Report to the Honorable Lynn C. 

Woolsey, House of Representatives 

United States General Accounting Office 

GAO 

June 2003 DEEP INJECTION 

WELLS 

EPA Needs to Involve 

Communities Earlier 

and Ensure That 

Financial Assurance 

Requirements Are 

Adequate 

GAO-03-761 
Although EPA provides opportunities for public comment on proposed 

commercial Class I deep injection wells as required by regulations, these 

opportunities come late in the process, after a draft permit has been 

prepared and this timing may limit the extent to which concerns are 

addressed. EPA responds to all public comments, but it cannot deny a 

permit on the basis of community concerns if all regulatory requirements 

for protecting drinking water are met. However, earlier involvement could 

give communities more time to contact appropriate state or local officials 

to address concerns that are not within the scope of EPA’s authority. In 

Michigan, where EPA issues injection well permits, communities believe that 

their concerns are often not fully resolved; in some instances, communities 

have filed legal actions and complaints to prevent well construction. In 

contrast, the three states to which EPA has authorized responsibility for 

issuing permits have enacted requirements for earlier and more public 

involvement. Overall, they believe that early involvement better addresses 

community concerns, mitigates controversial issues, and avoids litigation. 

EPA addresses environmental justice issues in two basic ways—first, as 

part of its process for deciding whether to issue a permit for well 

construction, and second, in response to specific civil rights complaints 

filed with the agency after permits are issued. EPA encourages its regional 

offices issuing construction permits to determine if minority and low-income 

populations are disproportionately affected by a proposed well’s location. 

Individuals and communities may appeal EPA permit decisions with EPA’s 

Environmental Appeals Board or, for other permit decisions, file complaints 

under Title VI of the Civil Rights Act with EPA’s Office of Civil Rights. Only 

one community has filed complaints related to deep injection wells; these 

complaints did not result in changes to the permit decisions. Court decisions 

have recently limited the basis for filing Title VI complaints, making the 

process an unlikely avenue for changing permit decisions. 

Current financial assurance requirements may not ensure that adequate 

resources are available to close a commercial deep injection well in the 

event of bankruptcy or ceased operations. While only four sites have gone 

into bankruptcy or ceased operating since the program began in 1980; two 

did not have adequate financial resources to plug and abandon wells and for 

the other two, financial assurance was not tested because other companies 

purchased and continued operating the wells. EPA has questioned the 

adequacy of some financial assurance requirements in other programs 

that are similar to those for Class I deep injection wells. EPA’s Office of 

Inspector General has reported that financial assurance requirements for 

another waste management program, which the requirements for deep 

injection wells mirror, may not be adequate to close facilities; an EPA 

working group is also reviewing similar aspects of financial assurance 

requirements for a different type of injection well for possible changes. 

Billions of gallons of hazardous 

liquid waste are injected into 

underground wells each year. 

These Class I hazardous deep 

injection wells are designed to 

inject waste into an area below the 

lowermost underground source of 

drinking water. EPA and the states 

grant permits to commercial 

operators to construct and operate 

these wells and must obtain public 

comments on the permits. 

Communities often raise concerns 

about well safety and other 

matters. GAO examined the extent 

to which EPA and the states 

(1) address these community 

concerns, (2) consider 

environmental justice issues, and 

(3) ensure that financial assurances 

adequately protect the taxpayer if 

bankruptcy occurs. GAO, among 

other things, examined the permit 

process in the four states that have 

commercial Class I wells. 

GAO recommends that EPA 

• involve the public earlier in the 

permitting process to allow 

more time for community 

concerns to be addressed; and 

• determine if the program’s 

financial assurance 

requirements need to be 

strengthened. 

 

EPA did not agree with GAO’s 

recommendations and stated that 

(1) public involvement is limited 

by program regulations and (2) 

financial assurance requirements 

are not deficient. GAO maintains 

the recommendations are sound. 

www.gao.gov/cgi-bin/getrpt?GAO-03-761.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact John B. 

Stephenson at (202) 512-3841 or 

stephensonj@gao.gov. 

Highlights of GAO-03-761, a report to 

the Honorable Lynn C. Woolsey, House of 

Representatives 

June 2003

DEEP INJECTION WELLS 

EPA Needs to Involve Communities 

Earlier and Ensure That Financial 

Assurance Requirements Are Adequate 
Page i GAO-03-761 Deep Injection Wells 

Letter 1

Results in Brief 3

Background 5

Community Concerns Could Be More Comprehensively Addressed 

Before Draft Permits Are Completed 9

Environmental Justice Concerns Are Addressed during the 

Permitting Process and in Response to Civil Rights Complaints 14

Financial Assurance Requirements May Not Be Adequate for 

Closing Wells 17

Conclusions 22

Recommendations for Executive Action 23

Agency Comments 23

Appendix I Chronology of Events for the Construction of 

Deep Injection Wells by the Environmental 

Disposal Systems Company 26 

Appendix II Scope and Methodology 29 

Appendix III Comments from the Environmental Protection 

Agency 31 

Appendix IV GAO Contacts and Staff Acknowledgments 36 

Table 

Table 1: Status of Title VI Complaints Filed with EPA’s OCR 

(October 1,1993, through May 5, 2003) 17

Figures 

Figure 1: Construction Design for a Class I Deep Injection Well 7

Figure 2: UIC Deep Injection Well Permitting and Public Comment 

Processes 11

Contents 
Page ii GAO-03-761 Deep Injection Wells 

List of Abbreviations 

EAB Environmental Appeals Board 

EDS Environmental Disposal Systems, Inc. 

EPA Environmental Protection Agency 

MDEQ Michigan Department of Environmental Quality 

NAPA National Academy of Public Administration 

OCR Office of Civil Rights 

OIG Office of Inspector General 

RCRA Resource Conservation and Recovery Act 

RECAP Romulus Environmentalists Care About People 

SDWA Safe Drinking Water Act 

TCEQ Texas Commission on Environmental Quality 

UIC Underground Injection Control 

This is a work of the U.S. Government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. It may contain copyrighted graphics, images or other materials. 

Permission from the copyright holder may be necessary should you wish to reproduce 

copyrighted materials separately from GAO’s product. 
Page 1 GAO-03-761 Deep Injection Wells 

June 13, 2003 

The Honorable Lynn C. Woolsey 

House of Representatives 

Dear Ms. Woolsey: 

Billions of gallons of hazardous liquid waste are injected into underground 

wells each year. These wells, known as Class I deep injection wells, are 

built to contain hazardous waste—from the pharmaceutical, chemical 

manufacturing, and metalworking industries, among others—below the 

lowest underground source of drinking water. Class I deep injection wells 

may either be owned and used by a facility to handle the waste it generates 

itself (noncommercial wells) or may be wells operated by companies that 

accept waste from multiple facilities and may be far from any particular 

waste-generating site (commercial wells).1

 Thirteen commercial wells 

operate in the United States; they are located in Louisiana, Ohio, and 

Texas. In addition, two commercial wells have been constructed in 

Michigan but are not yet operating. Under the Safe Drinking Water Act 

(SDWA), the Environmental Protection Agency (EPA) is responsible for 

establishing standards for and issuing permits for the construction and 

operation of these wells. EPA can authorize states to administer the 

program—giving them primacy—as long as the state requirements are at 

least as stringent as the federal requirements. EPA has granted primacy to 

Louisiana, Ohio, and Texas. Michigan has not applied for primacy and has 

no plans to do so because it does not believe it has enough wells to 

warrant devoting staff and resources to permitting and regulating them. 

In order to operate a commercial well that accepts hazardous waste, well 

owners need to obtain several different permits that establish conditions, 

including requirements under EPA regulations. First, under 

the Underground Injection Control (UIC) program, owners must obtain a 

construction permit, which, among other things, specifies how the well is 

to be constructed to prevent the injected waste from migrating to sources 

of drinking water. The wells must also be located in geologically suitable 

areas—areas that are not susceptible to earthquakes—to ensure that the 

 1

 This report focuses only on commercial Class I wells that accept hazardous waste, which 

are of greater concern to communities. 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-03-761 Deep Injection Wells 

waste will not migrate. Second, under the Resource Conservation and 

Recovery Act (RCRA), owners must obtain a permit to ensure that any 

above-ground treatment and storage facilities can be operated safely; 

owners frequently treat and store the waste on the surface before injecting 

it below ground. Under RCRA, they must also demonstrate that injected 

waste will be contained within a defined underground area. Finally, 

owners must have a UIC operating permit from EPA or the state before 

injecting any waste. Both UIC and RCRA regulations require EPA or the 

state to obtain public comments before they issue permits. 

