American Oil and Gas Reporter - November 2018 - 34

State Legislative Report

PIOGA-Backed Bill Comes Up Short
HARRISBURG, PA.-A promised veto
by Governor Tom Wolf stole the momentum of a bill that sought to create a
separate statue for conventional oil and
gas operations, the Pennsylvania Independent Oil & Gas Association reports.
HB 2154, known as the Conventional
Oil and Gas Act, was the top legislative
priority during the latter half of the Pennsylvania General Assembly's two-year session for PIOGA, the Pennsylvania Grade
Crude Oil Coalition and the Pennsylvania
Independent Petroleum Producers, PIOGA
indicates. Sponsored by Representative
Martin Causer, R-McKean County, the
legislation would have removed most facets
of conventional operations from Act 13 of
2012-which passed in response to the
rapid growth of the unconventional natural
industry at that time-and placed them
under an updated version of the original
Oil and Gas Act that was enacted in 1984.
"Many of the regulations developed
in response to Act 13 of 2012 were not
reasonable or relevant for the conventional
oil and gas industry," Causer said after
the House Environmental Resources and
Energy Committee approved his bill at
the end of April. "The conventional operators aren't asking for zero regulation,
they just want fair regulation and that's
what this bill aims to do."
Requirements relating to unconventional
operations and gas storage remain under
Act 13, PIOGA explains, while HB 2154
takes the framework of the 1984 law and
adds provisions that address how oil and
gas regulation should interact with the
Solid Waste Management Act, including
the beneficial use of brine and wastewater
treatment and disposal. According to PIOGA, the legislation also addresses and incentivizes voluntary plugging of orphan
wells. Other updates to the original Oil
and Gas Act deal with permitting, notice
obligations, site restoration, spill remediation,
inspections, enforcement and penalties.
HB 2154 earned House approval in
June and was voted out by the Senate
Environmental Resources and Energy
Committee in late September and the
Appropriations Committee in mid-October.
During the session's final days, HB 2154
appeared to have sufficient support to
pass the full Senate, PIOGA recounts,
but continued opposition by the governor
and his Department of Environmental
Protection convinced the legislative leadership not to bring the bill to the floor for
a final vote and, ultimately, a veto.
34 THE AMERICAN OIL & GAS REPORTER

PIOGA Executive Director Dan Weaver
expresses frustration about the fate of
HB 2154, and attributes much of the
failure of what he describes as a badlyneeded measure to the administration's
refusal to engage with industry representatives about the legislation.
"We put in countless hours educating
representatives and senators about the
need for this legislation, and now we
will have to start from scratch in a new
session in 2019 and hope for a better
outcome," Weaver considers. "DEP representatives told lawmakers over and over
again that the bill was unworkable in its
current form, but despite many requests,
they never sat down with industry or
lawmakers to discuss exactly what they
thought would be acceptable."
Similarly, the Senate's environmental
committee chairman, Gene Yaw, R-Lycoming, commented in media reports that
legislators had "very limited success in
getting real answers from DEP." Yaw sponsored a Senate companion to HB 2154.
In 2016, PIOGA recounts, legislation
was enacted to kill a DEP proposal that
many criticized as an inappropriate cutand-paste of rules written for unconventional operations. Although the new law
directed the department to start over,
Weaver points out, DEP has not offered
a new set of Chapter 78 regulations for
conventional surface operations nor offered
any description of the prospective rules.
"Our conventional operators are badly
in need of a regulatory scheme that is appropriate to the size and scope of what
they do," Weaver assesses. "We can only
hope they are able to hang on until we
can accomplish something either through
new legislation or sensible regulations."
No Severance Tax
According to Weaver, 2018 was a year
in which legislation of interest to PIOGA
failed to pass. That is not always bad, he
notes, citing the perennial issue of a
natural gas severance tax.
The session featured more than a
dozen stand-alone bills that sought to
impose a severance tax, he notes, but
the governor's annual budget proposal
has constituted the focal point for this
type of legislation.
However, the budget came together
with little political acrimony and no
serious push for new or increased taxes,
thanks to a positive revenue outlook and
a desire not to stir things up in a year in

which the governorship, all 203 seats in
the House of Representatives and half of
the 50 Senate districts were up for election,
Weaver explains.
"It also helped that, after two years of
decline, revenue from the Act 13 impact
fee on unconventional wells was up again
and brought in $209.6 million for local
communities and state programs," he adds.
"We really have emphasized that, despite
being called a fee, it is in fact a tax paid
by our industry and it has generated more
than $1.4 billion during the past seven
years. Unfortunately, the severance tax is
a fight we will fight again in 2019."
Other Legislation
As the general assembly drew to a
close, PIOGA recounts, the House Environmental Resources and Energy Committee announced plans to consider SB
138, one of several landowner-rights
measures that had progressed some early
in the two-year session. The bill would
give royalty owners the ability to inspect
producer records to ensure proper payment,
but PIOGA expressed concern that it also
would require operators to make royalty
payments within 60 days of production.
"Some of our members pointed out
that it can be a considerable time following
production before they even know what
price they will receive, let alone receive
payment from a purchaser," Weaver states.
"We raised our concerns about that part
of the bill as written and offered a more
workable compromise keyed to when the
producer receives payment."
The committee chair pulled the bill
from the calendar so the compromise
could be discussed with the original sponsor, but time ran out on further consideration, Weaver reports.
PIOGA also monitored several
pipeline-related bills, which have become
a hot topic in Pennsylvania, he adds. One
measure that saw movement at the end
of the session was SB 652, which established penalties for trespassing on facilities
defined as "critical infrastructure"-including several of interest to PIOGA,
such as pipelines, compressor stations,
well sites and refineries.
The bill was amended in House committee to change the focus from trespassing
to vandalizing after concerns were raised
about the possible impact on free speech
rights by those protesting pipelines, Weaver
recounts. Subsequently, it was not brought
up for a vote by the full chamber.
r
American Oil and Gas Reporter - November 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - November 2018
