Worth Another Look: 2022 Energy Recap

Legislation Enacted

Act 54/HB 1421 (Thomas, R-Bucks) amended the Fiscal Code to provide for the 2022-2023 fiscal year budget implementation. The bill established the Clean Water Procurement Program, which will provide for the purchase of verified nutrient or sediment reduction through a competitive bidding process. Act 54 also allocated federal money the state received from the American Rescue Plan Act (ARPA).

  • $225 million to the newly established the Clean Streams Fund for various conservation and nutrient management programs;
  • $214.4 million to the Commonwealth Financing Authority (CFA) to reopen the H2O PA program; and
  • $105.6 million to the CFA for reimbursement of water and sewer projects.

Act 108/HB 1059 (Hickernell, R-Lancaster) was an omnibus Tax Reform Code bill that passed just before session ended in November. The bill increased the annual cap on the existing Local Resource Manufacturing Tax Credit from $26.6 million per year to $56.6 million per year. Qualified taxpayers may claim a tax credit equal to $0.47 per unit of dry natural gas that is purchased and used in the manufacturing of petrochemicals or fertilizers. The bill also established the Regional Clean Hydrogen Hubs Program. The program will provide up to $50 million in tax credits annually to qualified taxpayers that make a capital investment of at least $500 million and create at least 1,200 permanent and new jobs to construct a facility located within a Hub designated by the U.S. Department of Energy.

Act 96/HB 2644 (Causer, R-McKean) was a funding bill that distributed federal dollars received from the Infrastructure Investment and Jobs Act (IIJA). The bill established the Orphaned Well Site Plugging, Remediation and Restoration Program to award grants to eligible well pluggers. In the first phase of funding, Pennsylvania will receive $104 million, and could receive up to $400 million in IIJA funding through 2029. Act 96 also set the bonding amount for conventional oil and gas wells at their current statutory amounts of $2,500 per well with a blanket bond of $25,000 for 10 years and makes clear that the Environmental Quality Board (EQB) and the Department of Environmental Protection (DEP) do not have the authority to adjust these amounts.

Act 136/HB 2528 (Struzzi, R-Indiana) amended the Program established in Act 96 to maintain federal compliance regarding the allocation of federal funds made available for well plugging. It also changed the maximum grant award amounts.

Act 153/SB 806 (Yaw, R-Lycoming) amended the Oil and Gas Lease Act to increase the amount of payment information that an unconventional operator must provide to a royalty owner and provides a timeline for payments.

Act 34/HB 1780 (Armanini, R-Clearfield) extended the sunset date for the Underground Storage Tank Environmental Cleanup Program and the Underground Storage Tank Pollution Prevention Program from June 30, 2022, to December 31, 2027.

Act 43/SB 635 (Yudichak, I-Luzerne) expanded the Commercial Property-Assessed Clean Energy Program (C-PACE) to include multifamily commercial buildings (ex: senior living centers), indoor air quality projects (ex: ventilation systems), and resiliency improvement projects (ex: flood mitigation, wind resistance, energy storage, and microgrids).

Act 133/HB 2458 (White, R-Philadelphia) established the Philadelphia LNG Export Task Force. The task force has the following duties:

  • Identify and examine the existing obstacles, economic feasibility, economic impact, and security necessary to making the Port of Philadelphia an LNG export terminal;
  • Identify industry partners able assist in the conversion;
  • Develop recommendations for making the conversion;
  • Hold public meetings; and
  • Issue a report no later than one year after the effective date of this legislation.

Regional Greenhouse Gas Initiative (RGGI)

RGGI is an initiative of 10 New England and Mid-Atlantic states, to reduce greenhouse gas emissions from the power sector while generating economic growth. Pennsylvania began the process of joining RGGI in 2019, when Governor Wolf signed an executive order directing DEP to initiate the rulemaking process.

On September 1, 2021, the Independent Regulatory Review Commission (IRRC) adopted the regulation for Pennsylvania to participate in RGGI. This jump started the legislative process to pull back the regulation.

  • Senate Concurrent Regulatory Review Resolution (SCRRR) disapproving of the regulation was adopted by the Senate on October 27, 2021.
  • The SCRRR was adopted by the House of Representatives on December 15, 2021.
  • Governor Wolf vetoed the SCRRR on January 10, 2022.
  • The Senate failed to override the Governor’s veto on April 4, 2022.

After the unsuccessful veto override, there were two lawsuits filed.

Legislative Reference Bureau (LRB) case

  • DEP and EQB filed a lawsuit to force the publication of the regulation in the PA Bulletin on February 5, 2022.
  • The Commonwealth Court issued a stay preventing LRB from publishing regulation on April 5, 2022.
  • The stay expired and the regulation was published in PA Bulletin on April 23, 2022.
  • The Senate Republican’s petition for a preliminary injunction was granted on July 8, 2022. LRB was enjoined from proceeding to codify of the regulation in the PA Code and DEP was enjoined from implementing and enforcing the regulation. The preliminary injunction will remain in place if/until the PA Supreme Court determines the injunction was improperly granted. The Court has not decided whether to hear the case yet.

Coal industry case

  • The coal industry lawsuit was filed on April 25, 2022.
  • A preliminary injunction was granted by the Commonwealth Court on July 8, 2022.
  • DEP and EQB were enjoined from implementing, administering, or enforcing the rulemaking.
  • The PA Supreme Court held a hearing to consider the issuance of the preliminary injunction on November 14, 2022. Upon resolution of the appeal, the matter will be returned to the Commonwealth Court to consider the substance of the lawsuit.

Emergency Air Quality Regulation

On November 30, the EQB adopted an emergency rule limiting volatile organic compound (VOC) emissions and methane emissions from existing conventional oil and gas sources. Under the federal Clean Air Act, Pennsylvania had until December 16 to submit a State Implementation Plan, including regulations covering VOC emissions for all required oil and gas sources, to the U.S. Environmental Protection Agency. Not meeting this deadline would have jeopardized more than $800 million in federal highway funding earmarked for Pennsylvania projects.

Public Utility Commission (PUC) News

  • On October 19, our former colleague Stephen DeFrank was confirmed by the PA Senate to serve as PUC Commissioner. His term will expire on April 1, 2025. Commissioner DeFrank was elected Vice Chairman of the Commission on October 27. Kathryn Zerfuss was also appointed, with her term expiring on April 1, 2026. Lastly, John Coleman was reappointment for a term that expires April 1, 2027.
  • On February 25, the PUC advanced a Final Rulemaking on the implementation of Act 120 of 2018 regarding the replacement of lead service lines and damaged wastewater service laterals and the recovery of associated costs. IRRC approved the regulation on May 19.
  • On April 14, the PUC voted to adopt regulations that require annual diversity reports for major electric, natural gas, water, and wastewater public utilities.
  • On June 22, Chairman Gladys Brown Dutrieuille was elected the new President of the Mid-Atlantic Conference of Regulatory Utilities Commissioners (MACRUC).
  • On November 10, the PUC launched a review of its current regulations relating to cybersecurity – including requirements for reporting cyber-attacks on utility systems and the regulations for utility self-certification of their security planning and preparedness.

Important Dates

  • House and Senate swearing-in: January 3
  • Inauguration of Governor-elect and Lieutenant Governor-elect: January 17
  • Special Election for three House seats: February 7
  • Senate session schedule:

January           3, 9, 10, 11, 17, 18, 23, 24, 25, 30, 31

February        1, 27, 28

March             1, 6, 7, 8

April                24, 25, 26

May                 1, 2, 3, 8, 9, 10

June                5, 6, 7, 19, 20, 21, 22, 23, 26, 27, 28, 29, 30