View

from

Cap

itols S

ession

The View from Three Capitols Speakers: Walter A. Bunt, Jr. – Partner, K&L Gates, Pittsburgh (Moderator) Peter A. Gleason – Partner, K&L Gates, Harrisburg Phil Reale – Attorney and Government Relations Consultant, Philip A. Reale, PLLC Jim Samuel – Principal/Founder, Capitol Integrity Group

April 27, 2012 Hilton Garden Inn Hotel – Southpointe/Pittsburgh

Contents “The View from Three Capitols”

“View from the Pennsylvania Capitol”............................................ A “View from Charleston, WV” & “West Virginia Issues: The Horizon Beckons” ........................................................................................ B “Ohio’s 21st Century Energy Policy”............................................... C

Biographies ................................................................................................. D

Walter A. Bunt, Jr. (Moderator) Peter A. Gleason Phil Reale Jim Samuel

Shale Gas Development Brochure ............................................................. E

K&L Gates LLP

A

Copyright © 2012 by K&L Gates LLP. All rights reserved.

View from the Pennsylvania Capitol: Will Act 13 Survive the Increasing Attacks from the Anti-Shale Activists?

Peter Gleason717.231.2892peter.gleason@klgates.com

This presentation is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.

1

Act 13 – February 2012

Natural Gas Energy Development Program

Enhanced environmental protection for the development of unconventional natural gas resources

Criminal and civil penalties Containment for unconventional wells

Air containment emissions Notification to public water system

Hydraulic fracturing chemical disclosure Protection of water supplier

Emergency response Well site relocation

Gathering lines Well location

Transportation of wastewater fluids Well permits

2

Act 13 – February 2012 (Continued) Collection and Distribution of an Impact Fee

$10,000$10,000$10,000$5,000$5,00015

$10,000$10,000$10,000$5,000$5,00014

$10,000$10,000$10,000$5,000$5,00013

$10,000$10,000$10,000$5,000$5,00012

$10,000$10,000$10,000$5,000$5,00011

$20,000$20,000$20,000$15,000$10,00010

$20,000$20,000$20,000$15,000$10,0009

$20,000$20,000$20,000$15,000$10,0008

$20,000$20,000$20,000$15,000$10,0007

$20,000$20,000$20,000$15,000$10,0006

$20,000$20,000$20,000$15,000$10,0005

$20,000$20,000$20,000$15,000$10,0004

$50,000$40,000$30,000$30,000$25,0003

$55,000$45,000$40,000$35,000$30,0002

$60,000$55,000$50,000$45,000$40,0001

$6 or higher$5 – 5.99$3.00 – 4.99$2.26 – 2.99$0 – 2.25Year

Administration – PA Public Utility Commission

Fee Distribution – 60% local, 40% state gas resource development and coordination

3

Act 13 – February 2012 (Continued)

Municipal ordinances and zoning standards

This Act supersedes all local ordinances purporting to regulate oil and gas operations

Uniformity of local ordinances

Administration/enforcement – PA Public Utility Commission

4

Natural Gas Uses

Residential and Commercial Cooking, washing, drying, warming water, heating and air conditioning

Industrial Pulp and paper, metals, chemicals, stone, clay, glass, process foods, treat waste,

incineration, drying, dehumidification, heating and cooling

Power Generation Electric utilities and independent producers increasingly using natural gas to provide

energy for power plants because: lower capital costs, built faster, work more efficiently, emit less pollution than fossil fuel plants

Fuel cost is 50% less than gasoline and 30% less CO2

Transportation Compressed natural gas (CNG) for

smaller to mid-size vehicles and fleets

Liquefied natural gas (LNG) for mid-size to large vehicles and fleets

12 Million CNG vehicles worldwide:

2.7MM in Pakistan, 1.9MM in Iran andArgentina1.6MM in Brazil, only 125,000 in U.S.

5

Economic Benefits

Key Report Findings

Pennsylvania is self-sufficient in natural gas (net exporter)

2020 output levels (17 billion cubic feet per day) could make the Marcellus the single largest producing gas field in the U.S.

Marcellus could produce a quarter of U.S. natural gas by 2020

$1.6 billion in lease and bonus payments in 2010

6

Economic Benefits

17.53.5Output (bcfe/day):

2,4972,300Wells Spudded:

256,420156,695Cumulative Employment:

$2 billion$1.23 billionState/Local Taxes:

$20.2 billion$12.8 billionEconomic Value Added:

20202011

7

Pennsylvania Jobs, Pennsylvania Workers

PA Department of Labor and Industry

229,000 employees in Marcellus and related industries

$76,036 average core industry wage

$30,000 higher than PA average

$63,155 average ancillary industry wage

$17,000 higher than PA average

7 in 10 hires are from Pennsylvania;Confirmed by MSC member survey

Source: PA Department of Labor and Industry, January 2012

8

Driven by Oil and Gas, Natural Resources was the Region’s Fastest Growing Industry during the Recession

Source: BLS Census of Employment and Wages, Southwestern Pennsylvania

9

More than 30 Houston-based energy companies have already come to the region

Allied TechnologyAllis-Chalmers Energy Inc.Baker Hughes Oilfield OperationsBJ Services Co.Burleson Cooke, LLPCabot Oil & Gas Corp.Carrizo Oil & Gas Inc.Complete Production Services Inc.Core Laboratories LPCrescent Directional DrillingCudd Energy ServicesEOG Resources Inc.Express Energy Services LPExterran Holdings, Inc.Flotek Industries, Inc.FMC Technologies Inc.Halliburton Energy Services

Allied TechnologyAllis-Chalmers Energy Inc.Baker Hughes Oilfield OperationsBJ Services Co.Burleson Cooke, LLPCabot Oil & Gas Corp.Carrizo Oil & Gas Inc.Complete Production Services Inc.Core Laboratories LPCrescent Directional DrillingCudd Energy ServicesEOG Resources Inc.Express Energy Services LPExterran Holdings, Inc.Flotek Industries, Inc.FMC Technologies Inc.Halliburton Energy Services

Hunting Energy ServiceKey Energy Services Inc.Kinder Morgan Energy PartnersMarathon Oil Co.National Oilwell VarcoRoyal Dutch Shell Schlumberger LimitedSmith InternationalSpectra Energy Corp.Stallion Oilfield ServicesTennessee Gas Pipeline Co.Texas Eastern Transmission, LPTSI Flow Products, Inc.Universal Pegasus InternationalValerus Compression ServicesWeatherford U.S., LPWilbros International

