EPA blasts DEQ application for injection well primacy, as Michigan taxpayers pump more money to DEQ

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by Ellis Boal

 

Class II injection Well, Wyles Howard, Holmes County, Ohio, with 181,513 barrels of fracking waste having been processed between Q3-2010 and Q1-2015. Photo courtesy of FracTracker.

The US Environmental Protection Agency (EPA) has rejected a draft application of Michigan’s Department of Environmental Quality (DEQ) to take control of regulation of the state’s oil-gas waste injection wells, Ban Michigan Fracking (BMF) learned recently via an information request to EPA.

The DEQ draft failed to “demonstrate” that its proposal would be “effective … to prevent underground injection which endangers drinking water sources.”

According to a polite cover letter of last January, EPA’s two “fundamental” concerns were that DEQ would provide less protection than EPA and the wording of DEQ’s draft was illogical:

EPA’s first concern is that certain Michigan regulatory provisions limit effective protection of USDWs [underground sources of drinking water]. Of particular concern is Michigan’s definition of “fresh water.” It is narrower in scope than the federal definition of USDWs….

EPA is also concerned about a number of inconsistencies and unclear descriptions in the draft application which prevent a clear understanding of the proposed program and introduce legal or technical ambiguity.

By contrast, for Kentucky this spring EPA approved primacy.

The DEQ drafts

There are about 1300 injection wells for oil and gas operations in Michigan, 900 of which are for waste disposal and the rest for what is called “enhanced recovery.”

These are called “class II” wells. Currently both DEQ and EPA have to sign off on any new class II permit, but DEQ is seeking what is called “primacy”: it would have sole power over decisionmaking and enforcement of the federal Safe Drinking Water Act in regard to class II, with but little EPA oversight.

DEQ’s August 2015 draft to EPA was actually a second draft. Previously we reported that in November 2014 DEQ had asserted it was “well equipped” for primacy, and claimed a “record of accomplishment for excellent environmental protection” and “good customer service” to the public. In the same paragraph it misspelled the adjective for “climate”: “climactic.”

A month later in December it held a secret “public hearing,” which is when it gave EPA the first draft.

Our article noted the secret hearing and the 2015 second draft. In 2015 DEQ and EPA were reeling from disclosures they had both dropped the ball in protection of Flint residents from lead in their drinking water.

We outlined the well-known history of failures of all well casings, whether or not they are inspected and regulated rigorously. We also noted DEQ’s separate admission of inadequate regulation of gas storage wells. (Michigan has more active storage fields than any other state.) We cited big protests against injection wells in three Michigan townships, to which one more can now be added in Johnstown Township Barry County in April 2017.

BMF filed objections to the first draft on several grounds, highlighting the DEQ definition of “fresh water,” and noting that for primacy approval DEQ would first have to change its administrative rules. Changing the rules is a lengthy process involving a draft, a public hearing, and approval by the state regulatory office plus two different legislative committees. Rule changes can take a year or more.

 

Class II injection well, Baughman W & Lucas C, Morrow County, Ohio, with 103,360 barrels of fracking waste having been processed between Q3-2010 and Q1-2016. Photo courtesy of FracTracker.

Also commenting on the first draft was petroleum geologist and writer Lee Smith. Among other things Smith questioned that state funding was insufficient without increasing the surveillance fees collected from oil and gas producers. He noted that DEQ was proposing to add only one new position to coordinate the injection program rather than four. Four would be comparable to the EPA-approved primacy program in Ohio.

(The wells pictured in this article are in Ohio. The Ohio Department of Natural Resources (ODNR) has its own primacy problems, one being “capture” of the agency by the oil-gas industry and another being an ODNR attack on “eco-left pressure groups.” It named the Sierra Club and Natural Resources Defense Counsel as examples.)

EPA’s blast

According to the cover letter of the EPA rejection in January, the two agencies had exchanged phone and email correspondence and had a meeting in EPA’s Chicago office.

