OH, PA Seek to Tighten Regulation of Shale Gas Production

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Ohio?s Attorney General Mike DeWine has ordered his office to review and strengthen the state?s laws as they pertain to the oil and gas industry. According to comments DeWine made to the Columbus Dispatch newspaper, Ohio is much softer on violators than states like New York and Pennsylvania, which impose per-day civil penalties. Currently, Ohio?s maximum fine for an environmental violation is $2,500 to $20,000 per incident, depending on the nature of the violation. DeWine says that should be raised to at least $10,000 per day.

DeWine is also advocating full disclosure of the chemicals found in hydraulic fracturing fluid. Ohio already requires hydraulic fracturing contractors to disclose what is in their fluid, but DeWine is apparently concerned that proprietary or ?trade secret? ingredients are sometimes not being identified.

Noting that he agrees with Governor John Kasich?s comments in his State of the State address earlier this week that ?you cannot degrade the environment at the same time you?re producing this industry,? DeWine told the Columbus Dispatch that we need to ensure protections are in place for the environment. DeWine also wants to protect the state?s landowners ? he wants Ohio?s consumer protection law to be available to landowners who are leasing property to energy companies, should problems arise.

The Ohio Department of Natural Resources, which oversees drilling activities in Ohio, is already revising many of its rules regarding drilling and brine disposal. The proposed rule revisions are available for review at the Ohio Department of Natural Resources website. The Department?s Division of Mineral Resource Management program was praised last year by STRONGER, the non-profit, multi-stakeholder organization for State Review of Oil and Natural Gas Resources, in its review of Ohio?s hydraulic fracturing program.

Meanwhile, in neighboring Pennsylvania, legislation to regulate Marcellus gas production is one step closer to reality. Governor Tom Corbett is expected to sign H.B. 1950, which passed the Senate and the House by 31-19 and 101-90 vote margins, respectively, earlier this week. The bill, which would allow county governments to assess an impact fee on Marcellus gas producers, is projected to raise as much as $212 million in the first year, with fees ultimately being phased out over 15 years.

Among other things, the bill would increase penalties for environmental violations, increase required setbacks from waterways and require disclosure of chemicals used in the hydraulic fracturing process, although it would provide a trade secret exemption. Local regulation of environmental concerns associated with oil and gas operations is expressly preempted by the bill, and municipalities are prohibited from disproportionately regulating drilling over other industries; failure to comply will result in the loss of fee revenues.

For more information on the changing regulatory landscape in either of these states, please contact us.

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