Disposal Well Public Protests
Thursday, December 27, 2012
In light of the public awareness
in fracking associated with the new movie Promised Land and recent
documentary Gasland, operators in the oil and gas sector (which includes
the saltwater management industry) must be aware of the changing political
situation and the growing national and local opposition to fracking and
saltwater injection wells. At the November 30th Oklahoma Corporation Commission
(OCC) 2012 Oil and Gas Institute entitled, “The Oklahoma Standard: Oklahoma Oil
and Gas Conservation Law and Practice”, the sixth, and last panel discussion of
the day, “Review and Comment - Current issues Impacting the OCC’s Oil and Gas
Conservation Adjudication Process” addressed such concerns.
Administrative Law Judge (ALJ), Kathy
McKeown of Tulsa told the November 30th meeting about a case that
she informally entitled, “Beware”. As
described in the proceedings, the case concerned “spacing and location
exception applications for horizontal drilling and a horizontal well.” A
respondent who had an interest in the unit being proposed was against the
horizontal drilling and fracturing method citing his concern that it could
cause ground and air pollution. For evidence that the applications should be
denied, he presented a copy of the movie, “Gasland.” The movie was not admitted
as evidence but it was acknowledged as a commercial movie on the record.
Michael Decker, Director, Office
of Administrative Proceedings (OCC), underscored the intent of the same
November 30th panel discussion in saying, “We strive in every way to make certain that a fair hearing is
provided, that everyone is listened to and that everyone is treated with the utmost
respect in our proceedings. So I hope that we have that message fully
articulated and that the claims that are brought before us, regardless of
presented by which side or which person or which owner, are all given the
fairness and respect that they should be provided.”
This blog gives a detailed
account of the address made to the November 30th panel discussion by
ALJ Michael Norris, Senior ALJ out of Oklahoma City, relating to a case that he
heard in August of 2012. The authors of this blog, who prepared the exhibits
and gave expert witness for the operator of a proposed salt water injection
well, came to know first-hand the dedication that the OCC shows in listening to
the protestants of a case referred to as XXXX Energy Services, Inc.. The
introduction of Norris’s talk in the proceedings described, “...the trend showing an increase in the applications for commercial
disposal wells and the increased interest and opposition to such applications.
The trends also demonstrate efforts by parties to organize a strenuous and
effective protest.” The case referred to in his talk concerned a commercial salt water disposal well near the
town of Pauls Valley in Garvin County that was previously permitted but when unable
to finish in time, due to financial restraints, it went up for re-permitting. Twenty
pages of documentation concerning the case including the exhibits for the
defendant were presented in the proceedings book accompanying the November 30th
panel discussion.
It is the intent of the authors
of this blog to use Judge Norris’ presentation to echo the fact that a
community united against a salt water disposal well or any other economic activity
can greatly influence the hearing process and furthermore, we question what
recourse operators have in counteracting such a strong and organized attack. Indeed,
the authors of this blog see changes in government regulations that will
encourage and abet citizens’ challenges.
Judge Norris described the story
that he was about to relate as, “Beware II: The Sequel”, referring to Judge
McKeown’s case involving the indicated use of the movie “Gasland” by an
opponent of horizontal wells. He shared
the trepidation associated with, at first, being assigned the XXXX case. (Judges
do not know beforehand which case they will be assigned from the docket). Having
heard that there was great community opposition to the salt water injection
well being re-applied for by XXXX, he understandably hoped that the case would
go to one of the other ALJs. His trepidation began to be realized when he
entered his court room to find 50-60 people, two or three news reporters, two
television stations, a county commissioner and a district attorney from the
county commissioner’s office and word that a state senator was involved. The
outcome of this case would not only be the immediate concern of the operator
and the people of Pauls Valley but it would also be a future concern for OCC cases
to come as the number of commercial disposal permits applied for has grown
significantly in the past four years: 2009 – 14; 2010 – 16; 2011 -21; and, as
of the end of November 2012 – 35.
The magnitude of the public
opposition to this saltwater injection well was indicated by the number of signatories
to a protesting petition – 1200. A petition of this size had never been
presented to the Commission. The case started out with all of the Pro Se
representatives in the judge’s chambers highly incensed that they hadn’t gotten
proper notice and that they were not going to get a fair hearing in front of
the OCC. They wanted all of the 1200 petition signers to be able to have their
protests heard and had, previous to the hearing, presented a motion to have at
least part of the case heard in Garvin County. They were totally convinced that
the regulatory agencies were not going to give them a fair shake or a good
hearing and that Judge Norris was going to be in favor of the commercial well
application. Norris said that he thought that he “did not do a very good job of convincing them that they would get a
fair shake.”
