Pa Environment Digest Feb. 29, 2016

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PA Environment Digest An Update On Environmental Issues In Pennsylvania

Edited By: David E. Hess, Crisci Associates

Winner Of PA Association of Environmental Educators Business Partner Of The Year Award

PA Environment Digest Daily Blog Twitter Feed

Issue #609 Harrisburg, PA February 29, 2016

Budget: DEP Does Not Have Enough Staff To Meet Needs In Any Of Its Programs

DEP Secretary John Quigley was very direct in telling the Senate

Appropriations Committee Thursday that his agency does not haveenough staff to meet the needs of any of its programs because of

persistent and continuous budget cuts over the last decade.

He added additional cuts would not only be “ruinous” for the

agency, but also for the regulated community.

“DEP's ability to protect public health and the environment, and

to perform basic functions like evaluating permit applications in a timely

fashion, have been stressed to the limit,” said Secretary Quigley.

“Further cuts will jeopardize the citizens we serve and the environment

that we are obligated to protect, and harm the state's economy.”

In comments at the end of the 3-hour hearing, Sen. Pat Browne (R-Lehigh), Majority

Chair of the Senate Appropriations Committee, said “a bunch” of DEP special funds will be“underwater” in the near future and many of them are for very important programs. He

mentioned the Clean Water and Radiation Protection funds.

Secretary Quigley said the Storage Tank Fund will be out of money in mid-2017 and the

Hazardous Sites Cleanup Fund in mid-2018.

Sen. Browne said other DEP funds do have money and could be looked at to support

other programs and looked forward to working with DEP on those issues.

Secretary Quigley said DEP has been in a position for the last decade to do more with

less. He noted the agency lost 14 percent of its staff, while the average agency lost 6 percent of

staff.

He added, in another example, DEP spent $23 million for information technology a

decade ago and just with inflation the budget should be $29 million. However, it is now just $16million.

Secretary Quigley said DEP has identified 10 projects under the Governor’s Go-Time

initiative to make the agency more efficient including--

-- Consolidating the grant application process into one platform;

-- DEP received permission to download apps to agency iPhone, which it could not do before,

that will make staff more effective;

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-- Adopted faster Internet service to its regional offices that will make work more efficient;

-- Start using iPads this year in the Oil and Gas Program, rather than carrying clipboards, that

will double the productivity of DEP’s inspectors;

-- Instituting an electronic document management solutions to eliminate the need of 10s of

thousands of square feet of warehouse space now used to store paper documents;

-- Replacing the eFACTS permit management and inspection reporting database, which isincluded in the Governor’s budget; and

-- Starting an electronic permit acceptance and review initiative in the mining program as a first

step to making other permit processing electronic.

Here are other changes proposed for DEP in the Governor’s FY 2016-17--

-- $0 funds will be transferred from the Marcellus Shale Legacy Fund to DEP in FY 2016-17,

$10.3 million was transferred in FY 2015-16; and

-- 2 new positions for Covered Device (electronics waste) Recycling Act administered at DEP.

Here is a quick summary of questions raised by Senators at the hearing--

-- EPA Clean Power Climate Rule: Sen. Gene Yaw (R-Lycoming), Majority Chair of the

Senate Environmental Resources and Energy Committee, asked why DEP is moving ahead with

developing a plan to meet the Clean Power Climate Rule when the U.S. Supreme Court stayedthe implementation of the Program.

Secretary Quigley said DEP is planning to continue working with stakeholders on the

development of a Pennsylvania Plan to meet the EPA rule because one of the outcomes of the

federal court challenge could be to meet the existing compliance schedule. He said it is worth a

“deep-dive” on the issue, because that is the safest option.

At the same time, Secretary Quigley said it is unlikely DEP will be submitting a Plan to

EPA before the legal challenges are decided.

He added, alternative/renewable energy and using Pennsylvania’s cleaner natural gas is

the future and those trends will continue irrespective of what happens to EPA’s rule.

Sen. Kim Ward (R-Westmoreland) asked what the cost is to develop Pennsylvania’s plan

to meet the requirement. Secretary Quigley said DEP is not hiring new staff to prepare the plan;

about 6 staff use part of their time to prepare the plan. In addition, Pennsylvania is getting

special modeling support from the National Governor’s Association to look at policy options.

Sen. John Wozniak (D-Cambria) said coal-fired power plants are important to the

economy in Western PA and everything should be done to protect them as long as possible.

-- Proposed Waste Fee Increases: Sen. Yaw asked Secretary Quigley to explain the proposed

$1.75/ton increase and broadening of the state waste disposal fee that would be deposited to

DCNR’s Oil and Gas Fund. Secretary Quigley said the idea behind the fee is to even the playing

field between municipal and construction and demolition and residual waste to which the fee is

proposed to apply. Without the fee increase, the Environmental Stewardship (Growing Greener)

Fund will be hit with a $35 million reduction in funding for watershed restoration and recreation projects [along with a $15 million reduction to the Hazardous Sites Cleanup fund].

-- Citizens Advisory Council/Oil & Gas Technical Advisory Board: Sen. Yaw asked about

issues related to advisory committees, including DEP’s Citizens Advisory Council where its

Executive Director was dismissed by the agency. He also noted the Oil and Gas Technical

Advisory Board and the Conventional Oil and Gas Advisory Committee both recommended DEP

not go ahead with Chapter 78 drilling regulation changes and DEP did. Sen. Yaw said it seems

like DEP ignores its advisory committee or the agency dismisses people it doesn’t like.

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Secretary Quigley said there was no policy differences with the Citizens Advisory

Council, but dismissing the Executive Director is a personnel issue that he could not discuss.

Secretary Quigley said he thought it was healthy to occasionally have disagreements with

its advisory committees as part of the discussion of regulatory requirements and policy. He

noted the Oil and Gas Technical Advisory Board which advises DEP on issues related to

Marcellus Shale drilling did not recommend delaying the regulationsHe said DEP appointed individuals to the two oil and gas advisory committees from

several sources, including Sen. Scott Hutchinson (R-Venango). He explained DEP added the

Conventional Oil and Gas Advisory Committee because there was only one advisory group

previously advising DEP on both the conventional and Marcellus drilling industries and they

thought separate groups would be helpful.

-- Chesapeake Bay Program: Sen. Yaw said he was aware of a proposed Growing Greener III

Program for a suggested $900 million with many, many items that were “nice to have.” He said

some of those may have to be redirected to support the Chesapeake Bay Program and other

programs the Commonwealth must do.

Secretary Quigley said there have been discussions with a variety of groups on a proposal

and Gov. Wolf is anxious to have a conversation with members of the General Assembly aboutwhat should be in any new Growing Greener Program.

Sen. Scott Wagner (R-York) asked later for more information on the Chesapeake Bay

Program on whether putting some of the required nutrient reductions out for bid would be a good

idea. [The reference is to Senate Bill 724 that would be an ineffective way to address nutrient

reductions that would not count toward the state’s Chesapeake Bay cleanup commitments.]

