Background

This section presents information on the use of injection wells in the oil  and gas industry and key provisions of the Safe Drinking Water Act and  EPA regulations related to protecting underground sources of drinking  water, and EPA UIC regulations and evaluations.

		Oil and Gas Production and Use of Underground Injection

After a long period of declining production that lasted through 2005,  annual U.S. production of oil and gas—and associated wastewater—has  experienced significant growth. This increase is due in large part to  development of oil and gas from unconventional formations. For example,  shale oil production increased more than 5-fold, from 39 million to about  217 million barrels from 2007 through 2011, while shale gas production  increased approximately 4-fold, from 1.6 to about 7.2 trillion cubic feet,  over the same period. Oil and gas production, including production from  unconventional oil and gas bearing formations, involves removing  hydrocarbon bearing fluids from geologic formations underground.  Conventional oil and natural gas are found in deep, porous rock or  reservoirs and can flow under natural pressure to the surface after drilling.  In contrast to the free-flowing resources found in conventional formations,  the low permeability of some formations, including shale, means that oil  and gas trapped in the formation cannot move easily from the rock.
As a result of geologic differences, the methods used to extract  hydrocarbon resources, including the amounts of water used and  wastewater produced during extraction, vary widely. Some oil and gas  can be developed by drilling a well and relying on the natural pressure in  the formation to push the oil or gas to the surface. When an oil or gas  producing reservoir is depleted—that is, no longer producing oil or gas—a  producer can inject fluids, such as saltwater, into the reservoir to increase  the pressure in the formation and move the residual oil and gas toward a  well and the surface for collection, a process known as enhanced  recovery (See fig. 1.).
Similarly, some hydrocarbons are produced through the use of hydraulic  fracturing. Hydraulic fracturing involves the injection of liquid under  pressure to fracture the rock in geologic formations such as shale to  create fractures and allow hydrocarbons to flow more freely from the  formation into the well for collection. The liquids used in this process  consist primarily of water, but also include chemicals, and sand or other  agents for holding open the fractures (proppants). When a well is no  longer economically viable, a producer may decide to cease production  from it. At some point after production stops, wells may be converted from  production wells to disposal wells, where wastewater can be injected for  disposal. If the well is not used for any of these purposes, it becomes idle  or inactive and will eventually be plugged and abandoned.
The process of extracting oil and gas creates several waste streams that  must be managed. Key among these waste streams is the water (brine)  produced along with the oil or gas during production. Produced water may  include water that occurs naturally in the formation, water or other liquids  that were injected into the formation to enhance recovery during the  drilling or production process, and flowback water, which consists of the  water, chemicals, and proppants used for hydraulic fracturing (fracturing  fluids). Over 90 percent of the water produced during oil and gas  operations is disposed of underground, either through injection for  disposal or for enhanced recovery. The remaining water may be  discharged to surface water such as streams or lakes, stored in surface  impoundments, reused for agricultural purposes such as irrigation or  livestock, or reused for hydraulic fracturing.
Differences in geologic formations can affect the pressure and volume of  wastewater injected underground for either disposal or reuse in  enhancement of oil and gas production. Layers of sediment and rock  deposited over time create different underground formations with different  characteristics, depending on the material that was deposited and various  geologic processes. These characteristics include how porous and  permeable a rock is—both characteristics that determine how well a  formation can accept and hold fluids such as wastewater. Generally,  fluids are injected into porous, permeable reservoirs below an upper  confining layer, or geologic formation with low permeability through which  significant quantities of liquids cannot move. The confining layer serves  as a barrier of protection between the reservoir where fluids are being  injected, known as the injection zone, and underground sources of  drinking water (see fig. 1). Ideally, an injection zone is sealed above and  below by continuous, impermeable rock formations and is large enough to  keep injected fluids from reaching pressures great enough to fracture the  confining rock layers.

		The Safe Drinking Water Act and the UIC Program

Much of the nation relies on groundwater as a source of drinking water,  and reflecting this fact, Congress included groundwater protection  provisions in the 1974 Safe Drinking Water Act, as amended. The act,  among other things, required EPA to establish the UIC program, including  the oversight of state programs regulating underground injection  activities, to prevent the endangerment of underground sources of  drinking water. Before the act’s passage, there was no overall federal  regulation of injection activities, although some individual states regulated  injection wells. Because of concerns about leaks from injection wells and  the potential contamination of underground sources of drinking water,  Congress established the national program in the Safe Drinking Water  Act.
The Safe Drinking Water Act requires EPA to establish regulations for  state programs with minimum requirements to prevent injection of fluids  that endanger underground sources of drinking water. These minimum  requirements are to prohibit the injection of fluids underground unless  permitted and are to include, among other things, requirements for  monitoring of and reporting on injection wells. In implementing the  program, EPA has defined underground sources of drinking water as an  aquifer, or part of an aquifer, that has not been exempted from regulation  and either supplies a public water system or contains a sufficient quantity  of water to supply a public water system and (1) currently supplies  drinking water for human consumption or (2) which, among other things,  contains fewer than 10,000 milligrams per liter (mg/l or parts per million)  total dissolved solids.the act and used for injection. Operators may apply for an exemption for a  particular aquifer from EPA and, if granted, operators may inject fluids  into the aquifer.
Aquifers can be exempted from protection under  The act, as amended through 1977, placed three conditions on the UIC  program. First, EPA’s program regulations must not interfere with or  impede the underground injection of brine or other fluids brought to the  surface in connection with oil or natural gas production or natural gas  storage operations, or any underground injection for the secondary or  tertiary recovery of oil or natural gas, unless such requirements are  essential to protecting underground sources of drinking water. Second,  EPA’s regulations of class II wells should provide for varying geological,  hydrological, and historical conditions within and among the states. Third,  EPA’s program must not unnecessarily disrupt existing state UIC  programs.
The act also included provisions for states to apply for and receive  approval from EPA to manage one or more of the UIC programs in their  state (each class of well is managed as a program).gain EPA approval, a state generally must adopt and implement a  program that meets the minimum requirements established under EPA  regulations and conduct reporting as EPA requires. EPA must approve or  disapprove a state’s program through a rulemaking process, and EPA’s  practice is to enter into a memorandum of agreement with each state,  outlining state and federal responsibilities for program management and  oversight. States with approved programs—state programs—manage the  permitting, inspection, and enforcement of injection wells in their states  under EPA oversight.
Under the act, to  Congress amended the act in 1980, creating an alternative process for  states to receive approval for their UIC class II programs specifically.  Using this alternative, in lieu of adopting EPA’s minimum requirements, a  state can seek approval to manage its own program by demonstrating to  EPA that its program is effective in preventing the contamination of  underground sources of drinking water. Similar to the conventional  approval process, states are required to submit an application to EPA and  enter into a memorandum of agreement with EPA laying out the  components of their program. However, EPA has discretion when making  the determination that the state’s program is effective at protecting  underground sources of drinking water. To help states seeking approval  for their programs under this approach, EPA developed guidance  outlining what would constitute a program that is effective in preventing  contamination of underground sources of drinking water.
Most states have class II programs that have been approved by EPA  under one or the other process, although some of these states do not  have class II injection wells. EPA has approved 16 states under the  conventional process (2 with class II injection wells), and 23 state  programs under the alternative process (all 23 with class II injection  wells), with most states approved in the 1980’s soon after the program’s  inception (see app. I for a list of states). Eleven states do not have  program approval (eight with class II injection wells), and the programs in  these states are managed by six EPA regional offices.

		EPA UIC Regulations and Evaluations

In 1980, EPA issued regulations that established minimum requirements  for state programs, and through the mid-1990s, issued guidance for the  class II programs. Until recently, EPA has made few significant additions  or updates to the regulations and guidance, which have remained in  effect to govern EPA’s class II program. In 1988, about a decade after  EPA issued its regulations, the agency initiated a midcourse evaluation of  the class II program to determine whether any changes were needed to  improve the program. EPA evaluated the adequacy of program  regulations and safeguards, including various safeguards such as  mechanical integrity tests, and found that most of the regulations and  corresponding safeguards were adequate to protect underground sources  of drinking water and needed no changes. EPA’s evaluation also  identified some areas of the program that could be improved, such as the  temporary abandonment of injection wells and construction requirements  for injection wells. In 1992, in a follow-on study, an EPA-chartered  workgroup recommended that the agency amend its regulations to ensure  that wells were abandoned in such a way that they would not provide a  conduit for injected fluids.construction requirements be changed so that all wells drilled after the  regulations went into effect have multiple layers of steel casing and  cement through formations that had a certain water quality. According to  EPA officials, EPA developed draft regulations to address some of the  recommendations from the evaluation and follow-on study, but the draft  regulations were never published. EPA announced in 1995 that it would  not pursue a change to regulations, and no subsequent action was taken.
The study also recommended that well  In 1996, EPA created the UIC Technical Workgroup to provide a forum to  evaluate ongoing technical issues in the UIC program. The workgroup  has members from EPA, states, and environmental organizations, which  discuss, review, and resolve technical matters related to underground  injection. The workgroup’s objectives include promoting consistent  implementation of the UIC program and assisting with the development of  regulatory revisions and technical guidance. Since its inception, the  workgroup has reviewed a number of technical issues surrounding class  II wells, including well construction standards and the types of fluids that  are acceptable for injection into wells.
In 2005, the Energy Policy Act amended the Safe Drinking Water Act to  exempt the underground injection of fluids associated with hydraulic  fracturing operations related to oil, gas, or geothermal production  activities from regulation under class II programs, except in cases where  diesel fuels are used in the fracturing process. In February 2014, EPA  issued class II permitting guidance for hydraulic fracturing operations  using diesel fuels. The guidance includes technical recommendations for  EPA permit writers.

	EPA Oversees Class II Programs, for Which EPA and States Provide a Mix of Resources

EPA and states have separate roles and responsibilities for class II  programs and provide a mix of resources to support them. EPA  headquarters oversees the class II program by setting program  regulations and guidance, while regions focus their oversight on  evaluating state programs and state reporting. State programs, as well as  EPA-managed programs, are largely responsible for the day-to-day  management of the class II program, including providing permits,  conducting inspections, enforcing regulations and guidance, and  collecting data and reporting. EPA and states provide a mix of resources  to support the class II program including EPA grants, EPA and state  personnel, and state funding.

