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Quarterly legislative action update: Marcellus and Utica shale region (4Q16)

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A quarterly update from the legal beagles at global law firm Norton Rose Fulbright. A quarterly legislative action update for the second quarter of 2016 looking at previously laws acted upon, and new laws introduced, affecting the oil and gas industry in Pennsylvania, Ohio and West Virginia.

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Quarterly legislative action update: Marcellus and Utica shale region (4Q16)

  1. 1. Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP – 2016 - Private and confidential
  2. 2. Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 2 Our Norton Rose Fulbright Pittsburgh-Southpointe practice tracks legislative activity that we believe may impact oil and gas development within the Marcellus and Utica shale regions (Pennsylvania, West Virginia and Ohio). This Update contains all of the relevant legislative activity occurring in Pennsylvania, West Virginia, and Ohio through December 22, 2016. Summary of Activity Since Previous Update Pennsylvania – Existing Bills Acted Upon: • PA House Bill 1391 – Amendments to Oil and Gas Lease Act • PA House Bill 1704 –Amendments to Engineer, Land Surveyor and Geologist Registration Law Pennsylvania – New Bills Introduced: • PA House Bill 2275 – Changes to Environmental Quality Board membership • PA House Bill 2277 – Amendment to Oil & Gas Act related to bonding requirements • PA House Bill 2319 – Amendment to Oil & Gas Lease Act • PA House Bill 2361 – Pennsylvania Turnpike Right-of-Way Act • PA House Bill 2366 – Amendments to Oil and Gas Act Concerning Setbacks • PA House Bill 2368– Amendments to Oil and Gas Act Concerning Distribution of Marcellus Legacy Fund • PA House Bill 2387 – Erosion and Sediment Control Permit Act • PA House Bill 2403 – Amendment to Clean Streams Law • PA House Bill 2431 – Amendments to Safe Drinking Water Act • PA Senate Bill 1235 – Amendments to the Pennsylvania One Call Law • PA Senate Bill 1401 – Water Quality Improvement Act • PA Senate Resolution 385 – Comparison of State and Federal Environmental Laws and Regulations
  3. 3. Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Contents1 Pennsylvania legislative action updates ...............................................................1 House ....................................................................................................................................................1 PA House Bill 33 – Amendments to Municipalities Planning Code ................................................1 PA House Bill 48 – Water Well Standards (see also PA House Bill 81 – identical when introduced) ...............................................................................................................1 PA House Bill 67 – Amends Dormant Oil and Gas Act regarding abandonment of mineral interest ..................................................................................................................2 PA House Bill 70 – Amends Dormant Oil and Gas Act regarding unknown owner trusts ..................................................................................................................................3 PA House Bill 81 – Water Well Standards (see also PA House Bill 48 – identical when introduced) ...............................................................................................................4 PA House Bill 82 – Amends Oil & Gas Act to impose natural gas severance tax..........................4 PA House Bill 151 – Recreational land offset for pipeline construction..........................................4 PA House Bill 167 – Permits issued by the Department of Environmental Protection supersedes local ordinances .............................................................................................5 PA House Bill 252 – Marcellus Shale Health Registry Act .............................................................5 PA House Bill 343 – Forest Reserves Municipal Financial Relief Law...........................................5 PA House Bill 371 – Amendments to Underground Utility Line Protection Law to require use of domestic steel.....................................................................................6 PA House Bill 445 – Amendments to Underground Utility Line Protection Law (PA One Call)............................................................................................................................6 PA House Bill 500 – Natural Gas Severance Tax ..........................................................................7 PA House Bill 507 – Pennsylvania Disposal Well Act ....................................................................7 PA House Bill 522 – Telephone reporting of violations of oil and gas laws....................................7 PA House Bill 523 – Amends Oil and Gas Act to require notice by newspaper publication of application for well permit..........................................................................8 PA House Bill 524 – Well Operation Response Team Act .............................................................8 PA House Bill 526 – Natural Gas Severance Tax ..........................................................................8 PA House Bill 528 – Natural Gas Severance Tax with proceeds to LIHEAP program ..................8 PA House Bill 621 – Format of documents recording lease assignments......................................9 PA House Bill 716 – Severance Tax Exemption for Manufacturing Purpose.................................9 PA House Bill 737 – Water Obstruction and Encroachment Permits.............................................9 PA House Bill 818 – Landowner notice of certain permit applications ........................................ 10 PA House Bill 855 – Amendments to Gas & Hazardous Liquids Pipelines Act........................... 11 PA House Bill 1097 – Water Well Insurance Fund ...................................................................... 11 PA House Bill 1099 – Provides for independent counsel for the Environmental Quality Board .................................................................................................................. 12 PA House Bill 1142 – Natural Gas Severance Tax ..................................................................... 12 PA House Bill 1253 – Professional licensure of engineers, land surveyors, and geologists........................................................................................................................ 13 PA House Bill 1292 – Hydraulic fracturing chemical disclosure requirements............................ 13 PA House Bill 1321 – Natural Gas Severance Tax ..................................................................... 14 1 Clicking on entries in this Table of Contents will take you directly to the summary of that legislation. Further, each summary contains hyperlinks to third party websites with further relevant information. An explanation of the third party websites associated with the hyperlinks is found at the beginning of each state section.
  4. 4. Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Bill 1325 – Amendments to Second Class Township Code Regarding Storm Water Facilities..................................................................................................... 14 PA House Bill 1327 – Amendments to Fiscal Code .................................................................... 15 PA House Bill 1363 – Natural Gas Severance Tax ..................................................................... 17 PA House Bill 1391 – Amendments to Oil and Gas Lease Act ................................................... 17 PA House Bill 1394 – Amendments to Borough Code Regarding Storm Water Facilities .......................................................................................................................... 18 PA House Bill 1517 – Natural Gas Vehicle Development Program extension............................ 18 PA House Bill 1536 – Natural Gas Severance Tax ..................................................................... 19 PA House Bill 1570 – Education Reinvestment Act .................................................................... 19 PA House Bill 1661 – Amendments to First Class Township Code Regarding Storm Water Facilities ............................................................................................................... 19 PA House Bill 1704 – Amendments to Engineer, Land Surveyor and Geologist Registration Law ............................................................................................................. 20 PA House Bill 1731 – Keystone Energy Enhancement Act......................................................... 21 PA House Bill 1743 – Natural Gas Severance Tax ..................................................................... 22 PA House Bill 1825 – Acid Mine Drainage .................................................................................. 22 PA House Bill 1846 – Amendment to Oil & Gas Act.................................................................... 22 PA House Bill 2030 – Amendment to Pennsylvania Climate Change Act................................... 23 PA House Bill 2275 – Changes to Environmental Quality Board membership ........................... 23 PA House Bill 2277 – Amendment to Oil & Gas Act related to bonding requirements ............... 23 PA House Bill 2319 – Amendment to Oil & Gas Lease Act......................................................... 24 PA House Bill 2361 – Pennsylvania Turnpike Right-of-Way Act................................................. 24 PA House Bill 2366 – Amendments to Oil and Gas Act Concerning Setbacks........................... 25 PA House Bill 2368 – Amendments to Oil and Gas Act Concerning Distribution of Marcellus Legacy Fund................................................................................................... 25 PA House Bill 2387 – Erosion and Sediment Control Permit Act................................................ 26 PA House Bill 2403 – Amendment to Clean Streams Law.......................................................... 26 PA House Bill 2431 – Amendments to Safe Drinking Water Act................................................. 26 PA House Resolution 316 – Study to Expand Availability of Natural Gas in Pennsylvania................................................................................................................... 26 PA House Resolution 388 – Accounting of Marcellus Legacy Fund ........................................... 27 Concurrent resolution .......................................................................................................................27 PA Concurrent Resolution – Disapproving the Environmental Protection Standards at Oil & Gas Well Sites Regulations Submitted by the Environmental Quality Board............................................................................................................................... 27 Senate..................................................................................................................................................27 PA Senate Bill 53 – Amends Oil and Gas Act related to lease disclosure and indemnification................................................................................................................ 27 PA Senate Bill 64 – Distribution of impact fee ............................................................................. 28 PA Senate Bill 116 – Natural Gas Severance Tax ...................................................................... 28 PA Senate Bill 145 – Amends Oil and Gas Act to mandate Pugh Clause .................................. 29 PA Senate Bill 147 – Amendments to Oil & Gas Lease Act........................................................ 29 PA Senate Bill 148 – Natural Gas Lease Anti-Retaliation Act..................................................... 30 PA Senate Bill 257 – Private water supply testing and public disclosure of results .................... 31 PA Senate Bill 279 – Pennsylvania Grade Crude Development Advisory Council Act............... 31 PA Senate Bill 307 – Provides for independent counsel for the Environmental Quality Board............................................................................................................................... 32 PA Senate Bill 313 – Unconventional Oil and Gas Unit Conservation and Integration Act................................................................................................................................... 33
