PRIOR PRINTER'S NO. 955 PRINTER'S NO. 1367
No. 866 Session of 1991
INTRODUCED BY D. R. WRIGHT, BLACK, STEIGHNER, BILLOW, TRELLO,
PESCI, STISH, NOYE, OLASZ, CARLSON, HERSHEY, VAN HORNE,
DeLUCA, PISTELLA, GODSHALL, MERRY, HANNA, SAURMAN, BARLEY,
E. Z. TAYLOR, JADLOWIEC, FLICK, PETRARCA, PRESTON,
RICHARDSON, JOHNSON, ALLEN, JAROLIN, PETRONE, HALUSKA,
GRUITZA, LEH, GAMBLE, GALLEN, STUBAN, LESCOVITZ, MARKOSEK,
BISHOP, KOSINSKI, BELFANTI, COY, VROON, S. H. SMITH, PERZEL,
FARGO, TULLI, McCALL, DeWEESE, PHILLIPS, CESSAR,
STRITTMATTER, DALEY, ROBINSON, KENNEY, F. TAYLOR, WOZNIAK,
RAYMOND, KASUNIC, SCHULER, HARPER, SEMMEL, CARN, COHEN,
DERMODY, VEON, CLYMER, LUCYK, TANGRETTI, COLAFELLA, GRUPPO
AND TELEK, MARCH 19, 1991
AS REPORTED FROM COMMITTEE ON CONSERVATION, HOUSE OF
REPRESENTATIVES, AS AMENDED, APRIL 17, 1991
AN ACT
1 Amending the act of December 19, 1984 (P.L.1140, No.223),
2 entitled "An act relating to the development of oil and gas
3 and coal; imposing duties and powers on the Department of
4 Environmental Resources; imposing notification requirements
5 to protect landowners; and providing for definitions, for
6 various requirements to regulate the drilling and operation
7 of oil and gas wells, for gas storage reservoirs, for various
8 reporting requirements, including certain requirements
9 concerning the operation of coal mines, for well permits, for
10 well registration, for distance requirements, for well casing
11 requirements, for safety device requirements, for storage
12 reservoir obligations, for well bonding requirements, for a
13 Well Plugging Restricted Revenue Account to enforce oil and
14 gas well plugging requirements, for the creation of an Oil
15 and Gas Technical Advisory Board, for oil and gas well
16 inspections, for enforcement and for penalties," further
17 providing for definitions, well permits, well registration,
18 inactive status, plugging requirements, well reporting
19 requirements, bonding, the Oil and Gas Technical Advisory
20 Board, public nuisances, civil penalties, determination of
21 compliance, unlawful conduct, surcharges for new wells;
22 exempting certain wells from bonding requirements; PROVIDING <--
23 FOR ACCOUNTING OF OIL OR GAS PRODUCTION; and further
1 providing for local ordinances.
2 The General Assembly of the Commonwealth of Pennsylvania
3 hereby enacts as follows:
4 Section 1. The definitions of "alteration" and "well
5 operator" or "operator" in section 103 of the act of December
6 19, 1984 (P.L.1140, No.223), known as the Oil and Gas Act,
7 amended October 9, 1986 (P.L.1431, No.135), are amended and the
8 section is amended by adding a definition to read:
9 Section 103. Definitions.
10 The following words and phrases when used in this act shall
11 have the meanings given to them in this section unless the
12 context clearly indicates otherwise:
13 * * *
14 "Alteration." Any operation which changes the physical
15 characteristics of the well bore, including stimulation or
16 removing, repairing or changing the casing: Provided, however,
17 That, for the purpose of this act only, the term shall not
18 include:
19 (1) repairing or replacing of casing [with casing of the
20 same diameter and length in noncoal areas;
21 (2) repairing or replacing of production casing with
22 casing of the same or smaller diameter and length: Provided,
23 however, That] if the activity does not affect the depth or
24 diameter of the well bore, provided that the use or purpose
25 of the well does not change and provided that the activity
26 complies with regulations promulgated hereunder. However,
27 this exclusion shall not apply to production casings in coal
28 areas when said production casings are also the coal
29 protection casings and shall not apply when the method of
30 repairing or replacing the casing would affect the coal
19910H0866B1367 - 2 -
1 protection casing;
2 [(3)] (2) nor shall it include stimulation [as a normal
3 initial completion procedure nor stimulation used to enhance
4 additional oil or gas zones within the same well bore.] of a
5 well.
6 * * *
7 "Orphan well." Any well abandoned prior to the effective
8 date of this act that has not been affected or operated by the
9 present owner or operator, and which the present owner, operator
10 or lessee has received no economic benefit, except only as a
11 landowner or recipient of a royalty interest from the well.
12 * * *
13 "Well operator" or "operator." The person designated as the
14 well operator or operator on the permit application or well
15 registration. Where a permit or registration was not issued, the
16 term shall mean any person who locates, drills, operates, alters
17 or plugs any well, or reconditions any well with the purpose of
18 production therefrom. In cases where a well is used in
19 connection with the underground storage of gas, the term also
20 means a "storage operator."
21 * * *
22 Section 2. The act is amended by adding a section to read:
23 Section 104. Exemptions.
24 All wells drilled prior to January 1, 1975, shall be exempt
25 from the bonding provisions of this act, if they are registered
26 within one year of the effective date of this amendatory act.
27 Well owners or operators registering their wells pursuant to
28 this amendatory act shall not be subject to fines, penalties or
29 other enforcement or department actions as a consequence of not
30 heretofore registering or complying with the bonding provisions
19910H0866B1367 - 3 -
1 of this act. Owners or operators of wells drilled prior to
2 January 1, 1975 that have already complied with the bonding
3 provisions of this act shall also be exempt from the bonding
4 requirement, provided they comply with all other applicable
5 environmental protection provisions of this act. The department
6 is not required to return bonds or fees submitted by the owner
7 or operator to comply with the bonding provisions of the act for
8 wells drilled prior to 1975, however, the owner or operator may
9 use the bonds or fees he deposited as a credit toward bonding
10 wells drilled after January 1, 1975.
