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Pennsylvania Governor Calls for Steeper Fees to Reduce Well Permit Backlog

Pennsylvania Gov. Tom Wolf wants to more than double natural gas well permit fees and give more money to the state Department of Environmental Protection (DEP) to reduce a backlog of permits and modernize the application process to make it more efficient.

The oil and natural gas industry has bemoaned the backlog as it’s worsened over the last year or so. In some cases, operators have waited more than 230 days for well permits, according to the Marcellus Shale Coalition (MSC). The backlog has become most severe in the DEP’s Southwest District Office, located in a part of the state where Marcellus and Utica shale development has been heaviest.

Permit applications have piled up amid a “decade of cuts that led to bigger backlogs and longer wait times,” DEP Secretary Patrick McDonnell said. Over the last decade, the agency’s oil and gas staff has declined from 226 employees to 190. Wolf said Friday that DEP will soon release a regulatory package calling for a well permit fee increase from $5,000 to $12,500 to help the agency implement efficiency initiatives that the administration said would better serve the industry.

Wolf also plans to call for $2.5 million in the 2018-2019 budget he’ll release in February to hire 35 new employees to fill high-priority positions across the agency. About half of DEP’s budget comes from the state general fund and federal funds, while the other half comes from fees and fines. DEP’s general fund appropriation has steadily decreased from a high of $245.6 million in 2002-2003 to about $148 million in this year’s budget. Wolf has unsuccessfully called for funding increases in the past that have not been met by the legislature, where some lawmakers have questioned the time it takes for DEP to issue oil and gas permits. 

After a yearlong effort to identify and implement strategies to cut the backlog, Wolf said Friday that DEP would also expand electronic permitting, support legislation to better align the permitting process with the industry being served and provide clearer instructions to operators to help reduce time-consuming incomplete applications.

Only underground mining permits and storage tank renewal authorizations are currently able to be applied for online. But the DEP said it plans to phase in its Office of Oil and Gas Management, along with the Bureau of Air Quality and others into the e-permitting platform by the end of the year. That would help reduce paperwork.

The administration also plans to support legislation that would eliminate the requirement that a well be constructed within one year of a permit being issued and replace it with a three-year term. As pads grow to accommodate more wells, Wolf said his administration would back other legislation that would allow for permitting multiple wells on one pad site with just one application.

MSC President David Spigelmyer welcomed the state’s commitment to solving the problem,  and said his organization would continue to “engage with policymakers on ways to enhance Pennsylvania’s business climate and maximize the shared benefits of natural gas development.”

However, the industry also seemed bearish on the idea of increasing permitting fees, which the MSC noted has happened before. Three years ago, fees were increased from an average of up to $3,600 -- based on the depth and length of a well -- to a flat fee of $5,000.

The DEP, however, continues to maintain that it’s been asked to do more with less. The agency’s responsibilities have only increased in the shale era. There are more than 10,000 unconventional wells on record in the state, according to the agency’s latest annual report. Some of DEP’s permitting initiatives, the Wolf administration said, are already being implemented, which have helped reduce the agency’s overall backlog by 6,000 permits since the summer. 

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