Hunting Energy ServiceKey Energy Services Inc.Kinder Morgan Energy PartnersMarathon Oil Co.National Oilwell VarcoRoyal Dutch Shell Schlumberger LimitedSmith InternationalSpectra Energy Corp.Stallion Oilfield ServicesTennessee Gas Pipeline Co.Texas Eastern Transmission, LPTSI Flow Products, Inc.Universal Pegasus InternationalValerus Compression ServicesWeatherford U.S., LPWilbros International

10

Diverse Job Opportunities

Source: Marcellus Shale Coalition Membership Survey, May 2011

11%

1%

3%

30%

2%

%

17%

1%4%

1%

2%

24%

Administrative: 11%

Commerical: 1%

Engineering and Construction: 24%

Environmental Health & Safety: 3%

Equipment Operations: 30%

Geology: 2%

Land: 4%

Operations and Maintenance: 17%

Purchasing: 1%

Water Management: 4%

Well Services: 1%

Other: 2%

Professional Functions Identified in MSC Survey

11

Regulatory Framework

Site Construction

Drilling PhaseMidstream

Hydraulic Fracturing

Reclaimed/Completed Site

12 PA Regulations

10 PA Regulations

11 PA Regulations

18 PA Regulations

18 PA Regulations

12

Environmental Protection

13

Issues Regulated

Employee Safety

Public Safety

Erosion and Sediment Control

Waste Handling Disposal

Well Density/Spacing

Well Testing

Floodplains

Fluid Handling/Disposal

Incident Reporting

Wetlands

Stream Crossings

Threatened and Endangered Species

Air Quality Groundwater Protection

(Surface Casing Programs)

Noise

Placement/Construction of Wellbores

Well Production

Surface Water Protection

Water Use

Road Use

Spill Response & Remedial Measures

Chemical Handling & Transportation

Cultural Resources

14

Consumer Benefits

Energy costs dropped by $633 million in 2010(Penn State, July 2011)

Electricity rates drop by 50% (Bloomberg News, January 2012)

Residential gas and electric customers are saving $200 a year (Navigant Consulting, January 2012)

Major utilities serving Philadelphia area have reduced gas bills by 37% to 52% since 2008(Philadelphia Inquirer, December 2011)

15

Revenue for Pennsylvania

$11 millionPermitting and enforcement fees to increase DEP personnel

$107 millionRoyalty payments to state in 20114

$411 millionRoad construction investments since 20083

$1.23 billionState and local taxes in 20112

$1.1 billionOverall taxes since 20061

Paid by Marcellus Industry

1 – Pennsylvania Department of Revenue, May 2011

2 – Penn State University, “The Pennsylvania Marcellus Shale Natural Gas Industry: Status, Economic Impacts and Future Potential,”July 20, 2011

3 – Survey of Marcellus Shale Coalition Full Members

4 – Pennsylvania Department of Conservation and Natural resources

16

Act 13 – A No Brainer, Right? Not so fast.

Officials voted wrongly for poor gas regs. Pocono Record, 02-13-2012

Robinson to contest new law. Washington Observer-Reporter, 02-14-2012

Let municipalities rule. State College Centre Daily Times, 02-15-2012

Lawmakers pass dangerous bill for Pennsylvania. Levittown Intelligencer, 02-15-2012

Commissioners eye legal action on state drilling bill. Pittsburgh Tribune-Review, 02-16-2012

New gas law should be challenged. Washington Observer-Reporter, 02-17-2012

Gas-fee law is corporate giveaway. Bloomsburg Press Enterprise, 02-23-2012

Organizations decry lack of concern for communities, health, property. Wayne Independent, 02-28-2012

Shale legislation is hurtful to Luzerne County. Wilkes-Barre Citizens' Voice, 03-09-2012

Environmental groups release impact fee vote scorecard ‎. Scranton Times-Tribune, 03-21-2012

Farmers begin to question Marcellus Shale drilling. Patriot News, Op-Ed, 03-29-2012

Peters joins fight to regulate drilling. Pittsburgh Post Gazette, 03-29-2012

17

Proposed Changes to Act 13

Nockamixon Township – Applicability of Local Zoning Restrictions to Conventional Wells

Chemical Disclosure – PA Medical Society Concern re “Gag Order”

18

Issues NOT Addressed by Act 13

Governor Corbett’s Marcellus Shale Advisory Commission (MSAC) – e.g., PA Environmental Council – use of non-fresh water sources for fracing, health registry, toughen permit conditions to protect endangered species and areas of high ecologic value.

PUC Safety Jurisdiction – Class I Pipelines (e.g., small diameter, rural areas)

Restoration of contaminated sites to “background standards” under Land Recycling Program. HB 2278 (Hanna)

19

Issues NOT Addressed by Act 13 (cont’d)

Surface Owners’ Protection Act. HB 1163 (George)

Subsurface quiet title (Dormant Oil & Gas). SB 1324 (Yaw), HB 2308 (Everett)

No eminent domain for any gathering line projects. HB 1926 (Preston)

Easement agreement disclosure mandates. HB 2310 (Reese)

B

K&L Gates SeminarView from Charleston, WV

April 27, 2012

Natural Gas Horizontal Well Control Act

• Enacted during Special Session on December 14, 2011

• Very Comprehensive• Provides certainty to oversight of drilling

activities• Covered site construction, impoundments,

reclamation, road usage, water considerations, safety, reclamation, air quality……

Executive Order No. 4-11

• Preceded Horizontal Well Act as a means of addressing growing public concern industry was not being regulated

• Directed WVDEP to exercise inherit authority to impose policy, rules and regulations governing drilling

Implementation of Legislation

• Some aspects still under construction

• Required creation of numerous forms, notices, etc.

Concerns

• WVDEP exceeding authority?

