Pennsylvania Legislation Will Exacerbate Massive Oil and Gas Well Backlog and Mismanagement of Federal Funds

Harrisburg, PA - Yesterday, House Bill 2644 became law as part of a budget deal Governor Wolf struck with the General Assembly. This bill eliminates the Environmental Quality Board’s (EQB) authority to set and adjust well bond amounts for conventional oil & gas wells for 10 years and would further likely forfeit the state’s access to tens of millions of dollars in federal funding. This bill would make it impossible for EQB to implement critical reforms to bonding for conventional wells. Additionally, this bill guts the Sierra Club and partner groups' petition for a rulemaking to raise bond amounts for conventional wells.

Currently, well bond amounts are far below the actual costs to plug a well. A bond is the money a company has to put up before drilling to ensure the costs to plug the well are covered. Bonds are meant to ensure companies are financially responsible for their wells at the end of their producing lifespan and to promote quick plugging. However, when bond amounts are too low, companies are more likely to let wells remain unplugged or even abandon them through bankruptcy rather than put up the costs to plug, leaving the responsibility to the state and its taxpayers to cover the financial, health, and environmental burdens. This is already a massive problem: the conventional industry has gotten over 4,000 notices of violation over the last five years for trying to illegally abandon wells without plugging them. On average, it costs Pennsylvania Department of Environmental Protection (DEP) about $38,000 to plug a well; locking bond amounts at $2,500 is a clear violation of the government’s trustee responsibilities under the Pennsylvania constitution.

This handout would also likely result in Pennsylvania having to return federal funding or potentially being excluded from subsequent rounds of federal funding for well plugging. In January, the Department of the Interior announced that Pennsylvania would receive $104 million in the first phase of funding to plug the Commonwealth's wells to address environmental, health, and safety concerns. This bill potentially puts Pennsylvania at risk of losing tens of millions of dollars from this pot of funding and in competitive grants for orphaned well plugging by not allowing the DEP to follow federal requirements for use of these federal funds and by allowing conventional operators to continue to pass the costs of remediation to taxpayers.

“Oil and gas companies have always been given the upper hand – using politicians to get what they want without cleaning up their own messes and, adding insult to injury, forcing taxpayers to pay for what these companies should have done in the first place,” said Sierra Club Senior Campaign Representative Kelsey Krepps. “The passage of HB 2644 continues this trend and  sets our communities and our environment back significantly. We will be continuing to pursue all avenues to leave a better legacy for Pennsylvanians than the one the oil and gas industry leaves us to clean up.”

The Sierra Club and partners are still currently waiting on a report from the Pennsylvania Department of Environmental Protection for their rulemaking petition to raise unconventional (fracking) bond amounts.