According to a 2001 EPA study of the risks associated with Class I wells, 

deep injection wells are relatively safe.2

 Nonetheless, communities where 

commercial wells are located have raised concerns about the hazards that 

these wells may pose. In particular, they point out that the aboveground 

activities at the well site, such as trucks that transport waste and 

treatment and storage facilities that handle waste, increase the possibility 

of accidental hazardous waste spills, noise, and odor pollution, and may 

reduce property values. 

Several grassroots and environmental organizations have also voiced 

environmental justice concerns, charging that low-income, minority 

communities are unfairly targeted as locations for hazardous facilities of 

all types, including commercial deep injection wells. Executive 

Order 12898, issued in 1994, directs federal agencies, as appropriate, to 

identify and address the disproportionately high and adverse health and 

environmental effects of its programs, policies, and activities on minority 

and low-income populations. Although this order does not create a right to 

judicial review, individuals who have environmental justice concerns may 

file a petition for review with EPA’s Environmental Appeals Board, if EPA 

is the involved party, or a Title VI complaint with EPA’s Office of Civil 

Rights, if the involved party is a recipient of EPA financial assistance, such 

as a state office. 

Finally, EPA requires a Class I well owner or operator to establish 

financial assurance to cover the estimated cost of the plugging and 

abandonment of the well. Financial assurance can be provided in several 

approved forms, such as trust funds or as surety bonds. Each year, the 

 2

 U.S. Environmental Protection Agency, Class I Underground Injection Control 

Program: Study of the Risks Associated with Class I Underground Injection Wells 

(Washington, D.C.: 2001). 
Page 3 GAO-03-761 Deep Injection Wells 

owner or operator must review the cost estimate on which the financial 

assurance is based to determine whether it is still adequate to cover 

anticipated costs due to inflation and make any needed changes. 

You asked us to examine the extent to which EPA and the states 

(1) address community concerns in permitting well construction, 

(2) address environmental justice issues in the construction permit 

process, and (3) ensure that financial assurances adequately protect the 

taxpayers if an owner goes bankrupt. To address these issues, we, among 

other things, examined the permitting process in the four states that have 

commercial Class I deep injection wells: Louisiana, Michigan, Ohio, and 

Texas. Because Michigan does not have primacy, EPA manages the 

permitting process. 

EPA requires opportunities for public comment on proposed commercial 

Class I deep injection wells during the permitting process, but these 

opportunities come late in the process and, therefore, may limit the extent 

to which community concerns are addressed. Specifically, for commercial 

wells, EPA must issue a public notice that a draft construction permit has 

been prepared; provide at least a 30-day comment period; hold public 

hearings, if needed; and issue final permit decisions and responses to 

public comments. However, EPA and the applicant may have worked 

together for more than a year to draft the permit before EPA releases it for 

public comment. Therefore, EPA and the well owner have already invested 

extensively in the draft permit and may be reluctant to change it as a result 

of community concerns. Furthermore, while EPA must respond to all 

public comments and could alter the draft permit in response to some 

community concerns under the Safe Drinking Water Act, EPA cannot deny 

a permit on the basis of community concerns if proposed wells meet all of 

the regulatory requirements. However, earlier public involvement would 

allow more time for individuals to approach appropriate state or local 

officials with their other concerns and potentially increase the likelihood 

that these concerns would be addressed and avoid project delays. For 

example, in Michigan, where EPA is the permitting authority, agency 

officials closely adhered to public participation requirements for the two 

wells under construction. However, community residents believed that 

their concerns were not fully addressed and filed legal actions and 

complaints to prevent the project’s construction. These actions have 

delayed the project for many months. In contrast, the states with primacy 

have recognized the need for greater public involvement early in the 

permitting process. For example, Texas requires public involvement even 

before the state and the owner draft the construction permit. As a result, 

Results in Brief 
Page 4 GAO-03-761 Deep Injection Wells 

according to the National Academy of Public Administration, states have 

mitigated or avoided controversial issues and costly litigation surrounding 

the permitting of commercial Class I deep injection wells. We are 

recommending that the Administrator, EPA, involve the public earlier in 

the permitting process to allow more time for community concerns to be 

addressed. 

EPA addresses environmental justice issues in two basic ways—first, 

as part of its process for deciding whether to issue a permit for well 

construction, and, second, in response to specific civil rights complaints 

filed with the agency after permits are issued. While EPA has yet to issue 

a national policy on environmental justice, it encourages regional offices 

that issue construction permits to determine if minority and low-income 

populations are disproportionately affected by a proposed well’s location. 

Individuals and communities may appeal permit decisions with EPA’s 

Environmental Appeals Board or file complaints under Title VI of the Civil 

Rights Act with EPA’s Office of Civil Rights. Members of one community—

Romulus, Michigan—have challenged EPA’s approval of Class I deep 

injection well permits on environmental justice grounds. EPA’s 

Environmental Appeals Board denied the community’s petition for review 

because it found no basis for review. EPA’s Office of Civil Rights also 

denied the Title VI complaint because it did not find any discrimination in 

violation of Title VI or EPA implementing regulations. Court decisions 

have recently limited the basis for filing Title VI complaints, making the 

process an unlikely avenue for changing permit decisions. 

Current financial assurance requirements may not ensure adequate 

resources to close a commercial deep injection well in the event of 

bankruptcy or if the well ceases operations. According to EPA and state 

officials, the owners of the 13 operating wells have provided financial 

assurance, such as trust funds or surety bonds, that are sufficient to cover 

the costs of the plugging and abandonment of a well. While only four sites 

have gone into bankruptcy or have ceased operating since the program 

began in 1980, two did not have adequate financial resources to plug and 

abandon the wells; for the other two, financial assurance was not tested 

because other companies purchased and continued operating the wells. 

Both sites that did not have adequate financial resources involved unique 

circumstances but demonstrate there is a potential burden to taxpayers if 

financial assurance requirements are not adequate. In one case, the 

insurance company that issued the surety bonds for the owner’s two wells 

cancelled the bonds, leaving the company without financial assurance. 

In 1997, citing several environmental problems and the owner’s lack of 

cooperation with federal requirements, the state revoked the owner’s 
Page 5 GAO-03-761 Deep Injection Wells 

UIC and RCRA permits. EPA assumed responsibility for this site under the 

Comprehensive Environmental Response, Compensation and Liability Act 

(Superfund), and is currently overseeing the cleanup of the site and 

identifying primary responsible parties to participate in conducting and 

funding the site’s remediation. In a second case, a company seeking a UIC 

construction permit allowed its financial assurance to expire as it tried 

to resolve issues resulting from the death of the company’s owner. The 

state is currently negotiating with the owners to determine who will pay 

for the closure. In March 2001, EPA’s Office of Inspector General reported 

that certain financial assurance requirements for RCRA facilities, which 

the deep injection well requirements mirror, may not adequately ensure 

sufficient resources to properly close facilities. An EPA working group is 

also reviewing similar aspects of financial assurance requirements for a 

different type of injection well for possible changes, but not Class I deep 

injection wells. We are recommending that the Administrator, EPA, review 

and, if warranted, strengthen financial assurance requirements. 

Disposing of wastewater through underground wells began in the 1930s, 

when oil companies started pumping brine produced from oil and gas 

production into porous rock formations underground. This disposal 

method is more cost effective than treating and reusing wastewater. This 

disposal method was increasingly used by the chemical and petrochemical 

industries in the 1960s and 1970s, and EPA raised concerns that injected 

waste could contaminate underground drinking water. Underground water 

supplies are used to provide about 50 percent of the public water in the 

United States and are vulnerable to contamination. The Safe Drinking 

Water Act (SDWA) of 1974 authorized EPA to regulate underground 

injection wells in order to protect drinking water sources. EPA published 

regulations establishing the Underground Injection Control (UIC) program 

in 1980, specifying safeguards to prevent injection wells from endangering 

underground sources of drinking water. 

The UIC program encompasses five classes of underground wells. 

Class I wells, which are the focus of this report, inject hazardous and 

nonhazardous waste from manufacturing and other sources below 

the lowermost underground source of drinking water located within a 

quarter mile of the well. Approximately 500 Class I wells operate 

nationwide, many concentrated in midwestern and southern states. The 

other four classes range from Class II wells involved in oil and natural gas 

production to Class V wells that include waste from agricultural runoff and 

septic systems. 

