Earthquakes: State Regulation of O&G Injection Wells Is OK Oklahoma Judge Dismisses Federal Lawsuit on Jurisdictional Grounds

On Tuesday, April 4, 2017, Judge Stephen P. Friot, United States District Court for the Western District of Oklahoma, dismissed a nationally significant lawsuit brought over earthquakes linked to oil and gas wastewater injection wells on jurisdictional grounds.  See Sierra Club v. Chesapeake Operating, LLC, et al., No. CIV-16-134-F (W.D. Okla., Order dated 4/4/2017) (unpublished), The court deferred to the expertise of the Oklahoma Corporation Commission (“OCC”), the state body governing wastewater injection wells in Oklahoma. Citing the actions and capability of the OCC, Friot concluded:

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. Responding to 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. Of equal importance, it is plain that the Oklahoma Corporate Commission has brought to bear a level of technical expertise that this court could not hope to match.  The challenge of determining what it will take to meaningfully reduce seismic activity in and near the producing areas of Oklahoma is not an exact science, but it is no longer one of the black arts.  This court is ill-equipped to outperform the Oklahoma Corporation Commission in advancing that science and putting the growing body of technical knowledge to work in the service of rational regulation.

The lawsuit was initially brought in federal court in 2016 by Public Justice on behalf of Sierra Club Oklahoma under the citizen suit provision of the Solid Waste Disposal Act, part of the federal Resource Conservation and Recovery Act (RCRA), against Chesapeake Operating, LLC, Devon Energy Corporation, and other operators in Oklahoma. In its complaint, Sierra Club Oklahoma alleged that deep injection of wastewater from oil and gas drilling operations contributed to an increase in earthquakes in Oklahoma and Kansas, presenting an “imminent and substantial endangerment to public health or the environment.”  Sierra Club Oklahoma cited a large increase in the number and severity of earthquakes in Oklahoma from 2009 through the current day.  In order to reduce the “substantial risk of harm” from the alleged increase and severity of earthquakes, the lawsuit sought a court order that would have required the defendants to immediately and substantially reduce wastewater injections and to establish an independent earthquake monitoring and prediction center to determine a suitable level of waste to inject into specific wells or formations to avoid triggering seismic activity.

In response, the defendants cited the OCC’s exclusive jurisdiction over regulating and adjudicating oil and gas injection wells in Oklahoma granted to them by EPA in 1981 under the Safe Drinking Water Act’s Underground Injection Control (UIC) program. The defendants then described the significant actions taken by the OCC in response to the increased seismic reactions caused by wastewater disposal. The defendants pointed to the OCC’s “traffic light” system for monitoring injection wells, recommended by the National Academy of Sciences, directing the OCC staff to review well permits in the context of proximity to faults, seismicity in the area, and other factors related to public health and the environment.  Further, the defendants argued that the OCC rules requiring daily well pressure and volume checks, and mechanical integrity checks, as well as the 2015 and 2016 OCC directives to injection well operators requiring volume reduction plans and complete cessation of operations were significant responses by the OCC to the increase in seismic activity.  These actions resulted in decreased wastewater injections. For example, in March, 2016, the OCC implemented volume reduction plans applicable to over 600 disposal wells requiring a 40% reduction in injections into disposal wells in the Arbuckle formation, which reduced total disposed wastewater by about 800,000 barrels a day.  Due to the exclusive jurisdiction of the OCC and the proper exercise of its jurisdiction, the court agreed with the defendants’ arguments and dismissed the lawsuit.

Oil and gas regulators in other states have also addressed earthquakes related to injection wells. In Colorado, for example, the Colorado Oil and Gas Conservation Commission (COGCC) has taken action to mitigate seismic activity related to injection wells, although Colorado has not has not had as dramatic an increase in seismic activity as Oklahoma. In June of 2014, the COGCC shut down a 10,000 barrel-per-day injection well in Weld County, describing the order as a “precautionary step” that would allow for further analysis of seismic activity.  As a result of that analysis, the COGCC adopted a “stoplight” risk management plan similar to the plan used in Oklahoma. While the COGCC has not changed any of its regulations based upon seismic activity, it has taken action to manage and mitigate the effects of the same.  Under the ruling in the Sierra Club case, actions like those taken by the OCC and the COGCC to address seismic activity related to injection wells are perhaps enough to avoid federal regulation and oversite of the same.