Acting DEP Secretary John Quigley told the Senate Appropriations Committee Wednesday Pennsylvania is not meeting its commitments to clean up the Chesapeake Bay Watershed and that a “reboot” is needed to get the program back on track.

He said there is a lack of resources for the program and he is working directly with Acting Agriculture Secretary Russell Redding to take a fresh look at the program.

Sen. Gene Yaw (R-Lycoming), Major Chair of the Senate Environmental Resources Committee, expressed skepticism about the need for funding wind mill and solar projects when they cannot economically stand on their own without taxpayer support.

He said Pennsylvania would be better off to devote those resources to cleanup the Chesapeake Bay Watershed.

Asked about the need for 50 additional staff for the Oil and Gas Program as proposed in the Governor’s budget, Quigley said DEP is now inspecting each of the Marcellus Shale wells twice when they should be getting to each well six times during critical parts of the drilling process.

Quigley noted, as he has in the past, over the last six years DEP has lost 14 percent of its employees and the agency has been “hollowed out,” compared to the average staff reductions of 6 percent in other state agencies.

In response to a question from Sen. Yaw, Quigley said he would consider an extension of the public comment period for the Chapter 78 and Chapter 78A proposed final drilling regulations.

Dana Aunkst, DEP Deputy Secretary for Field Operations, accompanied Quigley to the budget hearing

Many of the questions asked at the Senate budget hearing were discussed previously in the House budget hearing  March 11.  Here’s a summary of some of the key issues brought up during the hearing.

-- Chesapeake Bay Watershed Cleanup: Sen. Judy Schwank (D-Berks), Minority Chair of the Senate Agriculture and Rural Affairs Committee, asked what the follow up will be to the U.S. Environmental Protection Agency report on agriculture programs needed to cleanup the Chesapeake Bay Watershed. 

Quigley said Pennsylvania is not on track to meet the Chesapeake Bay cleanup milestones for nitrogen and sediment.  There is also not enough funding for the effort.  He said he is working with Russell Redding, Acting Agriculture Secretary, to reboot the whole program.

Quigley said they need to reach farmers with technical help and incentives to put best management practices on the ground.  It’s also about counting what we are now doing, he added, and getting more boots on the ground to deal with this issue.

[In fact, Pennsylvania has just 641 days to install the practices to meet the 2017 Chesapeake Bay cleanup milestones.]

-- Chesapeake Bay Watershed: Sen. Yaw noted the Governor’s proposal included more funding for solar and wind power projects that could not exist on their own without taxpayer support, and suggested Pennsylvania would be better off to devote those resources to cleanup the Chesapeake Bay Watershed.

In response to a follow-up question from Sen. Yaw about how to get more resources to cleanup the watershed, Quigley said all options are on the table, but technical assistance are a big part of responding to this issue.

--Natural Gas Severance Tax: Sen. Yaw asked where the floor price of $2.97 of natural gas came from in the Governor’s severance tax proposal.  He said the price of natural gas is $1.20 or a little more now. Quigley said that was the minimum amount needed to yield the funding Gov. Wolf thought was necessary to properly fund education. 

Quigley added that he thought the price of natural gas had no where to go but up, noting that the 12 or so proposed major pipeline projects will result, when built, in increased use and availability of natural gas.  He noted in his meeting with Sen. Yaw he said DEP would do what it can to shepherd these projects through the process.

Sen. Yaw later commented that Pennsylvania was actually leading the nation by adopting the Act 13 drilling impact fee and other states are missing out with the severance tax.

 -- Severance Tax Would Caused 15 Percent Increases In Taxes: Sen. Randy Vulakovich (R-Allegheny) said there has been an estimate the severance tax proposal would increases taxes on the drilling industry by 15 percent and asked if that is accurate.  Quigley said he was not familiar with the 15 percent number, but the intent is to model the proposal after the tax imposed by West Virginia.  Sen. Vulakovich commented he thought it is the wrong time to put a tax on the industry and Pennsylvania needs to look at the big picture.