The cover letter was accompanied by two detailed attachments, totaling 77 pages. The attachments mentioned the Michigan attorney general had participated in the conversations about some of the points below. Noting that “public input and hearings have been an area of public interest on Michigan wells during the last 5 years” (the period BMF has existed), the attachments specify several defects and inconsistencies including:

  • Certain “crucial” technical requirements are legally unenforceable, because they are not spelled out in DEQ’s administrative rules or in part 615 (DEQ’s oil-gas statute), but only in the draft application. Examples include requirements for chemical analyses of new brine sources “as they are added,” minimum cement casing conditions, and existence of surface casing. For EPA approval DEQ should have adopted legal requirements for “protecting USDWs from endangerment by injection operations.”
  • The administrative rules’ definition of class II wells does not “does not include wells used for hydraulic fracturing activities where diesel fuels are used,” as it should. Hydraulic fracturing “is a form of enhanced recovery.”
  • The rules require no information about the injection intervals’ confining zones.
  • The draft application language on mechanical integrity is “difficult to follow.”
  • Suspension of well operations in case of a violation and threat to the public would be limited to 21 days in the draft application, even though in EPA’s experience return to compliance by an operator after a violation can take more than 21 days.
  • The draft application uses the terms “fracture gradient” and “fracture pressure” interchangeably “although they are different physical parameters.”
  • “[S]ome Michigan rules may strongly limit input or place a high documentation burden on people in order to petition for a hearing.”

Fewer staff, increased work, more danger

The EPA letter was last January. According to DEQ manager Adam Wygant in April, “Michigan seeking primacy is still in [the] works, there will likely first be some changes to Part 615 Administrative Rules.”

But DEQ has no primacy-related rule changes listed in its regulatory plan for the year ending June 30.

Even if it proposes rule changes for the next year, given Smith’s comments about staff and funding, how could DEQ take on the additional workload? According to Midwest Energy News in April, DEQ says a hiring freeze is in effect for the oil-gas program, staffing levels have dropped 18% from a few years ago, and it expects to cut back on well inspection rates.

DEQ has less money because oil-gas production has been down. Most revenue for oil-gas surveillance comes from a percent DEQ gets of operator production. Hal Fitch, director of DEQ’s oil-gas operations, admitted an ethics issue, Midwest Energy News reports, at least in regard to incentives:

Some would say if (industry) is paying for it then our agency is beholden to the industry — I’d argue that’s not the case — and if we’re dependent on a fee for production then we have an incentive to increase production regardless of impacts.

Reduced staff and funding theoretically should mean reduced permitting. Instead, even without primacy DEQ’s workload is increasing. Plugged wells like producing wells require oversight. As noted above, eventually they leak. Abandoned operations can be dangerous. The fatal gas explosion in a house in Colorado in April was caused by an abandoned pipeline from a nearby well.

Michigan has 35,000 shut wells, and they don’t produce oil, gas, or jobs. The number of shut wells is constantly increasing. The reason for so many wells is the state’s statutory policy, on the books since 1939, requiring DEQ to “foster” the industry “favorably” and “maximize” production. In other words the more wells — and eventually the more abandonment — the better.

(The foster-the-industry policy will evaporate when the initiative campaign of the Committee to Ban Fracking in Michigan succeeds.)

 

Danny Long & Sons SWIW #9 & #12, Stark County, Ohio, with 22,486 barrels of fracking waste having been processed between Q2-2014 and Q1-2016. Photo courtesy of FracTracker.

Reduced inspection rates at the same time as increased workload? Unions used to call this “speed-up.” And it is a recipe for disasters like what happened in Colorado. After decades, the chickens are coming home to roost.

Taxpayers subsidizing the oil-gas industry

Midwest Energy News also reported that Michigan lawmakers recently have been “subsidizing oil and gas development.” Last year they approved a $4 million infusion into the DEQ oil-gas program from the taxpayer-supported general revenue fund. A similar transfer is expected for this year. This is above and beyond the surveillance fee assessed to the industry.

According to the annual regulatory plan, conformance bond amounts for operators haven’t risen in over 20 years, and DEQ is considering an increase.

