PRINTER'S NO.  413

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

SENATE BILL

 

No.

425

Session of

2011

  

  

INTRODUCED BY LEACH, FONTANA, ERICKSON, COSTA, RAFFERTY, GREENLEAF AND FERLO, FEBRUARY 7, 2011

  

  

REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, FEBRUARY 7, 2011  

  

  

  

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, for well permits, for well

18

location restrictions, for protection of fresh groundwater

19

and casing requirements and for protection of water supplies;

20

providing for hydraulic fracturing chemicals and surface

21

impoundments, for hydraulic fracture fluids monitoring and

22

for use of surface impoundments for temporary flowback

23

storage; and further providing for bonding, for enforcement

24

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

25

funds and for local ordinances.

26

The General Assembly of the Commonwealth of Pennsylvania

27

hereby enacts as follows:

28

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

29

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

 


1

adding definitions to read:

2

Section 103.  Definitions.

3

The following words and phrases when used in this act shall

4

have the meanings given to them in this section unless the

5

context clearly indicates otherwise:

6

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

7

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

8

the United States Geological Survey and the United States

9

Department of Agriculture Natural Resources Conservation

10

Service.

11

* * *

12

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

13

reservoir, swamp, marsh or wetland.

14

* * *

15

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

16

the Department of Environmental Protection and required for

17

earth disturbance activities associated with oil and gas

18

activities.

19

"FEMA."  The Federal Emergency Management Agency.

20

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

21

complete inundation of normally dry land areas from the overflow

22

of streams, rivers or other waters of this Commonwealth.

23

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

24

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

25

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

26

boundary of the floodplain is as indicated on maps and flood

27

insurance studies provided by the Federal Emergency Management

28

Agency or equivalent floodplain maps and studies. In an area

29

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

30

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

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1

contrary, that the floodplain extends from the stream to 100

2

feet from the top of the streambank.

3

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

4

the adjoining floodplains which are reasonably required to carry

5

and discharge the 100-year frequency flood. Unless otherwise

6

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

7

and flood insurance studies provided by the Federal Emergency

8

Management Agency. In an area where no Federal Emergency

9

Management Agency maps or studies have defined the boundary of

10

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

11

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

12

feet from the top of the streambank.

13

* * *

14

"Stream."  A watercourse.

15

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

16

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

17

terrain.

18

"Watercourse."  A channel or conveyance of surface water

19

having defined bed and banks, whether natural or artificial,

20

with perennial or intermittent flow.

21

* * *

22

"Wild trout stream."  A stream classified as supporting

23

naturally reproducing trout populations by the Fish and Boat

24

Commission.

25

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

26

Fish and Boat Commission to protect and promote native trout

27

fisheries and maintain and enhance wilderness aesthetics and

28

ecological requirements necessary for the natural reproduction

29

of trout.

30

* * *

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1

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

2

act are amended and the section is amended by adding a

3

subsection to read:

4

Section 201.  Well permits.

5

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

6

except for alterations which satisfy the requirements of

7

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

8

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

9

permit shall be kept at the well site during preparation or

10

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

11

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

12

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

13

(1)  the redrilling has been evaluated and approved as

14

part of an order from the department authorizing the cleaning

15

out and plugging or replugging of a nonproducing well,

16

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

17

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

18

Coordination Act; and

19

(2)  the redrilling is incidental to the plugging or

20

replugging operation and the well subsequently is plugged

21

within 15 days of redrilling.

