Deep Injection Wells General stated that financial
assurance requirements for RCRA facilities, on which financial assurance
requirements for deep injection wells were
based, needed improvement, and EPA is currently requesting public comments
on the Inspector General*s conclusions and recommendations. EPA has also
initiated an internal review of financial assurance requirements for Class
II oil and gas deep injection wells because of concerns that aspects of
current requirements, similar to aspects of the Class I deep injection
well requirements, may not be adequate.
When owners of commercial Class I wells have filed for bankruptcy or
ceased operating, they have not always had adequate financial resources to
cover the costs of plugging and abandonment of wells. Since 1980, when the
deep injection well program began, four owners have filed for bankruptcy
or ceased operating. In two cases, the adequacy of the financial assurance
was not tested because other companies purchased and continued operating
the wells. The new owners, according to state officials, provided adequate
financial assurance for these two sites. Two other sites did not have
adequate financial resources to shut down the wells. In one case, the
owner did not have adequate financial assurances in place as required. The
second case, although no permit was granted and thus the financial
assurance requirements were not tested, demonstrates
the potential cost to the public if adequate financial resources are not
available. Both of these cases occurred in Texas.
Malone Services Company operated two wells under state- issued UIC and
RCRA permits. In 1983, to meet the UIC financial assurance requirements,
the company provided a surety bond as financial assurance for the wells.
In 1988, the insurance company that had issued the bond cancelled it,
leaving the company without financial assurance for the wells. In 1992,
the
company submitted a new surety bond issued by a different insurance
company to meet its financial assurance requirements; however, the state
did not accept this assurance because the insurance company issuing the
bond was not an acceptable insurance provider. 9 In 1997, citing several
environmental problems relating to UIC and RCRA requirements for
monitoring, testing, reporting, and financial assurance and the owner*s
lack of cooperation, the state revoked the company*s UIC and RCRA
9 40 CFR S:144. 63 states that at a minimum the insurer must be licensed
to transact the business of insurance, or eligible to provide insurance as
an excess or surplus lines insurer, in one or more states. Adequate
Financial
Resources Have Not Always Been Available for Plugging and Abandonment of
Deep Injection Wells
Malone Services Company Deep Injection Wells
Page 19 GAO- 03- 761 Deep Injection Wells permits. In July 1998, the state
attorney general filed a petition to put Malone Services Company into
involuntary bankruptcy. Although state
officials were not concerned that the injected waste would migrate outside
of the approved injection zone, they were concerned about aboveground
contamination from surface spills. The surface had become so highly
contaminated that the site was classified as a Superfund site in June
2001, with EPA leading cleanup activities. As of May 2003, EPA is
overseeing the
Superfund cleanup and is using the well to dispose of liquid waste as part
of the site cleanup. In addition, EPA is contacting the primary
responsible parties, including the owner and the companies that sent waste
to the site, to encourage their participation in conducting and funding
the site remediation, in lieu of reliance on federal funds.
In 1979, Wastewater, Inc., began converting a well originally used for oil
and gas exploration to an injection well. This conversion, which was
conducted under the authority of Texas Department of Water Resources, took
place 1 year before the federal UIC program began and 3 years before Texas
obtained primacy for the program. When it received primacy, Texas required
the company to reapply for a new UIC well permit for construction and
operation so that the state could issue the permit based on the recently
enacted federal UIC regulations, including the requirement to provide
adequate financial assurance. 10 The company submitted a UIC permit
application to the state in July 1982 and provided a letter of credit for
financial assurance in July 1983. However, Texas never approved the 1982
application because the company requested that the state suspend the
application process while it resolved issues resulting from the death of
the company*s owner. In 1992, the company asked the state to withdraw its
application. In April 1998, the letter of credit for financial assurance
expired, but the company had ceased operating. In May 2000, the state
issued an enforcement order requiring the company
to plug the well. As of May 2003, the company had not done so, because
officials from the company that was formed after the bankruptcy* Future
Environmental Systems* were still discussing with state officials the
possibility of applying for an operating permit and providing adequate
financial assurance. While the well needs to be closed for safety reasons,
it does not pose immediate environmental concerns because construction was
not completed and waste had not been injected into the well,
10 Rather than issuing both a construction permit and an operating permit,
as EPA and some states do, Texas issues a permit to *construct and
operate.* Wastewater, Inc.,
Deep Injection Well
Page 20 GAO- 03- 761 Deep Injection Wells according to EPA and state
officials. If the company does not provide adequate financial assurance
and obtain authorization to operate the
well, the state will try to compel the company to close the well and, if
unsuccessful, will use its own funds to close it.
