Marcellus Shale companies are resisting a proposal by Pennsylvania regulators to more than double the price of drilling permit applications.
The state Department of Environmental Protection says it needs to raise permit fees from $5,000 to $12,500 per shale well to keep the state’s oil and gas oversight program from running out of money by next summer.
In response, shale companies and trade groups that have backed past fee increases now argue in public comments that the department has not sufficiently justified the need for this one.
Other funding sources — including the impact fee on shale companies and the department’s share of the taxpayer-supported general fund — should be tapped first, they say.
Pennsylvania would impose the highest well permit fee in the nation if the proposal is adopted, the Robinson-based Marcellus Shale Coalition said.
DEP’s oil and gas program reviews permit applications, inspects well sites and develops policies to improve oversight of the industry.
The monthlong public comment period on the proposal closed Monday. Common industry complaints in the comments included that past fee hikes did not lead to faster permit reviews, which dragged on well past mandated deadlines last year amid a shortage of reviewers, and that there is no guarantee the new proposal will have a different outcome.
Also, shale companies say they are being asked to subsidize oversight of the state’s conventional, storage and legacy wells, which take up about 40 percent of the agency’s workload.
While none of the industry commenters recommend raising fees on conventional drillers — and the department is not proposing any changes in conventional well fees — “it is readily apparent that PADEP is looking at the unconventional industry as a ‘cash cow,’” the Wexford-based Pennsylvania Independent Oil & Gas Association said.
A statewide environmental group, the Pennsylvania Environmental Council, said it is clear that state regulators and lawmakers need to identify other options to “provide more stable funding for the agency while maintaining protections and balancing costs for the regulated community.”
Department officials acknowledge that one-time shale well permit fees are not a sustainable funding source for a broad program of oil and gas oversight, and they have pledged to advocate for a more balanced funding mix.
One goal would be to pursue funding “that doesn’t require someone else” — meaning, other DEP programs or state agencies — “to get shortchanged for our benefit,” Scott Perry, the deputy secretary for the department’s office of oil and gas management, said at an advisory board meeting last week.
“I welcome everyone’s good ideas on how to do that,” he said.
It generally takes more than a year for a DEP regulation to take effect after it is first proposed. The review process includes scrutiny by committees in the Republican-led General Assembly, which also determines the agency’s annual general fund appropriation in conjunction with the governor.
Thirty-two Republican state representatives wrote to criticize the permit fee proposal and questioned whether the department has the authority “to propose such a disproportionate share of funding responsibility upon one segment of industry.”
Instead, they suggested DEP use part of its general fund appropriation to support the oil and gas program.
Laura Legere: llegere@post-gazette.com.
First Published: August 15, 2018, 12:30 p.m.
Updated: August 15, 2018, 12:34 p.m.
