1Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated
2Statutes, consolidating the Oil and Gas Conservation Law with
3modifications relating to definitions, standard unit order,
4process, administration, standard of review, hearings and
5appeals, establishment of units, integration of various
6interests, lease extension and scope; providing for gas and
7hazardous liquids pipelines; and making a related repeal.

8The General Assembly of the Commonwealth of Pennsylvania
9hereby enacts as follows:

10Section 1. Part III of Title 58 of the Pennsylvania
11Consolidated Statutes is amended by adding a chapter to read:

12CHAPTER 34

13UNCONVENTIONAL OIL

14AND GAS CONSERVATION

15Subchapter

16A. Preliminary Provisions

17B. (Reserved)

18C. Establishment of Standard Units

19D. Procedure

20E. Effect of Order

21F. (Reserved)

1G. (Reserved)

2H. (Reserved)

3I. (Reserved)

4J. Miscellaneous Provisions

5SUBCHAPTER A

6PRELIMINARY PROVISIONS

7Sec.

83401. Short title of chapter.

93402. Legislative intent.

103403. Definitions.

11§ 3401. Short title of chapter.

12This chapter shall be known and may be cited as the
13Unconventional Oil and Gas Unit Conservation and Integration
14Act.

15§ 3402. Legislative intent.

16The purposes of this chapter are:

17(1) To promote the development of unconventional oil and
18gas resources of this Commonwealth in accordance with the
19best principles and practices of oil and gas conservation
20while reasonably protecting the correlative rights of the
21person affected.

22(2) To provide for the protection of the environment.

23§ 3403. Definitions.

24The following words and phrases when used in this chapter
25shall have the meanings given to them in this section unless the
26context clearly indicates otherwise:

27"Coal and Gas Resource Coordination Act." The act of
28December 18, 1984 (P.L.1069, No.214), known as the Coal and Gas
29Resource Coordination Act.

30"Commission." The Pennsylvania Public Utility Commission.

1"Consenting party." A person participating in a unit
2established under this chapter who agrees or elects to
3participate in a pro rata share of costs and production of a
4well drilled on that unit in accordance with a joint operating
5agreement.

6"Control." To own or to have the right to explore for,
7develop, operate and produce oil or gas from the stratigraphic
8interval proposed to be included in a unit.

9"Correlative rights." The rights of each owner of oil and
10gas interests included or proposed to be included in a standard
11unit or in land that constitutes stranded acreage to have fair
12and reasonable opportunity to obtain a just and equitable share
13of the oil and gas in the unit without being required to drill
14unnecessary wells or incur other unnecessary expense to recover
15the oil or gas or its equivalent. The term includes the owners
16of oil and gas interests in properties adjacent to properties
17included or proposed to be included within the unit.

18"Department." The Department of Environmental Protection of
19the Commonwealth.

20"Drill." The drilling or redrilling of a well or the
21deepening or plugging back of an existing well.

22"Drill pad." The area of surface operations surrounding the
23surface location of a well or wells.

24"Horizontal well." A directional well that is drilled nearly
25vertically to a certain depth and then angled out horizontally
26or nearly horizontally to produce from and remain substantially
27or entirely within a specific geologic interval until the
28desired terminus of the well bore is reached.

29"Hydraulic fracture." A process to stimulate production in
30oil and gas wells by inducing or propping fractures in oil and

1gas bearing rocks using hydraulic pressure. The fluid mixtures
2which are typically pumped down the well during this process
3include water, sand and other specialty items.

4"Joint operating agreement." An agreement governing the
5actions of all participants in an established standard unit or a
6model agreement generally recognized in the extraction industry
7and all schedules and exhibits pertaining thereto.

8"Lateral." The portion of a well bore that deviates from
9approximate vertical orientation to approximate horizontal
10orientation and all well bores beyond such deviation to total
11depth or terminus.

12"Nonconsenting party." A person participating in an
13established standard unit who elects not to participate in its
14pro rata share of the costs of a well drilled upon that unit and
15who will pay a risk avoidance under the joint operating
16agreement.

