Bill Requires Applicants for Oil and Gas Disposal Well Permits to Notify Groundwater Conservation Districts

In June 2013, the Gonzales County Underground Water Conservation District (GCUWCD) discovered, through a newspaper publication in the Gonzales Inquirer, that Marathon Oil Company had applied to the Railroad Commission of Texas (RRC) for a permit to inject oil and gas waste into a former brackish groundwater well in the Carrizo formation of the Carrizo Wilcox Aquifer. The well is located in Gonzales County, four miles outside the groundwater district’s boundaries. The main water bearing formation in the GCUWCD is the Carrizo Aquifer. Although the disposal well is located only four miles from the district’s boundaries, Marathon Oil had no obligation to specifically notify the groundwater district of its application to dispose of oil and gas waste.

This is because, currently, Chapter 27 of the Water Code and RRC Rules governing oil and gas waste injection well permits (Class II injection wells) do not require applicants to notify groundwater conservation districts of an injection well application—even if the well is located within the groundwater district’s boundaries. Contrast the notification requirements for oil and gas disposal wells, which are regulated by the RRC, with those that apply to industrial and municipal waste regulated by the Texas Commission on Environmental Quality (TCEQ). If the TCEQ receives an application for an injection well permit to dispose of industrial and municipal waste and the proposed location of the injection well is in the territory of a groundwater conservation district, the TCEQ is required to submit a copy of the application to the groundwater conservation district. Texas Water Code § 27.017(b).

The RRC does have the authority, but not the obligation, to require an applicant to notify an “underground water district,” of the application for a disposal well permit, but it decides whether to do so on a case by case basis. 16 TAC § 3.9(C).

Applicants seeking permission from the RRC to dispose of oil and gas waste through underground injection are required to notify an “affected person,” and a relevant county and city. See16 TAC § 3.9(5). RRC Rules define an “affected person” as “a person who has suffered or will suffer actual injury or economic damage other than as a member of the general public or as a competitor, including surface owners of property where the well would be located and operators of nearby wells.” 16 TAC § 3.9(5)(A). For a commercial disposal well permit, an applicant is required to notify owners of property adjacent to the proposed disposal tract. 16 TAC § 3.9(5)(B).

Finally, the applicant must publish notice of the application in a newspaper in the county where the proposed well will be located, which is how the GCUWCD learned of Marathon’s application. 16 TAC § 3.9(5)(D).

Concerned that the disposal of oil and gas waste could contaminate future, brackish sources of groundwater in the Carrizo Wilcox Aquifer, the GCUWCD requested a hearing before the RRC on Marathon’s application for a disposal well permit. In an effort to protect drinking water supplies, the groundwater district sought to require Marathon Oil to utilize well construction standards more stringent than those required by the RRC.

Marathon filed a motion to dismiss the groundwater district’s request for a hearing, maintaining that the groundwater district lacked authority to challenge the disposal well application because the well is located outside of the district’s boundaries. Additionally, Marathon argued that a groundwater conservation districts is not an “affected person” under RRC Rules, and, therefore, does not have standing to protest disposal well permit applications.

An RRC hearing examiner disagreed with Marathon’s contentions, finding that the determination of whether the groundwater district is an affected party with standing to contest Marathon’s permit involved many factual issues that should be heard at an evidentiary hearing. Additionally, the hearing examiner dismissed Marathon’s argument that the groundwater district lacked authority to challenge the disposal well application because the well is outside of the district’s boundaries. The hearing examiner maintained that the district had expanded its boundaries in the past and “given the increasing water needs of the State of Texas, it is not unlikely that the District may again expand its boundaries and take in the area under consideration.” Read the RRC hearing examiner’s Memorandum.

The RRC subsequently reversed the hearing examiner’s decision, disallowing the GCUWC to protest Marathon Oil’s application to dispose of oil and gas waste on the basis that the well is outside of the groundwater district’s boundaries. The RRC did not address Marathon’s argument that groundwater conservation districts do not have standing to protest permits for disposal wells.

The outcome of GCUWCD’s attempt to protest Marathon’s disposal well application is disconcerting, given the close proximity of the well to the district’s boundaries, the fact that the groundwater district’s boundaries could expand in the future, and that technology and increased demand for water resources have resulted in previously inaccessible sources of groundwater being pumped for a variety of uses.

Equally disconcerting is that, currently, the RRC Rules do not require an applicant seeking to dispose of oil and gas waste through underground injection to notify a groundwater conservation district of its application for a permit to do so.

In attempt to rectify this deficiency, Senator Carlos Uresti has filed Senate Bill 517, which amends Chapter 27 of the Water Code to require applicants to notify a groundwater conservation district within ten miles of a proposed injection well of an application for a permit to dispose of oil and gas waste. Initially, the bill did not address the issue of whether a groundwater conservation district is an “affected person” with standing to protest an application. The committee substitute for Senate Bill 517, however, makes clear—-likely from pushback from the oil and gas industry— that notice does not grant a groundwater conservation district standing as an affected person.

The bill has been referred to the Senate Agriculture, Water, and Rural Affairs Committee. If the bill passes as drafted, a groundwater conservation district within ten miles of a proposed injection well would no longer have to comb through newspapers to find out whether someone has plans to inject oil and gas waste in the district’s backyard. But, it is unclear whether the groundwater district would have the ability to protest the application—in the past it has depended on the facts and whether the district could prove it is an “affected person” under RRC Rules.

In the Gonzales County case, Marathon Oil argued, however, that no groundwater district should have standing to protest a disposal well application because under Section 26.131 of the Water Code, only the Railroad Commission has the authority to protect groundwater from contamination from oil and gas related activities. Section 26.131 states, “The Railroad Commission is solely responsible for the control and disposition of waste and the abatement and prevention of pollution of surface and subsurface water resulting from . . . activities associated with the exploration, development, and production of oil or gas or geothermal resources . . . .”

It is true that the RRC has exclusive jurisdiction under Chapter 26 of the Water Code to regulate oil and gas disposal wells and protect groundwater from the underground disposal of oil and gas waste. But the RRC’s authority to regulate this activity should not exclude a groundwater conservation district, which has a constitutional obligation under Section 36.0015 of the Water Code to protect the groundwater resources of the State, from voicing concerns over the disposal of waste into an aquifer that it regulates.

Senate Bill 517 requires that applicants notify a groundwater district whose boundaries are within ten miles of a proposed well. This requirement recognizes that the politically created, jurisdictional boundaries of a groundwater conservation district do not mirror the hydrologic boundaries of an aquifer. It is possible that a disposal well outside of a district’s boundaries could be drilled into a formation that is hydrologically connected to a formation inside the district’s boundaries. The possibility of a hydrological connection is why it is important that a groundwater conservation district be given a chance to prove that it would be affected by a disposal well, rather than automatically excluded from the administrative process simply because the well is outside of the district’s jurisdictional boundaries or because the RRC has the exclusive authority to regulate oil and gas disposal wells.

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