S T A T E   O F   N E W   Y O R K
                 _________________________________________________________________

                                                            8748

                                             2009-2010 Regular Sessions

                                                  IN   A S S E M B L Y

                                                           June 5, 2009

       ___________

       Introduced  by  M. of A. BRENNAN, COLTON, MILLMAN, FIELDS -- Multi-Spon-
         sored by -- M. of A.  COOK, GLICK, GOTTFRIED,  MAGEE,  MAISEL,  NOLAN,
         ROBINSON,  WEISENBERG  --  read  once and referred to the Committee on
         Environmental Conservation

       AN ACT to amend the environmental conservation law, in relation  to  the
         regulation of the drilling of natural gas resources

         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section 1. Legislative intent. 1. The legislature finds that the proc-
    2  ess used to stimulate natural gas extraction referred  to  as  hydraulic
    3  fracturing utilizes components that are often toxic, that are non-biode-
    4  gradable,  and  that  are virtually impossible to remove once they enter
    5  the natural environment.  Thus, they pose such a high level of  environ-
    6  mental  risk  that  the  policy  of the state must be to insure they are
    7  excluded from any area that is significant  for  public  drinking  water
    8  resources or any other area that is environmentally sensitive.
    9    2.  Natural gas drilling is potentially highly transformative of rural
   10  landscapes, offering economic benefits to many landowners, but threaten-
   11  ing the property values of other  local  landowners,  traditional  rural
   12  economic  activity,  the  carrying capacity of local infrastructure, the
   13  natural habitat of wildlife, and the public health and quality  of  life
   14  of  residents  in  areas  where  there  is natural gas extraction taking
   15  place. Unless these resources are protected in the permitting and  regu-
   16  latory  processes of the state, the costs of Marcellus shale natural gas
   17  extraction will exceed the benefits  and  natural  gas  extraction  will
   18  become  a fundamentally unfair and divisive process in which the profits
   19  of some are subsidized by the costs to others.
   20    3. The proposed scope of natural gas drilling across the state of  New
   21  York  will  present  unprecedented  challenges  of regulatory oversight.
   22  Funding for such oversight must be sufficient to meet this challenge and
   23  should come from a series of fees paid  by  the  natural  gas  industry.

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD11784-03-9
       A. 8748                             2

    1  Similarly, the natural gas industry should pay for all other costs asso-
    2  ciated  with  natural  gas extraction. Otherwise, natural gas extraction
    3  will be unfairly subsidized, either  by the New York state  taxpayer  or
    4  by the impacts on local human and natural resources.
    5    4.  One  of  the  chief environmental and infrastructure assets of the
    6  state of New York is its drinking water systems, which play a  fundamen-
    7  tal  role  in  the economic productivity and public health of the state.
    8  The legislature finds that no risk to these resources and to the  public
    9  health  of  their  users  is acceptable and that the policy of the state
   10  with respect to the management of shale gas extraction must be one of no
   11  drinking water risk.
   12    5. The purpose of this legislation is to insure that the  exploitation
   13  of shale natural gas resources is conducted in a manner that is consist-
   14  ent  with and supportive of New York state's commitment to sustainabili-
   15  ty, and is consistent with other state economic development, energy  and
   16  environmental policies.
   17    6.  Therefore,  in light of the many commitments the state of New York
   18  has made to more sustainable development and the critical role  greening
   19  the state's economy will play in the future prosperity of the state, the
   20  only  acceptable  natural  gas  extraction practices will be sustainable
   21  ones. This act is intended to ensure that that goal is met.
   22    S 2. Article 23 of the environmental conservation law  is  amended  by
   23  adding a new title 29 to read as follows:

