Law Preventing Pa. Gas Well Bond Adjustments Challenged

Five environmental groups are suing the Commonwealth of Pennsylvania, arguing that a law enacted in 2022, which removed the Pennsylvania Environmental Quality Board’s authority to raise bonding amounts on oil and gas wells, is unconstitutional and harmful to public health and the environment.

The state Department of Environmental Protection requires a bond be posted on each new well that is drilled to ensure that it is properly plugged at the end of its production. However, the amount of those bonds falls far short of the actual cost of plugging a well.

Thousands of oil and gas wells have been drilled in Pennsylvania since the industry’s birth in 1859. Although owners and operators are legally responsible for plugging wells when oil and gas production ends, this does not always happen. Many of the 8,700 known abandoned wells in Pennsylvania’s database are so-called conventional “legacy wells” drilled before regulations on plugging existed and long since abandoned.

Research suggests there could be as many as 200,000 orphan wells in the state. At a conservative cost of $33,000 to plug an abandoned well, DEP’s liability ranges between $280 million to several billion, and plugging costs have been increasing in the past decade. Leaking wells are an environmental and health hazard, putting the potent greenhouse gas methane as well as chemicals including benzene, toluene, ethylbenzene, and xylenes, into the atmosphere and groundwater.

Act 96, passed by the legislature last year, took away the EQB’s authority contained in Act 13 to adjust the bonding amounts every two years to reflect the cost of well plugging and set bonding rates for conventional oil and gas wells in Pennsylvania at the current low level of $2,500 for the next 10 years. This could increase the state’s liability if an operator walks away from its plugging responsibility.

The lawsuit argues that Act 96 is unconstitutional because it violates the Environmental Rights Amendment in the state constitution, which guarantees the right to “clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment.”

“By freezing bonding amounts for conventional oil and gas wells at their current inadequate level, Section 2 of Act 96 prevents prompt remediation and clean-up of the many conventional oil and gas wells that have stopped producing or otherwise been abandoned. These wells emit harmful pollutants to the air and water on an ongoing basis, and otherwise harm Pennsylvania’s natural environment every day they remain unplugged,” the lawsuit argues.

The state Department of Environmental Protection has been working to plug more wells due to the Infrastructure Investment and Jobs Act passed by Congress that will provide about $400 million for the state over the next decade to address the problem. The DEP has also been tightening its oversight of conventional well operators, to ensure that they do not walk away from wells.

"We'd like to see the well bonding amounts reflect the actual cost of well plugging to ensure there is no financial incentive for drillers to abandon their wells and leave taxpayers on the

hook," Senior Attorney Jessica O'Neill of PennFuture, one of the groups involved in the suit, said in a release. The case will be heard by the state’s Commonwealth Court.