Royalties affecting Conservation

On February 24, 2016, the Department of Conservation and Natural Resources (DCNR) Secretary Cindy Dunn testified during budget hearings.  She said that there are currently no natural gas rigs operating in state forests.  There is a moratorium from Governor Tom Wolf that prohibits Pennsylvania from entering into any new state forest leases, but Ms. Dunn testified that she doubts the industry would have any interest in the leasing the land at this time anyway.  DCNR has leased mineral rights for state-owned waterways.  The rationale for leasing beneath waterways is that riverbed leases lessen land disturbance, according to Ms. Dunn.

Ms. Dunn also testified regarding Governor Wolf’s proposed shift in DCNR funding from the Oil and Gas lease fund to a structure of more allocation from the state’s general budget.  Ms. Dunn testified that the shift in funding will reduce the reliance on the constantly fluctuating natural gas market. 

Governor Wolf’s budget proposal includes spending an additional $61.3 million from the state’s general budget fund on the DCNR to offset the $51 million reduction the agency is facing from the decrease in oil and gas royalties.  Royalty revenues were down in the first six months of the current fiscal year from $68.3 million to $36.7 million.  The budget proposal calls for an increase in landfill tipping fees for municipal waste to replenish the Oil and Gas lease fund.  The landfill fee increase is projected to raise $35 million.  It is anticipated that the fund will bounce back when the price of natural gas rises.  

Written by - Stephen Kenney

Research Assistant

Center for Agricultural and Shale Law

Pipeline Infrastructure Taskforce Report

On February 18, 2016, the Pipeline Infrastructure Task Force released its final report to the governor.  The task force was created to identify “best practices for pipeline siting, permitting, and safety.”  The task force was made up of 48 members with more than 100 additional volunteers serving in 12 different workgroups.  The workgroups represented different constituencies in Pennsylvania that will be affected by construction of additional pipeline infrastructure.  The workgroups represented interests ranging from agricultural to local government. 

The task force focused on creating recommendations that could help meet six overarching goals: (1) “amplify and engage in meaningful public participation” (2) “develop long-term operations and maintenance plans to ensure pipeline safety and integrity” (3) “employ construction methods that reduce environmental and community impact” (4) “maximize opportunities for predictable and efficient permitting” (5) “plan, site, and route pipelines in ways to avoid or reduce environmental and community impacts” (6) “enhance workforce/economic development.”  The task force developed 184 recommendations and identified the top two recommendations for each category.

For the public participation goal, the task force recommended establishment of “early coordination with local landowners and lessors” and education of “landowners on pipeline development issues.”  The pipeline safety and integrity recommendations were to “train emergency responders” and “enhance emergency response training for responder agencies.”  The environmental impact recommendations were to “minimize impacts of stream crossings” and use “best available combination of technologies to protect exception value and high quality waters.”  The permitting recommendations were to “ensure adequate agency staffing for reviewing the pipeline infrastructure projects” and “implement electronic permit submissions for chapters 102 and 105” (water obstruction and encroachment permits and erosion and sediment control permits, respectively).  The avoidance of environmental and community impacts recommendations were to “expand PA1Call for all classes of pipelines” and “identify barriers to sharing rights-of-ways.”  The workforce/economic development recommendations included “attract military veterans to the energy workforce” and “enhance science, technology, engineering, and math (STEM) education.” 

Written by - Stephen Kenney

Research Assistant

Center for Agricultural and Shale Law

PENNSYLVANIA CONSIDERS ENACTING A SEVERANCE TAX

On February 11, 2015, Pennsylvania Governor Tom Wolf proposed to implement a severance tax on natural gas extraction as part of his legislative proposals for an Education Reinvestment Act. The proposals enact a 5% severance tax on the value of the gas and natural liquids, plus 4.7 cents per thousand cubic feet of gas extracted – modelled after the severance tax in West Virginia.

As the Joint Hearing of the Senate Environmental Resources & Energy Committee and Senate Finance Committee on the proposed severance tax on natural gas was taking place on June 1^st, 2015 in Harrisburg, various representatives and political figures debated and discussed the relevance of such tax proposition.

In her testimony, Acting Secretary for the Pennsylvania Department of Revenue, Eileen McNulty stated that “the tax will only apply to gas severed from unconventional formations using the technology generally known as hydraulic fracturing, or fracking”. She also mentioned that “since Pennsylvania exports a significant amount of the natural gas it produces, an estimated 80 percent of the tax will ultimately be paid by non-Pennsylvanians, according to the Independent Fiscal Office”.

Written by Chloe Marie - Research Fellow

06/02/2015