Pruitt’s EPA is boon to oil and gas

Accused polluter backs away from paying six-figure penalty in environmental settlement

FREMONT COUNTY, Wyo. — In a gas field in Wyoming’s struggling energy corridor, the Trump administration’s regulatory reversal is crowning an early champion.

Devon Energy, which runs the windswept site, had been prepared to install a sophisticated system to detect and reduce leaks of dangerous gases. It had also discussed paying a six-figure penalty to settle claims by the Obama administration that it was illegally emitting 80 tons each year of hazardous chemicals, like benzene, a known carcinogen.

But something changed in February just five days after Scott Pruitt, the former Oklahoma attorney general with close ties to Devon, was sworn in as head of the Environmental Protection Agency.

Devon, in a letter dated Feb. 22 and obtained by The New York Times, said it was “re-evaluating its settlement posture.” It no longer intended to move ahead with the extensive emissions-control system, secondguessing the EPA’s estimates on the size of the violation, and it was now willing to pay closer to $25,000 to end the 3-year-old federal investigation.

Devon’s pushback is the first known example under the Trump administration of an accused polluter — which has admitted violating the law — backing away from a proposed environmental settlement. It is being hailed by other independent energy companies as a template for the future.

“Not in our wildest dreams, never did we expect to get everything,” said Kathleen Sgamma, president of Western Energy Alliance, a Denver-based association of independent oil and gas companies. “We were kind of used to getting punished.”

Across the federal government, lobbyists and lawyers who once battled regulations on behalf of business are now helping run the agencies they clashed with.

President Donald Trump and his team believe that loosening the regulatory grip on business will help the economy, create jobs and allow Americans “to share in the riches,” as he said during the campaign. But in the energy field, environmentalists, Democrats and even some in the industry fear the efforts will backfire, harming health and safety without creating much economic benefit.

The EPA has not yet made a public response to Devon’s new posture, and Pruitt declined to comment for this article.

In just the past three months, with Pruitt in charge, the EPA postponed a long-planned rule requiring companies like Devon to retrofit drilling equipment to prevent leaks of methane gas — a major contributor to climate change — and to collect more data on how much of the gas is spewing into the air.

Interior officials have also announced their intention to repeal or revise a contentious rule requiring companies like Devon to take extra steps to prevent groundwater contamination caused by hydraulic fracturing, also known as fracking, a drilling technique in which chemicals and water are forced into rock formations.

Environmental groups like the Natural Resources Defense Council and the Environmental Defense Fund are outraged by these moves, and have vowed to fight any rollbacks in court.

“Devon is doing to the oil and gas industry what Donald Trump did to the Republican Party, pushing the whole agenda into a world of extremes,” said Mark Brownstein, a vice president at the Environmental Defense Fund.

The rollbacks cap a carefully coordinated campaign over the past eight years led in part by Devon, which is based in Oklahoma City and is the nation’s eighth-largest natural gas producer, and Pruitt, who served six years as Oklahoma attorney general before Trump named him EPA chief.

Devon and Pruitt, while he was still attorney general, teamed up to block new federal rules imposed by the Obama administration that required fossil fuel companies to more closely monitor oil and gas wells for leaks, and disclose chemicals used in fracking. Devon also poured millions of dollars a year into lobbying — and hundreds of thousands into campaign contributions to Pruitt and other Republicans — as it pushed regulators and lawmakers in Washington to do away with the restrictions.

In Riverton, Wyo., a frontier city a halfhour drive from where Devon operates its gas field, a fossil fuel revival could not come quickly enough.

Well-paying jobs in oil and gas are fast disappearing, as production in the state declines because of a slump in energy prices. Government agencies are bracing for cuts to basic services because of declining tax revenues from fossil fuel companies.

In the first year of the Obama presidency, Devon’s spending on lobbying jumped nearly 350 percent to $2.5 million.

The first major target was an EPA datacollection effort that had determined methane emissions caused by oil and gas operations were much larger than Devon’s calculations. Air pollution from the oil and gas industry was being blamed for extreme declines in air quality in rural areas of Wyoming and Utah.

Devon initially participated in a voluntary program to capture leaking methane, or close off leaks, but was so suspicious of the Obama administration’s intentions that it dropped out.

Within weeks of Pruitt’s confirmation as EPA administrator, the dismantling of the Obama-era rules was set in motion.

In April, Pruitt notified the oil and gas industry that he was granting its wish to at least temporarily suspend the agency’s new rule.

Devon Energy was poised to be a major beneficiary of the changes.

Killing the methane rule would save Devon an estimated $430,000 a year in the four states where it operates wells, according to an analysis by the Environmental Defense Fund.

Some Democrats in Congress have questioned whether Pruitt is taking actions explicitly to benefit Devon and other financial supporters.

In a letter last month, Sen. Sheldon Whitehouse, D-R.I., and three other Senate Democrats pressed Pruitt to explain why he canceled the data-collection effort on methane.

Pruitt agreed in early May to recuse himself from taking part in the agency’s response to the lawsuits he had filed as attorney general, including one challenging the EPA’s methane rule.

Oil and gas companies are hoping that Pruitt’s business-friendly approach will be extended to enforcement issues. Devon was first targeted by the EPA in 2014, after it was accused of illegally discharging 80 tons a year of volatile organic compounds into the Wyoming air. The company had been close to reaching a settlement with the federal government.

Devon disclosed in a filing with the Securities and Exchange Commission, on Feb. 15, that negotiations with the EPA “may result in a fine or penalty in excess of $100,000.”

But two days after that disclosure, Pruitt was confirmed as EPA administrator, and by the next week, Devon was changing its tune.

Tim Hartley, a Devon spokesman, acknowledged that the company had laid out a shift in its negotiating position. But he attributed the change to “simple economics.”

The plant, he said, was marginal and had been considered for shutdown, and adopting a sophisticated leak-detection program there was not economically feasible, especially at a difficult time for the oil and gas industry.

Hartley said that the violations stemmed from a misinterpretation of complicated regulations and that Devon had not intentionally circumvented the rules. He said Devon had not contacted Pruitt about the case.

The EPA has not yet made public the investigation, or its decision on a settlement. Andrew Mutter, a spokesman for the agency’s Colorado regional office, which covers Wyoming, said that talks on the matter remained active. The Justice Department attorney in charge of the case did not return requests for comment.