In this month's Pennsylvania Law Weekly / Legal Intelligencer column, I discuss Pennsylvania Senate Bill 1100 and Pennsylvania House Bill 1950. The bills, which implement many of the recommendations made by Pennsylvania Governor Tom Corbett's Marcellus Shale Advisory Commision, propose significant amendments to Pennsylvania's Oil and Gas Act intended to address Marcellus Shale gas development.
To read the column, click here.
Pennsylvania Governor Tom Corbett announced that he will present a plan to the General Assembly that will implement numerous recommendations proposed by the Marcellus Shale Advisory Commission (Commission), including an impact fee on wells and more rigorous standards on hydraulic fracturing. The impact fee would subject each well to a fee of up to $40,000 in the first year, $30,000 in the second, $20,000 in the third, and $10,000 in the fourth through tenth year, adding up to a potential $160,000 per well. Seventy-five percent of the revenues collected from these fees would be distributed to the counties and municipalities in which drilling is taking place, with the vast majority of the remainder going to the Pennsylvania Department of Transportation for infrastructure and maintenance of roads in those same counties.
The proposed standards would increase well setback distances from wells and waterbodies, increase penalties and bond requirements, and expand gas operators' "presumed liability" for impairing water quality from 1,000 to 2,500.
Governor Corbett created the Commission by Executive Order in March in order to create a plan for developing the Marcellus Shale responsibly, and on July 22 the Commission issued its final report, which included 96 policy recommendations.
In this month's Pennsylvania Law Weekly / Legal Intelligencer column, I examine the recent Pennsylvania Commonwealth Court decision, Energy Conservation Council v. Public Utility Commission, No. 951 C.D. 2010 (July 11, 2011), and the Environmental Rights Amendment to the Pennsylvania Constitution.
To read the article, click here.
Pennsylvania has entered into a settlement in Chesapeake Bay Foundation v. DEP, No. 2009-116-L (Pa. Envtl. Hearing Bd. July 6, 2011), which will require it to amend its Erosion and Sediment Control General Permit (ESCGP-1). A erosion and sediment control permit is required under Chapter 102 of the Pennsylvania Code for earth disturbance activities. The ESCGP-1 provides an expedited permit process for earth disturbance activities associated with oil and gas exploration, production, processing or treatment operations or transmission facilities. Under the terms of the settlement, the ESCGP-1 will no longer be available for projects in high quality or exceptional value water bodies, in a floodplain or on contaminated land.
In his monthly column in The Legal Intelligencer/Pennsylvania Law Weekly, David Mandelbaum of GT Philadelphia examines the trend of seeking an award of attorney fees under the Pennsylvania Clean Streams Law (CSL) from the Pennsylvania Department of Environmental Protection (DEP), and the implications for the DEP, public interest groups and industrial permitees.
In this month's column in The Legal Intelligencer/Pennsylvania Law Weekly, I discuss Pennsylvania's State Water Plan, which was recently amended to designate "critical water planning areas." Passed in 2002, the Water Resourcees Planning Act (Act 220) called for six regional committees and one statewide committee to develop the Plan and then to designate these "critical water planning areas." The State Water Plan attempts to avoid potential water resource conflicts created by residential land use, agriculture, and -- the most water-intensive activity -- thermo-electric power plants. While it receives a great deal of press currently, water used to support development of Marcellus Shale natural gas wells receives only cursory treatment in the current Plan because of the age of the available data. Click here to view the full article.
with Mark Glaser, GT Albany
Last week was an active week for those following regulation of Marcellus Shale natural gas development.
On December 11, New York Governor David Paterson vetoed AB 1143 / SB 8129, that would have banned all new permits for natural gas wells to be stimulated by hydraulic fracturing until May. Instead, he issued an Executive Order establishing a moratorium on new horizontal, high-volume, hydraulic fracturing until July 1, 2011. His counsel's statement is here.
Update: The Governor's veto message was released on December 14.
On December 9, the Delaware River Basin Commission published its long-awaited draft natural gas well pad regulations. It did so against the advice of New Jersey DEP Commissioner Bob Martin stated in a letter of December 7 and over the objection of New York Governor Paterson stated in a letter of December 6. New York voted against release of the draft regulations at the Commission meeting of December 8. Comments on the draft are due by March 16, 2011, and the Commission plans three public hearings in February.
On December 8, the Delaware River Basin Commission also adopted a resolution drastically curtailing, and possibly terminating, planned January hearings on natural gas exploratory wells -- that is wells intended for investigation and not production. Most of the issues to have been addressed in that hearing are now to be considered in the pending rulemaking. This resolution also avoided having the hearing address the adequacy of Pennsylvania state regulatory program, an issue that opponents of natural gas development had advanced in expert reports filed in the proceeding. The Commission Chair's instructions to the hearing officer of December 3 reflect the difficulty of that issue.