22

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

23

prepared by a competent engineer or a competent surveyor, on

24

forms to be furnished by the department, showing the political

25

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

26

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

27

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

28

surface landowners or water purveyors whose water supplies are

29

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

30

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

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1

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

2

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

3

the courses and distances of such location from two or more

4

permanent identifiable points or landmarks on said tract

5

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

6

if the well is to be deviated substantially from a vertical

7

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

8

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

9

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

10

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

11

information needed by the department to administer this act. The

12

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

13

to each political subdivision in which the well is to be

14

located, the surface landowner, all surface landowners or water

15

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

16

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

17

such coal seams, and every coal operator required to be

18

identified on the well permit application and shall submit proof

19

of such notification with the well permit application. With

20

respect to surface owners, notification shall be accomplished

21

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

22

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

23

the assessment books in the county in which the property is

24

located. With respect to surface landowners or water purveyors

25

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

26

proposed well location, notification shall be made on forms and

27

in a manner prescribed by the department sufficient to identify,

28

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

29

the advisability of taking their own predrilling or

30

prealteration survey. With respect to the political subdivision

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1

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

2

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

3

applicant submits to the department written approval of the

4

proposed well location by the political subdivision in which the

5

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

6

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

7

proposed well location and no objections are raised by the

8

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

9

been submitted and no objections are made to such proposed well

10

location within 15 days from receipt of such notice by the

11

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

12

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

13

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

14

permanent record of such location, subject to inspection at any

15

time by any interested person. The application form to operate

16

an abandoned or orphan well shall notify the applicant of its

17

responsibilities to plug the well upon abandonment.

18

* * *

19

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

20

the submission of a permit application unless the department

21

denies the permit application for one or more of the five

22

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

23

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

24

shown upon notification to the applicant of the reasons for that

25

extension. The department may impose such permit terms and

26

conditions as are necessary to assure compliance with this act

27

and other laws administered by the department. The department

28

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

29

following reasons:

30

* * *

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1

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

2

wells which the applicant operates, is in continuing

3

violation of this act or any other applicable statute

4

administered by the department. [The right of the department

5

to deny a permit under this paragraph shall not be effective

6

until a final administrative determination has been made of

7

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

8

stay has been granted.]

9

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

10

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

11

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

12

location shown on the plat after providing the department, the

13

surface landowner and the local political subdivision in which

14

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

15

drilling will commence. In noncoal areas where more than one

16

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

17

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

18

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

19

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

20

additional project wells, the well operator shall notify the

21

department of his intention and provide reasonable notice of the

22

date drilling will commence. Whenever, before or during the

23

drilling of any well which is not within the outside boundaries

24

of an operating coal mine, the well operator shall encounter

25

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

26

hole or portions thereof more hazardous than usual, or otherwise

27

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

28

verbal notice to the department, to immediately plug all or

29

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

30

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

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1

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

2

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

3

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

4

location complies with any existing law, regulation or spacing

5

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

6

from the nearest lease boundary. Within ten days of commencement

7

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

8

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

9

a completion report, a plugging certificate for the original

10

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

11

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

12

landowner identified on the well permit application within ten

13

days of commencement of the new well bore.

14

* * * 

15

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

16

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

17

conspicuous manner, prior to initiating preparation or

18

construction of the well site or access road or commencement of

19

drilling, operation or alteration of the well.

20

(g.1)  The department shall authorize conservation districts

21

to conduct a quarterly review of erosion and sediment control

22

permit applications issued on an expedited basis for all earth

23

disturbance associated with oil and gas activities. Conservation

24

districts shall conduct such review and submit a report to the

25

department of their findings. The department shall revoke any

26

permits related to the oil and gas operations for which an

27

expedited erosion and sediment control permit was issued if a

28

finding is made in the report that the erosion and sediment

29

control permit application contained material omission or

30

misstatement.

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1

* * *

2

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

3

Section 205.  Well location restrictions.

4

(a)  Wells may not be drilled within [200] 1000 feet measured

5

horizontally from any existing building or existing water well

6

without the written consent of the owner thereof. Where the

7

distance restriction would deprive the owner of the oil and gas

8

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

9

underlying said surface tract, the well operator may be granted

10

a variance from said distance restriction upon submission of a

11

plan which shall identify the additional measures, facilities or

12

practices to be employed during well site construction, drilling

13

and operations. The variance, if granted, shall include such

14

additional terms and conditions as the department shall require

15

to insure the safety and protection of affected persons and

16

property. The provisions may include insurance, bonding and

17

indemnification, as well as technical requirements.

18

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

19

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

20

water as identified on the most current 7 ½ minute topographic

21

quadrangle map of the United States Geological Survey] 

22

watercourse, natural or artificial lake, pond or reservoir or

23

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

24

the boundary of a wetland or the boundary that affects the

25

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

26

drilled using hydraulic fracturing or horizontal drilling within

27

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

28

groundwater source, that serves a public water system. The

29

distance from the public water supply source, as identified by

30

the department, shall be measured as follows:

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1

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

2

the distance shall be measured from the boundary of the lake

3

or reservoir.

4

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

5

distance shall be measured from a semicircular radius

6

extending upstream of the surface water intake.

7

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

8

measured from the wellhead or spring.

