DCNR to collect money from drillers who harvest gas under public streams

republicanherald.com/news/dcnr-to-collect-money-from-drillers-who-harvest-gas-under-public-streams-1.1324563

By Laura Legere (Staff Writer llegere@timesshamrock.com)
Published: June 4, 2012

Natural gas drillers have to sign leases and compensate the state if they plan to collect gas trapped deep beneath publicly owned streams and rivers, according to a policy developed recently by the Pennsylvania Department of Conservation and Natural Resources.

The policy applies to gas gathered from pads on neighboring properties – away from the streams and their banks – where wells are drilled vertically before turning and boring laterally underground.

Waterways in the commonwealth are considered publicly owned if they are, or have ever been, used for commercial trade or travel. The list and maps of the waterways compiled by DCNR include hundreds of streams throughout the state’s Marcellus Shale region.

Where the state owns the streambeds, it also owns the mineral rights beneath them.

DCNR spokeswoman Christina Novak said the state is developing a standard agreement for companies who either want to drill horizontal wellbores under streams or who will, through hydraulic fracturing, draw gas from rock formations deep under the waterways. Unlike standard lease agreements for drillers who operate in state forests, the leases will not address surface impacts because there won’t be any on state property, she said.

“This would just allow an operator to access underneath a navigable waterway from nearby but to compensate the commonwealth because it is the owner of the resource,” she said.

The agency alerted gas drillers in March that the state would begin seeking compensation through lease payments and royalties for gas removed under the waterways.

The issue emerged because the mineral rights beneath publicly owned waterways were either impeding natural gas development or drilling was taking place without the state being appropriately compensated, Novak said.

DCNR has not determined how many miles or acres of public waterways will be included in the leasing effort or how much Pennsylvania might make from current or future gas leases. It is also still exploring if it can collect money from any companies that might already have pulled gas from under the waterways.

DCNR has created an interactive map to help operators determine which streams are considered publicly owned, but the agency also cautions in a policy summary that the list of waterways is neither official nor final.

The list developed so far is based primarily on statutory declarations of navigable waterways from as early as the 18th century, but a declaration is not required for a waterway to be considered navigable and the state says it reserves the right to add or drop streams from the list.

Publicly owned waterways in the heart of Northeastern Pennsylvania’s shale region include the Susquehanna and Delaware rivers; Tunkhannock, Bowman and Mehoopany creeks in Susquehanna and Wyoming counties, and Wyalusing, Wysox, Wappasening, Sugar and Towanda creeks in Bradford County.

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NEPA counties to raise millions or nothing under gas impact fee

citizensvoice.com/news/nepa-counties-to-raise-millions-or-nothing-under-gas-impact-fee-1.1270948#axzz1mH3yTlIS

By Laura Legere (Staff Writer)
Published: February 13, 2012

Northeastern Pennsylvania’s Marcellus Shale boom counties stand to raise millions of dollars this year through an impact fee on the deep gas wells.

Other regional counties with a handful of wells may get little or nothing.

Once Gov. Tom Corbett signs natural gas legislation that passed the House and Senate last week, counties will have 60 days to adopt an ordinance to levy the optional fee.

Counties with active drilling that pass the ordinance will share with the state and their municipalities an estimated $180.5 million this year on the 3,850 vertical and horizontal shale wells that were drilled through 2011, according to state estimates. But only horizontal or producing vertical gas wells can be levied the fee.

Vertical exploratory wells that have never been hydraulically fractured and do not produce gas, like the two drilled in Lackawanna County and the eight drilled in Wayne County, will not be eligible for the fee.

“Our concern was that truly exploratory wells do not pay the impact fee,” said Drew Crompton, chief of staff for Senate President Pro Tempore Joseph Scarnati, R-Jefferson County. He added that the local impact of such wells is relatively minor and “quite frankly, we don’t want to discourage exploratory wells.”

On the other hand, the bill presumes that horizontal wells are not exploratory so even those not producing gas are eligible for the fee, he said.

That means Luzerne County’s two test wells, both of which are horizontal, will be subject to the $50,000 per well fee if the county adopts it, despite the fact that both were plugged after they showed little prospect of producing economic amounts of gas.

