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  • 05
  • April
  • 2017

Federal Court Dismisses Sierra Club’s Claim for Injunctive Relief Related to Oklahoma Seismicity

On April 4, 2017, Western District of Oklahoma Judge Stephen Friot dismissed an action brought under the Resource Conservation and Recovery Act (“RCRA”) by the Sierra Club against four deep fluid injection well operators. The plaintiff alleged that the defendants’ use of wastewater injection wells presented an “imminent and substantial endangerment to health or the environment” in violation of RCRA because it supposedly causes “waste-induced earthquakes.” The Sierra Club sought a wide range of injunctive relief, asking the court to order defendants to substantially reduce the volume of wastewater they inject into disposal wells, reinforce vulnerable structures, and establish a seismic activity monitoring center to further analyze (and predict) the potential for seismic effects of underground injection of oilfield wastes. 

Judge Friot granted defendants’ motions to dismiss under the Burford abstention and primary jurisdiction doctrines before reaching defendants’ substantive RCRA arguments. Pursuant to the Burford abstention doctrine, federal courts may decline to interfere with proceedings or orders of state administrative agencies where timely and adequate state-level review is available. The Court reasoned that the Oklahoma Corporation Commission (“OCC”) “has established and is operating its own authorized program to regulate these wells” and “has taken action to address the seismic activity which plaintiff maintains is linked to the Arbuckle disposal wells.” Oklahoma law also provides that any person affected by an OCC order may apply to the OCC for repeal, amendment, modification, or supplement of that order. The court also held that the OCC has primary jurisdiction over the harm alleged by the plaintiff for similar reasons. Judge Friot reasoned that the OCC was better equipped than the court to address seismicity concerns associated with fluid injection activities, and has “taken a series of actions, in response to seismic activity, to reduce the volume of wastewater injected into disposal wells.” The court also found that the OCC “has demonstrated diligence in resolving” seismicity issues, and, given its “scientific and technical expertise,” is the appropriate body to grant the type of injunctive relief requested by the plaintiff.

In closing, Judge Friot described the reality of being an Oklahoma resident – implying that he too lived with the tremors. “Every night, more than a million Oklahomans go to bed with reason to wonder whether they will be awakened by the muffled boom which precedes, by an instant, the shaking of the ground under their homes.” Finally, Judge Friot expressed his confidence in the seriousness of the OCC’s regulatory efforts, by noting that “responding to this earthquake activity is serious business, requiring serious regulatory action. The record in this case plainly demonstrates that the Oklahoma Corporation Commission has responded energetically to that challenge.”

Read the order dismissing plaintiff’s complaint in Sierra Club v. Chesapeake Operating, LLC, No. 5:16-cv-00134, here.

  • 05
  • April
  • 2017

Governor Signs Bill Banning Hydraulic Fracturing in Maryland

On April 4, 2017, Governor Larry Hogan signed into law a bill that makes Maryland the third state (following New York and Vermont) to ban hydraulic fracturing. Maryland’s ban is particularly notable as the Marcellus Shale formation extends into the western part of the state. Hydraulic fracturing has been under various moratoria in Maryland since June 2011, when former Governor Martin O'Malley issued an Executive Order directing the Maryland Department of the Environment ("MDE") and the Maryland Department of Natural Resources to study economic, environmental, and public health issues related to horizontal drilling and hydraulic fracturing in the Marcellus Shale. The final study, which was released in November 2014, concluded that any environmental or health risks from hydraulic fracturing could be adequately managed through regulatory measures, but, shortly after that study’s release, Maryland enacted a two-year moratorium that prevented the MDE from issuing any drilling permits for hydraulic fracturing before October 1, 2017. The new permanent ban on hydraulic fracturing takes effect on that same date—October 1, 2017. Read the full text of Senate Bill 740 here.

  • 22
  • February
  • 2017

DEP Concludes Seismic Activity in Pennsylvania “Likely Correlated” with Hydraulic Fracturing

On Friday, February 17, the Pennsylvania Department of Environmental Protection (“DEP”) published a report concluding that four specific low-magnitude seismic events that occurred on April 25, 2016 “were likely correlated” with hydraulic fracturing activity. The seismic events at issue were registered on the Pennsylvania Seismic Network and consisted of a series of four “microseismic events” at magnitudes unlikely to be noticed by humans. The report concludes that these seismic events showed a “marked temporal/spatial relationship” to hydraulic fracturing activities at a nearby well pad, but ultimately cautions that “there is no definitive geologic association of events at this time.” 

