In signing the bill, Corbett said “The bill enhances protection of our natural resources through stronger environmental standards, authorizes counties to adopt an impact fee, and builds upon efforts to help move Pennsylvania toward energy independence.”

The historic measure is the first comprehensive re-write of the state’s Oil and Gas Act since 1984. It contains much of what had been proposed by his Marcellus Shale Advisory Commission.

Under House Bill 1950 (Act 13 of 2012), natural gas drillers will be required to pay an impact feel to help fund various state and local programs.

The decision to impose the fee will be placed at the county level. If County Commissioners choose not to impose the 15-year impact feel, a critical mass of municipalities can override the ruling. Share percentages are split 60/40 between local municipalities and the state. A copy of the Governor’s Office Release on the bill signing is available here.

Another Marcellus Shale related bill, Senate Bill 1237 was signed into law as Act 16 of 2012. The bill, sponsored by Senate Majority Leader Dominic Pileggi (R-Delaware), expands the state’s Keystone Opportunity Zones. Lawmakers hope that the KOZ expansion will give Pennsylvania a competitive edge over Ohio and West Virginia in attracting a Shell petrochemical refinery to the Pittsburgh area, and spurring the state’s economy.

The Governor also signed House Bill 1294 (Act 11 of 2012), sponsored by Rep. Robert Godshall (R-Montgomery). This bill allows public utilities to charge ratepayers up front for distribution system improvement charges (improvements to power lines and water, sewer and natural gas pipelines.) In order to be eligible to recover costs through a DSIC, a utility must submit a longterm infrastructure improvement plan to the Commission.

Senate Bill 1386, sponsored by Sen. Elder Vogel (R-Beaver) amends the Air Pollution Control Act, repealing the requirements for low-RVP (Reid Vapor Pressure) gasoline in the Pittsburgh region and Stage II vapor controls.

During the meeting, Vogel explained that a seven-county region in southwest Pennsylvania is required to use a special summer blend of gasoline, and due to the closure of refineries in the southeast, there are concerns that enough summer blend will not be available. Therefore, the bill seeks to eliminate the special requirement.

Federal standards have limited the RVP of gasoline sold in the region during the “high ozone season.” RVP’s are blended seasonally to maintain gasoline engine reliability. Last fall, the EPA responded to a request from Governor Corbett and waived the 7.8 psi RVP requirement for the Pittsburgh region due to the lack of available fuel at that lower RVP.

Committee Chair Mary Jo White (R-Venango) also noted that state DEP Secretary Mike Krancer has some concerns with the bill, but has agreed to look at the special gas plan.

The committee also agreed to Senate Bill 1398, sponsored by Sen. John Yudichak (D-Luzerne), which extends the sunset of the Underground Storage Tank Environmental Cleanup Program from 2012 to 2017.

About 8,000 RACP items have been authorized since 1999, but many have come under fire as pet political projects. Under HB 2175 any projects not approved before the end of 2011 would be removed from the list and have to reapply, meeting stricter program criteria.

The bill decreases the debt limit from $4.05 billion to $3.5 billion, with the ceiling dropping by $50 million per year until 2020, when it then drops to $150 million each year until it reaches a new ceiling of $1.5 billion. This will bring the cap down close the 2003 level of $1.45 billion.

The bill was amended three times during debate on the House floor, and was recommitted to the Appropriations Committee. Many Democrats have criticized the bill stating that reverting to the 2003 level of funding does not provide enough capital for economic and community development projects statewide, especially with all corners of the Commonwealth experiencing higher costs for materials and construction.

ERG has written the Senate Committee leadership, asking them to retain an Energy Title within the next farm bill and provide the necessary funding for the programs.

Sen. Stabenow has said she expects to use the Farm Bill framework that was agreed to last fall as the starting point for constructing the 2012 Farm Bill. Under that framework, the Energy Title in the Farm Bill was retained but very little mandatory funding was made available for its programs. This would leave the fate of these relatively new programs to an ever-shrinking and uncertain pool of discretionary funding.

Renewable energy production including biomass has been a major driver of the U.S. farm economy over the last decade, helping bring net farm income to a projected all-time high of $104 billion in 2011. The USDA can play a critical role in helping the ag and forest sectors capitalize on these emerging opportunities, and the Farm Bill is a primary vehicle for authorizing programs and funding to support these efforts.

PA Congressmen Glenn Thompson and Tim Holden are also chair and ranking member of the US House Agriculture Committee’s subcommittee on Conservation and Energy, and will have a big say in what happens in the House. More…

Under the bill, signed into law on Monday, the PUC is responsible for administering the collection and distribution of a fee that local governments may impose to address impacts associated with the state’s growing natural gas drilling industry.

As the agency transitions into its new role, PUC Chairman Robert Powelson said that the collection and distribution of impact fees will be outsourced to a third party, private company for the next 18 months.

Powelson went onto say that the commission does not necessarily need to create a permanent internal structure to deal with the fee collection, noting other programs that are outsourced. He did say that most of the internals staff ramp-ups at the commission have been to cover new duties involving review of municipal ordinances relating to natural gas development.

Municipalities may request that the commission review draft ordinances, and conversely, a well operated aggrieved by an ordinance may also ask the PUC to review the ordinance to determine if it violates the Municipal Planning Code.

Under the law, a resident or well operator aggrieved by an ordinance also has the option to bring action before the Commonwealth Court, bypassing the PUC’s authority. While this is an option, the commission feels that if an issue bypasses the commission and goes directly to court, it is “likely the issue were very intensive.”

