United Refining Company v. DEP , 163 A.3d 1125 ( 2017 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
United Refining Company, :
Petitioner :
:
v. : No. 1321 C.D. 2016
: Argued: April 4, 2017
Department of Environmental :
Protection, :
Respondent :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
OPINION BY JUDGE BROBSON FILED: June 12, 2017
Petitioner United Refining Company petitions for review of an order
of the Environmental Hearing Board (Board), dated July 7, 2016, which dismissed
Petitioner’s appeal of an oil permit issued by Respondent Department of
Environmental Protection (Department) to Intervenor John D. Branch (Branch).
Petitioner contends that the Board’s decision is not supported by substantial
evidence and violates Pennsylvania environmental law and Article I, Section 27 of
the Pennsylvania Constitution, commonly referred to as the Environmental Rights
Amendment. We now affirm.
I. BACKGROUND
The following facts are undisputed based upon the parties’ stipulation
of facts and the filings of record. Since 1902, Petitioner has owned and operated
an 83-acre petroleum refinery in Warren, Pennsylvania (Property), which extends
approximately 1.6 miles along the north shore of the Allegheny River. The
subsurface below the Property includes the Warren 1st and Warren 2nd Sands, and
the Glade and Clarendon Sands. The top of the Clarendon Sands is approximately
780 feet below the surface of the Property. Petitioner has constructed several
aboveground storage tanks on the Property, including Tank 234 located on the
northern portion of the Property. Tank 234 has the capacity to contain 3.6 million
gallons of gasoline. Tank 234 has a steel floor, concrete ring wall, and an earthen
dike designed to contain 110% of its contents. It sits on fill materials, soils,
gravels, silt sands, and clays, and the bedrock is approximately 75 feet below the
bottom of the tank. Petitioner inspects Tank 234 every four years, and it last
inspected the tank in November 2014 and discovered no problems.
Since 1990, Petitioner has installed over 100 monitoring wells on the
Property. Petitioner has never drilled an oil or natural gas well on the Property,
although the Department’s records indicate that four oil or natural gas wells were
previously drilled on the Property. In 2001, Petitioner discovered an oil plume
below Tank 234, and the plume measured approximately 265 feet long by 180 feet
wide at the time the parties entered into their stipulation. Petitioner has recovered
in excess of 12,500 gallons of oil from the plume. Petitioner has used crude oil at
the Property but not in the area of Tank 234. There is no direct evidence of
unplugged wells near or under Tank 234 or anywhere else on the Property, and
Petitioner is unaware of any property damage, surface damage, or environmental
harm caused by hydraulically fracturing wells in the Glade or Clarendon Sands in
Warren, Pennsylvania.
Branch has been in the oil and gas business for 31 years and in the
drilling business for 15 years. He has drilled approximately 60 oil and gas wells
within the City of Warren, Pennsylvania. On September 16, 2014, Branch
submitted a permit application to the Department for authorization to drill an oil
2
well—Well 61—in Warren, Pennsylvania. Pursuant to the application, Branch
planned to drill Well 61 on a slant, with the top-hole location across the street from
the Property and the bottom-hole location under the Property. At the time Branch
submitted the permit application, he also submitted five other permit applications
for wells located near the Property. Prior to the Department’s approval of the
permit for Well 61, Branch met with representatives of Petitioner to tour the plant
and discuss his proposed drilling plans under the Property.
On October 24, 2014, Petitioner expressed concerns to the
Department regarding Branch’s proposed Well 61 and other proposed wells closest
to Tank 234, including a concern that fracking pressures could reach historic wells
and be released through unplugged wells to the surface. On November 5, 2014,
Branch responded to the Department regarding Petitioner’s concerns. In so doing,
Branch informed the Department that it was his opinion that any wells in the area
that were not plugged with cement would likely already have been plugged
naturally, as there is anywhere from 55 feet to 95 feet of gravel in the valley of
Warren. To avoid risks in response to Petitioner’s concerns, Branch stated that he
would not frack in the Warren 1st or Warren 2nd formations and that he would
utilize conductivity and video logs when he drilled the new wells and would avoid
hydraulically fracturing in the vicinity of zones indicated by these logs as having
excessive water. Branch stated that he and his team would closely watch the
pressure gauges when hydraulically fracturing and, if the gauges indicated
connection with another well, would cease operations immediately. Finally,
Branch advised the Department that he would conduct hydraulic fracturing with
smaller amounts of sand and water to control the length of the fractures. Branch
3
also altered the proposed termination point of Well 61, so as to avoid the vicinity
of the oil plume below Tank 234.
