THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GEORGE, BARBIN, BRADFORD, BRIGGS, CALTAGIRONE, COHEN, DEASY, DeLUCA, GOODMAN, HALUSKA, HESS, HORNAMAN, JOSEPHS, MUNDY, MURPHY, MURT, M. O'BRIEN, SANTARSIERO, SCHRODER, K. SMITH, STURLA, VITALI, WAGNER AND YOUNGBLOOD, MARCH 9, 2011

REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, MARCH 9, 2011  

AN ACT

Amending the act of December 19, 1984 (P.L.1140, No.223),

entitled "An act relating to the development of oil and gas

and coal; imposing duties and powers on the Department of

Environmental Resources; imposing notification requirements

to protect landowners; and providing for definitions, for

various requirements to regulate the drilling and operation

of oil and gas wells, for gas storage reservoirs, for various

reporting requirements, including certain requirements

concerning the operation of coal mines, for well permits, for

well registration, for distance requirements, for well casing

requirements, for safety device requirements, for storage

reservoir obligations, for well bonding requirements, for a

Well Plugging Restricted Revenue Account to enforce oil and

gas well plugging requirements, for the creation of an Oil

and Gas Technical Advisory Board, for oil and gas well

inspections, for enforcement and for penalties," further

providing for definitions, for well permits, for well

location restrictions, for protection of fresh groundwater

and casing requirements and for protection of water supplies;

providing for hydraulic fracturing chemicals and surface

impoundments, for hydraulic fracture fluids monitoring and

for use of surface impoundments for temporary flowback

storage; and further providing for bonding, for enforcement

orders, for penalties, for civil penalties, for well plugging

funds and for local ordinances.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 103 of the act of December 19, 1984

(P.L.1140, No.223), known as the Oil and Gas Act, is amended by

adding definitions to read:

Section 103.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"12-digit Hydrologic Unit Code."  A subwatershed, generally

ranging in size from 10,000 to 40,000 acres, as designated by

the United States Geological Survey and the United States

Department of Agriculture Natural Resources Conservation

Service.

* * *

"Body of water."  A natural or artificial lake, pond,

reservoir, swamp, marsh or wetland.

* * *

"Erosion and sediment control permit."  A permit issued by

the Department of Environmental Protection and required for

earth disturbance activities associated with oil and gas

activities.

"FEMA."  The Federal Emergency Management Agency.

"Flood."  A general but temporary condition of partial or

complete inundation of normally dry land areas from the overflow

of streams, rivers or other waters of this Commonwealth.

"Floodplain."  The lands adjoining a river or stream that

have been or may be expected to be inundated by flood waters in

a 100-year frequency flood. Unless otherwise specified, the

boundary of the floodplain is as indicated on maps and flood

insurance studies provided by the Federal Emergency Management

Agency or equivalent floodplain maps and studies. In an area

where no such maps or studies have defined the boundary of the

100-year floodplain, it is assumed, absent evidence to the

contrary, that the floodplain extends from the stream to 100

feet from the top of the streambank.

"Floodway."  The channel of the watercourse and portions of

the adjoining floodplains which are reasonably required to carry

and discharge the 100-year frequency flood. Unless otherwise

specified, the boundary of the floodway is as indicated on maps

and flood insurance studies provided by the Federal Emergency

Management Agency. In an area where no Federal Emergency

Management Agency maps or studies have defined the boundary of

the 100-year frequency floodway, it is assumed, absent evidence

to the contrary, that the floodway extends from the stream to 50

feet from the top of the streambank.

* * *

"Stream."  A watercourse.

"Top of streambank."  The first substantial break in slope

between the edge of the bed of the stream and the surrounding

terrain.

"Watercourse."  A channel or conveyance of surface water

having defined bed and banks, whether natural or artificial,

with perennial or intermittent flow.

* * *

"Wild trout stream."  A stream classified as supporting

naturally reproducing trout populations by the Fish and Boat

Commission.

"Wilderness trout stream."  A surface water designated by the

Fish and Boat Commission to protect and promote native trout

fisheries and maintain and enhance wilderness aesthetics and

ecological requirements necessary for the natural reproduction

of trout.

* * *

Section 2.  Section 201(a), (b), (e)(5), (f) and (g) of the

act, amended July 2, 1992 (P.L.365, No.78), are amended and the

section is amended by adding a subsection to read:

Section 201.  Well permits.