11 Section 3. Section 201(a) and (k) of the act, amended
12 October 9, 1986 (P.L.1431, No.135), are amended to read:
13 Section 201. Well permits.
14 (a) No person shall drill a well or alter any existing well,
15 except for alterations which satisfy the requirements of
16 subsection (j), without having first obtained a well permit
17 pursuant to subsections (b), (c), (d) and (e). A copy of the
18 permit shall be kept at the well site during drilling or
19 alteration of the well. However, no person shall be required to
20 obtain a permit to redrill a nonproducing well, if:
21 (1) the redrilling has been evaluated and approved as
22 part of an order from the department authorizing the cleaning
23 out and plugging or replugging of a nonproducing well,
24 pursuant to section 13(c) of the act of December 18, 1984
25 (P.L.1069, No.214), known as the Coal and Gas Resource
26 Coordination Act; and
27 (2) the redrilling is incidental to the plugging or
28 replugging operation and the well subsequently is plugged
29 within 15 days of redrilling.
30 * * *
19910H0866B1367 - 4 -
1 (k) No permit issued pursuant to this section or
2 registration issued pursuant to section 203 may be transferred
3 without prior approval of the department. Requests for approval
4 of such transfer shall be made on forms or in a manner
5 prescribed by the department. The department shall approve or
6 deny the transfer request within 45 days of receipt of a
7 complete and accurate application. The department shall only
8 have the authority to deny such request for the reasons set
9 forth in subsection (e)(4) or (5). Approval of the transfer
10 request shall permanently transfer responsibility to plug the
11 well under section 210 to the recipient of the transferred
12 permit or registration.
13 * * *
14 Section 4. Section 203(a) of the act is amended and the
15 section is amended by adding subsections to read:
16 Section 203. Well registration and identification.
17 (a) [Within one year from the effective date of this act,
18 every person owning or operating a well for which no drilling
19 permit was issued by the department shall register such well on
20 forms or in a manner prescribed by the department, which shall
21 contain the following information:] Within one year of the
22 effective date of this amendatory act, every person who is the
23 owner or operator of a well in existence prior to April 18,
24 1985, which well has not been registered with the department and
25 for which no drilling permit has been issued by the department,
26 shall register such well with the department. Any well owner or
27 operator who registers a well pursuant to this subsection, and
28 any well owner or operator who has previously registered a well
29 pursuant to this act shall, within one year of the effective
30 date of this amendatory act, identify any abandoned well on
19910H0866B1367 - 5 -
1 property such well owner or operator owns or leases and request
2 approval from the department for classification of the well as
3 an orphan well. Information regarding wells to be registered or
4 identified shall be provided on forms or in a manner prescribed
5 by the department and shall include:
6 (1) The name and address of the well operator and, if
7 the well operator is a corporation, partnership or a person
8 nonresident of the Commonwealth, there shall be designated on
9 the well registration application the name and address of an
10 agent for such operator upon whom notices, orders, process or
11 other communications issued pursuant to this act may be
12 served.
13 (2) The well name of such well and the location of the
14 well indicated by a point on a 7 1/2 minute United States
15 Geological Survey topographic map or any other location
16 description sufficient to enable the department to locate the
17 well on the ground.
18 (3) The approximate date of the drilling, completion of
19 said well and the approximate depth of said well, the
20 producing horizons, well construction information and
21 driller's logs, if available.
22 (4) An indemnity bond [or], an alternative fee in lieu
23 of bonding or such other evidence of financial security
24 submitted by the well operator and deemed appropriate by the
25 department and satisfying the requirements of section 215:
26 Provided, however, That no bond, alternative fee or other
27 evidence of financial security shall be required for
28 identification of an orphan well.
29 (5) A registration fee of $15 per well[, except that the
30 department may establish] or a blanket registration fee [not
19910H0866B1367 - 6 -
1 to exceed $250 where] of $250 for multiple well registration
2 applications which are submitted simultaneously [for wells
3 that are part of the same development project. The blanket
4 registration fee shall bear a reasonable relationship to the
5 administrative costs associated with processing such multiple
6 well registration applications]. The registration fee shall
7 be waived for a period of one year from the effective date of
8 this amendatory act, and no fee shall be charged for
9 identification of an orphan well.
10 (a.1) Well owners or operators who discover abandoned wells
11 on property purchased or leased by them after expiration of the
12 one-year period provided in subsection (a) shall identify such
13 well to the department within 60 days of discovery and advise
14 the department that they are seeking classification of such well
15 as an orphan well. No fee shall be required for such
16 identification.
17 (a.2) Persons who are not well owners or operators and who
18 discover an abandoned well on property owned or leased by them
19 shall identify such well to the department within 60 days of
20 discovery and advise the department that they are seeking
21 classification for such well as an orphan well. No fee shall be
22 required for such identification.
23 * * *
24 Section 5. Sections 204, 210, 212(a) and 213 of the act are
25 amended to read:
26 Section 204. Inactive status.
27 (a) Upon application, the department [may] shall grant
28 inactive status for a period of ten FIVE years for any permitted <--
29 or registered well [which satisfies] provided the following
30 requirements are met:
19910H0866B1367 - 7 -
1 (1) the condition of the well is sufficient to prevent
2 damage to the producing zone or contamination of fresh water
3 or other natural resources or surface leakage of any
4 substance;
5 (2) the condition of the well is sufficient to stop the
6 vertical flow of fluids or gas within the well bore and
7 [which] is adequate to protect freshwater aquifers, [if]
8 unless the department determines the well poses a threat to
9 the health and safety of persons or property or to the
10 environment;
11 (3) [the applicant certifies that the well is of future
12 utility and presents a viable plan for utilizing the well
13 within a reasonable time] the operator anticipates future use
14 of the well for primary or enhanced recovery, future gas
15 storage, or the operator anticipates the construction of a
16 pipeline, for approved disposal or other appropriate uses
17 related to oil and gas well production; and
18 (4) the applicant satisfies the bonding requirements of
19 section 215, except that the department may require
20 additional financial security for any well on which an
21 alternative fee is being paid in lieu of bonding under
22 section 215(d).