  5. 5. Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA Senate Bill 347 – Protection of water supplies ...................................................................... 34 PA Senate Bill 348 – Leasing of state forest lands...................................................................... 34 PA Senate Bill 367 – PA One Call System Applicability to Gathering Lines ............................... 35 PA Senate Bill 375 – Marcellus Shale Health Advisory Panel..................................................... 35 PA Senate Bill 380 – Disease and Cancer Cluster Coordination Act.......................................... 36 PA Senate Bill 395 – Education for Extraction Tax ..................................................................... 36 PA Senate Bill 413 – Amendments to Sections of Pennsylvania Consolidated Statutes Concerning Administrative Law & Procedure................................................... 37 PA Senate Bill 415 – Natural Gas Severance Tax ...................................................................... 37 PA Senate Bill 417 – Amendment to Oil and Gas Act to require use of steel made in United States .................................................................................................................. 37 PA Senate Bill 418 – Amendment to Underground Utility Line Protection Law........................... 38 PA Senate Bill 419 – Amendment to Oil and Gas Act to require publication of country of origin of steel products................................................................................................ 38 PA Senate Bill 455 – Amendment to Solid Waste Management Act........................................... 39 PA Senate Bill 519 – Natural Gas Severance Tax ...................................................................... 39 PA Senate Bill 551 – Physician Hydraulic Fracturing Chemical Disclosure ................................ 39 PA Senate Bill 557 – Pipeline Impact Fee................................................................................... 40 PA Senate Bill 561 – Amendments to Gas and Hazardous Liquids Pipelines Act...................... 40 PA Senate Bill 571 – Amends Safe Drinking Water Act.............................................................. 41 PA Senate Bill 572 – Amends Municipalities Planning Code ...................................................... 41 PA Senate Bill 653 – Water Well Construction Standards .......................................................... 41 PA Senate Bill 655 – Amendments to Fiscal Code ..................................................................... 42 PA Senate Bill 801 – Publication of Permits by DEP................................................................... 43 PA Senate Bill 802 – Notification of pipeline construction........................................................... 43 PA Senate Bill 803 – Protection of Act 43 farmland .................................................................... 44 PA Senate Bill 804 – Amends Gas and Hazardous Liquids Pipelines Act.................................. 44 PA Senate Bill 845 – Licensing of Soil Scientists ........................................................................ 45 PA Senate Bill 875 – Treated Mine Water Act............................................................................. 45 PA Senate Bill 886 – Affordable Energy Development Zones Act .............................................. 46 PA Senate Bill 905 – Local Taxation of Natural Gas Pipelines ................................................... 46 PA Senate Bill 953 – Natural Gas Infrastructure Expansion and Access Act ............................. 47 PA Senate Bill 992 – Amendment to Water Rights Law.............................................................. 47 PA Senate Bill 993 – Amendment to Delaware River Basin Compact........................................ 48 PA Senate Bill 994 – Amendment to Susquehanna River Basin Compact Law ......................... 48 PA Senate Bill 1011 – Rulemaking Prohibition Related to Conventional Oil and Gas Wells ............................................................................................................................... 49 PA Senate Bill 1044 – Rural Pennsylvania Pipeline Safety Act .................................................. 49 PA Senate Bill 1092 – Permit Tracking and Notification Law...................................................... 49 PA Senate Bill 1145 – Amendment to Oil & Gas Conservation Law........................................... 50 PA Senate Bill 1195 – Amendment to Pennsylvania Greenhouse Gas Regulation Implementation Act ......................................................................................................... 50 PA Senate Bill 1235 – Amendments to the Pennsylvania One Call Law .................................... 51 PA Senate Bill 1401 – Water Quality Improvement Act............................................................... 51 PA Senate Resolution 247 – Crude by Rail Shipments............................................................... 52 PA Senate Resolution 277 – Compliance with Clean Power Plan .............................................. 52 PA Senate Resolution 385 – Comparison of State and Federal Environmental Laws and Regulations.............................................................................................................. 53
  6. 6. Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 West Virginia legislative action updates .............................................................54 House ..................................................................................................................................................54 WV House Bill 2062 – Proposes § 22C-13-1 to create Legislative Oversight Commission on Energy Workers Safety (“Commission”) ............................................... 54 WV House Bill 2080 – Amends Severance & Business Privilege Tax Act (“Tax”) to reallocate up to $30 million of natural gas and oil severance tax revenues to the counties where the gas or oil originated from........................................................... 55 WV House Bill 2269 – Bars Department of Environmental Protection, Department of Health and Human Resources, Division of Natural Resources and Department of Commerce from proposing or promulgating rules which are more stringent than corresponding federal laws or regulations...................................... 56 WV House Bill 2407 – Proposes §11-13A-5b to reallocate and dedicate 3% of oil and gas severance tax revenues to the counties and municipalities from where the gas was taken........................................................................................................... 56 WV House Bill 2585 – Requires leaseholders to notify the mineral interest owners when there is an assignment of the lease ..................................................................... 57 WV House Bill 2707 – Proposes §36-3-8a to require natural gas lessors to provide surface owners the ability to purchase gas from those wells ......................................... 57 WV House Bill 2890 – Creating a procedure to quiet title to abandoned mineral interests by serving notice on a mineral interest owner and filing an affidavit with the county clerk within 60 days ............................................................................... 57 WV House Bill 2975 – Mandating that tax assessor value oil and gas interest based on amount of oil or gas actually produced...................................................................... 59 WV House Bill 2977 – Amends § 5A-11-3 to mandate that rents and royalties from mineral leases under state rivers and streams be expended for road paving and maintenance ............................................................................................................ 59 WV House Bill 3013 – Amends Natural Gas Horizontal Well Act to increase limit of disturbance of a well site to 1500 feet from an occupied structure and establishes air, noise, and dust monitoring requirements. ............................................. 60 Senate..................................................................................................................................................61 WV Senate Bill 564 – Authorizing Shallow Gas Well Review Board to grant waivers of minimum distance requirements for shallow wells to encourage multi-well pads ................................................................................................................................ 61 Ohio legislative action updates............................................................................62 House ..................................................................................................................................................62 OH House Bill 8 – Oil and gas-unit operation/valuing reserves-method ..................................... 62 OH House Bill 83 – Oil or gas well owner-royalty statement to holder of royalty interest ............................................................................................................................ 62 OH House Bill 522 - Oil and gas wells-local approval/conversion-injection wells ....................... 63 Senate..................................................................................................................................................63 OH Senate Bill 46 – Lake Erie – ban on oil & gas development ................................................. 63 OH Senate Bill 47 – Brine – prohibit land application and injection/well conversion- prohibit ............................................................................................................................ 64 OH Senate Bill 120 – Oil and Gas law – revise enforcement...................................................... 64 OH Senate Bill 166 – Horizontal wells-emergency response plans ............................................ 65
  7. 7. Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Contacts .................................................................................................................66
  8. 8. 1 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Pennsylvania legislative action updates2 House PA House Bill 33 – Amendments to Municipalities Planning Code Sponsor: Glenn Grell (Republican – part of Cumberland County [outside Harrisburg]) Overview: Amends Municipalities Planning Code (“MPC”) to allow governing body to appoint up to three residents of the municipality to serve as alternate members of the Planning Commission. Alternate members of Planning Commission appointed pursuant to this bill may participate fully in event of absence or recusal of any absent member. Current Status: Approved unanimously by the House Appropriations Committee on March 30, 2015. Passed unanimously by the House of Representatives on March 30, 2015. Reported unanimously out of the Senate Committee on Local Government on July 14, 2015. Passed unanimously by the Senate on September 28, 2015. Signed into law by Governor Tom Wolf as Act 42 on October 7, 2015. PA House Bill 48 – Water Well Standards (see also PA House Bill 81 – identical when introduced) Sponsor: Robert W. Godshall (Republican – part of Montgomery County [outside Philadelphia]; Chair of Consumer Affairs Committee) Overview: Establishes Chapter 33 of Title 27, setting forth private water well construction standards, including powers and duties of Department of Environmental Protection and penalties for noncompliance. 2 This summary contains hyperlinks to third party websites containing further relevant information. Clicking on the bill number will take you to the main bill information page at the General Assembly’s website, from which you can navigate to the bill text and legislative history. Where applicable, clicking on “Printer’s Number” will take you to the amended version of the bill. Clicking on the sponsor’s name will take you to the member information page on the General Assembly’s website, which includes biographical, district, and committee assignment information.
  9. 9. 2 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 “Construction” section states that Chapter shall not be construed to allow: • the Department of Conservation of Natural Resources to require a permit for construction/decommissioning of water wells; or • the Commonwealth or any municipality, agency, department, or division thereof to “meter, charge, tax or otherwise impose a fee for the usage of private water wells in this Commonwealth.” Amendments: Printer’s Number 1884: Requires the Environmental Quality Board (“EQB”) to promulgate standards for well construction and decommissioning that are consistent with those recommended by the American National Standards Institute or National Ground Water Association, removing discretion given under previous version allowing for “similar” standards as the EQB “deems necessary.” Current Status: Referred to the House Committee on Consumer Affairs on January 21, 2015. Reported unanimously out of the House Committee on Consumer Affairs on June 24, 2015. Reported unanimously out of the House Rules Committee on July 21, 2015. *PA House Bill 48 is a reintroduction of PA House Bill 343 from the 2013-2014 session of the Pennsylvania General Assembly. PA House Bill 67 – Amends Dormant Oil and Gas Act regarding abandonment of mineral interest Sponsor: Robert W. Godshall (Republican – part of Montgomery County [outside Philadelphia]; Chair of Consumer Affairs Committee) Overview: In instances where the mineral estate (including oil and gas) has been severed from the surface estate, an interest in oil or gas shall be deemed abandoned after twenty years in the absence of: • A permit to drill an oil or gas well; • Actual production of oil or gas from the land or from lands pooled/unitized with the interest; or • Use of interest in underground gas storage operations. An interest deemed to be abandoned shall vest in the owner of the surface estate as of the date of the abandonment. • Surface owner must file with recorder of deeds written notice of claim of vested interest in abandoned subsurface mineral estate rights.
