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Permits Challenged, Tax Sought in Pennsylvania

Pennsylvania environmentalists are pushing back on expedited permitting for gas drilling activity and pushing for a severance tax on the industry, which they said last Wednesday would amount to only a "pinprick on the balance sheets" of exploration and production companies.

For the first time since the Pennsylvania Department of Environment Protection (DEP) took over review of erosion, sediment and storm water control plans for gas drilling sites, the Chesapeake Bay Foundation (CBF) is challenging two permits in Tioga County, contending violations of commonwealth and federal laws. In April DEP took over the review authority from Pennsylvania county conservation districts. It also instituted an expedited storm water permitting process that CBF claims does not allow for participation by the public or "meaningful" review of permit applications.

"Instead of protecting the environment, DEP is rubber stamping permit applications without any formal review," said CBF Pennsylvania Executive Director Matt Ehrhart. "Wild trout streams and their tributaries, and exceptional value wetlands that should receive extra protection under the law are at risk due to the lack of thorough DEP oversight."

During a media briefing Jan Jarrett, CEO of Citizens for Pennsylvania's Future (PennFuture), which is working with CBF, called for the state to institute a severance tax on oil and gas producers as other producing states have done. Gov. Ed Rendell recently dropped plans for a 5% severance tax until at least next year, saying such a tax on growing gas production in the Marcellus Shale could hurt his state's gas industry (see NGI, Sept. 7).

Jarrett accused Pennsylvania lawmakers of wanting to "...let the energy corporations off the hook for a severance tax and allow them to lock up leases on state land at a time when they can pick up leases for bargain-basement prices.

"Energy corporations are flocking to Pennsylvania to exploit the Marcellus Shale gas deposit," she said. "Their enthusiasm for the potential of this deposit can hardly be overstated...The wells are prodigious producers of gas. The gas itself is very rich...It's high in energy content.

"The primary driver for the development of this resource will be the price of gas. It will not be the absence or presence of a severance tax. The industry pays a severance tax almost everywhere else it's doing business. It's figured into their cost of doing business...A severance tax will not deter them. If Pennsylvania does not assess a severance tax, we are allowing the industry to foist the costs of drilling onto taxpayers, and they are actually fairly substantial. It includes wear and tear on roads and other public infrastructure that was never designed to handle the heavy equipment and heavy truck traffic that Marcellus Shale drilling brings to a community."

Jarrett and CBF Pennsylvania staff attorney Matthew Royer said they are not opposed to gas drilling, but they want to be assured that the environment will be protected and that citizens and the state's budget will get their deserved economic uplift from the activity.

CBF is appealing the award of an erosion and sediment control permit issued to Fortuna Energy Inc. associated with operations on lands within Tioga State Forest. It also is challenging permits awarded to Fortuna and to Ultra Resources Inc. for activity on private lands.

The Fortuna pipeline would cross tributaries of wild trout streams and impact exceptional value wetlands in violation of Pennsylvania wetlands law, CBF maintains. The Ultra project would include pipeline crossings of high-quality trout streams within the Pine Creek watershed, home to the Pennsylvania Grand Canyon and one of the state's premier outdoor recreation destinations. "For both projects, there was no analysis of the rate or volume of storm water runoff from the construction, which can pollute streams," CBF maintains.

The appeals are to be heard by the Pennsylvania Environmental Hearing Board. A spokesperson for Fortuna parent Talisman Energy Inc. said she could not comment on the challenge to the company's permit; however, she said, "environmental stewardship is a top priority for us." Ultra did not respond to a request for comment by press time.

"That these permits were issued without technical review and an analysis of the damage caused by construction and post-construction runoff violates both the federal Clean Water Act and Pennsylvania law," said Royer. "Conservation districts have the local knowledge and experience to review the permits and manage the program. What we see here is a clear failure by DEP to meet fundamental permit review obligations. DEP should restore authority to the conservation districts."

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