EPA and state officials responsible for overseeing the 13 commercial Class
I wells currently in operation believe that the owners* or operators*
financial assurances provide enough funds to close their wells in the
event of bankruptcy. Seven of these well owners or operators have provided
financial assurance through insurance policies, while the other wells rely
on other forms of financial assurance.
Uncertainties about the adequacy of RCRA financial assurance requirements
have been raised by EPA officials, and EPA*s Office of Inspector General
(OIG) recommended changes to the requirements in March 2001. UIC financial
requirements are based on RCRA requirements and, therefore, the OIG
recommendations are relevant to the UIC program. According to the OIG, the
risk associated with financial assurance provided by insurance, surety
bonds, and trust funds may be higher than EPA initially estimated for its
financial assurance regulations, and funds may not be available when
needed. 11 Specifically, for state financial assurance programs for RCRA
facilities, insurance provided by captive insurance companies may be
inadequate for covering closure and post- closure costs. Captive insurance
companies are wholly owned subsidiaries of the corporation they are
insuring; if the parent company experiences financial difficulty, state
financial assurance programs can have little confidence that the captive
insurance company will provide the funds needed to pay for closure. These
insurance policies are also high risk if they cannot be assigned to
different owners when a RCRA facility is sold. The OIG recommended that
EPA issue guidance for state financial assurance programs to reduce risks
associated with insurance policies and
that EPA investigate complex insurance issues with states to determine
whether additional guidance is needed.
The OIG report also noted that state officials had difficulty determining
whether the dollar amounts provided for financial assurance were adequate
to cover all costs for closing facilities. Program officials
11 U. S. Environmental Protection Agency, Office of Inspector General,
RCRA Financial Assurance For Closure And Post- Closure, (Washington, D.
C.: 2001). Uncertainties Exist about
the Adequacy of Financial Assurance Requirements in Other Programs
Page 21 GAO- 03- 761 Deep Injection Wells reviewing financial assurance
statements often rely on subjective judgment and are unaware of automated
information available to assist in their reviews. This situation prompted
the OIG to recommend that EPA
help states obtain the automated information for reviewing cost estimates.
In October 2001, responding to the OIG report, EPA requested public
comments on the report*s conclusions. 12 Specifically, EPA requested
comments from the states, the insurance industry, and the regulated
community on the need for additional guidance on insurance used as
financial assurance for RCRA facilities. In addition, EPA requested
comments on any additional requirements for insurers in general, such as a
possible requirement that insurers have a minimum rating from commercial
rating services. By requiring insurers to have ratings that
reflect relatively strong financial conditions, EPA expects to reduce the
risk to the agency or to a state if the insurer fails to provide the
funding required for closing a facility. According to an EPA official, as
of May 2003, the agency is continuing to review the public comments
received and will then decide whether proposed changes to financial
assurance requirements are needed. The agency has not set a specific time
frame for proposing changes.
In July 2002, EPA also formed a UIC work group to review the adequacy of
financial assurance requirements for Class II oil- and gas- related
injection wells, but not Class I deep injection wells because of their
relatively small number. However, the concerns about adequacy are similar.
The work group was formed because EPA officials recognized that the
requirements, issued in 1984, might need updating and because regional
offices were not implementing the requirements consistently. Specifically,
the regional offices were not using a standard approach for calculating
the plugging and abandonment costs, which posed problems for operators
with
permitted facilities in more than one EPA region. Officials also observed
that under present economic conditions it is increasingly difficult for
owners to meet the financial assurance requirements, but failure to do so
risks contaminating underground drinking water sources. The work group is
to
identify financial assurance alternatives to those currently in use,
develop guidance for providing consistency in calculating plugging and
abandonment costs, 12 66 Fed. Reg. 52192 (Oct. 12, 2001).
