Why Texas officials decided not to levy penalties after pipeline leak


Highlights

Pipeline company DCP Midstream said it followed all state regulations.

A state administrative law judge recommended the Texas Railroad Commission penalize the company.

Two of the three commissioners said agency staff had failed to show that DCP was at fault.

A buried pipeline running across a Fayette County ranch was leaking, and at least 42 barrels, or 1,700 gallons, of liquid gas containing a known carcinogen were seeping into the ground and possibly making their way into the Central Texas water table. The landowner told the company that owned the pipeline of an unusual odor and dying mesquite trees.

Officials with the pipeline giant, Denver-based DCP Midstream, said they would alert state regulatory authorities.

But they didn’t do so until at least 3½ months after the spill, according to county and state officials.

Company officials say they have acted responsibly and followed all regulations, but this spring an administrative law judge, deciding the company had acted “with a lack of good faith,” recommended that the state’s oil and gas regulatory agency, the Texas Railroad Commission, levy a $10,000 penalty against the $6 billion company.

But instead of penalizing DCP Midstream over its failure to report the leak, which may have begun as early as 2013 before being repaired in 2014, two of the three commissioners criticized their own agency employees.

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In the end, the company, which says it is not to blame for any groundwater contamination, got off without a fine or reprimand.

The episode, pieced together through interviews and emails, documents, and notes obtained by the American-Statesman, illuminates the close ties between the commissioners overseeing the state agency and the industry they’re charged with regulating.

Christi Craddick, the commission chairwoman, has received awards from the oil and gas industry for her regulatory approach, and the agency’s executives have long cycled in and out of lobbying on behalf of industry.

But Railroad Commission officials have said they’re keen to levy penalties when industry runs afoul of its regulations.

“You never hear whenever we victoriously do the right thing,” Commissioner Wayne Christian told the Longview News-Journal in 2017. “When there’s a problem, we go investigate it. If there’s some bad actors, we fix it.”

In the case of the Fayette County pipeline spill, the state agency staff said the company had been slow to report the leak to authorities and declined to conduct further tests requested by the state.

But Christian credited the company with discovering the leak, cleaning it up quickly and adequately testing the soil around the leak site.

Craddick said that blaming DCP is an “overreach with a lot of supposition.”

Christian and Craddick voted against punishing the company.

Since 2011, the pipeline company, affiliated companies and the lawyers who represented it before the Railroad Commission in the Fayette County pipeline leak have contributed at least $22,500 to the Craddick campaign and $16,000 to the Christian campaign, according to campaign finance records.

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Aides speaking on behalf of Craddick and Christian said the commissioners do not take contributions into account while fulfilling their duties at the Railroad Commission.

Craddick didn’t agree to an interview for this story. Christian responded to questions by email.

The third commissioner, Ryan Sitton, whose campaigns have received at least $8,000 from DCP and the related parties, voted in favor of sanctioning DCP. He said the commissioners have to do a better job to win the trust of the people who elected them to office.

“The people of this state elect us to regulate — it’s not a political thing,” Sitton told the Statesman. “When it comes to a question of what happened, we have the chops to investigate and regulate. We really need the people in this state to have confidence us. It undermines public confidence in our agency. We should understand what happened, clean it up and get to the bottom of this.”

Pipeline leak

The 4-inch-diameter pipeline, buried about 4 feet below ground, that runs across Buckeye Ranch is a gathering line, used to transport natural gas from a wellhead to a central collection point.

Overall, the Railroad Commission regulates more than 224,000 miles of intrastate pipeline. In 2017, operators reported spills totaling nearly 65,000 gallons. That year, the commission assessed more than $5 million in oil and gas penalties.

The commission might never have heard about the Buckeye Ranch leak if a truck driver hauling away contaminated soil hadn’t stopped at a rural Fayette County fire department to ask for directions.

In late July 2014, according to a Railroad Commission incident report, the Winchester Volunteer Fire Department learned from the driver of an 18-wheeler that hazardous material had leaked from a pipeline owned by DCP Midstream.

