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Budget Briefing: Senate, House Budget Hearings Should Talk About Once-In-A-Generation Investments In Cleaning Up The Environment; Oil & Gas Program At A Crossroads

The departments of Environmental Protection, Conservation and Natural Resources and Agriculture appear before House and Senate budget committees starting February 28.

At stake are once-in-a-generation investments of federal funds for mine drainage cleanup (#1 water quality problem); reducing pollution runoff from farms (#2 water quality problem); plugging abandoned oil and gas wells; and investments in repairing and expanding Pennsylvania’s recreation and green infrastructure.

These initiatives require state funding to support the investment of these funds because without more people these monies can’t get where they are needed quickly.

The hearings will be held--

-- February 28: House - DEP. 10:00 a.m. Click Here to watch live.

-- March 2: Senate - DCNR-10:00 a.m.; DEP- 2:30 p.m. Click Here to watch live.

-- March 2: House - Agriculture. 10:00 a.m. Click Here to watch live.

-- March 3: Senate - Agriculture. 10:00 a.m. Click Here to watch live.

Here’s an outline of some of the key state budget issues facing these agencies that should come up during the budget hearings.

Once-In-A-Generation

There are three priorities for supporting the investment of new federal funds to address Pennsylvania’s worst water quality problems--

-- American Rescue Plan Funds: There are bipartisan initiatives in the Senate (Senate Bill 525 (Gordner-R-Columbia, Comitta-D-Chester) and House (House Bill 2020 Schlegel Culver-R-Northumberland, Guenst-D-Montgomery) to allocate $500 million in federal American Rescue Plan Funds for Growing Greener Program to support local watershed restoration, farm conservation, mine reclamation and recreation projects. Read more here.

A companion bipartisan bill-- Senate Bill 465 (Yaw-R-Lycoming, Comitta-D-Chester)-- establishes a new program to pay for on-farm conservation measures administered by the State Conservation Commission. Read more here.

Gov. Wolf’s budget proposal built on these initiatives by proposing a $450 million allocation for similar kinds of investments, although weighted toward farm conservation. Read more here.

These proposals will help Pennsylvania meet water quality cleanup goals statewide and especially in the Chesapeake Bay Watershed.

-- Bipartisan Infrastructure Law - Mine Reclamation: 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.]

More staff is needed at DEP to meet the dramatic expansion of this program.

-- Bipartisan Infrastructure Law - Plugging Abandoned Wells: 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 conventional drilling industry for taxpayers to take care of.

Pennsylvania is set to receive an estimated $395 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.]

Again, more staff is needed at DEP to meet the dramatic expansion of this program.

-- Bipartisan Infrastructure Law - Other Programs. 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.

Oil & Gas Program At Crossroads

DEP’s Oil and Gas Program has been playing catch-up with regulating the boom in shale gas drilling since the first well was fracked in 2003.

The program is now at a significant policy crossroads in five different policy areas that will determine the program’s viability and effectiveness at protecting the environment in the coming years.

Here’s a quick summary.

-- Funding Deficit: The Oil and Gas Program faces a $10.5 million annual funding deficit, nearly half of the approximately $25 million it costs to regulate conventional and unconventional drilling. This deficit has also cut staff from a full complement of 226 positions to 190. Read more here.

In addition, the conventional oil and gas drilling industry only contributed $46,100 toward the $10,600,000 it costs DEP to regulate that side of the industry in FY 2020-21.

Inspections of conventional drilling operations result in significantly more violations. In 2021, DEP inspectors found 4,386 violations of state regulations, four times what they found at unconventional wells.

The program is funded by fees on new drilling permits. The current fee structure was based on receiving 2,000 new unconventional drilling permits a year. In calender year 2021, DEP received 775 permit applications.

As of December 31, 2021 there were 100,500 active conventional wells in Pennsylvania and 12,694 active unconventional wells. [Read more here.]

There have been suggestions by the unconventional gas industry taxpayers pick up the difference in supporting this program, but as everyone knows the General Assembly and recent governors have a record of cutting General Fund support to DEP, not providing more. Read more here.

-- Preventing New Abandoned Wells: In November the Environmental Quality Board accepted a rulemaking petition to increase the bonding amounts for both conventional and unconventional oil and gas wells to the cost taxpayers would have to pay to plug them if abandoned by drilling companies. Read more here.

PA Environment Digest reported on February 23 DEP records show abandoning oil and gas wells without plugging them is pervasive in the conventional drilling industry.

DEP issued over 4,270 notices of violation to 256 conventional operators between 2016 and 2022 for abandoning wells without plugging them. Read more here.

The same issue affects unconventional drillers, but is much less severe.

DEP issued notices of violation to 12 unconventional drilling operators for abandoning wells on at least 35 well pads (which each have multiple wells) from 2016 to 2022.

DEP has taken enforcement actions against both conventional and unconventional oil and gas drillers who abandoned wells without plugging them, but it isn’t clear from DEP’s records how all these cases were resolved. Read more here.

For example, DEP signed a consent order with CNX Gas Company, LLC in 2019 to plug 131 conventional wells and 5 unconventional gas wells. Read more here.

Increasing bond amounts to the real taxpayer cost of plugging and closing the loophole in state law that exempts wells drilled before April 1985-- which is a majority of the 100,500 active conventional wells-- from any bonding requirement will go a long way to protecting taxpayers from billions of dollars in liability for plugging these wells if drilling companies walk-- and they are walking, particularly the conventional drillers. Read more here.

