PIOGA Tech

Water and Waste Management Training

August 21 2019

Kevin J. Garber and Jean M. Mosites

ROADMAP

• Statutes and Regulations

• Permits and Approvals

• Litigation

• Enforcement

Legislation and Regulation

Water and Waste Laws in Pennsylvania

Affecting the Oil and Gas Industry

PA Environmental Statutes

• Act 13

– WMP, spills, records, exemption from SWMA

• Clean Streams Law

– E&S, PCSM, permits and approvals, Section 402

– Liability under Section 301 and 401

• Dam Safety – thresholds for impoundments

• Solid Waste Management Act

– Transportation, Treatment, Disposal off well sites

• Tank Act exemptions

Act 13 –Pennsylvania Oil and Gas Act

• Water management plans,

§3211(m)

• Protection of water supplies,

§3218

– Water restoration and replacement

– Presumption and pre drill sampling /

pre frac sampling

• DEP Spill Notification to public

drinking water facilities, §3218.1

• Transportation records regarding

wastewater fluids, §3218.3

• Relationship to solid waste and

surface mining, §3273.1

Conventional Oil and Gas Act, SB 790

• New legislation that would remove the conventional oil and gas

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

1984.

– Authorizes brine spreading

– Limits PADEP permitting related to UIC wells

– Allows regional characterization of produced water

– Returns the water restoration standard to Act 223 –

• SDWA or comparable to the quality before impact if it did not meet that

standard

Chapter 78a – October 8, 2016

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

– Technical Guidance Document

• Temporary Storage,§78a.56

– Modular storage

• Production Fluids,§78a.57

– Secondary containment

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

• Impoundments,§§ 78a.59a, 59b, 59c

– Temporary injunction for existing centralized

impoundments

• Monthly Reporting,§78a.121

PA Storage Tank and Spill Prevention Act

Tank Act exclusions– ASTs do not include

• Surface impoundment, pit, pond or lagoon

• Stormwater or wastewater collection system

• Tanks used to store brines, crude oil, drilling/frac fluids and similar substances or

materials and are directly related to exploration, development or production of crude

oil or natural gas regulated under Oil and Gas Act

– ASTs and USTs do not include

• Pipeline facilities, including gathering lines, regulated under Natural Gas Pipeline

Safety Act of 1968 or Hazardous Liquid Pipeline Safety Act of 1979

• Flow-through process tank, including pressure vessel and oil and water separators

• Non-stationary tank liquid trap or associated gathering lines directly related to oil

and gas production or gathering operations

• Tanks regulated under the SWMA, e.g. WMGR 123

• Any other tank excluded by regulation

Tank Regulations

• December 2018 revisions to Chapter 245: Revised definitions and increased

inspection and testing for regulated tanks.

– AST exclusion clarified to exempt “tanks regulated under 58 Pa. C.S. Chapter

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

– Defines “above ground storage tank system,” which includes piping and

ancillary equipment within the emergency containment area, and emergency

and secondary containment

– Removed definition “reportable release”

– UST exclusions for pipelines revised to:• Refer to 48 USCA Section 60101-60141, rather than the Natural Gas Pipeline Safety Act of 1968

or the Hazardous Liquid Pipeline Safety Act of 1979

– Revised UST exclusion for waste water treatment tank system only if part of a

wastewater treatment facility regulated under Section 307 or 402 of the CWA• Others installed after May 7, 1985, not regulated under Section 307 or 402 of the CWA have

partial exclusions for some technical standards

USEPA Declines to Revise Existing E&P Waste Regs

• EPA investigation pursuant to December 2016 consent

decree to compel reconsideration of federal regulations of oil

and gas waste.

• EPA (April 23, 2019) – Unnecessary to revise RCRA Subtitle

D regulations re management of wastes from exploration,

development and production activities

• robust regulation at the state level.

SRBC Update

• Registration of Grandfathered Withdrawals and

Consumptive Uses – July 2017 Final Rule

– Registration required by 12.31.2019

– Provide withdrawal/consumptive use data for past 5 years

– Properly registered grandfathered facility retains existing exempt

status from permitting/docket requirements

– SRBC will determine peak consecutive 30 day avg determination

of a “grandfathered quantity”

DRBC Proposed Rulemaking

• 18 CFR Part 440.3 et seq. proposed rule:

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

during all stages of well completion) in the Basin.

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

hydraulic fracturing outside the Basin requires DRBC approval and,

as policy, is discouraged by DRBC.

– Part 440.5: any importation into the Basin and treatment and

discharge within the Basin of wastewater from hydraulic fracturing

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

DRBC Proposed Rulemaking

Comment period closed on March 30, 2018 with over 8,600 public

comments submitted.

• PIOGA, MSC submitted comments

• DRBC to review comments and prepare a response document

What’s next?

• De-facto moratorium on drilling in the Basin continues

• The rulemaking still pending with no schedule set for decision process.