		EPA Oversees State and EPA-Managed Programs

EPA headquarters regulates and oversees state class II programs, in  addition to all other UIC programs, by setting program regulations and  guidance and providing grant funding to state programs. EPA’s regional  offices primarily oversee states that have approved UIC programs— particularly class II programs—by reviewing grants and conducting annual  evaluations. EPA’s primary responsibilities include the following:
Establishes program regulations and guidance. EPA issues and, in  some cases, updates minimum federal regulations and develops  guidance, to assist with the implementation of UIC program  requirements, including those established in the Safe Drinking Water  Act. In addition, EPA develops guidance for state and EPA-managed  programs on technical program requirements such as pressure testing  and well construction.
Approves state program applications and state program revisions.  EPA reviews and approves state applications to manage their own  programs. The act requires EPA to approve state programs, and  certain revisions, by rule, meaning that EPA conducts a rulemaking  including public notice and opportunity to comment. EPA has issued  regulations and guidance concerning the process for approving state  programs and revisions. Currently, 39 states have approved class II  programs, and, according to EPA officials, there are two applications  pending approval. See appendix I for a list of states with approved  programs and appendix II for a description of the approval process.
Enforcement of state class II regulations. Once state programs are  approved, EPA incorporates state program regulations into federal  regulations, which gives EPA the ability to enforce state program  requirements in cases where the state does not take action or  requests EPA assistance. To incorporate state program  requirements into federal regulations, EPA conducts a rulemaking  process that provides public notice of the proposed regulations and  the opportunity for any person or organization to review the  requirements and submit comments in writing for a 30- to 90-day  period. EPA generally provides a response to the significant issues  raised during the comment period and discusses any changes made  to the regulation as a result, and it publishes the text of the final  regulation in the Federal Register. The Code of Federal Regulations  provides a public record of approved state programs that can be  enforced by EPA.
Oversees state programs. EPA regions oversee state programs. EPA  guidance issued in 1983 provides details of effective oversight of state  programs, including several steps that regions are to take. EPA  regional officials are expected to conduct annual on-site evaluations  of state managed programs that usually involve, among other things,  an on-site meeting with state class II officials to discuss program  performance and a review of permitting and inspection files, both of  which are intended to help determine whether the state program is  meeting the requirement to protect underground sources of drinking  water from endangerment by underground injections. EPA  headquarters is responsible for conducting the annual evaluation of  EPA-managed programs.
Allocates and administers grants. EPA allocates grant funding to state  programs using a formula that includes the number of underground  injection wells in each state, state population, and state land area. To  receive funding, states are required to submit a grant application with  a work plan that estimates the amount of federal funds and state  funds needed during the state’s fiscal year, and the number of  personnel the funding will support to accomplish specific activities  such as permitting, inspections, and data management. States are  required to match 25 percent of the grant funding allocated with state  funding. Funding allocated for EPA-managed class II programs is  provided to the EPA regional office to help cover its costs for  managing the programs. At least once annually, EPA regional officials  are to evaluate state program accomplishments and compare federal  funds and state matching funds spent to the state’s end of year  financial reporting.
Aggregates and reports data. EPA makes data available to the public  on the class II program, as well as other UIC programs, nationwide.  EPA’s guidance says that it will aggregate state-reported data on the  UIC program to allow tracking and evaluation of the program.  According to EPA officials, EPA developed and maintained a  mainframe database to aggregate and summarize state reporting data  at a national level until the mid-1990s, and it has not had a similar  database until recently when the agency determined that it needed to  modernize its data and reporting systems. EPA has three data  collection efforts under way: (1) a Web-based system to collect and  report basic information on program performance; (2) biannual  summary reporting forms submitted by the states or EPA regional  offices; and (3) a national well-specific database that, according to  agency documents, will ultimately provide data, by well, on a number  of variables, including violations, significant noncompliance, and  alleged contamination of underground drinking water. EPA is working  with state UIC programs to help them develop the capability to input  data directly into the database.

		States, and Some EPA Regions, Manage the Day- to-Day Activities of the Class II Program

States, as well as certain EPA regional offices responsible for EPA- managed programs in some states, are largely responsible for the day-to- day management of the class II program. Management includes  permitting wells, inspecting wells, enforcing regulations and guidance,  and collecting and reporting program data to EPA. More specifically,  managing the day-to-day activities of the class II program includes the  following:
Program management. States and EPA regional offices are  responsible for managing class II program staff, developing program  regulations and associated guidance, applying for EPA grants, and  tracking expenditures associated with EPA grant funding.
Permitting. States and EPA regional offices review and approve  permits for existing and new injection wells and regularly review  historical well records.
Monitoring and inspections. States and EPA regional offices review  monitoring reports submitted by well operators, conduct field  inspections of well sites, test wells to ensure protection of  underground sources of drinking water, and ensure that operator  reporting, inspections, and testing are done consistently and correctly.
Compliance and enforcement. States and EPA regional offices are  expected to identify wells that are not in compliance with regulations  and guidance, take enforcement action against well operators in  violation of regulations and guidance, and pursue legal action against  violators when necessary.
Aquifer identification and exemption. States and EPA regional offices  are expected to conduct aquifer surveys and develop inventories of  aquifers in the state. They assist with applications to EPA for aquifer  exemptions. In addition, they conduct investigations of potential  contamination of aquifers.
Data management and reporting. States and EPA regional offices  develop a complete inventory of class II wells in the state. They also  collect and manage data on wells to satisfy EPA’s reporting  requirements, including data on well inspections and compliance data,  such as well operator violations and any enforcement actions taken.
Public information, training, and technical assistance. States and EPA  regional offices conduct public outreach and training to help staff and  well operators keep current on technical issues. States and EPA  regional offices also provide technical assistance to well operators  when necessary.

		Resources for State and EPA-Managed Class II Programs Include EPA Grants, State Funds, and Federal and State Personnel

EPA and states provide a mix of resources to support the class II  program, including EPA grants, state funding, and EPA and state  personnel. State programs are funded in part by EPA grants. States  receive EPA grants to help pay for the costs of managing the class II  program. Federal officials said that federal grant funds for the UIC  program, including EPA grant funds for states’ class II programs, have  remained unchanged since the 1990s, at around $11 million in grant  funding for all states, territories, and tribes. As shown in figure 2, EPA’s  grant funding for the UIC program, as well as grants for state class II  programs, remained flat from fiscal year 2003 through fiscal year 2012.
Between fiscal year 2003 and fiscal year 2012, nationwide, grant funding  for state UIC programs has fluctuated between approximately $9.7 million  and $10.1 million. During the same period, total UIC grant funding for the  states we reviewed remained between $3.0 and $3.2 million, and grant  funding for state class II programs was around $4 million. As shown in  figure 2, considering inflation and rising costs these totals represent an  actual decline in available funds for state UIC programs when converted  to real fiscal year 2013 dollars.
State programs also use state funding, including revenues from well  permitting fees and other sources, to pay for their programs. For five of  the six programs we reviewed that provided budget data, states generally  provided most of the funding to support their class II programs (see table  1). Some states have increased their budgets for the class II program  over the last few years, while others’ budgets have stayed relatively level.  Even so, in the states we reviewed, the percentage of the state class II  program budgets covered by EPA grants has decreased in the last few  years in some states. For example, EPA grant funding comprised  approximately 6 percent of California’s class II program budget in fiscal  year 2008 and approximately 3 percent in fiscal year 2012. Similarly,  grant funding comprised approximately 35 percent of Colorado’s class II  budget in fiscal year 2008 and 30 percent in fiscal year 2012.
States also dedicate various staff resources to administer state class II  programs. Generally, states utilize management staff to administer the  program; technical staff, such as geologists and engineers to review  permit applications; and field based staff to conduct inspections and  observe well construction. According to state and EPA regional officials,  class II programs are managed by a combination of full-time staff and  part-time staff that split their responsibilities between the class II  programs and other tasks. In the states we reviewed, staffing levels for  the class II program have fluctuated over the past several years. For  example, Colorado and North Dakota remained flat at approximately 3  and 5 staff members in their programs respectively between 2008 and  2013, whereas Texas and Ohio increased the number of staff in their  class II programs from approximately 18 to 24 and 3 to 8 respectively  over the same time period. In contrast, the number of class II program  staff in Oklahoma decreased from 8 to approximately 6 between 2009  and 2013.
Resources for EPA-managed class II programs, such as Pennsylvania  and Kentucky, also include EPA grant funds and EPA staff, although EPA  regional offices do not separately track funding and staff resources  specific to the class II program. EPA allocates grant funding to all states  with UIC programs, regardless of whether they are managed by states or  regions, and EPA regions receive this grant funding to help pay for their  management. Regions that manage class II programs in certain states  said that they have approximately 4 to 6 staff working on the program  across all UIC programs, not just the class II program, as of fiscal year  2013. According to EPA officials, staffing resources and funding for the  programs has remained relatively flat or decreased since fiscal year 2011.  For example, staffing levels for EPA Region 4’s class II program in  Kentucky have decreased from approximately 8 staff to approximately 6  staff from fiscal year 2011 through fiscal year 2013.
According to EPA and state officials, UIC program responsibilities have  increased in the last several years. In particular, EPA, with the input of  some state program officials, developed guidance for diesel fuel use in  hydraulic fracturing operations and regulations for a new class of injection  wells associated with carbon sequestration, known as class VI wells. In  addition, between 2005 and 2012, the nationwide inventory of class II  wells increased from approximately 144,000 to 172,000.

	State and EPA- Managed Programs We Reviewed Have Safeguards to Protect Underground Drinking Water

All of the class II programs we reviewed have safeguards to prevent the  contamination of underground sources of drinking water by ensuring that  fluids injected into underground formations do not leak into aquifers that  are used, or could be used, for drinking water. The six state programs we  reviewed incorporate safeguards that EPA deemed effective at preventing  underground injections from endangering drinking water sources, while  the two EPA-managed programs incorporate the specific safeguards  established in EPA regulations and guidance. Officials who manage the  eight programs we reviewed reported few known instances of  contamination from the injection of fluids into class II wells in the last 5  years; however, EPA’s class II program does not require monitoring of  groundwater for contamination nor do most of the eight states we  reviewed. Moreover, EPA has noted that the absence of known  contamination is not necessarily proof that contamination has not  occurred. In the last several years, issues have emerged with the  potential to affect the protectiveness of class II safeguards, but EPA  officials have said that any changes or additions to the safeguards will be  addressed on a state-by-state basis.

		EPA Safeguards Seek to Prevent Fluids from Leaking into Underground Drinking Water Sources

EPA developed safeguards to protect underground drinking water  sources in the 1980s, designing them to prevent fluids that are injected  into underground formations from endangering underground drinking  water sources. Specifically, in a 1980 document titled Statement of Basis  and Purpose: Underground Injection Control Regulations (Basis and  Purpose), EPA identified the major pathways that contaminants can take  to enter underground sources of drinking water, and discussed EPA’s  proposed regulations to ensure that movement of injected fluids would not  endanger these sources.contamination, or ways in which fluids injected into a well could escape  the well and enter underground sources of drinking water. Figure 3 shows  four of the six different pathways.

		Programs in States We Reviewed Reported Few Instances of Alleged Contamination, Although Class II Program Safeguards Do Not Include Groundwater Monitoring

The programs in the eight states we reviewed reported few instances of  alleged contamination caused by potential leaks from underground  injections into underground drinking water sources. State and EPA  officials reported this information from two sources: (1) data on well  violations that could be significant enough to contaminate underground  sources and (2) data on citizen complaints of water well contamination  and resulting state investigations.
States and EPA-managed programs track data on well violations that are  significant enough to pose a risk of contaminating underground sources  of drinking water. State and EPA regional officials identify violations  through their well inspections and, using EPA definitions, identify the  violations that may have been significant enough to contaminate  underground sources of drinking water. State and regional officials do not  have to confirm that contamination has occurred, only that a violation was  significant enough that fluids may have contaminated an underground  source of drinking water. Officials for the eight programs we reviewed  said that they reported few such significant violations, and that few of  these had actually contaminated drinking water sources, as shown in  table 3. For example, California reported 9 instances of alleged  contamination in 2009, and 12 instances of alleged contamination in  2010; California officials told us that the instances of alleged  contamination resulted from an individual operator that was injecting  fluids illegally into multiple wells.
Officials from the eight states we reviewed also based their statements  about few or no instances of contamination from injection wells on their  efforts to track and investigate citizen complaints alleging water well  contamination. Each of the eight states we reviewed has a process for  receiving, tracking, and investigating citizen complaints about their water  wells being contaminated. The process the states use is similar, taking  citizen complaints and investigating the complaints. The investigation may  involve, for example, checking the drinking water well for contamination  and completing an assessment of the possible sources of contamination.
However, unless it is part of an investigation of a citizen or other  complaint, EPA and states generally do not directly monitor groundwater  to detect contamination from injection wells as part of their class II  programs. When it first developed the UIC program and its regulations,  EPA considered, but did not include, monitoring of groundwater for  contamination as a means of evaluating the effectiveness of the program   Furthermore, the Safe Drinking Water Act does not  and its safeguards.specifically require groundwater quality monitoring for class II wells.  Moreover, EPA guidance notes that, while evidence of the presence or  absence of groundwater contamination is important, it cannot serve as  the only measure of program effectiveness, and the absence of evidence  of contamination does not necessarily prove that contamination has not  occurred.
Nonetheless, some of the programs in the eight states we reviewed do  monitor baseline water quality, although EPA’s regulations do not require  it. North Dakota, Oklahoma, and Colorado each require sampling of  groundwater at various stages of the oil and gas production process. For  example, North Dakota requires applicants for a class II injection well  permit to provide a quantitative analysis from a state-certified laboratory  of freshwater from the two freshwater wells nearest to the proposed  injection well. Similarly, Oklahoma requires permit applicants to provide  an analysis of freshwater from two or more freshwater wells within a one- mile radius of the proposed injection well. Colorado officials said the state  requires oil and gas drilling permit applicants to analyze the water quality  of groundwater samples from four nearby water wells, depending on well  location and depth.