-- Capping Local Share Of Impact Fees: Sen. Kim Ward (R-Westmoreland) commented that the cap on local grants in the Governor’s severance tax proposal is like a taking, taking it away from areas of the state where drilling is occurring to other areas of the state. Quigley said the intent was to cap the funding at the highest level and provide funding for education programs.

-- Prohibiting Passing On Severance Tax To Landowners: Sen. Lisa Baker (R-Luzerne) said the oil and gas leases she has reviewed call for a portional share of any taxes between and landowner and drillers, inspite of the provisions in the Governor’s severance tax proposal for the landowner not to pay the tax.

Quigley said DEP was not involved in drafting the severance tax proposal and deferred to the Department of Revenue on that issue, but the intent is to protect landowners.

-- Additional Oil And Gas Staff: Sen. Yaw asked what the 50 new positions DEP proposes in the budget will be doing related to the Oil and Gas Program.

Acting Secretary Quigley said right now the average well is inspected twice and the additional staff would be used to increase the well inspections to six times per well.

Sen. Yaw said the number of drill rigs is now down by about one-third and asked why additional inspectors are needed.  Quigley said the number of wells drilled in Pennsylvania have actually increased. In 2013 were 1,207 wells were drilling and in1,372 in 2014. 

Sen. Ward asked if there have been any instances of things “slipping through the cracks” in oil and gas well inspections that required the increase in staff.

Quigley noted over the last six years DEP has lost 14 percent of its employees and the agency has been “hollowed out,” compared to the average staff reductions of 6 percent in other state agencies.  He said they took a look at what their needs were in the Oil and Gas Program and made a recommendation based on that need.

In terms of environmental impact, Quigley said the number of violations has gone down, and with additional staff DEP can make sure that trend continues.  He added Pennsylvania has the largest number of inspection staff of any state.

-- New Chapter 78 Drilling Regulations: Sen. Yaw said his Committee has not yet received a copy of the changes to the Chapter 78 and Chapter 78A drilling regulations as it was required to receive.  Quigley said the regulatory process is ongoing and a final regulation has not yet been completed. A draft final regulations will go out on April 4 for 30 days of public comment.

Sen. Yaw followed-up by asking if DEP plans a public hearing on the proposal.

Quigley said there are now no plans for a hearing, explaining the proposal will have been out for about 60 days by the end of the planned comment period.  He noted the process started in April 2011 on the regulations and in that timeframe other states have passed new laws and regulations and implemented them. 

He said there is a sense of urgency to get the regulations done.

Sen. Yaw asked DEP to extend the comment period in light of the previous 24,000 comments on the proposed regulation.  Quigley said he would consider it.

-- Conventional Oil And Gas Regulation: Sen. Ward said there are differences between conventional and unconventional (Marcellus Shale) drilling that should be recognized in DEP’s regulations.

Quigley said DEP has differentiated between the two types of drilling and created a special Conventional Oil and Gas Advisory Committee just dealing with conventional drilling.

-- Natural Gas Pipeline Siting: Sen. John Rafferty (R-Montgomery) asked if the $25 million set aside for the “last mile” of natural gas line will involve better communication with landowners on pipeline projects, expressing a concern about communication in existing projects.

Quigley said there will be 25-30,000 miles of natural gas pipelines that will be built over the next few years and noted DEP has created a Task Force to deal with pipeline siting and planning issues much like he did while DCNR Secretary on siting wind farms.

He said he has communicated directly with several pipeline companies, passing along the concern over the apparently lack of communication with landowners and communities.

In response to a follow-up question from Sen. Yaw, Quigley said there is no interest at DEP in taking over the inspection roles of the Public Utility Commission.

