EPS vs. FPL Farming Case – EPS vs. FPL Farming Case – Pore Space Competition and Pore Space Competition and

Underground TrespassUnderground Trespass

Bob Van VoorheesUnderground Injection Technology Council

TCEQ Environmental Trade FairAustin, TexasMay 6, 2015

UITC

• The Underground Injection Technology Council (UITC) is an organization of companies that use underground injection for safe and effective management of water resources, recovery and management of natural resources and environmental management.

• In operation since 1985• Established to preserve the availability of deepwell

injection technology as an environmental management option for hazardous and nonhazardous wastewaters under conditions where Class I deepwell injection of such wastes will be safe and effective as well as protective of human health and the environment.

ENVIRONMENTAL PROCESSING SYSTEMS, L.C. V.

FPL FARMING LTD.

Texas Supreme Court

Case Background• A rice farm landowner sued its neighbor, operator of a

Class I nonhazardous waste disposal well, on the theory that deep subsurface wastewater trespassed beneath the landowner’s property.

• The landowner conceded rice farming was the best use of its land and drinking water was undamaged.

• Jury returned verdict in favor of injection well operator. • After a series of appeals that included an opinion and

remand from the Texas Supreme Court, a court of appeals reversed the jury’s verdict.

• The Texas Supreme Court reversed but did not rule on whether deep subsurface wastewater migration is actionable as a common law trespass in Texas.

Location Background• FPL Farming Ltd. owns land which it uses

primarily for rice farming. • It owns all of the surface and non-mineral

subsurface rights to this land. • Environmental Processing Systems (EPS)

leased a five-acre tract on an adjacent property, where it constructed and operated a wastewater disposal facility.

• EPS began operating this facility under a 1996 permit from the Texas Natural Resource Conservation Commission (TNRCC).

Permitting Background• FPL Farming’s predecessor-in-title requested a

contested case hearing to challenge EPS’s initial 1996 permit applications for two wells.

• He later reached a settlement with EPS, forgoing his contest in exchange for $185,000.

• A written agreement reflected that the settlement was binding on all successors-in-title.

• EPS then drilled a well and began injecting wastewater approximately 8,000 feet below ground into the Frio formation (~144,000 ppm TDS).

Permitting Background - 2• In 1999, EPS applied to amend its permits to

increase the volume of wastewater it could inject into the Frio formation.

• FPL Farming contested permit amendments. • Administrative law judge (ALJ) acknowledged

that wastewater would likely enter the subsurface of FPL Farming’s land but found FPL Farming could not exclude EPS from the deep subsurface because FPL Farming’s right to obtain its own injection well permit would not be impaired.

Permit Challenge• TNRCC granted EPS’s permit amendments

upon the recommendation of the ALJ.• FPL Farming challenged the UIC permits as a

violation or taking of property rights, but the district court affirmed.

• Appeals court upheld, noting that, “should the waste plume migrate to the subsurface of FPL Farming’s property and cause harm, FPL Farming may seek damages from EPS.”

• FPL Farming, Ltd. v. Tex. Natural Res. Conservation Comm’n, No. 03-02-00477-CV, 2003 WL 247183, at *5 (Tex. App.—Austin Feb. 6, 2003, pet. denied).

Lawsuit Against Operator• Next FPL Farming sued EPS and alleged that wastewater had

migrated into the deep subsurface of its land, possibly contaminating the briny groundwater beneath it.

• FPL Farming sued for injunctive relief and damages for trespass, negligence, and unjust enrichment.

• At trial, the contested issues were whether EPS’s injected wastewater had actually entered beneath FPL Farming’s land, whether FPL Farming consented to the alleged entry, and the amount of damages, if any.

• Trial court excluded evidence on the Frost $185,000 settlement. • Before the jury verdict, the trial court denied FPL Farming’s no-

evidence motion for a directed verdict on the issue of whether EPS provided evidence that FPL Farming or Frost had consented to the subsurface entry.

Jury Charge and Verdict• The jury charge included consent in the definition of

trespass over FPL Farming’s objection that consent should be treated as an affirmative defense:– Question 1: Did EPS trespass on FPL [Farming’s] property?– “Trespass” means an entry on the property of another without

having consent of the owner. To constitute a trespass, entry upon another’s property need not be in person, but may be made by causing or permitting a thing to cross the boundary of the property below the surface of the earth. Every unauthorized entry upon the property of another is a trespass, and the intent or motive prompting the trespass is immaterial.

– Answer yes or no.

• The jury answered “No.” • Trial court entered a take-nothing judgment.

Jury Verdict Appeal – Round 1• On appeal, the court of appeals affirmed, holding that

FPL Farming could not recover in tort, as a matter of law, because the TNRCC/TCEQ had authorized EPS’s underlying actions by issuing UIC permits.