		New Program Risks Have Emerged that EPA Says Will Be Handled on a State-by-State Basis, but State Programs Could Benefit from Additional National Guidance

New risks have emerged in the management of class II disposal wells  that could affect the class II program: induced seismicity,  overpressurization of formations, and use of diesel fuel in hydraulic  fracturing operations. EPA has tasked the UIC Technical Workgroup with  providing technical information to inform states’ decisions about induced  seismicity, but plans to address overpressurization of formations and  diesel use on a state-by-state basis without requesting assistance from  the workgroup. Without similar reviews of other emerging risks, class II  programs may not have the information necessary to fully protect  underground drinking water.
Induced seismicity: Recent seismic activity associated with injection wells  in Arkansas, Ohio, Oklahoma, Texas, and West Virginia has raised  awareness of the potential for earthquakes resulting from the  underground injection of fluids. In addition, in 2012, the National Academy  of Sciences concluded that underground injection does pose some risks  for induced seismicity. To the extent that induced seismicity creates  conditions that endanger underground sources of drinking water,  according to EPA, it may have negative environmental effects.  Programs in three of the eight states we reviewed—Ohio, Texas, and  Oklahoma—have adopted steps to address the potential for seismic  activity in injection areas. Ohio finalized new regulations that went into  effect on October 1, 2012 that allow the state’s chief of the Division of Oil  and Gas to require a number of different tests or evaluations to address  potential induced seismic risks for companies seeking permits for brine  injection wells in Ohio.in-house seismic expert to assess potential risks and the state continues  to monitor developments and research related to induced seismicity.  Oklahoma has partnered with Region 6 to conduct three dimensional  mapping of seismic events for analysis.
According to Region 6 officials, Texas hired an  EPA officials said the agency has not amended its regulations to add  specific requirements related to seismic activity and injection wells, but  rather, tasked its UIC Technical Workgroup with conducting a study of the  problem and potential actions to be taken by EPA and the states. The  workgroup issued a draft white paper that identified the three key  components behind injection-induced seismic events and identified  possible steps to be taken by state programs to manage or minimize  induced seismicity, including (1) determining whether a site needs further  assessment to ensure protection of underground sources of drinking  water; (2) taking steps to assess the reservoir and to modify well  operations (injection pressure, intervals, or other measures); and/or (3)  require additional seismometers or increase monitoring of injection  pressures, formation pressures, and/or the characteristics of the fluids  being injected. EPA officials said that the white paper is still in draft, but  will help the state program directors to decide what, if any, regulations or  safeguards need to be adopted to deal with the issue of induced  seismicity.
Overpressurization of formations: Overpressurization, according to  Region 6 officials, occurs when fluids injected into a formation increase  the pressure in it to a point where the fluids flow back up a well and onto  the surface. Region 6 officials said that two such incidents occurred in  Oklahoma, and they noted that overpressurization is occurring in  locations where formations have been developed and receiving  wastewater for long periods of time. The key threat to underground  drinking water sources in such situations is from the leaked fluids  containing contaminants from produced water or fracturing fluids flowing  to the surface and migrating back into formations containing underground  sources of drinking water. Region 6 officials indicated that fluids could  leak from the well into groundwater formations through other pathways  and that it is difficult to determine if this has happened. In 2003, Region 6  held a conference, where officials expressed concern that a large number  of injection zones were becoming overpressurized because they were  seeing an increase in requests for permit modifications to increase  injection pressure. According to Region 6 officials, no additional actions  were taken to address the region’s concerns regarding  overpressurization. EPA officials said that instances of overpressurization  occur infrequently and that they plan to address overpressurization of  formations on a state-by-state basis, not through the UIC Technical  Workgroup. The issue could affect other states, however, as increased  volumes of fluids are injected into formations; these states and EPA  regions could benefit from the information that other states and regions  have learned.
GAO-12-732. physical characteristics of the fluids to be injected, the guidance suggests  focusing on prepermit water quality monitoring in the area of review.
According to EPA and state program officials, the UIC program guidance  for diesel use in hydraulic fracturing will be implemented on a state-by- state basis and does not need review from the UIC Technical Workgroup.  However, while it is the responsibility of the operator to obtain a permit for  any injection covered by UIC program laws or regulations, the information  officials need to ensure that diesel permits are issued when necessary  may not be available, depending on state requirements and practices.  Specifically, officials that manage seven of the eight state programs we  reviewed said that diesel fuel, as defined by EPA’s guidance, are not now  being used in oil and gas production in their respective states, and none  of the states we reviewed have issued permits for use of diesel fuels in  hydraulic fracturing, according to officials. California did not know whether  diesel had been used or not. To discover whether companies were using  diesel fuel, some of the states said that they had reviewed available  information on chemical disclosures and discussed operations with oil  and gas companies to determine whether companies are using diesel  fuels in hydraulic fracturing operations. While several states have begun  to require well owners or operators to use a national reporting system  called FracFocus to disclose chemicals used in hydraulic fracturing fluid  that could help states identify hydraulic fracturing operations using diesel  fuels, not all states have done this, which means that all operators may  not be providing information, and the information available is not   Furthermore, operators consider some information, such as  complete. hydraulic fracturing fluid chemical composition, to be classified business  information, which is not subject to public disclosure. Without an  assessment of the complete chemical information needed for permitting,  such as an assessment by the UIC Technical Workgroup, EPA and the  states may not have the chemical disclosure information they need to  ensure permits are issued for wells that use diesel fuel in hydraulic  fracturing.
Colorado, North Dakota, Ohio, Oklahoma, Pennsylvania and Texas require producers  and service companies disclose chemicals used in hydraulic fracturing in FracFocus. In  addition, California has developed a Chemical Disclosure Registry that requires disclosure  of the composition, and disposition of hydraulic fracturing fluids within 60 days of the  cessation of a hydraulic fracturing operation.

	EPA Is Not Consistently Performing Oversight and Enforcement Activities

EPA is not consistently performing two key activities associated with its  oversight and enforcement responsibilities for class II programs. First,  EPA does not consistently conduct annual on-site reviews of state  programs, which EPA guidance identifies as a key activity needed to  conduct effective oversight and to ensure that state and EPA-managed  class II programs are protecting underground sources of drinking water.  Second, EPA is not consistently incorporating changes to state class II  program requirements into federal regulations, as required by its  regulations, to enable enforcement of state program requirements if  necessary.

		EPA Is Not Consistently Conducting Annual On-site Evaluations of State or EPA-Managed Programs

As part of effective oversight of state programs and EPA-managed  programs, EPA’s guidance recommends that regional staff and  headquarters staff, conduct several ongoing oversight activities. These  include (1) reviewing annual reports from states, (2) reviewing financial  reporting on grant funding from state programs, (3) reviewing state  reports on injection wells that do not comply with federal or state  regulations, and (4) conducting annual on-site program evaluations.
For the regions we reviewed, EPA regional officials regularly conducted  three of the four oversight activities identified in EPA guidance. For  example, in the eight regions we reviewed, EPA officials regularly  reviewed states’ annual reports and forms identifying noncompliance  within each state to identify any areas of concern and followed up with  state officials to discuss and resolve them. In addition, EPA regional  officials reviewed grant financial reporting for class II programs as part of  their annual grant program review.
However, EPA regions we reviewed did not consistently conduct annual  on-site program evaluations as directed in the EPA guidance, nor did  EPA headquarters conduct such evaluations of EPA-managed programs.  According to EPA guidance, EPA regions should perform at least one on- site evaluation of each state program each year to, among other things,  assess whether the state is managing the program consistent with state  regulations, setting program objectives consistent with national and  regional program priorities, and implementing recommendations from  previous evaluations. Following the on-site evaluation, the regional office  should draft a written report on the state’s performance and submit the  report to EPA headquarters and the relevant state program office. EPA  headquarters is responsible for conducting similar program evaluations of  EPA-managed programs and producing the associated written reports.
EPA officials recognize the benefits of on-site evaluations of state  programs, but said they have limited resources to conduct them. Regional  officials said that on-site program evaluations are valuable for  coordinating between federal and state officials to improve program  management. For example, a comprehensive evaluation of the California  class II program contracted by Region 9 in 2011 resulted in a number of  recommendations, and as a result, California is planning to update their  regulations and hired 43 additional staff in the division, including  additional staff responsible for managing their class II program to bolster  regulatory activities. In addition, officials in Region 7 and Region 10 told  us that their evaluations have identified deficiencies in the financial  requirements of well operators planning to drill new class II injection wells  that are necessary to ensure that those wells can be adequately plugged  in an emergency. However, according to EPA officials, limited resources  have prevented regions, and EPA headquarters, from consistently  conducting on-site reviews. Three EPA regions told us that that they try to  conduct on-site evaluations of state programs every 3 to 5 years. For  example, officials in Region 5 and Region 7 told us that their goal is to  conduct on-site evaluations of each class II program at least once every 4  or 5 years, and that they prioritize their reviews based on issues such as  public complaints, regulation changes, staff changes, and other emerging  areas of concern. Region 6 has a goal of conducting annual on-site  evaluations of all class II programs each year, but regional officials said  they have had to increasingly rely on conference calls and electronic file  review in lieu of site visits to complete the annual evaluations and  associated reports. Similarly, EPA headquarters officials told us that they  do not conduct annual evaluations of EPA-managed programs due to  limited resources. Headquarters officials told us that in lieu of on-site  evaluations they focus on reviewing annual grant reports and hold  ongoing discussions of various policy issues with state officials.
According to EPA officials, even with the agency’s limited resources, EPA  has not evaluated the guidance and required oversight activities to  identify priority activities that are needed to oversee programs and ensure  their effectiveness. The agency issued guidance on effective oversight of  state and EPA-managed UIC programs in 1983, just after the national  UIC program’s inception when many state class II programs had just  been approved. The guidance contained activities that were needed to  ensure that a new program was being implemented as it was supposed  to, such as reviewing the memorandum of agreement in each state.  However, according to regional officials, some of these activities may not  be needed for programs as they mature. For example, officials in regions  4, 7, and 8 told us that while annual on-site evaluations can strengthen  oversight and improve communication with state program officials in  some cases, they may only be necessary every few years rather than  annually now that UIC programs have matured. In addition, Regions 6, 8  and 10 told us that, due to improvements in technology in electronic well  file sharing, they have been able to conduct some activities remotely,  such as file reviews, that once required an on-site visit. Without  evaluating its guidance, EPA does not know what oversight activities are  most effective and should be priorities—or even necessary—given  current program conditions and funding. Without updated guidance for  effective oversight, EPA cannot have reasonable assurance that state  class II programs are being managed effectively and cannot confirm  whether the programs are achieving their purpose of protecting  underground sources of drinking water.