(a)  No person shall drill a well or alter any existing well,

except for alterations which satisfy the requirements of

subsection (j), without having first obtained a well permit

pursuant to subsections (b), (c), (d) and (e). A copy of the

permit shall be kept at the well site during preparation or

construction of the well site or access road, or drilling,

operation or alteration of the well. However, no person shall be

required to obtain a permit to redrill a nonproducing well, if:

(1)  the redrilling has been evaluated and approved as

part of an order from the department authorizing the cleaning

out and plugging or replugging of a nonproducing well,

pursuant to section 13(c) of the act of December 18, 1984

(P.L.1069, No.214), known as the Coal and Gas Resource

Coordination Act; and

(2)  the redrilling is incidental to the plugging or

replugging operation and the well subsequently is plugged

within 15 days of redrilling.

(b)  The permit application shall be accompanied by a plat

prepared by a competent engineer or a competent surveyor, on

forms to be furnished by the department, showing the political

subdivision and county in which the tract of land upon which the

well to be drilled, operated or altered, is located, the name of

the surface landowner of record and lessor, the name of all

surface landowners or water purveyors whose water supplies are

within [1,000] 2,500 feet of the proposed well location, the

name of the owner of record or operator of all known underlying

workable coal seams, if any, the acreage in the tract to be

drilled, the proposed location of the well determined by survey,

the courses and distances of such location from two or more

permanent identifiable points or landmarks on said tract

boundary corners, the proposed angle and direction of such well,

if the well is to be deviated substantially from a vertical

course, the number or other identification to be given the well,

the workable coal seams, if any, underlying the tract of land

upon which the well is to be drilled, operated or altered, which

are to be cased off in accordance with section 207, and such

information needed by the department to administer this act. The

applicant shall forward, by certified mail, a copy of said plat

to each political subdivision in which the well is to be

located, the surface landowner, all surface landowners or water

purveyors whose water supplies are within [1,000] 2,500 feet of

the proposed well location, the owner and lessee, if any, of

such coal seams, and every coal operator required to be

identified on the well permit application and shall submit proof

of such notification with the well permit application. With

respect to surface owners, notification shall be accomplished

under this section by sending notice to the persons to whom the

tax notices for said surface property are sent, as indicated in

the assessment books in the county in which the property is

located. With respect to surface landowners or water purveyors

whose water supplies are within [1,000] 2,500 feet of the

proposed well location, notification shall be made on forms and

in a manner prescribed by the department sufficient to identify,

for such persons, the rights afforded them under section 208 and

the advisability of taking their own predrilling or

prealteration survey. With respect to the political subdivision

in which the well is to be located, notification shall be made

on forms and in a manner prescribed by the department. If the

applicant submits to the department written approval of the

proposed well location by the political subdivision in which the

well is to be located, the surface landowner and the coal

operator, lessee or owner, if any, of the coal underlying the

proposed well location and no objections are raised by the

department within 15 days of filing or if no such approval has

been submitted and no objections are made to such proposed well

location within 15 days from receipt of such notice by the

political subdivision in which the well is to be located, the

surface landowner and the coal operator, lessee or owner, if

any, or by the department, the same shall be filed and become a

permanent record of such location, subject to inspection at any

time by any interested person. The application form to operate

an abandoned or orphan well shall notify the applicant of its

responsibilities to plug the well upon abandonment.

* * *

(e)  The department shall issue a permit within 45 days of

the submission of a permit application unless the department

denies the permit application for one or more of the five

reasons set forth below: Provided, however, That the department

shall have the right to extend such period for 15 days for cause

shown upon notification to the applicant of the reasons for that

extension. The department may impose such permit terms and

conditions as are necessary to assure compliance with this act

and other laws administered by the department. The department

shall have the authority to deny a permit to any person for the

following reasons:

* * *

(5)  the applicant, with respect to any other well or

wells which the applicant operates, is in continuing

violation of this act or any other applicable statute

administered by the department. [The right of the department

to deny a permit under this paragraph shall not be effective

until a final administrative determination has been made of

any of these violations and no appeal is pending in which a

stay has been granted.]

(f)  Upon issuance of a permit, the well operator may proceed

[with the drilling of] to prepare or construct the well site and

access roads and drill, operate or alter the well at the exact

location shown on the plat after providing the department, the

surface landowner and the local political subdivision in which

the well is to be located 24 hours' notice of the date that

drilling will commence. In noncoal areas where more than one

well is to be drilled as part of the same development project,

only the first well of the project need be located by survey.

