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Sinclair Oil refinery
The Sinclair Oil refinery near Rawlins. (Courtesy photo)

CASPER — Presented with declining revenue, Wyoming lawmakers are determined to hold the line on spending during this budget session. But the state’s own energy ambitions force legislators to contemplate something that goes against their current fiscal instincts: increasing regulatory budgets.

The quandary resurfaced last week when a bill possibly requiring one additional staff position to help oversee new wind energy regulatory duties within a division of the Wyoming Department of Environmental Quality received lukewarm support in committee, along with much hand-wringing.

Budget issue

“We’re sitting here trying to recognize we have a state budget issue, and we also recognize we have a fairly good workload. What I tell legislators is, ‘I can’t tell you if we’re going to have a drop-off in permits,’ ” DEQ Administrator John Corra said.

Last week, Corra told House and Senate committees that the DEQ can manage its workload with its current staff of 267 employees. At the governor’s request, the DEQ and other state agencies made budget cuts of 5 percent to 10 percent.

But could holding the line on the budgets of state regulatory agencies make Wyoming and its energy industries more prone to federal intervention — particularly from the U.S. Environmental Protection Agency?

Some government watchdogs believe that’s already the case and that it’s been going on for years.

“DEQ certainly has some good people on the ground who do their level best, but often they cannot cover the vast expanse of Wyoming industry,” said Jill Morrison, community organizer for the Powder River Basin Resource Council, a landowner advocacy group.

Big workload

Natural-gas production in the Rocky Mountain region doubled to 8 billion cubic feet per day from 2002 to 2009, with Wyoming leading the way. During the same period, Wyoming annual coal production spiked by more than 15 percent to nearly 430 million tons.

Since 2003, the number of permitted facilities that the DEQ must oversee grew by 8,000 to 28,000 — a 40 percent increase, according to the DEQ. During the same period, the DEQ added 55 people to its staff for a total 268 full-time positions, a 26 percent increase.

Morrison and others suggest that a lack of proper oversight — particularly on the inspection and enforcement side — of Wyoming’s mineral and energy industries has essentially invited federal attention to areas where the EPA and the state already have policy disagreements.

“I think they (DEQ) have a tiger by the tail,” said Richard Garrett, energy and legislative advocate for the Lander-based Wyoming Outdoor Council.

The DEQ’s effectiveness has been called into question due to ozone problems in Pinedale related to deep natural gas drilling. There are groundwater concerns in Pavillion, and an oil refinery near Rawlins has spilled, on at least 14 occasions, toxic chemicals onto the ground and into the air during the past 12 months.

All of which has attracted inquiries and demands from the EPA’s Region 8 office in Denver.

In 2008, Corra said it was a lack of oversight by his own agency that allowed an alarming volume of environmental violations, including numerous spills, to go on for years at the state’s only operational in-situ leach uranium mine in Converse County.

Workload increase

Given the recent track record of human health and environmental concerns, Garrett said it is reasonable to ask whether state regulatory agencies will be prepared to manage a potential increase in permitting, inspection and enforcement duties.

Wyoming’s new wind energy industry could grow 10-fold beyond 4,000 wind turbines over the next 10 years. Recent momentum toward adding more nuclear power increases the likelihood that Wyoming will soon be home to a dozen or more new in-situ uranium mines. Within a few years, Carbon County could host the first-in-the nation coal-to-gasoline refinery.

“It is probably more likely that our workload is going to get a little heavier rather than a little lighter, based on the outlook of the economy,” Corra said.

The potential for energy growth and DEQ-permitted facilities in Wyoming goes on, as do potential conflicts with human health and the environment.

“Collectively, we as a state should be willing to fund these positions and willing to take care of these resources the way they should be taken care of,” Garrett said.

Doing its job

Corra said he’s confident that the DEQ is sufficiently staffed to oversee the agency’s large and growing workload.

In addition to past increases in staff, the department has increased productivity through electronic permitting and various efficiency improvements. The DEQ also performs a lot of boots-on-the-ground inspections, he said.

Seventy-four employees are dedicated to inspection duties, Corra said. In 2009, they conducted nearly 2,900 inspections.

“That’s not bad coverage,” he said. “You never have enough inspectors to be everywhere at once 24/7, so you have to rely on enforcement.”

On the enforcement side, Corra said the DEQ has increased the amount of penalties and fines it collects from violations. From 2003 to 2005, the DEQ was collecting an annual average of about $450,000 in penalties and fines. From 2006 to 2009, that figure increased to about $1.2 million annually, according to the DEQ.

“We try to make sure we have an adequate number of people out on the job inspecting, and use fines as a deterrent,” Corra said.

A vast majority — nearly 100 percent — of DEQ’s enforcement actions end in settlements. But Morrison said she doesn’t believe the settlements are a strong enough deterrent.

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She noted that it was the EPA, not the DEQ, that penalized the Cheyenne Frontier Refinery in 2009 for dumping hazardous waste, over several years, in a pond not meant for the waste.

“It finally took the EPA Region 8 to step in,” Morrison said.

Another concern, she said, is the fact that DEQ mostly relies on each company itself to report spills and problems. “And then they (DEQ) investigate.”

Complexities

There are important complexities to consider behind each environmental challenge that makes headlines in Wyoming, Corra said.

For example, the high ozone levels that have forced residents in the Pinedale area to avoid going outside on several occasions in recent years is not a matter that falls exclusively under the DEQ’s authority.

One of the main factors in the high ozone events is believed to be the massive drilling activity in the nearby Pinedale Anticline deep natural gas play. Corra noted that it is largely up to the U.S. Bureau of Land Management, not the state, as to how many wells are drilled and when.

In fact, Corra contends that Wyoming DEQ was the first state regulatory agency in the nation to require “minor source” regulation on the oil and gas industry to get a handle on emissions from diesel- and natural gas-fired engines.

He said the agency has also been successful in securing additional sources of revenue to implement expanded air and water monitoring in problem areas of the state.

As for egregious spills such as those reported from Sinclair Oil’s refinery in Carbon County, Corra said the DEQ cannot control mishaps. DEQ is currently seeking monetary penalties and corrective actions from Sinclair.

As for Cameco Corp.’s yearslong record of repeated violations at its Smith Ranch-Highland in-situ leach uranium mine north of Douglas, the DEQ reached a settlement of $1 million, plus an additional $400,000 if Cameco didn’t follow up with terms of the agreement.

In anticipation of several new and restarting uranium mines, Corra said the DEQ has already reassigned several staff members in the Land Quality Division to oversee and “tighten up” permits.

“I’m very confident we’ve got the experience and expertise and skills inside the agency,” Corra said.

Contact Dustin Bleizeffer at dustin.bleizeffer@trib.com or 307-577-6069.

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