Promised Land in OK: Results of a Public Protest Hearing
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 30thpanel 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 30thdiscussion 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 30thdescription 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.