		EPA Is Not Consistently Incorporating State Program Changes into Federal Regulations, Hindering Its Ability to Enforce Program Requirements

EPA has not consistently incorporated state program requirements, or  changes to state program requirements, into federal regulations, as  required by agency regulations; as a result, where it has not done so,  EPA does not have the ability to enforce these state program  requirements if necessary. Specifically, if a state does not enforce a  requirement against an injection well operator violating state regulations,  EPA can take enforcement action if EPA has approved the state  regulations being violated and incorporated them into federal regulations,  and has met specific procedural requirements. EPA regulations and  guidance establish a process for EPA and its regions to review and  approve state programs, as well as changes to state programs. Under its  regulations, EPA can only enforce state program requirements that it has  incorporated into federal regulations through a rulemaking process.  Rulemaking requires EPA to provide public notice of the proposed  regulatory changes, respond to the significant issues raised during the  comment period and discuss any changes made to the regulation as a  result, and publish the text of the final regulation in the Federal Register.
Simultaneous injection wells separate oil and/or gas from brine inside the wellbore,  produces the oil and/or gas along with a small fraction of wastewater to the surface, and  reinjects the remaining brine within the wellbore into formations below the base of  underground sources of drinking water. federal regulations and, as a result, does not have enforcement authority  for class II program regulations in either state.
Without incorporating state program requirements, or changes to state  program requirements, into federal regulations, EPA may not be able to  take enforcement action, if a state does not take such action or requests  EPA’s assistance to take action, against well operators that are violating  state regulations. Under EPA regulations, the agency cannot enforce   For example, according to  regulations that it has not approved by rule. an EPA official, Illinois requested that EPA Region 5 enforce the state’s  class II UIC requirements against an Illinois well operator for violating the  regulations after the state was unsuccessful at getting compliance from  the well operator through its own enforcement actions. The operator did  not conduct required mechanical integrity tests on six injection wells and  did not submit annual status reports for the wells. Without the operator’s  compliance with testing and reporting requirements, Illinois program  officials were unable to determine whether the wells were at risk of  contaminating underground sources of drinking water. EPA originally  issued an administrative order assessing a fine of $105,000. According to  EPA officials, the operator challenged EPA’s enforcement action several  times over a period of nearly 10 years, and eventually appealed the case  to the U.S. District Court. While on appeal, EPA discovered that the latest  Illinois regulations had not been incorporated into the federal regulations.  EPA moved to remand the case, and in 2012, the court granted EPA’s  request to remand the underlying decision of EPA’s Environmental   and EPA later settled the case with the estate of the  Appeals Board,operator for $20,000. EPA officials said that they do not often have to  step in to enforce a state class II program regulation, but as the oil and  gas industry continues to develop its resources and use innovative  technologies, state programs may change their regulations, and EPA may  have increasing numbers of state program changes to review, approve,  incorporate into federal regulations, and enforce.
Because EPA has not been incorporating changes to state program  requirements into federal regulations, the agency has a backlog of state  program requirements that it cannot enforce if necessary. When faced  with a similar backlog in the early 1990s, EPA conducted a review to  identify all state program changes since the UIC program’s inception in  the early 1980s, and then conducted one large rulemaking to incorporate  all of the identified changes into federal regulations. EPA spent 3 years  researching and comparing state regulations to those already  incorporated into federal regulations, and it identified changes to 37 state  programs that needed to be incorporated into federal regulations through  its rulemaking. However, EPA has not undertaken a similar effort to  identify and incorporate changes to state program requirements into  federal regulations since 1991. In 2010, EPA UIC officials assessed the  resources that would be needed to conduct a similar effort, and they  estimated the time and resources necessary to complete those steps. At  that time, according to EPA documents, EPA could not verify that any  state programs were up-to-date in federal regulations, and estimated that  it would require 2 to 3 years, $150,000 in outside contract support, and  dedicated EPA staff to identify and incorporate all state program changes  made since 1991 into federal regulations. Until it conducts a rulemaking  to incorporate the backlog of state program requirements and changes to  state program requirements that have been approved, EPA will not be  able to enforce some state program requirements, hindering the agency’s  enforcement of the program nationally.
EPA officials told us that incorporating changes into federal regulations,  particularly through the rulemaking process, was burdensome and time- consuming. Several EPA officials told us that reviewing, approving, and  then incorporating changes into federal regulations through rulemaking is  lengthy and resource intensive. As a result, the agency has not  conducted rulemakings to keep pace with the changes that are occurring  in state programs. The requirement that EPA incorporate changes to  state regulations into federal regulations is established through the  agency’s regulations, however, and is not required by the Safe Drinking  Water Act. According to EPA officials, other EPA programs have a less  burdensome process for reviewing and approving changes to state  programs that does not require a rulemaking for approval, and does not  require a separate rulemaking process for EPA to incorporate changes  into federal regulations. For example, under EPA’s Public Water System  Supervision program, the EPA Administrator can review and approve  changes to state programs and maintain enforcement authority, and the  agency does not require that those changes be incorporated into federal  regulations. The agency has discretion under the Safe Drinking Water  Act to change its UIC regulations to revise or eliminate the requirement  for incorporating state program changes into federal regulations, but,  according to officials, has not evaluated alternatives to its current  approval process. For example, EPA has not evaluated whether it could  remove the requirement for a separate rulemaking to incorporate state  program changes, or somehow modify its approval process to ensure that  state program changes are incorporated into federal regulations at the   Until EPA evaluates  same time changes are reviewed and approved.whether this requirement can be revised or eliminated to make the  review, approval, and incorporation of state program changes more  efficient, the process for incorporating future state program changes will  remain burdensome and time-consuming.

	EPA Collects a Large Amount of Data on Class II Wells, but the Data Are Not Sufficiently Complete or Comparable to Report on the Nationwide Program

EPA collects large amounts of data on class II wells in each class II  program, but the data are not sufficiently complete or comparable for  reporting to Congress, the public, or other groups interested in the  nationwide program. According to EPA’s guidance, the agency will  establish a tracking and evaluation system for the program, and provide  the Congress and other groups with information to assess the program.  To this end, the agency collects data on class II programs across the  country using required activity reports from state programs, and, to a  lesser extent, a Web-based performance management database. Our  review of the data shows that it is not sufficiently complete or comparable  to report on the program at a national level.

		EPA Collects a Large Quantity of Data on Class II Programs

To satisfy EPA’s goal of aggregating and reporting state data for the  purpose of responding to inquiries from Congress and other interested  groups, EPA collects a large amount of summary data on class II  programs. It does so using the following two methods:
Activity reporting. EPA’s primary method for collecting summary data  on state UIC and class II programs is its series of activity reporting  forms known as the 7520 forms. These forms are collected twice a  year from state programs and EPA-managed programs. The states  are to provide the forms to their respective EPA regional offices, and  the regional offices are supposed to submit the forms to EPA  headquarters for review. Five forms comprise the core of the 7520  series; each form collects information at a summary level on injection  wells under a state’s program, reported by type of UIC well, including  class II wells. Data collected include summary information on the total  number of permits issued during a year, total violations cited by  inspectors, enforcement actions taken on wells that do not comply  with regulations, wells that are repaired and returned to working  order—a process called returning to compliance–within specified  times, and total number of inspections and testing of the mechanical  integrity of wells.
Performance reporting. In addition to its 7520 forms, EPA collects  summary data on two basic performance measures through a Web- based program known as the Inventory Measures Reporting System,  to satisfy requirements of the Government Performance and Results  Act. The Inventory Management Reporting System was created in  2003 and collects data on the inventory of wells—that is, the number  of each type of injection well per state, including class II wells. This  inventory data is one factor used by EPA to calculate states’ annual  grant allocations. In 2006, the function of this Web-based system was  expanded to also collect information on the number of wells that failed  mechanical integrity tests and returned to compliance within 180 days  (the number of days that EPA deems appropriate). Both pieces of  data are generally entered into the Web-based system by EPA  regional officials; EPA reports the data by state in its annual  performance report.
Because the paper forms it uses are burdensome and time-consuming to  pull together, according to EPA officials, the agency is focusing its efforts  on the creation of a national UIC database to be able to report on the  national program. This database is designed to collect well-specific data  from state agencies—as opposed to summary data—and from regional  offices in cases where EPA manages state programs. The database will  also receive data electronically directly from the states and regions, rather  than through paper documents sent from the states to EPA regions, and  then to the agency’s headquarters. The database has been under  construction since 2007, and EPA officials report that it is now functional;  however, this database is not fully populated, as of January 2014, with  only eight class II programs uploading data into the database. EPA  officials told us that the database will not be complete and widely  populated enough to report national data for at least 2 to 3 years. Until the  agency has a fully populated database, EPA will not have a ready way to  aggregate and report data on the UIC program, and class II wells in  particular. Without this reporting, EPA may not fulfill its goal of providing  information on the national program. Given public concerns over oil and  gas development generally, demand for such data may increase;  however, in light of EPA’s budget limitations, it could be longer before the  UIC database is complete and the data are available.

		EPA’s Data Are Not Sufficiently Complete or Comparable for Reporting on the Class II Program at a National Level

