INDEPENDENT REGULATORY REVIEW COMMISSION Notice of Comments Issued [43 Pa.B. 7048]
[Saturday, November 30, 2013]Section 5(g) of the Regulatory Review Act (71 P. S. § 745.5(g)) provides that the Independent Regulatory Review Commission (Commission) may issue comments within 30 days of the close of the public comment period. The Commission comments are based upon the criteria contained in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b).
The Commission has issued comments on the following proposed regulations. The agency must consider these comments in preparing the final-form regulation. The final-form regulation must be submitted within 2 years of the close of the public comment period or it will be deemed withdrawn.
Close of the Public IRRC Comments Reg. No. Agency/Title Comment Period Issued 3-51 Department of Banking and Securities
Assessments
43 Pa.B. 5455 (September 14, 2013)10/15/13 11/14/13 7-483 Environmental Quality Board
Oil and Gas Well Fee Amendments
43 Pa.B. 5457 (September 14, 2013)10/15/13 11/14/13 Department of Banking and Securities Regulation #3-51 (IRRC #3021) Assessments November 14, 2013 We submit for your consideration the following comments on the proposed rulemaking published in the September 14, 2013 Pennsylvania Bulletin. Our comments are based on criteria in Section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b). Section 5.1(a) of the Regulatory Review Act (71 P. S. § 745.5a(a)) directs the Department of Banking and Securities (Department) to respond to all comments received from us or any other source.
1. Need; Reasonableness; Fiscal impact.
According to the Department, this proposed rulemaking would establish an assessment schedule for State-chartered institutions (institutions) which would provide adequate and sustainable funding for the Department and streamline reporting and billing requirements for institutions. Information provided in the Regulatory Analysis Form (RAF) indicates that the rulemaking will increase costs to the institutions by $3,550,000 in Fiscal Year (FY) 2014-2015; $6,386,000 in FY 2015-2016; $9,224,000 in FY 2016-2017 and $9,739,000 in FY 2017-2018 over what would be collected in FY 2012-2013.
Figures provided in the RAF also indicate that the assessment schedule would produce surpluses of $4,937,000 in FY 2014-2015; $5,286,000 in FY 2015-2016 and $7,621,000 in FY 2016-2017. Given the increased cost that this proposal will impose on the regulated community, we question how the Department determined that the projected surpluses are appropriate.
2. Implementation procedures.
As noted above, this proposed rulemaking would establish an assessment schedule for institutions. It is our understanding that the Department currently assesses these institutions, but the current assessment system is not administered via any particular rule or regulation. As such, there is nothing in this proposal that deletes the current assessment system. We ask the Department to explain how it currently collects fees from institutions and how it will transition to the new assessment schedule. Will the Department discontinue its current assessment system? Assuming that this proposal is ultimately adopted as a formal regulation, how and when would the regulated community be notified of the change?
3. Section 5.5. Adjustments to assessments; invoicing.—Implementation procedures; Reasonableness; Need; Fiscal impact.
Subsection (a)
This section sets forth the criteria for adjustments to assessments based upon an optional adjustment for inflation which would be applied to all institutions. It allows the Department to increase the amount of the assessment up to the increase in the Consumer Price Index or other similar index published by the United States Department of Labor Bureau of Labor Statistics, if the projected assessments are insufficient to provide for the Department's budget due to inflation.
We have several questions on how this provision will be implemented and why the Department believes this approach is reasonable.
• First, what safeguards are in place to ensure that the need for additional funding is based on inflation? Do the Pennsylvania General Assembly and the budgetary process have any input or oversight on whether an adjustment is needed?
• Second, will the Department notify the regulated community in advance about the imposition of the inflation adjustment? How and when would the regulated community be notified of the inflation adjustment?
• Third, how often are the cited inflation indices updated? Do the inflation indices correlate to the semiannual assessment notices of this rulemaking?
• Fourth, how did the Department determine that the cited inflation indices are most appropriate for all Pennsylvania State-charted institutions?
• Finally, what criteria will the Department use when deciding which inflation index to use?
We ask the Department to respond to these questions and to adjust the final-form rulemaking as it deems appropriate to provide for fair and uniform administration of adjustments of assessments.
