Osage (Pawhuska, Oklahoma)

Plain-English summary

Scott F. Wiehle, a rancher and farmer near Pawhuska, Oklahoma, challenged a UIC permit issued to Calumet Oil Company to convert a well into a Class II enhanced oil recovery injection well. He argued that the permit should include a public hearing, a pressure gauge, limits on injection pressure, and other protections for nearby water wells. The Board held that some issues were moot because an abandoned well was plugged and the permittee agreed to install a pressure gauge, and it denied review of other issues that were not preserved or did not show reversible error. It remanded the permit to require the gauge and to remove the unauthorized well-stimulation exception from the wellhead pressure limit.

Decision snapshot

• Cited authorities: Safe Drinking Water Act § 1421 et seq., 42 U.S.C. § 300f et seq., and 40 C.F.R. Part 147, Subpart GGG.
• Outcome: Review was denied in part, and the permit was remanded for a pressure-gauge requirement and a corrected wellhead injection-pressure limit.
• Key point: A Class II enhanced oil recovery permit may not allow the permittee to exceed the maximum wellhead injection pressure during well stimulation unless the governing regulation authorizes that exception.

Full text (EPA EAB public release)

+OSAGE (PAWHUSKA, OKLAHOMA) 395

IN THE MATTER OF OSAGE (PAWHUSKA, OKLAHOMA)
UIC Appeal No. 92-2

ORDER DENYING REVIEW IN PART AND REMANDING IN
PART

Decided November 24, 1992

Syllabus

Petitioner seeks review of an underground injection control (UIC) permit issued
to an oil company for the purpose of converting a well into a Class II enhanced
oil recovery injection well. He challenges the Region’s denial of his request for a
public hearing. He also seeks the inclusion of certain conditions in the permit.

Held: The Region erred by allowing the permittee to exceed the limit on maximum
injection pressure for the purpose of well stimulation. The Region did not commit
any error or abuse its discretion by denying Petitioner’s request for a public hearing.
The remaining issues are either moot due to changed circumstances or not reviewable
since Petitioner has failed to demonstrate that he raised such issue during the public
comment period. The permit is remanded (1) to include a requirement that a pressure
gauge be installed as agreed to by the permittee and (2) to limit injection pressure
at the wellhead in accordance with the regulations governing the permitting of Class
II enhanced oil recovery wells.

Before Environmental Appeals Judges Nancy B. Firestone,
Ronald L. McCallum, and Edward E. Reich.

Opinion of the Board by Judge Firestone:

Petitioner, Scott F. Wiehle, seeks review of an underground injec-
tion control (UIC) permit issued by Region VI of the U.S. Environ-
mental Protection Agency pursuant to Part C of the Safe Drinking
Water Act (SDWA), 42 U.S.C. § 300f et seq., as amended. Region
VI issued the UIC permit to Calumet Oil Company, the permittee,
authorizing the conversion of a well to a Class II enhanced oil recov-
ery injection well.! The well is located on Indian lands in the Osage

1Under the terms of the permit, authorization to inject fluids into the well is
granted separately from the issuance of the permit. Such authorization may be granted
when the operator has satisfactorily demonstrated compliance with certain construction

requirements and demonstrated mechanical integrity in accordance with 40 C.F.R.
Continued

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396 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

Mineral Reserve in Osage County, Oklahoma.2 Petitioner is a rancher
and farmer who owns and operates several fresh water wells near
the permitted injection well. The Environmental Appeals Board has
jurisdiction to consider this appeal under a delegation of authority
by the Administrator.

I. BACKGROUND

In February 1992, the Region issued public notice of its proposal
to issue a Class II UIC permit to the Calumet Oil Company. Both
prior to and after the public notice was issued, Petitioner submitted
comments, including reports by an engineering firm, expressing con-
cern for the fresh water aquifer which is represented to be Petition-
er’s sole source of drinking water. On February 25, 1992, Petitioner
requested a public hearing on the draft permit. On March 18, 1992,
an informal meeting was held between Petitioner, his consultants
and the Region.

On April 13, 1992, the Region issued the final permit authorizing
conversion of the well under the UIC program. On or about that
same date,3 the Region responded to Petitioner's comments and de-
nied Petitioner’s request for a hearing.

§ 147.2920(b)(1)(i). Mechanical integrity of the well was demonstrated on April 27,
1992.

In addition, § 147.2920(e) provides that operation shall not commence until proof
has been submitted to the Regional Administrator, or an EPA representative has
witnessed, that any corrective action specified in the permit has been completed.

