Drinking Water: EPA Needs to Collect Information and Consistently Conduct Activities to Protect Underground Sources of Drinking Water
Released: 2016-03-28T00:00:00

Letter

Background

This section presents information on roles and responsibilities of EPA and states in the UIC class II program, information on UIC class II inspection and enforcement processes, information collected from state and EPA- managed programs, and activities to oversee state and EPA-managed programs.

EPA and State Roles and Responsibilities for Class II UIC Programs

The UIC class II program is overseen by EPA headquarters and managed by states or EPA regions, depending on whether the state has received primacy. States can obtain primacy in one of two ways. Under section 1422 of the Safe Drinking Water Act, a state can adopt and implement a program that meets specific requirements established under EPA regulations and conduct reporting as EPA requires. Alternatively, under section 1425 of the act, a state can seek approval to manage its own program by demonstrating to EPA that the program is effective in preventing the contamination of underground sources of drinking water. Both types of program must meet four key requirements in the act: (1) they must prohibit unauthorized injections; (2) authorized injections must not endanger drinking water sources; (3) they must include inspection, monitoring, recordkeeping, and reporting requirements; and (4) they must apply their provisions to federal agencies and federal land. However, states approved by this alternative process do not need to address all of the specific requirements, such as those related to well construction and testing, established in EPA regulations.

Program oversight by EPA headquarters includes issuing regulations and guidance, assessing implementation of regulations and guidance by state and EPA-managed programs, and gathering information and reporting it. EPA regions both oversee state programs that have primacy and manage programs in states that do not have primacy, and states with primacy manage their own programs. Management includes permitting wells; inspecting wells; enforcing regulations and implementing guidance; reporting information on well inventories, inspections, violations, and enforcement actions; and investigating instances of potential contamination of aquifers.

EPA issued a series of guidance documents describing the program and various responsibilities of states and EPA regions. To oversee state and EPA-managed programs and to ensure that they are protecting underground sources of drinking water, EPA collects certain information and conducts certain activities, as described in several guidance documents. Specifically:

Memorandum of agreement for the UIC program. Issued in 1981, this guidance directs EPA regions to enter into a memorandum of agreement (MOA) with each primacy state that includes the terms, conditions, or agreements between the state and EPA regarding the administration and enforcement of state program requirements, including state inspection, enforcement, and reporting requirements.

Reporting Requirements—Underground Injection Control Program (Program Reporting). Issued in 1986, this guidance explains and clarifies the information state and EPA-managed programs are to report.

Underground Injection Control Program Compliance Strategy for Primacy and Direct Implementation Jurisdictions (Strategy). Issued in 1987, this document provides guidance to state and EPA- managed programs on well inspections and enforcement of program requirements, including information that should be reported on inspections and enforcement actions.

Interim Guidance for Overview of the Underground Injection Control Program (Program Oversight). Issued in 1983, this document provides guidance to EPA regions and headquarters on activities that they should take to effectively oversee state and EPA- managed programs, respectively.

Guidance for Review and Approval of State Underground Injection Control Programs and Revisions to Approved State Programs. Issued in 1984 to provide guidance for EPA regions on the review and approval of changes to state program requirements, this document includes guidance for EPA regions and headquarters on how to review and approve requests to exempt aquifers and how decisions on aquifer exemptions should be documented and reported.

Enhancing Coordination and Communication with States on Review and Approval of Aquifer Exemption Requests Under the Safe Drinking Water Act (Aquifer Exemption Coordination). Issued in 2014, this document provides guidance on how to improve coordination and recordkeeping on aquifer exemption decisions among states, EPA regions, and EPA headquarters.

According to EPA’s 1981 MOA guidance, EPA regions should develop an MOA with each primacy state to outline areas of the applicable regulations that are relevant to the administration and enforcement of the state’s program requirements, including clarifying

EPA and state roles and responsibilities and the process for sharing information between EPA and the state; state responsibilities for expeditiously drafting, circulating, issuing, modifying, reissuing, and terminating permits, consistent with applicable regulations; state responsibilities to operate a timely and effective system to track well operator compliance with program requirements, including inspection procedures; state responsibilities for taking timely and appropriate enforcement action against persons in violation of program requirements, including use of effective enforcement tools such as penalties; and state reporting requirements, including the type and frequency of data to be reported, and EPA’s annual evaluation of the state program.

According to EPA’s 1983 Program Oversight guidance, EPA-managed programs are also responsible for establishing systems to track well operator compliance; taking timely and appropriate action to resolve violations, including use of effective enforcement tools; and reporting data on the program.

Information on the UIC Class II Program Inspection and Enforcement Process

Injection well inspections, to discover and deter violations, and enforcement are identified in EPA’s 1987 Strategy as tools to achieve operator compliance with applicable requirements. According to the Strategy, each state and EPA-managed program should have a strategy for identifying how many wells it should inspect and the types of inspections to be conducted at these wells. The types of inspections that state and EPA inspectors conduct can vary from routine inspections that ensure that well sites are being properly maintained, to inspections that include observing pressure tests to determine if wells are structurally sound, known as mechanical integrity tests (see app. IV for information on types of inspections).

The enforcement process begins once an inspector identifies a violation. Violations of UIC program requirements can involve a number of actions on the part of well operators, such as injecting fluids without authorization, injecting fluids at pressures above those permitted, or failing to show that a well holds pressure during testing (mechanical integrity testing). According to EPA’s Strategy, a state or EPA-managed program can take various enforcement actions when it finds wells that are violating program requirements. When inspectors identify wells that are violating applicable program requirements, they typically first notify the well operators of the violations. According to EPA’s Strategy, these notifications can be done through discussion or in writing. For more serious violations, state and EPA-managed programs can take stronger enforcement actions.

According to EPA’s Strategy, state and EPA-managed programs are to escalate their enforcement response as needed to resolve violations, although the actions taken by a program may depend on a number of factors, including the severity of the violation and its potential to contaminate drinking water sources. Actions to gain compliance with program requirements can include sanctions, such as shutting down a well, assessing administrative penalties, or referring the matter for civil or criminal adjudication (see app. V for details of the enforcement process).

Information Collected from State and EPA-Managed Programs

EPA’s regulations and 1986 Program Reporting guidance direct state and EPA-managed programs to report specific information on class II wells to assist with program oversight. The Program Reporting guidance directs these programs to report data on inspections, violations, and enforcement actions. Specifically, the agency collects information from programs on different 7520 forms submitted by state and EPA-managed programs. According to the Program Reporting guidance, information on inspections conducted by state and EPA-managed programs is collected on 7520-3 forms and includes information on the total number of different types of inspections. According to this guidance, EPA also collects information on the number of significant violations and enforcement actions conducted by state and EPA-managed programs on 7520-4 forms. Under the Safe Drinking Water Act, EPA is required to notify primacy states of any violations of state UIC programs it discovers and, if a state does not take appropriate enforcement action within 30 days, issue an order or initiate legal action itself. According to EPA guidance, the 7520-4 forms collect information on individual significant violations that threaten underground sources of drinking water to help EPA determine whether it should intervene to enforce state or EPA requirements.

In June 2014, we found that the data on violations and contamination of underground sources of drinking water that EPA collects from its 7520 forms were not sufficiently complete or comparable to allow EPA to aggregate state information and report on the status of the class II program nationally. We also found that EPA was developing a national UIC database to collect comparable, well-specific data from states, but that, as of January 2014, the database was not fully populated. We recommended in our June 2014 report that to support nationwide reporting goals until the national UIC database is complete, EPA develop and implement a protocol for states and regions to enter 7520 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. 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. In response to our recommendation, according to EPA officials, the agency has proposed updated 7520 instructions, intended to encourage consistent reporting by states and regions. The updated instructions have not been finalized and, according to EPA officials, cannot be used for reporting until they are approved by the Office of Management and Budget. EPA has also developed new standard operating procedures that update protocols for EPA regional review of 7520 reports submitted by state programs and headquarters review of 7520 reports submitted by EPA-managed programs.

