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Pennsylvania Budget Negotiations Drag On With Oil/Gas Related Amendments

A budget-related bill passed by the Pennsylvania Senate last week would force the state Department of Environmental Protection (DEP) to start over on a series of new regulations for the conventional oil and gas industry, and could jeopardize the agency's more than four-year effort to implement new rules for shale drillers.

The fiscal code amendments passed last week were the latest twist in the state's nearly six-month budget impasse. They would also make it more difficult for the agency to comply with the Obama administration's Clean Power Plan (CPP) by moving up a deadline to present the state's strategy on how it would cut emissions from the power generation sector to the general assembly.

The DEP has until September 2016 to get a plan to the U.S. Environmental Protection Agency, but the fiscal code amendments would require it to present the plan to state lawmakers 180 days before it is submitted to the federal government, rather than 100 days before, as current law stipulates. That would limit the amount of time the agency has to work on the plan.

The amendments would also require the DEP to scrap its work on updating environmental regulations for legacy drillers, which have been met with strong opposition (see Shale DailyAug. 5). The bill would have the agency start over on those rules, which were split from an overhaul of environmental regulations for larger shale drillers, and are on track to be vetted by the Independent Regulatory Review Commission in April and possibly finalized thereafter. It's unclear what would happen if the agency is forced to start over on rules for conventional operators.

The state has been without a budget since June 30, when Democratic Gov. Tom Wolf vetoed a Republican-crafted $30.1 billion spending plan that excluded a 5% severance tax on natural gas (see Shale DailyJuly 1). For months, lawmakers have failed to agree on a compromise, but a severance tax has since been ruled out from the framework under which legislators have recently been working to get a budget bill passed. Early last month, Wolf and Republican leaders said they were nearing a deal, but nothing has changed since (see Shale DailyNov. 10).

The fiscal amendments would also strip $12 million from the Alternative Energy Investment Act to fund grants for businesses and other organizations to use more natural gas. A spokesman for the Wolf administration said it would not support parts of the fiscal code bill that undermine oil and gas regulations or compliance with the CPP.

The fiscal code bill, HB 1327, which accompanies the state budget as a blueprint on how to spend state money, has moved to the House for a vote. Both the House and Senate have approved their own versions of the state budget.

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