  10. 10. 3 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 An interest shall not be deemed abandoned if the owner records a claim of interest prior to the latest of the following: • Twenty years after the last sale, lease, mortgage, or transfer of record of the interest; or • Twenty years after the last issuance of a drilling permit, actual production of oil or gas from the interest or from lands pooled/unitized with the interest, or use of the interest in underground gas storage operations. The recorded claim of interest operates to preserve the interest for twenty years, and may be preserved indefinitely by recording written notices pursuant to the act. Bill does not indicate that twenty-year period begins to run from date of enactment, but could include time period before enactment as well. Current Status: Referred to House Committee on Environmental Resources and Energy on January 21, 2015. *PA House Bill 67 is a reintroduction of PA House Bill 97 from the 2013-2014 session of the Pennsylvania General Assembly. PA House Bill 70 – Amends Dormant Oil and Gas Act regarding unknown owner trusts Sponsor: Robert W. Godshall (Republican – part of Montgomery County [outside Philadelphia]; Chair of Consumer Affairs Committee) Overview: Allows owner of interest in oil and gas rights underlying a tract of land to petition court to set up a trust in favor of unknown owner(s) of the oil and gas rights underlying the tract. Requires petitioner to have made a diligent effort to locate the unknown owner(s). Petitioner must show that creation of the trust is likely to result in the commercial development of subsurface properties. Adds definitions for “Bonus” and “Correlative rights.” Current Status: Referred to House Committee on Environmental Resources and Energy on January 21, 2015. *PA House Bill 70 is a reintroduction of PA House Bill 96 from the 2013-2014 session of the Pennsylvania General Assembly.
  11. 11. 4 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Bill 81 – Water Well Standards (see also PA House Bill 48 – identical when introduced) Sponsor: Kate Harper (Republican – part of Montgomery County [outside Philadelphia]; Chair of Local Government Committee) Overview: Establishes Chapter 33 of Title 27, setting forth private water well construction standards, including powers and duties of Department of Environmental Protection and penalties for noncompliance. “Construction” section states that Chapter shall not be construed to allow: • the Department of Conservation of Natural Resources to require a permit for construction/decommissioning of water wells; or • the Commonwealth or any municipality, agency, department, or division thereof to “meter, charge, tax or otherwise impose a fee for the usage of private water wells in this Commonwealth.” Current Status: Referred to the House Committee on Environmental Resources and Energy on January 21, 2015. *PA House Bill 81 is a reintroduction of PA House Bill 343 from the 2013-2014 session of the Pennsylvania General Assembly. PA House Bill 82 – Amends Oil & Gas Act to impose natural gas severance tax Sponsor: Kate Harper (Republican – part of Montgomery County [outside Philadelphia]; Chair of Local Government Committee) Overview: Extensive severance tax bill, with rate of “3.5% of the gross value of units severed at the wellhead during a reporting period.” Current impact fee structure would remain unchanged and would be in addition to the new severance tax. Current Status: Referred to the House Committee on Environmental Resources and Energy on January 21, 2015. PA House Bill 151 – Recreational land offset for pipeline construction Sponsor: W. Curtis Thomas (Democrat – Philadelphia) Overview: Pipeline operator that purchases or obtains an easement over public land, agricultural- easement land, or permanently preserved land for a new or expanded pipeline must purchase or grant an easement for an equivalent section of land within the county for public active or passive recreational use. Pipeline operator must ensure that post-construction storm water runoff does not exceed pre-construction volume and rate.
  12. 12. 5 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Current Status: Referred to House Committee on Consumer Affairs on February 4, 2015. *PA House Bill 151 is a reintroduction of PA Senate Bill 506 from the 2013-2014 session of the Pennsylvania General Assembly. PA House Bill 167 – Permits issued by the Department of Environmental Protection supersedes local ordinances Sponsor: Seth Grove (Republican – part of York County [south-central Pennsylvania]) Overview: Amends Administrative Code to provide that a permit issued by the Department of Environmental Protection (“DEP”) shall supersede all local ordinances and enactments purporting to establish standards for natural resources and environmental protection that conflict with the DEP’s regulatory oversight. Current Status: Referred to the House Committee on Environmental Resources and Energy on January 23, 2015. *PA House Bill 167 is a reintroduction of PA House Bill 2115 from the 2013-2014 session of the Pennsylvania General Assembly. PA House Bill 252 – Marcellus Shale Health Registry Act Sponsor: Karen Boback (Republican – Wyoming County and parts of Lackawanna and Luzerne Counties [northeast Pennsylvania]) Overview: Establishes a “health registry” for the collection of health-related data associated with unconventional gas well drilling, consisting of data collected and provided by health care practitioners. Requires health care practitioners to report to Department of Health any “health concerns” that “may be associated with unconventional gas well operations.” Current Status: Referred to House Committee on Health on February 3, 2015. PA House Bill 343 – Forest Reserves Municipal Financial Relief Law Sponsor: Martin T. Causer (Republican – Cameron, Potter and part of McKean Counties [northern tier of Pennsylvania]; member of Environmental Resources & Energy Committee) Overview: Requires 20% of all revenue received by any state agency, except the Game Commission and the Fish and Boat Commission, through the sale of timber or through oil and gas leases and royalties, to be deposited into the Forest Reserves Municipal Relief Fund (“Fund”).
  13. 13. 6 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 State treasurer distributes money in Fund to counties, school districts, and municipalities based on relative number of acres in each county, school district, or municipality as certified by the Secretary of Conservation and Natural Resources under Section 2(a) of Forest Reserves Municipal Financial Relief Law. All money in Fund must be distributed on or before September 1 of each year. Current Status: Referred to House Committee on Environmental Resources and Energy on February 5, 2015. PA House Bill 371 – Amendments to Underground Utility Line Protection Law to require use of domestic steel Sponsor: Frank Burns (Democrat – part of Cambria County [central Pennsylvania]) Overview: Requires that any construction, alteration, repair, or maintenance of natural gas gathering lines that requires use of steel products only use steel products made in the United States. Current Status: Referred to House Committee on Consumer Affairs on February 9, 2015. PA House Bill 445 – Amendments to Underground Utility Line Protection Law (PA One Call) Sponsor: Matthew Baker (Republican – Tioga County and part of Bradford County [northeast Pennsylvania]) Overview: Adds several definitions; new defined term “conventional oil and gas well” specifically excludes horizontal, hydraulically stimulated well bores below the Elk Group or its stratigraphic equivalent (the Marcellus and Utica Shales lie below the Elk Group); “well pad” is also a newly defined term. Excludes “crude oil or natural gas production and gathering lines or facilities associated with conventional oil and gas well[s]” from definition of “‘line’ or ‘facility’” as used in act. Amends certain recordkeeping and reporting requirements applicable to all industries. Provides for annual fee assessed to users of One Call System; amount of fee is not specified in bill. Establishes a “Damage Prevention Committee” and provides that one of the members of the committee will be a representative of the natural gas or petroleum pipeline industry; committee shall review reports of violations of act, issue warnings, and make informal determinations of administrative penalties. Establishes Underground Utility Line Protection Fund. Current Status: Referred to House Committee on Consumer Affairs on February 11, 2015.
  14. 14. 7 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Bill 500 – Natural Gas Severance Tax Sponsor: Madeleine Dean (Democrat – part of Montgomery County [outside Philadelphia]) Overview: Extensive severance tax bill, with rate of “3.5% of the gross value of units severed at the wellhead during a reporting period, plus 3.5¢ per unit severed.” Repeals sunset provision of Oil & Gas Act that would have terminated the impact fee upon passage of a severance tax, allowing imposition of both an impact fee and severance tax. Current Status: Referred to the House Committee on Environmental Resources and Energy on March 4, 2015. PA House Bill 507 – Pennsylvania Disposal Well Act Sponsor: Matt Gabler (Republican – Elk County and part of Clearfield County [northern Pennsylvania]) Overview: Provides for 1,000 foot setback, measured horizontally from the vertical well bore, for disposal wells. Defines “disposal well” as a “permitted well that is: (1) drilled or altered to inject brines and other fluids associated with the production of oil and natural gas for disposal; or (2) classified as a Class II well and regulated under 40 CFR Pt. 144 (relating to underground injection control program).” Current Status: Referred to House Committee on Environmental Resources and Energy on February 17, 2015. PA House Bill 522 – Telephone reporting of violations of oil and gas laws Sponsor: Scott Conklin (Democrat – part of Centre County [central Pennsylvania]) Overview: Requires Department of Environmental Protection to establish toll-free, 24-hour telephone number maintained exclusively for the reporting of suspected violations of laws related to oil and gas. Current Status: Referred to House Committee on Environmental Resources and Energy on February 23, 2015.
  15. 15. 8 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Bill 523 – Amends Oil and Gas Act to require notice by newspaper publication of application for well permit Sponsor: Scott Conklin (Democrat – part of Centre County [central Pennsylvania]) Overview: Requires applicant for well permit to publish in newspaper of general circulation in locality where well is to be located notice of filing of application, once per week, for four consecutive weeks. Current Status: Referred to House Committee on Environmental Resources and Energy on February 23, 2015. PA House Bill 524 – Well Operation Response Team Act Sponsor: Scott Conklin (Democrat – part of Centre County [central Pennsylvania]) Overview: Directs Secretary of Labor and Industry to promulgate rules requiring that operators “make available a certified response team” that can respond to an emergency at well site; “emergency” is not defined. Promulgated rules also include additional training and reporting requirements imposed on operators. Current Status: Referred to House Committee on Environmental Resources and Energy on February 23, 2015. PA House Bill 526 – Natural Gas Severance Tax Sponsor: Scott Conklin (Democrat – part of Centre County [central Pennsylvania]) Overview: Extensive severance tax bill, with rate of “5¢ per unit severed at the wellhead.” Prohibits deduction of severance fee from royalty paid to mineral interest holder. Does not address current impact fee, presumably leaving intact 58 Pa. Cons. Stat. § 2318 that would sunset the impact fee upon imposition of a severance tax. Current Status: Referred to House Committee on Environmental Resources and Energy on February 23, 2015. PA House Bill 528 – Natural Gas Severance Tax with proceeds to LIHEAP program Sponsor: Scott Conklin (Democrat – part of Centre County [central Pennsylvania]) Overview: Extensive severance tax bill, with rate of “10¢ per unit severed at the wellhead.” First $300 million raised under tax to be allocated to Low-Income Home Energy Assistance Program, with any remaining amounts to be allocated to property tax or rent rebate under Taxpayer Relief Act.