Background 
Page 6 GAO-03-761 Deep Injection Wells 

Of the 473 Class I deep injection wells that exist nationwide, only 13 wells 

are at commercial sites that accept and inject hazardous waste from 

various manufacturing facilities, according to the most recent EPA data 

(2001). Two more commercial wells have been constructed in Michigan 

and are awaiting final approval for operation. The other noncommercial 

Class I wells are owned by companies that use them exclusively to 

dispose of their own manufacturing waste. Because hazardous waste is 

injected into Class I wells, EPA imposes stringent technical requirements 

on the wells to protect drinking water supplies through both UIC and 

RCRA regulations. 

Class I hazardous well owners and operators must meet certain 

requirements to construct a well. For example, they must review the area 

to ensure that the site is geologically suitable. One purpose of this review 

is to ensure that other existing or abandoned wells nearby do not provide 

avenues for the injected waste to enter underground sources of 

drinking water. 

To obtain final approval to operate a deep injection well, owners and 

operators are required to, among other things 

• properly design the well to ensure that the waste will not migrate into an 

underground source of drinking water; 

• assure that injection pressure does not cause fractures in the injection 

zone or migration of fluids; 

• provide plans for closing the well and post-closure care; 

• demonstrate and maintain financial assurance (trust fund, bond, or other 

approved forms) to ensure that the well can be properly plugged and 

abandoned; 

• establish monitoring and reporting requirements; and 

• demonstrate that the injected waste will not migrate beyond the injection 

zone for 10,000 years, if otherwise prohibited hazardous waste will be 

injected into the well. 

Well owners must design and construct a well shaft that is made of three 

or more protective layers of pipe or tubing that go into the injection zone. 

Wastewater is injected through the innermost part of the constructed well 

shaft, referred to as the injection tubing. (See fig. 1.) 
Page 7 GAO-03-761 Deep Injection Wells 

Figure 1: Construction Design for a Class I Deep Injection Well 
Page 8 GAO-03-761 Deep Injection Wells 

Owners of Class I injection wells must obtain RCRA permits if they plan 

to treat and store waste before injecting it. These permits are for building 

and operating treatment and storage facilities. RCRA prohibits the land 

disposal of restricted hazardous waste unless EPA determines the 

prohibition is not required in order to protect human health and the 

environment for as long as the waste remains hazardous. Under UIC 

program regulations, EPA requires owners to demonstrate, among other 

things, that, to a reasonable degree of certainty, the restricted hazardous 

waste will not migrate out of the injection zone for 10,000 years. EPA 

determines compliance with this requirement through its computer 

simulation models, which the owners use to enter their specific data to 

demonstrate the movement of injected waste under certain geologic 

conditions. If the owner successfully demonstrates that waste will not 

migrate out of the injection zone, EPA will grant an exemption to the 

RCRA regulation, sometimes referred to as a land ban petition or a 

no-migration petition. 

The permitting of deep injection wells can raise environmental justice 

concerns within a community, and permit decisions may be challenged 

based on environmental justice concerns. Executive Order 12898, 

issued in 1994, directed federal agencies to incorporate environmental 

justice as part of their missions. Agencies are to identify and address 

disproportionately adverse human health or environmental effects on 

minority or low-income populations of their programs, policies, or 

activities. Title VI of the Civil Rights Act of 1964 prohibits discrimination 

on the basis of race, color, or national origin in any program or activity 

that receives federal funding; individuals may appeal permit decisions if 

they believe the prohibited discrimination occurred. Section 601 of the act 

prohibits intentional discrimination on the basis of race, color, or national 

origin in programs or activities receiving federal financial assistance. 

Section 602 provides federal departments or agencies with the authority 

to issue rules or regulations implementing the objectives contained in 

section 601. 

To ensure that financial resources are available to close wells if they 

cease operation, EPA requires financial assurance from owners under the 

UIC and RCRA programs. Owners must provide financial assurance for 

plugging and abandonment of wells and closing associated RCRA 

treatment and storage facilities. For both the UIC and RCRA programs, 

owners can provide financial assurance through approved methods such 

as trust funds, surety bonds, letters of credit, or insurance. The amount of 

financial assurance needed is based on the estimated cost of the plugging 

and abandonment of the well or closing the treatment and storage facility. 
Page 9 GAO-03-761 Deep Injection Wells 

For example, the estimated cost for plugging and abandonment of one 

well in Michigan was $25,000, while the estimate for another well in Ohio 

was $250,000; the variation in cost was due to difference in the sizes and 

depths of the two wells. Each year owners must also certify that the 

financial assurance is adequate and make any necessary changes to the 

type or amount of financial assurance. 

Under EPA regulations, communities can raise concerns during the 

required public comment process for deep injection well permits after a 

draft permit is issued. EPA bases final approvals on whether a proposed 

well meets technical and safety requirements under its regulations and 

does not have authority under the Safe Drinking Water Act to deny a 

permit on the basis of other concerns. Earlier public involvement would 

allow more time for individuals to approach appropriate state or local 

officials with any other concerns. When states are the permitting authority, 

they provide more and earlier opportunities for obtaining community 

concerns. The National Academy of Public Administration believes that 

states can pay more attention to these concerns than EPA can and that 

these actions mitigate or avoid controversial issues and possible litigation. 

Community Concerns 

Could Be More 

Comprehensively 

Addressed Before 

Draft Permits 

Are Completed 
Page 10 GAO-03-761 Deep Injection Wells 

EPA regional offices, or state offices for states with primacy, obtain 

information about community concerns regarding UIC permits through 

public comment processes. These offices first request public comments 

after working with a prospective well owner to complete a draft permit, 

which may take as long as 2 years for a construction permit. When the 

draft is complete, EPA or state officials establish a list of interested 

parties—citizens and local government representatives—and mail a fact 

sheet describing the proposed well.3

 The public must be given at least 

30 days from the date of the draft permit notice to submit written 

comments or request a public hearing, in which case the hearing time and 

place are also published in the local newspapers. Last, EPA or a state 

office makes a final permit decision and prepares written responses to the 

public comments. Figure 2 shows the permitting process, including 

opportunities for public comment.4

 3

 For EPA-administered programs, the permit applicant must submit a list of all owners or 

record of land within a quarter mile of the facility boundary, unless the area is populous 

and the EPA Regional Administrator determines this is impractical. 

4

 40 CFR Part 124 and 40 CFR Parts 144, 146, and 148 set forth the public participation 

process requirements and the permitting and operational requirements, respectively, for 

the Underground Injection Control program. 

EPA Completes Draft 

Permits Before Addressing 

Public Concerns 
Page 11 GAO-03-761 Deep Injection Wells 

Figure 2: UIC Deep Injection Well Permitting and Public Comment Processes 
Page 12 GAO-03-761 Deep Injection Wells 

Because the agency and the prospective well owner have already 

expended time and resources to develop the draft permit, communities 

have raised concerns that the opportunity for commenting on the 

proposed construction permit is often too late in the process to have any 

effect. EPA does not have authority under the Safe Drinking Water Act to 

deny a permit if it meets technical and safety requirements, even if the 

application raises other community concerns. We also believe that, after 

this much investment, well owners may not be as willing to make changes 

in their planned operations and communities may not have enough time to 

contact appropriate state and local officials to have their nontechnical 

concerns addressed. 

Both EPA and the National Academy of Public Administration (NAPA) 

have noted the importance of getting the public involved early in the 

permitting process.5

 For example, in January 2001, EPA reported that it is 

important to involve the public early in its decision-making process 

because stakeholders (such as owners or city officials) and the public 

have perspectives that can greatly improve the quality of decision making.6

Similarly, in December 2001, NAPA raised concerns about how the public 

has missed opportunities to provide timely input in the permitting process. 

Without timely participation, the public is less able to affect important 

decisions at the state and local level, such as site location. 

Not providing an opportunity for early public involvement may result in 

extensive community opposition to proposed wells. For example, the two 

proposed wells in Romulus, Michigan generated extensive opposition. 

Community concerns included issues such as possible damage to the 

interstate highway as a result of increased traffic traveling to the wells. 

EPA only has authority to base permitting decisions on SDWA 

requirements and does not consider the impact of traffic on the interstate 

highway or the safety of transporting hazardous waste to Class I facilities. 