The bill allows fees to be collected for three years on horizontal wells with no production. After that, the fee is suspended for any well producing less than 90,000 cubic feet per day.

Crompton said the state recommends that counties with any shale gas wells pass the fee ordinance.

State lawmakers crafting the legislation broadened the fee eligibility from only counties with wells producing gas in an earlier draft of the bill to all those with unconventional gas wells that have been “spud” – the industry term for the start of drilling.

It is not entirely clear whether counties with “spud” wells that cannot be levied a fee, like Lackawanna and Wayne, will be allowed to share the money collected from the impact fee statewide.

Counties’ eligibility for the fee will be subject to a final determination by state environmental regulators, the governor’s office or the Public Utility Commission, Crompton said.

“Whether it covers everyone or not, we’ll have to see,” he said. “I think it will be interpreted that they should go ahead and vote on the resolution and hopefully make themselves eligible to receive, not a big part of the impact fee, but maybe some of it.”

Luzerne County will consider adopting the fee ordinance even if it stands to raise little from it, interim County Manager Tom Pribula said.

“All counties are basically revenue starved,” he said, “so if we have the ability to generate additional revenues it would be wise to do something.”

The county and its municipalities will share less about $51,000 of the $100,000 raised from the two wells – after the state’s share and distributions to other programs, like the Department of Environmental Protection, natural gas vehicle incentives and low-income housing support, are taken out.

In Wyoming County, where gas drilling has increased rapidly in the last year, commissioners are just beginning to review the impact fee bill, chief clerk William Gaylord said.

“There are a lot of questions to be answered,” he said. He did not indicate if the commissioners are inclined to adopt the fee ordinance.

“This has been talked about for years,” he said, “and they have never come out for or against it.”

If Wyoming County adopts the fee, its wells could raise $4.5 million this year. The county and its municipalities would share about $2.3 million of it, according to calculations based on state spud data.

Local and county governments in Susquehanna County, which ranks among the top gas producers in the state, are eligible for about $11 million of the $20.3 million its wells will raise this year if the county passes  the ordinance.

Efforts to reach the Susquehanna County commissioners on Friday were unsuccessful.

llegere@timesshamrock.com

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Pa. GOP to seek vote on drill bill

www.timesleader.com/news/Pa__GOP_to_seek_vote_on_drill_bill_02-06-2012.html

February 6, 2012

Party has notified lawmakers that it hopes to hold votes on impact fee, regs this week.

HARRISBURG — A final framework is at hand on sweeping legislation to impose an impact fee and update safety regulations on Pennsylvania’s booming natural gas industry, top Republican state lawmakers say.

Republicans notified rank-and-file lawmakers Saturday night that they hope to hold votes this week on a framework reached by negotiators from the House, Senate and Gov. Tom Corbett’s office during closed-door negotiations over the past six weeks.

“These discussions have progressed rapidly over the course of the last two weeks,” House Speaker Sam Smith and House Majority Leader Mike Turzai said in a letter to lawmakers. “In fact, staff have been working throughout the weekend and will be working (Sunday) in order to have a proposal that we can consider as early as this week.”

Pennsylvania is the only major gas-producing state that doesn’t tax natural gas production, and Democrats have not been part of the negotiations after trying unsuccessfully for three years to win enough Republican votes to impose a severance tax on the industry. Because Corbett opposes a tax on the industry, Republicans, who control the Legislature, have instead pursued an “impact fee” that he views as being fundamentally different than a tax. But House and Senate Republicans have clashed over the size of the fee, while Democrats and environmental groups view their proposals as too low and members of the industry have been split over paying any levy.

The 15-year impact fee would rise and fall with the price of natural gas and inflation. Currently, the price of natural gas is about $2.30 per million British thermal units — a measurement used at major pipeline hubs. If the price is between $3 and $5, the total per-well fee would be $310,000 over 15 years, not counting inflation, according to a summary distributed to senators.

At the current price of gas, the 15-year fee total would be $240,000 per well, not counting inflation, according to a summary distributed to House Democrats. The maximum per-well fee a company would pay is $355,000, if gas stays above $6, while the minimum would be $190,000, if gas stays below $2.25, again not including inflation.