The data that EPA collects from its 7520 forms represents the most  detailed and extensive set of data the agency compiles on the program;  however, it is not sufficiently complete or comparable to allow EPA to  aggregate state information and report on the national class II program.  The forms are not complete for two reasons. First, the forms are generally  received in paper format making the data difficult and time-consuming to  summarize and report. As a result, EPA headquarters does not have all  the 7520 forms to summarize and report. We requested, but were unable  to obtain, a full 5 years of 7520 forms for all states. EPA officials told us  that EPA headquarters provided all of the forms available, but that, in  some cases, the forms had not been submitted by the states. The agency  has attempted to compile the data as part of an effort to put the data in a  simple electronic spreadsheet, but it acknowledges that it is missing state  data and would have to get it from the regional offices or individual states.  Second, in our review of the 7520 forms provided to us by EPA, we found  examples of incomplete forms, including forms without state names and  forms with blank fields, with no indication of whether the blanks  represented missing data or a quantity of zero. According to officials at  the regional level, there are no data entry protocols to indicate whether  these blank fields represent zeros or missing data. While EPA regional  officials reported that they were familiar enough with operations in the  states that they knew which blanks were supposed to be zeros and which  were supposed to be blank fields, none reported editing the forms before  transmitting them to headquarters. Without reporting protocols, states  cannot provide complete data and regions cannot review the data and  ensure that it is sufficiently complete. Such incomplete data, when  aggregated and compared with other state data, could lead EPA, as well  as those to whom the agency reports, to draw incorrect conclusions on  the status of state programs and the national program.
In addition to being incomplete, the data that EPA collects through its  activity reporting forms is not comparable among states because of  inconsistencies in the way that state agencies responsible for class II  wells interpret the instructions on the forms. We found two key variables  that states in our sample were interpreting inconsistently: (1) significant  noncompliance and (2) alleged contamination of aquifers. As shown in  table 4, states found different levels of significant noncompliance—those  violations that, in general, pose a threat to underground sources of  drinking water. For example, from fiscal year 2008 through fiscal year  2012, most states’ instances of significant noncompliance represented  less than 1 percent of their total well inventory. However, instances of  significant noncompliance that occurred in Texas during this same period  range from 2 to 11 percent of the state’s total class II well inventory.
The amount of significant noncompliance reported by states can vary in  part because state and EPA regional officials interpret the definition of  significant noncompliance differently. Through discussions with officials in  the eight states we reviewed, we discovered that at least two states use a  different method than others to identify and record significant  noncompliance violations. EPA guidance for determining significant  noncompliance is outlined on the 7520 form, as well as through select  guidance documents, and allows state discretion for determining which  violations should be counted as significant noncompliance. Most states  generally reported adhering to the instructions on the 7520 forms, but  states’ interpretation of the directions varies. For example, Texas officials  reported that they consider all delinquent mechanical integrity violations  as significant noncompliance, and Ohio officials said that all mechanical  integrity failures are considered to be significant noncompliance  regardless of their resolution. However, the guidance for reporting  significant noncompliance notes that mechanical integrity violations  should be counted as significant noncompliance when the loss of integrity  causes the movement of fluid outside the authorized zone, if such  movement may have the potential for endangering underground drinking  water. Officials in Texas told us that they consider all significant  noncompliance a potential threat to groundwater, but they did not indicate  whether they consider proximity of underground drinking water when they  determine which mechanical integrity loss violations are recorded as  significant noncompliance. Ohio officials told us that significant  noncompliance violations are determined based on the state’s definition  of significant noncompliance, even if the violation does not endanger  groundwater.
Additionally, states vary in how they interpret a second key piece of  data—the instances of alleged contamination of underground sources of  drinking water. The instructions included on EPA’s 7520 form note that  the respondent should enter the number of times a well cited for  noncompliance has allegedly contaminated an underground source of  drinking water. Several state agencies with whom we spoke initially had  difficulty describing how they populated this field. Officials from three of  the state programs with whom we spoke told us that, as they interpreted  this question, they would only report instances of alleged contamination if  they were confirmed as cases of contamination due to a class II well.  However, officials representing the remaining five states said that they  would report instances of alleged contamination without needing to  confirm whether actual contamination had occurred from a class II well.  Officials in California, Colorado, North Dakota, and Oklahoma indicated  that they would investigate situations of potential underground drinking  water contamination, and if evidence showed a reasonable suspicion or  likelihood that contamination had occurred, it would be reported on the  form 7520 as a case of alleged contamination. Officials from EPA Region  3, who manage the program for Pennsylvania, told us any suspected  contamination of an underground source of drinking water would be  reported as an instance of alleged contamination on the 7520.
EPA officials acknowledge that there may be inconsistencies in how data  on these forms are reported, yet the data submitted on the 7520 forms is  not subjected to any formalized review to ensure completeness or  consistency. EPA regional officials said that they review the data for  completeness, however, they do not have a protocol to ensure data  quality or that states are reporting the data the same way in the first  place. Without protocols to ensure the consistency and completeness of  the data that states report, EPA regions cannot ensure the quality of the  data that are being reported to headquarters and EPA may not be able to  aggregate and report complete and comparable data.
EPA has also found inconsistencies in states’ data that are aggregated  and reported from the national UIC database, including class II data. The  agency found these inconsistencies by comparing data from the simple  7520 database it created to data in the national UIC database. For  example, on the basis of this data check, officials told us that they  planned to refine definitions for data fields that may be yielding  inconsistent results to make them more comparable across states, and  they have had some initial training sessions with regions to educate them  on the correct interpretation of definitions. These efforts should improve  the information that is ultimately submitted in the national UIC database,  according to EPA officials. These efforts could also help make the data  reported on the 7520 forms more consistent and comparable; however,  the agency does not plan to use the database to aggregate and report  UIC program data because it plans to phase out the 7520 reports when it  brings the national database online. In the meantime, however, EPA will  not be able to report on the national program if it cannot aggregate the  data with reasonable assurances of its completeness and consistency.  Given increased public attention on the oil and gas industry, reporting on  the national program is helpful for Congress, the public, and other groups  to understand the program. EPA officials indicated that they are open to  using the simple 7520 database for reporting if their efforts to improve the  data do not distract from their efforts to improve the national UIC  database.

	Conclusions

For over 30 years, EPA and states have managed regulatory programs  with safeguards that are designed to prevent contamination of  underground sources of drinking water from the injection of fluids  associated with oil and gas production. As domestic oil and gas  production and the demand for underground injection wells continue to  increase, EPA faces additional challenges maintaining sufficient oversight  and enforcement of these different programs and requirements in a  budget-constrained environment. States have been partners with EPA in  managing their programs, yet face similar budgetary constraints. To meet  its responsibilities to oversee and enforce class II program requirements,  it is important that EPA ensures that state programs have information on  risks to underground sources of drinking water posed by underground  injection, that its oversight and enforcement are focused and efficient, and  that it obtains sufficient information to monitor and report on the program  nationally. We have identified several challenges that EPA faces to meet  these responsibilities:
As the class II program has developed, new risks have emerged,  including overpressurization of geologic formations and potential  contamination of underground sources of drinking water by diesel  fuels. Without information on emerging risks on a national scale, such  as through a UIC Technical Workgroup review, state class II programs  may not have the information necessary to address these risks and  ensure that their programs are designed to be effective at protecting  underground sources of drinking water.
EPA regions and headquarters are not consistently carrying out  annual on-site evaluations of state class II programs—an activity that  EPA guidance, issued in 1983 when many state programs had just  been approved—identified as key to ensuring effective oversight of  state programs. Limited resources have prevented EPA from  conducting on-site evaluations annually. Yet, on-site evaluations may  only be necessary every few years now that UIC programs have  matured, and with improvements in technology, some activities that  once required an on-site visit, such as file reviews, can be done  remotely in some cases. Given that EPA has not conducted an overall  review of the class II program since the early 1990s, the agency has  not considered what activities should be priorities to ensure effective  oversight of the program as it currently stands, and what resources  are necessary to carry out those activities. Until EPA evaluates its  guidance to determine what activities are essential for conducting  effective oversight of a mature class II program, and revises its  guidance as needed to reflect those activities, it cannot ensure that its  oversight is effective.
Enforcement of state and federal class II program regulations is a key  EPA responsibility under the act. Yet, EPA has not taken steps to  ensure that it has appropriate enforcement authority for all state  program requirements. As a result, EPA cannot enforce some state  program requirements. EPA’s difficulty taking legal action against a  violator in Illinois illustrates the importance of EPA incorporating state  program requirements into federal regulations, as currently required  by EPA regulations. Since the agency’s 1991 rulemaking to  incorporate changes to state program requirements into federal  regulations, EPA has accumulated another backlog of state program  requirements that need to be incorporated. Until EPA begins  incorporating these changes, the backlog of state program changes it  must review, approve, and incorporate into federal regulations will  continue to increase. EPA officials are correct in their assessment that  the process created by EPA regulations and guidance to review,  approve, and separately incorporate changes in state program  requirements through a rulemaking is burdensome and resource  intensive. While agency officials recognize that other programs, such  as the Public Water System Supervision program, have more efficient  processes for reviewing and approving state requirements, EPA has  not evaluated whether it could remove the requirement for a separate  rulemaking to incorporate state program changes, or somehow modify  its approval process to ensure that changes to state program  requirements are incorporated into federal regulations at the same  time changes are reviewed and approved. Until EPA evaluates  whether this requirement can be revised or eliminated to make the  review, approval, and incorporation of state program changes more  efficient, the process for incorporating future state program changes  will remain burdensome and time-consuming.
Congress, the public, and national groups all have great interest in the  nation’s oil and gas resources and their development, including how  water and wastewater associated with those resources are managed.  The best source of information that EPA has is the simple 7520  database, and while it has taken steps to use that database to correct  information in developing and testing its national UIC database, it has  not taken steps to use the 7520 database for reporting. Yet, because  the 7520 data are not complete or consistent, they are not sufficiently  reliable for the purposes of reporting at a national level. The same  steps that the agency is taking to correct its data for the national UIC  database—using consistent definitions of terms in collecting program  data and having a protocol to check data quality—would help correct  its 7520 data and would make that data available, perhaps earlier, to  allow the agency to report on the program nationally. With some  additional effort, EPA could make the 7520 database useful for  reporting until the national UIC database is ready for reporting. Unless  EPA takes these steps, it will be several years before EPA can  provide updated information at a national level to Congress, the  public, and others on the UIC program, preventing them from  understanding the program and the protection being provided to  underground sources of drinking water at an important juncture in the  development of oil and gas in the country.

	Recommendations for Executive Action

To ensure that EPA’s oversight of the class II program is effective at  protecting drinking water sources from the underground injection of large  amounts of wastewater that will be produced with increasing domestic oil  and gas production, we recommend that the Administrator of the  Environmental Protection Agency take the following four actions:
Task the UIC Technical Working Group with reviewing emerging risks,  and related program safeguards, including overpressurization of  formations and information on use of diesel fuels in hydraulic  fracturing.
Evaluate and revise, as needed, UIC program guidance on effective  oversight to identify essential activities that EPA headquarters and  regions need to conduct to effectively oversee state and EPA- managed programs.
To ensure that EPA maintains enforcement authority of state program  conduct a rulemaking to incorporate state program requirements,  and changes to state program requirements, into federal  regulations, and at the same time, evaluate and consider alternative processes to  more efficiently incorporate future changes to state program  requirements into federal regulations without a rulemaking.
To support nationwide reporting goals until the national UIC database  improve the 7520 data for reporting purposes, as well as to help  with quality assurance for the national UIC database, by  developing and implementing a protocol for states and regions to  enter data consistently and for regions to check 7520 data for  consistency and completeness to ensure that data collected from  state and EPA-managed class II programs are complete and  comparable for purposes of reporting at a national level, and  in the interim, develop a method to use the 7520 database to  report UIC data, including data on class II wells, until the national  UIC database is fully populated with state data.

