Wednesday, April 26, 2017

Shale Law in the Spotlight: Recent Permitting of UIC Brine Disposal Wells in Pennsylvania and Related Litigation

Written by Chloe Marie – Research Fellow

Pursuant to the Safe Drinking Water Act (SDWA), the U.S. Environmental Protection Agency (EPA) is responsible for the regulation of underground injection wells, including those for waste disposal or storage associated with oil and gas production. The purpose of this regulatory oversight is to prevent the contamination of water sources through underground injection. EPA has classified underground injection wells into six different categories and provides requirements and standards for the construction and operation of injection wells depending upon the category of waste and disposal method. The categories are delineated as follows: 1) Class I Industrial and Municipal Waste Disposal Wells; 2) Class II Oil and Gas Related Injection Wells; 3) Class III Injection Wells for Solution Mining; 4) Class IV Shallow Hazardous and Radioactive Injection, 5) Class V Wells for Injection of Non-Hazardous Fluids into or Above Underground Sources of Drinking Water; and (6) Class VI Wells Used for Geologic Sequestration of CO2. Class II wells are subcategorized either as Class II-R for enhanced recovery or as Class II-D for brine disposal.  Interestingly, the Energy Policy Act of 2005 expressly exempts hydraulic fracturing from SDWA regulatory oversight unless diesel fuel is used in the hydraulic fracturing operation.

SDWA provides the possibility for states, territories and Tribes to obtain primary authority to enforce the Underground Injection Control (UIC) program as long as they meet EPA’s UIC requirements and standards. For Class I, III, IV, V and VI wells, Section 1422 of the SDWA requires primacy applicants to adopt statutes and regulations that are at least as stringent as the federal regulations in 40 CFR Part 145 before receiving approval from the EPA. For Class II wells, Section 1425 of the SDWA requires primacy applicants to demonstrate merely that the state program is effective in protecting drinking water supplies. If a state decides not to assume such responsibility, the interested EPA Regional Office will implement the applicable UIC program directly, which is the case in Pennsylvania where EPA Region 3 Office manages and enforces the UIC program for the state.

The UIC program in Pennsylvania became effective in June 1984, and operators must follow UIC requirements in 40 CFR Parts 124, 144, 146 and 148. In addition, they must comply with UIC specific requirements in 40 CFR Part 147, Subpart NN, including aquifer exemptions, injection pressure limitation for existing Class I, II, and III wells authorized by rule, and casing and cementing standards for injection wells authorized by permits. Following the grant of a permit by EPA, Pennsylvania DEP conducts a review to ensure compliance with applicable Pennsylvania regulations before granting its own permit. 

Through early 2017, only nine Class II-D underground injection brine disposal wells were active in Pennsylvania, including three in Warren County, two in Somerset County, two in Clearfield County, one in Beaver County, and one in Venango County. Recently, on March 27, 2017, the Pennsylvania Department of Environmental Protection (DEP) approved permits for two new UIC Class II-D wells for wastewater disposal. These newly permitted wells are located and operated in Highland Township, Elk County, by Seneca Resources Corporation (Seneca); and in Grant Township, Indiana County, by Pennsylvania General Energy (PGE) Company, LLC, respectively. These approvals have followed nearly four years of litigation between the energy companies seeking approval of the disposal wells and the townships in which the wells will be located.

In May 2013, PGE submitted an UIC permit application to EPA to convert an existing well into a Class II-D brine injection well and, in March 2014, EPA issued the UIC permit to PGE. Soon thereafter, some residents filed petitions for review to the U.S. Environmental Appeals Board. In August 2014, however, the Board denied these petitions. On June 3, 2014, the Grant Township adopted a Community Bill of Rights prohibiting activities and projects that would violate the Bill of Rights, including waste disposal associated with oil and gas activities within the Township boundaries. As a result, PGE filed a lawsuit against Grant Township in the U.S. District Court for the Western District of Pennsylvania and sought an injunction preventing the township from enforcing the Community Bill of Rights Ordinance. In December 2014, both parties filed cross motions for judgments on the pleadings. PGE argued that the Community Bill of Rights Ordinance violated several state laws and should be declared “invalid and unenforceable” while Grant Township asserted that it was “entitled to judgment on the pleadings because the people of Grant Township possess the inherent and constitutional right of local, community self-government and legal doctrines asserted by PGE in this action violate this right.” In March 2015, Grant Township also filed a motion to dismiss for lack of standing and mootness.

