Federal Court Properly Defers to Oklahoma Oil and Gas Oversight, Rejects Sierra Club Bid for Federal Regulation

Guest Commentary

Robeck_MarkBy Mark R. Robeck, Kelley Drye & Warren LLP. Mr. Robeck is a Partner in the firm’s Washington, DC office and a contributor to its Fracking Insider blog.

In 2016, the Sierra Club filed suit in Oklahoma alleging that use of state-permitted deep wastewater injection wells was causing increased seismic activity—both in frequency and severity.  Sierra Club v. Chesapeake Operating, LLC, et al., Case No. CIV-16-134-F, United States District Court for the Western District of Oklahoma.

In an April 4, 2017 Order the court dismissed the case, declining to exercise jurisdiction because doing so would interfere with the state regulators’ efforts to address the alleged increased seismic activity from wastewater injection.

For decades, wastewater injection wells have been used to safely dispose of water that is a common byproduct of oil and gas extraction.  The disposal wells are drilled and completed to protect drinking water.  The geological formations into which the wastewater is injected are thousands of feet below fresh water formations to prevent contamination of drinking water.  Without such disposal wells, oil and gas production in Oklahoma would become prohibitively expensive.

In 1981, pursuant to authority under the federal Safe Drinking Water Act, EPA granted primary jurisdiction to regulate wastewater disposal wells in Oklahoma to the Oklahoma Corporation Commission (OCC), the state agency with regulatory authority over oil and gas activity in Oklahoma.

The Sierra Club specifically alleged that the injection of wastewater produced during oil and gas extraction had caused a 300-fold increase in earthquakes from 2009 to 2015, and a 50-fold increase in the number of 3.5 scale earthquakes.  It further alleged that Oklahoma now has the highest risk of earthquakes in the nation, and that the earthquakes caused by wastewater injection created an imminent and substantial danger to the environment, infrastructure, public health, and safety.

Alleging violations of the federal Resource Conservation and Recovery Act (RCRA), the Sierra Club asked the court to remedy the alleged earthquake risk by ordering the defendants to (i) immediately and substantially reduce the volume of wastewater injections, (ii) pay for reinforcement of vulnerable structures, and (iii) establish an earthquake monitoring and prediction center to study and determine the volumes of wastewater that can be safely injected without inducing seismic activity.

The court acknowledged that RCRA allows a private party to bring suit against any person or entity that handles, stores, treats, or disposes of wastewater in a manner presenting an imminent and substantial endangerment to public health or the environment.  Nonetheless, the court concluded that dismissal was appropriate under the related doctrines of Abstention and Primary Jurisdiction.

The Abstention Doctrine allows a federal court to decline to hear a case that would disrupt state efforts to establish a uniform policy dealing with a matter of great public concern, especially when the state is actively addressing the concerns.  The Primary Jurisdiction Doctrine is intended to promote the proper separation between courts and specialized regulatory agencies, protecting the function of agencies that possess particularized expertise and are charged with ensuring uniformity of regulatory outcomes.

In reaching its decision to dismiss the case, the court relied on several factors weighing strongly against a court deciding the issues.  First, the court observed that OCC already has extensive regulations for permitting, regulating, and shutting down wastewater injection wells.  It noted, for example, that “an order or permit [for an injection well] may be permanently modified, vacated, amended, or terminated after notice and hearing if ‘information as to the permitted operation indicates that the cumulative effects on the environment are unacceptable.’”

Second, the OCC and the governor of Oklahoma have both responded to the increased seismic activity, with the OCC adopting a system for review of disposal permits recommended by the National Academy of Sciences, and the governor forming the Coordinating Council on Seismic Activity.  The court stressed that the Coordinating Council’s “primary responsibility is to coordinate and share information across state agencies and the state’s oil and gas industry, identify gaps in resources, and work cooperatively to develop solutions for seismic activity.  Two state legislators serve on the council to help ensure an efficient flow of information between state agencies and the legislature.”

Third, the recent increased seismic activity is a matter of substantial public concern, evident not only from the actions of the OCC and the Governor, but from the legislature’s recent authorization of the OCC “to ‘take whatever action is necessary’ to promptly respond to ‘emergency situations having potentially critical environmental or public safety impact.’”

Fourth, the OCC is an agency with the necessary expertise and resources, to effectively and systematically address the issue, and is better equipped than a court to evaluate the complex scientific and technical questions involving “geology, geophysics, hydraulics and petroleum engineering, to say nothing of seismology,” necessary to resolve the dispute.

Fifth, the relief Sierra Club requested would have required the court to engage in ongoing monitoring and enforcement to ensure compliance with its orders, the fashioning of which would be extremely difficult and place the court in the improper position of regulator.

Finally, leaving resolution of the issues to the courts could subject defendants to conflicting orders of both the OCC and the courts.

Each of these factors are classic reasons why allowing private litigants to supersede the regulatory process creates bad policy, unnecessarily increasing the costs of doing business and depressing economic development.  Whether deep injection of wastewater is the actual cause of earthquakes remains a matter of only nascent scientific study and unresolved debate, based on very little verifiable data.  OCC is a sophisticated and experienced regulator with deep understanding of Oklahoma geology and oil and gas development in the state.  It is actively addressing this issue of very significant public concern.

The court’s decision to decline to hear the case is rare, but welcome for anyone who supports scientifically based, uniform regulation developed in an open public forum where all stakeholders have a voice.

One thought on “Federal Court Properly Defers to Oklahoma Oil and Gas Oversight, Rejects Sierra Club Bid for Federal Regulation

  1. Pingback: Federal Court Defers to Oklahoma Oil and Gas Oversight, Rejects Sierra Club Bid for Federal Regulation - Fracking Insider

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