The Department issued permits for the six wells on
November 12, 2014, including the permit for Well 61.1 One of the special
conditions for the permits was that fracking operations would not be conducted in
the Warren 1st or Warren 2nd formations. Thereafter, Petitioner appealed the
issuances of the permits to the Board, identifying its concern that energy released
by Branch’s fracking could be conveyed through an unplugged well and result in
damage to Petitioner and the surrounding community, including potentially a
large-scale fire or explosion, as well as a release of oil into the water of the
Commonwealth.
The Honorable Thomas W. Renwand, Chief Judge and Chairman of
the Board, conducted a hearing at which the parties presented their stipulation of
facts and the testimony of Timothy Ruth (Ruth), a geologist and employee of
Petitioner; Craig Lobins (Lobins), a professional geologist who is employed by the
Department as the Northwest District Oil & Gas Manager; and Branch. Following
the hearing, the Board issued an adjudication, dated July 7, 2016, dismissing the
appeal relating to Well 61 and upholding the permit issued by the Department for
Well 61.
In addition to findings based upon the facts summarized above, the
Board made findings based upon the testimony received during the hearing. For
instance, with regard to the geology, the Board found that there are various layers
1
Although the Department granted all of the well permits, Branch allowed the permits
for the wells other than Well 61 to expire without drilling the wells.
4
of bedrock between 75 and 750 feet below the surface of the Property, and that
fracking would take place at various depths between 750 and 850 feet below the
Property. Well 61 would be located a little less than 300 feet from Tank 234, the
distance between Tank 234 and where the hydraulic fracturing would occur in
Well 61 is approximately 300 to 360 feet, and the fractures would travel 150 feet
horizontally and would be 600 to 800 feet below the surface of the Property. With
regard to the oil plume, the Board found that it consists of multiple components
and is likely from multiple sources.
With regard to the testimony of Lobins, presented on behalf of the
Department, the Board found that Lobins was very familiar with conventional well
drilling and instances where conventional wells fracked into abandoned oil and gas
wells. Lobins issued the permit for Well 61, was aware that Branch planned to use
a slant drilling technique, and had no problem with the use of that technique.
Furthermore, Lobins testified that the fracking of Well 61 would break away from
Tank 234 and would be too far underground to impact Tank 234, the plume, or the
Property. He opined that, because no fracturing would occur in the Warren 1st or
Warren 2nd formations and because fractures would stay in the zones being
fractured, there would be no effects on Tank 234 or the plume. The Board also
found that both Lobins and Branch testified that the drilling of Well 61 is unlikely
to create fractures impacting the plume or Tank 234, communicate with any
undocumented wells, impact groundwater, or impact the surface.
Based on its findings, the Board concluded that Petitioner had not met
its burden to prove by a preponderance of the evidence that the Department abused
its discretion by acting unreasonably and/or in violation of the laws of the
Commonwealth when issuing the permit. In so doing, the Board explained that it
5
dismissed Petitioner’s appeal on the basis that Petitioner had not met its burden of
proof because Petitioner failed to present sufficient expert testimony to
demonstrate actual risks associated with the drilling.
II. ANALYSIS
On appeal to this Court,2 the issues are as follows:3 (1) whether the
Board incorrectly applied the burden of proof; (2) whether the Board erred in
concluding that the Department’s issuance of the permit for Well 61 was
reasonable and in accordance with the law; and (3) whether issuance of the permit
violates Article I, Section 27 of the Pennsylvania Constitution.4
2
“Our scope of review of an order of the Board is whether the Board committed an error
of law or a constitutional violation, or whether any necessary findings of fact are not supported
by substantial evidence.” The Ainjar Trust v. Dep’t of Envtl. Prot., 806 A.2d 482, 487
(Pa. Cmwlth. 2002).
3
Petitioner’s brief includes a statement of the questions involved, and the Department’s
and Branch’s briefs contain counter-statements of the questions involved, all of which phrase the
issues differently. The issues now set forth by the Court fairly represent the issues presented by
the parties.
