On Friday, February 6, California’s Division of Oil, Gas, and Geothermal Resources (“DOGGR”) published a letter to the US Environmental Protection Agency (“USEPA”) addressing issues with California’s Class II Oil and Gas Underground Injection Control program (“UIC”).  DOGGR wrote the letter in response to two previous letters from the USEPA where the USEPA pointed out “serious deficiencies in California’s Class II program and inconsistencies with federal UIC regulations.” California is currently out of compliance with the Safe Drinking Water Act (“SDWA”) requirements for Class II injection wells because fluid from these wells is being injected into non-exempt aquifers, which is prohibited.

The USEPA classifies injection wells into six categories, based on the materials in the injection fluid.  Class II wells are wells in which fluids from oil and gas operations are injected.  The fluid is injected in order to safely dispose of it, and most of the fluid is “brine that is produced when oil and gas are extracted from the earth,” according to the California Department of Conservation. To date, there are over 50,000 Class II wells in the state and all are subject to regulation under the Class II UIC program.

The primary issue addressed in the letter from DOGGR to USEPA is that fluids from Class II wells are being injected into aquifers that have not been exempt by the USEPA.  An “exempt aquifer” is defined by the USEPA as a well for which “protection under the SDWA has been waived by the UIC Program.”  This means that the aquifer is not a source of drinking water or a source of water for public works.  The exemption requirement is in place due to public health concerns — the USEPA wants to ensure there is no risk of contamination.  If an aquifer is non-exempt, oil and gas waste disposal is prohibited under the SDWA.

DOGGR’s Rulemaking & Data Collection

To address this noncompliance, DOGGR will initiate a rulemaking by April 1, 2015.  The purpose of the rulemaking is to establish a “regulatory compliance schedule to eliminate Class II injection into undisputedly non-exempt aquifers statewide.”  (Letter from DOGGR to USEPA, at p. 6.)  DOGGR also announced that it will phase out injection into nonexempt aquifers by February 15, 2017.

Further, DOGGR is going to begin collecting data from oil and gas operators in order to support requests for aquifer exemptions for certain aquifers.  This will allow Class II injection to continue into aquifers once they have received an exempt status.  DOGGR announced that there will be two USEPA-sponsored workshops to assist in the data collection process: one in Bakersfield during the last week in February 2015 and one in Los Angeles during the last week in March 2015.  (Letter from DOGGR to USEPA, at p. 5.)

DOGGR also stated that there are no health issues associated with the current UIC program in California: “the analytical data from the water supply wells that the State ordered to be tested have not shown any contamination of the water supply wells by oil and gas injection activities.”  (Letter from DOGGR to USEPA, at p. 5.)

By Mike Mills (michael.mills@stoel.com) and Shannon Morrissey.  Ms. Morrissey is a Law Clerk with Stoel Rives LLP and is not currently licensed to practice law in California.