Analysis: Senate, House Each Passed Marcellus Bills, Where Do We Go From Here? Easy!

Senate and House Republicans each passed bills this week that would impose a Marcellus Shale drilling fee and enact the most sweeping measures the state has ever adopted to protect the Commonwealth's land and water from the potential impact of natural gas drilling.
The bills, in particular their approaches to imposing a drilling fee, are significantly different. The provisions relating to protecting the environment are different, but do overlap in many areas. And House Bill 1950 (Ellis-R-Butler) has several major provisions Senate Bill 1100 (Scarnati-R-Jefferson) does not, including major support for the Growing Greener Program through a transfer from DCNR's Oil and Gas Fund.

On the surface it would seem reconciling these differences would be a heavy lift, but if you look more closely, there is a path forward.

Drilling Fee/Program Funding

There are two parts to resolving the drilling fee and funding issues between the bills-- what to do with the fee and whether to use the Oil and Gas Fund to support Growing Greener and other programs.

Thanks to Grover Norquist's pronouncement that the fee in House Bill 1950 is indeed a tax and with the overwhelming vote of House Republicans and Senate Republicans for drilling fees in both bills, the issue of how to avoid the fee being called a tax is completely off the table.

House and Senate Republicans have said with their votes, "so what if it's a tax, we need it anyway."

Once relieved of that burden, members are free to design a fee system that is clean, simple and easy to administer and that argues for the Senate version of the fee-- a uniform fee, collected by the state, not an optional, county-adopted fee which was only proposed originally in such a convoluted form to avoid the "no-tax" label.

The House bill uses DCNR's Oil and Gas Fund to support the all-but-bankrupt Growing Greener Program that is critical to Pennsylvania meeting its obligations under the federal Clean Water Act and restoring the state's green infrastructure.

This proposal is supported by the Renew Growing Greener Coalition and a great way of investing the drilling royalties now coming in from State Forest lands in restoring the environment.

This transfer should be in the final bill, but it should not go to support the version of Growing Greener expanded by Gov. Rendell to include alternative energy and economic development projects like parking garages. It should be focused on the original priorities of the program-- mine reclamation, watershed restoration, farmland preservation and wastewater and drinking water projects.

There are some issues to resolve between specific items and amounts the Senate fee and the House fee and the Oil and Gas Fund support, but those could be worked out once this broader framework is set.

Environmental Protection

Both bills include a laundry list of measures to protect the environment from the potential impacts of Marcellus Shale drilling. The problem is they overlap, use different setback numbers and one bill has provisions the other does not.

Solution? Pick the most stringent provision covering each issue in the bills.

There are several tweaks and additions to these provisions needed based on the Governor's Marcellus Shale Commission report and recommended by the PA Environmental Council and the Chesapeake Bay Foundation--

-- Strengthen Permit Reviews: The permitting process must be enhanced to ensure that all appropriate site data is collected and assessed to be certain that all conditions have been properly addressed before drilling activity begins.

-- Identify Areas Where Drilling Is Prohibited: The Act should grant DEP greater ability to identify areas where drilling may be further restricted or prohibited; including areas of recognized high ecological value, floodplains, or in close proximity to public water supplies.

-- Track Water Use, Disposal: DEP should also be given clear authority for more robust water resource management, such as water withdrawal review and public reporting of wastewater reuse or disposal.

-- Real Well Setbacks: Meaningful setbacks must be created for well sites and should require best management practices when site conditions warrant. The act should set a floor, not a ceiling, of what is required of operators.

-- Spill Containment: DEP should be tasked to implement a review of spill containment systems at Marcellus Shale well sites. This analysis will lead to the new containment practices, structures, and procedures to safeguard the public and environmental quality.

-- Bonding/Financial Guarantees: Financial assurance for well site operations must, at an absolute minimum, match the potential costs associated with well site accidents or other impacts. Blanket bonds are insufficient.

Land Use And Other Provisions
With the local government associations now in apparent agreement on provisions in both bills relating to local regulation of drilling operations, this major issue has been taken off the table for most groups.
Another provision of concern to the environmental community-- private reviews of permit applications, the so-called expedited permit review-- was taken out of the House bill, resolving another concern.
This all sounds easy, right? In reality, everyone knows it won't be easy to resolve the differences between the Senate and House in a bill the Governor will sign, but if you look at it, it isn't overwhelming.

The Senate and House are now scheduled to adjourn for the year December 14.

Get busy!