• Environmentalists remain critical of water withdrawal, usage and disposal

• No forced pooling and unitization

• Severed estates

• Surface owner rights

Impending Studies

• Studies required by Act:– Workforce Investment Council Report – Noise, Light, Dust & Volatile Organic Compounds – Air Quality– Impoundment & Pit Safety

• Studies suggested by Legislature:– West Virginia Future Fund– Relationship between seismic events and

hydrocarbon production and exploration– Unification of surface and mineral estates under

certain circumstances– Feasibility of "green" liquefied gas fracturing

processes

Separating Fact from Fiction

Science vs. Rhetoric and Urban Myth – an Ongoing Issue

Communications

• Industry must recognize the need for effective communications as a critical component to doing business in an ever vigilant community

West Virginia Issues: The Horizon Beckons

Although the West Virginia Legislature passed landmark legislation in a special session in December of 2011, the legislation itself calls for continuing investigation, evaluation and action in a number of areas. Additionally, other legislative action conducted during the 2012 Regular Session brought into focus other issues and actions to be fulfilled in relationship to Marcellus Shale drilling and other oil and gas activity. In the aggregate, they include the following:

Studies required by “Natural Gas Horizontal Well Control Act” Workforce Investment Council Report to Legislature (§5B-2B-4a)

• Annual report to the Joint Committee on Government and Finance and the Legislative Oversight Commission on Education Accountability

• Report will include the following: • total number of jobs created • total payroll of all jobs created • average salary per job type • number of employees domiciled

in West Virginia • total economic impact • recommendations for the

establishment of a workforce investment public education agenda to maximize job creation opportunities

• number of jobs created for minorities

• number of jobs created for individuals re-employed from the state of West Virginia’s unemployment rosters

• number of jobs created for returning veterans

• number of jobs created for legal West Virginia residents and non-West Virginia residents

• Report must be delivered on or before November 1, 2012

Report on Noise, Light, Dust & Volatile Organic Compounds (§22-6A-12(e))

• By December 31, 2012, the Secretary must report to the Legislature on the noise, light, dust and volatile organic compounds generated by the drilling of horizontal

2 | P a g e

wells as they relate to the well location restrictions regarding occupied dwelling structures pursuant to this section.

• If there is a finding that the well location restrictions regarding dwellings are inadequate or require alteration, the secretary has the authority to propose for promulgation legislative rules establishing guidelines and procedures regarding reasonable levels of noise, light, dust and volatile organic compounds relating to drilling horizontal wells, including reasonable means of mitigating such factors.

Air Quality Study (§22-6A-22)

• By July 1, 2013, the Secretary must report to the Legislature on the need for further regulation of air pollution occurring from well sites including possible health impacts, the need for air quality inspections during drilling, the need for inspections of compressors, pits and impoundments, and any other potential air quality impacts that could be generated from this type of drilling activity that could harm human health or the environment

• If specialized permit conditions are necessary, the secretary has the authority to promulgate legislative rules establishing these new requirements

Impoundment & Pit Safety Study (§22-6A-23)

• By January 1, 2013, the Secretary must report to the Legislature on the safety of pits and impoundments including an evaluation of whether testing and special regulatory provision is needed for radioactivity or other toxins held in the pits and impoundments.

• If greater monitoring, safety and design requirements or other specialized permit conditions are necessary, the secretary the secretary has the authority to promulgate legislative rules establishing these new requirements

Rules authorized by “Natural Gas Horizontal Well Control Act” Karst Terrain (§22-6A-3a)

• Because drilling horizontal wells in naturally occurring karst terrain may require precautions not necessary in other parts of the state, the secretary may require additional safeguards to protect this geological formation including changing proposed well locations to avoid damage to water resources, special casing programs, and additional or special review of drilling procedures.

• The secretary, in consultation with the state geologist, shall propose emergency and legislative rules to establish designated geographic regions of the state where

3 | P a g e

the provisions of this section are applicable and to establish standards for drilling horizontal wells in naturally occurring karst terrain

• At a minimum the rules must: o Predrilling testing to identify the location of caves and other voids, faults

and relevant features in the strata and the location of surface features prevalent in naturally occurring karst terrain such as sink holes

o Provide any other requirements deemed necessary by the secretary to protect the unique characteristics of naturally occurring karst terrain, which may include baseline water testing within an established distance from a drilling site

Water Flow and Quality (§22-6A-8(g)(5))

• All drinking water wells within one thousand five hundred feet of a water supply well shall be flow and quality tested by the operator upon request of the drinking well owner prior to operating the water supply well

• The secretary shall propose legislative rules to identify appropriate methods for testing water flow and quality

Certificate of approval for large pits or impoundment construction (§22-6A-9)

• Every application for a certificate of approval must be made in writing on a form prescribed by the secretary and shall be signed and verified by the applicant

• The application must include a monitoring and emergency action plan and a maintenance plan, the required contents of which shall be established by the secretary by legislative rule

• The secretary is authorized to propose rules for legislative approval necessary to effectuate the provisions of this section

Well Location Restrictions (§22-6A-12(e))

• By December 31, 2012, the Secretary must report to the Legislature on the noise, light, dust and volatile organic compounds generated by the drilling of horizontal wells as they relate to the well location restrictions regarding occupied dwelling structures pursuant to this section.

• If there is a finding that the well location restrictions regarding dwellings are inadequate or require alteration, the secretary has the authority to propose for promulgation legislative rules establishing guidelines and procedures regarding reasonable levels of noise, light, dust and volatile organic compounds relating to drilling horizontal wells, including reasonable means of mitigating such factors.

4 | P a g e

Plugging of Horizontal Wells (22-6A-13)

• The secretary must propose legislative rules to govern the procedures for plugging horizontal wells, including rules relating to the methods of plugging the wells and the notices required to be provided in connection with plugging the wells

Performance Bonds (§22-6A-15(e))

• The secretary may establish procedures under which an operator may substitute a new bond for an existing bond or provide a new bond under certain circumstances specified in a legislative rule

Civil action for contamination or deprivation of fresh water source or supply; presumption; water rights and replacement; waiver of replacement (§22-6A-18)

• The secretary must propose rules for legislative approval to implement the requirements of this section

Air Quality (§22-6A-22)

• By July 1, 2013, the Secretary must report to the Legislature on the need for further regulation of air pollution occurring from well sites including possible health impacts, the need for air quality inspections during drilling, the need for inspections of compressors, pits and impoundments, and any other potential air quality impacts that could be generated from this type of drilling activity that could harm human health or the environment

• If specialized permit conditions are necessary, the secretary has the authority to promulgate legislative rules establishing these new requirements

Impoundment & Pit Safety (§22-6A-23)

• By January 1, 2013, the Secretary must report to the Legislature on the safety of pits and impoundments including an evaluation of whether testing and special regulatory provision is needed for radioactivity or other toxins held in the pits and impoundments.

