A state environmental oversight board agreed to increase the permit fee for natural gas drilling by 150 percent, arguing that the hike was needed to fund the state’s regulatory program.
During a meeting Tuesday, the Environmental Quality Board hiked the fee to $12,500 for any well, up from $5,000 for non-vertical wells and $4,200 for vertical wells.
Even as permit applications have declined from the peak of the gas boom, inspections have gone up, according to Department of Environmental Protection oil and gas chief Scott Perry.
While the agency has adopted new policies and digitized inspections to cut costs and increase efficiency, Perry said there isn’t much more that can be done under the current budget.
“We’re failing to meet many of our goals and we have IT projects that are going unmet,” Perry said.
According to the 2012 state law governing the natural gas industry, the permit fee should “bear a reasonable relationship to the cost of administering this chapter.”
The department estimates an annual budget of $25 million. The state’s impact fee — a tax on each well drilled, not on the gas extracted — provides $6 million each year to the DEP for oil and gas regulation. That is a small fraction of the $198 million the fee brought in last year.
Under the old permit fees, DEP’s oil and gas division was underfunded by $9 million, according to the agency. The increased fee, officials claim, will cover the shortfall.
The Marcellus Shale Coalition, an industry group, said in a statement that it supports fully funding DEP’s regulatory work. But the hefty increase could “impact the number of permit submissions being requested and discourage job-creating investment in the Commonwealth,” the trade group’s president, David Spigelmyer said in a statement.
The fee will be among the highest in the country. Total permit fees are $10,150 in West Virginia for a new fracking well. Ohio charges a minimum of $5,500 in total permitting expenses, according to a fee schedule.
Regulatory oversight in Ohio also receives a big boost from state’s severance tax, which brought in $52 million in 2018. Ninety percent of the revenue goes to regulating the industry.
The change must be approved by a final state regulatory review board before it becomes law.