Corbett's Shale Panel Recommends Drilling Impact Fee

- Corbett's Shale Panel Recommends Drilling Impact Fee

Friday, July 15, 2011
The Philadelphia Inquirer
by Angela Couloumbis

Gov. Corbett's Marcellus Shale advisory commission has recommend that Pennsylvania impose an impact fee, rather than a tax, on the extraction of natural gas.

The 30-member commission this morning also approved a long list of other recommendations for how to deal with the burgeoning drilling industry, including providing financial incentives for encouraging the use of natural gas.

But its decision on whether to have any sort of extraction levy was one the most eagerly anticipated.

Corbett has said he does not support a tax but would consider a local impact fee on drillers, as long as the money raised goes directly to those communities most heavily impacted by drilling.

The commission, in its recommendation, appeared to stick closely to those parameters, although it did not get into details, including how much that fee should be. It will leave that question to the legislature, which has signaled it will tackle the issue in the fall.

Senate President Pro Tempore Joe Scarnati (R., Jefferson) has an impact fee bill he is pushing.

Corbett assembled the commission four months ago to study the industry, find ways to facilitate its growth and determine how it affects drilling communities. Its recommendations are not binding.

Copyright (c) 2011, The Philadelphia Inquirer

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Debate on Gas Drillers' Impact Fee Put Off

- Debate on Gas Drillers' Impact Fee Put Off

Wednesday, June 29, 2011
The Morning Call, Allentown, Pennsylvania
by John L. Micek, The Morning Call, Allentown, Pa.

Hours after a threatened veto, Republicans who control the state House pulled the plug Tuesday on a planned debate over a local impact fee for natural gas drillers, saying they'll take up the issue this fall.

The 180-degree turn came as lawmakers worked to put the final pieces of a $27.15 billion budget into place so they could send it to Gov. Tom Corbett before the new fiscal year starts on Friday.

At a news conference, the GOP governor said he wants lawmakers to wait to debate any impact fee bill until after a Marcellus Shale commission submits its report next month on the effects of drilling.

"I have sent this message back: If something gets to my desk, it will be vetoed," Corbett said.

The budget cleared a major hurdle as the Senate voted 30-20 along straight party lines to approve it, positioning it for a vote by the House as soon as Wednesday.

Also on Tuesday, House and Senate Democrats withdrew their opposition to funding bills for Penn State, Temple and Lincoln universities and the University of Pittsburgh, and the veterinary school at the University of Pennsylvania, mustering the two-thirds majority needed for approval.

Democrats in the two chambers withheld their votes for the schools Monday, complaining they hadn't had time to review the details of the sprawling main budget bill. Once that happened overnight and into Tuesday, the Democrats said they were prepared to withdraw their opposition. In short order, the House and Senate separately voted to approve the appropriations.

A key budget bill governing how the state regulates public education and a bill known as the fiscal code, which implements the spending in the main budget, were also moved into place. The House advanced the fiscal code bill, positioning it for a vote Wednesday. The school code bill cleared the Senate on a 33-17 vote and went to the House for approval.

During lengthy debate in the Senate, Democrats repeated arguments that the budget, which trims overall state spending by about 3 percent largely through more than $1.1 billion in cuts to public schools and 18 universities, would result in reduced services for the needy and the aged, tuition hikes for college students and local property tax increases for homeowners.

They also reiterated longstanding complaints that Republicans and the administration had refused to tap a year-end stimulus of as much as $700 million to restore some of the deepest cuts. The spending plan includes more than $100 million in surplus funds.

"This budget recognizes that there are tough, tough choices, I understand that," said Sen. Lisa Boscola, D-Northampton. "But it also includes some bad choices on how to reinvest $27.15 billion for as many Pennsylvania families as we can."

Republicans have said they're not comfortable with all the reductions in the spending plan. But they stressed that the plan "reflects the circumstances of the times," while ducking any major tax increases.