These particular wells have generated substantial public comment and 

legal action by community members. In 1996, the applicant, Environmental 

 5

 National Academy of Public Administration, Environmental Justice in EPA Permitting: 

Reducing Pollution in High-Risk Communities is Integral to the Agency’s Mission

(Washington, D.C.: December, 2001). The study was conducted at EPA’s request to 

examine how environmental justice could be incorporated into EPA’s air, water, and waste 

permitting programs. 

6

 U.S. Environmental Protection Agency, Office of Policy Economics, and 

Innovation, Stakeholder Involvement and Public Participation at the U.S. EPA 

(Washington, D.C., 2001). 
Page 13 GAO-03-761 Deep Injection Wells 

Disposal Systems (EDS), applied for a construction permit. The public was 

first notified of the draft permit 15 months later. After another 2 years, and 

significant public comments, EPA issued the construction permit without 

significant modifications. As of April 2003, EPA was still engaged in 

resolving community concerns through public hearings relating to the nomigration petition. 

Recognizing the importance of public involvement in making decisions 

that affect the environment, Texas, Ohio, and Louisiana have gone 

beyond the federal minimum public notice and comment requirements to 

address community concerns. For example, the Texas Commission on 

Environmental Quality (TCEQ) must notify the public when it first 

receives a completed permit application—unlike EPA, which requires 

public notification after the permit is drafted. Texas’s process increases 

the opportunity for the public to provide comments at a point when the 

state can better address the comments. In addition, in making permitting 

decisions, TCEQ must determine that the well is in the public interest, 

considering the following issues: 

• compliance history of the applicant; 

• whether the applicant will maintain adequate insurance for bodily injury 

and property damage caused by accidents, or will otherwise demonstrate 

financial responsibility; and 

• whether there is a reasonably available practical, economic, and feasible 

alternative to an injection well. 

In addition, the well must not impair existing rights, including mineral 

rights. If the well is not in an industrial area, the applicant must make a 

reasonable effort to ensure that the burden on local law enforcement, 

emergency medical or fire-fighting personnel, or public roadways will be 

reasonably minimized or mitigated. 

All three states have also enacted additional requirements to address 

community concerns. For example, under its RCRA program, Texas 

requires that new commercial hazardous waste management facilities, 

including those associated with Class I deep injection wells, be more than 

2,640 feet from an established residence, church, school, day care center, 

surface water body used for a public drinking water supply, or public park. 

States have also taken other steps to address community concerns. For 

instance, for one commercial Class I deep injection well in Ohio, state 

officials assisted a community in speaking directly with the prospective 

Some States Require 

Community Concerns to 

Be Addressed Early in the 

Permitting Process 
Page 14 GAO-03-761 Deep Injection Wells 

well owner. During these discussions, community residents raised 

concerns about transporting waste under dangerous weather conditions 

and the increased likelihood of spills. In response, the company agreed not 

to transport waste to the well site during adverse weather conditions. 

EPA addresses environmental justice issues during the process for 

deciding on a construction permit and when civil rights complaints are 

filed with the agency after permits are issued. While EPA has yet to issue 

a national policy on environmental justice, some regional offices have 

independently developed and implemented their own guidelines for 

considering environmental justice during their decision-making processes. 

After permit decisions are made, individuals and communities may raise 

environmental justice issues by appealing permit decisions with EPA’s 

Environmental Appeals Board or filing complaints under Title VI of the 

Civil Rights Act with OCR. Recent court decisions, however, have limited 

the basis for filing these complaints, making the process an unlikely 

avenue for changing permit decisions. EPA’s Title VI regulations and 

administrative processes for Title VI complaints remain in effect. 

In 1995, in response to Executive Order 12898, EPA incorporated 

environmental justice considerations into its approval process for 

construction permits. Under EPA’s strategy, staff must integrate 

environmental justice into every EPA program, policy, and activity. EPA’s 

Office of Environmental Justice oversees the implementation of 

environmental justice, and it has drafted national guidance that will assist 

EPA staff in evaluating potential environmental justice concerns and 

taking actions to address them. To date, the national guidance has been 

reviewed internally within EPA, but EPA has not yet published it for 

comment in the Federal Register. In reviewing the draft guidance, EPA’s 

Office of General Counsel raised a number of policy concerns that will be 

resolved before the guidance is released for public comment. As of May 

2003, Office of Environmental Justice officials could not say when the 

guidance would be released for public comment. 

In the absence of national EPA guidance on environmental justice, 

EPA’s offices in regions V and VI have developed guidelines for evaluating 

potential environmental justice considerations; these regions cover the 

four states that have commercial Class I deep injection wells. Regional 

officials said that environmental justice assessments are routinely being 

performed for Class I deep injection wells, although the regional 

guidelines only encourage EPA staff to conduct an assessment that 

Environmental 

Justice Concerns 

Are Addressed 

during the Permitting 

Process and in 

Response to Civil 

Rights Complaints 

EPA Regions Are 

Encouraged to Consider 

Environmental Justice 

Issues for Proposed 

Well Sites 
Page 15 GAO-03-761 Deep Injection Wells 

considers demographic make up and the potential health risks that the site 

might pose to area residents. For example, in assessing demographics for 

issuing a permit for a facility, such as a waste treatment facility, staff in 

EPA region V would determine whether the number of low-income and 

minority residents living within a specific radius of the facility is greater 

than or equal to two times the average low-income and minority 

population in the state. If that were the case, EPA staff would conduct 

community outreach efforts, such as holding public meetings or 

workshops, to better understand and respond to community concerns. 

Regional officials said they might decide that issuing a permit would 

present additional risks to a community already affected by other 

environmental sites and they would, therefore, impose special permit 

requirements, such as limiting the amount of waste injected into wells or 

requiring increased monitoring, to ensure safe operation. EPA region VI 

has performed demographic analyses on all current Class I deep injection 

wells and will perform them on any new Class I deep injection wells that 

submit no-migration petition applications in the future. 

Officials from the three states that have primacy for deep injection wells—

Louisiana, Ohio, and Texas—told us that they are not required under state 

law to specifically consider environmental justice issues during permitting 

processes. However, Title VI prohibits discrimination in any program that 

receives federal funds. The state officials were not aware of any 

communities that had raised environmental justice concerns. 

Individuals or communities with environmental justice concerns may file 

petitions with EPA’s Environmental Appeals Board (EAB) to review 

permit decisions or file complaints under Title VI of the Civil Rights Act 

with EPA’s Office of Civil Rights (OCR). These complaints involve a broad 

range of facility permit decisions, not just deep injection wells. Members 

of only one community—Romulus, Michigan—have challenged permit 

decisions for a commercial Class I deep injection well on environmental 

justice grounds. In 1998, two individuals filed petitions with EAB to review 

EPA’s issuance of construction permits to Environmental Disposal 

Systems (EDS). Among other things, the petitions claimed that (1) the 

permits and EPA’s response to written comments were not provided in a 

timely manner for public review to two libraries, (2) EDS should be 

required to conduct a survey of the surrounding area to determine the 

location of other deep injection wells because the Michigan Department of 

Environmental Quality information was unreliable, and (3) the EPA 

environmental justice demographic analysis was flawed because it used 

data from a 2-mile radius instead of a 4-mile radius, which would have 

included a larger minority population. In October 1998, the EAB concluded 

Individuals Can Raise 

Environmental Justice 

Concerns through Civil 

Rights Complaints Filed 

with EPA 
Page 16 GAO-03-761 Deep Injection Wells 

that the petitions did not provide a basis for review of the permit decision. 

Specifically, the board found that the alleged delay in permit notification 

and responses to comments did not affect the petitioner adversely because 

EPA provided 6 extra days for public comments. Regarding the survey for 

other wells, the EAB stated that the petitioner did not provide any support 

for his claim that data from the Michigan Department of Environmental 

Quality was unreliable. The EAB stated that the region did not rely only on 

this data and that there was no indication that EPA’s conclusion was 

erroneous. Lastly, regarding the use of the 2-mile radius for the 

demographic analysis, the EAB deferred to the EPA region’s decision that 

2 miles was an appropriate radius for the analysis, stating that determining 

the radius is a highly technical judgment based on the probable dispersion 

of pollutants. 

