Shale Daily / NGI All News Access

Appeals Court Says $3.5M Lawsuit Against ODNR Must Be Heard

A long-running dispute between Patriot Water Treatment LLC of Warren, OH, and the Ohio Department of Natural Resources has been revived with the decision from an Ohio Appeals Court in December that Ohio's Court of Claims must consider a lawsuit filed by the company in November 2012 that seeks $3.5 million in damages from the regulatory agency.

Patriot treats the kind of low-salinity brine water that poses problems for injection wells in the state because it doesn't sink as fast as heavier brine, which requires operators to request pressure variances in order to force the lighter water down injection wells. After the water is treated, it is then disposed of through the Warren Pollution Control Department.

Patriot's case against ODNR essentially began in 2010 when the Ohio Environmental Protection Agency (OEPA) granted it permits to treat and dispose of the wastewater (see Shale Daily, Dec. 8, 2010). But a new agency director in 2011, who still holds the position, Scott J. Nally, determined that ODNR ultimately had the final say in brine disposal permits as the state's chief oil and gas regulatory agency (see Shale Daily, May 20, 2011).

That move led the OEPA to later issue new permits to Warren's Water Pollution Control Department that included a ban on accepting brine water treated at Patriot. The agency's decision came at a time when fracking wastewater treatment facilities were basically nonexistent in the state -- which is largely the case today as only a few have been, or will be permitted -- and it based the new permits on ODNR's reading of disposal laws in the state at the time, which are currently being updated (see Shale Daily, Dec. 24, 2013).

The ban shut down Patriot's operations for three straight months in 2012 (seeShale Daily, March 21, 2012), prompting the company to file suit for damages against ODNR in Ohio Claims Court, which hears cases against state agencies. That case had been dismissed after a judge said the claims court lacked jurisdiction in the matter and it should have been dealt with by the Ohio Environmental Review Appeals Commission, which ultimately reinstated Patriot's treatment and disposal permits in July 2012 (see Shale Daily, July 6, 2012).

When it argued before the environmental commission, Patriot had requested documents and public records from ODNR to defend itself against the state's change in disposal policy. At the time, Patriot President Andrew Blocksom, who couldn't be reached to comment about the appeal court's latest decision on New Year's Eve, and his attorneys, alleged that ODNR withheld and destroyed public documents that proved damaging to the state, with Patriot contending that ODNR was concerned about private competition because the agency collects a small fee on the millions of barrels of fracking waste disposed in the state each year.

ODNR has denied that claim, while also electing not to comment on further specifics of the pending litigation. Patriot filed suit against ODNR and made the claims because it believes the documents supposedly withheld would have helped it resolve its case before the environmental commission faster.

When it appealed to the Tenth District Court of Appeals in Columbus, OH, the court ruled in Patriot's favor and determined in early December that the claims court has jurisdiction in the matter and must determine whether damages are warranted and if ODNR withheld documents that would have aided Patriot in its case before the environmental commission.

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