Why Won’t the Environmental Protection Agency Fine New Mexico’s Greenhouse Gas Leakers?

In the fall of 2019, the Environmental Protection Agency (EPA) hired a helicopter equipped with a leak-detecting infrared camera to criss-cross the Permian Basin looking for gaseous emissions, part of a monitoring program undertaken at the behest of and in partnership with the New Mexico Environment Department (NMED). Over the course of nine days, the EPA found leaking valves, leaking hatches, leaking tank batteries and compressor stations and unlit and partially lit gas flares on wells. In all, the flights documented 111 emissions at facilities run by 24 different oil and gas companies.

In 2020, the EPA did it again, this time undertaking 15 days of flights and expanding their range to include part of the San Juan Basin in northern New Mexico. They found 244 facilities emitting gases. At least one site had five separate emission sources. Then, in March of this year, the EPA issued consent agreements with 11 companies—some of the biggest producers in the country, including Chevron, ConocoPhillips and Occidental—for violations of the Clean Air Act, based on the 2019 flights. Yet under those agreements, two and a half years in the making, only one company was fined for environmental violations, despite the fact that all of the companies were cited for “directly releasing emissions to atmosphere.” The EPA fined another company for a paperwork violation.

Chisholm Energy (purchased by Earthstone Energy in December) operated three wells drilled without proper state permits and received a $162,385 fine. All three wells had multiple leaks which were not noted in the settlement. BTA Oil Producers received a $75,500 fine for operating two unregistered, leaking wells. Based on estimates from the New Mexico Oil Conservation Division, those wells produced oil and gas worth roughly $17 million for Chisholm and $30 million for BTA since they began production in 2018. The other 21 operators of leaking wells weren’t fined anything at all.

The Permian Basin, where the majority of the flights took place, isn’t much to look at. It’s 75,000 square miles of mostly flat, mostly treeless scrubland straddling the Texas-New Mexico border. This one-time ranchland is now the nation’s most productive oil and gas field, with more than 38,000 active wells and associated facilities just on the New Mexico side. But that wealth of resources comes at a cost. Recent studies show that Permian wells emit much more methane—a greenhouse gas 80 times more potent than CO2 in its first 20 years in the atmosphere—than previously thought, a finding backed up by new reporting requirements from the state’s Oil Conservation Division. Operators themselves are reporting dramatically more venting, flaring and leaks than ever. And that’s on top of the unreported releases documented by the EPA flights.

All of these emissions fuel climate change, which poses a deep and immediate threat to New Mexico. Massive forest fires supercharged by long-term aridification have charred more than a half-million acres across the state already this year, months before the usual start of fire season. This includes the largest single fire in the state’s recorded history.

Despite calls for proper monitoring and crackdowns on violators, the EPA has been slow in enforcement. Its recent consent agreements cover only what the agency found on the first round of flights. According to an EPA spokesperson, the 2020 flights are still being assessed, a year and a half after they concluded. No flights were conducted in 2021.

The EPA spokesperson also says that the agency can’t disclose the companies in the 2020 assessments because the investigations are ongoing. But a comparison of coordinates of the 2020 leaks provided by NMED with a list of the state’s oil and gas wells shows that 10 of the 11 companies cited in 2019, including Chisholm and BTA, again had leaks in 2020. Those leaks were sometimes at the exact same sites, as shown in 2019 and 2020 videos of a site operated by Chisholm.

But it’s not clear what the EPA will do about what it found in 2020—those flights happened before the EPA began notifying operators of the previous year’s violations. 

It’s also not clear why the EPA didn’t fine more companies for their violations of the Clean Air Act. After days of costly helicopter flights, infrared camera rentals and more than two years of office and inspection work confirming that the companies had vented unknown amounts of methane and other gases into the atmosphere, the EPA wrote to most of the companies: “Upon review, EPA hereby confirms that you have completed all requirements … satisfactorily.”

No fines. No punishment. According to EPA documents, the companies simply fixed the leaks and pledged not to do it again.

NMED Secretary James Kenney, who requested the flights in the first place, thinks it’s unlikely that the companies will make good on that commitment.

“Unless there is significant deterrence, there’s no change in behavior,” he says. “And what you want to see from an enforcement program is a change in behavior.”

The above videos show EPA infrared footage of the same tank battery operated by Chisholm Energy in 2019 (top) and 2020. The black wispy clouds are escaping gases that led to the EPA’s Clean Air Act violation notice to the company. Last Wednesday, the EPA publicly posted its close-out letter to Chisholm, saying the company had met its requirements for the 2019 violations “satisfactorily.”