Another Romulus citizen filed a Title VI complaint with EPA’s OCR, 

which was accepted for review in December 2001, raising three issues 

regarding Michigan’s RCRA permit decisions on the sites’ treatment and 

storage facilities. (Michigan has primacy for RCRA.) Two of these issues 

concerned procedural matters which OCR rejected. OCR dismissed the 

third issue: that citizens of Romulus were disproportionately exposed to 

pollution and other environmental dangers. OCR found that the facility 

would not adversely impact the community because EPA had concluded 

that the wells would not damage water, air, or soil quality, nor would they 

increase noise pollution. Moreover, OCR found that the potential facility 

impacts would not have a disparate effect on African-Americans for 

Title VI purposes. A chronology of the events for the EDS site is presented 

in appendix I. 

Since 1992, in addition to the Romulus petition, EAB has received one 

other petition involving environmental justice concerns related to a Class I 

deep injection well. In that case, which involved a noncommercial well in 

Michigan, individuals claimed that the well permits should be denied 

because the area surrounding the site was already host to numerous 

burdensome land uses and that the 2-mile area analyzed by EPA was 

too small to allow for proper evaluation of the sociological, health, and 

financial impacts. The board rejected these claims and denied review on 

these issues, stating that the petitioner had failed to show that the permit 

would not protect drinking water sources of populations within 2 miles 

of the well site or that citizens at a greater distance would not 

be protected. Since 1993, OCR has received 135 Title VI complaints—

including complaints not related to deep injection wells. Most of these 

complaints—91—were rejected for investigation or dismissed. Table 1 

shows the disposition of all Title VI complaints as of February 2003. 
Page 17 GAO-03-761 Deep Injection Wells 

Table 1: Status of Title VI Complaints Filed with EPA’s OCR (October 1,1993, 

through May 5, 2003) 

Status of reviews Number of cases

Pending 

Under review for possible investigation/rejection/referral 6

Accepted for investigation 26

Suspended because complaint is part of other litigation 7

Closed 

Rejected for investigation or dismissed after acceptance 94

Referred to another federal agency 2

Informally resolved 2

Sources: EPA and GAO. 

Recent court decisions have limited the basis for filing Title VI complaints, 

making the process an unlikely avenue for challenging permit decisions. 

In 2001, the Supreme Court ruled that individuals do not have a cause of 

action for violations of disparate impact regulations—those regulations 

which prohibit activities that are not intentionally discriminatory but 

which, in fact, that have the effect of discriminating.7

 Later in 2001, the 

U.S. Court of Appeals for the Third Circuit, relying on the Supreme Court 

decision, held that individuals could not challenge disparate impact 

regulations and that Title VI only prohibits intentional discrimination.8

 The 

federal government, however, can still bring enforcement actions. 

It is uncertain whether the financial assurance requirements for closing 

deep injection wells can adequately provide the needed financing in cases 

of owner bankruptcy or other events that force well closure. EPA and 

state officials believe that financial assurance requirements are adequate 

and would cover the closing costs for the 13 commercial wells currently 

in operation. While only four sites have ceased operation since the UIC 

program began in 1980, two did not have adequate financial resources to 

plug and abandon the wells, resulting in additional costs to taxpayers. 

For two other sites, the financial assurance was not tested because 

other companies purchased and continued operating the wells. EPA 

has questioned the adequacy of similar aspects of financial assurance 

requirements in other programs. In 2001, EPA’s Office of Inspector 

 7

 Alexander v. Sandoval, 532 U.S. 275 (2001). 

8 South Camden Citizens in Action v. New Jersey, DEP, 274 F.3d 771 (3rd Cir. 2001). 

Financial Assurance 

Requirements May 

Not Be Adequate for 

Closing Wells 
Page 18 GAO-03-761 Deep Injection Wells 

General stated that financial assurance requirements for RCRA facilities, 

on which financial assurance requirements for deep injection wells were 

based, needed improvement, and EPA is currently requesting public 

comments on the Inspector General’s conclusions and recommendations. 

EPA has also initiated an internal review of financial assurance 

requirements for Class II oil and gas deep injection wells because of 

concerns that aspects of current requirements, similar to aspects of the 

Class I deep injection well requirements, may not be adequate. 

When owners of commercial Class I wells have filed for bankruptcy or 

ceased operating, they have not always had adequate financial resources 

to cover the costs of plugging and abandonment of wells. Since 1980, when 

the deep injection well program began, four owners have filed for 

bankruptcy or ceased operating. In two cases, the adequacy of the 

financial assurance was not tested because other companies purchased 

and continued operating the wells. The new owners, according to state 

officials, provided adequate financial assurance for these two sites. Two 

other sites did not have adequate financial resources to shut down the 

wells. In one case, the owner did not have adequate financial assurances in 

place as required. The second case, although no permit was granted and 

thus the financial assurance requirements were not tested, demonstrates 

the potential cost to the public if adequate financial resources are not 

available. Both of these cases occurred in Texas. 

Malone Services Company operated two wells under state-issued UIC and 

RCRA permits. In 1983, to meet the UIC financial assurance requirements, 

the company provided a surety bond as financial assurance for the wells. 

In 1988, the insurance company that had issued the bond cancelled it, 

leaving the company without financial assurance for the wells. In 1992, the 

company submitted a new surety bond issued by a different insurance 

company to meet its financial assurance requirements; however, the state 

did not accept this assurance because the insurance company issuing the 

bond was not an acceptable insurance provider.9

 In 1997, citing several 

environmental problems relating to UIC and RCRA requirements for 

monitoring, testing, reporting, and financial assurance and the owner’s 

lack of cooperation, the state revoked the company’s UIC and RCRA 

 9

 40 CFR §144.63 states that at a minimum the insurer must be licensed to transact the 

business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, 

in one or more states. 

Adequate Financial 

Resources Have Not 

Always Been Available for 

Plugging and 

Abandonment of Deep 

Injection Wells 

Malone Services Company 

Deep Injection Wells 
Page 19 GAO-03-761 Deep Injection Wells 

permits. In July 1998, the state attorney general filed a petition to put 

Malone Services Company into involuntary bankruptcy. Although state 

officials were not concerned that the injected waste would migrate outside 

of the approved injection zone, they were concerned about aboveground 

contamination from surface spills. The surface had become so highly 

contaminated that the site was classified as a Superfund site in June 2001, 

with EPA leading cleanup activities. As of May 2003, EPA is overseeing the 

Superfund cleanup and is using the well to dispose of liquid waste as part 

of the site cleanup. In addition, EPA is contacting the primary responsible 

parties, including the owner and the companies that sent waste to the site, 

to encourage their participation in conducting and funding the site 

remediation, in lieu of reliance on federal funds. 

In 1979, Wastewater, Inc., began converting a well originally used for oil 

and gas exploration to an injection well. This conversion, which was 

conducted under the authority of Texas Department of Water Resources, 

took place 1 year before the federal UIC program began and 3 years before 

Texas obtained primacy for the program. When it received primacy, 

Texas required the company to reapply for a new UIC well permit for 

construction and operation so that the state could issue the permit based 

on the recently enacted federal UIC regulations, including the requirement 

to provide adequate financial assurance.10 The company submitted a UIC 

permit application to the state in July 1982 and provided a letter of credit 

for financial assurance in July 1983. However, Texas never approved the 

1982 application because the company requested that the state suspend 

the application process while it resolved issues resulting from the death 

of the company’s owner. In 1992, the company asked the state to withdraw 

its application. In April 1998, the letter of credit for financial assurance 

expired, but the company had ceased operating. 

In May 2000, the state issued an enforcement order requiring the company 

to plug the well. As of May 2003, the company had not done so, because 

officials from the company that was formed after the bankruptcy—Future 

Environmental Systems—were still discussing with state officials the 

possibility of applying for an operating permit and providing adequate 

financial assurance. While the well needs to be closed for safety reasons, 

it does not pose immediate environmental concerns because construction 

was not completed and waste had not been injected into the well, 

 10 Rather than issuing both a construction permit and an operating permit, as EPA and 

some states do, Texas issues a permit to “construct and operate.” 

Wastewater, Inc., 

Deep Injection Well 
Page 20 GAO-03-761 Deep Injection Wells 

according to EPA and state officials. If the company does not provide 

adequate financial assurance and obtain authorization to operate the 

well, the state will try to compel the company to close the well and, if 

unsuccessful, will use its own funds to close it. 

EPA and state officials responsible for overseeing the 13 commercial 

Class I wells currently in operation believe that the owners’ or operators’ 

financial assurances provide enough funds to close their wells in the event 

of bankruptcy. Seven of these well owners or operators have provided 

financial assurance through insurance policies, while the other wells rely 

on other forms of financial assurance. 

