On February 14, 2012, Pennsylvania Governor Corbett signed House Bill 1950 into law as Act 13 of 2012, the Unconventional Gas Well Impact Fee Act (Act 13). This long bill (174 pages) provides for an impact fee, Oil and Gas Act (Title 58) amendments and local ordinance standards. We followed the legislative progression of the Act and, as promised, offer more detailed analysis of the environmental aspects of the Act here. In short, Act 13 provides for new well fees to be assessed on unconventional wells as well as restrictions on local government’s authority to impose burdens on oil and gas activities over and above those required by the state (which some municipalities are preparing to challenge). There are also new environmental and safety provisions for both surface and subsurface activities, some of which will be effective immediately while other will require a rulemaking by the Environmental Quality Board before becoming effective. This article discusses five significant “specifics” of the new environmental and safety provisions imposed by Act 13 and the implications on future permitting and operation of unconventional natural gas development.

  1. The Act provides enhanced hydraulic fracturing chemical disclosure requirements – this is a new requirement.

Act 13 requires operators of unconventional wells to disclose hydraulic fracture fluids to the Chemical Disclosure Registry (which is a website developed by the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission) which will make information about chemicals and additives available to the public in a fully searchable format. Act 13 provides, “Within 60 days following the conclusion of hydraulic fracturing, the operator of the well shall complete the chemical disclosure registry form and post the form on the chemical disclosure registry in accordance with regulations promulgated under this chapter in a format that does not link chemicals to their respective hydraulic fracturing additive” (section 3221.1) Specific information regarding chemicals claimed as trade secrets and proprietary information can be protected from disclosure. Further, certain “trace amounts” of chemicals need not be disclosed.

Act 13 also provides for enhanced well reporting requirements, including production data.

The implication of this provision on future operation of unconventional natural gas development is clearly to require operators to know and disclose hydraulic fracking fluids, even if those chemicals are being supplied by a vendor. Further, it is intended that the Registry be “fully searchable” by the Pennsylvania Department of Environmental Protection (DEP) and the public by geographic region on state wide bases. This could have liability implications in penalty and alleged contamination cases.

  1. Producers must submit to DEP a report identifying and quantifying actual air contaminant emissions, with the report due by March 1 for air contaminant emissions during the preceding calendar year – this is a new requirement.

Section 3227 of Act 13 requires an owner or operator of a facility conducting natural gas operations in unconventional formations including development, production, transmission and processing to “submit to the [DEP] a source report identifying and quantifying actual air contaminant emissions from any air contamination source.” The reports under this section are due March 1 for the preceding year. Previously, on December 6, 2011, DEP alerted companies involved in unconventional natural gas development around Pennsylvania that they must submit to the department data on their facilities’ air emissions for 2011. The reports are due March 1, 2012. Details regarding the air emission inventory can be found here. It is unclear at this time whether and to what extent Act 13 changes or modifies the emission reporting requirements DEP notified regulated entities about in 2011.

  1. Increased record keeping for transportation of waste water fluids – this is a revised requirement.

Under Act 13, producers are now required to maintain transportation records regarding the movement of wastewater In many ways, this is yet another move on the part of the legislature and DEP to discourage disposal of fracking wastewater and encourage on-site reuse. DEP’s preference for onsite reuse can also be seen in another provision of Act 13 where DEP can now deny permits for “failure to submit a water management plan that does not include a reuse plan for fluids that will be used to hydraulically fracture a well.” Therefore, the implication of these provisions on future operations of unconventional natural gas development is to look for future policies to further encourage reuse of wastewater.

  1. Unconventional operators are presumed to be responsible for pollution of water supplies within 2,500 feet of the well bore when the pollution occurs within 12 months of the later of completion, drilling, stimulation or alteration of the well – this is a revised provision.

The Oil and Gas Act has always contained a rebuttable presumption of liability for pollution from gas wells. This rebuttable presumption was based on the distance of the well pad from the alleged pollution and the timing of the pollution event. Act 13 increases the distance of the rebuttal presumption of pollution from 1,000 feet to 2,500 feet from the water supply and the timing of such presumption is increased from six months to 12 months following the last drilling activity for unconventional drilling. The implication on future operation of unconventional natural gas development is an increase in an unconventional well operator’s window of presumed liability, both in distance and time.

  1. Additional permitting and penalty provisions – this is a revised provision.

There are many permitting and penalty provisions in Act 13, including newly required notices to municipalities, as well as water management plans. Further, the Environmental Quality Board must issue regulations for DEP to use in evaluating: impact to public resources, for “ensuring optimal development of oil and gas resources” and respecting property rights of oil and gas owners. Further, aligning itself with other PA environmental statutes, the Oil and Gas Act now explicitly states that permits may be denied for continuing violations by an applicant’s parent or subsidiary. Also, Act 13 increases threefold the “not to exceed” ceiling for civil penalty assessment against unconventional well operators, and it is now up to $75,000. The implications on future permitting operations of unconventional natural gas development could be significant, and the EQB regulations will be something to watch for.

There are many other changes to the Oil and Gas Act under Act 13: bonding requirements, well siting and set-back provision changes, and well control emergency response - to name a few. This article serves to highlight five of the more significant measures.