PIOGA Tech

Water and Waste Management Training

April 26, 2018

Kevin J. Garber and Jean M. Mosites

ROADMAP

• Statutes and Regulations

• Permits and Approvals

• Litigation

• Enforcement

Legislation and Regulation

Water and Waste Laws in Pennsylvania

Affecting the oil and gas industry

PA Environmental Statutes

• Clean Streams Law

– E&S, PCSM, permits and approvals

– Liability under Section 301 and 401

• Dam Safety – thresholds for impoundments

• Solid Waste Management Act

– Transportation, Treatment, Disposal

• Tank Act exemptions

Act 13 –Pennsylvania Oil and Gas Act

• Water management plans,

§3211(m)

• Protection of water supplies,

§3218

– Water restoration and replacement

– Presumption and pre drill sampling /

pre frac sampling

• DEP Spill Notification to public

drinking water facilities, §3218.1

• Transportation records regarding

wastewater fluids, §3218.3

• Relationship to solid waste and

surface mining, §3273.1

Conventional Oil and Gas Act, SB 1088

• New legislation that would remove the conventional oil and gas

industry from Act 13. A standalone statute, with updates to Act 223 of

1984.

– Authorizing brine spreading

– Limiting PADEP permitting related to UIC wells

– Allowing regional characterization of produced water

– Returning the water restoration standard to Act 223 – SDWA or

comparable to quality before impact

– Clarifying the exemption from the Tank Act

– Dewasting secondary products from produced water

– Addressing TDS standard for centralized wastewater treatment

and recycling

Chapter 78 – 2016 revisions abrogated

• Water replacement standard

– 25 Pa. Code§78.51

• General requirements

–§78.54

• Temporary and Permanent Storage

–§§78.56, 57

• Onsite pits

–§78.58

• Discharge and disposal

–§78.60, 61, 62, 63

• Act 52, CDAC and Chapter 78

Chapter 78a – October 8, 2016

• Water replacement standard, 25 Pa. Code§78a.51

– Technical Guidance Document

• Temporary Storage,§78a.56

– Modular storage

• Production Fluids,§78a.57

– Secondary containment

• Onsite processing,§78a.58 – OG71A and B

• Impoundments,§§ 78a.59a, 59b, 59c

– MSC temporary injunction for existing

impoundments

• Monthly Reporting,§78a.121

PA Storage Tank and Spill Prevention Act

Tank Act regulatory exemptions for oil and gas operations

(25 Pa. Code Chapter 245)– Pipeline facilities, including gathering lines, regulated under Natural

Gas Pipeline Safety Act of 1968

– Non-stationary tank liquid trap or associated gathering lines directly

related to oil and gas production or gathering operations

– Flow-through process tank, including pressure vessel and oil and

water separators

– Tanks used to store brines, crude oil, drilling/frac fluids and similar

substances or materials and are directly related to exploration,

development or production of crude oil or natural gas regulated under

Oil and Gas Act

Tank Regulations

• Proposed revisions to Chapter 245: Revise definitions and increase inspection

and testing for regulated tanks.

– First exemption revised to exempt a pipeline facility including gathering lines

that is either:

• Regulated under 49 U.S.C. Chapter 601; or

• An intrastate pipeline facility regulated under state laws as provided in 49

U.S.C. Chapter 601 and which the Secretary of the US DOT determines to

be connected to a pipeline or to be operated or intended to be capable of

operating at pipeline pressure or as an integral part of a pipeline.

– Fourth Exemption clarified to exempt “tanks regulated under 58 Pa. C.S.

Chapter 32 (relating to oil and gas development) used to store brines, crude

oil...”

