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Natural Gas Industry, Senate Republicans Launch Effort To Unleash The Industry, Reduce Regulation, Call For Automatic Approval Of Permits, Limit Public Comments

On January 20, the natural gas industry and Senate Republicans launched an effort to unleash the industry by reducing regulations, requiring automatic approval of permits and limiting opportunities for public review of permits at a hearing of the Senate Republican Policy Committee in Pittsburgh.

David Callahan, President of the Marcellus Shale Coalition, told the Committee--

“One of the most critical challenges we face in the natural gas industry is the inability to acquire operating permits in a predictable time frame. Whether they are permits required to produce, process or transport the gas through pipeline development, Pennsylvania’s process to review and approve the required permits is entirely unpredictable and unnecessarily time consuming.

“While the PA Department of Environmental Protection has, on its face, a Permit Decision Guarantee policy, in reality the policy is not adhered to.

“Too often, rather than either approving or denying a permit, the Department simply takes no action while it constantly re-engineers project designs, requests additional or supplemental information from applicants far beyond what the permit instructions compel or imposes permit criteria on applicants that are not found in either statute or regulation.”

“In some regions, particularly north central Pennsylvania, operators are generally able to acquire permits in a predictable timeframe (albeit longer than what the Permit Decision Guarantee dictates they ought to be).

“However, in some cases, particularly here in southwestern Pennsylvania, it can take 200, 300 or even more days to obtain a simple, straightforward earth disturbance permit to build a well pad, compressor station, or pipeline.”

“We have greatly appreciated the support of you and your colleagues to advance legislative solutions to reform permitting and provide greater predictability, through proposals such as “deemed approved” legislation that would hold the Department accountable to a set timeline and third-party permit review, which is utilized successfully in other agencies and across the nation.

“While no legislative solution will ever be able to fully address the bureaucratic maladies that frustrate energy development in Pennsylvania, knowing that we have strong, vocal and effective advocates in the General Assembly, and in this caucus, has been reassuring to many who wish to continue to invest in our state and employ our residents.”

The Republicans on the Committee agreed, saying they’ve seen businesses caught up in the “hamster wheel of red tape… you never get your permits, you just run around,” Committee Chair Sen. Dan Laughlin (R-Erie) said. Read more here.

Chuck DiBello, Vice President For Facilities at the Allegheny Health Network, said they anticipate a 27% increase in overall utility costs in 2023 which he said will only “exacerbate” their financial challenges ahead. Read more here.

John Krolicki, of UPMC, offered similar comments about the increase in utility costs.

Shawn Steffee, of Boilermakers Local 154, pointed out how critical skilled labor is to grid reliability and to keeping power plants running, especially during events like Winter Storm Elliot over Christmas.

He also made comments opposed to the final regulations reducing carbon pollution from power plants and legislation that would impose fees on the use of water by power plants.

Jeff Kotula, President of the Washington County Chamber of Commerce, explained “Washington County is and has been a leading county across the state in both wells drilled and production – a title we are proud to acknowledge.”

“However, what is even more stunning is that despite these successes, we could be producing and exporting even more natural gas with additional pipeline capacity, particularly interstate pipelines to move the gas to other markets domestically or by providing additional deliveries to the Marcus Hook Natural Gas Liquids terminal near Philadelphia to process the gas and other liquids and export it around the globe.”

Lauren Connelly, of the Greater Pittsburgh Chamber of Commerce, noted in April of 2022 the Allegheny Conference released a report outlining how accelerating decarbonization and a transition to clean energy sources are critical to the future competitiveness of the Pittsburgh Region. Read more here.

Click Here to watch a video of the hearing and for more testimony.

What Wasn’t Mentioned

The Senate Republican hearing missed the “Big Picture” of oil and gas development in Pennsylvania.

The hearing did not include any comments from the Department of Environmental Protection or communities and individuals impacted by oil and gas development, or any environmental or health advocacy groups that could have provided the Committee with a more holistic view of the oil and gas industry in Pennsylvania.

There was no discussion of the grand jury convened by then Attorney General Josh Shapiro that found Pennsylvania failed to protect citizens during the natural gas fracking boom because state laws were not strong enough to protect public health and the environment from the impacts of oil and gas development [Read more here] or the legislation introduced to implement the recommendations [Read more here.]