On October 14, 2015, in response to PGE’s motion for judgment on the pleadings, the U.S. District Court enjoined Grant Township from enforcing parts of the Community Bill of Rights Ordinance and thus denied Grant Township’s own motion for judgment on the pleadings. The court pointed out that PGE’s oil and gas activities in Grant Township are “legitimate business activit[ies] and land use within Pennsylvania” and that the ordinance violates Pennsylvania law. On the same day, the U.S. District Court denied Grant Township’s motion to dismiss. More information can be found at docket no. 1:14-cv-00209. PGE is continuing to pursue damages and legal fees in excess of $300,000 from Grant Township as a result of the township’s actions.

Similarly, in November 2014, Seneca submitted to EPA an UIC permit application to alter the use of an existing well from the production of gas to the disposal of waste. Just as with Grant Township, Highland Township adopted a local ordinance that prohibited the permanent deposition of waste from oil and gas extraction within the township’s boundaries. On February 18, 2015, Seneca filed a lawsuit against Highland Township challenging the validity of the ordinance. On March 12, 2015, Seneca filed a Motion for Preliminary Injunction to enjoin Highland Township from enforcing the ordinance and argued that “the Ordinance is replete with unconstitutional and illegal provisions.”

In April 2015, Highland Township filed a motion to dismiss for lack of jurisdiction claiming that Seneca “holds neither a federal permit nor a state permit to create or operate its proposed injection wells . . . [and] . . . its alleged injuries are not redressable by this Court.” In August 2015, Pennsylvania DEP decided to suspend its review of the UIC permit application pending the ongoing ordinance challenge. In March 2016, the U.S. District Court denied Highland Township’s motion to dismiss and, later in August 2016, Highland Township agreed to “withdraw any pending challenges to Seneca’s pending DEP permit applications for activity in the Township.” Further information can be found at docket no. 1:15-cv-00060.

In its recent Press Release, dated March 27, 2017, announcing the approval of the permits for the Class II-D wells, DEP stated that “after a thorough review, [it] determined that both applications meet all regulations, are sufficient to protect surface water and water supplies, and would abate pollution.” DEP, however, declared that “due to concerns about seismic activity related to UIC wells that has occurred in other states DEP has applied special conditions to the permit to ensure early detection if even minor seismic events occur.”  Subsequent to its approval of the permits, DEP also has filed litigation against both townships seeking to invalidate the provisions of each township’s Community Bill of Rights Ordinance as applied to the waste disposal wells.

Monday, April 24, 2017

Shale Law Weekly Review - April 24, 2017

Written by Jacqueline Schweichler - Education Programs Coordinator

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

Public Utility Commission Announces Intent to Appeal Stripper Well / Impact Fee Court Ruling
On April 11, 2017, the Pennsylvania Public Utility Commission Chairman Gladys Brown wrote to Governor Tom Wolf announcing an intent to appeal a decision by the Commonwealth Court regarding the interpretation of low producing wells (so called “stripper wells”) that are subject to impact fee payments. (Snyder Brothers, Inc. v. Pa. Public Utility Commission, No. 1043 C.D. 2015). The court held that the language in Act 13 defined stripper wells as those that produced less than 90,000 cf of gas in at least one month, rather than less than 90,000 cf of gas in every month. Brown stated that this decision by the court “has significantly jeopardized the current and future fees generated by Act 13.  According to Brown the impact fee collection will be affected by $16 million or 10 percent of Pennsylvania's total annual impact fee.

New Dimock Township Lawsuit Filed Against Cabot Oil
On April 13, 2017, a resident of Dimock Township filed suit against Cabot Oil & Cas Corp., Gassearch Drilling Services Corp., and Williams Field Services Co. alleging that his water was contaminated as a result of natural gas exploration and production in the area (Kemble v. Cabot Oil and Gas Corp, et al.). The resident, Raymond Kemble, alleges that soon after the defendants began drilling, the water from his well became discolored and had sediment build up. The complaint seeks $75,000 plus costs, as compensation for the loss of “use and quiet enjoyment of his property” as well as punitive damages.

EPA Issues Stay of Oil and Gas Emissions Rule for Reconsideration
On April 19, 2017, a press release by the United States Environmental Protection Agency (EPA) announced their intent to reconsider the Oil and Gas New Source Performance Standards for New, Reconstructed, and Modified Source Rule. The purpose of the rule was to amend source performance and establish new greenhouse gases and volatile organic compounds standards for oil and natural gas operations. The EPA will issue a 90 day stay on the June 3rd compliance date originally set for the rule. The EPA is reconsidering the rule after receiving petitions for review from the Texas Oil and Gas Association, GPA Midstream Association, and other oil and gas companies. According to the letter sent from the EPA to the petitioners, the issues raised met the requirements for reconsideration of the rule.

IECA Argues Against U.S. LNG Exports
On April 13, 2017, Industrial Energy Consumers of America (IECA) sent a letter to United States Department of Energy Secretary detailing concerns over liquified natural gas (LNG) exports. The IECA argued that “U.S. natural gas policy should focus on how to use natural gas to “maximize” job growth.” In addition, the IECA states that exports of LNG “represent a serious threat to U.S. manufacturing competitiveness and jobs long-term.”

