PRINTER'S NO. 4250
No. 2741 Session of 2008
INTRODUCED BY QUINN, GALLOWAY, GEORGE, MAJOR, McILVAINE SMITH,
R. MILLER, MILNE, SIPTROTH AND SWANGER, AUGUST 21, 2008
REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
AUGUST 21, 2008
AN ACT
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
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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