• If greater monitoring, safety and design requirements or other specialized permit conditions are necessary, the secretary the secretary has the authority to promulgate legislative rules establishing these new requirements

Casing and Cement Standards (§22-6A-24)

5 | P a g e

• The secretary must propose legislative and emergency rules to carry out the purposes of this section

• Rules promulgated by the secretary pursuant to this section shall include provisions to accomplish the following:

o Effective control of the horizontal well by the operator o Prevention of the migration of gas or other fluids into sources of fresh

groundwater or into coal seams o Prevention of pollution of or diminution of fresh groundwater o Prevention of blowouts, explosions, or fires o Appropriate disposition of brines and discharges from the drilling or

operation of horizontal well • The rules regarding the casing program shall require the following information:

o The anticipated depth and thickness of any producing formation, expected pressures, anticipated fresh groundwater zones, and the method or information by which the depth of the deepest fresh groundwater was determined

o The diameter of the borehole o The casing type, whether the casing to be utilized is new or used, and the

depth, diameter, wall thickness, and burst pressure rating for the casing o The cement type, yield, additives, and estimated amount of cement to be

used o The estimated location of centralizers o The proposed borehole conditioning procedures o Any alternative methods or materials required by the secretary as a

condition of the well work permit • The rules promulgated by the secretary shall provide procedures for the

following: o Appropriate installation and use of conductor pipe, which shall be

installed in a manner that prevents the subsurface infiltration of surface water or fluids

o Installation of the surface and coal protection casing including remedial procedures addressing lost circulation during surface or coal casing;

o Installation of intermediate production casing o Correction of defective casing and cementing, including requirements that

the operator report the defect to the secretary within twenty-four hours of discovery by the operator

o Investigation of natural gas migration, including requirements that the operator promptly notify the secretary and conduct an investigation of the incident

o Any other procedure or requirements considered necessary by the secretary

6 | P a g e

• Notwithstanding the minimum casing and cementing standards set forth in this section, the secretary may revise the casing and cementing standards from time to time through the legislative rulemaking process so long as the revised casing and cementing standards are at least as protective of the environment

Notification of claim (§22-6B-5)

• If more than three tenants in common or other co-owners hold interest in land, then the oil and gas developer may give the notice of reclamation to the person described in the records of the sheriff or publish a Class II legal containing the notice and information the secretary prescribes by rule

Studies suggested by Legislature

West Virginia Future Fund

• SCR 52 - Requesting Joint Committee on Government and Finance study future legislation relating to natural gas reserve development and recovery

• HCR 106 - Requesting a study on how to best use the additional severance tax collections attributed to the production of natural gas

• Will likely lead to extensive discussions regarding severance taxes and the sufficiency of current rates

House Concurrent Resolution 53

• Requesting a study of the relationship between increases in seismic events and hydrocarbon production and exploration in the State of West Virginia

House Concurrent Resolution 147

• Requesting a study of the means by which owners of surface interests in tracts of real property from which ownership of interests in the minerals have been severed may have a first option to purchase interests in severed minerals which are sold on the courthouse steps for non-payment of property taxes

House Concurrent Resolution 148

• Requesting a study on the feasibility of encouraging the utilization of "green" liquified gas fracturing processes as an alternative to water based extraction technologies

7 | P a g e

SORO/Activist Groups

• Interest on the part of SORO and others in the unification of mineral properties with surface states continues. Legislation sponsored by Delegates Manypenny and Fleischauer, H.B. 2851, was defeated this year but will most certainly re-appear. Similar legislation may arise from other sponsors next year.

• Media accounts of SORO and activist driven community based public meetings are beginning to reoccur with increased frequency, stimulating conversation about surface owner rights and environmental issues.

• Advocacy groups, such as the ultra-liberal WV Center for Budget and Policy, raise a number of issues, the primary of which being various ways of capturing additional tax dollars from the natural gas industry, along with unreasonable expectations of hiring a West Virginia-only workforce.

C

Mid-Biennium Review |  Ohio’s  21st Century Energy Policy 1

Energy OHIO’S 21ST CENTURY ENERGY POLICY: Leading the Nation with a Comprehensive Energy Strategy Job  creation  remains  Ohio’s  top  priority.    Though  Ohio’s  unemployment  rate  has  dropped  from  9.0  to  7.7  percent  since  January 2011, too many Ohioans are still unemployed. We’re  making  progress  but  Ohio  still  has  a  lot  of  work  to  do.    To  further efforts to recreate a jobs-friendly climate in Ohio—efforts that started last year with his Jobs Budget and other policies—Gov. John Kasich initiated a comprehensive review of state government management, operations and policies in key areas. Referring to this process as the Mid-Biennium Review (MBR), because it came half-way  through  Ohio’s  two-year budget cycle,  Gov.  Kasich  worked  with  his  cabinet  and  staff  to  develop  new  strategies  that  improve  the  management  of  Ohio’s  government agencies and health systems, improve  Ohio’s  education  and  workforce  development  efforts,  and  improve  Ohioans’  access  to  low-cost, reliable energy. Ohio’s  economy—especially our large manufacturing and agriculture sectors—depends on access to reliable, diverse and low-cost energy. With no federal energy policy to rely on and continued uncertainty in the Middle East, Gov. Kasich and his staff began working with energy stakeholders—from energy producers to environmentalists to energy consumers—to develop a comprehensive energy policy for Ohio that  would   encourage  economic   growth.     The  Governor’s   21st Century Energy and Economic Summit was held in September 2011, and out of that summit came ideas and strategies the governor’s  policy  team  used  to  build  a  comprehensive  energy  policy  that  rests  on 10 pillars. The pillars below comprise the governor’s   energy   policy   for  Ohio—ideas to support a diverse mix of reliable, low-cost   energy   sources   that  meet  Ohio’s  continuing job-creation needs. PILLAR 1—SHALE: Ensuring Resources Benefit All Ohioans, Modernizing Antiquated Regulations Recent advancements in technology have allowed previously unattainable natural resources found in shale to now be extracted. The governor believes all Ohioans should benefit from the natural resources housed beneath our state, and it is equally as important to put necessary precautions in place to ensure public safety.

Modernizing  Ohio’s  Oil  and  Gas  Tax  System  to  Provide  Income  Tax  Cuts  for  All  Ohio  Taxpayers: The first comprehensive  update  of  Ohio’s  severance  tax  structure in more than 40 years is necessary to keep pace with new technologies  and  will  ensure  that  new  revenue  from  Ohio’s  shale  oil  and  gas  production  goes  to  Ohio  taxpayers  through  state income tax reductions. [See separate fact sheet] Modernizing Regulations While Promoting Job Growth: Health and environmental regulations must be updated to account  for  changes  in  Ohio’s  new  shale  industry,  and  must  strike  a  critical  balance  between  needed  protections  and  creating a jobs-friendly environment. Several state agencies impact this industry, and regulatory updates include: • Ohio Dept. of Natural Resources (ODNR): Well construction standards and other regulations are being updated to

meet the new demands and technologies of shale development. Chemicals used in the well development process must be disclosed to regulators.