Sen. Pat Browne (R-Lehigh), Majority Chair of the Senate Appropriations Committee, underscored the need to deal more effectively with public concerns on the safety of the new natural gas pipelines.  Quigley said safety is not a primary responsibility of DEP, but has met with several pipeline companies and passed along concerns about the need for more community engagement.

-- Health Impacts Of Drilling: Sen. Stewart Greenleaf (R-Montgomery) asked about doing a study of the health impacts of natural gas drilling.  Quigley said the Governor supports the development of a Health Registry and will have discussions with the Secretary of Health and the Physician General on the issue.

-- Crude Oil Train Safety: Sen. Browne asked if DEP is involved in the issue of crude oil train safety.  Quigley noted the Governor has written to the President and the Governor is focused on this issue.  DEP is partnering with the PUC and PA Emergency Management Agency on emergency planning and response to a rail safety issue.

Sen. Browne said Pennsylvania’s rail freight industry has had a comeback and said one of the reasons for downturns in the past were because of government overreach.  He said he hoped DEP and other agencies would respond to specific issues and not overreach.

-- Accuracy Of Oil And Gas Data: Sen. John Blake (D-Lackawanna) noted there have been concerns about accuracy of data on the Oil and Gas Program and asked where that now stands with the agency. 

Quigley said DEP has been doing “heroic work” with inadequate systems and DEP needs to invest more broadly upgrading data management systems.  He said DEP needs to get off paper records and look to develop a strategic IT plan which will not be cheap.  He said one of his objectives is to be able to tell the public what is and is not a real issue.

-- Susquehanna River Impairment: Sen. Rob Teplitz (D-Dauphin) asked if DEP has a different position on the issue of designing the lower Susquehanna River as water quality impaired.

Quigley said he DEP is partnering with the Fish and Boat Commission on a study of the river to determine, based on science, what the status of the river should be.  He said a report and recommendation is due at the end of this year. 

-- Delaware River Basin Commission: Sen. Baker said the budget proposed a $316,000 increase in Delaware River Basin Commission funding and commented some feel Pennsylvania shares an unfair burden on supporting the Commission.

-- Act 162 Stream Buffer Law: Sen. Baker asked who was consulted in developing the technical guidance needed to implement the Act 162 setting new stream buffer requirements which are now out for public comment. 

Dana Aunkst, DEP Deputy for Field Operations,  said DEP was under a 60 day deadline to implement the law and developed the guidance to use until the regulations themselves are changed.

Sen. Baker asked if the waivers now in the regulations would be preserved.  Aunkst said their interpretation of the law is that the law eliminates those waivers by direct action of the law.  Sen. Baker said that is “troubling.”

Sen. Mario Scavello (R-Monroe) asked for a clarification on the elimination of the waivers now in the regulations and Quigley said they were following the letter of the law in developing the implementing guidance, but would like to discuss the issue further.

-- Stormwater/Flooding Improvements: Sen. Matt Smith (D-Allegheny) noted stormwater and flooding issues are a major concern in Allegheny County and noted multi-municipal authorities are a good way to address this issue.  Specifically, he asked about funding for these two programs.

Quigley said DEP is funding some projects “creatively,” but there is tremendous need, especially for stormwater management.  He noted DEP is also now updating the drinking water and wastewater needs report done about five years ago. 

At the end of the day, he said, someone has to pay for infrastructure improvements.  He said DEP is working with Pittsburgh to introduce green infrastructure to address stormwater issues.

-- Abandoned Mine Land Reclamation: Sen. Blake asked about the status of federal funding for abandoned mine land reclamation.  Quigley said DEP is working constantly to make sure Pennsylvania gets the most it can from available federal funding.

-- Old Forge Borehole: Sen. Blake said there is a federal effort to address the pollution coming from the Old Forge Borehole and asked Quigley to support it.

