January 2015 • Issue 57

The

PIOGA pressThe monthly newsletter of the Pennsylvania Independent Oil & Gas Association

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®

News reports from across the country and publicity frominterested organizations about litigation involving so-called “community bill of rights” ordinances have

become more commonplace in recent months. These ordinancesseek to ban, among other activities, lawful oil and gas operations.These efforts are bringing the significant legal, economic, andpolitical issues to the attention of the public outside the munici-palities involved—something both proponents and opponents ofthese ordinances want, but for different reasons.

These issues include the proper way to change a state consti-tution; the use of unwitting community residents to advance thepolitical agenda of environmental extremists; the exposure ofmunicipalities to significant damage awards; the potential forcivil and criminal penalties against municipalities and municipalofficials who adopt these ordinances; the unnecessary and coun-terproductive waste of time, money, and resources spent propos-ing, adopting, challenging and defending these ordinances; theloss of safe, responsible, and lawful development and all the eco-nomic activity that results; and the unnecessary creation of ani-mosity that undermines and thwarts mutually beneficially work-ing relationships among the affected businesses, industries andmunicipalities.

Proponents of these ordinances admit that the ordinances areunconstitutional but want more publicity to advance a politicalagenda of social and constitutional change, while opponentswant more publicity to focus attention on all the wastedresources and lost opportunities resulting from the adoption ofthese ordinances. Opponents are also seeking to focus attentionon the blatant illegality of these ordinances, both in their ownright and as a vehicle for the social and constitutional change theproponents seek.

On January 4, The New York Times published an article,“Heavyweight Response to Local Fracking Bans,”1 reporting ondevelopments primarily in Longmont, Colorado, but also in

‘Community bill of rights’ ordinances gain national attentionCalifornia, Maryland, New York, Ohio, Pennsylvania and Texas.In November, The Washington Times2 picked up a story firstreported locally about an ordinance in Mora County, NewMexico.3

Common provisionsNo matter what particular business or industry or activity

these ordinances target, all of them include these key provisions:• Stripping corporations of all rights granted to “persons”

under state and federal constitutions and prohibiting corporationsfrom challenging the validity of the ordinance;

• Bestowing personal “rights” on “natural communities and

The value of yourPIOGA membershipBy Lou D’AmicoPresident & Executive Director

At this time of year, the majority ofour members have recently receiveddues renewal notices. If they are

prudent businesspeople, they should be ask-ing, Is PIOGA membership a good value? Iwould like to take a few minutes of yourtime to explain why it is an excellent value and suggest how youcan make it even more so. Let’s break it down this way:

Inclusiveness. There are other organization representing vari-ous segments of our industry, but PIOGA is the only one dedicat-ed to working for the entire upstream oil and gas industry inPennsylvania. That means conventional operators and shale pro-

ducers, both big and small, and the fullgamut of businesses that serve produc-ers—drilling contractors, service com-panies, consultants, attorneys, account-ing firms, pipelines, refiners, CNG andLNG specialists, equipment manufac-turers, training providers and many,many more. I’m always amazed by thevariety when I scan the list of the prod-ucts and services our members provide.

On top of that, we are the oldest andlargest oil and gas trade association in

Winter Meeting preview . . . . . . . . . . . . . . . . . 6Participants wanted for CNG/LNG group . . . . 6State leasing lawsuit decision. . . . . . . . . . . . . 8New DEP TENORM requirements . . . . . . . . 11Sales and use tax “mining” exemption . . . . . 13Reduce your taxes, help a child . . . . . . . . . . 17PIOGA comments on enforcement policy. . . 18Winter operation on ANF roads . . . . . . . . . . 19Working safely outside in cold weather . . . . 20December Spud Report . . . . . . . . . . . . . . . . 22Help prepare your future workforce . . . . . . . 27New York bans high-volume fracking . . . . . . 30

Other perspectives on the NY ban . . . . . . . . 31United against a severance tax. . . . . . . . . . . 33SRBC approves revised regulations . . . . . . . 33Alternative fuel vehicle rebates continue . . . 33EID on declining methane emissions . . . . . . 34PIOGA Member News . . . . . . . . . . . . . . . . . 35Member profile: Matrax . . . . . . . . . . . . . . . . . 36Oil & Gas Trends. . . . . . . . . . . . . . . . . . . . . . 40New members. . . . . . . . . . . . . . . . . . . . . . . . 42Calendar of Events . . . . . . . . . . . . . . . . . . . . 43PIOGA contacts . . . . . . . . . . . . . . . . . . . . . . 43

Page 2 The PIOGA Press

Ordinances: Continued from page 1

ecosystems”; and• Invalidating state and federal government permits and laws

inconsistent with the ordinance. The significant effects of these ordinances on the municipali-

ties and businesses involved belie the small size of theCommunity Environmental Legal Defense Fund (CELDF),4 thePennsylvania-based public interest law firm/organization solicit-ing and then convincing and aiding municipalities across thecountry to adopt them.

Grant Township, Indiana CountyRecently, and closer to home, Grant Township in Indiana

County adopted one of the CELDF ordinances in response toPIOGA member Pennsylvania General Energy’s undergroundinjection control well, permitted by both the U.S EnvironmentalProtection Agency and the Pennsylvania Department ofEnvironmental Protection. In October, PIOGA petitioned tointervene in PGE’s federal court challenge to the ordinance,which also grants township residents the “right to be free fromactivities related to fossil fuel extraction and production,” but thecourt has not yet decided whether PIOGA may intervene.

It was an ecosystem’s attempt to exercise its “rights” thatattracted media attention to the Grant Township ordinance. A fewweeks after PIOGA requested intervention, the Little MahoningWatershed—described as “an ecosystem within the Township,along with its associated aquatic and terrestrial natural communi-ties, the Little Mahoning Creek and its tributaries including EastRun Creek and Mill Run Creek, and underlying groundwater

systems”—petitioned to intervene in PGE’s federal court action.CELDF, which is the township’s legal counsel, issued a pressrelease touting the watershed’s filing as a “first-in-the-nationaction” and stating that “[s]ince 2006, communities inPennsylvania and around the country have recognized the rightsof ecosystems and natural communities in law with the supportof the Community Environmental Legal Defense Fund.”5 Theseother communities include those named in the articles mentionedabove.

This past December, StateImpact Pennsylvania reported onthe ecosystem’s filing and followed up the next day with reportson National Public Radio.6 A week later, the Johnstown Tribune-Democrat published an article addressing in more detail theunlawfulness of these CELDF ordinances in Pennsylvania andthe resulting penalties and costs that could be imposed on munic-ipalities and municipal officials who adopt these ordinances.7

This article references a 2008 Commonwealth Court decisioninvolving a CELDF ordinance adopted by East BrunswickTownship banning corporations from spreading sewage sludgefertilizer on farmlands.

East Brunswick Township, Schuylkill CountyPIOGA General Counsel Kevin Moody is very familiar with

this decision, which is the first by a Pennsylvania state appellatecourt to address the legal basis for the CELDF ordinances.Moody says, “The township’s brief in that case makes clear thatthe legal basis for these ordinances is based on a superior ‘rightto local self-government’ purportedly reserved by Sections 2 and25 of the Pennsylvania Constitution Declaration of Rights.” Thecourt’s decision quoted the township’s brief said:

[P]eople are the source of all power, and communi-ties possess an inalienable right to govern ... [which]cannot be delegated, limited, or made subservient toany other power. The power of local self-governmentis exempt from, and hence superior to, the generalgovernment of the state.8

Moody noted, “This is the same Pennsylvania Constitution argu-ment relied upon by the Grant Township ordinance. TheCommonwealth Court in East Brunswick acknowledged that thisposition reads these two constitutional provisions together tomean that local government is superior to the state, and flatlyrejected it.” Moody provided this quote from the decision thatexplains the court’s rationale:

There are several reasons why the Township’sargument must be rejected. First and foremost, weare not prepared to reject one of the most basic pre-cepts of governmental structure in thisCommonwealth, i.e., that “local governments arecreatures of the legislature from which they get theirexistence.”... Indeed, under our constitution, localgovernment begins with enabling legislation enactedby the General Assembly [pursuant to Article IX,Section 1].

....The Township’s argument stems from a flawed

premise. Article 1 of the Pennsylvania Constitutionsets forth a Declaration of the Rights of individualcitizens, not the rights of municipal corporations. Itprotects individuals “against infringement by govern-ment.” ...

February 2014 Page 3January 2015 Page 3

Page 4 The PIOGA Press

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Specifically, the “inviolate” rights referenced inSection 25 are those “fundamental rights [of citizens]that cannot be encroached on by the state govern-ment.” ... A township is not a citizen. Article 1,Section 25 does not recognize or protect the rights oflocal governments from encroachment by state gov-ernment.

Section 2 guarantees citizens the right to amendthe Pennsylvania Constitution. As treatise authorityexplains,

Constitutional amendment is the legalprocess ... by which the people ma y exercisetheir “inalienable and indefeasible right toalter ... their government [pursuant toSection 2].”

.... Article 1, Section 2 is silent on how local govern-ment is changed. Accordingly, it does not authorizecitizens to amend their form of local governmentwithout following the statutory procedures therefor[citing laws related to the adoption and amendmentof city charters and the Home Rule Charter andOptional Plans Law).9

“Despite this ruling, which the court affirmed twice after-wards, CELDF continues to assert in its ordinances that the rightto local self-government is now recognized and secured byArticle 1, Section 2 of the current Pennsylvania Constitution,even though it posts a video on its website admitting that theseordinances are contrary to state and federal law and that state andfederal constitutions need to be changed to authorize this so-called right,”10 Moody said. “I’m amazed that the video states

one question to be asked is whether the proponents of these ordi-nances can put sufficient pressure on local officials to adoptsomething that is contrary to state law. The issue is simple—peo-ple don’t have the power to create rights in this way; they mustfollow the processes in the constitution and applicable statutes.”

Real agendaRecently an official in Conestoga Township, Lancaster

County, refused to succumb to this pressure to oppose a naturalgas pipeline through the township,11 and an article on the MoraCounty, New Mexico, ordinance stated that many local residentsthat initially supported the ordinance now believe they have beenused by outsiders pushing their own agenda.12 That same articlenotes that of the seven fracking bans on ballots in November2013 (three in Ohio and four in Colorado), several were in areaswhere there is no potential for oil and natural gas development,showing that the ordinances “are part of an attempt to build anational movement.” The May 2014 Green Watch report fromwhich that article is excerpted included commentary by TomShepstone of the Northeast Marcellus Initiative describing propo-nents of these ordinances as “profoundly radical individualsdetermined not to protect the environment but, rather, overturncivil society and replace it with their own special brand of tyran-ny.”13 And an article just published on January 7 quoted national-ly known oil and natural gas attorney, scholar and formerProfessor Emeritus Bruce Kramer saying that attorneys who pro-pose these as valid ordinances “are coming close to engaging inlegal malpractice” and that encouraging litigation to advancethese ordinances is wrong .14

February 2014 Page 5January 2015 Page 5

Liability exposure“The East Brunswick decision showed CELDF the proper

way to advocate for its social change is to amend the state con-stitution—and CELDF knows this because, according to its web-site video, the organization has assisted in preparing constitution-al amendments for introduction in four states,” said Moody.“That is what’s so frustrating for opponents of these ordinances,”he added. “It takes time and resources to challenge these ordi-nances in a forum where they don’t belong, when even the pro-ponents acknowledge the unlawfulness of the ordinances. That iswhy we believe adopting these ordinances exposes the munici-palities and municipal officials to the very real potential for civilpenalties, such as federal Section 1983 civil rights actions andsurcharges under state law, and criminal penalties under the offi-cial oppression statute.”

The official oppression statute is found in the PennsylvaniaCrimes Code, 18 Pa. C.S. § 5301, and imposes criminal liabilityon any “person acting or purporting to act in an official capaci-ty...if, knowing that his conduct is illegal, he...subjects anotherto...infringement of personal or property rights...or denies orimpedes another in the exercise or enjoyment of any right, privi-lege, power or immunity.” Moody said, “That sure looks likewhat’s happening when municipalities adopt these ordinances.That also raises the issue of whether municipality insurance willcover the costs associated with these activities, further exposingthem to significant costs.”