• Public Utilities Commission of Ohio (PUCO): The Pipeline Safety Division will update regulations for construction, inspection, and safety of new high and low pressure natural gas gathering lines,

Mid-Biennium Review |  Ohio’s  21st Century Energy Policy 2

• Ohio EPA (OEPA): o Encourage wastewater treatment and recycling technologies to conserve water resources and to assist with

managing water from oil and gas fracturing activities and reduce our reliance on our network of underground injection wells,

o Issuance of general permits to streamline the lengthy EPA permitting process needed for oil and gas operations, and ensure permits are protective of health and the environment. These permits are just as protective but can be issued in a matter of days versus several months,

• Commerce: Consolidate and streamline review of structures at well sites for gas processing facilities and fractionation facilities that need local review and inspections for construction and occupancy. Local counties do not generally have needed expertise and a statewide review by Commerce will ensure consistency,

• Taxation: To cover impacts from drilling, oil and gas companies will pay an upfront fee of $25,000 per well to local government. These dollars will be provided before the majority of impacts occur so local governments have the resources needed to offset impacts. Oil and gas companies will get this money back over time. This change is revenue neutral—it is not a tax—it is simply delivering funds to locals more quickly than the current system allows,

• Ohio Dept. of Transportation (ODOT): Developed a model road use agreement for counties and townships to use with oil and gas companies to determine what roads will be used, what and how these roads will be maintained, and who will pay for road maintenance. ODNR will verify if this agreement is in place as part of the permit process to receive a permit to drill any new oil and gas well.

PILLAR 2—GENERATION: Ensuring Ohio’s Generation Capacity and Investing in New Technologies Ensuring Ohio businesses and citizens have the energy they need is key to a strong economy, and this starts with generation of that energy. The OEPA will work with the PUCO to:

Review and pilot new generation and efficiency technologies (ex: Smart Grid) Expand customer choice for renewables Assess federal EPA impacts on future generation and transmission Advocate for reforms to expand the reliability pricing model

PILLAR 3—ELECTRICITY TRANSMISSION & DISTRIBUTION: Meeting Needs of Industry and Consumers A major factor in job creation is getting energy where it needs to be so companies can operate efficiently and at a low cost. To  ensure  Ohio’s  transmission  infrastructure  meets  these  needs,  particularly  for  the  development  and  expansion  of  the  shale industry in eastern Ohio, the PUCO will be authorized to:

Review transmission infrastructure in the Ohio shale region to ensure transmission and distribution are adequate, Assess and recommend changes in the transmission and distribution system that would make the development of

renewable energy in Ohio more accessible and cost effective. PILLAR 4—COGENERATION / WASTE HEAT RECOVERY: Capturing Waste Heat to Make Green Energy Turning  otherwise  wasted  byproducts  into  usable  energy  makes  sense  if  it’s  cost  effective.    To encourage efforts to recover waste heat and identify cogeneration as an appropriate technology, the following policy changes are proposed:

Allow cogeneration to qualify as a renewable energy source in Ohio, Allow all Ohio electric utilities to use cogeneration to meet alternative efficiency standards, Revamp the Energy Loan Fund to place more focus on energy efficiency and alternative fuels, Require the Ohio Dept. of Administrative Services (DAS) to review cogeneration as part of new construction and

major renovations in state facilities. PILLAR 5—WORKFORCE TRAINING: Aligning Industry Needs with Worker Training

Mid-Biennium Review |  Ohio’s  21st Century Energy Policy 3

Matching  the  skills  of  workers  with  the  demands  of  the  energy  industry  is  a  crucial  part  of  Ohio’s  energy  policy.    By  providing a skilled workforce to the industry, Ohio will be in a better position to attract business and jobs over neighboring states with comparable natural resources and logistical advantages. Workforce strategies include:

Investing in shale and energy industry training o Zane State: $6M proposed in Capital Budget to construct new training space o Stark State: $10M proposed in Capital Budget to construct indoor drill training rig o Nabors Drilling: State assisting with site selection to build oil and gas training rig

Creating a website linking Ohio companies with a trained workforce Working with companies to develop training credentials to ensure skills match demand Linking veterans and minorities with jobs specific to oil and gas industry

PILLAR 6—CNG/ALTERNATIVE FUELS: Promoting the Use of Natural Gas Alternative fuels have the potential to reduce our reliance on foreign energy sources. In order to encourage examination and  adoption  of  alternatives  fuels,  the  Governor’s  Office,  PUCO  and  ODOT  will:

Sign an agreement with other states to develop regional Compressed Natural Gas (CNG) refueling infrastructure and promote the usage of CNG vehicles in Ohio (signed on 2/29/2012),

Assess converting all or part of the state fleet to CNG, Develop flexible revolving loan fund for alternative fuels (CNG, biodiesel and ethanol).

PILLAR 7—ENERGY EFFICIENCY: Promoting Efficiency to Save Resources Promoting efficiency and maximizing our energy resources will help offset rising energy prices. DAS and the PUCO will work to:

• Improve state building efficiency and finance through Air Quality Development Authority, • Identify new efficiency technologies and programs available to Ohio, • Determine standards for state fleet vehicle replacement to increase efficiency, • Review utility green pricing programs and expand customer choice.

PILLAR 8—COAL: New Opportunities for a Critical Resource Ohio  is  rich  with  coal,  and  it’s  a  critical  resource  for  our  state’s  energy  needs.    However,  it’s  important  that  we  pursue  new technologies  that  reduce  coal’s  impact  on  the  environment. The energy policy proposes:

• $30M for coal research projects on carbon capture, sequestration, enhanced oil recovery, and new technologies, • Streamlining and simplifying permit process for coal companies, • Exempt coal combustion waste from additional fees and encourage solid waste landfill management.

PILLAR 9—REGULATORY REFORM: Streamline and Expedite Environmental Permits Smart regulation is necessary but the process by which businesses must comply with these regulations should be simple to understand and navigate. The OEPA will:

• Develop  and  issue  “general  permits”  for  business  to  minimize  lengthy  permit  review, • Request federal wetland permitting program authority to eliminate duplication with state program.

PILLAR 10—RENEWABLES: Promoting Renewables for a Balanced Energy Portfolio Pursuing  reliable  and  cost  effective  renewable  energy  sources  is  the  final  piece  of  Ohio’s  comprehensive  energy  strategy.    The PUCO will:

• Develop flexible revolving loan fund for alternative fuels, • Revamp the Energy Loan Fund to help finance energy efficiency and renewable energy projects, • Identify and address interconnection challenges to renewable energy projects,

Mid-Biennium Review |  Ohio’s  21st Century Energy Policy 4

• Review utility green pricing programs and expand customer choice. BOTTOM LINE: In order to ensure economic stability and move toward energy independence, Ohio must develop a comprehensive energy policy that includes a diverse mix of sources available at a low cost. By utilizing partnerships between the government, industry leaders, the education system, and environmental advocates, as well as by using new technologies and applying appropriate regulatory oversight to ensure public safety, Ohio can lead the nation with a complete energy  policy  while  maintaining  Ohioans’  historical  common  sense  stewardship  of  the environment.