Activities to Oversee State and EPA-Managed Programs

EPA’s regulations and 1983 Program Oversight guidance direct EPA headquarters and regions to conduct specific activities to ensure that the state and EPA-managed programs are protecting underground sources of drinking water. These activities include conducting annual on-site evaluations of state and EPA-managed programs. In addition, EPA regulations require the agency to incorporate state program requirements, and any changes to them, into federal regulations to be able to enforce them if necessary, and to approve aquifers for exemption from protection under the act, as appropriate, to allow injection of fluids.

According to EPA’s Program Oversight guidance, EPA regional officials are expected to conduct annual on-site evaluations of state programs. These evaluations involve, among other things, an on-site meeting with state UIC officials to discuss program performance and can include a review of inspection and enforcement files, both of which are intended to help determine whether the state program is effective at protecting underground sources of drinking water. We found in June 2014, however, that EPA was not consistently carrying out annual on-site evaluations of state class II programs. According to EPA officials at the time, limited resources have prevented EPA regions and headquarters from consistently conducting on-site reviews, and some of the oversight activities identified in the Program Oversight guidance may no longer be needed. We recommended, and EPA agreed, that EPA should 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.

According to EPA regulations, EPA is also required to incorporate state program requirements and changes to those requirements into federal regulations. Under its regulations, EPA can only enforce state program requirements that it has incorporated into federal regulations. In June 2014, we found that EPA was not consistently incorporating state program requirements, or changes to state program requirements, into federal regulations, and as a result, EPA had not been able to enforce at least one state’s program requirements. To ensure that EPA maintains enforcement authority of state program requirements, we recommended that EPA 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. EPA disagreed with this recommendation and said that in lieu of a single rulemaking, it was conducting an ongoing process of individual rulemakings to approve and codify state program revisions, as discussed later in the report.

According to EPA regulations and EPA’s 2014 Aquifer Exemption Coordination memorandum, EPA is responsible for the final review and approval of all aquifer exemption requests. Well operators seeking an aquifer exemption to conduct injection activities in a state with primacy typically submit the exemption application to state program officials along with supporting information. State program officials are to review the application and, if the information submitted supports an exemption, submit a request to approve the exemption to the appropriate EPA regional office. Applicants in states with EPA-managed programs are to submit applications directly to the EPA region managing the program, and the region approves or disapproves the exemption applications. EPA regions are responsible for maintaining documentation supporting the decision to exempt an aquifer and a record of all exempted aquifers. According to the Aquifer Exemption Coordination memorandum, maintaining the decision memos and records underlying EPA’s approval or disapproval of exemption applications and standardized, readily available data on all existing aquifer exemptions is important to supporting informed decisions about uses for drinking water.

Under the act, if EPA determines that a state program is no longer protecting underground sources of drinking water, the agency can revoke a state’s primacy by rule. According to EPA officials, before such a point is reached, the agency can work with the state to return the state’s program to compliance with EPA and state UIC class II regulations. For example, in July 2014, after California identified instances in which it had authorized injection into nonexempt aquifers, EPA determined that the state’s program was not in compliance with state and EPA requirements. In a series of letters from July 2014 through July 2015, EPA and the state’s Division of Oil, Gas, and Geothermal Resources reached agreement on a plan to improve California’s program. (See app. II for the details of the status of California’s program.)

EPA Has Not Collected Information, or Consistently Conducted Activities, Necessary to Assess If Programs Are Protecting Underground Sources of Drinking Water

EPA has not collected inspection and enforcement information, or consistently conducted specific oversight activities, to assess whether state and EPA-managed programs are protecting underground sources of drinking water. EPA’s 1981 MOA guidance directs states and EPA regions to include provisions in memorandums with states to ensure that regional offices can collect the information and conduct the activities necessary for oversight, including (1) collecting information on inspections and enforcement actions and (2) conducting activities to incorporate approved changes to state program regulations into federal regulations, conducting annual on-site program evaluations, and reviewing and approving aquifer exemption applications. EPA’s Program Oversight guidance also states that EPA headquarters should collect the same information and conduct the same activities to oversee programs managed by EPA regions where applicable.

EPA Has Not Collected Inspection and Enforcement Information to Assess Whether Programs Are Protecting Underground Sources of Drinking Water

EPA has not collected inspection and enforcement information that can be used to assess whether state and EPA-managed programs are effectively protecting underground sources of drinking water.

Inspections

EPA collects information from state and EPA-managed programs on the types of inspections they conduct, but the information EPA collects is at a summary level and not specific enough to assess whether states are meeting inspection goals established to protect underground sources of drinking water. In the 1987 Strategy, EPA provides guidance on the types of UIC inspections that state and EPA-managed programs should conduct and specifies minimum annual inspection goals (i.e., frequency of each inspection type) for state and EPA-managed programs. For example, (1) 100 percent of wells associated with emergency responses and public complaints should be inspected annually, (2) 25 percent of mechanical integrity tests conducted annually should be witnessed by an inspector, and (3) routine inspections to verify that wells are operating in compliance with applicable requirements should be conducted at least once every 5 years. According to the Strategy, state and EPA-managed programs should set goals for different types of inspections based on factors such as available resources and program priorities (see app. IV for additional information on EPA guidance on inspections and selected state inspection programs).

EPA’s 1987 Program Reporting guidance states that the inspection data that EPA collects from state and EPA-managed programs should be used to track each program’s progress toward meeting its inspection goals, which are to be based on EPA’s minimum annual inspection goals. EPA’s minimum annual inspection goals are specified at the well level (e.g., 100 percent of wells associated with emergency responses). However, state and EPA-managed programs report annual summary data on the number of inspections conducted for each inspection type by state and not data on which wells were inspected, when they were inspected, the types of inspection conducted at each well, and the results of those inspections. For example, the summary data EPA collects on routine inspections, as shown in table 1, could not be used to determine if a state or EPA-managed program had conducted a routine inspection of each of its class II wells over a 5-year period or multiple inspections of individual wells. For the seven state and EPA-managed programs we reviewed, annual data reported to EPA included the total number of wells inspected and types of inspections conducted statewide, as shown in table 1 for fiscal year 2013.

Because the inspection data that EPA has collected from states have not been well-specific and therefore have not included the total number of inspections by type that could have been done, EPA’s ability to track each state program’s progress toward meeting its inspection goals is limited. Under federal standards for internal control, managers need to compare actual performance to planned or expected results and analyze significant differences. EPA officials told us that they recognize that they cannot verify progress toward meeting state program inspection goals without well-specific data on inspections and have made efforts to collect well- specific data through voluntary programs, but do not require its collection. Starting in 2007, EPA had been working to develop a voluntary national UIC database to provide well-specific data from state and EPA-managed programs; however, according to EPA officials in December 2015, Montana was the only participating state program, and the agency plans to complete the national database with Montana and the seven EPA- managed programs currently participating. EPA officials said that they do not have well-specific information because they do not require it and most state programs have not provided it voluntarily through the national UIC database. However, EPA’s MOA guidance says that EPA may request and should be given access to all files necessary for evaluating the administration of the state program. Until EPA requires and collects well-specific data on inspections from state and EPA-managed programs, including the types of inspections conducted at each well, when the inspections were conducted, and the results of the inspections, the agency cannot assess whether the programs are meeting their annual inspection goals to protect underground sources of drinking water. EPA officials said that EPA will also have access to another voluntary database being compiled by the Department of Energy that contains additional data from state programs on injection wells. According to the officials, however, the department’s database does not provide well- specific information on inspections either.

Enforcement

EPA has not collected consistent or complete enforcement information that can be used to assess whether state and EPA-managed programs are effectively protecting underground sources of drinking water. To carry out the Safe Drinking Water Act’s provision that EPA take action on violations that have not been enforced, EPA’s 1987 Strategy directs state and EPA-managed programs to take timely and appropriate enforcement action against significant violations of state or EPA requirements. The Strategy defines a timely and appropriate response taken by a state or EPA-managed program as resolving the violation or initiating a formal enforcement action within 90 days of the identification of the violation. To help ensure that violations are addressed in a timely and appropriate way, EPA’s 1987 Strategy and 1986 Program Reporting guidance call for state and EPA-managed programs to report information to EPA on significant violations that were not resolved within 90 days of discovery and also did not have a formal enforcement action taken against the well operator. The act requires EPA to enforce state program requirements within 30 days after the agency becomes aware that the state has not taken appropriate enforcement action.

