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Republican Senators Introduce Bill To Deregulate Oil & Gas Industry, Coal-Fired Power Plants, Open State Forests To Drilling, Withdrawn From RGGI

On May 5, Republican Senators Doug Mastriano (R-Adams) and Scott Hutchinson (R-Venango) introduced Senate Bill 1219 they said “to stabilize energy costs for Pennsylvanians, protect against market volatility in the long term, and utilize Pennsylvania’s unique natural resources to finally cement the Commonwealth as a premier energy powerhouse.”

What it will really do is deregulate the oil and gas industry, attempt to prevent federal regulation of the coal industry and power plants, deny critical funding to DEP to regulate oil and gas drilling, withdraw Pennsylvania from the Regional Greenhouse Gas Initiative and reopen state forest land for oil and gas leasing.

The bill contains a laundry list of many proposals Republicans have tried to get enacted for years to emasculate environmental protection efforts in Pennsylvania.

Click Here for the announcement of the legislation.

The bill was referred to the Senate Environmental Resources and Energy Committee for consideration.

Major Provisions

The major provisions in the bill include--

-- Natural Gas and Drilling

-- “Immediate suspension of the Corporate Net Income Tax and Personal Income Tax for natural gas producers” [Note: This is just a straight giveaway to the industry for no required benefit to the public.]

-- “Reduce DEP’s gas permit fees to pre-2020 levels (200% cut from current fees)”

[Note: Shale Gas companies already don’t use 40 percent of the drilling permits they are issued by DEP, so it’s likely fees aren’t the problem. Read more here. Right now DEP has an estimated $8 million to $10.5 million deficit in permit fee revenue for the current fiscal year that supports the Oil and Gas regulatory program, which is nearly half of the $25 million it costs to run the program. Read more here. In addition, conventional oil and gas drillers only contribute $46,100 of the $10.6 million it costs to regulate that industry. Read more here.]

-- “End the moratorium on new leases on state lands by directing DCNR to initiate an approval process for new leasing opportunities.”

[Note: DCNR said at its budget hearing March 2 shale gas drillers haven’t developed 65 percent of the State Forest land they already have leases to drill on, so opening more land they might not drill on doesn’t seem to be the right solution. Read more here.]

-- Coal-Powered Plants

[Note: Pennsylvania only has three remaining coal-fired power plants that haven’t announced plans to close due to competition from natural gas and now renewables. More than 19 other coal plants are already closed for the same reason. Read more here.]

-- “Exempt Pennsylvania from plant-closing EPA regulations such as the Wastewater Rule and the Cross State Air Pollution Rule.”

[Note: That’s not the way it works. A state cannot exempt itself from a federal law or regulation. It still applies whether EPA enforces it or the state does through its federally-approved pollution control programs. The issue of whether a state can secede from the Union unilaterally was settled at Appomattox.]

-- “Intrastate Coal/Natural Gas Use Provision: establish a provision to clearly state that any environmental regulation of coal and natural gas that is extracted and used in Pennsylvania can only be exclusively regulated by the Commonwealth, not by the Federal government.”

-- Regulations and Permits

-- “Require a report from DEP to the General Assembly on all current rules and regulations affecting the natural gas and coal industries and the respective economic impact.”

[Note: Will the Senate and House offer to pay for this report out of their $233 million operating surplus just sitting in their bank accounts?]

-- “Require legislative approval for any new regulations affecting the natural gas and coal industries.”

[Note: House and Senate Republicans have wanted to do this for years. They even moved legislation to kill regulations by doing nothing. Read more here.]

-- “Improve transparency in the permit review process and expedite approvals.

[Note: At DEP’s budget hearing February 28, the agency announced it would be unveiling a new tool to track permits through the review process. Read more here. On expediting permit approvals, Senate Republicans have moved legislation creating yet another bureaucracy to allow private review of permits without such basic provisions as conflict of interest standards which would prevent private consultants from reviewing their own applications. Read more here.]

-- Regional Greenhouse Gas Initiative

-- “Immediate suspension of Pennsylvania’s entry into RGGI”

[Note: Republicans have opposed establishing a program to cut carbon pollution from power plants consistent with the Regional Greenhouse Gas Initiative since it was first suggested. Eliminating this regulation would not address the issue of “fluctuating energy and fuel costs” nor would it somehow increase available supplies of energy.]

Bill Does Nothing For Energy Independence/Price Volatility

Anyone would be hard-pressed to understand how any of these suggestions would stabilize “fluctuating energy and fuel costs” in the state.

First, Pennsylvania produces only a relatively small amount of crude oil and most of that is refined into lubricating oil, not gasoline or other fuels, as anyone familiar with the oil industry in the Commonwealth would know.