Page 22 GAO- 03- 761 Deep Injection Wells determine whether states are
requiring adequate financial assurance for plugging and abandonment of
injection wells, and
prepare possible modifications of the financial assurance language
contained in the SDWA. The work group expects to complete all of its
objectives by April 2004. The public participation process EPA currently
uses is not as effective as it could be in addressing the broad range of
community concerns about Class I deep injection wells. Because EPA*s
current requirements call for the agency to notify the public after it
drafts the permit, rather than when it receives a permit application, we
believe the process is essentially too late to have a meaningful effect,
and that it reduces public confidence in the process. In contrast, when
states involve the community early, they have experienced better community
relations* which EPA believes is important and wants to achieve* and have
avoided costly, time- consuming delays. The ultimate test of whether
financial assurances are adequate is an
owner*s bankruptcy. If an owner declares bankruptcy and the financial
assurances are found to be inadequate, drinking water sources may be at
risk and the public may be required to bear the cost of closing a well.
Consequently, any uncertainties about the adequacy of financial assurances
need to be minimized. Both the potential burden to the taxpayer if
adequate financial resources are not available and the potential problems
pointed out by the OIG and by EPA*s own working group call for
action to review and improve these requirements to determine if
improvements are necessary. Conclusions
Page 23 GAO- 03- 761 Deep Injection Wells To allow more time for community
concerns to be addressed, we recommend that the Administrator, EPA,
involve communities earlier in
the permitting process for constructing a well. Furthermore, to ensure
that requirements are adequate to cover the costs of plugging and
abandonment of Class I hazardous deep injection wells and thereby reducing
the public*s financial risk, we recommend that the Administrator, EPA,
review and, if warranted, strengthen financial assurance requirements for
Class I hazardous deep injection wells. In so doing, the Administrator
should
consider the applicability of the Office of the Inspector General*s
findings and recommendations for RCRA financial assurance, and consider
the applicability of the results and recommendations of the
ongoing work group for Class II wells. We provided a draft of this report
to EPA for its review and comment. EPA did not agree with the report*s
conclusions and recommendations for improving the UIC program and stated
that the report contained various factual and technical errors. We
continue to believe that our report is accurate and that our
recommendations are sound. We have made some changes to clarify our
findings.
EPA raised several principal objections to the report. First, EPA stated
that our report mischaracterizes its authority under the UIC program and
the relevant scope of public involvement and comment; to this end it
suggested that our report and recommendations attribute responsibilities
to the UIC program beyond the scope of the SDWA. It was not our intent to
attribute responsibilities to the UIC program beyond the scope of the SDWA
and we have made clarifications to reflect that some community concerns
are not within the scope of EPA*s authority. The report clearly sets forth
the public comment process that EPA follows and explains that the agency
cannot deny a permit on the basis of community concerns if the permit
applicant meet all regulatory requirements. While EPA does not have
authority to address certain nontechnical community concerns under the
SDWA, we believe that public involvement before the draft construction
permit is issued would allow more time for the community to have its
nontechnical concerns addressed at the state or local level. In
addition, nothing in the SDWA precludes EPA from involving communities
earlier in the permitting process, before draft construction permits are
issued. Indeed, involving the community earlier in the process is
consistent with, and in the spirit of, EPA*s policy stressing the
importance of early public involvement. Recommendations for
Executive Action Agency Comments
Page 24 GAO- 03- 761 Deep Injection Wells Second, EPA stated that our
report mistakenly implies a significant deficiency in the financial
assurance requirements for deep injection
wells and that this finding is inconsistent with a long history of success
of financial assurance provisions for Class I wells. We disagree that the
financial assurance requirements for deep injection wells have a long
history of success, and we believe there is sufficient evidence to suggest
a re- examination of these requirements. Our report describes instances in
which owners have failed to provide adequate financial resources and
demonstrates there is a potential burden to the taxpayer if financial
assurance requirements are not adequate. EPA further states that our
recommendation to review the financial assurance requirements
inappropriately relies on experiences from another program (RCRA). We have
clarified this section of our report to more clearly state that we are in
fact discussing financial assurance requirements for the RCRA program.