17"Perforated segment." The entire perforated length of each
18lateral well bore, as shown on a directional survey or
19predrilled unsurveyed plan, projected vertically to the surface.
20In the event of the use of a form of completion that does not
21involve cementing and perforating, the term shall mean the
22entire length of each lateral from penetration point of the
23target reservoir to the terminus of the well bore.

24"Plat." A map, drawing or print showing the proposed or
25existing location of a well or a unit.

26"Royalty interests." An interest in oil or gas or rights
27expressly stated to be royalty interests, overriding royalty
28interests or rights to participate in a share of production but
29that do not provide a right to conduct exploration, drilling or
30production.

1"Standard unit." A unit for the production of oil or natural
2gas that is not more than 640 acres in area, plus 10% tolerance
3for possible survey error or other acreage discrepancies, and
4that, absent interference by an adjacent preexisting voluntary
5unit, includes all interests in the oil and gas within the
6boundaries of the proposed standard unit. Acreage in excess of
7the 640-acre maximum and 10% tolerance may be included in a
8standard unit if necessary to:

9(1) Avoid the creation of stranded acreage.

10(2) Prevent the loss of the use and benefit of potential
11recoverable oil and gas.

12(3) More efficiently recover oil or gas.

13"Stranded acreage." Land that cannot be developed for
14production of oil or gas from unconventional reservoirs because
15of the 250 feet minimum setback requirements under this chapter
16when applied to the boundaries of standard units.

17"Unconventional reservoir." A formation below the base of
18the Elk Sandstone or its geologic equivalent stratigraphic
19interval that contains or produces oil or gas that generally
20cannot be economically produced at flow rates or in volumes
21except by hydraulic fracturing, horizontal or multi-lateral well
22bores or other techniques to expose the reservoir to the well
23bore.

24"Unit." A consolidation of interests of persons actively
25engaged in the business of extracting oil or gas from land owned
26or leased by the persons within a defined geographic area to
27facilitate the drilling of wells from one or more unconventional
28reservoirs.

29"Voluntary unit." A unit created under a lease or other
30voluntary agreement of the owners and lessees of all interests

1in the oil or gas in the unit.

2"Waste." The unnecessary loss of potentially recoverable oil
3or gas.

4"Working interest owner." An owner of the right to develop,
5operate and produce the oil or gas sought to be produced, except
6where specifically provided in a joint operating agreement
7governing a standard unit.

8SUBCHAPTER B

9(Reserved)

10SUBCHAPTER C

11ESTABLISHMENT OF STANDARD UNITS

12Sec.

133421. Standard unit order.

143422. Technical assistance.

15§ 3421. Standard unit order.

16(a) Authorization.--A person actively engaged in the
17business of extracting oil or gas who owns or leases at least
1865% of the oil or gas working interests in a proposed unit that
19does not have a voluntary agreement to extract oil or gas from
20the entire area may apply to the commission for an order to
21establish a standard unit under this chapter to integrate the
22interests controlled by another person actively engaged in the
23business of extracting oil or gas who owns or leases the
24remaining land in the proposed unit.

25(b) Approval.--If a person does not own or control at least
2665% of the oil or gas working interests in a proposed standard
27unit but demonstrates by written evidence that it has an
28agreement with collaborating owners who control interests within
29the proposed unit that total 65% of the unit, the person may
30apply for the establishment of a standard unit.

1(c) Other interests.--Interests of a person actively engaged
2in the business of extracting oil or gas that may be combined
3under subsection (a) into a standard unit may include interests
4of the other working interest owners and royalty interests.

5(d) Integration.--Upon the grant of an order by the
6commission establishing a standard unit, all oil and gas
7interests within the unit shall be integrated in accordance with
8this chapter.

9(e) Scope.--This chapter shall apply to interests of owners
10engaged in the business of extracting oil or gas.