No one raised the issue of why oil and gas and particularly pipeline companies have been assessed over $70 million in penalties for violating the state’s existing environmental and safety laws by DEP and the Public Utility Commission-- several of them the highest penalties on record [Read more here]-- and have plead guilty or no contest to a variety of environmental crimes, more than any other industry [Read more here]. (See list below)

There was no discussion of the fact that 2022 in particular was a record year for the oil and gas industry in Pennsylvania in several other ways--

-- The most criminal convictions for environmental violations;

-- A record number of environmental violations issued by DEP;

-- The conventional industry continued their pervasive abandonment of oil & gas wells;

-- DEP said in a special report on conventional oil & gas industry environmental compliance the industry has a “culture of non-compliance as an acceptable norm”;

-- Conventional drilling wastewater continues to be illegally dumped on our roads;

-- Conventional & unconventional drillers are creating hundreds of new brownfields and waste dumps on well pads wherever they drill; and

-- Evidence continues to mount on the negative public health and environmental impacts of oil and gas facilities. Read more here.

There was no mention of the fact natural gas prices increased over 94.7% in 2022 because of Russia’s war against Ukraine and that natural gas prices are now set on world markets, not by how much natural gas infrastructure there is in Pennsylvania or how much gas we produce. Read more here.

The war clearly shows linking the U.S. and Pennsylvania to high-priced, volatile LNG natural gas markets in Europe and Asia resulted in increasing natural gas costs to Pennsylvanians by up to 128%, and drove electricity prices up by as much as 34%. Read more here. Read more here.

And this price volatility will continue into the foreseeable future, according to Pittsburgh-based EQT Corporation, the largest natural gas producer in the U.S. Read more here.

After the January 20 hearing, the Marcellus Shale Coalition Tweeted- “We need regulatory certainty for large-scale infrastructure projects like #pipelines & #LNG terminals in order to share our energy with the world” [unsaid-- to better connect to those high-priced markets].

Chesapeake Energy CEO Nick Dell’Osso last week urged his peers in the U.S. natural gas industry to scale back production to increase the price of natural gas. Read more here.

Pittsburgh-based EQT Corporation CEO Toby Rice, who has been an outspoken advocate of dramatically increasing LNG exports to take advantage of higher natural gas prices in foreign markets, said decreases in the price of natural gas will only slow supply growth. Read more here.

Clearly, the industry knows high prices are in the best financial interest of the natural gas companies and their investors and they’ve said so clearly over the last year in their reports of record profits and returns to their stockholders.

Although the Christmas Winter Storm Elliott that resulted in the PJM Interconnection calling for the public to conserve electricity use was discussed at the hearing, there was no mention of the fact that PJM’s preliminary review of what went wrong cited the fact that natural gas-fired power plants failed to provide power when called upon at over triple the rate of other technologies and fossil fuel power plants generally failed at an “unacceptable” level. Read more here.

Pipelines and other natural gas infrastructure simply froze in the storm and prevented the reliable delivery of gas to power plants. Bloomberg reported 70% of the almost 46 GW of electric generation outages were natural gas plants. Read more here.

But we did limp through that short crisis, but no one raised the issue of what will happen when we have a freeze longer than a few days like we did during the polar vortex of 2013-14.

PJM generators now face up to $2 billion in penalties for failing to run when called upon during the winter storm. Read more here.

There is clearly a much bigger problem here than reducing regulations that was not acknowledged at the hearing.

Automatic Permit Approvals

Proposals to reduce regulations, provide for automatic approval of permits and limit public review of permits for the oil and gas industry is part of the “unleashing” the oil and gas industry agenda promoted by the industry and Republicans last session and launched again at the January 20 hearing. Read more here.

The centerpiece of that agenda mentioned by the industry-- automatic permit approvals and limiting public reviews-- was included in House Bill 604 (Fritz-R-Susquehanna) passed by the House in 2022.

The Marcellus Shale Coalition talked about the “chronic permitting logjam” in a May 13, 2021 post on their blog and that House Bill 604 was a big part of the solution.

House Bill 604 requires DEP to either issue or refuse to issue any application for any environmental permit it reviews within 45 calendar days of when the application is filed based solely on the information submitted by the applicant.

This deadline applies regardless if the application is a simple one-page authorization or a complex multi-volume submission.