What’s nextMoody stated that the association will vigorously fight these

ordinances on multiple fronts.“PIOGA will continue to explore all avenues of opposing

these unlawful ordinances because it is clear that the proponentsof these ordinances will continue their sham of an existing ‘rightto local self-government’ under the Pennsylvania Constitution asjustification for these ordinances,” he said. “Allowing each localcommunity to self-govern would prevent the orderly flow of gov-ernment in everything from traffic to taxation and ensures thatNIMBY (‘not in my back yard’) would prevail, paralyzing devel-opment and progress for the greater good.” ■

1 www.nytimes.com/2015/01/04/us/heavyweight-response-to-local-fracking-bans.html?ref=todayspaper2 “Judge weighs tossing first US county drilling ban” –www.washingtontimes.com/news/2014/nov/6/judge-parts-of-county-ordinance-unconstitutional/3 “Judge: Parts of Mora law unconstitutional” –www.lasvegasoptic.com/content/judge-parts-mora-law-unconstitutional

4 www.celdf.org5 www.celdf.org/press-release-first-in-nation-ecosystem-files-to-defend-legal-rights-to-exist—flourish6 “Indiana County township claims ecosystem has legal rights” –stateimpact.npr.org/pennsylvania/2014/12/01/indiana-county-township-claims-ecosystem-has-legal-rights/. StateImpact Pennsylvania is a collaboration betweenPublic Broadcasting stations WITF and WHYY, and a reporting project of NPRmember stations.7 “Dispute pits small community against large gas driller” –www.tribdem.com/news/dispute-pits-small-community-against-large-gas-driller/article_8ff65b0e-8284-11e4-83c6-1f0f7dc76661.html8 Commonwealth of Pennsylvania v. East Brunswick Township, and EastBrunswick Township Board of Supervisors, 956 A.2d 1100, 1107 (Pa.Cmwlth.2008).9 956 A.2d at 1106-1107.10 “So Your Community is Going to be Fracked, Mined, Factory Farmed, or fillin the blank…” – www.celdf.org/so-your-community-is-going-to-be-fracked-mined-or-fill-in-the-blank . The video is 19 minutes, 26 seconds long, and theseadmissions are made at the following marks: 8:30, 9:25, 12:17, 14:42, 16:36,17:35, 17:5611 “Voting for ‘community rights’ ordinance would violate my oath” – lancast-eronline.com/opinion/columnists/voting-for-community-rights-ordinance-would-violate-my-oath/article_099aa3a0-80ac-11e4-94a6-cb1d828f6b55.html 12 “Mora County’s Drilling Ban, the Moral High Ground or Moronic?” –www.redstate.com/diary/energyrabbit/2014/04/28/mora-countys-drilling-ban-moral-high-ground-moronic13 “Mora County and the Parachute Organizers, Environmental extremists targeta poor county for a ban on all drilling, not just fracking” –capitalresearch.org/wp-content/uploads/2014/05/GW1405-final-for-posting-140428.pdf , p.4.14 “Speaking for the trees, lawyer pushes unconventional doctrine” –www.eenews.net/stories/1060011209

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“Clouds on the Horizon” is the theme of PIOGA’sWinter Meeting on Tuesday and Wednesday,February 24-25, at Seven Springs Mount Resort in

Champion. The agenda includes updates on a wide range of chal-lenges facing the industry—local ordinances, state legislation,state and federal regulations, and public opinion.

But that’s not to say the atmosphere will be overwhelminglygloomy. There will be good news delivered too, along withopportunities for fun and networking for participants.

The fun actually starts on Monday the 23rd with an optionalclay shoot on the amazing Seven Springs course. The event runsfrom 11 a.m. to 2 p.m. The $100 fee includes lunch. Equipmentand ammo will be available directly through Seven Springs.

The program kicks off at 9 a.m. both Tuesday and Wednesday.The events’s meeting topics include:

• Review of PIOGA’s 2014 accomplishments• Legal review and outlook for 2014• Federal legislative and regulatory outlook for 2015• Air quality challenges in 2015—EPA and methane• State environmental regulatory issues• Severance tax proposals• The unconventional well impact fee—the benefits• Pennsylvania legislative outlook for 2015• Local ordinances—Act 13 and the Community Legal

Environmental Defense Foundation• Combatting the crazies—public relations and public educa-

tion

• Condensate and natural gas liquids safety awarenessAfter Tuesday’s sessions adjourn, a PIOGA Political Action

Committee reception ($50 minimum donation) will take place,followed by dinner and the always-popular, free-to-all-partici-pants Monte Carlo Night.

A new addition to our event will be the Product and ServiceShowcase. It will provide member companies with the opportu-nity to present information about exciting new products to othermembers.

Please visit the event page on our website—www.pioga.org—for a complete, up-to-date agenda and list of speakers and theirtopics. Registration and lodging information will be availablethere as well.

We’ll plan on seeing you at Seven Springs next month! ■

Wanted: Participants for CNG/LNG subcommittee

PIOGA’s Pipeline and Gas Market Development Committee (PGMD) recognizes the growth potential of compressed natural gas(CNG) and liquefied natural gas (LNG) for transportation markets and is helping support the infrastructure needed for a strong

alternative fuel and vehicle market in Pennsylvania by creating a CNG/LNG Alternative Fueling and Infrastructure Subcommittee.The subcommittee’s mission:

The PIOGA CNG/LNG Alternative Fueling and Infrastructure Subcommittee will focus on four categories: alternative fuel-ing development and installation; issues affecting consumer and fleet adoption; alternative fuel education; and state leg-islative support for infrastructure incentives. The subcommittee recognizes that discussions in the each of the four cate-gories will overlap; therefore, all participants are encouraged to provide input across all categories. The overall goal is toshare gained knowledge, information, contacts, and promote CNG/LNG as a clean and economical transportation fuel.The subcommittee hopes to educate and ensure that our general members are aware of market developments and asso-ciated industry benefits. The expectation is that each participant on the CNG/LNG Alternative Fueling and Infrastructure Subcommittee will submitwritten and verbal content to the subcommittee leader, who will prepare a monthly summary report to be submitted to thePipeline and Gas Market Development Committee’s monthly agenda. The findings in the summary report will be utilizedfor continued discussions with various stakeholders. The subcommittee leader will best determine how to foster and facili-tate participant feedback.

Subcommittee participants will also become members of the PGMD Committee and are encouraged to participate in the meet-ings, which typically take place on the first Thursday of the month at PIOGA’s offices in Wexford and last approximately two hours.Conference calling is available for those who cannot attend in person.

We are looking for members in all industry capacities who feel they wish to offer their expertise to the discussion. If you wouldlike to be an active member of the CNG/LNG Alternative Fueling and Infrastructure Subcommittee, email Joyce Turkaly atjoyce@pioga.org with your contact information.

At the same time, we are pleased to announce that Bob Beatty, CEO of “O” Ring CNG Fuel Systems, L.P. has agreed to lead thissubcommittee. With continued support from current members and new interest, we are looking forward to a year of lively discussionsaround the role of natural gas as an alternative fuel.

Thank you for your consideration of joining this important subcommittee.

Don’t let the ‘clouds’ keep you away from PIOGA’s Winter Meeting!

Come and enjoy the always-popular Monte Carlo Night!

February 2014 Page 7January 2015 Page 7

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State leasing lawsuit decisionoverwhelmingly positive

The General Assembly has the right to use revenue fromthe dedicated Oil & Gas Leasing Fund for general statebudget purposes, the Commonwealth Court ruled in a

January 7 decision involving a lawsuit brought by thePennsylvania Environmental Defense Foundation (PEDF). Thecourt also found that the Department of Conservation andNatural Resources (DCNR), rather than the governor, has theexclusive authority to decide whether to lease lands the agencyadministers.

PEDF brought the suit in 2012, challenging natural gas leas-ing on state lands and the legislature’s use of revenue from theOil & Gas Lease Fund for general budget needs (SeptemberPIOGA Press, page 14). Rents and royalties from oil and gasleasing are directed into the lease fund for use by DCNR for con-servation, recreation and flood control under a 1955 law.Beginning in 2009, as the lease fund swelled with revenue fromMarcellus Shale leasing, the General Assembly has transferredmoney to the general fund each year to help balance the statebudget.

The Commonwealth Court rejected the argument that the Oil& Gas Lease fund is a constitutionally based “trust fund” thatmust be used only to advance the purposes of Article I, Section27 of the Pennsylvania Constitution—the Environmental RightsAmendment (ERA) made famous by the Pennsylvania SupremeCourt’s Robinson Township ruling in December 2013 involvingAct 13 of 2012 (January 2014 PIOGA Press, page 1).

“Although the Environmental Rights Amendment places anaffirmative duty on the Commonwealth to ‘prevent and remedythe degradation, diminution, or depletion of our public naturalresources’—i.e., to conserve and maintain, the EnvironmentalRights Amendment does not also expressly command that allrevenues derived from the sale or leasing of theCommonwealth’s natural resources must be funneled to thosepurposes and those purposes only,” Judge P. Kevin Brobsonwrote in the majority opinion. The seven-member court wasnearly unanimous in its decision; only Judge Renee CohnJubelirer offered a dissent on one portion of the ruling.

The PEDF challenge gained new vigor last May afterGovernor Tom Corbett modified a moratorium on additionalleasing of state lands put in place by his predecessor, Ed Rendell.Under Corbett’s order, new leasing would be allowed if the natu-ral gas could be accessed without additional long-term surfacedisturbance on DCNR-administered lands, or if the drilling couldoccur horizontally from adjacent private lands. In the fiscal year2014-15 budget passed by the legislature, this leasing was toraise $95 million to be transferred into the general fund. Theleasing plan was put on hold pending the CommonwealthCourt’s decision, under an agreement between the PEDF and theCorbett administration.

In its January 7 ruling, the court found that per theConservation and Natural Resources Act (CNRA)—the 1995 lawthat created DCNR—decisions on leasing are up to the secretaryof DCNR, not the governor. The court found that althoughappointed agency heads “serve at the pleasure of the governor,”their primary duty is to serve “the people of thisCommonwealth,” who expect those officials to defend the envi-

February 2014 Page 9January 2015 Page 9

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ronmental rights defined in the state constitution “even whenfaced with overwhelming political pressure, perhaps from thegovernor, to act against their better judgment.”

“This is not to say that the Governor, as the chief executive,and the General Assembly are precluded from attempting toinfluence DCNR’s leasing decisions,” Judge Brobson wrote. Butbased on the CNRA, “the ultimate decision lies exclusively withDCNR, and DCNR, therefore, is accountable for making thedecision to lease and, if challenged, justifying it.”

The issue of Corbett’s immediate successor attempting toimpose leasing on a reluctant DCNR is likely moot, because TomWolf has gone on record as opposing any new leasing of stateforest or park lands and promising to reinstate the Rendell mora-torium, something this decision holds he cannot do. PIOGAGeneral Counsel Kevin Moody commented, “In any event, Ibelieve it would be difficult to justify stopping annual leasingcompletely, and certainly stopping what’s allowed underGovernor Corbett’s moratorium modification, in view of thefindings and conclusions in DCNR’s April 2014 monitoringreport.”

Corbett’s energy executive, Patrick Henderson, described thedecision as a “resounding victory for the Commonwealth.”

“We’re extremely happy with the court’s recognition of theauthority of the executive and the legislative branch,” Hendersontold StateImpact Pennsylvania. He said the court’s order to leaveleasing up to DCNR simply maintains the status quo.

“There has never been a scenario where we have said [toDCNR officials] go lease this or that, and here are the terms,”Henderson told StateImpact. “When we put our own executiveorder [to lease land] in place, we didn’t say to DCNR ‘go forth

and lease.’ We said, Here’s our criteria by which to consider leas-ing. It was a policy matter.”

PEDF’s attorney said he was disappointed the court did notfully consider the constitutional issues and the organization plansto appeal to the state Supreme Court. The foundation wants thecourt to rule that current leases issued under the Rendell admin-istration are unconstitutional. Moody said, “That seems veryunlikely. The court declined to address the matter of the existingleases because all the necessary parties were not in the case, andthat is a jurisdictional defect.”

PIOGA participationPIOGA participated as an amicus in the case before the

Commonwealth Court, arguing that:• “Conservation” means reasonable development and use of

public natural resources for the benefit of all citizens, notabsolute preservation and no development.

• PEDF’s reliance on the Supreme Court’s plurality opinionregarding the Constitution’s Environmental Rights Amendment isunwarranted and ineffectual. Environmental interests must bebalanced against other public interests under the ERA.