23 (b) The owner or operator of any well granted inactive
24 status shall be responsible for monitoring the mechanical
25 integrity of such well to insure that the requirements of
26 subsection (a)(1) and (2) are met and shall report the same on
27 an annual basis to the department in a manner and form as the
28 department shall prescribe by regulation.
29 [(c) Approval of inactive status under this section shall be
30 valid for a period of five years unless renewed pursuant to the
19910H0866B1367 - 8 -
1 requirements of this section. The department shall have the
2 right to revoke such status and order the immediate plugging of
3 said well if it is in violation of this act or any other
4 statute, rule or regulation administered by the department or
5 upon receipt by the department of notice of bankruptcy
6 proceedings by the permittee.]
7 (c) Any well granted inactive status pursuant to subsection
8 (a) shall be plugged in accordance with section 210 or returned
9 to active status within ten FIVE years of the date inactive <--
10 status was granted, unless the owner or operator applies for an
11 extension of inactive status which may be granted on a year-to-
12 year basis if the department determines that the owner or
13 operator has demonstrated his ability to continue to meet the
14 requirements of this section, and the owner or operator
15 certifies that the well will be of future use within a
16 reasonable period of time. An owner or operator who has been
17 granted inactive status for a well which is returned to active
18 status prior to expiration of the ten-year FIVE-YEAR period set <--
19 forth in subsection (a) shall notify the department that the
20 well has been returned to active status and shall not be
21 permitted to apply for another automatic ten-year FIVE-YEAR <--
22 period of inactive status for such well. The owner or operator
23 may make application to return the well to inactive status, and
24 such application may be approved on a year-to-year basis if the
25 department determines that the owner or operator has
26 demonstrated an ability to continue to meet the requirements of
27 this section, and the owner or operator certifies that the well
28 will be of future use within a reasonable period of time. The
29 department shall approve or deny an application to extend a
30 period of inactive status or to return a well to inactive status
19910H0866B1367 - 9 -
1 within 60 days of receipt of such application, and such
2 application shall not be unreasonably denied. If the department
3 has not completed its review of the application within 60 days,
4 the inactive status shall be presumed to be renewed. If the
5 department denies an application to extend the period of
6 inactive status or to return a well to inactive status, a well
7 owner or operator aggrieved thereby shall have the right to
8 appeal such denial to the Environmental Hearing Board within 30
9 days of receipt of such denial. Upon cause shown by a well owner
10 or operator, the board may grant a supersedeas pursuant to
11 section 4 of the act of July 13, 1988 (P.L.530, No.94), known as
12 the Environmental Hearing Board Act, in order that the well in
13 question may retain inactive status during the period of appeal.
14 (d) The department shall have the right to revoke inactive
15 status and order the immediate plugging of a well if it is in
16 violation of this act or rules or regulations promulgated
17 thereunder, or if the owner or operator demonstrates inability
18 to perform his obligations under this act or becomes financially
19 insolvent, or upon receipt by the department of notice of
20 bankruptcy proceedings by the permittee.
21 Section 210. Plugging requirements.
22 (a) Upon abandoning any well, the owner or operator thereof
23 shall plug the well in a manner prescribed by regulation of the
24 department in order to stop any vertical flow of fluids or gas
25 within the well bore unless the department has granted inactive
26 status for such well pursuant to section 204[.] or the well has
27 been approved by the department as an orphan well pursuant to
28 section 203. Where the department determines that a prior owner
29 or operator received economic benefit, other than economic
30 benefit derived only as a landowner or from a royalty interest,
19910H0866B1367 - 10 -
1 subsequent to April 18, 1979, from an orphan well or from a well
2 which has not been registered, such owner or operator shall be
3 responsible for the plugging of the well. Where, in the case of
4 gas wells penetrating workable coal seams which were drilled
5 prior to the effective date of the Gas Operations Well-Drilling
6 Petroleum and Coal Mining Act or which were permitted after such
7 date but not plugged in accordance with this act, the owner or
8 operator of such a well, or a coal operator or his agent,
9 proposes to plug such well for the purpose of allowing the
10 mining through of it, the gas well shall be cleaned out to a
11 depth of at least 200 feet below the coal seam in which the
12 mining through is proposed and unless impracticable, to a point
13 200 feet below the deepest minable coal seam. Such gas well
14 shall be plugged from that depth in accordance with the
15 provisions of section 13 of the act of December 18, 1984
16 (P.L.1069, No.214), known as the Coal and Gas Resource
17 Coordination Act, and the regulations of the department.
18 (b) Prior to the abandonment of any well in an area
19 underlain by a workable coal seam, the well operator or owner
20 shall notify the coal operator, lessee or owner and the
21 department of his intention to plug and abandon any such well
22 and submit a plat, on a form to be furnished by the department,
23 showing the location of the well and fixing the date and time at
24 which the work of plugging will be commenced, which time shall
25 be not less than [72 hours] three working days after the time
26 when such notice is received, nor more than 30 days thereafter
27 in order that their representatives may be present at the
28 plugging of the well. Such notice may be waived by the
29 department and said coal operator, lessee or owner, and any of
30 them may likewise waive their right to be present, but such
19910H0866B1367 - 11 -
1 waiver by coal operator, lessee or owner shall be in writing and
2 a copy thereof attached to the notice of abandonment, filed with
3 the department under this section. Whether or not such
4 representatives appear, the well operator may, if he has fully
5 complied with the requirements of this section, proceed at the
6 time fixed, to plug the well in the manner as prescribed by
7 regulation of the department. When such plugging has been
8 completed, a certificate shall be prepared and signed, on a form
9 to be furnished by the department, by two experienced and
10 qualified people who participated in the work setting forth the
11 time and manner in which the well has been plugged. One copy of
12 this certificate shall be mailed to each coal operator, lessee
13 or owner to whom notice was given by certified mail and another
14 copy shall be mailed to the department.