SRBC Update

• Final Rule - effective 7.1.2017

– Definition of “produced water” unchanged (proposal broadened

definition to include “other fluids associated with the development of

natural gas resources”)

– Consumptive Use Mitigation Policy/rule not changed (but may be

under further examination in 2018)

– Changes to grandfathering provisions (effective 1.1.2018) Project

review/alternatives analysis

SRBC Update

• Registration of Grandfathered Withdrawals and

Consumptive Uses

– Grandfathered facilities must provide withdrawal/consumptive use

data for past 5 years

– SRBC will determine peak consecutive 30 day avg determination

of a “grandfathered quantity”

– Registration required by 12.31.2019 (fee increases on 7.1.18 and

1.1.2019)

– Properly registered grandfathered facility retains existing exempt

status from permitting/docket requirements

DRBC Proposed Rulemaking

• 18 CFR Part 440.3 et seq. proposed rules:

– Part 440.3(b): prohibits HVHF ( > 300,000 gallons of

water used during all stages of well completion) in the

Basin.

– Part 440.4: any exportation of water from the Basin to

support hydraulic fracturing outside the basin requires

DRBC approval and, as policy, is discouraged by DRBC.

– Part 440.5: any importation into the Basin and treatment

and discharge within the Basin of wastewater from

hydraulic fracturing wells requires DRBC approval and, as

policy, is discouraged by DRBC.

DRBC Proposed Rulemaking

Comment period closed on March 30 with over 8,600 public

comments submitted.

• PIOGA submitted comments.

• DRBC to review comments and prepare a response

document. No schedule set for decision process but final

rules may only be adopted at a duly-noticed public meeting.

Permitting

State and Federal Permits and Approvals

OG-71 A and B

• Forms Utilized by BOGM

– OG-71A “Request for Approval of Alternative Waste

Management Practices”

– OG-71B “Request for Approval of Previously Approved

Alternative Waste Management Practices”

• De-wasting PBR for well pad liners

• MSC Challenge to 78a.58(f) – SWMA permitting

WMGR 123

• General permit, amended in 2012; expires 2020

• Authorizes processing, transfer and beneficial use

of oil and gas liquid waste to develop or

hydraulically fracture an oil or gas well

• Appendix A (maximum concentrations)

UIC Wells – Summary of PA Class II Wells

Well Operator County Type

Maximum Injection

Pressure (MIP)

(Surface)

Maximum

Permitted Rate

Cottonwood Operating Corporation, Inc. Somerset Non-Commercial 3,250 psi 900 bbls/d

Dominion Exploration and Production, Inc.

(original permit issued to CNX Gas Company, LLC)Somerset Non-Commercial 3,218 psi 30,000 bbls/mo

EXCO - North Coast Energy, Inc. Clearfield Non-Commercial 3,240 psi 27,000 bbls/mo

Columbia Gas of Pennsylvania, Inc. Beaver Non-Commercial 1,300 psi 700 bbls/d

EXCO - North Coast Energy, Inc. Clearfield Non-Commercial 1,450 psi 9,000 bbls/mo

Bear Lake Properties Warren Commercial 1,696 PSI 30,000 bbls/mo

Bear Lake Properties Warren Commercial 1,726 psi 30,000 bbls/mo

Stonehaven Energy Venango Non-Commercial 1,358 psi 4,500 bbls/mo

Windfall Oil and Gas Clearfield Commercial 2,433 psi 30,000 bbl/mo

Seneca Resources Elk Non-Commercial 1,421 psi 45,000 bbl/mo

Seneca Resources Elk Non-Commercial 1,416 psi 45,000 bbl/mo

Pennsylvania General Energy (PGE) Indiana Non-Commercial 2,933 psi 30,000 bbl/mo

Sammy Mar Clearfield Commercial 2,598 psi 30,000 bbl/mo

Bear Lake Properties Warren Commercial 1,651 psi 30,000 bbl/mo

Bear Lake Properties Warren Commercial 1,732 psi* 30,000 bbl/mo

Bear Lake Properties Warren Commercial 1,717 psi* 22,500 bbl/mo

Penneco Allegheny Commercial 1,421 psi 54,000 bbl/mo

*Pressure limit proposed in application.

UIC Wells – Recent Litigation

• PGE v. DEP, PA EHB., No. 2017-032

(unconsolidated)

• Penneco Envtl. Solutions, LLC, EPA Envtl. Appeals

Bd., No. UIC 18-02

• Marshall v. Windfall Oil and Gas Inc., PA EHB, No.

