If you're looking for a dramatic example of a government regulatory agency run amok, consider EPA’s arbitrary and shameful attack on one Texas natural gas company.

In December 2009, one Steven Lipsky noticed a problem with his water well at his new home just west of Dallas, Texas. He began to suspect that the source was a nearby natural gas well that Range Resources had built and “fracked” earlier that year to exploit a part of the massive Barnet Shale a mile underground.

The technique of hydraulic fracturing, which permits extraction of oil and gas from impermeable rock such as hard shale, has vastly increased the country’s recoverable reserves of energy. In the last year, the U.S. has doubled its estimate of the recoverable natural gas in the U.S., and a single new find, the Marcellus Shale in Pennsylvania and New York, is thought to contain more total energy than all of Saudi Arabia.

Naturally, the prospect of a boom in fossil fuel production has driven environmentalists crazy. Environmental activists soon made contact with Mr. Lipsky, told him to watch a largely fraudulent documentary called Gasland, and encouraged him to bring EPA into the action quickly. In later summer 2010, he duly filed a complaint with both federal and state regulators.

EPA testing soon showed that there were traces of methane in his drinking water, and that, like the methane deep in the Barnet Shale, it was “thermogenic” rather than “biogenic.” All that proved was that both samples had come from deep underground, which was obvious anyway. But that was all the EPA needed to slap Range Resources with an endangerment finding and remediation order. “We know they’ve polluted the well,” claimed EPA regional administrator Al Armendariz in a television interview at the time. “We know they’re getting natural gas in there.”

In fact, Armendariz didn’t know anything. A week after the EPA order, its staff met with the company, which wanted to find out just how EPA thought it had polluted the well. The gas from the company’s well could only have gotten into Mr. Lipsky’s well in one of two ways: either it had migrated vertically over 5000 feet up to the Trinity Aquifer as a result of 10 days of fracking the new well, or it had migrated into the aquifer from a mechanical integrity failure in the well pipe. EPA staff agreed that fracking could not have caused the contamination, because there were no faults extensive enough to permit migration of gas over such a great distance. And they did not dispute the veracity of the pressure-testing that confirmed the mechanical integrity of the well. They couldn’t propose a single theory as to how the gas had gotten into the well.

Range challenged the order in court, and after EPA fought mightily to avoid having anyone testify at all, a federal judge ordered EPA to provide information about its investigation and make someone available for a sworn deposition. Under oath, regional EPA enforcement chief John Blevins was confronted with internal emails in which an EPA engineer warned that the simple methane isotope test EPA had conducted was not “conclusive” proof.

Range lawyers asked Mr. Blevins whether he was aware that many of the water wells in the area had contained natural gas long before any drilling. He was. Had he seen the email from an outside scientist telling EPA that it had to “evaluate the potential for other sources that would be thermogenic and the geology or structures that would store or transmit the gas from origin to aquifer.” He had. Had EPA had considered other possible geological sources of the gas in the Lipsky well? It had not.

In other words, EPA hadn’t even completed the most elementary investigation before issuing the “emergency order.” If they had, they would have quickly realized what the source of the gas was. Just beneath the Trinity Aquifer, from which the Lipsky well draws its water, is a rock strata laden with natural gas and salt water called the Strawn formation, which extends down to about 400 feet underground. Over 5,000 feet below that is the Barnett Shale, from which Range was extracting natural gas.

The Trinity Aquifer and Strawn formation overlap in places, which allows gas and salty water to migrate from the Strawn to the aquifer. Residential development in the area has decreased the pressure in the aquifer, which causes gas and salt water to be drawn in from the formation underneath, particularly where water wells have drilled through the Trinity and into the Strawn.

Confronted with this information, Blevins backed away from the original order. He would not affirm that the company had “caused or contributed to” the endangerment; only that the company “may have” done so.

A complex battery of chemical finger-print testing, focused particularly on nitrogen content, quickly and irrefutably demonstrated that the gas in the Lipsky well was the same as that in the Strawn formation, and different than that in the Barnet Shale. That explained why area residents had found natural gas in their water wells years before any drilling for natural gas. Some water wells were even “flared” for days after drilling, to release dangerous levels of methane. One area subdivision’s water tanks warn “Danger: Flammable Gas.”

At every step in this fast-moving fiasco, EPA’s legal position shifted: Its original order was based on the factual assertion that Range had caused the contamination; when it couldn’t explain how, it retreated to the position that Range “may have” caused it; and when that possibility was excluded, it retreated to the ultimate redoubt of government authority: arbitrary power. Now, confronted with incontrovertible evidence that the source of the gas was something else entirely, EPA claims that the law didn’t require to prove or even allege any connection between Range and the contamination. It is suing Range for millions of dollars for failure to comply fully with its original order.

Agencies are not required to establish causation prior to issuing an emergency order; due process requires only a speedy determination of the facts. But was EPA required to make any factual inquiry at all? Apparently not: Under Sec. 1431 of the Safe Water Drinking Act, the EPA administrator may “take such actions as he may deem necessary” when he knows of a possible contamination of drinking water, including “issuing such orders as may be necessary to protect the health of persons.”

The plain meaning of this provision is that EPA can commandeer anybody at random and force him to clean up, at his own expense, a problem that he can immediately prove he’s had nothing to do with.

By now it should be no surprise to learn that the Lipsky well wasn’t even “contaminated” to start with. The methane measured in Lipsky’s well water, 2.3 parts per million, was well within the typical range for wells in that area, and significantly below the federal endangerment threshold of 10 parts per million. According to the Department of Interior, water wells bearing methane below that threshold pose no endangerment if properly monitored and vented.

There’s more. When the original order came down, EPA regional administrator Armendariz explained that he had to act fast because “Natural gas could be building up in the homes … There’s a danger of fire or explosion.” In fact, Mr. Lipsky had disconnected his well from the house months before, and the other residential well mentioned in the order had been configured so that the gas never reached the resident’s house at all. Armendariz very simply had no idea what he was talking about, and has had none from the start.

What are the lessons of this crazy story? First, EPA administrator Armendariz should be fired. Second, state regulators should have been allowed to deal with the problem from the start. They know the area, they knew where the gas was coming from, and they knew that Lipsky’s house was not in imminent danger. EPA regulators, by contrast, don’t know the area, they have no experience with oil and gas operations, and they jumped to all of their conclusions based on uneducated guesses.

By a deft use of the precautionary principle, environmentalists have learned to make their righteous indignation weigh more than the facts. It’s madness to give people in that frame of mind such a degree of arbitrary power.

Mario Loyola is a fellow at the Texas Public Policy Foundation.

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