15 (c) Prior to the abandonment of any well, except an
16 uncompleted bore hole plugged immediately upon suspension of
17 drilling in an area not underlain by a workable coal seam, the
18 well operator shall notify the department of his intention to
19 plug and abandon any such well and submit a plat, on a form to
20 be furnished by the department, showing the location of the well
21 and fixing the date and time at which the work of plugging will
22 be commenced, which time shall not be less than [72 hours] three
23 working days nor more than 30 days after the time [of mailing]
24 when such notice is received, in order that the department
25 representative may be present at the plugging of the well. Such
26 notice or waiting period may be verbally waived by the
27 department. In noncoal areas where more than one well has been
28 drilled as part of the same development project and these wells
29 are now to be plugged, it is required that the department be
30 given [72 hours'] three working days' notice prior to plugging
19910H0866B1367 - 12 -
1 the first well of such project subject to waiver of notice
2 described herein. In the plugging of subsequent wells, no
3 additional notice shall be required if the plugging on the
4 project is continuous. If the plugging of subsequent wells is
5 delayed for any reason, notice shall be given to the department
6 of the continuation of such project. Whether or not such
7 department representative appears, the well operator may, if he
8 has fully complied with the requirements of this section,
9 proceed at the time fixed to plug the well in the manner as
10 prescribed by regulation of the department. When such plugging
11 has been completed, a certificate shall be prepared, on a form
12 to be furnished by the department, by two experienced and
13 qualified people who participated in the work, setting forth the
14 time and manner in which the well was plugged. A copy of this
15 certificate shall be mailed to the department.
16 (d) Whenever any well is to be abandoned immediately after
17 completion of drilling, the well operator shall give at least 24
18 hours' notice by telephone, confirmed by certified mail, to the
19 department and to the coal operator, lessee or owner, if any,
20 fixing the date and time at which the work of plugging will be
21 commenced. Such notice may be waived by the department and said
22 coal operator, lessee or owner, and any of them may likewise
23 waive their right to be present. Whether or not any
24 representative of the department or of the coal operator, lessee
25 or owner, if any, appear, the well operator may, if he has fully
26 complied with the requirements of this section, proceed at the
27 time fixed, to plug the well in the manner provided by
28 regulation prescribed by the department. The well operator shall
29 prepare the certificate of plugging and mail copies of the same
30 as provided in subsections (b) and (c).
19910H0866B1367 - 13 -
1 (e) If a well is an orphan well or abandoned without
2 plugging or if a well is in operation but is not registered
3 pursuant to section 203, the department shall have the right to
4 enter upon the well site and plug the [abandoned] well and to
5 sell such equipment, casing and pipe at the abandoned well or
6 unregistered well site as may have been used in the production
7 of the well in order to recover the costs of plugging. In the
8 case of a well which is in operation but has not been
9 registered, the department shall make an effort to determine
10 ownership of such well and provide written notice to such owner
11 of pending action which may be taken pursuant to this
12 subsection. If the department cannot determine ownership of the
13 well within 30 days, it may proceed pursuant to this subsection.
14 [Said costs] Costs of plugging shall have priority over all
15 liens on said equipment, casing and pipe, and said sale shall be
16 free and clear of any such liens to the extent the costs of
17 plugging exceed the sale price. If the equipment price obtained
18 for casing and pipe salvaged at the abandoned well or
19 unregistered well site is inadequate to pay for the cost of
20 plugging the abandoned or unregistered well, the owner or
21 operator of the abandoned or unregistered well shall be legally
22 liable for the additional costs of plugging the well.
23 Section 212. Well reporting requirements.
24 (a) Every well operator shall file with the department, on a
25 form provided by the department, an annual report specifying the
26 amount of production [from each well on an individual well
27 basis. Where said data is not available on a well basis, it may
28 be reported] on the most well-specific basis available. Annual
29 reports shall also specify the status of each well; however, in
30 subsequent years, only changes in the status need be reported.
19910H0866B1367 - 14 -
1 [All such reports shall be kept confidential for one year after
2 the date the information is required to be filed hereunder. Upon
3 request of the well operator, the department shall extend the
4 period of confidentiality for four years. The total period of
5 confidentiality shall not exceed] The department shall keep all
6 such reports confidential for five years: Provided, however,
7 That the [department] Commonwealth shall have the right to
8 utilize such information in enforcement proceedings, in making
9 designations or determinations under section 1927-A of the act
10 of April 9, 1929 (P.L.177, No.175), known as The Administrative
11 Code of 1929, or in aggregate form for statistical purposes.
12 * * *
13 Section 213. Notification and effect of well transfer.
14 The owner or operator of any well shall notify the
15 department, in writing, in such form as the department may
16 direct by regulation, of the sale, assignment, transfer,
17 conveyance or exchange by the owner or to the owner of such well
18 within 30 days after such sale, assignment, conveyance or
19 exchange. No such transfer shall relieve the well owner or
20 operator of any [liability] obligation accrued under this act,
21 nor shall it relieve him of the obligation to plug said well
22 until the requirements of section 215 have been met, after which
23 time the transferring owner or operator shall be relieved from
24 any obligation under this act including the obligation to plug
25 said well.
26 Section 6. Section 215 of the act, amended October 9, 1986
27 (P.L.1431, No.135), is amended to read:
28 Section 215. Bonding.
29 (a) (1) Except as provided in section 104 and subsections
30 (d) and (d.1) [hereof] of this section, upon filing an
19910H0866B1367 - 15 -
1 application for a well permit and before continuing to
2 operate any oil or gas well, the owner or operator thereof
3 shall file with the department a bond for the well and the
4 well site on a form to be prescribed and furnished by the
5 department. Any such bond filed with an application for a
6 well permit shall be payable to the Commonwealth and
7 conditioned that the operator shall faithfully perform all of
8 the drilling, water supply replacement, restoration and
9 plugging requirements of this act. Any such bond filed with
10 the department for a well in existence on the effective date
11 of this act shall be payable to the Commonwealth and
12 conditioned that the operator shall faithfully perform all of
13 the water supply replacement, restoration and plugging
14 requirements of this act. The amount of the bond required
15 shall be in the amount of $2,500 per well for at least two
16 years following the effective date of this act, after which
17 time the bond amount may be adjusted by the Environmental
18 Quality Board every two years to reflect the projected costs
19 to the Commonwealth of performing well plugging.