Uncertainties about the adequacy of RCRA financial assurance 

requirements have been raised by EPA officials, and EPA’s Office of 

Inspector General (OIG) recommended changes to the requirements in 

March 2001. UIC financial requirements are based on RCRA requirements 

and, therefore, the OIG recommendations are relevant to the UIC program. 

According to the OIG, the risk associated with financial assurance 

provided by insurance, surety bonds, and trust funds may be higher than 

EPA initially estimated for its financial assurance regulations, and funds 

may not be available when needed.11 Specifically, for state financial 

assurance programs for RCRA facilities, insurance provided by captive 

insurance companies may be inadequate for covering closure and 

post-closure costs. Captive insurance companies are wholly owned 

subsidiaries of the corporation they are insuring; if the parent company 

experiences financial difficulty, state financial assurance programs can 

have little confidence that the captive insurance company will provide the 

funds needed to pay for closure. These insurance policies are also high 

risk if they cannot be assigned to different owners when a RCRA facility is 

sold. The OIG recommended that EPA issue guidance for state financial 

assurance programs to reduce risks associated with insurance policies and 

that EPA investigate complex insurance issues with states to determine 

whether additional guidance is needed. 

The OIG report also noted that state officials had difficulty determining 

whether the dollar amounts provided for financial assurance were 

adequate to cover all costs for closing facilities. Program officials 

 11 U.S. Environmental Protection Agency, Office of Inspector General, RCRA Financial 

Assurance For Closure And Post-Closure, (Washington, D.C.: 2001). 

Uncertainties Exist about 

the Adequacy of Financial 

Assurance Requirements 

in Other Programs 
Page 21 GAO-03-761 Deep Injection Wells 

reviewing financial assurance statements often rely on subjective 

judgment and are unaware of automated information available to assist in 

their reviews. This situation prompted the OIG to recommend that EPA 

help states obtain the automated information for reviewing cost estimates. 

In October 2001, responding to the OIG report, EPA requested public 

comments on the report’s conclusions.12 Specifically, EPA requested 

comments from the states, the insurance industry, and the regulated 

community on the need for additional guidance on insurance used as 

financial assurance for RCRA facilities. In addition, EPA requested 

comments on any additional requirements for insurers in general, such 

as a possible requirement that insurers have a minimum rating from 

commercial rating services. By requiring insurers to have ratings that 

reflect relatively strong financial conditions, EPA expects to reduce the 

risk to the agency or to a state if the insurer fails to provide the funding 

required for closing a facility. According to an EPA official, as of May 2003, 

the agency is continuing to review the public comments received and will 

then decide whether proposed changes to financial assurance 

requirements are needed. The agency has not set a specific time frame for 

proposing changes. 

In July 2002, EPA also formed a UIC work group to review the adequacy of 

financial assurance requirements for Class II oil- and gas-related injection 

wells, but not Class I deep injection wells because of their relatively small 

number. However, the concerns about adequacy are similar. The work 

group was formed because EPA officials recognized that the requirements, 

issued in 1984, might need updating and because regional offices were not 

implementing the requirements consistently. Specifically, the regional 

offices were not using a standard approach for calculating the plugging 

and abandonment costs, which posed problems for operators with 

permitted facilities in more than one EPA region. Officials also observed 

that under present economic conditions it is increasingly difficult for 

owners to meet the financial assurance requirements, but failure to do 

so risks contaminating underground drinking water sources. The work 

group is to 

• identify financial assurance alternatives to those currently in use, 

• develop guidance for providing consistency in calculating plugging and 

abandonment costs, 

 12 66 Fed. Reg. 52192 (Oct. 12, 2001). 
Page 22 GAO-03-761 Deep Injection Wells 

• determine whether states are requiring adequate financial assurance for 

plugging and abandonment of injection wells, and 

• prepare possible modifications of the financial assurance language 

contained in the SDWA. 

The work group expects to complete all of its objectives by April 2004. 

The public participation process EPA currently uses is not as effective 

as it could be in addressing the broad range of community concerns 

about Class I deep injection wells. Because EPA’s current requirements 

call for the agency to notify the public after it drafts the permit, rather 

than when it receives a permit application, we believe the process is 

essentially too late to have a meaningful effect, and that it reduces public 

confidence in the process. In contrast, when states involve the community 

early, they have experienced better community relations—which EPA 

believes is important and wants to achieve—and have avoided costly, 

time-consuming delays. 

The ultimate test of whether financial assurances are adequate is an 

owner’s bankruptcy. If an owner declares bankruptcy and the financial 

assurances are found to be inadequate, drinking water sources may be at 

risk and the public may be required to bear the cost of closing a well. 

Consequently, any uncertainties about the adequacy of financial 

assurances need to be minimized. Both the potential burden to the 

taxpayer if adequate financial resources are not available and the potential 

problems pointed out by the OIG and by EPA’s own working group call for 

action to review and improve these requirements to determine if 

improvements are necessary. 

Conclusions 
Page 23 GAO-03-761 Deep Injection Wells 

To allow more time for community concerns to be addressed, we 

recommend that the Administrator, EPA, involve communities earlier in 

the permitting process for constructing a well. 

Furthermore, to ensure that requirements are adequate to cover the costs 

of plugging and abandonment of Class I hazardous deep injection wells 

and thereby reducing the public’s financial risk, we recommend that 

the Administrator, EPA, review and, if warranted, strengthen financial 

assurance requirements for Class I hazardous deep injection wells. In so 

doing, the Administrator should 

• consider the applicability of the Office of the Inspector General’s findings 

and recommendations for RCRA financial assurance, and 

• consider the applicability of the results and recommendations of the 

ongoing work group for Class II wells. 

We provided a draft of this report to EPA for its review and comment. EPA 

did not agree with the report’s conclusions and recommendations for 

improving the UIC program and stated that the report contained various 

factual and technical errors. We continue to believe that our report is 

accurate and that our recommendations are sound. We have made some 

changes to clarify our findings. 

EPA raised several principal objections to the report. First, EPA stated 

that our report mischaracterizes its authority under the UIC program and 

the relevant scope of public involvement and comment; to this end it 

suggested that our report and recommendations attribute responsibilities 

to the UIC program beyond the scope of the SDWA. It was not our intent 

to attribute responsibilities to the UIC program beyond the scope of the 

SDWA and we have made clarifications to reflect that some community 

concerns are not within the scope of EPA’s authority. The report clearly 

sets forth the public comment process that EPA follows and explains that 

the agency cannot deny a permit on the basis of community concerns if 

the permit applicant meet all regulatory requirements. While EPA does not 

have authority to address certain nontechnical community concerns under 

the SDWA, we believe that public involvement before the draft 

construction permit is issued would allow more time for the community to 

have its nontechnical concerns addressed at the state or local level. In 

addition, nothing in the SDWA precludes EPA from involving communities 

earlier in the permitting process, before draft construction permits are 

issued. Indeed, involving the community earlier in the process is 

consistent with, and in the spirit of, EPA’s policy stressing the importance 

of early public involvement. 

Recommendations for 

Executive Action 

Agency Comments 
Page 24 GAO-03-761 Deep Injection Wells 

Second, EPA stated that our report mistakenly implies a significant 

deficiency in the financial assurance requirements for deep injection 

wells and that this finding is inconsistent with a long history of success 

of financial assurance provisions for Class I wells. We disagree that the 

financial assurance requirements for deep injection wells have a long 

history of success, and we believe there is sufficient evidence to suggest 

a re-examination of these requirements. Our report describes instances 

in which owners have failed to provide adequate financial resources 

and demonstrates there is a potential burden to the taxpayer if financial 

assurance requirements are not adequate. EPA further states that our 

recommendation to review the financial assurance requirements 

inappropriately relies on experiences from another program (RCRA). 