24              TITLE 29
   25                     REGULATION OF NATURAL GAS DRILLING
   26  SECTION 23-2901. NATURAL GAS DRILLING; PROHIBITION  NEAR WATERSHED.
   27          23-2903. DISCLOSURE OF HYDRAULIC FRACTURING MATERIALS.
   28          23-2905. PROTECTION OF OTHER ENVIRONMENTAL RESOURCES.
   29          23-2907. PROTECTION OF LOCAL RESOURCES.
   30          23-2909. WATER WITHDRAWALS.
   31          23-2911. ENFORCEMENT AND FINANCIAL SECURITY.
   32          23-2913. OTHER PROVISIONS.
   33  S 23-2901. NATURAL GAS DRILLING; PROHIBITION NEAR WATERSHED.
   34    1.  NATURAL  GAS  DRILLING  SHALL NOT BE PERMITTED WITHIN THE NEW YORK
   35  CITY WATERSHED OR AT ANY POINT WITHIN FIVE MILES OF ITS BOUNDARY.
   36    2. NATURAL GAS DRILLING SHALL NOT BE PERMITTED WITHIN THE WATERSHED OF
   37  THE DELAWARE RIVER, IN ANY RECHARGE AREA OF A SOLE  SOURCE  AQUIFER,  IN
   38  ANY  AREA  WHERE  GROUNDWATER  CONTRIBUTES  A  SIGNIFICANT  BASE FLOW TO
   39  SURFACE WATER SOURCES OF DRINKING WATER, AND IN ANY OTHER AREA WHERE THE
   40  DEPARTMENT SHALL FIND PRESENTS A SIGNIFICANT THREAT OF  HYDRAULIC  FRAC-
   41  TURING COMPOUNDS ENTERING INTO A SIGNIFICANT SOURCE OF DRINKING WATER.
   42    3. NATURAL GAS DRILLING SHALL BE CONDUCTED IN WAYS THAT DO NOT CONTAM-
   43  INATE DRINKING WATER WELLS. IN ANY AREA WHERE NATURAL GAS DRILLING TAKES
   44  PLACE AND CONTAMINATION OF INDIVIDUAL DRINKING WATER WELLS OCCURS, THERE
   45  SHALL  BE A PRESUMPTION THAT THE NATURAL GAS DRILLING IS RESPONSIBLE FOR
   46  SUCH CONTAMINATION UNLESS THE NATURAL GAS DRILLER CAN SHOW, BY CLEAR AND
   47  CONVINCING EVIDENCE, THAT SUCH DRILLER IS NOT THE SOURCE OF THE  CONTAM-
   48  INATION.  UPON  RECEIVING  A REPORT OF AN INCIDENT OF WELL CONTAMINATION
   49  FROM NATURAL GAS DRILLING, THE DEPARTMENT SHALL INVESTIGATE SUCH  REPORT
   50  WITHIN TWENTY-FOUR HOURS AND SHALL HAVE THE AUTHORITY TO ORDER IMMEDIATE
   51  REMEDIAL  ACTION,  INCLUDING  ISSUING  IMMEDIATE CEASE AND DESIST ORDERS
   52  WITH RESPECT TO THE DRILLING ACTIVITY.  IN THE EVENT THAT THE DEPARTMENT
   53  IS UNABLE TO INVESTIGATE SUCH REPORT WITHIN TWENTY-FOUR  HOURS,  IT  MAY
   54  REQUEST  THAT LOCAL OR STATE POLICE AUTHORITIES CONFIRM THE INCIDENT AND
   55  REPORT AND, IF CONFIRMED, SHALL ISSUE A CEASE AND DESIST ORDER  TO  SUCH
       A. 8748                             3