The remaining wells of the project shall be shown on the plat in

a manner prescribed by regulation. Prior to drilling each of the

additional project wells, the well operator shall notify the

department of his intention and provide reasonable notice of the

date drilling will commence. Whenever, before or during the

drilling of any well which is not within the outside boundaries

of an operating coal mine, the well operator shall encounter

conditions of such a nature as to render drilling of the bore

hole or portions thereof more hazardous than usual, or otherwise

impossible, then the well operator shall have the right, upon

verbal notice to the department, to immediately plug all or

portions of the bore hole, if drilling has occurred, and to

commence a new bore hole not more than 50 feet distant if the

location of the new bore hole does not violate section 205 and

if, for wells subject to the act of July 25, 1961 (P.L.825,

No.359), known as the Oil and Gas Conservation Law, the new

location complies with any existing law, regulation or spacing

order and if the new bore hole is a minimum of 330 feet distant

from the nearest lease boundary. Within ten days of commencement

of the new bore hole, the well operator shall file with the

department a written notice of intention to plug, a well record,

a completion report, a plugging certificate for the original

bore hole and an amended plat for the new bore hole. The well

operator shall forward a copy of the amended plat to the surface

landowner identified on the well permit application within ten

days of commencement of the new well bore. 

(g)  The well permit number and operator's name, address and

telephone number shall be posted at the drilling site, in a

conspicuous manner, prior to initiating preparation or

construction of the well site or access road or commencement of

drilling, operation or alteration of the well.

(g.1)  The department shall authorize conservation districts

to conduct a quarterly review of erosion and sediment control

permit applications issued on an expedited basis for all earth

disturbance associated with oil and gas activities. Conservation

districts shall conduct such review and submit a report to the

department of their findings. The department shall revoke any

permits related to the oil and gas operations for which an

expedited erosion and sediment control permit was issued if a

finding is made in the report that the erosion and sediment

control permit application contained material omission or

misstatement.

* * *

Section 3.  Section 205 of the act is amended to read:

Section 205.  Well location restrictions.

(a)  Wells may not be drilled within [200] 1,000 feet

measured horizontally from any existing building or existing

water well without the written consent of the owner thereof.

Where the distance restriction would deprive the owner of the

oil and gas rights of the right to produce or share in the oil

or gas underlying said surface tract, the well operator may be

granted a variance from said distance restriction upon

submission of a plan which shall identify the additional

measures, facilities or practices to be employed during well

site construction, drilling and operations. The variance, if

granted, shall include such additional terms and conditions as

the department shall require to insure the safety and protection

of affected persons and property. The provisions may include

insurance, bonding and indemnification, as well as technical

requirements.

(b)  No well site may be prepared or well drilled within 100

feet measured horizontally from any [stream, spring or body of

water as identified on the most current 7 ½ minute topographic

quadrangle map of the United States Geological Survey] 

watercourse, natural or artificial lake, pond or reservoir or

within [100 feet of any wetlands greater than one acre in size] 

the boundary of a wetland or the boundary that affects the

functions and values of a wetland. However, no well may be

drilled using hydraulic fracturing or horizontal drilling within

2,500 feet of a surface water source, and within 1,000 feet of a

groundwater source, that serves a public water system. The

distance from the public water supply source, as identified by

the department, shall be measured as follows:

(1)  For a surface water intake on a lake or reservoir,

the distance shall be measured from the boundary of the lake

or reservoir.

(2)  For a surface water intake on a flowing stream, the

distance shall be measured from a semicircular radius

extending upstream of the surface water intake.

(3)  For a groundwater source, the distance shall be

measured from the wellhead or spring.

The department may waive such distance restrictions upon

submission of a plan which shall identify the additional

measures, facilities or practices to be employed during well

site construction, drilling and operations. Such waiver, if

granted, shall impose such permit conditions as are necessary to

protect the waters of the Commonwealth.

(c)  [The] On making a determination on a well permit, the 

department shall[, on making a determination on a well permit,] 

consider and may deny or condition a well permit based on the

impact of the proposed well on public resources to include, but

not be limited to, the following:

(1)  Publicly owned parks, forests, gamelands and

wildlife areas.

(2)  National or State scenic rivers.

(3)  National natural landmarks.

(4)  Habitats of rare and endangered flora and fauna and

other critical communities.

(5)  Historical and archaeological sites listed on the

Federal or State list of historic places.