But the fee at any price would be well below the average lifetime per-well tax paid in other natural gas states, including $993,700 in West Virginia, $878,500 in Texas and $555,700 in Arkansas, according to the Harrisburg-based Pennsylvania Budget and Policy Center, a liberal think tank.

Counties that host the drilling would have the option of whether to impose the fee — a key element sought by Corbett and disliked by senators — but a critical mass of municipalities would have 60 days to override a county’s refusal. Counties and municipalities that refuse the fee would not get a share of the money.

Money from the impact fee and state forest drilling royalties would be distributed to a wide range of purposes, including bridge repairs, open space, water and sewer plant improvements, statewide environmental cleanup programs and purchases of natural-gas fleet vehicles. Local governments that are home to drilling would get 60 percent of the money from an impact fee, with 40 percent going to state programs or agencies, according to the summaries, even though Corbett had opposed using impact fee money for state programs.

The bill would increase the required distance between drilling and public water sources such as reservoirs, but not to the extent sought by Democrats and environmental groups, and it would require the state to develop regulations for transporting drilling wastewater and enforce qualifications of treatment plant operators.

The legislation also would address a top priority of the natural gas industry and set limits to prevent municipal officials from imposing zoning ordinances that effectively prevent drilling there. A drilling operator could ask state utility regulators to review a local ordinance to determine whether it allows for “the reasonable development of oil and gas.” If the Public Utility Commission or a state court decides that a local ordinance fails, the municipality would be unable to receive impact-fee money until it changes it, according to the summaries.

Pennsylvania lawmakers have talked about whether to tax the natural gas industry since it arrived in earnest in 2008 to tap into the Marcellus Shale natural gas formation, considered the nation’s largest-known natural gas reservoir. The drilling has drawn opponents who fear it is polluting the water supply.

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Drilling fee legislation near?

www.timesleader.com/news/Scarnati__Drilling_fee_legislation_near_01-31-2012.html

January 31, 2012

HARRISBURG — Pennsylvania’s highest-ranking state senator said Monday he thinks an agreement on a sweeping bill to impose a fee on the booming natural gas drilling industry can be finished in a week, right before Gov. Tom Corbett unveils his budget plan.

Senate President Pro Tempore Joe Scarnati said negotiators from the House, Senate and governor’s office are trying to agree on the size of the fee and the distribution of the money.

He said negotiators are working toward a “hybrid” solution to iron out differences over whether the state or the county that hosts the drilling should enforce the fee.

Scarnati said Senate negotiators are trying to make a final bill more appealing to advocates of allowing municipalities to regulate drilling activity than earlier proposals that passed the Senate.

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Revised data good case for severance tax

republicanherald.com/opinion/revised-data-good-case-for-severance-tax-1.1242950
Published: December 12, 2011

In its diligent effort to prevent the natural gas industry from paying a fair tax on the wealth it extracts from Pennsylvania, the Corbett administration often has overstated the positive impact of the industry.

State agencies have overstated job creation and nonseverance tax revenue attributable to the industry as Gov. Tom Corbett unconvincingly has argued against a severance tax.

At one point, the Department of Revenue attributed to the industry millions of dollars in tax payments collected from individual taxpayers who work in drilling and related fields.

Now, the Department of Revenue has acknowledged that it overestimated, by more than 100 percent, the amount of income tax revenue collected from Pennsylvania property owners who receive royalty payments on gas leases.

The Department recently reported that it had received $46.2 million in such payments, 122 percent less than the $102.7 million it had projected.

That, of course, is $46.2 million to the good. But it also illustrates that the administration is willing to accept whatever Marcellus activity happens to generate, rather than ensuring that gas wealth extraction fairly contributes to the government.

Competing bills in the Legislature establish local impact fees that could be implemented by counties that  host gas drilling. But the aggregate revenue to be generated by those fees would be far less than amounts generated through severance taxes on the books in every other gas-drilling state. That is all the more true since the gas industry here also gets a pass on local property taxes that most other states assess on the value of properties that produce gas.

There is no doubt that the gas industry has had a positive economic impact on Pennsylvania. The industry and its impact also are likely to grow.