11§ 3422. Technical assistance.

12The Bureau of Topographic and Geologic Survey of the
13Department of Conservation and Natural Resources shall provide
14technical and other assistance to the commission as requested by
15the commission.

16SUBCHAPTER D

17PROCEDURE

18Sec.

193431. Process.

203431.1. Powers of commission.

213432. Standard unit protest.

223433. Standard of review.

233434. Hearings and appeals.

243435. Final action.

253436. Appellate jurisdiction of Commonwealth Court.

26§ 3431. Process.

27(a) Filing.--An applicant for an order to establish a
28standard unit under this chapter shall file the application with
29the commission. The commission shall review the application for
30completeness and notify the applicant of any deficiencies and

1refer a completed application to the Office of Administrative
2Law Judge within five business days of submission.

3(b) Voluntary unit.--An order of the commission shall not be
4required for working interest owners or standard units to
5establish a voluntary unit under a lease or other agreement.

6(1) Lessees that provide the establishment of voluntary
7units may proceed under the terms of their leases and no
8proceedings under this chapter shall be required.

9(2) A lessee may file to establish a unit under this
10chapter. If the application is approved, this chapter shall
11supersede the terms of the leases relating to pooling and
12utilization with respect to the lands included in the unit.

13(c) Application.--A standard unit application shall be in a
14form approved by the commission and shall include:

15(1) Information regarding all working interest owners
16proposed to be included in the standard unit that are
17controlled and that are not controlled by the applicant.
18Working interests shall include all leases, mortgages,
19judgments and other liens and encumbrances of record upon any
20interest in the proposed unit. The list shall include:

21(i) The name and address of each owner of an
22interest proposed to be integrated.

23(ii) The type of interest held by each owner.

24(iii) The extent of the interest held.

25(2) A plat that:

26(i) Depicts the boundaries of the proposed standard
27unit, the total acreage and the location and acreage of
28each tract included in the proposed standard unit.

29(ii) Identifies the location of all initial proposed
30wells and laterals.

1(iii) Identifies the stratigraphic interval proposed
2for integration.

3(3) A statement of the allocation of interests in the
4proposed standard unit.

5(4) Proof that notice of the filing of the standard unit
6application has been given to the following:

7(i) The owners of interests not controlled by the
8applicant that are proposed to be included in the
9standard unit.

10(ii) The owners of all land adjacent to the proposed
11standard unit.

12(5) Proof of notice of the filing of the standard unit
13application. The notice shall identify all parcels and parts
14of parcels proposed to be included using the existing tax and
15property records of the county.

16(6) A statement of the estimated well costs that
17includes an industry form for authorizing expenditures with
18detailed tangible and intangible drilling costs.

19(7) A joint operating agreement with an attached
20proposed lease and all relevant schedules.

21(d) Review.--Applications shall be referred to the Office of
22Administrative Law Judge for review within five days of a
23determination that the application is complete.

24(e) Protests.--

25(1) A protest shall be filed within 20 days of the
26filing of the application. If no protest is filed within 20
27days of the filing of the application, the application shall
28be deemed approved and a notice shall be transmitted to the
29commission. If the commission takes no action on the
30application within 30 days of its filing, the application

1shall be deemed approved and a letter closing the docket
2shall be filed.

3(2) The commission may reject the application if it
4fails to meet the requirements of section 3433 (relating to
5standard of review). If a protest is filed within 20 days of
6the filing of the application, the administrative law judge
7shall schedule a hearing to be held within 20 days of the
8close of the protest period. The hearing may be held at a
9later date if the applicant and protestants agree to an
10extension of time.

11(3) Following the hearing, the staff shall prepare a
12recommendation for submission to the commission. A
13recommendation may include proposed amendments to the
14application or joint operating agreement or conditions to
15protect correlative rights. The recommendation and
16certification of the evidentiary record shall be forwarded to
17the commission.

18(f) Decision.--The commission shall rule on protested
19applications within 45 days of the hearing.

