GOP, industry oppose updated rules for conventional wells

HARRISBURG — Republicans in the General Assembly echoed calls from Pennsylvania’s traditional oil and gas industry this winter and urged the Department of Environmental Protection to drop its effort to modernize rules for the state’s conventional wells.

In appeals to the DEP written in nearly identical language, the Pennsylvania Grade Crude Oil Coalition, an industry advocacy group, and Republican members of the state House of Representatives said the department’s push to finalize new rules for the industry ignores the Legislature’s intent to stop the revisions from applying to traditional wells when lawmakers put a special provision into a budget bill last summer.

An amendment added to the fiscal code instructed the state's environmental rulemaking board to separate rules for conventional wells, which are generally shallow and vertical, from rules for unconventional wells that tap deep shale formations using technologies like horizontal drilling and hydraulic fracturing.

The goal, according to legislators who proposed the split at the time, was to tailor rules to different industries, not to lessen environmental standards on conventional wells.

Since then, DEP has continued the process of revising its rules for above-ground impacts related to oil and gas development that it began in 2011 by splitting its work-in-progress in two: one chapter of regulations, Chapter 78a, for the sophisticated operations of companies targeting the Marcellus and Utica shales, and another, Chapter 78, for the state’s legacy industry that coaxes fuel from wells that can be new or a century old.

Regulators started by defining which existing rules apply to each industry, then layered their proposed changes on top in a marked-up document posted online and discussed at public meetings.

On Dec. 5, the Pennsylvania Grade Crude Oil Coalition wrote a letter to then-acting DEP Secretary Dana Aunkst to criticize this “word processing effort” and ask DEP to “immediately halt” its work to finalize new rules for conventional operations, according to letters provided to the Post-Gazette through the state’s open records law.

“When the Pennsylvania General Assembly passed the bifurcation bill, it was with the clear intent that the pending Chapter 78 rulemaking proposal would apply to unconventional operations only, and that the existing Chapter 78 would remain in place for conventional operations,” the coalition’s president David Clark wrote. “Dividing the proposed rule into two parts as a word processing task is clearly not what the legislators intended.”

“If and when” revisions to the state’s conventional rules become necessary, he added, DEP should start the years-long rulemaking process over from the beginning.

Two weeks later, 17 Republican House members led by Rep. Donna Oberlander, chairwoman of the House Gas and Oil Caucus, repeated the criticism in a letter to Mr. Aunkst that borrowed the majority of its language from the lobbying group’s letter, including a call for DEP to “immediately halt” the process of finalizing conventional drilling rules.

The letter so closely mirrored the coalition’s letter that it duplicated a typo in the first paragraph from the original.

“When we passed the bifurcation bill, it was with the clear intent that the pending Chapter 78 rulemaking proposal would apply to unconventional operations only, and that the existing Chapter 78 would remain in place for conventional operations,” the representatives wrote in one closely matched section. “Dividing the proposed rule into two parts as a word processing task is not what was intended.”

State Senate Republicans raised similar concerns in a letter to acting DEP Secretary John Quigley on Jan. 20 — the first day of Democratic Gov. Tom Wolf’s administration.

But in a shift from the lobbying group’s appeal, the 15 senators who signed the letter asked the department to review and refine its rulemaking effort, not halt it. They also characterized the Legislature’s goals for the divided rules differently, never saying that the General Assembly intended to keep the current rules for conventional operations in place.

Instead they wrote that the Legislature’s intent was to “separate” the pending rules “and to recognize that these two types of drilling are entirely different in their industrial operation and activity.”

“It was done with the expectation that the department would develop and refine these separate regulatory proposals, and make necessary substantive modifications that reflect the unique and very different nature of these two Pennsylvania industries,” the senators wrote.

Despite a warning from an attorney for the crude oil coalition that DEP’s steps do not meet the legal standards for creating new regulations, the Department of Environmental Protection does not plan to suspend its work to revise the rules for either industry.

DEP released updated drafts of its proposed changes earlier this month that reflect the rule split as well as the agency’s consideration of thousands of suggestions submitted after the first official version of the proposals was posted for public comment in December 2013.

DEP plans to open an additional 30-day period for written public comments on the new changes to the drafts for both conventional and unconventional well development on April 4.

In a Feb. 6 letter in response to the Senate Republicans, Mr. Quigley wrote that while a large part of the effort to update the state’s drilling rules has focused on shale gas development, “There have always been portions of this rulemaking that applied to the entire oil and gas industry with the specific intent of regulating certain conventional well development practices.”

He said the department had listened to the conventional industry’s concerns and dropped costly and contentious earlier proposals that would have required conventional operators to remove all buried tanks from their well sites within three years and install locking devices on tank valves and lids.

DEP believes that its actions comply with both the legal requirements and the spirit of the fiscal code amendment, he wrote.

Suggestions that the disagreement may end up in court were raised again last week at a meeting of a new DEP conventional oil and gas advisory board, where several industry groups joined the Pennsylvania Grade Crude Oil Coalition in asking DEP to scuttle the rule and start again.

“I think the legislative intent — I know the legislative intent — was to start over,” the crude oil coalition’s vice president Bruce Grindle said. “If you don’t start over for the conventional rules, we’ll be deprived of the due process that was given to the unconventional rules and any other regulation that’s promulgated.”

DEP’s Deputy Secretary for Oil and Gas Management Scott Perry said the agency will continue to be attentive to the industry’s concerns, but DEP designed the rule from the beginning to apply to some practices at conventional sites. The agency does not agree that the law requires it to start over.

“I sincerely hope” that the industry trade groups “will see that the department is being receptive, open, fair,” he said, “and that there won’t be legal disputes at the resolution of this process.”

Laura Legere:

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