	Agency Comments and Our Evaluation

We provided a draft of this report to EPA for review and comment. EPA  provided written comments, reproduced in appendix V, in which the  agency expressed general agreement with the report’s findings,  conclusions, and recommendations. Overall, the comment letter agreed  with the report’s characterization of the resource challenges facing state  and EPA-managed programs. EPA agreed with three recommendations,  and agreed with the findings of another recommendation but did not  agree with the recommended action. EPA also provided technical  comments that we incorporated as appropriate. In addition, we provided  appropriate sections of the draft report to the six states whose programs  we reviewed. State officials from California, Colorado, North Dakota,  Ohio, Oklahoma, and Texas provided technical comments, which we  incorporated as appropriate.
In response to our recommendation that EPA task the UIC Technical  Workgroup with reviewing emerging risks and related program  safeguards, EPA agreed that to ensure effective oversight of the class II  program the agency must  identify emerging risks and provide state and  EPA-managed class II programs with the information they need to  address those risks. EPA stated that it will provide information on  overpressurization to state and EPA-managed programs in the UIC  Technical Workgroup’s planned report on induced seismicity; and that its  February 2014 guidance on class II program permitting for hydraulic  fracturing with diesel fuels provides recommendations to EPA permit  writers, including best practices identified by states and industry. We  recognize EPA’s efforts to provide additional information to state and  EPA-managed programs on induced seismicity, overpressurization, and  permitting hydraulic fracturing operations that use diesel fuels, but these  efforts do not completely address the issues we identified. As a part of  these efforts, it is important that the UIC Technical Workgroup provide  information to states and EPA-managed programs on the other risks  posed to underground sources of drinking water by overpressurization of  formations, such as potential contamination by surface breakout of  injected fluids as occurred in Oklahoma in recent years. In addition, since  not all states legally require disclosure of hydraulic fracturing fluid  composition through the FracFocus database, including states with large  numbers of wells such as California, it is critical that the UIC Technical  Workgroup provide guidance on the information that all states must  collect to successfully identify and permit hydraulic fracturing operations  using diesel fuels.
In response to our recommendation that EPA evaluate and revise, as  needed, UIC program guidance to identify essential activities needed to  effectively oversee state and EPA-managed programs, EPA stated that it  generally agreed with our finding and the recommendation. The agency  stated it will begin an internal dialogue among the UIC program managers  at the June 2014 UIC National Managers Meeting and continue this  dialogue over the next year to evaluate the effectiveness of the agency’s  oversight activities, and will document the results of this process and any  recommendations for further action by July 2015. EPA further stated that  if any change in expectations or practice is warranted, the agency will  develop an advisory document that supplements its 1983 guidance on  effective oversight by July 2016.
In response to our two-part recommendation that EPA conduct a  rulemaking to incorporate state program requirements and changes to  state program requirements into federal regulations, and that EPA  evaluate and consider alternative processes to efficiently review, approve,  and incorporate future changes to state program requirements into  federal regulations without a rulemaking, EPA agreed with GAO’s findings  but it did not agree to take the recommended actions. In response to the  first part of the recommendation, EPA stated that the agency cannot  conduct a rulemaking to approve and codify all state program revisions  without going through considerable effort to determine whether each of  the changes meets the requirements of the Safe Drinking Water Act. EPA  also stated that conducting a single rulemaking of this scale to  incorporate all outstanding state program changes would be impractical  because EPA, in conjunction with all state programs, would have to  simultaneously review all state class II programs approved through both  the conventional and alternative processes laid out in the Safe Drinking  Water Act. EPA stated that given that the process would take many years  to complete, this approach would still not ensure that all program changes  are up to date in federal regulations, as other states could make changes  to their programs during this time. In lieu of a single rulemaking EPA said  it was conducting an ongoing process of individual rulemakings to  approve and codify state program revisions in a collaborative manner with  states, EPA regions, and EPA’s Office of Enforcement and Compliance  Assurance. However, as stated in the report, according to an analysis  conducted in 2010, EPA estimated that it would take 2 to 3 years,  dedicated EPA personnel, and $150,000 in outside contractor support to  identify, approve, and incorporate all state program changes made since  1991 into federal regulations. By EPA's own estimate, the targeted state- by-state approach will take much longer than a single rulemaking and will  face greater challenges of states continuing to make changes in the  interim, leaving EPA without the ability to enforce the program, if needed.  EPA provided no evidence in its comment letter that the effort it is now  contemplating would be any less costly or any more efficient than the  approach it assessed in 2010. For this reason, we believe that our  recommendation is still necessary for EPA to carry out its responsibilities  for the class II program.
In response to the second part of this recommendation, that EPA  consider alternative processes to review and approve state program  revisions and to incorporate state programs into federal regulations  without rulemaking, EPA stated that (1) the Safe Drinking Water Act  specifically requires that state UIC program revisions made in response to  changes in EPA UIC regulations be approved by rule, and (2) the agency  would need to revise its regulations to be able to approve state program  changes without a rulemaking. We were not suggesting that EPA violate  the Safe Drinking Water Act and have made changes to the  recommendation language to avoid any such confusion. The focus of our  recommendation is on the requirement appearing in EPA's regulation, but  not in the Safe Drinking Water Act, that effectively prohibits EPA  enforcement of state UIC regulations unless the latter are codified in the  federal regulations. EPA stated that there are strong policy and  programmatic reasons to maintain this requirement. Specifically,  according to EPA, without codification it would not be possible to find a  complete set of EPA approved rules for a state in one place, making it  difficult for the regulated community, EPA, and the Department of Justice  to determine what state program requirements are applicable and  enforceable under the Safe Drinking Water Act. If EPA believes the  codification process is important, it should devote the resources  necessary to implementing it, or, if those resources are not forthcoming, it  should consider alternative methods of maintaining federal enforceability  within existing resource constraints that are likely to reduce the current  backlog. In its letter, EPA states that it will continue coordination among  its offices to make the program review and rulemaking process more  efficient. However, it provided no detail as to what actions may produce  such efficiencies, when they might take effect, or why they have not  already been implemented. For these reasons, we continue to believe  that EPA should explore alternative methods for ensuring the  enforceability of state UIC regulations that do not rely on the rulemaking  process.
In response to our recommendation that EPA develop and implement a  protocol for states and regions to ensure that 7520 data are complete and  comparable for purposes of reporting at the national level and that EPA  develop a method to use the 7520 database to report UIC data until the  national UIC database is fully populated with state data, EPA agreed with  our finding and recommendation. Specifically, EPA agreed that there is  room for improvement in the completeness and consistency of data  submitted by the states and regions through the 7520 forms, and that the  7520 database should be completed so that it can be used as a tool to  better understand national UIC activities. In addition, EPA described  actions that it plans to take to implement the recommendation, including  updating the instructions on the 7520 forms by adding instructions to  eliminate blank fields and clarifying data definitions.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  appropriate congressional committees, the Administrator of EPA, and  other interested parties. In addition, the report is available at no charge on  the GAO Web-site at http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or at gomezj@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made major contributions to  this report are listed in appendix VI.

Appendix I: List of State and EPA-Managed Class II Programs and Well Inventory

Table 5 provides a list of EPA-managed programs, state programs with  safeguards deemed effective by EPA, state programs that have adopted  minimum federal underground injection control requirements, and the  number of class II wells in each state in 2012.

Appendix II: Key Legal Provisions and Guidance Governing EPA Approval of State Programs and State Program Changes

This appendix presents information on provisions of law and regulations,  as well as guidance that govern EPA approvals of state class II  Underground Injection Control (UIC) programs.

	Safe Drinking Water Act

The Safe Drinking Water Act establishes several requirements for EPA  and the UIC program. These requirements include the review and  approval of programs at the state level, review and approval of revisions  to these programs, conditions under which EPA could manage programs  for a state, and enforcement of the UIC programs. The act applies to six  types of well classes, including class II wells for oil and gas related  purposes.

		State Program Approvals

The Safe Drinking Water Act (SDWA) of 1974 required EPA to establish  the underground injection control program. Among other things, EPA  was to promulgate regulations specifying minimum requirements for state  UIC programs. Under section 1422, each identified state was to propose  its own program, meeting the EPA requirements. EPA was then to review  state submissions, and within 90 days and after reasonable opportunity  for presentation of views, approve or disapprove the state program “by  rule.” Once approved, the state has primary enforcement authority for  underground water sources in the state.standards may be referred to as section 1422 states.
The act also requires states to revise their programs when EPA amends  its regulation concerning requirements of state programs adding or  revising a requirement. EPA showing that the state meets the new or revised requirement.
42 U.S.C. § 300h-1(b)(1)(B) (2014). is to approve or disapprove such changes using the same process as  with initial program approvals, that is, by rule.

		Alternative Approval Process for State Class II Programs

Following EPA’s June 1980 promulgation of the regulations establishing  minimum requirements for state programs, Congress amended the act.  The December 1980 amendments created an alternative way for states to  receive EPA approval of UIC class II programs in SDWA section 1425.  Using this alternative, in lieu of adopting EPA’s minimum requirements, a  state can seek approval of its program—and primary enforcement  authority—by demonstrating to EPA that its program is effective in  preventing contamination of underground drinking water sources. A state  must show that its program meets the same four key requirements that  the EPA regulations were to address: (1) prohibition of unauthorized  injections; (2) authorized and permitted injections must not endanger  drinking water sources;(3) include inspection, monitoring, recordkeeping,  and reporting requirements; and (4) apply to federal agencies and federal  land.
These states may be referred to as section 1425 states.
The House Commerce Committee report for this amendment noted that  32 states already regulated underground injection related to the recovery  or production of oil or natural gas and believe they have programs already  in place that meet the minimum requirements of the act. The report  states, “it is the committee’s intent that states should be able to continue  these programs unencumbered with additional federal requirements if  they demonstrate that they meet the requirements of the act. These  requirements are the same as must be met by the administrator in  establishing the regulations, thus ensuring that a state program pursuant  to an alternative demonstration results in an equivalent degree of  protection for drinking water sources.”initial approval, new demonstrations may be needed, such as if EPA   The report also noted that, after  revises a requirement, or “instances in which a state significantly alters a  program for which a demonstration has been made, or in which the  administrator determines that new information about the endangerment of  drinking water supplies necessitates a new demonstration.” According  to the report, under such circumstances, EPA would need to determine,  by rule after public hearing, that a state’s demonstration is no longer  adequate.
Under these amendments, a state using the alternative demonstration  process under section 1425 is to submit to EPA a demonstration showing  its program meets the four statutory requirements. process is the same as for a regular approval: EPA is to review the state  submission, and within 90 days and after reasonable opportunity for  presentation of views, approve or disapprove the state program by rule.  Once approved, the state has primary enforcement authority for  underground water sources in the state. As with the section 1422 states  approved under the regular approval process, states need to take action  when EPA amends its regulation adding or revising a requirement relating  to class II underground injection. In such cases, a state is to submit a  notice to EPA demonstrating that with respect to the changed aspect of  the state regulation, the state meets the four statutory requirements and  represents an effective program to prevent underground injection that  endangers drinking water sources. EPA is to approve or disapprove  such changes using the same process as with initial program approvals,  that is, by rule.

		EPA-Managed Programs within States

42 U.S.C. § 300h-4(a) (2014). for that state. EPA can revise such a program from time to time by  regulation.

		Enforcement of State and EPA-Managed Programs

The act authorizes EPA to enforce requirements of an applicable UIC  program in a state with primary enforcement authority under certain  circumstances. Specifically, when EPA finds a person in violation of  such a requirement, has notified the state, and after 30 days the state has  not commenced appropriate enforcement action, the act requires EPA to  issue an order requiring compliance or to initiate court action. The act  defines “applicable underground injection control program” with respect to  a state with primary authority as the program or most recent amendment  that has been adopted by the state and approved by EPA by rule. With  respect to a state where EPA has primary enforcement authority,  “applicable underground injection program” is the program which has  been prescribed by the Administrator by regulation.

	EPA Regulations

Charged with developing the new UIC program, EPA promulgated a  series of regulations in the early 1980s. EPA’s regulations, as amended,  are divided into distinct parts. For example, 40 C.F.R. part 144 sets forth  permitting and other program requirements for all UIC programs; part 145  sets forth the requirements and procedures for approval of state  programs under section 1422; and part 146 establishes technical criteria  and standards for use by states and EPA in the development and  implementation of state UIC programs. These program regulations do  not establish requirements for owners or operators of injection wells, but  rather, establish requirements for state or EPA officials to use in  developing UIC programs that in turn establish enforceable requirements  for owners or operators of injection wells. As such, there are no  “background” federal regulations directly imposing requirements onto  regulated parties, as is found in several other major environmental  statutes.