20§ 3431.1. Powers of commission.

21(a) Authority.--The commission may promulgate regulations
22and policy statements and issue orders to carry out its duties
23under this chapter.

24(b) Temporary regulations.--The commission may promulgate
25regulations in order to promptly implement this chapter. The
26regulations shall be deemed temporary regulations and shall
27expire no later than two years following their adoption. The
28temporary regulations shall not be subject to:

29(1) Sections 201, 202 and 203 of the act of July 31,
301968 (P.L.769, No.240), referred to as the Commonwealth

1Documents Law.

2(2) The act of June 25, 1982 (P.L.633, No.181), known as
3the Regulatory Review Act.

4(c) Expiration of authority.--The authority of the
5commission to adopt temporary regulations under subsection (b)
6shall expire two years from the effective date of this
7subsection. Regulations adopted after this period shall be
8promulgated as provided by law. Permanent regulations shall be
9published within 12 months following the effective date of this
10section.

11(d) Compliance.--Every person subject to the provisions of
12this chapter shall comply with the regulations and orders of the
13commission and their terms and conditions.

14(e) Employees.--The commission may appoint employees,
15attorneys, consultants and other individuals as necessary to
16carry out the purposes of this chapter. Employees under this
17subsection shall serve at the pleasure of the commission.

18(f) Fees and costs.--The commission shall adopt a reasonable
19filing fee for applications under this chapter. Additional
20process costs of the Office of Administrative Law Judge may be
21assessed on the application.

22§ 3432. Standard unit protest.

23(a) Parties with standing.--Parties with standing to protest
24a proposed standard unit application are the following:

25(1) The owners of a working interest subject to
26integration in the standard unit who have not entered into a
27voluntary agreement with the applicant.

28(2) The owners of oil and gas in land directly adjacent
29to but outside the proposed standard unit.

30(3) The owners of interests in potentially stranded

1acreage who have not entered into a voluntary agreement with
2the applicant.

3(4) The owner of the mineral rights that are proposed to
4be integrated.

5(b) Notice.--Applicants shall employ reasonable methods to
6determine the identity of persons entitled to notice as follows:

7(1) An applicant shall send a notice of the filing of a
8standard unit order application to all persons with standing
9to object.

10(2) All notices shall state the date intended for the
11filing of an application.

12(3) Notices shall be sent via United States certified
13mail with return receipt requested or other mail or delivery
14service providing a proof of delivery.

15(4) Notices shall be sent at least five business days
16before the filing of a standard unit application.

17(5) An applicant may arrange for personal service of a
18notice required under this chapter if proof of service is
19provided.

20(6) Notices to persons who cannot be identified or
21located shall be given in accordance with the requirements of
22Pa.R.C.P. No. 430 (relating to service pursuant to special
23order of court. publication).

24§ 3433. Standard of review.

25(a) Standard of review.--The commission shall order the
26establishment of the proposed standard unit if the applicant
27shows by a preponderance of the evidence that the plan for the
28establishment of the unit will minimize surface disruption or
29impact to property or other environmental impact and:

30(1) prevent the unnecessary loss of the use and benefits

1of potentially recoverable oil or gas to a person or the
2Commonwealth; or

3(2) protect the rights of owners of oil or gas interests
4in a manner that ensures the fair and reasonable ability to
5obtain an equitable share of oil and gas.

6(b) Determination.--In making a determination under
7subsection (a), the commission may consider whether the
8establishment of the unit will permit the optimal development of
9oil and gas resources in this Commonwealth consistent with the
10protection of the health, safety, environment and property of
11its citizens.

12(c) Protests.--Protests to applications for a standard unit
13may be filed only for the following reasons:

14(1) The application fails to comply with the
15requirements of this subsection.

16(2) The terms of the proposed joint operating agreement,
17including royalty payments, are not reasonable or the
18applicant failed to act in good faith.

