In late June of this year Pennsylvania Governor Wolf signed Senate Bill 279.  This enactment, now known as Act 52 of 2016, created the Pennsylvania Grade Crude Development Advisory Council.  This seventeen member council will oversee DEP actions and policies that impact conventional oil and gas activities.  However and more importantly for the Commonwealth’s conventional oil and gas producers, Act 52 abrogated the near final Chapter 78 rules that addressed surface activities associated with conventional oil and gas production.  

As was reported previously in this column, the prescriptive nature of the proposed Chapter 78 rules resulted in a multi-year battle that pitted the DEP against the Oil and Gas Technical Advisory Board and the industry.  While the proposed rules focused on the larger impacts associated with unconventional operations, the provisions also covered activities associated with the smaller conventional operations.  A cost analysis of the proposed rules by the industry showed that the already reeling conventional oil and gas producers would be unable to continue operations under the rules.  In response, a provision was inserted in the 2014 fiscal code by the legislature that mandated the development of separate and more appropriate rules for conventional operations.  DEP responded by bifurcating the Chapter 78 rules into two separate packages – Chapter 78 for conventional operations and Chapter 78a for unconventional operations.  This resulted in near identical packages for both industries, less some provisions that didn’t apply to conventional operations.  Unfortunately, this “new” Chapter 78 still contained a number of costly permitting and operational provisions that made little sense for these small, low production operations.

Subsequently, the DEP’s newly formed Conventional Oil and Gas Advisory Committee passed a resolution noting that the DEP’s actions of bifurcating the original rule package and editing the conventional portion did not properly recognize the distinct differences between to the two industries.

Additional lobbying by the conventional industry and industry associations resulted in the language inserted into Senate Bill 279 that called for the abrogation of the conventional industry rules and a complete restart of the rulemaking process.  As noted above, this bill was presented to and signed by Governor Wolf.  The DEP and the conventional industry now have the opportunity to work together to develop rules that specifically address the issues associated with conventional oil and gas operations in Pennsylvania.