Secretary Quigley said there are opportunities for market-based approaches to nutrient

reductions, like the Nutrient Credit Trading Program, and DEP is now proposing changes to the

program to make it more effective.

Secretary Quigley said there is an “incredible sense of urgency” in making the changes

needed to make the Trading Program more efficient and effective and to address Pennsylvania’s

Chesapeake Bay cleanup commitments.

Sen. Elder Vogel (R-Beaver) asked if the Penn State survey of farmers on conservation

practices mentioned in the Chesapeake Bay Reboot will actually be used in the Chesapeake Bay

Program. Secretary Quigley said the survey is part of an effort to get Pennsylvania farmers the

maximum credit possible for conservation practices on the ground, but which have not be

credited within the Bay Program.

Sen. Lloyd Smucker (R-Lancaster) said Lancaster County is at “ground zero” on

Chesapeake Bay Program and there are concerns about the Bay Reboot proposed by DEP. He

asked about the confidentiality of the farmer survey results. Secretary Quigley said Penn State is

handling the survey and no data from individual farmers will be made available to DEP. It will

be aggregated for DEP’s use.Sen. John Eichelberger (R-Blair) asked what role county conservation districts will have

in implementing the Chesapeake Bay Reboot and expressed concerns about district involvement.

Sen. Lloyd Smucker (R-Lancaster) had similar concerns. Secretary Quigley said DEP had paid

for 100 educational visits to farmers, but now DEP is proposing, instead, to pay for 50

enforcement visits to farmers. However, DEP is not asking districts to take enforcement actions.

He emphasized the new program would be voluntary on the part of districts. Secretary Quigley

said Pennsylvania has been trying to educating farmers for 30 years; now is the time to go to the

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next step.

He acknowledged there has not be enough outreach to districts about the reboot, noting

DEP is meeting with districts next week to discuss Reboot in detail. Sen. Eichelberger said he is

concerned about conservation districts being viewed as an “enforcer,” rather than being an entity

that helps farmers.

-- Susquehanna River Impairment: Sen. Rob Teplitz (D-Dauphin) asked what the next step isin making a decision on listing the Lower Susquehanna River as impaired. Secretary Quigley

said DEP does not yet have a specific source for the endocrine disruptors and herbicides that are

the likely the causes for the smallmouth bass in the river. He said DEP will be doing a herbicide

use survey and an extended water sampling program that will go up the river’s tributaries to try

to identify sources.

-- Federal Mine Reclamation Fee: Sen. John Yudichak (D-Luzerne), Minority Chair of the

Senate Environmental Resources and Energy Committee, said the federal Abandoned Mine

Reclamation Fund fee is set to expire in 2021 and wanted to know what is DEP doing to ensure it

continues. Secretary Quigley said they are deeply engaged with the state’s Congressional

Delegation to do everything we can to make sure the fee continues.

-- Coal Waste Power Plants:

Sen. Yudichak (D-Luzerne) said he learned this week the PantherCreek waste coal power plant is cutting back its operations which provide not only energy, but

mine reclamation benefits. He asked what DEP is doing to make sure these plants and their

benefits continue. Secretary Quigley said the waste coal power plants are an “incredible”

resource for Pennsylvania because of their multiple benefits. He said has been in discussions

with White House officials on how the coal waste plants can continue to be viable. He added

they also recognized their importance as they had the opportunity to comment on federal air

quality regulations.

Sen. Randy Vulakovich (R-Allegheny) also expressed support for coal waste power

plants and their multiple benefits.

-- Lead In Drinking Water: Sen. Yudichak (D-Luzerne) asked about what DEP is doing to

prevent lead in drinking water problems. [Sen. Yudichak sponsored Senate Bill 1254

signed into

law last year that lowered the lead content of pipes and other plumbing products as part of a

program that has been in place in Pennsylvania since 1989.]

Sen. Vincent Hughes (D-Philadelphia), Minority Chair of the Senate Appropriations

Committee, also expressed concerns about lead levels in children in Pennsylvania. He said he

understands part of the problem is due to Pennsylvania’s older housing stock.

Secretary Quigley said DEP has a water sampling program for the 159 public water

systems in the state and noted that none of Pennsylvania’s public water supplies exceed

EPA

lead standards. Secretary Quigley agreed with Sen. Hughes the problem is caused in large part by

the older housing stock in Pennsylvania.

He said one problem DEP has is the Safe Drinking Water Program is down 25 percent inits staff due to the relentless cuts in DEP’s budget. The major impacts of all the budget cuts has

disportionately fallen on water protection programs because they are supported by the General

Fund. If we continue on this path, Secretary Quigley said, he is not confident their success with

these programs can continue. DEP was asked to provide its recommendations on what it needed

to properly support this program.

-- Pipeline Infrastructure Task Force: Sen. Yudichak (D-Luzerne) asked what parts of the

Pipeline Infrastructure Task Force recommendations will require legislation to implement.

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Secretary Quigley said Gov. Wolf wants to use as much natural gas as possible for energy

generation and to make things and pipelines are a key part of doing that. He said DEP is

responsible for implementing 94 of the 184 recommendations and an internal task force has been

formed to see how each of those recommendations will be implemented, including by legislation.

DEP, he said, will also continue to reach out to stakeholders as this process goes forward. He

noted the first recommendation was that DEP needed more staff.-- Speed Of Oil & Gas/Other Permit Programs: Sen. James Brewster (D-Allegheny) asked

what steps DEP is taking to speed up the permitting of oil and wells and related permitted

processes and whether DEP had the staff needed for the program. Secretary Quigley said, “no,”

DEP does not have enough staff to meet the needs of any of the regulatory programs or for the

regulatory community, not just in the Oil and Gas Program. He said DEP is going to electronic

permitting process and other changes that will help speed up the process and provide more

transparency for the public.

Secretary Quigley said at the same time there is a responsibility on the part of the

applicants to submit good applications. He noted last Fall his staff did an analysis of 2,600

randomly selected applications from DEP’s biggest programs -- the Chapter 102 erosion control

and Chapter 105 stream encroachment programs.He said 30 percent of the applications had technical deficiencies that slowed down DEPs

review process. Only a handful of the 47 firms preparing those applications got passing grades

in application preparation-- 1 consultant got an A, 5 consultants got a B, 7 got a C, 8 a D and 26

an F.

Sen. Scott Wagner (R-York) asked later if the list of substandard consultants is publicly

available. Secretary Quigley said DEP has not gotten in the business of shaming companies, but

wanted to work individually with consultants.

Secretary Quigley noted DEP’s Southeast Regional Office has four permit writers with

over 200 permit applications on their desk [in the Chapter 102-105 programs]. He said

additional cuts would not only be “ruinous” for the agency, but also for the regulated

community. He said he would not come to the Governor or the General Assembly for more staff

unless he first did as much as possible to reduce costs.

-- Extending Existing Permits: Sen. Mario Scavello (R-Monroe) suggested extending existing

environmental permits rather than having companies re-apply for new permits as a way to save

money and support businesses. Secretary Quigley said it would not be an appropriate solution to

this issue, in particular where there are updated environmental protection standards that apply to

issuing new permits. Investments in electronic permitting and other initiatives will help speed

the permit process, he said.