Nonetheless, the DEP’s report includes several recommendations that will likely have an impact on how operators conduct their fracturing activities in certain areas of the Utica Shale formation. The technique used at the time of the April 2016 seismic activity is called “zipper fracturing,” and involves conducting hydraulic fracturing operations concurrently at two horizontal wellbores that are parallel and adjacent to each other. The DEP report describes that DEP and the operator agreed to a seismic monitoring plan in November 2016 that requires the operator of the well at issue to (i) discontinue the use of the “zipper fracturing” technique during any future completions when there is less than a quarter mile between lateral portions of adjacent wellbores; (ii) maintain its own seismic network to detect events; and (iii) adopt a specific seismic reporting and response plan. The plan also requires the operator of the well at issue to abide by a “traffic light” system, whereby the operator must, among other things, (i) notify DEP of seismic activity above 1.0 magnitude within 6 miles of a wellbore path, (ii) suspend operations if three seismic events between 1.5 and 1.9 magnitude occur within three consecutive days within 3 miles of a wellbore path, and (iii) shut down well operations if a seismic event magnitude 2.0 or greater occurs within 3 miles of a wellbore path. The report recommends that other operators in North Beaver, Mahoning, and Union Townships in Pennsylvania follow similar plans.

The report’s “traffic light” system recommendations are particularly notable because they apply at conservative levels of seismicity compared to other jurisdictions. For example, Well Completion Seismicity Guidance applicable to operators in the Scoop and Stack plays published by the Oklahoma Corporation Commission in December 2016 requires reporting of seismicity at magnitude 2.5 or greater within 1.25 miles of fracturing operations, a temporary pause in operations at magnitude 3.0 or greater, and the suspension of operations at magnitude 3.5 or greater. It remains to be seen whether the report’s recommendations will affect the level of hydraulic fracturing activity in the affected townships.

  • 13
  • December
  • 2016

EPA Releases Final Assessment of Fracking Impacts on Drinking Water

On December 13, 2016, the United States Environmental Protection Agency (“EPA”) released its Final Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources. Issuance of the final report comes over eighteen months after EPA released a draft report for external review in June 2015, and approximately a year after an EPA Science Advisory Board panel released its initial recommendations regarding the closely-followed hydraulic fracturing study. Pursuant to those recommendations, the final report reflects the removal of the draft report’s overarching conclusion that EPA “did not find evidence that” hydraulic fracturing activities “have led to widespread, systemic impacts on drinking water resources in the United States.” In an accompanying set of “ Questions and Answers about EPA's Hydraulic Fracturing Drinking Water Assessment,” EPA explains that its scientists concluded that the conclusion of the draft report “could not be quantitatively supported” and that it did not “clearly communicate the findings of the report.” Instead, the final report concludes that “hydraulic fracturing activities can impact drinking water resources in the United States under some circumstances.” 

Importantly, however, EPA’s findings that underlie the final report’s conclusion are generally consistent with those set forth in the June 2015 draft report. For example, both the draft report and the final report identify above- and below-ground mechanisms in the hydraulic fracturing water cycle that “have the potential to impact drinking water resources.” Similarly, both the draft report and the final report characterize the number of identified cases of drinking water resource contamination as “small” in comparison to the number of hydraulically fractured wells in the United States. Finally, consistent with the draft report, most of the small number of "impacts on drinking water resources" identified by EPA appear to be unrelated to fracturing activity itself. Nonetheless, like the draft report, the final report identifies the “potential for hydraulic fracturing fluids . . . to reach underground drinking water resources” via the fracture network. On this topic, the final report identifies with more specificity those areas in which hydraulic fracturing activity has occurred within underground drinking water resources—namely “in some areas in the western United States (e.g., the Wind River Basin near Pavillion, Wyoming, and the Powder River Basin of Montana and Wyoming).” 