However, our review of data collected by EPA on significant violations demonstrated that EPA’s ability to take action may be limited by incomplete and inconsistent enforcement data reported by state and EPA-managed programs. Specifically, our analysis of 93 significant violations for fiscal years 2008 thru 2013 for the seven state and EPA- managed programs we reviewed found that there were 29 that were not resolved within 90 days of operator notification and for which formal action had not been taken within that time. According to the Strategy, each of these violations should have been reported on the 7520-4 form by the state to the appropriate EPA region or by the EPA-managed program to EPA headquarters. However, our analysis of the 7520-4 form data showed that state and EPA-managed programs reported 7 of these 29 violations to the agency. Table 2 shows the results of our analysis of the 7520-4 forms (see app. V for additional information on our analysis and app. VI for the full list of violations and enforcement actions taken).

According to EPA headquarters, regional, and state officials we interviewed, state and EPA-managed programs used different interpretations of the Strategy and Program Reporting guidance to fill out the forms, resulting in incomplete, and potentially inconsistent, information across the programs. EPA headquarters officials told us that all significant violations that were not resolved within 90 days from the date the violation was discovered should be reported on the 7520-4 form quarterly until they are resolved, regardless of whether the program had already initiated enforcement action against the well operator. However, EPA’s Strategy and Program Reporting guidance call for programs to report, on the 7520-4 form, information on significant violations that (1) were not resolved within 90 days from the date the violation was discovered and (2) had not had a formal enforcement action taken against the well operator. In addition, according to the Program Reporting guidance, significant violations reported on the 7520-4 form should continue to be reported quarterly on subsequent 7420-4 forms until they are resolved. State and EPA officials we interviewed provided different interpretations of what they were to put on the 7520-4 form, which would result in some programs reporting significant violations and some not. Consistent with EPA’s Strategy and Program Reporting guidance, officials we interviewed from Ohio and EPA Region 4 (Kentucky) told us that they only report significant violations on the 7520-4 form that were not resolved within 90 days and for which a formal enforcement action had not been taken against the well operator. However, officials we interviewed from North Dakota, Oklahoma, Texas, and EPA Region 3 (Pennsylvania), told us that they report all unresolved significant violations regardless of whether they have taken a formal enforcement action. According to the officials, the information that ultimately gets reported on the 7520-4 form is based on a quarterly calculation of how long the well has been out of compliance; however, according to the officials, EPA only requires state and EPA-managed programs to submit 7520-4 forms to EPA semiannually. In addition, officials in North Dakota and Oklahoma told us that they only report significant violations once and not in subsequent quarters, even if the violations have not been resolved.

EPA headquarters officials told us they are aware that the information reported by states and EPA regions is not complete or consistent, but they have not clarified, in guidance or otherwise, what information should be reported. EPA headquarters officials told us that regions are responsible for ensuring that state and EPA-managed programs take timely and appropriate enforcement actions, and that regions generally assess the programs’ enforcement response on a case-by-case basis through informal communications with state program staff. The information received on the 7520-4 form, however, is the only documented information reported to EPA regions and headquarters on individual violations that may not have been enforced in a timely or appropriate manner. Until it clarifies guidance on what data should be reported on the 7520-4 form, EPA does not have reasonable assurance that state and EPA-managed programs report complete and consistent information on unresolved significant violations or that it has the information it needs to assess whether it must take enforcement action, as directed under the act, to protect underground sources of drinking water.

EPA Has Not Consistently Conducted Oversight Activities Necessary to Assess Whether Programs Are Protecting Underground Sources of Drinking Water

EPA has not consistently conducted three oversight activities necessary to assess whether state and EPA-managed programs are protecting underground sources of drinking water, as required by regulations and specified in guidance: (1) incorporation of state program requirements, or changes to state program requirements, into federal regulations; (2) the final review and recordkeeping for all aquifer exemption applications it approves; and (3) annual on-site program evaluations.

State Program Requirements

We found in June 2014 that EPA had not consistently incorporated state program requirements, or changes to state program requirements, into federal regulations, as required by agency regulations. 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. Where it has not done so, EPA is not able to enforce state program requirements if needed. In June 2014, we found that EPA had not yet incorporated changes to some state program requirements into federal regulations and therefore did not have the ability to enforce these state program requirements if necessary. We concluded that until it conducts a rulemaking to incorporate the backlog of state program requirements and changes to state program requirements that have been approved, EPA would not be able to enforce some state program requirements, hindering its ability to protect underground sources of drinking water. To ensure that EPA maintained enforcement authority of state program requirements, we recommended that EPA conduct a rulemaking to incorporate state program requirements, and changes to state program requirements, into federal regulations. We also recommended that at the same time, EPA evaluate and consider alternative processes to more efficiently incorporate future changes to state program requirements into federal regulations without a rulemaking.

In comments responding to our June 2014 report, EPA disagreed with our recommendation to conduct a rulemaking and said that a single rulemaking would be impractical because the process would take many years to complete and would still not ensure that all program changes were incorporated into federal regulations, as other states could make changes to their programs during this time. In lieu of a single rulemaking, EPA said in its comments that it was conducting an ongoing process of individual rulemakings to approve and codify state program revisions in collaboration with states, EPA regions, and EPA’s Office of Enforcement and Compliance Assurance. However, as stated in our June 2014 report, according to an analysis conducted by EPA 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 conduct a single rulemaking to 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 with states continuing to make changes in the interim, leaving EPA without the ability to enforce state programs to protect underground sources of drinking water if needed. EPA provided no evidence in its comments that individual rulemakings would be any less costly or any more efficient than the approach it assessed in 2010. As of December 2015, EPA has not taken action to incorporate state program requirements, or changes to state program requirements, into federal regulations.

Aquifer Exemptions

EPA is also responsible for the final review, approval, and recordkeeping for all aquifer exemption applications, but the agency does not have the location or supporting documentation necessary to identify the size and location of all aquifers for which it has approved exemptions from protection under the act. According to EPA’s 2014 Aquifer Exemption Coordination guidance, EPA regions need to have complete records documenting support for EPA’s approval or disapproval of exemption applications to inform decision making by state and EPA-managed programs on injection well permits. According to EPA officials, regional offices generally maintain the most comprehensive and up-to-date data on aquifer exemption approvals. Since 2003, EPA has worked to compile comprehensive information on aquifer exemptions, including data on the aquifers’ sizes and locations. In 2011, EPA determined that its headquarters did not have information on all exempted aquifers and requested that EPA regional offices provide information on all aquifers exempted in their respective regions to help compile a centralized database.

According to EPA officials, the agency has compiled a rudimentary database from regional datasets, paper files supporting aquifer exemption decisions, and hard copies of maps specifying the size and location of exempted aquifers. However, EPA officials said that the database of aquifer exemptions does not include complete information on each exemption listed and that EPA does not have a complete inventory of exemptions. In particular, according to EPA officials, the agency is missing information on exemption decisions made when state programs were granted primacy in the 1980s because the supporting documentation is not readily accessible or was damaged while in storage.

If EPA had maintained an updated database on aquifer exemptions, then EPA Region 9 may have had the information it needed to review injection well permits to determine whether injections were being made into exempted aquifers in California. Instead, California discovered that it had authorized injection into nonexempt aquifers. Specifically, EPA requested additional information on aquifer exemptions from California in 2012 as a part of EPA’s review of historical data on aquifer exemptions nationwide. At that time, the state reviewed supporting documentation for the aquifer exemptions and the associated injection wells and determined that it had permitted operators to inject into nonexempt aquifers that the state believed were exempted in the 1980s, when EPA granted primacy to California to manage the class II program.

In July 2014, after identifying water supply wells in the vicinity of some of these injection wells and informing EPA Region 9, California ordered operators of those injection wells to cease injection into certain nonexempt aquifers, and to submit data to California so the threat to underground sources of drinking water and human health could be assessed. In July 2014, as a result of this issue, EPA determined that California’s program was not in compliance with state and EPA requirements and supported California’s plan to review injection wells that were permitted to inject into nonexempt aquifers. As of October 2015, California had identified over 500 wells injecting into 11 nonexempt aquifers with the potential to threaten underground sources of drinking water, and 23 of those wells had been shut-in, or ceased injecting fluids. In November 2015, California shut-in an additional 33 injection wells injecting into nonexempt aquifers. As of October 2015, California officials said that they are continuing to collect information on wells injecting into nonexempt aquifers to determine if additional wells should be shut-in to protect underground sources of drinking water and are working with EPA Region 9 to collect additional information on aquifer exemptions to help complete EPA’s database.