4
On March 14, 2017, during the pendency of this appeal, Branch filed with this Court a
motion to dismiss this appeal on the basis of mootness, asserting that he “spud” Well 61 on
November 9, 2015, to avoid expiration of the permit; drilled Well 61 to total depth as of
September 27, 2016; received written approval from the Department to hydraulically fracture
Well 61 on December 27, 2016; began hydraulically fracturing Well 61 on March 2, 2017; and
finished hydraulically fracturing Well 61 on March 3, 2017, without incident or any known
adverse effect to the environment, Tank 234, the surface, or anything else. Branch argued that in
light of the completion of the fracturing, the appeal became moot. The Department joined in
Branch’s motion. Petitioner objected to the dismissal, contending that the matter is not moot
because the permit authorizes Branch to engage in future fracking and operations of Well 61,
thereby causing Petitioner to remain at risk. Petitioner also appeared to disagree with Branch’s
contention that no harm resulted from hydraulically fracturing Well 61. By order dated
March 24, 2017, the Court denied the motion to dismiss.
6
At the outset, we note that Petitioner’s overarching theme in this
appeal is that the Department’s approval of the permit for Well 61 is at odds with
the purposes of what is commonly referred to as the Oil and Gas Act, 58 Pa. C.S.
§§ 3201-3274, which Petitioner characterizes as assuring safe oil and gas
development. Petitioner even suggests that “this is not a case . . . that requires a
close reading of statutory language or an analysis of legislative intent.”
(Petitioner’s Br. at 19.) While Petitioner asserts that the permit violates the
purposes of the Oil and Gas Act by threatening the health and safety of the
environment, its personnel and facilities, and the surrounding residents, Petitioner
does not assert that issuance of the permit actually violates a substantive provision
of the Oil and Gas Act.
Pursuant to Section 3211(e.1) of the Oil and Gas Act, 58 Pa. C.S.
§ 3211(e.1), the Department may deny a permit for an oil or gas well for any of the
following reasons:
(1) The well site for which a permit is requested is in
violation of any of this chapter or issuance of the permit
would result in a violation of this chapter or other
applicable law.
(2) The permit application is incomplete.
(3) Unresolved objections to the well location by the coal
mine owner or operator remain.
(4) The requirements of section 3225 (relating to
bonding) have not been met.
(5) The department finds that the applicant, or any parent
or subsidiary corporation of the applicant, is in
continuing violation of this chapter, any other statute
administered by the department, any regulation
promulgated under this chapter or a statute administered
by the department or any plan approval, permit or order
of the department, unless the violation is being corrected
to the satisfaction of the department. . . .
7
(6) The applicant failed to pay the fee or file a report
under section 2303(c) (relating to administration), unless
an appeal is pending. . . .
If none of the six statutory reasons for denial exist, then the Department is required
to issue the permit within 45 days. Section 3211(e) of the Oil and Gas Act, 58 Pa.
C.S. § 3211(e). Third parties, such as Petitioner, have a right to appeal to the
Board the Department’s issuance of a permit. Section 4 of the Environmental
Hearing Board Act, Act of July 13, 1988, P.L. 530, 35 P.S. § 7514. The Board
must determine whether a party appealing the issuance of a permit has
demonstrated its case by a preponderance of the evidence. See 25 Pa. Code
§ 1021.122(a). Petitioner had the burden before the Board to show by a
preponderance of the evidence that the Department acted arbitrarily or abused its
discretion when it issued the permit for Well 61. See 25 Pa. Code § 1021.122;
Pa. Trout v. Dep’t of Envtl. Prot., 863 A.2d 93, 105 (Pa. Cmwlth. 2004) (“[A]
party protesting [the Department’s] issuance of a permit has the burden to show, on
the record produced before the [Board], issuance of the permit was arbitrary or was
an abuse of discretion.”).
A. Whether the Board Incorrectly Applied the Burden of Proof
Petitioner argues that the Board incorrectly applied the burden of
proof by requiring Petitioner to establish that damage to persons or the
environment from the drilling of Well 61 was more likely than not. Petitioner
contends that the Board should have required Petitioner to show, by a
preponderance of the evidence, only that the Department’s decision to grant the
permit was unreasonable, arbitrary and capricious, an abuse of discretion, or
contrary to law. Petitioner relies on one passage of the Board’s opinion, which
provides: “In other words, a party cannot simply come forward with a laundry list
8
of potential problems, and then rest their case. They must prove by a
preponderance of the evidence that these problems are likely to occur.” (Board’s
Adjudication at 8, attached to Petitioner’s Br. as Ex. “A.”) Petitioner contends that
by focusing on the likelihood of harm rather than the Department’s decision, the
Board asked the wrong question. Under this faulty approach, as characterized by
Petitioner, any risky activity, no matter the magnitude of harm that could
potentially result, would be deemed to be acceptable unless a party could prove
that it likely would occur. Petitioner argues that this standard is incorrect, because
in order to meet its burden of proof, it is not necessary for Petitioner to show that a
release or explosion at Tank 234 is more likely than not to occur or is a scientific
certainty. Thus, Petitioner asserts that the Department erred by evaluating the
preponderance of the evidence in the context of whether it had been shown that a
catastrophic event was more likely to occur than not, rather than the question
presented by the appeal—i.e., whether the Department’s action in granting the
permit under these circumstances was unreasonable or contrary to law.
