In the week since the state Independent Regulatory Review Commission approved contentious oil and gas regulations, industry officials are rallying the troops to keep fighting against what they call industry-ending overreach by the state Department of Environmental Protection.
“It was not the ‘independent review’ it should have been,” said former Republican U.S. Congressman John Peterson; he represented the 5th Congressional District from 1997 to 2009. “If the (state) Legislature doesn’t get a handle on the DEP, natural resources don’t have a future in Pennsylvania.”
Peterson added, “We don’t need to have a government that’s hostile to the whole resource industry.”
Along with Peterson, senators Joe Scarnati, R-Brockway and Scott Hutchinson, R-Oil City, have spoken out against the environmental regulations, as have state Rep. Marty Causer, R-Turtlepoint, officials with American Refining Group, Pennsylvania Independent Petroleum Producers (PIPP), Pennsylvania Independent Oil and Gas Association (PIOGA) and Penn Grade Crude Council.
WOLF’S TAKE
At the same time, Gov. Tom Wolf “applauds the Independent Regulatory Review Commission’s recent approval of new oil and gas regulations that will improve protection of water resources, add public resources considerations, protect public health and safety, address landowner concerns, enhance transparency and improve data management,” according to a statement provided to The Era by Wolf’s press secretary Jeffrey Sheridan.
David Sumner, executive director of Pennsylvania Independent Regulatory Review Commission, also defended the agency’s action.
“The Commission’s obligation is to determine whether a regulation is in the public interest by considering whether each rulemaking satisfies the criteria set forth in the Regulatory Review Act,” Sumner said. “This includes the statutory authority of the agency, the reasonableness of the regulation, and its financial impacts. After a thorough review, our Commission determined that regulation was lawful and in the public interest. In addition to our review, the regulation was separately reviewed by the Office of Attorney General, the Office of General Counsel, and the Commonwealth Budget Office. It will undergo an additional review by the Attorney General for legality before it can go into effect.”
Sheridan said, “The Department of Environmental Protection has carefully evaluated the potential costs of the proposed regulation and believes that it has found an appropriate balance which will allow the conventional industry to continue to succeed while appropriately protecting the environment and public health.”
COST OF REGULATIONS
Industry officials and several legislators say the DEP has ignored the costs that might put independent producers — mom-and-pop, generational, family-owned companies — out of business.
“We can’t even accurately quantify the costs of complying with these new requirements,” said Kevin Moody, general counsel and vice president of government affairs for PIOGA. He spelled out a few of the proposed requirements as well — “restoring or replacing water supplies to meet Safe Drinking Water Act standards when they didn’t meet them before drilling occurred, and may not even be able to meet them, except at an exorbitant cost or no matter what is done.”
Post-construction stormwater management obligations will be imposed on small sites, and only the oil and gas industry will be required to comply with the “costly, time-consuming Act 2 remediation process for small spills of brine, along with new reporting requirements applicable only to our industry,” Moody said.
“In its rulemaking documents, DEP amazingly estimated no or only minor costs of complying with these requirements, and there are other new and expanded requirements that have real costs that DEP either didn’t estimate or significantly underestimated,” he added.
“Even if the conventional industry was not in the current depressed oil and natural gas price environment, the additional costs of complying with all the new and expanded requirements in the Chapter 78 regs would be difficult for most conventional operators,” Moody continued, “but in this current price environment these additional costs spell disaster for most, if not all, conventional operators — and the families, employees and communities that depend upon them.”
IMPACT
Several legislators, including Causer, called these regulations “patently illegal” because the law requires separate regulations for the conventional, shallow-well producers and unconventional, shale-type producers.
“I also question how the majority of IRRC could possibly find these regulations to be reasonable. If they are allowed to move forward, the conventional oil and gas industry — and the people who have made it their life’s work — will be irreparably harmed. Dozens of producers from our area went to Harrisburg in an attempt to educate IRRC about their industry and how these regulations are both unreasonable and unnecessary. Sadly, their statements were dismissed by the commission members who voted in favor of these regulations.
“The industry is basically under attack, and it doesn’t make sense. Virtually every Pennsylvanian relies on oil and gas to run their cars or heat their homes,” Causer continued.
“It’s an industry that provides good, family-sustaining jobs. And it’s an industry with a long history of good stewardship of the environment,” the legislator said. “We should not be running them out of business. We should be working with them.”
Hutchinson had similar concerns.