As of December 2015, EPA officials told us that the majority of aquifers in its database of approved exemptions have complete size and location data and that headquarters continues to collect information from the regions and state programs to fill in the remaining data gaps and ensure that the database is complete and accurate. The officials told us that for this reason, it is unlikely that they will discover deficiencies in recordkeeping for approved aquifer exemptions similar to those identified in California. However, while EPA officials believe that they have the majority of the data on aquifer exemptions, the database does not include some historical data on exemption decisions made when state programs were granted primacy in the 1980s. In addition, the database only has aquifer exemption data through 2011 and is missing data on aquifer exemptions approved over the past 4 years. According to EPA officials, the database is a headquarters-based spreadsheet and updates with new approvals on aquifer exemptions will need to be collected from EPA regions and entered manually. The officials also said that EPA will complete the database using 2011 data and only plan to add updated data if sufficient resources are available. Until it has a complete aquifer exemption database and a way to update it periodically, EPA does not have sufficient information on aquifer exemptions to oversee state and EPA-managed programs and assess whether programs are protecting underground sources of drinking water.

Annual On-site Program Evaluations

As we reported in June 2014, EPA has not consistently conducted annual on-site program evaluations, as directed by its 1983 Program Oversight guidance. This guidance directs EPA regions and headquarters to conduct annual on-site program evaluations of state and EPA-managed programs, which it characterizes as a key activity necessary for effective oversight, and to ensure that state and EPA-managed class II programs protect underground sources of drinking water. According to EPA’s Program Oversight guidance, EPA regions should perform at least one on-site evaluation of each state program each year to 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, among other activities. According to the Program Oversight guidance, annual on-site evaluations of state programs should also include a review of permitting and inspection files or activities to assess whether the state program is protecting underground sources of drinking water. In particular, because permitting files should include information on the well location, and the geology and aquifers in the area surrounding the injection well, a review of permitting files should cover this information. EPA headquarters is responsible for conducting similar on-site program evaluations of EPA-managed programs.

In our June 2014 report, regional officials said that on-site program evaluations are valuable for coordinating between federal and state officials to improve program management. According to EPA officials at the time, however, limited resources have prevented regions, and EPA headquarters, from consistently conducting on-site program evaluations. To ensure effective oversight of the class II program, in June 2014, we recommended, and EPA agreed, that EPA 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 they were effective at protecting underground sources of drinking water.

If EPA had conducted oversight activities, such as annual on-site program evaluations, EPA Region 9 may have discovered that California’s class II program did not comply with state and EPA requirements before 2014. In particular, regular on-site program evaluations that included reviews of permitting files may have identified the deficiencies in California’s program. Specifically, reviews of well permitting files, including well location and information on aquifers surrounding the well, may have helped identify injections into nonexempt aquifers when compared to complete records on aquifer exemptions. However, according to EPA Region 9 officials, they have not conducted annual on-site evaluations of California’s program. In 2011, regional officials requested a third-party audit of California’s program, which was the first comprehensive review of California’s program since primacy was granted in 1983. The audit found several program deficiencies, including inadequate inspection and enforcement practices and insufficient staff to adequately manage and implement the program, but Region 9 did not have complete information on approved aquifer exemptions in California and did not conduct a review of permitting files and aquifers in the area surrounding injection wells to identify wells that California had authorized to inject into nonexempt aquifers. According to EPA officials, in response to the recommendation from our June 2014 report for EPA to update its guidance on effective oversight, EPA headquarters and regional officials have held preliminary discussions to determine what oversight activities are necessary to ensure that state and EPA-managed programs are effective at protecting underground sources of drinking water, including on-site evaluations of state and EPA-managed programs.

Concerning why annual on-site reviews had not been consistently conducted, EPA headquarters and regional officials said that they have few resources to oversee state and EPA-managed programs, and regional officials told us that available resources are directed toward the class II programs they manage directly and not oversight of state programs. EPA headquarters officials we interviewed said that they have an effective oversight program and conduct necessary activities with the resources available. The same officials said they do not have the resources, including the workforce, necessary to consistently conduct the oversight activities to help assess whether state and EPA-managed programs are complying with applicable requirements.

According to a key workforce planning principle from our body of work on strategic human capital management, an agency should determine the critical skills and competencies that will be needed to achieve current and future programmatic results, particularly given factors that change the environment within which agencies work, such as budget constraints. Our body of work on strategic human capital management indicates that each agency needs to ask if it has an explicit workforce planning strategy linked to the agency’s strategic and program planning efforts to identify its current and future human capital needs, including the size of the workforce; its deployment across the organization; and the knowledge, skills, and abilities needed for the agency to pursue its shared vision. In November 2015, EPA officials said that the agency had not conducted a comprehensive workforce analysis to identify the resources necessary, including human capital resources, to oversee state and EPA-managed programs, and that the agency had not requested additional resources for oversight. Without conducting such an analysis, EPA will not be able to identify the human capital and other resources it needs to carry out its oversight of state and EPA-managed programs and help ensure that they are effective at protecting underground sources of drinking water.

Conclusions

EPA established the UIC class II program in in the 1980s, with a vigorous role for the agency to oversee state and EPA-managed programs to prevent contamination of underground sources of drinking water. However, the findings in our June 2014 report, our findings on inspection and enforcement information and oversight activities in this report, and the recent decision that California’s program was not complying with state and EPA requirements illustrate that EPA does not have the information, or consistently conduct the oversight activities, needed to assess state and EPA-managed class II programs to help ensure that they protect underground sources of drinking water.

Specifically, the data EPA requires and collects from state and EPA- managed programs do not include well-specific information on inspections conducted by those programs needed to track each program’s progress toward meeting its annual inspection goals, as called for in EPA’s Program Reporting guidance. Until EPA requires and collects well-specific data on inspections from state and EPA-managed programs, including when wells were inspected, the types of inspections conducted at each well, and the results of those inspections, the agency does not have the well-specific information to assess whether the programs are meeting annual inspection goals to protect underground sources of drinking water.

To assess whether state and EPA-managed programs are effectively protecting underground sources of drinking water when permitting fluids to be injected into aquifers, EPA needs complete, updated information on approved aquifer exemptions. Yet EPA does not have a complete, up-to- date database on aquifer exemptions for all state and EPA-managed programs, or a way to keep the database containing information on aquifer exemptions updated. Until it has a complete aquifer exemption database and a way to update it, EPA does not have sufficient information on aquifer exemptions to oversee state and EPA-managed programs and assess whether programs are effectively protecting underground sources of drinking water.

Moreover, under the Safe Drinking Water Act, EPA must enforce state program requirements if they have not been enforced by the state in a timely and appropriate fashion. However, because of inconsistent interpretations of reporting guidance, state and EPA-managed programs report inconsistent and incomplete information on individual significant violations that have not been resolved, and therefore EPA regions and headquarters cannot know about, let alone take enforcement action against, operators committing significant violations. Until it clarifies guidance on what data should be reported on the 7520-4 form, EPA does not have reasonable assurance that state and EPA-managed programs report complete and consistent information on unresolved significant violations or that it has the information needed to assess whether it must take enforcement action, as required under the act, to protect underground sources of drinking water.

Finally, although EPA headquarters officials said they do not have the resources necessary to conduct the oversight activities needed to assess whether state and EPA-managed programs comply with applicable requirements, the agency has not conducted a workforce analysis to identify the resources, including human capital resources, the agency needs to oversee state and EPA-managed programs. Without conducting such an analysis, EPA will not be able to identify the human capital and other resources it needs to oversee state and EPA-managed programs and help ensure that they are effective at protecting underground sources of drinking water.

Recommendations for Executive Action

To help ensure protection of underground drinking water from the injection of wastewater associated with domestic oil and gas production, we recommend that the Administrator of the Environmental Protection Agency take the following four actions:

Require and collect well-specific data on inspections from state and EPA-managed programs, including when the wells were inspected, the types of inspections conducted, and the results of the inspections in order to track progress toward state and EPA-managed annual inspection goals.