In a similar vein, Petitioner also contends that the Board applied the
wrong burden of proof to Petitioner’s evidence regarding the existence of the old
wells, which it claims are generating the oil plume. It asserts that instead of
requiring Petitioner to show the existence of an unplugged well with a
preponderance of the evidence, the Board imposed a higher standard by requiring
Petitioner to prove the existence of an unplugged well as an “established scientific
fact.” (Petitioner’s Br. at 32.) Petitioner contends that, at most, it needed only to
show that the well is likely to exist. Specifically, Petitioner maintains that it
provided extensive testimony regarding the underground plume of oil below
Tank 234 that had been detected, sampled, and studied for a period of many years.
9
It also provided evidence to show that the plume exists and that it is highly
unlikely to have originated from a spill or release of oil from the refinery.
Petitioner asserts that, overall, it provided evidence that the most reasonable and
likely explanation for the oil plume is an abandoned well, yet the Board did not
consider the existence of an unplugged well causing or contributing to the
underground plume because it was not shown by Petitioner to be a “scientific fact.”
This is a key issue because, according to Petitioner, once there is recognition of the
existence of an unplugged well, then the entire analysis of the reasonableness of
the Department’s issuance of the permit changes. The unplugged well establishes
a clear prime pathway for the impact and energy of the fracking to be
communicated outside of the planned zone of fracturing and presents a much
greater risk to Tank 234. Thus, Petitioner maintains that the application of the
wrong burden of proof as to whether an abandoned or unplugged well exists on the
Property changed the entire dynamic of the Board’s analysis of the likelihood of
the risk presented by the permit and the reasonableness of the Department’s action
in issuing the permit.
The Board, in its opinion, set forth a detailed explanation of the
burden of proof when it wrote:
The burden to show that the permit should not have been
issued is on the party challenging the permit.
[Petitioner], therefore, must prove by a preponderance of
the evidence that the permits should not have been
issued. To prove one’s case by a “preponderance of the
evidence” means that the “evidence in favor of the
proposition must be greater than that opposed to it. . . . It
must be sufficient to satisfy an unprejudiced mind as to
the existence of the factual scenario sought to be
established.” Therefore, [Petitioner] was required to
present evidence that the Department’s issuance of the
permit to . . . Branch was not appropriate or did not
10
conform with the applicable law or was unreasonable,
and its evidence must be greater than the evidence
showing that the issuance of the permit was appropriate
or in accordance with the applicable law.
In other words, an appellant must come forward
and prove their allegations by a preponderance of the
evidence. They may not simply raise an issue and then
speculate that all types of unforeseen calamities may
occur. When they raise technical issues they must come
forward with technical evidence. In many cases, such as
this one, they need expert testimony to prove their
claims. In other words, a party cannot simply come
forward with a laundry list of potential problems and then
rest their case. They must prove by a preponderance of
the evidence that these problems are likely to occur.
(Board’s Adjudication at 8 (internal citations omitted) (emphasis added).)
With regard to its application of the burden of proof, the Board then
further explained that it recognized Petitioner’s witness, Ruth, as an expert in the
field of geology but not in the area of drilling oil and gas wells or the intricacies of
hydraulic fracturing. Although Ruth raised legitimate concerns about the risks of
drilling a well at the proposed location, his testimony was not sufficient to satisfy
the burden of proof. The Board wrote:
The evidence regarding unplugged wells in the vicinity
of Tank 234 is speculative, rather than established
scientific fact. [Petitioner] concedes that there may not
be any wells in that location. Even more importantly, the
testimony does not provide a scientific basis for how the
drilling of Well . . . 61 would impact either the plume or
Tank 234.
(Board’s Adjudication at 9 (emphasis added).) Thus, Ruth’s concerns were not
supported by his testimony.