-- Natural Gas Severance Tax: Sen. Kim Ward (R-Westmoreland) asked if the proposed 6.5

percent natural gas severance tax would allow for deductions for production costs. She noted the

existing drilling impact fee, which would be retained under the Governor’s proposal, has a 5.5 percent effective rate. Secretary Quigley said the proposal does have credits for payments under

the drilling impact fee. He also noted Pennsylvania drillers/producers have low production costs,

and producers have been bragging about how low they are in announcements of recent business

results.

-- Keystone Landfill/Act 101 Update: Sen. John Blake (D-Lackawanna) asked about the status

of the Keystone Landfill expansion application. Secretary Quigley said DEP expects a response

to the technical deficiency letter sent to Keystone in late Spring or early Summer. DEP has

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already started the air monitoring that local residents had requested with the federal Agency for

Toxic Substances and Disease Registry. The results will be released to the public when they

becomes available.

Sen. Blake followed up by saying he was working on an update to the 1988 Act 101

Municipal Waste Planning, Recycling and Waste Reduction Act saying there should be a review

of state waste disposal fee and where it is directed and the materials included in the mandatoryrecycling program. Secretary Quigley said he would be happy to work with the Senator on an

update. He also said other acts are due for a review as well, including the Act 537 Sewage

Facilities Act.

Sen. Blake asked whether there was a way to set different requirements for imported

waste. Secretary Quigley said court decisions have held waste imports are part of a “protected

class” of interstate commerce.

-- Recycling Fund: Sen. Scott Wagner (R-York) asked for more details on revenues and

expenditures from the Recycling Fund and noted the number of grants available to buy recycling

containers and support local programs seems to be declining. [Sen. Wagner is the owner of

PennWaste which provides waste and recycling services in Central Pennsylvania.] He said

money should never have been transferred out of the Recycling Fund to balance the state’s budget. The Senator said “I’m more on (DEP’s) side than you think” on this issue. Secretary

Quigley said $15 million was transferred out of the Recycling Fund to balance the budget several

years ago. He also noted the amount of waste being disposed in Pennsylvania is declining.

-- Electronics Waste: Sen. Elder Vogel (R-Beaver) expressed concerns about shrinking options

for electronics waste. Secretary Quigley said the problem needs a legislative fix that Rep. Chris

Ross (R-Chester), but it is a real problem. He specifically expressed concerns about the illegal

dumping of TVs, if local recycling programs started charging for recycling services instead of

having electronics manufactures pay for recycling like they do now.

-- Hazardous Sites Cleanup Fund: Sen. Stewart Greenleaf (R-Montgomery) asked for the

status of the Hazardous Sites Cleanup Fund and its funding. Secretary Quigley said there has

been a 55 percent reduction in funding to the Hazardous Sites Cleanup Program with the end of

the Capital Stock and Franchise Tax and said it will run out of money by mid-2018. [Note: If the

increase and broadening of the state’s waste tipping fee is not adopted and deposited to the Oil

and Gas Lease Fund, a $15 million transfer to the Hazardous Sites Cleanup Fund could not be

made.]

-- Third Party Permit Reviews: Sen. Gene Yaw (R-Lycoming) asked, given DEP’s concerns

about staffing, whether it would be possible to have third-party review of permits by consultants.

Secretary Quigley said for the sake of public integrity he believes permit reviews and decisions

should remain at a public agency. He said as an option might be what PennDOT has done. That

agency pays for additional DEP staff to work on its permits.

-- Permit Fee Increases: Sen. Lloyd Smucker (R-Lancaster) asked about the status of permit feeincreases. Secretary Quigley he would get the detailed information to the Committee, but noted

22 percent of DEP’s budget is General Fund, 28 percent is federal funds and the remainder is

permit review or administrative fees. He said generally the agency review permit fees every

three years and they are in that review cycle now.

[The Governor’s Regulatory Agenda published on February 27 shows DEP proposing

permit fee increases for the coal and noncoal mining, Safe Drinking Water, Environmental

Laboratories, Radiation Protection and Air Quality programs in the coming year. ( PA Bulletin,

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page 1127 )

-- Black Fly Control Program: Sen. Rob Teplitz (D-Dauphin) asked about the status of the

Black Fly Control Program and whether it will be expanded. Secretary Quigley said the program

would need more funding to be expanded beyond the cost-to-carry budget appropriation of $3.3

million included in the budget request.

-- Travel Ban: Sen. Bob Mensch (R-Lehigh) said he has had problems arranging a meeting withhis local constituents and DEP on water pollution issues in Montgomery County because of the

Governor’s travel ban that prevents certain travel by DEP employees. DEP offered to meet at

the Norristown Regional Office, but that was not an acceptable solution. He said they did finally

arrange for a meeting, but it wasn’t a good situation. Secretary Quigley said the travel ban has

been lifted with the signing of the budget in December. He said DEP has a cost of doing

business and that bill has to get paid, particularly during a budget impasse. He said DEP has

tried to accommodate the public within its restrictions. Sen. Mensch said that is not a good way

of doing business. He noted the Governor spent over $30 billion during the impasse, and said

there is a lesson here to be learned.

Click Here for a copy of Secretary Quigley’s written testimony. Click Here for a video

of the DEP budget hearing [to be posted].Budget Background

DEP received about $164.4 million in 1994-95 from the General Fund which increased to

a high of $245.6 million in 2002-03. In the 2014-15 budget, DEP’s General Fund total was

$141.4 million, after bottoming out in 2012-13 at $126.8 million, about half the highwater mark

in 2002-03.

DEP’s authorized complement has shrunk from 3,200 in 2002-03 to its current 2,495,

about 705 positions-- 22 percent-- as DEP Secretary John Quigley mentioned in a video report to

DEP employees in a way that he considered them lost.

Two additional developments will cause a decrease in watershed restoration and other

funding available to DEP in the coming year.

The Independent Fiscal Office released a new report last week saying the drop in natural

gas prices means the state will collect $38 million less in Act 13 impact fees this year than it did

last year.

A portion of those fees go to support the Environmental Stewardship (Growing Greener)

Fund to support local watershed projects. As noted above, the Governor’s budget does not

transfer money to DEP to support its Oil and Gas Regulatory Program for the coming year.

The Independent Fiscal Office issued another report saying royalty income from natural

gas wells on DCNR State Forest land would decline by 40 percent in the current fiscal year

going to the Oil and Gas Lease Fund.

Gov. Wolf’s budget includes a proposal to increase and expand the state waste disposal

fee by $1.75/ton with the resulting $35 million in revenue to be deposited in the Oil and GasLease Fund.

The fee increase was necessary, according to the proposal, to allow the continued

transfers out of the Oil and Gas Lease Fund to the Environmental Stewardship (Growing

Greener) Fund ($35 million) and the Hazardous Sites Cleanup Fund ($15 million) required by

Act 13.

If the waste fee increase doesn’t go through (it has to be done legislatively), these two

programs would take a hit financially.