-- EPA Section 111(d) Clean Power Rule: Sen. Elder Vogel (R-Beaver), Majority Chair of the Senate Agriculture and Rural Affairs Committee, asked about the status of Section 111(d) carbon reduction regulation. Quigley said DEP is now designing the public participation/stakeholder process, in response to the law passed last year on the issue to be ready for when EPA finalizes the regulation.  He said Pennsylvania has been selected by the National Governor’s Association to receive additional technical assistance to meet the Section 111(d) requirements.

Sen. Sean Wiley (D-Erie) asked specifically about the deadlines in the Section 111(d) Clean Power rule.  Quigley said the proposed EPA rule requires states to reduce carbon emissions by 30 percent by 2030.  

He said Pennsylvania has to do it our way to protect the coal industry, but we have to look at new technologies to meet the requirement.  Quigley said they are also evaluating tools like the Regional Greenhouse Gas Initiative or other regional mechanisms that might help them comply.

-- Coal Waste Power Plants: Sen. Vulakovich expressed concern about the Section 111(d) Clean Power Plan impact on coal waste power plants.

-- FirstEnergy Coal Ash Disposal: Sen. Vogel asked about the closure of the FirstEnergy Blue Run Coal Ash Disposal Facility and permitting a new disposal facility saying the new facility is needed by the Bruce Mansfield Power Plant.

Quigley said he met with FirstEnergy last week and said DEP is on track to meet the target construction dates laid out by the company.

-- Preserving Coal-Fired Power Plants:  Sen. Vogel asked about protecting coal-fired power plants in Pennsylvania to preserve a vital part of the state’s economy.  Quigley said the Governor is committed to protect the position of coal in generating electricity and to meeting federal air pollution limits in a “Pennsylvania-centric” way.  He also said he was also pursuing initiatives with the industry to perfect carbon capture technology, like he did when he was DCNR Secretary.

-- Anthracite Coal: Sen. David Argall (R-Schuylkill) asked what the state can do better to maintain jobs and protect the environment in the anthracite coal industry, noting Russian and Ukrainian coal could be sold in the United States cheaper than it can be mined here.

Quigley said he had a meeting with anthracite coal industry and heard first-hand about the issues they face and is now in “listening-mode” to see if there are actions the state can take to address the issue.

-- Alternative Energy Proposal: Sen. John Eichelberger (R-Blair) asked for an overview of the alternative energy proposal in the Governor’s budget.

Quigley said the $225 million proposal covers all forms of energy, including the restart of the Pennsylvania Sunshine Program, natural gas “last mile” pipelines and reviving the wind industry.  The proposal looks to capture the economic benefits of the investments as well as the environmental benefits.

Sen. Eichelberger said he does not see the value of wind energy, based on experiences in his district, and said he does not think it is a prudent use of tax money.

-- Capacity Of Windmills: Sen. Vulakovich asked for the generation capacity of windmills.  Quigley said there are 127 windmills in the state that generate enough electricity to serve 350,000 homes.

Sen. Wiley said in the Erie area there is interest in wind energy sources and appreciated the alternative energy initiatives in the Governor’s budget.  Quigley said unfortunately there has not been any major wind farms built in Pennsylvania in the last several years.

-- Green Building: Sen. Matt Smith (D-Allegheny) asked if there is a role for DEP in promoting green building and energy efficiency projects, noting PNC is now completing what it says is the greenest skyscraper in the world.

Quigley said part of the Governor’s budget would support energy efficiency projects.  In addition, DEP is in the process of refocusing and reorganizing its energy programs within the agency.

-- Alternative Fuel/Natural Gas Vehicle Conversions: Sen. Greenleaf asked about alternative fuel and natural gas grant programs.  Quigley said the Alternative Fuels Incentive Grant Program is on-going, but would follow up with more specific information.

-- Brownfields Redevelopment: Sen. Browne said one of the most successful environmental programs in recent years has been the brownfields redevelopment program and asked if DEP would help promote DCED’s Keystone Special Sites Program.