But a bond increase won’t be enough, particularly if DEQ manages to change its administrative rules to EPA’s satisfaction to get primacy over oil-gas injection. If bonds now and in the past actually were high enough, lawmakers would not be considering a taxpayer subsidy.

Michigan taxpayers should not subsidize a single dime for climate-changing oil-gas production. Nor should matters be made worse by subsidizing the disposal of oil-gas waste here.

New DEQ fracking rules don’t help; we still need a ban

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A frack well in Gladwin County, Wiley 1-81 HD1, in 2012. Photo by LuAnne Kozma.

By Ellis Boal

After public hearings last summer amid the public uproar about fracking, in March 2015 the Michigan Department of Environmental Quality’s Office of Oil, Gas and Minerals published new administrative rules for oil, gas, and fracking. DEQ provided a link and said the new rules:

contain additional requirements when completing a well using high volume hydraulic fracturing [HVHF] by modifying Rule 201 and adding Part 14 High Volume Hydraulic Fracturing. The revised administrative rules also contained other minor updates related to definitions, injection, and spacing issues.

Since horizontal fracking came to Michigan in 2010, some environmental groups have put all effort into improving sloppy practices, and getting tighter DEQ fracking regulation.

The new rules show the futility of those efforts. If anything, they facilitate more fracking than the old rules.  Protection of public health, the environment, forests, water resources, air, climate, and our communities is still at stake.

The technical details are below.

“Construction of part”

The overall show-stopper is the legislature’s statutory finding at MCL 324.61502. This law will remain in place unless the ballot initiative campaign of the Committee to Ban Fracking in Michigan succeeds in 2016. Innocuously titled “construction of part” – meaning “how the DEQ is to construe part 615 [the state oil-gas law]” – the finding ends with these words:

It is accordingly the declared policy of the state to protect the interests of its citizens and landowners from unwarranted waste of gas and oil and to foster the development of the industry along the most favorable conditions and with a view to the ultimate recovery of the maximum production of these natural products. To that end, this part is to be construed liberally to give effect to sound policies of conservation and the prevention of waste and exploitation.

Binding on judges, juries, and DEQ regulators, this special-interest provision has been on the books since 1939. Most government agencies treat their regulated industries neutrally. Not so with DEQ and oil-gas. “Fostering” the industry means fostering oil-gas profits. “Maximizing” oil-gas production means maximizing Michigan’s contribution to fossil fuel-driven global warming.

Thus “construction of part” declares a vision statement or ideology, that animates both the old DEQ rules and the new DEQ rules.

The citizen-led ballot initiative will ban horizontal fracking and acidizing in the state, and render the HVHF rules obsolete.

Just as importantly, it will eliminate the oil-gas industry’s special-interest protection. Instead of fostering the industry and maximizing production, the new “construction of part” will say:

It is accordingly the declared policy of the state to protect the interests of its people and environment during gas and oil development. This part is to be construed liberally to give effect to sound policies of conservation and to protect water resources, land, air, climate, human health, and the natural environment.

Terminology and a caveat

Terminology: “Part 615” noted above refers to the oil-gas “part” of Michigan’s overall environmental law known as “Natural Resources and Environmental Protection act” (NREPA), found at MCL 324.101 et seq. Part 327, noted below, is also in NREPA.

The DEQ rules are also divided into “parts,” numbered part 1 through part 14. They are in a different number sequence than the parts of NREPA. Confusingly, the two sets of “parts” have no relation to each other.

The caveat: Many of the new rules refer to “high volume hydraulic fracturing” (HVHF), defined as fracking which uses a total volume of more than 100,000 gallons of primary carrier fluid. HVHF usually occurs in wellbores which are horizontal, but not always. The ballot initiative of the Committee to Ban Fracking in Michigan by contrast seeks to ban fracking and acidizing in horizontal wellbores, without tying it to a specific volume of primary carrier fluid.

