Targeted by the EPA

A three-inch lizard scuttled into the spotlight in December after the U.S. Fish and Wildlife Service proposed moving it onto the Endangered Species List. The dunes sagebrush lizard’s habitat covers just eight counties on the Texas-New Mexico border, right in the heart of the Permian Basin, a major oil-producing region. Particularly in Texas, industry leaders and local businesses see the action as hostile​—​another Obama administration environmental policy targeting their successful, energy-sparked economy.

“This is a lizard versus families,” says Bill Hammond, president of the Texas Association of Business, the state’s largest business interest group. “Nothing is more important than a job.”

Setting 1980s Dallas stereotypes aside, oil and gas production is between 12 and 15 percent of the Texas economy. It’s more than 70 percent of the economy in the vast and sparsely populated Permian Basin. The 17-county basin produces nearly 20 percent of all domestic crude oil. Of the eight counties in the lizard’s habitat, four are in Texas. All those are among the top ten oil-yielding counties in the state.

In its proposal to list the lizard as endangered, U.S. Fish and Wildlife argues that several activities fragment the creature’s habitat. Together these constitute a clean sweep of the region’s economic drivers: oil and gas (particularly exploration), wind turbine erection, and agriculture. The dunes sagebrush lizard resides only in areas with sandy dunes covered by low-lying shinnery oak trees.

A public comment period closed May 9, and U.S. Fish and Wildlife will decide by mid-December whether to put the lizard on the Endangered Species List. An “endangered” finding triggers an assessment period to define the lizard’s range and identify protection strategies. At that time, new surface-disrupting economic activity and perhaps maintenance of existing wells and windmills could be hampered.

Steve Pruett, president and CFO of Midland-based Legacy Reserves LP, explains that stifling exploration threatens the most jobs. He hires subcontractors to operate his rigs, the towering structures used to drill wells. Legacy runs just one rig in the lizard’s presumptive habitat, but 131 other rigs are active, each of which drills two wells a month and employs about 150 people.

“We wouldn’t be contracting as many wells to be drilled,” Pruett says. “Not to mention the general loss of confidence of our investors. We would have less production and less cash to pay out.”

According to Permian Basin Petroleum Association president Ben Shepperd, wells produce at diminishing rates, making new exploration vital to retaining blue-collar workers like roughnecks and roustabouts. He cites a study that found a majority of jobs even in the cities of Midland and Odessa depend on oil and gas production.

“If oil and gas were to stop out here, these West Texas towns would just dry up and blow away,” Shepperd says. Excluding giants like Chevron, the average Permian Basin Petroleum Association member employs about 10 people.

Texas opponents of listing the lizard dispute the thoroughness of U.S. Fish and Wildlife’s science and say they will work cooperatively to rehabilitate the population. Conservation agreements​—​another way to restore species populations​—​are already in place in New Mexico. With the agreements, private landowners, businesses, and the government follow a prearranged plan, although Sheppard says signing on can cost an oil business as much as $20,000 per well.

Texas land commissioner Jerry Patterson told an industry rally in Midland in late April that the state’s landowners and businesses need a chance to work out agreements with the fish and wildlife service. The state currently enforces mitigation for turtle populations near drilling along the Gulf Coast, an arrangement that followed a court battle. “We can plant a lot of shinnery oak if we need to,” Patterson said. “It’s not the lizard or us. It’s both of us.”

Even if Texas, with New Mexico’s help, is able to avoid endangered species classification for the dunes sagebrush lizard, a proposed listing for another species in the Permian Basin, the lesser prairie chicken, lurks in the future.

Hammond, with the business association, says the effort to list the lizard as endangered is but one grievance his group has with the Obama administration, which he says is engaged in a “job-killing enterprise” against Texas.

Texas’s showdown with the Environmental Protection Agency over air permitting is the major concern.

“Industry has spent literally trillions of dollars to bring air quality to a level that is perfectly acceptable,” according to Hammond.

Industry efforts aside, last year the EPA ruled that certain permits issued by the Texas Commission on Environmental Quality​—​which had regulatory authority under the Clean Air Act​—​do not comply with federal law. Operating under the permits since 1994, more than 100 businesses have been left in legal limbo while Texas contests the decision.

One affected business is EBAA Iron, Inc., a family-owned iron foundry with 250 employees at plants in Eastland and Albany, Texas. Until last year, the foundry ran under a flexible permit issued by the state environmental agency. The flexible permits emphasized results over an entire organization, while EPA concerns itself with individual sources of emissions.

Jim Keffer, president of EBAA Iron, Inc., says his staff has contacted EPA for guidance but keeps getting put off. The business, which opened in 1964, may be operating illegally.

Keffer runs the iron foundry full time, but he also serves as the state representative for his area and chairs the Texas House Energy Resources Committee.

“Everywhere you look, every time you turn around, the federal government is trying to stop exploration, to stop the use of fossil fuels,” Keffer says. “We’re trying to work on self-reliance. We’re trying to explore and bring to the country the resources that Texas has been blessed with.”

While the Texas Commission on Environmental Quality’s mission requires it to consider economic impacts, U.S. Fish and Wildlife and EPA don’t have to. Keffer points out EPA’s December emergency order to a Fort Worth company under the Safe Drinking Water Act. The agency acted in response to alleged contamination of two drinking water wells, even though the state’s gas regulatory agency had been on the scene. More than a mile separates the shallow wells from Range Resources’ natural gas wells. The company says it has spent $1.5 million defending itself against the EPA order.

“The EPA was having a press conference before they had all the facts,” Keffer says. “If you sit back and take in all that’s happened, it’s easy to look at a conspiracy theory.”

The Texas Public Policy Foundation, a free-market think tank, held a briefing last month on 10 proposed and adopted rules it says constitute an “Approaching EPA Avalanche.” The organization is most concerned with EPA’s order that states regulate greenhouse gas emissions from major sources. The Lone Star State alone refused to comply, although at least 20 others are also suing the agency over greenhouse gas regulations.

TPPF scholar Kathleen Hartnett White, a former state environmental director, says the rules also require “Rolls Royce” emissions control technologies on industrial boilers and certain cement kilns. Unions claim the boiler rule alone could send 700,000 U.S. jobs to countries less concerned about air quality.

EPA is also considering tightening standards on “coarse particulate matter,” White says, and the proposed rule would drop the exemption for rural dust, a fact of life in West Texas. Remediation techniques for rural dust suggested by EPA include watering dirt roads and no-till days for farmers.

Because of the makeup of its economy, including the nation’s largest petrochemical complex, in Houston, Texas will be disproportionately affected by most air quality regulations. White says it doesn’t matter if Washington is deliberately picking on her state, though the administration’s actions speak to a strong desire to make alternatives to fossil fuels more appealing.

“We are a bad example,” White says. “We are not what the administration would like to see.”