EOR Energy LLC et al v. Bonnett et al
Filing
54
OPINION Entered by Judge Sue E. Myerscough on 09/19/2017. SEE WRITTEN OPINION. Defendants' Motion to Dismiss Second Amended Complaint (d/e 45 ) is GRANTED. The Second Amended Complaint is DISMISSED WITH PREJUDICE. This case is closed. (DM, ilcd)
E-FILED
Wednesday, 20 September, 2017 10:18:09 AM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
E.O.R. ENERGY L.L.C., and
AET ENVIRONMENTAL, INC.,
)
)
)
Plaintiffs,
)
)
v.
)
)
ALEC MESSINA, as Director of
)
Illinois Environmental Protection )
Agency, and ILLINOIS
)
ENVIRONMENTAL PROTECTION )
AGENCY,
)
)
Defendants.
)
No. 3:16-CV-03122
OPINION
SUE E. MYERSCOUGH, U.S. District Judge.
This cause is before the Court on the Motion to Dismiss
Second Amended Complaint (d/e 45) filed by Defendants Alec
Messina, Director of the Illinois Environmental Protection Agency
(IEPA) and the IEPA. Because the suit is barred by the Eleventh
Amendment and collateral estoppel, Defendant’s Motion to Dismiss
is GRANTED.
Page 1 of 19
I. BACKGROUND
Plaintiffs E.O.R. Energy, LLC (EOR) and AET Environmental,
Inc. (AET) purport to bring this cause of action pursuant to the
citizen suit provisions of the Resource Conservation and Recovery
Act and the Safe Drinking Water Act. See 42 U.S.C. § 6972; 42
U.S.C. § 300j-8. Therefore, a brief description of the two Acts is
necessary.
The Resource Conservation and Recovery Act, 42 U.S.C.
§ 6901 et seq., “is a comprehensive environmental statute that
governs the treatment, storage, and disposal of solid and
hazardous waste.” Meghrig v. KFC W., Inc., 516 U.S. 479, 483
(1996). The primary purpose of the Act is to reduce the hazardous
waste that is generated and ensure that the hazardous waste is
properly treated, stored, and disposed. Id. The Resource
Conservation and Recovery Act allows each state to promulgate its
own hazardous waste program. 42 U.S.C. § 6926(b). If the United
States Environmental Protection Agency (USEPA) approves the
state’s program, the state’s standards supersede the federal
regulations. AM Int’l, Inc. v. Datacard Corp., 106 F.3d 1342, 1350
(7th Cir. 1997).
Page 2 of 19
Congress enacted the Safe Drinking Water Act, 42 U.S.C.
§ 300f et seq., “with the basic goal of protecting the purity of the
drinking water provided by the nation’s public water systems.”
United States v. Mass. Res. Auth., 256 F.3d 36, 38 (1st Cir. 2001).
Part C of the Safe Drinking Water Act governs the protection of
underground sources of drinking water. See 42 U.S.C. § 300h;
Natural Res. Def. Council, Inc. v. U.S. E.P.A., 824 F.2d 1258, 1269
(1st Cir. 1987) (noting that, in Part C, “Congress sought to protect
underground sources of drinking water from what are termed
‘underground injections’”).
Section 300h(a)(1) of the Safe Drinking Water Act directs the
Administrator of the USEPA to promulgate regulations setting forth
the minimum requirements for state underground injection control
(UIC) programs. A state assumes primary enforcement of a UIC
program by enacting its own program and obtaining approval from
the USEPA. See 42 U.S.C. § 300h-1.
The USEPA approved Illinois’ program for regulating
underground injection wells. 49 Fed. Reg. 20138-01, 20204 (May
11, 1984); see also 40 C.F.R. § 147.700 (stating that the UIC
program of Class I, III, IV and V wells in Illinois—with the
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exception of those on Indian lands—is the program administered
by the IEPA and approved by the USEPA); 40 C.F.R. § 147.701
(same re: Class II wells). Therefore, Illinois’ standards regarding
underground injection wells operate in lieu of the otherwise
applicable federal programs. See 42 U.S.C. § 6926(b); 42 U.S.C.
§ 300h-1. Illinois’ state program classifies Class I and Class II
wells as follows:
a) Class I injection wells. A Class I injection well is any
of the following:
1) A Class I hazardous waste injection well that is
used by a generator of hazardous waste or an owner
or operator of a hazardous waste management facility
to inject hazardous waste beneath the lowermost
formation containing an underground source of
drinking water within 402 meters (one-quarter mile)
of the well bore.
