Wednesday, July 26, 2017

Nothing In Senate $970 Million Revenue Package For The Environment, Code Bills Littered With Environmental Riders

The $970 million revenue package was passed by the Senate Thursday by a vote of 26 to 24 includes no new money for environmental project or program funding and the related Code bills are filled with environmental riders, most wanted by industry groups.
The package does include a new natural gas severance tax, a new gross receipts tax on consumer natural gas use, increases in the telcom and electric gross receipts taxes and changes to the Sales Tax law that would force vendors doing business through online marketplaces such as Amazon to pay Sales Tax.
Also part of the recurring revenue package is $200 million for expanded gaming, but the Senate will not consider a gaming bill this week.
There remaining budget deficit will be made up by securitizing the tobacco settlement money totalling about $1.3 billion in new debt.
Taking Away DEP’s Ability To Issue Permits
The amendments adopted by the Senate Appropriations Committee Wednesday night to the Tax Code bill-- House Bill 542 (Thomas-D-Philadelphia) -- includes provisions creating a special Advisory Committee that must approve any air quality general permits for oil and gas operations before they go into effect and directs DEP to set up a third party permit review program for all its permits.
The net impact of the changes would be to emasculate the ability of the Department of Environmental Protection to regulate pollution under any of its programs and sets up significant conflicts with the ability of the agency to continue to administer any of its federal regulatory programs.
The Senate amendments create another private bureaucracy of third-party reviewers and allow a permit applicant to pick the reviewer he wants, including picking a landscape architect to review as hazardous waste permit.
All, of course, with no resources to administer this new private bureaucracy and with no supervision or accountability provisions for the third-party reviewers.
Click Here for all the details.
Revenue Sources
The new severance tax is expected to generate about $108 million and revenues generated from the tax will be pledged to hold harmless the Unconventional Gas Well [Act 13 Impact Fee] Fund at the $200 million annual funding level and the remainder will be deposited in the General fund.
In exchange for the severance tax, Senate Majority Leader Jake Corman (R-Centre) said they have negotiated regulatory reforms for the Marcellus Shale drilling industry that involves provisions that would deem approve permits not processed by existing permit review deadline (45 days), not starting the clock over again when a permit is resubmitted and “other issues significant for the industry.” (Click Here for a description of those changes, which were partially described above.)
The new Gross Receipts Tax on Natural Gas would generate about $303.7 million of which $20 million dedicated to LIHEAP and $20 million for natural gas infrastructure improvements and to expand market access for residential gas customers.
Another provision would annually transfer $20 million from the Oil and Gas Lease Fund to the Marcellus Shale Legacy Fund [it should be $35 million] for distribution to the Environmental Stewardship Fund and $15 million is transferred to the Marcellus Legacy Fund to transfer to the Hazardous Sites Cleanup Fund.  
The summary of these provisions includes the line: “When making appropriations from the Oil and Gas Lease Fund, the General Assembly shall consider their trustee duties under Section 27, Article 1 of the Pennsylvania Constitution” in a nod to the June 20 PA Supreme Court case on the Environmental Rights Amendment.
Nonrecurring revenues include transferring $200 million from the Joint Underwriting Association Fund.
Sen. Corman also said Senate Republicans intend to do agency mergers related to human service programs, but not this week.
Environmental Riders
The following is a summary of the major environment-related riders in the Fiscal Code, Tax Code and Administrative Code bills--
Fiscal Code - House Bill 453 (Ryan-R-Lebanon)
-- Oil and Gas Lease Fund: Annually transfer $20 million [supposed to be $35 million] from the Oil and Gas Lease Fund to the Marcellus Shale Legacy Fund for distribution to the Environmental Stewardship Fund and $15 million transferred to the Marcellus Legacy Fund to transfer to the Hazardous Sites Cleanup Fund.
-- Air Pollution Act Transfer: $30.4 million from a settlement by the Attorney General relating to violations of the Air Pollution Control Act by Volkswagen received during the fiscal year to the General Fund.