• The political branches of state government have constitu-tional budgeting duties and may use the Oil & Gas Lease Fundto serve multiple public interests.

• PEDF exaggerated and speculated about the environmentaleffects oil and gas development.

Moody said, “I am discouraged by the court’s reference to theRobinson Township plurality opinion’s statement of the affirma-tive duty placed on the Commonwealth by the ERA to ‘preventand remedy the degradation, diminution, or depletion of our pub-lic natural resources’ and the court’s equating that narrow andnegative description with the broader constitutional language ‘toconserve and maintain.’ But I’m encouraged by the court’srefusal to rely upon the Robinson Township plurality opinion toimpose constitutional limits on state lands leasing. As only oneof the three Justices in that plurality remain on the court now, it’san open question whether the ERA will have as much effect onlitigation involving environmental issues as the plurality’s sup-porters believed after the decision was issued. In my opinion,

this decisionshould be wel-comed by theWolf administra-tion because itgives them a sig-nificant revenuesource to use inbalancing theupcoming budg-et—if the newgovernor is will-ing to do theright thing andnot try to rein-state the Rendellmoratorium.” ■

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DEP issues new TENORM managementrequirements effective January 1

PIOGA has learned that the state Department of Environ -mental Protection is implementing new requirementsaffecting the management of technically enhanced natural-

ly occurring radioactive material (TENORM) by landfills, waste-water management operators and oil/natural gas operators. DEPhas sent letters to landfill operators to inform them of a newmonthly TENORM allocation/reporting requirement that effec-tively establishes a monthly rather than annual TENORM alloca-tion limit to maintain the 50:1 ratio of non-TENORM-containingwaste to TENORM-containing waste.

DEP has also inserted in the tracking sheet a multiplier of“3” for waste code 804, which is primarily sludge from the treat-ment of oil and gas well wastewater, “to ensure that the concen-tration of radioactive materials in 804 wastes is more accuratelycounted against the [landfill] facility’s TENORM allocation.”DEP says this multiplier is necessary because sludge generatedfrom processing oil and natural gas related waste “is not in astate of secular equilibrium and, consequently, its radioactiveconcentration (pCi/g) is approximately three or more times high-er than indicated by the measured exposure rate (µR/hr).”

These changes went into effect January 1. The goal of thenew requirements for landfill operators is to achieve a homoge-nous mixture of the amount of TENORM accepted along withmunicipal solid waste throughout the year and maintain the 50:1ratio in volume.

PIOGA also understands that DEP soon will be sending let-ters to wastewater operators and industry groups to similarlyinform them of these new requirements and the need to plan theiroperations and TENORM management plans accordingly. Wewill update members on all aspects of these new requirements assoon as information is received. ■

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February 2014 Page 13January 2015 Page 13

Department of Revenue issuesguidance on ‘mining’ exemptionto Pennsylvania sales and use tax

Oil and gas developers and their vendors may claim anexemption from Pennsylvania sales and use tax on quali-fied purchases of certain property and services. Until the

past few years, there was little published guidance available tothe oil and gas industry on the availability of the so-called “min-ing exemption” for purchases of property and services used inconventional and unconventional oil and gas extraction.

In response to the demand for guidance on this issue, thePennsylvania Department of Revenue (DOR) has published sev-eral reference materials concerning the application of the miningexemption to oil and gas developers. In September, the DORpublished Sales and Use Tax Information Notice 2014-02, whichprovides a detailed examination of the availability of the miningexemption for purchases made at each stage of natural gas devel-opment, including exploration, site preparation and pre-produc-tion construction, extraction and production, transport, and stor-age. This article discusses the mining exemption and some of thenew guidance contained in the information notice.

The mining exemptionPennsylvania assesses a 6 percent sales tax on retail sales of

tangible personal property and certain services that are made inthe Commonwealth and a corollary 6 percent use tax on the useof such property and services, if the vendor does not collect salestax. 72 P.S. §§ 7202(a) and (b). Exemptions from sales and use

taxes exist for the purchase of otherwisetaxable goods and services that are used inmanufacturing and industrial processes,including mining and resource extraction.72. P.S. §§ 7201(k)(8) & (o)(4). Purchasersmay claim this “mining” exemption if theproperty or services are predominately usedby the purchaser directly in extraction activ-ities, with consideration given to the proper-ty’s or services’ physical and temporaryproximity to the extraction operation, andthe existence of an active causalrelationship between use of theproperty or service and theextracted product. 61 Pa. Code §32.35(a)(1).

Who may claim the exemption?The DOR’s regulation on the mining exemption states that the

exemption is available to “a person engaged in the business ofmining.” 61 Pa. Code § 32.35(a)(1). The regulation refers to“mining” and “miners” because it was directed at the coal indus-try. The sales and use tax statute, however, defines “mining” toinclude exploring or extracting natural resources from the earth.72. P.S. § 7201(c)(3). In previously released guidance, the DORconfirmed that oil and gas extraction related activities are “min-ing” activities for purposes of the mining exemption.

Oil and gas developers also rely heavily on third-party con-tractors to perform critical services at all stages of production,but the mining exemption regulation does not indicate whethervendors that provide services to developers are entitled to claim

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the exemption. The information notice clarifies this issue by stat-ing that if a developer would be entitled to claim the exemptionon its purchase of otherwise taxable property or services, thenthird-party vendors performing the same development-relatedactivity on behalf of the developer would be entitled to claim themining exemption on such purchases.

ExplorationThe information notice notes that “mining” is defined in the

sales and use tax statute to include exploration for naturalresources, so otherwise-taxable personal property and servicesare exempt from sales and use tax when they are predominatelyused directly in gas exploration-related processes. Examples ofproperty and services used in oil and gas exploration that arecovered by the exemption include seismic exploration services,exploratory well drilling services, seismic imaging services andseismic data.

Extraction and productionThe DOR’s previously published guidance on the mining

exemption identified as either exempt or taxable various piecesof equipment used in natural gas extraction and productionprocesses, including equipment related to drilling rigs, frackingunits and wastewater impoundments. The information noticecontains new guidance on the application of the exemption topurchases of other equipment and services that are used in theproduction process. The following equipment was identified asexempt: gyroscopes and the wireline with which a gyroscope ishoisted and lowered into a wellbore, when the gyroscope data isused by the driller to guide and direct equipment used during

drilling production; communication devices used predominatelyin production activities, such as radios primarily used to coordi-nate work among production employees of equal rank; equip-ment used to test and inspect the product up to the last physicalchange of the gas prior to it being sold to another party; and ero-sion control materials, such as silt fences, stakes or hay bales, ifused to control, abate or prevent air, water or noise pollutiongenerated from production activity. The information notice iden-tified as taxable certain equipment used in production adminis-tration and management, including equipment used to record thequantity and quality of work in production or goods in storage,the flow of work, and the results of inspection; equipment usedto record the volume and pressure of gas coming from the well-head; and communication devices used for managerial directionand supervision.

Post-production, transport and storagePerhaps the most useful new guidance contained in the infor-

mation notice concerns the availability of the exemption for thepurchase of equipment and services that are utilized after gasleaves the wellhead. The DOR’s regulation on the mining exemp-tion provides that transportation equipment used to transportextracted product from the extraction point to a preparation siteis exempt, but that equipment used to transport product “after thefinal mining operation” is taxable. 61 Pa. Code §§32.35(a)(2)(i)(H) and (3)(iii)(I). The information notice statesthat the exemption applies to equipment and services used totransport gas from the wellhead to compression and refineryoperations up to the last physical change of the gas prior to itsbeing sold to another party. Exempt property includes dehydra-tors and other equipment used to remove water or vapors or toseparate other hydrocarbons from methane; compression andpump equipment used to move gas through gathering lines; andmaterial used in the construction of gathering lines, includingpipes and foundation materials used directly under the pipes,such as sand, stone and similar materials. Equipment used toconstruct gathering lines, including bulldozers and backhoes, isnot exempt.

The information notice also addressed the availability of themining exemption for purchases of equipment and services usedin gas storage. The notice, however, notes that since the defini-tion of “mining” in the sales and use tax statute includes theextraction of natural resources from “stockpiles,” the withdrawalof natural gas from storage facilities is considered to be anexempt mining activity. Therefore, equipment and services thatare purchased for use in withdrawing gas from storage facilitiesare exempt. Equipment and services used to inject gas into stor-age facilities, however, are taxable.

If you have any questions about your ability to make a claimto the mining exemption for purchases of equipment and servicesused in oil and gas development, please contact the author at412-394-6582 or bmilleville@babstcalland.com. ■

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PIOGA member businesses can for little out-of-pocket costhelp secure the educational future of hundreds of low-income children trapped in the lowest-performing schools

in Pennsylvania. Imagine a way to make your state tax dollarswork for you and directly prepare your future workforce, allwhile gaining strong marketing support in the communities youserve. Through the PA Opportunity Scholarship Tax CreditProgram your business can leverage your state taxes and directlyhelp a child stuck in a failing school.

How does it work? Businesses complete a short online appli-cation (www.newpa.com/OSTC) that tells the state how muchyou will donate to an eligible K-12th grade scholarship organiza-tion. If you make a two-year commitment for the same amount,your business receives 90 percent of the amount donated back touse as a state tax credit for that year. For a one-year commit-ment, your business receives 75 percent of the amount donatedcredited back to your Pennsylvania taxes. In addition, businessesget a federal charitable gift deduction for the donation, thus mak-ing the out of pocket cost about a nickel for a dollar in scholar-ship support.

The tax credit can be applied to certain state taxes, includingCorporate NetIncome Tax,Capital Stock andFranchise Tax orpass through topersonal incometax of owners ofLLCs, S corpora-tions and partner-ships. There is no minimum amount and the maximum is up to$750,000 in state tax credits. Businesses already participating inthe related Educational Improvement Tax Credit, or EITC, canalso participate in this program.

Once approved, you then donate to one of the eligible scholar-ship organizations, which are listed at www.newpa.com/sites/default/files/uploads/business/Business%20Financing/OSTC-List.pdf. In turn, the scholarship organization provides a scholar-ship to a child stuck in the lowest 15 percent of performingschools in the state to attend a higher quality public, private orparochial school (depending on the organization’s scholarshipparameters).

You may want to help children that live in a certainPennsylvania city or region. For example, let’s say you wantyour donation to go to school age children in Philadelphia. You

could designate the Children’s Scholarship Fund Philadelphia(www.csfphiladelphia.org) as the designated recipient. Children’sScholarship Fund Philadelphia is the largest provider of K-8thgrade scholarships to low-income children in Pennsylvania. It isone of the few eligible scholarship organization not affiliatedwith a particular school, religion or political movement, makingit a good fit for companies looking for a child-focused, good citi-zen marketing message in the community.

Different eligible organizations may have different methods ofdistributing the scholarships dollars. You might want to visit thewebsite or give them a call. For example, the Children’sScholarship Fund Philadelphia serves about 5,000 children,attending over 185 diverse private and parochial schools. A need-based lottery is used to assure all children from low-income fam-ilies have a chance to get a quality education.

Think about it as an investment in the next generation and agood business decision. ■

This article was co-authored with Nicole Tell of the Children’sScholarship Fund Philadelphia. She can be reached at 215-606-1874, or visit www.csfphiladelphia.org/taxcredits for more infor-mation.

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Page 18 The PIOGA Press

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PIOGA comments on DEP’s proposed enforcement policy

Commenting on a draft Department of EnvironmentalProtection technical guidance on enforcement of oil andgas violations and response to water contamination com-

plaints, PIOGA argues that the proposed policy “would substan-tially—and negatively—alter existing requirements regarding allaspects of oil and gas operations in Pennsylvania, for both con-ventional and unconventional operations.”

The draft policy, entitled “Standards and Guidelines forIdentifying, Tracking, and Resolving Oil and Gas Violations,”was published in the October 4 Pennsylvania Bulletin. Asexplained in an article by R. Timothy Weston and Tad J.Macfarlan of K&L Gates in the October PIOGA Press, the pro-posed guidance modifies inspection and enforcement proceduresand describes a new process for providing timely responses towater supply contamination complaints.

The draft policy places renewed emphasis on issuing noticesof violation (NOVs) for any alleged violation that cannot beremedied during an inspection, and for fully resolving violationnegotiations within 180 days of notice. Further, the draft policyaffirms DEP’s commitment to inspecting every well in theCommonwealth at key operational stages, such as before andduring drilling, during casing and cementing, following wellstimulation and completion, after post-drilling restoration, duringplugging, after post-plugging restoration, before financial securi-ty is released, and after any complaint or violation.