  16. 16. 9 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Repeals 58 Pa. Cons. Stat. § 2318 so that impact fee does not expire upon passage of severance tax. Current Status: Referred to House Committee on Environmental Resources and Energy on February 23, 2015. PA House Bill 621 – Format of documents recording lease assignments Sponsor: Sandra Major (Republican – parts of Susquehanna and Wayne Counties [northeast Pennsylvania]) Overview: Requires that documents presented for recordation that contain or reference multiple leases include an addendum containing (1) the names of the lessor(s), (2) the prior recording information for the leasehold interest, and (3) the property with which each lease is associated. Allows recorder of deeds to refuse, and his/her sole discretion, to record documents incorporating by reference or exhibit more than fifty (50) leases. Current Status: Unanimously passed by House of Representatives on May 13, 2015. Referred to Senate Committee on Environmental Resources and Energy on May 28, 2015. PA House Bill 716 – Severance Tax Exemption for Manufacturing Purpose Sponsor: Mike Carroll (Democrat – parts of Lackawanna and Luzerne Counties [northeast Pennsylvania]) Overview: Prohibits imposition of a tax on natural gas that is: (1) “sold and delivered by a producer at or near the producing site for the processing or manufacture of tangible personal property” or (2) “provided free of charge to the surface owner of the land from which the natural gas is severed.” Current Status: Referred to the House Committee on Environmental Resources and Energy on March 4, 2015. PA House Bill 737 – Water Obstruction and Encroachment Permits Sponsor: Michael K. Hanna (Democrat – Clinton County and part of Centre County [north-central Pennsylvania]) Overview: Permit fee under 25 Pa. Code Ch. 105 (related to dam safety and waterway management) for a “de minimis impact project” shall be $100.00.
  17. 17. 10 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Defines “de minimis impact project” as “the construction, maintenance, testing, repair, rehabilitation or replacement of water obstructions and encroachments that create a disturbance that affects an area not larger than 1/20 of an acre located within a floodway.” Current Status: Referred to the House Committee on Environmental Resources and Energy on March 6, 2015. PA House Bill 818 – Landowner notice of certain permit applications Sponsor: W. Curtis Thomas (Democrat – Philadelphia) Overview: Requires all applicants for permits under the “Air Pollution Control Act,” the “Dam Safety and Encroachments Act,” the “Clean Streams Law,” as well as applicants for water allocation permits pursuant to the Act of June 24, 1939 (P.L. 842, No. 365), to provide certain information to landowners in the “area of concern” The “area of concern” is defined as an “area where all of the following apply”: (1) “An area affected by a radius of one-half mile from the center of a proposed permit activity or, where an activity is not centralized, an area extending one- half mile beyond the boundary of the proposed activity; (2) An area where one or more impacts of the type for which the Department of Environmental Protection [“DEP”] is authorized to analyze are anticipated; and (3) An area where one or more impacts that are not included under clause (2), such as noise, vibration or odor, are reasonably anticipated to arise from the proposed permitted activity.” The applicant must provide landowners within the “area of concern” written notice of the date of publication of the permit application in the Pennsylvania Bulletin and information addressing submission of public comments related thereto, as well as the date, location, and time of any hearing scheduled by the DEP regarding the application, provided at least five (5) days prior to the hearing date. In addition, the applicant must give landowners within the “area of concern” written notice of: (1) A description of the type of permit application submitted to the DEP; (2) A brief description of the activity planned for the project under the permit application; (3) A statement that the project under the application is anticipated to have one or more impacts on the landowners; and (4) A brief description of the anticipated impact or impacts. Requires DEP to post each permit application on its website in its entirety.
  18. 18. 11 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Current Status: Referred to House Committee on Environmental Resources and Energy on March 23, 2015. PA House Bill 855 – Amendments to Gas & Hazardous Liquids Pipelines Act Sponsor: Robert W. Godshall (Republican – part of Montgomery County [outside Philadelphia]; Chair of Consumer Affairs Committee) Overview: Transfers authority over pipeline safety inspections from Public Utility Commission to Department of Environmental Protection (“DEP”). Specifies civil penalty of up to $1,000 per day for violations of Act by pipeline operator. Directs DEP to submit a certification to United States Department of Transportation (“USDOT”) to authorize the DEP to enforce federal pipeline safety laws regarding intrastate pipelines within Pennsylvania. Directs DEP to make an agreement with USDOT to authorize DEP to enforce federal pipeline safety laws regarding interstate pipelines within Pennsylvania. Current Status: Referred to House Committee on Consumer Affairs on April 14, 2015. PA House Bill 1097 – Water Well Insurance Fund Sponsor: Peter J. Daley (Democrat - parts of Fayette and Washington Counties [south of Pittsburgh]) Overview: Establishes the Water Well Insurance Board (“Board”) and Water Well Insurance Fund. Water well owners may apply to “become a subscriber to the fund for the purpose of insuring the water well against damages from intrusion or contamination.” Premium rates are set by the Board. The term “contamination” is not defined in the bill. Maximum payout under an insurance policy is capped at “replacement cost of the insured well or the maximum amount of coverage established by the fund, whichever is less.” Bill expressly states that it “shall not be construed to relieve any person, partnership, or corporation otherwise liable from any liability for damages sustained.” Current Status: Referred to House Committee on Environmental Resources and Energy on May 4, 2015.
  19. 19. 12 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Bill 1099 – Provides for independent counsel for the Environmental Quality Board Sponsor: John Maher (Republican – parts of Allegheny and Washington Counties [outside Pittsburgh]) Overview: Requires the Department of Environmental Protection to appoint independent counsel for the benefit of the Environmental Quality Board (“EQB”). Independent counsel shall assist EQB on all matters, “including, but not limited to, the review of rulemaking petitions submitted to the [EQB], the drafting and development of amendments to proposed and final rulemaking and advice relating to procedural matters.” Provides that discussions between independent counsel and EQB are privileged. Amendments: Printer’s Number 1755: Changes scope of privilege; as amended, bill would provide that “[a]ll communication between the independent counsel and a board member shall be subject to the attorney- client privilege consistent with the rules of professional conduct.” Current Status: Printer’s Number 1755 passed by House of Representatives (160-28) on June 10, 2015. Referred to Senate Committee on Environmental Resources and Energy on June 12, 2015. PA House Bill 1142 – Natural Gas Severance Tax Sponsor: Margo L. Davidson (Democrat – part of Delaware County [outside Philadelphia]) Overview: Extensive natural gas severance tax bill imposing a tax of (1) “[f]our and seven tenths cents for each unit of natural gas severed measured at the wellhead meter,” (2) “[f]ive percent of the average market price … of each unit of the dry natural gas derived from the natural gas severed,” and (3) “[f]ive percent of the gross value of the natural gas liquids derived from the natural gas severed as shown by the gross proceeds derived from the sale by the producer.” Sets a price floor of $2.97 per unit for purposes of calculating tax. Prohibits producer from making the tax an obligation of the landowner or leaseholder. Requires every producer to obtain a license from the Department of Revenue (“Department”) “before severing natural gas from this Commonwealth.” Imposes criminal penalties for severing gas without a license from the Department. Does not repeal or alter the Impact Fee, meaning that both the Impact Fee and the Severance Tax are payable by producers. Alters distribution scheme for Impact Fee revenue.
  20. 20. 13 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Current Status: Referred to the House Committee on Environmental Resources and Energy on May 12, 2015. PA House Bill 1253 – Professional licensure of engineers, land surveyors, and geologists Sponsor: Mark Mustio (Republican – part of Allegheny County [outside Pittsburgh]) Overview: Removes certain exemptions to the professional licensure requirement for engineers, land surveyors, and geologists. Specifically, the following exemptions from licensure have been eliminated: • The practice of engineering, land surveying or geology, not exceeding thirty days in the aggregate in one calendar year, by a nonresident not having a place of business in this Commonwealth; • The practice of engineering, land surveying or geology by any person or by any employee of any copartnership, association or corporation upon property owned by such person or such copartnership, association or corporation; and • The practice of engineering, land surveying or geology work by a manufacturing, mining, communications common carrier, research and development or other industrial corporation or by employees of such corporation, provided such work is in connection with or incidental to products of, or non-engineering services rendered by, such corporation or its affiliates. Current Status: Referred to House Committee on Professional Licensure on May 28, 2015. PA House Bill 1292 – Hydraulic fracturing chemical disclosure requirements Sponsor: Dan Frankel (Democrat – Pittsburgh) Overview: Amends Oil and Gas Act to clarify obligations of health professionals with respect to disclosure of trade secrets and/or confidential proprietary information. Prohibits health professional from disseminating trade secret and/or confidential proprietary information except in following instances: • Disclosure relates to diagnosis or treatment of a patient and is provided to a person whose knowledge the health professional deems important to the diagnosis or treatment of the patient; • The disclosure occurs during procurement of payment for services rendered or planned; • The disclosure is provided to a public health official or is intended to further public health; or • The disclosure is used for the study of any chemical involved.
