Thursday, May 5, 2016

Analysis: Will The Confrontation Over Drilling Regs Kill The Entire Package?

It’s the political equivalent of the tail wagging the dog.  Will opposition to DEP’s final drilling rules by conventional oil and gas drillers sink the entire comprehensive update to DEP’s drilling regulations in Chapters 78 (conventional) & 78a (unconventional)?
A vote in the House and Senate on House Concurrent Regulatory Review Resolution #1 in the coming weeks and Gov. Wolf’s action to sign or veto that resolution will tell the tale.
In just over a decade, the unconventional (Marcellus Shale) gas drilling industry has overtaken Pennsylvania’s conventional oil and gas drilling operations in production and economic contributions to our economy by many orders of magnitude.
Yet, the current attempts to kill DEP’s drilling regulations are being driven, for the most part, by the conventional drillers that have consistently fought against any attempts by the state, or anyone else, to regulate their activities since the original Oil and Gas Act was passed in 1984.
Legislators of both parties are falling in line behind the arguments of the conventional industry in spite of the facts--
-- DEP didn’t listen to their concerns during the 4-year process of developing the regulations, the 12 public hearings, the 20 meetings of DEP’s oil and gas advisory committees, the almost 28,000 comments submitted (an overwhelming number in support of the regulations) through the Rendell, Corbett and Wolf Administrations.  In fact, members of DEP’s Conventional Oil and Gas Advisory Committee wrote to DEP in July of 2015 saying they opposed the regulations “regardless of revisions that DEP may or may not make;”
-- DEP doesn’t have separate regulations covering conventional and unconventional wells as required by law even though members of the General Assembly have in front of them a final regulation with separate conventional (Chapter 78) and unconventional wells (78a) requirements; and
-- DEP didn’t consider the impact of the regulations on small business (conventional drillers) or submit a report on the economic impact of the regulations to the Independent Regulatory Review Commission as required by law even though the IRRC concluded on April 21 DEP’s regulations were based in law, were in the public interest and complied with the Regulatory Review Act that includes an economic impact analysis.
Legislators are listening to the conventional drillers in spite of the compliance record of the industry versus unconventional drillers--
-- Conventional oil and gas wells have three times the violations of DEP’s existing environmental regulations over unconventional wells resulting from about the same number of inspections for each;
-- DEP takes nearly three times the number of enforcement actions against conventional wells over unconventional wells;
-- Half the cases of water supply damage come from conventional wells and half from unconventional wells; and
-- 14 of the 19 “special caution areas” identified by DEP as having deadly hydrogen sulfide dangers dealt with by the agency are from conventional wells.
Attempts started in the General Assembly in 2014 to kill the conventional drilling regulations DEP developed during the Corbett Administration, but neither Senate Bill 1378 nor House Bill 2350 saw a vote by either the full House or Senate.  These bills even had a provision calling conventional drilling “benign.”
Instead, conventional drillers snuck a provision in the “Christmas Tree” that was the 2014 Fiscal Code bill to require DEP to have separate conventional and unconventional requirements.
Gov. Corbett signed the bill into law because it implemented the budget, but then-DEP Secretary Chris Abruzzo said the law would not stop the development of the drilling regulations which were split into the two chapters-- one covering conventional (Chapter 78) and the other covering unconventional drilling (Chapter 78a)-- now in the final package.
Conventional drillers again had another provision snuck into the Fiscal Code bills in 2015-- Senate Bill 655 and this year-- House Bill 1327, but this time the language would have killed the conventional regulations altogether and forced DEP to start the process over.  
Gov. Wolf vetoed both bills as part of the overall, ongoing budget conflict.
In April, the Senate Environmental Resources and Energy Committee reported out Senate Bill 1011 (Hutchinson-R-Venango) that has the same language to kill the conventional regulations and force DEP to start over.  The bill is now in position for a final Senate vote when it returns to session May 9.
And now, of course, there is House Concurrent Regulatory Review Resolution #1, but this time, if the resolution is passed by both the Senate and House (a certainty) and is not vetoed by Gov. Wolf, it would kill the ENTIRE regulation covering both the conventional and unconventional drilling industries.
Will House and Senate members continue to support the conventional drilling industry by killing DEP’s ENTIRE drilling regulation?
The Wolf Administration has several options at this point.
Will Gov. Wolf follow the Corbett Administration and stand up for both the conventional and unconventional drilling regulations by vetoing the House resolution?  
Can that veto be sustained in the Senate and House?
Will the Wolf Administration cut a deal to support Senate Bill 1011 covering only the conventional regulations in exchange for no action on the House Resolution and save at least the regulations covering unconventional (Marcellus Shale) drilling?
The showdown over whether to kill DEP’s final drilling regulations is coming to a head.
Who’s side will House and Senate members and Gov. Wolf be on?
Who will hold them accountable for their decisions either way?
Stay tuned…...

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