Bills that would place a severance tax on natural gas drilling in the Marcellus Shale, raise minimum royalty payments, require full disclosure of the chemicals used in hydraulic fracturing and more could all soon be taken up for consideration by Pennsylvania lawmakers — but the General Assembly’s efforts to close a $1 billion budget gap might push at least some of those bills to a back burner.

On Tuesday the House Environmental Resources and Energy Committee approved a pair of bills designed to “mitigate threats from Marcellus Shale gas drilling,” according committee chairman Camille “Bud” George (D-74) of Clearfield County.

HB 2213 would bolster the Pennsylvania Department of Environmental Protection’s authority to deny well permits and to suspend drilling, increase potential civil penalties to $100,000 and potential fines for continuous violations to $10,500 per day, extend to 2,500 feet the presumed liability of a well-polluting water supply and require full disclosure of chemicals used in the fracing process. Also approved by the committee was HB 2214, which would raise the minimum royalty payment to 15% of gross proceeds and prohibit royalty deductions for severance taxes, applicable state fees or post-production costs.

“The committee recognized that Pennsylvania must keep pace with the challenges and costs already being encountered throughout much of Pennsylvania,” George said.

But those bills may get “tangled up behind budget considerations,” according to a spokesman from George’s office. The House recessed Wednesday and is not scheduled to return to Harrisburg until June 7.

Last year George introduced Pennsylvania’s HB 1489, which would have imposed a “privilege tax” on all of the state’s natural gas producers at a rate of 5% of the gross value at the wellhead, plus 4.7 cents/Mcf (see NGI, June 29). Last year’s budget did not include the tax (see NGI, Oct. 12, 2009), but now there are “rumblings out of the senate that they’re going to accept the severance tax,” the spokesman said. “Now it’s where the proceeds will be divided up and how big and how much, but it remains very much under consideration.”

Awaiting approval by the Environmental Resources and Energy committees in both the state House and Senate — as well as reviews by the Independent Regulatory Review Commission (IRRC) and the Pennsylvania Attorney General’s office — are proposed regulations that would significantly lower the amount of total dissolved solids (TDS) permitted in wastewater discharges from Marcellus drilling operations. Pennsylvania’s Environmental Quality Board (EQB) recently approved the “first-of-its-kind regulation,” which would restrict wastewater discharges from drilling operations to a more stringent 500 milligrams per liter (mg/l) standard, while other new and expanded facilities in general use would be allowed discharges up to a threshold of 2,000 mg/l (see NGI, May 24).

Those regulations unfairly target the industry and would create more problems than they would solve, according to Kathryn Klaber, president of the Marcellus Shale Coalition, which was formed by natural gas producers to advance energy development in the state.

According to the EQB, “the lower standard was set for the drilling industry because drilling wastewater is so heavily polluted and because drillers have options other than returning water to rivers and streams such as reusing and recycling it, or injecting it deep into caverns situated below ground water supplies when approved by the U.S. Environmental Protection Agency.”

“500 [mg/l] is a secondary drinking water standard widely accepted at the level that where you’re drinking a glass of water it’s not a health issue, but it’s a nuisance” that could, for example, leave spots on glasses after dishwashing, Klaber told NGI. “That is a good number for what is coming into a home, but it is not a good number for what is going out a pipe into the river…to have us treat one individual stream of water to that low a standard before it goes into the river uses more energy, creates more waste streams and more new air emissions than we are solving by doing that treatment in the first place.

“The Marcellus Shale Coalition has been very clear on this issue: we are supportive of having total dissolved solids within our commonwealth waterways that meet the drinking water standard. That in-stream standard is a good thing, but this in-the-pipe standard is really putting the emphasis on the wrong thing. We think we should have a much more workable standard than that.”

Singling out drilling operations for the 500 mg/l standard is a change made since the rule was first proposed, Klaber said. “I think that’s a pretty significant change from a proposed rule to a final rule, especially because…TDS is TDS. It’s not like one type of a discharge is worse than another. Why would a state give some higher level for the same exact pollutant if they really cared about the pollutant?”Overlooked in the wastewater debate are some “huge sources” of TDS, including discharge from abandoned mines and tons of salt put down on winter roads, Klaber said. “Some municipal authorities have talked about the fact that the TDS that they discharge to the waterways tripled during the wintertime,” she said.

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