  21. 21. 14 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Removes ability of vendor, service provider, or operator to request a statement of need and a confidentiality agreement from health professional. Current Status: Referred to House Committee on Environmental Resources and Energy on June 5, 2015. PA House Bill 1321 – Natural Gas Severance Tax Sponsor: Gene DiGiorlamo (Republican – part of Bucks County [outside Philadelphia]) Overview: Extensive natural gas severance tax bill imposing a tax of (1) “[f]our and nine-tenths percent of the gross value of the dry natural gas derived from the natural gas severed as shown by the gross proceeds derived from the sale by the producer,” and (2) “[f]our and nine-tenths percent of the gross value of the natural gas liquids derived from the natural gas severed as shown by the gross proceeds derived from the sale by the producer.” Sets a price floor of $2.97 per unit for purposes of calculating tax. Prohibits producer from making the tax an obligation of the landowner or leaseholder. Requires every producer to obtain a license from the Department of Revenue (“Department”) “before severing natural gas from this Commonwealth.” Imposes criminal penalties for severing gas without a license from the Department. Does not repeal or alter the Impact Fee, meaning that both the Impact Fee and the Severance Tax are payable by producers. Alters distribution scheme for Impact Fee revenue. Current Status: Referred to the House Committee on Environmental Resources and Energy on June 11, 2015. PA House Bill 1325 – Amendments to Second Class Township Code Regarding Storm Water Facilities Sponsor: Mark Mustio (Republican – part of Allegheny County [outside Pittsburgh]) Overview: Allows Board of Supervisors to enact and enforce ordinances to govern and regulate the planning, management, implementation, construction, and maintenance of storm water facilities. Allows township to assess fees based in whole or in part on the characteristics of the subject property. Amendments: Printer’s Number 2554: Changes provision relating to fees by specifically defining classes of properties which may be assessed a fee. Provides that fee must be used for purposes of funding the construction, maintenance, and operation of storm water management facilities, systems, and management plans.
  22. 22. 15 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Printer’s Number 2611: Removes language referring to Storm Water Management Act as basis for assessing fees. Printer’s Number 3164: Adds provision limiting fees assessed to “the amount necessary to meet the minimum requirements of the Federal Water Pollution Control Act (62 Stat. 1155, 33 U.S.C. § 1251, et seq.), and federal or state laws governing the implementation of the Federal Water Pollution Control Act, for the construction, maintenance and operation of storm water management facilities, systems and management plans, as specified in 40 CFR 122.26.” Current Status: Printer’s Number 2611 passed by House of Representatives (150-47) on December 9, 2015. Printer’s Number 3164 passed by the Senate (48 to 1) on June 15, 2016. Printer’s Number 3164 passed by House of Representatives (136 to 59) on June 21, 2016. Printer’s Number 3164 signed into law by Governor Tom Wolf as Act 62 on July 1, 2016. PA House Bill 1327 – Amendments to Fiscal Code Sponsor: Michael Peifer (Republican – parts of Pike and Wayne Counties [northeast Pennsylvania]) Overview: Original bill (Printer’s Number 1788) was unrelated to oil and gas Amendments: House Bill 1327 became the vehicle to implement provisions of General Fund budget, most of which are unrelated to oil and gas development or regulation. Provisions relevant to oil and gas development in each of the bill’s subsequent amended versions are listed below: Printer’s Number 2650: Natural Gas Infrastructure Development Fund (“Fund”) • Establishes the Fund in the state treasury. • Reallocates $12 million from the Alternative Energy Investment Act to the Fund for the provision of grants to the following to obtain access to natural gas: hospitals, businesses, economic development organizations, municipalities, counties, and school districts.
  23. 23. 16 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Submission of State Plan for Green House Gas Regulation • Increases from 100 to 180 days the period for the General Assembly to review the plan developed by the Department of Environmental Protection (“Department”) prior to submission to the United States Environmental Protection Agency (“EPA”) under the EPA’s Clean Power Plan. • Provides procedure in event General Assembly fails to approve plan proposed by Department. Rulemaking Prohibition Related to Conventional Oil and Gas Wells • Amends Fiscal Code to prohibit Environmental Quality Board (“EQB”) from adopting or promulgating (i) a revision of 25 Pa. Code Ch. 78 (relating to oil and gas wells) applicable to the operation of conventional oil and gas wells or (ii) a regulation applicable to the operation of conventional oil or gas wells. • Declares any rulemaking procedure concerning conventional oil and gas wells published after November 30, 2013, to be invalid and abrogated. • Permits EQB to conduct future rulemaking concerning conventional oil and gas wells so long as the rulemaking is accompanied by the submission of a regulatory analysis form prepared following the effective date of the bill. • This topic also is addressed by PA Senate Bill 1011. Printer’s Number 2694: Removes provisions in Printer’s Number 2650 related to oil and gas development. Printer’s Number 2697: Reinserts provisions in Printer’s Number 2650 related to oil and gas development as originally proposed. Printer’s Number 2711: No changes related to oil and gas development. Current Status: Printer’s Number 1788 passed unanimously by House of Representatives on November 17, 2015. Printer’s Number 2650 reported out of Senate Appropriations Committee (25 to 1) on December 9, 2015. Printer’s Number 2650 passed by Senate (48 to 2) on December 10, 2015. Printer’s Number 2694 reported out of House Rules Committee (18 to 15) on December 21, 2015. Printer’s Number 2697 reported out of House Rules Committee on December 22, 2015. Printer’s Number 2711 reported out of House Rules Committee on January 11, 2016. Printer’s Number 2711 passed by House of Representatives (111 to 81) on January 12, 2016. Printer’s Number 2711 referred to Senate Committee on Rules and Executive Nominations on January 19, 2016.
  24. 24. 17 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Bill 1363 – Natural Gas Severance Tax Sponsor: Gene DiGiorlamo (Republican – part of Bucks County [outside Philadelphia]) Overview: Extensive natural gas severance tax bill imposing a tax of (1) “[t]hree and two-tenths percent of the gross value of the dry natural gas derived from the natural gas severed as shown by the gross proceeds derived from the sale by the producer,” and (2) “[t]hree and two-tenths percent of the gross value of the natural gas liquids derived from the natural gas severed as shown by the gross proceeds derived from the sale by the producer.” Does not set a price floor. Allows Impact Fee to expire. Alters distribution scheme for Impact Fee revenue. Prohibits producer from making the tax an obligation of the landowner or leaseholder. Requires every producer to obtain a license from the Department of Revenue (“Department”) “before severing natural gas from this Commonwealth.” Imposes criminal penalties for severing gas without a license from the Department. Current Status: Referred to House Committee on Environmental Resources and Energy on June 29, 2015. PA House Bill 1391 – Amendments to Oil and Gas Lease Act Sponsor: Garth D. Everett (Republican – parts of Lycoming and Union counties [northern Pennsylvania]) Overview: Adds definitions for “lessee,” “lessor,” “operator,” “production unit,” “royalty,” “royalty payment,” “unconventional formation,” and “unconventional gas well.” Requires that the minimum royalty payment to a lessor shall not be less than one-eighth of the price received by operator. Prohibits deductions for “any” costs that would reduce royalty below one-eighth. Applies to existing and future leases. Provides civil remedy for failure to pay minimum royalty, including an award of attorney fees and treble damages if operator was notified by lessor of deficient payments and failed to cure within 60 days. Current Status: Reported out of the House Committee on Environmental Resources and Energy (20 to 7) on June 27, 2016. Reported out of the House Rules Committee on September 19, 2016.
  25. 25. 18 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Bill 1394 – Amendments to Borough Code Regarding Storm Water Facilities Sponsor: Mark Mustio (Republican – part of Allegheny County [outside Pittsburgh]) Overview: Allows borough to enact and enforce ordinances to govern and regulate the planning, management, implementation, construction, and maintenance of storm water facilities. Allows borough to assess fees based in whole or in part on the characteristics of the subject property. Amendments: Printer’s Number 2555: Changes provision relating to fees by specifically defining classes of properties which may be assessed a fee. Provides that fee must be used for purposes of funding the construction, maintenance, and operation of storm water management facilities, systems, and management plans. Printer’s Number 2612: Removes language referring to Storm Water Management Act as basis for assessing fees. Printer’s Number 3165: Adds provision limiting fees assessed to “the amount necessary to meet the minimum requirements of the Federal Water Pollution Control Act (62 Stat. 1155, 33 U.S.C. § 1251, et seq.), and federal or state laws governing the implementation of the Federal Water Pollution Control Act, for the construction, maintenance and operation of storm water management facilities, systems and management plans, as specified in 40 CFR 122.26.” Printer’s Number 3306: Makes identical amendments to Third Class City Code. Current Status: Printer’s Number 2612 reported by House of Representatives (152-45) on December 9, 2015. Printer’s Number 3306 reported out of the Senate Committee on Local Government (10 to 1) on May 10, 2016. PA House Bill 1517 – Natural Gas Vehicle Development Program extension Sponsor: Tedd C. Nesbit (Republican – parts of Butler and Mercer Counties [north of Pittsburgh]) Overview: Extends Natural Gas Vehicle Development Program for three years (through 2017- 2018 fiscal year) at an annual amount of $10,000,000. Current Status: Referred to the House Committee on Environmental Resources and Energy on September 8, 2015.
  26. 26. 19 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Bill 1536 – Natural Gas Severance Tax Sponsor: Scott A. Petri (Republican – part of Bucks County [outside Philadelphia]) Overview: Extensive severance tax bill, with rate of “5% upon the market value of natural gas sold during a reporting period.” Provides for a credit against the severance tax of “50% of the rate imposed in subsection (b) [imposing the 5% tax] upon the market value of natural gas sold and severed … through a marginal gas well”, which is defined as “[a]n unconventional gas well incapable of producing more than 4,500,000 cubic feet of gas per month during a calendar month …” Does not address current impact fee, presumably leaving intact 58 Pa. Cons. Stat. § 2318 that would sunset the impact fee upon imposition of a severance tax. Current Status: Referred to the House Committee on Environmental Resources and Energy on September 4, 2015. PA House Bill 1570 – Education Reinvestment Act Sponsor: Seth Grove (Republican – part of York County [south-central Pennsylvania]) Overview: Establishes a program for the leasing of subsurface rights under state forest and park land for oil and gas development from horizontal drilling originating from well sites outside state forest or park property. Directs that funds collected through the leasing program are to be distributed to school districts in the state according to formula provided in bill. Current Status: Referred to the House Committee on Environmental Resources and Energy on September 29, 2015. PA House Bill 1661 – Amendments to First Class Township Code Regarding Storm Water Facilities Sponsor: Mark Mustio (Republican – part of Allegheny County [outside Pittsburgh]) Overview: Allows township to plan, design, construct, assemble, install, and alter facilities, including, but not limited to, inlets, outlets, systems of piping, diversion terraces, grass waterways, energy dissipaters, storm water retention devices, and natural or artificial infiltration areas, to manage surface water runoff. Allows township to purchase or acquire by eminent domain all or part of any existing system or facility for management of surface water runoff. Requires township to comply with Storm Water Management Act and any watershed storm water management plan approved by the Department of Environmental Protection (“Department”).
