Louisiana: auditor finds state not effectively regulating oil and gas wells

I recently blogged about an investigation by the Pennsylvania Auditor General which found that the state's Department of Environmental Protection is "unprepared to effectively administer laws and regulations to protect drinking water and unable to efficiently respond to citizen complaints."

Now a report that raises similar concerns comes from Louisiana's state auditor regarding the regulation of oil and gas companies in that state. In Louisiana, oil and gas operations are regulated by the Office of Conservation (OC) in the Department of Natural Resources. Among the audit's findings:

  • OC does not sufficiently monitor wells to determine if they are in compliance with regulations and does not always take enforcement action when it identifies noncompliance.
  • More than half of Louisiana's oil and gas wells went without routine inspections in accordance with timeframes established by the Commissioner. From fiscal years 2008 through 2013, 53 percent  of the state's 50,960 oil and gas were not inspected when they were supposed to be: at least once every three years.
  • OC rarely imposes fines. "Since fiscal year 2008, OC has only issued an average of $150,468 in penalties each year for violations." This is the case even though the agency can impose fines of up to $5,000 per day for each violation.
  • Penalties aren't always imposed when operators fail to correct a violation. "Out of 918 compliance orders with uncorrected violations, 507 (55%) were not issued a penalty.
  • Only 25% of active oil and gas wells are required to be covered by financial security. OC’s current regulations do not require that all operators provide financial security on their oil and gas wells. The auditor looked at financial security requirements in 10 states and found Louisiana to have one of the lowest for wells less than 3,000 feet deep. Where financial security is required, OC’s requirements are not sufficient to cover the cost of plugging most wells.

Perhaps one conclusion by the auditor can summarize the biggest take-away from this audit: OC’s enforcement process does not appear to deter operators from having "subsequent violations."

The auditor's report includes 21 important recommendations. In the OC's response, the agency says that it agrees with all of the recommendations. We hope the state takes action to follow up and prioritizes putting in place the strongest rules possible--and also the political will to strictly enforce them. Louisiana has more than 50,000 active oil and gas wells, and almost 3,000 orphaned wells that have not been plugged. Each of these presents their own risks to health and the environment.