Ohio’s biennial budget was signed into law on June 30. The new budget legislation does not include an increase to the oil and gas severance tax, which would have only applied to operators of horizontal wells. The budget also includes several changes to oil and gas industry regulations. The changes include:
- Horizontal well owners must report production on a quarterly basis rather than an annual basis;
- Beginning on March 31, 2015, well owners must disclose the country of origin of all steel pipes used in the drilling process;
- Only synthetically lined pits or impoundments may be used for temporary storage of brine and other fluids;
- The owner or operator of a solid waste facility may accept material containing technologically enhanced naturally occurring radioactive materials (TENORM) if the material contains less than five picocuries per gram above natural background of radium-226 or radium-228; and,
- After January 1, 2014, the storage, recycling, treatment, processing or disposal of brine or other waste substances must be in accordance with a permit issued by the chief of ODNR.
Several other changes oil and gas industry regulations were signed into law in addition to those summarized above.
A bill was recently introduced in the Pennsylvania House of Representatives that would require use of closed containment or loop systems for all non-freshwater associated with drilling and hydraulic fracturing. Introduced by Representative Karen Boback, who represents parts of Luzerne, Wyoming, and Columbia counties, House Bill 1546 would prohibit the use of open impoundments to store “any produced liquids, treated water, hydraulic fracturing fluid or industrial wastes,” and would mandate the use of “closed containment system” or “closed loop system,” as defined in the bill. “Closed containment system” is defined as “closed noncorrosive tanks or containers” for storing the fluids described above, while “closed loop system” means “a series of interconnected, enclosed noncorrosive storage tanks or containers” that can help maximize the amount of drilling fluid that can be reused and recycled in the hydraulic fracturing process. Rep. Boback acknowledged that the bill is aimed at a minority of operators who still use open impoundments to store the described fluids.
The State Journal reports that the West Virginia Department of Transportation, Division of Highways (DOH), recently presented to state lawmakers regarding West Virginia roadway issues. DOH showed pictures of roads in Ohio, Marshall and Ritchie Counties in an effort to demonstrate that problems with some West Virginia roads are attributable to the natural gas industry. DOH indicated that the problems are mostly the result of the utilization of secondary roads that were not constructed to handle the type or amount of vehicles and equipment being transported by the industry. DOH also said West Virginia appears to be the only state with a road maintenance policy. Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, also spoke to the lawmakers. Burd reported that the oil and gas industry began working voluntarily with DOH two or three years ago, and that the organizations often work together to resolve issues regarding West Virginia roads.
Two bills aimed at expanding natural gas infrastructure to rural and under-served areas in the state were passed by the Pennsylvania Senate on Wednesday. The legislation originated after realizing that a large part of Pennsylvania is not served by natural gas, even though the state hosts one of the largest natural gas deposits in the world. Senate Bill 738 would require natural gas utility companies to submit a three-year plan to the Public Utility Commission outlining plans for expansion. The bill will also allow for the accelerated expansion of projects at the request of residential, commercial, or industrial entities, and provide a cost-spreading plan for customers. Senate Bill 739 would amend the state’s Alternative Energy Investment Act and provide $20M for grants to schools, hospitals, and small business for access to natural gas. Such grants could provide up to half of the cost of a project. The bills will move to the Pennsylvania House of Representatives for further consideration.
Maryland recently enacted legislation, Senate Bill 854, which amends Title 14 (Oil and Gas) of the Environment Article, Annotated Code of Maryland, and imposes reclamation and financial assurance requirements. The new legislation adds the requirement of site reclamation as a permit condition, and replaces the existing bonding requirement of $100,000 (single well) or $500,000 (blanket bond) with a minimum bond of $50,000 per well and not less than “the most recent closure cost estimate.” The legislation also requires a permittee to carry a minimum of $1 million in environmental liability insurance, in addition to the existing requirement to maintain general liability insurance. Under this legislation, the Maryland Department of the Environment may establish alternative means to demonstrate financial assurance. The new legislation does not apply to wells that existed on or before October 1, 2013, unless the well is substantially modified after that date.
Although Marcellus Shale is located in western Maryland, no Marcellus Shale well permits have been issued in Maryland. Earlier this year, efforts to ban hydraulic fracturing in Maryland failed in the legislature.
On May 16th, Pennsylvania House Bill 1414 was referred to the Environmental Resources and Energy House Committee. If passed into law, the bill would require Pennsylvania oil and gas operators to share certain information concerning production, wells and royalties with lessors. The bill would require operators to include the following, among other items, on a check stub or on an attachment accompanying a royalty payment: (i) the name and/or number of the lease, property, unit or well for which the payment is being made; (ii) the month and the year of production; (iii) the total barrels of crude oil or total Mcf of gas sold; (iv) the price received per barrel or Mcf; (v) the total amount of severance and other production taxes and other permitted deductions; (vi) the net value of total sales from property, less taxes and deductions; (vii) the interest owner’s interest in production; (viii) the interest owner’s share of the total value of sales prior to deduction of taxes and other expenses; and (ix) interest owner’s share of sale value less the interest owner’s share of taxes and deductions.