2'The Osage Mineral Reserve in Oklahoma was established by an Act of Congress
in 1906, which allows the Osage Indian Tribe, through the Bureau of Indian Affairs
(BIA), to establish leasing policies and obtain royalties from oil and gas production.
See 49 Fed. Reg. 45,292, 45,300 (Nov. 15, 1984). Because of the nature of this grant
of authority, the State of Oklahoma does not regulate mineral extraction activities
on the Reserve and the Oklahoma UIC program for Class II wells, approved in 1981,
does not apply to injection activities on the Reserve. Id. In 1984, the Agency estab-
lished a federal Class II UIC program in the Osage Mineral Reserve at 40 C.F.R.
Part 147 Subpart GGG. Id. In consideration of the large number of wells in the
Osage Mineral Reserve and the fact that the Reserve already had a considerable
history of regulation of Class II wells, the Agency tailored the UIC program specifically
to the Reserve by drawing from existing BIA requirements, requirements from the
approved Oklahoma UIC program in effect in the rest of the State, the EPA UIC
minimum requirements, and the expressed preferences of the Osage Tribe. Id.

3The administrative record does not show the exact date when the Region’s Re-
sponse to Comments was issued or served. Petitioner acknowledges he received a
copy of the Region’s Response to Comments on April 13, 1992.

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OSAGE (PAWHUSKA, OKLAHOMA) 397

The Petition for Review was filed on May 20, 1992.4 The Petition
asserts that the Region erred by (1) failing to hold a public hearing;
(2) failing to require the permittee to plug abandoned Well No. 4;
(3) failing to expressly provide that the approved injection pressure
of 419 psig should not be “increased to fit the operator’s needs”;
(4) failing to expressly require in the permit that a “working, func-
tional pressure gauge” be installed at the well to enable Petitioner
to observe and monitor the pressure of injection; and (5) failing to
require the permittee to conduct mechanical integrity tests more fre-
quently than once every five years.

While the case was pending on appeal, the permittee, on Septem-
ber 9, 1992, filed a motion for issuance of interim authorization
to inject into Well No. 6, the permitted well. In this motion, the
permittee asserts that changed circumstances warrant this relief.
First, permittee maintains that Well No. 4 has been plugged as
requested by the Petitioner. Second, it maintains it has agreed to
place a pressure gauge on the Well No. 6 injection pump, again,
as requested by Petitioner.

On September 11, 1992, this Board ordered the Region and Peti-
tioner to file a response to the permittee’s motion and to specifically
address which issues, if any, remain on appeal in light of the alleged
changed circumstances. Both the Region and Petitioner filed re-
sponses.

In their responses, both the Region and Petitioner agree that
Well No. 4 has been plugged. The Region concurs that the permittee
has agreed to install a permanent injection pressure gauge on Well
No. 6. The Region further commits to modify the final permit to
require this pressure gauge. Petitioner states, however, that the per-
mittee has not agreed with him in writing to install the pressure
gauge at Well No. 6.

In view of the changed circumstances and the agreement with
the permittee, the Region maintains that there remain three issues
on appeal: (1) whether the Region committed error or an abuse of
discretion by not granting Petitioner’s request for an administrative

4 Agency rules require that a petition for review must be filed within thirty days
after issuance of the final permit decision. 40 C.F.R. § 147.2929(j)(2). This thirty day
period begins with the service of notice of the Regional Administrator’s final permit
decision unless a later date is specified in that notice. Id. While the administrative
record does not show when notice of the final permit decision was served on Petitioner,
the Region has represented to the Board that the Petition for Review was timely
filed.

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398 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

hearing; (2) whether the Region erred by not including as a condition
in the permit that the approved injection pressure of 419 psig shall
not be increased to “fit the operator’s needs”; and (3) whether the
Region erred by not including as a condition in the permit a require-
ment that mechanical integrity tests be performed more frequently
than once every five years.

II. DISCUSSION

As a threshold matter, under the rules that govern this proceed-
ing, a UIC permit ordinarily will not be reviewed unless the condition
in question is based on a finding of fact or conclusion of law that
is clearly erroneous, or involves an exercise of discretion or important
matter of policy that warrants review. 40 C.F.R. § 147.2929(j)(3)(ii);
see also Avery Lake Property Owners Association, UIC Appeal No.
92-1, at 3 (September 15, 1992) (UIC permit proceeding under Part
124). In general, the “power of review should be only sparingly exer-
cised” and “most permit conditions should be finally determined at
the Regional level * * *.” See Avery Lake, UIC Appeal No. 92-1,
at 3 (quoting from the preamble to Part 124).5 The burden of dem-
onstrating that review is warranted is on the petitioner. 40 C.F.R.
§ 147.2929(j)(3).