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House Budget Hearing

DEP’s House Appropriations Committee budget hearing is March 1 at 9:30. Click Here

to watch House hearings live.

Here are the major budget documents from the Governor’s Budget Office--

-- FY 2016-17 Executive Budget

-- FY 2016-17 Line-Item Spreadsheet NewsClips:

DCNR Finds Errors In Royalties Paid To Oil & Gas Fund

Slowdown In PA Natural Gas Industry Adds To Budget Crisis

State Sees Little Activity On Natural Gas Leases On Forest Land

Dwindling Royalties Mean DCNR Funding Significantly Diminished

Funding For Susquehanna Heritage Area In Jeopardy

Penn State Threatens To Lay Off 1,100 Extension Employees

Penn State Warns It May Lay Off 1,100 In Ag Programs

Penn State Can’t Justify Using Tuition For Extension Services

Game Commission Considers Shutting Middle Creek

Middle Creek Considered For Closure By Game Commission Swift: Budget Work Starts (Again) In Harrisburg

Swift: Election Might Perpetuate State Budget Fiasco

Related Stories:

PA Faces Losing Control Of Environmental Programs Due To DEP Funding, Staff Cuts

PUC Asks For Increased Funding For More Rail, Pipeline Inspectors

Governor’s Office Latest Regulatory Agenda: DEP Permit Fee Increase For 6 Programs

DCNR Budget Hearing: No Drilling Rigs Now On State Forest Land

DCNR Secretary Cindy Adams Dunn Written Budget Testimony-Full Text

What’s In Gov. Wolf’s New Budget For The Environment? Not Much

Lack Of Funding, Focus Is Critically Harming Pennsylvania’s Environmental Programs

CBF-PA: Wolf’s Budget Proposal Lacks Adequate Funding For New Clean Water Plan

CBF: Obama Budget Helps Chesapeake Bay Farmers At Critical Time, Shorts Cities

Wolf Budget Proposes To Raise, Expand State Waste Disposal Fees To $9.00/Ton

Wolf Shrinks DEP’s Staff By Another 200, Even Though DEP Has More Money

Op-Ed: Pennsylvania Must Invest In Its New Clean Water Plan

Drilling Impact Fees Drop By $5,000 Per Well In 2015, Loss Could Be $34 Million

IFO: DCNR Oil & Gas Lease Fund Revenues To Drop Nearly 40 Percent

CBF-PA: PA Releases New Strategy For Meeting Chesapeake Bay Cleanup Commitments

DEP: Pennsylvania Not Meeting Chesapeake Bay Cleanup Commitments

Analysis: PA Isn’t Cleaning Up Our Rivers, Abandoned Mines Quickly Enough

DEP Secretary John Quigley’s Written Budget Testimony

The following is the text of DEP Secretary John Quigley’s written

testimony submitted to the Senate and House Appropriations Committees

which outlines DEP’s accomplishments in the first year of the Wolf

Administration, efficiencies the agency is implementing and DEP’s

budget needs for FY 2016-17--

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Thank you for the opportunity to present Gov. Wolf’s proposed Fiscal Year 2016-2017

budget for the Department of Environmental Protection (DEP). I'm honored to work with over

2,600 of Pennsylvania's finest public servants, who set a high standard of professionalism every

day.

As you know, DEP's duty begins with Article 1, Section 27 of Pennsylvania's

Constitution. Our charge, as trustee of our natural resources, is to protect the public's right toclean air, pure water and preserving our environment for our citizens today and for every

generation of Pennsylvanians yet to come.

DEP's mission is to protect Pennsylvania's air, land and water from pollution and to

provide for the health and safety of our citizens. We are to guarantee that all Pennsylvanians,

including future generations, have a safe, healthy environment.

We are to work as partners with individuals, organizations, governments and businesses

to achieve a balance in preventing pollution and protecting our natural resources, while carrying

out these responsibilities in a fair and timely manner that respects both the environment and the

regulated community, and is deserving of the public's trust.

I come before you today representing an agency that has been severely degraded over the

last eight years, a condition that the Wolf Administration has been working to overcome.It's important to understand that, after years of relentless budget cuts , DEP has over 670

fewer staff than it did eight years ago. Over 440 of those positions performed the basic agency

functions of inspections and processing permits.

Here is an important example of the two paths we face: cuts have been made in the past

to meet short-term deficits, and this has hurt Pennsylvania businesses that rely on our permits

and Pennsylvania communities that rely on our protection.

The choice in front of us is to choose a path that addresses the structural deficit and

avoids further cuts, or continue this path we're on - where cuts hurt the economy and the

environment.

Our regulatory responsibilities have not diminished; indeed, workload is increasing. In

recent audits, the U.S. Environmental Protection Agency has cited DEP for severe understaffing

in our coal mine inspection, air quality monitoring, safe drinking water, and stormwater

programs.

As a result, DEP's ability to protect public health and the environment, and to perform

basic functions like evaluating permit applications in a timely fashion, have been stressed to the

limit.

Further cuts will jeopardize the citizens we serve and the environment that we are

obligated to protect, and harm the state's economy.

DEP's staffing level is not the only issue we face.

DEP's information Technology budget in 2004 was $23 million, and at that time the

agency received an "A" grade from the Office of Administration, which rated us then as amongthe most capable agencies in state government from an IT perspective.

Today, we are at the bottom of the class, rating at best a "D." Merely adjusted for

inflation since 2004, our IT budget should be $29 million today.

Unfortunately, it stands at $16 million - 43 percent less in nominal terms than I I years

ago. And that's not because personal computers have become cheaper. This represents a

cumulative $83 million divestment in the agency's IT capacity over the period.

One of the results is that agency staff are using antiquated tools to permit and monitor

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industries equipped with 21st Century technology. We must reinvest in our IT capacity to

improve efficiency, productivity, business processes, service levels, and transparency. That

investment is required for all of DEP's GO-TIME initiatives.

The budget proposal that Gov.Wolf has presented for my agency is exceptionally lean in

the face of a projected $2 billion structural budget deficit. It embodies the Governor's directive to

agencies to reduce costs, improve efficiency and effectiveness, and enhance transparency in agovernment that works.

I want to focus my testimony this morning on the initiatives we've undertaken at DEP to

respond to his direction - and to concerns that I've heard from members of the General Assembly

about the agency's performance.

First, we have begun a multi-phase agency reorganization, separating Water Programs

and Water Resources Planning into different deputates - without adding any additional staff - to

better align resources and improve management focus and accountability.

Among the next steps is to evaluate the effectiveness of our current implementation of

stormwater regulation to improve implementation consistency statewide and to restore and

maintain Pennsylvania's water quality.

I want you to know that I've heard the concerns expressed by some members of theGeneral Assembly that the agency's policies and compliance efforts varied widely from region to

region.

We are currently reviewing and revising internal policies and procedures regarding

inspections, compliance, and enforcement to not only make them more effective, but to help

ensure consistent application across all of our regional operations.

We will be releasing those revised policies for public comment this year.