-- Small Water And Sewer System Funding: $15 million available for small water and sewer projects with a cost of not less than $30,00 or more than $500,000.  Transfers an additional $10 million from Building PA Program to small water and sewer projects.
-- Funding Sewer/Water Laterals: Allows public municipal authorities to use funds to replace private water and sewer laterals.
-- Susquehanna and Delaware River Basin Commissions: Authorizes the Auditor General to audit the river basin commissions and no more than 25 percent of the appropriations to the commissions may be spent in any quarter and the commissions shall reimburse the Auditor General for the cost of the audit.
-- Natural Gas Pipeline Fund: $6 million transfer from the Building Pennsylvania Program to the Natural Gas Pipeline Fund
-- Repeals Drilling Moratorium End Date In Southeast: Repeals the January 1, 2018 expiration on the drilling moratorium in the South Newark Basin in Southeast PA.
-- Temporary Cessation Of Oil & Gas Wells: Provisions relating to payments of royalties during periods of nonproduction.
-- Farm Succession Planning Grants: Allows the Department of Agriculture to use funds from the Agricultural Conservation Easement Purchase Fund for succession planning grants to continue agricultural operations.
Click Here for the amendment
Tax Code - House Bill 542 (Thomas-D-Philadelphia)
-- Natural Gas Production Severance Tax (New): $108 million, would range from 1.5 to 3.5 cents per MCF depending on the price of natural gas.  Revenues generated from the tax will be pledge to hold harmless the Unconventional Gas Well [Act 13 Impact Fee] Fund at $200 million and the remainder will be deposited in the General fund.
-- Gross Receipts Tax (News) - Natural Gas: $303.7 million of which $20 million dedicated to LIHEAP, $20 million for natural gas infrastructure improvements and to expand market access for residential gas customers
-- Wild Conservation Tax Checkoff: Made permanent
Click Here for the amendment.
Administrative Code - House Bill 118 (Kaufer-R-Luzerne)
-- Recycling Fee Extension: Removes the sunset date for the $2/ton municipal waste recycling fee and funds will remain in the Recycling fund for grants.
-- Solar Borders: Requiring solar energy credits under the Alternative Energy Portfolio Standards to be purchased within Pennsylvania. [Senate Bill 404 this session, House Bill 2040 last session.]
-- Manganese Standard: Directs the Environmental Quality Board to propose regulations setting a point source water quality criterion for manganese to an upstream area within 5 miles or less of a known potable water supply or known private water supply within 90 days. [Supported by the Coal Alliance adopting a standard used by West Virginia prohibiting enforcement of a manganese discharge standard unless it was within 5 miles of a water supply.]
-- Conventional Oil & Gas Wastewater Treatment: Requires water treatment facilities providing water disposal services exclusively to conventional oil and gas wells shall be allowed to operate under existing permits through December 31, 2019. \[Supported by conventional oil & gas drilling industry and applies to three privately-operated conventional wastewater treatment facilities.]
-- Wyoming County State Park: Requires DCNR to conduct a feasibility study for the establishment of a state park in Wyoming County, including an appraisal of the fair market value of property proposed for a state park. [No funding provided.]
Click Here for Administrative Code bill amendment + summary.
Links To All Code Bills + Summaries
-- Tax Code: House Bill 542 (Thomas-D-Philadelphia) notice of Sales Tax due requirements for online vendors (Click Here for the amendment) (Click Here for Senate Fiscal Note and summary) Vote 26 to 24.
-- Fiscal Code: House Bill 453 (Ryan-R-Lebanon) one vehicle for Fiscal Code now relating to responding to Auditor General Reports  (Click Here for the amendment) (Click Here for Senate Fiscal Note and summary)  Vote 40 to 10.
-- Administrative Code: House Bill 118 (Kaufer-R-Luzerne) comprehensive opioid package (Click Here for Administrative Code bill amendment + summary) (Click Here for Senate Fiscal Note and summary) Vote 37 to 13.
-- Human Services Code: House Bill 59 (Moul-R-Adams) adoption subsidy appeals (Click Here for the amendment + summary) (Click Here for Senate Fiscal Note and summary) Vote 35 to 15.
-- Public School Code: House Bill 178 (Day-R-Berks) relating to school security drills (Click Here for the amendment) (Click Here for Senate Fiscal Note and summary) Vote 34 to 16.
(Sen. Corman’s press Conference was broadcast by PLS Reporter via the Periscope App.)
NOTE: This article will be updated as new information becomes available.

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