That is for the most fundamental reason of all. It’s not because of the Corbett administration allowing the industry to export as profit as much of the wealth that it possibly can. It’s because the gas is here.

Lawmakers should stop dithering and establish a fair severance tax that puts state revenue on par with that of other states that host the industry.

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Corbett unveils shale proposal

standardspeaker.com/news/corbett-unveils-shale-proposal-1.1212610#axzz1ZowPSaWj
By ROBERT SWIFT (Harrisburg Bureau Chief)
Published: October 4, 2011

HARRISBURG – Gov. Tom Corbett threw a curveball into the Marcellus Shale impact fee debate Monday by proposing that individual counties take the responsibility for adopting an impact fee.

The governor suggested a two-step process in which the state would approve enabling legislation setting the fee amount and uses for fee revenue. Then counties with operating wells would have the choice of adopting or not adopting the per-well fee.

Corbett’s proposal differs from other major impact fee bills before the Legislature that call for state collection of impact fee revenue and disbursement of revenue to eligible counties. He also endorsed recommendations made by his Marcellus Shale Advisory Commission to keep wells at a greater distance from water sources, increase well bonding requirements for drillers and double penalties for violations. Offered one month before the Nov. 8 general  election, the governor’s emphasis on county adoption of an impact fee could become an issue in county commissioner races.

Corbett proposed that each Marcellus well pay an impact fee of $40,000 the first year of operation, $30,000 the second year; $20,000 the third year and $10,000 in the fourth through sixth years in counties that adopt an impact fee.

Under the proposal, a county could provide a fee credit up to 30 percent if a driller invests in natural gas fueling stations or public transit.

Corbett outlined a list of mainly local uses for fee revenue with a smaller 25 percent share going to several state agencies that respond to drilling-related issues. Legal uses for revenue would range from road and bridge repairs, human services and courts and records management and geographic information systems.

“Whatever the fee brings in, it’s going to the places that are feeling the impact,” Corbett said.

The governor predicted that fee revenue from his proposal could generate $120 million in the first year and reach nearly $200 million in six years. This is an amount below the $200 million first-year revenue yield that Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson County, called for last week.

“I think it would be very difficult to get a single Democrat in support of a county impact fee,” said Sen. John Yudichak, D-14, Nanticoke, who has offered his own impact fee bill. “All the governor’s proposal is doing is authorizing counties.”

Yudichak’s proposal would set a $17,000 base impact fee per Marcellus well and splits revenue between local communities and state environmental programs such as Growing Greener.

“We’re clearly open to the governor’s proposal,” said House Majority Leader Mike Turzai, R-28, Pittsburgh, emphasizing that nothing is set on the county fee adoption provision.

There are pros and cons to requiring that counties adopt a fee, said Douglas Hill, executive director of the County Commissioners Association of Pennsylvania. “It (revenue) comes straight to us, and we don’t have to wait,” he added. “It does raise some risk of a competition between the counties (with or without impact fees).”

The governor’s plan doesn’t account for the statewide impacts of natural gas drilling, said Bill Patton, spokesman for House Minority Leader Frank Dermody, D-33, Pittsburgh.

rswift@timesshamrock.com

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Air, rail needs emphasized for Marcellus Shale region

http://republicanherald.com/news/air-rail-needs-emphasized-for-marcellus-shale-region-1.1184992
BY ROBERT SWIFT (HARRISBURG BUREAU CHIEF rswift@timesshamrock.com)
Published: August 6, 2011

HARRISBURG – Freight railroad lines and airports in the Marcellus Shale drilling regions would be targeted for improvements under recommendations made by two gubernatorial commissions.

The Governor’s Marcellus Shale Advisory Commission and Transportation Funding Advisory Commission both addressed the issue in reports released within the past two weeks.

Commission members suggested that improving both types of transportation will help the long-term development of deep gas reserves and reduce highway congestion from truck traffic associated with drilling operations. One recommendation would earmark revenue from an existing state surcharge on tickets issued for speeding and other moving vehicle violations to a new fund to pay for rail, airport and port infrastructure projects statewide.

The various recommendations are now being studied by Gov. Tom Corbett and lawmakers.

