Texas companies involved in illegal air pollution releases were penalized by the state in fewer than 3% of all cases,according to a new report.

The figure underscores the need for strong federal oversight in a period when the Trump administration is seeking to slash the Environmental Protection Agency’s budget and roll back rules, said Ilan Levin, associate director of the Environmental Integrity Project (EIP).

“Lax enforcement at the state level is a real problem at a time when EPA is being gutted,” he said.

The report, Breakdowns in Enforcement, was released on Friday by the EIP and Environment Texas. The advocacy groups’ analysis of state records found that overall Texas imposed penalties for 588 out of 24,839 “malfunction and maintenance events” reported by companies from 2011 to 2016. The incidents caused the emission of over 500m pounds of pollutants and total fines amounted to $13.5m.

In 2016 there were 3,720 unauthorised pollution events but only 20 times did the state regulator, the Texas commission on environmental quality (TCEQ), impose a penalty, the report found.

Texas is the US’s leading oil and gas producer, making it a template for others. “Other states follow Texas when it comes to environmental regulation,” Levin said. But environmentalists have long complained that the Republican-dominated state government is too soft on an industry that is vital to the state’s economy but a major source of pollution.

“The State of Texas claims primary responsibility for enforcing antipollution laws, but itself rarely takes action against companies for allowing dangerous amounts of soot, sulfur dioxide, benzene and other pollutants to escape from plants during what industry calls ‘upset’ events,” the report says. It adds that the pattern of modest, infrequent, fines discourages companies from investing in upgrades and repairs to their facilities.

The worst region for unauthorised air pollution releases during malfunction and maintenance events last year was Midland, the hub of Permian Basin activity, with Houston, home to one of the world’s largest petrochemical complexes, second. A TCEQ spokesman declined to comment on the report because the agency has not yet seen it.

The analysis also claims that many polluters, such as oil and gas wells, are escaping regulators’ attention by wrongly asserting that they emit under 25 tons of sulfur dioxide and volatile organic compounds each year, a tally entitling them to a permit exemption under state and federal law.

Allegations of slack controls in Texas come as Scott Pruitt, the head of the Environmental Protection Agency and an advocate for states’ rights and limited regulation, has tried to undo, delay or block more than 30 environmental rules in his first four months in the job, the New York Times reported.

Still, environmental advocates have enjoyed some victories. This week a federal appeals court stopped Pruitt’s agency from imposing a stay on the implementation of a rule requiring oil and gas companies to report and fix methane leaks.

Last April a federal judge in Houston fined ExxonMobil $20m for emitting 10m pounds of unauthorised air pollutants over eight years at a plant near the city.

Harris County, which includes Houston, is suing a refinery owned by Petrobras, the Brazilian state-run energy company, alleging pollution violations.

But Texas’ government has passed laws in recent years that make it harder for local authorities to assert control and pursue cases in court. In one example, after the city of Denton, near Dallas, prohibited fracking, the state moved swiftly in 2015 to ban the ban.