Current Regulatory Issues Impacting the Appalachian Basin. Gary E. Slagel Steptoe & Johnson PLLC October, 2014

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1 Current Regulatory Issues Impacting the Appalachian Basin Gary E. Slagel Steptoe & Johnson PLLC October, 2014

2 Regulatory Issues PA Chapter 78a, Subchapter C comprehensive environmental performances standards for unconventional gas wells. Currently being redrafted, early 2016 final rules Chapter 78, Subchapter D new and enhanced standards for subsurface activities associated with unconventional gas wells DEP still working on draft rules TENORM investigation new radiation standards Exemption 38 air permitting issues Mechanical integrity assessments PNDI/T&E and Special Concern Species

3 Regulatory Issues PA What must be filed by the operator Well permit Well permit transfer application Water management plans Inactive status request ESCGP transfer ESCGP noncompliance reports ESCGP NOI for major modifications ESCGP notice of termination Centralized impoundment permit

4 Regulatory Issues PA OG 71 (drill cuttings disposal) 26R Chemical analysis for residual waste Variance approval Coal pillar approval Road spreading approval Proposed alternate method casing, venting etc Stray gas report Spill reports NOV responses Spud notice

5 Regulatory Issues PA Cementing casing notice Pressure test notice Stimulation notice Plugging notice Completion of stimulation notice Preconstruction conference notice Seven day earth disturbance notice Three day bulk earth disturbance 911 emergency plan Emergency response plan Wastewater reduction plan Containment plan

6 Regulatory Issues PA PPC plan E&S plan PCSM plan Water management plan Waste reports Mechanical integrity assessment Centralized impoundment certification Well record Country of origin steel Completion report Completion report CPI& trade secrets Production report

7 Regulatory Issues PA Inactive status report NOI to plug certificate 26RW chemical characterization Site restoration report FracFocus chemical disclosure Industry logs Other industry data Centralized impoundment quarterly reports Centralized impoundment monitoring reports Pre drill surveys Well locations

8 Legislative Issues WV Pooling Bill considerable effort went into building the necessary coalition to give this the best chance of success. Should be on the 2015 legislative agenda Aboveground Storage Tank Act in response to the 2014 chemical spill near Charleston.

9 Regulatory Issues WV AST Emergency Rule released on 9/18/2014. The public comment period is open until 10/24. Sets standards for tank registrations, certificates to operate, O & M, reporting and recordkeeping, release prevention and secondary containment. Until implemented, the previously released temporary interpretative rule remains in effect. Northern panhandle tanks most are level 1

10 AST Magnitude of the Task As of October 1 st over 45,000 tanks had been registered in West Virginia Approximately 6 percent, or 2700, are in zones of critical concern, i.e. they represent a high potential risk to public health or the environment due to their location, contents or size.

11 AST Registration The owner of every AST, regardless of AST level, must register each tank regardless of its operational state. A registration fee will be established by the state. Notification must be provided to the state within 30 of any changes, upgrades or closures or transfer of ownership of any AST.

12 AST Operation and Maintenance The owner or operator must ensure that visual inspections of the secondary containment for Level 1 ASTs are performed once every 72 hours and monthly for Level 2 ASTs. The owner or operator must ensure that a maintenance check of the facility and equipment is performed each month for Level 1 and 2 AST systems.

13 AST Release Prevention The owner or operator has numerous obligations related to the previously mentioned issues such as: Spill and overfill protection Secondary containment Leak detection and inspections Additional detailed standards the owner or operator must meet relative to these obligations are detailed in Section 10 of the emergency rules.

14 Final Statements WV Code The AST Act states: (g) On and after October 1, 2014, it shall be unlawful for any owner or operator to operate or use an aboveground storage tank subject to this article which has not been properly registered or for which any applicable registration fee has not been paid. Also 4.1.b. Failure to register a tank, failure to obtain a Certificate to Operate, or revocation of a Certificate to Operate does not relieve a tank owner or operator from the obligation to fully comply with all applicable requirements of the AST Act and its Rules.

15 Legislative Issues OH Severance Tax currently in the 2.7% range some industry support to get it passed before the end of the session. Make peace with Governor Kasich Open up state lands for drilling Get a lower tax on the books PA situation if Tom Wolf gets elected

16 Regulatory Issues OH Horizontal Well Pad Construction Rules these are draft rules currently being worked on by the DNR. Will require the following: A Chief s order to begin well pad construction Pad design approved by a PE Geotechnical borings now required Flood risk zones identified Downstream emergency release information Rules finalized in early 2015

17 Future Rulemaking OH Waste treatment, processing, recycling & storage Waste impoundments Alternative disposal options Freshwater impoundments Secondary containment Discharge reporting Gas release reporting Disposal & treatment of oily and saline solid wasters Compact and contiguous drilling units