		Review and Approval of State Program Changes

In establishing the initial 1980 regulations for the UIC program, EPA  interpreted the act to establish a process for changes to state programs  that were originally approved under both the regular and alternative  processes. As noted above, the act requires that when EPA amends the  regulations to add or revise a requirement, states must in essence show  they meet the requirement. The act does not speak to state-initiated  changes. In the regulations providing for state program approvals (part  145), EPA acknowledged that state program changes may be in response  to an EPA change to a requirement, or be state-initiated. EPA’s  regulations require states to “keep EPA fully informed of any proposed  modifications to its basic statutory or regulatory authority, its forms,  procedures, or priorities.”
Under EPA’s regulations, program revisions begin when a state submits  documents to EPA, as necessary under the circumstances. As to  processing the revision, EPA’s regulations make a distinction not found in  the statute. The regulations distinguish “substantial changes” as requiring  a rulemaking process, including notice in the Federal Register, a 30-day  public comment period, and opportunity for a hearing, with notice of the  approval in the Federal Register. The regulations do not require this  process for nonsubstantial program changes, which may be approved by   Since part 145 is only applicable to state  a letter from EPA to the state. programs approved under section 1422 of the Safe Drinking Water Act,  this section concerning program revisions does not directly apply to the  class II programs approved under section 1425 of the act. EPA officials  stated, however, that the agency considers this section as guidance for  1425 states.
The regulation specifies the Administrator, but this has been delegated to the regional  administrators.
The regulations do not define substantial and nonsubstantial; however,  EPA guidance provides a few examples of substantial changes, such as  changes to a state’s authority, transfer from an approved state agency to  another, and changes which would make the program less stringent than  applicable requirements. Available documents, such as the original  Federal Register preambles for this part, do not explain why EPA made  this distinction. EPA officials said that because of the expense and time  for rulemakings, EPA may have determined that such a requirement  could not be intended to apply to any sort of change that could occur— such as editorial or renumbering changes—and thus carved out a less  burdensome process for such changes. We note that because the  regulation does not distinguish certain changes subject to specific  requirements in the act—that is, state revisions that are necessitated in  response to an EPA change to a requirement—and introduces a less  rigorous process for some changes, it is not clear whether the regulation  ensures that the statutory requirement is being met. That is, under the  statute, all state revisions made in response to an EPA change are to be  approved by rule. Under the regulation, however, state revisions deemed  nonsubstantial can be approved by letter, rather than by rule, and it  appears possible that these nonsubstantial changes could include  changes made in response to an EPA requirement.

		Codifying State Program Changes in Federal Regulations

In addition to the program regulations for review and approval of state  programs, EPA determined in 1983 that another part was required in  regulations (1) to contain EPA’s requirements in states where EPA would  manage the program and have primary enforcement authority and (2) to  codify EPA’s approval of state UIC programs. On this basis, EPA  promulgated part 147 in 1984. The general provisions state that part  147 “sets forth the applicable Underground Injection Control (UIC)  programs” in each state, and that “egulatory provisions incorporated by  reference (in the case of approved state programs) or promulgated by  EPA (in the case of EPA-administered programs), and all permit  conditions or permit denials issued pursuant to such regulations, are  enforceable by the Administrator” under the act. Thus, EPA established  in its regulation an obligation not found in the act: that state programs  must be codified into the part 147 regulations to be enforceable by EPA.
Available documents, such as the original Federal Register preambles for  this part, do not explain why EPA added this obligation. EPA officials  noted that without codification, however, there could be a due process  issue whereby regulated entities may lack notice of the requirements  applicable to them and enforceable by EPA.

	EPA Guidance

EPA wrote guidance in 1984 to help states with the process of review and  approval of state programs and state program changes, but it has not  written guidance on how these changes will be codified in federal  regulations under section 147. The guidance applies to all state programs  approved under both sections 1422 and 1425.
The guidance, Guidance for Review and Approval of State Underground  Injection Control (UIC) Programs and Revisions to Approved State  Programs, distinguishes between substantial and nonsubstantial changes  to state programs and includes examples of substantial changes.  Substantial changes, including changes to a state’s authority, transfer  from an approved state agency to another, and changes which would  make the program less stringent than applicable requirement, are to be  approved by the EPA Administrator. Nonsubstantial changes may be  approved by a Regional Administrator in a letter to a state’s Governor.
The guidance also indicates that states will apply for EPA to review and  approve their program changes and also sets out a process for EPA to  review and approve the program changes in 90 days. The process  involves a rulemaking procedure different from the process needed to  codify the state program or program changes into section 147.
Once a state program or program change is approved, EPA’s regulations  indicate that it should be codified into section 147 to allow EPA to enforce  the state program, if needed. However, the guidance is silent on the steps  EPA headquarters and regions need to take to incorporate approved  programs or program changes into section 147.
Many states had approved programs for one or more well classes by  1984, and EPA’s initial promulgation of part 147 in that year codified most  of them. EPA typically conducted two discrete steps to approve and  codify the programs: (1) approval by rule of a state program and (2) later  codification of the approved program into part 147. Over time, additional  states obtained EPA approval for their programs. For example, Montana’s  class II program was approved by rule in 1996. In addition, some states  made changes to their programs. According to EPA headquarters  officials, there have been few substantial changes to state class II  programs, and EPA has not changed any requirements for class II  programs that would trigger state revisions.
EPA has not, however, codified some state programs. It last conducted  an exercise to update its part 147 regulations in 1991, updating the  references to state regulations. Even so, the revisions did not codify all  of the programs approved to date. For example, West Virginia and  Arkansas both had class II programs approved by EPA in 1983 and 1984,  respectively, but these programs were neither included in the original part  147 nor the 1991 revisions. EPA officials could not explain why these  state programs were not codified, noting that these events predated their  tenure at the agency. EPA officials are aware that part 147 is out of date  with respect to state program revisions, as well as these two state  programs missing in their entirety. According to officials, resources have  not been provided to conduct the necessary research and rulemaking.  Thus, by the terms of section 147.1 in conjunction with the act, EPA is  unable to enforce those state program requirements that are not  contained in part 147.

Appendix III: Objectives, Scope, and Methodology

The objectives of this report are to examine: (1) EPA and state roles,  responsibilities, and resources in management the class II program; (2)  safeguards select states have in place to ensure the protection of  underground drinking water; (3) EPA’s regulation and oversight of class II  programs; and (4) the reliability of data to report on the class II program  nationwide. To address all objectives, we reviewed the Safe Drinking  Water Act and EPA’s regulations and guidance on the Underground  Injection Control (UIC) program, including class II wells. We also spoke  with officials from EPA headquarters and regional offices about all  aspects of the class II program. Because this report also examines states’  roles in the program, we chose a sample of eight states on which to focus  our analysis: California, Colorado, Kentucky, North Dakota, Ohio,  Oklahoma, Pennsylvania, and Texas. These states represent a  nonjudgmental sample, selected on the basis of the location of current  shale oil and gas plays across the country, the number of class II wells in  each state, and whether the class II program was managed by the state  or EPA regions. To identify current shale oil and gas plays across the  country, we used Energy Information Administration regions that are  organized around national shale oil and shale gas resources. These  regions represent diverse geography and geologic formations, as well as  different oil and gas and wastewater operations. We selected at least one  state in each of the six regions identified by the Energy Information  Administration. We also selected states that had higher numbers of class  II wells to ensure our sample represented significant class II activity. And  finally, we selected states that had both state and EPA-managed  programs. We spoke with state and EPA officials from programs in each  of the eight states, and we visited four of these states in person. During  these visits, we discussed program management and data collection and  reporting with state officials, and we reviewed a sample of state  inspection and violation files.
To determine the roles and responsibilities of state class II programs, we  reviewed EPA regulations and guidance for the program. We also spoke  with officials from six of our eight selected states about their management  and reporting on the program, as well as EPA’s oversight of the program.
To understand the roles and responsibilities of EPA for EPA-managed  programs, we spoke with EPA headquarters and regional officials. To  evaluate funding for state and EPA-managed programs, we requested  class II program budget data for fiscal year 2008 through fiscal year 2012  from the six states and two EPA regional offices that manage the class II  programs in the states we reviewed. We discussed budget data with state  officials to assess its reliability, and we determined that it was reliable for  our purpose of summarizing state program budgets. We also obtained  EPA UIC grant data for federal fiscal years 2008 through fiscal year 2012,  including grants provided to all UIC programs, and class II programs  specifically. We interviewed EPA officials about the data, and assessed  the data for any outliers or missing data, and determined that they were  reliable for the purpose of reporting on class II program funding. To  evaluate the resources that state programs have to administer the  program, we gathered state-reported budget data on the amount of  funding for the class II program supplied by the state, and compared it to  annual grant allocations from EPA to states. This enabled us to develop a  percentage of total class II funding that came from each state’s grant  compared to the funding that came from the state budget. To show the  trend in funding over the last several years, we converted the EPA grant  data into real fiscal year 2013 dollars. To assess staffing resources for  both state and EPA-managed programs in the eight states we selected,  we interviewed state and EPA regional officials about their staffing levels  from fiscal year 2008 through fiscal year 2012.
To analyze and compare the safeguards that EPA and selected states  have in place to ensure the protection of underground drinking water, we  reviewed the basic safeguards outlined in federal regulations, state  regulations, guidance, and related program documents in each of our  eight selected states. To better understand the basis and purpose for  regulations addressing safeguards, we reviewed a key EPA document,  the Statement of Basis and Purpose: Underground Injection Control  Regulations, and spoke with EPA officials. Based on EPA’s Statement of  Basis and Purpose, we identified seven program safeguards required for  EPA-managed programs. To compare the safeguards in each state and  EPA-managed program in eight selected states, we developed a table for  each safeguard that categorized and compared the safeguards used by  the programs in each of the eight states. We identified state program  safeguards in state regulations, program guidance, and other documents.  Our review included a summary and comparison of the regulations and  guidance that establish state and EPA-managed program safeguards, but  we did not analyze the technical sufficiency of those safeguards.  Additionally, we gathered data from the states on inspections and alleged  contamination of underground sources of drinking water. We discussed  these data with state officials to assess their reliability for reporting, and in  some instances, used limited EPA data to corroborate the state-reported  data. We determined that these data were reliable to report for our  purposes of describing state program safeguards. To identify any  potential gaps in the safeguards in place, we obtained and analyzed EPA  reviews such as the Mid-Course Review and an EPA contracted report by  the technical and strategic consulting group, Cadmus. We also spoke  with EPA and state officials about potential weaknesses in the  safeguards, the effectiveness of the safeguards, and any issues that may  affect the protectiveness of the safeguards.
To examine EPA’s regulation and oversight of the class II program, we  focused on the regulation and oversight of programs in our eight selected  states: six state programs and two EPA-managed programs. To  understand EPA’s regulation of the programs in the eight states, we  reviewed EPA’s regulations for state programs. A key aspect of these  regulations is the need to incorporate state regulations and revisions to  these state regulations into federal regulations; this allows EPA to enforce  state programs, when appropriate. To assess the extent to which EPA  had accomplished the incorporation of state regulations into federal  regulations, we identified situations in which the states we reviewed had  updated or changed regulations and discussed the status of EPA’s  approval and incorporation of these changes. We also reviewed EPA’s  guidance and processes for requesting and approving aquifer  exemptions, and we requested documentation of exemptions from EPA  regions and headquarters. To understand EPA’s oversight responsibilities  and evaluate the extent to which they are being carried out, we reviewed  EPA guidance outlining effective oversight of state programs. We spoke  with EPA headquarters and regional officials regarding how they  completed the actions outlined in the guidance. We also obtained and  reviewed the annual reports that EPA regions are to write for state  programs, Memoranda of Agreements between EPA and each state  program, and relevant grant reports from states.
Finally, in order to examine the reliability of the data that EPA has on  class II programs, we interviewed EPA headquarters’ officials about their  various data collection methods and reviewed related documentation and  guidance, as available. We identified three methods that EPA  headquarters uses to collect data on the UIC program, including the class  II program, and discussed the data collected by each method with EPA  officials. We determined that one source of data contained the information  we needed—the state activity reporting forms (7520 forms) that each  state completes twice per year. We requested these forms from EPA for  fiscal year 2008 through fiscal year 2012 and obtained all the forms that  EPA said it had. The forms were in paper format, which we saved and  transferred into an electronic database to analyze. To assess the  reliability of the data for our reporting purposes, we took steps to evaluate  the completeness and comparability of the data. To evaluate the  completeness of the data, we performed basic checks of the data  supplied by EPA to identify missing data. We found numerous missing  data that resulted from incomplete or missing forms and mislabeled  forms. We interviewed headquarters and regional EPA officials about this  data, and they said that they had provided all the forms available to them.  We also performed basic data checks on the consistency of the data  provided by discussing state data with officials in the states we visited.  We interviewed state officials about how they completed the 7520 forms  and what data they used to complete the forms, and we discussed their  understanding of the instructions on the 7520 form. From our evaluation  of the completeness and consistency of the data, we determined that the  7520 data were not sufficiently complete or consistent, and we decided  not to report the data, with two exceptions: we reported the number of  instances alleged contamination reported by each of the eight states we  reviewed because these data were solely descriptive, and we reported  data on significant violations reported by the eight states to show the  inconsistency in state reporting. In addition to discussing the 7520 data,  we spoke with state and regional officials about the national UIC  database and its development. We also reviewed documentation related  to the national UIC database in development, including its data dictionary  and business rules to example the progress and status of the database.
We conducted this performance audit from November 2012 to June 2014  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe the  evidence provides a reasonable basis for our findings and conclusions  based on our audit objectives.