    1  DRILLER  UNTIL IT SHALL MAKE SUCH INVESTIGATION AND DETERMINE THE PROPER
    2  COURSE OF INSURING FULL REMEDIATION.
    3    4.  ANY  SPILLS  OR  PROHIBITED  DISCHARGES  OF  HYDRAULIC  FRACTURING
    4  COMPOUNDS SHALL BE IMMEDIATELY REPORTED BY THE NATURAL  GAS  DRILLER  TO
    5  THE  DEPARTMENT,  WHICH  SHALL  ESTABLISH  PROCEDURES  FOR RECORDING AND
    6  REVIEWING SUCH REPORTS AND FOR ORDERING REMEDIAL ACTION TO  CONTAIN  THE
    7  SPILL  AND KEEP THE SPILL OR DISCHARGE INCIDENT FROM BEING REPEATED. THE
    8  DEPARTMENT SHALL HAVE THE AUTHORITY  TO  IMPOSE  FINES  FOR  FAILURE  TO
    9  REPORT  SUCH INCIDENTS, TO ORDER IMMEDIATE CLEANUP OF SUCH SPILLS AT THE
   10  EXPENSE OF SUCH DRILLER AND, SHOULD SUCH DRILLER FAIL  TO  DO  SO  IN  A
   11  TIMELY  FASHION,  TO  ENTER  INTO  THE  DRILLING AREA AND DO THE CLEANUP
   12  ITSELF, AT THE EXPENSE OF SUCH DRILLER. IN ANY INSTANCE WHERE SUCH DRIL-
   13  LER SHALL REFUSE TO CARRY OUT A DEPARTMENT CLEANUP  OR  REMEDIAL  ACTION
   14  ORDER IN A TIMELY AND APPROPRIATE MANNER, THE DEPARTMENT SHALL ORDER ALL
   15  DRILLING  ACTIVITY  TO CEASE AND DESIST UNTIL SUCH TIME AS THE SPILL HAS
   16  BEEN CLEANED UP AND SUCH DRILLER HAS REMEDIATED THE CONDITIONS OR  PRAC-
   17  TICES THAT CAUSED THE SPILL.
   18    5.  ANY  DRILLER  OF  NATURAL GAS WHO KNOWINGLY ATTEMPTS TO COVER UP A
   19  SPILL OR PROHIBITED DISCHARGE SHALL BE GUILTY OF A CLASS A  MISDEMEANOR.
   20  ANY DRILLER OF NATURAL GAS WHO KNOWINGLY DISCHARGES HYDRAULIC FRACTURING
   21  COMPOUNDS  INTO  THE  SURFACE  WATERS  OF THE STATE SHALL BE GUILTY OF A
   22  CLASS E FELONY.
   23    6. NOTHING IN THIS TITLE OR ANY OTHER LAW OR REGULATION  SHALL  ALTER,
   24  LIMIT,  IMPAIR  OR  OTHERWISE  AFFECT  THE AUTHORITY OF THE STATE OF NEW
   25  YORK, OR THE AUTHORITY OF THE CITY OF NEW YORK  IN  THE  NEW  YORK  CITY
   26  WATERSHED,  TO  TAKE  WHATEVER  MEASURES  ARE NECESSARY UNDER THE LAW TO
   27  PROTECT THE QUALITY AND SAFETY OF THE SOURCES OF THE DRINKING WATERS  OF
   28  NEW YORK STATE.
   29  S 23-2903. DISCLOSURE OF HYDRAULIC FRACTURING MATERIALS.