If DEP fails to meet this deadline, and the permit or authorization application is accompanied by an affidavit from a professional engineer, landscape architect, geologist or land surveyor that the application is “true and correct,” then the application is “deemed approved.”

Within 15 days of filing the application, and within the 45 day limit, DEP must determine whether an application is administratively complete and provide an explanation of why it is incomplete to the applicant.

The term “administratively complete” does not mean, according to the legislation, whether the “information supplied in the application is sufficient to grant the application.” The term “complete” only means all the pieces there, not whether they comply with environmental laws and regulations.

An application is “presumed” to be complete if it is accompanied by that affidavit from a professional engineer, landscape architect, geologist or land surveyor that the application is “true and correct.”

The 45 day time period is “tolled” while the applicant is responding to the incomplete determination.

If there is a dispute over whether the application is complete, the legislation provides that a “referee” can be requested by the applicant to review the disagreement and make a decision.

A referee can be a professional engineer, landscape architect, geologist or land surveyor. The legislation does not require the referee to have any expertise in the kind of application being reviewed. There are no conflict of interest provisions.

The decision of the referee on completeness is not appealable to the Environmental Hearing Board.

House Bill 604 also limits opportunities for any public comment on any of DEP’s permit applications to those where hearings or comment periods are “explicitly” required by federal or state law.

If DEP wants to hold a comment period or hearing requested by citizens not required by law, they must do it within the 45 day review deadline.

Reality Check

Let’s look at a few real facts.

Current Permit Review Numbers

The oil and gas industry often quotes the fact that it can take “200, 300 or even more days” to get a simple permit from DEP.

DEP’s just released 2021 Oil and Gas Program Annual Report says--

-- Oil & Gas Drilling Permits take 20 days in the DEP Southwest Office and 22 days in the Northwest Office;

-- Related Erosion & Sedimentation Control Permits take 58 days in the Southwest Office and 40 days in the Eastern DEP Office.

These are numbers for permits covered by DEP Permit Decision Guarantee Program relaunched by Gov. Tom Corbett.

The deadlines are tolled in the Guarantee Program while applicants are responding to incomplete or deficiencies in the permit applications.

50%+ Of Applications Incomplete/Deficient

The Cumberland County Conservation District told the House Environmental Resources and Energy Committee at a hearing in 2019 that more than half of the erosion and sedimentation permit applications they receive from consultants (almost all registered engineers) are incomplete and/or deficient. Read more here.

DEP’s own analysis of applications it receives found in 2017 60 percent of erosion and sedimentation permit applications were incomplete or had technical deficiencies in the Oil and Gas Program and outside of that program as many as 80 percent of the permit applications DEP received were incomplete or had deficiencies.

DEP has been trying to increase the percentage of complete applications it receives by educating consultants and moving to electronic permitting systems that do not allow an applicant to advance to the next section of an application unless they provide correct responses.

While the numbers no doubt need to be updated, and we hope they’ve improved, there is clearly a problem here that hasn’t been solved or addressed by any legislation-- the failure of consultants to submit applications that are simply incomplete and too deficient to be reviewed by DEP.

Having a professional engineer, landscape architect, geologist or land surveyor sign an application a second time saying all the information is complete won’t cure that problem.

And it’s not clear why the oil and gas industry and House Bill 604 would want a land surveyor or landscape architect or even just a geologist signing off on oil and gas, erosion control, dam safety and encroachment, hazardous waste, landfill or air quality permit applications ensuring they are true and correct.

The simple lack of expertise of land surveyors, landscape architects and geologists in preparing all these applications would open companies to significant legal liabilities.

33 Business Days To Respond

It should be noted the Cumberland County Conservation District also told the House Environmental Resources and Energy Committee at a hearing in 2019 it took consultants an AVERAGE of 33 business days for consultants to respond to deficiencies in permit applications-- more than 6 calendar weeks. Read more here.

Again, this is not an isolated experience, and we hope the numbers have improved, but it points to a real problem in permit decision delays that isn’t under DEP’s control.

40% Of Permits Unused

While the oil and gas industry keeps saying it can’t get permits fast enough, it forgets to mention that 40% of the permits they do receive from DEP haven’t been used.