"The document reflects the need for the commonwealth to be fiscally responsible at a time of difficult financial challenges," said Majority Whip Pat Browne, R-Lehigh.

Negotiations continued on two of Corbett's key legislative priorities: authorization of public school vouchers and legislation closing most of the loopholes in a law requiring voter referendums for any school tax hike that outpaces inflation. The governor wants both measures passed before lawmakers start their summer break.

"The House and the Senate have worked with us to reach a final budget," Corbett said. "Because we planned carefully, estimated conservatively, we have a framework to put our budget together."

Corbett has pressed hard to close the loopholes in the "back-end referendum" law, raising the issue in nearly every negotiating session with legislative leaders. Implementing language sponsored by Rep. Seth Grove, R-York, has been attached to a Senate bill currently scheduled for a House vote Wednesday. The governor appeared ready to play hardball with lawmakers, saying "until there is a budget, until I sign one, there is no budget."

Talks on the school-choice bill are continuing, with House leaders saying it's up to the Senate to make the first move. "The Senate has always been in the lead," said House Majority Leader Mike Turzai, R-Allegheny.

Senate President Joe Scarnati, R-Jefferson, said the chamber is "continuing to work with the House to see if there's support" for a school-choice bill and to "see what we can get done before we leave."

House Republicans denied that Corbett's veto threat had anything to do with their decision to put off a vote on an impact fee until the fall. They were complying with his long-stated position that lawmakers delay voting until the Marcellus Shale commission presents its report.

"We'll try to design a legislative package that addresses the full impact of drilling," House GOP spokesman Steve Miskin said.

Scarnati, who spearheaded the push for a drilling fee, said Corbett's veto threat had "changed the dynamic. ... Obviously, it's not going to get done by June 30 if the governor has put his marker down," he said.


Copyright (c) 2011, The Morning Call, Allentown, Pa.

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Democrats Want Corbett Involved in Drilling Fee Talks

- Democrats Want Corbett Involved in Drilling Fee Talks

Friday, June 24, 2011
Pittsburgh Post-Gazette
by Laura Olson

Calling on Gov. Tom Corbett to "engage" in the ongoing discussions of a drilling fee, Democratic state senators this morning offered yet another variation on how to assess the state's natural gas wells.

Rather than offering their proposal as a bill, they say they plan to offer an amendment to the budget bills that are expected to come up for a vote early next week.

"The governor has really decided not to engage on this issue, has suggested that it should not be part of this budget debate," said Sen. John Yudichak, D-Luzerne. "We believe it should be. We cannot go through another budget season with more being said and less being done."

The governor said again earlier this week that he does not want lawmakers to consider a drilling fee until his Marcellus Shale Advisory Commission issues its report on July 22. Mr. Corbett said that if a budget bill reaches him with such a fee included, he is "leaning toward" vetoing it.

The Senate Democratic proposal would reverse many of the broader changes added to Senate President Pro Tem Joe Scarnati's impact fee measure in a committee last week. The fee initially would be $17,000, changing based on the price of natural gas and a well's production level. Under the current bill, it would start at $40,000, decreasing annually for four years, and charging drillers no fee after the 10th year of production.

It also would slightly lower the amount for localities and conservation districts, boost the share for emergency responders to $2 million, and allow for a portion of the local government funding to go to areas that have no drilling but do have pipelines and other gas transportation infrastructure.

"No legislation ever gets through the state without support from all regions of the state," said Sen. Andrew Dinniman, D-Chester. "The legislation that came out of [the Senate committee] helped one region of the state, but most of the people weren't helped."

Closed-door budget negotiations are continuing among Republican leaders from both chambers and the governor's office. While it remains unclear whether a drilling fee has been part of those talks, House Republicans are likely to discuss what to do about the various fee proposals during their caucus meeting today.