   30    1. ALL COMPONENTS OF HYDRAULIC FRACTURING MATERIALS SHALL BE DISCLOSED
   31  TO  THE  DEPARTMENT AT THE TIME OF APPLICATION FOR A WELL PERMIT FOR THE
   32  DRILLING OF NATURAL GAS PURSUANT TO THIS ARTICLE.
   33    (A) EMERGENCY HEALTH SITUATION. WHEN A HEALTH PROFESSIONAL  DETERMINES
   34  THAT A MEDICAL EMERGENCY EXISTS RELATED TO A HYDRAULIC FRACTURING OPERA-
   35  TION  AND  THE INGREDIENTS AND SPECIFIC CHEMICAL IDENTITY OF A HYDRAULIC
   36  FRACTURING FLUID IS NECESSARY FOR EMERGENCY  OR FIRST-AID TREATMENT, THE
   37  HYDRAULIC FRACTURING OPERATOR SHALL IMMEDIATELY  DISCLOSE  THE  SPECIFIC
   38  CHEMICAL  IDENTITY  OF  A  TRADE  SECRET CHEMICAL TO THE TREATING HEALTH
   39  PROFESSIONAL, REGARDLESS OF THE EXISTENCE OF A WRITTEN STATEMENT OF NEED
   40  OR A CONFIDENTIALITY AGREEMENT.
   41    (B) NON-EMERGENCY HEALTH SITUATION.  WHEN  A  HEALTH  PROFESSIONAL  OR
   42  GOVERNMENT  AGENCY DETERMINES THAT THE INGREDIENTS AND SPECIFIC CHEMICAL
   43  IDENTITY OF A HYDRAULIC  FRACTURING  FLUID  ARE  NECESSARY  FOR  MEDICAL
   44  TREATMENT,  AN OPERATOR SHALL DISCLOSE A SPECIFIC CHEMICAL IDENTITY TO A
   45  HEALTH PROFESSIONAL OR GOVERNMENT AGENCY IF A REQUEST HAS BEEN  MADE  IN
   46  WRITING  THAT  DESCRIBES  WITH  REASONABLE  DETAIL ONE OR MORE HEALTH OR
   47  SAFETY NEEDS FOR THE INFORMATION  AND  INCLUDES  A  DESCRIPTION  OF  THE
   48  PROCEDURES  TO  BE USED TO MAINTAIN THE CONFIDENTIALITY OF THE DISCLOSED
   49  INFORMATION. THE HEALTH PROFESSIONAL OR GOVERNMENT AGENCY SHALL AGREE IN
   50  A WRITTEN CONFIDENTIALITY AGREEMENT THAT THE  TRADE  SECRET  INFORMATION
   51  WILL  NOT  BE  USED FOR ANY PURPOSE OTHER THAN THE HEALTH NEEDS ASSERTED
   52  AND SHALL AGREE NOT TO RELEASE THE INFORMATION UNDER  ANY  CIRCUMSTANCES
   53  OTHER THAN TO A HEALTH PROFESSIONAL OR GOVERNMENT AGENCY.
   54    2.  NO NATURAL GAS DRILLER MAY CHANGE THE COMPONENTS OR COMPOSITION OF
   55  HYDRAULIC FRACTURING MATERIALS FROM THOSE SPECIFIED IN ITS PERMIT APPLI-
       A. 8748                             4

