Friday, September 22, 2017

Analysis: Refresher On Senate, House Budget Proposals, A Race To The Bottom

Since the Senate and House are likely to be busy trying to reconcile the differences between the budget proposals passed by both chambers, it might be helpful to have in one place what each proposal contains.
First, no prizes will be issued to either proposal for “best budget” from an environment and energy point of view.
There are no prizes for cutting the least.
House Republican Budget
The House Republican revenue proposal in House Bill 453 (Fiscal Code) cuts a $317 million swath through environmental and energy funds removing financial support for community-based environmental restoration and recreation projects and conservation districts.
The most damage occurs to--
-- Recycling Fund - $70 million
-- Environmental Stewardship (Growing Greener) Fund - $70 million
-- Keystone Recreation, Park and Conservation Fund - $50 million
-- Multimodal Transportation Fund - $50 million
-- Underground Storage Tank Indemnification Fund - $100 million
-- County Conservation District Fund - $2.5 million
-- Industrial Sites Cleanup Fund - $10 million
-- Industrial Sites Environmental Assessment Fund - $7.5 million
-- Energy Development Fund - $3.96 million
-- Environmental Education Fund - $500,000
-- Coal Lands Improvement Fund - $2 million
-- Highway Beautification Fund - $500,000
-- Solid Waste-Resource Recovery Development Fund - $448,000
But, the damage does not stop there.
The bill includes environmental riders, just like the Senate-passed revenue plan, that have nothing to do with the budget, including--
-- Extends, Not Repeals Newark Shale Moratorium: Extends the existing ban on drilling in the Newark Shale natural gas deposits in the Southeast to January 1, 2024 from 2018.  (new from Senate plan)
-- 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. (same as Senate plan)
-- 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. (same as Senate plan)
-- 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. (same as Senate plan)
-- 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.  (same as Senate plan)
-- 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.  (same as Senate plan)
-- Funding For Washington Crossing Historical Park: Requires $2.25 million of DCNR’s State Parks Operations line item to be expended on maintenance for Washington Crossing State Park. (same as Senate plan)
-- Taken Out Of Senate Plan: Natural Gas Pipeline Fund: $6 million transfer from the Building Pennsylvania Program to the Natural Gas Pipeline Fund
-- Taken Out Of Senate Plan: Funding Sewer/Water Laterals: Allows public municipal authorities to use funds to replace private water and sewer laterals.
-- Taken Out Of Senate Plan: Temporary Cessation Of Oil & Gas Wells: Provisions relating to payments of royalties during periods of nonproduction.
Senate Revenue Plan
The Senate passed a revenue plan that does not rely on taking money out of environmental and energy funds, but it does uproot environmental permit programs, blocks initiatives and removes key environmental standards.
The Senate plan is endorsed by Senate Republicans and Democrats, House Democrats and Gov. Wolf and it passed the Senate by a vote of 26 to 24 on July 27 in a three bill package-- Tax Code House Bill 542 (still in the House), Fiscal Code House Bill 453 (returned by the House to the Senate amended with the Republican plan) and the Administrative Code House Bill 118 (still in the House).
Senate Tax Code
While House Bill 542 contains a new severance tax expected to generate about $108 million the first year, the revenues are pledged to hold harmless the Unconventional Gas Well [Act 13 Impact Fee] Fund at the $200 million a year level and the remainder will be deposited in the General Fund.
A new Gross Receipts Tax on natural gas is included that would generate about $303.7 million the first year, of which $20 million is dedicated to the Low Income Home Energy Assistance Program (LIHEAP) and $20 million for natural gas infrastructure improvements and to expand market access for residential gas customers.
The bill also makes permanent the Wild Resources Conservation Tax Checkoff.
But the bill also includes riders that have nothing to do with the budget which--
-- Third-Party Permit Reviews: Requires DEP to set up a third-party permit review program for all its permit programs that would allow unqualified individuals review and issue permits, even their own applications.  Click Here for more.
-- Legislative Approval Of Oil & Gas Emission Controls: Creates a special 7-member (6 legislative appointees) “Advisory” Committee that must approve any air quality general permits for oil and gas operations that is clearly designed to block the General Permits DEP proposed to better control these emissions.  Click Here for more.
-- Deemed Approved Oil & Gas Permits: Would deem approved oil and gas well permits where DEP did not complete a review within a certain number of days regardless of whether they met environmental standards or not. Click Here for more.
A coalition of business leaders, including shale gas, distanced themselves publicly from these changes to permit programs in August saying, in part, they did not believe they would survive a legal challenge.  So, it begs the question, who exactly supports these changes, beyond the legislators who proposed them?
Senate Administrative Code
House Bill 542 contains a mish-mash of environmental riders many of which have little to do with the budget--
-- 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. [Senate Bill 646 (Killion-R- Delaware) pending in the House would extend the Recycling Fee for only 1 year.]
-- 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 and changing the point of compliance from the discharge point to the point of intake by public water supplies. [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.]
Senate Fiscal Code
The Senate version of House Bill 453 has everything the House did, but added, as noted above--
-- Natural Gas Pipeline Fund: $6 million transfer from the Building Pennsylvania Program to the Natural Gas Pipeline Fund
-- Funding Sewer/Water Laterals: Allows public municipal authorities to use funds to replace private water and sewer laterals.
-- Temporary Cessation Of Oil & Gas Wells: Provisions relating to payments of royalties during periods of nonproduction.
Analysis - How Will It All Fit?
No one knows the final shape of the budget, but the starting points for negotiations on environmental and energy funding and program changes isn’t all that encouraging, unless sufficient public pressure is brought to bear to step back from these proposals.
These cuts and changes, whatever they will be, come on top of more than a decade of cuts to the General Fund budgets for DEP and DCNR.  
DEP, in particular, has seen a 40 percent reduction in General Fund support and lost over 25 percent of its staff over the last 14 years.
And these cuts are in addition to the Trump Administration’s proposal to cut 40 percent or more from the grants to states, including Pennsylvania, to administer federal environmental programs.  If those cuts are enacted, on top of state funding cuts, the impact will be to cripple these programs.
And this at a time when Pennsylvania’s Safe Drinking Water, Air Quality, Mining and other programs are being criticized by the federal government for not even meeting minimum federal requirements for inspections and other obligations.
There seems to be a three part strategy being implemented to dismantle and hamstring Pennsylvania’s environmental programs--
-- Step 1: Cut the budgets for state agencies with environmental programs-- DEP, DCNR, Agriculture trying to hamstring environmental programs from the top down (already implemented);
-- Step 2: Eliminate funding for community-based environmental restoration and recreation projects, essentially trying to eliminate environmental protection efforts from the bottom up (proposed by House Republicans); and
-- Step 3: Eliminate environmental protection and program laws themselves (already suggested in a number of bills and this week by one House Republican who said he wants to get rid of the mandate to recycle added in response to a question on the Growing Greener Program-- Two-thirds of the state is covered by woods, so “how much greener should we be?
Over the last two weeks environmental groups, county and township governments and many others have opposed the dramatic cuts and changes proposed by the House and Senate.
They clearly demonstrated the value of these programs to the public, communities and the environment.
Now it’s up to members of the House and Senate to listen.
(Written By: David E. Hess, former DEP Secretary under Governors Ridge and Schweiker.)
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