PIOGA’s formal comments contend that the draft policy failsto reflect the clear instructions in the Oil and Gas Act requiringDEP to oversee the industry in a manner that will “permit opti-mal development of oil and gas resources of this Commonwealth

consistent with protection of the health, safety, environment andproperty of Pennsylvania citizens.” Gone without explanation arestatements from existing DEP compliance and enforcement poli-cies such as, “All companies are to be treated fairly and equallyby the Department” and that compliance efforts are to “identifyopportunities for and to provide technical educational assistanceto oil and gas operators and the public.”

The association is concerned that the new policy:• Precludes necessary discretion by oil and gas inspectors to

allow alleged violations to be corrected without additional andunnecessary formal enforcement activities.

• Contains procedural defects in failing to address or providea means by which inspection reports can be corrected or NOVscan be disputed.

• Allows contested NOVs, or those issued for de minimis vio-lations, to be used in the calculation of penalties.

• Inappropriately requires and admission of guilt from opera-tors negotiating consent assessments of civil penalties, whiledepriving operators of information necessary for an arm’s lengthnegotiation of such agreements.

• Provides overly detailed provisions for inspections that fur-ther restrict department staff from identifying opportunities forproviding technical and educational assistance to oil and gasoperators where little or no environmental harm results from thealleged violations.

PIOGA also pointed out that the industry’s compliance wouldrate a grade of “A” under existing policies. As of mid-November,DEP had conducted nearly 23,000 inspections at more than11,000 oil and gas sites during 2014, finding that 90 percent

February 2014 Page 19January 2015 Page 19

were in complete regulatory compliance. In less than 3 percentof the inspections were conditions found that required enforce-ment action. Despite the industry’s excellent record of compli-ance, the new Enforcement Process section is written in “a veryheavy-handed, imperialistic style and intends very harsh circum-stances,” PIOGA observed.

Additionally, the association’s comments highlighted prob-lems with confusing requirements with uncertain legal authority,inconsistent and confusing terminology and language, unclearprocedures and more. PIOGA also raised a variety of concernsabout sections dealing with water supply investigation requestsand providing temporary water supplies. ■

Winter operation on ANF roads

With snowmobile season running from December 20 toMarch 31 in the Allegheny National Forest (ANF),forest managers have

issued a guidance for winter opera-tion on oil, gas and timber roads.Forest Supervisor Sherry Tuneexplained in the December 11 docu-ment that a considerable portion ofthe ANF snowmobile trail system islocated on roads jointly used byvehicles and snowmobiles. Toreduce potential conflict betweenusers and protect the integrity of thetrail system, Tune asked that thefollowing guidelines be used whenplowing snow on these roads:

• Snowplows must be equippedwith adequate shoes to protect theroad surface and leave a snow mat of at least 3 inches, or what isrequired under the timber sale contract or road use permit.

• Once the road is frozen, a snow mat should be maintainedby the operator as long as weather permits. Snow must beremoved from the entire road width, including turnouts andbreaks in berms provided for drainage.

• During icy conditions, sanding should be used on mixed-useroads. However, the snowplow operator should leave an un-sand-ed corridor for snowmobiles on the treated road segment.

• Commercial and administrative traffic should operate withtheir headlights or other running lights on during the snowmobileseason.

• Oil and gas operators should post appropriate warning signsper the Manual of Uniform Traffic Control Devices on segmentsof joint-use roads with active operations.

• Operators should review pertinent road use permits oragreements regarding hauling or operating conditions on joint-use roads.

Tune also asked all users to operate in a safe and courteousmanner and at safe speeds when traveling on roads and trails.Additionally, she advised that flaggers should be used whenmajor movements of equipment are planned.

Questions or concerns should be directed to Bradford DeputyDistrict Ranger Paul Weese at 814-363-6082 or MarienvilleDistrict Ranger Rob Fallon at 814-927-5799. ■

Page 20 The PIOGA Press

Working outside incold weatherThe following is from the Pennsylvania Department of Labor &Industry.

Anyone working outdoors in a cold environment and forextended periods may be at risk of cold stress. The fol-lowing frequently asked questions will help workers

understand what cold stress is, how it may affect their health andsafety, and how it can be prevented.

How cold is too cold?What constitutes extreme cold and its effects can vary across

different areas of the country. In regions that are not used to win-ter weather, near freezing temperatures are considered “extremecold.” A cold environment forces the body to work harder tomaintain its temperature. Whenever temperatures drop belownormal and wind speed increases, heat can leave your body morerapidly.

Wind chill is the temperature your body feels when air tem-perature and wind speed are combined. For example, when theair temperature is 40°F, and the wind speed is 35 mph, the effecton the exposed skin is as if the air temperature was 28°F.

Cold stress occurs by driving down the skin temperature andeventually the internal body temperature (core temperature). Thismay lead to serious health problems, and may cause tissue dam-age, and possibly death.

What are the risk factors that contribute to cold stress?Some of the risk factors that contribute to cold stress are:• Wetness/dampness, dressing improperly and exhaustion • Predisposing health conditions such as hypertension,

hypothyroidism and diabetes • Poor physical conditioning

How does the body react to cold conditions?In a cold environment, most of the body’s energy is used to

keep the internal core temperature warm. Over time, the bodywill begin to shift blood flow from the extremities (hands, feet,arms and legs) and outer skin to the core (chest and abdomen).This shift allows the exposed skin and the extremities to coolrapidly and increases the risk of frostbite and hypothermia.Combine this scenario with exposure to a wet environment, andtrench foot may also be a problem.

What are the most common cold induced illnesses/injuries?

• Hypothermia• Frostbite• Trench foot

What is hypothermia?Hypothermia occurs when body heat is lost faster than it can

be replaced and the normal body temperature (98.6°F) drops toless than 95°F. Hypothermia is most likely at very cold tempera-tures, but it can occur even at cool temperatures (above 40°F), ifa person becomes chilled from rain, sweat or submersion in coldwater.

What are the symptoms of hypothermia?• Mild symptoms:

—An exposed worker is alert.—He or she may begin to shiver and stomp the feet inorder to generate heat.

• Moderate to severe symptoms: —As the body temperature continues to fall, symptomswill worsen and shivering will stop. —The worker may lose coordination and fumble withitems in the hand, become confused and disoriented—He or she may be unable to walk or stand, pupilsbecome dilated, pulse and breathing become slowed, andloss of consciousness can occur. A person could die if helpis not received immediately.

What can be done for a person suffering from hypothermia?• Call 911 immediately in an emergency; otherwise seek med-

ical assistance as soon as possible. • Move the person to a warm, dry area. • Remove wet clothes and replace with dry clothes, cover the

body (including the head and neck) with layers of blankets; andwith a vapor barrier (e.g. tarp, garbage bag). Do not cover theface.

• If medical help is more than 30 minutes away: —Give warm sweetened drinks if alert (no alcohol), tohelp increase the body temperature. Never try to give adrink to an unconscious person. —Place warm bottles or hot packs in armpits, sides ofchest and groin. Call 911 for additional rewarming instruc-tions.

• If a person is not breathing or has no pulse: —Call 911 for emergency medical assistance immediately.—Treat the worker as per instructions for hypothermia, butbe very careful and do not try to give an unconscious per-son fluids. —Check him/her for signs of breathing and for a pulse.Check for 60 seconds.—If after 60 seconds the affected worker is not breathingand does not have a pulse, trained workers may start rescuebreaths for 3 minutes.—Recheck for breathing and pulse, check for 60 seconds.If the worker is still not breathing and has no pulse, contin-ue rescue breathing.—Only start chest compressions per the direction of the911 operator or emergency medical services.—Reassess patient’s physical status periodically.

What is frostbite?Frostbite is an injury to the body caused by freezing of the

skin and underlying tissues. The lower the temperature, the morequickly frostbite will occur. Frostbite typically affects theextremities, particularly the feet and hands. Amputation may berequired in severe cases.

What are the symptoms of frostbite?• Reddened skin develops gray/white patches.

Safety Committee CornerSafety Committee Corner

January 2015 Page 21

• Numbness in the affected part. • Feels firm or hard.• Blisters may occur in the affected part, in severe cases.

What can be done for a person suffering from frostbite?• Follow the recommendations described above for hypother-

mia.• Do not rub the affected area to warm it because this action

can cause more damage. • Do not apply snow/water. Do not break blisters.• Loosely cover and protect the area from contact. • Do not try to rewarm the frostbitten area before getting med-

ical help; for example, do not place in warm water. If a frostbit-ten area is rewarmed and gets frozen again, more tissue damagewill occur. It is safer for the frostbitten area to be rewarmed bymedical professionals.

• Give warm sweetened drinks, if the person is alert. Avoiddrinks with alcohol.

What is immersion/trench foot?Trench foot or immersion foot is caused by prolonged expo-

sure to wet and cold temperatures. It can occur at temperaturesas high as 60°F if the feet are constantly wet. Non-freezinginjury occurs because wet feet lose heat 25 times faster than dryfeet. To prevent heat loss, the body constricts the blood vessels toshut down circulation in the feet. The skin tissue begins to diebecause of a lack of oxygen and nutrients and due to the buildupof toxic products.

What are the symptoms of trench foot?• Redness of the skin, swelling, numbness, blisters

What can be done for a person suffering from immersionfoot?

• Call 911 immediately in an emergency; otherwise seek med-ical assistance as soon as possible.

• Remove the shoes, or boots, and wet socks. • Dry the feet.

How can cold stress be prevented?Although OSHA does not have a specific standard that covers

working in cold environments, employers have a responsibility toprovide workers with employment and a place of employmentwhich are free from recognized hazards, including cold stress,which are causing or are likely to cause death or serious physicalharm to them (Section 5(a)(1) of the Occupational Safety andHealth Act of 1970). Employers should, therefore, train workers

on the hazards of the job and safety measures to use, such asengineering controls and safe work practices, that will protectworkers’ safety and health.

Employers should train workers on how to prevent and rec-ognize cold stress illnesses and injuries and how to apply firstaid treatment. Workers should be trained on the appropriate engi-neering controls, personal protective equipment and work prac-tices to reduce the risk of cold stress.

Employers should provide engineering controls. For exam-ple, radiant heaters may be used to warm workers in outdoorsecurity stations. If possible, shield work areas from drafts orwind to reduce wind chill.

Employers should use safe work practices. For example, it iseasy to become dehydrated in cold weather. Employers therefore,can provide plenty of warm, sweetened liquids to workers. Ifpossible, employers can schedule heavy work during the warmerpart of the day. Employers can assign workers to tasks in pairs(buddy system), so that they can monitor each other for signs ofcold stress. Workers can be allowed to interrupt their work, ifthey are extremely uncomfortable. Employers should give work-ers frequent breaks in warm areas. Acclimatize new workers andthose returning after time away from work by gradually increas-ing their workload, and allowing more frequent breaks in warmareas, as they build up a tolerance for working in the cold envi-ronment. Safety measures, such as these, should be incorporatedinto the relevant health and safety plan for the workplace.

Dressing properly is extremely important to preventing coldstress. The type of fabric worn also makes a difference. Cottonloses its insulation value when it becomes wet. Wool, silk andmost synthetics, on the other hand, retain their insulation evenwhen wet. The following are recommendations for working incold environments:

• Wear at least three layers of loose fitting clothing. Layeringprovides better insulation. Do not wear tight fitting clothing.

—An inner layer of wool, silk or synthetic to keep mois-ture away from the body.—A middle layer of wool or synthetic to provide insulationeven when wet.—An outer wind and rain protection layer that allows someventilation to prevent overheating.

• Wear a hat or hood to help keep your whole body warmer.Hats reduce the amount of body heat that escapes from yourhead.

• Use a knit mask to cover the face and mouth (if needed).• Use insulated gloves to protect the hands (water resistant if

necessary).• Wear insulated and waterproof boots (or other footwear).

