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.

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