(6)  Bodies of water and watercourses, including, but not

limited to, wetlands, wild trout streams and wilderness trout

streams.

(d)  Prior to submitting a permit application to the

department for a well or well site within a wild trout stream,

High Quality or Exceptional Value watershed as indicated by the

12-digit Hydrologic Unit Code, the applicant shall consult with

the Pennsylvania Fish and Boat Commission.

Section 4.  Section 207 of the act is amended by adding a

subsection to read:

Section 207.  Protection of fresh groundwater; casing

requirements.

* * *

(e)  The department shall inspect each permitted well drilled

in any formation using hydraulic fracturing or horizontal

drilling, or both, during each phase of cementing, completing

and altering. The permittee may not proceed to the next phase of

the drilling operation until an inspection by the department has

been performed. The department shall allocate an appropriate

portion of the well permit fees to fund the inspection and may

increase the permit fees to meet an increase in the inspection

costs.

Section 5.  Section 208(c) and (d) of the act are amended and

the section is amended by adding subsections to read: 

Section 208.  Protection of water supplies.

* * *

(b.1)  Upon a written request by any landowner residing

within 5,500 feet but farther than 2,500 feet of a proposed gas

well using hydraulic fracturing, the well permit applicant shall

conduct a predrilling or prealteration survey, using a facility

or laboratory certified by the department, and send a copy of

the survey by certified mail to the requestor. A predrilling or

prealteration survey shall provide at a minimum the testing

results for chemicals or chemical compounds known to be commonly

used for hydraulic fracturing including, but not limited to, the

following: all major cations and anions, arsenic, benzene,

toluene, ethylbenzene, xylenes, manganese, dissolved methane,

total dissolved solids, chlorides, nutrients and radionuclides.

(c)  Unless rebutted by one of the five defenses established

in subsection (d), it shall be presumed that a well operator is

responsible for the pollution of a water supply that is within

[1,000] 2,500 feet of the oil or gas well, where the pollution

occurred within [six] 12 months after the completion of drilling

or alteration of such well.

(c.1)  In case of horizontal drilling, the presumption under

subsection (c) covers the entire length of the horizontal

drilling and extends an additional 2,500 feet from the end or

ends of the horizontal well bore.

(d)  In order to rebut the presumption of liability

established in subsection (c), the well operator must

affirmatively prove one of the following five defenses:

(1)  The pollution existed prior to the drilling or

alteration activity as determined by a predrilling or

prealteration survey.

(2)  The landowner or water purveyor refused to allow the

operator access to conduct a predrilling or prealteration

survey.

(3)  The water supply is not within [1,000] 2,500 feet of

the well.

(4)  The pollution occurred more than [six] 12 months

after completion of drilling or alteration activities.

(5)  The pollution occurred as the result of some cause

other than the drilling or alteration activity.

* * *

Section 6.  The act is amended by adding sections to read:

Section 208.1.  Hydraulic fracturing chemicals and surface

impoundments.

(a)  Notwithstanding a trade secret claim, a well operator

shall file a report with the department for each well that is

drilled using the hydraulic fracturing process within 30 days of

completion of such well. The report shall include, without

limitation, the complete list of the chemicals and chemical

compounds used in the fracturing fluid products, specifying the

volume of fluid utilized in each separate hydraulic fracturing

operation and the Chemical Abstract Service registry number for

each constituent chemical. The department shall make the report

available to the public upon a written request.

(b)  In case of a medical emergency, the operator shall

provide the concentration of each constituent chemical and the

formula for each chemical compound to medical emergency

personnel or local emergency personnel, or both.

(c)  The well operator shall keep a copy of the report at the

well site and produce it upon request by the department, local

emergency personnel or surface landowners residing within 5,500

feet of the well.

Section 208.2.  Hydraulic fracture fluids monitoring.

For each individual hydraulic fracturing operation performed

at a well site, the well operator shall maintain the data

indicating the total volume of fracturing fluids used for the

operation as well as the total volume of fluids that returned to

the surface. The well operator shall compile the data and the

necessary records to support the data, and submit it to the

department on a semi-annual basis.

Section 208.3.  Use of surface impoundments for temporary

flowback storage.

Where centralized flowback impoundments are used to

temporarily store flowback water, the department shall require

the use of dual liner systems with a leak detection system

installed between the two liners. The department shall inspect

such impoundments on a monthly basis.