We believe in transparency and have several examples to prove it. In 2015, DEP

instituted monthly online production reporting for unconventional natural gas wells to improve

transparency in gas production information - a move that will be particularly useful for royalty

owners and production forecasters. Production data was previously reported on a semi-annual

basis.

We launched the online eComment tool to enhance public participation in and

transparency of regulatory process. Nearly 4,000 comments have been submitted to the system

on a wide variety of issues.

In 2016, we will roll out additional tools to provide accessible, understandable online

reporting and public information.

We have improved key operations and our effectiveness, and saved money.

DEP evaluated and redesigned a treatment method at Lancashire acid mine drainage

treatment plant in Cambria County within the West Branch Susquehanna River Basin, lowering

operating costs while preserving plant performance, with annual savings of more than $200,000.

Our nation-leading well integrity reporting system has already enabled operators to avoidrisk and protect public health and the environment by significantly increasing their well plugging

activities.

In 2016, we will tie our new well integrity database to water supply investigations in the

field with mobile technology, to increase efficiency, effectiveness, and responsiveness. This

data-driven work will also enable more surgical rulemaking aimed at specific problems that we

are now more readily able to identify.

We have focused on restoring the agency's information technology capacity as the fastest

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path to costs savings and efficiency gains. DEP completed an assessment of IT needs and

developed a strategic plan to improve business processes, track performance metrics, transition

to new geolocation-based mobile solutions, and institute paperless workflows.

We are also planning to digitize our archives instead of warehousing paper records.

Indeed, IT has been the focus of DEP's GOTIME initiatives, which will be grounded in a

standard methodology for calculating cost savings and productivity gains.We are hard at work on ten GOTlME projects that have already saved the

Commonwealth over $250,000 and that will produce over $28.5 million in net annual savings

when completed.

A detailed breakdown of those savings has been provided to you in preparation for

today's hearing. The projects include:

-- DEP's grant programs are currently managed by several bureaus across multiple systems,

duplicating efforts and wasting IT resources. Partnering with DCED, we have begun to

consolidate those programs and centralize the awarding of grant money to improve service to the

public, local government, universities, and the business community. As part of this process, we

will decommission an outdated server. Moving grant administration from many systems to one

with on-line grant application processes will create efficiencies.-- In July 2015, DEP deployed 25 high resolution scanners to employees who handle large

volumes of paper. The scanners maximize efficiency, minimizing use of paper and streamlining

the agency's workflow.

-- Slow network connectivity for employees in DEP's six regional offices reduces productivity.

Web pages take many minutes to load, if they load at all. To remedy this, DEP will procure a

much faster connection through an open bid process to commence in July 2016.

-- We will purchase routers and switches that are currently leased at all 26 office locations,

resulting in net savings in less than 3 years.

-- We have begun the deployment of mobile iPhone applications on agency smartphones to

improve efficiency, minimize paper usage, streamline the agency's workflow, and improve

service provided to the public and the regulated community.

-- In 2015, DEP purchased 147 tablet computers for emergency and critical staff according to the

agency's continuity of operations plan, creating a more mobile working environment for agency

personnel and reducing the number of devices and volume of paper in circulation.

-- DEP inspectors are currently sent into the field with clipboards and carbonless forms.

They record results twice - on paper in the field, then electronically in the office. In 2016, by

partnering with PennDOT, we will begin the process of equipping our inspection staff

throughout the agency with tablet computers. This could double their productivity, and

significantly reduce our ongoing needs for additional staff while better serving the regulated

community and the public.

-- DEP relies heavily on paper records and archives, which require more personnel time tomanage and more space to house. DEP is exploring various department-wide electronic

document management system (EDMS) solutions. By instituting an EDMS system agency-wide,

the ability to share information across agencies will be improved, and the turnaround time for

responding to requests for public information will improve.

-- Faced with increasing demand for capacity, aging hardware and limited space, DEP is

transitioning to an outsourced data center to reduce cost and provide for more efficient

maintenance.


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-- DEP's central database, known as eFACTS (Environment Facility Application Compliance

Tracking System), uses end-of-life technology that will be supported for only five more years.

This database is critical to providing accurate information for agency operations and to the public

and the regulated community. We will achieve significant cost savings by updating the system

now, versus waiting until the technology is no longer supported in five years.

These projects serve as the foundation for additional work to improve our efficiency,effectiveness, and productivity, and to respond to the needs to the regulated community.

For example, among the top recommendations of Gov. Wolf’s Pipeline Infrastructure

Task Force was for DEP to move to electronic permitting, streamlining the process for the

regulated community.

I am happy to report that, building on the initiatives I've described this morning, we are

currently also designing a pilot project to implement e-permitting within DEP's Mining Deputate,

so that we can learn from that deployment and then proceed to adopt it agency-wide over the

course of the next two years.

DEP is striving to demonstrate government that works. That great work takes time to

build. We are hard at the task.

Thank you.Click Here for a copy of Secretary Quigley’s written testimony. Click Here for audio and

video of the Senate budget hearings.

House Budget Hearing

DEP’s House Appropriations Committee budget hearing is March 1 at 9:30. Click Here

to watch House hearings live.

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IFO: DCNR Oil & Gas Lease Fund Revenues To Drop Nearly 40 Percent CBF-PA: PA Releases New Strategy For Meeting Chesapeake Bay Cleanup Commitments




The PA Environmental Council and Chesapeake Bay

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Foundation-PA wrote to members of the Senate Appropriations Committee Wednesday to raise

concerns about the risk of losing control of key environmental regulatory programs to the federal

government and courts because of the cuts in funding and staff at the Department of

Environmental Protection over the past decade.

The following is the text of the letter--

Tomorrow the Senate Appropriations Committee will hold a hearing on budgeting for theDepartment of Environmental Protection (Department). Against the backdrop of the ongoing

budget stalemate, it could be easy to lose sight of the very real and precarious situation facing the

Department with respect to capacity issues.

We are writing to underscore some of those issues, which, if not addressed by the

Governor and General Assembly, may result in a series of unintended and damaging

consequences including federal management of permitting programs.

Budget Impacts to Department Operations

Since FY 2002-2003, there has been more than a 40 percent cut in General Fund support

for the Department – going from $245.6 million in 2002-2003 to $142.6 million in 2015-2016.

As a result, the Department has lost 22 percent of its staff. That’s more than 700 positions.

These cuts have occurred across the board, crippling the Department’s ability to meet itsmission of protecting the health and safety of Pennsylvania’s citizens. It has also cost the

Commonwealth millions of dollars in federal funding for staff and program support.

These cuts have been made without regard for their impact on reviewing and issuing

permits, conducting compliance inspections, and taking enforcement actions. They are cuts the

Department has simply been expected to live with, regardless of the consequences.

At the same time, there has been no corresponding decrease in the laws the Department

has to enforce, the projects it is told to undertake, the mandates it must meet, and the

emergencies to which it must respond in order to protect public health and the environment.

Those responsibilities have only increased in the last decade.

Consequences of Budget Cuts

We have reached the tipping point. Failure to change course will lead to the courts and

federal government making our decisions for us.