20 (2) In lieu of individual bonds for each well, an owner
21 or operator may file a blanket bond, on a form prepared by
22 the department, covering all of its wells in Pennsylvania as
23 enumerated on the bond form. A blanket bond shall be in the
24 amount of $25,000 for at least two years following the
25 effective date of this act, after which time the bond amount
26 may be adjusted by the Environmental Quality Board every two
27 years to reflect the projected costs to the Commonwealth of
28 performing well plugging.
29 (3) Liability under such bond shall continue until the
30 well has been properly plugged in accordance with this act
19910H0866B1367 - 16 -
1 and for a period of one year after filing of the certificate
2 of plugging with the department. Each bond shall be executed
3 by the operator and a corporate surety licensed to do
4 business in the Commonwealth and approved by the secretary.
5 The operator may elect to deposit cash, [bank] certificates
6 of deposit[,] or automatically renewable irrevocable [bank]
7 letters of credit from financial institutions chartered or
8 authorized to do business in Pennsylvania and regulated and
9 examined by the Commonwealth or a Federal agency which may be
10 terminated [by the bank] at the end of a term only upon the
11 [bank] financial institution giving 90 days prior written
12 notice to the permittee and the department or negotiable
13 bonds of the United States Government or the Commonwealth,
14 the Pennsylvania Turnpike Commission, the General State
15 Authority, the State Public School Building Authority or any
16 municipality within the Commonwealth, or United States
17 Treasury Bonds issued at a discount without a regular
18 schedule of interest payments to maturity, otherwise known as
19 Zero Coupon Bonds, having a maturity date of not more than
20 ten years after the date of purchase and at such maturity
21 date having a value of not less than $25,000, with the
22 department in lieu of a corporate surety. The cash deposit,
23 [bank] certificate of deposit, amount of such irrevocable
24 letter of credit or market value of such securities shall be
25 equal at least to the sum of the bond. The secretary shall,
26 upon receipt of any such deposit of cash, letters of credit
27 or negotiable bonds, immediately place the same with the
28 State Treasurer, whose duty it shall be to receive and hold
29 the same in the name of the Commonwealth, in trust, for the
30 purpose for which such deposit is made. The State Treasurer
19910H0866B1367 - 17 -
1 shall at all times be responsible for the custody and
2 safekeeping of such deposits. The operator making deposit
3 shall be entitled from time to time to demand and receive
4 from the State Treasurer, on the written order of the
5 secretary, the whole or any portion of any collateral so
6 deposited, upon depositing with him, in lieu thereof, other
7 collateral of the classes herein specified having a market
8 value at least equal to the sum of the bond, and also to
9 demand, receive and recover the interest and income from said
10 negotiable bonds as the same becomes due and payable. Where
11 negotiable bonds, deposited as aforesaid, mature or are
12 called, the State Treasurer, at the request of the owner
13 thereof, shall convert such negotiable bonds into such other
14 negotiable bonds of the classes herein specified as may be
15 designated by the owner. Where notice of intent to terminate
16 a letter of credit is given, the department shall give the
17 operator 30 days' written notice to replace the letter of
18 credit with other acceptable bond guarantees as provided
19 herein and, if the owner or operator fails to replace the
20 letter of credit within the 30-day notification period, the
21 department shall draw upon and convert such letter of credit
22 into cash and hold it as a collateral bond guarantee.
23 (b) No bond shall be fully released until all requirements
24 of this act identified in subsection (a) or section 213 are
25 fully met. Upon release of all of the bonds and collateral as
26 herein provided, the State Treasurer shall immediately return to
27 the owner the amount of cash or securities specified therein.
28 (c) If the well owner or operator fails or refuses to comply
29 with the applicable requirements of this act identified in
30 subsection (a), the regulations promulgated hereunder or the
19910H0866B1367 - 18 -
1 conditions of the permit relating thereto, the department may
2 declare the bond forfeited and shall certify the same to the
3 Attorney General, who shall proceed to enforce and collect the
4 full amount of the bond and, where the owner or operator has
5 deposited cash or securities as collateral in lieu of a
6 corporate surety, the department shall declare said collateral
7 forfeited and shall direct the State Treasurer to pay the full
8 amount of said funds into the Well Plugging Restricted Revenue
9 Account or to proceed to sell said security to the extent
10 forfeited and pay the proceeds thereof into the Well Plugging
11 Restricted Revenue Account. Should any corporate surety or
12 [bank] financial institution fail to promptly pay, in full, a
13 forfeited bond, it shall be disqualified from writing any
14 further bonds under the act or any other environmental act
15 administered by the department. Any person aggrieved by reason
16 of forfeiting the bond or converting collateral, as herein
17 provided, shall have a right to appeal to the Environmental
18 Hearing Board in the manner provided by law. Upon forfeiture of
19 a blanket bond for a violation occurring at one or more well
20 sites, the person whose bond is forfeited shall submit a
21 replacement bond to cover all other wells of which he is owner
22 or operator within ten days of said forfeiture. Failure to
23 submit said replacement bond constitutes a violation of this
24 section as to each of the wells owned or operated by said
25 person.
26 (d) (1) Any [well] operator of not more than 200 50 wells <--
27 who cannot obtain a bond for a well drilled prior to [the
28 effective date of this act] April 18, 1985, as required under
29 subsection (a), due to an inability to demonstrate sufficient
30 financial resources [shall submit to the department letters
19910H0866B1367 - 19 -
1 of rejection from three separate bonding companies licensed
2 to do business in the Commonwealth. Such letters shall state
3 that the operator has been denied a bond and state the
4 grounds for denial of the bond. In] may, in lieu of the
5 bond[, the operator shall submit]:
6 (i) Submit to the department a fee in the amount of
7 $50 per well, or a blanket fee of $500 for ten to 20
8 wells, or a blanket fee of $1,000 for more than 20 wells,
9 which shall be a nonrefundable fee paid each year that
10 the operator has not filed a bond with the department.