Nevertheless, we disagree that the lessons learned from the RCRA financial
assurance requirements are inapplicable to Class I Hazardous deep
injection wells. In the preamble to the final rule promulgating the
financial assurance requirements for Class I hazardous deep injection
wells, EPA stated that it had determined that most of the RCRA financial
assurance requirements should apply to Class I wells. EPA noted that many
wells have RCRA surface facilities that already must comply with RCRA
requirements and that wells are major facilities that may require
substantial resources to plug properly. We believe that this reasoning
still applies today, and that it is appropriate for EPA to consider
corresponding changes to the financial assurance requirements for Class I
hazardous deep injection wells. EPA further states that our discussion of
its financial assurance work group is misleading because the group is
examining an entirely different class of well. Our report acknowledges
that the EPA working group is examining the requirements for Class II oil
and gas wells, but we believe that certain aspects of those wells, such as
a
standard method for calculating plugging and abandonment costs, may also
be applicable to Class I wells. We have clarified our recommendation to
state more directly that EPA should *consider* the results and
recommendations from the working group for Class I wells.
Finally, EPA stated that the report contains factual and technical errors
that it pointed out during the development of the report. We do not
believe this assertion is fair or accurate. In accordance with GAO*s
normal practice, based on oral comments received during our exit
conference with EPA officials we incorporated changes into the draft
report. While EPA may disagree with our interpretation of the facts, we
are unaware of any other instances in which EPA provided factual or
technical comments that we did not address. EPA*s comments and our
detailed responses are in appendix III.
Page 25 GAO- 03- 761 Deep Injection Wells We conducted our review from May
2002 through May 2003 in accordance with generally accepted government
auditing standards. (See app. II for a
detailed description of our scope and methodology.) As arranged with your
office, unless you publicly announce its contents earlier, we plan no
further distribution of this report until 30 days after the date of this
letter. At that time, we will send copies to other appropriate
congressional committees and the EPA Administrator. We will also make
copies available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at http:// www. gao. gov/.
Should you or your staff need further information, please contact me on
(202) 512- 3841. Key contributors to this report are listed in appendix
IV.
Sincerely yours, John B. Stephenson Director, Natural Resources
and Environment
Appendix I: Chronology of Events for the Construction of Deep Injection
Wells by the Environmental Disposal Systems Company
Page 26 GAO- 03- 761 Deep Injection Wells Environmental Disposal Systems
(EDS) is interested in constructing and managing deep injection wells for
treating and disposing of hazardous
wastewater from various industries, including, steel production, food
processing, automobile manufacturing, and oil and gas production. The
company initiated the process in 1990 by applying for two Class I deep
injection well construction permits. As of May 2003, EDS had not yet
started operating the wells due to a myriad of events that caused delays,
including relocating the well site, building a storage and treatment
facility,
participating in several public hearings, and facing challenges to EPA*s
permit decisions filed with EPA*s Environmental Appeals Board and a Title
VI complaint filed with EPA*s Office of Civil Rights. EDS also needs a
RCRA operating permit from the state to begin hazardous waste operations.
