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March 24, 2011 | By | Posted in Legislature

DEP could impose stiffer penalties for repeat violators

Krancer says DEP has enough Marcellus well inspectors
 
By Eric Boehm | PA Independent
 
HARRISBURG — The new leader of the department responsible for overseeing and enforcing Pennsylvania’s natural gas industry says he supports harsher penalties for those who intentionally or repeatedly violate the state’s environmental laws.
 
Michael Krancer, secretary of the Department of Environmental Protection, on Thursday told the Senate Appropriations Committee the department would not tolerate “heinous” violations when it comes to natural gas drilling and the disposal of wastewater from the drilling process, such as the illegal dumping operation uncovered by the state last week.
 
The state attorney general’s office filed 98 criminal counts against Robert Allan Shipman and 77 counts against his company, Allan’s Waste Water Service, for illegally dumping drilling wastewater in abandoned mine shafts and waterways in western Pennsylvania.
 
Krancer said the company’s permits were immediately suspended by the state, and the DEP would continue to watch for signs of illegal dumping. 
 
Going forward, Krancer said he would support changes to the DEP’s fines and penalties for environmental violations, including a tiered structure to increase penalties for repeat offenders and those who intentionally violate the law.
 
“If they are cheating, and they are intentionally cheating, they are ruining it for everyone,” said Krancer. “They are also getting an unfair market advantage if they aren’t doing what they are supposed to and everyone else is.”
 
State Sen. John Pippy, R-Allegheny, said he believed in harsh punishment.
 
“I believe we should punish those who violate the law, and severely punish those who violate the law intentionally,” said Pippy.
 
State Sen. John Yudichak, D-Luzerne, minority chairman of the Senate Environmental Committee, said the state needs to protect its water resources and avoid the mistakes made when regulating the coal industry, which caused significant damage to Pennsylvania’s environment.
 
Enough inspectors for now
 
Several senators raised concerns about the department’s ability to adequately inspect the state’s nearly 3,000 Marcellus shale gas wells. The number of shale gas wells is expected to rise dramatically in coming years as the industry grows.
 
Krancer said the department currently employs 84 people for the sole purpose of Marcellus shale well inspections, which includes 78 inspectors and six managers. He said he was confident in the department’s ability to inspect wells and punish violators.
 
“We have the boots on the ground — the inspectors to make sure it’s being done right,” said Krancer. “And quite honestly, if it isn’t, we respond to it.”
 
State Sen. Richard Kasunic, D-Fayette, said the public needed to be reassured the department is doing everything it can to protect the environment.
 
"It’s the department’s job to make the public feel safe, and not only feel safe but to be safe with this process,” said Kasunic. “And I’m not sure that’s happening.”
 
Krancer said public safety was the top priority of the DEP, which conducted 5,000 well inspections during 2010, a 100 percent increase from the year before. The department is on pace to do more than 7,000 this year, he said.
 
The funding for the inspections comes entirely from the drilling permit fees paid by the gas companies, which totaled more than $10 million last year, said Krancer. Because the inspections are paid for by permit fees, the number of inspectors can increase as more wells are drilled, he said.
 
He did not answer questions about the department’s long-term plans for well site inspections, since permitting fees are paid up front, but wells may continue to produce gas for a decade or more.
 
State Sen. Llyod Smucker, R-Lancaster, said the state should better educate the public on the safeguards that are in place to prevent polluted drilling water from making its way into rivers and drinking water supplies.
 
Local impact fee discussed
 
Krancer declined to comment on whether the Corbett administration is shifting its position on the creation of a natural gas drilling tax or fee to benefit local governments.
 
Gov. Tom Corbett has repeatedly said he would veto any attempt to tax the natural gas industry in Pennsylvania. The state is the only major gas producing state without an extraction tax.
 
The governor on Wednesday said he would continue to block any effort to use a natural gas tax or fee to fund the state’s budget, but he left the door open to the creation of a “local impact fee” designed to help county and municipal governments cover some of the costs incurred by the drilling industry.
 
“I understand there is an impact on the local communities, and I believe that in some way, shape or form we need to address that impact,” said Corbett. 
 
State Sen. Mary Jo White, R-Venango, chairwoman of Senate Environmental and Energy Committee, also left open the possibility of an impact fee, which she said is different than a tax.
 
“I think the question is the timing, the size of the fee and what it’s used for,” said White. “Certainly I wouldn’t close the door on it.”
 
The new focus on a local impact fee comes on the heels of a study from Penn State University showing counties with Marcellus shale wells have significantly better finances than those without gas drilling. 
 
The study analyzed state Department of Revenue data and found counties with at least 150 Marcellus wells reported an 11 percent increase in state sales tax collections between 2007 and 2010, while counties with few wells reported a slight decline in sales tax. According to the study, counties with 10 or more Marcellus shale wells reported an average personal income increase of 7 percent, while counties without wells reported an average decline in personal income during the same period.   
 
The governor announced the creation of a commission on Marcellus shale during his March 8 budget address. The commission has its first meeting Friday, but some lawmakers have criticized it for a lack of diversity in viewpoints and make up.
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