Complete the aquifer exemption database and establish a way to update it to provide EPA headquarters and regions with sufficient information on aquifer exemptions to oversee state and EPA- managed programs.

Clarify guidance on what data should be reported on the 7520-4 form to help ensure that the data collected are complete and consistent across state and EPA-managed programs and to provide the information EPA needs to assess whether it must take enforcement actions.

Conduct a workforce analysis to identify the human capital and other resources EPA needs to carry out its oversight of state and EPA- managed programs.

Agency Comments and Our Evaluation

We provided the Administrator of EPA with a draft of this report for review and comment. In written comments provided by EPA (reproduced in app. VII), EPA generally agreed with our analysis and findings on the class II program and described planned actions, but disagreed with some findings and recommended actions, as discussed below. EPA also provided technical comments that we incorporated in the report, as appropriate. In addition, we provided the draft report to the six states whose programs we reviewed. Officials from these states—California, Colorado, North Dakota, Ohio, Oklahoma, and Texas—provided technical comments, which we incorporated as appropriate.

In response to our first recommendation that EPA require and collect well- specific data on inspections from state and EPA-managed programs to track progress toward state and EPA-managed annual inspection goals, EPA stated that the agency’s goal is to obtain high quality data to understand program activities at the well-specific level, but that it didn’t make sense to require the states to submit well-specific data now. EPA said that it is mindful of the need to think carefully about requiring information from states, and it will continue to work with its state partners to improve both the collection and the quality of the data currently required and to expand EPA’s access to additional state data. Specifically, EPA stated that it had taken steps to address the gaps in the summary data collected on 7520 forms identified in GAO’s June 2014 report, including developing standard operating procedures for submission and review of the data forms, and revising instructions to increase consistency in reporting the data to EPA. EPA said that it plans to continue to increase the inventory of well-specific data in the national UIC database including states that were working towards e-reporting status, and that EPA welcomes and encourages further participation. Further, EPA stated that it will continue to work with the Department of Energy and other stakeholders as they develop a database with well- specific state inventory data. We recognize EPA’s efforts to improve the consistency and completeness of summary data collected on the 7520 forms, and to collect additional well-specific data through voluntary programs such as the national UIC database and the Department of Energy’s database, but EPA has made little progress since 2007 collecting well-specific inspections data from state programs voluntarily. As we stated in the report, EPA needs access to well-specific inspections data from all programs to track the progress of state and EPA-managed programs towards meeting their inspection goals. If EPA believes that well-specific data is important, it should require that state and EPA- managed programs report well-specific data on inspections.

In response to our second recommendation that EPA complete the aquifer exemption database and establish a way to update it to provide EPA headquarters and regions with sufficient information on aquifer exemptions to oversee state and EPA-managed programs, EPA disagreed with our assessment that the agency is deficient in its duties to maintain aquifer exemption records, but is taking action to complete the database and to update it. Specifically, EPA stated that the draft report presents incomplete information as to which materials are held at the EPA headquarters and regional levels, and the roles and objectives that EPA headquarters and regions play regarding aquifer exemptions and the use of data. EPA said that our statement that the agency does not have sufficient information to oversee state and EPA-managed programs is incorrect because its regions have the most comprehensive and current data on aquifer exemptions as they conduct the final review of exemption requests and must approve all exemptions. According to EPA, it initiated the effort to collect data from the regional offices to better understand the number, locations, and nature and quality of aquifers exempted by the UIC program and expects to release a public data set by the end of 2016, which will include data current through 2015 with the exception of Region 9’s data for the State of California. EPA stated that it anticipates adding Region 9's aquifer exemption data for California as the region works with the state to clarify the boundaries of the agency's historic approvals and takes action on the state's requests for new exemptions. Further, EPA said it plans to update the data set annually and that the regions will continue to hold the most current data. We commend EPA’s efforts to develop an up-to-date data set of aquifer exemptions and note that the updated information is important for overseeing whether the regions have current information on aquifer exemptions. As shown in the situation in Region 9 with California, at least one region did not have current or comprehensive information on aquifer exemptions. Further, EPA has been working since 2003 to compile comprehensive information on aquifer exemptions from regions, and, according to EPA officials, does not have a complete inventory of exemptions. In light of the situation in Region 9, until EPA has a complete aquifer exemption database and a way to update it, we continue to believe that it does not have sufficient information on aquifer exemptions to oversee state and EPA-managed programs and assess whether programs are protecting underground sources of drinking water.

In response to our third recommendation that EPA clarify guidance on what data should be reported on the 7520-4 form to help ensure that the data collected are complete and consistent across state and EPA- managed programs and to provide the information EPA needs to assess whether to take enforcement action, EPA agreed that the continued improvement in collection and consistency of data via the 7520-4 form would be valuable for more effective oversight. Specifically, EPA stated that the form is a tool for obtaining important information used in assessing enforcement activities and that providing guidance on the 7520-4 form could be valuable to improve the quality of information the agency receives. EPA also said that the 7520 standard operating procedures that it created in response to our June 2014 report reminds reviewers that wells with significant violations for two or more quarters should remain listed on the 7520-4 until the issue is resolved. In addition, EPA said that it will provide further materials to UIC data submitters to improve completeness and consistency of the data that programs report on the 7520-4 form within 6 months of this final report. As these standard operating procedures have not yet been finalized, we have not assessed them to determine whether they meet the intent of our recommendation.

In response to our fourth recommendation that EPA should conduct a workforce analysis to identify the resources it needs to conduct effective program oversight, EPA agreed that oversight is an important aspect of ensuring an effective UIC program, but stated that a workforce analysis was not necessary to better assess the resources needed to oversee the implementation of the UIC class II program. EPA stated that it is working with program managers to evaluate the effectiveness of EPA’s oversight activities in response to our June 2014 report, and would expand the evaluation to include elements of inspection and enforcement activities if necessary. Upon completion of its evaluation, EPA said that it would look to improve the effectiveness of state and EPA oversight of the UIC programs, if needed. EPA may, for example, pilot a project to explore the potential to ensure program implementation by use of remote approaches, such as data collection, data analysis, targeting and priority ranking, and public transparency, as a viable option for increased oversight. While we recognize EPA’s commitment to assess whether it should expand its evaluation of oversight activities to include inspections and enforcement, we still believe it is critical for EPA to identify the resources necessary, including human capital resources, to oversee state and EPA-managed programs and that without doing so, EPA may not have reasonable assurance that it can effectively collect information or conduct activities to ensure protection of underground sources of drinking water.

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 the Environmental Protection Agency, and other interested parties. In addition, this report will be available at no charge on the GAO website 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 gomezj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix VIII.

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

Table 3 provides a list of programs managed by the Environmental Protection Agency (EPA), 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 2014.

Appendix II: Status of California’s Underground Injection Control Class II Program

According to a 2015 letter from California to Environmental Protection Agency (EPA) Region 9, California is the nation’s third largest oil- producing state, producing 575,000 barrels per day, and the state’s oil and gas industry earns $34 billion annually. Injection wells have been used in the state for more than 50 years. According to a 2015 report, currently over 50,000 injection wells are operating in California, with about 75 percent of the state’s production coming from enhanced oil recovery methods using underground injection wells. California’s class II underground injection control (UIC) program is managed by the Division of Oil, Gas, and Geothermal Resources (Division) and is divided across the Division’s six district offices. The majority of class II underground injection activity occurs in District 1 (Cypress) and District 4 (Bakersfield).

California Program Determined to Be Noncompliant

In July 2014, EPA Region 9 determined that the UIC class II program managed by the Division did not comply with state and EPA requirements. In a series of letters from July 2014 through July 2015, EPA Region 9 and the Division reached agreement on a plan to improve California’s UIC class II program. Below is a summary of the deficiencies identified in California’s UIC class II program and the plans California and EPA Region 9 agreed on to resolve these deficiencies, including actions taken by EPA and California before and after the determination of noncompliance in 2014.