Safety tips for workers• Your employer should ensure that you know the symptoms

of cold stress.• Monitor your physical condition and that of your coworkers.• Dress properly for the cold.• Stay dry in the cold because moisture or dampness, e.g.

from sweating, can increase the rate of heat loss from the body.• Keep extra clothing (including underwear) handy in case

you get wet and need to change.• Drink warm sweetened fluids (no alcohol).• Use proper engineering controls, safe work practices, and

personal protective equipment provided by your employer. ■

Page 22 The PIOGA Press

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EQT Production Co 29 12/5/14 059-26567* Greene Morris Twp12/5/14 059-26640* Greene Morris Twp12/5/14 059-26641* Greene Morris Twp12/5/14 059-26642* Greene Morris Twp12/5/14 059-26643* Greene Morris Twp12/5/14 059-26644* Greene Morris Twp12/5/14 059-26645* Greene Morris Twp12/5/14 059-26646* Greene Morris Twp12/5/14 059-26647* Greene Morris Twp12/5/14 059-26648* Greene Morris Twp12/5/14 059-26649* Greene Morris Twp12/5/14 059-26669* Greene Morris Twp12/5/14 059-26670* Greene Morris Twp12/5/14 059-26671* Greene Morris Twp12/6/14 059-26672* Greene Morris Twp12/6/14 059-26673* Greene Morris Twp12/6/14 059-26674* Greene Morris Twp12/6/14 059-26675* Greene Morris Twp12/6/14 059-26676* Greene Morris Twp12/17/14 125-27425* Washington Amwell Twp

Spud Report:December

The data show below comes from the Department ofEnvironmental Protection. A variety of interactive reports are

OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY

available at www.portal.state.pa.us/portal/server.pt/community/oil_and_gas_reports/20297.

The table is sorted by operator and lists the total wells report-ed as drilled last month. Spud is the date drilling began at a wellsite. The API number is the drilling permit number issued to thewell operator. An asterisk (*) after the API number indicates anunconventional well.

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12/17/14 125-27435* Washington Amwell Twp12/17/14 125-27436* Washington Amwell Twp12/17/14 125-27504* Washington Carroll Twp12/17/14 125-27505* Washington Carroll Twp12/17/14 125-27506* Washington Carroll Twp12/17/14 125-27507* Washington Carroll Twp12/17/14 125-27508* Washington Carroll Twp12/17/14 125-27509* Washington Carroll Twp12/17/14 125-27510* Washington Carroll Twp

EXCO Resources PA LLC 1 12/22/14 113-20330* Sullivan Shrewsbury TwpGas & Oil Mgmt Assoc Inc 5 12/2/14 123-47515 Warren Mead Twp

12/8/14 123-47516 Warren Mead Twp12/12/14 123-47517 Warren Mead Twp12/18/14 123-47519 Warren Mead Twp12/23/14 123-47525 Warren Mead Twp

Hilcorp Energy Co 6 12/19/14 073-20483* Lawrence Pulaski Twp12/19/14 073-20484* Lawrence Pulaski Twp12/19/14 073-20485* Lawrence Pulaski Twp12/19/14 073-20486* Lawrence Pulaski Twp12/11/14 085-24715* Mercer Jefferson Twp12/17/14 085-24725* Mercer Jefferson Twp

Howard Drilling Inc 2 12/4/14 083-56598 McKean Wetmore Twp12/11/14 083-56597 McKean Wetmore Twp

Inflection Energy (PA) LLC 4 12/1/14 081-21520* Lycoming Eldred Twp12/1/14 081-21500* Lycoming Eldred Twp12/2/14 081-21527* Lycoming Eldred Twp12/2/14 081-21521* Lycoming Eldred Twp

Interstate Gas Mkt Inc 2 12/3/14 019-22357 Butler Oakland Twp12/16/14 019-22351 Butler Oakland Twp

Jalog Oil & Gas LLC 1 12/17/14 121-45639 Venango Cranberry TwpKoebley Timothy W 1 12/9/14 123-47616 Warren Warren CityLendrum Energy LLC 4 12/3/14 121-45738 Venango Pinegrove Twp

12/8/14 121-45734 Venango Pinegrove Twp12/10/14 121-45732 Venango Pinegrove Twp12/16/14 121-45735 Venango Pinegrove Twp

Mieka LLC 2 12/12/14 083-56679 McKean Wetmore Twp12/24/14 083-56678 McKean Wetmore Twp

MSL Oil & Gas Corp 4 12/4/14 083-56484 McKean Hamilton Twp12/8/14 083-56485 McKean Hamilton Twp12/11/14 083-56483 McKean Hamilton Twp12/18/14 083-56486 McKean Hamilton Twp

Range Resources Appalachia 12/14/14 125-27286* Washington Blaine Twp12/14/14 125-27287* Washington Blaine Twp12/14/14 125-27288* Washington Blaine Twp12/23/14 125-27186* Washington Canton Twp12/5/14 125-27394* Washington N Strabane Twp12/5/14 125-27432* Washington N Strabane Twp12/5/14 125-27396* Washington N Strabane Twp12/5/14 125-27433* Washington N Strabane Twp12/5/14 125-27445* Washington N Strabane Twp12/29/14 125-27391* Washington Smith Twp12/29/14 125-27390* Washington Smith Twp12/29/14 125-27387* Washington Smith Twp12/22/14 125-27335* Washington West Finley Twp12/23/14 125-27336* Washington West Finley Twp12/23/14 125-27337* Washington West Finley Twp12/23/14 125-27501* Washington West Finley Twp12/23/14 125-27502* Washington West Finley Twp

RE Gas Dev LLC 2 12/2/14 019-22360* Butler Center Twp12/3/14 019-22359* Butler Center Twp

Rice Drilling B LLC 5 12/5/14 059-26711* Greene Aleppo Twp12/5/14 059-26712* Greene Aleppo Twp12/5/14 059-26713* Greene Aleppo Twp12/15/14 059-26705* Greene Aleppo Twp12/6/14 125-27531* Washington W Pike Run Twp

Seneca Resources Corp 10 12/4/14 047-24899* Elk Jones Twp12/4/14 047-24904* Elk Jones Twp12/5/14 047-24903* Elk Jones Twp12/5/14 047-24906* Elk Jones Twp12/9/14 083-56646* McKean Norwich Twp12/11/14 083-56647* McKean Norwich Twp12/13/14 083-56623* McKean Norwich Twp12/18/14 083-56622* McKean Norwich Twp12/20/14 083-56620* McKean Norwich Twp12/22/14 083-56621* McKean Norwich Twp

Snyder Bros Inc 3 12/19/14 083-55798 McKean Corydon Twp12/20/14 083-55797 McKean Corydon Twp12/22/14 083-55796 McKean Corydon Twp

Southwestern Energy Prod Co 4 12/17/14 081-21552* Lycoming Jackson Twp12/15/14 115-21840* Susquehanna Great Bend Twp12/4/14 115-21866* Susquehanna Jackson Twp12/5/14 115-21865* Susquehanna Jackson Twp

SWEPI LP 3 12/9/14 117-21748 Tioga Charleston Twp12/10/14 117-21755 Tioga Delmar Twp12/10/14 117-21756* Tioga Delmar Twp

Titusville Oil & Gas Assoc Inc 3 12/19/14 053-30646 Forest Harmony Twp12/23/14 053-30649 Forest Harmony Twp12/26/14 053-30645 Forest Harmony Twp

Trimont Energy LLC 1 12/11/14 121-45784 Venango Allegheny TwpVantage Energy Appalachia II 1 12/23/14 059-26750* Greene Washington TwpWarren E&P Inc 3 12/6/14 131-20486* Wyoming Washington Twp

12/6/14 131-20488* Wyoming Washington Twp12/6/14 131-20487* Wyoming Washington Twp

Xite Energy Inc 1 12/12/14 121-45651 Venango Cornplanter Twp

OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY OPERATOR WELLS SPUD API # COUNTY MUNICIPALITY

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Shaler’s STEAM program looks for support in preparing your future workforceBy Dr. Timothy J. Royall, PrincipalShaler Area High School

Combining a solid understanding of publicschool curriculum with the need for high-priority occupations in the natural gas

drilling and production industries, we havefound a critical need for advancing public educa-tion, training, school-to-industry partnershipsand career preparedness within the regionalworkforce. With this vision, Shaler Area HighSchool organized a STEAM Advisory Boarddedicated to preparing students for successfulcareers and advanced study in a dynamic, tech-nology-based, global environment. STEAM is acurricular initiative showcasing science, technol-ogy, engineering, arts and mathematics(STEAM) with their application in communitybusiness, industries and related fields of study.

Serving the Allegheny County communitiesof Shaler, Etna, Millvale and Reserve, the ShalerArea High School STEAM Advisory Board, ateam of 15 high school educators, has developedan educational framework to promote the critical thinking skillsstudents need for real world employment. We believe that engag-ing students in STEAM learning will connect them to industrytrends in the regional workforce. According to the U.S. Bureauof Labor Statistics, many of the fastest growing and highest pay-ing careers are in the areas of science, technology, engineeringand mathematics. Shaler Area High School is responding to thisemployment trend by developing programs of study that will bet-ter prepare students for employment and career stability. In addi-tion to those fields, we believe that the practical arts can engagestudents in developing a sense of creative expression and innova-tion. Therefore, our focus on science, technology, engineering,arts and mathematics is intended to prepare our students for theemerging STEAM fields that utilize these cognitive skills.

Description of projectThe STEAM Advisory Board would like to modify the learn-

ing space within Shaler Area High School to better meet the col-laborative and design needs of interdisciplinary, project-basedinstruction. Creating a research and design center, enhancing alarge group collaboration room, and expanding accessibility toengineering labs would greatly promote student engagement andcareer readiness in this era of STEAM expansion. Shaler AreaHigh School would like to gain support for our STEAM initia-tives and develop partnerships for future program development.In doing so, we can better teach our children about the fastestgrowing industries and careers in Pennsylvania.

Rather than pulling manpower from surrounding states to fillopen jobs, we can supply the workforce with locally trained andhighly qualified individuals. The expanded learning areas wouldbenefit nearly 1,600 children and 130 teachers in the high school,as well as enhance visionary instruction of 3,000 children and260 teachers in grades K-8. Our high school facility would serveas a training and education center to host field trips that promoteengineering and service careers for the natural gas drilling andproduction industries. A three-year strategic plan to expand our

curriculum, instruction and postsecondary advancement includes:1. Creating a research and development room2. Enhancing our large group instruction room3. Developing a design lab within the technology education

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5. Acquiring science and technology equipment to support ourcurriculum design

6. Acquiring scholarship funding to promote post-secondarycareers and areas of study

Regional opportunityThe vision of our STEAM Advisory Board is to bridge the

gap between educational goals, universities and industry needs.Skills required for college or career readiness in STEAM pro-grams include critical thinking, problem solving and teamwork.This advisory board has developed an educational framework forall disciplines and types of learners with the goal of engagingstudents in learning and providing opportunities for students toadvance in a competitive employment market. With the mixeddemographics of students at Shaler Area High School, our chil-dren will enter directly into the workforce, attain a post-second-ary education or enter the military after graduation. The STEAMAdvisory Board would like to develop additional programs thatwill connect our students to growth trends in the regional work-force. Student and faculty collaboration will focus on project-based learning that includes interdisciplinary relationships in sci-ence, information technology, engineering, practical arts andmathematics.

Several key areas of concentration were designed to guide stu-dents in course selection during their high school years. Eacharea is aligned with specific examples of STEAM careers so thatstudents can gain a sense of those fields and the necessary skillsneeded for success. Areas of concentration are intended to pushstudents beyond the typical criteria for acquiring a high schooldiploma. Each area is defined by a minimum accruement of 28credits; including four years of mathematics, four years of sci-ence and nine department-specific electives. Students need toapply for a specific area of concentration during the third quarterof their senior year. A team of administrators and guidance coun-selors will review the application and issue the advanced certifi-cate to successful applicants.

Funding priorityTeaching our students in a competitive employment market

will require financial support through grants and donations topurchase the necessary equipment and resources to advance ourcurrent and potential programs. In order to do this, the STEAMAdvisory Board established the Shaler Area EducationalFoundation (EIN 46-5018857). The Shaler Area EducationFoundation is a 501(c)(3) non-profit organization dedicated tosupporting the educational needs and curricular advancement ofthe students in the Shaler Area School District. We are requesting

February 2014 Page 29January 2015 Page 29

corporate support to purchase the necessary equipment andresources to advance our educational programs.

Although funds acquired from corporate partnerships will beused to purchase supplies, equipment and resources to improvethe education of all students at Shaler Area, the primary focuswill be to enhance the high school’s science and engineeringinfrastructure, enrich our secondary curriculum and prepare highschool students for relevant degrees and employment. ShalerArea High School would like to gain support for our STEAMinitiatives and develop partnerships for future program develop-ment. In doing so, we can better teach our children about thefastest growing industries and careers in Pennsylvania.

