Aug. 15, 2018
HARRISBURG – Rep. Cris Dush (R-Jefferson/Indiana) and 31 other members of the Pennsylvania House Oil and Gas Caucus have sent a letter to Department of Environment Protection (DEP) Secretary and Environmental Quality Board Chairman Patrick McDonnell regarding a proposed rulemaking change which would drastically increase the application fee for an unconventional well permit from the current $5,000 to $12,500.
The letter comprehensively addresses the following issues:
Permit Review Timeframes
“While permits can be applied for and received in many states in a week or less, it is our understanding that last year the average review time for an unconventional well permit was in excess of 110 days.
“DEP has referred to this permit fee increase as a ‘status quo’ increase, meaning that no additional efficiencies or improvement to review times will be realized under this proposal. It is inconceivable that a permit fee increase of 150 percent, totaling nearly $15 million in new revenue annually, will merely maintain a status quo that currently lags behind other states with which we are competing for capital investment and job creation.”
Relevant Statutory Authority
“The Oil and Gas Act requires that any permit fee charged by the Department bear a reasonable relationship to the cost of overseeing the oil and gas industry. It is our understanding that, while the unconventional natural gas industry accounts for approximately 60 percent of the workload of the department, it contributes in excess of 99 percent of the department's oil and gas program budget. This funding inequity is only exacerbated by imposing an additional $15 million in permit fees on the shale gas industry.”
“More importantly, we do not believe that the statutory authority granted to the Environmental Quality Board by the General Assembly allows for the department to propose such a disproportionate share of funding responsibility upon one segment of industry.”
Competitiveness with Other States
“Under the Regulatory Review Act, agencies are required to consider the negative implications of a proposed rule on the Commonwealth’s economic competitiveness. However, in its analysis, the department chose only to look at four adjacent states—two of which (New York and Maryland) have prohibited shale gas development and are therefore completely irrelevant to this statutorily mandated consideration. DEP should have included a survey of other shale-gas producing states with which Pennsylvania is competing for capital investment in order to do an adequate and fair comparison.
“Based on our own comparison, it is clear that Pennsylvania’s proposed permit application fee of $12,500 will be the highest in the nation, yet another distinction that signifies Pennsylvania is not open for business.”
Conclusion
“We recognize the need for the department to have adequate staff and resources necessary to meet its statutory obligations. However, the proposed permit fee increase is unwarranted and is unsupported by the statutory authority afforded to the department. We strongly urge the department to reconsider this proposal and instead utilize General Fund dollars already available to the agency to help support the oil and gas program.
“Additionally, the $6 million impact fee allocation to the department should be utilized as intended by the General Assembly. Consideration of these steps will significantly alleviate, if not fully address, the need to levy such a significant permit fee increase on an industry that still lags far behind other basins across the country.”
Representative Cris Dush
66th Legislative District
Media Contact: Ty McCauslin
717.772.9979
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