EPA officials anticipate approving the no- migration petition in mid-
2003, and at that time Michigan*s Department of Environmental
Quality will consider the issuance of the RCRA operating license. The
following chronology details the significant events that occurred during
this lengthy process:
1990* EDS applied to EPA for construction permits for two Class I deep
injection wells in Romulus, Michigan, which is located near the Detroit
Metropolitan Airport. City council members supported the wells*
construction, adopted a resolution welcoming EDS and, under an agreement
with EDS, planned to receive around $1 million in royalties from EDS once
the wells began operating. 1991* In August 1991, the Romulus City
Council passed a resolution
rescinding its earlier welcoming resolution to EDS. After obtaining
relatively few public comments on the draft construction permits, EPA
issued a final construction permit in October. 1993* EDS had almost
completed the construction of one well when
significant public outcry developed because of the well*s location within
the city. Concerned members of the community were represented by an
environmental group called Romulus Environmentalists Care About People
(RECAP). As a result of this concern, the city of Romulus filed a lawsuit
against EDS claiming that the wells were in an area that was not properly
zoned for business activity. The city of Romulus won a preliminary
injunction prohibiting any further activity by EDS and staying any further
court proceedings until the city had exhausted its administrative
remedies. Members of RECAP were elected to the Romulus City Council. The
well that was under construction has since been plugged. 1995* The local
zoning board determined that the proposed well did
not fall within acceptable uses for the district in which it was to be
constructed. The board denied EDS*s request for a variance. Appendix I:
Chronology of Events for the
Construction of Deep Injection Wells by the Environmental Disposal Systems
Company
Appendix I: Chronology of Events for the Construction of Deep Injection
Wells by the Environmental Disposal Systems Company
Page 27 GAO- 03- 761 Deep Injection Wells 1996* The Wayne County Circuit
Court affirmed both of the local zoning board*s decisions. The state of
Michigan passed a law requiring that any
company accepting commercial hazardous waste for disposal in an injection
well have treatment and storage facilities on site that have been
permitted by the Michigan Department of Environmental Quality (MDEQ).
Under the new law, EDS would need a storage and treatment facility
construction permit from Michigan*s Department of Environmental Quality
(MDEQ) if it planned to construct and operate wells in Michigan. Also in
1996, because EDS was still interested in establishing its deep
injection well business, EDS purchased additional land in Romulus near the
Detroit Metropolitan Airport. In May, EDS applied to EPA for construction
permits for two injection wells. 1997* EPA issued draft construction
permits in August and accepted
public comments from September through October. 1998* In March, after
responding to a significant number of public
comments on the draft construction permits, EPA issued permits for
constructing the two wells. Members of the community raised environmental
justice concerns, and two citizens filed appeals with EPA*s Environmental
Appeals Board raising a number of concerns about the wells, including
environmental justice concerns. The board denied review. 1999* EDS
submitted its permit application to the state for the planned
waste treatment and storage facilities for the wells. MDEQ officials found
the application technically complete and arranged to obtain public
comments on the draft permit. MDEQ referred the permit application to a
site review board--- a 10- member board charged with investigating and
deliberating on the impact of the proposed facility on a local community.
The Site Review Board held numerous open meetings and public hearings,
receiving oral and written comments on many issues from local community
officials, the public, EDS, and MDEQ. In March 2000, the board voted to
recommend that the MDEQ deny the construction permit for
several reasons, including an increase in traffic volumes, and the lack of
need for the facility. The board did not find any fault with the technical
aspects of the facility*s design or operation. 2000* During the Site
Review Board*s deliberations, it was disclosed that the proposed storage
and treatment facilities and wells were located in a
protected wetlands area. EDS applied for a wetlands construction permit
during the site review board process. The permit was issued by the MDEQ in
June. The wetlands permit was challenged by the cities of Romulus and
Taylor in a contested case hearing with MDEQ that was subsequently
dropped. 2001* After determining that the Site Review Board did not
provide a
defensible basis for denial, the MDEQ issued a construction permit for the
treatment and storage facility associated with the injection wells. The
permit contained special conditions requiring EDS to mitigate the
Appendix I: Chronology of Events for the Construction of Deep Injection
Wells by the Environmental Disposal Systems Company
Page 28 GAO- 03- 761 Deep Injection Wells legitimate concerns raised by
the Site Review Board in its recommendation for denial, including limiting
the traffic volume and
adding an emergency access road. The cities of Romulus and Taylor and
Wayne County appealed the permit decision to the Wayne County Circuit
Court, arguing that the MDEQ should have followed the board*s
recommendation, that the facility is not needed, and that the facility
should not be allowed in a wetland. The circuit court affirmed the MDEQ
decision. The case is currently under review by the Michigan Court of
Appeals, and as of May 2003 no decision has been issued. 2002* A citizen
filed a Title VI complaint with EPA*s Office of Civil Rights
raising a number of issues, including the fact that the community was
disproportionately exposed to pollution and other environmental dangers.