Rather than pulling manpower from surrounding states to fillopen jobs, we can supply the workforce with locally trained andhighly qualified individuals. The Shaler Area High School servesa significant amount of underprivileged students. With nearly 45percent economically disadvantaged students and 20 percent spe-cial education students, any enhancement to our educational pro-grams can be directly associated with improving the lives of dis-advantaged students. The district is very supportive of theSTEAM Advisory Board that has an overarching priority on stu-dent-centered instructional improvement. With this targeted mis-sion in mind, overall student performance can increase systemat-ically through curriculum design and related professional devel-opment. With a focus on integrating and monitoring curricularstandards, significant gains are projected over the next threeyears in mathematics, reading and science for all students,including the challenging subgroups of economically disadvan-taged and special education children. ■

Contact informationDr. Timothy J. Royall, Principal

Shaler Area High School381 Wible Run RoadPittsburgh, PA 15209

412-492-1200 ext. 1505royallt@sasd.k12.pa.us

Regional supportersA.W. Beattie Career Center

ALCOSANAllegheny County Council

Allegheny Intermediate UnitCarlow University

Carnegie Science CenterCONSOL Energy

Duquesne UniversityHealthyWorks of PennsylvaniaPennsylvania Governor’s Office

Pennsylvania Independent Oil and Gas AssociationPhipps Conservatory

Pittsburgh Zoo and PPG AquariumRobotics Engineering Consortium

SWPA Workforce Investment BoardUniversity of Pittsburgh

Westinghouse

Page 30 The PIOGA Press

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New York issues statewide ‘high-volume’ fracking ban restrictingshale gas productionBy Jeffrey A. Smith, Chet M. Thompsonand R. Timothy McCrum

Crowell & Moring LLP

On December 17, New York Governor Andrew Cuomoannounced the decision to ban so-called “high-volume”hydraulic fracturing combined with horizontal drilling

for shale gas production throughout the state. Cuomo’sannouncement, which took place in a televised cabinet meeting,settles years of speculation and institutionalizes the moratoriumon high-volume hydraulic fracturing that has been in place inNew York since 2008. A final state environmental impact state-ment, which will not be subject to public comment, will beissued to implement the ban in early 2015.

While fracking and horizontal drilling in shale has created athriving industry with enormous economic multiplier effects instates such as Pennsylvania, New York has approached the issuewith caution and repeated delays. High-volume hydraulic fractur-ing in shale formations has been on hold in the state since theDepartment of Environmental Conservation (DEC) first launchedits review of the practice more than four years ago. The state hasdeclined to allow permits for hydraulic fracturing operations tobe issued until the DEC conducted an environmental impactstudy and drafted new regulations to govern the process. Thisdecision led to the Department of Health (DOH) study that ulti-

mately formed the basis for Cuomo’s statewide ban. The controversy in New York ostensibly had its foundation in

the fear of contamination of drinking water sources through themigration of naturally occurring methane or by chemicals in thehydraulic fracturing fluid that is injected underground. However,numerous federal and state regulatory officials in recent yearshave publicly stated that the hydraulic fracturing process itselfposes no threat of contamination to groundwater aquifers.

Notably, as recently as January 8 the DEC continued toexpress positive statements about hydraulic fracturing and hori-zontal drilling on the agency’s website, including the view that“[h]orizontal drilling and hydraulic fracturing are legal and com-mon in New York” (www.dec.ny.gov/energy/46288.html).Similarly, the DEC has continued to state that horizontal drillinghas been used in New York since the 1980s, and that hydraulicfracturing has been used in the state since the 1950s. The DEChas stated further that, “[e]xcept for special tools used under-ground, horizontal drilling is performed using the same equip-ment and technology as vertical drilling, with the same protocolsin place for aquifer protection, fluid containment and waste han-dling.” During the moratorium on high-volume hydraulic fractur-ing of shale formations in New York, the practice of hydraulicfracturing in conventional sandstone formations with verticalwells has continued.

The DEC is charged with permitting drilling in New York andas early as 1992 developed a generic environmental impact state-ment (GEIS) that set statewide parameters for the review of oiland gas well permitting. In 2008, the DEC began an environmen-tal review of the impacts of fracking—a process that placed a defacto moratorium on high-volume fracking permits during the

February 2014 Page 31January 2015 Page 31

pendency of the review. In an August 11, 2008, public statement(on the DEC website as of this writing), DEC CommissionerPete Grannis stated, in part: “Oil and gas drilling in New Yorkhas been around since the 19th century and is an importantindustry, with hundreds of drilling permits issued every year.Because wells in New York are so tightly regulated with a fullcomplement of environmental protections, many people don’teven realize that there are approximately 13,000 active oil andgas wells in the state” (www.dec.ny.gov/energy/46570.html).

In February 2009, the DEC narrowed the scope of issues to bereviewed into a draft supplemental generic environmental impactstatement (SGEIS). More than 13,000 comments were receivedon the original SGEIS during the comment period. Yet, beforeany action could be taken, in December 2010 then-Governor David Paterson signed an executive order halting anyhigh-volume hydraulic fracturing combined with horizontal

More thoughts on the New York ban...Wolf weighs in. At a press conference in northeast

Pennsylvania, incoming Governor Tom Wolf described the NewYork action as “unfortunate.”

“I want to have my cake and eat it, too. I don’t want to do whatNew York did,” he said. “I want to do what I think we can do herein Pennsylvania, and that is have this industry, but do it right froman environmental point of view, from a health point of view.”

Drilling in the Delaware basin? New York’s fracking banmeans the drilling moratorium in the far eastern tip ofPennsylvania, where the Delaware River Basin Commission(DRBC) has authority to regulate shale gas activity via its man-date to protect water resources, may continue indefinitely. Madeup of representatives of the federal government and the fourstates drained by the Delaware River, the DRBC put the morato-rium on unconventional gas development in place in 2010 andinstructed staff to draw up regulations.

After taking comments and revising the proposed regulations,the commission has never acted on the rules. Now, New York hasjoined Delaware on the no-drilling side, and Pennsylvania hasalso shifted with Wolf signaling that he supports keeping themoratorium in place—unlike his predecessor, Tom Corbett, whowas a strong advocate of drilling. New Jersey and the federalgovernment—the other two members of the DRBC—have beenessentially silent on whether the rules should be approved.

The ‘kids’ test. Apparently, what sealed the deal is that NewYork State’s health commissioner wouldn’t want his children livingnear a drill site. Here’s exactly how The Buffalo News reported it:

“I cannot support high-volume hydraulic fracturing inthe great state of New York,” the state health commis-sioner, Dr. Howard Zucker, said at a meeting of Gov.Andrew M. Cuomo’s Cabinet in Albany.

Zucker’s announcement came at the end of a years-long Health Department study of fracking, which has ledto a gas boom in neighboring Pennsylvania and otherstates along with persistent complaints of well watercontamination and air pollution.

Reviewing the research surrounding fracking, Zuckersaid he asked himself if he would want his family to livenear a fracking site.

“The answer is no,” Zucker said.That appeared to be good enough for Cuomo, who

called Zucker’s talk “especially effective,” adding that ifZucker doesn’t want his children living near fracking, nochild should.

drilling until July 1, 2011. He directed the DEC to conduct fur-ther environmental review to ensure that all environmental andpublic health impacts were mitigated or avoided and to then havethis information presented to the public for further review.

In July 2011, the DEC released the full preliminary reviseddraft SGEIS, prepared after considering the many commentsreceived on the draft SGEIS. The draft SGEIS in 2011 set forthnumerous favorable findings about the environmental protective-ness of high-volume hydraulic fracturing, including that “[r]egu-latory officials from 15 states have recently testified that groundwater contamination from the hydraulic fracturing procedure isnot known to have occurred despite the procedures widespreaduse in many wells over several decades.” (2011 Draft SGEIS,Chapter 6, p. 6-51.) In September 2011, DEC released therevised draft SGEIS, opening the public comment period untilJanuary 2012, by which time DEC had received some 80,000comments. The proposal, along with the SGEIS, had it beenimplemented, would have banned fracking in the New York Cityand Syracuse watersheds and within 500 feet of the state’s 18primary aquifers. It also would have required that natural gascompanies disclose the chemical additives used during thehydraulic fracturing process.

Due to the intense controversy over the issue, however, inSeptember 2012, Joseph Martens, the state DEC commissioner,asked DOH Commissioner Nirav Shah to review the work of theDEC to ensure that it sufficiently accounted for public healthimpacts of high-volume hydraulic fracturing.

While the DOH review was proceeding, a separate environ-mental regulatory process played out. The deadline for finalizingthe proposed regulations under the State Administrative

Page 32 The PIOGA Press

Procedures Act had been November 28, 2012. Instead of finaliz-ing those regulations, however, the DEC filed a notice of contin-uation with the Department of State to extend the rulemakingprocess by 90 days to complete review of the draft SGEIS. Toreceive the needed extension, DEC was required by law to re-filethe draft regulations along with the responses to public com-ments received during the public comment period, and prelimi-nary revisions, responsive to those comments.

These draft regulations retained the key limits that wereincluded in the earlier proposed rules, including a ban on frack-ing in the New York City and Syracuse watersheds and within500 feet of the state’s 18 primary aquifers. Similarly, they limitedwell pads within 4,000 feet of unfiltered surface drinking watersupply watersheds; within 100-year floodplains; and within2,000 feet of public drinking water supply wells, reservoirs, nat-ural lakes, man-made impoundments or springs. The revised pro-posal also included an additional 500-foot setback requirementfrom inhabited dwellings and places of assembly.

The DEC was criticized by a coalition of environmentalgroups, which said the agency should have waited for the resultsof the DOH study and the SGEIS before issuing regulations.Those groups argued that by releasing the draft regulations priorto the final SGEIS on which they were based, the public was leftto evaluate the regulations without access to relevant health andenvironmental considerations.

By law, the DEC had to allow for a 30-day period—which ranfrom December 12, 2012, until January 11, 2013—for additionalpublic comment. The DEC had until February 13, 2013, to issuenew draft regulations and until February 27 to finalize those reg-ulations, before the DEC would be required to restart the rule-

making process and re-open it for public comment. However, asof February 13, 2013, neither the DOH results, nor the finalSGEIS, had been made public, and Governor Cuomo announcedthat the decision on fracking would be delayed yet again.

The DEC then declared it would not take any final action ormake any decision on fracking until after Dr. Shah’s DOH healthreview was completed and the DEC, through the environmentalimpact statement, was satisfied that fracking could be done safe-ly in New York State. The final DOH review report, datedDecember 17, 2014, found, in part, that there were “significantuncertainties about the kinds of adverse health outcomes thatmay be associated with…” high-volume hydraulic fracturing.

Governor Cuomo’s resulting statewide ban does on a univer-sal basis what some municipalities had attempted individuallyand that had been the subject of active litigation concerningmunicipal control and New York’s home rule laws. Over 30municipalities in upstate New York have banned fracking, while80 more have issued temporary moratoria. Although these sepa-rate actions now have been supplanted by the statewide ban,individual property owners seeking to capitalize on their mineralrights may have a clearer path to a remedy for being deprived ofthose economic gains. Industry response by developers who haveinvested billions of dollars for the rights to drill in the MarcellusShale, including challenges to the long and byzantine administra-tive process, will doubtlessly be considered over the comingweeks and months. ■

Mr. Smith is a partner with Crowell & Moring LLP, in New YorkCity, and Mr. Thompson and Mr. McCrum are partners in thefirm’s Washington, D.C., office.

January 2015 Page 33

Uniting to head offa severance tax

Last month, PIOGA joined with tother industry groups to pro-vide media representatives with information on the impacts of aseverance tax on the industry and on the Commonwealth’s econ-omy. The media call generated many articles, including this oneby the Pittsburgh Tribune-Review’s David Conti, which ranunder the headline, “Natural gas groups says increase inPennsylvania taxes would bring dire results for economy.”

Leaders of three natural gas industry groups joined forcesTuesday to fight increased taxes on their business as aMcKeesport lawmaker renewed his proposal to enact a

severance tax. The groups appear steadfast in their position that increasing

the amount of gas money Pennsylvania takes above the $210million companies are paying annually in impact fees wouldreduce investment, slow production and hurt the economythey’ve helped to support.