Judge Norris described the first part of the case going much the same as a typical case with the applicant (team) making their case and that the technical part and the strategic part and the location went very well. The Pro Se defendants objected from time to time about the information and how it was handled; the right to object in a hearing is not available to industry personnel, only their lawyers. From the beginning it was apparent to Judge Norris, “that there was a whole lot of media attention going on. It seems that fracking and commercial disposal wells go hand in hand and people are concerned about it if they are afraid of it [fracking]; sometimes legitimately, sometimes for legitimate reasons, sometimes perceived. But it is getting to be a very hot topic and some of the issues that were raised in this very well presented and organized protest.”
The protestants told Judge Norris
that they felt that they could not get a concerted effort by the Transportation
Department or the Commission to address their concerns. They insisted that the regulatory agencies
would not serve their interest in this matter.
Judge Norris in his November 30th
discussion cautioned the body of lawyers and oil and gas professionals before
him, “that anybody who is involved in these
cases, whether they represent the applicant, or represent protestants, or just
a landman trying to get interest from people, or people that own mineral
interests, they (the protestants) make these arguments now that they (the
protestants) cannot get a concerted effort cooperation from these regulatory
agencies that protect our interests against these sorts of cases.”
Many aspects of the XXXX case
represented “firsts” for the Commission as already mentioned with the number of
people who signed the petition. He told of another “first” that came with the
involvement of the county commissioner assisted by the district attorney for
Garvin County. He explained that, “they
[Garvin County Commissioners] raised issues about traffic load, transportation
issue; the breakdown of roads because of weight load, increased traffic, and
the actual noise and pollution that was going to happen from having 18 wheelers
running up and down a lake road 24/7 taking disposal saltwater into the site.
They went so far as to have the transportation or the county commission do a
study that showed that they had just gotten $1.5 million to improve the road to
the lake in Garvin County; new bridge, new roads, ditches, and drainage; all of
this because, for those of you not familiar, Garvin County also has a noodling tournament
out there. This is the main road that goes to that lake and they did not want
the noodling tournament messed up or roads torn down or torn up by a bunch of
18 wheeler salt water disposal trucks going towards that lake.”
The protestants told the judge
that they did a study illustrating, “that
weight limit and that number of trucks and that type of disposal would destroy
their brand new 1.5 million dollar improvement in about 3 years if it was
allowed” and the Commissioner added that they, “were not going to allow that to happen in their community.” Judge
Norris continued to emphasize the novel role of the county commissioner in this
case, he continued saying, “Now whether
he could or he couldn’t”, the county commissioner said that he would have
people sitting out there weighing each truck that comes down the road and that
every (truck) that is overweight, he would fine because he would not have them
destroy the roads that were in his county. Judge Norris added that the
commissioner made a lot of other dire statements. The judge commented that the
protestants were very serious about it and they put on a very good case for the
transportation problems involved in one of these wells and that, “nobody had considered it except that it
will make a big bad impact on their community.”
Judge Norris told how the
protestants again brought up their issue of notice, complaining had it not been
one of the residents of the area near the disposal well habitually reading the
public notice section in the paper that they would not have known anything
about the proposed well.
Also new to the hearings of injection
wells, Judge Norris reported, protestants are more likely to bring up the issue
of groundwater pollution and the concern that water can migrate further away
than any of the experts say. Judges now are seeing professional geologists and
engineers being brought in from both the applicant and the protestant’s side. Furthermore,
protestants are bringing up complaints new to the arena with issues such as how
much noise pollution, light, and dust from unpaved roads, and unpaved
turnarounds affect the landowners.
Unforeseen complications to the XXXX
case arose when the Pro Se individuals who represented the protestants again came
to Judge Norris and said that they thought that they were now getting a fair shake
from the commission but they still had some concerns and that they now wanted
to put people on the stand and he agreed. At this point in the presentation,
Judge Norris related a personal story that emphasized the notion that if you
think you have won half way through a trial you are asking for trouble.
The Pro Se introduced one of
their own team who was a neighboring landowner. Judge Norris explained, “When he got on the stand, he was very
professional, very well prepared , very articulate and he started talking about
the applicant and there were numerous objections, as you can imagine, but he
went on about the experience and the background and the finances of this
applicant (XXXX Energy Services, LLC). And then there were appropriate
objections about his qualifications to testify and finally it was on my
shoulders to decide what he could say and could not say and I decided to ask
him, “Sir, you seem to know a lot about this and you seem to know what you are
talking about but I haven’t heard your background. Can you tell me why you know
so much about this information and this particular financial arrangement that
this LLC has established?”” As it turns out the Pro Se member was an SEC
investigatory attorney in financial matters for 12 years at the Security and
Exchange Commission, for a living, investigated fraud and misrepresentations
and he said that, “This smacks of that!” Judge
Norris emphasized that, “testimony like this is bound to get the attention of an
ALJ.”
Judge Norris further explained
that the protestant’s outside geologic expert talked about the migration of
saltwater from the injection wells and they disputed the range of travel by
disposal fluids claiming that migration may be much greater than the
applicant’s experts had espoused.