Subsection (b)
This subsection allows for an optional adjustment to be applied only to specific institutions based upon their Uniform Financial Institutions Rating System or Uniform Interagency Rating System composite rating. What is the need for this surcharge and why does the Department believe it is the most reasonable approach to assessing certain institutions? How did the Department determine that a 30 percent surcharge is appropriate for an institution with a composite rating of four and that a 50 percent surcharge is appropriate for an institution with a composite rating of five?
In addition, we note that this subsection provides the Department with discretion as to whether the surcharge will be imposed. What criteria will guide the Department in its determination that this surcharge is appropriate? Will the surcharge be imposed to close a budgetary gap or will it be imposed to encourage institutions to improve their composite ratings?
4. Section 5.6. Implementation schedule.—Reasonableness; Fiscal impact.
This section provides for a phase-in of the new assessment schedule; however, the phase-in only applies to banks, bank and trust companies, saving banks, savings associations and trust companies. The Department notes that the phase-in will not apply to credit unions because the collective impact of the assessments on the budgets of credit unions would be modest. A commentator has asked the Department to consider the merits of imposing the new assessment schedule on an incremental basis for credit unions with larger assets. As the Department prepares the final-form rulemaking, we ask it to consider the recommendation of the commentator as a way to lessen the immediate fiscal impact it would have on larger credit unions.
Environmental Quality Board Regulation #7-483 (IRRC #3022) Oil and Gas Well Fee Amendments November 14, 2013 We submit for your consideration the following comments on the proposed rulemaking published in the September 14, 2013 Pennsylvania Bulletin. Our comments are based on criteria in Section 5.2 of the Regulatory Review Act (RRA) (71 P. S. § 745.5b). Section 5.1(a) of the RRA (71 P. S. § 745.5a(a)) directs the Environmental Quality Board (EQB) to respond to all comments received from us or any other source.
1. Section 78.1. Definitions.—Clarity and lack of ambiguity; Need.
Conventional well
EQB proposes to define conventional well as ''a bore hole drilled or being drilled for the purpose of or to be used for the production of oil or gas from a conventional formation.'' Commentators question whether secondary and tertiary recovery or disposal injection wells would be considered conventional wells under this definition. The commentators further state that both the regulated community, as well as regulators, would benefit from a more detailed definition of a conventional well. Specifically, commentators suggest using the description of a conventional well in Section E of the Preamble as the basis for a more detailed definition of conventional well in the regulation.
We ask EQB to consider the commentators' suggestion or ensure that the definition of a conventional well in the final-form regulation is clear and lacks ambiguity for the regulated community.
Subsection (a)
EQB proposes to delete the current subsection (a) which states that certain words and terms used in the chapter are defined by other statutes. EQB did not address this deletion in the Preamble. We ask EQB to explain the need for removing this subsection in the final-form regulation.
2. Section 78.19. Permit application fee schedule.—Economic or fiscal impacts; Reasonableness.
The Department's Oil and Gas Program (Program) is funded primarily through the oil and gas well permit fee. The Department of Environmental Protection (Department) is required to evaluate the oil and gas well permit fee every three years and recommend any changes to the fee necessary ''to address any disparity between program income generated by the fees and the Department's cost of administering the program with the objective of ensuring fees meet all program costs and programs are self-sustaining.'' 25 Pa. Code § 78.19(f). However, the Oil and Gas Act (Act) requires the permit fee to bear a ''reasonable relationship'' to the cost of administering the Act. 58 P. S. § 601.201(d).
Based on the most recent evaluation, EQB proposes to change the current oil and gas well permit fee from a sliding fee schedule to a fixed fee for most wells. The change would result in a fixed $5,000 fee for each nonvertical unconventional well (an increase of $1,800 or 36 percent from the current average permit fee of $3,200), and a fixed $4,200 fee for each vertical unconventional well (an increase that is more than double the current average permit fee of $2,000).
As noted above, permit fees must bear a ''reasonable relationship'' to the cost of the Program. In reviewing the Regulatory Analysis Form and Preamble, we do not see an explanation regarding how the proposed permit fees relate to the anticipated Program costs. Given that EQB proposes significant increases for unconventional well permits, we ask EQB to explain how it arrived at the anticipated Program costs to support the reasonableness of the increases. We will review EQB's response to these concerns as part of our consideration of the final-form regulation.
SILVAN B. LUTKEWITTE, III,
Chairperson[Pa.B. Doc. No. 13-2234. Filed for public inspection November 27, 2013, 9:00 a.m.]