In 2011, EPA requested a third-party audit of the state’s UIC class II program. The audit made recommendations to improve California’s class II program, including recommendations regarding the program’s definition of underground sources of drinking water, area of review calculations, well construction practices, inspection and enforcement practices, and staff qualifications.

In November 2012, the Division developed an action plan to address each of the recommendations from EPA’s audit. To address a number of recommendations necessitating regulatory updates, the Division committed to update its class II program regulations beginning in 2013.

In response to an EPA inquiry initiated in 2012, California reviewed program records to ensure that injection wells the state authorized aligned with EPA-approved aquifer exemptions. In doing so, in 2014 the Division discovered that it authorized operators to inject class II wastewater into 11 nonexempt aquifers in the vicinity of water supply wells, and EPA determined that the program was not in compliance with state and EPA requirements.

In October 2015, the Division issued the first report from its Monitoring and Compliance Unit, which was created in 2011. The report identified a number of program deficiencies, including insufficient staffing to address increasing regulatory workload and significant remedial programmatic work; poor recordkeeping on mostly paper forms and a lack of modern data tools and systems; outdated regulations that in some cases do not address the modern oil and gas extraction environment; inconsistent and understaffed program leadership; insufficient breadth and depth of technical talent; insufficient coordination among district and state offices; and lack of consistent, regular, high-quality technical training.

Division officials also identified deficiencies with the enforcement of class II requirements. Division officials said that the state office receives violation information from districts and is responsible for pursuing enforcement actions against operators and collecting penalties assessed by the Division. However, according to Division officials, California has historically had difficulties enforcing regulations for both production and class II wells in the state. In particular, the Division identified many examples of enforcement actions that were not pursued and wells that were not being returned to compliance in a timely manner. For example, in 2010, the Division hired a contractor to review its accounts receivable to identify outstanding penalties that the Division had not collected. According to Division officials, there were over $5 million in unpaid penalties that the Division had assessed but did not collect. In September 2015, according to Division officials, the Division hired a deputy supervisor to start tracking enforcement of state requirements and to lead the development of new business processes to improve violation tracking and enforcement.

Division’s Plan for Program Improvements

Since July 2014, the Division, California’s State Water Resources Control Board (Board), and EPA have been working together to systematically address a number of important deficiencies in the UIC program, including permitting injection into nonexempt aquifers. In letters between California (the Division and the Board) and EPA, the three-agency group agreed to a plan for the Division to shut down wells permitted to inject into nonexempt aquifers and improve and modernize its UIC practices. Specifically, the plan consists of four major components to be completed concurrently:

New regulations and program revisions. The Division determined that many state regulations that govern underground injection control are obsolete, deficient, or unable to address current industry practice. According to agency documents, the Division plans to undertake a series of rulemakings to improve California’s regulatory framework to address these issues, including isolation of injected fluids, quality of water to be protected, well construction practices, cyclic steam operations, project review, and idle well standards and testing. In July 2015, the Division stated that it planned to update its class II regulations in two phases, with the first phase starting with the informal circulation of draft regulations in the fall of 2015 and the second phase beginning in 2016.

Well review and aquifer exemptions. The Division and the Board have been systematically reviewing injection wells that may have been permitted to inject into nonexempt aquifers. The Division has proposed a schedule for reviewing and ceasing injection into these aquifers. As of October 2015, the Division shut down 23 wells injecting wastewater into underground sources of drinking water that may have posed an immediate risk to waters of beneficial use. Over the next 2 years, through 2017, according to agency documents, the Division will review additional injection wells to determine whether they should be shut down or continue operating. The Division is collecting information from operators interested in pursuing exemptions and will review each exemption application to determine whether exemption criteria have been sufficiently met. If the Division approves the aquifer exemption, it will forward it to EPA for review and approval or disapproval. EPA has final authority to declare an aquifer exempt. The Division has issued regulations to ensure that injection activity ends by specified deadlines unless aquifer exemptions are approved.

Project-by-project review of injection project approvals. The Division plans to conduct individual project reviews designed to find missing data, identify UIC compliance issues, and compare existing project approvals with current conditions in the field. Operators will be required to provide missing data, and the Division will reevaluate the project based on all relevant regulations, mandates, and policies, including demonstration of zonal isolation of injected fluids. Projects will be reapproved, modified, or canceled as appropriate. The Division plans to conduct separate reviews in each Division district and plans to complete the review by October 2018.

Development of a modern well and data management system.

The Division is updating its data management systems for production and injection wells to improve regulatory compliance and effectiveness, transparency, and support of all stakeholders. Finishing every component of the UIC improvement plan submitted to EPA could take 3 to 4 years. However, according to state documents, as each piece is completed, improvements in the Division’s mission performance will follow. According to state documents, changes will be supported by the development of training programs to support the process of internal review and adjustments for continuously improving the Division’s execution of its responsibilities.

Appendix III: Objectives, Scope, and Methodology

This report examines the Environmental Protection Agency’s (EPA) Underground Injection Control (UIC) class II program to determine the extent to which EPA has collected the inspection and enforcement information needed, and conducted the oversight activities necessary, to assess that state and EPA-managed programs are protecting underground sources of drinking water. To perform this work, we reviewed and analyzed the Safe Drinking Water Act, and EPA regulations and guidance applicable to the UIC class II program. We also interviewed EPA UIC program officials in the eight regional offices with class II wells. To understand the class II program at the state level, we interviewed state officials and reviewed state program documentation for the same sample of states from our June 2014 report on the UIC program. Specifically, we selected a nongeneralizable sample of eight states with class II programs. Two of these states are managed by EPA regions—Kentucky and Pennsylvania—and the remaining six—California, Colorado, North Dakota, Ohio, Oklahoma, and Texas—are managed under provisions of the act that allow them to have primary responsibility to manage the program in their states. We selected these states from the six shale oil and gas regions defined by the Energy Information Administration. For each of the six shale regions, we selected at least one state that had among the highest number of class II injection wells.

In July 2014, after we issued our June 2014 report and before we started the work on this review, EPA determined that one of the programs in the eight states we reviewed, California’s class II program, was not in compliance with state or EPA requirements. EPA Region 9 officials and California’s UIC program officials have since agreed to a plan to improve the California program over the next several years. We interviewed EPA headquarters, EPA Region 9, and California officials regarding the deficiencies in California’s program, the agreed-upon improvement plan, and EPA oversight of California’s progress. A summary of the deficiencies found by EPA and California, and California’s plans to improve its program, can be found in appendix II. Because of the deficiencies in California’s program, we chose not to include California in our detailed analysis of inspection and enforcement information from the states. Thus, the results of our review of inspection and enforcement reflect the seven states remaining in our sample. Because the sample is a nongeneralizable sample, our results cannot be generalized to other states but do provide detailed examples of EPA’s and states’ management of class II programs.

To analyze whether EPA collects the information it needs to assess whether state and EPA-managed programs are protecting underground sources of drinking water, particularly inspection and enforcement information, we first reviewed EPA regulations and guidance on UIC inspections and enforcement to determine what information EPA needs to assess the programs and their ability to protect underground sources of drinking water. EPA’s 1987 guidance document Underground Injection Control Program Compliance Strategy for Primacy and Direct Implementation Jurisdictions (Strategy) establishes minimum goals for inspections of class II wells. We obtained and summarized inspections data collected by EPA from each program we reviewed for fiscal year 2013, the most current year of data available at the beginning of this review. The state and EPA-managed programs are directed to report these data to EPA quarterly on the 7520-3 form. To assess the reliability of these data, we interviewed EPA and state officials about their processes for managing the data collected on the 7520-3 forms and tested the data for completeness. We found that the data were not comparable across states but were sufficiently reliable for reporting on a state-by-state basis. To understand EPA’s use of the data to assess state and EPA-managed programs, we interviewed officials from EPA headquarters about their use of the information to oversee EPA-managed programs and from EPA regions about their oversight of inspections conducted by state programs. We also interviewed selected state program officials about how they manage class II inspections, and we requested information on annual inspection goals and inspection strategies. Similarly, we interviewed regional office staff responsible for managing the programs in Kentucky and Pennsylvania about their management of the class II programs in these states, including any inspection goals and strategies they have.