Copyright (c) 2011, Pittsburgh Post-Gazette

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Proposed Drilling Fee May Piggyback on Budget Bill

- Proposed Drilling Fee May Piggyback on Budget Bill

Thursday, June 16, 2011
Knight Ridder/Tribune Business News
by Brad Bumsted, The Pittsburgh Tribune-Review

A Bucks County legislator said she will try to attach her proposed impact fee on deep natural gas wells to a budget companion bill that allows the state to raise revenue.

Her bill normally would have difficulty maneuvering through legislative committees in the two weeks remaining before summer recess. By offering it as an amendment to the budget companion bill, state Rep. Marguerite Quinn, a Republican, hopes the governor could sign it into law with the budget.

Quinn said she initially planned to hold back her bill out of respect for Republican Gov. Tom Corbett, who wants to consider an impact fee after his Marcellus Shale Advisory Commission issues a report in late July.

But because the GOP-controlled Senate appears ready to move impact fee legislation before the June 30 budget deadline, Quinn said she wants to try to enact H.B. 1700.

She has bipartisan support for her plan to assess $50,000 per well in the first and second years, declining in subsequent years; 35 co-sponsors signed onto her bill, including House Appropriations Committee Chairman Bill Adolph, R-Delaware County.

The companion budget bill is the state fiscal code that sets tax rates, and without it, the state could not raise revenue or, ultimately, spend money.

Kevin Harley, Corbett's spokesman, said Tuesday that Corbett intends to wait for the advisory panel's report so that he knows the potential impact on communities. Corbett has said he wants any money from a fee to pay for community needs that arise from drilling.

Quinn's bill would allocate 50 percent for local governments, 5 percent to county conservation districts, 20 percent for the state Motor License Fund and 25 percent for state environmental spending.

She said her plan abides by Corbett's desire not to put impact fee money into the General Fund.

A recent statewide poll found that Pennsylvania voters said by a margin of 69-24 percent that gas extraction from deep wells should be taxed.

"I believe this is a common-sense, balanced approach to address the variety of issues our local governments and communities are experiencing," Quinn said. "It will address the infrastructure and the environment (and) yet not prevent the growth of this industry."

If lawmakers attach a shale tax amendment to the fiscal code, and Corbett holds to his timetable and criteria, it could set up a gubernatorial veto and jeopardize timely passage of the budget.

Copyright (c) 2011, The Pittsburgh Tribune-Review

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Impact Fee Proposed on Natural Gas Wells

- Impact Fee Proposed on Natural Gas Wells

Tuesday, June 14, 2011
Pittsburgh Post-Gazette
by Laura Olson

A state Senate measure to charge natural gas drillers a per-well impact fee will be getting some tweaks today, in an effort to move forward on the measure as lawmakers head into final budget talks.

One lawmaker says those are the beginning of a more comprehensive revamp to the drilling fee legislation, which is being negotiated by supporters in that chamber.

The Senate Environmental Resources and Energy Committee this morning will be taking up the impact fee bill from the chamber's President Pro Tem Joe Scarnati, R-Jefferson. An amendment from the panel's chairwoman would raise the initial amount of that fee, Although no fee would be assessed after the 10th year of production.

Under Mr. Scarnati's current bill, a $10,000 base fee would be charged, with that fee rising based on the price of natural gas and level of production. The senator's staff estimates that the average fee for a well in its first year of production would be between $25,000 and $30,000.

Of the revenue collected, 60 percent would go to local and county governments with drilling activity. The other 40 percent would go for environmental initiatives.

Changes from Sen. Mary Jo White, R-Venango, would start that fee at a flat $40,000, lowering it by $10,000 per year in the second, third and fourth years. A fee of $10,000 would be assessed from years four through 10.

Adam Pankake, the Senate panel's executive director, said that reflected the decrease they'd seen in the impacts on local communities as a well ages. As production decreases -- which occurs rapidly during the first few years that a shale well is producing -- the truck traffic and other strains on a municipality also shrink, he said.