The most recent DEP Oil & Gas Workload Report shows DEP has approved permits for 23,141 unconventional shale gas wells as of January 13 of which only 13,917 wells were drilled.

The gap of 9,224 wells-- just short of 40%-- haven’t been drilled.

They were never drilled for several reasons, but probably waiting for higher natural gas prices is the biggest one. There could also be operational considerations, financial limitations on implementing a drilling plan, the timing just didn’t work out or they just let permits expire.

You would be hard-pressed to find any other program in DEP with this kind of a record for not using approved permits.

In addition, DEP is wasting a colossal amount of staff time-- 40%-- reviewing permits that never get used. This waste of time is certainly demoralizing for DEP staff trying to do a good job.

Limiting Public Review

One of the other major provisions in House Bill 604 limits public review of environmental permits of all kinds to those where public review is “explicitly” required by statute.

First, there is no public notice in the PA Bulletin or practical opportunity to comment on permit applications submitted for drilling a well-- that was 964 conventional and unconventional shale gas permits in 2022.

The only way to know if a well permit application has been submitted near you is to sign up for DEP’s eNOTICE system.

But only limited permit application information is available online. You would have to go to a DEP office to review the actual permit for the details.

Second, public notice is required in the PA Bulletin by regulation, often not law, for Chapter 102 erosion and sedimentation, Chapter 105 encroachment, Air Quality and many waste-related permits but they show up as small bits of information when published--

“E5829222-014. Williams Field Services Co LLC, 310 State Route 29 North, Tunkhannock, PA 18657, Jessup Township and Rush Township, Susquehanna County. U.S. Army Corps of Engineers Baltimore District. Application received: November 14, 2022.”

And many of these small notices leave you wondering exactly what the project is and where it is because they typically have no more specific address than the township or county.

Most permit applications aren’t online so, again, you have to visit the DEP Office to review the application.

House Bill 604 would eliminate many of these existing, although poorly executed opportunities to comment on permit applications.

Third, there are no provisions in House Bill 604 that directs or allows DEP to take public comments into account in making a decision on a permit application.

Consistent with DEP’s obligation as a public agency serving the public, we should be looking for opportunities to improve the public notice and comment provisions, making permit applications more easily available to the public, not simply eliminating them from the process.

Again, information presented during hearings in the General Assembly clearly shows a huge chunk of permit review time is wasted because permit applications are incomplete and/or deficient and consultants take too long to get back to DEP with corrections.

The public and communities affected by these projects should not be cut out of this process.

Initiatives like electronic permitting will and have made the entire permit process more transparent and effective for all involved, including the public.

Inadequate Resources

DEP warned policymakers all during 2022 that revenue from the per well permit fees is significantly below where it should be to pay for the costs of regulating the conventional and unconventional shale gas industry in Pennsylvania. Read more here.

The current fees became effective in August of 2020, but they were out-of-date even before they were adopted.

DEP estimated revenue from 2,000 unconventional shale gas permits a year was needed to support the program. As of December 31, DEP received 731 unconventional permits for review in 2022.

In February, DEP reported to the Environmental Quality Board conventional oil and gas drilling companies only paid $46,100 of the $10,600,000 it cost for DEP to regulate that industry in FY 2020-21. Read more here.

DEP estimates 60 percent of these costs are accounted for by activities related to unconventional oil and gas well activities-- about $15,988,224 and 40 percent by conventional oil and gas wells-- about $10,658,816. Read more here.

In 2015, DEP’s Oil and Gas Program had 226 filled positions and now it has 176-- a 22% drop.

DEP Oil and Gas Program staff do inspections, investigate complaints, and many other tasks as well as review permits. This workload only grows with every well drilled-- 790 new wells in 2022 alone-- but the resources to pay for this program cannot support the comprehensive program the public needs to ensure regulatory compliance with existing laws.

Same Republican Initiatives

Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee, already announced he will be reintroducing the same energy and oil and gas initiatives from last session, including--

-- Redefining what constitutes pollution and spill reporting [Read more here];

-- Prohibiting communities from choosing clean sources of energy to fight climate change [vetoed by Gov. Wolf last year]; and

-- Prohibiting counties from receiving Act 13 impact fees if they only allow drilling on 99% of their land area [Read more here].

Click Here for a complete list.