To analyze whether EPA has the enforcement information to assess whether state and EPA-managed programs are protecting underground sources of drinking water, we reviewed EPA’s Strategy, which also establishes enforcement expectations for both state and EPA-managed programs. In particular, the Strategy identifies the need for state and EPA-managed programs to conduct timely and appropriate enforcement actions. Specifically, state and EPA-managed programs are expected to resolve significant violations within 90 days of discovery or take a formal enforcement action against the well operator. According to the Strategy, a formal enforcement action, among other things, is legally enforceable, explicitly requires the well owner to take corrective action, and specifies a timetable for completion. Under the act, EPA is to intervene and take enforcement action once it is notified that a violation has occurred and that the state has not taken appropriate action after 30 days. Similarly, EPA regions should take timely and appropriate enforcement actions in states with EPA-managed programs. According to EPA’s 1987 Reporting Requirements—Underground Injection Control Program Guidance (Program Reporting), EPA uses the 7520-4 forms to evaluate the timeliness and appropriateness of a state or EPA-managed program’s enforcement response; EPA regions receive 7520-4 forms from their state programs, and EPA headquarters collects information on the 7520-4 forms from programs managed by EPA regions.

We then assessed a sample of violations, using EPA’s definition of timely and appropriate resolution from its Strategy and Program Reporting guidance, to determine if EPA receives information on individual significant violations that may have the potential to threaten underground sources of drinking water. We selected a nongeneralizable sample of 134 notices of violation, issued from 2008 through 2013 (the most recent years of data available when we began our audit work), from the seven state and EPA-programs we reviewed and compared the data to enforcement data provided to EPA on the 7520-4 forms. We selected a nongeneralizable sample of at least six notices of violation in each of the seven states in our sample based on the significance of the violation; the type of enforcement action taken; and the number of days between when the operator was notified and when the violation was resolved, termed returning to compliance with applicable requirements. We also obtained the 7520-4 forms for fiscal years 2008 through 2013 to identify what violations had been reported on these forms. We analyzed the number of days that each significant violation in our sample had been open and compared this to the number of days (90) established by EPA as timely. We then analyzed each violation to determine if a formal action had been taken. We identified 93 violations that were open for more than 90 days and compared these to the information reported on the 7520-4 form by the appropriate state. We then interviewed EPA, regional, and state officials to determine how they reported the information on the 7520-4 form.

Because our sample of violations is nongeneralizable, our results cannot be generalized to other states and violations; however, they do provide detailed information on the violations that should have been reported by state and EPA-managed programs. To assess the reliability of the violation and enforcement information we obtained, we interviewed EPA headquarters officials about their processes for collecting and managing the information and tested the information for completeness by looking for missing information. We determined that the information from EPA’s reporting forms was reliable for purposes of reporting individual state results.

To analyze the activities EPA conducts to assess whether state and EPA- managed programs protect underground sources of drinking water, we reviewed several EPA guidance documents that describe activities EPA is to take to oversee state and EPA-managed programs. EPA’s 1983 guidance document, Interim Guidance for Overview of the Underground Injection Control Program, states that EPA is supposed to conduct annual on-site evaluations of state and EPA-managed programs. EPA’s UIC regulations describe activities that EPA is supposed to conduct to ensure that it can enforce state program requirements, if necessary. EPA’s 1984 guidance, Guidance for Review and Approval of State Underground Injection Control Programs and Revisions to Approved State Programs, describes the activities that EPA is to conduct to review changes to state program requirements. We reviewed the extent to which EPA conducted the first two activities in our June 2014 report on the UIC program. We met with EPA headquarters officials to discuss our findings from that report and EPA’s efforts to implement our recommendations.

To analyze the extent to which EPA has carried out activities to review and approve aquifer exemptions for state and EPA-managed programs, we reviewed EPA guidance documents on aquifer exemptions. We then interviewed EPA headquarters officials about EPA’s progress developing and maintaining a database on aquifer exemptions. To analyze the extent to which EPA applied best practices for workforce planning and strategic human capital management to the management of the UIC program, we reviewed GAO reports specifying best practices for strategic human capital management. We then interviewed EPA’s headquarters officials about EPA’s efforts to apply those best practices to the UIC program.

We conducted this performance audit from October 2014 to February 2016 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 that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix IV: Information on Inspections Conducted by Selected State and EPA- Managed Programs

The Safe Drinking Water Act requires states to include inspection requirements in their programs. In a 1987 document titled Underground Injection Control Program Compliance Strategy for Primacy and Direct Implementation Jurisdictions (Strategy), the Environmental Protection Agency (EPA) provides guidance on the types of inspections and the frequency at which they should be conducted. The types of inspections include routine inspections, well construction inspections, mechanical integrity tests witnessed, emergency and complaint response, enforcement follow-up, and plugging and abandonment verification.

According to the Strategy, the goal of an inspection program is to determine that a well is in compliance with applicable requirements and to detect any violations of those requirements. It directs programs to adopt minimum priority standards for each type of inspection and gives the programs discretion to consider additional priorities, such as environmental risks, population risks, and well construction, when determining which wells to inspect. The Strategy ranks inspection types, including those for class II wells, by priority, as shown in table 4.

The seven state and EPA-managed programs we reviewed establish goals for each of the inspection types identified in the Strategy based on program priorities and available inspection resources. Table 5 shows state and EPA-managed program inspection goals by inspection type. Some states have goals to inspect all of their wells monthly or quarterly. For example, North Dakota program officials told us that their goal is to conduct routine inspections at all class II injection wells monthly, and Ohio has a goal of inspecting 100 percent of its wells quarterly, according to program officials. Other programs we reviewed do not set specific annual goals for individual types of well inspections. For example, according to EPA Region 4 officials, EPA Region 4 has a goal of conducting routine inspections of all of the class II wells in Kentucky at least once every 5 years and does not set inspection goals for observing well plugging and well construction. Some state and EPA program officials told us that when states do not have the resources to inspect all wells annually, type and frequency of inspections are prioritized based on risk factors such as the operator’s history of compliance with state or EPA requirements or danger to the general public. For example, Oklahoma officials told us that inspectors will inspect an operator more frequently if the inspector determines the well operator is violating state requirements and will also prioritize inspections in areas of the state where there is a history of illegal disposal activity. Similarly, EPA Region 3 officials told us that they do not set annual inspection goals by inspection type, but prioritize inspections based on factors such as danger to the general public, emergency response, and the availability of inspection staff.

Generally, according to state officials, state inspection staff in the five state programs we reviewed are responsible for inspecting both production and class II injection wells in the state. According to state officials, staff may inspect only class II or production wells or may inspect both. For example, of the 47 staff members conducting inspections in Ohio, 4 conduct inspections on class II wells full-time and 8 to 10 split responsibilities between production and class II wells. Similarly, inspection staff in EPA regions we reviewed are responsible for inspecting all classes of injection wells managed by the region. For example, according to EPA Region 4 officials, Region 4 has approximately 3 program staff members and 2 contractors to conduct inspections of all classes of injection wells in the region.

State agencies and EPA regional offices responsible for managing or overseeing programs in the seven states we selected vary in the inventory of wells they manage and the staffing resources dedicated to inspect those wells. For example, according to North Dakota officials, North Dakota has 35 staff members to inspect 14,158 production and class II injection wells in the state. According to Oklahoma officials, Oklahoma has 62 staff members to inspect the state’s almost 190,000 production and class II wells. EPA regions managing programs in states we selected have comparatively fewer inspection staff to inspect the injection wells they manage. For example, according to EPA officials, Region 3 has 1 full-time inspector and 3 part time inspectors to inspect the almost 29,000 injection wells it manages region-wide, including over 1,800 class II wells in Pennsylvania.

Appendix V: Information on Enforcement Actions Taken by Selected State and EPA- Managed Programs

This appendix contains information on the enforcement process used by selected state programs and programs managed by the Environmental Protection Agency (EPA), the enforcement tools available to programs, and our analysis of a sample of enforcement cases that we reviewed. We selected a nongeneralizable sample of at least six enforcement cases in each of the seven states in our sample, based on the significance of the violation, the type of enforcement action taken, and the number of days between when the operator was notified and when the violation was resolved—defined as returning to compliance—with applicable requirements.

