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EQB To Consider Significant Increase In Unconventional Oil & Gas Permit Review Fee May 16

On May 16 the Environmental Quality Board will consider a proposed regulation increasing permit review fees for unconventional oil and gas drilling by more than two-and-a-half times.

DEP is proposing to increase unconventional well permit fees from $5,000 for nonvertical unconventional wells or $4,200 for vertical unconventional wells to $12,500 for all unconventional well permit applications.

“Although unconventional well permit application numbers are down from original estimates upon which current fees were based, Program obligations and operations remain at least static every year, but more typically expand annually due to the additional well inventory, development activity, and the need for guidance and technical tools to stay current.

“In Fiscal Year (FY) 2015-16, permit application fee and Impact Fee revenues totaled $13.9 million, but costs to run the Program exceeded $21.6 million.

“In FY 2016-17 permit application fee and Impact Fee revenues totaled $15.7 million, but costs to run the Program exceeded $22 million.

“The fee/costs differential has been covered by the Well Plugging Fund reserves.

“The Oil and Gas Program projects further increasing costs with declining revenues in future fiscal years, making the Well Plugging Fund insolvent by FY 2019-2020.

“In response to declining Well Plugging Fund balances, the Oil and Gas Program reduced staff over the past few years from 226 employees to 190 employees today.

“The Oil and Gas Program also reduced operating costs by 38 percent. Operating expenses only account for 10 percent of total program costs, therefore any future cost savings would primarily come from a reduction in staff.

“At the current disparity between fee revenues and expenditures, the Oil and Gas Program would need to reduce its complement by almost 70 additional positions to make up the difference.”

DEP provided the EQB with an overview of the financial condition of the Oil and Gas Program at its April 17 meeting.

In January, Gov. Wolf and DEP also announced a series of initiatives to eliminate well permit backlogs and streamline the permitting process. A Permitting Reform White Paper released at that time noted the need to increase permit review fees to $12,500.

DEP also noted in its Executive Summary of the proposal to the Board for this meeting, it had consulted with the Oil and Gas Technical Advisory Board during three meetings in July and October of 2017 and February of 2018.

Also on the EQB agenda are proposed updates to Pennsylvania’s regulations governing surface coal mining operations required by the federal Office of Surface Mining Reclamation and Enforcement.

The meeting will be held in Room 105 of the Rachel Carson Building starting at 9:00 a.m.

For more information and available handouts, visit the Environmental Quality Board webpage. Questions should be directed to: Laura Edinger by calling 717-772-3277 or sending email to: ledinger@pa.gov.

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