Details on the new rules

  • Greenhouse gas (GHG) emissions: On April 27 the Detroit News editorialized against signing the ballot initiative, asserting that the new rules “control methane emissions.” They do not. New rule 1404(1)(c) provides only for testing for methane (and six other chemicals) in water wells which are near HVHF wells. No tests are done for fugitive methane (methane which escapes into the air). Methane is the primary constituent of natural gas, and a potent GHG. Other new rules say nothing and do nothing about Michigan’s contribution to global warming. Comments by Ban Michigan Fracking at last summer’s hearings made particular note that the prohibition of “waste” in MCL 324.61501(q)(ii)(B) does not include air or climate as protected values, and that DEQ’s historic permitting practice has been to monitor only non-GHG emissions.
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This frack well fragmented a state forest in Antrim County, 2011, (State Mancelona 1-28 HD1). Photo by LuAnne Kozma.

  • Cumulative impacts and habitat fragmentation: The new rules say nothing about proliferation and cumulative impacts of wells. The DNR leases oil-gas rights and DEQ permits oil-gas wells separately with no coordination between them. Wells are often located near rivers and streams. In basins with a high density of operations, numerous wellpads in the same watershed compound cumulative impacts of above-ground wellheads, compressors, pipelines, access roads, and associated industry.
  • IMG_0113Wastewater, radioactivity: The new rules have no requirement for geochemical analysis of flowback and produced water, particularly from underground radioactive shale rock typically associated with shale gas.
  • Compulsory pooling of surface owners can now be done after drilling and fracking is done:  Rule 301(1)(d) now allows a permit to be issued and the well drilled on a unit with fractures extending under unleased land — land the fracker does not have the rights to — prior to a hearing being held to see if a dominant leaseholder can force other owners into a pool. The theory under MCL 324.61513(4) is that the leaseholder should not be deprived of a fair share of oil or gas in the pool. Pooling orders are typically justified by the “construction of part” language that requires the state to foster “maximum production” (language which will be eliminated if the ballot initiative succeeds). See this example of a case of compulsory pooling where DEQ relied on “construction of part” to force owners into a drilling unit. The assumption of compulsory pooling is that everyone wants to produce oil or gas from his/her land to the max. If ever accurate historically, the assumption is not uniformly true today. Cosmetically, the new rules also change the term “compulsory pooling” to “statutory pooling,” hiding the fact that landowners are forced into drilling units against their will.
  • Seismic impacts: The new rules have a single passing reference to seismic activity. It is in rule 1202(3)(a), the procedure for petitioning to establish secondary recovery operations. In April, the US Geological Survey linked oil-gas activities to induced earthquakes. The new rules require no seismic precautions.
  • Confidentiality: Rule 416(3) requires operators on request of the DEQ to give it fracking, acidizing, and other well records. But if an operator asks DEQ to hold well data and samples confidential (excepting data on spills, leaks, and chemicals used), DEQ will do so until 90 days after drilling is completed. Confidentiality advances no environmental principle or policy.
  • Spacing and blowouts: When a fracker seeks a special spacing order, rule 303(2) no longer requires that DEQ make sure that the distance between wells prevents interference. Interference can result in a blowout at an adjacent well. DEQ is now content to grant a permit to a well where a blowout could happen.
  • Conformance bonds: Bonds for single wells range between $10k and $30k depending on depth according to rule 212, but the state auditor general found in 2013 the average cost to plug one is $50k+.
  • Hearings on well permits: Rule 201(4) provides for no notice to nearby landowners of fracker applications for well permits, and no hearings or appeals if a permit is granted.
One of the many injection wells used to dispose of horizontal frack wastes in Michigan, the Slowinski injection well in Kalkaska County. Photo by LuAnne Kozma.

One of the many injection wells used to dispose of horizontal frack wastes in Michigan, the Slowinski injection well in Kalkaska County. Photo by LuAnne Kozma.