Section 7.  Section 215(a), (c), (d), (d.1) and (f) of the

act, amended July 2, 1992 (P.L.365, No.78), are amended to read: 

Section 215.  Bonding.

(a)  (1)  Except as provided in subsection (d) hereof, upon

filing an application for a well permit and before continuing

to operate any oil or gas well, the owner or operator thereof

shall file with the department a bond for the well and the

well site on a form to be prescribed and furnished by the

department. Any such bond filed with an application for a

well permit shall be payable to the Commonwealth and

conditioned that the operator shall faithfully perform all of

the drilling, water supply replacement, restoration and

plugging requirements of this act. Any such bond filed with

the department for a well in existence on the effective date

of this act shall be payable to the Commonwealth and

conditioned that the operator shall faithfully perform all of

the water supply replacement, restoration and plugging

requirements of this act. The amount of the bond required

shall be in the [amount of $2,500 per well for at least two

years following the effective date of this act, after which

time the bond amount] following amounts and may be adjusted

by the Environmental Quality Board every two years to reflect

the projected costs to the Commonwealth of performing well

plugging:

(i)  For wells less than 2,500 feet in depth:

(A)  $2,500 per well, provided the operator shall

not be required to provide a bond under this item

exceeding $35,000 for 25 wells.

(B)  For operating 26 to 50 wells, $35,000 plus

$2,500 per well, provided the operator may not be

required to provide a bond under this item exceeding

$60,000.

(C)  For operating 51 to 100 wells, $60,000 plus

$2,500 per well, provided the operator may not be

required to provide a bond under this item exceeding

$100,000.

(D)  For operating over 100 wells, $100,000 plus

$2,500 per well, provided the operator may not be

required to provide a bond under this item exceeding

$250,000.

(ii)  For wells less between 2,500 feet and 5,000

feet in depth:

(A)  $5,000 per well, provided the operator may

not be required to provide a bond under this item

exceeding $70,000 for 25 wells.

(B)  For operating 26 to 50 wells, $70,000 plus

$5,000 per well, provided the operator may not be

required to provide a bond under this item exceeding

$120,000.

(C)  For operating 51 to 100 wells, $120,000 plus

$5,000 per well, provided the operator may not be

required to provide a bond under this item exceeding

$200,000.

(D)  For operating over 100 wells, $200,000 plus

$5,000 per well, provided the operator may not be

required to provide a bond under this item exceeding

$500,000.

(iii)  For wells over 5,000 feet in depth:

(A)  $12,500 per well, provided the operator may

not be required to provide a bond under this item

exceeding $220,000 for 25 wells.

(B)  For operating 26 to 50 wells, $220,000 plus

$12,500 per well, provided the operator may not be

required to provide a bond under this item exceeding

$375,000.

(C)  For operating 51 to 100 wells, $375,000 plus

$12,500 per well, provided the operator may not be

required to provide a bond under this item exceeding

$625,000.

(D)  For operating over 100 wells, $625,000 plus

$12,500 per well.

[(2)  In lieu of individual bonds for each well, an owner

or operator may file a blanket bond, on a form prepared by

the department, covering all of its wells in Pennsylvania as

enumerated on the bond form. A blanket bond shall be in the

amount of $25,000 for at least two years following the

effective date of this act, after which time the bond amount

may be adjusted by the Environmental Quality Board every two

years to reflect the projected costs to the Commonwealth of

performing well plugging.]

(3)  Liability under such bond shall continue until the

well has been properly plugged in accordance with this act

and for a period of one year after filing of the certificate

of plugging with the department. Each bond shall be executed

by the operator and a corporate surety licensed to do

business in the Commonwealth and approved by the secretary.

The operator may elect to deposit cash, certificates of

deposit or automatically renewable irrevocable letters of

credit from financial institutions chartered or authorized to

do business in Pennsylvania and regulated and examined by the

Commonwealth or a Federal agency which may be terminated at

the end of a term only upon the financial institution giving

90 days prior written notice to the permittee and the

department or negotiable bonds of the United States

Government or the Commonwealth, the Pennsylvania Turnpike

Commission, the General State Authority, the State Public

School Building Authority or any municipality within the

Commonwealth, or United States Treasury Bonds issued at a

discount without a regular schedule of interest payments to

maturity, otherwise known as Zero Coupon Bonds, having a

maturity date of not more than ten years after the date of

purchase and at such maturity date having a value of not less

than $25,000, with the department in lieu of a corporate

surety. The cash deposit, certificate of deposit, amount of

such irrevocable letter of credit or market value of such

securities shall be equal at least to the sum of the bond.

