In this April 24, 2015 photo, Carl Johnson examines a pasture near Crossroads, N.M., where an oilfield wastewater spill killed vegetation. Five years after a broken pipeline soaked the ground with up to 420,000 gallons of brine, much of the land is still barren. The New Mexico Salt Water Disposal Co. acknowledged responsibility. No fines were levied because the leak was accidental. (AP Photo/Charlie Riedel)

In this April 24, 2015 photo, Carl Johnson examines a pasture near Crossroads, N.M., where an oilfield wastewater spill killed vegetation. Five years after a broken pipeline soaked the ground with up to 420,000 gallons of brine, much of the land is ... still barren. The New Mexico Salt Water Disposal Co. acknowledged responsibility. No fines were levied because the leak was accidental. (AP Photo/Charlie Riedel) (The Associated Press)

Despite damage, state regulators rarely punish companies for oil wastewater spills

Energy Associated Press

In April 2013, a malfunctioning oil well in the countryside north of Oklahoma City caused storage tanks to overflow, sending 42,000 gallons of briny wastewater hurtling over a dike, across a wheat field and into a farm pond.

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State regulators ordered the oil company to clean up as much of the spill as possible and repair the site. But they didn't impose fines or other punishment against Moore Petroleum Investment Corp., a tiny company in Norman that operates only a few wells.

Regardless of the damage done, the no-penalty policy is standard practice across the country after oilfield wastewater accidents by companies of all sizes. Spills by the tens of thousands have denuded farm and ranch lands and polluted waters in oil-producing areas for decades, yet only a small minority resulted in discipline. Regulators' approach toward oil spills is largely the same.

"We certainly believe there's a time and a place for that hammer, but we want to be very judicious in its use," said Matt Skinner, spokesman for the Oklahoma Corporation Commission, which oversees the industry in that state. Moore Petroleum promptly arranged cleanup of its spill, which was accidental, he said.

Environmental activists and groups representing landowners contend the lack of punishment helps explain why the industry hasn't done more to prevent spills, and shows regulators' deference to oil and gas producers.

"It's almost a coddling relationship," said Jill Morrison of the Powder River Basin Resource Council, an environmental advocacy group in Wyoming, adding that it takes large court judgments or settlements for companies to mend their ways. "The industry looks at spills as a cost of doing business."

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Most states don't keep statistics on wastewater discharges that brought fines. Regulators said their top priority is getting companies to clean up the spills and restore the land. A punitive approach could inspire delays and even lawsuits, they said.

"Here's a farmer who's got his land polluted and needs it back in production, and you're busy fighting tooth and jowl in court," Skinner said.

The drilling boom has vastly increased the agencies' oversight challenge. Oklahoma has 67 field inspectors and other personnel to keep watch over roughly 185,000 active wells, and the Oil and Gas Division took a budget cut this year. State regulators rely on companies or landowners to notify them about wastewater spills. Without industry cooperation, more likely would go unreported, officials said.

When regulators crack down, the case usually involves gross negligence or deliberate action.

Williams Production Co. of Tulsa, Oklahoma, had a series of wastewater releases from coal-bed methane gas production between 2006 and 2010 in Wyoming's Powder River Basin that eroded rangeland and polluted surface waters. At least 11 spills happened on one ranch in less than a year. The state Department of Environmental Quality fined the company $60,000.

However, the agency assessed nothing against its successor company, WPX Energy, for several more recent spills exceeding 1 million gallons that resulted from bad weather or human error.

Company spokesman Kelly Swan said the later spills accounted for less than one-tenth of 1 percent of the wastewater generated in those operations.

The oil and gas regulatory agency in Texas, the state Railroad Commission, emphasizes helping violators get into compliance, said spokeswoman Ramona Nye. Fines are levied as a last resort.

In the 2014 fiscal year, only about 3 percent of 62,385 oil and gas rule violations discovered during inspections, such as oil and wastewater spills and inadequate sign postings, were referred for enforcement action, according to one state report.

"Protecting public safety and our natural resources is the commission's highest priority," Nye said.

The state's Sunset Advisory Commission, a legislative oversight panel, has called for taking a harder line to provide more deterrence of spills and other oilfield violations.

Some of the loudest complaints of lax enforcement are raised in North Dakota, which ranks second to Texas in oil production.

In Bottineau County on the Canada border, grain farmer Darwin Peterson still fumes over a 2011 spill that polluted 24 acres of cropland and 10 ponds. No penalty has been levied, although regulators said a settlement is being negotiated as the responsible company, Petro Harvester Oil & Gas LLC, treats damaged soil.

"You get so frustrated, it makes me upset just talking about it," Peterson said.

Lynn Helms, director of the state Department of Mineral Resources, said his policy of avoiding penalties encourages better company behavior. When his office does propose fines, they are usually suspended before full payment, which Helms likened to putting the offender on probation.

"We can hold a large suspended penalty over their heads for one to five years and they agree to pay immediately with no court process if they violate again," he said. "We don't see much recidivism this way."

Since early 2013, the agency has proposed $2,575,000 in fines but collected only $203,112.