As was previously noted on this blog site, the PA Department of Environmental Protection embarked on an effort several years ago to revise its Chapter 78 rules pertaining to the permitting and environmental issues associated with oil and gas operations. These proposed rules were published for comment in December, 2013. While the need for some of the revisions was mandated by Act 13 in 2012; the industry commented then that sections of these proposed rules clearly exceeded what was needed to comply with the Act. DEP’s proposal created concerns for both conventional and unconventional producers throughout the Commonwealth. Eventually the proposed rules generated an unprecedented number of comments that were submitted by industry and non-industry alike and the DEP reportedly spent months preparing a yet to be released comment and response document as required by the Commonwealth’s administrative regulatory process. It was clear from the industry’s perspective that if these rules were promulgated as proposed that an already slow and complex permitting process for oil and gas operations in Pennsylvania would be made more difficult. 

In response to concerns raised by the conventional industry that the proposed rules improperly included their operations in rules that were primarily intended to address unconventional operations, the DEP bifurcated the rule package in late 2014. The result was Chapter 78 (rules for conventional operations) and Chapter 78a (rules for unconventional operations). This move was intended to remove some of the more burdensome and meaningless provisions from the original Chapter 78 package and provide some relief for the conventional producers.

In early March, 2015, the DEP released two new proposed rule packages for Chapters 78 and 78a. Industry was hopeful that these revised proposed rules would contain some changes in response to the industry’s comments. In particular the industry had identified four major areas of concern with the original package. These were areas where DEP had clearly exceeded the mandates of Act 13, were costly or difficult to implement or where adequate rules were already in place. These were 1) public resource identification and protection, 2) water and wastewater handling, 3) water supply replacement standards and 4) pre-hydraulic fracturing assessments.

Additionally, the industry determined that the costs and benefits associated with these new proposed standards were not adequately addressed in the Department’s required Regulatory Cost Analysis and provided the DEP with additional data to establish more accurate costs.

Unfortunately, the Department’s March 2015 package seems to contain few changes in response to the industry’s comments. It appears the negative impacts and potential costs to comply will likely exceed those in the original proposal.

As examples, these reproposed rules have increased the scope and requirements for identifying non threatened and endangered species by inserting a new term of “other critical communities” and expanding what can fall into that category and who can get involved. In response to a few incidences where early, under designed in-ground impoundments leaked, the Department is now calling for an elimination of all in-ground wastewater centralized impoundments within three years or the repermitting of same to residual waste standards. The DEP’s preferred alternative – above ground tank storage – will now be encouraged but only if it meets the requirements contained in nine pages of the proposed rules. Another significant addition that wasn’t in the original proposal is noise control. All those changes, if part of the final rule package will have a huge cost impact on unconventional operations in the Commonwealth and they have not been evaluated as part of the required Regulatory Cost Analysis.

Overall, this is a frightening package for the unconventional producers in Pennsylvania but just as disconcerting is the conventional producer’s package. While this package contains fewer pages than the unconventional proposal, it imposes enough new requirements on this historic and low impact segment of the industry that this segment will find it difficult to operate in the Commonwealth.

The industry’s best hope is that the rules contained in this current package are derailed by the legislature’s standing regulatory review committees or the Commonwealth’s Independent Regulatory Review Commission.