Ms. White's proposed changes would also narrow how the 40 percent that goes toward environmental initiatives could be used. With the current measure, some funds could be used for open-space preservation and recreation trails. That option would be removed, Mr. Pankake said.

Another change would allow drillers a credit of up to 30 percent of their overall fee if they donate to a county housing trust fund or a nonprofit involved in affordable housing.

Drew Crompton, Mr. Scarnati's chief of staff, said the senator was pleased that his measure will probably be moving forward, but added that there were "some aspects that are going to need further conversation." Those include the proposed changes to how the environmental funds can be spent, he said.

Sen. Tim Solobay, D-Canonsburg, said other changes were under discussion for a broader overhaul of the fee proposal. Funding for continued training of emergency responders, as well as incentives for converting fleet vehicles to natural gas, could be included, he said.

Mr. Solobay said he supported the general aim of the impact fee plan to send the majority of funding to communities with drilling and reserve the remainder for environmental or infrastructure projects.

While he was optimistic that the measure "definitely" can be approved this month alongside the state budget, Mr. Scarnati's staff gave a more cautious forecast.

"It doesn't mean it gets done, but we are going to push the issue," Mr. Crompton said.

Copyright (c) 2011, Pittsburgh Post-Gazette

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Bucks County Republican Looks for Sponsor on Shale Fee

- Bucks County Republican Looks for Sponsor on Shale Fee

Thursday, June 09, 2011
Knight Ridder/Tribune Business News
by Brad Bumsted, The Pittsburgh Tribune-Review

A Bucks County Republican is asking legislators to co-sponsor her shale impact fee which she says is designed to try to win GOP Gov. Tom Corbett's approval.

Corbett has said any measure must be a fee and not a tax and the main purpose must be to help compensate municipalities for damages gas drilling causes. He has said revenue from a fee should not go into the state's General Fund.

For starters, Rep. Marguerite Quinn says her proposal is a fee. It is not based on gas well production nor is it tied to the price of natural gas like a half-dozen or so tax proposals pending in the House and Senate, she said. It's a flat rate on a declining scale, starting at $50,000 per well.

While the state Department of Revenue would collect the fee, the revenue would not go into the General Fund, Quinn told colleagues in a memo seeking co-sponsorship.

"I've been working on it -- something that does meet the governor's criteria," Quinn said today. "I tried to respect the governor's call for no tax. I made it a simple impact fee."

Asked about Quinn's proposal, Kevin Harley, Corbett's spokesman was non-committal. "Gov. Corbett has said he is open to an impact fee. But he wants to wait until his Marcellus Shale Advisory Commission issues a report."

The commission, headed by Lt. Gov. Jim Cawley, is attempting to quantify local drilling costs. The report will be issued July 22 while lawmakers are likely on summer recess after adopting a state budget by June 30.

Quinn said she plans to meet with Cawley to outline her proposal.

Under Quinn's proposal, half of the revenue would be deposited into an "impact mitigation fund" for use by counties and municipalities hosting drilling. That would cover fire, police and emergency service costs, as well local water issues, and repairing roads and bridges.

Twenty-five percent of money would go for statewide environmental projects and hazardous waste cleanup. The money would go to a state fund for environmental use called Growing Greener. It would be used for projects such as watershed protection, acid mine drainage abatement and cleanup and plugging of wells.

And 20 percent of the revenue would go to the state Motor License fund for road and bridge repairs. Five percent would go to local conservation districts.

Quinn says she is calling her plan a fee on shale, not Marcellus shale. The point is to cover drilling in deeper layers beneath the Marcellus shale formation such as the Utica formation.

"We don't want to be shortsighted in structuring this and have to re-invent the wheel later," she said.

Copyright (c) 2011, The Pittsburgh Tribune-Review

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Drilling Impact Fee Won't Go To Those Who Ban It

- Drilling Impact Fee Won't Go To Those Who Ban It

Thursday, May 19, 2011
Knight Ridder/Tribune Business News
by Brad Bumsted, The Pittsburgh Tribune-Review

Local governments that want to share revenue from a proposed impact fee on natural gas drilling cannot adopt more stringent zoning regulations than a statewide "model ordinance" called for in a Senate bill.