11 [The operator must demonstrate every three years a
12 continued inability to obtain a bond as prescribed
13 above.] All fees collected in lieu of a bond under this
14 subsection shall be paid into the Well Plugging
15 Restricted Revenue Account and shall be used for the
16 purposes authorized by this act. The Environmental
17 Quality Board shall have the power, by regulation, to
18 increase the amount of the fees established under this
19 subsection [if it is found that the total moneys
20 collected hereunder are insufficient to reimburse the
21 Commonwealth for costs incurred in correcting violations
22 on wells covered under this subsection].
23 (ii) (A) Make phased deposits of collateral to
24 fully collateralize the bond. Such payment shall be
25 based on the number of wells the operator owns or
26 operates. The operator shall make an initial deposit
27 and shall, thereafter, make annual deposits in
28 accordance with the schedule in clause (B). Interest
29 accumulated by the collateral shall become a part of
30 the bond until such time as the collateral, plus
19910H0866B1367 - 20 -
1 accumulated interest, equals the amount of the
2 required bond. The collateral shall be deposited, in
3 trust, with the State Treasurer, as provided in this
4 subsection, or with a bank selected by the department
5 which shall act as trustee for the benefit of the
6 Commonwealth, to guarantee the operator's compliance
7 with the drilling, water supply replacement,
8 restoration and plugging requirements of this act.
9 The operator shall be required to pay all costs of
10 the trust.
11 (B) An operator of up to ten existing wells who
12 does not intend to operate additional wells shall
13 deposit $250 per well and shall, thereafter, annually
14 deposit $50 per well until the obligations of this
15 section are fully met. An operator of 11 to 25 wells
16 or an operator of up to ten wells who applies for one
17 or more permits for additional wells shall deposit
18 $2,000 and shall, thereafter, annually deposit
19 $1,150, plus $150 for each additional well to be
20 permitted that year, until the obligations of this
21 section are fully met. An operator or 26 to 50 wells
22 shall deposit $3,000, and shall, thereafter, annually
23 deposit $1,300, plus $400 for each additional well to
24 be permitted that year, until the obligations of this
25 section are fully met. An operator of 51 to 100 wells <--
26 shall deposit $4,000 and shall, thereafter, annually
27 deposit $1,500, plus $400 for each additional well to
28 be permitted that year, until the obligations of this
29 section are fully met. Operators of 101 to 200 wells
30 shall deposit $8,000 and shall, thereafter, annually
19910H0866B1367 - 21 -
1 deposit $1,600, plus $1,000 for each additional well
2 to be permitted that year until the obligations of
3 this section are fully met. Operators of more than
4 200 50 wells shall fully bond their wells <--
5 immediately. The department shall reduce the amount
6 of phased collateral payments or the period of time
7 over which phased collateral payments shall be made
8 on behalf of owners or operators who, prior to the
9 effective date of this amendatory act, have paid a
10 fee in lieu of bond pursuant to subsection (d)(1)(i),
11 and who, within one year of the effective date of
12 this amendatory act, choose to enter the phased
13 collateral program pursuant to subsection (d)(1)(ii)
14 rather than to continue to make payments in lieu of
15 bond. Payments made in lieu of bond prior to the
16 effective date of this amendatory act shall not be
17 credited in any other manner, nor shall the
18 department be required to refund such fees at any
19 time. The Environmental Quality Board shall have the
20 power, by regulation, to change the annual deposits
21 established under this clause if it is found to be
22 necessary to accommodate a change in the amount of
23 the bond required under this section.
24 (2) An operator may continue to pay a fee in lieu of
25 bond or make phased deposits of collateral to fully
26 collateralize the bond so long as the operator does not miss
27 any payments for wells as provided under this subsection and
28 so long as the operator remains in compliance with the
29 provisions of this act and regulations and permits issued
30 thereunder. If an operator has missed any payments for wells
19910H0866B1367 - 22 -
1 as provided under this subsection, the operator shall:
2 (i) immediately submit the appropriate bond amount
3 in full; or
4 (ii) cease all operations and plug the wells in
5 accordance with section 210.
6 (d.1) (1) An individual who cannot obtain a bond to drill
7 new wells due to an inability to demonstrate financial
8 resources, [as evidenced by letters of rejection as required
9 under subsection (d),] may meet the collateral bond
10 requirements of subsection (a) by making phased deposits of
11 collateral to fully collateralize the bond. Such individuals
12 shall be limited to drilling [two] ten new wells per calendar
13 year. The individual shall, for each well to be drilled,
14 deposit $500 and shall, thereafter, annually deposit 10% of
15 the remaining bond amount for a period of ten years. Interest
16 accumulated by the collateral shall become a part of the bond
17 until such time as the collateral, plus accumulated interest,
18 equals the amount of the required bond. The collateral shall
19 be deposited, in trust, with the State Treasurer as provided
20 in subsection (a) or with a bank selected by the department
21 which shall act as trustee for the benefit of the
22 Commonwealth, to guarantee the individual's compliance with
23 the drilling, water supply replacement, restoration and
24 plugging requirements of this act. The individual shall be
25 required to pay all costs of the trust.
26 (2) Individuals may continue to use phased collateral to
27 obtain permits so long as they have not missed any payments
28 for wells drilled under this provision and so long as they
29 remain in compliance with this act[,] and regulations and
30 permits issued thereunder. If an individual has missed any
19910H0866B1367 - 23 -
1 payments for wells under this subsection, the operator shall:
2 (i) immediately submit the appropriate bond amount
3 in full; or
4 (ii) cease all operations and plug the wells in
5 accordance with section 210.
6 For the purposes of this subsection an "individual" is defined
7 as an applicant who is a natural person doing business under his
8 own name.