-- Hazardous Sites Cleanup Funding: Sen. Rafferty expressed concern about level funding for the Hazardous Sites Cleanup Program.  Quigley said there will be a question of funding the program in the future with the phaseout of the Capital Stock and Franchise Tax, but for now the proposed funding will cover the costs of the program.

-- Keystone Landfill Expansion: Sen. Blake commented DEP needs to be transparent in the process of considering a Keystone Landfill expansion and asked if the current landfill standards are adequate to the task.

Quigley said the process will be transparent and said he believes the current landfill standards are up to the task.  He said DEP is in the process of scheduling another public meeting on the issue to gather more public comments.   Quigley said the agency is about a year or so away from making a decision on the application.

-- Waste Tire Cleanup: Sen. Argall asked about the status of waste tire dump cleanup in the state. Quigley said DEP has cleaned up 35 million waste tires and is continuing the same level of effort.

-- Agency Complement Fee Supported: Sen. Baker asked about how much of DEP’s staff is supported by fees on the industry, for example the blue stone industry.   Quigley said 21 percent of DEP’s budget is General Fund, 28 percent is federal funding, 51 percent is special funds-- fees, fines penalties.  He noted Water Quality programs are supported by the General Fund and have seen some of the biggest cuts in recent years.

-- Permit Delays: Sen. Eichelberger said he has concerns about permit delays within DEP.  Quigley said the Permit Decision Guarantee Program has resulted in having 92 percent of the permit decisions on time.  He added even if an application is deficient, DEP makes its decisions on time in 82 percent of the cases.  He said his staff is now doing a “deep dive” on how these problems come about and hopes to correct the issues to raise those percentages higher.

-- DEP Inspection Procedures: Sen. Scott Wagner (R-York) made a number of statements during his question time.  For example, said he was opposed to giving DEP any additional inspectors until the agency improves its operations, like making appointments for inspections and upgrading its management procedures.  He noted in 30 years in the waste collection industry he has never had an inspector make an appointment.  He also asked if the inspectors are unionized and how many lawyers DEP has and whether they were unionized.

Quigley noted about 30 percent of DEP staff are unionized, but would have to provide additional information.

-- Relationship With Municipalities: Sen. Schwank asked how DEP would be changing its relationship with local officials.  Quigley noted he is the former mayor of Hazleton and is familiar with many of those issues.  He said DEP has to work with communities as a partner, particularly on Act 537 sewage issues and for stormwater management (MS4), both of which have been “chronically underfunded.”  He noted the example of York County where the county and municipalities have gotten together on stormwater management as a good example of partnership in dealing with water issues.

-- Accommodating Additional Growth: Sen. Browne asked about the capacity of DEP to deal with growing communities through the sewage facilities permitting and other programs.  Quigley said he hopes to move toward all-electronic process of permitting programs, but that will require investment in technology.

-- Poaching Industries By Other State: Sen. Argall noted the Governor of Florida came to Pennsylvania and said he can process environmental permits through his state faster than Pennsylvania.

Quigley said he would like to understand where the Governor of Florida got his statistics because he would stack DEP’s record against Florida’s any day.

Click Here for a copy of Quigley’s written testimony.  Click Here for a summary of the Governor’s proposed environmental budget.

Next Week

The Senate budget hearing for the Department of Agriculture is March 31 at 3:00 and the Department of Conservation and Natural Resources is April 1 at 11:00.

Written testimony and a video of each House hearing will be posted on the Republican House Appropriations Committee webpage.  Information about Senate budget hearings are posted on the Senate Republican Caucus website.

NewsClips:

Counties Seek To Keep Drilling Impact Fee

Lawmakers Dig In On Natural Gas Severance Tax

Marcellus Shale Coalition Blasts Severance Tax

Poll: 59% Of Voters Support Wolf’s Tax Plans, 35% Him

Related Article:

Analysis: PA Environmental Funding: Eat Your Vegetables, Then You’ll Get Dessert

3/30/2015