American Oil and Gas Reporter - November 2016 - 105

Fight Against PaDEP Rules Continues
The Pennsylvania Department of Environmental Protection's Chapter 78a regulations for surface activities associated
with unconventional wells became effective Oct. 8. But five years after the rulemaking process began, their ultimate implementation and disposition remain in
limbo.
Five days after the rules were published
in the Pennsylvania Bulletin, the Marcellus
Shale Coalition challenged specific provisions of the new rules in Pennsylvania
Commonwealth Court.
And two weeks before that, the Pennsylvania Independent Oil & Gas Association appealed to the state Supreme Court,
the Commonwealth Court's rejection of
its lawsuit challenging DEP's continued
use of its Pennsylvania Natural Diversity
Index (PNDI) policy, which requires operators applying for permits to drill to
notify entities such as schools, municipalities, and owners of playgrounds or
water supplies.
PIOGA Vice President and General
Counsel Kevin Moody points out that if
the association's appeal is successful, it
would overturn the Chapter 78a regulation's so-called public resources provisions,
which codify the DEP's long-standing
PNDI policy and are based on provisions
of Act 13 that the association contends
were invalidated by the Pennsylvania
Supreme Court.
MSC Lawsuit
MSC President David Spigelmyer emphasizes that the association is not attempting to overturn the Chapter 78a regulations in their entirety. "To be clear,"
he says, "MSC and its members support
fair, consistent and clear regulation of
the industry while protecting the environment and ensuring safety. However,
certain provisions conflict with DEP's
legal authority granted by the Pennsylvania
General Assembly, while other provisions
are vague and it isn't clear how they will
be implemented.
"We continue to seek ways to work
constructively with the DEP to address
issues surrounding implementation of the
new regulations, but on a limited number
of issues, it is imperative our members
seek legal redress to provide clarity and
consistency."
Within the Chapter 78a regulations,
Spigelmyer says, MSC is challenging:
* Section 78a.15, the public resource
section, which is at the root of PIOGA's
lawsuit;
* Section 78a.52, Chapter 78a's "area

of review" provision, which requires operators to identify the surface and bottom-hole locations of active, inactive, orphan, abandoned, and plugged and abandoned wells within 1,000 feet of both
vertical and horizontal proposed wellbores;
* Section 78a.58 setting out requirements for on-site processing of fluids
and drill cuttings;
* Sections 78a.59(a) and (c) requirements for impoundment embankments
and closing centralized impoundments;
* Section 78a.65(d) site restoration
standards;
* Section 78a.66 requirements for reporting and remediating spills and releases;
and
* Section 78a.121(b) requiring monthly rather than semi-annual waste reports.
Moody says PIOGA anticipates filing
an amicus brief supporting MSC's arguments on Chapter 78a's public resource
section and possibly the section dealing
with fluids and drill cuttings disposal.
But he says the association will not file a
separate lawsuit against Chapter 78a, nor
address all the points raised by MSC.
"It really isn't necessary because
(MSC) is going to do a good job," he
reasons.
PIOGA Appeal
Regarding its lawsuit, Moody says PIOGA filed a notice of appeal on Sept.
29, asking the Pennsylvania Supreme
Court to review the Commonwealth
Court's Sept. 1 order denying the association's challenge of DEP's continued enforcement of its PNDI policy under provisions of Act 13 that PIOGA contended
were invalidated by the Supreme Court's
December 2013 Robinson Township v.
Commonwealth (Robinson II) decision.
He explains that in Robinson II, the
Supreme Court determined that Section
3215(b)(4) of the comprehensive 2012
oil and gas law was unconstitutional.
And because most other portions of Section 3215-including 3215(c) and (e), by
which DEP has continued to enforce its
PNDI policy-were inextricably linked to
3215(b)(4) as part of the permit decisional
process, they were found invalid and
were enjoined.
However, the Commonwealth Court
majority agreed with DEP, which argued
that Section 3215(c) stood alone from
the portion of Section 3215(b)(4), stating
that "DEP's authority . . . to consider the
impact that a proposed well will have on
public resources, those listed and unlisted,

is extant, limited only by the portion of
the Supreme Court's mandate . . . that
enjoins its application and enforcement
with respect to the water source setback
and waiver provisions set forth in Sections
3215(b)" (AOGR, October 2016, pg. 17).
PIOGA's jurisdictional statement,
which was filed in conjunction with its
notice of appeal, presents eight questions
for the Supreme Court's review.
In general, Moody observes, the questions involve matters of law that PIOGA
believes the Commonwealth Court decided
incorrectly. Significantly, he says, "The
Robinson II majority determined that the
Act 13 provisions that provided authority
for DEP's overseer role were inextricably
intertwined with the provisions the
Supreme Court determined to be unconstitutional and invalid, but the Commonwealth Court nonetheless improperly revisited that determination and substituted
its own analysis to reach a contrary and
erroneous determination."
Furthermore, Moody continues, "The
Commonwealth Court failed to acknowledge that the DEP had not developed the
criteria and standards required by Act 13
to implement its overseer role, and so
that court did not address the constitutional
problems concerning DEP's exercise of
the authority the Commonwealth Court
concluded the DEP still had."
One More Ruling
On Sept. 28, Moody mentions, in a
ruling styled Robinson IV, the Pennsylvania Supreme Court struck down several
other Act 13 provisions dealing with the
Pennsylvania Public Utility Commission's
review of local ordinances, the act's socalled physician gag rule, DEP notification
of public water supply operators in the
event of a spill, and eminent domain
powers for natural gas storage facilities.
Although PIOGA views those provisions as having little effect on the oil and
gas industry's day-to-day operations,
Moody says Robinson IV reiterated that
the public resource provisions of Act 13
were no longer in effect because of the
court's decision in Robinson II.
"That is a piece of good news," Moody
says, adding PIOGA cites that ruling in
its jurisdictional statement as well.
He says, "In MSC's Chapter 78a lawsuit, DEP describes the Robinson IV statements we rely on as 'misstatements' by
the high court concerning its own prior
decision, which I believe is incredibly
insolent. We will make sure the Supreme
Court is aware of this."
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NOVEMBER 2016 105

American Oil and Gas Reporter - November 2016

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