FPL Farming Ltd. v. Envtl. Processing Sys., L.C., 305 S.W.3d 739, 744–45 (Tex. App.—Beaumont 2009), rev’d, 351 S.W.3d 306 (Tex. 2011), remanded to 383 S.W.3d 274 (Tex. App.—Beaumont 2012, pet. granted).

• The Texas Supreme Court reversed, holding that government-issued permits do not shield a permit holder from civil tort liability.

• But the Court reserved the question of whether “subsurface wastewater migration can constitute a trespass, or whether it did so in this case.” FPL Farming Ltd., 351 S.W.3d at 314–15.

Jury Verdict Appeal – Round 2• On remand, the court of appeals reversed,

holding that: 1. Texas recognizes a common law trespass cause for

deep subsurface migration;

2. Consent is an affirmative defense to trespass, on which EPS bore the burden of proof, and therefore the jury charge was improper;

3. FPL Farming was not entitled to a directed verdict because there was some evidence that it (or Frost) impliedly consented to the subsurface entry; and

4. the trial court erroneously excluded the settlement agreement between EPS and Frost from evidence.

383 S.W.3d at 282, 284–85, 288–89.

Supreme Court Decision• The jury charge here provided the well-established definition of a

trespass, which includes lack of consent or authorization as an element of the cause of action.

• FPL Farming was not entitled to a directed verdict on the issue of consent for different reasons than the court of appeals stated.

• Because EPS prevailed there was no harm in the submission of a jury question asking whether it committed a trespass by causing deep subsurface wastewater to migrate underneath FPL Farming’s property.

• This lack of harm eliminates the need to address whether Texas law recognizes a trespass cause of action for deep subsurface wastewater migration.

• Furthermore, the Court neither approved nor disapproved the court of appeals’ analysis and holding on the trespass issue.

• On May 1, 2015 the Supreme Court denied a motion for rehearing.

USDWs & Exempted Aquifers

Clarifying Exempted Aquifers• EPA UIC policies on exempted aquifers are evolving• Issues have arisen over what EPA calls “more complex

aquifer exemption requests”• Last year EPA sent a memorandum to its Regional

Water Division Directors to “to promote a consistent and predictable process for the review of Aquifer Exemption requests”

• EPA OGWDW Memorandum “Enhancing Coordination and Communication with States on Review and Approval of Aquifer Exemption Requests Under SDWA” (July 24, 2014).

• That memorandum has not been entirely successful.

Underground Sources of Drinking Water (USDWs)

• The UIC regulations provide that no injection shall be authorized by permit or rule if it results in the movement of fluid containing any contaminant into underground sources of drinking water (USDWs), if the presence of that contaminant may cause a violation of any primary drinking water regulation or may adversely affect the health of persons.

40 CFR § 144.1(g)

Exempted Aquifers• A UIC Director may designate ‘‘exempted aquifers’’

using the criteria in 40 CFR § 146.4. • Such aquifers are those which would otherwise qualify

as ‘‘underground sources of drinking water’’ to be protected, but which have no real potential to be used as drinking water sources.

• Therefore, they are not USDWs. • No aquifer is an exempted aquifer until it has been

affirmatively designated under § 144.7. • Aquifers which do not fit the definition of ‘‘underground

source of drinking water’’ are not ‘‘exempted aquifers.’’ They are simply not subject to the special protection afforded USDWs. 40 CFR § 144.1(g)

Regulatory Background• EPA's approach to aquifer exemptions promulgated in a 1980

rulemaking.• EPA determined that without aquifer exemptions, certain types of

energy production, solution mining, or waste disposal would be severely limited.

• EPA adopted a broad definition of covered underground waters coupled with a discretionary exemption mechanism—allows the agency to prevent endangerment consistent with the statute while allowing some case-by-case consideration.

• This approach protects underground sources of drinking water while also allowing underground injection associated with industrial activities including the production of minerals, oil, or geothermal energy.

• “EPA retains the final approval authority over aquifer exemption decisions regardless of state primacy status.” Mem. 3.

GWPC Workgroup• EPA says it participated with some states in a

Ground Water Protection Council workgroup• Purpose was to

– Review issues associated with more complex aquifer exemption requests

– Make recommendations on steps to improve the review process

• “EPA and participating states agreed on a number of steps to enhance coordination and communication between EPA regions and state UIC programs regarding proposed aquifer exemptions”

Complications• It has become apparent that the EPA memo

suggests more agreement than is the case • Primary concern is over how EPA views its role

in the process for designating exempted aquifers vis-à-vis primacy states

• There is also concern over the way EPA wants states to establish current and potential future aquifer use

• That approach is viewed as a substantial departure from previous practice

EPA Aquifer Exemption Role• “EPA is responsible for the final review and

approval of all aquifer exemption requests, based on the regulatory criteria in 40 CFR 146.4” Mem. 1.

