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Commission Approves Pennsylvania Oil/Gas Regulatory Overhaul, Moving Package Closer to Reality

Pennsylvania’s Independent Regulatory Review Commission (IRRC) has approved the state Department of Environmental Protection's (DEP) sweeping overhaul of environmental regulations for the oil and natural gas industry, bringing the rules one step closer to being finalized after more than four years and much controversy.

The IRRC approved the rules late Thursday, after a hearing that lasted hours in which it heard testimony from conventional and unconventional producers, environmental organizations, landowners, state officials and other stakeholders.

Years in the making, the new rules include separate standards for both industries, and would reduce impacts on public resources, help prevent spills, strengthen waste management and require stronger well site restoration standards, among other things (see Shale Daily, Jan. 6).

"I am pleased that IRRC moved these important regulatory updates closer to the finish line," said DEP Secretary John Quigley, who shortly after being appointed last year to lead the agency said he would aim to tighten the regulations even more (see Shale DailyMarch 9, 2015). "The...regulations have been written with an unprecedented amount of public participation, including from the conventional and unconventional drilling industries. This final regulatory package will improve protection of water resources, add public resources considerations, protect public health and safety, address landowner concerns, enhance transparency and improve data management."

The Marcellus Shale Coalition’s Patrick Henderson, director of regulatory affairs, said during his testimony that "many of the most onerous proposals have been unveiled in the last year." Environmentalists, meanwhile, hailed the IRRC's approval but said the new rules still don't go far enough.

"While these rules could go further to protect the environment and public health, the compromises were important to update rules that were last revised in 2001, prior to the Marcellus Shale boom," said PennFuture President Larry Schweiger.

The package will now be reviewed by the state legislature. After that, it will be reviewed by the Attorney General's office before becoming effective. The legislature has an opportunity to vote against the rules, but Democratic Gov. Tom Wolf, who supports them, could veto it.

The rulemaking process, which included 12 public hearings and attracted 28,000 public comments, has rankled the industry, particularly legacy oil and gas producers that have accused the agency in heated exchanges and lawsuits of overstepping its boundaries and writing ambiguous rules for both industries.

In a lawsuit filed last month, the Pennsylvania Independent Petroleum Producers Association (PIPP) accused the DEP of ignoring Act 126 of 2014, which required the agency to adopt separate regulations for conventional and unconventional producers (see Shale DailyMarch 28). PIPP requested that the IRCC hearing be enjoined and asked a state judge to declare the regulations unlawful. The Commonwealth Court, however, denied the requests, writing in an opinion that the rules have not yet become law and don't warrant any action from the court (see Shale Daily, April 18).

While there are separate regulations in the package, both conventional and unconventional producers would be required to adhere to some of the same rules, such as closer regulatory scrutiny for wells near public resource protection zones like parks and schools. All operators would be required to conduct reviews of abandoned and active wells near their pads prior to drilling, among other things.

The Pennsylvania House and Senate energy committees have also voted against the regulations. They had urged the IRCC not to approve them, questioning how they were written and calling some of the requirements costly and illegal.

But commissioners said they believed the regulations were crafted transparently, adding that the overhaul was needed given the rapid changes in the state's oil and gas industry with the rise of the Marcellus and Utica shales.

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