Deep Injection Wells
EPA Needs to Involve Communities Earlier and Ensure That Financial Assurance Requirements Are Adequate Gao ID: GAO-03-761 June 13, 2003Billions 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.
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.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-03-761, Deep Injection Wells: EPA Needs to Involve Communities Earlier and Ensure That Financial Assurance Requirements Are Adequate
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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:
GAO Highlights:
Highlights of GAO-03-761, a report to the Honorable Lynn C. Woolsey,
House of Representatives
Why GAO Did This Study:
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.
What GAO Found:
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.
What GAO Recommends:
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.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Community Concerns Could Be More Comprehensively Addressed Before Draft
Permits Are Completed:
Environmental Justice Concerns Are Addressed during the Permitting
Process and in Response to Civil Rights Complaints:
Financial Assurance Requirements May Not Be Adequate for Closing Wells:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Chronology of Events for the Construction of
Deep Injection Wells by the Environmental Disposal Systems Company:
Appendix II: Scope and Methodology:
Appendix III: Comments from the Environmental Protection Agency:
Appendix IV: GAO Contacts and Staff Acknowledgments:
Table:
Table 1: Status of Title VI Complaints Filed with EPA's OCR
(October 1,1993, through May 5, 2003):
Figures:
Figure 1: Construction Design for a Class I Deep Injection Well:
Figure 2: UIC Deep Injection Well Permitting and Public Comment
Processes:
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:
United States General Accounting Office:
Washington, DC 20548:
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).[Footnote 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 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.[Footnote 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
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.
Results in Brief:
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, 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 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.
Background:
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.
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.):
Figure 1: Construction Design for a Class I Deep Injection Well:
[See PDF for image]
[End of figure]
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. 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.
Community Concerns Could Be More Comprehensively Addressed Before Draft
Permits Are Completed:
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.
EPA Completes Draft Permits Before Addressing Public Concerns:
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.[Footnote 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.[Footnote 4]
Figure 2: UIC Deep Injection Well Permitting and Public Comment
Processes:
[See PDF for image]
[End of figure]
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.[Footnote 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.[Footnote 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 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 no-migration
petition.
Some States Require Community Concerns to Be Addressed Early in the
Permitting Process:
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 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.
Environmental Justice Concerns Are Addressed during the Permitting
Process and in Response to Civil Rights Complaints:
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.
EPA Regions Are Encouraged to Consider Environmental Justice Issues for
Proposed Well Sites:
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 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 Can Raise Environmental Justice Concerns through Civil
Rights Complaints Filed with EPA:
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 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.
Table 1: Status of Title VI Complaints Filed with EPA's OCR
(October 1,1993, through May 5, 2003):
Status of reviews: Pending: Under review for possible investigation/
rejection/referral; Number of cases: 6.
Status of reviews: Pending: Accepted for investigation; Number of
cases: 26.
Status of reviews: Pending: Suspended because complaint is part of
other litigation; Number of cases: 7.
Status of reviews: Closed: Rejected for investigation or dismissed
after acceptance; Number of cases: 94.
Status of reviews: Closed: Referred to another federal agency; Number
of cases: 2.
Status of reviews: Closed: Informally resolved; Number of cases: 2.
Sources: EPA and GAO.
[End of table]
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.[Footnote 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.[Footnote 8] The
federal government, however, can still bring enforcement actions.
Financial Assurance Requirements May Not Be Adequate for Closing Wells:
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 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.
Adequate Financial Resources Have Not Always Been Available for
Plugging and Abandonment of Deep Injection Wells:
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 Deep Injection Wells:
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.[Footnote 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 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.
Wastewater, Inc., Deep Injection Well:
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.[Footnote 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, 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 Exist about the Adequacy of Financial
Assurance Requirements in Other Programs:
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.[Footnote 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 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.[Footnote 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,
* 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.
Conclusions:
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.
Recommendations for Executive Action:
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.
Agency Comments:
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.
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.
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:
Signed by John B. Stephenson:
[End of section]
Appendix I: Chronology of Events for the Construction of
Deep Injection Wells by the Environmental Disposal Systems Company:
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.
* 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
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 no-
migration petition. Obtaining approval of this petition is one of the
final steps before operations begin.
