On January 18, DEP Executive Deputy Ramez Ziadeh outlined the agency’s 2022 priorities to DEP Citizens Advisory Council, including finding a stable source of revenue to increase funding for the Oil and Gas Program and getting the resources needed to invest the unprecedented federal funding coming to Pennsylvania for mine reclamation and oil and gas well plugging.

Oil & Gas Funding

“As far as the Oil and Gas Program, one of the main priorities that we're gonna be working on is to establish a stable source of funding that will move away from well permit application fees as it has become evident over the years that this one-time source of funding fails to account for the oversight required by the department for the decades that a well may be operating,” said Ziadeh. 

When asked about what options DEP is considering, Ziadeh said, “We are looking at the annual fees versus a one-time permit fee or a combination of an annual permit fee with a one-time permit fee.  The main issue with the Oil and Gas Program is that it is entirely supported by program fees… none of the positions in that program sit on the General Fund which makes it unique.”

“And certainly before anything moves forward, there will be outreach to advisory groups to discuss all these different ideas,” Ziadeh added.

James Welty, a member of Council who works for the Marcellus Shale Coalition, suggested DEP consider having taxpayers pick up more of the cost of the Oil and Gas Program through an appropriation from the General Fund.

“The unconventional shale industry has looked for and tried working with the department for years with respect to finding alternative funding mechanisms for the oil and gas program, other than the reliance on fees,” said Welty.  “I guess my question is, why is there continued aversion to general fund revenues being used to help fund that program like the other programs in the department?”

“I'll continue to offer, as we've done over the better part of a decade, to work with the department, to find those funding mechanisms and identify those funding streams, because we think it's short sighted to just rely on fees, and certainly the penalties.” added Welty.

“Maybe this is like a topic for the budget hearings,” said Ziadeh. 

[Note: The track record of the General Assembly and recent governors providing General Fund support to environmental programs isn’t exactly steller.

[In 2010, Gov. Rendell actually bragged about the fact General Fund monies for DEP were below 1994-95 appropriations. Read more here.]

[Since 2003, General Fund support for environmental programs in DEP have been cut about 40 percent and as a result staffing was reduced by nearly 30 percent, especially in water quality protection programs.  Read more here.]

Background On Oil & Gas Program Funding

The latest unconventional well permit fee increase became effective on August 1, 2020 and was already out of date when it was adopted.  It was in development for over two and a half years.  The last update was in 2014.  [Read more here.]

There has been no increase in fees for conventional oil and gas drillers since 2014.

The revenue projections done for the unconventional fee regulation were based on DEP receiving 2,000 permits a year. In calendar 2021, DEP received 741 unconventional well permits, far less than half the number needed to adequately support the program.

DEP, in fact, projected a 70 percent drop in revenue from well permit fees to support the Oil and Gas Program in December 2020 and they came pretty close.  Over 80 percent of program costs are staff expenses.  [Read more here.]

When this final regulation was approved by the Independent Regulatory Review Commission in 2020, Chairman George Bedwic said, as the IRRC members said before, a per-application fee that is expected to cover the cost of regulating an oil and gas well for the life of that well is not a good way to fund the Oil and Gas Management Program.  [Read more here.]

In January 2020, DEP did collect a penalty assessment of $30.6 million from ETC Northeast Pipeline for the 2018 explosion of the Revolution Pipeline in Beaver County that was deposited into the Fund supporting the Oil and Gas Management Program.  Read more here.

And the penalty funding did prop up the program for a while, however, DEP has never used penalties as a way of raising money to support its regulatory programs and it would be bad public policy to do so.

Bipartisan Infrastructure Funding

“The big, big priority clearly will be our effort to manage and expand the infrastructure funding that Pennsylvania will be receiving under the Infrastructure, Jobs and Investment Act that President Biden signed into law on November 15th of 2021,” said Ziadeh.  

“So the funding we're anticipating is certainly once in a generation federal investment. It will include funding to address abandoned wells, abandoned mine lands, improvements to drinking water and wastewater systems, Superfund site cleanups, and expanding electric vehicle networks, and many other areas,” said Ziadeh. 

“The department and the Administration have been gearing up to ensure we are prepared to accept and use these funds. So far, we've had extensive discussions on staffing needs to implement the increased funds and we are planning out timelines to ensure funds are applied for, accepted, and used within the established time frames included in the Bipartisan Infrastructure [Law],” explained Ziadeh.