9

The department may waive such distance restrictions upon

10

submission of a plan which shall identify the additional

11

measures, facilities or practices to be employed during well

12

site construction, drilling and operations. Such waiver, if

13

granted, shall impose such permit conditions as are necessary to

14

protect the waters of the Commonwealth.

15

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

16

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

17

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

18

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

19

not be limited to, the following:

20

(1)  Publicly owned parks, forests, gamelands and

21

wildlife areas.

22

(2)  National or State scenic rivers.

23

(3)  National natural landmarks.

24

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

25

other critical communities.

26

(5)  Historical and archaeological sites listed on the

27

Federal or State list of historic places.

28

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

29

limited to, wetlands, wild trout streams and wilderness trout

30

streams.

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1

(d)  Prior to submitting a permit application to the

2

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

3

High Quality or Exceptional Value watershed as indicated by the

4

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

5

the Pennsylvania Fish and Boat Commission.

6

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

7

subsection to read:

8

Section 207.  Protection of fresh groundwater; casing

9

requirements.

10

* * *

11

(e)  The department shall inspect each permitted well drilled

12

in any formation using hydraulic fracturing or horizontal

13

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

14

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

15

the drilling operation until an inspection by the department has

16

been performed. The department shall allocate an appropriate

17

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

18

increase the permit fees to meet an increase in the inspection

19

costs.

20

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

21

the section is amended by adding subsections to read: 

22

Section 208.  Protection of water supplies.

23

* * *

24

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

25

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

26

well using hydraulic fracturing, the well permit applicant shall

27

conduct a predrilling or prealteration survey, using a facility

28

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

29

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

30

prealteration survey shall provide at a minimum the testing

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1

results for chemicals or chemical compounds known to be commonly

2

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

3

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

4

toluene, ethylbenzene, xylenes, manganese, dissolved methane,

5

total dissolved solids, chlorides, nutrients and radionuclides.

6

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

7

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

8

responsible for the pollution of a water supply that is within

9

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

10

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

11

or alteration of such well.

12

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

13

subsection (c) covers the entire length of the horizontal

14

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

15

ends of the horizontal well bore.

16

(d)  In order to rebut the presumption of liability

17

established in subsection (c), the well operator must

18

affirmatively prove one of the following five defenses:

19

(1)  The pollution existed prior to the drilling or

20

alteration activity as determined by a predrilling or

21

prealteration survey.

22

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

23

operator access to conduct a predrilling or prealteration

24

survey.

25

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

26

the well.

27

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

28

after completion of drilling or alteration activities.

29

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

30

other than the drilling or alteration activity.

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1

* * *

2

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

3

Section 208.1.  Hydraulic fracturing chemicals and surface

4

impoundments.

5

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

6

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

7

drilled using the hydraulic fracturing process within 30 days of

8

completion of such well. The report shall include, without

9

limitation, the complete list of the chemicals and chemical

10

compounds used in the fracturing fluid products, specifying the

11

volume of fluid utilized in each separate hydraulic fracturing

12

operation and the Chemical Abstract Service registry number for

13

each constituent chemical. The department shall make the report

14

available to the public upon a written request.

15

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

16

provide the concentration of each constituent chemical and the

17

formula for each chemical compound to medical emergency

18

personnel or local emergency personnel, or both.

19

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

20

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

21

emergency personnel or surface landowners residing within 5,500

22

feet of the well.

23

Section 208.2.  Hydraulic fracture fluids monitoring.

24

For each individual hydraulic fracturing operation performed

25

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

26

indicating the total volume of fracturing fluids used for the

27

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

28

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

29

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

30

department on a semi-annual basis.

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1

Section 208.3.  Use of surface impoundments for temporary

2

flowback storage.

3

Where centralized flowback impoundments are used to

4

temporarily store flowback water, the department shall require

5

the use of dual liner systems with a leak detection system

6

installed between the two liners. The department shall inspect

7

such impoundments on a monthly basis.

8

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

9

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

10

Section 215.  Bonding.

