Tuesday, July 22, 2014

DEP: Auditor General Report Validates DEP’s Approach To Regulating Drilling Activities

The Auditor General's Office Tuesday released the Special Audit of DEP's Performance in Monitoring Potential Impact to Water Quality from Shale Gas Development for the period 2009 through 2012, finding no instances where DEP failed to protect public health, safety or the environment with respect to unconventional gas drilling activities.
The audit report encompasses the period of January 1, 2009 through December 31, 2012 and focuses largely on DEP's management of electronic data with respect to water supply complaint investigations.
Click Here for a copy of DEP’s point-by-point response to the audit.
"For the past 16 months, we've cooperated fully with the Auditor General's Office and we appreciate the professionalism shown by their staff," DEP Secretary E. Christopher Abruzzo said. "As we've explained to the auditors, because the report focused on the time period up until the end of 2012, most of this audit reflects how our Oil and Gas Program formerly operated, not how the program currently functions.”
Throughout the audit period until the present, DEP's Oil and Gas Program has made great strides improving the effectiveness of its regulatory efforts and its transparency to the public. Also, it's important to recognize that Act 13 of 2012, the first significant amendment to Pennsylvania's oil and gas laws in over 30 years, was enacted during the audit period, introducing sweeping changes to DEP's regulatory authority over the unconventional natural gas industry.
"We're not surprised by the results of this audit; we've volunteered to have our Oil and Gas program audited numerous times in the past by a nonprofit, multi-stakeholder organization called State Review of Oil and Natural Gas Environmental Regulations, Inc. (STRONGER)," Abruzzo said. "The most recent STRONGER audit was in March of 2013, and they found our program to be proficient and ready to address the increase of oil and gas operations in Pennsylvania, specifically praising our hydraulic fracturing and well construction regulations that are designed to protect fresh groundwater."
"We also agree with many of the helpful recommendations in the Auditor General's report. In fact, thanks to the leadership of Gov. Corbett, the emphasis he puts on protecting the environment, and the increased protections in Act 13, many of these recommendations have already been implemented, or are in the process of being implemented," Abruzzo said.
Findings that DEP disagrees with include that "DEP did not routinely and consistently issue orders requiring oil and gas operators to restore or replace adversely impacted water supplies as required by law." In these instances, orders were not necessary.  The operators in those instances had already remediated the affected water supplies without an order.
"DEP's goals are to determine if oil and gas activities contaminated a water supply and to ensure restoration of that water supply if it is warranted," Abruzzo said. "If an operator voluntarily replaces or restores an impacted water supply prior to DEP's determination, negating the need for an order, our goals are still achieved."
Further, several of the 15 cases highlighted by the Auditor General were not related to unconventional drilling activities and while some of the cases are still pending, the operators in question have been fined more than $848,000 to date.
Also, DEP does not agree with the Auditor General's finding that "DEP utilizes an ineffective complaint tracking system that does not provide management with timely and accurate complaint information related to oil and gas activities."
DEP's Complaint Tracking System (CTS) is an internal case management tool developed for and utilized by the entire Department, rather than just the Oil and Gas Program. However, with the recent expansion of unconventional oil and gas activities, DEP realized that CTS lacked some functionality with respect to tracking data specific to the Oil and Gas Program.
Due to this, DEP's Bureau of Information Technology made numerous adjustments to CTS in July 2011 and July 2012 to allow for more precise tracking of information related to water supply complaints. Consequently, many of the criticisms contained in this finding have already been addressed.
DEP does not agree with the Auditor General's finding that "it could not provide reliable assurance that all active shale gas wells were inspected timely." In fact, the audit staff acknowledged that they did not conduct a comprehensive review of the information necessary to make this conclusion.
DEP is committed to inspecting all unconventional gas wells during "critical stages" of the well construction process and DEP has significantly increased unconventional well site inspections over the past five years. In 2008, DEP conducted 1,262 unconventional well inspections. By 2012, the number of inspections increased to 12,680 and remained steady through 2013.
DEP concurs with many of the Auditor General's recommendations regarding this finding – many of which are currently being implemented, including some enacted through Act 13.
Also, in June, a fee increase on unconventional well permits went into effect, which is projected to result in additional annual revenue of approximately $4.7 million, supporting new information technology projects related to oil and gas, including streamlining electronic review, mobile digital inspections, upgrades to reporting systems and modernization of forms and databases.  
The new revenue will also be used to hire additional Office of Oil and Gas Management staff for inspections, policy and program writing, and permitting.
Click Here for a copy of DEP’s point-by-point response to the audit.

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