The Winchester fire chief informed Fayette County Emergency Management Coordinator Janet Carrigan.

READ: State scientist tapped for EPA panel with backing of Texas GOP donor

The morning of July 28, Carrigan reported the possible leak to the Railroad Commission district office.

By that evening, after a visit from a commission official, a DCP official said that 42 barrels of gas condensate “had leaked out over a period of time from several leaks on this line,” according to records.

The company “determined that there were no impacts to ground water or surface water,” DCP senior environmental specialist Kirt Crawford wrote to Carrigan.

Another company official told state investigators that he was contacted about the leak on April 15, 2014, and made repairs that day — and said there had not been any other leaks in the previous year.

As part of a remediation effort, a contractor hired by DCP began digging up soil at the site July 23 — transporting the material to a licensed disposal site. (It was apparently a truck driver involved with that operation who asked for directions at the fire station.)

On July 29, Carrigan wrote to the Texas Division of Emergency Management district coordinator in Waco about what she had learned during a site visit.

“Property owners were told by the removal company that the contaminant was benzene, and if not completely removed could seep into the water table and cause problems for future generations,” Carrigan wrote. “They were also told that the Railroad Commission had been contacted (it had not).”

Company officials told Carrigan that they initially thought less than five barrels, or about 210 gallons, had leaked — a key reporting threshold — so the Railroad Commission was not called.

“When pressed what data or formula did they use to come up with that amount, both said they had not ‘put pen to paper,’ ” Carrigan wrote.

“After meeting with the family, it became very clear that DCP Midstream wanted to get the contaminant out (it is is being taken to Altair, Texas), cover it over, and no (one) would be the wiser,” Carrigan wrote. “The family specifically asked if the Railroad Commission had been contacted and were told ‘yes.’ ”

DCP Midstream attorney Phil Gamble told the Statesman that to determine the amount of natural gas condensate that had dripped out of the pipeline, DCP had to complete its excavation work. “The same day excavation was completed, DCP’s remediation contractor notified the Railroad Commission district office,” he said.

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The next day, July 30, as temperatures reached the mid-90s, state and county officials visited the site.

Texas Department of State Health Services inspector Terry Sheppard reported a “noticeable odor” and was told by Terry Webster, the remediation company owner, that it was hydrocarbons probably coming from the excavated soil. The inspector, in notes sent to other state health officials, reported, “I felt nauseous and a slight headache.” Carrigan, he reported, “was starting to feel nauseous with red itching eyes and border line ‘migraine’ headache.”

The property owners had complained numerous times to DCP concerning pipeline leaks, observing dead trees and an unusual odor, “but nothing was done,” according to the State Health Services notes, citing a conversation Carrigan said she had with the landowner.

In filings with the Railroad Commission, DCP, which operates more than 27,000 miles of oil and gas pipelines in Texas, says it “understands and appreciates its regulatory and operational responsibility and obligations to the regulators, the public, land owners, customers, DCP employees, and to all of its oil and gas industry partners throughout Texas. … DCP does not shirk from its responsibility for its actions, nor disregard its duty to appropriately respond and work with landowners and the Railroad Commission of Texas.”

The owner of the property, called Buckeye Ranch, declined to talk about the incident.

“I’m looking at this for my grandchildren,” Carrigan told the Statesman. “When I was growing up, clean water was a given, not just an expectation. It’s not an easily renewable resource.

“I don’t like slapping someone on the hand,” she said, “but we want to keep the land and water as pristine as we can.”

Groundwater testing

The Railroad Commission staff at least twice asked the company to set up groundwater monitoring wells — an initial test conducted by the company’s own consultant had detected elevated levels of benzene in the water table. The company consultant said the benzene level was above state limits for groundwater that is used for human consumption or agricultural purposes, according to state documents.

But company officials declined to do further testing, blaming the benzene on leaks from old oil and gas wells nearby.

“DCP Midstream fully remediated the 2014 gathering line incident with absolutely no impact on the subsurface water,” Gamble said. “DCP Midstream followed the Railroad Commission rules and the field guide for the cleanup of soil from a condensate spill and successfully excavated all impacted soils.”