11

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

12

filing an application for a well permit and before continuing

13

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

14

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

15

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

16

department. Any such bond filed with an application for a

17

well permit shall be payable to the Commonwealth and

18

conditioned that the operator shall faithfully perform all of

19

the drilling, water supply replacement, restoration and

20

plugging requirements of this act. Any such bond filed with

21

the department for a well in existence on the effective date

22

of this act shall be payable to the Commonwealth and

23

conditioned that the operator shall faithfully perform all of

24

the water supply replacement, restoration and plugging

25

requirements of this act. The amount of the bond required

26

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

27

years following the effective date of this act, after which

28

time the bond amount] following amounts and may be adjusted

29

by the Environmental Quality Board every two years to reflect

30

the projected costs to the Commonwealth of performing well

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1

plugging[.]:

2

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

3

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

4

not be required to provide a bond under this item

5

exceeding $35,000 for 25 wells.

6

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

7

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

8

required to provide a bond under this item exceeding

9

$60,000.

10

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

11

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

12

required to provide a bond under this item exceeding

13

$100,000.

14

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

15

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

16

required to provide a bond under this item exceeding

17

$250,000.

18

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

19

feet in depth:

20

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

21

not be required to provide a bond under this item

22

exceeding $70,000 for 25 wells.

23

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

24

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

25

required to provide a bond under this item exceeding

26

$120,000.

27

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

28

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

29

required to provide a bond under this item exceeding

30

$200,000.

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1

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

2

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

3

required to provide a bond under this item exceeding

4

$500,000.

5

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

6

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

7

not be required to provide a bond under this item

8

exceeding $220,000 for 25 wells.

9

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

10

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

11

required to provide a bond under this item exceeding

12

$375,000.

13

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

14

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

15

required to provide a bond under this item exceeding

16

$625,000.

17

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

18

$12,500 per well.

19

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

20

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

21

the department, covering all of its wells in Pennsylvania as

22

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

23

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

24

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

25

may be adjusted by the Environmental Quality Board every two

26

years to reflect the projected costs to the Commonwealth of

27

performing well plugging.]

28

(3)  Liability under such bond shall continue until the

29

well has been properly plugged in accordance with this act

30

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

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1

of plugging with the department. Each bond shall be executed

2

by the operator and a corporate surety licensed to do

3

business in the Commonwealth and approved by the secretary.

4

The operator may elect to deposit cash, certificates of

5

deposit or automatically renewable irrevocable letters of

6

credit from financial institutions chartered or authorized to

7

do business in Pennsylvania and regulated and examined by the

8

Commonwealth or a Federal agency which may be terminated at

9

the end of a term only upon the financial institution giving

10

90 days prior written notice to the permittee and the

11

department or negotiable bonds of the United States

12

Government or the Commonwealth, the Pennsylvania Turnpike

13

Commission, the General State Authority, the State Public

14

School Building Authority or any municipality within the

15

Commonwealth, or United States Treasury Bonds issued at a

16

discount without a regular schedule of interest payments to

17

maturity, otherwise known as Zero Coupon Bonds, having a

18

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

19

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

20

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

21

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

22

such irrevocable letter of credit or market value of such

23

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

24

The secretary shall, upon receipt of any such deposit of

25

cash, letters of credit or negotiable bonds, immediately

26

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

27

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

28

Commonwealth, in trust, for the purpose for which such

29

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

30

responsible for the custody and safekeeping of such deposits.

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1

The operator making deposit shall be entitled from time to

2

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

3

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

4

any collateral so deposited, upon depositing with him, in

5

lieu thereof, other collateral of the classes herein

6

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

7

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

8

interest and income from said negotiable bonds as the same

9

becomes due and payable. Where negotiable bonds, deposited as

10

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

11

request of the owner thereof, shall convert such negotiable

12

bonds into such other negotiable bonds of the classes herein

13

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

14

intent to terminate a letter of credit is given, the

15

department shall give the operator 30 days' written notice to

16

replace the letter of credit with other acceptable bond

17

guarantees as provided herein and, if the owner or operator

18

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

19

notification period, the department shall draw upon and

20

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

21

collateral bond guarantee.

22

* * *

23

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

24

with the applicable requirements of this act identified in

25

subsection (a), the regulations promulgated hereunder or the

26

conditions of the permit relating thereto, the department may

27

declare the bond forfeited and shall certify the same to the

28

Attorney General, who shall proceed to enforce and collect the

29

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

30

deposited cash or securities as collateral in lieu of a

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1

corporate surety, the department shall declare said collateral

2

forfeited and shall direct the State Treasurer to pay the full

3

amount of said funds into the Well Plugging Restricted Revenue

4

Account or to proceed to sell said security to the extent

5

forfeited and pay the proceeds thereof into the Well Plugging

6

Restricted Revenue Account. Should any corporate surety or

7

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

8

bond, it shall be disqualified from writing any further bonds

9

under the act or any other environmental act administered by the

10

department. Any person aggrieved by reason of forfeiting the

11

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

12

right to appeal to the Environmental Hearing Board in the manner

13

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

14

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

15

bond is forfeited shall submit a replacement bond to cover all

16

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

17

said forfeiture. Failure to submit said replacement bond

18

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

19

owned or operated by said person.

