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PA Sen. Wants Lawmakers to Oversee Oil/Gas Violation Fees Collected by Regulators

Adding to a list of actions he's taken or plans to take, Pennsylvania Republican state Sen. Scott Hutchinson intends to introduce legislation that would essentially wrest control of oil and gas violation fees from the Department of Environmental Protection to the General Assembly.

Hutchinson circulated a memo late last month searching for co-sponsors for a bill that would redirect revenue received by the DEP from violations to the general fund, which the legislature appropriates. That memo came after the General Assembly passed legislation Hutchinson sponsored that scrapped new regulations for the conventional oil and gas industry and requires the DEP to rewrite them. It also came before a memo he circulated last week seeking co-sponsors for legislation that would redraft the Oil and Gas Act of 1984 to clarify its language and address the current challenges facing legacy producers that operate under it.

The DEP currently levies and collects revenue from oil and gas violations that is appropriated directly to the agency. Hutchinson told lawmakers that his bill would send that money to the state's general fund where it could be more effectively appropriated to best meet the needs of the DEP and its oil and gas program on a year-to-year basis.

"For regulation to be effective and fair, it must be enforced objectively without the presence of incentives," Hutchinson wrote in the memo. "This would hopefully create more objective enforcement of the laws and regulations currently in place."

The DEP said in its 2015 annual oil and gas report that well site inspections have steadily increased since 2008 as the agency has aimed to improve its compliance and enforcement programs. It also said  unconventional well violations dropped 67% from 2010 to 2015 and that conventional well violations declined 51% from 2011 to 2015. From 2009 to 2015, the DEP collected about $23.2 million as a result of noncompliance at oil and gas sites in the state.

Those fines and penalties are used to reimburse operating costs incurred by the DEP. The agency receives about half of its funding from fees and fines and about half from the state general fund and federal funds. As the state has confronted budget deficits in recent years, the DEP has been hit hard and faced underfunding and understaffing. Hundreds of positions, including inspectors, have been cut from the agency over the last decade, or so.

Companies facing fines also have recourse, they can file an appeal with the independent Environmental Hearing Board -- a five-member body that consists of administrative law judges. The EHB reviews numerous types of final actions taken by DEP that range from permitting decisions to fines and penalties.

Hutchinson represents a five-county district in the Northwest part of the state that has long been home to the conventional industry, which has deteriorated with the commodities downturn. Legacy producers have also been cited over the years for more violations than shale producers because they have far more wells in the state, DEP data shows.

State lawmakers returned to the Capitol earlier this month for swearing-in ceremonies and are not expected to reconvene until Jan. 23. The General Assembly faces another tough budget year. The state is confronting a $600 million revenue shortfall this year, while the Independent Fiscal Office has projected a budget deficit of $1.7 billion next fiscal year, which begins July 1.

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