2) An industrial or municipal disposal well that
injects fluids beneath the lowermost formation
containing an underground source of drinking water
within 402 meters (one-quarter mile) of the well bore.
3) A radioactive waste disposal well that injects fluids
below the lowermost formation containing an
underground source of drinking water within 402
meters (one-quarter mile) of the well bore.
b) Class II injection wells. A Class II injection well is one
that injects any of the following types of fluids:
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1) Fluids that are brought to the surface in
connection with conventional oil or natural gas
production and which may be commingled with
wastewaters from gas plants that are an integral part
of production operations, unless those waters are
classified as a hazardous waste at the time of
injection;
2) Fluids that are used for enhanced recovery of oil or
natural gas; and
3) Fluids that are used for storage of hydrocarbons
that are liquid at standard temperature and pressure.
35 Ill. Admin. Code § 730.105(a)(1),(b)(1).
Plaintiff EOR is a small, independent oil producer operating
two oil leases, one in Sangamon County and one in Christian
County. Sec. Am. Compl. ¶ 1. EOR holds seven oil producing
operating permits, two related Class II underground injection
control disposal permits, and one gas injection permit issued by
the Illinois Department of Natural Resources (IDNR). Id. ¶ 2.
Plaintiff AET provides material broker services and is licensed to
handle, transport, and store solid and hazardous wastes. Id.
On March 23, 2007, the IEPA filed a complaint before the
Illinois Pollution Control Board (Board) alleging that EOR and AET
unlawfully transported hazardous waste from Colorado to Illinois
for disposal and that EOR unlawfully disposed of the hazardous
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waste in its Illinois underground injection wells without first
obtaining a proper permit for hazardous waste disposal. Sec. Am.
Compl ¶ 66; Ex. 8, IEPA complaint ¶ 23 (alleging that EOR
discharged hazardous waste into wells between August 2002 and
February 2004). In 2012 and 2013, the Board issued orders
finding that EOR and AET committed the alleged violations and
ordered EOR to cease and desist from the alleged violations. Id.
¶¶ 67, 68; see also Ex. 9 (d/e 43-1, 13 of 21) (finding that EOR
violated the Illinois Environmental Protection Act by injecting
hazardous waste acid into wells without a UIC permit).
The Court takes judicial notice of the Illinois Appellate Court
decision that followed Plaintiffs’ appeal of the Board’s decision.
E.O.R. Energy, LLC v. Pollution Control Bd., 2015 IL App (4th)
130443 ¶ 61 (2015), appeal denied, 39 N.E.3d 1001, 39 N.E.3d
999, cert. denied 136 S. Ct. 1684 (2016); see Olson v. Champaign
Cnty., Ill., 784 F.3d 1093, 1096 n.1 (7th Cir. 2015) (a court may
take judicial notice of documents in the public record when ruling
on a motion to dismiss under Rule 12(b)(6)). On administrative
review, Plaintiffs argued that the IEPA and the Board did not have
jurisdiction and, even if they did have jurisdiction, the record failed
Page 6 of 19
to support the Board’s grant of summary judgment. E.O.R.
Energy, 2015 IL App (4th) 130443 ¶ 61. The appellate court
affirmed.
Specifically, the appellate court agreed with the Board that
the acid material at issue constituted waste or hazardous waste
within the meaning of the Illinois Environmental Protection Act
(415 ILCS 5/3.220). Id. ¶ 80. In addition, the court rejected
Plaintiffs’ argument that the acid material injected into the Class II
wells fell within the exclusive regulatory jurisdiction of the IDNR
under the Oil and Gas Act. Id. ¶ 91.
The appellate court noted that the General Assembly created
a comprehensive statutory structure—known as the Illinois UIC
program—for the regulation of underground injection of materials
into wells. E.O.R. Energy, 2015 WL App (4th) 130443, ¶ 83. The
Illinois UIC program was promulgated with federal approval
pursuant to the federal UIC program, which allows states the
option of implementing their own UIC programs that comply with
federal standards. Id. The federal UIC program was promulgated
under the Safe Drinking Water Act and, to the extent the program
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deals with hazardous waste, the Resource Conservation and
Recovery Act. Id.
