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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY QUINN, BEYER, GINGRICH, MAJOR, MURT, PICKETT, SIPTROTH, SWANGER AND YOUNGBLOOD, MARCH 9, 2009 |
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| REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, MARCH 9, 2009 |
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| AN ACT |
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1 | Amending the act of December 19, 1984 (P.L.1140, No.223), |
2 | entitled "An act relating to the development of oil and gas |
3 | and coal; imposing duties and powers on the Department of |
4 | Environmental Resources; imposing notification requirements |
5 | to protect landowners; and providing for definitions, for |
6 | various requirements to regulate the drilling and operation |
7 | of oil and gas wells, for gas storage reservoirs, for various |
8 | reporting requirements, including certain requirements |
9 | concerning the operation of coal mines, for well permits, for |
10 | well registration, for distance requirements, for well casing |
11 | requirements, for safety device requirements, for storage |
12 | reservoir obligations, for well bonding requirements, for a |
13 | Well Plugging Restricted Revenue Account to enforce oil and |
14 | gas well plugging requirements, for the creation of an Oil |
15 | and Gas Technical Advisory Board, for oil and gas well |
16 | inspections, for enforcement and for penalties," further |
17 | providing for bonding and for well plugging funds. |
18 | The General Assembly of the Commonwealth of Pennsylvania |
19 | hereby enacts as follows: |
20 | Section 1. Sections 215(a) and 601(b) and (c)(1) of the act |
21 | of December 19, 1984 (P.L.1140, No.223), known as the Oil and |
22 | Gas Act, amended July 2, 1992 (P.L.365, No.78), are amended to |
23 | read: |
24 | Section 215. Bonding. |
25 | (a) (1) Except as provided in subsection (d) hereof, upon |
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1 | filing an application for a well permit and before continuing |
2 | to operate any oil or gas well, the owner or operator thereof |
3 | shall file with the department a bond for the well and the |
4 | well site on a form to be prescribed and furnished by the |
5 | department. Any such bond filed with an application for a |
6 | well permit shall be payable to the Commonwealth and |
7 | conditioned that the operator shall faithfully perform all of |
8 | the drilling, water supply replacement, restoration and |
9 | plugging requirements of this act. Any such bond filed with |
10 | the department for a well in existence on the effective date |
11 | of this act shall be payable to the Commonwealth and |
12 | conditioned that the operator shall faithfully perform all of |
13 | the water supply replacement, restoration and plugging |
14 | requirements of this act. The amount of the bond required |
15 | shall be in the amount of [$2,500] $5,000 per well for at |
16 | least two years following the effective date of this act, |
17 | after which time the bond amount may be adjusted by the |
18 | Environmental Quality Board every two years to reflect the |
19 | projected costs to the Commonwealth of performing well |
20 | plugging. |
21 | (2) In lieu of individual bonds for each well, an owner |
22 | or operator may file a blanket bond, on a form prepared by |
23 | the department, covering all of its wells in Pennsylvania as |
24 | enumerated on the bond form. A blanket bond shall be in the |
25 | amount of [$25,000] $50,000 for at least two years following |
26 | the effective date of this act, after which time the bond |
27 | amount may be adjusted by the Environmental Quality Board |
28 | every two years to reflect the projected costs to the |
29 | Commonwealth of performing well plugging. |
30 | (3) Liability under such bond shall continue until the |
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1 | well has been properly plugged in accordance with this act |
2 | and for a period of one year after filing of the certificate |
3 | of plugging with the department. Each bond shall be executed |
4 | by the operator and a corporate surety licensed to do |
5 | business in the Commonwealth and approved by the secretary. |
6 | The operator may elect to deposit cash, certificates of |
7 | deposit or automatically renewable irrevocable letters of |
8 | credit from financial institutions chartered or authorized to |
9 | do business in Pennsylvania and regulated and examined by the |
