EPA sets new requirements and compliance deadlines for a stricter regulatory oversight program.

On March 9, the US Environmental Protection Agency (EPA) released a letter to the California State Water Resources Control Board and the Department of Conservation, Division of Oil, Gas and Geothermal Resources (DOGGR) concerning California’s Underground Injection Control (UIC) Program. In the letter, EPA sets forth requirements for increased oversight of Class II underground injection wells and a schedule for DOGGR to ensure that those wells comply with the Safe Drinking Water Act (SDWA). EPA’s letter and the requirements for increased oversight are likely to affect thousands of injection wells across the state.

Under the schedule set forth by EPA, DOGGR must confirm by February 15, 2017 that all Class II wells currently injecting into nonexempt aquifers fully comply with standards of the SDWA. Prior to that date, the state agencies must meet deadlines in May 2015, July 2015, and February 2016 to evaluate three different categories of wells—in October 2015, December 2015, and February 2016 for the shutting in of wells that inject into nonexempt aquifers, and in July 2015, August 2015, October 2015, and February 2016 for the submission of aquifer exemption applications. In addition, EPA gave California a schedule for the promulgation of new rules relating to both a short-term corrective action program to ensure that the state is in compliance with the federal standards and to a reworking of the state’s current UIC Program and internal processes to ensure future compliance. The state must submit a proposed emergency rulemaking by April 30, 2015 and finalize the rulemaking by April 20, 2016. Finally, the state must submit the proposed regulatory program revisions for approval by September 16, 2016, with completion by September 2018.

Background

The SDWA Class II UIC Program regulates wells used both to dispose of waste oil and gas production fluids and to increase hydrocarbon recovery. The program protects groundwater sources that EPA classifies as drinkable by prohibiting underground injection wells in the zone of protected aquifers. EPA may also waive protection of an aquifer by categorizing it as exempt.

In 2010, EPA began an audit of DOGGR’s Class II UIC practices to ensure compliance with the SDWA. The resulting report in 2011 identified areas for improvement, which EPA then asked the California agencies to address. More recently, state officials admitted lapses in oversight of Class II injection wells. State officials have also acknowledged a failure to apply for SDWA-required exemptions for aquifers in hydrocarbon-bearing zones for locations that would likely qualify for the exemptions. Additionally, a number of injection well permits were issued for wells near 11 aquifers with pre-1982 injection histories after those aquifers were deemed exempt. State officials now question the validity of the geologic basis for these exemptions as well as the validity of the related permits.

Following discussions between state and federal officials, California proposed a plan to upgrade its UIC Program to EPA on February 6, 2015. EPA’s March 9 letter retains the same basic structure that California proposed but adds additional detail, interim deadlines, and other requirements.

EPA Deadlines in Detail

EPA’s compliance plan for California sets deadlines and requirements for the state to (1) evaluate current Class II injection wells; (2) shut in wells that do not comply with the SDWA; (3) address the process for exempting aquifers from UIC requirements, and propose aquifers for such exemptions; (4) draft new rules for the Class II UIC Program; and (5) engage in public outreach.

The state is required to evaluate wells and assign them to one of three categories based on their potential impact on groundwater. This categorization will improve the quality of the records and data on Class II wells, which will inform the forthcoming revisions to the State’s UIC Program. Deadlines for these evaluations depend on the well category. Category 1 wells, which consist of Class II water disposal wells that inject into nonexempt, non-hydrocarbon-bearing aquifers and the 11 aquifers historically treated as exempt, must be screened by May 15, 2015. Category 2 wells, which consist of Class II enhanced oil recovery (EOR) wells that inject into nonexempt, hydrocarbon-bearing aquifers, must be screened by July 31, 2015. Category 3 wells, which include Class II disposal and EOR wells that are inside the surface boundaries of exempted aquifers, but that may be injecting into a zone not exempted by EPA, must be screened by February 15, 2016. The state must also propose a schedule for reviewing cyclic steam wells and achieving compliance for those wells by May 15, 2015.

EPA provides deadlines for shutting in wells on a schedule commensurate with the threat that they pose to drinking water sources. Wells that inject into nonexempt, non-hydrocarbon-bearing aquifers with a total dissolved solid (TDS) concentration below 3,000 mg/L must be shut in by October 15, 2015. Wells that inject into the 11 historically exempted aquifers must be shut in by December 31, 2016, unless they are exempted by EPA under the forthcoming regulatory plan. Finally, all other wells that inject into nonexempt aquifers containing TDS at a concentration less than 10,000 mg/L must be shut in by the final compliance deadline of February 15, 2017.

EPA’s changes to the aquifer exemption process require multiple steps, beginning with issuing aquifer exemption guidance on April 1, 2015. By July 15, 2015, the state must submit a plan with time frames for closing the injection wells for which it will not seek exemptions. By the same date, the state must also submit an evaluation of the 11 aquifers that have historically been considered exempt and address whether current data supports continued exemption status. July 15, 2015 is also the deadline for the state to submit all other proposed aquifer exemptions for Category 1 wells that inject into aquifers containing 3,000 mg/L TDS or less. Ninety percent of the state’s proposed exemptions for other Category 1 wells, those with injection into nonexempt, non-hydrocarbon-bearing aquifers containing 3,000-10,000 mg/L TDS and the 11 historically exempt aquifers are due on November 15, 2015. For Category 2 wells, 90% of proposed exemptions are due to EPA by February 15, 2016, and for Category 3 wells, 90% of applications for exemption are due by August 15, 2016. All other proposed exemptions are due by October 15, 2016.

EPA requirements for drafting new rules for the Class II UIC Program begin with the April 9, 2015 deadline for the state to submit a proposed emergency rulemaking regarding the winding down of injections into nonexempt aquifers. This emergency rule must be finalized by April 30, 2015. Following this, a permanent rulemaking on the subject must be initiated by June 1, 2015 and finalized by April 30, 2016. The state must submit a plan that includes both a proposed rulemaking and nonrulemaking steps to improve the entire Class II UIC Program to EPA by July 15, 2015. Initial proposed regulatory revisions must be submitted by September 30, 2016 and completed by September 2018.

Finally, EPA’s letter strongly emphasizes the importance of the state’s communications going forward, both with EPA and with the public. To that end, EPA requests that the state submit a report by December 31, 2015 on the feasibility of initiating a searchable well database. This database is meant to inform EPA and the public and should be in place by February 2017. The agencies are also directed to meet monthly to review the program’s implementation.

Conclusion

EPA delegated control over the regulation of Class II injection wells to California pursuant to a 1982 UIC Program Memorandum of Agreement. It is clear, however, that for the foreseeable future, EPA intends to closely supervise the state’s policies and programs. For oil and gas developers, this means that increased scrutiny of thousands of underground injection wells is likely. In addition, developers should expect new, more stringent rules and regulations.