A lawsuit seeking an immediate halt to oil and gas wastewater injection at 2,500 wells across California took a positive turn for energy producers last week as Superior Court Judge George C. Hernandez denied plaintiffs’ motion for a preliminary injunction in a closely watched case challenging long-standing operations in the California oil and gas industry.

Plaintiffs in Center for Biological Diversity v. California Department of Conservation, California Superior Court, Alameda County, asked the court to throw out the emergency proposed rulemaking recently issued by the Division of Oil, Gas and Geothermal Resources (“DOGGR”). Additionally, the plaintiffs sought an injunction to stop injection wells operating in disputed aquifers.

Under the emergency proposed rulemaking, wastewater injections into non-exempt aquifers must be phased out by 2017. The proposed phasing-out period gives both DOGGR and the U.S. Environmental Protection Agency (“EPA”) the opportunity to determine whether some of the aquifers should be considered suitable places to inject produced water.

In finding no evidence of risk of imminent harm to protected non-exempt aquifers, the court concluded: “On this record, the threat of such contamination [of drinking water aquifers] is theoretical and speculative and plainly outweighed by the other harms [to the public, economy and industry] which are virtually certain to occur if an injunction issues.”

This ruling frees DOGGR to begin working with the EPA to resolve the issues surrounding the disputed aquifers. Indeed, DOGGR recently submitted a letter to the U.S. EPA that provides an update on its progress on reviewing aquifer exemptions and boundary changes for the disposal of produced water under the Safe Drinking Water Act (“SDWA”).

DOGGR has an agreement with the EPA to operate the Underground Injection Control (“UIC”) program in the state. The UIC is a federal program that regulates the construction, operation, permitting, and closure of underground injection wells.

Under the SDWA, an aquifer may be exempted from the UIC program if it is not currently being used — and will not be used in the future — as a drinking water source, or it has a high total dissolved solids content. Without an aquifer exemption, certain types of energy production, mining, or waste disposal into underground sources of drinking water are prohibited.

DOGGR plans to conduct a preliminary assessment of whether the disputed aquifers, which were historically treated as exempt, presently meet the criteria for an aquifer exemption. Where there is insufficient evidence that the zone of injection meets the criteria for an aquifer exemption, DOGGR will implement a plan and timeframe for addressing the closure of injection wells in those areas.

DOGGR’s preliminary assessment is that some of the disputed aquifers may not meet the criteria for an aquifer exemption. However, there are residual water quality questions to be resolved concerning these aquifers that may support exemptions.

In terminating injection permits, DOGGR is required to adhere to Federal regulations implementing the UIC program. Under section 124.5(a) of the Code of Federal Regulations, title 40, injection permits issued by DOGGR “may only be modified, revoked and reissued, or terminated for the reasons specified in §§ 144.39 or 144.40.”

Under Section 144.40, DOGGR may only terminate a permit during its term for three causes:

  1. Noncompliance by the permittee with any condition of the permit;
  2. The permittee’s failure in the application or during the permit issuance process to disclose fully all relevant facts, or the permittee’s misrepresentation of any relevant facts at any time; or
  3. A determination that the permitted activity endangers human health or the environment and can only be regulated to acceptable levels by permit modification or termination[.]