State Environmental Leader Gets His Hands Dirty

Kenney asked to meet in person at NMED’s Albuquerque office to discuss the EPA flights. It was surprising that he had the time: His agency was about to implement historic new clean car rules while simultaneously monitoring the environmental fallout of the state’s colossal wildfires, but he wanted to be sure that NMED’s commitment to monitoring gaseous emissions was clear. Kenney is tall and rangy, and he answers questions directly. The environmental engineer in him filled those replies with detailed background information, and he tapped the table when he was making a point.

He also loves to talk about getting his hands dirty in his early years as an inspector. “I’ve climbed things, gone under things, grabbed samples of things,” he said. “Had a shotgun pulled on me one day.”

At an oil site? “It was actually a dry cleaner,” he said. “I probably should have just left, but I stayed.”

Soon after New Mexico Gov. Michelle Lujan Grisham took office in 2019, she hired Kenney to lead NMED. He had spent the previous 19 years working enforcement cases at the EPA, often targeting the oil and gas industry in other parts of the country. Now, the two wanted to undo eight years of neglect and chronic underfunding in the department by the previous administration of Republican Gov. Susana Martinez and then-NMED Secretary Ryan Flynn. The latter left his state office in 2016 to become the head of the New Mexico Oil and Gas Association, the state’s most prominent lobbying and interest group.

“It’s taken me three years to get to this point where I feel like we should have been in 2019,” Kenney said. “We’re still cleaning up the prior administration’s problems.”

New Mexico Asks for Help From Once-Unwelcome EPA

One of the first things he did was call a group with the resources and expertise to investigate some of the largest, most powerful companies in the country: his former employer—the EPA.

“In the Martinez administration, EPA wasn’t allowed in New Mexico,” Kenney said. “In the Lujan Grisham administration, the first thing we did is invite EPA in.”

Together, the EPA and NMED set up what would become the 2019 and 2020 aerial programs to find leaks and emissions at oil and gas wells and other facilities and then prosecute offenders for violations they found. While Kenney wouldn’t discuss details, he says that the EPA’s failures to fine don’t mean that prosecution is out of the question for offending companies. He said that NMED has several oil and gas producers on its prosecution radar based on the overflights, and he hopes to be able to announce them by the end of this summer.

If that also seems even slower than the EPA, that’s because it is.

Kenney pointed out that while the feds have the money and staff to hire helicopters and track down systemic corporate offenders, no one knows New Mexico wells and production better than the air quality inspectors in his office. Problem is, Kenney has been able to keep only three of seven positions filled. Except for when someone quits and only two are filled. And the department has only one lawyer to vet and write cases against offending oil and gas companies. In the last legislative session, Kenney made waves as he fought for more positions and increased salaries for the people who keep an eye on the petroleum industry in the state—to little avail.

“We can’t deliver on everything, given the budget that the Legislature gives us. We just can’t,” Kenney said.

So when it comes to the state prosecuting fossil fuel operators, “It’s dreadfully slow,” he said.

And that’s why he invited the EPA to New Mexico. It has people, money, an ongoing oil and gas aerial monitoring program—and the ability to prosecute and fine companies that operate in violation of the Clean Air Act.

But to this point, it hasn’t.

Of the 111 leaks from 24 companies that the EPA recorded that first year, the agency acted on just 27 infractions by 11 companies.

When asked why, Kenney said: Ask the EPA. “I’d be curious how they answer it.”

As of publication, the EPA hasn’t answered.

Even some of the offending companies were expecting a penalty. The Securities and Exchange Commission (SEC) requires publicly traded companies to inform shareholders of impending legal matters and sizable fines, and five of the 11 that received violation notices listed the EPA violations in their quarterly and annual SEC filings.

The wording differed from company to company, but the gist from all of them was similar to what Marathon Oil told its shareholders in a quarterly financial report from September 2021. “In January 2020, we received a Notice of Violation from the EPA related to the Clean Air Act,” the company reported. “However, we believe that any penalties, mitigation costs or corrective actions that may result from this matter will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.”

According to the EPA website, the agency could have assessed a penalty of up to $25,000 a day, up to a total of $200,000, for each infraction, with penalties doubled for subsequent convictions. That may seem like small potatoes to a large corporation, but multiple violations can add up. Marathon Oil had to prepare its shareholders for that eventuality. But in the end, the company suffered no adverse effects at all. Five months after issuing the notice of violation, the EPA sent Marathon Oil a final notice closing its case without one dollar in fines.

