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Conventional Drillers Tell Court Time Is Now To Decide Whether DEP Violated The Law

Lawyers representing conventional oil and gas drillers told Commonwealth Court Thursday the time is now to decide whether DEP violated provisions of a 2014 Fiscal Code amendment directing DEP to adopt separate regulations for conventional and unconventional oil and gas drilling.

Lawyers for DEP, the Environmental Quality Board and the Independent Regulatory Review Commission countered saying the legal challenge to DEP’s Chapter 78 (conventional) and 78a (unconventional) drilling regulation is premature and the conventional drillers are just speculating about the decisions the IRRC, environmental committees of the Senate and House and the Office of Attorney General will make about the final regulation as the regulatory review process proceeds.

DEP counsel agreed, however, the issue may ripe to challenge again when the regulations are published as final in the PA Bulletin.

The Court hearing Thursday in front of Senior Commonwealth Court Judge James Gardner Colins lasted just over 90 minutes with both sides presenting their arguments to the Court. The courtroom was packed with PIPP supporters.

Driller’s Challenge

The PA Independent Petroleum Producers Association, joined by the PA Independent Oil and Gas Association, filed a challenge to DEP’s Chapter 78 and 78a regulations on March 26 asking the Court to order DEP to start its rulemaking process over and promulgate separate regulations for conventional oil and gas well drillers.

PIPP said a 2014 amendment to the Fiscal Code directed DEP to promulgate separate regulations. Counsel for PIPP said DEP’s “cut and paste” exercise he described as “meaningless” in dividing the regulations into Chapter 78 (conventional) and 78a (unconventional) does not meet the requirements of that law.

The relevant part of the Fiscal Code amendment says--

“Section 1741.1-E. Environmental Quality Board. (a) Regulations.--From funds appropriated to the Environmental Quality Board, the board shall promulgate proposed regulations and regulations under 58 Pa.C.S. (relating to oil and gas) or other laws of this Commonwealth relating to conventional oil and gas wells separately from proposed regulations and regulations relating to unconventional gas wells. All regulations under 58 Pa.C.S. shall differentiate between conventional oil and gas wells and unconventional gas wells. Regulations promulgated under this section shall apply to regulations promulgated on or after the effective date of this section.”

Counsel for PIPP said the nature of conventional drilling is so different from unconventional drilling it deserved to be treated through a separate process as the Fiscal Code amendment envisions without being “polluted” by the unconventional industry.

Instead, PIPP said, DEP and the EQB adopted one regulation dealing the drilling that has one IRRC number and which was considered at the same set of public hearings. PIPP counsel noted an attempt at the EQB meeting to consider each chapter separately was voted down.

PIPP counsel said the facts of applying the Fiscal Code law will not change regardless of the actions the IRRC, legislative committees or other parties take in the as yet incomplete regulatory review process.

Click Here for a copy of the PIPPA complaint.

DEP, EQB, IRRC Response

The legal argument made in response to the PIPPA lawsuit hinges, in part, on the word “promulgate.”

DEP and the Environmental Quality Board say no possible harm could occur to conventional oil and gas drillers (a standard for granting Court relief) until and unless the regulations are promulgated, meaning when they are published as final in the PA Bulletin, after the IRRC, legislative committees and the Office of Attorney General act.

Court action to block their publication before they go through the complete regulatory review process and are promulgated (published in the PA Bulletin) is premature. DEP and the other respondents also argued PIPPA did not have standing to file the lawsuit.

In addition, DEP said the plain language of the 2014 Fiscal Code amendment did not direct the Environmental Quality Board to withdraw the regulations they had already published as proposed and start over.

DEP counsel told the Court the facts of this case needed to be developed because there are many substantive differences between the regulatory requirements in Chapter 78 covering the conventional industry and Chapter 78a covering unconventional drilling.

DEP also pointed out the regulations have undergone the most extensive public participation process in DEP’s history-- 12 public hearings, 2 separate public comment periods, and more than a dozen public meetings with the oil and gas technical advisory boards.

The final rulemaking represents the first comprehensive changes to DEP’s drilling regulations in 15 years, since 2001 and was developed in response to changes in drilling technology and practices and legislation passed by the General Assembly in 2012 and signed into law by Gov. Corbett.

Click Here for a copy of the EQB response to the lawsuit.

Independent EQB Counsel

In an unprecedented action, the Environmental Quality Board was represented separately in this case by an outside lawyer selected by DEP in the person of Adam Levine of Stradley, Ronon in Philadelphia.

DEP Secretary John Quigley notified members of the Environmental Quality Board Monday that outside counsel had been retained for the EQB, however, the Board had no input into the response filed by Levine with the Court because of the short deadline for a response, Quigley said.

On a conference call and in email exchanges, several members of the Board expressed concern about the lack of input and on the decision to retain counsel, including Rep. John Maher (R-Allegheny), Majority Chair of the House Environmental Resources and Energy Committee, who sits on the EQB.

The EQB voted 15 to 4 in February to approve the final regulations, with Rep. Maher in the negative, so the Board was divided when it took action.

This is the first time since it was formed 1971 that the EQB has been represented by its own legal counsel.

Sen. John Yudichak (D-Luzerne), Minority Chair of the Senate Environmental Resources and Energy Committee, reintroduced a bill-- Senate Bill 307 in January of 2015 to let the EQB select its own counsel. The bill passed the Senate in June of 2015 and is on the House Calendar awaiting action.

Rep. Maher introduced a companion bill-- House Bill 1099-- in May of 2015 and it passed the House in June of 2015 and remains in the Senate Environmental Resources and Energy Committee awaiting action.

Court Decision Before April 21

Judge Colins said from the bench the Court would render a written opinion on the issue before the scheduled April 21 IRRC meeting on DEP’s regulation.

Committee Action

The House Environmental Resources and Energy Committee is scheduled to meet on April 12 for a voting meeting on DEP’s Chapter 78 (conventional) and 78a (unconventional) final regulations.

Among the Committee’s review options under the Regulatory Review Act are sending a letter disapproving of the regulations, issuing an early intent to extend its review time 14 days beyond the April 21 meeting the Independent Regulatory Review Commission has set for action on the regulations or reporting out a concurrent, House-Senate resolution disapproving of the regulation. If passed by the House and Senate, the resolution would then be presented to the Governor for his action.

The meeting will be in Room 205 Ryan Building starting at 9:30.

The Senate Environmental Resources and Energy Committee is also scheduled to meet April 12 to vote on sending correspondence to the IRRC on DEP’s Chapter 78 (conventional) and 78a (unconventional) final drilling regulations.

Also scheduled to be considered is Senate Bill 1011 (Hutchinson-R-Venango) killing DEP’s final drilling regulations covering conventional oil and gas wells and starting the rulemaking process over and Senate Bill 1195 (White-R-Indiana) (not yet online) to further delay a Pennsylvania plan for meeting EPA’s Clean Power Climate Plan rule.

The meeting will be held in Room 8E-A East Wing starting at 11:00.

For more information on the regulations, visit DEP’s Oil and Gas Regulations webpage.

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