PA Environment Digest

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Gov. Shapiro’s Budget Includes Energy Plan; Funding To Make-up Deficit In Oil & Gas Program; New State Park, Trail Initiative; Over $6.2 Billion In Federal Funding At Risk For DEP, DCNR, PennVEST

Gov. Josh Shapiro has proposed a $51.1 billion 2025-26 budget proposal that includes $2 billion more for human services, primarily to pay for rising medical care costs for the poor; $526 million more for K-12 schools; $300 million for transit; and the Lightning Energy Plan initiative he announced previously to lower energy costs, increase and diversify electric generation resources.

In addition to the Energy Plan, other highlights of the Governor’s budget using state funds include--

-- $13 million DEP appropriation to make up for revenue lost from downturn in shale gas industry permit applications;

-- 10 new positions in DEP for agricultural conservation support

-- 4 new positions for mine reclamation & enforcement

-- $5 million DCNR trail connector initiative

-- Proposed new Laurel Caverns State Park and expansion of the Lehigh Gorge State Park to include the Glen Onoko Falls Trail

-- $13 million increase in Agriculture’s Innovation Grants

-- $2 million county-based Digester Pilot Program in Agriculture

Federal Funding At Risk

As a result of the President’s executive orders requiring a review, freeze or claw-back of federal funding, ANY federal funding now received by state agencies is at risk of being reduced or eliminated.

The departments of Environmental Protection and Conservation and Natural Resource receive a total of about $3,463,810,000 in federal funds-- DEP- $3,310,235,000 and DCNR- $153,575,000.

The PA Infrastructure Investment Authority expects to receive $2.3 billion in federal funding in the coming fiscal year for drinking water, wastewater system and water infrastructure improvements.

DEP now receives significant federal funding for state and local abandoned mine reclamation projects [$843.6 million] and conventional oil and gas well plugging [$197 million] under the federal Bipartisan Infrastructure Act (IIJA) and Inflation Reduction Act (IRA) and hundreds of millions of dollars of pass-through grant funding for various energy and climate programs authorized under the Inflation Reduction Act.

But, DEP also receives federal funding to support core environmental protection program staff and operational costs for programs it administers for the federal government, like Air Quality [$4.2 million], Water Quality [$5.5 million] , Mining [$6.5 million], Drinking Water [$7 million], Storage Tanks [$4.6 million], Coastal Zone [$4.7 million], in addition to federal pass-through grants in some of these programs.

During the previous federal Republican Administration, serious proposals were made to cut these grants to states, which would cripple these programs.

[Note: Any line item with an (F), an (IRA) or (IIJA) in the Big Budget Book listing for DCNR represents federal funds. Read more here, page E18-2]

DCNR also has funding from the federal Bipartisan Infrastructure Act (IIJA) and the Inflation Reduction Act (IRA) as well as grant and other funding from the federal Land and Water Conservation Fund, US Forest Service, US Department of Agriculture and other sources that support its programs.

[Note: Any line item with an (F), an(IRA) or (IIJA) in the Big Budget Book listing for DCNR represents federal funds. Read more here, page E12-2]

The PA Infrastructure Investment Authority expects to receive $2.3 billion in federal funding for drinking water [$1,252,756,000] and wastewater [$1,063,400,000] system improvements under the federal Bipartisan Infrastructure Act (IIJA).

[Note: Any line item with an (F), an (IIJA) in the Big Budget Book listing for PennVEST represents federal funds. Read more here, page E28-2]

The looming risk of significant federal budget cuts opens a second front in what is expected to be a busy state budget season.

[NOTE: On February 13, Gov. Josh Shapiro filed a lawsuit challenging the Trump Administration’s unconstitutional freeze of federal funding. Read more here.]

Highlights From State Agency Budgets

Here are some highlights from the state funding for the departments of Environmental Protection, Conservation and Natural Resources and Agriculture--

Environmental Protection

-- Overall increase of $27.4 million or 11.8% in state funding [Read more here]

-- Oil & Gas Regulatory Program: $13,026,000 to fill funding deficit caused by a significant reduction in permit application fee revenue from the shale gas industry used to support personnel and other operational costs of the Program. DEP ended 2024 receiving 482 shale gas permits, when DEP estimated the revenue from 2,000 permits annually was needed to adequately support the cost of the regulatory program. Meanwhile 314 new shale gas wells were drilled in 2024 bringing the total to 14,634 wells in the state needing oversight. [Read more here.]