We conclude that the changed circumstances identified by the
permittee in its motion render two of the issues on appeal moot.
Cf. In the Matter of W.R. Grace & Company, RCRA Appeal No.
89-28, n.6 at 4 (March 25, 1991). The permittee’s action in plugging
Well No. 4 has rendered that issue moot.6 In addition, the permittee’s

5While this appeal arises under the special rules governing UIC permitting on
the Osage Mineral Reserve, the preamble to Subpart GGG under Part 147, governing
the Osage UIC program, indicates that the provisions for appeals were intended to
be largely “similar or identical” to those in Part 124, governing the general UIC
program. See 49 Fed. Reg. at 45,300.

6Petitioner argued that prior to approving the permit for Well No. 6, Well No.
4 should be plugged. In support of his position, Petitioner identified several Agency
regulations: 40 C.F.R. § 147.2903 (prohibiting the abandonment of any injection well
in a manner which allows movement of fluid containing any contaminant into a
USDW thereby causing a violation of Part 142 or otherwise adversely affecting the
health of persons), 40 C.F.R. § 147.2905 (requiring that an injection well must be plugged
within 1 year after termination of injection unless EPA allows an extension of time
under specified circumstances); 40 C.F.R. § 147.2914 (authorizing the Region to exercise
its discretion to prevent movement of fluid into a USDW by requiring corrective
action to plug an abandoned well within the “zone of endangering influence” of an
injection well authorized by rule); and 40 C.F.R. § 147.2923 (requiring that all improperly
sealed, completed or abandoned wells within the “zone of endangering influence” that
penetrate the “injection zone” of a Class II well must have corrective action taken
to prevent movement of fluid into a USDW). Because Well No. 4 has been plugged,

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OSAGE (PAWHUSKA, OKLAHOMA) 399

agreement to install a pressure gauge on Well No. 6 and the Region’s
commitment to modify the permit to require this pressure gauge
renders that issue moot, as well.

We now turn to the three remaining issues on appeal. For two
of the issues, we conclude, for the reasons set forth below, that
the Petitioner has not met his burden of showing that the Region’s
permit decision should be reviewed. For the third issue, which con-
cerns the permit condition limiting the injection pressure at the well-
head, we conclude that the Region failed to comply with Agency
regulations. That issue is remanded for modification of the permit
in accordance with our discussion below.

A.

First, the Region did not commit error or abuse its discretion
by not granting Petitioner’s request for an administrative hearing.
In this type of permit proceeding, the Region’s decision to hold a
public hearing is largely discretionary. 40 C.F.R. § 147.2929(f) (“The
Regional Administrator shall hold a public hearing whenever he finds
a significant amount of public interest in a draft permit, based on
the requests submitted, or at his discretion”); Avery Lake, UIC Appeal
No. 92-1, at 2 (UIC permit proceeding under Part 124).

During the public comment period, comments were provided only
by the permittee and Petitioner. Petitioner’s request for a public
hearing was the only request received by the Region. Notwithstanding
the Region’s decision to deny a public hearing on the draft permit,
a Regional representative traveled to Tulsa, Oklahoma on March
16, 1992, for a meeting with Petitioner, during which meeting addi-
tional verbal comments were accepted. All of Petitioner’s written and
verbal comments were considered by the Region and addressed in
the formal response to comments. Consequently, Petitioner was af-
forded ample opportunity for participation in the permit process.

we do not reach the issue of which regulation, if any, would have required plugging
Weill No. 4.

In his Reply to the permittee’s Motion for Interim Authorization to Inject, Petitioner
has not asserted that the plugging of Well No. 4 was performed improperly or did
not comply with any regulation. Since Well No. 4 was plugged in July 1992, Petitioner’s
concerns regarding Well No. 4 have continued to be limited to the conduct of the
Region prior to the plugging, i.e, that the Region made “inconsistent findings” as
to the integrity of Well No. 4 prior to the plugging and that there is a “lack of
accountability for decisionmaking” by the Region. See Petitioner’s Reply to Permittee’s
Motion for Interim Authorization to Inject, at 2-4. In the context of this proceeding,
those issues are moot.

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400 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

In these circumstances, Petitioner has failed to show that the
Region’s decision not to hold a public hearing was clearly erroneous
or an important exercise of discretion that warrants review.

B.

Next, we turn to the two conditions which Petitioner seeks to
have included in the permit. Under the rules that govern this pro-
ceeding, the petitioner has the burden of demonstrating that he may
properly seek review in accordance with § 147.2929(j)(1).7 40 C.F.R.
§ 147.2929(j)(3). In particular, paragraph (1) of § 147.2929(j) requires
that the petition must include a statement of reasons supporting
review, including a demonstration that the petitioner submitted com-
ments during the comment period, including any public hearing. See
Avery Lake, UIC Appeal No. 92-1, at 3 (UIC permit proceeding under
Part 124).