Over the past several years, the Department has been engaged in a series of remedial

reports and action plans with the U.S. Environmental Protection Agency (EPA) and Office of

Surface Mining Reclamation and Enforcement (OSMRE), among others, to address ongoing

capacity and staffing issues. Some examples include:

Some examples include:

-- U.S. Environmental Protection Agency - Water

There are a number of programs where EPA review has found deficiencies in staffing and

resources:

-- A 2012 Summary Field Report on the Department’s Stormwater Program, that containedseveral observations regarding lack of capacity including: insufficient Regional Office reviews

of post construction stormwater management plans (Observation 5); overall ability to undertake

compliance and enforcement activities (Observation 10); lack of Central Office oversight

(Observations 14 and 23); and insufficient staffing to implement the Municipal Separate Storm

Sewer System (MS4) Total Maximum Daily Load (TMDL) and Chesapeake Bay Pollution

Reduction Plans.

-- A May 2015 letter , noting that EPA may need to condition or redirect federal funding for

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Chesapeake Bay pollution reduction efforts. This funding was indeed withheld, though it was

recently released upon announcement of the Department’s Reboot Plan for the Chesapeake Bay .

However, ongoing funding will be contingent on demonstration of sufficient funding and

outcomes for that effort.

-- A June 2015 EPA Program Evaluation Report on the Drinking Water State Revolving Fund

Program, which is administered by both the Department and the Pennsylvania InfrastructureInvestment Authority. Specific action items from the Report included Department evaluation of

staff resources to address failures in inspections and the finalization of projects.

-- A June 2015 EPA Program Evaluation Report on the Clean Water State Revolving Fund

Program, noting similar staffing review needs as with the Drinking Water State Revolving Fund

Program.

-- U.S. Environmental Protection Agency - Air

In a November 2015 EPA Technical System Audit on air quality monitoring (attached

with this correspondence), EPA determined that the Department’s Air Quality Monitoring

Division is “severely understaffed,” constituting a Major Finding which equates to

“nonconformance of high importance which is unacceptable and must be remedied.”

Report discussion notes that the Department lacks adequate resources both in personneland funding, and that EPA auditors found “significant concerns with [the Department’s] field

staff shortage.”

The corrective recommendation offered in the report is that vacant positions “need to be

filled in order to continue operating (the) air monitoring program pursuant to 40 CFR 58

Appendix A.”

-- Office of Surface Mining and Reclamation Enforcement

Since 2011, the Department has been required to submit a series of Action Plans for

regulatory compliance to OSMRE. In the 2016 Oversight Performance Agreement and Action

Plan signed by both the Department and OSMRE, there are two specific areas of particular note

with respect to budget issues:

-- Due to staffing reductions, the Department has not been able to meet required inspection

compliance rates. In 2012, the compliance rate was 71% on active mine permits; 38% on inactive

mine permits; and 20% on bond forfeited permits.

-- OSMRE has also taken issue with adequacy of bonding for mining permits, citing the inability

of the Department to conduct full volume bonding with proper site analysis due to staffing

shortfalls. This matter is doubly important because any bonding shortfalls could (and likely will)

ultimately become a liability for the Commonwealth.

In correspondence between OSMRE and the Department (attached to this

correspondence), OSMRE states: “failure [to comply with the Oversight Performance Agreement

and Action Plan] will jeopardize Pennsylvania’s primacy under the Federal Surface Mining

Control and Reclamation Act … for regulating coal surface mining operations.”Pennsylvania’s Budget & Environmental Responsibility

These examples, which are likely a few of many areas of concern, demonstrate a

pervasive inability of the Department to perform its mandated responsibilities. These deficiencies

are not the result of Department neglect – they stem directly from long-term staffing and funding

shortfalls.

In other words, there are deficiencies that we have the means to remedy. These are

deficiencies that we are legally obligated, through state and federal law, to address.

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The obligations of the Department are only going to increase. One of Pennsylvania’s

most immediate and challenging obligations – cleaning of roughly 19,000 miles of polluted

streams in Pennsylvania, including the Chesapeake Bay Watershed – is now squarely in the

crosshairs.

The Commonwealth is projecting a significant shortfall for 2017 pollution reduction

targets. These are not aspirational standards; they are legally-mandated requirements thatPennsylvania is not going to meet.

The Department has been extraordinarily candid about this reality, even while

undertaking a new multi-agency strategy, using all available resources, to reduce water pollution.

If the Governor and General Assembly fail to fully act, they knowingly risk the very real

possibility that Pennsylvania will lose control of air, water, and mining programs, among others,

to the federal government.

This is not an outcome that anyone, regardless of party affiliation or fiscal viewpoint,

should want.

We suspect the regulated community would strongly agree.

Lack of adequate funding for the Department will, and should, result in dramatic permit

fee increases in an effort to at least partially bridge the shortfall.By our very own state constitution, there is a definitive obligation on elected members of

government to protect public health and the environment. This starts with ensuring that our

resource protection agencies have the tools and capacity needed to fulfill their mission.

Sincerely,

Davitt Woodwell, President and CEO, PA Environmental Council

Harry Campbell, PA Executive Director, Chesapeake Bay Foundation

A copy of the letter and attachments is available online.

For more information on programs, initiatives and special events, visit the PA

Environmental Council website, visit the PEC Blog, follow PEC on Twitter or Like PEC on

Facebook . Click Here to receive regular updates on PEC programs, activities and special

events.)

For more on Chesapeake Bay-related issues in Pennsylvania, visit the CBF-PA webpage.

Click Here to sign up for Pennsylvania updates (bottom of left column). Click Here for a copy

of CBF-PA’s most recent newsletter.

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DEP Secretary John Quigley’s Written Budget Testimony-Full Text




DCNR Budget Hearing: No Drilling Rigs Now On State Forest Land DCNR Secretary Cindy Adams Dunn Written Budget Testimony-Full Text







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Governor’s Office Latest Regulatory Agenda: DEP Permit Fee Increases For 6 Programs

The Governor’s Office published its semiannual Regulatory Agenda showing regulation changes

in process and being developed in the coming year in the February 27 PA Bulletin starting on

page 1119 . The Agenda provides an agency-by-agency listing of regulations.

For the Department of Environmental Protection, the Governor’s Regulatory Agenda

shows DEP proposing permit fee increases for the coal and noncoal mining, Safe Drinking

Water, Environmental Laboratories, Radiation Protection and Air Quality programs in the

coming year.