2018-034

• Seismic monitoring conditions

UIC Wells – PA State Seismic Network (PASEIS)

A Word About the ERA

Article One, § 27. Natural resources and the public estate.

The people have a right to clean air, pure water, and to the preservation of

the natural, scenic, historic and esthetic values of the environment.

Pennsylvania's public natural resources are the common property of all the

people, including generations yet to come.

As trustee of these resources, the Commonwealth shall conserve and

maintain them for the benefit of all the people.

SO WHAT IS DEP DOING?

Litigation

Challenges to State and Federal Regulations and

Enforcement

EQT v. DEP – a win for the good guys

• Declaratory Judgment Action challenged PADEP’s

interpretation of liability under Clean Streams Law

• Commonwealth Court held that mere presence in WOC is

not a violation

• PA Supreme Court affirmed

– DEP’s water to water theory was rejected

• DEP’s soil to water theory - case by case determination

– EQT penalty matter on appeal in the Commonwealth Court now

MSC v. DEP – Chapter 78a Challenge

• DJA challenges seven specific provisions of Chapter 78a

regulations promulgated in 2016 for unconventional

operators

• Includes challenges to:– Impoundment provisions – stayed as to existing impoundments

– SWMA permitting for onsite processing

– Monthly waste reporting

• Dispositive Motions filed by both parties– MSC moved, briefed and argued Count I, public resources in 2017

– Both parties moved and are briefing all remaining Counts, II-VII

– The injunction was appealed but remains in place at this time

PGCC v. EPA – UOG ELG Rule

• Petition challenged U.S. EPA’s Effluent Limitation Guidelines and

Standards for the Oil and Gas Extraction category (“UOG Rule”)

• UOG Rule = “zero discharge” standard – cannot send to POTWs

• Included Pennsylvania conventional operators

– defined UOG to include oil and gas developed from shale or tight formations

• EPA deferred the compliance deadline until 2019 for existing sources

• Voluntary remand to EPA for additional review, reconsideration

– EPA CWA 308 request for information to nine conventional operators

– IPAA, API, AXPC seeking a true pretreatment rule, not a ban

Lawson v DEP / HydroTransport – EHB appeal

• Resident appeal of DEP approval of brine

spreading

• Farmington Twp and PSATS intervention granted

• Damascus Citizens intervention denied

• Appellant moved for summary judgment on the law

• DEP moved to dismiss as moot –

– Agrees it has no authority under SWMA to approve brine

spreading

• ERA arguments pending review by Judge Beckman

Enforcement

Statutory Civil Penalty Authority

• Act 13, Section 3256

– DEP after hearing may assess:

• Conventional: $25,000 maximum plus $1,000/day each day violation

continues.

• Unconventional: Maximum of $75,000 maximum plus $5,000/day each

day violation continues.

• Factors: willfulness, damage to natural resources, safety, cost to remedy

harm, savings to violator, and other relevant factors.

• After notice, pay the penalty in full or appeal to EHB within 30 days.

• Clean Streams Law, Section 605

– DEP after hearing may assess maximum of $10,000/day/violation.

• Factors: willfulness, damage to waters of the Commonwealth, cost of

restoration, and other relevant factors

Statutory Civil Penalty Authority

• Solid Waste Management Act, Section 605

– DEP may assess a maximum penalty of $25,000 per offense and each

violation for each separate day is a separate and distinct offense.

– After notice, pay the penalty in full or appeal to EHB within 30 days.

• Dam Safety, Section 21

– EHB may assess a maximum penalty for violations or unlawful conduct of

$10,000 plus $500 for each day of continued violation.

– Assessment after hearing unless hearing waived.

– Officer of corporation authorizing unlawful conduct separately liable

• Tank Act, Section 1307

– DEP may assess a maximum penalty of $10,000 per day for each violation.

Each day of violation is a separate violation.

– Pay or appeal with payment of penalty bond within 30 days.