###

D

PITTSBURGH OFFICE

412.355.8906 TEL

412.355.6501 FAX

walter.bunt@klgates.com

Walter A. Bunt, Jr.

AREAS OF PRACTICE

Mr. Bunt’s primary role is as trial counsel for corporate clients. For over 30 years, he has represented natural gas and coal bed methane producers, pipeline companies, natural gas reservoir operators and utilities with their major energy litigation. He has litigated cases involving lease disputes, development obligations, eminent domain, royalty class actions, ejectment, quiet title, right of ways, land use, coal bed methane, natural gas reservoirs, salt-dome storage, pipeline explosions, residential explosions and fires, public utility litigation, personal injury and commercial property damage matters. Mr. Bunt has tried cases in numerous Federal District Courts, Pennsylvania Common Pleas Courts, other state’s trial courts and before administrative and arbitration tribunals.

PROFESSIONAL BACKGROUND

Prior to practicing at K&L Gates, from 1976 to 1982, Mr. Bunt served as Executive Assistant to the District Attorney for Allegheny County. His responsibilities included District Attorney office administrative activities as well as trying numerous felony/misdemeanor criminal jury and non-jury cases.

Mr. Bunt also served as a part-time instructor at the University of Pittsburgh and has taught at other colleges and universities in western Pennsylvania.

PROFESSIONAL/CIVIC ACTIVITIES

Allegheny County Bar Association (Civil and Public Utilities Sections) American Bar Association Pennsylvania Bar Association (Civil and Public Utilities Sections) BTI Client Service All-Star - 2007

COURT ADMISSIONS

U.S. Supreme Court U.S. Third Circuit Court of Appeals U.S. District Court, Western District of Pennsylvania United States Tax Court Pennsylvania Supreme Court

BAR MEMBERSHIP

Pennsylvania

EDUCATION

J.D., Duquesne University Ph.D., University of Pittsburgh M.A., University of Pittsburgh B.A., The Citadel

K&L Gates LLP

Walter A. Bunt, Jr.

K&L Gates LLP

RECOGNITIONS AND AWARDS

Received Martindale- Hubbell’s® AV® Preeminent™ peer review rating The Best Lawyers in America® for Commercial Litigation (2012)

GRANTS AND SCHOLARSHIPS

von Humboldt Fellowship, Bonn University Fulbright Travel Grant Salzburg Seminars Fellowship, Salzburg, Austria

HARRISBURG OFFICE

717.231.2892 TEL

717.231.4501 FAX

peter.gleason@klgates.com

Peter A. Gleason

AREAS OF PRACTICE

Mr. Gleason concentrates his practice as Pennsylvania and federal legislative and regulatory policy counsel. Building on his experience with the Office of the Governor in Pennsylvania, the Pennsylvania General Assembly and the United States Congress, Mr. Gleason has a unique perspective on and an understanding of the legislative and administrative processes, and an insider’s view of the political considerations and other motivations that drive those processes. He currently represents a diverse client base, including prominent leaders within industries such as: manufacturing, rail freight transportation, natural gas production, energy policy, financial services, emerging growth and high tech, health care and retail. In 2010, Mr. Gleason was also selected to serve on Governor Tom Corbett’s Transition Team.

PROFESSIONAL BACKGROUND

Prior to joining K&L Gates, Mr. Gleason served in Pennsylvania Governor Mark Schweiker’s Cabinet as Secretary for Legislative Affairs. In that capacity, he advised the Governor, the Governor’s senior staff and fellow cabinet secretaries on legislative, regulatory and policy matters affecting all agencies under the governor’s jurisdiction. On his departure from state government, Governor Schweiker had this to say about Mr. Gleason:

“Pete Gleason has been a vital advisor to me, and a trusted liaison with the General Assembly. He helped my Administration win passage of many historic pieces of legislation, including reforms to Pennsylvania’s Medical Malpractice and Joint and Several Liability laws, not to mention the 2002-03 Budget – one of the most difficult budgets in Commonwealth history.”

From 1997 to 2001, Mr. Gleason had served as deputy secretary for legislative affairs with the office of the governor in Pennsylvania. He worked with former Governor Tom Ridge until his appointment as director of Homeland Security.

During his tenure with the office of the governor, as the Governor’s liaison to Pennsylvania General Assembly legislative leaders and committee chairs, Mr. Gleasonplayed an integral role in the enactment of the following legislative initiatives:

The 2002-03 General Fund Budget (in the wake of a structural deficit in excess of $1.4 billion dollars).

All legislative tax policy matters; including several significant amendments to the Public Utility Realty Tax Act (PURTA), changes to the Corporate Net Income Tax (CNIT), the phase-out of the Capitol Stock and Franchise Tax (CSFT) and changes to the state Sales Tax.

The creation and expansion of Keystone Opportunity Zones (KOZ), Enhancement Zones (KOEZ) and Improvement Zones (KOIZ)..

Historic reforms to Pennsylvania’s Medical Malpractice and Joint and Several Liability laws.

The enactment of the Commonwealth’s Procurement Code.

K&L Gates LLP

Peter A. Gleason

K&L Gates LLP

Natural Gas Deregulation. The Uniform Electronic Transactions Act. Land Use Reform (“Growing Smarter”). The Environmental Stewardship Act (“Growing Greener”). The Uniform Construction Code. Workers’ Compensation Reform.

Mr. Gleason’s past positions also include director of legislative affairs at the Pennsylvania Department of Labor & Industry, special projects director to the Republican Leader of the Pennsylvania House of Representatives, and special assistant to former United States Senator John Heinz.

In 2008, Pennsylvania Report named Mr. Gleason as one of Pennsylvania’s “Top 100 Most Influential People,” in a list comprised of the 100 people most likely to have an impact on government and politics in Pennsylvania in 2008. In a 2004 poll conducted with state legislators, staff, lobbyists and other state policy stakeholders, he was named as “Most Effective Lobbyist” in Pennsylvania. Mr. Gleason was recently honored by the Pennsylvania Law Weekly and the Legal Intelligencer as one of forty lawyers under forty “On the Fast Track” for his work at K&L Gates and in the office of the governor.

REPRESENTATIVE EXPERIENCE

Oil & Gas Legislative and Regulatory Policy: Representing several natural gas producers operating within the Marcellus Shale on legislative and regulatory policy matters pending within the PA General Assembly and numerous regulatory agencies with oversight for Marcellus Shale activities.