The secretary shall, upon receipt of any such deposit of

cash, letters of credit or negotiable bonds, immediately

place the same with the State Treasurer, whose duty it shall

be to receive and hold the same in the name of the

Commonwealth, in trust, for the purpose for which such

deposit is made. The State Treasurer shall at all times be

responsible for the custody and safekeeping of such deposits.

The operator making deposit shall be entitled from time to

time to demand and receive from the State Treasurer, on the

written order of the secretary, the whole or any portion of

any collateral so deposited, upon depositing with him, in

lieu thereof, other collateral of the classes herein

specified having a market value at least equal to the sum of

the bond, and also to demand, receive and recover the

interest and income from said negotiable bonds as the same

becomes due and payable. Where negotiable bonds, deposited as

aforesaid, mature or are called, the State Treasurer, at the

request of the owner thereof, shall convert such negotiable

bonds into such other negotiable bonds of the classes herein

specified as may be designated by the owner. Where notice of

intent to terminate a letter of credit is given, the

department shall give the operator 30 days' written notice to

replace the letter of credit with other acceptable bond

guarantees as provided herein and, if the owner or operator

fails to replace the letter of credit within the 30-day

notification period, the department shall draw upon and

convert such letter of credit into cash and hold it as a

collateral bond guarantee.

* * *

(c)  If the well owner or operator fails or refuses to comply

with the applicable requirements of this act identified in

subsection (a), the regulations promulgated hereunder or the

conditions of the permit relating thereto, the department may

declare the bond forfeited and shall certify the same to the

Attorney General, who shall proceed to enforce and collect the

full amount of the bond and, where the owner or operator has

deposited cash or securities as collateral in lieu of a

corporate surety, the department shall declare said collateral

forfeited and shall direct the State Treasurer to pay the full

amount of said funds into the Well Plugging Restricted Revenue

Account or to proceed to sell said security to the extent

forfeited and pay the proceeds thereof into the Well Plugging

Restricted Revenue Account. Should any corporate surety or

financial institution fail to promptly pay, in full, a forfeited

bond, it shall be disqualified from writing any further bonds

under the act or any other environmental act administered by the

department. Any person aggrieved by reason of forfeiting the

bond or converting collateral, as herein provided, shall have a

right to appeal to the Environmental Hearing Board in the manner

provided by law. Upon forfeiture of a [blanket] bond for a

violation occurring at one or more well sites, the person whose

bond is forfeited shall submit a replacement bond to cover all

other wells of which he is owner or operator within ten days of

said forfeiture. Failure to submit said replacement bond

constitutes a violation of this section as to each of the wells

owned or operated by said person.

(d)  [(1)  Any operator of not more than 200 wells who cannot

obtain a bond for a well drilled prior to April 18, 1985, as

required under subsection (a), due to an inability to

demonstrate sufficient financial resources may, in lieu of

the bond:

(i)  Submit to the department a fee in the amount of

$50 per well, or a blanket fee of $500 for ten to 20

wells, or a blanket fee of $1,000 for more than 20 wells,

which shall be a nonrefundable fee paid each year that

the operator has not filed a bond with the department.

All fees collected in lieu of a bond under this

subsection shall be used for the purposes authorized by

this act. The Environmental Quality Board shall have the

power, by regulation, to increase the amount of the fees

established under this subsection.

(ii)  (A)  Make phased deposits of collateral to

fully collateralize the bond. Such payment shall be

based on the number of wells the operator owns or

operates. The operator shall make an initial deposit

and shall, thereafter, make annual deposits in

accordance with the schedule in clause (B). Interest

accumulated by the collateral shall become a part of

the bond until such time as the collateral plus

accumulated interest equals the amount of the

required bond. The collateral shall be deposited, in

trust, with the State Treasurer as provided in this

subsection, or with a bank selected by the department

which shall act as trustee for the benefit of the

Commonwealth to guarantee the operator's compliance

with the drilling, water supply replacement,

restoration and plugging requirements of this act.

The operator shall be required to pay all costs of

the trust.