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

• Governors Wolf, Murphy (NJ), and Carney (DE) supported a complete ban

within the Delaware River Watershed at the Delaware River Governors

Summit on May 16, 2019

DRBC - Wayne Land Case

• Wayne Land and Mineral Group v. Delaware River Basin

Commission, No. 3:16-CV-897 (M.D. Pa. filed May 17, 2016)

– Alleged DRBC lacks authority to require approval to build a well pad

and drill a natural gas well on its property in Wayne County

• District Court dismissed the case in March 2017

DRBC - Wayne Land Case

• Third Circuit vacated the dismissal and remanded for further

proceedings in July 2018

– Found the definition of the term “project” under Section 1.2(g) of the Compact

to be ambiguous and that the district court decision on the merits was

premature

• Proceedings are on-going in the Middle District

– Court recently denied a petition to intervene filed by Senators Lisa Baker,

Joseph Scarnati, and Gene Yaw; Senators are appealing the denial

– Dispositive motions are due in February 2020

Permitting

State and Federal Permits and Approvals

WMGR 123

• General permit, amended in 2012; expires 2020

• Authorizes processing, transfer and beneficial use

of oil and gas liquid waste to develop or

hydraulically fracture an oil or gas well

• Appendix A (maximum concentrations)

OG-71 A and B

• Forms Utilized by BOGM

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

Management Practices”

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

Alternative Waste Management Practices”

• MSC Challenge to 78a.58(f) –

– SWMA permitting required for handling waste on well

sites?

UIC Wells – Summary of PA Class II Wells

Operator Permit Status Municipality County

Bear Lake Properties, LLC Active Columbus Township Warren

Bear Lake Properties, LLC Active Columbus Township Warren

Bear Lake Properties, LLC Active Columbus Township Warren

CNX Gas Co., LLC? Active Jenner Township Somerset

Columbia Gas of PA, Inc. Active South Beaver Township Beaver

LPR, Inc. (formerly Cottonwood OPR

Corp.)Active Stonycreek Township Somerset

EXCO Resources PA, LLC Active Bell Township Clearfield

Pennsylvania General Energy Active Grant Township Indiana

Sammy-Mar, LLC Active Huston Township Clearfield

Seneca Resources Corp Active Highland Township Elk

Stonehaven Energy Mgmt Co., LLC Active Cranberry Township Venango

Windfall Oil & Gas, Inc. Active Brady Township Clearfield

Penneco PADEP Review Borough of Plum Allegheny

UIC Wells – PA State Seismic Network (PASEIS)

UIC Wells – Recent Litigation

• PGE v. DEP, PA EHB., No. 2017-032

– Stay of proceedings in effect until 12/2/19

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

2018-034

– DEP motion for summary judgment denied 5/16/19

– Hearing scheduled for 9/30/19

Freshwater and Produced Water Pipelines

Origination/generation location requirements– Freshwater withdrawal

– Storage

• Type (AST, tank farms, impoundments) and duration

– Residual waste characterization

– Recordkeeping

Destination requirements– Reuse/recycle (potential WMGR123, depending on location (onsite/offsite))

– Treatment/disposal (NPDES, air, UIC permits; CWT regulations, etc.)

– Monitoring, reporting and recordkeeping

Freshwater and Produced Water Pipelines

Temporary water lines

Well development pipelines - 78a.68b• “Lose functionality after restoration”

Underground pipelines– Intrastate and interstate

New EPA CWA Section 401 Guidance

• EPA (6/7/19) – new CWA Section 401 guidance setting

tighter timelines for states completing reviews of federally

approved permits

– 1 year statutory clock for permit certification begins when a state

receives a request for permit certification under 401, rather than when

the application is “complete”

• Reviewers must limit the scope of review to potential water

quality impacts

– State permit conditions unrelated to water quality may not be

recognized by EPA and deem the state’s review waived

– Climate change considerations?

New EPA CWA Section 401 Guidance

• Opposition to Guidance– Democratic attorneys general from 14 states urging EPA to withdraw guidance in

comments submitted to USEPA Administrator Wheeler on July 25, 2019

• Signed by both PA AG Josh Shapiro and PADEP Secretary Patrick McDonnell

– Policy also opposed by Association of Clean Water Administrators and Association of

State Wetland Managers

• Next steps

– USEPA plans to propose changes to the CWA rules based on the guidance

– Proposed changes sent to OMB for review on July 11, 2019

– Proposed rule expected to be published in early August.

Groundwater Conduit Theory Developments

• Conduit Theory: Should CWA liability attach or permitting be

required if a point source discharges to groundwater with a

hydrologic connection to WOTUS?

• County of Maui (SCOTUS) -- oral argument November 6, 2019

• April 12, 2019 EPA Interpretive Statement

– Release of pollutants to groundwater is categorically excluded from

CWA permitting or liability

– Groundwater already regulated by other programs

– Currently being applied, except in 4th and 9th Circuits

– Comment period closed June 7, 2019

Litigation

Challenges to State and Federal Regulations and

Enforcement

MSC v. DEP – Chapter 78a Challenge

• DJA challenges seven provisions of Chapter 78a regulations

promulgated in 2016 for unconventional operators

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

– SWMA permitting for onsite processing – clarified by the Court?