In summarizing his message to the
audience Judge Norris emphasized how this case was, “a wake-up call for anybody who is involved in this kind of
application, or defense, or who works for an oil company, or who works for a
disposal company, or is involved in the industry in any way; that if you are
doing these things, or are involved, you should do them to the utmost of your
ability and should leave no log or leaf unturned. You should prepare immensely
for the case; don’t think it is going to be a command for administrative
approval anymore because more and more people are incensed about these things,
valid or invalid.”
He continued that there is
growing concern from landowners, citing one gentleman whose property abutted
the disposal well being discussed. The landowner testified that he would, “see nothing but trucks and traffic and
dirt from my yard from now on.”
Judge Norris emphasized that
people are very concerned and they are,
“hiring the right people and the right people to protect them and try to win
the battle they see is something that affects them in an immense way in the
community.” He cautioned concern for,”
site selections, parking, turn around areas, traffic, and all those things that
may not have been a distinct consideration in the past for some things.” He
added, “Any of you who are involved in disposal
wells should very much consider, and have a very good selection process
available when you start this because the better your site, the better the
selection I think your [location] is from populated areas, the better off you
are going to be from an opposition standing.”
As participants in the case
referred to in this talk we appreciate the guidelines for the future but offer
some questions as to the proceedings in the case, namely the role of the Pro Se
opponents. We contend that if they had paid counsel they would not have had the
ear (and sympathy) of the judge. Would there have been intimidation from a proper
counsel insinuating that his clients were not going to get a fair hearing with
the OCC? The Pro Se protestants were granted unusual latitude to oppose the
application with groundless hearsay and “sidewalk engineers”. What recourse
does the applicant have when the so-called expert witness has a history in the
oil business but is out-of-date? Detailed testimony concerning the Arbuckle
Formation was presented by the authors but countered by protestants’ geologist
who used repeated reference to the Biblical Flood in his testimony.
More discussion went on with Pro
Se in private chambers without XXXX’s counsel present than would have taken
place otherwise. Our contention in hearing Judge Norris’s November 30th
description of the hearing is that the discussion concerning the road to the
lake where the noodling tournament took place was not done in the hearing but
in his chambers. What else was discussed that we were not privy to as part of
the applicant’s team in the case?
In summary, the Pro Se
protestants were allowed wide latitude in terms of ancillary issues not germane
to the UIC permit.
·
The OCC has
no jurisdiction over traffic issues and road usage; why were these arguments
entertained by the ALJ? Road noise, dust, damage to roads are all dealt with
most adequately by state and local laws; overweight trucks, for example, are
issued tickets and fines all around the state. Traffic has nothing to do with
the issuance of UIC permits. UIC permits are not cancelled for parking tickets.
·
And as to
the testimony of financial arrangements of the applicant, as long as an
operator has a valid operating bond, the OCC has no jurisdiction to investigate
financial affairs of an operator but the protestant’s financial witness not
only questioned the financial history of XXXX’s owner but exposed an indictment
of one of XXXX’s partners concerning a trial that had not yet taken place. In
our estimation he talked about the partner as if he were guilty in a case not
yet gone to trial in Houston. As it turned out, XXXX’s partner was found
innocent but not in time to clear his name that was unnecessarily and falsely defamed
in this hearing. Should oil and gas applicants now investigate the credit
rating and mortgage status of all the residents within a mile of the proposed injection
well? Where does this stop and what is the relevance to a UIC permit?
The cause was dismissed without
prejudice as it was clear to the defendant that he would not win in light of
the opposition using tactics, such as what the County Roads Commissioner
threatened.
The authors fully agree with the
cautions that Judge Norris presented with the best advice being plan disposal
wells entirely removed from residences. Going farther, however, the authors see
a growing trend of allowing Pro Se protestants almost complete freedom to refute
and defame responsible applicants.
The Authors:
Marian M.
Smith, Ph.D., University of South Carolina (Geology) is a partner in Odin Oil
and Gas, LLC, in Oklahoma City, OK. Dr. Smith has expertise in reservoir
geology and image analysis. For most of her career she was an educator at all
levels from graduate school geology courses at Michigan Technological
University to the teaching of science in middle school in South Carolina. At
present she is combining her background in research and teaching to work as a
consultant with Dr. Langhus at Odin Oil and Gas, LLC.
Bruce G.
Langhus, Ph.D., is a petroleum geologist with over 45 years' experience in oil
and gas business including water-flood design and operation; Class I, II, and
III disposal well location, permitting and operation; and injection well
remediation. Dr. Langhus has been the
Class II Program Manager in Oklahoma, the second largest UIC program in the
country. He was a founding partner of
ALL Consulting, a successful geotechnical consultancy in Tulsa, OK. Dr. Langhus is now part of Amerex Resources,
operators of disposal facilities in Texas, Oklahoma, Montana, and North
Dakota.