  27. 27. 20 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Amendments: Printer’s Number 2557: Changes provision relating to fees by specifically defining classes of properties which may be assessed a fee. Provides that fee must be used for purposes of funding the construction, maintenance, and operation of storm water management facilities, systems, and management plans. Printer’s Number 2765: Minor edit to remove reference to Storm Water Management Act in section concerning fee assessment. Printer’s Number 3166: Adds provision limiting fees assessed to “the amount necessary to meet the minimum requirements of the Federal Water Pollution Control Act (62 Stat. 1155, 33 U.S.C. § 1251, et seq.), and federal or state laws governing the implementation of the Federal Water Pollution Control Act, for the construction, maintenance and operation of storm water management facilities, systems and management plans, as specified in 40 CFR 122.26.” Current Status: Printer’s Number 2557 reported unanimously out of the House Committee on Local Government on November 18, 2015. Printer’s Number 2765 passed by House of Representatives (164 to 25) on January 27, 2016. Printer’s Number 3166 reported out of the Senate Committee on Local Government (10 to 1) on April 12, 2016 PA House Bill 1704 – Amendments to Engineer, Land Surveyor and Geologist Registration Law Sponsor: Mark Mustio (Republican – part of Allegheny County [outside Pittsburgh]) Overview: Provides for use of current term “Engineer Intern” for predecessor title of “Engineer-in- Training.” Allows for distance learning to complete continuing professional competency requirements so long as course relates to professional practice and units awarded are verifiable and measurable by actual hours of instruction. Amendments: Printer’s Number 2972: Minor typographical changes.
  28. 28. 21 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Current Status: Printer’s Number 2972 reported unanimously out of the House Committee on Professional Licensure on March 16, 2016. Printer’s Number 2972 reported unanimously out of the House Appropriations Committee on May 18, 2016. Printer’s Number 2972 passed by House (187 to 3) on May 18, 2016. Printer’s Number 2972 reported unanimously out of the Senate Committee on Consumer Protection and Professional Licensure on October 18, 2016.. Printer’s Number 2972 reported unanimously out of the Senate Appropriations Committee on October 26, 2016. PA House Bill 1731 – Keystone Energy Enhancement Act Sponsor: Mike Turzai (Republican, Speaker of the House – part of Allegheny Count [Pittsburgh]) Overview: Establishes Keystone Energy Authority (“KEA”) and provides for appointment of members thereto. Provides that purpose of KEA is to “further[] the development of manufacturing business, petrochemical business and other downstream business opportunities through the increased use of natural gas produced in this Commonwealth. The [KEA] shall work to increase job creation and capital investments in manufacturing, petrochemical and other downstream businesses in this Commonwealth.” Directs KEA to cooperate with industrial development agencies, local authorities, and the Department of Community and Economic Development, Department of Environmental Protection, Department of Revenue, Public Utility Commission, and other agencies. Directs KEA to facilitate the proliferation of transmission and distribution pipelines for the transportation of natural gas and natural gas liquids by identifying corridors for safe and efficient transmission and distribution pipelines and coordinating with regulatory agencies. Provides for establishment by KEA of no more than twenty (20) Keystone Energy Enhancement Zones (“Zones”), each not to exceed 500 acres, comprised of “deteriorated property.” Individuals and businesses within a Zone are entitled to tax exemptions, deductions, abatements, or credits as provided in Act. Provides that individuals, businesses, or political subdivisions may apply to have a property designated as a Zone, but must include in the application a detailed strategic plan as described in the Act. Extensive description of tax benefits for qualified businesses, including job creation tax credit of up to $1,250 per job after 2020. Establishes Keystone Energy Enhancement Fund.
  29. 29. 22 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Current Status: Referred to House Committee on Commerce on December 3, 2015. PA House Bill 1743 – Natural Gas Severance Tax Sponsor: James R. Santora (Republican – part of Delaware County [outside Philadelphia]) Overview: Extensive severance tax bill, with rate of “4% of the gross value of units severed at the wellhead during a reporting period.” Repeals sunset provision of Oil & Gas Act that would have terminated the impact fee upon passage of a severance tax, allowing imposition of both an impact fee and severance tax. Current Status: Referred to the House Committee on Environmental Resources and Energy on December 6, 2015. PA House Bill 1825 – Acid Mine Drainage Sponsor: Tommy Sankey (Republican – parts of Cambria and Clearfield Counties [central Pennsylvania]) Overview: Amends Land Recycling and Environmental Remediation Standards Act (commonly known as Act 2) to add definitions and to add Chapter 8 regarding “Beneficial Use of Abandoned Mine Drainage.” Provides immunity to “landowner, person or water pollution abatement operator who provides equipment, funding, materials or services for a water pollution abatement project for beneficial use.” Requires that party seeking immunity must submit water pollution abatement plan to Department of Environmental Protection for approval, and requires Department to review and approve plan if it is likely to improve water quality of mine drainage or mine pool and is not likely to exacerbate water pollution. Current Status: Referred to House Committee on Environmental Resources and Energy on February 2, 2016. PA House Bill 1846 – Amendment to Oil & Gas Act Sponsor: Scott A. Petri (Republican – part of Bucks County [outside Philadelphia]) Overview: Requires an operator seeking to use the Pennsylvania Turnpike’s right-of-way for gas transmission lines to have a valid fee agreement with the Pennsylvania Turnpike Commission.
  30. 30. 23 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Requires Pennsylvania Turnpike Commission to promulgate regulations relating to the commercial use of the Pennsylvania Turnpike’s right-of-way for gas transmission lines. Current Status: Referred to House Committee on Environmental Resources and Energy on February 9, 2016. PA House Bill 2030 – Amendment to Pennsylvania Climate Change Act Sponsor: Steven J. Santarsiero (Democrat – part of Bucks County [outside Philadelphia]) Overview: Amends Pennsylvania Climate Change Act (“Act”) to require that the action plan mandated under Section 7 of the Act, “when combined with existing efforts in this Commonwealth to reduce [greenhouse gas] emissions, will cumulatively result in a total [greenhouse gas] emissions reduction of 50% lower than 2005 levels no later than December 31, 2030.” Action plan mandated under Section 7 of the Act must: provide a schedule of economically feasible benchmarks for greenhouse gas emissions reduction goals; recommend to the governor any administrative changes necessary to increase collaboration between Department of Environmental Protection (“Department”) and other state agencies; identify actions that the Department may take and incentives that Department may utilize without legislative action by the General Assembly that will achieve goals. Current Status: Referred to the House Committee on Environmental Resources and Energy on March 15, 2016. PA House Bill 2275 – Changes to Environmental Quality Board membership Sponsor: Cris Dush (Republican – Jefferson County and part of Indiana County [western Pennsylvania]) Overview: Changes composition of the Environmental Quality Board (“EQB”) and removes from the EQB the Secretary of the Department of Environmental Protection (“DEP”). Secretary of DEP previously had been included as the chair of the EQB. Current Status: Referred to House Committee on Environmental Resources and Energy on August 5, 2016. PA House Bill 2277 – Amendment to Oil & Gas Act related to bonding requirements Sponsor: Thomas P. Murt (Republican – parts of Montgomery and Philadelphia Counties) Overview: Adds Section 3225.1 to the Oil & Gas Act to require liability bonding in amount of $2,000,000 for unconventional wells.
  31. 31. 24 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Bond must be filed at time of permit application or before continuing to operate unconventional well. Bond must cover remediation liabilities. “In lieu of individual bonds for each well, an owner or operator may file a blanket bond in an amount equal to 20% of the sum total for all individual bonds that would otherwise be required of the operator.” “Liability under the bond shall continue until any release has been properly remediated and the well has been properly plugged in accordance with this chapter and for a period of two years after filing of the certificate of plugging with the [D]epartment [of Environmental Protection].” Provides alternative bond and fee arrangement for owners/operators who cannot obtain a sufficient bond. Current Status: Referred to House Committee on Environmental Resources and Energy on August 5, 2016. PA House Bill 2319 – Amendment to Oil & Gas Lease Act Sponsor: Cris Dush (Republican – Jefferson County and part of Indiana County [western Pennsylvania]) Overview: Adds definitions for “royalty” and “wellhead.” “Royalty” is defined as “[a] lessor’s ownership interest in the oil, natural gas or gas of any other designation produced from below a specific tract of real property, which interest is valued at the wellhead free of expenses of production and transportation.” “Wellhead” is defined as “[t]he point at which oil, natural gas or gas of any other designation reaches the ground surface or departs from the subject real property for which a lease or other such agreement conveys from the lessor to the lessee the right to remove or recover oil, natural gas or gas of any other designation.” Current Status: Referred to House Committee on Environmental Resources and Energy on September 9, 2016. PA House Bill 2361 – Pennsylvania Turnpike Right-of-Way Act Sponsor: Scott A. Petri (Republican – part of Bucks County [outside Philadelphia]) Overview: Allows for granting, upon proper application and approval, of right-of-way through land owned by Pennsylvania Turnpike Commission (“Commission”) for “pipeline purposes for the transportation of materials.” Provides detailed application requirements, including provision for public hearings where appropriate.