We have clarified this section of our report to more clearly state that we 

are in fact discussing financial assurance requirements for the RCRA 

program. Nevertheless, we disagree that the lessons learned from the 

RCRA financial assurance requirements are inapplicable to Class I 

Hazardous deep injection wells. In the preamble to the final rule 

promulgating the financial assurance requirements for Class I hazardous 

deep injection wells, EPA stated that it had determined that most of the 

RCRA financial assurance requirements should apply to Class I wells. EPA 

noted that many wells have RCRA surface facilities that already must 

comply with RCRA requirements and that wells are major facilities that 

may require substantial resources to plug properly. We believe that this 

reasoning still applies today, and that it is appropriate for EPA to consider 

corresponding changes to the financial assurance requirements for Class I 

hazardous deep injection wells. EPA further states that our discussion of 

its financial assurance work group is misleading because the group is 

examining an entirely different class of well. Our report acknowledges that 

the EPA working group is examining the requirements for Class II oil and 

gas wells, but we believe that certain aspects of those wells, such as a 

standard method for calculating plugging and abandonment costs, may 

also be applicable to Class I wells. We have clarified our recommendation 

to state more directly that EPA should “consider” the results and 

recommendations from the working group for Class I wells. 

Finally, EPA stated that the report contains factual and technical errors 

that it pointed out during the development of the report. We do not believe 

this assertion is fair or accurate. In accordance with GAO’s normal 

practice, based on oral comments received during our exit conference 

with EPA officials we incorporated changes into the draft report. While 

EPA may disagree with our interpretation of the facts, we are unaware of 

any other instances in which EPA provided factual or technical comments 

that we did not address. EPA’s comments and our detailed responses are 

in appendix III. 
Page 25 GAO-03-761 Deep Injection Wells 

We conducted our review from May 2002 through May 2003 in accordance 

with generally accepted government auditing standards. (See app. II for a 

detailed description of our scope and methodology.) 

As arranged with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after the 

date of this letter. At that time, we will send copies to other appropriate 

congressional committees and the EPA Administrator. We will also make 

copies available to others upon request. In addition, the report will be 

available at no charge on the GAO Web site at http://www.gao.gov/. 

Should you or your staff need further information, please contact me on 

(202) 512-3841. Key contributors to this report are listed in appendix IV. 

Sincerely yours, 

John B. Stephenson 

Director, Natural Resources 

 and Environment 
Appendix I: Chronology of Events for the 

Construction of Deep Injection Wells by the 

Environmental Disposal Systems Company 

Page 26 GAO-03-761 Deep Injection Wells 

Environmental Disposal Systems (EDS) is interested in constructing and 

managing deep injection wells for treating and disposing of hazardous 

wastewater from various industries, including, steel production, food 

processing, automobile manufacturing, and oil and gas production. The 

company initiated the process in 1990 by applying for two Class I deep 

injection well construction permits. As of May 2003, EDS had not yet 

started operating the wells due to a myriad of events that caused delays, 

including relocating the well site, building a storage and treatment facility, 

participating in several public hearings, and facing challenges to EPA’s 

permit decisions filed with EPA’s Environmental Appeals Board and a 

Title VI complaint filed with EPA’s Office of Civil Rights. EDS also needs a 

RCRA operating permit from the state to begin hazardous waste 

operations. EPA officials anticipate approving the no-migration petition in 

mid-2003, and at that time Michigan’s Department of Environmental 

Quality will consider the issuance of the RCRA operating license. The 

following chronology details the significant events that occurred during 

this lengthy process: 

• 1990—EDS applied to EPA for construction permits for two Class I deep 

injection wells in Romulus, Michigan, which is located near the Detroit 

Metropolitan Airport. City council members supported the wells’ 

construction, adopted a resolution welcoming EDS and, under an 

agreement with EDS, planned to receive around $1 million in royalties 

from EDS once the wells began operating. 

• 1991—In August 1991, the Romulus City Council passed a resolution 

rescinding its earlier welcoming resolution to EDS. After obtaining 

relatively few public comments on the draft construction permits, EPA 

issued a final construction permit in October. 

• 1993—EDS had almost completed the construction of one well when 

significant public outcry developed because of the well’s location within 

the city. Concerned members of the community were represented by an 

environmental group called Romulus Environmentalists Care About 

People (RECAP). As a result of this concern, the city of Romulus filed a 

lawsuit against EDS claiming that the wells were in an area that was not 

properly zoned for business activity. The city of Romulus won a 

preliminary injunction prohibiting any further activity by EDS and 

staying any further court proceedings until the city had exhausted its 

administrative remedies. Members of RECAP were elected to the 

Romulus City Council. The well that was under construction has since 

been plugged. 

• 1995—The local zoning board determined that the proposed well did 

not fall within acceptable uses for the district in which it was to be 

constructed. The board denied EDS’s request for a variance. 

Appendix I: Chronology of Events for the 

Construction of Deep Injection Wells by the 

Environmental Disposal Systems Company 
Appendix I: Chronology of Events for the 

Construction of Deep Injection Wells by the 

Environmental Disposal Systems Company 

Page 27 GAO-03-761 Deep Injection Wells 

• 1996—The Wayne County Circuit Court affirmed both of the local zoning 

board’s decisions. The state of Michigan passed a law requiring that any 

company accepting commercial hazardous waste for disposal in an 

injection well have treatment and storage facilities on site that have been 

permitted by the Michigan Department of Environmental Quality (MDEQ). 

Under the new law, EDS would need a storage and treatment facility 

construction permit from Michigan’s Department of Environmental 

Quality (MDEQ) if it planned to construct and operate wells in Michigan. 

Also in 1996, because EDS was still interested in establishing its deep 

injection well business, EDS purchased additional land in Romulus near 

the Detroit Metropolitan Airport. In May, EDS applied to EPA for 

construction permits for two injection wells. 

• 1997—EPA issued draft construction permits in August and accepted 

public comments from September through October. 

• 1998—In March, after responding to a significant number of public 

comments on the draft construction permits, EPA issued permits 

for constructing the two wells. Members of the community raised 

environmental justice concerns, and two citizens filed appeals with EPA’s 

Environmental Appeals Board raising a number of concerns about the 

wells, including environmental justice concerns. The board denied review. 

• 1999—EDS submitted its permit application to the state for the planned 

waste treatment and storage facilities for the wells. MDEQ officials found 

the application technically complete and arranged to obtain public 

comments on the draft permit. MDEQ referred the permit application to a 

site review board---a 10-member board charged with investigating and 

deliberating on the impact of the proposed facility on a local community. 

The Site Review Board held numerous open meetings and public hearings, 

receiving oral and written comments on many issues from local 

community officials, the public, EDS, and MDEQ. In March 2000, the board 

voted to recommend that the MDEQ deny the construction permit for 

several reasons, including an increase in traffic volumes, and the lack of 

need for the facility. The board did not find any fault with the technical 

aspects of the facility’s design or operation. 

• 2000—During the Site Review Board’s deliberations, it was disclosed that 

the proposed storage and treatment facilities and wells were located in a 

protected wetlands area. EDS applied for a wetlands construction permit 

during the site review board process. The permit was issued by the MDEQ 

in June. The wetlands permit was challenged by the cities of Romulus and 

Taylor in a contested case hearing with MDEQ that was subsequently 

dropped. 

• 2001—After determining that the Site Review Board did not provide a 

defensible basis for denial, the MDEQ issued a construction permit for the 

treatment and storage facility associated with the injection wells. The 

permit contained special conditions requiring EDS to mitigate the 
Appendix I: Chronology of Events for the 

Construction of Deep Injection Wells by the 

Environmental Disposal Systems Company 

Page 28 GAO-03-761 Deep Injection Wells 

legitimate concerns raised by the Site Review Board in its 

recommendation for denial, including limiting the traffic volume and 

adding an emergency access road. The cities of Romulus and Taylor and 

Wayne County appealed the permit decision to the Wayne County Circuit 

Court, arguing that the MDEQ should have followed the board’s 

recommendation, that the facility is not needed, and that the facility 

should not be allowed in a wetland. The circuit court affirmed the MDEQ 

decision. The case is currently under review by the Michigan Court of 

Appeals, and as of May 2003 no decision has been issued. 

• 2002—A citizen filed a Title VI complaint with EPA’s Office of Civil Rights 

raising a number of issues, including the fact that the community was 

disproportionately exposed to pollution and other environmental dangers. 

EPA’s Office of Civil Rights investigated the complaint but did not find any 

violations of Title VI. 