-- Well Permit Churning: A perennial issue at budget hearings is how fast DEP reviews permit applications for new oil and gas wells. No matter how fast DEP turns out new permits, it is never fast enough.

The fact is the February 18 DEP’s workload report shows DEP has approved permits for 22,632 unconventional gas wells in the history of the program, however, the industry has only actually drilled 13,395 wells.

The gap of 9,237 permitted wells-- 40 percent-- represents the number of unconventional wells never drilled for a number of reasons like low natural gas prices, operational considerations, expired permits or timing that just didn’t work out.

The Department of Conservation and Natural Resources also reported at the Senate budget hearing in 2021 that 65 percent of the State Forest land already leased for Marcellus Shale gas drilling has not been developed and 68,000 acres of land leased in 2008 and 2010 were actually returned to DCNR undeveloped. Read more here.

The industry will no doubt say it’s DEP’s responsibility to review all the permits submitted by industry, and that’s certainly true, but why clog up DEP’s permit review system with its limited staff time on permits that are never used?

If the unconventional industry was smarter and submitted well permits they would actually use, there would not be as big a gap in their unused permits and DEP wouldn’t waste staff time reviewing permit applications that never get used.

-- New Conventional Drilling Regulations: DEP is drafting proposed regulations setting updated environmental protection standards for conventional oil and gas well drilling.

These regulations are critically needed since the previous final regulations updating requirements were killed by the politicians in the General Assembly protecting the conventional industry in 2016. Read more here.

The conventional drilling industry is fighting hard against these new regulations saying any new requirements will put them out of business and will result in more abandoned wells. [This claim has been repeated since the industry began in 1859.] Read more here. Read more here.

DEP has been reviewing one of the two parts of updated regulations with its various advisory committees for more than a year and is expected to submit the first proposal to the Environmental Quality Board for action sometime in the next few months. Read more here.

Senate and House Republicans are also continuing their effort to move legislation to rollback regulation of the conventional oil and gas industry and legalize the road dumping of conventional drilling wastewater through legislation.

In November of 2020, Gov. Wolf vetoed legislation that would have rolled back regulation of conventional oil and gas wells to 1984. Read more here.

In May of 2021, the House did pass a bill that again rolls back conventional oil and gas well regulation and specifically makes road dumping of their wastewater legal. Read more here.

That bill-- House Bill 1144 (Causer-R-Cameron) and a Senate companion Senate Bill 534 (Hutchinson-R-Venango)-- are both awaiting action in the Senate.

The conventional drilling industry believes it beat DEP once and killed their regulations, and they can do it again or simply wait for a new governor.

-- Ban Road Spreading Conventional Oil & Gas Wastewater: DEP received a significant study of the water quality impacts of road spreading of conventional oil and gas wastewater from Penn State on December 30. It is one in a series of studies in the last two years on this topic.

The study is expected to have a major impact on how DEP deals with this issue, but has not yet been released.

Other Penn State studies have clearly shown road spreading conventional oil and gas wastewater is a threat to the environment and public health. Read more here. Read more here.

DEP has banned the practice for the unconventional drilling industry, but so far has not taken the same action on the conventional side, even though it has the same chemical and physical characteristics.

DEP has determined that road spreading of conventional drilling wastewater on dirt roads is being done illegally under its Residual Waste Regulations, but it has not made a final determination. Read more here.

DEP’s findings so far show 2.3 million gallons of conventional wastewater was dumped on roads illegally [Read more here] and lists 84 townships in 13 counties as “waste facilities” where road dumping occurs [Read more here].

DEP has not addressed the issue in the update to its conventional oil and gas regulations drafted so far. Read more here.

Other Issues

The perennial issue of adequate funding for the perennially short-changed Hazardous Sites Cleanup Fund-- Pennsylvania’s Superfund law-- will be brought up.

It is now funded by taking money from DCNR’s Oil and Gas Fund, passing it through the Marcellus Shale Legacy Fund to be deposited in the Hazardous Sites Cleanup Fund. Read more here.

It’s one of the obvious examples of robbing Peter to pass through Paul to pay Mary’s bills budgeting the General Assembly spent the last decade perfecting.

Another example is the transfer of an additional $67.7 million from DCNR’s Oil and Gas Fund to pay for State Park and Forest administrative costs the PA Supreme Court has declared unconstitutional-- twice. Read more here.

Of course, no one is likely to bring up the issue of why the Senate and House have a $233 million surplus in operating funds-- up $30 million from the previous year-- sitting in their legislative accounts doing nothing. Read more here.

Dog Whistles

The budget hearing questions will again be filled with the usual “dog whistle” issues designed to score debating points, but not really look at the serious budget issues facing DEP.

DEP’s final regulations establishing a Carbon Pollution Reduction Program covering power plants consistent with the Regional Greenhouse Initiative is a huge dog whistle for all sides. Read more here.

Other likely dog whistles will be--

-- Legislation to kill regulations by doing nothing;

-- Legislation to fundamentally change the definition of water pollution and letting companies decide when to report spills;

-- Stopping public participation/rulemaking during emergencies;

-- Creating a new bureaucracy to privately review permit applications;

-- Legislation to stifle renewable energy development through extra bonding, nonsense recycling requirements;

-- Legislation prohibiting communities from promoting clean energy;

-- Legislation prohibiting the state from owning renewable energy credits;

-- Legal action by Senate Republicans to block the Delaware River Basin Commission ban on fracking oil and gas wells;

-- Allowing more natural gas drilling on State Forest Lands;

-- Authorizing damaging off-highway motorcycles on State Forest Lands;

-- And much more.