19(3) An owner or lessor of a working interest proposed to
20be integrated into the unit has or will have the capacity and
21resources and plan to develop their respective acreage
22outside the proposed unit in a manner that is consistent with
23oil and gas conservation principles. In determining whether a
24protest under this paragraph shall result in denial or
25modification of the application as to the acreage subject to
26the objection, the commission shall consider the following:

27(i) The timing of the proposed development of the
28applicant and the protestant.

29(ii) The investment of the parties in their
30respective acreage.

1(iii) The impact of the inclusion or exclusion of
2the contested parcel on the long-term development plans
3of the applicant and the objector.

4(iv) The scope of the proposed development of the
5applicant and the protestant.

6(v) The type of commitments each applicant is
7willing to make to develop the contested land.

8(vi) Whether inclusion of the acreage that is the
9subject of the protest meets the objectives of section
103402 (relating to legislative intent).

11(vii) Any other relevant factors the commission
12reasonably determines to be appropriate.

13(4) The proposed standard unit fails to protect the
14correlative rights of an owner of adjacent oil or gas
15interests, the owner of potentially stranded acreage or the
16integrated mineral owner. This objection must be filed by the
17owner.

18(d) Other protests.--Protests by persons other than those
19specified with standing or authorized under section 3432(d)
20(relating to standard unit protest) shall not be considered.

21(e) Averments.--Averments of a party relied upon by the
22commission in evaluating a protest under this section shall be
23made part of the joint operation agreement.

24(f) Expansion.--The commission may order expansion of
25proposed standard units to avoid the potential for stranded
26acreage.

27§ 3434. Hearings and appeals.

28(a) Nature of proceedings.--Proceedings at all hearings
29shall be conducted in accordance with this chapter and rules
30adopted by the commission.

1(b) Proposed findings and conclusions.--Before submission of
2a recommendation to the commission, the parties are entitled to
3a reasonable opportunity to submit for consideration:

4(1) proposed findings and conclusions to be included in
5the recommendations submitted to the commission; and

6(2) supporting reasons for the proposed findings or
7conclusions.

8(c) Action by commission.--If the commission determines that
9an applicant failed to make a good faith effort to reach a
10voluntary agreement to establish a unit comprised of land owned
11or leased by a business actively engaged in the extraction of
12oil or gas for control of all unleased oil and gas interest
13owners and all working interests to be integrated into the unit,
14the commission may exclude the property subject to that
15determination from the proposed unit and the applicant shall
16have the option of proceeding with the unit as modified or of
17withdrawing its application for the unit.

18§ 3435. Final action.

19The decisions of the commission shall constitute the final
20action of the commission with respect to the matters subject to
21the hearing.

22§ 3436. Appellate jurisdiction of Commonwealth Court.

23Appeals from decisions of the commission shall be heard by
24the Commonwealth Court. The court shall consider appeals on the
25record of the proceedings before the commission and shall apply
26a narrow certiorari review standard.

27SUBCHAPTER E

28EFFECT OF ORDER

29Sec.

303441. Establishment of units.

13442. (Reserved).

23443. Integration of working interests.

33444. Additional considerations.

43445. Joint operating agreement.

5§ 3441. Establishment of units.

6(a) Establishment.--Upon the grant of an order establishing
7a standard unit, all oil or gas interests within the unit shall
8be integrated in accordance with this chapter.

9(b) Stratigraphic intervals.--Standard units created under
10this chapter:

11(1) Shall be specific as to the stratigraphic intervals
12sought to be explored and produced by the applicant.

13(2) May be created in stratigraphic intervals in lands
14already subject to voluntary units or to involuntary units
15established under this chapter. To incorporate in whole or in
16part a prior voluntary or involuntary unit of which the
17applicant does not control at least 65% of the interests, the
18prior units may not contain a well capable of producing from
19that stratigraphic interval and no active drilling permit
20exists for such a well, and, upon the creation of a unit
21under this chapter within any part of a preexisting voluntary
22or involuntary unit producing from a different stratigraphic
23interval, the voluntary or involuntary unit shall not be
24applicable to the portion of the specific stratigraphic
25interval that is subject to the new standard unit. Otherwise,
26the prior unit shall continue in effect as originally
27created.