Appendix IV: Select States’ Class II Program Safeguards and Related Regulations

In the 1980s, to fulfill its statutory obligations under the Safe Drinking  Water Act, EPA developed safeguards to protect underground drinking  water sources from contamination by fluids that are injected into  underground formations and could leak into other formations that contain  sources of drinking water. Specifically, the safeguards help ensure that  wells are designed to prevent fluids that are injected into underground  formations from endangering underground drinking water sources. This  appendix and the following tables summarize requirements for key class  II program safeguards for the programs we reviewed in eight states:  California, Colorado, Kentucky, North Dakota, Ohio, Oklahoma,  Pennsylvania, and Texas. The programs in two of these states— Kentucky and Pennsylvania—are managed by EPA regions under EPA  regulations, while the remaining six programs are state programs  approved by EPA.

	Area of Review

To prevent fluids from entering an underground drinking water source,  state UIC program directors determine an area of review necessary to  obtain a permit for new injection wells. This is an area around an injection  well where pressure in the injection zone may cause the migration of  fluids into an underground source of drinking water, according to EPA  documents. Before fluids can be injected into a new well, the state  director must consider information on other active or abandoned wells in  the area, and the corrective action status of any defective wells. The size  of the area of a review can be a fixed radial distance of one-quarter mile  or greater, or it can be calculated by a formula that considers the injection  rate, movement of fluids through the injection zone, and the size of the  injection zone among other factors. Table 6 shows the requirements for  area of review for the eight programs we reviewed.

	Geologic Information, Water-Bearing Formations, and Confining Layers

To ensure that fluids do not travel through weak areas of a confining  layer, EPA regulations require that appropriate geological data on the  injection zone and confining zone be considered before issuance of a  permit to inject fluids. Programs can rely on existing data, but a permit  cannot be issued until confining formations are determined to be sound  and capable of containing injected fluids. Table 7 shows the requirements  for geologic and other information for the eight programs we reviewed.

	Casing, Cementing, Tubing, and Packer

To prevent fluid from moving through a faulty injection casing, EPA set  specific requirements for well construction. According to EPA’s Basis and  Purpose report, some wells only need surface casing, or casing that  extends the length of the bore through the formation in which shallow  drinking water exists, while other wells may need multiple sets, or  “strings,” of casing depending on the depth of the well and the  surrounding geologic formation. For example, intermediate casing can  be necessary to protect other underground resources such as coal beds  or gas storage zones. The deepest layer of casing, known as the long- string or production casing, isolates injected fluids into designated  formations. EPA also requires that each layer of casing be surrounded by  cement and suggests that specific equipment called tubing and packer be  used. Tubing is typically steel or plastic pipe inserted inside the  production casing, which isolates the casing from the fluid injected into  the well. Tubing set on a packer allows well operators to directly inject  fluids into formations and prevents corrosion by not allowing injected  fluids to contact the casing wall. A packer is a mechanical device that sits  below the tubing and locks into the casing wall, sealing the space  between the tubing and casing, called the annulus, from the injection  zone. Table 8 shows requirements for casing and cementing for the eight  programs we reviewed.

	Mechanical Integrity

To prevent fluids from leaking out or up through the wellbore, along the  outside of the cement surrounding the casing, EPA’s regulations require  that a well needs to demonstrate mechanical integrity, or the absence of  leaks. Mechanical integrity testing involves, for example, increasing the  pressure in the tubing and ensuring that the well is able to hold that  pressure for a period of time. Verification first occurs prior to the well  being authorized as ready for injection, with subsequent verification  occurring at least once every 5 years during the operation of most wells.  Table 9 shows the requirements for mechanical integrity testing for the  eight programs we reviewed.

	Injection Pressure

Another measure to ensure that fluids do not travel through the confining  layers and into a source of drinking water is to control the pressure at  which fluids are injected, or injection pressure. EPA regulations require  that well injection pressure should be controlled to avoid initiating  fractures or propagating existing fractures in the confining zone adjacent  to underground sources of drinking water. Table 10 shows the  requirements for injection pressure for the eight programs we reviewed.

	Plugging and Abandonment

To prevent fluid from moving through improperly abandoned wells, EPA  regulations require that after operation of a well ceases the wellbore be  plugged with cement. Table 11 shows the requirements for plugging and  abandoning new wells for the eight programs we reviewed.
In addition, EPA guidance and state requirements describe actions to  take for inactive wells, which EPA refers to as temporarily abandoned  wells. These are wells that will not be operating for several months to  years. Table 12 shows the different requirements for the eight programs  we reviewed.

	Monitoring and Reporting

To provide an early warning of potential problems, EPA regulations  require monitoring of fluids to be injected and well operation. For class II  wells, EPA requires, among other things, that operators “monitor the  nature of the injected fluids with sufficient frequency to yield data   according to EPA’s Basis and  representative of their characteristics;”Purpose report, such information can help federal and state regulators  understand reasons for well failures and take appropriate corrective  actions. In addition, class II wells should be monitored on a daily to  monthly basis. Table 13 shows the different requirements for the eight  programs we reviewed.

Appendix V: Comments from the Environmental Protection Agency

Appendix VI: GAO Contact and Staff Acknowledgments

	GAO Contact

	Staff Acknowledgments

In addition to the individual named above, Susan Iott (Assistant Director),  Elizabeth Beardsley, Mark Braza, Antoinette Capaccio, John Delicath,  Rich Johnson, Karine McClosky, Micah McMillan, Emily Norman, Dan C.  Royer, and Maria Stattel made key contributions to this report.

Summary:
Why GAO Did This Study

Every day in the United States, at least 2 billion gallons of fluids are injected into over 172,000 wells to enhance oil and gas production, or to dispose of fluids brought to the surface during the extraction of oil and gas resources. These wells are subject to regulation to protect drinking water sources under EPA's UIC class II program and approved state class II programs. Because much of the population relies on underground sources for drinking water, these wells have raised concerns about the safety of the nation's drinking water.
GAO was asked to review EPA's oversight of the class II program. This report examines (1) EPA and state roles, responsibilities, and resources for the program, (2) safeguards to protect drinking water, (3) EPA oversight and enforcement of class II programs, and (4) the reliability of program data for reporting. GAO reviewed federal and state laws and regulations. GAO interviewed EPA and state officials and reviewed class II programs from a nongeneralizable sample of eight states selected on the basis of shale oil and gas regions and the highest number of class II wells.

What GAO Found

The Environmental Protection Agency's (EPA) role in the Underground Injection Control (UIC) class II program is to oversee and enforce fluid injection into wells associated with oil and gas production, known as class II wells. EPA has approved 39 states to manage their own class II programs, and EPA regions are responsible for managing the programs in remaining states. EPA regions and states use a mix of resources to manage class II programs, including EPA grant funding, state funding, and federal and state personnel. EPA's UIC grant funding has remained at about $11 million for at least the past 10 years.
Class II programs from the eight selected states that GAO reviewed have safeguards, such as construction requirements for injection wells, to protect against contamination of underground sources of drinking water. Programs in two states are managed by EPA and rely on EPA safeguards, while the remaining six programs are state managed and have their own safeguards that EPA deemed effective at preventing such contamination. Overall, EPA and state program officials reported that these safeguards are protective, resulting in few known incidents of contamination. However, the safeguards do not address emerging underground injection risks, such as seismic activity and overly high pressure in geologic formations leading to surface outbreaks of fluids. EPA officials said they manage these risks on a state-by-state basis, and some states have additional safeguards to address them. EPA has tasked its UIC Technical Workgroup with reviewing induced seismicity associated with injection wells and possible safeguards, but it does not plan reviews of other emerging risks, such as high pressure in formations. Without reviews of these risks, class II programs may not have the information necessary to fully protect underground drinking water.
EPA is not consistently conducting two key oversight and enforcement activities for class II programs. First, EPA does not consistently conduct annual on-site state program evaluations as directed in guidance because, according to some EPA officials, the agency does not have the resources to do so. The agency has not, however, evaluated its guidance, which dates from the 1980s, to determine which activities are essential for effective oversight. Without such an evaluation, EPA does not know what oversight activities are most effective or necessary. Second, to enforce state class II requirements, under current agency regulations, EPA must approve and incorporate state program requirements and any changes to them into federal regulations through a rulemaking. EPA has not incorporated all such requirements and changes into federal regulations and, as a result, may not be able to enforce all state program requirements. Some EPA officials said that incorporating changes into federal regulations through the rulemaking process is burdensome and time-consuming. EPA has not, however, evaluated alternatives for a more efficient process to approve and incorporate state program requirements and changes into regulations. Without incorporating these requirements and changes into federal regulations, EPA cannot enforce them if a state does not take action or requests EPA's assistance to take action.
EPA collects a large amount of data on each class II program, but the data are not reliable (i.e., complete or comparable) to report at a national level. EPA is working on a national database that will allow it to report UIC results at a national level, but the database will not be fully implemented for at least 2 to 3 years.

What GAO Recommends

GAO recommends that, among other things, EPA review emerging risks related to class II program safeguards and ensure that it can effectively oversee and efficiently enforce class II programs. EPA agreed with all but the enforcement recommendation. GAO continues to believe that EPA should take actions to ensure it can enforce state class II regulations, as discussed in the report.