“You’ll see fewer rigs, fewer jobs, fewer opportunities, andthat would squander a tremendous generational opportunity forthe commonwealth,” said David Spigelmyer, president of theNorth Fayette-based Marcellus Shale Coalition.

Joined by the leaders of the Pennsylvania Independent Oil andGas Association and the Associated Petroleum Industries ofPennsylvania, Spigelmyer repeated arguments his industry madeduring this year’s gubernatorial race, in which Democrat TomWolf of York County campaigned on raising taxes paid bydrillers in the bountiful Marcellus and Utica shales. Wolf beatGov. Tom Corbett, a gas-tax opponent who helped enact the per-well impact fee, and takes office next month.

“The idea that the impact fee is fair is nonsense,” said Sen.Jim Brewster, D-McKeesport, who announced details Tuesday oflegislation that will add a severance tax—also known as anextraction tax—based on a percentage of the price of gas pro-duced by each well.

Much of the impact fee, which is assessed on each well nomatter how much gas it produces, goes to communities that hostwells. Like Wolf, Brewster wants more money to help fund pub-lic school districts and proposes a combined fee and tax thatequates to a 5 percent levy.

Brewster said he’d propose the tax no matter who won thegovernor’s race. But he said he is working with Wolf’s chief ofstaff, former Department of Environmental Protection SecretaryKatie McGinty, to file legislation that is consistent with Wolf’sagenda and that could pass a Republican-controlled GeneralAssembly.

“I’m hoping this will be the start of a discussion,” he said. The industry doesn’t seem ready to talk. “We are opposed to any level of a severance tax,” Stephanie

Catarino Wissman, executive director of Harrisburg-basedAssociated Petroleum Industries of Pennsylvania, said during aconference call with Spigelmyer and Lou D’Amico, president ofMarshall-based Pennsylvania Independent Oil and GasAssociation.

The industry leaders say companies working in the Marcellusare hurting without the tax because of low gas prices caused by aglut of supply and few pipelines to take it to market. Calculatinghow much money a tax would raise is complicated by regional

differences in prices based on pipeline availability. Wolf estimated a 5 percent tax could give the state up to $1

billion annually. The industry groups dismissed that figure. They said they pay the taxes that other businesses pay, plus

the impact fee, which leaders started calling an impact tax. “Does it make sense (to penalize) the one industry creating

jobs?” D’Amico said. ■

Revised SRBC regulationsgoing into effect this month

Under amendments to the Susquehanna River BasinCommission’s (SRBC) natural gas regulations, the defi-nition of “hydrocarbon development” has been expanded

to “hydrocarbon development project” so that all water-relatedactivities and facilities at the drilling pad site are included.

The revisions were given final approval at the commission’sDecember 5 meeting and published in the December 18 FederalRegister. They take effect January 23.

The changes involve consumptive uses under the SRBC’sApproval by Rule program. According to a previous FederalRegister notice, the new definition retains “the current languagereferring to ‘the drilling, casing, cementing, stimulation andcompletion’ of oil and gas wells, and…add[s] new language tocover all water-related activities and facilities on the drilling padsite as well as specific uses of water off the drilling pad site.”

The revised definition includes activities on the drilling padsite associated with an unconventional well’s “production, main-tenance, operation, closure, plugging and restoration of wells ordrilling pad sites.” Off the pad site, the regulated uses are waterused for hydro-seeding, dust suppression and hydro-excavationof access roads and underground lines, as well as tank cleaning,related to a drilling pad site or centralized impoundments.

Additionally, consumptive use permits will be good for 15years rather than five years.

The final rules are available under Policies & Regulations atwww.srbc.net. ■

Alternative fuel vehicle rebates extended

The Department of Environmental Protection has announcedthe extension of the Alternative Fuel Vehicle Rebate pro-

gram, which will continue to provide $1,000 rebates for naturalgas and propane-powered vehicles.

DEP provides these rebates as incentives to assist Penn -sylvanians with the incremental cost of purchasing an alternativefuel vehicle. To qualify, the vehicle must be registered inPennsylvania, operated primarily in-state and be purchased nomore than six months before the rebate application is submitted.The rebates are funded by the Alternative Fuels Incentive GrantProgram, which is supported by a gross receipts tax on utilities.

Rebate applications and updated guidelines are available hereon DEP’s website, www.dep.state.pa.us, keyword: AlternativeFuel Vehicle Rebates. Information on rebate availability will beupdated regularly. ■

Page 34 The PIOGA Press

By Katie BrownEnergy In Depth

Anew report by Energy In Depth (EID) shows thatmethane emissions from oil and gas development havesignificantly declined in many of the top producing

basins across the country, even as oil and gas production has sky-rocketed.

Based on data from the U.S. Environmental ProtectionAgency’s (EPA) Greenhouse Gas Reporting Program, EID’sreport shows that methane emissions from some of the most pro-lific shales in the United States have fallen considerably.

For example, in the basins that include the Utica andMarcellus shales, methane emissions fell by 55 percent and 10percent, respectively. The San Juan Basin—an area that anti-fracking activists have claimed has rising emissions—actuallyreduced methane emissions by 6 percent. In the AnadarkoBasin—which includes portions of western Oklahoma, one of thetop oil and gas producing states—methane emissions decreasedby 34 percent. Substantial reductions have also been achieved inTexas, which is leading the United States in oil and gas produc-tion: In the Permian and Gulf Coast Basins, methane emissionsdecreased by 9 percent and 18 percent, respectively.

Despite the great progress being made to reduce emissions,environmentalists have been pushing state regulators and the

EPA to impose additional and costly regulations on methaneemissions. For instance, a coalition of environmental groups,including the Sierra Club, Natural Resources Defense Counciland League of Conservation Voters, said in a letter to PresidentObama:

“We urge you and your administration to build on thislegacy by announcing enforceable national methane emis-sions standards for new and existing oil and gas sourcesthis fall […] This is essential to protect communitiesacross the country and reduce the pollution that is disrupt-ing our climate…”The data from EPA, however, show that actions already being

taken by the industry are delivering substantial results. InFebruary, the EPA released its annual Greenhouse Gas Inventory,which also showed a decline in methane emissions from the oiland natural gas production industry. For natural gas production,the EPA credited the industry for its “voluntary reductions” inmethane, specifically through the use of new technologies. Asthe EPA observed:

“The decrease in production emissions is due to increasedvoluntary reductions, from activities such as replacinghigh bleed pneumatic devices, regulatory reductions, andthe increased use of plunger lifts for liquids unloading.” ■

February 2014 Page 35January 2015 Page 35

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PIOGA Member News

Tenaska Westmoreland project seeks support

Tenaska, Inc. is in the process of trying to build the natural-gas-fueled Westmoreland Generating Station nearSmithton. The project will bring jobs, tax revenue and a

boost to the local economy. The state Department ofEnvironmental Protection is taking public comments as part ofthe permitting process, and Tenaska has developed a simple,effective way to show support for the project. Visitwww.tenaskawestmorelandproject.com/support/ to quickly andeasily submit a letter of support online and to learn more aboutthe project.

RJR Safety merges with 3P Safety

RJR Safety Inc. announces the merger with 3P Safety LLC onJanuary 1. Both are providers of safety consulting services.

“This merger with 3P Safety LLC, based in Harmony, furtherstrengthens both our reputation and position in providing safetyconsulting services to the oil and gas industry, the manufacturingindustry, and the construction industry,” commented RJR SafetyPresident Wayne Vanderhoof, CSP. “It also expedites expansionopportunities of RJR Safety Inc. into northwest Pennsylvania andnortheast Ohio.”

RJR Safety Inc. will continue to maintain the corporate officein Claysville. 3P Safety will continue to operate, for the immedi-

ate future, under that name as a division of RJR Safety Inc.

ETC Introduces 10K Mini Frac Tank

Some drilling projects do not require the capacity of a full-size frac tank, or companies have space limitations that do notallow for full-size frac tanks on their pads. Rather than layingout extra capital for unnecessary capacity or trying to accommo-date a full-sized frac tank into a limited amount of space, compa-nies are turning to the mini frac tank.

Environmental Tank & Container’s standard Mini Frac Tankhas a capacity of 10,000 gallons, but 8,400 gallon and 5,000 gal-lon models are also available. The tank is constructed from one-quarter-inch corrugated steel walls and has a V-bottom floor foreasy cleanout. The standard 10,000 gallon tank measures 8 feet,6 inches wide, 24 feet long, and 9 feet, 6 inches high (lengthand height differ for the 8,400 gallon and 5,000 gallon models).The 10,000 gallon tank is also available in open-top and flow-back designs.

Page 36 The PIOGA Press

MatraxMatrax is a full-service matting supplier, contractor and

manufacturer providing site access and ground support solu-tions to the oil and gas, mining, stadium turf protection, andconstruction industries. Matrax offers a variety of productsincluding timber, steel, plastic and rig mats, temporary bridges,outrigger pads, and road plates. Products are designed andmanufactured in-house or sourced through a network of suppli-ers to ensure that the most appropriate solution is made avail-able. Matrax engages in the sale and rental of its products andcan provide professional installation services as well as per-form site surveys and provide application recommendations.Soil erosion and sediment control services are also available.

Matrax was founded by Joseph M. Wright and David J.Buddemeyer in 2010. The founders have a proven track recordof success in the matting market as well as other constructionequipment rental and construction service businesses. With over50 years combined contracting, field and business experience torely on, they take a solution-based approach and are committedto providing the highest level of customer service possible.Integrity, consistency and honesty are the core values at Matrax.

For the oil and gas industry specifically, Matrax offers mat-ting products for site access, drilling, completion and produc-tion operations. At Matrax, “One Size Does Not Fit All” allow-ing for a variety of options by which a value engineering solu-tion can be made possible. Matrax Rig Mats are the strongestby weight on the market and are designed for the heaviestoperations. The Matrax Strong Plank steel mat is durable andcompact, making it perfect for supporting work over rigs andother medium-duty equipment. The Matrax 4x4 HDPE com-posite mat is an excellent product for protecting containmentliner from damage during operations and it also makes a per-fect pedestrian walkway or temporary surface for the storing of

materials. Matrax products are unaffected by petroleum prod-ucts and can be thoroughly cleaned and decontaminated.

Matrax is committed to meeting or exceeding client’sexpectations both in North America and internationally. Theemployees are willing, able and eager to work with clients toassess their needs and to respond with the appropriate productfor the application, on time and within established budgets.Matrax values its customers and employees, is proud to bemade in the USA, understands that business is earned andlooks forward to the opportunity to earn your business.

PIOGA Member Profile

Elmore appointed head of oil and gas industrygroup

Jackson Kelly PLLC attorney Elizabeth B. Elmore has beenappointed head of the firm’s Oil and Gas Industry group.Elmore is a member of the firm and co leader of the Land andNatural Resource Development Practice Group. With more than20 years of legal experience, Elmore focuses her practice onenergy law, including claims of underpayment of royalties, jointventures between producers for the acquisition and developmentof oil and gas leases, and rights of way for pipeline systems.

Attorneys in Jackson Kelly’s Oil and Gas Industry Groupadvise clients relating to matters from the wellhead to the burnertip. The Oil and Gas Industry Group is made up of attorneyswho have experience from working in the field, participation inindustry organizations and working with the constituents servingthe industry.

Curry Supply makes significant investmentin painting process

Curry Supply Company, manufacturer and dealer of commer-

cial service vehicles, recently has made significant improvementsto its paint department procedures. The first change involves con-verting the paint process from conventional spray to electrostaticadhesion. The transition, which happened over a several-monthperiod, has been completed and is now being used on all newand restored commercial service vehicles.

Painting using electrostatic adhesion is a process in whichspecially formulated paint is given a positive charge. The surfaceto be painted is then grounded. When sprayed, the paint isattracted to the surface much like a magnet to metal. Unlike con-ventional spray, there is very little overspray. This means that thepaint process is faster and covers more surfaces with greater uni-formity. Paint can be applied at a higher film build resulting inbetter coverage. For the recipient of the painted vehicle, thatmeans superior rust and corrosion protection.

The second, equally significant paint department improvementinvolves all water and vacuum tanks now being manufacturedwith an interior protective lining. During the manufacturingprocess the lining is affixed using a two component reactor unitsprayed with a fusion gun and using polyurea material. Thisextra manufacturing step is intended to extend the life of thetank. ■

Joseph Wright (above) and David Buddenmeyer (inset).