  32. 32. 25 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Requires Commission to issue regulations or impose stipulations concerning environmental protection, including: restoration of land; protection of air and water quality standards; prevention of damage to the environment, property, and health and safety. Requires annual inspection by Secretary of Transportation of all pipelines and related facilities on land owned by Commission. Right-of-way may not exceed 50 feet unless Commission finds that a wider right-of-way is necessary. Duration of right-of-way is limited to “reasonable term” in light of all circumstances and may not exceed 50 years. Pipelines constructed pursuant to act shall be “constructed, operated and maintained as common carriers.” Requires Commission to promulgate regulations related to liability. Current Status: Referred to the House Committee on Environmental Resources and Energy on September 22, 2016. PA House Bill 2366 – Amendments to Oil and Gas Act Concerning Setbacks Sponsor: Robert F. Matzie (Democrat – parts of Allegheny and Beaver Counties [outside Pittsburgh]) Overview: Increases the setback requirement of unconventional gas wellbores from water wells, surface water intakes, and water supply extraction points from 1,000 to 2,000 feet. Increases the setback requirement of unconventional gas wellbores from any dam or reservoir from 1,000 to 4,000 feet. Current Status: Referred to the House Committee on Environmental Resources and Energy on September 23, 2016. PA House Bill 2368 – Amendments to Oil and Gas Act Concerning Distribution of Marcellus Legacy Fund Sponsor: W. Curtis Thomas (Democrat – Philadelphia) Overview: Directs that 1% of the fees collected under the Oil & Gas Act be deposited into the Marcellus Shale Legacy Fund for the purpose of mitigating environmental damage caused by pipelines in Philadelphia. Current Status: Referred to the House Committee on Environmental Resources and Energy on September 23, 2016.
  33. 33. 26 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Bill 2387 – Erosion and Sediment Control Permit Act Sponsor: David H. Zimmerman (Republican – part of Lancaster County [south central Pennsylvania]) Overview: Requires any project, excluding those subject to National Pollution Discharge Elimination System requirements, involving an earth disturbance activity regulated by 25 Pa. Code Ch. 102 to apply for and obtain an erosion and sediment control permit. Permit must be submitted by a licensed engineer. Current Status: Referred to the House Committee on Environmental Resources and Energy on October 3, 2016. PA House Bill 2403 – Amendment to Clean Streams Law Sponsor: James R. Santora (Republican – part of Delaware County [outside Philadelphia]) Overview: Provides exemptions for certain earth disturbance projects from requirements to use riparian buffers. Current Status: Referred to the House Committee on Environmental Resources and Energy on October 17, 2016. PA House Bill 2431 – Amendments to Safe Drinking Water Act Sponsor: Thomas P. Murt (Republican – parts of Montgomery and Philadelphia Counties) Overview: Directs Environmental Quality Board to adopt maximum contaminant levels of five parts per trillion for perfluorooctane and perfluorooctanoic acid. Current Status: Referred to the House Committee on Environmental Resources and Energy on October 26, 2016. PA House Resolution 316 – Study to Expand Availability of Natural Gas in Pennsylvania Sponsor: Kevin J. Schreiber (Democrat – part of York County [south-central Pennsylvania]) Overview: Directs the Legislative Budget and Finance Committee (“Committee”) to conduct a study on the issue of expanding the availability of natural gas to Pennsylvania homes, businesses, nonprofit organizations and units of government. Specifically directs the committee to consider whether there is a need for particular types of infrastructure to address gaps in the availability of natural gas service. Current Status: Referred to House Committee on Environmental Resources and Energy on May 5, 2015.
  34. 34. 27 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA House Resolution 388 – Accounting of Marcellus Legacy Fund Sponsor: Kate Harper (Republican – part of Montgomery County [outside Philadelphia]) Overview: Directs House Legislative Budget & Finance Committee to report on expenditures and distributions made from the Marcellus Legacy Fund, which receives 40% of the revenue collected under the Commonwealth’s Unconventional Gas Well Fund. Current Status: Referred to the House Committee on Environmental Resources and Energy on June 12, 2015. Concurrent resolution PA Concurrent Resolution – Disapproving the Environmental Protection Standards at Oil & Gas Well Sites Regulations Submitted by the Environmental Quality Board Overview: Pursuant to Section 7(d) of the Regulatory Review Act, disapproves of the action by the Independent Regulatory Review Commission, on April 21, 2016, to approve the “Environmental Protection Standards at Oil & Gas Well Sites” Regulations concerning Chapter 78 of the Pennsylvania Code. Current Status: Reported (19 to 8) out of House Committee on Environmental Resources and Energy on May 3, 2016. Senate PA Senate Bill 53 – Amends Oil and Gas Act related to lease disclosure and indemnification Sponsor: Stewart J. Greenleaf (Republican – parts of Bucks and Montgomery Counties [outside Philadelphia]) Overview: Requires operator, prior to executing an oil and gas lease, to disclose to lessor that lessor may be liable to other landowners for damages resulting from drilling. Requires an oil and gas lease to contain an indemnification provision that holds landowner harmless from any and all liability, including environmental liability, arising out of operator’s operations pursuant to the lease. Current Status: Referred to the Senate Committee on Environmental Resources and Energy on January 14, 2015. *PA Senate Bill 53 is a reintroduction of PA Senate Bill 154 from the 2013-2014 session of the Pennsylvania General Assembly.
  35. 35. 28 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA Senate Bill 64 – Distribution of impact fee Sponsor: Stewart J. Greenleaf (Republican – parts of Bucks and Montgomery Counties [outside Philadelphia]) Overview: Appropriates $3 million per year from revenue received from the impact fee to be directed to the Department of Health in order to: • conduct research to determine whether health services are adequate in regions where unconventional gas operations occur and • conduct research on effects of air quality in regions where unconventional gas operations occur. Current Status: Referred to Senate Committee on Environmental Resources and Energy on January 14, 2015. *PA Senate Bill 64 is a reintroduction of PA Senate Bill 790 from the 2013-2014 session of the Pennsylvania General Assembly. PA Senate Bill 116 – Natural Gas Severance Tax Sponsor: James R. Brewster (Democrat – parts of Allegheny and Westmoreland Counties [outside Pittsburgh]) Overview: Extensive natural gas severance tax bill imposing a tax of (1) “[f]our and seven tenths cents for each unit of natural gas severed measured at the wellhead meter,” (2) “[f]ive percent of the average market price … of each unit of the dry natural gas derived from the natural gas severed,” and (3) “[f]ive percent of the gross value of the natural gas liquids derived from the natural gas severed as shown by the gross proceeds derived from the sale by the producer.” Sets a price floor of $2.97 per unit for purposes of calculating tax. Prohibits producer from making the tax an obligation of the landowner or leaseholder. Requires every producer to obtain a license from the Department of Revenue (“Department”) “before severing natural gas from this Commonwealth.” Imposes criminal penalties for severing gas without a license from the Department. Does not repeal or alter the Impact Fee, meaning that both the Impact Fee and the Severance Tax are payable by producers. Alters distribution scheme for Impact Fee revenue. Current Status: Referred to the Senate Committee on Environmental Resources and Energy on May 14, 2015.
  36. 36. 29 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA Senate Bill 145 – Amends Oil and Gas Act to mandate Pugh Clause Sponsor: Gene Yaw (Republican – Bradford, Lycoming, Sullivan, and Union Counties and part of Susquehanna County [northern tier]) Overview: Provides that operations and production on a unit into which a leasehold has been unitized shall not maintain a lease into the secondary term for portions of the leasehold not included in the unit. Applies only to lease interests in unconventional reservoirs, defined to include formations below the Elk Sandstone or its stratigraphic equivalent, and which can be economically produced only through the use of horizontal drilling and hydraulic fracturing. Applies only to leases entered into on or after the passage of the bill. Current Status: Referred to the Senate Committee on Environmental Resources and Energy on January 14, 2015. *PA Senate Bill 145 is a reintroduction of PA Senate Bill 356 from the 2013-2014 session of the Pennsylvania General Assembly. PA Senate Bill 147 – Amendments to Oil & Gas Lease Act Sponsor: Gene Yaw (Republican – Bradford, Lycoming, Sullivan, and Union Counties and part of Susquehanna County [northern tier]) Overview: Adds definitions for (i) Lessee and (ii) Lessor. Adds “unique property identification” as one piece of information required on check stub/payment information. Adds a section regarding information to be provided in case of a joint venture. Adds a section allowing for inspection of records. Adds definitions for Joint Venture. Revises the section dealing with “Accumulation of Proceeds from Production.” Amendments: Printer’s Number 0177: Extends date by which to royalties must be paid to lessor from sixty (60) days to ninety (90) days following production. Printer’s Number 0238: Provides that information contained in records inspected by lessor may not be disclosed to any other person except an attorney or accountant employed by lessor. Current Status: Printer’s Number 0238 passed unanimously by the Senate on January 28, 2015. Referred to House Committee on Environmental Resources and Energy on February 2, 2015.
  37. 37. 30 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 *PA Senate Bill 147 is a reintroduction of PA Senate Bill 1236 from the 2013-2014 session of the Pennsylvania General Assembly. PA Senate Bill 148 – Natural Gas Lease Anti-Retaliation Act Sponsor: Gene Yaw (Republican – Bradford, Lycoming, Sullivan, and Union Counties and part of Susquehanna County [northern tier]) Overview: Prohibits retaliation by lessee when the lessor takes a “good faith action.” “Good faith action” is defined as “A claim, demand or complaint intended to secure rights granted under a lease or to determine whether the terms of a lease are being complied with, including, but not limited to, a request for an accounting of any costs, taxes or fees allowed to be deducted from royalty payments by lessee, that is made without malice or ulterior motive and which the lessor or a party acting on the lessor's behalf reasonably believes to be valid and legally correct.” Allows a private civil action; must be within 1 year of alleged violation. Statutory defense to liability if lessee “proves by a preponderance of the evidence that the action by the lessee was authorized under the terms of the lease or occurred for legitimate business reasons.” Damages available: “reasonable damages” and a “civil fine of up to $1,000 per day for each day the provisions of section 3 have been violated.” But, a court that “finds that an action has been instituted for other than a good faith action as defined in this act may order the lessor to pay reasonable damage to the lessee.” Current Status: Passed unanimously by the Senate on January 28, 2015. Referred to House Committee on Environmental Resources and Energy on February 2, 2015. *PA Senate Bill 148 is a reintroduction of PA Senate Bill 1237 from the 2013-2014 session of the Pennsylvania General Assembly.