“These new regulations are overreaching and onerous and will imperil jobs associated with the conventional oil and gas industry here in Northwest Pennsylvania,” Hutchinson said, calling IRRC’s decision “stunning” and “blatantly partisan.”
“The recent decision by the IRRC to approve the Chapter 78 oil and gas regulations is very troubling,” said Scarnati, who serves as the president pro tempore of the state Senate. “The Department of Environmental Protection could have made accommodations, but purposefully chose not to.
“On April 20th Governor Wolf’s spokesman Jeff Sheridan told The Bradford Era that ‘The governor understands the importance of the oil and gas industry better than anybody.’ It is extremely disingenuous to say you are for oil and gas production and then subsequently choose to crush the industry through regulations,” Scarnati said. “Governor Wolf and his Administration cannot have it both ways.”
Jeannine Schoenecker, president and chief operating officer of American Refining Group, said refinery officials are following the legislation closely.
“This one-size-fits-all approach to DEP regulations would result in regulatory burdens that are both expensive and unreasonable for conventional producers,” Schoenecker said. She pledged vigorous support of industry associations like PIPP, PIOGA and the Crude Council in their resistance to the passage of the regulations.
“Indeed, lumping shallow-well and shale-gas producers together under the same regulations would significantly influence our refinery’s operation and strategic planning, but our greater concern is for the industry itself and its longstanding, impactful economic legacy in our region,” Schoenecker noted.
IRRC’S APPROVAL
IRRC’s 3-to-2 decision to approve the regulations despite the House’s and Senate’s disapproval — and seven hours of testimony on the day of the hearing — was shocking to many. When asked, Sumner, IRRC’s executive director, acknowledged it doesn’t happen often.
“While Standing Committee disapprovals are a rare occurrence, we have previously approved regulations following a disapproval by one or both of the applicable House and Senate Standing Committees,” he said. “Our Commission carefully weighs all comments in its review of regulations and we were certainly mindful of the action of the committees during our consideration of this matter. However, after carefully considering the agency’s rulemaking and applying the criteria of the Regulatory Review Act, a majority of the Commission ultimately determined that this regulation was in the public interest.”
Peterson, who had served in the state Senate and U.S. House of Representatives during his decades-long political career, said he doesn’t remember such a case, and said this process had been “co-opted” by Wolf and DEP Secretary John Quigley.
“It was not meant to be partisan,” Peterson said. He added that he doesn’t remember a time when the DEP was more difficult to work with. “This is the most hostile DEP in 40 years.”
Quigley came to the Wolf administration from the environmental group PennFuture.
Peterson opined, “We really have the most radical environmental group in Pennsylvania running these agencies.”
The former congressman had some harsh words for Pennsylvania’s governor as well.
“Wolf does not seem to know how to govern, at least not that I’ve seen,” Peterson said. “He’s used to being the boss and he wants (things his way).”
Governing is an art, Peterson said, “You can’t be snide, snippy and snarly.”
He predicted dire consequences if these regulations are permitted to become law.
“If this doesn’t get changed, we will not have a Penn Grade Crude patch,” Peterson said. “And we will limit the enormous potential of the Marcellus Shale because the big companies are getting discouraged.
“We have an administration that’s out to get them,” Peterson alleged. Referring to the rural part of the state, the former congressman said, “The ‘T’ is in trouble.”
WHAT’S NEXT?
So what comes next?
Causer said, “The House returns to session next week and I will push for the adoption of a concurrent resolution to put a stop to these regulations. DEP needs to come back to us with reasonable, responsible and relevant regulations that both protect the environment and allow us to grow this industry for our state and our nation.”
Hutchinson and Scarnati have introduced Senate Bill 1011 to clarify that the DEP must pass separate regulations for conventional and unconventional producers.
“I will be working with Senate Environmental Resources and Energy Chairman Gene Yaw to review this latest development and determine where we go from here,” Scarnati said. “I joined Senator Scott Hutchinson in introducing Senate Bill 1011 which would prohibit DEP from implementing these harmful regulations. It is clear that the majority of the General Assembly supports the oil and gas industry and numerous family sustaining jobs which it provides within our Commonwealth.”
Schoenecker noted, “We strongly encourage all business leaders and community members to contact our representatives and speak out against the proposed regulations.”
Peterson added that he knows legislators and industry officials are angry, and said now is the time to put that anger to work. “They’ve got to get tough.”
