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The Foundation Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina F. Buchman)

On July 8, 2023, the Pennsylvania Department of Environmental Protection (PADEP) published a notice of availability of a new draft technical guidance document (TGD) entitled “Guidelines for the Development and Implementation of Oil and Gas Well Site Integrated Contingency Plans for Unconventional Well Sites,” TGD No. 800-2200-001 (July 6, 2023). See 53 Pa. Bull. 3649 (July 8, 2023). The draft TGD is intended to provide direction to unconventional gas operators regarding expected and useful information to include in unconventional well site emergency response plans and preparedness, prevention, and contingency plans.

PADEP hopes that the document will provide operators with a practical and consolidated approach to meeting requirements under multiple state regulations for emergency or contingency planning. PADEP also hopes that utilizing a “one-plan” approach will minimize duplicating effort and standardize the format of emergency response information. Plans prepared in accordance with this TGD are intended to satisfy the requirements of seven different PADEP regulations and guidance documents.

The draft TGD includes a plan template divided into sections to facilitate field use: (1) a plan introduction, with pertinent site contact information and administrative obligations, and “quick sheets,” providing critical information and maps for first responders and site personnel; (2) a two-part section containing site-specific information and the purpose of the plan and the procedures and actions operators, their agents, and responders will utilize to respond to an emergency at the site; (3) a section focusing on preparedness, prevention, and contingency planning as required across multiple regulations to reduce redundant information already incorporated into other sections of the plan; (4) a section outlining the training and exercise the operator will conduct to ensure that the responding agencies are familiar with the plan and properly trained in the event of an emergency; (5) appendices with references, checklists, incident command system definitions, and forms; and (6) a regulation and guidance matrix referencing applicable state regulation and guidance requirements.

Pennsylvania House of Representatives Passes Resolution Directing Study of Oil and Gas Revenue

On June 29, 2023, the Pennsylvania House of Representatives passed House Resolution 131, a resolution directing the Legislative Budget and Finance Committee (LBFC) to study the revenue of Pennsylvania’s oil and natural gas industry. Since the enactment of Act 13 of 2012, producers in Pennsylvania have paid an impact fee based on production and pricing for unconventional gas wells. This differs from other states, including Texas, where producers pay a severance tax—a tax on the extraction of oil and natural gas.

The resolution, which was introduced by Representative Mandy Steele, directs the LBFC to conduct a study to determine the revenue Pennsylvania may have collected since the enactment of Act 13 if a severance tax had been implemented. The bill also directs the LBFC to report its findings and severance taxes, impact fees, or other oil or gas related taxes paid by producers in other states for natural gas production by June 2024.

The LBFC is a bipartisan legislative service agency consisting of 12 members of the General Assembly. The LBFC conducts studies and makes recommendations regarding the elimination of unnecessary expenditures, promotion of economy in government, and assurance that commonwealth expenditures are made in accordance with their legislative intent. The staff of the LBFC has experience in business administration, business analytics, economics, environmental science, public administration, law, and supply chain management. They have assisted the LBFC in a variety of public policy and state program areas, including emergency preparedness, community and economic development, education, environmental protection, game and fisheries, health and welfare, law enforcement, liquor control, local government, rural affairs, transportation, and veteran’s affairs.

Proposals to levy a severance tax on oil and gas production have been common in recent years. Former Pennsylvania Governor Tom Wolf proposed a severance tax during each of his eight years in office. These efforts met significant opposition from Republican lawmakers and the oil and gas industry. Current Governor Josh Shapiro did not propose a severance tax during his campaign or in his current budget plan.

House Resolution 131 will be submitted to the Pennsylvania Senate for consideration. If the resolution passes, a report may be expected in the second quarter of 2024.

PADEP Releases Regulatory Update, Including for Rules Applicable to Conventional Oil and Gas Operations

On July 22, 2023, the Pennsylvania Department of Environmental Protection (PADEP) published its semi-annual Regulatory Update, which summarizes the current status of regulations under development or consideration (and includes recently completed regulations). See 53 Pa. Bull. 3905 (July 22, 2023). The Regulatory Update highlighted agency progress on two proposed rulemakings to amend 25 Pa. Code ch. 78, the regulations governing conventional oil and gas well operations, that have been in development since 2020.

The first proposed rulemaking, “Environmental Protection Performance Standards for Conventional Oil and Gas Operators” (#7-539), proposes to amend 25 Pa. Code ch. 78 to update the environmental protection performance standards for surface activities at conventional oil and gas well sites. Among other things, it would amend the chapter 78 regulations to update well reporting requirements and protection and replacement of public or private water supply regulations to align them with Act 13 of 2012 (which amended Pennsylvania’s Oil and Gas Act, 58 Pa. Cons. Stat. §§ 2301–3504). The proposed rule would also amend bonding requirements to align with Act 57 of 1997 (which amended the Administrative Code of 1929) and amends the regulations regarding well inactive status designations. See Proposed Chapter 78 Annex A Rulemaking (Aug. 19, 2021). This proposed rulemaking was most recently presented at the December 16, 2021, Pennsylvania Grade Crude Development Advisory Council (CDAC) meeting and the proposed date of promulgation is Q4 2023. See 53 Pa. Bull. 3905 (July 22, 2023).

The second proposed rulemaking, “Waste Management and Related Issues at Conventional Oil and Gas Well Sites” (#7-540), addressed the proper management of waste at conventional oil and gas well sites. This rulemaking would amend chapter 78 to require operators to establish an area of review prior to initiating operations to identify any wells within certain distances of the planned operations, would require operators to develop preparedness, prevention, and contingency plans, and addresses proper handling, storage, processing, and disposal of waste generated by conventional oil and gas operations. See Proposed Chapter 78 Annex A Rulemaking (Aug. 19, 2021). This proposed rulemaking was most recently presented at the February 16, 2023, CDAC meeting and the proposed date of promulgation is the first quarter of 2024.

As noted, PADEP’s Regulatory Update also highlighted completed regulations. Those included “Control of Emissions from Conventional Oil and Natural Gas Sources” (#7-580), a rulemaking to amend 25 Pa. Code ch. 129 to establish emissions limitations and reasonably available control technology requirements for volatile organic compounds and other pollutants applicable to existing conventional oil and natural gas operations. Pennsylvania’s Independent Regulatory Review Commission (IRRC) approved this rule on April 20, 2023. See IRRC, Approval Order, Regulation No. 7-580 (Apr. 20, 2023).

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