28(c) Location of involuntary unit.--Nothing in this chapter
29shall prohibit the commission from establishing a standard unit
30which is located around or, in whole or in part, within a

1voluntary unit of which the applicant controls at least 65% of
2the interests producing from the same formation or stratigraphic
3interval. An objection to a proposed allocation of royalty or
4other payment from that unit may be adjusted as necessary to
5promote fairness among all interest holders.

6(d) Perforated segments.--A standard unit may be established
7on lands upon which a well exists, except no perforated segment
8of a well drilled under a later unit shall be less than 500 feet
9from any perforated segment in the same stratigraphic interval
10existing on the date of its establishment.

11(e) Contiguous units.--Upon the agreement of the working
12interest owner of at least 65% of the cost-bearing interests in
13two or more contiguous units, wells may be drilled within 250
14feet from the adjacent boundaries of those units and production
15shall be allocated among the units as agreed by the working
16interest owner.

17(f) Royalties and interests.--Royalties and interests shall
18be apportioned and paid to royalty interest holders based upon
19the relative surface acreage of the interests in each unit as
20set forth in the commission's order unless all of the owners of
21integrated interests expressly agree in writing to deviate from
22this chapter and adopt a different allocation method. Nothing in
23this section shall alter the application of the rule of
24apportionment of royalties as to oil and gas leases partially
25included in any unit established under this chapter.

26(g) Stranded acreage.--If an application results in stranded
27acreage and 65% of the interests in the stranded acreage is
28timely filed as a protest to the application, the commission may
29order any of the following:

30(1) Incorporation of the stranded acreage into the unit.

1(2) Granting the protesters an exception to allow the
2land to be developed for oil and natural gas production
3without regard to the mandatory 250 feet setback requirements
4under this chapter.

5§ 3442. (Reserved).

6§ 3443. Integration of working interests.

7(a) Working interest.--A working interest owner within the
8approved standard unit who has not entered into a voluntary
9agreement with the applicant may elect to be treated as one of
10the following:

11(1) A nonconsenting party subject to the terms of the
12joint operating agreement for the unit, entitling him to a
13proportionate share of profits after being assessed a risk
14fee apportioned among all nonconsenting parties at the rate
15of 300% of their proportionate share of all of the costs
16incurred by the designated operator.

17(2) A consenting party subject to the terms of the joint
18operating agreement for the unit, requiring him to contribute
19a proportionate share of the costs of preparing, drilling,
20completing and operating the well at the time of his election
21under this subsection and entitling him to a proportionate
22share of profits.

23(b) Election.--The election under subsection (a) shall be
24exercised by returning a signed election form to the working
25interest owner and the Commonwealth within 14 calendar days of
26the date of the order establishing the unit. A working interest
27owner who fails to make an election under this subsection shall
28be treated as a nonconsenting party under subsection (a)(1).

29(c) Limited nature of election.--A working interest owner
30shall be subject to the terms, conditions, rights and

1obligations specified in the joint operating agreement. The
2election shall apply only to the well for which the election is
3made, with any further elections to be governed by the joint
4operating agreement.

5§ 3444. Additional considerations.

6(a) Additional matters.--Additional matters subject to an
7order of the commission under this chapter shall be governed by
8a joint operating agreement. An applicant may file a proposed
9joint operating agreement for the unit as part of the
10application for a standard unit order on a form approved by the
11commission. The following shall apply to an agreement under this
12subsection:

13(1) A party controlling at least 15% of the working
14interests in the unit may propose additional drilling. No
15party owning or controlling less than 65% of interests in the
16unit may propose the drilling of more than one well in a
17calendar year.

18(2) A lease attached to the joint operating agreement
19shall be the lease currently in use by the applicant.