Competitive Industrial Electric Rates: Assisted large manufacturing clients in enacting legislation permitting large industrial customers to negotiate competitive rates with incumbent electric utilities, paving the way for significant, historic capital investments by those customers.

Economic Development Incentives: Secured tens of millions of economic incentives for clients seeking to make large capital investment and significantly increase jobs in the Commonwealth, including grants and low interest loans, transportation assistance, rail capital and community development funds.

Business Tax Reform: Successfully led a large coalition of manufacturers and high/bio tech companies to secure dramatic statutory changes in Pennsylvania’s Corporate Net Income Tax structure that had penalized companies for increased capital and employee investment in the Commonwealth.

Tax Free Zones: Successfully assisted large manufacturing client with the enactment of legislation creating several state and local tax free zones throughout Pennsylvania to facilitate business expansion and relocation.

Civil Justice Reform: Successfully represented several clients in passing legislation repealing the doctrine of joint & several liability in Pennsylvania.

Procurement Bid Protests: Managed several, successful bid protests on behalf of clients that wanted to pursue a protest without jeopardizing agency relationships.

Health Care: In separate matters, successfully represented several hospitals and

Peter A. Gleason

K&L Gates LLP

the pharmaceutical industry in reversing or mitigating proposed agency recommendations that would have caused significant harm to those clients.

PROFESSIONAL/CIVIC ACTIVITIES

Supreme Court of Pennsylvania Dauphin County Bar Association Pennsylvania Bar Association Chairman of the Board of Directors: The Bridge Educational Foundation Board of Directors: The Country Club of Hershey Derry Township Planning Commission

PRESENTATIONS

“Procedural Pitfalls in the Legislative Process,” presented in the Governor’s “Office of General Counsel University”

“Lobbying Disclosures and the Pennsylvania Ethics Act,” presented to the Cumberland County, PA Inn of Court.

“Interaction with the Legislature by Government Attorneys,” presented to the Governor’s Office of General Counsel.

BAR MEMBERSHIP

Pennsylvania

EDUCATION

J.D., Widener University School of Law, 1995 B.S., Arizona State University, 1989

Phil Reale Attorney and Government Relations Consultant Philip A. Reale, PLLC Phil Reale is an attorney and government relations consultant who has vast experience in oil and gas matters as both an attorney and as lobbyist for the industry. He is a 1977 graduate of the West Virginia University College of Law and upon graduation engaged in the general practice of law in the natural gas producing region of central West Virginia, including a period between 1982 and 1988 as general counsel for Waco Oil and Gas Company in Glenville, West Virginia. During that time he became an active member of the Independent Oil and Gas Association of West Virginia, including one term as president of the organization and at all times an effective coordinator of public policy and legislative affairs for the industry in West Virginia. In recent years he has served as lobbyist for both the Independent Oil and Gas Association of West Virginia and the West Virginia Oil and Natural Gas Association. He serves on the Board of Directors of Alliance Petroleum Corporation, an exploration and production company with operations in Ohio, West Virginia and Pennsylvania. In 1988, he chaired the transition team for incoming West Virginia Governor, Gaston Caperton and ultimately served the new governor as his Chief of Staff, a role that led him into a career of helping guide clients through legislative and government processes. He has served the state in a variety of capacities including that of its representative to the Interstate Oil and Gas Compact Commission for which he served as its Vice Chairman. Additionally, he Co-Chaired the Higher Education Advocacy Team and championed a higher education reform effort, served two terms as Chairman of the State College System of West Virginia Board of Directors, served on the West Virginia Judicial Investigation Commission, served on the West Virginia Educational Broadcasting Authority, served on the West Virginia Prepaid College Tuition Trust Fund Board of Directors, and has held offices in the West Virginia Democratic Party and served as the first Chairman of the WV Democratic Legislative Council. He is the recipient of two Distinguished West Virginian Awards of Public Service. On the charitable side of the ledger, he has served as Chairman of Special Olympics of West Virginia, been an avid supporter of youth athletics, is the Chairman of the West Virginia Golf Hall of Fame, a member of the West Virginia Golf Association Executive Committee and a member of the Board of Directors of the West Virginia Golf Foundation. He is married to his wife of nearly 37 years, the former Terry Smith of Vienna, West Virginia and has two sons, namely Philip A. Reale, II who practices law in Charleston, West Virginia and Patrick Anthony Reale, who currently works and lives in Greenville, North Carolina where he is attending law school.

K&L Gates LLP

Jim Samuel Principal/Founder Capitol Integrity Group, Ltd. Mr. Samuel founded Capitol Integrity Group, Ltd. in 2005 as a strategic policy development and communications consultancy whose clients include public and private corporations, government agencies, institutions of higher education, business associations and non-profit entities. Mr. Samuel provides clients with strategic guidance, cultivated resources, and a comprehensive approach focused on issue management, public perception and political forces. He has unique insight and knowledge of complex governmental and business structures serving in executive management positions at five cabinet-level agencies in the administrations of two Ohio Governors. Mr. Samuel has served as a key policy strategist, chief spokesman, principal legislative agent and crisis coordinator. Mr. Samuel is a Fellow of Cleveland State University’s Maxine Goodman Levin College of Urban Affairs and served as a co-author of Driving Ohio’s Prosperity, a strategy document for Ohio’s automotive and advanced manufacturing sector and as an advisor on An Analysis of The Econmic Potentital for Shale Formations in Ohio. He serves as a member of the Columbus Chamber Government Affairs Steering Committee and on the Board of Directors of the Ohio League of Conservation Voters and the Nemacolin Energy Institute. Previously he served as Vice President of CompeteColumbus. Prior to founding CIG, Mr. Samuel served the Governor of Ohio personally as Executive Assistant for Business & Industry, the primary advisor and liaison between Ohio’s business community and the Office of the Governor; providing policy review, recommendations and advice. Mr. Samuel also served as the governor’s primary liaison to seven cabinet agencies and two commissions: the Public Utilities Commission of Ohio, the Departments of Development, Transportation, Taxation and Agriculture, the Bureau of Workers’ Compensation, the Industrial Commission of Ohio, the Ohio Turnpike Commission and the Ohio Expositions Commission. Mr. Samuel led successful efforts to achieve lawsuit and workers’ compensation reforms, the creation of the Ohio Business Development Coalition, and served as the lead in responding to numerous energy policy matters, reliability and industry crisis response issues, including the Blackout of 2003. He also led state preparation efforts for the 2005 DoD Base Realignment and Closure review. His tenure was highlighted by the passage of historic tax reform legislation for which he was recognized at the highest levels as being instrumental to the success with reforming Ohio’s antiquated tax system. Immediately prior to his appointment to the Governor's Staff, Mr. Samuel served eight years as Deputy Administrator & Chief of Corporate Affairs for the Ohio Bureau of Workers' Compensation, at the time the largest single-line insurer in the nation with more than $22 billion in assets. Mr. Samuel’s work has been recognized with awards from the Public Relations Society of America, Bulldog Award for Crisis Communications and induction as an Ohio Commodore. Jim is a native of Northeast Ohio and began his career working in a family printing business in downtown Cleveland. He graduated from The Ohio State University with a degree in Social & Behavioral Sciences and received an honorable discharge from the United States Air Force. Jim lives in central Ohio with his wife Heidi and their two children. He contributes time to his community as an active and involved father to his two children and as a member of the School Advisory Board for St. Catharine School.