The provision is aimed at Pittsburgh, which banned drilling, and any other municipalities that would do the same, said Andrew Crompton, chief counsel for Senate President Pro Tempore Joe Scarnati, R-Jefferson County, the bill's author.

"It's mainly to make sure the city of Pittsburgh and any others that have explicitly zoned out shale are not getting rewarded by getting a share of the (drilling) fee," Crompton said.

The way the bill is structured Pittsburgh wouldn't be eligible for the local share of the money, which goes to communities in or near drilling sites, but it would otherwise be eligible for statewide revenue the bill provides, Crompton said.

Ben Price, project director for the Community Environmental Legal Defense Fund, which drafted Pittsburgh's no-drilling ordinance, called the revenue "blood money" that requires municipalities to abrogate their authority to protect communities in order to get state revenue. He claimed the gas industry drafted the Scarnati bill, which Crompton denied.

The Public Utility Commission would develop the model zoning ordinance, which would permit drilling "by right" in all but residentially zoned areas.

Crompton said he suspects the commission would rely on a model zoning proposal used by the Pennsylvania State Association of Township Supervisors.

"We put a model ordinance out to members so they can properly plan for (drilling)," said Elam Herr, an official with the supervisors association. The group is still reviewing Scarnati's bill, Herr said, but has no problem with preventing revenue from going to municipalities that ban drilling.

Scarnati on Monday introduced the bill, which would impose a $10,000-per-well fee on deep gas sites, with potential revenue much higher depending on the price of gas and volume produced by the well.

The legislation would bring in $121.2 million in revenue by March 1, 2012. The first $7.5 million would go to conservation districts. The split after that would be 60 percent to counties and municipalities and 40 percent for statewide grants on projects such as roads, stormwater and sewer systems and protecting open space.

But the bill faces hurdles: Gov. Tom Corbett has said he would consider an impact fee, but the money must remain local and not come to Harrisburg. The Republican-controlled House has shown no appetite for a statewide fee or tax. There are six other tax or fee proposals on Marcellus shale drilling.

Copyright (c) 2011, The Pittsburgh Tribune-Review

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State Senate Proposes Impact Fee on Gas Drillin

State Senate Proposes Impact Fee on Gas Drillin

Friday, April 29, 2011
Knight Ridder/Tribune Business News
by Brad Bumsted and Andrew Conte, The Pittsburgh Trib

The ranking Republican in the state Senate today proposed an impact fee on Marcellus shale gas drilling, of which an estimated 60 percent would go to counties and municipalities with deep wells as well as townships and boroughs neighboring drilling production sites.

The fee would be used to help cover damage to roads and bridges, maintenance and improvement costs for water and sewage systems and emergency responder costs, said Senate President Pro Tempore Joe Scarnati, R-Jefferson County.

The other 40 percent would be split between conservation districts statewide and environmental funds for clean up and infrastructure, Scarnati said.

The exact breakdown of revenue from the fee is still subject to negotiation in a bill that Scarnati hopes will be ready for a vote in early June. The bill could be introduced as soon as next week.

The baseline fee is $10,000 per well, but it would be adjusted based on gas volume and the price of gas. The average fee per well would be about $25,000 in 2011, according to Scarnati's office.

The fee would be retroactive for 2010 and raise $45 million for last year. It will bring in $76 million this year and will rise to at least $150 million by 2014, Scarnati said.

The legislation was much anticipated because of Scarnati's stature in legislative leadership and because Republican Gov. Tom Corbett has said flatly he will not consider a tax that brings money into the General Fund.

"I have to believe this is in the sweet spot of where I believe most legislators will be," Scarnati said.