Unlike the draft report, the final report includes a list of “combinations of activities and factors” associated with hydraulic fracturing activity that EPA concludes “are more likely than others to result in more frequent or more severe impacts” to drinking water resources. That list consists of:

  • Water withdrawals in times or areas of low water availability, particularly in areas with limited or declining groundwater resources;
  • Spills during the management of hydraulic fracturing fluids, chemicals, or produced water that reach groundwater resources;
  • Injection of hydraulic fracturing fluids into wells with inadequate mechanical integrity, allowing gases or liquids to reach groundwater resources;
  • Injection of hydraulic fracturing fluids directly into groundwater resources (a practice primarily associated with coalbed methane production)
  • Discharge of inadequately treated hydraulic fracturing wastewater to surface water resources; and
  • Disposal or storage of hydraulic fracturing wastewater in unlined pits, resulting in contamination of groundwater resources.

Notably absent from this list of increased risk activities is hydraulic fracturing of deep shale formations. Indeed, the final report acknowledges that the presence of “thousands of feet of rock between hydraulically fractured rock formations and underground drinking water resources can reduce the frequency of impacts on drinking water resources” during well injection. Read the final report in full here.

For more insight on water laws and regulation, visit V&E’s Water Blog.

  • 23
  • November
  • 2016

Two Lawsuits Relating to Induced Seismicity Filed in Oklahoma

Two lawsuits recently filed in courts in Oklahoma allege claims relating to induced seismicity following a September 8, 2016 earthquake, which measured magnitude 5.8 and had an epicenter approximately 8 miles northwest of Pawnee, Oklahoma.  That quake was the largest reported in Oklahoma since seismic record-keeping began.

The first case, filed in Oklahoma state court on November 17, is a putative class action brought by an Oklahoma resident against 27 oil and gas companies that have engaged in injection well operations near Pawnee, 25 of which are unnamed in the class action petition. The petition generally alleges that defendants’ disposal of fracking wastewater in injection wells caused dozens of earthquakes near Pawnee from September through November 2016 (including the magnitude 5.8 earthquake on September 3) and asserts claims of absolute liability for ultrahazardous activities, negligence, private nuisance, and trespass.  The petition seeks damages for physical damage to real and personal property, market value losses to real property, and punitive damages, and alleges that the defendants are jointly and severally liable for such damages.  Read the Class Action Petition in James Adams et al. v. Eagle Road Oil LLC et al., case number CJ201678, in the District Court of Pawnee County, Oklahoma here.

The second case, brought by the Pawnee Nation of Oklahoma (the “Pawnee Nation”) in federal court, involves claims against the United States Bureau of Indian Affairs, the Bureau of Land Management, and Sally Jewell as Secretary of the Interior.  Specifically, the complaint alleges that defendants’ approval of various oil and gas leases and drilling permits on Pawnee land failed to comply with several federal laws, including the National Environmental Policy Act (“NEPA”), the National Historic Preservation Act, and the American Indian Agricultural Resource Management Act of 1993. The complaint links these failures to various impacts on Pawnee land that have occurred as a result of oil and gas development, including earthquakes allegedly caused by hydraulic fracturing operations.  Like the petition in Eagle Road discussed above, the Pawnee Nation’s complaint makes specific reference to the magnitude 5.8 earthquake that occurred on September 3.  Among the myriad of violations alleged in the complaint is a claim that environmental assessments prepared to comply with NEPA in association with the issuance of drilling permits were deficient for failing to consider earthquakes as an “indirect impact.”  The complaint asks the court to set aside 17 leases approved in 2013, as well as at least 10 related permits to drill and associated sundry notices, and to enjoin the defendants from approving any other activities on the relevant leases until defendants have complied with all federal laws.  Read the complaint in Pawnee Nation of Oklahoma et al. v. Jewell et al., case number 4:16cv00697, in the U.S. District Court for the Northern District of Oklahoma here.

  • 21
  • November
  • 2016

New Study Links Hydraulic Fracturing Operations to Earthquakes in Western Canada

A newly-released study links hydraulic fracturing operations to injection-induced earthquakes in Western Canada. Geoscientists at the University of Calgary studied all wells completed from December 2014 to March 2015 within the Devonian Duvernay Formation, finding both spatial and temporal correlations between hydraulic fracturing operations and seismic activity in the area. The largest observed seismic event during this time measured magnitude 3.9. Nonetheless, a prior study found that induced seismic events of magnitude 3 or greater are associated with only about 0.3% of hydraulically fractured wells in western Canada.