9 (e) All remedies for violation of this act, the regulations
10 adopted hereunder or the conditions of permits are expressly
11 preserved. Nothing in [subsections (a), (b) and (c)] this
12 section shall be construed as an exclusive penalty or remedy for
13 such violations of law. No action taken pursuant to [subsection
14 (c)] this section shall waive or impair any other remedy or
15 penalty provided in law.
16 (f) Owners or operators who have failed to meet the
17 requirements of this section prior to the effective date of this
18 amendatory act shall not be required to make payments pursuant
19 to this section on a retroactive basis as a condition of
20 obtaining a permit under this act.
21 SECTION 7. THE ACT IS AMENDED BY ADDING A SECTION TO READ: <--
22 SECTION 217. RESPONSIBILITY OF WELL OPERATOR TO PROVIDE
23 ACCURATE ACCOUNTING.
24 (A) A WELL OPERATOR SHALL PROVIDE EACH PERSON WHO HAS
25 LEASED, SOLD OR OTHERWISE CONVEYED TO THE WELL OPERATOR THE
26 RIGHT TO REMOVE OR RECOVER OIL OR GAS FROM REAL PROPERTY WITH A
27 STATEMENT WHICH SHALL ACCOMPANY EACH PAYMENT TO SUCH PERSON AND
28 WHICH SHALL SPECIFY THE PRODUCTION FROM THAT PROPERTY FOR THE
29 PERIOD COVERED BY THE PAYMENT.
30 (B) UPON THE WRITTEN REQUEST OF A PERSON WHO HAS LEASED,
19910H0866B1367 - 24 -
1 SOLD OR OTHERWISE CONVEYED TO THE WELL OPERATOR THE RIGHT TO
2 REMOVE OR RECOVER OIL OR GAS FROM REAL PROPERTY, AND IN THE
3 PRESENCE OF THE WELL OPERATOR AND SUCH PERSON, IF EITHER SO
4 DESIRES, THE DEPARTMENT SHALL INSPECT, OR CAUSE TO BE INSPECTED,
5 FOR ACCURACY ANY METER USED BY THE WELL OPERATOR TO MEASURE THE
6 PRODUCTION FROM THE PROPERTY IN QUESTION. THE WELL OPERATOR
7 SHALL REPLACE OR REPAIR SUCH METER WITHIN A REASONABLE TIME IF
8 THE DEPARTMENT DETERMINES THAT THE METER IS NOT ACCURATE WITHIN
9 COMMERCIALLY REASONABLE LIMITS OF ACCURACY. AN INSPECTION FEE
10 SHALL BE CHARGED, IN ACCORDANCE WITH A FEE SCHEDULE ESTABLISHED
11 BY DEPARTMENT REGULATIONS, TO THE PERSON REQUESTING THE
12 INSPECTION, EXCEPT THAT SUCH FEE SHALL BE CHARGED TO THE WELL
13 OPERATOR IF THE DEPARTMENT DETERMINES THAT THE METER IS NOT
14 ACCURATE WITHIN COMMERCIALLY REASONABLE LIMITS.
15 (C) THE DEPARTMENT SHALL PROMULGATE SUCH RULES AND
16 REGULATIONS AS ARE NECESSARY TO CARRY OUT THE PROVISIONS OF THIS
17 SECTION.
18 Section 7 8. Section 505 of the act is amended by adding a <--
19 subsection to read:
20 Section 505. Penalties.
21 * * *
22 (d) Any person who fails to register a well pursuant to the
23 provisions of this amendatory act shall be subject to pay a fine
24 of $2,500 per well to a maximum of $25,000 in addition to any
25 other fines provided by this act.
26 Section 8 9. The heading of section 508 of the act is <--
27 amended and the section is amended by adding a subsection to
28 read:
29 Section 508. Production of materials; witnesses; depositions;
30 rights of entry; determination of compliance.
19910H0866B1367 - 25 -
1 * * *
2 (f) Any purchaser of oil or gas shall, upon request, provide
3 to the department information as may be necessary for the
4 department to determine ownership of facilities from which such
5 oil or gas was obtained. Such information shall be kept
6 confidential for a period of five years. The department shall
7 have the right to utilize such information in enforcement
8 proceedings.
9 Section 9 10. Sections 509, 601 and 602 of the act are <--
10 amended to read:
11 Section 509. Unlawful conduct.
12 It shall be unlawful for any person to:
13 (1) Drill, alter, operate or utilize an oil or gas well
14 without a permit or registration from the department as
15 required by this act or in violation of the rules or
16 regulations adopted under this act, or orders of the
17 department, or in violation of any term or condition of any
18 permit issued by the department.
19 (2) Conduct any activities related to drilling for, or
20 production of, oil and gas, contrary to the rules or
21 regulations adopted under this act, or orders of the
22 department, or any term or any condition of any permit, or in
23 any manner as to create a public nuisance or to adversely
24 affect the public health, safety, welfare or the environment.
25 (3) Refuse, obstruct, delay or threaten any agent or
26 employee of the department in the course of lawful
27 performance of any duty under this act, including, but not
28 limited to, entry and inspection [under any circumstances].
29 (4) Attempt to obtain a permit or identify a well as an
30 orphan well by misrepresentation or failure to disclose all
19910H0866B1367 - 26 -
1 relevant facts.
2 (5) Cause the abandonment of a well by removal of casing
3 or equipment necessary for production without plugging the
4 well in a manner prescribed pursuant to section 210. The
5 owner or operator of a well may only temporarily remove
6 casing or equipment necessary for production if it is part of
7 the normal course of production activities.
8 Section 601. [Well Plugging Restricted Revenue Account.] Well
9 plugging funds.