Lack of Penalties ‘Horrifying’ to Local Activist

Kayley Shoup knew about the EPA flights and, as the Carlsbad-based director of Citizens Caring for the Future, did her best to follow up on their findings. Over the past year, she has traveled around the Permian Basin with field workers from the environmental group Earthworks, looking at wells and facilities with their own infrared camera, spotting emissions and reporting them to NMED. They used the EPA flight data to choose which wells to check among the tens of thousands in the region. 

“We could check maybe four of those in a given day,” she said. “And the ones that were emitting when [the EPA] flew over were still emitting.”

But Shoup didn’t know that the EPA had found leaks but closed most of the investigations without penalties.

“I’m not shocked,” she said, “but that’s horrifying.”

Last year, the state developed new rules to reduce so-called ozone precursors—airborne chemicals known as volatile organic compounds (VOC) that contribute to ozone pollution and smog. The regulations, which will likely receive their final approval and implementation from NMED’s governing board this month, require producers to stop leaks of ozone-causing chemicals from oil and gas wells. The rules have the added effect of penalizing operators whose wells emit methane, a fellow traveler of the ozone precursors.

The rules were triggered in part by seven New Mexico counties on an air pollution watchlist. They are within 95 percent of the maximum ozone level allowed by the EPA. Of those counties, one contains a suburb of Albuquerque, the state’s largest city, and another contains Las Cruces, the second-largest city. The other five counties encompass the state’s two oil and gas producing regions—including Eddy County, where Shoup lives.

“Clearly this has impacts,” she said. Shoup knows families with endocrine issues, reproductive issues, a family with a premature baby. As with so many diseases, there are no definable, single causes, but “these people live basically right in the middle of the oil field,” where the air smells of oil, gas and other VOCs. 

In light of this, her group is trying to get indoor air purifiers installed in some vulnerable people’s homes to filter out VOCs. She says it’s a new idea that will take a lot of time, as well as money that people don’t have. “But, you know, we are trying to start it.” 

Shoup talked just after driving down state highway 285 between Artesia and Carlsbad, through one of the more productive—and destructive—regions of the Permian Basin. On the east side of the highway was a mature oilfield. On the other side, companies are drilling new wells in a gas field, and the air is banked in smog.

“It looks like Los Angeles,” she says, “but like 10 times worse and dusty and disgusting.”

Filling Gaps with Technology and Pressing For Enforcement

Kenney is trying to fix that.

“It is excruciatingly painful to have the information, the evidence, the understanding of environmental impact, the understanding that our ozone levels are getting worse, the understanding that communities are affected,” he said.

“I know how to do this, and my only Achilles heel is resources right now … We don’t have the resources to be the regulator that people expect us to be.”

His department is trying out new technology that can do the work of several on-the-ground inspectors. He talks of working with Sceye to deploy High-Altitude Platform Stations (aka automated blimps) to monitor methane and other leaks in the state’s oil and gas fields in unprecedented detail and in real time. He also says NMED recently tested a car outfitted with a sniffer that can immediately detect methane and other VOCs in the surrounding air. But the systems aren’t deployed yet.

“I am very clear about my role on enforcement, and it’s shaped by 20-plus years of working these cases,” Kenney said.

“I am not just making shit up,” he said, tapping the table. “I have a plan.”

Part of that plan is continuing to work with the EPA—and continuing to press for enforcement. The agency conducted another round of monitoring flights earlier this year. Details of those flights are not yet available, even to Kenney. Again, he suggests asking the EPA.

The EPA didn’t respond to questions about the 2022 flight program—nor to questions about the pace of prosecutions, why so few companies were singled out for violation letters or why companies weren’t fined for violating the Clean Air Act, one of the agency’s signature duties. Since the federal overflight program began, New Mexico has implemented its own tougher oil and gas emission regulations, but without a parallel increase in enforcement staffing. It’s not clear if additional federal monitoring will effectively fill the gap.

In late April, the EPA did send out its first two violation letters from the 2020 flights. One went to Murchison Oil and Gas for a pair of leaking wells. The other went to Occidental Petroleum, which had received a notice for a leaking valve on a tank battery found during the 2019 flights. In 2020, the new letter reveals, the EPA found leaks at nine Occidental sites, including multiple leaks at the same tank battery. To date, the EPA has not issued any fines to Occidental for those emissions.