Yesterday, the United States District Court for the Western District of Oklahoma issued an order granting the motions to dismiss of three oil and gas operator defendants, Chesapeake Energy, Devon Energy, and New Dominion, in an action brought by the Sierra Club alleging that the operators’ activities “contributed, and continues to contribute, to an increase in earthquakes throughout the State of Oklahoma and in southern Kansas.”
Sierra Club v. Chesapeake Operating, LLC, Case No. CIV-134-F (W.D. Okla. April 4, 2017). Because of Sandridge Energy’s bankruptcy, action against the company was stayed and a motion to dismiss was not filed, despite it being a defendant in the original complaint.
In its complaint, the Sierra Club alleged that both the number and severity of earthquakes in the region had increased as a result of the defendants’ “deep injection of liquid waste from oil and gas activities.” Thus, the Sierrra Club alleged, “the earthquakes induced by defendants’ waste disposal activities present an imminent and substantial endangerment to the public health and environment.”
The Sierra Club sought to reduce the alleged risk by requiring the defendants to:
- Reduce the amount of wastes injected “to levels that seismologists believe will not cause or contribute to increased earthquake frequency and severity,”
- Reinforce vulnerable structures that forecasts indicate could be impacted by large magnitude earthquakes,
- Establish an independent earthquake monitoring and prediction center “to determine the amount of [wastes] which may be injected into a specific well or formation before induced seismicity occurs.”
The three defendants moved to dismiss the Sierra Club’s complaint on several grounds, including the argument that “the court should decline to exercise jurisdiction over this action under the Burford abstention and primary jurisdiction doctrines because the Oklahoma Corporation Commission has taken action in response to the increased seismicity caused by wastewater disposal activities.”
In addressing the motions to dismiss, the court reviewed the relevant statutory and regulatory framework, as well as the actions of the Oklahoma Corporation Commission (the “OCC”) which, by state statute, is vested “with exclusive jurisdiction, power and authority, and it shall be its duty to promulgate and enforce rules, and issue and enforce orders governing:  injection wells known as Class II wells under the federal Underground Injection Program.” (52 O.S. 2011 Section 139(B)(1)(f)).
In addition, the court considered the principles of abstention and primary jurisdiction under abstention doctrine set forth in Burford v. Sun Oil Co., 319 U.S. 315 (1943), which counsels that:
[w]here timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case at bar; or (2) where the exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial concern [New Orleans Public Service, Inc. v. Council of New Orleans, 491 U.S. 350, 361 (1989)].
In light of these principles, and the actions of the OCC, the court concluded that the case fell “within the Burford doctrine.”
Further, the court reviewed the doctrine of primary jurisdiction, which, as with Burford abstention, “is concerned with protecting the administrative process from judicial interference.” The court concluded that “primary jurisdiction to redress the harm alleged by plaintiff rests with the OCC” after determining that the “requested relief requires scientific and technical expertise, which the OCC and its collaborators possess.”
In light of its determinations on Burford abstention and primary jurisdiction, the court ordered the dismissal of the complaint against the three defendants stating:
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 this 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 Corporation 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 the science and putting the growing body of technical knowledge to work in the service of rational regulation.