10 (a) All fines, civil penalties, permit and registration fees
11 collected under this act [shall be paid into the State Treasury
12 into a restricted revenue account to be known as the Well
13 Plugging Restricted Revenue Account, hereby established, which
14 shall be administered by the department for the plugging and
15 sealing of abandoned wells and to cover the purposes of
16 administering this act. All the moneys from time to time paid
17 into the Well Plugging Restricted Revenue Account are
18 specifically appropriated, upon annual approval by the
19 Governor,] are hereby appropriated to the Department of
20 Environmental Resources to carry out the purposes of this act.
21 (b) To aid in the indemnification of the Commonwealth for
22 the cost of plugging abandoned wells, there shall be added to
23 the permit fee established by the department under section 201
24 for new wells a $50 surcharge. All moneys [deposited in this
25 restricted revenue account from the surcharge] collected as a
26 result of this surcharge shall be paid into the State Treasury
27 into a restricted revenue account to be known as the Abandoned
28 Well Plugging Fund, hereby established, and shall be expended by
29 the department to plug abandoned wells which threaten the health
30 and safety of persons or property or pollution of the waters of
19910H0866B1367 - 27 -
1 the Commonwealth.
2 (c) (1) There is hereby created a restricted revenue <--
3 account to be known as the Orphan Well Plugging Fund. There
4 shall be added to the permit fee established by the
5 department under section 201 for new wells a $100 surcharge
6 for wells to be drilled for oil production and a $200
7 surcharge for wells to be drilled for gas production, which
8 surcharges shall be placed in the Orphan Well Plugging Fund
9 and shall be expended by the department to plug orphan wells.
10 (C) (1) THERE IS HEREBY CREATED A RESTRICTED REVENUE <--
11 ACCOUNT TO BE KNOWN AS THE ORPHAN WELL PLUGGING FUND. THERE
12 SHALL BE ADDED TO THE PERMIT FEE ESTABLISHED BY THE
13 DEPARTMENT UNDER SECTION 201, SURCHARGES ON NEW DRILLING AS
14 FOLLOWS:
15 (I) FOR NEW WELLS, A $100 SURCHARGE FOR WELLS TO BE
16 DRILLED FOR OIL PRODUCTION AND A $200 SURCHARGE FOR WELLS
17 TO BE DRILLED FOR GAS PRODUCTION; AND
18 (II) FOR NEW WELLS, A SURCHARGE OF 25¢ PER FOOT TO
19 THE DRILLED DEPTH OF THE WELL.
20 If an operator rehabilitates a well abandoned by another
21 operator or an orphan well, the permit fee and the surcharge <--
22 SURCHARGES for such well shall be waived. <--
23 (2) The department shall conduct a study of its
24 experience in implementing this section and shall report its
25 findings to the Governor and the General Assembly within five
26 years of the effective date of this amendatory act. The
27 report shall contain information relating to the balance of
28 the fund, the number of wells plugged, the number of
29 identified wells eligible for plugging, and any
30 recommendations on alternative funding mechanisms.
19910H0866B1367 - 28 -
1 Section 602. Local ordinances.
2 Except with respect to ordinances adopted pursuant to the act
3 of July 31, 1968 (P.L.805, No.247), known as the Pennsylvania
4 Municipalities Planning Code and the act of October 4, 1978
5 (P.L.851, No.166), known as the Flood Plain Management Act, all
6 local ordinances and enactments purporting to regulate oil and
7 gas well operations regulated by this act are hereby superseded.
8 No ordinances or enactments adopted pursuant to the
9 aforementioned acts shall contain provisions which impose
10 conditions, requirements or limitations on the same features of
11 oil and gas well operations regulated by this act or that
12 accomplish the same purposes as set forth in this act. The
13 Commonwealth, by this enactment, hereby preempts and supersedes
14 the regulation of oil and gas wells as herein defined.
15 Section 10 11. Section 603.1 of the act, added October 9, <--
16 1986 (P.L.1431, No.135), is amended to read:
17 Section 603.1. Relationship to solid waste and surface mining.
18 (a) The obligation to obtain a permit and post a bond
19 pursuant to Articles III and V of the act of July 7, 1980
20 (P.L.380, No.97), known as the Solid Waste Management Act, and
21 to provide public notice pursuant to section 1905-A(b)(1)(v) of
22 the act of April 9, 1929 (P.L.177, No.175), known as The
23 Administrative Code of 1929, for any pit, impoundment, method or
24 facility employed for the disposal, processing or storage of
25 residual wastes generated by the drilling of an oil or gas well
26 or from the production of such wells which is located on the
27 well site shall be satisfied if the owner or operator of the
28 well meets the following conditions:
29 (1) the well is permitted pursuant to the requirements
30 of section 201 or registered pursuant to the requirements of
19910H0866B1367 - 29 -
1 section 203;
2 (2) the owner or operator satisfies the financial
3 security requirements of section 215 by obtaining a surety or
4 collateral bond for the well and well site; and
5 (3) the owner or operator maintains compliance with
6 [the] this act and any applicable regulations promulgated by
7 the Environmental Quality Board.
8 (b) Obligations under the act of December 19, 1984
9 (P.L.1093, No.219), known as the Noncoal Surface Mining
10 Conservation and Reclamation Act, or any rule or regulation
11 promulgated thereunder, for any borrow area where minerals are
12 extracted solely for the purpose of oil and gas well
13 development, including access road construction, shall be
14 satisfied if the owner or operator of the well meets the
15 conditions imposed under subsection (a)(1) and (2) and the owner
16 or operator maintains compliance with this act and any
17 applicable regulations promulgated by the Environmental Quality
18 Board.
19 [(b)] (c) Nothing in this section shall diminish any other
20 duties or obligations that an owner or operator may have under
21 the Solid Waste Management Act. The provisions of this section
22 shall not apply to any waste which is classified as a hazardous
23 waste pursuant to the Solid Waste Management Act, or the
24 Resource Conservation and Recovery Act of 1976 (Public Law 94-
25 580, 90 Stat. 2795, 42 U.S.C. § 6901 et seq.).
26 [(c)] (d) As used in this section and sections 206 and 215,
27 the term "well site" means the areas occupied by all equipment
28 or facilities necessary for or incidental to the drilling,
29 production or plugging of a well.
30 Section 11 12. This act shall take effect in 30 days. <--
L13L58JLW/19910H0866B1367 - 30 -