New Markey-Holt Report Reveals “Drilling Dysfunction” on Federal Lands

WASHINGTON (February 8, 2012) - For safety and environmental infractions that occurred over a thirteen year period starting in the late 1990s, the Interior Department collected less than $300,000 in fines from oil and gas companies that violated regulations for hydraulic fracturing for natural gas, as well as other oil and gas drilling on federal lands, according to a report released today by the House Natural Resources Committee's Democratic staff. The committee staff report shows that the Interior Department has demonstrated erratic and inconsistent enforcement of federal drilling safety rules relating to such drilling activities, pointing to the need for the agency to reform its oversight of drilling on federal lands.

The report, entitled "Drilling Dysfunction: How the Failure to Oversee Drilling on Public Lands Endangers Health and the Environment," was prepared by the House Natural Resources Committee's Democratic Staff, at the direction of the committee's top Democrat, Rep. Ed Markey (D-Mass.), joined by Rep. Rush Holt (D-N.J.). It represents the results of an exhaustive review of violations, fines, and regulations related to oil and gas activities on public lands in 17 states.

A copy of the report can be found on the Natural Resources Democrats' website here

"It would be an overstatement to even call these fines a slap on the wrist. For oil and gas companies making billions from drilling on America's public lands, this kind of inadequate oversight and enforcement is little more than a pin prick," said Rep. Markey. "American citizens and workers should feel confident that oil and gas companies are conducting business in the safest manner possible, and when they don't, that the U.S. government will step in and make sure they pay the price for their actions. This report indicates that confidence in the oversight of drilling on public lands should be limited, at best."

"It's incomprehensible. In the past decade, oil and gas companies have committed thousands of drilling violations, yet they have faced a grand total of $300,000 in fines," said Rep. Holt. "That's roughly a single minute of oil company profits-the equivalent of levying a 10-cent fine against someone who earns $50,000 a year. Can anyone seriously argue that these fines are sufficient to deter wrongdoing or that they reflect the very real risks that drilling poses to the environment and public health?"

The report finds that from 1998 to 2011, more than two thousand violations were handed out by the U.S. Department of Interior to oil and gas companies drilling on taxpayer-owned lands. Some were issued to companies for not installing the now-infamous blowout preventer. Some were for poorly protecting the walls of the well from potentially leaking gas, oil or fluids. In dozens of cases, oil and gas companies even started to drill on federal lands before their permit was fully approved.

The report found that the total amount of fines issued for these years of violations to more than 300 companies in 17 states that put the health of workers, drinking water and taxpayer land at risk was only $273,875 -- a tiny amount in relationship to the huge profits oil and gas companies make from drilling on public lands.

Major findings of the report include:

There were a total of 2,025 safety and drilling violations that were issued to 335 companies drilling in seventeen states between February 1998 and February 2011, 549 of which were classified as "major" by committee staff.
DOI issues fines in an inconsistent manner, sometimes issuing monetary penalties to one company for a violation, and then does not do so with a second company for an identical violation.
In fifty-four instances, operators were given written citations because they began drilling on federal lands before the permit to drill was fully processed and approved.
Of the major violations, 53 percent (293 of 549 violations) were related to non-functional blowout preventers.
Twenty-one percent (113 of 549) major environmental or safety violations were issued because of deficiencies in casing and cementing programs. Appropriate casing and cementing is the first line of defense in protecting underground sources of drinking water.
Only 125 (six percent) of all the violations were levied a monetary fine. Although the violations that occurred were spread across 17 states, violators in eight states (AK, AR, LA, ND, NV, OH, SD, and WV) were never issued a monetary fine of any amount during the entire period examined.

Due to the findings of the report, Reps. Markey and Holt today transmitted the analysis to Interior Secretary Ken Salazar asking him to reform and enhance his agency's oversight of drilling on federal lands. The letter from Reps. Markey and Holt to Secretary Salazar can be found HERE.

"As industry expands the use of hydraulic fracturing to tap into more oil and gas reserves across the nation, including on federal lands, it is imperative that the process is performed in a safe and environmentally sound manner that protect surface and subsurface resources," write the two Congressmen to Salazar. "A strong and consistent approach to oversight and enforcement of drilling practices on federal lands is important in advancing that goal."