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Pennsylvania DEP Asks For Budget Increase to Step-Up Oil/Gas Regulations

The Pennsylvania Department of Environmental Protection (DEP), which regulates the state's oil and gas industry, would receive a 5% increase in general fund appropriations under Democratic Gov. Tom Wolf's 2015-2016 budget.

Acting Secretary John Quigley said during testimony before the state House of Representatives' Appropriations Committee that his department sorely needs the additional money to bolster staff levels, oversee new energy-related programs and modernize its daily operations.

"This budget is about investing in Pennsylvania's future -- investing in both energy development and heavily in environmental protection," Quigley told lawmakers. "These two concepts are inextricably linked and will pay dividends for our state and local economies. The budget also allows us to take the next steps toward modernizing the DEP's activities and policies -- something that is long overdue."

The agency's budget request includes $147 million from the state's general fund and asks for a spending authorization of $697 million. The general fund request would represent a more than 5% increase over the agency's current budget. Wolf's plan would also add more than $7.8 million to the DEP's current budget.

In recent years, as development in the Marcellus Shale has skyrocketed and traditional oil and gas development has been steady, the DEP's responsibilities have grown to inspecting more than 22,000 oil and gas wells, 23,000 mining operations and 7,000 wastewater treatment facilities in the state. Top officials from other administrations have repeatedly said the agency is understaffed. Wolf's budget, which also calls for a 5% severance tax on oil and gas production, would set aside $10 million in revenue from that reform to fund about 50 new oil and gas well inspectors (see Shale Daily, Feb. 11).

The DEP has also been at work on updating its environmental protection standards for the oil and gas industry for about four years. Quigley said some of those revisions would be stricter under Wolf's administration and the DEP is aiming to roll the rule changes out by Spring 2016 (see Shale Daily, March 9). Among other things, they deal with reducing impacts to public resources, preventing spills, waste management and restoring well sites after drilling. DEP is also aiming to modernize its records system to make the data it collects more transparent and easy to access electronically.

Quigley said during his testimony that the state expects more than 25,000 miles of gathering and interstate natural gas pipelines to be built over the next decade. The agency is now considering creating a task force of sorts that would consist of midstream companies, nonprofits, municipalities and environmental groups that would work together to reduce environmental and community impacts.

Wolf's $30 billion budget would also help fund several energy initiatives through $675 million in bonds. The DEP would help oversee those programs and the bond's interest would be paid with revenue created by Wolf's severance tax proposal. The plan would set aside $275 million for wind power, solar rebates, increasing the use of natural gas in the state and helping to stoke a market for more renewable energy sources.

"To take the reins as the nation's energy leader, we must expand and develop new markets for Pennsylvania's energy technologies, services and fuels, and this budget makes historic investments to bolster and transform our energy economy," Quigley said.

He added that Wolf recognizes that the state is "blessed" with an abundance of cheap natural gas. He said to fully utilize it, Wolf is suggesting funding for natural gas pipeline projects. The program would provide $25 million to build out distribution infrastructure to underserved areas that might otherwise be uneconomical for private industry.

Budget hearings are set to last through April 1. By law, the state must pass a budget by July 1.

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