Moreover, he said it would be difficult to pass a state budget without some sort of levy on the burgeoning industry.

"I can't see how we get a state budget done without bringing some dollars in from this industry," he said.

The fees will not be used to balance the budget, which is $4.2 billion in the red. But the political dynamic of lawmakers voting for cuts requires a fee on the industry, he said.

Statewide polls show widespread support for a tax on shale drilling -- 69-22 percent in favor in a recent Quinnipiac University poll.

Scarnati said it is a fee and not a tax because the money does not go to the General Fund. There also are no exemptions as typically exist with shale extraction taxes, he said.

"What's the difference between a fee and tax? Governor Corbett's pen," Scarnati said. "That will be the ultimate test."

He said he had lunch with Corbett on Monday.

"At this point, I have a caution light," Scarnati said today in a phone conference with reporters. "I don't have a red light. I don't have a green light."

Marcellus drillers are open to an impact fee that provides money for local communities as long as it's "clear, straightforward and competitive," Kathryn Klaber, president of the Marcellus Shale Coalition trade group, said in a statement.

"Our industry understands that, while there are tremendous financial opportunities in Marcellus Shale development, there also can be impacts felt by our host communities," Klaber said.

"We support the concept of a fee with portions for local government and conservation and most importantly strong but consistent local regulations as part of this approach," said Matt Pitzarella, a spokesman for Range Resources.

"The devil is and will always be in the details and we eagerly look forward to seeing and reviewing those particulars, but we remain supportive of the concept."

Marcellus Impact Fee Proposal In The Works

Marcellus Impact Fee Proposal In The Works

Monday, March 28, 2011

Knight Ridder/Tribune Business News

by  Brad Bumsted, The Pittsburgh Tribune-Review

 

Republican senators will introduce legislation to impose a fee on Marcellus shale drillers in a few weeks, in an effort to offset costs municipalities experience dealing with the growing natural gas industry, said a top Senate staffer.

Senate President Pro Tempore Joe Scarnati of Jefferson County, the party's highest-ranking senator in the GOP-controlled General Assembly, could be lead sponsor of the bill, said his chief counsel Andrew Crompton.

Counties where drilling occurs would benefit the most monetarily, but lawmakers likely will try to compensate contiguous municipalities, Crompton said. Those municipal boundaries could cross county lines, he said, so "contiguous counties could well get money."

Lt. Gov. Jim Cawley said yesterday a shale advisory panel he chairs will report to Gov. Tom Corbett in 120 days and include a recommendation on assessing a local impact fee to help municipalities defray costs such as road repairs and first responder units.

Corbett has said he would consider a fee to help local government finances. But the money should not go to the state, he said.

The Senate might produce a different interpretation. Scarnati "believes local needs are paramount, but knows that there needs to be a statewide portion, likely for 'Growing Greener' projects and/or hazardous site cleanup," Crompton said.

Cawley said the administration would not impose a severance tax on gas extraction, and the Marcellus Shale Advisory Commission wants evidence of damage that's occurring from drilling operations.

"We want to understand what the actual impact is," he said.

It's not clear whether the full Senate would vote on a bill before the commission concludes its work. Crompton said senators do not want to usurp the commission, but Scarnati senses urgency among local government officials and doesn't want to wait until fall to address it.

The commission will consider a range of issues, such as environmental impacts and the extent to which natural gas eventually could be used to fuel state vehicles, prisons and schools, Cawley said.

Corbett's critics have said the commission's makeup is industry-heavy. It includes drilling company executives, business representatives, six members of Corbett's cabinet, a member of the Public Utility Commission, environmentalists, local government officials and the governor's energy executive, Patrick Henderson.

"This is a very interesting group of cheerleaders," Virginia Cody of Wyoming County told the panel during its first meeting.

Joanne Fiorito, who lives near drilling sites in that county, said she moved there "to be at peace with nature."

"You have ripped my American dream apart, and I am appalled and outraged," she said.