The West Virginia legislature has passed Senate Bill 243, the legislation which authorizes the Department of Environmental Protection, Office of Oil and Gas (OOG), to promulgate the pending Horizontal Well Act regulations. According to the West Virginia Legislature’s bill tracking tool, Senate Bill 243 currently awaits Governor Tomblin’s signature. Notably, this bill includes a measure that would allow an operator to designate certain information regarding hydraulic fracturing chemicals as trade secret when filling out a well completion report. The trade secret measure compels the operator to share the information designated as trade secret with health professionals or the OOG in the event of a medical emergency or an investigation by the OOG.
Updating a previous post, The Intelligencer reports that the West Virginia Senate declined to consider legislation that would have allowed un-leased land to be included in drilling units. Senator Brooks McCabe (D-Kanawha), who introduced Senate Bill No. 616, stated that “I don’t want to speculate whether it was for a lack of support, or if it was just introduced too late in the session. It just never got any traction.”
The West Virginia Senate is reportedly considering legislation, Senate Bill No. 616, that would allow un-leased land to be included in drilling units. This bill would not force an unwilling landowner into a unit, but rather would provide a mechanism for land with unknown owners to be included in a pool. Any royalties resulting from drilling on those lands would be paid into an escrow account until the owner could be found.
As we previously reported in a mid-February post, a bill has been proposed “that would limit the treatment liability of entities that choose to utilize acid mine water (AMD) for hydraulic fracturing of oil/gas wells, or other industrial uses.” Senate Bill 411, sponsored by Senator Kasunic, has generated significant discussion in recent weeks by industry, the Commonwealth, and environmental activists. On March 13, 2013, the bill was tabled by the Senate for further review. Note that the Pennsylvania DEP issued a white paper in January of this year regarding the use of mine influenced water in drilling operations.
On March 11, 2013, Pennsylvania State Representative Mike Reese introduced legislation that would require a new disclosure statement in easements for certain natural gas pipelines. The legislation, House Bill No. 904, specifically provides that “[a]ny easement agreement for a natural gas pipeline, other than a natural gas pipeline operated by a public utility regulated by the commission and used to provide retail natural gas service to end-use customers, entered into or otherwise obtained after the effective date of this section shall include a disclosure statement identifying the natural gas pipeline’s potential impact radius and potential impact circle.” The terms “potential impact radius” and “potential impact circle” are defined by referencing the definitions already established in the minimum federal safety standards for gas pipeline facilities.
On March 8, 2013, Pennsylvania State Representative Greg Vitali (D-Delaware County) introduced legislation, House Bill 950, to permanently ban Marcellus Shale leasing on “lands owned and managed by the Department of Conservation and Natural Resources” (DCNR). In 2010, then-Governor Ed Rendell imposed by executive order a moratorium on additional leasing of state forests for drilling. Vitali said his legislation is needed because Governor Tom Corbett could lift the Rendell moratorium at any time. According to Vitali’s press release, House Bill 950 would not affect drilling on private land, nor would it prevent drilling on the more than 700,000 acres of state forest already available for drilling.
On February 28, 2013, the West Virginia House of Delegates reportedly approved a measure that would significantly increase maximum civil penalties for safety violations involving natural gas pipelines regulated by the West Virginia Public Service Commission (PSC). Under current law, the PSC may impose a civil penalty of $1,000 per day for a pipeline safety violation, up to a maximum of $200,000. The measure passed by the House of Delegates would raise those limits to $200,000 per day and up to a maximum of $2 million. The penalty increase would apply only to natural gas pipeline facilities that are under the jurisdiction of PSC, which oversees about 10 percent of the facilities in the state. The other 90 percent fall under state or federal jurisdiction. The legislation now moves to the West Virginia Senate.
The State Journal reports that West Virginia lawmakers introduced 60 energy-related bills in the first two days of the 2013 regular West Virginia legislative session. Twenty four of the bills concern natural gas, while 16 address a broad range of coal-related issues. In addition, The Dominion Post reports that West Virginia’s joint Legislative Rule Making Review Committee gave a “qualified blessing” to the rules proposed by the Department of Environmental Protection (DEP) to govern horizontal well development. WVDEP developed the proposed rules in 2012 in an effort to implement the Natural Gas Horizontal Well Control Act of 2011. In the next step of the rulemaking process, the proposed rules will be reviewed by House and Senate committees.
Ohio’s rules governing naturally occurring radioactive waste, already among the most restrictive in the country, may be getting even tighter. Several Ohio government agencies are proposing legislation that would tighten regulations dealing with radioactive waste generated during oil and gas drilling activities. Such low-level radioactive material is naturally occurring, and poses little risk to human health. However, the new rules would require materials with elevated levels of radiation to be disposed of in special landfills, or be treated and undergo testing before being disposed of in regular landfills under the supervision of the state EPA.