EPA*s Office of Civil Rights investigated the complaint but did not find
any violations of Title VI. 2003* In January and April public hearings
were held on the EDS nomigration petition. Obtaining approval of this
petition is one of the final
steps before operations begin.
Appendix II: Scope and Methodology Page 29 GAO- 03- 761 Deep Injection
Wells To determine the extent that EPA and states address community
concerns in issuing permits for deep injection wells, we obtained
information on the
criteria and processes from agency officials in the Office of Water, UIC
program, located in Washington, D. C., and from regional program officials
located in Chicago, Illinois, and in Dallas, Texas. We obtained
information on the criteria and processes from state program officials in
the states that have commercial Class I deep injection wells currently
operating or under construction (Louisiana, Michigan, Ohio, and Texas).
Three of the states* Louisiana, Ohio, and Texas* have regulatory authority
(primacy) for implementing the UIC programs in their states. In addition,
we identified and reviewed the applicable federal and state regulations
and other guidance that describe the criteria and processes for public
notice and comment. Because owners of commercial Class I wells may have to
obtain RCRA permits to construct and operate treatment and storage
facilities associated with the operation of the wells, we discussed these
requirements with the EPA and state officials and obtained supporting
documentation describing RCRA requirements. To further understand the
process for addressing community concerns, we obtained and analyzed
information on how the process worked for individual wells that were
approved for operation and for two wells under construction in the state
of Michigan. We also obtained and reviewed reports published by EPA and
NAPA that address the importance of involving citizens in the permitting
process.
In determining the extent that environmental justice issues are considered
during the construction permit process, we reviewed the executive order on
environmental justice issued in 1994 and Title VI of the Civil Rights Act
of 1964. We obtained information from EPA officials in the Office of
Environmental Justice and the Office of Civil Rights to determine how EPA
has implemented the executive order and the status of implementing the
environmental justice policy issued by the EPA*s Administrator. We
obtained and reviewed several reports prepared for the Office of
Environmental Justice that addressed how environmental justice could be
incorporated within existing programs, including permitting decisions. In
addition, we obtained and analyzed information on the number and status of
environmental justice appeals and Title VI complaints filed with the
agency, including those involving commercial Class I wells. We also
analyzed recent court decisions that impact the basis for determining
whether discrimination has occurred under Title VI. We interviewed
officials from EPA*s Office of Water and regional UIC offices, as well as
from the four states with commercial Class I deep injection wells in
operation or under construction to determine how they have incorporated
environmental justice practices into their permitting process. We also
Appendix II: Scope and Methodology
Appendix II: Scope and Methodology Page 30 GAO- 03- 761 Deep Injection
Wells verified with the officials the number of environmental justice
appeals or Title VI complaints involving deep injection wells.
To determine the adequacy of financial assurances for providing funds to
properly shut down Class I wells if owners go bankrupt, we reviewed
federal and state regulations to determine the financial assurance
requirements. We obtained information on how financial assurance
regulations are implemented from EPA and state program officials and
reviewed documentation for Class I wells currently operating, as well as
for wells with owners in bankruptcy, to determine if the owners had
provided sufficient financial assurances. We also discussed with EPA
officials the efforts of an ongoing agency work group that is assessing
the adequacy of financial assurance requirements for injection wells and
reviewed documentation on the issues the group is addressing. Because the
UIC financial assurance requirements were based on RCRA financial
requirements, we obtained information on recent reviews and proposed
changes to the RCRA financial assurance requirements. Specifically, we
obtained and reviewed an EPA Office of Inspector General report on the
adequacy of RCRA financial assurance requirements and proposed agency
changes to the requirements.