20(3) The cash and royalty provided under the lease shall
21be as provided under this chapter. The royalty shall be
22treated as a cost shared pro rata among all consenting and
23nonconsenting parties to the joint operating agreement.

24(4) A risk avoidance penalty as provided under this
25chapter.

26(5) Parties to the joint operating agreement shall have
27the right to take their gas in kind. Should a consenting or a
28nonconsenting party not elect to take its share of gas in
29kind, the operator of the unit shall have the right to market
30the share of production along with the operator's production

1in accordance with the terms of the joint operating
2agreement. In no event may the nonoperator be entitled to
3receive an amount in excess of the amount received by the
4operator for its share of production. The joint operating
5agreement shall include an oil and gas balancing agreement.
6No working interest owner transporting oil or gas from a well
7in which the working interest owner has an interest shall be
8deemed a utility.

9(b) Aggrieved party.--A party aggrieved by terms proposed by
10the applicant in a joint operating agreement filed with the
11application may protest as provided in this chapter.

12(c) Withdrawal.--An applicant may withdraw its application
13within ten days after an order.

14§ 3445. Joint operating agreement.

15(a) Applicants and lessors.--A standard unit under this
16chapter shall be operated in accordance with the terms of the
17applicable leases, as modified by an order issued by the
18commission, if the only interest holders in the unit are the
19applicant and lessors.

20(b) Other units.--All other standard units established under
21this chapter shall be operated under the terms of applicable
22leases, as modified by commission order and under the terms of
23the joint operating agreement. The consenting and nonconsenting
24parties may alter the terms of the joint operating agreement
25only by unanimous consent or by filing a petition with the
26commission for amendment. The commission shall approve or deny
27the amendment within 90 days of the date of filing. An amendment
28adopted by unanimous consent shall be filed with the commission.

29SUBCHAPTER F

30(Reserved)

1SUBCHAPTER G

2(Reserved)

3SUBCHAPTER H

4(Reserved)

5SUBCHAPTER I

6(Reserved)

7SUBCHAPTER J

8MISCELLANEOUS PROVISIONS

9Sec.

103491. Certain rights preserved.

113492. Trade secrets.

123493. Applicability.

133494. Well setback.

143495. Voluntary establishment of a standard unit.

153496. Drilling permit not required.

16§ 3491. Certain rights preserved.

17(a) Policy statement.--Voluntary units implemented in
18accordance with the terms of executed oil and gas leases for the
19bona fide purpose of promoting the development of unconventional
20natural gas resources are declared to be necessary and
21reasonable for the development of unconventional gas resources
22in accordance with reasonable conservation principles and to
23reasonably protect affected correlative rights. Units created
24under a voluntary unitization agreement are declared to be per
25se reasonable and subject to modification only in accordance
26with the terms of the applicable leases or the express terms of
27this chapter.

28(b) Common law rights.--Except as expressly provided under
29this chapter and in orders issued by the commission, this
30chapter does not supersede any common law rights of any person

1before or after the effective date of this chapter recognized by
2the courts of this Commonwealth.

3(c) Successors in interest.--All rights related to units
4created under this chapter and all leases integrated in the
5units, in whole or in part, shall be binding upon the heirs,
6successors and assigns of all parties, including a party taking
7title to the property as the result of judicial sale, mortgage
8foreclosure, tax sale or by other operation of law and shall be
9binding upon and shall run with the land. No action by an owner
10of any interest in a lien, judgment, mortgage or other
11encumbrance shall extinguish or impair the establishment of a
12standard unit under this chapter.

13§ 3492. Trade secrets.

14(a) Right to privacy.--Confidential proprietary information
15or trade secrets submitted by parties during proceedings under
16this chapter may not be disclosed by the commission or any other
17parties privy to such information or secrets. The information
18may be submitted under seal for review by the administrative law
19judge only and shall be exempt from the act of February 14, 2008
20(P.L.6, No.3), known as the Right-to-Know Law.