The Marcellus commission recommends giving priority to an evaluation of rail freight systems in the Marcellus regions in order to relieve the burden on roads and bridges from transporting sand, water and pipe to serve gas well operations. Another suggestion is for the state to partner with local rail authorities to seek federal rail freight dollars for this effort.

The Marcellus commission also recommends the state Transportation Department’s Aviation Bureau undertake a detailed assessment of air service needs at airports in the region in order to capitalize on economic opportunities from gas drilling.

The transportation commission focused more on finding new revenue sources for the state’s transportation system. The commission’s report noted short-line railroads in the northern tier counties need money to fix and maintain track, bridges and switches in order to support drilling operations. If more drilling materials can be shipped by rail, it will reduce truck traffic, the report states.

Pennsylvania airports get revenue from a tax on jet fuel, but revenue only covers a quarter of the improvements needed, the report states.

To address these needs, the commission recommends creating an “Intermodal Transportation Fund” for rail freight, aviation, passenger rail and ports across the state. Revenue from an existing surcharge on tickets for moving vehicle violations that currently goes to the all-purpose state General Fund could be diverted to the new intermodal fund, the commission said.

If that happens, its report projects $7 million in new revenue for aviation in fiscal 2012-13 going up to $11 million in five years and $9 million for rail freight in fiscal 2012-13 going up to $17 million in five years. The entire fund would have $54 million in 2012-13.

Before this, lawmakers have sought to provide potential funding for rail freight projects in the Marcellus region in a piecemeal fashion by adding authorizations to capital budget bills. The state pays for capital projects through the sale of bonds to investors and the governor decides which projects get the green light. It’s a tough competition and projects can remain on lists for years.

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Commentary: Pa. Gov. Tom Corbett ignores critics, stays course

http://www.pennlive.com/midstate/index.ssf/2011/04/commentary_pa_gov_tom_corbett.html
Published: Friday, April 29, 2011, 9:27 AM
By Laura Vecsey

Commentary: Pa. Gov. Tom Corbett ignores critics, stays course

And on the 101st day of his reign, Gov. Tom Corbett told state colleges they could solve their budget problems by drilling for natural gas in deposits under their campuses.

Can’t wait to hear what Joe Paterno will say about having to design a new offense to work around a drill rig on the 15-yard line. There could be gas under Penn State, which could be renamed “Marcellus U.,” according to Corbett’s line of thinking.

If there’s one, clear example why Pennsylvania’s new governor is not exactly excelling at crowd-pleasing, his suggestion Thursday about campus drilling says it all.

With such outlandish flouting of public sentiment about drilling and an extraction tax on natural gas, people might be thinking: What IS Tom Corbett thinking?

Here’s a guess: “Polls, schmolls.”

So what if the new governor’s approval ratings are in the tank?

Who cares that a chunk of people who voted for him regret their decision?

He could be Attila the Hun and guess what? It doesn’t matter.

He’s not running for office now. He won. He’s in for another three years and eight months, which is about six lifetimes for a politician, maybe nine.

Critics are calling him One-Term Tommy. But what if he turns out to be Nine-Lives Corbett?

“We may disagree with his choices and the random nature of his choices, but no one can dispute what he’s up against,” Philadelphia political strategist Larry Ceisler said.

“He is what we think he is. He’s not a showboat. He’s a prosecutor who I don’t think has yet to make the transition to leader, so it will be interesting to see if that transition takes place over the next three years. Can you teach an old dog new tricks?” Ceisler said.

Most political analysts insist it’s too soon to tell about Corbett, even as he polarizes voters over his backing of school vouchers and his refusal to impose an extraction tax on natural gas in the Marcellus Shale — a confounding stance given that shale drillers expect a tax.

“First impressions of new governors are usually not lasting impressions for most Pennsylvania voters,” said G. Terry Madonna, the Franklin & Marshall political analyst.

“In fact, Corbett seems to be playing out a familiar script in his first year in office. With few exceptions, Pennsylvania governors in recent history have had a rocky first year in office, always fail to impress the voters that first year and are always re-elected three years later.”

