DEP Projects Nearly 70% Drop In Revenue Supporting Oil & Gas Drilling Regulatory Program Due To Downturn In Industry; Health Impacts Study Report Due This Month

On December 16, Scott Perry, DEP Deputy Secretary for Oil and Gas Management, told the Oil and Gas Technical Advisory Board his program could see a nearly 70 percent reduction in revenue from the permit application fees used to support the regulatory program which will require a significant cut in program expenses-- 86 percent of which are the cost of personnel.

DEP’s fee increase was based on the agency receiving 2,000 shale drilling permit applications a year, but, from August to November, Perry said DEP only received about 202 unconventional permits.  

If that trend continues, he said, DEP will receive only 606 applications over the first year of the new fees resulting in estimated revenue of $7.575 million and a revenue gap of about $17.5 million.

Perry noted 86 percent of the Program expenses are personnel or about $18 million.

“In order to address any of these shortfall, we would have to have a significant reduction in program expenses, so we have begun the task of addressing these shortcomings and addressing ways in which we can resolve them,” said Perry.

“Obviously, everyone within the Environmental Quality Board and the Independent Regulatory Review Commission noted that the current fee structure was already outdated at the time it was proposed, and now we have to start looking at alternatives, and that is what we intend to do and put forward to the Environmental Quality Board,” added Perry.

DEP first started to develop the current fees in February 2018 with the Oil and Gas Technical Advisory Board that ultimately became effective August 1, 2020.  It was the first fee increase since 2014.

A group of 14 Republican Senators and 32 mostly Republican House members wrote to the Environmental Quality Board opposing the proposed DEP increase in unconventional drilling permit fees in 2018.  Only Sen. Camera Bartolotta (R-Washington) wrote to the Independent Regulatory Review Commission opposing the final regulation.

“I’m sorry, it’s a very disturbing forecast, but we are in very bad shape and even though we are attempting to maintain our current level of inspection responsibilities and permitting responsibilities, the industry’s current level of activity is not supporting it,” he added. 

“It is clear the need for the Office of Oil and Gas Management remains the same, so we will be putting forth a new three-year fee report to describe our current situation and then request the EQB address our financial shortcomings,” said Perry.

Health Study Report

Perry also reported the Department of Health is expected to announce yet this month the specific steps it will be taking with an academic partner in Southwestern Pennsylvania to research health effects associated with shale gas drilling and development.

He said there will be two studies examining the short term health outcomes, like adverse impacts on pregnancy and asthma and longer-term outcomes like childhood cancer.

He said one goal of the additional studies is to attempt to reproduce prior epidemiologic research done in Southwest Pennsylvania.

For more information and available handouts, visit DEP’s Oil and Gas Technical Advisory Board webpage.  Questions should be directed to Todd Wallace by sending email to: twallace@pa.gov or call 717-579-7176.

[Posted: December 16, 2020]  PA Environment Digest