10 | Commonwealth or a Federal agency which may be terminated at |
11 | the end of a term only upon the financial institution giving |
12 | 90 days prior written notice to the permittee and the |
13 | department or negotiable bonds of the United States |
14 | Government or the Commonwealth, the Pennsylvania Turnpike |
15 | Commission, the General State Authority, the State Public |
16 | School Building Authority or any municipality within the |
17 | Commonwealth, or United States Treasury Bonds issued at a |
18 | discount without a regular schedule of interest payments to |
19 | maturity, otherwise known as Zero Coupon Bonds, having a |
20 | maturity date of not more than ten years after the date of |
21 | purchase and at such maturity date having a value of not less |
22 | than [$25,000] $50,000, with the department in lieu of a |
23 | corporate surety. The cash deposit, certificate of deposit, |
24 | amount of such irrevocable letter of credit or market value |
25 | of such securities shall be equal at least to the sum of the |
26 | bond. The secretary shall, upon receipt of any such deposit |
27 | of cash, letters of credit or negotiable bonds, immediately |
28 | place the same with the State Treasurer, whose duty it shall |
29 | be to receive and hold the same in the name of the |
30 | Commonwealth, in trust, for the purpose for which such |
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1 | deposit is made. The State Treasurer shall at all times be |
2 | responsible for the custody and safekeeping of such deposits. |
3 | The operator making deposit shall be entitled from time to |
4 | time to demand and receive from the State Treasurer, on the |
5 | written order of the secretary, the whole or any portion of |
6 | any collateral so deposited, upon depositing with him, in |
7 | lieu thereof, other collateral of the classes herein |
8 | specified having a market value at least equal to the sum of |
9 | the bond, and also to demand, receive and recover the |
10 | interest and income from said negotiable bonds as the same |
11 | becomes due and payable. Where negotiable bonds, deposited as |
12 | aforesaid, mature or are called, the State Treasurer, at the |
13 | request of the owner thereof, shall convert such negotiable |
14 | bonds into such other negotiable bonds of the classes herein |
15 | specified as may be designated by the owner. Where notice of |
16 | intent to terminate a letter of credit is given, the |
17 | department shall give the operator 30 days' written notice to |
18 | replace the letter of credit with other acceptable bond |
19 | guarantees as provided herein and, if the owner or operator |
20 | fails to replace the letter of credit within the 30-day |
21 | notification period, the department shall draw upon and |
22 | convert such letter of credit into cash and hold it as a |
23 | collateral bond guarantee. |
24 | * * * |
25 | Section 601. Well plugging funds. |
26 | * * * |
27 | (b) To aid in the indemnification of the Commonwealth for |
28 | the cost of plugging abandoned wells, there shall be added to |
29 | the permit fee established by the department under section 201 |
30 | for new wells a [$50] $100 surcharge. All moneys collected as a |
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1 | result of this surcharge shall be paid into the State Treasury |
2 | into a restricted revenue account to be known as the Abandoned |
3 | Well Plugging Fund, hereby established, and shall be expended by |
4 | the department to plug abandoned wells which threaten the health |
5 | and safety of persons or property or pollution of the waters of |
6 | the Commonwealth. |
7 | (c) (1) There is hereby created a restricted revenue |
8 | account to be known as the Orphan Well Plugging Fund. There |
9 | shall be added to the permit fee established by the |
10 | department under section 201 for new wells a [$100] $200 |
11 | surcharge for wells to be drilled for oil production and a |
12 | [$200] $400 surcharge for wells to be drilled for gas |
13 | production, which surcharges shall be placed in the Orphan |
14 | Well Plugging Fund and shall be expended by the department to |
15 | plug orphan wells. If an operator rehabilitates a well |
16 | abandoned by another operator or an orphan well, the permit |
17 | fee and the surcharge for such well shall be waived. |
18 | * * * |
19 | Section 2. This act shall take effect in 60 days. |
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