(B)  An operator of up to ten existing wells who

does not intend to operate additional wells shall

deposit $250 per well and shall, thereafter, annually

deposit $50 per well until the obligations of this

section are fully met. An operator of 11 to 25 wells

or an operator of up to ten wells who applies for one

or more permits for additional wells shall deposit

$2,000 and shall, thereafter, annually deposit $1,150

plus $150 for each additional well to be permitted

that year until the obligations of this section are

fully met. An operator of 26 to 50 wells shall

deposit $3,000 and shall, thereafter, annually

deposit $1,300 plus $400 for each additional well to

be permitted that year until the obligations of this

section are fully met. An operator of 51 to 100 wells

shall deposit $4,000 and shall, thereafter, annually

deposit $1,500 plus $400 for each additional well to

be permitted that year until the obligations of this

section are fully met. Operators of 101 to 200 wells

shall deposit $8,000 and shall, thereafter, annually

deposit $1,600 plus $1,000 for each additional well

to be permitted that year until the obligations of

this section are fully met. Operators of more than

200 wells shall fully bond their wells immediately.

The department shall reduce the amount of phased

collateral payments or the period of time over which

phased collateral payments shall be made on behalf of

owners or operators who, prior to the effective date

of this amendatory act, have paid a fee in lieu of

bond pursuant to subparagraph (i), and who, within

one year of the effective date of this amendatory

act, choose to enter the phased collateral program

pursuant to this subparagraph (ii) rather than to

continue to make payments in lieu of bond. Payments

made in lieu of bond prior to the effective date of

this amendatory act shall not be credited in any

other manner, nor shall the department be required to

refund such fees at any time. The Environmental

Quality Board shall have the power, by regulation, to

change the annual deposits established under this

clause if it is found to be necessary to accommodate

a change in the amount of the bond required under

this section.

(2)  An operator may continue to pay a fee in lieu of

bond or make phased deposits of collateral to fully

collateralize the bond so long as the operator does not miss

any payments for wells as provided under this subsection and

so long as the operator remains in compliance with the

provisions of this act and regulations and permits issued

thereunder. If an operator has missed any payments for wells

as provided under this subsection, the operator shall:

(i)  immediately submit the appropriate bond amount

in full; or

(ii)  cease all operations and plug the wells in

accordance with section 210.

(d.1)  (1)  An individual who cannot obtain a bond to drill

new wells due to an inability to demonstrate financial

resources may meet the collateral bond requirements of

subsection (a) by making phased deposits of collateral to

fully collateralize the bond. Such individuals shall be

limited to drilling ten new wells per calendar year. The

individual shall, for each well to be drilled, deposit $500

and shall, thereafter, annually deposit 10% of the remaining

bond amount for a period of ten years. Interest accumulated

by the collateral shall become a part of the bond until such

time as the collateral, plus accumulated interest, equals the

amount of the required bond. The collateral shall be

deposited, in trust, with the State Treasurer as provided in

subsection (a) or with a bank selected by the department

which shall act as trustee for the benefit of the

Commonwealth, to guarantee the individual's compliance with

the drilling, water supply replacement, restoration and

plugging requirements of this act. The individual shall be

required to pay all costs of the trust.

(2)  Individuals may continue to use phased collateral to

obtain permits so long as they have not missed any payments

for wells drilled under this provision and so long as they

remain in compliance with this act and regulations and

permits issued thereunder. If an individual has missed any

payments for wells under this subsection, the operator shall:

(i)  immediately submit the appropriate bond amount

in full; or

(ii)  cease all operations and plug the wells in

accordance with section 210.

For the purposes of this subsection an "individual" is defined

as an applicant who is a natural person doing business under his

own name] The Environmental Quality Board may, by regulation,

develop an alternative financial assurance requirement in which

an operator may voluntarily choose to participate. An operator

participating in the alternative financial assurance requirement

established pursuant to this paragraph may be exempt from a bond

specified under subsection (a). The alternative financial

assurance requirement may require an insurance policy, trust

fund or financial mechanism but must provide for full coverage

of an operator's well plugging liability as determined by the

board. The alternative financial assurance mechanism may only be

utilized to plug wells upon abandonment and may not be forfeited

or otherwise recovered for violations of this act.

* * *

[(f)  Owners or operators who have failed to meet the

requirements of this section prior to the effective date of this

amendatory act shall not be required to make payments pursuant

to this section on a retroactive basis as a condition of

obtaining a permit under this act nor shall such failure be

deemed a violation of this act.]

Section 8.  Sections 503(c), 505 and 506 of the act are

amended to read:

Section 503.  Enforcement orders.