    1  CATION WITHOUT FIRST FILING FOR AND RECEIVING  A  MODIFICATION  OF  SUCH
    2  PERMIT.
    3    3.  THE  DEPARTMENT  SHALL ESTABLISH A STANDARD FOR THE COMPOSITION OF
    4  HYDRAULIC FRACTURING COMPOUNDS AND REQUIRE NATURAL GAS DRILLERS  TO  USE
    5  SUCH  STANDARD.  THE DEPARTMENT SHALL HAVE THE POWER TO PROHIBIT THE USE
    6  OF SPECIFIC CHEMICALS IN THE COMPOSITION OF HYDRAULIC FRACTURING MATERI-
    7  ALS.
    8    4. HYDRAULIC FRACTURING LIQUIDS AND LIQUID WASTE FROM DRILLING MAY NOT
    9  BE STORED IN OPEN LAGOONS, BUT MUST BE KEPT IN CORROSION PROOF TANKS.
   10    5. NOTWITHSTANDING ANY OTHER PROVISION OF LAW OR ADMINISTRATIVE DETER-
   11  MINATION, HYDRAULIC FRACTURING MATERIAL SHALL BE REGARDED  AS  HAZARDOUS
   12  WASTE AND TREATED AND DISPOSED OF AS SUCH.
   13    6.  THE  DEPARTMENT  SHALL ISSUE REGULATIONS REQUIRING THE TRACKING OF
   14  ALL CHEMICAL COMPONENTS OF HYDRAULIC FRACTURING MATERIALS AND SHALL HAVE
   15  THE POWER TO ENFORCE SUCH REGULATIONS BY APPROPRIATE FINES AND CEASE AND
   16  DESIST ORDERS.
   17  S 23-2905. PROTECTION OF OTHER ENVIRONMENTAL RESOURCES.
   18    1. DRILLERS OF NATURAL GAS SHALL BE  RESPONSIBLE  FOR  MITIGATING  ALL
   19  DAMAGE  TO  ANY  REGULATED  ENVIRONMENTAL  RESOURCES,  INCLUDING BUT NOT
   20  LIMITED TO AIR, WETLANDS, STREAM CORRIDORS, AND ENDANGERED  AND  THREAT-
   21  ENED SPECIES HABITAT.
   22    2.  WELL  PERMITS FOR THE DRILLING OF NATURAL GAS SHALL NOT BE GRANTED
   23  IN ANY AREA WHERE SUCH DRILLING SHALL ADVERSELY IMPACT THE  RECOVERY  OF
   24  THREATENED  OR  ENDANGERED  SPECIES OR WHERE IT SHALL DESTROY OR DEGRADE
   25  OTHER UNIQUE NATURAL OR SCENIC RESOURCES. WELL PERMITS FOR THE  DRILLING
   26  OF  NATURAL  GAS  SHALL NOT BE GRANTED IN ANY AREA THAT IS DESIGNATED AS
   27  FOREVER WILD UNDER THE STATE CONSTITUTION OR LAWS, IN  STATE  PARKS,  IN
   28  AREAS IDENTIFIED FOR STATE ACQUISITION AND/OR PROTECTION UNDER THE STATE
   29  OPEN SPACE PLAN, OR IN STATE FORESTS AND STATE PARKS.
   30    3.  APPLICATIONS  FOR  A  WELL  PERMIT FOR THE DRILLING OF NATURAL GAS
   31  SHALL  INCLUDE  AN  ASSESSMENT  OF  ITS  IMPACT  ON  LOCAL  BIODIVERSITY
   32  RESOURCES AND A SHOWING THAT SUCH DRILLING SHALL BE WITHIN THE LEASEHOLD
   33  AT  THE  LOWEST  IMPACT  POINT  ON  WILDLIFE. TO MINIMIZE IMPACT THROUGH
   34  EITHER GROUND DISTURBANCE OR TRAFFIC, ALL EFFORTS SHALL BE MADE TO CLUS-
   35  TER WELLS, CENTRALIZE  OPERATIONS,  AND  USE  TELEMETRY.  IF  NECESSARY,
   36  SEASONAL  RESTRICTIONS  SHALL BE IMPOSED TO PROTECT WILDLIFE BREEDING OR
   37  MIGRATION.
   38    4. APPLICATIONS FOR A WELL PERMIT FOR  THE  DRILLING  OF  NATURAL  GAS
   39  SHALL  LIST ALL EXPECTED EMISSIONS OF AIR POLLUTANTS, INCLUDING, BUT NOT
   40  LIMITED TO, ALL GREENHOUSE GASES SUCH AS METHANE. THE  DEPARTMENT  SHALL
   41  HAVE  THE  AUTHORITY  TO  SPECIFY  LIMITS ON ALL SUCH AIR EMISSIONS AS A
   42  CONDITION OF GRANTING SUCH  PERMIT,  TO  REQUIRE  APPROPRIATE  EMISSIONS
   43  MONITORING  AND  CONTROLS  BY THE OPERATOR, AND TO DENY ANY PERMIT WHOSE
   44  OPERATION SHALL BE INCONSISTENT WITH STATE POLICY AND  REGULATIONS  WITH
   45  RESPECT TO ADDRESSING GLOBAL WARMING.
   46  S 23-2907. PROTECTION OF LOCAL RESOURCES.
   47    1.  THE  DEPARTMENT SHALL HAVE THE AUTHORITY TO IMPOSE FEES TO COMPEN-
   48  SATE LOCAL GOVERNMENT FOR ANY COSTS OR IMPACTS IMPOSED UPON SUCH GOVERN-
   49  MENTS AS A RESULT OF DRILLING FOR NATURAL GAS.
   50    2. THE DEPARTMENT, IN ITS PERMITTING DECISIONS,  SHALL  TAKE  CARE  TO
   51  INSURE  THAT  NATURAL GAS WELLS ARE SITUATED IN WAYS THAT MAXIMIZE FIELD
   52  PRODUCTIVITY  WHILE  MINIMIZING  IMPACTS  ON  THE  LANDSCAPE.  FOR  THIS
   53  PURPOSE,  THE  DEPARTMENT MAY, WITHIN SPECIFIC REGIONAL AREAS, ESTABLISH
   54  PROCEDURES TO REQUIRE PERIODIC BATCH PROCESSING OF PERMIT  APPLICATIONS,
   55  INCLUDING  MANDATORY  DATES  FOR  APPLICATION SUBMISSION, AND MAY IMPOSE
   56  WELL CLUSTERING, CENTRALIZED OPERATIONS, AND THE USE OF TELEMETRY.
       A. 8748                             5