[End of section]
Appendix II: Scope and Methodology:
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 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.
[End of section]
Appendix III: Comments from the Environmental Protection Agency:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
See comment 1.
See comment 2.
See comment 3.
See comment 4.
See comment 5.
See comment 6.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY:
OFFICE OF WATER:
WASHINGTON, D.C. 20460
MAY 22 2003:
John B. Stephenson:
Director, Natural Resources and Environment
United States General Accounting Office
Washington, DC 20543:
Dear Mr. Stephenson:
Thank you for the opportunity to review the General Accounting Office's
(GAO) draft report: Deep Injection Wells - EPA Needs to Address
Community Concerns Earlier and Strengthen Financial Assurance
Requirements (GAO-03-761), dated May, 2003. The Environmental
Protection Agency (EPA) has coordinated with your Office throughout the
study. The Underground Injection Control (UIC) program is highly
technical and certain aspects of the Class I hazardous waste injection
well component of the program can be particularly controversial. The
Agency has provided extensive material at your request and professional
staff have been available for numerous meetings.
You provided the Agency a very brief period to review your final draft
report. We have identified three major areas of concern with this
report:
l. The report mischaracterizes EPA authority under the Underground
Injection Control program and therefore the relevant scope of public
involvement and comment opportunities.
2. The report implies a significant deficiency in the UIC financial
assurance requirements for deep injection wells that does not exist.
3. The report continues to contain a number of mistakes and factual
errors despite EPA providing GAO with corrections on several occasions.
Each of these will be discussed in detail below.
The Underground Injection Control program is a cornerstone in the
protection of our nation's drinking water. It is one of our key source
water contamination prevention programs in that regard. The Class I UIC
deep well program, which is the focus of your study, constitutes only a
small fraction of the estimated 650,000 to 800,000 injection wells in
the United States. Since the mid-1980s, EPA, in conjunction with our
state partners, has spent a considerable amount of time and resources
in developing and implementing a safe and effective Class I hazardous
waste well program. Reports completed by your Office in December 1994,
as well as studies prepared by the Office of Water in 1991 and a March
2001 study for Congress, have provided a favorable review of the manner
in which the Class I UIC program is working to protect drinking water
resources.
Our initial concern with the report involves your recommendation that
EPA needs to involve the public earlier in the permitting process for
commercial Class I deep injection wells to better address community
concerns. As you are aware, permit applications for Class I hazardous
waste injection wells, whether commercial or non-commercial, are
reviewed in great detail by
EPA and primacy state agencies with respect to all technical matters.
Operators of Class I hazardous injection wells must also get final
approval by EPA for an exemption to Land Disposal Restrictions under
the Hazardous and Solid Waste Amendment (HSWA) of 1984 to the Resource
Conservation and Recovery Act (RCRA). UIC regulations establish clear
procedures for extensive public involvement, through public comment and
hearings, during these activities. The procedures are set forth in
detail in the Code of Federal Regulations (40 CFR Part 124 - Procedures
for Decision Making). However, as you know, the extent of these
permitting activities and, therefore, the related public participation
is limited to the scope of the Congressionally established program.
Your report and recommendations attribute responsibilities to the
federal UIC program beyond the scope which Congress assigned in the
Safe Drinking Water Act (SDWA). Part of the confusion is generated by
your intermingling the discussion of deep injection wells and hazardous
waste surface treatment and storage facilities. On the federal level,
the former is regulated by the SDWA UIC program while the latter is
covered by RCRA. Thus, the UIC program addresses issues related to deep
injection well permitting as it is authorized to do under the law,
while the State of Michigan has separate responsibilities under RCRA
that they follow as well.
The wording and recommendations of your report imply that the UIC
program has authority and responsibility for the siting of hazardous
waste treatment and storage facilities. In fact, the statutory mandate
for the UIC program is the protection of Underground Sources of
Drinking Water (USDW) from the subsurface emplacement of fluids.