-- New Positions: 10 for agricultural conservation; 4 for surface mining reclamation and enforcement support; 1 other new position for “fiscal support” [Read more here] [Read more here]

-- Conservation District Funding: Same as last year [Read more here]

-- Susquehanna & Delaware River Basin Commissions: Same as last year [Read more here]

-- Total Federal Funds At Risk: $3,310,235,000 [Read more here, page E18-8]

Conservation & Natural Resources

-- Overall increase of $23 million or 13.2% from current year in state funding [Read more here]

-- New State Park: Proposed first underground state park by adding Laurel Caverns and expanding Lehigh Gorge State Park to include the Glen Onoko Falls Trail. [Read more here]

-- Trail Connections: $5 million for infrastructure, trail connection improvements [Read more here]

-- Heritage Parks: $5 million [Read more here]

-- “Parks, Forests and Recreation Projects”: $900,000 [Read more here]

-- Keystone Tree Fund: $272,000 down from $693,000 in current budget [Read more here]

-- Petroleum & Subsurface Geology Support: 2 new positions [Read more here]

-- Increase in utilization of Oil & Gas Lease Fund to $83.2 million [Read more here]

-- Total Federal Funds At Risk: $153,575,000 [Read more here, page E12-5]

Agriculture

-- Overall decrease in funding of 2.3% [Read more here]

-- Agriculture Conservation Assistance Program:

-- $38,896,000 down from $43,498,000 (from Clean Streams Fund) [Read more here, page E9-5]

-- $13,038,000 transfer from Environmental Stewardship Fund to Agriculture Conservation Assistance Program, up from $12,807,000 last year [Read more here, page E9-5]

-- Clean Streams Fund Total: $44,336,000, down from $50,274,000 [Read more here, page E9-5]

-- Agriculture Innovation Grants: $13 million increase for ag innovation grants [Read more here]

-- County-based Digester Pilot Program: $2 million (included in Ag Innovation Grants) [Read more here]

-- Farmland Preservation Program: 1 new position [Read more here]

-- Conservation District Funding: Same as last year [Read more here]

-- Total Federal Funds At Risk: $104,350,000 [Read more here, page E9-6]

Miscellaneous

-- Transfer To Pay Growing Greener Debt Service: $10 million transfer from General Fund Personal Income Tax Revenue to Environmental Stewardship Fund. [Read more here]

-- Solar For Schools Funding: Provides another $25 million for grants. [Read more here]

-- Environmental School Repairs: Increase funding by $25 million to $125 million Environmental Repair Grants to support safety, environmental and health improvements to schools. [Read more here]

-- PEMA Emergency Assistance Decrease: Zeros out Urban Search & Rescue ($6 million), Disaster Relief ($10 million), Hazard Mitigation ($1 million) and Emergency Management Assistance Compact ($4 million). Disaster Assistance To Individuals maintained at $5 million [Read more here]

-- Legalize and tax “skill” gambling games to generate an estimated $1.6 billion annually with most of the money going to the General Fund and a smaller portion to the Lottery Fund. [Read more here] [Sen. Yaw proposed using the revenue from skill games to support the Agriculture Conservation Assistance Program and the Clean Streams Fund. Read more here. Other legislators proposed to support transit systems with this funding.]

Energy Plan

Gov. Shapiro said his proposed 'Lightning Energy Plan' would create energy jobs, lower costs for consumers, protect Pennsylvania from global instability by building next generation power, and position the Commonwealth to continue to be a national energy leader for decades to come. Read more here.

The Governor’s initiatives would save Pennsylvania energy customers $664 million by 2040, while generating $11.4 billion in investment in clean, reliable energy sources.

The Plan would--

-- RESET Energy Facility Siting Board: Pennsylvania needs to streamline the process for building energy projects. Currently, Pennsylvania is one of only 12 states without a state entity to handle siting decisions for key energy projects. The Governor is proposing the Pennsylvania Reliable Energy Siting and Electric Transition (RESET) Board to speed up permitting, reduce red tape, and support the next generation of energy projects in the state.

-- Repurposing EDGE Tax Credit: The Pennsylvania Economic Development for a Growing Economy (PA EDGE) Tax Credit Program, established in 2022, hasn’t been used, leaving billions in potential economic development untapped.