Soil samples tested by the company “demonstrated that the condensate spill was fully remediated, that it did not extend greater than 14 feet below ground surface and that there were no detectable hydrocarbons in the remaining soils following the remediation,” he said.

In filings with the Railroad Commission, the company said it should not have to conduct further monitoring because “there is no causation between the DCP pipeline spill incident and any alleged contamination of subsurface water.”

Pointing to old wells in the vicinity, including ones that have been cited for violations of their own, company officials said the agency’s groundwater monitoring requests were “contradicted by the facts, the science, the law, and the findings of DCP’s own experts and its expert contractors’ recommendations.”

The company said a 7-foot layer of clay beneath the spill site would have prevented any of the natural gas from seeping into the water table.

DCP lawyers said the company had followed all Railroad Commission rules and that, short of any positive proof the company was to blame, it should not be required to monitor or clean up subsurface water.

But earlier this year, a Railroad Commission administrative law judge — who had weighed arguments from the company and the Railroad Commission staff — told the commissioners that the company deserved to be penalized.

“The preponderance of the evidence presented shows there is groundwater pollution in the immediate area of the spill,” administrative law judge Clayton Hoover told the commission in April. “DCP has not brought the violation into compliance by the installation of additional monitoring wells and there is lack of good faith.”

As for DCP’s argument that old wells were to blame, Hoover said it had no real support.

“Even DCP’s own experts could not positively link the groundwater contamination with such historical operations,” he said. “It’s a mere possibility.”

And he wrote that the company had “failed to demonstrate” that the clay layer “is a competent barrier to inhibit vertical migration to shallow groundwater.”

No penalty

Hoover recommended the state assess DCP an administrative penalty of $10,000 and order the company to bring the pipeline and spill site into compliance.

The commissioners took up the matter at a meeting in April.

“One of our major duties is to protect the public and our underground drinking water,” Christian told Hoover. “But with due respect, after careful consideration of the evidence and the record, I find that DCP quickly discovered the leak, quickly cleaned it up, has adequately tested the soil surrounding the leak site, and presented evidence that any pollution in the groundwater beneath the leak site was likely caused by nearby unplugged wells. Given this evidence, staff has not met, I believe, their burden of proof to show that DCP has or by preponderance of the evidence given the groundwater pollution at issue here. Therefore I move to dismiss the complaint without prejudice.”

Craddick seconded Christian’s motion.

Sitton stepped in: “What do you envision we would do about groundwater contamination if we dismiss this case?”

“We just don’t have enough certainty here to fine DCP,” Christian said.

Craddick agreed: “I don’t think staff ever made the case that DCP had caused this. We didn’t prove our case up. There’s a lot of possibilities, and no preponderance of evidence.”

Ordering “additional wells to monitor is an overreach,” Craddick continued.

“I vehemently disagree,” said Sitton, who said DCP went at least 3½ months without reporting the leaks.

“If our approach is, ‘You didn’t notify us, no big deal. You didn’t do the tests, no big deal,’ then how are we going to get the data to make these decisions? I feel like your point here is to get them to go out and do additional tests — that ought to be exactly what we ought to do. That’s how we’re going to find out what happened in this case.”

Craddick and Christian then voted to dismiss the complaint.

“I didn’t think it was justifiable to penalize DCP Midstream and require them to conduct expensive groundwater monitoring,” Christian told the Statesman. “Holding polluters accountable means you punish those who caused the pollution, and in this case our staff did not meet the burden of proof to show that pollution was likely caused by DCP Midstream. I do not believe it is right to punish someone, unless you have proof they committed the offense.”

Before the commissioners made their decision, the staff enforcement arm had concluded that “the extent of groundwater contamination cannot yet be known because of lack of reliable data,” according to state documents, and that the company has “therefore not been brought into compliance.”

The Railroad Commission is now scheduling further groundwater assessments at the site using money from the Oil and Gas Regulation and Cleanup Fund, which is funded by oil and gas industry fees paid to the state, agency spokeswoman Ramona Nye said.



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