The appellate court noted that the Illinois Environmental
Protection Act designated the IEPA as the implementing agency for
all purposes of the Safe Drinking Water Act, with the exception of
section 300h-4 of the Safe Drinking Water Act, which provides the
authority for federally approved state programs relating to “(1) the
underground injection of brine or other fluids which are brought to
the surface in connection with oil or natural gas production or
natural gas storage operations, or (2) any underground injection
for the secondary or tertiary recovery of oil or natural gas.” Id.
¶ 84. (quoting 42 U.S.C. § 300h-4 (2006)). “Illinois’s package of
UIC-related statutes and regulations submitted to the federal
government for approval provided that Class II wells … be
regulated by the IDNR under the Oil and Gas Act. E.O.R. Energy,
2015 WL App (4th) 130443, ¶ 84 (also noting that Class II wells are
known as “oil-and-gas-related-injection wells”). The IEPA was
given the authority over hazardous-waste injection wells, which
include Class I wells. Id. (citing 35 Ill. Adm. Code 730.105 (2012).
Page 8 of 19
The appellate court found that the Oil and Gas Act provided
the IDNR authority only over Class II injections into Class II
injection wells, meaning that the IDNR’s regulatory power under
the UIC program was limited to the injection of fluids associated
with oil and gas extraction. Id. ¶ 87. Because the material
injected in the case was not a Class II fluid that the IDNR was
authorized to regulate, and because the material was an acid
material that fell within the Environmental Protection Act’s
definition of “hazardous waste,” the IEPA and the Board had
jurisdiction over the injection. Id. ¶ 88. The fact that the material
was injected into a Class II well did not matter for jurisdictional
purposes. Id.
Finally, the appellate court held that the facts of the record
were sufficient to support the Board’s grant of summary judgment.
Id. ¶¶ 93-97. On December 15, 2015, the IEPA issued demand
letters to EOR and AET seeking payment of the assessed penalties
as well additional penalties for the failure to comply with the
Board’s final orders. Id. ¶ 69, Ex. 10.
Plaintiffs originally filed this suit in May 2016. In September
2016, Plaintiffs filed a First Amended Complaint (d/e 17). In the
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First Amended Complaint, Plaintiffs asked this Court to declare
and order that (1) under federal law, Class II injection wells in
Illinois are subject only to IDNR regulation and permit
requirements, per the express provisions of the Safe Drinking
Water Act and Resource Conservation and Recovery Act, as
codified at 40 C.F.R. § 147.700 and 701; and (2) under federal law,
the IEPA and the Pollution Control Board may not regulate or
require a second UIC injection permit under 40 C.F.R. § 147.700
for Class II wells in addition to existing IDNR Class II permits.
Defendants moved to dismiss the First Amended Complaint
on the grounds of res judicata, collateral estoppel, and the
Eleventh Amendment. Mot. to Dismiss (d/e 18). This Court
rejected Defendants res judicata and collateral estoppel
arguments, interpreting Plaintiffs’ complaint as seeking a
declaratory judgment “that only IDNR has the authority to regulate
the injection of acid—as distinguished from hazardous waste—into
Class II wells and that EOR does not have to obtain a separate
Class I permit from the IEPA to conduct secondary recovery of oil
and gas in Illinois.” Opinion at 13 (d/e 36). The Court found that
this issue did not arise from the same operative facts as those
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resolved in the earlier action. Id. at 13-14. The Court questioned,
however, whether Plaintiffs could demonstrate an actual
controversy and granted Plaintiffs leave to replead. Id. at 15-16.
The Court deferred ruling on the Eleventh Amendment argument.
Id. at 17.
In May 2017, Plaintiffs filed their Second Amended
Complaint. In the Second Amended Complaint, EOR states that it
wants to conduct “acidization” of its Illinois oil leases, a process
Plaintiffs describe as a secondary oil recovery method involving the
underground injection of hazardous materials. Sec. Am. Compl.
¶¶ 3, 4. In addition, EOR wants to use “unwanted acid” that costs
little or nothing, like the acid it used when EOR was prosecuted by
the IEPA. Id. ¶ 40; see also id. ¶ 51 (stating that EOR plans to
acidize its wells using “off-spec” acid without obtaining a Class I
permit). AET is interested in brokering acids available on existing
secondary hazardous material exchanges for EOR’s upcoming
acidization but is afraid to engage in such activity because AET
was prosecuted for EOR’s last acidization. Id. ¶ 8.