As noted earlier, the preamble to Subpart GGG under Part 147
indicates that the provisions for appeals were intended to be largely
“similar or identical” to those in Part 124. See 49 Fed. Reg. at 45,300.
We therefore conclude that, as with petitions filed pursuant to Part
124, a petitioner in a permit proceeding pursuant to Subpart GGG
under Part 147 must raise all reasonably ascertainable issues and
submit all reasonably available arguments supporting the petitioner's
position by the close of the comment period. See 40 C.F.R. §§ 124.13
and 124.19(a).

In this case, Petitioner has failed to preserve the issue of whether
the permit should require mechanical testing more frequently than
once every five years because he failed to identify that concern during
the public comment period. Accordingly, we deny review on this
issue.8

7 Paragraph (1) of § 147.2929(j) provides:

Any person who filed comments on the draft permit or participated
in the public hearing may petition the Administrator to review
any condition of the permit decision. Any person who failed to
file comments or participate in the hearing may petition for ad-
ministrative review only to the extent of the changes from the
preliminary permit to the final permit decision.

While we are denying review on the ground that Petitioner failed to preserve
the issue for review with respect to whether the permit should require mechanical
testing more frequently than once every five years, we note that this permit challenge
must also fail on the merits. Agency regulations require that each well must have
mechanical integrity and that mechanical integrity must be shown prior to operation.
Mechanical integrity is met only if there is no significant leak in the casing, tubing
or packer and there is no significant fluid movement into an underground source

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OSAGE (PAWHUSKA, OKLAHOMA) 401

With respect to the issue of whether the permit properly limits
injection pressure, we conclude that the Petitioner failed to raise
this issue during the comment period, and thus did not preserve
the issue. Nonetheless, remand is necessary because it appears that
the Region failed to comply with the specific regulations governing
Class II enhanced oil recovery wells. The permit condition at issue
appears under the heading of Operating Requirements. It provides
as follows:

Except during well stimulation,9 injection pressure
at the wellhead shall not exceed 419 psig.

(Final Permit, Part I.B.2, at page 1 of 3.) In his appeal, Petitioner
requests, without any discussion, that the Agency specify that “the
approved injection pressure of 419 psig not be increased to fit the
operator’s needs.” In response, the Region maintains that the lan-
guage sought by Petitioner, would be superfluous since “the pressure
of 419 psig will not be increased for any reason except well stimula-
tion and therefore, will not be increased for any other reasons includ-
ing ‘any other needs of the operator.’”

The Region did not interpret Petitioner’s request to change this
permit condition as a challenge to the “well stimulation exception.”

of drinking water through vertical channels adjacent to the well bore. 40 C.F.R.
§ 147.2920(b)(1) and (2). Subparagraph (i) of § 147.2920(b)(1) provides that the absence
of any significant leak in the casing, tubing or packer may be shown by “[pJerformance
of a pressure test of the casing/tubing annulus to at least 200 psi, or the pressure
specified by the Regional Administrator, to be repeated thereafter, at five year inter-
vals, for the life of the well.”

Here, the permit requires that authorization to inject will not be granted until
the permittee shows to the satisfaction of the Director of the Water Management
Division pursuant to 40 C.F.R. § 147.2920(b)(1)(i) that the well has mechanical integrity.
The permit further provides that (1) the injection well must have and maintain me-
chanical integrity consistent with 40 C.F.R. § 147.2920(b); (2) mechanical integrity must
be demonstrated any time the tubing is removed from the well, the packer is reset,
or a loss of mechanical integrity becomes evident during operation; and (3) the Regional
Administrator may by written notice require the permittee to demonstrate mechanical
integrity at any time. Consequently, the permit conditions concerning mechanical integ-
rity not only comply with Agency regulations, but they allow for a demonstration
of mechanical integrity more frequently than every five years after the initial dem-
onstration if the Region so requires. Petitioner has failed to explain why this procedure
is inadequate. As such, the Region did not err or abuse its discretion in failing
to require the mechanical testing as requested by Petitioner.

9The permit defines “well stimulation” as “several processes used to clean the
wellbore, enlarge channels, and increase pore space in the interval to be injected
thus making it possible for wastewater to move more readily into the formation,
and includes (1) surging, (2) jetting, (3) blasting, (4) acidizing, [and] (5) hydraulic
fracturing.”