* * *

(c)  Prior to the [suspension or] revocation of a well permit

or registration, the department shall serve written notice upon

the well operator or its agent of the intention of the

department to [suspend or] revoke and shall state with

specificity the statutory provisions, appropriate rule or

regulation or other reason and the factual circumstances which

surround the violation upon which the suspension or revocation

is to be based. The well operator shall have 15 days to request

a conference with the department to give such cause why such

action should not be taken. Upon receipt of such written notice,

the department shall hold a conference and shall, within 15 days

thereafter, make a decision on whether to [suspend or] revoke

the well permit or registration. The department shall provide

written notice of its decision to revoke to the well operator or

its agent, which shall become effective upon receipt thereof and

the operator shall immediately plug the well.

* * *

Section 505.  Penalties.

(a)  Any person who violates any provisions of the act is

guilty of a summary offense and, upon conviction thereof, shall

be sentenced to pay a fine of not more than [$300] $10,000 or

undergo imprisonment of not more than 90 days, or both. Each

day's continuance of such violation shall be a separate and

distinct offense.

(b)  Any person who willfully violates any provisions of this

act or any order of the department issued pursuant to the

provisions of this act is guilty of a misdemeanor and, upon

conviction thereof, shall be sentenced to pay a fine of not more

than [$5,000] $150,000 or undergo imprisonment of not more than

one year, or both. Each day's continuance of such violation

shall be a separate distinct offense.

(c)  The department shall have the authority to institute

prosecutions against any person or municipality under this act.

Section 506.  Civil penalties.

In addition to proceeding under any other remedy available at

law or in equity for a violation of a provision of this act or a

rule or regulation of the department or any order of the

department, the Environmental Hearing Board, after hearing, may

assess a civil penalty upon a person for such violation. Such a

penalty may be assessed whether or not the violation was

willful. The civil penalty so assessed shall not exceed

[$25,000, plus $1,000] $100,000, plus $10,500 for each day of

continued violation. In determining the amount of the civil

penalty, the board shall consider the willfulness of the

violation, damage or injury to the natural resources of the

Commonwealth or their uses, endangerment of the safety of

others, costs of remedying the harm, savings resulting to the

person in consequence of such violation and other relevant

factors. It shall be payable to the Commonwealth and shall be

collectible in any manner provided at law for the collection of

debts. If any person liable to pay any such penalty neglects or

refuses to pay the same after demand, the amount, together with

interest and any costs that may accrue, shall be a lien in favor

of the Commonwealth upon the property, both real and personal,

of such person but only after same has been entered and docketed

of record by the prothonotary of the county where such is

situated. The board may, at any time, transmit to the

prothonotaries of the respective counties certified copies of

all such liens, and it shall be the duty of each prothonotary to

enter and docket the same of record in his office and to index

the same as judgments are indexed, without requiring the payment

of costs as a condition precedent to the entry thereof.

Section 9.  Sections 601(a) and 602 of the act, amended July

2, 1992 (P.L.365, No.78), are amended to read:

Section 601.  Well plugging funds.

(a)  All fines, civil penalties, permit and registration fees

collected under this act are hereby appropriated to the

Department of Environmental [Resources] Protection to carry out

the purposes of this act.

* * *

Section 602.  Local ordinances.

Except with respect to ordinances adopted pursuant to the act

of July 31, 1968 (P.L.805, No.247), known as the Pennsylvania

Municipalities Planning Code, [and], the act of October 4, 1978

(P.L.851, No.166), known as the Flood Plain Management Act, and

the act of March 31, 1927 (P.L.98, No.69), known as the Second

Class City Zoning Law, all local ordinances and enactments

purporting to regulate oil and gas well operations regulated by

this act are hereby preempted and superseded to the extent the

ordinances and enactments regulate the method of oil and gas

well operations. No ordinances or enactments adopted pursuant to

the aforementioned acts shall contain provisions which impose

conditions, requirements or limitations on the [same features] 

method of oil and gas well operations regulated by this act or

that accomplish the same purposes as set forth in this act. [The

Commonwealth, by this enactment, hereby preempts and supersedes

the regulation of oil and gas wells as herein defined] Nothing

in this act shall affect the traditional power of local

government to regulate zoning and land development of oil and

gas activities as well as other aspects, such as the time and

the place of operations to protect the health, safety and

welfare of the general public through local ordinances and

enactments.

Section 10.  This act shall take effect in 60 days.