EQT Corp. won a temporary victory in its continuing effort to defend against the potential shutdown of its 200 oil and gas wells and one wastewater injection well in Fayette County, West Virginia, after the District Court for the Southern District of West Virginia issued a preliminary injunction on February 8 enjoining the enforcement of a new county ordinance aimed at stopping all operation of oil and gas wells in Fayette.
On January 12, the Fayette County Commission adopted an ordinance banning the storing, disposing, handling, treating, and processing of gas or oil waste within the boundaries of Fayette County. The ordinance was created in response to citizen complaints about a wastewater injection well in Fayette County operated by Danny Webb Construction, another well operator in Fayette County seeking to enjoin the ordinance. After receiving a petition with 5,000 signatures pleading for a ban on wastewater wells in Fayette, the Commission began to develop the new ordinance. Drafting of the ordinance was headed by the West Virginia Mountain Party, a grassroots political party that believes the county has the right to protect its citizens from the alleged hazardous waste that comes from these wells.
Upon the ordinance’s enactment, EQT filed a complaint against the Fayette County commissioners, seeking injunctive relief and asserting that the “patently illegal ordinance” prohibits gas and oil operations considered legal under state and federal law. Because all wells produce waste as a part of the extraction process, EQT argues that the ordinance is “so broad [as to] effectively prohibit anyone” from operating oil and gas wells in the county. And according to Tom Rhule, communications director for the Mountain Party, that was precisely the point of the ordinance — to put a stop to the oil and gas industry in Fayette.
The West Virginia Oil and Gas Act created a program, overseen by the Department of Environmental Protection, that currently permits and regulates oil and gas production in the state. EQT asserts that the Oil and Gas Act preempts the county ordinance. And since injection wells used for disposal of oil and gas waste are permitted by the Department of Environmental Protection under the federal Safe Drinking Water Act, the ordinance cannot contravene the state and federal laws.
EQT further asserts that the ordinance is “a government ‘taking’ of private property without just compensation in violation of the Fifth Amendment” of the U.S. Constitution.
West Virginia’s state code allows county commissions to create ordinances intended to eliminate public nuisances and hazards to public health. According to the county, the ordinance would keep the oil and gas companies from injecting hazardous materials into disposal wells within Fayette. But EQT argues in its complaint that the county’s determination that its oil and gas activities present hazards to the public “is arbitrary, capricious, unreasonable, unfairly discriminatory, wholly without factual support and bears no substantial relation to the public health, safety, morals, or general welfare.”
Violation of the ordinance is a misdemeanor and each day of operation constitutes a separate offense, which could result in fines up to $5 million and one year in jail for any person convicted of disposing of gas or oil waste. Additionally, the ordinance creates a private right of action for any citizen in the county to commence a civil suit enforcing the ordinance and recover all costs of litigation.
More than 500 oil and gas wells are currently operated in Fayette County, though EQT is the largest operator. EQT’s wells in Fayette generate more than $100,000 in annual tax revenue and tens of thousands of dollars in royalty payments to landowners.
The resolution of the case is important to the oil and gas industry throughout West Virginia as the Mountain Party is in contact with five other counties interested in enacting similar county ordinances. If these ordinances are valid and enforceable, county commissions throughout the state could completely shut down otherwise legal oil and gas operations.
Final hearing on the request for a permanent injunction has been set for April 22, 2016.