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402 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

Consequently, the Region has not addressed whether the exception
for well stimulation to the injection pressure limit of 419 psig com-
plies with the relevant UIC regulations. Rather, the Region argues
it properly calculated the injection pressure of 419 psig in accordance
with the formula set out in § 147.2912(b)(1) and that such injection
pressure complies with § 147.2920(c).

For the reasons that follow, we conclude that the Region had
no basis for allowing for a well-stimulation exception. The well at
issue in this permit is a Class II enhanced recovery well.

Subsection (c) of § 147.2920, entitled “Operating requirements for
wells authorized by permit” provides:

Injection pressure at the wellhead shall be limited
so that it does not initiate new fractures or propagate
existing fractures in the confining zone adjacent to
any [USDW].

The only “well stimulation exception” provided for under the regula-
tions for Class II wells is set forth in § 147.2912(b), which concerns
existing Class II salt water disposal wells authorized by rule:

(1) For existing Class II salt water disposal wells,
the owner/operator shall, except during well stimula-
tion, use an injection pressure at the wellhead no
greater than the pressure calculated by using [the
formula set out in this paragraph].

(Emphasis added). Since the well at issue here is a Class II enhanced
oil recovery well authorized by permit and not an existing Class
II salt water disposal well authorized by rule,!° reliance on
§ 147.2912(b)(1) is not appropriate. In fact, we can find nothing in
Subpart GGG which would allow a permittee of a Class II enhanced
recovery well to exceed the maximum injection pressure calculated
for such well. Moreover, there appears to be nothing in Parts 144
and 146 (which govern other state and federal UIC programs) which
would allow a permittee to exceed the maximum injection pressure
calculated for Class II wells.11 In these circumstances, the Region

10The Administrative Record reflects that the Class II enhanced recovery well
which is the subject of this appeal was converted from an oil well. See Administrative
Record, at 42. Consequently, the permitted well was not previously an “existing Class
II salt water disposal well.”

11 Agency regulations at Part 144, which establish minimum requirements for
UIC programs and constitute a part of the UIC program for States listed in Part

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OSAGE (PAWHUSKA, OKLAHOMA) 403

impermissibly relied on § 147.2912(b)(1) to support the permit’s well
stimulation exception to the maximum injection pressure.

The regulations for the Osage Mineral Reserve UIC program
require a limitation on injection pressure at the wellhead for Class
II wells authorized by permit and do not provide that this limitation
may be exceeded during well stimulation for Class II enhanced recov-
ery wells. Accordingly, the Region erred by including the “well stimu-
lation exception” in the permit.

On remand, we believe the Region should take special care to
ensure that it fulfills the primary aim of the UIC program which
is to protect sources of drinking water from contamination, especially
contamination resulting from pressure induced fractures in the con-
fining zone. In this connection, we believe any reliance on
§ 147.2912(b)(1) to suggest, even by analogy, that the Region may
leave well pressure to the discretion of the permittee would be mis-
placed. We recognize that in establishing well pressure for a Class
II well, the Region may need to take into account special cir-
cumstances such as well stimulation. Nonetheless, the Region’s free-
dom to establish appropriate pressures for different circumstances,
does not mean that the permittee shall have the freedom to set
its own pressure limitation. Indeed, § 147.2912(b)(1) does not so pro-
vide even for existing Class II salt water disposal wells. While
§ 147.2912(b)(1) provides an exception to the use of the specific for-
mula set forth in that section, it does not provide that no pressure
need be set during well stimulation. Rather, in all such cir-
cumstances, the Region must establish and specify a single or, if
appropriate, several well pressures which the Region believes will
assure compliance with both the regulations and the Safe Drinking
Water Act.

II. CONCLUSION

For the reasons stated above, the Petition for Review is denied.12
The permit is remanded to the Region for modification to: (1) require
a pressure gauge on Well No. 6 in accordance with the agreement
by the permittee and (2) limit injection pressure at the wellhead
in accordance with the regulations governing the permitting of Class

147, provide that for Class II wells “[t]he owner shall not exceed a maximum injection
pressure at the wellhead * * * .” Similarly, Agency regulations at Part 146, which
sets forth technical criteria and standards for the UIC program, do not provide any
exception to the maximum injection pressure calculated for Class II wells. See 40
CFR § 146.23(a)(1).

12The permittee’s motion for issuance of interim authorization is denied.

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404 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

II enhanced oil recovery wells. The Region should give public notice
of the remand in accordance with 40 C.F.R. § 147.2929(d). Appeal to
the Board of the remand decision will be required to exhaust adminis-
trative remedies. See 40 C.F.R. § 147.2929(j)(7)(iii).

So ordered.

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