Enforcement Process

According to EPA’s Underground Injection Control Program Compliance Strategy for Primacy and Direct Implementation Jurisdictions (Strategy), state and EPA-managed programs should escalate their enforcement response if compliance is not achieved in a timely manner. The enforcement action taken can depend on a number of factors, including the severity of the violation and its potential to contaminate underground sources of drinking water. Our analysis of enforcement actions taken by select state and EPA-managed programs found that the programs have generally similar enforcement processes to respond to class II Underground Injection Control (UIC) violations.

A violation can be discovered a number of ways, including through an inspection, administrative review of a well file, or reports by citizens or others. According to EPA and state officials, the enforcement process generally begins when program officials notify a well operator that the well is in violation of applicable requirements. Six of the seven programs we reviewed generally issue a written notice of the violation to the well operator, but North Dakota program officials told us that they instead give a verbal notification and then, depending on the severity of the violation, will allow a 30-day grace period before initiating a formal enforcement action. For the state and EPA-managed programs we reviewed, notices of violation can include one or more violations in a single notice. If the operator does not take action to resolve a significant violation—that is, return the well to compliance with all state and federal regulations—in a timely manner, EPA’s 1987 Strategy directs state and EPA-managed programs to take formal enforcement actions to ensure that compliance is achieved. Formal enforcement actions can include the following: Administrative orders. Administrative orders are legally enforceable orders, the terms of which can either be dictated by the program or negotiated with the well operator in violation (which may be referred to as a consent order or consent agreement). Administrative orders may enjoin the well operator from taking certain actions, may require the well operator to take corrective action, and may impose monetary penalties.

Civil judicial action. Civil judicial actions are lawsuits filed against an operator that has failed to comply with, for example, statutory or regulatory requirements or an administrative order. Civil actions are generally taken when administrative enforcement actions have been unsuccessful in achieving compliance and resolving the violation, according to EPA officials.

Criminal judicial action. A program may also refer a case to the criminal justice system if an action is willfully committed. A criminal court conviction can result in fines or imprisonment.

Enforcement Tools Available to State and EPA-Managed Programs

State and EPA-managed programs have various tools available to facilitate a return to compliance with applicable requirements and deter future violations. According to EPA officials, state and EPA-managed programs can vary in their approaches to enforcing UIC program requirements as long as the programs are effective at protecting underground sources of drinking water. Six of the seven state and EPA- managed programs in our review have authority to assess monetary penalties. Table 6 details the types of administrative, civil, and criminal monetary penalty authority available at the state and federal levels for the selected states in our review.

While six of the seven programs we reviewed have the legal authority to assess monetary penalties, some do not regularly use these authorities for various reasons. For example, North Dakota’s program has administrative authority to assess a monetary penalty, but the state prefers to employ a more cooperative approach to get operators to bring wells back into compliance, according to North Dakota officials. According to Colorado officials, Colorado’s program has also historically employed a cooperative approach, but the state recently revised its regulations to require a more prescriptive approach to enforcement. Ohio program officials told us that they do not have an administrative process for assessing a monetary penalty, and the penalty must instead be pursued through the civil judicial process. In turn, Ohio officials told us that they consider the advantages and disadvantages of resolving a violation through negotiated consent agreement before referring the case to the state’s attorney general to pursue civil penalties.

Other tools available to selected state and EPA-managed programs to enforce program requirements may include the following: Well shut-in. Some programs we reviewed may temporarily close down a well until a violation is resolved. For example, Oklahoma officials can shut-in a well if an operator is out of compliance with its financial assurance requirements.

Pipeline severance. A program may also have the authority to sever an operator’s access to oil and gas pipelines. For example, if an operator uses a well that has been shut-in for violations, Texas may take the further step of refusing to renew certain documents the operator needs to do business in the state. If the disposal well operator also has production wells in the state, this would prevent the operator from producing oil and gas. According to EPA officials, this can be an effective enforcement tool given that a company’s income is generated on the production side.

Permit revocation or temporary suspension. A program may have the authority to revoke or temporarily suspend existing UIC permits, thereby making it illegal for an operator to continue injecting into a well or group of wells covered under the permit. For example, North Dakota may revoke permits after notice and hearing if the well operator fails to comply with the terms and conditions of its permit or any applicable rule or law, and the state may suspend permits for good cause.

Moratorium on new or renewed permits. A program may be able to refuse to issue new permits to an operator with a history of noncompliance. For example, Oklahoma program officials can seek an order denying a permit to an operator with an unsatisfactory compliance history.

Bond forfeiture. A program may require well operators to post a bond to ensure compliance with requirements applicable to the well. If an operator fails to comply with these terms, a state may be able to seize the bond to cover the costs of returning the well to compliance. For example, if Ohio officials find that an operator has failed to comply with, among other things, certain orders, regulations, or its permit, it may declare the operator’s bond to be forfeit.

Timely and Appropriate Enforcement of State and EPA Requirements

Under the Safe Drinking Water Act, EPA must enforce state requirements if violations have not been enforced by states in a timely and appropriate manner. EPA’s Strategy sets forth standards for timely and appropriate enforcement action in response to significant violations. Specifically, state and EPA-managed programs are expected to resolve significant violations within 90 days of discovering the violation or take a formal enforcement action against the well operator. According to the Strategy, a formal enforcement action, among other things, is legally enforceable, explicitly requires the well owner to take corrective action, and specifies a timetable for completion. When EPA becomes aware that an operator is violating a state program requirement, a provision in the act requires EPA to notify the state and, if the state does not take appropriate action within 30 days, to intervene by issuing an administrative order or commencing a civil action. Similarly, EPA regions should take timely and appropriate enforcement actions in states with EPA-managed programs.

State and EPA-managed programs are required to submit periodic reports to EPA headquarters with information on enforcement actions taken against well operators. One of the required reports is to provide quarterly information on individual significant violations by well operators that have not been resolved and that may have the potential to threaten underground sources of drinking water. EPA uses the 7520-4 form to collect this information. According to EPA’s 1987 Reporting Requirements—Underground Injection Control Program Guidance (Program Reporting), EPA uses the 7520-4 forms to evaluate the timeliness and appropriateness of a state or EPA-managed program’s enforcement response.

Our analysis of a sample of significant violations from selected state and EPA-managed programs found that a subset of significant violations that should have been reported on the 7520-4 forms were not reported, and that the forms contained incomplete and inconsistent information. Specifically, we sampled 134 notices of violation from selected state and EPA-managed programs, of which 93 included significant violations (see app. VI for a list of the enforcement cases we reviewed in the seven state and EPA-managed programs). Table 7 shows the number and types of violation notices we assessed from our sample of 134 notices of violation, for fiscal years 2008 through 2013, for each state and EPA-managed program in our review.

To establish which of those 93 violations should have been reported on the 7520-4 form, we used EPA’s 1987 Strategy and 1986 Program Reporting guidance, which call for state and EPA-managed programs to report information on significant violations that were not resolved within 90 days of discovery and also did not have a formal enforcement action taken against the well operator. To determine the 90-day allowable time frame, we calculated the number of days between the date the operator was notified of the violation and the date a formal enforcement action was taken, and found that 29 significant violations had gone longer than 90 days without formal enforcement action and should have been reported on the 7520-4 form (see table 8). We then compared the results of our calculation to 7520-4 forms we obtained from EPA for fiscal years 2008 through 2013, and found that 7 of the 29 were reported by the respective program.

Appendix VI: Information on Sample Enforcement Cases from Selected State and EPA-Managed Programs

State KY

State ND

State OK

State OK

State TX

Legend: EPA = Environmental Protection Agency; CO = Colorado; KY = Kentucky; ND = North Dakota; OH = Ohio; OK = Oklahoma; PA = Pennsylvania; TX = Texas; N/A = not applicable, Admin = administrative order; Consent = consent agreement; Civil = civil judicial action; Criminal = criminal judicial action.

Appendix VIII: GAO Contact and Staff Acknowledgments

GAO Contact:

Staff Acknowledgments

In addition to the contact named above, Susan Iott (Assistant Director), Mark Braza, Antoinette Capaccio, John Delicath, John Hocker, Rich Johnson, Micah McMillan, Maria Stattel, Kiki Theodoropoulos and Breanna Trexler made key contributions to this report.