January 2015 Page 37

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Page 38 The PIOGA Press

Value of membership: Continued from page 1

Pennsylvania, with more than 900 member companies. PIOGAitself came into being in 2010 with the merger of theIndependent Oil & Gas Association of Pennsylvania and thePennsylvania Oil & Gas Association, but we can directly traceour roots back to 1918 and the creation of the Pennsylvania Oil,Gas and Minerals Association.

Advocating your interests. PIOGA’s diversity, size and longexperience all work to our advantage when we represent yourinterests in the government arena and speak out on the industry’sbehalf. These days, PIOGA’s government relations work is worththe cost of your dues many times over.

We are a frequent and effective presence in the state capitol;in the recently ended legislative session we monitored more than200 industry-related bills, 65 of which we considered high priori-ty. I’m pleased to say that we came through the session nearlyunscathed—quite an accomplishment when you consider thenumber of proposals to further regulate or impose additional taxburdens our industry.

With the invaluable assistance of our EnvironmentalCommittee and our Vice President & General Counsel, KevinMoody, we are deeply involved with agencies like theDepartment of Environmental Protection, the Department ofConservation and Natural Resources, and the PennsylvaniaPublic Utility Commission, looking out for your interests. On thelegal front, we are continually involved in key court cases affect-ing our industry. One of our most important victories came thispast year when we earned a final, precedent-setting victory in amulti-year case defending the right to access privately held oil

and gas resources in northwest Pennsylvania’s AlleghenyNational Forest. Again, our regulatory and legal work are bythemselves worth the cost of your dues.

Additionally, we cooperate closely with other state andnational oil and gas associations to leverage our influence inHarrisburg, Washington and elsewhere, giving you an evenstronger voice. We also serve as the industry’s voice at a widevariety of public forums.

“It’s up to you to let us know what is

important to you and how we can better

serve your interests on behalf of

Pennsylvania’s oil and gas industry.”

Opportunities for involvement. I briefly mentioned ourEnvironmental Committee and the invaluable work it does onbehalf of the entire industry. At the same time, our SafetyCommittee advocates best practices within the industry—some-thing that certainly affects your bottom line—and our TaxCommittee strives to make sure you keep as much of your hard-earned revenue as possible.

PIOGA’s Pipeline and Gas Market Development Committee isdoing particularly interesting work as the group takes on the taskof not only getting our natural gas to market but also expandingour market opportunities. With the able help of Joyce Turkaly,our Director of Natural Gas Market Development, the committeeis leading the charge in areas such as gas-electric coordinationand natural gas vehicles. They are on the cutting edge of ensur-

Bituminous knows oil and gas.

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January 2015 Page 39

ing that Pennsylvania truly becomes “The Keystone of America’sEnergy Future.”

Our committees are always looking for involvement frommembers. Not only will lending your expertise help advance ourindustry’s interests, but your business can benefit as other mem-bers see your employees in action helping to address the chal-lenges and opportunities facing our fast-evolving industry.Contact the PIOGA office if you would like to join a committee.

Information, information, information. The world runs oninformation, and at PIOGA we work hard to provide you withthorough, relevant and fresh information. We do it via ThePIOGA Press—which I consider the best state oil and gas tradepublication going—our weekly electronic newsletter and othertargeted emailings. We do it through programming such as ourannual tax seminar, the Winter Meeting, the Pig Roast andTechnical Seminar, and our Eastern Oil & Gas Conference andTrade Show, along with other seminars and workshops organizedto address specific issues, such as the recent ConventionalProducers Roundtable addressing natural gas pricing.

Enhancing your business. We also provide opportunities foryou to grow your business by networking with other members atPIOGA events, your company’s listing in the Service Directorysection of our website, our annual membership directory, spon-sorships at PIOGA events, advertising in our publications, andtaking advantage of the Career Center section of our website topost open positions and look for potential employees.

Saving you money. Whether attending PIOGA events,exhibiting at our trade shows or advertising in our newsletter, weoffer members substantial discounts. Additionally, PIOGA’sStaples Advantage partnership provides discounts and special

pricing on a variety of Staples products and services. Takingadvantage of these lower costs can greatly offset what you payannually in dues, while bringing your company other benefitssuch as a better-informed workforce and increased sales.

But wait, there’s more! PIOGA’s creative and hard-workingstaff members are always looking for new ways to make yourmembership more valuable. For example, soon we will beunveiling an online association management system that willprovide additional opportunities for you to interact with otherPIOGA members and access important information.

Finally, I want to emphasize that PIOGA is a member-drivenorganization: It’s up to you to let us know what is important toyou and how we can better serve your interests on behalf ofPennsylvania’s oil and gas industry. Not only do we want you tocontinue to be a PIOGA member, but we want you to be anactive, involved member taking full advantage of what we haveto offer. ■

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Page 40 The PIOGA Press

Natural Gas Futures Closing PricesAs of January 9

Month PriceFebruary 2015 2.946March 2.947April 2.931May 2.948June 3.000July 3.054August 3.062September 3.043October 3.066November 3.161December 3.342January 2016 3.487

SourcesAmerican Refining Group: www.amref.com/Crude-Prices-New.aspxErgon Oil Purchasing: www.ergon.com/prices.phpGas futures: http://quotes.ino.com/exchanges/?r=NYMEX_NGBaker Hughes rig count: http://gis.bakerhughesdirect.com/ReportsNYMEX strip chart courtesy of Direct Energy Business, 304-464-1176

Oil & Gas Trends

0

10

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Mon

th Jan

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Feb

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rAp

rM

ayM

ayM

ay Jun

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cDe

cJa

nPrevious Year Currrent Year

Pennsylvania Rig Count

Due to technical issues, we werenot able to update the chart

this month.

February 2014 Page 41January 2015 Page 41

$2.00

$2.50

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$7.501/

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/14

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NYMEX Natural Gas Futures Contract 12 Month Forward Strip Average Prices Through 12/22/14

Purchasers of Penn Grade & Utica Crude Oil

77 N. Kendall Ave.Bradford, PA 16701

814-368-1200

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Page 42 The PIOGA Press

New PIOGA members — welcome!

KPMG LLP500 Grant Street, Pittsburgh, PA 15219-2598412-232-1556Professional Firm

Premier Utility Services100 Marcus Boulevard, Suite 3, Hauppauge, NY 11788800-262-8600www.premiersvc.comService Provider

Profire Energy Inc.321 South 1250 West, Suite 1, Lindon, UT 84042801-796-5127www.profireenergy.comService Provider

RigGrip, Inc.1 Coffin Avenue, New Bedford, MA 02746617-548-9134www.riggripinc.comService Provider

Vickie Rosbach211 Chilly Bowl Road, Rutherfordton, NC 28139 Royalty Owner

Sargent Safety Services, LLC2767 Liberty Avenue, Pittsburgh, PA 15222412-394-7500www.sargentsafety.comService Provider

University of Pittsburgh at Bradford300 Campus Drive, Bradford, PA 16701814-362-5197Associate

PIOGA Board of DirectorsGary Slagel (Chairman), Steptoe & Johnson PLLC (representing

CONSOL Energy)Sam Fragale (Vice Chairman), SEF Consulting, LLCFrank J. Ross (2nd Vice Chairman), T&F Exploration, LPJames Kriebel (Treasurer), Kriebel CompaniesCraig Mayer (Secretary), Pennsylvania General Energy Co., LLCTerrence S. Jacobs (Past President), Penneco Oil Company, Inc.L. Richard Adams, Chief Oil and GasThomas M. Bartos, ABARTA EnergyStanley J. Berdell, BLX, Inc.Rob Boulware, Seneca Resources CorporationCarl Carlson, Range Resources - Appalachia, LLCMike Cochran, Energy Corporation of AmericaDon A. Connor, Open Flow EnergyTed Cranmer, TBC ConsultingJack Crook, Atlas Resource Partners, LPRobert Esch, American Refining Group, Inc.Michael Hillebrand, Huntley & Huntley, Inc.Jim Hoover, Phoenix Energy Productions, Inc. Ron McGlade, Tenaska Resources, LLCJim McKinney, EnerVest Operating, LLCSteve Millis, Vineyard Oil & Gas CompanyGregory Muse, PennEnergy Resources, LLCJoy Ruff, Dawood Engineering, Inc.Stephen Rupert, Texas Keystone, Inc.Jake Stilley, Patriot Exploration CorporationBurt A. Waite, Moody and Associates, Inc.Roger B. Willis, Universal Well Services, Inc.Thomas Yarnick, XTO Energy

Committee ChairsEnvironmental Committee

Paul Hart, Fluid Recovery Services, LLCKen Fleeman, ABARTA Energy

Legislative CommitteeBen Wallace, Penneco Oil CompanyHolly Christie, Steptoe and Johnson, PLLC

Pipeline & Gas Market Development CommitteeBob Eckle, Appalachian Producer Services, LLCGas-Electric Subcommittee: Sandy Spencer, Appellation Pre-FabCNG/LNG Alternative Fueling and Infrastructure Subcommittee:

Bob Beatty, "O" Ring CNG Fuel Systems, L.P.Health & Safety Committee

Pat Carfagna, CONSOL EnergyMeetings Committee

Lou D’Amico, PIOGATax Committee

Donald B. Nestor, Arnett Foster Toothman, PLLCCommunications Committee

Terry Jacobs, Penneco Oil Company, Inc.

StaffLou D'Amico (lou@pioga.org), President & Executive DirectorKevin Moody (kevin@pioga.org), Vice President & General Counsel Debbie Oyler (debbie@pioga.org), Director of Member ServicesMatt Benson (matt@pioga.org), Director of Internal Communications

(also newsletter advertising & editorial contact)Joyce Turkaly (joyce@pioga.org), Director of Natural Gas Market

DevelopmentDan Weaver (dan@pioga.org), Public Outreach DirectorDanielle Boston (danielle@pioga.org), Director of AdministrationChris Lisle (chris@pioga.org), Manager of Finance Tracy Zink (tracy@pioga.org), Administrative Assistant

Pennsylvania Independent Oil & Gas Association115 VIP Drive, Suite 210 • Wexford, PA 15090-7906724-933-7306 • fax 724-933-7310 • www.pioga.org

Northern Tier Office (Matt Benson)Mail: P.O. Box L, Mount Jewett, PA 16740-0554

Physical address: 167 Wolf Farm Road, Kane, PA 16735Phone/fax 814-778-2291

© 2015, Pennsylvania Independent Oil & Gas Association

February 2014 Page 43January 2015 Page 43

PIOGA EventsPIOGA Winter Meeting

February 24-25, Seven Springs Mountain Resort, ChampionInfo: www.pioga.org/events/category/pioga-events

PIOGA Summer Picnic & Golf OutingJune 1 , Wanango Golf Club, RenoInfo: www.pioga.org/events/category/pioga-events

PIOGA Pig Roast, Equipment Show & SeminarJuly 28-29, Seven Springs Mountain Resort, ChampionInfo: www.pioga.org/events/category/pioga-events

18th Annual Divot Diggers Golf OutingAugust 26, Tam O’Shanter of Pennsylvania, Hermitage Info: www.pioga.org/events/category/pioga-events

Eastern Oil & Gas Conference and Trade ShowOctober 27-28, Monroeville Convention Center, MonroevilleInfo: www.pioga.org/events/category/pioga-events

Industry EventsIOGAWV Winter Meeting

February 10-11, Charleston (WV) MarriottInfo: events.iogawv.org/Events

IPAA Congressional Call-UpMarch 2-4, Loews Madison Hotel, Washington, DCInfo: hwww.ipaa.org/meetings-events

OOGA Winter MeetingMarch 11-13, Hilton Columbus at Easton, OHInfo: ooga.org/events

IPAA Midyear MeetingJune 24-26, Eldorado Hotel & Spa, Santa Fe, NMInfo: hwww.ipaa.org/meetings-events

KOGA Annual MeetingJuly 14-16, Hyatt Regency Lexington, KYInfo: koga.memberclicks.net/2015-annual-meeting

IOGANY Summer MeetingJuly 8-9, Peek'n Peak Resort & Conference Center,Findley Lake, NYInfo: www.iogany.org/events.php

IPAA Annual MeetingNovember 9-10, The Ritz-Carlton, New Orleans, LAInfo: hwww.ipaa.org/meetings-events

Calendar of Events

➤ More events: www.pioga.org

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