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According to documents and interviews, state regulators have recently unveiled their proposed regulations outlining the appropriate handling of hazardous oilfield waste after drilling a well. The public is now granted a one-month window to provide feedback on these rules. Interestingly, certain industry representatives have already been offering their input for over two years.
Starting from 2021, the regulations were drafted with the assistance of oilfield waste executives and consultants. Additionally, the Railroad Commission of Texas, responsible for industry regulation, received valuable input from advocates of the oil and gas business.
The attempt was set in motion by a commissioner who holds investments in oilfield waste companies. Jim Wright, one of the agency’s three elected commissioners, campaigned with the intention of revising Rule 8. According to statements submitted to the Texas Ethics Commission, Wright possesses shares in various hazardous waste management companies in Texas.
During an interview, Wright dismissed critics who accuse him of being a biased regulator due to his involvement in the industry. He claimed that he had minimal influence on rewriting the rules after assuming the role of commissioner. Moreover, he asserted that being a part of the Commission has actually been detrimental to his businesses rather than advantageous. According to Wright, very few companies are willing to take the risk of engaging with businesses linked to regulatory authorities.
Wright clarified, “To those who believe that this rule is solely my decision, driven by my own preferences, I assure you that is completely untrue. The commission staff had recognized the imperative to thoroughly evaluate Rule 8 long before I assumed office.”
According to Wright, he is of the opinion that the newly implemented regulations will be advantageous for the entire Texan population, extending beyond just the oilfield waste sector.
Supporters of industry’s early involvement say the rules, which haven’t been significantly revised since 1984, needed to be changed to make the permitting process more efficient and to allow new waste recycling technologies to be permitted. Critics say the revised regulations would benefit the industry over the public.
Virginia Palacios, executive director of Commission Shift, a watchdog group advocating for stricter financial policies for commissioners, expressed concerns about the industry having the ability to modify their own regulations for personal financial gain. She emphasized the potential harm caused by such actions, including the occurrence of illnesses, groundwater contamination, and the jeopardizing of our collective future.
Disagreeing with the statement, Michael Lozano, responsible for communications and government affairs at the Permian Basin Petroleum Association, provided input on the draft rules to the Commission before their release.
He stated, “While acknowledging the environmental NGO’s perspective, it is important to note that they may lack knowledge about the practical implementation of their suggestions and the daily operations of operators. It is essential for everyone to strive for stringent environmental standards.”
According to Patty Ramon, spokesperson for the Railroad Commission, it is customary for the agency to seek early input from the industry. Ramon mentioned that they have also extended an invitation to at least one individual from the public who had previously protested a facility’s permit, in order to gather their early feedback.
The disposal of large quantities of waste is regulated by complex rules. In Texas, numerous wells are drilled annually by companies. During the drilling process, mud is commonly injected into the ground, resulting in the extraction of rocky soil and a salty liquid called “produced water” along with the oil and natural gas. Consequently, there is a need for proper management and disposal of this waste.
That’s where Rule 8 comes in.
The Railroad Commission uses Rule 8 to decide how companies should handle that material. Unlike most hazardous waste, the toxic muck from the oilfield is exempt from federal regulations. The state regulations govern how waste can be recycled or dumped — typically in pits near the well or in commercial hazardous waste pits.
If the pits are not appropriately managed, they have the potential to release toxic chemicals and radioactive materials, resulting in surface and groundwater pollution.
In recycling, the mud can be cleaned and used for more drilling, rocks and gravel can be used to build roads and some of the less-contaminated water can be removed for other uses. However, “produced water” is most often injected back into the earth under a different permit, a method that has caused an increase in earthquakes across West Texas.
According to Ramon, the proposed rule change aims to introduce new environmental standards, including restrictions on waste pit locations, provisions for innovative oilfield waste recycling methods suggested by companies, and limitations on permit protests. Environmental groups have expressed concerns that these changes could reduce public involvement, but Ramon argues that filing a protest is not a complicated procedure and that the revisions would primarily prevent competitors from submitting protests.
Texans have until 5 p.m. on Nov. 3 to give feedback on the draft changes by filling out an online form or attending a meeting at 10 a.m. Oct. 26 at the Commission’s office or 9 a.m. Oct. 27 online at adminmonitor.com/tx/rrc. There will then be another formal proposal and chance for comment later.
Residents want more protections; new rules would allow industry-created pilot programs
For years, Texans have been making efforts to prevent the relocation of oilfield waste dumps into their communities, a challenging battle according to some.