• 2003—In January and April public hearings were held on the EDS nomigration petition. Obtaining approval of this petition is one of the final 

steps before operations begin. 
Appendix II: Scope and Methodology 

Page 29 GAO-03-761 Deep Injection Wells 

To determine the extent that EPA and states address community concerns 

in issuing permits for deep injection wells, we obtained information on the 

criteria and processes from agency officials in the Office of Water, UIC 

program, located in Washington, D.C., and from regional program officials 

located in Chicago, Illinois, and in Dallas, Texas. We obtained information 

on the criteria and processes from state program officials in the states 

that have commercial Class I deep injection wells currently operating or 

under construction (Louisiana, Michigan, Ohio, and Texas). Three of the 

states—Louisiana, Ohio, and Texas—have regulatory authority (primacy) 

for implementing the UIC programs in their states. In addition, we 

identified and reviewed the applicable federal and state regulations and 

other guidance that describe the criteria and processes for public notice 

and comment. Because owners of commercial Class I wells may have to 

obtain RCRA permits to construct and operate treatment and storage 

facilities associated with the operation of the wells, we discussed these 

requirements with the EPA and state officials and obtained supporting 

documentation describing RCRA requirements. To further understand the 

process for addressing community concerns, we obtained and analyzed 

information on how the process worked for individual wells that were 

approved for operation and for two wells under construction in the state 

of Michigan. We also obtained and reviewed reports published by EPA 

and NAPA that address the importance of involving citizens in the 

permitting process. 

In determining the extent that environmental justice issues are considered 

during the construction permit process, we reviewed the executive order 

on environmental justice issued in 1994 and Title VI of the Civil Rights Act 

of 1964. We obtained information from EPA officials in the Office of 

Environmental Justice and the Office of Civil Rights to determine how 

EPA has implemented the executive order and the status of implementing 

the environmental justice policy issued by the EPA’s Administrator. 

We obtained and reviewed several reports prepared for the Office of 

Environmental Justice that addressed how environmental justice could be 

incorporated within existing programs, including permitting decisions. In 

addition, we obtained and analyzed information on the number and status 

of environmental justice appeals and Title VI complaints filed with the 

agency, including those involving commercial Class I wells. We also 

analyzed recent court decisions that impact the basis for determining 

whether discrimination has occurred under Title VI. We interviewed 

officials from EPA’s Office of Water and regional UIC offices, as well as 

from the four states with commercial Class I deep injection wells in 

operation or under construction to determine how they have incorporated 

environmental justice practices into their permitting process. We also 

Appendix II: Scope and Methodology 
Appendix II: Scope and Methodology 

Page 30 GAO-03-761 Deep Injection Wells 

verified with the officials the number of environmental justice appeals or 

Title VI complaints involving deep injection wells. 

To determine the adequacy of financial assurances for providing funds 

to properly shut down Class I wells if owners go bankrupt, we reviewed 

federal and state regulations to determine the financial assurance 

requirements. We obtained information on how financial assurance 

regulations are implemented from EPA and state program officials and 

reviewed documentation for Class I wells currently operating, as well as 

for wells with owners in bankruptcy, to determine if the owners had 

provided sufficient financial assurances. We also discussed with EPA 

officials the efforts of an ongoing agency work group that is assessing the 

adequacy of financial assurance requirements for injection wells and 

reviewed documentation on the issues the group is addressing. Because 

the UIC financial assurance requirements were based on RCRA financial 

requirements, we obtained information on recent reviews and proposed 

changes to the RCRA financial assurance requirements. Specifically, we 

obtained and reviewed an EPA Office of Inspector General report on the 

adequacy of RCRA financial assurance requirements and proposed agency 

changes to the requirements. 

We conducted our work from May 2002 through May 2003 in accordance 

with generally accepted government auditing standards. 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 31 GAO-03-761 Deep Injection Wells 

Appendix III: Comments from the 

Environmental Protection Agency 

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix. 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 32 GAO-03-761 Deep Injection Wells 

See comment 1. 

See comment 2. 

See comment 3. 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 33 GAO-03-761 Deep Injection Wells 

See comment 4. 

See comment 5. 

See comment 6. 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 34 GAO-03-761 Deep Injection Wells 

1. We agree that EPA’s UIC regulations establish procedures for 

public involvement through public comment and hearings during 

the permitting activities for Class I hazardous injection wells. We 

have made changes to our report to further clarify EPA’s authority 

and to explain that the agency does not have the authority to 

address all community concerns. However, we believe that earlier 

public involvement would allow communities a greater opportunity 

to contact appropriate state and local officials regarding those 

concerns not within EPA’s authority. No provisions in the SDWA 

preclude EPA from involving communities earlier in the permitting 

process, before draft construction permits are prepared. Involving 

the community earlier is consistent with, and in the spirit of, EPA’s 

policy stressing the importance of early public involvement. 

2. It is not our intent to imply that the UIC program has authority and 

responsibility for siting hazardous waste treatment and storage 

facilities. Our report clearly states that these facilities are covered 

under RCRA. We also did not intend to suggest that the UIC 

program provide additional opportunities to address citizen 

concerns in Michigan. Our report describes the opportunities 

provided for public comment in Michigan, but it does not conclude 

that additional opportunities should have been provided. It should 

be noted, however, that EPA Region V program officials did 

provide additional opportunities to address citizen concerns by 

conducting a second hearing on the no-migration petition for the 

well site in Romulus, Michigan. 

3. We disagree with EPA that our characterization of the financial 

assurance requirements is problematic and that the financial 

assurance provisions for Class I wells have a long history of 

success. We believe there is sufficient evidence to suggest a 

reexamination of the financial assurance requirements. Our report 

describes instances in which owners filed for bankruptcy and did 

not have sufficient financial resources to close wells. While these 

instances may be limited, they demonstrate there is a potential 

burden to taxpayers if financial assurance requirements are 

not adequate. 

4. We do not agree that the discussion of problems with RCRA 

financial assurance requirements is inadequate support for our 

recommendation to examine UIC financial assurance 

requirements. The UIC regulations were based on the RCRA 

regulations and, with few exceptions, are almost identical. 

Potential deficiencies with the RCRA requirements would also 

apply to the UIC program. 

5. We disagree with EPA’s statement that our discussion of the 

financial assurance work group is misleading because the group is 

GAO’s Comments 
Appendix III: Comments from the 

Environmental Protection Agency 

Page 35 GAO-03-761 Deep Injection Wells 

examining the requirements for a different class of well. Our report 

acknowledges that the working group is examining the 

requirements for Class II oil and gas wells, but it may develop 

information that is applicable to Class I injection wells. We have 

clarified our recommendation to state more directly that EPA 

should consider the group’s results and recommendations for Class 

I wells. 

6. We disagree that on several occasions EPA has pointed out factual 

errors during the development of our report that we did not 

address. In accordance with our normal practice, we made changes 

to the draft report based on comments received on a statement of 

facts provided during our final meeting with EPA. The agency also 

provided technical comments on the draft report. While EPA may 

disagree with our interpretation of the facts, we are unaware of any 

factual or technical comments that EPA provided and that we did 

not address. 
Appendix IV: GAO Contacts and Staff 

Acknowledgments 

Page 36 GAO-03-761 Deep Injection Wells 

John B. Stephenson, (202) 512-3841 

John Wanska, (312) 220-7628 

In addition to the individuals named above, Mary Nugent and Kimberly 

Clark made key contributions to the report. Important contributions were 

also made by Carol Shulman and Amy Webbink. 

Appendix IV: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 

Acknowledgments 

(360225) 
The General Accounting Office, the audit, evaluation and investigative arm of 

Congress, exists to support Congress in meeting its constitutional responsibilities 

and to help improve the performance and accountability of the federal 

government for the American people. GAO examines the use of public funds; 

evaluates federal programs and policies; and provides analyses, 

recommendations, and other assistance to help Congress make informed 

oversight, policy, and funding decisions. GAO’s commitment to good government 

is reflected in its core values of accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost is 

through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and fulltext files of current reports and testimony and an expanding archive of older 

products. The Web site features a search engine to help you locate documents 

using key words and phrases. You can print these documents in their entirety, 

including charts and other graphics. 

Each day, GAO issues a list of newly released reports, testimony, and 

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site 

daily. The list contains links to the full-text document files. To have GAO e-mail 

this list to you every afternoon, go to www.gao.gov and select “Subscribe to daily 

E-mail alert for newly released products” under the GAO Reports heading. 

The first copy of each printed report is free. Additional copies are $2 each. A 

check or money order should be made out to the Superintendent of Documents. 

GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a 

single address are discounted 25 percent. Orders should be sent to: 

U.S. General Accounting Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm 

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800 

U.S. General Accounting Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

GAO’s Mission 

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Mail or Phone 

To Report Fraud, 

Waste, and Abuse in 

Federal Programs 

Public Affairs