American Oil and Gas Reporter - March 2016 - 80

ConventionSection: Pennsylvania Independent Oil & Gas Association

Pennsylvania Producers
Await New Drill Rules
By Dan Holder
CANONSBURG, PA.-The Pennsylvania Environmental Quality Board's Feb.
3 approval of revised regulations for oil
and natural gas drilling activities is one
more administrative step in what will be
a crippling regulatory regime, predicts
Gary E. Slagel, chairman of the Pennsylvania Independent Oil & Gas Association.
Speaking in advance of the association's
spring conference, to be held April 7 at
the Rivers Casino in Pittsburgh, Slagel
says it is likely that planned changes to
the oil and gas well sections of the Pennsylvania Code will be in effect by midsummer, irrespective of the industry's
extensive objections.
Following EQB's decision, he says
the Chapter 78 and 78a revisions-for
conventional and unconventional oil and
gas activities, respectively-next face
scrutiny by the Independent Regulatory
Review Commission (IRRC), and the
Environmental Resources and Energy
committees in the Pennsylvania House
and Senate.
Even if PIOGA's efforts to encourage
IRRC and the legislative committees to
disapprove the rules under the Pennsylvania Regulatory Review Act prove successful, Governor Tom Wolf still can
override any legislative vetoes, says Slagel,
a government affairs specialist at Steptoe
& Johnson PLLC in Canonsburg. "And
so, there is little or no chance we are
going to see any significant changes to
that rule package."
PIOGA President Louis D. D'Amico
points out the regulatory reforms' impetus
is to update rules for unconventional operators, but the state Department of Environmental Protection cannot, even after
four years of trying, justify applying
those changes to conventional wells.
"DEP pretty much is cutting and pasting between the two sets of regulations,"
D'Amico characterizes. "If the industry
cannot change these rules, it will all but
be the death of Pennsylvania's conventional industry. I don't think industry has
80 THE AMERICAN OIL & GAS REPORTER

enough votes in the House or Senate to
override the governor's veto of their disapproval, should they vote to do so. No
matter what industry would do to try to
help the cause legislatively, I believe the
governor would veto it."
Revised Regulations
According to DEP, both chapters of
the rule include revised regulations governing impacts on public resources, water
supply replacement, waste management
and disposal, and hydraulic fracturing.
DEP says the changes include prohibitions
on all pits, including those used for drill
cuttings and flowback fluids.
New provisions cover wastewater impoundment-banning their use in most
cases-on-site wastewater processing, site
restoration, and remediating spills and
releases. Chapter 78a also contains requirements for containing regulated substances, oil and gas gathering pipelines,
well development pipelines, and water
management plans, DEP states.
The agency asserts the two sets of
regulations differ because they treat conventional operators as small businesses
and tailor the regulations to suit their
limitations, while imposing stronger measures on unconventional well owners.
Slagel says conventional operators detect little differentiation between the two
chapters. "DEP took the unconventional
rules and deleted some sections that made
no sense for conventional operations,"
he says. "It essentially kept the rest of
the rules intact. When Governor Wolf
came in, he created a separate advisory
board to review and comment on those
That board voted not to endorse the rules
because they failed to recognize the
distinct differences between conventional
and unconventional operations."
Slagel says state officials released the
comment responses to the Chapter 78/78a
revisions a year later than PIOGA had
hoped to see them, as well as the regulatory
analysis form DEP used to quantify the
cost/benefits aspects of the rule package.
"Not surprisingly, DEP's cost estimates
of the regulatory obligations are signifi-

cantly underestimated, based on the industry's own assessments," Slagel says.
"It is a significant cost consideration,
particularly at a time when the industry
can ill afford to have any additional cost
burdens. And it is an administrative
burden, with considerably more time involved in completing forms and getting
the necessary approvals as part of any
permit application process."
One particular provision of concern
is a public resource section that gives
permitting input and authority to entities
with little or no oil and gas industry experience, Slagel relates. That role may
include input on well locations, likely
impacts to threatened or endangered
species, or issues of historical significance,
he details.
"When I say additional entities, I am
talking about not only traditional agencies
such as DEP, the Department of Conservation and Natural Resources, or Fish &
Wildlife Service at the federal level, but
the state now is throwing in local governments and even school districts. They
will have some ability to call themselves
a public resource agency, and have the
opportunity to offer comments and mitigation measures on any nearby drilling
proposals," Slagel indicates.
The association is considering a legal
response to the new regulations, Slagel
says. PIOGA already has mounted a challenge to the public resources issue in the
Chapter 78/78a revisions. He points out
two years ago the Pennsylvania Supreme
Court invalidated several sections of Act
13, the 2012 legislation written to regulate
shale gas development in the state. One
overturned section deals with authorizing
DEP to consider impacts on public resources.
"We are saying that since that section
was invalidated, those sections of the
proposed rules that address public resources are invalid as well. Right now,
PIOGA seems to be on a favorable track
in Pennsylvania Commonwealth Court
as it relates to moving that issue forward,"
Slagel says. "That will create an interesting
dilemma for DEP if these rules are finalized, and then the Commonwealth Court

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