Ron Pilsner, a 63-year-old resident, resides in a quaint city named Nordheim, located southeast of San Antonio. In this region, drivers transport waste to a commercial pit facility situated adjacent to Pilsner’s family-owned farm, a place that holds deep sentimental value as it has been passed down through generations. The property is characterized by a charming ranch-style home, encompassed by picturesque scenery including Black Angus cattle, majestic oak trees, and vast stretches of lush grassland.
Pilsner expresses how the facility has disrupted their tranquility. During the night, obtrusive bright lights illuminate the surroundings. The constant beeping of vehicles reversing and the unpleasant odors of petroleum, insecticides, and a skunk-like scent further contribute to the disturbance. Consequently, Pilsner no longer feels comfortable opening the windows and is concerned about potential leaks from the waste pits, which could contaminate the local groundwater.
Nordheim residents tried to stop a San Antonio-based developer from building the pits in 2014. Pilsner’s parents, Marvin and Bernice, joined the protesters, who put up “DON’T DUMP ON NORDHEIM” signs with a skull and crossbones. The couple went at least once to Austin to ask the Railroad Commission not to approve the project.
The agency approved it anyway; a lawsuit by residents seeking to overturn the decision failed.
Petro Waste Environmental’s construction and operations caused the nuisance to worsen, ultimately leading Pilsner’s dad to halt the renovation of the farmhouse, which was supposed to be his retirement haven. Despite his usual frugal nature, he spent $16,000 on new furniture. Tragically, he never had the chance to sleep on the new mattresses as he had to move into a nursing home. Unfortunately, he passed away last year.
In the blazing heat of a September afternoon, Pilsner accompanied Sister Elizabeth Riebschlaeger, an 87-year-old Catholic nun with relatives in Nordheim, on a tour around the waste pit’s surrounding area. Riebschlaeger passionately advocated for the commission to grant citizens a greater voice in the matter.
“Although we may be defeated,” Riebschlaeger remarked, “we are not giving up and are still making our voices heard.”
Waste Management, the company that purchased Petro Waste in 2019, confirmed that it adhered to the existing Rule 8 and anticipated no modifications to be necessary in light of the proposed regulations.
The company affirmed that it ceased accepting certain odorous materials in 2021 and was actively working on minimizing truck traffic at their facility. The statement emphasized the company’s dedication to safety and being a responsible neighbor.
The proposed regulations state that only individuals, such as the Pilsner family, who own land neighboring a potential waste pit or recycling facility would receive notification regarding a company’s intention to establish its facility in that area.
Only individuals who can demonstrate that they would experience “real harm or financial loss” as a result of a waste pit would be eligible to voice their opposition to a new facility permit. This definition aims to minimize the impact of environmental organizations in preventing the construction of new pits. These individuals would be given a 15-day window to file a protest, starting from the moment the company submitted the application or released public notice. Subsequently, the company would have 30 days to either retract the permit application or seek an administrative hearing to resolve the conflict.
The introduced draft rules additionally provide companies with the opportunity to establish pilot programs for managing their waste. Rather than simply disposing of it in pits or recycling it, companies can suggest alternative recycling approaches that are not addressed in the regulations.
The modification aims to address the industry’s concern regarding the inflexibility of existing regulations in accommodating new technologies. However, environmental groups express concerns about the potential for new methods to receive expedited permits with insufficient oversight.
The new rules otherwise update existing standards, adding detail and codifying what was internal guidance used by Railroad Commission staff. For example, under current rules the pits are required to have a plan to manage stormwater runoff, including during intense rainfall events, and cannot be located in a floodplain. Under the new draft rules, such pits also can’t be located on a beach, barrier island, or within 300 feet of wetlands, rivers, streams or lakes. Nor can they be located within 500 feet of any public water system well or intake location.
The old rules said liners for waste pits must “reasonably” prevent pollution but didn’t include specific standards. The draft rules say pits must be lined with a plastic strong enough to resist damage from crude oil, salts, acids and alkaline solutions. Critics of the commission said the new liner standards aren’t much stronger than the internal guidance used by the agency.
Critics additionally highlight the absence of penalties specified in the draft rules for instances of pit leakage or operators’ noncompliance with their permit requirements. According to Ramon, the spokesperson for the commission, further information regarding fines would be provided in the official rule proposal and would probably align with the current regulations.
