Wednesday, September 19, 2018

Shale Law in the Spotlight: Pennsylvania Environmental Quality Board Proposes Increase in Unconventional Well Permit Application Fee

Written by Chloe Marie - Research Fellow

On July 14, 2018, the Pennsylvania Environmental Quality Board (EQB) issued a notice of proposed rulemaking that proposes to increase the permit fees for unconventional wells by amending sections of Chapter 78a (25 Pa. Code, Ch. 78a). Currently, the well permit application fees are $5,000 for non-vertical unconventional wells and $4,200 for vertical unconventional wells. Pursuant to the proposed rule, the permit application fees will be increased to $12,500 for all unconventional well permit applications.

According to EQB, the fee increase is justified by the need to “address any disparity between income generated by the well permit application fees and the cost of administering [the Oil and Gas Program]” relating to oil and gas development. The notice of proposed rulemaking specifies that the fee increase does not apply to conventional well permit applications. 

The increase of unconventional well permit fees comes in response to a 3-Year Regulatory Fee and Program Cost Analysis Report prepared by the Pennsylvania Department of Environmental Protection (DEP) and submitted to EQB on April 17, 2018. In this report, DEP found there is a lack of funding to account for the increasing responsibility of the Oil and Gas Program. The agency pointed out that “given the low number of permits received over the past two fiscal years and all indications that permit volumes are not expected to rebound in the near term, the current well permit fee is no longer sufficient to fund DEP’s Oil and Gas Program; even with substantial cost-saving measures that have [already] been implemented.”

DEP anticipates that “approximately 2,000 well permit applications will be received annually following the adoption of this proposed rulemaking, which would result in an additional annual incremental permit application cost of $15 million to the regulated community.”

A comment period on this proposed regulation was open through August 13, 2018. EQB has not yet issued a notice of final rulemaking in the Pennsylvania Bulletin.

This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture. 

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