Plaintiffs seek a declaratory judgment that the IEPA cannot
require that EOR obtain a Class I UIC permit for Class II wells in
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addition to the existing IDNR Class II permit and/or that EOR need
not obtain a second permit under Section 300h-1 of the Safe
Drinking Water Act to conduct “do-it-yourself” mini-acidization of
its wells using local labor and off-spec acids from the secondary
market. Sec. Am. Compl. ¶¶ 117, 122. Plaintiffs assert that a
declaratory judgment is necessary because of the prior IEPA
action, the Board’s orders appearing to prohibit EOR from
acidizing its wells, and the current threat of further enforcement of
EOR’s last attempted acidization in 2004. Id. ¶ 4.
Defendants have filed a Motion to Dismiss asserting that the
Eleventh Amendment bars Plaintiffs’ claims, Plaintiffs fail to allege
any violations of federal environmental statutes, and Plaintiffs fail
the “zone of interests” test. Defendants further argue that, to the
extent Plaintiffs claim that they were not engaging in the disposal
of hazardous waste in the prior proceeding, that argument is
foreclosed by the doctrine of collateral estoppel.
II. LEGAL STANDARD
A motion under Rule 12(b)(6) challenges the sufficiency of the
complaint. Christensen v. Cnty. of Boone, 483 F.3d 454, 458 (7th
Cir. 2007). To state a claim for relief, a plaintiff need only provide
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a short and plain statement of the claim showing she is entitled to
relief and giving the defendants fair notice of the claims. Tamayo
v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). When
considering a motion to dismiss under Rule 12(b)(6), the Court
construes the complaint in the light most favorable to the plaintiff,
accepting all well-pleaded allegations as true and construing all
reasonable inferences in her favor. Id.
The Court may consider documents attached as exhibits to
the complaint when ruling on a motion to dismiss. Ctrs. v.
Centennial Mortg., Inc., 398 F.3d 930, 933 (7th Cir. 2005); Fed R.
Civ. P. 10(c) (“A copy of a written instrument that is an exhibit to a
pleading is part of the pleading for all purposes.”). If the exhibit
conflicts with the allegations in the complaint, the exhibit generally
controls. Massey v. Merrill Lynch & Co., Inc., 464 F.3d 642, 645
(7th Cir. 2006).
A Rule 12(b)(6) motion to dismiss is proper when an
affirmative defense is disclosed by the complaint. Muhammad v.
Oliver, 547 F.3d 874, 878 (7th Cir. 2008). An affirmative defense
is “disclosed in the complaint where (1) the facts that establish the
defense are definitely ascertainable from the allegations of the
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complaint, the documents (if any) incorporated therein, matters of
public record, and other matters of which the court may take
judicial notice; and (2) those facts conclusively establish the
defense.@ Novickas v. Proviso Township High School 209, No. 09cv-3982, 2010 WL 3515793, at *2 (N.D. Ill. Aug. 21, 2010).
III. ANALYSIS
The Eleventh Amendment “bars federal jurisdiction over
suits brought against a state, not only by citizens of another state
or a foreign state, but also by its own citizens.” MCI Telecomm.
Corp. v. Ill. Bell Tel. Co., 222 F.3d 323, 336 (7th Cir. 2000). This
jurisdictional bar applies “regardless of the nature of the relief
sought.” Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S.
89, 100 (1984). The immunity afforded by the Eleventh
Amendment extends to state agencies. Id.
However, three exceptions to the Eleventh Amendment’s bar
apply. Specifically, a state can be sued in federal court where: (1)
Congress has abrogated the state’s immunity from suit, (2) a state
has waived its immunity and consented to suit, or (3) the suit is
one against a state official seeking prospective relief for an ongoing
violation of federal law (Ex parte Young, 209 U.S. 123, 159-60
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(1908)). See Ind. Prot. & Advocacy Serv. v. Ind. Family & Soc.
Serv. Admin., 603 F.3d 365, 371 (7th Cir. 2010); Sonnleitner v.
York, 304 F.3d 704, 717 (7th Cir. 2002).
In this case, Plaintiffs do not argue that Congress abrogated
Illinois’ immunity from suit or that Illinois has waived its immunity
and consented to suit. Therefore, Plaintiffs’ suit survives only if
the suit is one against a state official seeking prospective relief for
an ongoing violation of federal law.
Plaintiffs bring this action against Messina in his official
capacity as Director of the IEPA and against the IEPA. The claim
against the IEPA is clearly barred by the Eleventh Amendment.
See U.S. Ecology, Inc. v. Carlson, 638 F. Supp. 513, 519 (C.D. Ill.
