Argued: April 4, 2017
BEFORE: HONORABLE P. KEVIN BROBSON, Judge, HONORABLE PATRICIA
A. McCULLOUGH, Judge, HONORABLE MICHAEL H. WOJCIK, Judge.
KEVIN BROBSON, JUDGE
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.
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
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.
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 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.
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 also altered the proposed termination
point of Well 61, so as to avoid the vicinity of the oil
plume below Tank 234.
Department issued permits for the six wells on November 12,
2014, including the permit for Well 61. 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.
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.
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 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.
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.
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 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.
appeal to this Court,  the issues are as follows: (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
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.
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
(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. . . .
(6) The applicant failed to pay the fee or file a report
under section 2303(c) (relating to administration), unless an
appeal is pending. . . .
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. ...