  • Injection wells: There is no change in rule 102(x), the definition of “injection well.” The rule’s definition includes disposal wells and wells used to inject water “for the purpose of increasing the ultimate recovery of hydrocarbons from a reservoir.” A reservoir is any gas-bearing formation, even if it is solid rock. Injecting to increase recovery is just what frack wells do in the Utica-Collingwood, A-1 carbonate, and other gas-bearing formations. By nature, frack wells are permanent disposal wells of half their own injectate. In 2014 our court of appeals interpreted the rule definition to refer to any well used to increase recovery of hydrocarbons from a reservoir which was already producing before water was injected. Every well in the Utica-Collingwood and A-1 carbonate, and practically every other frack well in the state today, fits that interpretation. Yet DEQ refuses to treat them under the rules for injection wells. Those rules include rule 804 which uses a formula to limit the amount of injection pressure.
  • HVHF: The new rules have an amended part 2 and a new part 14 to cover high volume hydraulic fracturing (HVHF). HVHF is defined in rule 1401(h) as fracking which uses a total volume of more than 100,000 gallons of primary carrier fluid.
  • Trade secrets and HVHF: Under rule 201(2)(c), anticipated chemicals in the injectate, and their “chemical abstracts service” (CAS) numbers, must be identified in advance. Under rule 1406(1)(c), the chemicals and CAS numbers actually used have to be listed with FracFocus 30 days after completion. (FracFocus does not operate under a public mandate or verify information submitted to it.) But both requirements have an exception if the fracker simply makes a claim for protection under Michigan’s trade secrets statute, MCL 445.1901 et seq. The trade secrets law does not protect the public from frackers. It protects frackers from each other. Neither the trade secrets law nor the new rules provide a mechanism for a citizen to challenge a fracker’s claim of secrecy.
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    Students protest in Mt. Pleasant, 2012. Photo by LuAnne Kozma.

    Baseline water testing and HVHF: Rule 1404 requires the permit holder to do pre-drilling sampling of water from potable wells near the surface hole, test the samples at a lab for seven chemicals, and give a copy of the lab results to the landowner. No testing for the hundreds of other chemicals identified in frack operations is required. And chemicals in secret mixtures can’t be tested for at all. Sampling in the vicinity of the horizontal laterals, sampling of water levels and flows, sampling of surface waters, splitting samples so the landowner can have half, and doing post-drilling sampling are not required. Nor is sampling required for water wells near gas wells which are not HVHF.

  • Water Withdrawal Assessment Tool and HVHF: Rule 1402 has provisions for protection of water withdrawn for fracking. The rule requires screening by Michigan’s water withdrawal assessment tool (WWAT), adopted in 2008 by the legislature in MCL 324.32701 et seq (or NREPA part 327). If a fracker’s withdrawal request fails WWAT screening, it may request a site-specific review. DEQ would then take a closer look and decide whether to approve withdrawal. In the past, DEQ has routinely approved permits even when the WWAT test “fails.” WWAT screening has problems. It estimates surface water flows from just 147 gauged stream segments around the state. The gauges tend to be on medium- and large-sized streams, not sensitive headwaters. WWAT has not been updated since 2008. It was developed to deal with long-term withdrawals like agricultural irrigation, not the short-term intensive withdrawals required for fracking. WWAT cannot assess the potential impacts on habitat, wildlife, and nearby waters receiving site runoff. It does not account for water withdrawal impacts to wetlands and lakes. It cannot measure potential changes in surface runoff patterns due to the clearing of land and road construction. It overestimates stream flow (and so underestimates adverse effects). Academics have criticized it.
  • Use of WWAT and HVHF: Even were WWAT a valid screening device, DEQ misuses it. Two big frack wells were permitted in 2011, State Excelsior 1-13 HD1 and State Excelsior 1-25 HD1. Both wells failed WWAT screening according to the linked DEQ paperwork for the wells. That triggered a site-specific review by DNR water specialist David Deyoung. Deyoung gave the go-ahead and permits were granted. But according to pages 84-87 and 108-113 respectively of the paperwork, he gave no reasoning, did not consider the stream or river flow data of affected stream reaches, and did not even state he visited the sites.

To protect Michigan from harm, we must use the Precautionary Principle and do no harm. Rules by which to frack, only lead us down the road to more and increased fracking across the state.