1986) (Eleventh Amendment barred suit against the IEPA).
As for the claim against Messina in his official capacity, the Court
must determine whether Plaintiffs are seeking prospective relief for
an ongoing violation of federal law. When determining whether the
doctrine of Ex parte Young applies, the Court conducts a
“’straightforward inquiry into whether the complaint alleges an
ongoing violation of federal law and seeks relief properly
characterized as prospective.’” Verizon Md., Inc. v. Public Serv.
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Comm’n of Md., 535 U.S. 635, 645 (2002) (quoting Idaho v. Coeur
d’Alene Tribe of Idaho, 521 U.S. 261, 296 (1997) (brackets
omitted).
Plaintiffs argue in response to the Motion to Dismiss that they
only seek a declaration that the IEPA may not regulate future
injections of hazardous off-spec acids into EOR’s Class II wells and
oil wells. EOR Resp. at 2 (d/e 52); AET Resp. at 1-2 (adopting
EOR’s response). However, the Illinois Appellate Court held that
the IEPA has jurisdiction over the injection of a hazardous waste
into a Class II well. E.O.R. Energy, 2015 IL App (4th) 130443 ¶ 88;
¶ 91 (holding that the “unpermitted injection of hazardous-waste
acid into EOR’s wells (1) did not constitute a Class II injection
authorized by the Oil and Gas Act . . . and; (2) therefore, fell within
the EPA’s and the Board’s jurisdiction to enforce the provisions of
the Environmental Act regulating hazardous waste”). The Illinois
Appellate Court also affirmed the Board’s decision that EOR
violated the Environmental Protection Act by injecting hazardous
waste acid in its wells without have a UIC permit. Board Order
(d/e 43-1, 13 of 21); E.O.R. Energy, 2015 IL App (4th) 130443 ¶ 99
(affirming the Board’s decision). Therefore, whether the IEPA may
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regulate injections of hazardous off-spec acids into Class II wells
and oil wells has been decided in previous litigation involving
Plaintiffs, and Plaintiffs are collaterally estopped from raising it
again. See Nowak v. St. Rita High Sch., 197 Ill. 2d 381, 390 (2001)
(collateral estoppel applies where (1) the issue decided in the prior
adjudication is identical to the issue presented in the suit in
question; (2) there was a final judgment on the merits in the prior
adjudication; and (3) there is an identity of parties or their privies).
Moreover, this Court cannot overturn the Illinois appellate court’s
determination that the IEPA has jurisdiction over the injection of
hazardous waste in Class II wells and that EOR violated the
relevant law by failing to obtain a Class I permit, which is
essentially what Plaintiffs are asking this Court to do. See Brown
v. Bowman, 668 F.3d 437, 442 (7th Cir. 2012) (the RookerFeldman doctrine bars federal claims where a plaintiff requests
that the federal district court overturn an adverse state court
judgment).
To the extent Plaintiffs’ Second Amended Complaint can be
construed as seeking a declaratory judgment that the IEPA cannot
require EOR to obtain a Class I permit to conduct the secondary
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recovery of oil and gas in Illinois that does not involve the injection
of hazardous waste, Plaintiffs have failed to show an ongoing
violation. Plaintiffs have alleged no factual basis for their assertion
that the IEPA requires or will require a Class I permit to conduct
the secondary recovery of oil and gas in Illinois that does not
involve the injection of hazardous waste. Plaintiffs point to the
Board orders and IEPA demand letters as evidence of a dispute
whether EOR is required to obtain Class I permits to conduct
secondary recovery of oil and gas in Illinois. However, those orders
and demands pertain to Plaintiffs’ unlawful transport, storage, and
disposal of hazardous waste that was the subject of the appellate
court decision discussed above. The orders and demand do not
show that IEPA required or will require a Class I permit to conduct
secondary recovery of oil and gas in Illinois that does not involve
hazardous waste. Therefore, Plaintiffs have not shown on ongoing
violation by the IEPA. Without an ongoing violation, Plaintiffs’
claims do not fall within the exception set forth in Ex parte Young.
Plaintiffs’ claims are barred by the Eleventh Amendment.
Page 18 of 19
IV. CONCLUSION
For the reasons stated, Defendants’ Motion to Dismiss
Second Amended Complaint (d/e 45) is GRANTED. The Second
Amended Complaint is DISMISSED WITH PREJUDICE. This case
is closed.
ENTER: September 19, 2017
FOR THE COURT:
s/Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE
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