Pennsylvania Oil & Gas Act Amendments Target Fracking Operations

We’re seeing interest in Pennsylvania’s Marcellus Shale bill, as recently enacted amendments to the state’s Oil and Gas Act are known. Designed to strengthen environmental protections, the legislation imposes additional reporting and operating burdens on natural gas producers in the state. 

For your reference, here’s quick roundup of key points addressed in the new law. We’ll continue to update this list as additional legal commentary comes in:

1. Increased Fees:

“The legislation authorizes an impact fee on ‘unconventional gas wells.’ An ‘unconventional gas well’ is one that is drilled into a geologic formation that requires fracking, multilateral well bores, or other techniques to produce gas at economic rates or volumes. The impact fee is based on several factors, including when the well is spud (i.e., when the physical drilling begins), the year of the well, and the average price of natural gas.” (Pennsylvania Passes Comprehensive Amendments to Oil and Gas Laws by Morgan Lewis) 

2. Increased Reporting Requirements:

“The recodified Act includes a new section on fracturing fluid chemical disclosure, requiring all operators to complete a chemical disclosure form and post the form on the chemical disclosure registry in accordance with yet to be promulgated regulations. In essence, this section makes mandatory chemical disclosure on the FracFocus website.” (New Pennsylvania Oil and Gas Law Targets Unconventional Gas Operations for Heightened Regulatory Oversight by K&L Gates LLP) 

3. New Deadline:

“On April 1 of each year of operation, every natural gas producer must submit a report to the Pennsylvania Public Utility Commission, along with payment of the appropriate fee. The report must include: (1) the number of unconventional gas wells the producer operates in each municipality within each county that has imposed the fee; and, (2) the date each unconventional gas well was drilled/spud, or ceased production. But since the fee will be imposed retroactively, a company’s ‘catch-up’ payment and report for any well spud prior to January 1, 2012 is due by September 1, 2012.” (Pennsylvania Passes Marcellus Shale Unconventional Gas Well Fee by Reed Smith) 

4. Uniform Standards Across the State:

“In addition to both preserving and expanding the scope of preemption of local ordinances purporting to regulate ‘oil and gas operations,’ House Bill 1950 contains additional provisions mandating uniformity among municipal ordinances regulating such activities… House Bill 1950 requires that all local ordinances regulating oil and gas operations allow for the ‘reasonable development’ of oil and gas resources.” (Pennsylvania’s Oil and Gas Act Amended to Require “Uniformity” with Respect to Municipal Ordinances Regulating Oil and Gas Operations by K&L Gates LLP) 

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