The Governor’s proposed budget includes key tax credit modifications to revamp the program, including:

-- Reliable Energy Investment Credit: Up to $100 million per facility for three years, focused on adding reliable energy sources to the grid.

-- Regional Clean Hydrogen Tax Credit: Up to $49 million annually for regional hydrogen projects, with lower thresholds to qualify.

-- Sustainable Aviation Fuel: Up to $15 million per year for a taxpayer who makes a $250 million capital investment and creates 400 jobs at a facility to produce sustainable aviation fuel (SAF), like the CNX and KeyState Energy collaboration at Pittsburgh International Airport.

-- PACER (Pennsylvania Climate Emissions Reduction Act): PACER would establish a cap-and-invest program to set Pennsylvania’s carbon limit and invest in reducing electricity costs. Under PACER, 70 percent of the revenue generated would be returned to Pennsylvanians as rebates on their electric bills.

-- PRESS (Pennsylvania Reliable Energy Sustainability Standard): PRESS would modernize Pennsylvania’s outdated energy standards, incentivizing innovation in nuclear and renewable energy, including battery storage, to remain competitive with other states.

-- Lowering Energy Costs for Rural Communities: The Governor’s proposed 2025-26 budget introduces “Community Energy,” a proposal that helps rural communities, farmers, and low-income Pennsylvanians jointly share energy resources to lower costs. For example, farmers could use methane digesters to produce energy for their farms, reducing reliance on utility companies and lowering their energy prices.

-- Rebates to Reduce Household Energy Costs: In addition to these initiatives and reimagining the PA EDGE tax credit programs, Pennsylvania must reform Act 129, the law that provides rebates and incentives to buy new energy efficient appliances and other ways to reduce electricity needs over time — which in turn, leads to lower electricity prices. The Governor’s proposal will update these energy efficiency standards for the first time in nearly two decades.

-- Funding For New Projects: The Governor’s energy plan will provide funding for new projects through an updated Pennsylvania Economic Development for a Growing Economy (EDGE) manufacturing tax credit, streamline energy project approvals by creating a state energy siting board to cut red tape, and encourage communities to lower utility bills through shared energy resources. Additionally, the plan increases rebates for energy-efficient appliances to help reduce household energy costs.

-- Cap On PJM Energy Auction Prices: Gov. Shapiro also noted he had reached an agreement with PJM Interconnection on a plan to resolve his recent lawsuit and to save consumers over $21 billion over the next two years. Read more here.

The Governor’s announcement builds on the energy plan unveiled by the Governor last March [PACER and PRESS], which will protect and create nearly 15,000 energy jobs, lowering utility bills for households, and taking real action to address carbon pollution.

These initiatives are projected to save Pennsylvania energy customers $664 million by 2040 and generate $11.4 billion in clean, reliable energy investments.

The Governor said independent studies confirm the PACER and PRESS proposals will save Pennsylvanians money on their electricity bills, create energy jobs, and lead to billions in new investment in power plants and energy infrastructure. Read more here.

Budget Documents

-- Governor’s Remarks As Prepared For Delivery

-- Governor’s Big Budget Book

-- House Democrats Budget Summary

-- House Republican Budget Summary

-- Governor’s Line Item Spreadsheet

Resource Links:

-- Gov. Shapiro Proposes ‘Lightning’ Energy Plan To Increase & Diversify Energy Generation; Reduce Climate Changing Pollution; Lower Energy Costs; Create Jobs [PaEN]

-- PUC: Calendar Year 2024 Act 13 Drilling Impact Fees To Remain Same As 2023; Dramatic Decline In Financial Support From Shale Gas Industry Continues [PaEN]

-- Erie Times - Brian Whipkey: Game Commission Sees $221 Million Drop In Natural Gas Royalties From Previous Year

-- PA Republican Senator To Introduce Bill Suspending State Taxes On Natural Gas Producers; Cut DEP Permit Fees; End Drilling Moratorium On DCNR Lands; Exempt Coal-Fired Power Plants From EPA Regulations [PaEN]

-- PA Senate Republicans Reintroduce Bills To Eliminate State Appeals Of Pipeline Permits; Limit Grounds For Appeal Of Any DEP Permits; Punish Communities For Protecting Their Constituents Against Shale Gas Drilling Impacts [PaEN]