    1    3. ALL SITING OF NATURAL GAS DRILLING ACTIVITY SHALL CONFORM TO  LOCAL
    2  ZONING.
    3    4.  ANY  PERMIT  HOLDER  SHALL BE REQUIRED, AT THE END OF ITS DRILLING
    4  OPERATIONS, TO FULLY RESTORE THE DRILL  SITE  TO  ITS  PREVIOUS  NATURAL
    5  CONDITION.  TO  ENFORCE  THE  PROVISIONS OF THIS SUBDIVISION, BEFORE ANY
    6  LAND CLEARING OPERATIONS RELATED TO DRILLING ARE COMMENCED, SUCH  PERMIT
    7  HOLDER  SHALL  FILE  WITH THE DEPARTMENT, A NON-REVOCABLE AND BANKRUPTCY
    8  PROOF BOND SUFFICIENT, UNDER REGULATIONS TO BE ISSUED BY THE DEPARTMENT,
    9  TO COVER ALL FORESEEABLE COSTS OF SITE RESTORATION.
   10    5. GAS DRILLING OPERATIONS SHALL BE CONDUCTED IN A MANNER  THAT  SHALL
   11  NOT  BURDEN  ADJACENT LANDOWNERS AND RESIDENTS. NO NOISE AUDIBLE INDOORS
   12  IN RESIDENCES LOCATED ON ADJACENT PROPERTY SHALL  BE  PERMITTED  BETWEEN
   13  THE HOURS OF 8:00 PM AND 8:00 AM ON WEEKDAYS AND 6:00 PM AND 10:00 AM ON
   14  WEEKENDS. SIMILARLY, NIGHT LIGHTING SHALL NOT BE OBTRUSIVE OR DISRUPTIVE
   15  OF LIFE FOR SUCH ADJACENT LANDOWNERS AND RESIDENTS. THE DEPARTMENT SHALL
   16  ENFORCE  THE  PROVISIONS  OF THIS SUBDIVISION BY APPROPRIATE REGULATIONS
   17  INCLUDING A SYSTEM OF FINES, AND SHALL FURTHER HAVE THE POWER  TO  ISSUE
   18  CEASE  AND  DESIST  ORDERS  TO ENFORCE THESE PROTECTIONS AND PROTECT THE
   19  QUIET ENJOYMENT OF LOCAL RESIDENTS.
   20    6. LANDOWNERS FORCED INTO A  PRODUCTION  POOL  SHALL  BE  ENTITLED  TO
   21  RECEIVE THE HIGHEST PAYMENT THAT ANY OTHER POOL MEMBER RECEIVES.
   22    7.  ANY  LANDOWNER  WHO  ENTERS INTO A CONTRACT OR LEASE TO PERMIT THE
   23  DRILLING FOR NATURAL GAS ON SUCH LANDOWNER'S PROPERTY SHALL HAVE A THIR-
   24  TY DAY RIGHT OF RECISSION WITH RESPECT TO  SUCH  CONTRACT.  DURING  SUCH
   25  THIRTY  DAY  PERIOD, SUCH LANDOWNER MAY CANCEL SUCH CONTRACT OR LEASE AT
   26  ANY TIME WITHOUT PENALTY.
   27    8. NO WELL PERMIT FOR THE DRILLING OF NATURAL GAS SHALL BE GRANTED FOR
   28  A PERIOD LONGER THAN TEN YEARS. ANY PERMIT UNDER  WHICH  ACTUAL  NATURAL
   29  GAS  EXTRACTION  IS NOT UNDERTAKEN WITHIN FIVE YEARS SHALL EXPIRE AND BE
   30  DEEMED NULL AND VOID.
   31    9. THE DEPARTMENT, IN CONSULTATION WITH THE  ATTORNEY  GENERAL,  SHALL
   32  ISSUE  GUIDANCE  DOCUMENTS  TO  LANDOWNERS, WITH RESPECT TO THEIR RIGHTS
   33  WITH RESPECT TO NATURAL GAS DRILLING CONTRACTS AND LEASES.  THE  DEPART-
   34  MENT  IS  HEREBY  AUTHORIZED  TO  REQUIRE  STANDARD  PROVISIONS  IN SUCH
   35  CONTRACTS OR LEASES IN ORDER TO PREVENT UNFAIR TREATMENT OF LANDOWNERS.
   36    10. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, NATURAL  GAS  DRILLERS
   37  SHALL  BE  RESPONSIBLE  FOR  THE COSTS OF ALL ENVIRONMENTAL DAMAGE WHICH
   38  OCCURRED IN THE PROCESS OF DRILLING FOR AND EXTRACTING NATURAL GAS.  THE
   39  DEPARTMENT  MAY  REQUIRE THE PROVISION OF APPROPRIATE FINANCIAL SECURITY
   40  TO ENSURE LANDOWNERS ARE PROTECTED FROM ANY CONTINGENT LIABILITY. SHOULD
   41  DRILLING ACTIVITY LEAD TO DESIGNATION AS A BROWNFIELD SITE,  AS  DEFINED
   42  IN SUBDIVISION TWO OF SECTION 27-1405 OF THIS CHAPTER, SUCH DRILLER, NOT
   43  THE LANDOWNER, SHALL BE CONSIDERED TO BE PARTY IN THE CHAIN OF RESPONSI-
   44  BILITY.
   45  S 23-2909. WATER WITHDRAWALS.
   46    ALL  SURFACE  OR  GROUNDWATER  WITHDRAWALS  OF MORE THAN FIVE THOUSAND
   47  GALLONS A DAY FOR NATURAL  GAS  DRILLING  PURPOSES,  OR  MORE  THAN  ONE
   48  PERCENT  OF  IN STREAM FLOW, SHALL REQUIRE A PERMIT FROM THE DEPARTMENT.
   49  THE DEPARTMENT  SHALL  ISSUE  REGULATIONS  GOVERNING  SUCH  WITHDRAWALS,
   50  INCLUDING  PROVISIONS  TO  ASSURE  THAT WATER WITHDRAWALS ARE LIMITED TO
   51  LEVELS THAT DO NOT HARM STREAM ECOLOGY OR FISHERY RESOURCES.
   52  S 23-2911. ENFORCEMENT AND FINANCIAL SECURITY.
   53    1. NO PERMIT FOR THE DRILLING OF NATURAL GAS SHALL BE GRANTED IF  SUCH
   54  APPLICANT HAS FAILED TO MEET HIS ENVIRONMENTAL AND FINANCIAL OBLIGATIONS
   55  UNDER  A  PREVIOUS  PERMIT  OR  IF  SUCH  APPLICANT HAS UNPAID FINANCIAL
       A. 8748                             6