It is important to note that Ruth’s testimony regarding his concerns
was not the only testimony considered by the Board. Rather, the Board considered
11
the expert testimony of the Department’s witness, Lobins, and the testimony of
Branch. The Board wrote:
Mr. Lobins testified that the safeguards in the permit that
allow hydraulic fracturing to occur in only certain zones
will allow the drilling to take place without any impact to
the surface or the structures on it. Mr. Lobins testified
that even if there are unplugged wells and even if those
unplugged wells were impacted by the drilling (big if’s
based on his testimony), he opined that there would be
little or no impact to any of the structures on [Petitioner’s
P]roperty and that any impacts could be quickly and
easily addressed. Mr. Branch, an experienced oil and gas
operator, who also was qualified as an expert, testified as
to his drilling plan and about the many wells he has
drilled without incident in this locale. The expert
testimony as a whole leads us to conclude that there is
justification under the law to issue the oil and gas permit
under appeal.
(Board’s Adjudication at 9 (emphasis added).)
The Board finished its preponderance of the evidence analysis by
concluding that the weight of evidence did not demonstrate that Branch’s drilling
of an oil and gas well is likely to impact Tank 234 or the Property adversely. It
noted that “[t]he facts and expert testimony do not prove by a preponderance of the
evidence that drilling would damage or otherwise impact [Tank 234, the] plume, or
[the P]roperty.” (Board’s Adjudication at 10.)
We agree with Petitioner that, to the extent that the Board’s discussion
of the burden of proof could be interpreted to require Petitioner to prove every
factual detail by a preponderance of evidence or require Petitioner to prove that it
was more likely than not that harm would occur, such an interpretation would
impose a higher burden than required. The Board was required to determine
whether, based upon its factual findings, Petitioner proved by a preponderance of
12
the evidence that the Department acted arbitrarily or abused its discretion. We can
envision a scenario where the likelihood of the harm occurring is significant but
less than fifty percent likely. The severity of the possible harm, however, could be
so immense that issuing a permit could be determined to be abuse of discretion.
To require a petitioner to prove a fifty percent or greater likelihood that the harm
will occur would unduly restrict the Board’s ability to consider the reasonableness
of the issuance of a permit under this or any other similar scenario.
We are not convinced that the Board in this case, however, wrongly
applied the burden of proof to the evidence presented. Petitioner had the burden to
prove, by a preponderance of evidence, that the Board’s issuance of the permit was
arbitrary or an abuse of discretion. 25 Pa. Code § 1021.122; Brockway Borough
Mun. Auth., 131 A.3d at 587; Pa. Trout, 863 A.2d at 105. The appeal involved
technical issues, and expert testimony is required where the issues require
scientific or specialized knowledge or experience to understand. Dep’t of Transp.
v. Agric. Lands Condemnation Approval Bd., 5 A.3d 821, 828-29 (Pa.
Cmwlth. 2010). After weighing the evidence and testimony presented, the Board
found that Petitioner did “not provide a scientific basis for how the drilling of
Well 61 will impact either the plume or Tank 234.” (Board’s Adjudication at 9.)
The Board essentially found that even if it were to accept that an unplugged well
existed in the vicinity of Tank 234 or Well 61, Petitioner still did not present
testimony as to how the drilling or fracturing of Well 61 could communicate with
the unplugged well or negatively impact either the plume or Tank 234. Absent
some supporting expert testimony or facts, Petitioner could not prove by a
preponderance of the evidence that the permit for Well 61 should not have been
issued. In other words, Petitioner did not support its claims with credible expert
13
testimony and, thus, failed to meet its burden of proof. By contrast, the
Department and Branch provided credible testimony from expert witnesses that
refuted Petitioner’s concerns.5
B. Whether the Department’s Issuance of the Permit for Well 61 Was
Reasonable and in Accordance With the Law
1. Abnormally Dangerous Activity
With regard to whether the Board erred in concluding that the
Department’s issuance of the permit for Well 61 was reasonable and in accordance
with the law, Petitioner approaches this issue by focusing on what it characterizes
as the “unique characteristics of Branch’s proposed project” and by asserting that
the nature of the project requires a greater deal of scrutiny. (Petitioner’s Br. at 34.)
Petitioner points out that even the Board recognized that this was a “unique”
permitting situation. (Board’s Adjudication at 10.) Petitioner analogizes Branch’s
proposed project—drilling and fracking underneath an oil refinery and a
3.6 million gallon gasoline storage tank in close proximity to an underground oil
plume evidencing the potential for an abandoned well and near a neighborhood—
which it characterizes as unique and dangerous, to the tort concept of an
abnormally dangerous activity. As such, Petitioner asserts that issuance of the
permit for Well 61 should be subject to a higher degree of scrutiny and that the
Department’s evaluation of the application was far below the appropriate level of
5
The Board is the sole finder of fact and, as such, has sole discretion regarding witness
credibility, weight of the evidence, and resolution of evidentiary conflicts. Brockway Borough
Mun. Auth. v. Dep’t of Envtl. Prot., 131 A.3d 578, 587 (Pa. Cmwlth. 2016). On appeal of a
Board decision, “this Court does not ‘accept invitations to reevaluate evidence and credibility
determinations.’” Sunoco, Inc. v. Dep’t of Envtl. Prot., 865 A.2d 960, 969-70 (Pa.
