HARRISBURG - The debate over Marcellus Shale impact fees on drillers has taken as many twists and turns during the past year as an earlier, unsuccessful two-year push to levy a state severance tax on natural gas production.
The election of Republican Tom Corbett as governor one year ago marked a decisive turning point away from any prospect that Pennsylvania would levy a state severance tax on natural gas production, as a majority of drilling states have done.
Corbett had campaigned against what he labeled as an energy tax, as well as any state tax hikes. He has used every opportunity in office to criticize a severance tax, even though Democratic lawmakers continue to introduce severance tax bills that remain stuck in committee.
The push for a severance tax began in 2009 when former Gov. Ed Rendell called for one in his state budget address and reached its zenith with an unusual provision in the 2010 fiscal code where the two majority legislative caucuses declared their intent to pass such a tax. Rendell found he had little political leverage to implement that agreement during his waning months in office last year.
It has not been a smooth road either for lawmakers trying to advance the alternative to a severance tax:
impact fee legislation to generate revenue to help municipalities recoup some of the costs of hosting drilling activities and perhaps replenish the empty coffers of state environmental programs. The effort continues with 43 percent of voters in a new Franklin and Marshall College poll rate passing a "tax on natural gas extraction and distribution" as the most important or one of the most important issues facing the state. The issue falls second to transportation funding which has a 55 percent rating. The poll interviewed 525 adult residents, of whom 419 were registered voters. The sample of 525 people had a margin of error of plus or minus 4.3 percentage points. The 419-person sample had a margin of error of plus or minus 4.8 points.Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson County, unveiled the first impact fee bill in April after months of preparation. The governor warned lawmakers last spring about making a move on impact fees in advance of the report issued by his Marcellus Shale Advisory Commission.
The commission recommended a generic impact fee in July. Mr. Corbett waited several months before proposing that individual counties with Marcellus wells decide whether they want to levy an impact fee and keep 75 percent of the revenue for a range of local uses. Mr. Corbett's county option plan got a boost last week when the House Finance Committee approved a bill containing it on a party-line vote.
House GOP leaders support the bill and the Marcellus Shale Coalition, an industry trade group, issued a supportive statement saying the fee structure would keep the industry competitive in Pennsylvania.
Both the House and Senate could vote on impact fee bills when lawmakers return to session the week starting Nov. 14. The scope of these bills has expanded to include many of the environmental protection recommendations dealing with well proximity to water supplies and handling of drilling wastewater offered by the governor's commission.
The Senate postponed a vote last week on Mr. Scarnati's impact fee bill, which would establish a state-administered fee while sending most revenue to local municipalities.
"We want to put a reasonable fee on the industry that will not hurt that industry's job growth in the future and yet be able to provide some significant dollars back to the communities," said Mr. Scarnati.
The approach in the Senate has been to fashion a bill with bipartisan support.
That means having a bill with a statewide impact fee and not a county-based fee to get support from Senate Democrats, said Sen. John Yudichak, D-14, Nanticoke, ranking Democrat on the Senate Environmental Resources and Energy Committee. He said the Senate vote postponement was necessary. "It was fair to all parties that we not try to rush this," Mr. Yudichak said.
Several key issues still have to be resolved between the governor's office and two chambers.
- Local control: The House bill provides for state pre-emption of local gas drilling ordinances in areas where the state has enacted "appropriate" regulations. The Senate bill would establish a model zoning ordinance for municipalities receiving impact fee revenue.
- State/local: The county optional fee advocated by Mr. Corbett versus a state-administered fee remains a major difference.
- Fee amount: The House bill sets a fee up to $40,000 in the well's first year of operation, up to $30,000 in the second year, up to $20,000 the third year and up to $10,000 in the fourth through 10th years while the Senate bill sets a flat $40,000 fee in the first year, $30,000 in year two, $20,000 in year three and $10,000 in the fourth through 10th years.
- Other impacts: While both key bills levy a per-well fee, some officials raise the issue of how to address the impact of drilling activities in areas that have compressor stations or major pipelines but no wells.
The local control issue is among the most volatile.
"Citizens and local officials are being steamrolled by lawmakers in Harrisburg who are giving in to industry demands for an end to local zoning authority in exchange for a tiny drilling fee," said Sharon Ward, director of the Pennsylvania Budget and Policy Center, a Harrisburg think tank that supports a severance tax, in a statement about the House bill.
Having statewide standards will benefit residents of the nearly half of the municipalities in the Marcellus Shale formation that don't have formal zoning ordinances, said MSC President Kathryn Klaber.
Contact the writer: rswift@timesshamrock.com