Global Shale Law Compendium: Shale Governance in Pennsylvania – Legislation from 2013 to 2016

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal developments and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. In this article, we will focus on the legal, policy, and governance issues related to shale gas development in the United States, and more specifically in the state of Pennsylvania.

Given the long history of oil and gas development in Pennsylvania, the state already had extensive legislation in place governing oil and gas exploration and production prior to the onset of shale development. As this type of unconventional development became of great significance for Pennsylvania, the state General Assembly passed several laws to address issues that had arisen. In a prior article, we set out all statutes applicable to unconventional oil and gas development that were enacted in Pennsylvania during the time period from 2010 through 2012. This article will address the statutes enacted from 2013 through 2016.

Statutes enacted during the 2013-2014 legislative session:

·       Act 66 of July 9, 2013 – Oil and Gas Lease Act (2013 PA S.B. 259)

The Pennsylvania General Assembly signed into law the Oil and Gas Lease Act amending the Guaranteed Minimum Royalty Act of 1979. The Oil and Gas Lease Act provides for further disclosure of payment information to be included into periodic financial statements or check stubs sent to royalty owners. Furthermore, the Act allows the joint operation of contiguous parcels for horizontal drilling unless explicitly prohibited in the oil and gas leases as well as accumulated payment when production proceeds for the year total less than $100.

·       Act 152 of October 22, 2014 – Recording of Surrender Documents from Oil and Natural Gas Lease Act (2014 PA H.B. 402)

The Recording of Surrender Documents from Oil and Natural Gas Lease Act requires a lessee to deliver a recordable surrender document to the lessor within 30 days following the termination, expiration or cancellation of a lease. The purpose of this formal release process is to increase the efficiency of leasing oil and natural gas rights in Pennsylvania.

·       Act 173 of October 22, 2014 – Unconventional Well Report Act (2014 PA H.B. 2278)

The Pennsylvania General Assembly enacted the Unconventional Well Report Act requiring unconventional well operators to submit to the Pennsylvania DEP monthly reports specifying well-specific production amounts. These reports are publicly available on DEP’s Internet website in an effort to ensure that landowners or royalty owners receive proper compensation for the produced oil and gas under their leases. The Unconventional Well Report Act also repealed 58 Pa.C.S. § 3222(a.1) requiring biannual reporting requirements.

Statutes enacted during the 2015-2016 legislative session:

·       Act 47 of October 8, 2015 – Treated Mine Water Act (2015 PA S.B. 875)

The Pennsylvania General Assembly enacted the Treated Mine Water Act specifically addressing the use of treated mine water for oil and gas development. The Treated Mine Water Act gives immunity from legal actions to mine operators who provide treated mine water from a permitted mining activity in case of harm resulting from the use of the water.  This immunity is provided so long as the water is used for oil and gas development outside the boundaries of the permitting mining activity and the mine operator is not the one using the water.

The Treated Mine Water Act also provides legal immunity to the person who acquires treated mine water from a mine operator for the treatment or abatement of the mine drainage or mine pool water. Neither party, however, is immune from liability in the event of unlawful spills or releases of the water.

·       Act 47 of June 23, 2016 – Amendments to Title 66 Public Utilities Code (2016 PA H.B. 57)

The Pennsylvania General Assembly amended certain provisions of Title 66 of the Public Utilities Code and altered the method of calculating interest rates associated with the recovery of purchased gas costs. The legislation also eliminated migration charge for consumers who select a different gas supplier and allowed distribution companies to recover all reasonable costs for establishing a consumer choice program.

·       Act 52 of June 23, 2016 – Pennsylvania Grade Crude Development Act (2016 PA S.B. 279)

The Pennsylvania Grade Crude Development Act created the Pennsylvania Grade Crude Development Advisory Council. The Advisory Council, among other things, is responsible to make recommendations for technical regulatory requirements, but also review and comment on all technical regulations proposed under 58 Pa. C.S., and “explore development” of the regulatory system that is specifically applicable to conventional development. Furthermore, the Advisory Council is required to submit an annual report addressing the Council’s activities and recommendations to the state Governor, House and Senate leadership, the chairpersons of the House and Senate Environmental Resources and Energy Committees and the DEP secretary.

In addition, this Act requires DEP to consult with the council on “all policies and technical regulations” promulgated under 58 Pa. C.S. as well as requiring EQB to undertake rulemaking for conventional wells “separately and independently” from that of unconventional wells.