Cmwlth. 2005) (citing Birdsboro and Birdsboro Mun. Auth. v. Dep’t of Envtl. Prot., 865 A.2d
969-70 (Pa. Cmwlth. 2005)).
14
care under the circumstances of this case, such that issuance of the permit
constitutes arbitrary, capricious, and unreasonable decision-making.
The concept of abnormally dangerous activity applies to strict liability
causes of action and is inapplicable to the instant matter which is governed by
statute. Also, while not binding on this Court, the United States District Court for
the Middle District of Pennsylvania has held that hydraulic fracturing is not an
abnormally dangerous activity under Pennsylvania law. See Ely v. Cabot Oil &
Gas Corp., 38 F. Supp. 3d 518, 534 (M.D. Pa. 2014). Thus, we reject Petitioner’s
argument.
2. Reasonable Level of Scrutiny
Petitioner contends that even if the Department was not required to
apply strict scrutiny, the Board still erred in affirming the issuance of the permit for
Well 61 because the Department failed to apply a reasonable level of scrutiny.
Specifically, Petitioner points to: (1) what it refers to as the “lack of evaluation”
by the Department’s program manager, Lobins;6 (2) the uniqueness of the situation
(i.e., use of a slant drill under a large gasoline tank near an oil plume);7 (3) the
Department’s “faulty” analysis of the risk posed by the proximity of Well 61 to
6
With regard to this point, Petitioner refers to Lobins’ uncertainty as to whether he was
aware of Petitioner’s concerns at the time the Department issued the permit and lack of
understanding as to how those concerns had been evaluated.
7
Petitioner asserts that the potential for encountering an abandoned well is greater for a
slant well that travels a distance horizontally compared to a vertical well that is in a single, fixed
location. Petitioner argues that the Department improperly utilized Branch’s prior well projects
in Warren, Pennsylvania, as a basis to evaluate the permit application for Well 61, because those
projects did not involve circumstances similar to those in the matter now before the Court. In
fact, Lobins testified that of the 41,000 well permits he had been involved in issuing, the permit
for Well 61 was the only one that involved drilling under a refinery. (R.R. at 373a.)
15
Tank 234, which was prepared only for purposes of this litigation;8 (4) the
Department’s “deficient Zone of Capture calculation”;9 (5) an overreliance on the
hope that any abandoned wells would have been naturally plugged; and (6) the
Department’s implicit knowledge that risk is presented by these circumstances.
(Petitioner’s Br. at 37, 41.)
Petitioner’s contention that the Board erred in concluding that the
issuance of the permit was not unreasonable due to lack of adequate scrutiny by the
Department appears to be based in part on Petitioner’s misperception that the
Board, in considering the reasonableness and legality of a permit, must confine its
review to the information considered by the Department at the time it issued the
permit. It is important to remember that the Board is not tasked with the duty to
review the Department’s decision-making process. Rather, the Board reviews the
Department’s issuance of a permit de novo, meaning it can properly consider
evidence produced after the Department’s action in question and in anticipation of
litigation. On appeal from a decision of the Board, the Court “must review the
adjudication of the Board rather than the administrative action which was reviewed
by the Board.” Warren Sand & Gravel Co., Inc. v. Dep’t of Envtl. Prot.,
341 A.2d 556, 565 (Pa. Cmwlth. 1975). The Board’s de novo review allows it to
8
Petitioner contends that the Department’s evaluation of the risk was erroneous. An
exhibit introduced by the Department depicting a 200-foot radius around the endpoint of Well 61
is, according to Petitioner, inaccurate and misleading because the zone of capture should have
been placed at a different location. Petitioner notes that the Department, during the hearing,
admitted that the zone of capture should have been placed at a different location. (R.R. at 348a,
386a.)
9
Petitioner contends that the Department further erred by using just a 200-foot zone of
capture and asserts that the Department should have used a 500-foot zone of capture based on
proposed 2013 regulations that were never adopted.
16
admit and consider evidence that was not before the Department when it made its
initial decision, including evidence developed since the filing of the appeal. The
Board determines the reasonableness and legality of the Department’s actions
based upon the record developed before the Board.