20

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

21

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

22

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

23

demonstrate sufficient financial resources may, in lieu of

24

the bond:

25

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

26

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

27

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

28

which shall be a nonrefundable fee paid each year that

29

the operator has not filed a bond with the department.

30

All fees collected in lieu of a bond under this

- 19 -

 


1

subsection shall be used for the purposes authorized by

2

this act. The Environmental Quality Board shall have the

3

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

4

established under this subsection.

5

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

6

fully collateralize the bond. Such payment shall be

7

based on the number of wells the operator owns or

8

operates. The operator shall make an initial deposit

9

and shall, thereafter, make annual deposits in

10

accordance with the schedule in clause (B). Interest

11

accumulated by the collateral shall become a part of

12

the bond until such time as the collateral plus

13

accumulated interest equals the amount of the

14

required bond. The collateral shall be deposited, in

15

trust, with the State Treasurer as provided in this

16

subsection, or with a bank selected by the department

17

which shall act as trustee for the benefit of the

18

Commonwealth to guarantee the operator's compliance

19

with the drilling, water supply replacement,

20

restoration and plugging requirements of this act.

21

The operator shall be required to pay all costs of

22

the trust.

23

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

24

does not intend to operate additional wells shall

25

deposit $250 per well and shall, thereafter, annually

26

deposit $50 per well until the obligations of this

27

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

28

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

29

or more permits for additional wells shall deposit

30

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

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1

plus $150 for each additional well to be permitted

2

that year until the obligations of this section are

3

fully met. An operator of 26 to 50 wells shall

4

deposit $3,000 and shall, thereafter, annually

5

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

6

be permitted that year until the obligations of this

7

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

8

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

9

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

10

be permitted that year until the obligations of this

11

section are fully met. Operators of 101 to 200 wells

12

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

13

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

14

to be permitted that year until the obligations of

15

this section are fully met. Operators of more than

16

200 wells shall fully bond their wells immediately.

17

The department shall reduce the amount of phased

18

collateral payments or the period of time over which

19

phased collateral payments shall be made on behalf of

20

owners or operators who, prior to the effective date

21

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

22

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

23

one year of the effective date of this amendatory

24

act, choose to enter the phased collateral program

25

pursuant to this subparagraph (ii) rather than to

26

continue to make payments in lieu of bond. Payments

27

made in lieu of bond prior to the effective date of

28

this amendatory act shall not be credited in any

29

other manner, nor shall the department be required to

30

refund such fees at any time. The Environmental

- 21 -

 


1

Quality Board shall have the power, by regulation, to

2

change the annual deposits established under this

3

clause if it is found to be necessary to accommodate

4

a change in the amount of the bond required under

5

this section.

6

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

7

bond or make phased deposits of collateral to fully

8

collateralize the bond so long as the operator does not miss

9

any payments for wells as provided under this subsection and

10

so long as the operator remains in compliance with the

11

provisions of this act and regulations and permits issued

12

thereunder. If an operator has missed any payments for wells

13

as provided under this subsection, the operator shall:

14

(i)  immediately submit the appropriate bond amount

15

in full; or

16

(ii)  cease all operations and plug the wells in

17

accordance with section 210.

18

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

19

new wells due to an inability to demonstrate financial

20

resources may meet the collateral bond requirements of

21

subsection (a) by making phased deposits of collateral to

22

fully collateralize the bond. Such individuals shall be

23

limited to drilling ten new wells per calendar year. The

24

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

25

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

26

bond amount for a period of ten years. Interest accumulated

27

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

28

time as the collateral, plus accumulated interest, equals the

29

amount of the required bond. The collateral shall be

30

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

- 22 -

 


1

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

2

which shall act as trustee for the benefit of the

3

Commonwealth, to guarantee the individual's compliance with

4

the drilling, water supply replacement, restoration and

5

plugging requirements of this act. The individual shall be

6

required to pay all costs of the trust.