    1  LIABILITIES TO EITHER THE STATE, A LOCAL GOVERNMENT OR A  PRIVATE  LAND-
    2  OWNER.
    3    2.  IN DETERMINING WHETHER OR NOT A PERMIT FOR THE DRILLING OF NATURAL
    4  GAS SHALL BE GRANTED, THE DEPARTMENT SHALL  CONSIDER  THE  PRIOR  RECORD
    5  UNDER  PREVIOUS  PERMITS  OF  THE APPLICANT. APPLICANTS WHO HAVE SHOWN A
    6  PATTERN OF VIOLATION OF PERMIT CONDITIONS OR A LACK OF A PROPER STANDARD
    7  OF CARE IN DRILLING OPERATIONS SHALL NOT BE GRANTED A PERMIT.
    8    3. A PERMIT FOR THE DRILLING OF NATURAL GAS SHALL  INCLUDE  APPLICABLE
    9  LEASE  DOCUMENTS BETWEEN THE DRILLING COMPANY AND THE LANDOWNER OR LAND-
   10  OWNERS FOR THE DRILLING SITE FOR WHICH THE APPLICATION IS MADE.
   11    4. A PERMIT APPLICATION SHALL  INCLUDE  A  COMPREHENSIVE  HYDROLOGICAL
   12  ASSESSMENT  OF  THE  SUBSURFACE  STRATA  INCLUDING THE POTENTIAL FOR ANY
   13  FISSURING THAT WOULD DRAW HYDRAULIC FRACTURING  FLUID,  NATURAL  GAS  OR
   14  OTHER POLLUTANTS INTO WATER BEARING AQUIFER STRATA.
   15    5.  THE  DEPARTMENT  SHALL  PROVIDE FOR UNANNOUNCED INSPECTIONS OF ALL
   16  NATURAL GAS DRILLING SITES AND FOR THE  PROVISION  OF  SOIL  TESTING  TO
   17  DETERMINE THE PRESENCE OF UNREPORTED SPILLS.
   18    6.  THE  DEPARTMENT  SHALL  REQUIRE  THAT  ALL  CASING CONSTRUCTION BE
   19  CARRIED OUT IN THE PRESENCE OF INDEPENDENT  QUALITY  CONTROL  ENGINEERS.
   20  THE  DEPARTMENT SHALL HAVE THE AUTHORITY TO SPECIFY STANDARDS FOR CASING
   21  CONSTRUCTION, INCLUDING COMPOSITION  OF  CONCRETE  AND  OTHER  TECHNICAL
   22  PARAMETERS FOR DEEP WELL CONSTRUCTION TO INSURE MAXIMUM CASING INTEGRITY
   23  AND  PREVENT  LEAKAGE OF HYDRAULIC FRACTURING COMPOUNDS, NATURAL GAS AND
   24  OTHER SUBSURFACE MATERIALS INTO WATER  BEARING  STRATA.  THE  DEPARTMENT
   25  SHALL,  OVER  THE  LIFE  OF  THE WELL, CARRY OUT PERIODIC INSPECTIONS TO
   26  ENSURE THAT CASING INTEGRITY IS MAINTAINED.
   27  S 23-2913. OTHER PROVISIONS.
   28    1. THE STATE COMPTROLLER SHALL ANNUALLY AUDIT ALL ROYALTY PAYMENTS  TO
   29  THE  STATE AND LOCAL GOVERNMENTS, INCLUDING THE GAS PRODUCTION AND SALES
   30  FIGURES ON WHICH THEY ARE BASED, AND SHALL HAVE THE AUTHORITY TO REQUIRE
   31  APPROPRIATE FISCAL REPORTING AND RECORD  KEEPING  BY  BOTH  NATURAL  GAS
   32  PRODUCERS  AND  OTHER DEPARTMENTS OF STATE GOVERNMENT CHARGED WITH THEIR
   33  SUPERVISION.
   34    2. THE STATE COMPTROLLER SHALL  HAVE  THE  AUTHORITY  TO  PERIODICALLY
   35  AUDIT PAYMENTS MADE UNDER DRILLING CONTRACTS AND LEASES TO PRIVATE LAND-
   36  OWNERS, INCLUDING THE GAS PRODUCTION AND SALES FIGURES ON WHICH THEY ARE
   37  BASED,  TO  DETERMINE THAT THEY ARE IN COMPLIANCE WITH THE PROVISIONS OF
   38  THE CONTRACT OR LEASE AND ALL APPLICABLE LAWS.
   39    3. THE DEPARTMENT SHALL  ESTABLISH  AN  IMPARTIAL  TECHNICAL  ADVISORY
   40  COMMITTEE, WHOSE RESEARCH AND WORK SHALL BE SUPPORTED BY PERMIT FEES, TO
   41  REVIEW  AND  ISSUE  GUIDANCE  DOCUMENTS  ON GAS DRILLING BEST PRACTICES.
   42  SUCH COMMITTEE SHALL  INCLUDE  AT  LEAST  ONE  REPRESENTATIVE  FROM  THE
   43  FOLLOWING  INTEREST  GROUPS:  THE  ENVIRONMENTAL  COMMUNITY;  THE PUBLIC
   44  HEALTH COMMUNITY; AND THE GAS DRILLING INDUSTRY, ALONG WITH PERSONS FROM
   45  THE DEPARTMENT OR OTHERS THE DEPARTMENT DEEMS APPROPRIATE.  THE  DEPART-
   46  MENT MAY REQUIRE COMPLIANCE WITH SUCH PRACTICES AS A CONDITION OF PERMIT
   47  APPROVAL.
   48    S 3. This act shall take effect on the one hundred twentieth day after
   49  it shall have become a law, provided, however, that effective immediate-
   50  ly,  the  addition,  amendment  and/or  repeal of any rule or regulation
   51  necessary for the implementation of this act on its  effective  date  is
   52  authorized to be made and completed on or before such date.

