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An Interview with Governor Wolf’s Administrations – Regulatory Reform, Permitting, Fee/Taxes

  April 2018 / Vol 8 Issue 2

An Interview with Governor Wolf’s Administrations – Regulatory Reform, Permitting, Fee/Taxes
By: Teresa Irvin McCurdy, President of TD Connections, Inc.

 

I believe to get from point A to point B you should take the shortest route. I use the same philosophy to get information, go directly to the source. I had the pleasure of speaking with Pennsylvania Governor Wolf ’s Secretary of Policy and Planning Sarah Galbally and Deputy Chief of Staff Rob Ghormoz.

Sarah obtained a B.A. in urban studies from the University of Pennsylvania and an M.P.A. from Villanova University where she later worked as a graduate student for the PA Intergovernmental Cooperation Authority focusing on municipal financial policy and as a mayor’s Intern for the City of Philadelphia which included the School District of Philadelphia. She has experience in the government and nonprofit sectors. Sarah served as Wolf ’s policy director for his campaign prior to joining his Administration in January 2015 as deputy secretary for policy and planning.

Rob was born and raised in Wilkes-Barre where he obtained a B.A. in Political Science from Penn State University. After college he was the Personal Aide to Senator Robert Casey, then went onto hold various roles in the Wolf campaign and Transition Committee before serving as the Special Assistant to Governor Wolf during the first year before taking on his current role.

 

So where does the Wolf Administration stand on issues affecting Oil and Gas? I asked them a series of questions to find out.

Teresa: Over the past 10+ years, the Dept. of Environmental Protection (DEP) has proposed regulations and general permits that some say it didn’t have the authority. This has led to the introduction of numerous regulatory reform bills in the General Assembly. The House State Government recently advanced three bills to address repealing regulations, a tracking system to track permits and other reform measures. Where does the Governor stand on regulatory reform, such as those moved from Committee? Does he support any of the regulatory reform bills?

Sarah: There are already measures established to address some of these concerns such as the Independent Regulatory Review (IRRC) process which is charged with overseeing the promulgating of regulations, provides public input and takes almost two years to move a proposed regulation to final.Additionally, the Governor has recently announced major permitting reforms and the Department of Environmental Protection has already made significant strides to improve the permit process. Therefore, the Governor does not feel the need to create an additional layer of bureaucracy that is not needed.

Teresa: The conventional gas industry’s regulations have been in limbo since Act 13. Subsequent law ordered DEP to bifurcate the regulations which it did by creating Chapter 78 for conventional and 78a for unconventional. Meanwhile, Senator Hutchinson introduced SB 1088 would require DEP to make changes to the conventional regulations based on provisions outlined in his bill rather than its present path. Where does the Governor stand on this issue?

Sarah: Senator Hutchinson’s bill seeks to reenact the 1984 Oil and Gas Act which was updated by Act 13, and in some places even roles back the requirements of that 30-year-old law. There has been a lot of work done on the draft regulations that are needed to protect the environment and bring their operations up to meet current technology and best management practices. We would like to continue to work with the industry on a redraft of the regulations.

Teresa: There has been a long-standing problem with permit approvals going months and months past their due date. DEP has implemented an initiative referred to as the Pittsburgh 100 that has resulted some success by reducing some of the backlogs and getting more permits issued in a timely manner. What are the next steps in keep that success moving forward?

Sarah: Everyone wants certainty in the process. What we found is that there were areas where we could find faster ways to do things. For instance, some complex permits may have several boxes of paper. By moving to an electronic ePermitting system it will ensure that the permit is complete when filed which will also facilitate approving them faster. Our goal is to have all our permits moved into the ePermitting system by the end of the year. The different Bureaus of Oil and Gas, Radiation Protection, Information Technology, Air, Waste, Waterways & Wetlands, Abandoned Mines, Storage Tanks and Clean Water will be released on a quarterly basis.

Rob: The first ePermitting set was in Mining last year. The plan is to test a batch aggressively for a couple of months both internally and with stakeholders before they go live at the end of each quarter. In September is when a large amount of oil and gas permits will go live. However, in June there are a few that go live that affect oil and gas such as GP-5/5A which is when those GPs are expected to be published in the PA Bulletin.

Teresa: Since the final draft was presented at the AQTAC meeting in December 2017, the department has been still working on the Comment Response document while having some additional public comment. Will there be any surprises when the GP-5/5A gets released in June?

Rob: No real surprises since December’s AQTAC meeting. We have heard back from industry and received a lot of good feedback from folks about the changes the department made since the original draft.

Teresa: In working with industry on making changes to the original draft of the GP-5/5A, we do appreciate DEP working with us to make crucial changes. It was a testament that working together can end in a win-win for both sides. Another area industry would like to work with DEP is on how to address Legacy/abandoned wells. Since this issue affects conventional operators the most I know they would like to work with the Administration to be creative in solving the issue whether it be through legislation or through other funding mechanisms.

Sarah: We’re always willing to discuss issues with stakeholders to find a reasonable solution.

Teresa: With respect to the budget coming up, DEP is seeking fee increases department wide and the Governor is seeking a severance tax. Can you please explanation to our readers what cuts the department has taken and why there remains a need for both fee increases and a severance tax?

Sarah: DEP’s funding is extremely complicated because some of its budget is through the General Fund and other parts are through special funds, such as the Oil and Gas Fund. The Office of Oil and Gas is running a deficit of $600k per month even with decreasing the number employees from 226 to 190. Decreasing staff, such as permit reviewers, has a negative impact on the permit review time. That is why DEP has proposed a permit fee increase from $5,000 to $12,500.

Rob: It should be noted that in PA there is no annual fee, so the one-time well permit fee of $5,000 must also pay for years of inspection and follow up. In addition, the General Assembly has not appropriated the amount needed to adequately to fund the department. Here is a link to the White Paper the Governor released on this issue – https://bit.ly/2HYFM3Z

Teresa: Although not new, I’ve heard from some in the regulated community that they are hesitant to reach out to Central Office, their Legislature or even the Administration for help in resolving a regional permitting issue due to being afraid of retaliation in that the reviewer or inspector may “crack down on them harder.” If someone knows of this to happen and can verify it, what would the administration do?

Sarah: We know DEP officials work hard every day to move permits forward that comply with laws and regulations and protect our environment, and this type of behavior is not one we’ve seen from state employees. Any form of retaliation is unacceptable and should be dealt with immediately. While we are unaware of any examples, we encourage anyone who believes they have experienced any form of retaliation to reach out and report it.

I want to thank both Sarah and Rob for taking precious time from their day to provide some insights into the Governor’s Administration.


If you have a problem and/or a solution, Teresa would love to hear from you by contacting her at 717-329-6402 or Teresa@TDConnections.com.

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