The new study also found important differences in how different portions of the underlying fault system responded seismically; the east fault strand was primarily active during hydraulic fracturing operations, whereas the west fault strand remained activated for several months afterwards. The authors conclude that “the elastic response of the rockmass to hydraulic fracturing” is one of several different mechanisms that can trigger fault activation, leading to seismic activity. Indeed, the study acknowledges that the recent increase in induced seismic activity in North America “is primarily associated with” a different mechanism—the “high-rate injection of large volumes of saltwater into porous rock formations” that occurs in underground wastewater disposal operations. However, the authors also cite to two earlier studies that found links between hydraulic fracturing operations and earthquakes in Oklahoma and Poland, Ohio. Speaking with the New York Times, one of the study’s authors acknowledged that different geographic areas respond differently to hydraulic fracturing activity, and that additional research should be conducted to “understand[] the origin of the differences.” Read the study in full here.

  • 11
  • November
  • 2016

Wyoming DEQ Issues Final Report Concluding that Upward Migration of Fracturing Fluids at Depth Is Unlikely

The Wyoming Department of Environmental Quality ("WDEQ") has released its final report in response to resident concerns alleging a link between well water taste and odor issues in the Pavillion Gas Field and hydraulic fracturing activity. The final report brings to a close an investigative effort that initially began in 2009.  While a 2011 draft report by the United States Environmental Protection Agency ("EPA") concluded that hydraulic fracturing fluids may have impacted groundwater in the Pavillion Gas Field, WDEQ’s final report concludes that "[i]t is unlikely that hydraulic fracturing fluids (injected into the deeper production zone(s)) have risen to the depths utilized by water-supply wells.”  This finding is consistent with WDEQ’s December 2015 draft final report as well as EPA's June 2015 draft hydraulic fracturing study, which did not identify any instances where fluids migrated from the factures made in rock formations more than a mile below the surface up into aquifers that could be potential sources of drinking water. Like other recent studies, the final report further concludes that well construction issues present the "most probable pathway for gas or other fluids to reach shallow depths" via seepage along the wellbore, a risk WDEQ likewise identified in its December 2015 draft final report. Read WDEQ's final report in full here and the tables here.

  • 14
  • October
  • 2016

Industry Advocates Sue Over Pennsylvania’s New Hydraulic Fracturing Rules

On Thursday, October 13th, a trade group representing unconventional gas producers filed suit asking a Pennsylvania court to delay implementation of the rules until the appeal is decided. The challenge targets provisions in the new rules that industry representatives claim are vague, burdensome, and not authorized under Pennsylvania law, including a rule expanding operators’ responsibility to avoid and protect endangered species and rules governing site remediation, spill-reporting, and waste disposal, among others. The new rules have been in effect less than a week.

  • 12
  • October
  • 2016

Pennsylvania’s New Fracking Regulations

On October 8, 2016, the Pennsylvania Environmental Quality Board published a comprehensive set of new rules regulating hydraulic fracturing operations in the state. Discussion of these rules began in 2011 and resulted in significant opposition--including resistance at the Pennsylvania legislature. Pennsylvania’s rules governing above-ground operations at oil and gas well sites had not been updated since 2001, prior to the expansion of hydraulic fracturing in the state. Under the regime implemented by the new rules, Pennsylvania has bifurcated its regulation of conventional and unconventional wells; the regulations governing conventional operations appear at 25 Pa. Code Chapter 78, while the regulations governing unconventional operations appear at 25 Pa. Code Chapter 78a. Many fear that the new rules will stifle energy production at a time when production has already slowed due to uncertain commodity prices, while others argue that the rules provide changes to protect both public health and the state’s natural resources. Read the full article here.

  • 29
  • August
  • 2016

Colorado Anti-Fracking Measures Fail to Satisfy Signature Validation Requirements

State officials in Colorado have indicated that supporters of two anti-fracking initiatives did not collect enough valid signatures to qualify the initiatives for the November ballot. Supporters of the initiatives initially submitted more than the required 98,492 signatures for each initiative, but fell short of meeting the required threshold after the Secretary of State’s office screened the signatures to determine their validity. The measures would have authorized local communities to limit or ban hydraulic fracturing and created a 2,500-foot setback requirement, which could have severely limited oil and gas production throughout the state. The announcement marks another high profile defeat for anti-fracking activists following the Colorado Supreme Court’s ruling earlier this year that municipal regulation of hydraulic fracturing is preempted by existing state law. Proponents of the initiatives have 30 days to appeal the decision to the Denver District Court.

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