The Environmental Protection Agency was justified in intervening to examine possible risks of gas drilling to Texas drinking water, the agency's internal watchdog reported Tuesday.

But environmentalists say the report raises fresh concerns about the EPA's 2012 decision to halt its investigation into possible well water contamination in Parker County, Texas.

The EPA Inspector General's report is the latest analysis to spotlight the regulator's handling of high-profile cases of alleged drinking-water contamination near natural gas drilling sites.

Over the past three years, the EPA has sampled water in Dimock, Pa.; Pavillion, Wyo.; and Parker County, Texas, after residents complained that their water had turned foul once natural gas drilling began nearby. In each case, the EPA found evidence of contamination, but declined to pursue further water sampling or disciplinary action against the energy companies.

Critics have accused the Obama administration of backing away from the inquiries amid industry and political pressure, and because it views natural gas drilling as crucial to the economy and a cleaner environment. In July, an internal EPA report indicated that workers in its Philadelphia office wanted to keep monitoring Dimock's drinking water but EPA headquarters closed the investigation.

The Inspector General's inquiry was launched at the behest of Sen. James Inhofe, R-Okla., and other lawmakers who contend that EPA's regional office in Texas, EPA Region 6, had exceeded its authority during the Parker County investigation. Many Republicans viewed the EPA's probe as a politically motivated attack against the oil and gas industry.

On Tuesday, Inhofe's office dismissed the Inspector General's report, saying it had "failed to examine (a) closed-door conspiracy" to ruin the reputation of the energy company involved, Range Resources.

But environmentalists welcomed it as vindication of efforts by the EPA and independent scientists to explore the potential pollution risks of hydraulic fracturing, or fracking. The process involves injecting millions of gallons of water and sand laced with chemicals deep underground to crack shale formations and unlock oil and gas.

The EPA got involved in 2010 because Range Resources and Texas state regulators failed to act immediately on homeowners' complaints of possible drinking water contamination, the report said.

When EPA conducted its own tests, it found such high levels of methane in the water supply of two homes that it posed a risk of explosion, the report said. EPA tests also showed that the water contained benzene, a known carcinogen, above the EPA's maximum contamination levels.

Methane is the main component of natural gas, and an analysis performed for the EPA by an independent scientist found it to be nearly identical to the natural gas from the nearby Range Resources gas well.

Range Resources and the state of Texas denied that the company's gas development had contaminated the Parker County residents' water.

EPA issued an emergency order against Range Resources to provide drinking water to the affected residents and to better monitor the gas well. When Range Resources did not fully comply, the Justice Department filed a complaint on behalf of EPA in January 2011, but withdrew it by March 2012.

The Inspector General's report said that the EPA and Justice Department halted their action because the EPA worried about the costs and legal risks of the case. Although most officials were confident of their evidence, "there was always a risk that the judge could rule against the EPA. If that happened, it would risk establishing case law that could weaken the EPA's ability to enforce" parts of the Safe Drinking Water Act, the report said.

Range Resources threatened to refuse to cooperate with a study the EPA had launched into possible effects of fracking on drinking water if the agency disciplined it, the report said. The EPA shelved its complaint after getting a non-binding agreement for access to the company's sites, the report said, but so far, has declined to participate in the study.

A policy analyst for the Natural Resources Defense Council, Amy Mall, noted that EPA had enough evidence to intervene but "chose to step away from enforcing the law when drinking water was unsafe. ... Drinking water quality should never be traded for a hollow promise that may never be fulfilled."

In a statement, the EPA said the report determined its action were "supported by law and fact."

Range Resources spokesman Matt Pitzarella denied that its natural gas development had contaminated drinking water and said it is reviewing the report. The company is pursuing a $3 million defamation lawsuit against one of the homeowners who complained about his water, Steve Lipsky.

Explore further EPA urged to update rules on secret email accounts

©2013 Tribune Co.

Distributed by MCT Information Services