At the same time, Sen. Yaw said in a press release last week, “I’m committed to working with the new governor and his administration to advance policies that promote energy development, protect our environment and produce results for residents across the Commonwealth.” Read more here.

Sen. John DiSanto (R-Dauphin) just reintroduced Senate Bill 188 authorizing the General Assembly to kill economically significant regulations by doing nothing. Read more here.

Sen. Camera Bartolotta (R-Washington) reintroduced Senate Bill 198 limiting the grounds for appealing DEP permit and other actions before the Environmental Hearing Board. Read more here.

And, Senate Republicans passed Senate Bill 1 (Laughlin-R-Erie) proposing to amend the state constitution to give the General Assembly unilateral power to veto any state regulation by simply passing a resolution. Read more here.

If passed by the House, the amendment could be on the ballot as early as the May Primary Election.

60 Years Of Fracking, 20 Years Of Shale Gas

Do you believe drilling oil and natural gas wells is a clean business? Obviously not. It’s a dirty, loud and sometimes dangerous industrial process for its workers and neighbors.

While the work is honorable, the people who run the conventional and unconventional oil and natural gas companies have created an industrial machine that cuts through farms and forests-- even Pennsylvania’s only national forest-- punching holes in the ground, generating and spreading pollution, creating waste dumps and new brownfields, producing wastewater that has to be managed for decades to come and imposing legal liabilities for plugging those wells on well owners and state taxpayers with every new well they drill.

Real issues affecting real communities and people need to be dealt with before we can talk about anything else.

The estimated 1 billion cubic feet of natural gas that leaked from a Cambria County gas storage area in November [Read more here]; the ongoing pollution episodes caused by pipeline and water withdrawal construction in the Exceptional Value Loyalsock Creek Watershed in Lycoming County [Read more here]; the recent explosion and 9.5 hour uncontrolled leak of ethane from a Washington County cryogenic processing facility [Read more here]; dozens of families being without clean drinking water since June as a result of a “frack-out” of a shale gas well in Greene County [Read more here]; the continued illegal dumping of conventional wastewater on roads [Read more here]; both unconventional and conventional operators creating hundreds of new brownfield sites with soil and water contamination from their industrial operations [Read more here]; unresolved impacts from Mariner East Pipeline on the homes of people like Navy Veterans Patrick and Helen Robinson in Indiana County [Read more here]; the investigation into rare childhood cancers in Southwest PA [Read more here]; allowing the resumption of shale gas development near Dimock, Susquehanna County an area notoriously difficult to frack without contaminating groundwater [Read more here]; and DEP’s shrinking financial resources to fund the Oil and Gas Regulatory Program [Read more here] are just the tip of the iceberg.

Click Here to read more about the record of the oil and gas industry in Pennsylvania.

New Governor

With the oil and gas industry and Senate Republicans sticking to their old playbook of “unleashing” the industry, the new factor in the political equation is how will the Shapiro-Davis Administration react to these proposals?

We’ll have to wait and see.

Resource Links:

-- What Can We Expect From Gov. Shapiro, Lt. Gov. Davis On Environmental, Energy Issues? [PaEN]

-- Capital & Main - Audrey Carleton: In PA, Hopes Rise But Questions Remain About New Governor’s Environmental Agenda

-- Feature: 60 Years Of Fracking, 20 Years Of Shale Gas: Pennsylvania’s Oil & Gas Infrastructure Is Hiding In Plain Sight [PaEN]

-- Senate Republicans Urge Gov. Shapiro To Take Steps ‘Immediately’ To Repeal Final Reg. Limiting Carbon Pollution From Power Plants [RGGI] [PaEN]

-- Sen. Yaw Looks For Common Ground With New Governor On Energy, Environmental Issues [PaEN]

-- Senate Environmental Committee Reports Out Diesel Mining Equipment Bill, Postpones Resolution On Restart Of Keystone XL Pipeline [PaEN]

NewsClips - Industry Push To Reduce Regulations:

-- Pittsburgh Business Times: Businesses, Energy Groups Tell Senators Regulatory Burden, High Energy Costs Must Be Lowered

-- The Center Square: ‘Fuel Poverty’ Stresses Pennsylvania’s Hospitals

-- Bloomberg: Chesapeake Energy CEO Urges U.S. Natural Gas Sector To Scale Back Production Due To Low Natural Gas Prices