Among the regulations listed in the Agenda for DEP are---- Proposed Noncoal Permit Fee Increases - 2nd Quarter

-- Proposed Coal Mining Permit Fee Increases - 2nd Quarter

-- Proposed Subchapter D, Chapter 78 Drilling Regulation Changes - 4th Quarter

-- Final Total Coliform In Drinking Water Rule - 3rd Quarter

-- Final Disinfectant Residual in Drinking Water Rule - 4th Quarter

-- Proposed Safe Drinking Water Fee Increases - 4th Quarter

-- Proposed Nutrient Credit Trading/Offset Program Changes - 2nd Quarter

-- Triennial Review Of Water Quality Standards - 2nd Quarter

-- Proposed Changes To Sewage Facilities Planning, Permitting - 4th Quarter

-- Proposed Environmental Laboratory Fee Increases - 2nd Quarter

-- Final Land Recycling Program Changes - 1st Quarter

-- Proposed Storage Tank Regulation Changes - 4th Quarter

-- Proposed Radiation Protection Permit Fee Increases - 1st Quarter

-- Proposed Air Quality Permit Fee Increases - 2nd Quarter

-- Proposed Elimination Of Low-RVP Gasoline In Pittsburgh - 2nd Quarter

-- Proposed Eliminating Installation of Stage II Vapor Recovery Systems - 3rd Quarter

For the Department of Conservation and Natural Resources, the Regulatory Agenda

includes updating the agency’s list of threatened, endangered and rare native wild plants (PA

Bulletin, page 1123

).

In addition to this Regulatory Agenda, the Department of Environmental Protection

published its Non-Regulatory/Technical Guidance Documents Agenda on February 1 showingguidance in process and under development for the coming year.

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Wolf Budget Proposes To Raise, Expand State Waste Disposal Fees To $9.00/Ton Wolf Shrinks DEP’s Staff By Another 200, Even Though DEP Has More Money








Appearing before the House Appropriations CommitteeWednesday, Public Utility Commission Chair Gladys Brown said

the PUC’s FY 2016-17 budget request includes the hiring of two

additional rail safety inspectors and two additional pipeline

inspectors, but not an increase in overall PUC complement.

“Pennsylvania’s growth as an energy hub is driving a series

of interrelated issues across the state,” said Brown. “For instance,

the PUC is witnessing a growing demand for access to gas. In

response, over the past two years the PUC has approved pilot

projects for seven natural gas distribution companies. These pilots

are aimed at reducing costs and providing alternative financing

mechanisms for the extension of gas service to homes and businesses.

“There is no doubt that a growing list of Pennsylvanians want access to low cost natural

gas – and they want it sooner rather than later – but we cannot overlook the importance of

replacing old leak-prone and possibly corroded lines as quickly as possible,” explained Brown.

“The Commission continues to push for rapid replacement of aging natural gas infrastructure,

especially in Philadelphia and other older service areas, where thousands of miles of old cast iron

and unprotected steel lines are considered “at risk.”

“Just last month the PUC approved a mechanism to expedite Philadelphia Gas Works

pipeline replacement plan significantly, from 86 years to approximately 55 years. On a dollar

basis, companies like UGI Gas and Columbia have increased expenditures on pipeline

replacement by more than 100 percent since 2010. These companies are now on pace to replaceall at-risk pipe by 28 and 14 years respectively.

“Currently, the PUC has 15 gas safety inspectors who are responsible for inspecting

46,000miles of distribution pipeline, 3,000 miles of transmission pipeline, and 1,300 of Act 127

non-jurisdictional pipeline,” said Brown. “I am proud to convey that last year the PUC received

the results of a 2014 PHMSA performance evaluation. PHMSA gave the PUC a perfect score in

its evaluation of our enforcement of federal pipeline safety regulations.

“These results will help bolster our case for continued federal funding. However, as I

http://wallaby.telicon.com/pa/library/2016/20160224tx.pdfhttp://www.paenvironmentdigest.com/newsletter/default.asp?NewsletterArticleID=30987http://paenvironmentdaily.blogspot.com/2015/03/dep-pennsylvania-not-meeting-chesapeake.htmlhttp://paenvironmentdaily.blogspot.com/2016/01/cbf-pa-pa-releases-new-strategy-for.htmlhttp://www.paenvironmentdigest.com/newsletter/default.asp?NewsletterArticleID=34690http://www.paenvironmentdigest.com/newsletter/default.asp?NewsletterArticleID=34689http://paenvironmentdaily.blogspot.com/2016/02/op-ed-pennsylvania-must-invest-in-its.htmlhttp://paenvironmentdaily.blogspot.com/2016/02/wolf-shrinks-deps-staff-by-another-200.htmlhttp://paenvironmentdaily.blogspot.com/2016/02/wolf-budget-proposes-to-raise-expand.htmlhttp://paenvironmentdaily.blogspot.com/2016/02/cbf-obama-budget-helps-chesapeake-bay.htmlhttp://paenvironmentdaily.blogspot.com/2016/02/cbf-pa-wolfs-budget-proposal-lacks.htmlhttp://paenvironmentdaily.blogspot.com/2016/02/pec-cbf-pa-lack-of-funding-focus-is.htmlhttp://paenvironmentdaily.blogspot.com/2016/02/whats-in-gov-wolfs-new-budget-for.htmlhttps://goo.gl/cFwpa6


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noted earlier in my remarks, our budget includes the proposed hiring of two additional gas safety

inspectors to assist with our efforts to effectively monitor the safety of this burgeoning industry.

“The PUC continues to promote enhancements to the PA One Call programs, aimed at

reducing the number of “hits” on underground lines. These hits are a threat to the safety of

workers and bystanders, and can impact the cost and reliability of utility service.

“We believe that the transfer of enforcement authority from the Department of Labor &Industry (L&I) to the PUC will increase enforcement of PA One Call, curb the number of

underground line hits, improve public safety, and reduce costs associated with line hits for

utilities, excavators and ultimately utility customers.

“I encourage you to support these PA One Call legislative initiatives, which are contained

in House Bill 445 (R-Bradford), as well as the inclusion of an amendment to remove the

exemption related to crude oil or natural gas production and gathering lines, or facilities

associated with conventional oil and gas wells.

“The flow of resources used to produce energy across Pennsylvania is not just occurring

by pipeline, but also by rail – something that is a concern for communities across our state, for

you, and for the PUC.

“Approximately 70 trains cross through Pennsylvania each week carrying millions ofgallons of Bakken Shale crude oil. Working in partnership with the Federal Railroad

Administration (FRA), PUC rail safety inspectors work to ensure the safe movement of trains

throughout the state by checking tracks, equipment, operating practices, signals, grade crossings

and the handling of hazardous materials.

“Currently, we have eight rail safety inspectors (one vacancy) responsible for 5,600 miles

of railways located in the Commonwealth.

“Over this past year, we have worked to fill vacancies in our rail safety inspection unit,

and the budget request before you includes the hiring of two additional inspectors – increasing

our complement by 25 percent and going beyond recommendations included in the Governor’s

August 2015 Assessment of Crude By Rail Safety Issues in Commonwealth of Pennsylvania

report.

“Our goal, working with FRA, is to ensure that our rail network is safe for transporting

all cargoes – from crude oil to people – so communities and industries across the state can

continue to benefit from the positive economic impact that rail transportation provides.”

A copy of the PUC’s written testimony is available online . Click Here for vidoes of

House budget hearings..