– Monthly waste reporting – Court upheld as to legal authority

• Dispositive Motions filed on six counts– The Commonwealth Court decided partial summary judgment motions 7/22/19

– Mixed holdings, finding legal authority for some, invalidating others

– Declined to reach the challenge to remediation obligations in Chapter 78a.

• Court ordered case management order for pre hearing filings

PGCC v. EPA – UOG ELG Rule

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

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

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

• Included Pennsylvania conventional operators

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

• Compliance deadline of August 29, 2019 for existing sources

• EPA on remand decided to NOT revise the rule, July 5, 2019

• Clarified exclusion for Subpart F – Stripper Wells

B&R Resources v. DEP

• DEP order issued to LLC and sole member to plug

47 wells because they were not producing

• EHB found liability of the sole member based on

“participation theory” under common law

• Commonwealth Court remanded for EHB to

determine how many wells B&R could have

plugged – a financial determination

A Word About the ERA

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

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

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

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

people, including generations yet to come.

As trustee of these resources, the Commonwealth shall conserve and

maintain them for the benefit of all the people.

SO WHAT ARE DEP AND EHB DOING?

Enforcement

Statutory Civil Penalty Authority

• Act 13, Section 3256

– DEP after hearing may assess:

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

continues.

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

day violation continues.

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

harm, savings to violator, and other relevant factors.

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

• Clean Streams Law, Section 605

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

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

restoration, and other relevant factors

Statutory Civil Penalty Authority

• Solid Waste Management Act, Section 605

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

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

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

• Dam Safety, Section 21

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

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

– Assessment after hearing unless hearing waived.

– Officer of corporation authorizing unlawful conduct separately liable

• Tank Act, Section 1307

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

Each day of violation is a separate violation.

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

Enforcement/Penalty Statistics

• Between 1/1/2018 – 12/31/2018:

– 4,594 total violations identified (711 for Ch. 78a provisions);

– 572 total NOVs for violations occurring from 1/1/18 onward;

– 52 CACPs/COAs (11 of which affirmatively identified as

unconventional operators)

• $1,000 - $1,500,000; median $15,500

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

Number of violations cited for water/waste-related provisions

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

Nature of Violation # of violations alleged

(1/1/18 – 12/31/18)

Ch. 102 (Erosion & Sediment Controls) 649

Ch. 78, 78a, Subch. C (Envtl. protection performance standards) 943

Ch. 105 (Waterway Management) 50

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

Commonwealth)

423

SWMA Violations (301, 501) 319

Enforcement/Penalty Statistics

• Between 1/1/2019 – 7/31/2019:

– 1,823 total violations identified (390 for Ch. 78a provisions);

– 366 total NOVs for violations occurring from 1/1/19 onward;

– 7 CACPs/COAs (2 of which affirmatively identified as unconventional

operators)

• $3,000 - $138,000; median $8,500

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

Number of violations cited for water/waste-related provisions

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

Nature of Violation # of violations alleged

(1/1/19 – 7/31/19)

Ch. 102 (Erosion & Sediment Controls) 447

Ch. 78, 78a, Subch. C (Envtl. protection performance standards) 478

Ch. 105 (Waterway Management) 49

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

Commonwealth)

278

SWMA Violations (301, 501) 227

Enforcement

1. Inspection and Enforcement

NOV

Administrative orders and judicial enforcement

Civil penalty complaint

Criminal referral – Office of Attorney General

Other agencies

Fish & Boat Commission

EPA

Enforcement

2. Settlement

New, upfront confidentiality commitment:

“Settlement negotiations, including documents and materials exchanged in

furtherance of potential settlement, are confidential settlement

communications. Please confirm by email that _________ (including its

related companies) and its attorneys agree that no confidential settlement

communications will be disclosed to any third-party, including any court or

tribunal, in the absence of written consent of all parties or a direct order of a

court or tribunal of competent jurisdiction, and further agree that such

communications are inadmissible per Rule 408 of the Pa.R.E.”

Enforcement

3. Settlement

CACP

COA

Admitting the violation(s)

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

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

or validity of these findings in any matter or proceeding involving

[name] and the Department.”

Enforcement

4. Litigation

EHB

Appeals

Penalty complaints

Commonwealth Court

Declaratory action

Mandamus

Judicial enforcement

Record Retention

Statutory, Regulatory, Permitting Obligations

Strategic Considerations

Record Retention Considerations

• Wastewater fluid transportation records:

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

• Production fluid tank monthly inspection records:

– 1 year, per 25 Pa. Code§78a.57(i)

• Secondary containment repair records:

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

• Withdrawal data and daily instream flow measurements and purchases

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

Record Retention Considerations

• Water resources planning records:

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

• Residual waste generator records:

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

• Records required by permit:

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

Consider keeping certain records beyond mandatory

retention period

Record Retention Considerations

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

retention period?

• Paper vs. electronic format

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

• Be prepared for:

– Agency site inspection

– Agency information request

– Internal audit

PADEP Resources

• FAQs at

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

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

• Forms at

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

s/OilandGasMgmt/Forms/Pages/default.aspx

• Technical Guidance at

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

8294

• Webinars and Chapter 78 training at

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

and-Gas.aspx

Thank you