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Shale Gas Industry Tells House Committee, We Don’t Want Regulatory Relief, We Want Permits On Time

The House State Government Committee held its third hearing Tuesday on the regulatory climate in Pennsylvania, this one focused on potential solutions to regulatory burdens.  However, they were told by the Shale gas industry they don’t want regulatory relief, they just want their permits on time.

Carl Carlson, Range Resources (Shale natural gas driller), said permitting delays and new regulations by DEP are impeding competition with other states in natural gas development.  The drilling industry, he said, needs a constant stream of new permits to keep drilling moving or the investments will go elsewhere.

 “The industry is not looking for regulatory relief from environmental requirements, but more certainty in permit review times,” said Carlson.

Jennifer Hoffman, Huntley & Huntley Energy Exploration, said she has confidence in the professionalism in the staff of DEP and echoed Carlson’s comments on not seeking regulatory relief.

Carlson explained erosion and sedimentation review times differ significantly from DEP region to region, from 90 days in one office to 200+ days in others.  He also said review times for the basic oil and gas well has exceeded the 45 days required in the Oil and Gas Act.

He also noted the number of permits is down significantly from its peak, yet permit review times increase.

Hoffman said there are a number of reasons for differences in review times, including inadequate applications submitted by consultants.

Carlson expressed specific concerns about the potential review times for the proposed GP-5 and GP-5A permit when the existing GP-5 permit covering methane emissions from oil and gas operations exceeds the 30 day limit in the state Air Pollution Control Act.

Larry Schweiger, President & CEO of PennFuture, told the Committee the debate in the General Assembly so far on regulations has missed the mark.  Pennsylvania voters want their air and water resources protected and regulations are needed to do that. 

He said voters have proven this point over and over again by supporting the state constitution’s Environmental Rights Amendments by an overwhelming 82 percent and other environmental initiatives.

Schweiger said Senate Bill 561, now in the Committee, would provide an unconstitutional veto of regulations.  He said House and Senate committees already have oversight responsibilities on regulations through constitutional pathways and Senate Bill 561 is not needed.  (Click Here for more on Senate Bill 561.)

Schweiger said Pennsylvania needs effective regulations on methane emissions and on the conventional oil and gas operations.

He said the bill would put yet another bureaucratic hurdle in the way of adopting regulations.  Pennsylvania already has one of the most byzantine processes for adopting regulations.

Schweiger also noted the General Assembly has used the power of the purse in a punitive way to cut DEP’s staff and resources.  He said these cuts are the reason for permit delays that plague certain areas of the state and have left the agency unable to properly oversee energy development in the state.

Schweiger said these cuts should be the subject of the Committee hearing, not regulations.

George Bedwick, Commissioner on the Independent Regulatory Review Commission, and David Sumner, Executive Director, provided an overview of the existing regulatory review process and background on the enactment of the original Regulatory Review Act of 1982.

Commissioner Bedwick, who noted he was on the staff on the General Assembly when the Act passed in 1982, said, at that time, there was a concern agencies were adopting regulations not in line with statutory direction.

Bedwick said the original Act contained a one-House veto of a regulation that was challenged in Commonwealth Court by the state Department of Environmental Resources [forerunner of DEP] during the Casey Administration saying it was unconstitutional because it violated the separation of powers.

The Court ruled the provision was unconstitutional because the Senate and House have to act as a body and nothing was presented to the Governor for his action as required by the constitution. [DER v. Julielier, 130 Pa.Commw. 124, 567 A.2d 741 (1989)]

The Act was then amended by the General Assembly with the current process which requires the Senate and House to pass a resolution and that resolution has to be presented to the Governor for his action.  The change was adopted prior to a final ruling on the case by the PA Supreme Court which then ruled the case moot because the law was changed. [DER v. Jubelirer, 531 Pa 472 (1992)]

Bedwick said they have seen a consistent decline in the number of regulations presented to the IRRC over the last few years.  There were just 43 final rules last year as opposed to 91 in 2001.  He noted a study recently found Pennsylvania and North Carolina tied for having the regulatory review process with the most opportunity for input in the process.

In response to a question, Berwick and Sumner said the Regulatory Review Act contains a process where anyone can petition the Commission to review an existing regulation.

Bedwick said they do not take a position on legislation, but noted a concern with Senate Bill 561 saying it would lengthen an already long regulatory process.

Kevin Moody, PA Independent Oil & Gas Association (conventional oil and gas drillers), offered his support for Senate Bill 561 which allows the General Assembly to disapprove regulations by taking no action at all.

[Note: In 2016, conventional oil and gas drillers successfully lobbied the General Assembly to pass a law to kill an update of conventional drilling regulations DEP had been working on for five years, even without a process like Senate Bill 561 would enact.]

Paul Brahim, CEO of BPU Investment Management, Inc., provided an overview of the regulatory burden on the financial services industry.

James Broughel, Mercatus Center at George Mason University, repeated the testimony he gave at the Committee’s June 6 hearing recommending a cap on the number of regulations. 

He said at the earlier hearing, a cap could lock in advantages for Pennsylvania, because the state’s regulatory environment actually looks more competitive than neighboring New York and New Jersey.

The cap concept is simply numerical and takes no account of the content of those regulations, statutory direction (state or federal) to adopt a regulation or the benefits or cost of a regulation, much like the Trump Administration’s Executive Order requiring the elimination of two regulations for every new one adopted. 

One member of the Committee-- Rep. Mary Jo Daley (D-Montgomery)-- noted it might be good to adopt the same concept in capping the number of House and Senate bills members introduce, since so few of them ever become law.

David Taylor, President PA Manufacturers’ Association, said the state’s regulatory environment is just as important as tax policy, lowering state spending and preparing a workforce for jobs.

Taylor said no one is saying we should not protect the environment with reasonable regulations.  He said the Commonwealth should be a partner in compliance, because that is the “public good” outcome of regulations.

Government should be required to show the benefits of regulations outweigh the costs to the public, there should be limits set on the cost of complying with a regulation and standards should not be tightened just because “you can measure smaller and smaller particles.”

In response to a question, Taylor said Pennsylvania should follow the actions of the Trump Administration to require review and elimination of regulations.

Darrin Youker, PA Farm Bureau, also submitted written comments to the Committee.

Click Here to watch a video of the hearing.

Follow Up Hearing

The Committee has scheduled a hearing on June 26 to hear comments from entities regulated by the Susquehanna River Basin Commission and concerns about regulatory overreach. Shrewsbury Borough Municipal Building, 35 West Railroad Ave., Shrewsbury, York County. 9:00.

On June 7 the House passed House Bill 922 (Tallman-R-Adams) removing new employees of the Susquehanna River Basin Commission from the state employees retirement system.  (A House Fiscal Note and summary is available.)

The legislation is sponsored by the same House members who have been expressing concerns about the way SRBC is doing its work under its interstate compact.

Rep. Daryl Metcalfe (R-Butler) serves as Majority Chair of the Committee and can be contacted by sending email to: Rep. Matthew Bradford (D-Montgomery) serves as Minority Chair and can be contacted by sending email to:

Related Stories:

House Committee Seeks Ways The General Assembly Can Get More Involved In Regulatory Process

DEP To Senate Committee: Complete Applications, More DEP Staff Keys To Improving permit Turnaround Times

[Posted: June 20, 2017]


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