We conducted our work from May 2002 through May 2003 in accordance with
generally accepted government auditing standards.
Appendix III: Comments from the Environmental Protection Agency
Page 31 GAO- 03- 761 Deep Injection Wells Appendix III: Comments from the
Environmental Protection Agency
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
Appendix III: Comments from the Environmental Protection Agency
Page 32 GAO- 03- 761 Deep Injection Wells See comment 1. See comment 2.
See comment 3.
Appendix III: Comments from the Environmental Protection Agency
Page 33 GAO- 03- 761 Deep Injection Wells See comment 4. See comment 5.
See comment 6.
Appendix III: Comments from the Environmental Protection Agency
Page 34 GAO- 03- 761 Deep Injection Wells 1. We agree that EPA*s UIC
regulations establish procedures for public involvement through public
comment and hearings during
the permitting activities for Class I hazardous injection wells. We have
made changes to our report to further clarify EPA*s authority and to
explain that the agency does not have the authority to address all
community concerns. However, we believe that earlier
public involvement would allow communities a greater opportunity to
contact appropriate state and local officials regarding those concerns not
within EPA*s authority. No provisions in the SDWA preclude EPA from
involving communities earlier in the permitting process, before draft
construction permits are prepared. Involving the community earlier is
consistent with, and in the spirit of, EPA*s policy stressing the
importance of early public involvement. 2. It is not our intent to imply
that the UIC program has authority and
responsibility for siting hazardous waste treatment and storage
facilities. Our report clearly states that these facilities are covered
under RCRA. We also did not intend to suggest that the UIC program provide
additional opportunities to address citizen concerns in Michigan. Our
report describes the opportunities provided for public comment in
Michigan, but it does not conclude that additional opportunities should
have been provided. It should be noted, however, that EPA Region V program
officials did provide additional opportunities to address citizen concerns
by conducting a second hearing on the no- migration petition for the well
site in Romulus, Michigan. 3. We disagree with EPA that our
characterization of the financial
assurance requirements is problematic and that the financial assurance
provisions for Class I wells have a long history of success. We believe
there is sufficient evidence to suggest a reexamination of the financial
assurance requirements. Our report describes instances in which owners
filed for bankruptcy and did not have sufficient financial resources to
close wells. While these instances may be limited, they demonstrate there
is a potential burden to taxpayers if financial assurance requirements are
not adequate. 4. We do not agree that the discussion of problems with RCRA
financial assurance requirements is inadequate support for our
recommendation to examine UIC financial assurance requirements. The UIC
regulations were based on the RCRA regulations and, with few exceptions,
are almost identical. Potential deficiencies with the RCRA requirements
would also apply to the UIC program. 5. We disagree with EPA*s statement
that our discussion of the
financial assurance work group is misleading because the group is GAO*s
Comments
Appendix III: Comments from the Environmental Protection Agency
Page 35 GAO- 03- 761 Deep Injection Wells examining the requirements for a
different class of well. Our report acknowledges that the working group is
examining the
requirements for Class II oil and gas wells, but it may develop
information that is applicable to Class I injection wells. We have
clarified our recommendation to state more directly that EPA should
consider the group*s results and recommendations for Class I wells. 6. We
disagree that on several occasions EPA has pointed out factual
errors during the development of our report that we did not address. In
accordance with our normal practice, we made changes to the draft report
based on comments received on a statement of facts provided during our
final meeting with EPA. The agency also provided technical comments on the
draft report. While EPA may disagree with our interpretation of the facts,
we are unaware of any factual or technical comments that EPA provided and
that we did not address.
Appendix IV: GAO Contacts and Staff Acknowledgments
Page 36 GAO- 03- 761 Deep Injection Wells John B. Stephenson, (202) 512-
3841 John Wanska, (312) 220- 7628
In addition to the individuals named above, Mary Nugent and Kimberly Clark
made key contributions to the report. Important contributions were also
made by Carol Shulman and Amy Webbink. Appendix IV: GAO Contacts and Staff
Acknowledgments GAO Contacts Acknowledgments
(360225)
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