Daily GPI / NGI The Weekly Gas Market Report / Regulatory

New PA Shale Regulations Advance, But Legislature Squashes Conventional Well Rules

After more than five years in the making, months of fiery debate and weeks of behind-the-scenes negotiations, the Pennsylvania General Assembly on Wednesday approved new environmental regulations for shale gas production and voted for legislation to scrap new rules for legacy producers.

The package of rules leaves the legislature for Democratic Gov. Tom Wolf's desk looking very different than when it arrived a few weeks ago. The Pennsylvania Department of Environmental Protection (DEP) had drafted regulations for both the conventional and unconventional oil and gas industries and sent them out for the regulatory review process earlier this year (see Shale DailyJan. 6).

The agency began drafting them in 2011, but Wolf's administration pledged to tighten them last year (see Shale DailyMarch 9, 2015). Since then, legacy producers, trade organizations and state lawmakers on both sides of the aisle have accused the DEP of writing ambiguous and similar regulations for two very different industries. They claimed DEP ignored Act 126 of 2014, which required the agency to adopt separate regulations for legacy and shale producers, and wanted the conventional rules scrapped.

Last month, the House Energy committee approved a resolution to kill the entire package and prevent it from being implemented even though the Environmental Quality Board and the Independent Regulatory Review Commission approved it (see Shale DailyMay 5). Last week, however, the committee amended and approved SB 279, which prevents the DEP from implementing new regulations on conventional oil and gas operations (see Shale DailyJune 8). The legislation passed both chambers Wednesday in a deal that allows the unconventional rules to move forward.

Wolf hailed the compromise, indicating he would sign the legislation and get to work on helping to properly draft new conventional regulations.

"These regulations have been under development for more than five years, through three separate administrations and have benefited from an unprecedented process of engagement and public participation," Wolf said in a statement. "I would like to thank both Democrats and Republicans for working together with me and for the commitment both sides showed to ensuring our environment and our people are safe."

The regulations must now be reviewed by the state Attorney General. Once they are published in the state bulletin, they will take effect immediately, said DEP spokesperson Neil Shader.

The new rules are designed to reduce impacts on public resources, such as schools and parks, help prevent spills, strengthen waste management and require stronger well site restoration standards.

Also on Wednesday, the legislature approved SB 1195, which would allow the general assembly to consider the DEP's strategy for implementing the Obama administration's Clean Power Plan before its is submitted to the Environmental Protection Agency.

"It is definitely appropriate that these bills are moving in tandem," said state Sen. Don White, of Southwest Pennsylvania, who introduced SB 1195. "They both address concerns that good jobs and vital industries could be lost due to overzealous regulations. SB 279 requires the DEP to recognize that conventional oil and gas well operations have been a key part of our communities for 150 years and that they should not be treated in the same manner as the Marcellus Shale industries."

SB 279 would also establish the Pennsylvania Grade Crude Development Advisory Council to advise and assist the DEP in crafting appropriate regulations for the conventional industry that reflect the differences in their operations compared to those of shale drillers.

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