U.S. Dept. Of Interior Notified DEP A Republican Bill Allowed To Become Law In July May Block Funding For New Federal Conventional Oil & Gas Well Plugging Program

On September 19, the U.S. Department of the Interior notified the Department of Environmental Protection state legislation that became law in July may “preclude state compliance with the Davis-Bacon Act or the Build America, Buy American Act” under the federal Bipartisan Infrastructure Law conventional Oil and Gas Well Plugging Program.

As a result, the agency said it may restrict the awarding of Oil and Gas Well Plugging Grant funds to Pennsylvania.

On July 18, Gov. Wolf let House Bill 2644 (Causer-R-Cameron) become law without his signature.  Read more here.

The bill blocks any increase in conventional oil and gas well plugging bonds for 10 years and continues exempting pre-1985 wells (which is most of the 100,500 active conventional wells) from any bonding leaving taxpayers liable for $5.1 billion in cleanup costs.  Read more here.

But, the legislation also sets aside 20 percent of the new funding for use in a conventional oil and gas well plugging program with few restrictions and requirements.  It is these provisions the Department of the Interior is particularly concerned about. Read more here.

The letter says, “The Department of the Interior has recently become aware of legislation enacted by the Commonwealth (House Bill 2644) that, depending on its implementation and the construction of state law, may be inconsistent with the Bipartisan Infrastructure Law.

“In particular, a state law is inconsistent with the Bipartisan Infrastructure Law insofar as it is interpreted as precluding state compliance with the Davis-Bacon Act or the Build American, Buy American Act.

“Section 2822 of House Bill 2644 appears to govern Pennsylvania’s receipt and use of certain funds provided by the Orphaned Well program, and our initial analysis suggests it may restrict the Commonwealth’s capacity to comply with the aforementioned Congressionally-imposed statutory requirements in the Bipartisan Infrastructure Law when awarding Oil and Gas Well Plugging Grant Program grants.

“Given the importance of the program to both the Commonwealth and the Department, it is our goal to make you aware of these concerns so that you are able to take appropriate action to ensure that Pennsylvania is fully compliant with requirements for orphaned well plugging and related activities in Fiscal Year 2022 and beyond.

“Leadership at the Department shares Pennsylvanians’ desire to use these legacy pollution cleanup programs to improve air and water quality for communities, while creating good-paying jobs.  We look forward to working with you further on this issue.”

The letter was signed by Winnie Staehelberg, Infrastructure Coordinator.

Click Here for a copy of the letter.

DEP Expressed Concerns In July

On July 19, Joe Adams, Acting Executive Deputy Secretary For Programs, told the DEP Citizens Advisory Council “certainly there are concerns” about how the new law blocking increases in conventional oil and gas well bonding will impact the funding Pennsylvania is in line to receive under the new federal Bipartisan Infrastructure Law to plug abandoned conventional oil and gas wells.  Read more here.

Kurt Klapkowski, Acting Deputy for Oil and Gas Management, said the new state law may also have an impact on whether DEP can meet federal requirements for regulating oil and gas drilling wastewater injection wells.

In response to questions from John Walliser, PA Environmental Council, Acting Executive Deputy Secretary for Programs Joe Adams told the Council-- “Certainly there are concerns on our end related to how we can integrate the requirements that are contained within the [new state] law with the requirements that are set forth by the [U.S.] Department of the Interior and the federal government for actually receiving the [conventional oil and gas well plugging] grant money.”

Pennsylvania may receive up to $395 million from the Bipartisan Infrastructure Law over the next 15 years to plug oil and gas wells abandoned by conventional oil and gas drillers in the state.

About $20 million of that funding would be available only if Pennsylvania meets federal requirements to adopt measures to prevent oil and gas drillers from abandoning more wells.  Read more here.

DEP’s Oil and Gas Compliance database shows the conventional oil and gas industry is accelerating the pace of abandoning wells without plugging them, threatening to put the new well plugging effort under the federal program even further behind.  Read more here.

In July and August, DEP issued 108 notices of violation to conventional oil and gas operators for abandoning wells without plugging them and two notices of violation for the same offense to an unconventional shale gas driller, according to DEP’s Oil and Gas Program Compliance Database.  Read more here.

That’s more NOVs for the same offense issued in the three months of the second quarter-- 82 conventional wells and 21 unconventional wells (total 103)-- and the three months of the first quarter-- 77 conventional wells and 8 unconventional wells (total 85).  Read more here.

So far in 2022 a total of 267 notices of violation were issued for conventional wells and 34 for unconventional shale gas wells for abandoning without plugging them for a total of 298 wells.  Read more here.

For more information on the abandoned and orphan program, visit DEP’s Infrastructure Investment And Jobs Act webpage.

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Related Articles This Week:

-- DEP Tells Citizens Advisory Council Road Dumping Conventional Oil & Gas Wastewater Still Does Not Meet Residual Waste Regulations; Remains Illegal  [PaEN]

-- Penn State Research Links Groundwater Contamination To Areas Of Unconventional Shale Gas And Conventional Oil And Gas Drilling  [PaEN]

-- House Committee Fails To Address $70 Million In Penalties On Natural Gas Pipelines Or Real Concerns Of People Living Near Gas Production & Distribution Facilities  [PaEN]

-- DEP Finalizing First Bid Packages To Plug 249 Conventional Oil & Gas Wells Under New Federal Taxpayer Funded Well Plugging Program  [PaEN]

-- PA Environmental Council: Clean Hydrogen & Carbon Capture Can Be Part Of A Comprehensive Decarbonization Strategy: Responsibly Deployed With Environmental Integrity, Accountability And Equity  [PaEN]

-- Landowners Urge Lawmakers To Pass Real Community Solar Energy Bills To Give $1.8 Billion Boost To PA Economy, Help Farmers As Senate Committee Meets Sept. 20  [PaEN]

Related Articles:

-- DEP Concerned About Impact Of New Law Blocking Conventional Oil & Gas Well Bonding On New Federal Well Plugging Funds, Regulating Waste Injection Wells [PaEN]

-- Conventional Oil & Natural Gas Companies Accelerating Pace Of Abandoning Wells Without Plugging Them Threatening To Put PA’s Taxpayer-Funded Well Plugging Program Even Further Behind  [PaEN]

[Posted: September 20, 2022]  PA Environment Digest