K&L Gates LLP

E

PUBLIC POLICY AND LAW: SHALE GAS DEVELOPMENT

The K&L Gates oil and gas team has profound experience helping natural gas

producers in the major U.S. shale plays—including the Marcellus, Barnett, and

Haynesville—navigate through the threats and opportunities posed by local,

state, and federal policy.

We assist our clients in the legislative and regulatory processes by helping them understand what motivates legislators and by actively seeking solutions to meet our clients’ public policy needs. Our public policy professionals closely coordinate with lawyers in our Austin, Dallas, Fort Worth, Harrisburg, Pittsburgh, and Washington, D.C. offices who are involved in regula-tory, enforcement, and litigation matters on behalf of the industry. Our team is deeply involved with and has decades of experience working with legislative leaders, committee chairs, rank-and-file lawmakers, state regulators, and the Governor’s offices in key states. We also work with federal

Our team members are highly effective in developing public policy strategies drawing on their prior experience in both industry and government. Various team members have held senior positions in both industry (for example, as Senior Government Affairs Representative for Amoco Corporation) and in the legislative and executive branches of the federal and state governments. Our team includes past members of Congress from the U.S. Senate (including Chair of the Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies which has jurisdiction over lands issues) and the House (including a 20-year veteran of Congress representing a district within the Marcellus Shale area and a past Chair of four House Appropriations Com-mittees), as well as senior staff in Congress such as a Chief Tax Counsel for the U.S. Senate Finance Committee, Chief Counsel for the Senate Environment Committee, and professional staff of the Energy and Environment Subcommittee of the U.S. House Committee on Science and Technol-ogy. Others bring strong executive branch experience, including an Associate General Counsel for the U.S. Environmental Protec-tion Agency and senior political appointees in the U.S. Department of Energy.

“We assist our clients in the legislative

and regulatory processes.”

officials in Congress and with federal agencies, such as the Department of Energy, the Department of the Interior, the Environmental Protection Agency, and the Federal Energy Regulatory Commission, on the development of regulatory policies of national and regional significance, as well as effectively resolving individual permitting and enforcement disputes. This allows K&L Gates to be uniquely positioned to offer clients a coordinated strategy between their legal and policy priorities. We are prepared to develop a strategic public policy plan based upon client substantive priorities and preferred public profile—high, medium or low.

Our ExperienceWe are versed on the following federal and state policy proposals important to the development of the main U.S. shale plays:

Federal

• EPA Proposed GHG Endangerment Finding, and prospects for federal regu-lation of CO2 and with consequences for shale extraction and natural gas.

• The Ozone Transport Commission (OTC).

• Clean water act stormwater permitting rules for oil and gas sites.

• Federal climate change legislation, specifically amendments to promote natural gas relative to other fossil fuels which have larger carbon footprints.

• Energy Reauthorization and Natural Gas Promotion Legislation.

• Fossil Energy Grant Funding and Programmatic Support from the Department of Energy, including support from DOE’s Fossil Energy Office and the National Energy Technology Laboratory.

• Appropriations for technology develop-ment in fossil energy and working with key Congressman and Senators who serve on the relevant Appropriations Subcommittees.

• Support from the Department of the Interior on federal lands and mining issues related to health and safety and reclamation.

• Federal Safe Drinking Water Act’s Underground Injection Control (UIC) regulations and potential legislation that would repeal an exemption from UIC regulation provided for injection for fracture stimulation.

State

• New Yorko NY’s Supplemental Generic

Environmental Impact Statement and evolving regulatory program for shale gas development

o Water resource impact concerns surrounding the NYC water supply system

• North Carolinao Legislative and regulatory counseling

— Development of shale gas regulatory

o State and Local Tax Issues

—Authorization for severance tax

—Local property tax issues

o Local Government Land Use Issues

—Zoning

— Special use permits and approvals

o Environmental Regulation

—Water supply issues

—Wastewater management

— Sedimentation and erosion control

—Stormwater management

• Pennsylvaniao State and local tax issues

—Severance tax

—Local property assessment

—Clean & Green “fix”

o Legislative reaction/solutions to litigation threats

— Minimum Royalty Act/post-production cost deductions

— Local government zoning/preemption

— State parks, forest and game commission activities

o Gas Well Development Regulation

— Surface owners rights

— Well reporting data

— Water well protection/testing

— Act 214 spacing (coal resource and gas well coordination)

— Conservation Act spacing

— Pooling proposals

o Transportation/infrastructure issues

— PUC gathering lines/pipeline enforcement proposal

— Road bonding and repair

o Environmental legislation and regulations

— Proposed wastewater treatment and TDS standards

— Erosion, sedimentation, and stormwater regulatory changes

— River Basin Commission regulatory programs

• Texaso State and local tax issues

— Severance

— Property taxes and situs issues

o Legislative initiatives and surface owner issues

— Municipal ordinances

— Trucking restrictions

— Restrictions on hours of operation

— Well site locations and restrictions

— Pipeline rights of way and eminent domain

o Agency Initiatives

— Benzene regulation and pos-sible application of Title V to oil and gas operations

— Bonding requirements

— Fresh water usage10

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Learn more about our Shale Gas Development practice at klgates.com.

NewarkJohn F. Spinello

+1.973.848.4061

john.spinello@klgates.com

RaleighAmy H. Fullbright

+1.919.743.7352

amy.fullbright@klgates.com

Washington, D.C.Tim L. Peckinpaugh

+1.202.661.6265

tim.peckinpaugh@klgates.com

Contacts:

AustinJack M. Erskine

+1.512.482.6875

jack.erskine@klgates.com

HarrisburgPeter A. Gleason

+1.717.231.2892

peter.gleason@klgates.com