Pennsylvania Passes Comprehensive Amendments to Oil and Gas Laws

Morgan Lewis

On February 13, Governor Tom Corbett signed House Bill 1950, amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes. This legislation, most of which will become effective on April 13, imposes a drilling “impact fee” and preempts local environmental regulation of oil and gas operations. It also strengthens requirements for permitting and expands disclosure requirements for fracking chemicals and reporting obligations. Fracking, or hydraulic fracturing, is a technique that uses water mixed with chemicals and sand to pump deep into shale layers to extract gas.

The legislation authorizes an impact fee on “unconventional gas wells.” An “unconventional gas well” is one that is drilled into a geologic formation that requires fracking, multilateral well bores, or other techniques to produce gas at economic rates or volumes. The impact fee is based on several factors, including when the well is spud (i.e., when the physical drilling begins), the year of the well, and the average price of natural gas. The Public Utility Commission (PUC) may adjust the fee based on the Consumer Price Index.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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