Here, the Board heard testimony regarding the concerns expressed by
Petitioner, including those identified by Petitioner in connection with the lack of
scrutiny argument Petitioner now raises. Those concerns involve factual matters,
and the Board considered the evidence before it in reaching its decision.10 As
discussed above, it is immaterial whether the Department considered the same
matters when issuing the permit.
3. Issuance of Permit Without Further Special Conditions
Petitioner contends that the Department erred by issuing the permit to
Branch without including, as express permit conditions, safe drilling and operating
practices that Branch proposed and upon which the Department relied in making
its decision to grant the permit.
The Department’s authority to attach special conditions to a permit is
discretionary, and the Board can properly substitute its own discretion for that of
the Department and thereby order the issuance of permits subject to certain special
conditions. Pequea Twp. v. Herr, 716 A.2d 678, 686 (Pa. Cmwlth. 1998). It
appears that the Board chose not to substitute its discretion in this case because,
10
“[Q]uestions of resolving conflicts in the evidence, witness credibility, and evidentiary
weight are within the exclusive discretion of the [Board], the fact finding agency, and are not
matters for a reviewing court.” Pa. Trout, 863 A.2d at 104. Thus, we may not substitute our
judgment for that of the Board. Id. To the extent that Petitioner invites us to do just that—i.e.,
reconsider the evidence in a light more favorable to its position—we cannot do so.
17
having weighed the evidence, including expert testimony, it concluded that there
was insufficient evidence of harm to justify imposition of additional special
conditions.11 By asking this Court to conclude that special conditions were
necessary, Petitioner is essentially asking this Court to reweigh the evidence and
make credibility determinations regarding the validity of Petitioner’s concerns,
which is beyond our purview. The Board already weighed this evidence and made
credibility determinations that properly supported its decision. The Board accepted
Lobins’ and Branch’s testimony that communication was unlikely to occur
between Well 61 and the plume, an unplugged well, or Tank 234. Conversely, the
Board found that Ruth’s testimony regarding the existence of unplugged wells in
the vicinity of Tank 234 or the plume was speculative, and Petitioner failed to
present evidence supporting a “scientific basis for how the drilling of Well . . . 61
will impact either the plume or Tank 234.” (Board’s Adjudication at 9.)
Moreover, Petitioner provides no evidence showing that the
additional conditions were necessary to ensure the permit’s compliance with the
law. Branch testified that these measures were added safety precautions; he did
not testify that they were necessary to drill. (R.R. at 262a.) Lobins testified that
the only special condition that he believed should be added to the permit was the
condition that Branch would not hydraulically fracture in the Warren 1st or Warren
2nd formations. Thus, the Board did not err in concluding that the Department did
not act unreasonably in failing to impose additional conditions on the permit for
11
The Department did include in the permit for Well 61 a prohibition against drilling in
the Warren 1st and Warren 2nd formations.
18
Well 61, and the Board did not err in not imposing those additional conditions on
the permit itself.
C. Whether Issuance of the Permit Violates Article I, Section 27 of the
Pennsylvania Constitution
As to the alleged violation of the Pennsylvania Constitution, Petitioner
argues that the Board erred in allowing the Department to issue Branch the permit
for Well 61 because the Commonwealth’s natural resources will be injured in
violation of Article I, Section 27 of the Pennsylvania Constitution, which provides:
The people have a right to clean air, pure water, and to
the preservation of the natural, scenic, historic and
esthetic values of the environment. Pennsylvania’s
public natural resources are the common property of all
the people, including generations yet to come. As trustee
of these resources, the Commonwealth shall conserve
and maintain them for the benefit of all the people.
We agree with the Department and Branch, however, that Petitioner failed to raise
his constitutional claim before the Board. Issues not raised before the Board are
waived before the Commonwealth Court.12 Ingram v. Dep’t of Envtl. Prot.,
595 A.2d 733, 738 (Pa. Cmwlth. 1991).
12
When determining whether an action violates Article I, Section 27 of the Pennsylvania
Constitution, this Court must weigh the following considerations:
(1) Was there compliance with all applicable statutes and regulations relevant to
the protection of the Commonwealth’s public natural resources? (2) Does the
record demonstrate a reasonable effort to reduce the environmental incursion to a
minimum? (3) Does the environmental harm which will result from the
challenged decision or action so clearly outweigh the benefits to be derived
therefrom that to proceed further would be an abuse of discretion?
Payne v. Kassab, 312 A.2d 86, 94 (Pa. Cmwlth. 1973), aff’d, 361 A.2d 263 (Pa. 1976). If we
were to consider this argument, we would conclude that all of the prongs of the Payne test weigh
in favor of constitutionality, and the Board did not err in concluding that the Department did not
violate Article I, Section 27 by issuing the permit for Well 61 to Branch.
