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Media Alerts - EQT Production Company v. Wender -- Fourth Circuit
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September 29, 2017
  EQT Production Company v. Wender -- Fourth Circuit
Creatures of the State: County Ordinances May Not Nullify State-Issued Licenses

Areas of Law: Environmental, Statutory Interpretation

Issue Presented: Whether a county ordinance banning the disposal of wastewater in state-licensed wells was preempted by state and federal laws that specifically permitted the activity.

Brief Summary: In a published opinion, the United States Court of Appeals for the Fourth Circuit held that the district court correctly determined Fayette County did not have the authority to nullify state-issued licenses to dispose of wastewater. The Fourth Circuit found the County's ordinance was preempted by West Virginia's Water Pollution Control Act and Oil and Gas Act. As such, EQT Production Company (a company engaged in licensed wastewater disposal) was granted a permanent injunction against enforcement of the ordinance.

Extended Summary: EQT Production Company ("EQT") is one of the largest natural gas producers in the Appalachian Basin. EQT operates approximately 200 conventional oil and natural gas wells in Fayette County, West Virginia. Because these wells generate wastewater during the natural gas production process (known to many as "fracking"), EQT stores the wastewater in short-term storage tanks so the water does not pollute the environment. But because these storage tanks often reach capacity, EQT operates one injection well in the County, which it uses to permanently dispose of the excess wastewater.

Both the production and disposal processes are heavily regulated by state and federal laws. For example, West Virginia state law governs, among other things, permanent wastewater disposal, including the permitting of injection wells. EQT held a permit for its injection well and its well never posed any apparent danger. Nevertheless, on January 12, 2016, the Fayette County Commissioners enacted the "Ordinance Banning the Storage, Disposal, or Use of Oil and Natural Gas Waste." The Ordinance banned the use of "injection wells for the purpose of permanently disposing of natural gas and oil waste." Furthermore, the Ordinance specifically stated that holders of state or federal permits were not exempt from enforcement.

EQT challenged this enactment, contending that the County's blanket ban was invalid because it conflicted with superior state laws. (This is known as "preemption.") In response, the County argued that EQT lacked standing to sue because it had not yet suffered an injury, and also that the Ordinance was enforceable because state law allowed a county to abate anything it "determines to be a public nuisance." The United States District Court for the Southern District of West Virginia found for EQT, writing that the County could not "unilaterally prohibit conduct that federal and state law both expressly permit." The County then appealed to the Fourth Circuit.

The Fourth Circuit held that the district court properly determined the Ordinance was preempted because the Ordinance banned activities that were specifically licensed and regulated by the state.

The court first disposed of the County's argument that EQT lacked standing to sue because it had not suffered an injury in fact. The court noted that the ban on the permanent disposal of wastewater would require EQT to shut down its existing well and construct a new one in a neighboring county. Because this would necessarily burden EQT with additional costs, the court found that EQT suffered an injury in fact.

On the merits of the preemption claim, the court first outlined West Virginia's governmental hierarchy. The court noted that county commissions are provided with limited power by the state and as such, any county ordinance is automatically "inferior" to all legislative acts of the state. Relying on the West Virginia Supreme Court of Appeals' decision in Brackman's Inc. v. City of Huntington, 27 S.E.2d 71, 78 (W. Va. 1943), the Fourth Circuit held that counties lack the authority to impede activities that a state has regulated and licensed "pursuant to a state statute."

Finally, the court addressed the County's contention that the Ordinance was not preempted because of language in state law that permits counties to "suppress nuisances" or "abate any pollution." The court held that the County's interpretation of this language was greatly overstated. The court found the language gave the County the right to abate established nuisances, but did not allow the County to unilaterally determine what a nuisance is. See Sharon Steel Corp. v. City of Fairmont, 334 S.E.2d 616, 626 (W. Va. 1985). If injection wells should turn into a public nuisance, the County's appropriate and legal course of action would be to bring a common law action against the particular injection well operators. The Fourth Circuit affirmed the District Court's judgment, holding the Fayette County's Ordinance preempted and thus, unenforceable.

Judge Wynn dissented, finding that West Virginia's Supreme Court of Appeals would have been the more appropriate forum to decide the issue because it is the state court's role to determine the balance of power between state and local authorities.

To read the full opinion, click here.

Panel: Judges Niemeyer, Wynn, and Harris

Argument Date: 05/09/2017

Date of Issued Opinion: 08/30/2017

Docket Number: No. 16-1938

Decided: Decided by published opinion.

Case Alert Author: Jeremy Himmelstein, Univ. of Maryland Carey School of Law

Counsel: ARGUED: Derek Owen Teaney, APPALACHIAN MOUNTAIN ADVOCATES, INC., Lewisburg, West Virginia, for Appellants. Timothy M. Miller, BABST, CALLAND, CLEMENTS & ZOMNIR, P.C., Charleston, West Virginia, for Appellee. ON BRIEF: Thomas A. Rist, HUMPHREY & RIST, LLP, Fayetteville, West Virginia, for Appellants. Christopher B. Power, BABST, CALLAND, CLEMENTS & ZOMNIR, P.C., Charleston, West Virginia, for Appellee. Roger G. Hanshaw, BOWLES RICE LLP, Charleston, West Virginia, for Amici Curiae.

Author of Opinion: Judge Harris

Case Alert Supervisor: Professor Renée Hutchins

    Posted By: Renee Hutchins @ 09/29/2017 05:42 PM     4th Circuit  

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