Pennsylvania collected $2.2 billion in General Fund revenue in January, which was $10.4 million, or 0.5 percent, less than anticipated, Secretary of Revenue Daniel Meuser reported today. Fiscal year-to-date General Fund collections total $13.8 billion, $497.2 million, or 3.5 percent, below estimate.

Senate President Pro Tempore Joe Scarnati is still hopeful that a deal on natural gas severance fee can be reached this month, and many organizations are pushing for a tax to be enacted to help carry the state’s financial burden.

According to a report recently released by the Pennsylvania Budget and Policy Center, the state has lost more than $300 million in revenue since 2009 by not passing a tax on natural gas production.

The tax and budget policy research nonprofit said its drilling tax ticker breached the benchmark on Monday. The ticker uses monthly well-drilling reports to calculate the average total production and estimates taxes lost based on the 5 percent tax proposed by former Gov. Ed Rendell in 2009, as well as the 4.7-cent fixed surcharge per 1,000 cubic-feet of gas produced.

“I’m directing my administration to allow the development of clean energy on enough public land to power 3 million homes,” said President Obama. “And I’m proud to announce that the Department of Defense, working with us, the world’s largest consumer of energy, will make one of the largest commitments to clean energy in history—with the Navy purchasing enough capacity to power a quarter of a million homes a year.”

President Obama also emphasized the need for greater energy efficiency, proposing to help manufacturers eliminate energy waste in their factories and to give businesses incentives to upgrade their buildings, potentially cutting their energy bills by $100 billion over the next decade. In addition, the president referenced a number of tax incentives that would aid domestic manufacturing of clean energy technologies, including an extension of the Advanced Energy Manufacturing Tax Credit. See the president’s State of the Union address on the White House website, as well as the White House fact sheets on the president’s proposals for energy and manufacturing.

Despite reported setbacks in the renewable energy sector, representatives from the National Biodiesel Board see achieving this milestone as proof that the biodiesel tax incentive and the renewable fuel standard are working just as Congress intended.

“I think our success in 2011 reflects the bigger picture reality, which is that strong energy policy is working to stimulate production of clean, American-made energy, “said Anne Steckel, VP of federal affairs for NBB. “Our industry is creating jobs, reducing our dependence on imported fuel, and improving the environment.”

A recent economic study commissioned by NBB found that biodiesel production of 1 billion gallons supports 39,027 jobs across the country and more than $2.1 billion in household income. An additional 11,698 jobs could be added between 2012 and 2013 alone under continued growth in the RFS and with an extension of the biodiesel tax incentive.

The tax incentive has since expired (again) as of Dec. 31. The industry is calling on Congress to extend the credit.

The memo states that Turzai’s office has worked with members on both sides of the aisle, and the “legislation incorporates common sense changes to bring the program (and the resulting debt load) to a more responsible and manageable level.”

The RACP program was established in 1999 with an initial debt ceiling of $1.2 billion. Since that time, the debt ceiling has been raised six times, and is currently at $4.05 billion. The memo states that there are approximately 8,000 RCAP projects itemized in the nine Itemization Acts that have passed since 1999. Most projects have not yet been authorized.

Outline of the bill is as follows:

RACP Debt Reduction

• This legislation would immediately decrease the authority of the Commonwealth to incur debt for the purposes of RACP projects. No new projects may be authorized until existing RACP project commitments fall below $3 billion. In each year thereafter, the debt ceiling for RACP projects would be decreased by $150 million until the debt ceiling for RACP reaches $1.5 billion.

Redefining RACP

• This legislation would shift the emphasis of RACP projects to infrastructure (i.e. roads, bridges, tunnels, waste disposal, storm water, sewage or water infrastructure; bridges or roads when part of a business or industrial park facility) projects with a total cost of $1 million of more. An eligible project must generate substantial economic activity (i.e. substantial increases in employment or tax revenues) and have a substantial regional or multijurisdictional economic impact.
• Projects on the current itemization list that have not been authorized as of December 31, 2012 would expire. To be relisted in any future Itemization Acts, a project must comply with all new RACP requirements.
• The current law allows the list of itemized projects (the “wish list”) to exist in perpetuity. Projects under the reformed RACP program would expire after two years and would need to be relisted.
• Itemized capital projects must be listed under specific categories and contain a specific description of the capital project, including the senatorial and legislative district in which the project is located; the estimated cost of the project; and the fund to be charged with the repayment of the obligation to be incurred.

Stringent Review and Approval Process

• Under the proposal, applicants must submit an application to the Office of the Budget requesting the grant for an RCAP which is included in the itemization bill. In addition to specifics about the individual project (name and address of the applicant, cost and location of the project), the applicant must ensure that the project is consistent with any existing comprehensive county plan where the project is located.
• The applicant must also ensure that the county and municipal governing bodies where the project is located have been notified of the project; and, that the applicant has held at least one public informational meeting on the RCAP project within 10 miles of the project.
• This legislation ensures that the secretary considers the likelihood that the infrastructure will be used upon project completion; whether the project will enable future employment opportunities or have a net positive economic impact on the surrounding community; whether the project is “shovel ready” (i.e. will commence within six months of approval), prior to a grant application being approved. The secretary is also required to hold at least one public informational meeting on any RACP project being considered for approval.
• Once requirements have been met and a public information meeting has been held, the secretary may approve the proposal. If approved, the office shall notify the applicant and the Majority and Minority Chairs of the House and Senate Appropriations Committees as well as the state senator and state representative in whose districts the RACP project is located prior to execution of a contract.
• Applicants will have a maximum of six months to submit the required applications and contracts. No contract may be executed if the applicant fails to submit an executed contract within six months.
• Finally, no RACP project may be approved in the period between the date of a general election at which a Governor is elected and the third Tuesday of January next following the election.