American Oil and Gas Reporter - October 2015 - 115

ConventionSection: Pennsylvania Independent Oil & Gas Association

PIOGA Contests Stringent Regulations

HARRISBURG, PA.-Pennsylvania's
oil and gas industry is facing one of
the most stringent regulatory environments in the country, energy leaders
there suggest. And if present trends
continue, the situation likely will worsen.
Pennsylvania Independent Oil & Gas
Association Chairman Gary Slagel comments that the commonwealth's Department of Environmental Protection seems
to respond to every complaint or concern
it receives about the industry with new
requirements or policies. The DEP appears
to want to regulate all aspects of the industry, rather than allowing companies
and industry groups to develop their own
best practices, he says.
"The DEP does not seem willing to
recognize that Pennsylvania's already
comprehensive (regulatory) program is
more than sufficient," Slagel remarks.
"There is no need to develop new regulations to govern everyday occurrences,
such as a slip that occurs on an access
road. Those kinds of things happen; that
is why we have inspectors and compliance
requirements. But it certainly doesn't indicate there is a need for more regulations
to cover those occurrences."
Slagel says PIOGA is growing concerned with the building trend because
the "cost of doing business" continues to
increase with each new regulation and
requirement. And, because there is limited
state pre-emption over municipal ordinances, PIOGA members have to meet
requirements at all levels, he says. "Because of all this, Pennsylvania's regulatory
environment remains a very complex situation," he adds.
Among the regulations Slagel says
PIOGA is monitoring and commenting
on is DEP's latest draft final-form rule
for oil and gas surface operations. Subchapter C of Chapter 78 for conventional
operations and Chapter 78a for unconventional resources have been in the rulemaking process for four years, he notes.
The latest revisions were made public in
August and early September.
"The Chapter 78 rules are a very high
priority for PIOGA," Slagel remarks.
"We cannot follow through with any
legal action until the rules take effect,
but we are looking at all our options. If
at all possible, we want to encourage the
DEP to scale the regulations back."

Chapter 78 Rules
PIOGA Legal Counsel Jean Mosites
of Babst Calland advises and assists with
the association's political and legal responses to the proposed revisions to the
Chapter 78 Oil & Gas Rules. She says
the association's substantive objections
to and concerns about the rules include
at least five categories.
First, Mosites says the new well permitting application process will add several
items that will make the process longer
and more difficult for both conventional
and unconventional well operators. This
includes adding a new process for broadly
defined "agencies" to provide comments
for DEP to consider in developing permit
conditions for wells near schools, playgrounds, state forests, and other listed
areas.
The process also would allow DEP to
require protecting species that are not
listed as threatened or endangered, but
have been categorized as "special concern
species" by various agencies and entities.
Categorizing such species is not subject
to any scientific standard or peer review,
and proceeds without public input or accountability, Mosites says.
The second category is waste and
water handling, where Mosites says the
association is seeking more flexibility so
that companies can recycle more. However, the DEP has constrained ways that
wastewater may be handled, including
transportation, storage and disposal.
Mosites lists the third category of concern as site restoration after wells have
been drilled. She says that while this is
regulated already under Pennsylvania's
Clean Stream Law, the DEP wants to
create additional obligations that will increase a well site's footprint and environmental impact. "The DEP has added
requirements regarding post-construction
stormwater controls that increase the size
of the well pad," she explains. "That is
one example of (the proposed rules) being
more costly and creating a bigger footprint,
if this is finalized."
Fourth, PIOGA is concerned with the
DEP's proposed rules on spill remediation,
which will affect any and all materials
spilled at a well site. Mosites clarifies
that these rules do not acknowledge variations in the materials spilled, commenting
that some, such as brine, are more benign
than others. Instead, the rules include all

materials under a very strict and overly
complicated procedure, she contends.
"For example, on a well site, brine is
a fairly benign material, relatively speaking, because it's not excessively toxic,"
she elaborates. "Yet the regulations are
stricter for well site spills than they are
for other industries or other materials.
It's not a good fit. The department is creating a very costly cleanup process that
does not match the potential impact from
spills, especially small ones."
The last category Mosites describes
is a proposal for applicants to identify
abandoned wells, which is an issue that
she says will affect operators of both
conventional and unconventional wells.
Under the proposed rules, operators must
identify active, inactive, abandoned and
plugged wells 30 days before drilling.
She says PIOGA objects that several
parts of the identification rules are unclear.
"Operators have to report these other
wells, but sometimes there isn't any good
information, or sometimes they are on
private property to which (the operator)
doesn't have access," she worries. "Nevertheless, the department proposes to require operators to monitor these wells,
which seems to imply that you need
someone physically on site to look at
each one of them."
Even though, in concept, all operators
look for nearby wells as part of their due
diligence, Mosites asserts DEP's proposal
raises the level of confusion about "what
the new obligations include, how far they
go, and when they end."
Mosites gives one example of this
ambiguity: Operators must submit a questionnaire to landowners on forms to be
provided by the DEP. "We don't have
the forms, so we don't know what they
will say," she protests. "The department
has provisions we can't evaluate yet, because we don't have the form.
"I would say there are more than a
dozen circumstances in the rule where
that is the case-where there is a form or
something that you need to know to actually understand the rule, but the forms
haven't been developed," she continues.
Mosites emphasizes PIOGA objects
to the rules' enormous cumulative impact,
as almost all of them would take effect
on publication in early 2016. However,
PIOGA recommends that the DEP allow
OCTOBER 2015 115

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