Here are the major budget documents from the Governor’s Budget Office--

-- FY 2016-17 Executive Budget

-- FY 2016-17 Line-Item Spreadsheet

NewsClips:

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Editorial: Help Keep Heat On For PA’s Poorest

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2nd PUC Hearing Ordered On PECO Smart Meters

Nuclear Industry Bemoans Clean Power Climate Plan Stay

Op-Ed: Nuclear Plants Contribute To Greener Energy Future

PUC Wary Of Ohio Electric Deals With FirstEnergy, AEP

http://powersource.post-gazette.com/powersource/companies/2016/02/26/Pa-PUC-wary-of-Ohio-electric-deals-with-FirstEnergy-and-AEP/stories/201602260127http://mobile.philly.com/beta?wss=/philly/opinion&id=369600931http://powersource.post-gazette.com/powersource/policy-powersource/2016/02/23/Nuclear-industry-bemoans-Clean-Power-Plan-stay-by-Supreme-Court/stories/201602230009http://www.philly.com/philly/business/energy/20160226_Hearing_ordered_in_2nd_customer_complaint_about_Peco_smart_meters.htmlhttp://lancasteronline.com/news/local/ruling-farmers-can-continue-to-sell-excess-power-from-manure/article_fe598288-d4ea-11e5-a846-5b18ce22b7f1.htmlhttp://www.pennlive.com/opinion/2016/02/help_pennsylvanias_poorest_kee.html#incart_river_indexhttp://www.pennlive.com/news/2016/02/how_a_controversial_law_left_a.html#incart_river_homehttp://www.pennlive.com/news/2016/02/as_utility_shutoffs_have_risen.html#incart_river_homehttps://goo.gl/rGjjAIhttp://www.budget.pa.gov/PublicationsAndReports/CommonwealthBudget/Documents/2016-17%20Proposed%20Budget/2016-17%20Budget%20Document%20Web.pdfhttp://www.pahousegop.com/budgethearings.aspxhttp://wallaby.telicon.com/pa/library/2016/20160224tx.pdfhttp://www.legis.state.pa.us/cfdocs/billInfo/billInfo.cfm?sYear=2015&sInd=0&body=H&type=B&bn=0445


19/76

USGS Reduces Coal Industry’s Life Expectancy

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IFO: DCNR Oil & Gas Lease Fund Revenues To Drop Nearly 40 Percent CBF-PA: PA Releases New Strategy For Meeting Chesapeake Bay Cleanup Commitments



Budget: DCNR-- No Drilling Rigs Now On State Forest Land

Department of Conservation and Natural Resources Secretary Cindy Adams

Dunn appeared before the Senate Appropriations Committee Wednesday to

answer questions about the Governor’s proposed FY 2016-17 budget request

for more than two and one-half hours.

Secretary Dunn said DCNR has seen a significant decline in drilling

on the existing leases on State Forest Land saying there isn’t a single drilling

rig in State Forests.

Senators from both parties also expressed support for the Heritage

Areas Program that was not funded by the Governor’s request and asked

detailed questions about the loss of natural gas royalties going to the Oil and

Gas Lease Fund and its impact on DCNR.

The Governor’s budget includes $50.9 million in additional General Fund support for

DCNR to take another step toward weaning the agency off the Oil and Gas Lease Fund revenue

to pay for administration and operational costs.

The budget would also increase and broaden the state waste disposal fee by $1.75/ton with the resulting $35 million in revenue to be deposited in the Oil and Gas Lease Fund to help

make up for the loss of revenue from DCNR natural gas royalties to the Fund .

The fee increase and expansion are necessary, according to the proposal, to allow the

continued transfers out of the Oil and Gas Lease Fund to the Environmental Stewardship

(Growing Greener) Fund and the Hazardous Sites Cleanup Fund required by Act 13.

$35 million is to be transferred to the Environmental Stewardship Fund and $15 million

to the Hazardous Sites Cleanup Fund in FY 2016-17. If those transfers do not happen, these

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20/76

Funds will also be obviously short for the coming year.

Other changes proposed in the budget include--

-- $2.5 million increase in PA Conservation Corps; and

-- 1 new position for PA Conservation Corps for a total of 1,427 full-time positions, although the

freeze imposed by the Governor’s budget office prevents vacancies from being filled.

Here is a quick summary of the questions asked Secretary Dunn during the budgethearing--

-- State Forest Natural Gas Royalties: In response to questions from Sen. Gene Yaw

(R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee,

Secretary Dunn said natural gas royalties declined $60 million in FY 2015-16 and is projected to

be down $48 million next fiscal year. The Governor’s proposed budget includes an increase and

expansion of the state waste tipping fee by $1.75/ton.

Secretary Dunn said there are still many existing leases that need to be developed. She

noted there is not a single drilling rig on State Forest land at the moment. She said Gov. Wolf

issued a moratorium on new natural gas leasing on State Forest and Park lands, but even without

that, drilling activity is down across the state.

In addition, Secretary Dunn said, in response to a question from Sen. Elder Vogel(R-Beaver), there have a handful of drillers who let leases expire without doing any drilling.

Again in response to a question, Secretary Dunn said DCNR still considers new leases

under rivers and streams-- submerged land-- to accommodate pipelines and more efficient well

development on both sides of a water body. These leases are not covered by the Governor’s

moratorium.

Sen. Yaw asked if DCNR retained an outside auditor to look at whether DCNR received

all the royalties they were due. Secretary Dunn said they have-- Penn State University-- as a

double-check on royalty income and they have found errors.

-- Severance Tax: Sen. Kim Ward (R-Westmoreland) noted the Governor’s natural gas

severance tax is not likely to bring in the kind of money the Governor is expecting, especially

since the industry is down right now. Secretary Dunn acknowledged the industry does go up and

down and as more pipelines come online there will be more production. A severance tax, she

said, is part of the initiatives needed to increase state revenues.

-- Keystone Fund: Sen. John Blake (D-Lackawanna) noted there is an increase in the Keystone

Recreation, Parks and Conservation Fund monies provided to DCNR in the coming year because

it is funded by real estate transfer tax. Secretary Dunn said it will increase by about $8.6 million

for DCNR to use for parks and recreation grants. She said there is currently an $800 million list

of backlogged infrastructure projects in parks and forests. A next generation of the Growing

Greener Program would also be a help.

Sen. Mario Scavello (R-Monroe) suggested the Keystone Fund increase be used instead

of the General Fund increase requested by DCNR to offset less revenue from natural gasroyalties. Secretary Dunn said what is needed is more revenues in the budget. The Keystone

Fund is now used for specific purposes and not for covering operating costs.

-- Heritage Areas: Sen. Blake said he and many members of the Senate support Heritage Areas

funding and were disappointed to see it was zeroed out. Secretary Dunn said the Wolf

Administration supports Heritage Areas as an economic driver, but the lack of funds points to the

need for more state revenue sources. She noted these areas can still apply for Growing Greener

funds.

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-- State Forest Management: Sen. Judy Schwank (D-Berks) asked about the status of timber

sales on State Forest lands. Secretary Dunn said the timber industry contributes to the economy

of every county in the Commonwealth. DCNR has set up a Green Ribbon Task Force to

determine how the state can maximize the benefits from and grow the timber and related

industries. In 2015 State Forest timber harvests b