HB 542 & the Dealing of Pennsylvania's Environment (II)

Part I of this blog discussed recent DEP budget cuts and the Permit Decision Guarantee, the DEP’s 2012 policy to ensure that environmental permits are issued expeditiously.

Here, I’ll scrutinize the forced-approval and third-party review provisions of HB 542, and explain why the House of Representatives should vote against the bill.

“Deemed Approvals”

Under the forced-approval rider in HB 542, permit applications related to shale gas development would be “deemed approved” if the DEP did not approve or deny them on their merits within “an applicable time period for review.” 

The rider specifically mentions, and assigns review periods to, three types of permits: (1) permits to drill wells (45 or 60 days), (2) “general air quality permits” (30 days), which currently cover air pollution from most pipeline compressor stations and soon will cover well pads unless the Air Quality Permit Advisory Committee that HB 542 would create prevents this, and (3) erosion and sedimentation control permits (24 or 53 days), which authorize earth disturbance for well pads, pipelines, and other infrastructure.

Depending on how you read the “forced approval” provisions in HB 542 (the language is ambiguous), they could apply just to these three kinds of permits or to all permits for activities “related to unconventional oil and gas development” – from the treatment and storage of toxic gas well wastes to the filling of wetlands.

While it’s received less attention than HB 542’s third-party-review provisions, the “deemed approval” rider is more radical. Forced-approval would allow shale gas development activities to occur not based on whether they satisfied legal standards, but because a certain amount of time had passed since a company submitted its permit application. Unfortunately, when an application is “delayed” at the DEP, there’s a good chance it’s problematic – and that issuing a permit might endanger human health or the environment. Such applications are the last ones that should get automatic approval.

“Deemed approval” raises enforcement questions. What would happen, for instance, if the DEP determines afterward that an activity doesn’t meet legal standards? HB 542 says that deemed approvals do not “relieve a person who commences activity under [a deemed approval] from complying with each law pertaining to the activity…” But if the operator disagreed with the DEP’s assessment of legality, would the DEP have to file a lawsuit? (When an activity is formally permitted, the DEP can revoke the permit). This would consume scarce DEP resources - and face political headwinds, for projects already underway.

If an application poses a threat, some argue, the DEP could prevent forced-approval by denying the application. While that’s true, such denials could all be appealed (which would discourage more denials), and the DEP would likely be attacked as obstructionist and risk more budget cuts by the General Assembly.

One part of the forced approval rider does seem to make sense. Currently, if an application contains deficiencies, it no longer qualifies for Permit Decision Guarantee policy. Under HB 542, deficient applications would stay on the clock, with the review period “tolled” (i.e., temporarily stopped) while an applicant was correcting deficiencies. This would likely speed the review of deficient applications significantly. Why also have “deemed approvals,” then? The mechanism amounts to a bet that red-flagged gas development activities are more likely to be safe than to be dangerous. Pennsylvanians have much to lose from this bet, and nothing to gain.

Third-Party Review

HB 542’s third-party review provisions would allow parties with “delayed” permit applications to opt out of DEP review and instead have their applications “resolved” by third-party reviewers, whom they (the applicants) would choose. All DEP permits would be subject to third-party review, and “delay” would be triggered when Permit Decision Guarantee timeframes were exceeded, or (for permits not covered by the Guarantee) 30 days after an application is submitted.

To implement this rider, the DEP would have to create a new bureaucracy, and the state Environmental Quality Board (EQB) would have to write new regulations for it. Then the DEP would enter into contracts with eligible professionals to act as reviewers. Bizarrely, only landscape architects, engineers, land surveyors, and geologists would be eligible to “resolve” applications, and nothing in HB 542 limits what kinds of permits each kind of professional could review. “If you want land surveyors to review oil and gas or hazardous waste permits,” former DEP Secretary David Hess told a reporter, “this bill is for you.”

The third-party-review rider in HB 542 has been widely criticized, and for good reason. It does not explain who (if anyone) would supervise third-party reviewers. There is no provision for public participation, or any conflict-of-interest language to prevent individuals at the same firm from preparing and reviewing applications. Applicants could choose their own reviewers. It’s unclear who would defend third-party-reviewed permits if they’re appealed, or fund the litigation.  And it’s anyone’s guess whether third-party review would actually speed permit processing: HB 542 establishes no timelines for third-party review, and again, if an application is delayed at the DEP, it’s likely problematic and would not be easily “resolved.”

Apologists say third-party review works in other places, pointing to Colorado and the Pennsylvania Department of Transportation, and that issues like conflict-of-interest could be addressed through regulations. But where third-party review happens in Colorado and at PennDOT, it happens on technical engineering and computer modeling issues, not difficult matters of legal compliance.

And while it’s true that the EQB could address some issues by regulation, is that what the General Assembly wants? The House State Government Committee spent much of this spring holding hearings on regulatory “burdens” and “overreach,” and so far in 2017, at least four bills – SB 561, HB 911, HB 1030, and HB 1237 – would give small groups of legislators new powers to kill proposed regulations. These bills are probably unconstitutional, but all the anti-regulatory activity begs the question of what the Senate sees to like in a new, complicated regulatory system. Are legislators really willing to go so far to avoid funding the DEP and protecting Pennsylvanians?

What Will the House Do?

The third-party-review and deemed-approval riders in HB 542 are both meant to address the gas industry’s dissatisfaction with how fast the DEP is processing permit applications. But for the reasons discussed above, these provisions are unworkable, imprudent, and dangerous, and neither addresses the fundamental problem: the fact that the General Assembly isn’t appropriating enough funds to the DEP. Even the Pennsylvania Independent Oil and Gas Association agrees with this.

There is also a question of constitutionality. HB 542 is a Tax Code bill, and the riders were inserted in it at the last minute as a “trade” for a severance tax. This is an example of “logrolling,” a practice in which several statutory provisions lacking majority support are rolled together in one bill that has “something for everyone.” Article III, Section 3 of the Pennsylvania Constitution prohibits logrolling. And as the state Supreme Court recently affirmed, Article I, Section 27 prohibits legislative actions that would violate Pennsylvanians legal rights to clean air, pure water, and a healthy environment.

In any case, making major changes to environmental policy in a Tax Code bill is terrible governance – especially since the changes were voted on with barely any discussion within the General Assembly and no public debate. It’s the legislative equivalent of getting married on Friday to someone you met on Tuesday, on Facebook.

Fortunately, House Bill 542 is not yet law. The Senate passed it on July 27, but the House has yet to take it up. Most observers expect the House to return to Harrisburg on September 11. With hope the solemnity of that date will inspire a more serious, prudent, and environmentally responsible approach to policy-making – and the House will vote down HB 542.

About the Authors

Mark Szybist

Senior Advocate, Energy & Transportation Program

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