Since 1970, all but one modern governor has had a turbulent initial year in office — a year so tempestuous each of them was labeled a one termer early on, Madonna said.

“Yet each of them was also re-elected comfortably. The only governor to have a tight re-election campaign, Dick Thornburgh, was also the only governor to have a solid first year.”

Still, Corbett’s ratings are historically low.

A Quinnipiac Poll this week found that 37 percent of voters disapprove of Corbett’s job as governor, compared with 11 percent disapproval in the group’s Feb. 16 survey, tripling Corbett’s disapproval rating since he unveiled his budget.

Thirty-nine percent of those surveyed approve of the job Corbett is doing.

Last week, Public Policy Polling showed that among independents, Corbett only has a 31 percent approval rating. In November, Corbett won the independent votes by 18 percentage points over Democrat Dan Onorato.

But for the new governor who was swept in during a national surge favoring conservative Republicans, this is exactly the time to be spending some political capital.

“Corbett is smart to make the hard choices now, early in his administration,” said former Dauphin County Commissioner Lowman Henry of the Lincoln Institute.

“If he can get the budget balanced, improve the state’s business climate and the economy improves, the election is three and a half years away and he can take credit for having made the tough choices and putting us back on the right track.”

Henry said the current recession is so severe government and its programs cannot escape the ill effects.

“We can’t afford double- and triple-the-rate-of-inflation increases in education spending any more, and so the gravy train is over. That is bound to incite the special interests, but grass-roots taxpayers are pleased he is finally cutting off the never-ending flow of money,” he said.

Still, it’s interesting to see some Pennsylvania voters recoil at their gubernatorial choice. Corbett’s Facebook page contains myriad appeals to the former attorney general about his agenda, which includes increased prison funding while slashing education, including higher ed.

“Governor Corbett, I voted for you but I am starting to regret my decision,” said Chad Germer, an auto technician from Elizabethtown.

“You need to re-think your education cuts and the lack of taxing all the well-drilling companies who are destroying the natural beauty of our state. If you ever would like to have a conversation with one of your voters, look me up.”

Corbett does not have a knack for cozy chats with voters, or the media. But after a hands-off approach that has startled even top-ranking Republican leaders, Corbett has started to make the rounds to sell his budget.

On Wednesday, Corbett spent his 100-day anniversary in Pittsburgh touring Google.

“My budget is a commitment to Pennsylvania’s workers,” Corbett said.

Corbett’s budget would cut state spending by 3 percent. He has taken his no-tax pledge so seriously that he has yet to flinch on his opposition to an extraction tax.

“Where the state can help, we’re here to help. And where we can keep out of the way, we will.”

Corbett might not be very appealing, but it’s unlikely he cares. Not now.

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Corbett says colleges could drill for cash

http://www.timesleader.com/news/Corbett_says_colleges_could_drill_for_cash_04-28-2011.html
Posted: April 29, 2011

Six of the 14 state campuses in Pennsylvania are located on Marcellus Shale formation.

Gov. Tom Corbett speaking at the Greater Scranton Chamber of Commerce.

EDINBORO — Some Pennsylvania universities should consider drilling for natural gas below campus to help solve their financial problems, Gov. Tom Corbett said Thursday.

The Erie Times-News reported that Corbett made the suggestion during an appearance at a meeting of the Pennsylvania Association of Councils of Trustees at Edinboro University.

Corbett said six of the 14 campuses in the Pennsylvania State System of Higher Education are located on the Marcellus Shale formation, part of a vast region of underground natural gas deposits that are currently being explored and extracted.

The Republican governor’s proposed budget for the fiscal year that starts in July would cut $2 billion from education and reduce aid to colleges and universities by 50 percent. The newspaper said Corbett emphasized the cuts are only proposals and that funding for education could change as he negotiates the budget with state lawmakers.

The Marcellus Shale formation lies primarily beneath Pennsylvania, New York, West Virginia and Ohio; Pennsylvania, however, is the center of activity, with more than 2,000 wells drilled in the past three years and many thousands more planned.

Drilling for gas in deep shale deposits is emerging as a major new source of energy that supporters say is homegrown, cheap and friendlier environmentally than coal or oil.