• UIC permit applicants typically delineate the proposed exempted area and submit the delineation to the primacy agency

• States review to determine if the information submitted supports an aquifer exemption, make a designation, provide for public comment and submit a request to the EPA Region for approval of a program revisionWDD Memorandum

Aquifer Exemption Approval• EPA notes that approval of complex cases will be by

Regional administrators for non-substantial program revisions and by the EPA Administrator for substantial program revisions

• But EPA treats its review of program revisions as if it is conducting a de novo review of the exempted aquifer designation

• Program revision reviews should be to ensure that a primacy state followed the appropriate procedures, considered the appropriate factors and made a decision that is not clearly unreasonable

• States should be making the decisions on appropriate state resource uses, including groundwater

Recommended New Steps• Use Aquifer Exemption information checklist • Create Statement of Basis or decision memo• EPA Regions encouraged to schedule early

discussion with the state UIC program managers for complex aquifer exemptions

• Regional UIC managers encouraged “to elevate significant disagreements on AE requests to senior program managers rather than allowing them to persist at the staff level for extended periods of time” Mem. 3.

• Most technical issues should be resolved in Regions• Regions should maintain standardized, readily

available data on all existing aquifer exemptions

“Does Not Serve” Criterion• EPA must first find that the state or the applicant, has

demonstrated that the aquifer or the portion of an aquifer identified by the state as exempt "does not currently serve as a source of drinking water"

• EPA has determined that water that currently serves as a source of drinking water includes water that is being withdrawn in the present moment and water that will be withdrawn in the future by wells currently in existence.

• Evaluation of this criterion ensures that “water from the exempted area of the aquifer ‘does not currently serve as a source of drinking water’ for nearby drinking water wells as required by 40 CFR 146.4(a).” Mem. 3.

• But Part 146 uses “public water system,” not “wells”

“Will Not Serve” Criterion

• EPA must determine either– That an aquifer cannot now and will not in the future

serve as a source of drinking water for a public water system or

– That the total dissolved solids content of the ground water is more than 3,000 and less than 10,000 mg/I and it is not reasonably expected to supply a public water system

Well Evaluations

• Are there any public or private drinking water wells or springs capturing (or that will be capturing) or producing drinking water from the aquifer or portion thereof within the proposed exemption area? Y/N*– Evaluate the capture zone of the well(s) in the area near the proposed

project (i.e., the volume of the aquifer(s) or portion(s) thereof from within which groundwater is expected to be captured by that well).

– A drinking water well's current source of water is the volume (or portion) of an aquifer which contains water that will be produced by a well in its lifetime. What parameters were considered to determine the lifetime of the well?

(*) If the answer to this question is Yes, therefore the aquifer currently serves as a source of drinking water.

Aquifer Exemption Checklist item 1

Not Reasonably Expected

• Include information about the quality and availability of water from the aquifer proposed for exemption.

• Also, the exemption request must analyze the potential for public water supply use of the aquifer: – A description of current sources of public water

supply in the area; – A discussion of the adequacy of current water

supply sources to supply future needs, population projections, economy, future technology; and

– A discussion of other available water supply sources within the area.

Aquifer Exemption Checklist item 6

Other Developments

Injection Well Interaction

• Recent experience has highlighted potential interaction between injection wells permitted by TCEQ and wells permitted by the RRC

• Pressure interactions arise where Class II brine and Class I disposal wells are injecting into the same formation although separated by distance

• Such interactions pose questions regarding how the various permitting agencies involved (TCEQ, RRC, and even potentially EPA Region 6) should address interactions of injection wells.

• Under the TCEQ-RRC MOU this should start with cooperative coordination between the two agencies

Primacy for UIC Program

• Texas has primacy for implementation of the UIC program through TCEQ and the Railroad Commission (Class II)

• EPA Region 6 has oversight to ensure proper Texas program implementation

• EPA has limited direct responsibilities (e.g., no migration demonstrations; exempted aquifer program revisions; and Class VI wells)

• EPA oversight is an intergovernmental matter between EPA Region 6 and TCEQ/RRC

• Coordinating respective roles is important to avoid authority vacuum and duplication of effort

For More Information:

Bob Van Voorhees, Executive Director

Underground Injection Technology Council

1155 F Street, NW, Ste 700

Washington, DC 20004-1312

202-508-6014

bob.vanvoorhees@gmail.com

See also: www.UITCouncil.org