19
III. CONCLUSION
For the reasons set forth above, the Board did not err in concluding
that Petitioner failed to establish that the Department’s issuance of a permit for
Well 61 to Branch was unreasonable or contrary to law. Accordingly, the order of
the Board is affirmed.
P. KEVIN BROBSON, Judge
20
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
United Refining Company, :
Petitioner :
:
v. : No. 1321 C.D. 2016
:
Department of Environmental :
Protection, :
Respondent :
ORDER
AND NOW, this 12th day of June, 2017, the order of the
Environmental Hearing Board is AFFIRMED.
P. KEVIN BROBSON, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
United Refining Company, :
Petitioner :
: No. 1321 C.D. 2016
v. :
: Argued: April 4, 2017
Department of Environmental :
Protection, :
Respondent :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
DISSENTING OPINION BY
JUDGE McCULLOUGH FILED: June 12, 2017
As recognized by the Environmental Hearing Board (Board), this
matter involves a unique and unprecedented process of slant drilling by John D,
Branch (Applicant), posing unknown dangers, particularly in the area near an
active refinery. The Board’s decision reflects these concerns where it states:
“[T]his case is unique as Mr. Lobins [the expert testifying for the Department of
Environmental Protection (Department)], himself, indicated. It is out of the
ordinary for the Department to receive an application for an oil and gas permit that
allows drilling by a third party underneath an oil and gas refining company in full
operation and in close proximity to a 3.6 million gallon gasoline storage tank.”
(Board op. at 10.)
Despite dismissing the appeal of United Refining Company (United
Refining), the Board further expressed concern for the process in which the
Department engaged, calling for a “more transparent” process and improved
communication among the parties, which the Board suggested as “a more robust
permitting application process.” (Board op. at 11.) The Majority aptly cites
section 3211(e.1) of the Oil and Gas Act, 58 Pa.C.S. §3211(e.1), dealing with the
sole grounds on which the Department may deny a well permit. Subsection (3)
states as a specific ground for denial: “Unresolved objections to the well location
by the coal mine owner or operator.” 58 Pa.C.S. §3211(e.1)(3) (emphasis
added).
Notwithstanding the above, the Board identified two significant
questions or objections left unresolved by the Department when it granted the
application for the permit: (1) “[H]ow would the fracking of the well impact the
surface?” and, (2) “How would the fracks propagate into the unplugged wells at
the depths and distances where the fracking would take place?” (Board op. at 10.)
Clearly, under the Board’s own analysis, there are “unresolved objections” which
need to be answered by the Board.
This Court’s review under the Oil and Gas Act is to ascertain whether
the permitted use was shown to have been “necessary for the safe operation of a
particular mine. . . .” Foundation Coal Resources Corporation v. Department of
Environmental Protection, 993 A.2d 1277, 1290 (Pa. Cmwlth. 2010) (dealing with
the prior version of this statute and applying the standards for denial in a case in
which this Court affirmed the issuance of oil and gas drilling permits).
Here, the unprecedented and unique method of fracking was to occur
underneath an active refinery. United Refining raised concerns about safe drilling
and operating practices and the Board expressed concerns and questions about the
issuance of the permits. Applicant proposed five safeguards to address United
Refining’s expressed concerns about Applicant’s operations: (1) there would be no
fracking in the Warren 1st or Warren 2nd formations; (2) conductivity and video
PAM - 2
logs would be used when new wells were drilled and hydraulic fracturing in the
vicinity of zones indicated by the logs as having excessive water would be
avoided; (3) the pressure gauges would be closely monitored while fracking, and if
the gauges indicated connection with another well, operations would cease
immediately; (4) fracking would be conducted with smaller amounts of sand and
water to control the length of the fractures; and, (5) the proposed termination point
of Well 61 was altered to avoid the vicinity of the oil plume below Tank 234.
Nonetheless, when the Department issued the permits, it imposed only
the first of these special conditions proposed by Applicant. In light of the
unresolved objections and the unprecedented use of this fracking method in a
potentially dangerous zone, it is incumbent upon the Board to address the
remaining four proposals as special conditions to the permits.
Accordingly, I would vacate and remand to the Board to resolve the
unresolved objections and questions identified by the Board in its dismissal of the
appeal, and to impose any special conditions necessary to alleviate the same upon
remand.
________________________________
PATRICIA A. McCULLOUGH, Judge
PAM - 3