Enforcement/Penalty Statistics

• Between 1/1/2017 – 4/15/2018:

– 6,044 total violations identified (875 for Ch. 78a provisions);

– 637 total NOVs for violations occurring from 1/1/17 onward;

– 20 CACPs/COAs (3 of which affirmatively identified as unconventional

operators)

• $550 - $1,687,500; median $18,975

Information taken from PADEP Oil and Gas Compliance Database,http://www.depreportingservices.state.pa.us/ReportServer/Pages/ReportViewer.aspx?/Oil_Gas/OG_Compliance.

Number of violations cited for water/waste-related provisions

Information taken from PADEP Oil and Gas Compliance Database,http://www.depreportingservices.state.pa.us/ReportServer/Pages/ReportViewer.aspx?/Oil_Gas/OG_Compliance.

Nature of Violation # of violations alleged

(1/1/17 – 4/15/18)

Ch. 102 (Erosion & Sediment Controls) 759

Ch. 78, 78a, Subch. C (Envtl. protection performance standards) 946

Ch. 105 (Waterway Management) 69

Clean Streams Law and Ch. 91 (Discharges into waters of

Commonwealth)

485

SWMA Violations (301, 501) 367

Large Penalty Assessments from 1/1/2017 onward

• Energy Corp. of America

– $1,687,500 CACP on 12/28/17

– Incidents involving leaking pits containing flowback water at well sites

– DEP cited violations of 78.56(a) (failure to contain wastes in pit); CSL 301

and 402

• Seneca Resources

– $375,000 CACP on 4/11/17

– DSEA, CSL, SWMA issues at Clermont Pad

• CNX

– $241,000 CACP on 9/11/17

– CSL and SWMA issues relating to spills of reuse water, flowback water and

impaired water during drilling at GH9 well pad in May 2016

NOTE: EQT case before Commonwealth Court may impact

magnitude of future penalties involving discharge incidents

Strategies and Options

1. Inspection and Enforcement

NOV

Administrative orders and judicial enforcement

Civil penalty complaint

Criminal referral – Office of Attorney General

Other agencies

Fish & Boat Commission

EPA

Strategies and Options

2. Settlement

New, upfront confidentiality commitment

CACP

COA

Admitting the violation(s)

“The parties agree that the findings in Paragraphs A through xx

are true and correct and [name] shall not challenge the accuracy

or validity of these findings in any matter or proceeding involving

[name] and the Department.”

Strategies and Options

3. Litigation

EHB

Appeals

Penalty complaints

Commonwealth Court

Declaratory action

Mandamus

Judicial enforcement

Record Retention

Statutory, Regulatory, Permitting Obligations

Strategic Considerations

Record Retention Considerations

• Wastewater fluid transportation records:

– 5 years, per Oil and Gas Act, 58 Pa. C.S.§3218.3(a)(1)

• Production fluid tank monthly inspection records:

– 1 year, per 25 Pa. Code§78a.57(i)

• Secondary containment repair records:

– until the well site is restored, per 25 Pa. Code§78a.64a(e)

• Withdrawal data and daily instream flow measurements and purchases

– at least 5 years, per 25 Pa. Code§78a.69(e)(4)

Record Retention Considerations

• Water resources planning records:

– at least 5 years, per 25 Pa. Code§110.402

• Residual waste generator records:

– 5 years, per 25 Pa. Code§287.55(a)(2)

• Records required by permit:

– minimum of 5 years, e.g., General Permit WMGR123

Consider keeping certain records beyond mandatory

retention period

Record Retention Considerations

• What if applicable statute/rule/permit does not specify a

retention period?

• Paper vs. electronic format

• Location (on-site, nearest field office, etc.)

• Be prepared for:

– Agency site inspection

– Agency information request

– Internal audit

PADEP Resources

• FAQs at

http://www.dep.pa.gov/Business/Energy/OilandGasProgram

s/OilandGasMgmt/Pages/Oil-and-Gas-FAQ.aspx

• Forms at

http://www.dep.pa.gov/Business/Energy/OilandGasProgram

s/OilandGasMgmt/Forms/Pages/default.aspx

• Technical Guidance at

http://www.elibrary.dep.state.pa.us/dsweb/View/Collection-

8294

• Webinars and Chapter 78 training at

http://www.dep.pa.gov/DataandTools/Webinars/Pages/Oil-

and-Gas.aspx

Thank you