Pennsylvania Lawsuits Proceed Against Townships that Prohibit Injection Wells
On April 13, 2017, Citizens Advocating a Clean Healthy Environment (CACHE) and the Crystal Spring Ecosystem filed a motion to intervene in a Pennsylvania court case between Seneca Resources and Highland Township in Elk County, according to a press release issued by the Community Environmental Legal Defense Fund (CELDF) (Seneca Resources v. Highland Township).  The case involves Highland Township’s municipal ordinance that prohibits wastewater injection wells. Seneca Township filed suit against the township in 2015 arguing that the ordinance was invalid. Similarly, this year the Pennsylvania Department of Environmental Protection filed suit against Highland Township and Grant Township in Indiana County after approving permits for a new injection well in each township. Both townships have ordinances prohibiting injection wells, which ordinances conflict with the DEP permits. According to StateImpact, the townships have agreed to temporarily halt enforcement of portions of the charters while the cases proceed.
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Monday, April 17, 2017

Shale Law Weekly Review - April 17, 2017

Written by Jacqueline Schweichler - Education Programs Coordinator

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

FERC Issues Environmental Impact Statement for PennEast Pipeline
On April 7, 2017, the Federal Energy Regulatory Commission (FERC) issued the Final Environmental Impact Statement (EIS) for the PennEast Pipeline Project, according to a FERC press release. FERC concluded that “construction and operation of the Project would result in some adverse environmental impacts, but impacts would be reduced to less-than-significant levels with the implementation of PennEast’s proposed and FERC staff’s recommended mitigation measures.” The EIS covers over 120 miles of pipeline from Pennsylvania to New Jersey and includes a compressor station, metering stations, valves sites, and pig launcher/receiver sites.

Wayne Land and Mineral Group to Appeal Case Against Delaware River Basin Commission
On April 7, 2017, the Wayne Land and Mineral Group, LLC filed a Notice of Appeal to the U.S. Court of Appeals for the Third Circuit (Wayne Land and Mineral Group, LLC v. Delaware River Basin Commission, 3:16-CV-00897). Wayne Land brought the case against the Delaware River Basin Commission (Commission) in May 2016, arguing that the Commission “lacks authority under the Delaware River Basin Compact to review and approve a natural gas well pad…” The district court disagreed with Wayne Land’s arguments and granted the Commission’s Motion to Dismiss.

IHS Markit Releases Study Evaluating PA Natural Gas Resources and Opportunities
IHS Markit recently released a study entitled “Prospects to Enhance Pennsylvania’s Opportunities in Petrochemical Manufacturing.” The report was commissioned by Team Pennsylvania Foundation “to identify and evaluate the opportunities for petrochemical and plastics manufacturing in Pennsylvania based on natural gas resources available in the Marcellus and Utica Shale plays.” The report concludes that Pennsylvania has significant potential for economic development in this area in part due to the high amount of ethane and propane produced in the state.

NY DEC Denies Permit for Northern Access Project  
On April 7, 2017, the New York State Department of Environmental Conservation (DEC) denied permits for the Northern Access natural gas pipeline project. The proposed pipeline would transport natural gas from Pennsylvania through New York and deliver the gas to several states, as well as Canada. The DEC stated that the project did not comply with New York water quality standards because it “fails to avoid or adequately mitigate adverse impacts to water quality and associated resources.”

Sierra Club and Environment New Jersey Appeal Commission’s Pipeline Approval
On April 10, 2017, the Sierra Club and Environment New Jersey filed an appeal against the State of New Jersey Pinelands Commission for the approval of the South Jersey Gas pipeline. In February, the Pinelands Commission approved the 22-mile gas pipeline which will pass through the Pinelands area. The Sierra Club argues that the pipeline “will destroy environmentally sensitive land,” and cause water pollution problems. In addition, their appeal argues that “this type of infrastructure is only allowed through the Pinelands Forest Preservation Area, if it primarily serves the Pinelands, but it does not.”

North Dakota Governor Signs Bill Amending Oil and Gas Spill Reporting Requirements
On April 7, 2017, North Dakota Governor Doug Burgum signed a bill which exempts oil and gas operators from reporting leaks or spills of less than ten barrels. Specifically, House Bill 1151 allows the reporting exemption if the leak or spill remains on the site or within the facility and if the spill is “less than ten barrels cumulative over a fifteen-day time period...” The bill was introduced January 3, 2017 and then advanced through the Energy and Natural Resources Committee.
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See our new blog series: Global Shale Law Compendium: Shale Governance in Maryland

Stay informed with our monthly Agricultural Law Brief located here.