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The DEC has just released the Final Scope that outlines the topics that will be reviewed in the SGEIS (Supplemental Generic Environmental Impact Statement), expected out sometime this spring.

The SGEIS will analyze the potential impacts of shale gas development using horizontal drilling and high-volume hydraulic fracturing, with particular attention to issues associated with multi-well drilling sites. Heightened attention to the latter topic is a direct result of the scoping process, which also resulted in the following significant additions to the scope:

 DEC Finalscope.pdf

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Natural gas companies plan to acquire fewer leases in 2009 

Friday, January 16, 2009                                                                                                      Pittsburgh Business Times - by Anya Litvak

No one’s knocking on Gary Sheppard’s door. And judging from the calls he gets as a gas lease educator, no one’s knocking on doors anywhere else.

The land grab in the promising Marcellus Shale has been silenced by a more pressing need: cash.

“Which makes sense because the sheer dollars going around were monstrous,” Sheppard said. “We saw them hit that $3,000 per acre mark. We saw royalty rates change. We heard 17, 18, 19 percent. Of course, we don’t hear anything now. It’s quiet as a mouse.”

For many oil and gas companies looking to secure their fortune in the natural gas reservoir that spans most of the state, the strategy was to grab first and develop later.

Of the estimated $4 billion that has gone into the Marcellus gas play so far, almost three quarters went to land acquisition, said Louis D’Amico, executive director of Pennsylvania’s Independent Oil and Gas Association. Hundreds of thousands of leases were signed, most of them good for five years with all the money paid up front, though the large sums await landowners through royalties, when the gas begins flowing.