7

(2)  Individuals may continue to use phased collateral to

8

obtain permits so long as they have not missed any payments

9

for wells drilled under this provision and so long as they

10

remain in compliance with this act and regulations and

11

permits issued thereunder. If an individual has missed any

12

payments for wells under this subsection, the operator shall:

13

(i)  immediately submit the appropriate bond amount

14

in full; or

15

(ii)  cease all operations and plug the wells in

16

accordance with section 210.

17

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

18

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

19

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

20

develop an alternative financial assurance requirement in which

21

an operator may voluntarily choose to participate. An operator

22

participating in the alternative financial assurance requirement

23

established pursuant to this paragraph may be exempt from a bond

24

specified under subsection (a). The alternative financial

25

assurance requirement may require an insurance policy, trust

26

fund or financial mechanism but must provide for full coverage

27

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

28

board. The alternative financial assurance mechanism may only be

29

utilized to plug wells upon abandonment and may not be forfeited

30

or otherwise recovered for violations of the act.

- 23 -

 


1

* * *

2

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

3

requirements of this section prior to the effective date of this

4

amendatory act shall not be required to make payments pursuant

5

to this section on a retroactive basis as a condition of

6

obtaining a permit under this act nor shall such failure be

7

deemed a violation of this act.]

8

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

9

amended to read:

10

Section 503.  Enforcement orders.

11

* * *

12

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

13

or registration, the department shall serve written notice upon

14

the well operator or its agent of the intention of the

15

department to [suspend or] revoke and shall state with

16

specificity the statutory provisions, appropriate rule or

17

regulation or other reason and the factual circumstances which

18

surround the violation upon which the suspension or revocation

19

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

20

a conference with the department to give such cause why such

21

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

22

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

23

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

24

the well permit or registration. The department shall provide

25

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

26

its agent, which shall become effective upon receipt thereof and

27

the operator shall immediately plug the well.

28

* * *

29

Section 505.  Penalties.

30

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

- 24 -

 


1

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

2

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

3

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

4

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

5

distinct offense.

6

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

7

act or any order of the department issued pursuant to the

8

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

9

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

10

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

11

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

12

shall be a separate distinct offense.

13

(c)  The department shall have the authority to institute

14

prosecutions against any person or municipality under this act.

15

Section 506.  Civil penalties.

16

In addition to proceeding under any other remedy available at

17

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

18

rule or regulation of the department or any order of the

19

department, the Environmental Hearing Board, after hearing, may

20

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

21

penalty may be assessed whether or not the violation was

22

willful. The civil penalty so assessed shall not exceed

23

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

24

continued violation. In determining the amount of the civil

25

penalty, the board shall consider the willfulness of the

26

violation, damage or injury to the natural resources of the

27

Commonwealth or their uses, endangerment of the safety of

28

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

29

person in consequence of such violation and other relevant

30

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

- 25 -

 


1

collectible in any manner provided at law for the collection of

2

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

3

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

4

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

5

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

6

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

7

of record by the prothonotary of the county where such is

8

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

9

prothonotaries of the respective counties certified copies of

10

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

11

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

12

the same as judgments are indexed, without requiring the payment

13

of costs as a condition precedent to the entry thereof.

14

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

15

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

16

Section 601.  Well plugging funds.

17

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

18

collected under this act are hereby appropriated to the

19

Department of Environmental [Resources] Protection to carry out

20

the purposes of this act.

21

* * *

22

Section 602.  Local ordinances.

23

Except with respect to ordinances adopted pursuant to the act

24

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

25

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

26

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

27

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

28

Class City Zoning Law, all local ordinances and enactments

29

purporting to regulate oil and gas well operations regulated by

30

this act are hereby preempted and superseded to the extent the

- 26 -

 


1

ordinances and enactments regulate the method of oil and gas

2

well operations. No ordinances or enactments adopted pursuant to

3

the aforementioned acts shall contain provisions which impose

4

conditions, requirements or limitations on the [same features] 

5

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

6

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

7

Commonwealth, by this enactment, hereby preempts and supersedes

8

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

9

in this act shall affect the traditional power of local

10

government to regulate zoning and land development of oil and

11

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

12

the place of operations to protect the health, safety and

13

welfare of the general public through local ordinances and

14

enactments.

15

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

- 27 -