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Fiscal Code Bill Fundamentally Changes How Conventional Drilling Is Regulated

Work on the Fiscal Code bill-- House Bill 278 (Baker-R-Tioga)-- that follows to implement provisions in the General Fund budget still is not done and it contains a provision that fundamentally changes the way conventional oil and gas operations are regulated in Pennsylvania.

The Senate Tuesday passed the Fiscal Code bill, but House Republicans amended the bill and returned it to the Senate forcing them to return to Harrisburg on July 8

This year the bill includes creation of whole new programs, some which have never passed either the Senate or House, provides for transfers from special funds and makes other changes.

A detailed summary and House Fiscal Note are available.

Of particular concern are provisions requiring DEP to use funds to promulgate separate conventional and unconventional oil and gas regulations from Senate Bill 1378 (Scarnati-R- Jefferson) and House Bill 2350 (Causer-R-Cameron) which were never passed on their own in either the Senate or House.

The Pennsylvania Environmental Council made several efforts to communicate with the sponsors of the conventional drilling bills expressing its concerns about the language fundamentally changing well regulation, but received no response. PEC followed up with communications to both the Senate and House opposing the language. (See separate article.)

Consideration of the Fiscal Code bill went like this.

Very late on Monday the Senate Appropriations Committee made 66 pages of additions to House Bill 278 (Baker-R-Tioga) that gave Senate members little time to absorb the volume of changes included in the bill.

The announcement of the final Senate vote on the bill was interrupted on the Senate Floor because it resulted in a 25-25 tie. Only after Sen. Scott Wagner (R-York) changed his vote from no to yes was the 26-24 final vote announced.

In the House, House Bill 278 (Baker-R-Tioga) was amended to provisions related to the Bank Shares Tax (which helped balance the budget), City Revitalization and Improvement Zone, extra funding for the Allentown school district and authorizing the enactment of a cigarette tax in Philadelphia.

During the House Floor debate, Rep. Greg Vitali (D-Delaware), Minority Chair of the House Environmental Resources and Energy Committee, challenged two provisions in the bill related to transferring $95 million from the Oil and Gas Fund to the General Fund to balance the budget and a section calling for new, separate operational and environmental standards for regulating conventional oil and gas wells.

Rep. Vitali’s motions to suspend the rules to offer an amendment to impose a moratorium on oil and gas drilling on DCNR land failed 70 to 130 a second amendment to remove sections related to conventional wells failed 79 to 121.

Rep. Vitali also challenged the constitutionality of the consideration of the bill since many of the provisions, including the conventional well sections, were never passed on their own by either the Senate and House.

The motion of constitutionality failed 117 to 83 and the House voted to send the amended House Bill 278 back to the Senate 121 to 78.

The Senate must now decide whether to insist on its amendments or concur with the House changes when it returns to session July 8.

Summary Of Bill

Here’s a quick summary of some of the major provisions--

Major Programs Included--

— Requires DEP to use funds to promulgate separate conventional and unconventional oil and gas regulations-- Senate Bill 1378 (Scarnati-R-Jefferson), House Bill 2350 (Causer-R-Cameron) were never considered by the full Senate, House)

— Creating new Rural Regional College-- Senate Bill 1000 (Scarnati-R-Jefferson) which passed the Senate, House Bill 1701 (Causer-R-Cameron) which did not pass the House.

— Reduction in Small Games of Chance license fee from $2,000 to $500

— Education funding distribution to local school districts

— $10 increase in judicial surcharge

Transfer of Funds--

— Transfer $20 million from State Forest Timber leases

— Transfers $95 million from DCNR Oil and Gas Fund for additional “non-impact” gas leasing

— Transfers $8,672,845 from the Alternative Energy Investment Act

— Suspend transfer to Rainy Day Fund

— Horsemen transfers from Governor’s budget $17.6 million

— Transfers $225,000,000 of tobacco venture assets to PSERS

— Transfers $8,000,000 in excess law enforcement grants from Gaming Board to General Fund

— Transfers $5,676,000 from Gaming Capital money to General Fund for Pittsburgh Penguins