21(b) Violations.--A violation of this section shall
22constitute a violation of this chapter and also a violation of
2312 Pa.C.S. Ch. 53 (relating to trade secrets), for which relief
24may be sought by an aggrieved party under and in accordance with
25the terms of 12 Pa.C.S. Ch. 53.

26§ 3493. Applicability.

27(a) Sandstone extractions.--This chapter shall apply to all
28wells drilled after the effective date of this chapter into and
29producing from unconventional oil and natural gas reservoirs
30below the base of the Elk Sandstone or its geologic equivalent

1stratigraphic interval in this Commonwealth other than coal bed
2methane.

3(b) Vertical wells.--The only provision of this chapter that
4shall apply to vertical wells is the 250 feet setback
5requirement from lease or unit lines and from other wells
6seeking production from the same stratigraphic interval. In the
7event of a preexisting vertical well on land subject to an
8integrated unit proceeding, a setback of 250 feet around the
9bore of that well shall be maintained in all operations upon a
10unit created under this chapter. The acreage within that setback
11area shall not be acreage within the unit. For horizontal wells,
12the 250 feet setback requirement from lease and unit lines
13imposed under section 3421(c) (relating to standard unit order)
14shall apply to wells drilled after the effective date of this
15chapter.

16§ 3494. Well setback.

17No perforated segment of any well drilled to be produced from
18an unconventional reservoir shall be located at any point less
19than 250 feet from the boundary of:

20(1) a lease not included in a proposed voluntary unit or
21unit applied for or established under this chapter;

22(2) a voluntary unit formed for the well; or

23(3) any unit applied for or established under this
24chapter for the well.

25§ 3495. Voluntary establishment of a standard unit.

26An order of the commission shall not be required for the
27voluntary establishment of a standard unit.

28§ 3496. Drilling permit not required.

29The commission may not require an applicant to obtain a
30drilling permit to qualify for the establishment of a standard

1unit.

2Section 2. Repeals are as follows:

3(1) The General Assembly declares that the repeal under
4paragraph (2) is necessary to effectuate the addition of 58
5Pa.C.S. Ch. 34.

6(2) The act of July 25, 1961 (P.L.825, No.359), known as
7the Oil and Gas Conservation Law, is repealed.

8Section 3. The addition of 58 Pa.C.S. Ch. 34 is a
9continuation of the act of July 25, 1961 (P.L.825, No.359),
10known as the Oil and Gas Conservation Law. The following apply:

11(1) Except as otherwise provided in 58 Pa.C.S. Pt. III
12Ch. 34, all activities initiated under the Oil and Gas
13Conservation Law shall continue and remain in full force and
14effect and may be completed under 58 Pa.C.S. Ch. 34. Orders,
15regulations, rules and decisions which were made under the
16Oil and Gas Conservation Law and which are in effect on the
17effective date of section 2(2) of this act shall remain in
18full force and effect until revoked, vacated or modified
19under 58 Pa.C.S. Ch. 34. Contracts, obligations and
20collective bargaining agreements entered into under the Oil
21and Gas Conservation Law are not affected nor impaired by the
22repeal of the Oil and Gas Conservation Law.

23(2) Except as set forth in paragraph (3), any difference
24in language between 58 Pa.C.S. Ch. 34 and the Oil and Gas
25Conservation Law is intended only to conform to the style of
26the Pennsylvania Consolidated Statutes and is not intended to
27change or affect the legislative intent, judicial
28construction or administration and implementation of the Oil
29and Gas Conservation Law.

30(3) Paragraph (2) does not apply to the addition of the

1following provisions:

2(i) The following definitions in section 3403:

3(A) "Nonconsenting party."

4(B) "Unit."

5(ii) Section 3421(a) and (c).

6(iii) Section 3431.1(a) and (c).

7(iv) Section 3433(c)(2) and (3).

8(v) Section 3434(c).

9(vi) Section 3441(c).

10(vii) Section 3443(a) introductory paragraph.

11Section 4. This act shall take effect immediately.