“With that said though, we are still awaiting more guidance from the federal government on the specifics on how this will all work. So right now, as of today, we do not have the bill guidance on any of these funding sources to the different program areas,” said Ziadeh.  “But, we are doing as much as we can from our end to ensure that we are positioned well to apply for annual system infrastructure funding.”

“One thing that we've completed on time is we were required to submit a notice of intent for one of the available grant programs related to abandoned well plugging and we successfully submitted that information to the [U.S.] Department of Interior in late December, and that was in the form of a notice of intent,” said Ziadeh.

Background On Federal Infrastructure Funds

Thanks to the passage of the federal Bipartisan Infrastructure Law, Pennsylvania is in line to receive an estimated $3.8 billion over the next 15 years to reclaim abandoned coal mine lands in the state.

The Law also reauthorizes the federal Abandoned Mine Reclamation Fee for the next 13 years, something Pennsylvanians have fought for the last five years to accomplish.

This largest-ever investment in reclaiming abandoned mine lands and treating mine discharges will address Pennsylvania’s #1 water pollution problem.  [Read more here.]

The second major component of the Bipartisan Infrastructure Law will make another unprecedented investment in the plugging of thousands of oil and gas wells abandoned by the industry to taxpayers to take care of.

Pennsylvania is set to receive an estimated $400 million over the next 15 years to plug these wells that are frequently leaking methane and oil and create a conduit to pollute ground and surface water.

Over the last 30 years, Pennsylvania was only able to spend $37 million to plug 300 abandoned wells, when there are hundreds of thousands in the state.  [Read more here.]  [DEP Gets Headstart On Spending These Funds]

Many other provisions in the Bipartisan Infrastructure Law will also benefit Pennsylvania’s environment and public health, including--

-- Replacing lead pipes, addressing drinking water contamination by PFAS, wastewater facilities;

-- Cleaning up Superfund and brownfield sites [$38.7 million already announced];

-- Making infrastructure resilient against impacts of climate change and extreme weather;

-- Increase funding for Chesapeake Bay Program by $238 million over 5 years [Read more here];

-- $26 million for Delaware River Basin Restoration;

-- Modernizing electric grid and expanding the use of renewable energy;

-- $171 million to expand PA’s EV charging network and address [Read more here]; and

-- Electric, hybrid school buses.

Other DEP Priorities

Executive Deputy Ziadeh mentioned these other 2022 priorities--

-- Continue advancing the long-term success of watershed restoration efforts, in particular in the Chesapeake Bay Watershed;

-- Also in the water program, finalizing the PFAS drinking water standard and Manganese water quality standard rulemaking packages;

-- Continuing to work on the implementation of the Carbon Pollution Reduction Program covering power plants [RGGI] regulations;

-- Working with the General Assembly to modernizing the 1988 Municipal Waste Recycling Act and Electronic Waste Recycling Program;

-- Monitoring the decommissioning of the Three Mile Island Nuclear Power Plant;

-- Working with the General Assembly on legislation to require radon testing in schools and daycare centers;

-- Working to update DEP’s Environmental Justice Review Policy;

-- Working to transition energy generation to cleaner energy sources and increase Pennsylvania’s ability to deploy a trained clean energy workforce; and

-- Expand mosquito control programs throughout the Commonwealth in 2022.

For more information and available handouts, visit the DEP Citizens Advisory Council webpage. Questions should be directed to  Keith Salador, Executive Director, 717-787-8171 or ksalador@pa.gov.

NewsClip:

-- ScrantonT Editorial: Act 13 Drilling Impact Fee Shortchanges State Taxpayers

Related Articles:

-- Chesapeake Bay Foundation Calls For Greater Investments To Reduce Pollution As Number Of Impaired Streams Increases In PA

-- Two Bipartisan Bills Just Sitting In Senate Waiting To Address Record Number Of Water Quality Impaired Streams Reported In 2022  [PaEN]

-- DEP 2022 Water Quality Report Shows 27,886 Miles Of Streams With Impaired Water Quality In PA (33%) - An Increase From 25,468 In 2020  

-- IFO: 2021 Act 13 Drilling Impact Fee Revenue $233.8 Million; Still Short Of 2018 Revenue Of $251.8 Million

[Posted: January 18, 2022]

1/24/2022