But shale drilling requires injecting huge volumes of water underground to help shatter the rock — a process called hydraulic fracturing. Some of that water returns to the surface, in addition to the gas, in the form of ultra-salty brine tainted with metals like barium and strontium, trace radioactivity and small amounts of toxic chemicals injected by the drilling companies.

Most big gas states require drillers to dump their wastewater into deep shafts drilled into the earth to prevent it from contaminating surface water. Although it has moved to limit it, Pennsylvania still allows hundreds of millions of gallons of the partially treated drilling wastewater to be discharged into rivers from which communities draw drinking water.

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Pa Democratic budget plan includes drilling severance TAX

HARRISBURG – A state budget plan offered by Democratic senators last week includes a tax on Marcellus Shale gas production, but the caucus is proposing other actions to head off deep cuts in state aid for education, health care and social services.

Outnumbered 30-20 in the Senate, Democratic senators said it is important that they offer alternatives to the $27.3 billion state budget for fiscal 2011-12 unveiled last month by Republican Gov. Tom Corbett.

Mr. Corbett proposes to cut state aid to public schools and higher education by 50 percent, eliminate $35 million for the Human Services Development Fund, a conduit of state aid for county-run human services programs, and reduce some aid for hospitals. The governor wants to increase welfare spending by 7 percent.

The Democratic caucus plan would put together $1.1 billion in revenues to help balance the budget through cost-saving efforts and tax changes.

The senators say an estimated $750 million in savings can be achieved by finding alternatives to state prison for nonviolent offenders and weeding out ineligible individuals receiving welfare benefits.

Senators think the Liquor Control Board will be able to generate up to $100 million more from state store liquor sales if allowed more flexibility on pricing, hiring and purchasing practices.

They say nearly $300 million in revenue can be generated by extending a state tax on corporate stock values for another year, reversing new accelerated depreciation rules for businesses and collecting sales tax on Internet sales.

The senators would use this revenue to keep state aid to public schools and higher education at current levels and fund the human services development fund and homeowner mortgage-assistance programs. They want to tap the state tobacco settlement fund again to revive the adultBasic health coverage program for low-income adults.

“The (Corbett) cuts in education K-12 and higher education are much too severe,” said Sen. John Yudichak, D-14, Nanticoke.

Mr. Yudichak said the caucus wants a Marcellus Shale tax to be seriously considered during the budget floor debate later this spring.

He recently sponsored a severance bill to levy an initial rate of 2 percent on the gross value of gas production for the first three years of production, then hike the rate to 5 percent, reverting back to 2 percent after a well’s rate of production falls below set daily thresholds. But the Democratic caucus has yet to endorse a specific severance tax.

There is an emerging consensus among lawmakers that any Marcellus Shale revenue should not go to the state General Fund, but differences exist over which environmental or water-protection programs should be beneficiaries, said Mr. Yudichak, ranking Democrat on the Senate Environmental Resources and Energy Committee.

House and Senate Republican leaders are looking to restore proposed education cuts and make up the difference with cuts instead to public welfare programs.

The first budget bills out of the majority caucuses are expected early next month.

Mr. Corbett has reaffirmed his opposition to a severance tax and other state tax hikes in recent appearances. Senate GOP leaders are working on legislation to allow local governments to levy an impact fee on gas drillers to offset the municipal-related costs for roads and infrastructure repair.

Meanwhile, the Senate Democratic Policy Committee will hold a hearing Wednesday in Scranton on caucus proposals dealing with the budget and economic development. The hearing starts at 12:30 p.m. at the Nazareth Student Center at Marywood University. Sen. Lisa Boscola, D-18, Lower Saucon Twp., is chairwoman of that panel.

“This public hearing will be a great opportunity for legislators to not only discuss with our residents the pressing budget issues, but also a great opportunity for our community and business leaders to share their experience,” said Sen. John Blake, D-22, Archbald.

By Robert Swift (Harrisburg Bureau Chief)
Published: April 16, 2011
Contact the writer: rswift@timesshamrock.com
http://thetimes-tribune.com/news/democratic-budget-plan-includes-drilling-severance-tax-1.1133427#axzz1Jb4OFfes

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