The DRBC draft regulations would govern a number of issues, such as bonding and setbacks, also regulated by Pennsylvania and New York. If adopted, they would impose different rules for identical natural gas development in different watersheds, including different watersheds within the same state. The December 10 Philadelphia Inquirer quoted Commission Executive Director Carol Collier as analogizing this distinction to the regulations administered in the New Jersey Pinelands by the Pinelands Commission. Those are quite explicitly land use regulation. Whether the Interstate Compact Commissions intend to regulate each wave of land development, or just to focus on the current natural gas "boom," remains to be seen.
Documents:
Statement of Peter Kiernan, Counsel to the Governor of New York (Dec. 11, 2010)
Veto Message No. 6837 (released Dec. 14, 2010)
New York Executive Order No. 41 (Dec. 13, 2010)
Delaware River Basin Commission Draft Regulations on Natural Gas Development (Dec. 9, 2010)
Letter from New York Gov. David Paterson to DRBC Executive Director Carol Collier (Dec. 6, 2010)
Delaware River Basin Commission Resolution and Order for the Minutes (Dec. 8, 2010)
Letter from DRBC Chair Katherine Bunting-Howarth to Hon. Edward Cahn (Dec. 3, 2010)
Rules Set Out For Gas Drilling, Philadelphia Inquirer, Dec. 10, 2010, at A.1
Contributed by Marvin A. Kirsner
GT Tax Practice, Boca Raton
The Pennsylvania Department of Revenue has ruled that equipment purchased by a company that provides fracturing and acidizing services in connection with natural gas wells is exempt from the Commonwealth's sales and use tax under the mining exemption. The ruling also concludes that materials used in fracturing services (such as gases, sand, and cement) are also exempt from sales and use tax under the mining exemption. For the full text of SUT-10-003 click here.
The New York Times recently covered the ongoing dispute over drilling for natural gas in the Delaware River Basin, an area not only subject to the jurisdiction of state environmental agencies but also an interstate compact agency known as the Delaware River Basin Commission. At the Commission's regular September 15 meeting, the DRBC Executive Director announced that draft regulations for natural gas wells expected by "end of Summer" would be delayed until "mid-October." The Commission will not consider new production wells for approval until those regulations are adopted after a public review process.
However, at the same meeting, the Commission considered a request by opponents of natural gas development to stop construction of exploratory or "science" wells currently under way. The Executive Director's determination subjecting exploratory wells other than certain grandfathered wells to DRBC approval is the subject of a contested hearing, but that hearing may not take place until after the grandfathered wells, or several of them, are complete. On September 15, the Commission voted not to stop construction of the grandfathered wells. Until those wells are completed and analyzed, the gas production companies cannot decide whether to proceed with production wells in the area, and so if they are permitted, natural gas development can remain on track despite the "moratorium" currently in place until the Commission adopts regulations.
The request for a "supersedeas" filed by the opponents, Damascus Citizens for Sustainability, the Delaware Riverkeeper, and the Delaware Riverkeeper Network may be found here. The responses of the drilling proponents, Northern Wayne Property Owners' Alliance and Newfield Appalachia PA, LLC, may be found here and here.
From David Mandelbaum, GT Philadelphia.
On April 6, the Federal Highway Administration disapproved Pennsylvania's proposal to 
impose tolls on Interstate 80, one of two main east-west highways through the Commonwealth. The funds were to be used to provide secure funding for a broad range of transportation needs in Pennsylvania, including, importantly, capital improvements to the major metropolitan public transportation systems. FHWA reasoned that federal law restricted the use of toll revenues to improvements of I-80, and would not permit use of the funds to rebuild other roads and bridges or to fund mass transit.
If you believe that the cost of transportation fuels will increase because of climate policy, international politics, or availability of petroleum, then you believe that those regions that can do business 
with less fuel will do better. Cities with better transit will, all other things equal, be where businesses and people want to be. In the process, the nation as a whole will become more efficient as activity flows to those places. As a practical matter, capital improvements to urban transit systems are just not going to be funded by the bus fairy. Pennsylvania tried one interesting approach to having one transportation mode help fund the sort of capital improvements that climate-friendliness and energy-efficiency would require. We see here an example of the sclerotic complexity that rebuilding the economy for an energy- or carbon-constrained world encounters.
GT’s Environmental Practice is one of the largest and geographically broadest environmental groups in any law firmMore...
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