Critics argue that allowing fines to be determined on a case-by-case basis and potentially reduced if a company demonstrates “good faith” would provide companies with greater flexibility to challenge the fines.
Industry drafts the rules
The draft rules serve as the fulfillment of a goal and campaign vow for Wright, a Republican hailing from South Texas, who secured a position in the Railroad Commission in 2020. Wright’s initial attempt to shape the agency’s regulations dates back to his involvement in the oilfield waste services sector.
According to state filings, Wright served as the CEO and president of Environmental Evolutions, a company based in Corpus Christi that specializes in hauling hazardous waste and holds investments in other hazardous waste companies. Wright expressed his desire to assist the commission’s staff, alongside his clients, in providing guidance on the consistent implementation of regulations that impact their operations.
At the time, one commissioner agreed to give the group access to commission staff members, according to an interview Wright did on a podcast, but none of the staff actually wanted to work with them on the rules at that time. A 2019 bill to formalize a commission-appointed oil and gas advisory group failed to pass.
Wright made the decision to pursue a seat on the Railroad Commission.
Campaign finance reports reveal that Wright has accepted campaign donations from the oilfield waste industry. One of his major contributors is NGL Water Solutions Permian LLC, the oilfield waste division of NGL Energy Partners, which has generously donated $226,000 to Wright since 2019. Additionally, a company executive has personally contributed an extra $2,500. It is worth noting that NGL Water Solutions Permian LLC has also made donations to the campaigns of the other two commissioners, Christi Craddick and Wayne Christian.
During an interview, Wright expressed his perspective on campaign fundraising as a “necessary evil” when it comes to being involved in politics. However, he emphasized that campaign donations do not influence his decision-making process regarding the Railroad Commission. Wright made it a point to communicate this clearly to his donors.
After he defeated the better-funded incumbent Ryan Sitton in an upset, Wright’s staff turned to the waste rules, internal documents show. An investigative watchdog group called Documented obtained copies of the documents through public records requests and shared them with the Tribune.
Kate Zaykowski, the ex-director of public affairs at Wright, played a key role in establishing a regulatory task force. This task force consisted of representatives from various oil and gas and oilfield waste companies, including Pioneer Natural Resources and Waste Management, Inc.
Kevin Ware, the chair of the task force, stated that in early 2021, they meticulously reviewed a previous effort from several years ago to modify the regulations. This served as a foundation for establishing precise guidelines on the approval and denial of permits. Once the task force completed their assessment, they presented their proposed revisions to the commission.
Afterwards, the Commission staff extended an invitation to influential oil and gas lobbying organizations to participate in an “unofficial evaluation” of the task force’s suggestions. Notably, representatives from leading corporations like ExxonMobil, Apache Corp., and Chevron were welcomed to Commission meetings concerning the regulations. These companies, along with at least one lobbying group, provided input and raised inquiries.
In August 2022, Mark Henkhaus, a consultant and former employee of the Railroad Commission who also chaired a regulatory committee for the Permian Basin Petroleum Association, expressed his concerns in an email to a commission staff member. He suspected that an oil waste company may have been attempting to manipulate the regulations to favor their own interests.
Henkhaus wrote, “I want to ensure that the waste handlers are not exploiting the Commission for their own business gains, if you catch my drift.” Henkhaus refused to provide any comments.
According to Aaron Krejci, the director of public affairs at Wright, the task force has been reactivated and their input has been requested. However, he clarified that he was not personally engaged in the group’s discussions or their recommendations to the agency staff.
Krejci stated in an email that the task force played a crucial role in initiating the rulemaking process. However, he clarified that the recently released rule was not developed by the task force, but rather by the Commission staff who have been internally working on these updates for a considerable period.
According to Wright, if the regulations were solely designed to favor the waste management industry, they would remain unchanged as the current state of affairs generally benefits business.
In contrast, he labels the draft rules as a positive progression in the Railroad Commission’s capacity to effectively oversee an industry that has undergone significant transformations in the past forty years and safeguard water resources against pollution. He highlights that the rules incorporate fresh guidelines for maintaining distance from surface water and improved criteria for lining waste pits.
“I believe that Texas, not just the industry, is benefiting from this,” Wright asserted. “I fail to perceive any intentions of formulating this rule solely for the advantage of the industry.”
Carla Astudillo contributed to this story.
Disclosure: Exxon Mobil Corporation and Permian Basin Petroleum Association have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.