Shale oil executives themselves-- which don’t operate in Pennsylvania-- have said supply chain issues, labor shortages, wary investors, sand supplies and equipment shortages are hampering production-- as well as previously low crude oil prices. Read more here.

Shale oil executives have also said-- “The [energy] markets] turbulence has just begun.” Read more here.

Global market forces, not our abundance of domestic fossil fuels, set the price of oil, gasoline and natural gas in the United States and the world. Read more here.

Just because you have an abundant supply of something, doesn’t mean you control demand or the price. Read more here.

A good illustration of that is the oil price collapse in 2020 due to COVID when the price of crude oil dropped below zero for a time. [Note: BTW, the price at the pump didn’t go to zero.]

The reason natural gas producers in Pennsylvania have kept thousands of their shale gas wells shut in, haven’t used 40 percent of the DEP permits they got and haven’t drilled on state land they have already leased-- is because the demand for their product and the price of natural gas wasn’t high enough.

The oil and gas industry now wants to use the invasion of the Ukraine as an opportunity to increase market share, sell their product at whatever premium price they can get and build out an oversized infrastructure because they know the cost of clean, renewable energy is going down and its cost is more predictable. Read more here.

The real question is-- why would we want to lash ourselves even tighter to volatile foreign energy markets when there is no limit on what they can charge us for oil and natural gas? Read more here.

The proposals in this legislation are a good example of political “dog whistles.”

NewsClips This Week On Energy Prices:

-- WSJ: Oil Prices Top $100, Yet Some Big U.S. Frackers Let Their Production Fall

[“Shale-Oil producers return more cash to investors than is going toward drilling, in a reversal from industry’s boom years.”]

-- USA Today: Oil Giants Reap Record Profits As War Rages In Ukraine, Oil/Natural Gas Prices Soar: Here’s How Much They Made

-- Bloomberg: Big Oil Spends On Investors, Not Output, Prolonging Crude Oil Crunch

-- Bloomberg: Natural Gas Hit Fresh 13-Year High In U.S. On Growing Supply Jitters As Demand Soars

[“Natural gas prices in the U.S. hit a fresh 13-year high on growing concern that stockpiles of the power-plant fuel will fall short of demand this summer.”]

-- Reuters: U.S. Natural Gas Production Growth Wanes As Need Arises

-- Financial Times: US Natural Gas Prices Surge As Europe Turns Away From Russian Energy

[“The Henry Hub natural gas benchmark settled at $8.415 a million British thermal units on Wednesday, more than double the price at the start of the year and far above the $3 average of the previous 10 years.”

[“But for LNG, the price of Henry Hub would be $3.50 a million Btu,” said Paul Cicio, president of the Industrial Energy Consumers of America, a trade group that has long criticised US LNG exports.

[But shale gas companies have been slow to boost production despite higher commodity prices.

[“Producers are not responding because everyone is so focused on capital discipline,” said Rosenthal, who added that a “Covid hangover” was still causing labour shortages and late winter outages in areas such as North Dakota were also hindering drillers.]

-- Reuters: Explainer: Why Are U.S. Natural Gas Prices Soaring? [Updated]

-- Bloomberg Green: As Natural Gas Prices Soar, Nobody Knows How Much Methane Is Leaking

-- Reuters: U.S., Canada Spot Natural Gas Prices Soar On Unusual Spring Heat

-- NYT: Get Ready For Another Energy Price Spike: High Electric Bills Caused By Surge In Natural Gas Prices

Related Articles This Week:

-- Post-Gazette: DEP Evaluating Whether To Resubmit Oil & Gas Methane Rule To EQB To Address Concerns About A Separate Conventional Oil & Gas Rule

-- Republican ‘Sandbox Permit’ Legislation Would Allow Agencies, Permit Applicants To Permanently Waive And Replace Any Regulatory Requirement With Minimal Public Review

-- Conventional Oil & Gas Drillers Dispose Of Drill Cuttings By ‘Dusting’ - Blowing Them On The Ground, And In The Air Around Drill Sites

Related Articles:

-- Quarterly Report: DEP Issued 77 Notices Of Violations To Conventional Drillers, 8 To Shale Gas Drillers For Attempting To Abandon Wells Without Plugging Them [4.7.22]

[“Warning: The average person is likely to be shocked at the number and extent of the violations documented by DEP day in and day out.”]

-- Guest Essay: Our Addiction To Fossil Fuels Fuel War: ‘Only Truly Addicted People Chase After Their Next Hit With Singular Focus As The Consequences Of Their Addiction Pile Up Around Them’ - By Rev. Mitchell C. Hescox, Evangelical Environmental Network