Congress did not provide the EPA UIC program with authority over
surface siting of injection wells for reasons unrelated to the
protection of USDWs. Your report suggests that the EPA UIC program
provide additional opportunities for public involvement to address
citizen concerns raised in Michigan about the location of hazardous
treatment and storage facilities. The concerns cited in your report
include noise, odor, traffic from trucks and potential impacts on
property values. However, none of these are relevant to the
Congressionally established mission of the UIC program. Rather, there
are numerous other local, state and federal programs charged with
considering these potential impacts. Your report nonetheless suggests
these are within the scope of UIC authority. Your final report should
correct this inaccuracy and avoid creating confusion. If your intent is
to recommend to Congress that it should expand EPA's SDWA mandate to
give it authority to control local siting and land use decisions, it
should be stated more clearly. If that is your intent, I am concerned
that such a step is unnecessary and that expanding the UIC program's
authority may inappropriately interfere with state or local decision-
making. In the case of the Michigan UIC wells that is at the center of
your report, EPA has, over the years, provided extensive and multiple
opportunities for public coordination, input and formal comment.
GAO's finding that "...financial assurance requirements may not ensure
that adequate resources are available to close a commercial deep
injection well..." is also problematic. This finding is inconsistent
with the long history of the success of financial assurance provisions
for Class I wells in meeting their programmatic goals. It is also
inconsistent with the specific examples contained in your report. Your
extensive investigation found only two instances where there might be
potential inadequacies in financial assurance for UIC Class I permits.
Even in those two cases, your report finds there were "...unique
circumstances..." in one of those cases, the well was never completed
and there was never any injection of fluids. In the second case, you
note that the state of Texas, which operates the program governing this
well, does not have concerns about any threats from the injected
wastes. Despite your recognition that these situations do not represent
the program, you nonetheless suggest they constitute a potential
program deficiency justifying new federal regulations. Rather than rely
on the primary data of the strong record of financial assurance in the
Class I UIC program, you attempt to support your recommendation by
discussing the experience in an entirely separate program. Using
exceptions as if they were the norm and tangential examples in place of
the actual record of the program under examination is highly
inappropriate. Your discussion of EPA's UIC financial assurance work
group is also misleading. As we have explained, that group is examining
the need to change the requirements for an entirely different class of
well. That effort is based upon a concern that changing circumstances
for small well operators may necessitate some fine tuning of
requirements. The effort is targeted at that well type because of a
best professional evaluation of evolving program needs for those wells.
We have not seen a similar need for the hazardous deep injection wells.
Your recommendation that this effort be expanded to include the Class I
wells ignores our professional advice without explanation or
justification. As noted above, EPA and the states have a demonstrated
history of success in the important area of financial assurance and we
will continue to ensure that permits appropriately address financial
responsibility.
Finally, there are still various factual and technical errors, as we
have pointed out during the development of the report, most recently in
specific comments by an email message on May 22. We hope that you will
address these issues to ensure the accuracy of your document. On future
technical reports such as this, you may wish to consider the benefits
of conducting an independent technical peer review as is generally done
for comparable studies in most other Federal government organizations.
I hope these concerns can be addressed in your final report. I believe
they will make it a stronger, clearer, more accurate and more
informative document. If you choose not to address these comments,
please include this letter in your final report.
If there are additional questions or if you wish further clarification
of our comments, please contact William R. Diamond, Director, Drinking
Water Protection Division, in the Office of Ground Water and Drinking
Water, at (202) 564-3751. We look forward to working with you on this
project and future reports concerning the quality of our nation's
drinking water.
Sincerely,
G. Tracy Mehan, III
Assistant Administrator:
Signed by Jane Moore for G Tracy Mehan, III
GAO's Comments:
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.
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.
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.
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.
We disagree with EPA's statement that our discussion of the financial
assurance work group is misleading because the group is 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.
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.
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
John B. Stephenson, (202) 512-3841 John Wanska, (312) 220-7628:
Acknowledgments:
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.
FOOTNOTES
[1] This report focuses only on commercial Class I wells that accept
hazardous waste, which are of greater concern to communities.
[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).
[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.
[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).
[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).
[9] 40 CFR §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.
[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."
[11] U.S. Environmental Protection Agency, Office of Inspector General,
RCRA Financial Assurance For Closure And Post-Closure, (Washington,
D.C.: 2001).
[12] 66 Fed. Reg. 52192 (Oct. 12, 2001).
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