On December 7, 2010, EPA issued an emergency order to Range Resources Corporation and Range Production Company (“Range”), finding that Range “caused or contributed” to methane contamination in a Texas aquifer which “may present an imminent and substantial endangerment to the health of persons” and that state and local authorities have not acted in response. Threatening daily penalties of up to $16,500, the order directs Range almost immediately to take measures intended to mitigate the methane contamination.

Background

Range has been involved in natural gas production in the Barnett Shale formation.

The aquifer in question supplies private drinking water wells in Parker County, Texas, near Fort Worth, in the Barnett Shale. According to the order’s cover letter, EPA “has data to indicate” that at least two of those wells were impacted by methane contamination “directly related to oil and gas production facilities.” The order also refers to tests showing the presence of other hydrocarbons in the wells (benzene was identified in one well).

Notably, the order’s legal basis is a provision of the Safe Drinking Water Act (“SDWA”) that allows EPA broad discretion in issuing orders to respond to imminent and substantial endangerment caused by contamination of drinking water. This provision could be used to target various activities otherwise outside the reach of EPA’s traditional regulatory authority under the SDWA.

Key Features of the Order

EPA issued the order under its “emergency powers” granted by section 1431 of the SDWA. The order directs Range to take several actions on the following schedule (calculated by reference to Range’s receipt of the order):

  • Within 24 hours, to notify EPA in writing whether Range will comply with the order.
  • Within 48 hours, to provide “replacement potable water supplies” to water consumers from the two affected wells and install explosivity meters in their dwellings.
  • Within 5 days, to submit to EPA a survey of private water wells in the area and a proposal for sampling those wells to determine whether they are contaminated (the sampling must commence no later than 5 days after the plan is submitted).
  • Within 14 days, to submit to EPA a proposed plan to conduct soil gas surveys and indoor air concentration analyses of properties and dwellings served by the two affected wells.
  • Within 60 days, to submit to EPA a proposed plan to identify gas flow pathways to the underlying aquifer, eliminate such gas flow if possible and remediate the aquifer.

With respect to the order’s demand that Range propose a plan to remediate the aquifer, there is significant disagreement on whether EPA can properly order aquifer remediation under section 1431 when other interim measures are available to address the potential health risk at issue.

Notably, the order finds that “State and local authorities have not taken sufficient action to address the endangerment described herein and do not intend to take such action at this time.” This is a legal prerequisite to the exercise of EPA’s section 1431 emergency powers. Section 1431 also provides for daily civil penalties for violating an order issued under it.

The order concludes by offering Range an “opportunity to confer informally with EPA concerning the terms and applicability of this Order.” However, the order identifies itself as a “final agency action” subject to judicial review.

Range’s Public Response

Range issued a public statement on December 8, 2010, disputing its alleged responsibility for the contamination: “Based on our findings to date, it’s very clear that our activities have not had any impact on the water aquifer in southern Parker County or the subject water wells.” The statement also notes that Range and the Texas Railroad Commission (the state agency responsible for regulating many aspects of oil and gas production) have “conducted extensive testing of both Range-operated gas wells and the water wells of concern.”

The Texas Railroad Commission

The Texas Railroad Commission issued a public statement on December 7, 2010, indicating that it could not yet reach conclusions about the source of the methane contamination. The statement quotes agency heads characterizing EPA’s issuance of the order as “premature” and “Washington politics of the worst kind.”

On December 8, 2010, the agency announced that it would be holding a public hearing on the original contamination complaint (made by a landowner) on January 10, 2011.

Issues to Watch For

EPA’s order exemplifies the agency’s continued application of novel, aggressive enforcement tools in an attempt to regulate areas that EPA officials perceive as having been historically underregulated. The order also highlights the role of state regulators in response to alleged groundwater contamination, because EPA’s authority to issue an order under SDWA section 1431 is predicated on inaction by state and local authorities.