LIVERMORE (KPIX 5) — Hundreds of oilfield wastewater wells across California must shut down Wednesday, after a federal audit found the state illegally allowed oil companies to inject contaminated fluids into protected water supplies.

But that’s not stopping the state from backing yet another oil company’s request to inject wastewater into a protected underground water source right here in the Bay Area.

You’d never know it but in the shadow of the windmills that surround the Livermore Valley there’s an active oilfield.

“We started seeing major problems here,” said Phillip Marshall. The oil company has two wells on his property.

He says problems started when the company removed some old tanks, uncovering contaminated soil.

“There were strong odors, really intense petroleum smelling odor. We looked and there was obviously contaminated soil,” he said.

The county cited E&B Natural Resources for “failure to provide an immediate verbal report” of the contamination.

In another incident involving E&B tanks on a neighboring property, the Alameda County’s District Attorney sued E&B for improper transportation and disposal of hazardous waste.

“They are very sloppy, messy operators that just really don’t have any regard for the property they are on, the community around them,” said Marshall.

Marshall makes no profit from the oil, he simply owns the surface land, not the mineral rights under it. And under the law, he has to allow the oil company access to his property.

Marshall is one of dozens of Livermore residents that showed up at a recent public hearing to protest E&B’s request to expand its wastewater disposal boundaries. Some worried about groundwater contamination.

“Surrounding this aquifer is 15 domestic water use wells within a quarter mile, that is extremely close,” said Livermore resident Ash Lauth.

Others worry about the nearby Greenville earthquake fault.

“I don’t see how anyone can guarantee that another earthquake can’t create new pathways for this wastewater to escape,” said Livermore resident Pat Scofield.

Contaminated water from the oil extraction process has to be re-injected into the ground for disposal and can also be used for enhanced oil recovery. But either way it can “only” be injected into a water table that’s exempted from the federal Safe Drinking Water Act.

Officials with the Department of Conservation’s Division of Oil and Gas, which oversees oil production in California, told the packed house that a portion of the water table under the oilfield in Livermore is already exempted and that expanding its boundaries is appropriate because it’s way too dirty to ever be used for drinking or irrigation.

But some say not so fast.

“Unfortunately it’s part of a larger pattern of the state rubber stamping these exemption applications on behalf of the oil industry,” said Hollin Kretzmann with the Center for Biological Diversity. “We are not going to be able to rely on EPA in the future, so it heightens the responsibility of our state to really serve as a check on the oil industry.”

E&B Resources turned down our request for an interview but told us when they bought the oilfield here a decade ago the equipment on it was in bad shape, so they invested over half a million dollars to improve it.

In the process, the company says “a small amount of dry, oil-stained soil was discovered under one of the older tanks. E&B acted immediately to clean it up and in full cooperation with the county tested the groundwater, which confirmed no impact whatsoever to any groundwater.”

As for the District Attorney’s complaint, E&B says it “inadvertently shipped a small quantity of sludge from a storage tank as non-hazardous and subsequently discovered a classification error. Corrective action was taken.”

But Marshall says that on his property, the cleanup still isn’t over.

“They started on that plan back in April of 2015 and they are still not complete,” he said, explaining that he’s given up on getting any help from the state.

“The regulatory agency DOGGR here is not doing their part,” he said.

Marshall said he hopes the EPA will get the message.

The state still has to approve the expansion request, then it goes to the EPA for final approval.