  38. 38. 31 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA Senate Bill 257 – Private water supply testing and public disclosure of results Sponsor: Wayne D. Fontana (Democrat - part of Allegheny County [including Pittsburgh]) Overview: Requires Department of Environmental Protection (“DEP”) to sample and test private water supplies upon request by owner. Results of testing of private water supplies must be provided to owner and must be disclosed publicly on DEP website. Current Status: Referred to Senate Committee on Environmental Resources and Energy on January 15, 2015. *PA Senate Bill 257 is a reintroduction of PA Senate Bill 592 from the 2013-2014 session of the Pennsylvania General Assembly. PA Senate Bill 279 – Pennsylvania Grade Crude Development Advisory Council Act Sponsor: Scott E. Hutchinson (Republican – Clarion, Forest, Venango, and parts of Butler and Warren Counties [northwest Pennsylvania]; member of the Environmental Resources & Energy Committee) Overview: Establishes the named Council and provides for its tasks: • Study and recommend technical regulations and policies that impact the conventional oil and gas industry; • Explore the development of a regulatory scheme for oversight and enforcement of the conventional oil and gas industry; • Promote long-term viability of conventional oil and gas industry;; • Issue a report of findings and recommendations, within 180 days of effective date of Act, to listed state officers; • Assist Secretary of Department of Environmental Protection (“DEP”) and provide written comments on new DEP policy that will impact conventional oil and gas industry; • Review and comment on all technical regulations under Oil and Gas Act; • Provide institutional support to conventional oil and gas industry; • Recommend measures to promote and develop conventional oil and gas industry; • Develop plan to increase PA grade crude production; • Develop joint working group with DEP to explore and develop economically viable production water management options; and • Produce annual report of activities and recommendations.
  39. 39. 32 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Provides 2 duties to DEP: • Consult with Council on all policies/technical regulations promulgated under Oil and Gas Act; • Include written comments of the Council as part of submission to Environmental Quality Board; and • Provide technical assistance to Council to enable Council to carry out duties. Amendments: Printer’s Number 0444: Adds Secretary of Environmental Protection to list of recipients of annual report produced by Council. Printer’s Number 1903: Abrogates the revisions promulgated by the Department of Environmental Protection to the Chapter 78 regulations concerning oil and gas operations as those proposes revisions relate to conventional oil and gas wells. Requires that any future rulemaking involving conventional oil and gas operations be “undertaken separately and independently of unconventional wells” and include a regulatory analysis form submitted to the Independent Regulatory Review Commission that is restricted to the subject of conventional oil and gas wells. Current Status: Printer’s Number 0444 passed by the Senate Committee on Appropriations on February 17, 2015. Passed unanimously by Senate on February 18, 2015. Printer’s Number 1903 reported (18 to 5) by the House Committee on Environmental Resources and Energy on June 8, 2016. Printer’s Number 1903 passed by the House of Representatives (141 to 46) on June 15, 2016. Printer’s Number 1903 passed by Senate (37 to 12) on June 15, 2016. Printer’s Number 1903 signed into law by Governor Tom Wolf as Act 52 on June 23, 2016. *PA Senate Bill 279, as introduced, was a reintroduction of PA Senate Bill 1310 from the 2013-2014 session of the Pennsylvania General Assembly. PA Senate Bill 307 – Provides for independent counsel for the Environmental Quality Board Sponsor: John T. Yudichak (Democrat – Carbon County and part of Luzerne County [northeast Pennsylvania]) Overview: Requires the Department of Environmental Protection to appoint independent counsel for the benefit of the Environmental Quality Board (“EQB”).
  40. 40. 33 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Independent counsel shall assist EQB on all matters, “including, but not limited to, the review of rulemaking petitions submitted to the [EQB], the drafting and development of amendments to proposed and final rulemaking and advice relating to procedural matters.” Provides that discussions between independent counsel and EQB are privileged. Amendments: Printer’s Number 1138: Changes scope of privilege; as amended, bill would provide that “[a]ll communication between the independent counsel and a board member shall be subject to the attorney- client privilege consistent with the rules of professional conduct.” Printer’s Number 2015: Adds provision regarding distribution of money from the State Racing Fund by the Department of Agriculture; unrelated to oil and gas development. Current Status: Passed unanimously by Senate on June 25, 2015. Printer’s Number 1138 reported (20-6) out of House Committee on Environmental Resources and Energy on June 29, 2015. Printer’s Number 2015 passed by House of Representatives (157 to 37) on July 12, 2016. Printer’s Number 2015 referred to Senate Committee on Rules and Executive Nominations on July 13, 2016. PA Senate Bill 313 – Unconventional Oil and Gas Unit Conservation and Integration Act Sponsor: Gene Yaw (Republican – Bradford, Lycoming, Sullivan, Union, and part of Susquehanna Counties [northeast Pennsylvania]; Chair, Senate Committee on Environmental Resources and Energy) Overview: Applies only to unconventional reservoirs below the base of the Elk Sandstone or its stratigraphic equivalent, other than coal bed methane. Provides for compulsory creation of drilling and production units. Public Utility Commission (“PUC”) may, upon application, order creation of unit where applicant demonstrates that the plan for establishment of the unit will minimize surface disruption, impact to property, or other environmental impact. PUC also may consider whether establishment of unit will permit optimal development of oil and gas resources. Provides for rights of protest by certain defined individuals and/or entities. Provides for 250-foot setback for laterals from boundary of unit. Voluntary units (i.e. permitted by lease) are declared per se reasonable and subject to modification only in certain circumstances.
  41. 41. 34 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 Repeals Oil and Gas Conservation Law. Current Status: Referred to the Senate Committee on Environmental Resources and Energy on January 23, 2015. *PA Senate Bill 313 is a reintroduction of PA Senate Bill 355 from the 2013-2014 session of the Pennsylvania General Assembly. PA Senate Bill 347 – Protection of water supplies Sponsor: John T. Yudichak (Democrat – Carbon County and part of Luzerne County [Wilkes- Barre]) Overview: Amends Chapter 32 of the Oil & Gas Act to provide the following: • Provides more time for the Department of Environmental Protection (“DEP”) to conduct an investigation into alleged pollution or diminution of water supply where “migration of natural gas is involved”; • Requires DEP to publish on its website “lists of probable cases of subterranean water supply contamination that are supported by credible evidence”; • Requires DEP to inspect each unconventional well site at least once per year after well begins production; and • Requires DEP to maintain records on generation, transportation, and disposal of drill cuttings. Current Status: Referred to Senate Committee on Environmental Resources and Energy on January 28, 2015. PA Senate Bill 348 – Leasing of state forest lands Sponsor: John T. Yudichak (Democrat – Carbon County and part of Luzerne County [Wilkes- Barre]) Overview: Department of Conservation and Natural Resources (“DCNR”) must hold at least one public hearing prior to entering into any lease for development of natural gas underlying state forests or parks. • Act appears to apply regardless of whether surface development actually occurs on state lands. DCNR must “attempt to acquire” subsurface rights in order to protect state forest or park land if the land has “unique environmental, natural, historical, or cultural features” making it “especially worth of permanent preservation.” Current Status: Referred to Senate Committee on Environmental Resources and Energy on January 28, 2015. *PA Senate Bill 348 is a reintroduction of PA Senate Bill 941 from the 2013-2014 session of the Pennsylvania General Assembly.
  42. 42. 35 Quarterly legislative action update: Marcellus and Utica shale region Norton Rose Fulbright US LLP 2016 PA Senate Bill 367 – PA One Call System Applicability to Gathering Lines Sponsor: Donald C. White (Republican – Armstrong and Indiana Counties and parts of Butler and Westmoreland Counties [outside Pittsburgh]) Overview: Amends Underground Utility Line Protection Law to include natural gas gathering lines within the definition of “line” or “facility,” such that owners and operators of gathering lines must specifically comply with One Call System requests. Current Status: Referred to the Senate Committee on Consumer Protection and Professional Licensure on January 30, 2015. PA Senate Bill 375 – Marcellus Shale Health Advisory Panel Sponsor: Joseph B. Scarnati III (Republican – Cameron, Clinton, Elk, Jefferson and McKean Counties and part of Clearfield County [northern Pennsylvania]; President Pro Tempore) Overview: Establishes the “Health Advisory Panel on Shale Gas Extraction and Natural Gas Use.” Provides for composition and appointment of nine-member panel, and for meetings to occur no less frequently than biannually. Duties of the panel include: • Consult with experts involved with extraction and use of natural gas in Pennsylvania; • Consult with Pennsylvania Department of Health (“DOH”) to review public health data relating to areas where shale gas extraction occurs and the benefits of the use of natural gas; • Consult with experts regarding potential public health effects from extraction and use of natural gas; • Evaluate public health data regarding extraction and use of natural gas, as well as information on extraction techniques, in order to provide government and public with information and analysis of safe, efficient, and environmentally responsible extraction and use of natural gas; and • Submit annual report on activities to Governor and General Assembly. Panel sunsets in six years. Current Status: Recommitted to the Senate Appropriations Committee on March 3, 2015.

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